SECOND DIVISION

[G.R. No. 109373. March 20, 1995.]

PACIFIC BANKING CORPORATION EMPLOYEES ORGANIZATION,

PAULA S. PAUG, and its of cers and members , petitioners, v s . THE
HONORABLE COURT OF APPEALS and VITALIANO N. NAAGAS II,
as Liquidator of Pacific Banking Corporation , respondents.

[G.R. No. 112991. March 20, 1995.]

THE PRESIDENT OF THE PHILIPPINE DEPOSIT INSURANCE

CORPORATION, as Liquidator of the Paci c Banking Corporation ,
petitioner, v s . COURT OF APPEALS, HON. JUDGE REGINO T.
VERIDIANO II, DEPUTY SHERIFF RAMON ENRIQUEZ and ANG ENG
JOO, ANG KEONG LAN and E.J. ANG INT'L. LTD., represented by
their Attorney-in-fact, GONZALO C. SY , respondents.

Puruganan Chato Tan & Geronimo for petitioner in G.R. No. 112991.
Potenciano A. Flores for petitioners in G.R. No. 109373.
Marbibi Law Office for private respondent.
The Solicitor General for public respondent.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; DISTINCTION BETWEEN AN ORDINARY ACTION AND A

SPECIAL PROCEEDING. Elucidating the crucial distinction between an ordinary action
and a special proceeding, Chief Justice Moran states: Action is the act by which one sues
another in a court of justice for the enforcement or protection of a right, or the prevention
or redress of a wrong while special proceeding is the act by which one seeks to establish
the status or right of a party, or a particular fact. Hence, action is distinguished from
special proceeding in that the former is a formal demand of a right by one against another,
while the latter is but a petition for a declaration of a status, right or fact. Where a party-
litigant seeks to recover property from another, his remedy is to le an action. Where his
purpose is to seek the appointment of a guardian for an insane, his remedy is a special
proceeding to establish the fact or status of insanity calling for an appointment of
guardianship.
2 . ID.; ID.; ID.; PETITION FOR LIQUIDATION OF AN INSOLVENT
CORPORATION UNDER REPUBLIC ACT NO. 265 (CENTRAL BANK ACT), A SPECIAL
PROCEEDING. Considering this distinction, a petition for liquidation of an insolvent
corporation should be classi ed a special proceeding and not an ordinary action. Such
petition does not seek the enforcement or protection of a right nor the prevention or
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 redress of a wrong against a party. It does not pray for af rmative relief for injury
arising from a party's wrongful act or omission nor state a cause of action that can be
enforced against any person. What it seeks is merely a declaration by the trial court of
the corporation's insolvency so that its creditors may be able to le their claims in the
settlement of the corporation's debts and obligations. Put in another way, the petition
only seeks a declaration of the corporation's state of insolvency and the concomitant
right of creditors and the order of payment of their claims in the disposition of the
corporation's assets.
3. ID.; ID.; ID.; ID.; DOES NOT RESEMBLE PETITION FOR INTERPLEADER.
Contrary to the rulings of the Court of Appeals' Fourteenth Division, liquidation
proceedings do not resemble petitions for interpleader. For one, an action for
interpleader involves claims on a subject matter against a person who has no interest
therein. This is not the case in a liquidation proceeding where the Liquidator, as
representative of the corporation, takes charge of its assets and liabilities for the
bene t of the creditors. He is thus charged with insuring that the assets of the
corporation are paid only to rightful claimants and in the order of payment provided by
law.
4. ID.; ID.; ID.; ID.; RESEMBLES A PROCEEDING FOR SETTLEMENT OF
ESTATE OF DECEASED PERSONS. Rather, a liquidation proceeding resembles the
proceeding for the settlement of estate of deceased persons under Rules 73 to 91 of
the Rules of Court. The two have a common purpose: the determination of all the
assets and payment of all the debts and liabilities of the insolvent corporation or the
estate. The Liquidator and the administrator or executor are both charged with the
