Central Bank Board of Liquidators v. Banco Filipino
REITERATIONFacts
The Antecedents: Respondent Banco Filipino Savings and Mortgage Bank (Banco Filipino) was allowed to operate as a savings bank in 1963. In 1984, the Monetary Board (MB) of the Central Bank (CB) placed Banco Filipino under conservatorship due to massive loan applications. In 1985, the MB ordered the closure of Banco Filipino and placed it under receivership, citing insolvency. Subsequently, the CB ordered the liquidation of Banco Filipino. These actions were assailed by Banco Filipino through several complaints filed with the Regional Trial Court (RTC) of Makati. Procedural History: The Supreme Court ordered the consolidation of the cases before Branch 136 of the RTC Makati. In 1991, the Supreme Court nullified the MB Resolution ordering the closure and receivership, and directed the CB and its MB to reorganize the bank and allow it to resume business. In 1993, Republic Act (R.A.) No. 7653, the New Central Bank Act, abolished the CB and created the Bangko Sentral ng Pilipinas (BSP), with the Central Bank Board of Liquidators (CB-BOL) tasked to administer the CB's assets and liabilities. Banco Filipino reopened in 1994. In 1995, Banco Filipino filed an Amended/Supplemental Complaint seeking to substitute the CB-BOL for the defunct CB and its MB, and to recover damages. The RTC admitted this complaint. In 2003, Banco Filipino filed a Second Amended/Supplemental Complaint seeking to include the BSP and its MB as additional defendants, alleging new causes of action that arose after 1994, including refusal to grant a universal banking license, smear campaign, disqualification of a board member, conspiracy with minority stockholders, and unheeded demands for settlement. The CB-BOL opposed this, arguing it raised new causes of action against a new party. The RTC admitted the Second Amended/Supplemental Complaint, which was affirmed by the Court of Appeals (CA). The Petition: The CB-BOL filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision, arguing that the RTC erred in admitting the Second Amended/Supplemental Complaint because it introduced new parties, subject matter, and causes of action different from and unrelated to the original complaint.
Issue(s)
Whether the RTC erred in admitting Banco Filipino's Second Amended/Supplemental Complaint. Whether the Second Amended/Supplemental Complaint introduced new and independent causes of action against new parties (BSP and its MB) and whether the second supplemental pleading was improper. Whether the admission of the Second Amended/Supplemental Complaint violated the rules on joinder of parties and causes of action.
Ruling
The Supreme Court granted the Petition, reversed the decision of the Court of Appeals, and set aside its resolution. The RTC was directed to proceed with the trial of the case with utmost dispatch.
Ratio Decidendi
On the impropriety of the second amendment of the Complaint: The Court held that the causes of action in the Second Amended/Supplemental Complaint arose in 1994, well after those in the original Complaint, which were based on the alleged illegal closure in 1985. The new causes of action stemmed from alleged oppressive and arbitrary acts committed by the BSP and its MB after Banco Filipino reopened in 1994, which were distinct from the original causes of action. The Court emphasized that while amendments are generally liberally construed, they cannot be used to set up a cause of action that did not exist at the time of the filing of the original complaint. The Second Amended/Supplemental Complaint asked for damages as a consequence of acts complained of, which included not only the 1984-1985 closure but also alleged acts of harassment by the BSP and MB after 1994, constituting a whole new cause of action and asserting a new relief. This would require the RTC to delve into two entirely different causes of action, which is not countenanced by law. On the impropriety of the second supplemental pleading and whether new causes of action were introduced: The Court clarified that a supplemental pleading can set forth new facts but must bolster or add to the primary pleading, usually to justify, enlarge, or change the relief sought with respect to the same subject matter. A supplemental complaint must be founded on the same cause of action as the original complaint, or at least be germane and intertwined with it. The Second Amended/Supplemental Complaint attempted to raise new and different causes of action that arose only in 1994, which had no relation to the original causes of action involving the 1985 closure and liquidation. Allowing such amendments would lead to an endless process of amending the complaint, as future acts could also be alleged. On the violation of rules on joinder of parties and causes of action: The Court found that the admission of the Second Amended/Supplemental Complaint violated the rules on joinder of parties and causes of action. For multiple parties and causes of action to be joined, the right to relief must arise out of the same transaction or series of transactions, and there must be a question of law or fact common to all parties. The BSP and its MB have different legal personalities from the defunct CB and its MB. The reliefs for damages did not arise from the same transaction or series of transactions; the first complaint dealt with the 1985 closure, while the second dealt with alleged acts of oppression by the BSP and MB after 1994. Furthermore, there was no common question of fact or law, as the acts attributed to the BSP and MB pertained to events after 1994, unrelated to the 1985 closure. The only common factor was Banco Filipino as the alleged aggrieved party.
Main Doctrine
The admission of a Second Amended/Supplemental Complaint is improper if it introduces new and independent causes of action that arose after the filing of the original complaint, as this violates the rules on joinder of causes of action and parties, and expands the scope of the dispute beyond the original transaction or series of transactions.