Friday, January 28, 2022

Pacific Banking Corp. Employees Org. v. CA

Pacific Banking Corp. Employees Org. v. CA
GR 109373
Mar. 20, 1995
242 SCRA 492


The Pacific Banking Corporation (PaBC) was placed under receivership by the Central Bank of the Philippines. Later, it was placed under liquidation. 

The PaBC Union filed a complaint-in intervention seeking payment of holiday pay, 13th month pay differential, salary increase differential, Christmas bonus, and cash equivalent of Sick Leave Benefit due its members. The trial court ordered payment of the principal claims of the Union. The respondent judge disallowed the Liquidator's Notice of Appeal on the ground that it was late.

Ang Keong Lan and E.J. Ang Int'l., private respondents filed claims for the payment of investment in the PaBC. Respondent judge of the RTC directed the Liquidator to pay private respondents the total amount of their claim. MR and Notice of Appeal were denied.

The CA 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 final order rendered therein is 30 days. 

On the other hand it was ruled in the case of the Stockholders/Investors that a liquidation proceeding is an ordinary action. The Liquidator's petition was dismissed for being late. 


Whether a petition for liquidation under Sec. 29 of Rep. Act No. 265, otherwise known as the Central Bank Act, is a special proceeding or an ordinary civil action. 


The SC held that a petition for liquidation under Sec. 29 of Rep. Act No. 265, otherwise known as the Central Bank Act should be classified as a special proceeding and not an ordinary action. Such petition 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 affirmative 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 file their claims in the settlement of the corporation's debts and obligations. 

Elucidating the crucial distinction between an ordinary action and a special proceeding the SC quoted Chief Justice Moran:

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 file 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.

A liquidation proceeding resembles the proceeding for the settlement of state 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 benefit 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. 

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