assets for the bene t of the claimants. The court's concern is with the declaration of
creditors and their rights and the determination of their order of payment. Furthermore,
as in the settlement of estates, multiple appeals are allowed in proceedings for
liquidation of an insolvent corporation.
5. ID.; ID.; ID.; ID.; APPEALS; RECORD OF APPEAL, JURISDICTIONAL. In G.R.
No. 112991, the Liquidator's notice of appeal was led on time, having been led on the
23rd day of receipt of the order granting the claims of the Stockholders/Investors.
However, the Liquidator did not le a record on appeal with the result that he failed to
perfect his appeal. As already stated, a record on appeal is required under the Interim
Rules and Guidelines in special proceedings and for cases where multiple appeals are
allowed. The reason for this is that the several claims are actually separate ones and a
decision or nal order with respect to any claim can be appealed. Necessarily the
original record on appeal must remain in the trial court where other claims may still be
pending.
6. ID.; ID.; ID.; ID.; ID.; FAILURE TO PERFECT APPEAL RENDERS ORDER
GRANTING CLAIMS OF STOCKHOLDERS/INVESTORS FINAL. Because of the
Liquidator's failure to perfect his appeal, the order granting the claims of the
Stockholders/Investors became final.
7. ID.; ID.; ID.; ID.; ID.; FILING OF RECORD ON APPEAL WITHIN EXTENSION
SOUGHT, WITHIN PERIOD. On the other hand, in G.R. No. 109373, we nd that the
Fifth Division correctly granted the Liquidator's Petition for Certiorari, Prohibition and
Mandamus. As already noted, the Liquidator led a notice of appeal and a motion for
extension to le a record on appeal on December 10, 1991, i.e., within 30 days of his
receipt of the order granting the Union's claim. Without waiting for the resolution of his
motion for extension, he led on December 20, 1991 within the extension sought a
record on appeal. Respondent judge thus erred in disallowing the notice on appeal and
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 denying the Liquidator's motion for extension to file a record on appeal.
8. ID.; ID.; ID.; ID.; FUNCTION OF THE TRIAL COURT. In liquidation
proceedings, the function of the trial court is not limited to assisting in the
implementation of the orders of the Monetary Board. Under the same Section (S29) of
the law invoked by the Union, the court has authority to set aside the decision of the
Monetary Board "if there is a convincing proof that the action is plainly arbitrary and
made in bad faith."
9. MERCANTILE LAW; REPUBLIC ACT NO. 265 (CENTRAL BANK ACT);
LIQUIDATION OF INSOLVENT BANK; LIQUIDATOR; NOT ONLY THE REPRESENTATIVE
OF CENTRAL BANK BUT ALSO OF THE INSOLVENT BANK. In truth, the Liquidator is
the representative not only of the Central Bank but also of the insolvent bank. Under
Sections 28A-29 of Rep. Act No. 265 he acts in behalf of the bank "personally or
through counsel as he may retain, in all actions or proceedings for or against the
corporation" and he has authority "to do whatever may be necessary for these
purposes." This authority includes the power to appeal from the decisions or nal
orders of the court which he believes to be contrary to the interest of the bank.
10. REMEDIAL LAW; SPECIAL PROCEEDINGS; LIQUIDATION OF INSOLVENT
BANK; APPEAL; NOTICE OF APPEAL AND MOTION FOR ADDITIONAL TIME TO SUBMIT
RECORD ON APPEAL, FILED JOINTLY BY THE OFFICE OF THE SOLICITOR GENERAL
AND LAWYERS OF PDIC. Finally the Union contends that the notice of appeal and
motion for extension of time to le the record on appeal led in behalf of the Central
Bank was not led by the Of ce of the Solicitor General as counsel for the Central Bank.
This contention has no merit. On October 22, 1992, as Assistant Solicitor General
Cecilio O. Estoesta informed the trial court on March 27, 1992, the OSG had previously
authorized lawyers of the PDIC to prepare and sign pleadings in the case. Conformably
thereto the Notice of Appeal and the Motion for Additional Time to Submit Record on
Appeal led were jointly signed by Solicitor Reynaldo I. Saludares in behalf of the OSG
and by lawyers of the PDIC.

DECISION

MENDOZA , J : p

These cases have been consolidated because the principal question involved is
the same: whether a petition for liquidation under 29 of Rep. Act No. 265, otherwise
known as the Central Bank Act, is a special proceeding or an ordinary civil action. The
Fifth and the Fourteenth Divisions of the Court of Appeals reached opposite results on
this question and consequently applied different periods for appealing. cdphil

The facts are as follows:

I.
Proceedings in the CB and the RTC
On July 5, 1985, the Paci c Banking Corporation (PaBC) was placed under
receivership by the Central Bank of the Philippines pursuant to Resolution No. 699 of its
Monetary Board. A few months later, it was placed under liquidation 1 and a Liquidator
was appointed. 2
On April 7, 1986, the Central Bank led with the Regional Trial Court of Manila,
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 Branch 31, a petition entitled "Petition for Assistance in the Liquidation of Paci c
Banking Corporation." 3 The petition was approved, after which creditors led their
claims with the court.
On May 17, 1991, a new Liquidator, Vitaliano N. Naagas, 4 President of the
Philippine Deposit Insurance Corporation (PDIC), was appointed by the Central Bank. prcd

On March 13, 1989 the Paci c Banking Corporation Employees Organization

(Union for short), petitioner in G.R. No. 109373 , led a complaint-in-intervention seeking
payment of holiday pay, 13th month pay differential, salary increase differential,
Christmas bonus, and cash equivalent of Sick Leave Bene ts due its members as
employees of PaBC. In its order dated September 13, 1991, the trial court ordered
payment of the principal claims of the Union. 5
The Liquidator received a copy of the order on September 16 , 1991 . On October
16, 1991, he led a Motion for Reconsideration and Clari cation of the order. In his
order of December 6, 1991, the judge modi ed his September 13, 1991 6 but in effect
denied the Liquidator's Motion for reconsideration. This order was received by the
Liquidator on December 9 , 1991 . The following day, December 10 , 1991 , he led a
Notice of Appeal and a Motion for Additional Time to Submit Record on Appeal. On
December 20, 1991, he led the Record on Appeal. On December 23, 1991, another
Notice of Appeal was filed by the Office of the Solicitor General in behalf of Naagas.

In his order of February 10, 1992, respondent judge disallowed the Liquidator's
Notice of Appeal on the ground that it was late, i.e., more than 15 days after receipt of
the decision. The judge declared his September 13, 1991 order and subsequent orders
to be final and executory and denied reconsideration. On March 27, 1992 he granted the
Union's Motion for Issuance of a Writ of Execution.
Ang Keong Lan and E.J. Ang Int'l., private respondents in G.R. No. 112991 ,
likewise led claims for the payment of investment in the PaBC allegedly in the form of
shares of stocks amounting to US$2,531,632.18. The shares of stocks, consisting of
154,462 common shares, constituted 11% of the total subscribed capital stock of the
PaBC. They alleged that their claim constituted foreign exchange capital investment
entitled to preference in payment under the Foreign Investments Law. cdll

In his order dated September 11, 1992, respondent judge of the RTC directed the
Liquidator to pay private respondents the total amount of their claim as preferred
creditors. 7
The Liquidator received the order on September 16 , 1992 . On September 30 ,
1992 he moved for reconsideration, but his motion was denied by the court on October
2, 1992. He received the order denying his Motion for Reconsideration on October 5 ,
1992. On October 14,1992 he led a Notice of Appeal from the orders of September
16, 1992 and October 2, 1992. As in the case of the Union, however, the judge ordered
the Notice of Appeal stricken off the record on the ground that it had been led without
authority of the Central Bank and beyond 15 days. In his order of October 28, 1992, the
judge directed the execution of his September 11, 1992 order granting the
Stockholders/Investors' claim.
II.
Proceedings in the Court of Appeals
The Liquidator led separate Petitions for Certiorari, Prohibition and Mandamus
in the Court of Appeals to set aside the orders of the trial court denying his appeal from
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 the orders granting the claims of Union and of the Stockholders/Investors. The two
Divisions of the Court of Appeals, to which the cases were separately raf ed, rendered
conflicting rulings.
In its decision of November 17, 1992 in CA-G.R. SP No. 27751 (now G.R. No.
109373) the Fifth Division 8 held in the case of the Union that the proceeding before the
trial court was a special proceeding and, therefore, the period for appealing from any
decision or nal order rendered therein is 30 days. Since the notice of appeal of the
Liquidator was led on the 30th day of his receipt of the decision granting the Union's
claims, the appeal was brought on time. The Fifth Division, therefore, set aside the
orders of the lower court and directed the latter to give due course to the appeal of the
Liquidator and set the Record on Appeal he had filed for hearing. llcd

On the other hand, on December 16, 1993, the Fourteenth Division 9 ruled in CA-
G.R. SP No. 29351 (now G.R. No. 112991 ) in the case of the Stockholders/Investors
that a liquidation proceeding is an ordinary action. Therefore, the period for appealing
from any decision or nal order rendered therein is 15 days and that since the
Liquidator's appeal notice was led on the 23rd day of his receipt of the order appealed
from, deducting the period during which his motion for reconsideration was pending,
the notice of appeal was led late. Accordingly, the Fourteenth Division dismissed the
Liquidator's petition.
III.
Present Proceedings
The Union and the Liquidator then separately filed petitions before this Court.
In G.R. No. 109373 the Union contends that:
1. The Court of Appeals acted without jurisdiction over the subject matter or
nature of the suit.
2. The Court of Appeals gravely erred in taking cognizance of the petition for
certiorari filed by Naagas who was without any legal authority to file it.

3. The Court of Appeals erred in concluding that the case is a special

proceeding governed by Rules 72 to 109 of the Revised Rules of Court.

4. The Court of Appeals erred seriously in concluding that the notice of

appeal filed by Naagas was filed on time.

5. The Court of Appeals erred seriously in declaring that the second notice of
appeal filed on December 23, 1991 by the Solicitor General is a superfluity.

On the other hand, in G.R. No. 112991 the Liquidator contends that:
1. The Petition for Assistance in the Liquidation of the Paci c Banking
Corporation is a Special Proceeding case and/or one which allows multiple
appeals, in which case the period of appeal is 30 days and not 15 days
from receipt of the order/judgment appealed from.

2. Private respondents are not creditors of PaBC but are plain stockholders
whose right to receive payment as such would accrue only after all the
creditors of the insolvent bank have been paid.
3. The claim of private respondents in the amount of US$22,531,632.18 is not
in the nature of foreign investment as it is understood in law.

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 4. The claim of private respondents has not been clearly established and
proved.
5. The issuance of a writ of execution against the assets of PaBC was made
with grave abuse of discretion.

The petitions in these cases must be dismissed.

First. As stated in the beginning, the principal question in these cases is whether
a petition for liquidation under 29 of Rep. Act No. 265 is in the nature of a special
proceeding. If it is, then the period of appeal is 30 days and the party appealing must, in
addition to a notice of appeal, le with the trial court a record on appeal in order to
perfect his appeal. Otherwise, if a liquidation proceeding is an ordinary action, the
period of appeal is 15 days from notice of the decision or final order appealed from. cdphil

BP Blg. 129 provides:

39. Appeals. The period for appeal from nal orders, resolutions, awards,
judgments, or decisions of any court in all cases shall be fteen (15) days
counted from the notice of the nal order, resolution, award, judgment or decision
appealed from: Provided, however, that in habeas corpus cases the period for
appeal shall be forty-eight (48) hours from the notice of the judgment appealed
from.
No record on appeal shall be required to take an appeal. In lieu thereof, the entire
record shall be transmitted with all the pages prominently numbered
consecutively, together with an index of the contents thereof.
This section shall not apply in appeals in special proceedings and in other cases
wherein multiple appeals are allowed under applicable provisions of the Rules of
Court.

The Interim Rules and Guidelines to implement BP Blg. 129 provides:

19. Period of Appeals.
(a) All appeals, except in habeas corpus cases and in the cases referred to in
paragraph (b) hereof, must be taken within fteen (15) days from notice of the
judgment, order, resolution or award appealed from.
(b) In appeals in special proceedings in accordance with Rule 109 of the
Rules of Court and other cases wherein multiple appeals are allowed, the period
of appeals shall be thirty (30) days, a record on appeal being required.

The Fourteenth Division of the Court of Appeals held that the proceeding is an
ordinary action similar to an action for interpleader under Rule 63. 10 The Fourteenth
Division stated:
The petition led is akin to an interpleader under Rule 63 of the Rules of Court
where there are con icting claimants or several claims upon the same subject
matter, a person who claims no interest thereon may file an action for interpleader
to compel the claimants to "interplead" and litigate their several claims among
themselves. (Section 1, Rule 63).
An interpleader is in the category of a special civil action under Rule 62 which, like
an ordinary action, may be appealed only within fteen (15) days from notice of
the judgment or order appealed from. Under Rule 62, the preceding rules covering
ordinary civil actions which are not inconsistent with or may serve to supplement
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 the provisions of the rule relating to such civil actions are applicable to special
civil actions. This embraces Rule 41 covering appeals from the regional trial court
to the Court of Appeals.
...
Thus, under Section 1, Rule 2 of the Rules of Court, an action is de ned as "an
ordinary suit in a court of justice by which one party prosecutes another for the
enforcement or protection of a right or the prevention or redress of a wrong." On
the other hand, Section 2 of the same Rule states that "every other remedy
including one to establish the status or right of a party or a particular fact shall be
by special proceeding."
To our mind, from the aforequoted de nitions of an action and a special
proceeding, the petition for assistance of the court in the liquidation of an asset
of a bank is not "one to establish the status or right of a party or a particular fact."
Contrary to the submission of the petitioner, the petition is not intended to
establish the fact of insolvency of the bank. The insolvency of the bank had
already been previously determined by the Central Bank in accordance with
Section 9 of the CB Act before the petition was led. All that needs to be done is
to liquidate the assets of the bank and thus the assistance of the respondent
court is sought for that purpose. LLphil

It should be pointed out that this petition led is not among the cases categorized
as a special proceeding under Section 1, Rule 72 of the Rules of Court, nor among
the special proceedings that may be appealed under Section 1, Rule 109 of the
Rules.

We disagree with the foregoing view of the Fourteenth Division. Rule 2 of the
Rules of Court provide:
1. Action de ned . Action means an ordinary suit in a court of justice, by
which one party prosecutes another for the enforcement or protection of a right, or
the prevention or redress of a wrong.
2. Special proceeding distinguished. Every other remedy, including one to
establish the status or right of a party or a particular fact, shall be by special
proceeding.

Elucidating the crucial distinction between an ordinary action and a special

proceeding, Chief Justice Moran states: 11

Action is the act by which one sues another in a court of justice for the
enforcement or protection of a right, or the prevention or redress of a wrong while
special proceeding is the act by which one seeks to establish the status or right of
a party, or a particular fact. Hence, action is distinguished from special
proceeding in that the former is a formal demand of a right by one against
another, while the latter is but a petition for a declaration of a status, right or fact.
Where a party-litigant seeks to recover property from another, his remedy is to le
an action. Where his purpose is to seek the appointment of a guardian for an
insane, his remedy is a special proceeding to establish the fact or status of
insanity calling for an appointment of guardianship.

Considering this distinction, a petition for liquidation of an insolvent corporation

should be classi ed a special proceeding and not an ordinary action. Such petition
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 does not seek the enforcement or protection of a right nor the prevention or redress of
a wrong against a party. It does not pray for af rmative relief for injury arising from a
party's wrongful act or omission nor state a cause of action that can be enforced
against any person.
What it seeks is merely a declaration by the trial court of the corporation's
insolvency so that its creditors may be able to le their claims in the settlement of the
corporation's debts and obligations. Put in another way, the petition only seeks a
declaration of the corporation's debts and obligations. Put in another way, the petition
only seeks a declaration of the corporation's state of insolvency and the concomitant
right of creditors and the order of payment of their claims in the disposition of the
corporation's assets.
Contrary to the rulings of the Fourteenth Division, liquidation proceedings do not
resemble petitions for interpleader. For one, an action for interpleader involves claims
on a subject matter against a person who has no interest therein. 12 This is not the
case in a liquidation proceeding where the Liquidator, as representative of the
corporation, takes charge of its assets and liabilities for the bene t of the creditors. 1 3
He is thus charged with insuring that the assets of the corporation are paid only to
rightful claimants and in the order of payment provided by law.
Rather, a liquidation proceeding resembles the proceeding for the settlement of
estate of deceased persons under Rules 73 to 91 of the Rules of Court. The two have a
common purpose: the determination of all the assets and the payment of all the debts
and liabilities of the insolvent corporation or the estate. The Liquidator and the
administrator or executor are both charged with the assets for the bene t of the
claimants. In both instances, the liability of the corporation and the estate is not
disputed. The court's concern is with the declaration of creditors and their rights and
the determination of their order of payment. LexLib

Furthermore, as in the settlement of estates, multiple appeals are allowed in

proceedings for liquidation of an insolvent corporation. As the Fifth Division of the
Court of Appeals, quoting the Liquidator, correctly noted:
A liquidation proceeding is a single proceeding which consists of a number of
cases properly classi ed as "claims." It is basically a two-phased proceeding. The
rst phase is concerned with the approval and disapproval of claims. Upon the
approval of the petition seeking the assistance of the proper court in the
liquidation of a closed entity, all money claims against the bank are required to be
led with the liquidation court. This phase may end with the declaration by the
liquidation court that the claim is not proper or without basis. On the other hand, it
may also end with the liquidation court allowing the claim. In the latter case, the
claim shall be classified whether it is ordinary or preferred, and thereafter included
Liquidator. In either case, the order allowing or disallowing a particular claim is
final order, and may be appealed by the party aggrieved thereby.
The second phase involves the approval by the Court of the distribution plan
prepared by the duly appointed liquidator. The distribution plan speci es in detail
the total amount available for distribution to creditors whose claim were earlier
allowed. The Order finally disposes of the issue of how much property is available
for disposal. Moreover, it ushers in the nal phase of the liquidation proceeding
payment of all allowed claims in accordance with the order of legal priority and
the approved distribution plan.

Verily, the import of the nal character of an Order of allowance or disallowance

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 of a particular claim cannot be overemphasized. It is the operative fact that
constitutes a liquidation proceeding a "case where multiple appeals are allowed
by law." The issuance of an Order which, by its nature, affects only the particular
claims involved, and which may assume nality if no appeal is made therefrom,
ipso facto creates a situation where multiple appeals are allowed.
A liquidation proceeding is commenced by the ling of a single petition by the
Solicitor General with a court of competent jurisdiction entitled, "Petition for
Assistance in the Liquidation" of e.g., Paci c Banking Corporation. All claims
against the insolvent are required to be led with the liquidation court. Although
the claims are litigated in the same proceeding, the treatment is individual. Each
claim is heard separately. And the Order issued relative to a particular claim
applies only to said claim, leaving the other claims unaffected, as each claim is
considered separate and distinct from the others. Obviously, in the event that an
appeal from an Order allowing or disallowing a particular claim is made, only said
claim is affected, leaving the others to proceed with their ordinary course. In such
case, the original records of the proceeding are not elevated to the appellate court.
They remain with the liquidation court. In lieu of the original record, a record of
appeal is instead required to be prepared and transmitted to the appellate court.
Inevitably, multiple appeals are allowed in liquidation proceedings. Consequently,
a record on appeal is necessary in each and every appeal made. Hence, the period
to appeal therefrom should be thirty (30) days, a record on appeal being required.
(Record, pp. 162-164).

I n G.R. No. 112991 (the case of the Stockholders/Investors), the Liquidator's

notice of appeal was led on time, having been led on the 23rd day of receipt of the
order granting the claims of the Stockholders/Investors. However, the Liquidator did
not le a record on appeal with the result that he failed to perfect his appeal. As already
stated, a record on appeal is required under the Interim Rules and Guidelines in special
proceedings and for cases where multiple appeals are allowed. The reason for this is
that the several claims are actually separate ones and a decision or nal order with
respect to any claim can be appealed. Necessarily the original record on appeal must
remain in the trial court where other claims may still be pending.
Because of the Liquidator's failure to perfect his appeal, the order granting the
claims of the Stockholders/Investors became nal. Consequently, the Fourteenth
Division's decision dismissing the Liquidator's Petition for Certiorari, Prohibition and
Mandamus must be affirmed albeit for a different reason.
On the other hand, in G.R. No. 109373 (case of the Labor Union), we nd that the
Fifth Division correctly granted the Liquidator's Petition for Certiorari, Prohibition and
Mandamus. As already noted, the Liquidator led a notice of appeal and a motion for
extension to le a record appeal on December 10, 1991, i.e., within 30 days of his
receipt of the order granting the Union's claim. Without waiting for the resolution of his
motion for extension, he led on December 20, 1991 within the extension sought a
record on appeal. Respondent judge thus erred in disallowing the notice on appeal and
denying the Liquidator's motion for extension to file a record on appeal. Cdpr

The Fifth Division of the Court of Appeals correctly granted the Liquidator's
Petition for Certiorari, Prohibition and Mandamus and its decision should, therefore, be
affirmed.
Second. In G.R. No. 109373, The Union claims that under 29 of Rep. Act No. 265,
the court merely assists in adjudicating the claims of creditors, preserves the assets of
the institution, and implements the liquidation plan approved by the Monetary Board
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 and that, therefore, as representative of the Monetary Board, the Liquidator cannot
question the order of the court or appeal from it. It contends that since the Monetary
Board had previously admitted PaBC's liability to the laborers by in fact setting aside
the amount of P112,234,292.44 for the payment of their claims, there was nothing else
for the Liquidator to do except to comply with the order of the court.
The Union's contention is untenable. In liquidation proceedings, the function of
the trial court is not limited to assisting in the implementation of the orders of the
Monetary Board. Under the same section (29) of the law invoked by the Union, the
court has authority to set aside the decision of the Monetary Board "if there is a
convincing proof that the action is plainly arbitrary and made in bad faith." 14 As this
Court held in Rural Bank of Buhi, Inc. v. Court of Appeals: 15
There is no question that the action of the Monetary Board in this regard may be
subject to judicial review. Thus, it has been held that the Court's may interfere
with the Central Bank's exercise of discretion in determining whether or not a
distressed bank shall be supported or liquidated. Discretion has its limits and has
never been held to include arbitrariness, discrimination or bad faith (Ramos v.
Central Bank of the Philippines, 41 SCRA 567 [1971]).
In truth, the Liquidator is the representative not only of the Central Bank but also
of the insolvent bank. Under 28A-29 of Rep. Act No. 265 he acts in behalf of the bank
"personally or through counsel as he may retain, in all actions or proceedings or against
the corporation" and he has authority "to do whatever may be necessary for these
purposes." This authority includes the power to appeal from the decisions or nal
orders of the court which he believes to be contrary to the interest of the bank.

Finally the Union contends that the notice of appeal and motion for extension of
time to le the record on appeal led in behalf of the Central Bank was not led by the
Of ce of the Solicitor General as counsel for the Central Bank. This contention has no
merit. On October 22, 1992, as Assistant Solicitor General Cecilio O. Estoesta informed
the trial court on March 27, 1992, the OSG had previously authorized lawyers of the
PDIC to prepare and sign pleadings in the case. 16 Conformably thereto the Notice of
Appeal and the Motion for Additional Time to Submit Record on Appeal led were
jointly signed by Solicitor Reynaldo I. Saludares in behalf of the OSG and by lawyers of
the PDIC. 17
WHEREFORE, in G.R. No. 109373 and G.R. No. 112991, the decisions appealed
from are AFFIRMED.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Puno, JJ., concur.

Footnotes

1. MB Resolution No. 1233 issued on November 22, 1985.

2. Renan V. Santos, Special Assistant to the Governor of the Central Bank of the
Philippines.
3. Docketed as SP Proc. No. 86-35313.

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 4. MB Resolution No. 537.
5. The dispositive portion of the order, dated September 13, 1991, reads:
WHEREFORE, the Court hereby directs the Liquidator to immediately compute
and pay the following monetary claims of the plaintiffs/intervenors:
(a) Holiday pay covering the period from November 1, 1974 to October 31,
1985;
(b) 13th month pay in 1985 and salary differential pay to employees with
permanent appointments as of January 1982 including the 28% salary increase under
the 1982 CBA; and

(c) 1985 Christmas bonus;

(d) Commutation and payment of all unused sick leave credits; and
(e) The payment of 10% of the total claims as computed, due and paid to
the plaintiffs/intervenors' counsel, Atty. Potenciano A. Flores, as attorney's fees through
the Branch Clerk of Court.

The Monetary Claims of the plaintiffs/intervenors for the Emergency Leave

credits, Hospital Assistance Funds, and Anniversary Increase are DENIED unless
supporting documents are presented by claimants/intervenors as attested by PaBC's
physician and/or responsible officers of the PaBC that they are entitled to said claims.
SO ORDERED.

6. The dispositive portion of the order, dated December 6, 1991, reads:

WHEREFORE, the Order of this Court dated September 13, 1991 is hereby
modi ed and the Liquidator is ordered to immediately compute and pay the following
monetary claims of the plaintiffs/intervenors:

a) The claim for holiday pay covering the period from November 1, 1974 to
October 31, 1985;

b) The claim for 28% salary differential pursuant to the CBA increase;

c) The claim for Christmas Bonus which should be pro rated based on the
employees length of service rendered up to 1985 when the Paci c Banking Corporation
was placed under liquidation; and

d) The claim for unused sick leave bene ts which should be computed and
paid accordingly.
Furthermore, this Court orders:

a) The prorata payment of 13th month pay in accordance with the position
taken by the Liquidator provided in the Implementing Rules of the Department of Labor;
and
b) Consistent with the previous orders of this Court payment of 10%
attorney's fees should be deducted from the total claims afforded to the
plaintiffs/intervenors and other employees of the bank (PaBC).

7. The dispositive portion of the trial court's order, dated September 11, 1992 reads:
WHEREFORE, premises considered, the Liquidator of PaBC is ordered to pay
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 claimants, through their Attorney-In-Fact Gonzalo C. Sy, their total investment of
US$2,531,632.18 as preferred creditors. Dividends and/or interest that accrued in favor
of claimants is hereby deferred pending study by the Liquidator who is hereby ordered
to submit his report and recommendation within thirty (30) days from receipt of this
Order.
8. Justice Sera n E. Camilon, Chairman and ponente; Justices Sera n V.C. Guingona and
Cancio C. Garcia, Members, concurring.

9. Justice Antonio M. Martinez, Chairman and ponente; Justices Artemon D. Luna and
Ma. Alicia Austria-Martinez, Members, concurring.
10. 1. Interpleader when proper. Whenever con icting claims upon the same subject
matter are or may be made against a person, who claims no interest whatever in the
subject matter, or an interest which in whole or in part is not disputed by the claimants,
he may bring an action against the con icting claimants to compel them to interplead
and litigate their several claims among themselves.
11. 1 MORAN, COMMENTS ON THE RULE OF COURT 119-120 (1979), citing Hagans v.
Wislizenus, 42 Phil. 880, 882, (1922).
12. Alvarez v. Commonwealth, 65 Phil. 302 (1938).
13. Rep. Act No. 265, 29, as amended.

14. Salud v. Central Bank of the Philippines, 143 SCRA 590 (1986).
15. 162 SCRA 288 (1988).
16. Rollo, p. 41, G.R. No. 112991.
17. Annexes "H" and "I", Rollo, CA-G.R. S.P. No. 27751.

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