Central Bank Of The Philippines v. Court Of Appeals

ESGUERRA, J.:

After the petition herein was given due course by resolution of this Court dated March 4, 1974, and the Motion to Dismiss filed by the respondents had been denied in the resolution of March 11, 1974, the petitioners were required to file their brief. Several extensions for filing petitioners' brief were granted due to pressure of work on the part of the Solicitor General who represents the petitioner. By motion of September 4, 1974, petitioner requested suspension of the running of the period for filing its brief on the ground that negotiations between the petitioner and the respondents were underway for the amicable settlement of this case and considerable time would be needed for the same to be carried out because of the intricacies of the terms of settlement, the amount involved, and the important public interest affected by the issues raised in the petition.

By resolution dated September 29, 1974, this Court resolved to suspend the running of the period for filing petitioner's brief for a period of thirty (30) days counted from notice thereof. The said period was further suspended for thirty (30) days from October 23, 1974, pending completion of the agreement between the parties, which suspension was finally extended for twenty (20) days from November 22, 1974, by resolution dated November 25, 1974. On December 4, 1974, or within the twenty-day extension period last granted by the resolution of November 25, 1974, both parties filed a motion dated December 3, 1974, submitting to this Court an agreement dated November 29, 1974, for the amicable settlement of this case (Central Bank of the Philippines vs. Court of Appeals, G.R. No. L-38224) and Civil Case No. 89689 pending before the Court of First Instance of Manila entitled, "Republic of the Philippines vs. Republic Bank", which agreement provides that the decision of the Court of First Instance of Manila dated February 27, 1970 in the case entitled, "Pablo R. Roman vs. Central Bank", Civil Case No. 68685: and the decision of the Court of Appeals in the same, case, CA G.R. No. 49144-R, be vacated and in lieu thereof judgment be rendered in accordance with the terms and conditions of the aforesaid agreement.

The full text of the compromise agreement reads as follows: A G R E E M E N T KNOW ALL MEN BY THESE PRESENTS: This AGREEMENT entered into in the City of Manila, Philippines, this 29th day of November, 1974 among: The CENTRAL BANK OF THE PHILIPPINES, with principal offices at Roxas Boulevard, Manila, Philippines, herein represented by its Governor, G. S. LICAROS; The REPUBLIC BANK, a domestic banking corporation organized under the laws of the Philippines, with principal offices at 277 Escolta, Manila, Philippines, represented by its President, PABLO R. ROMAN; PABLO R. ROMAN, VICTORIA B. ROMAN, LOURDES R. ABELLO, ARACELI R. MATHAY, LUCILA R. REYES, and the STOCKHOLDERS of the Republic Bank, who are all parties to Civil Case No. G.R. No. L-38224, entitled "Central Bank of the Philippines vs. Court of Appeals, et al.," all of legal age, with addresses at 78 Panay Avenue, Quezon City (for Spouses Pablo R. Roman and Victoria B. Roman); 37 Timog Avenue, Quezon City (for Lourdes R. Abello); 19 South 2, Quezon City (for Araceli R. Mathay); and 69 Macopa St., Quezon City (for Lucila R. Reyes), respectively; - and - The REPUBLIC OF THE PHILIPPINES, represented herein by its Secretary of Finance, CESAR VIRATA; WITNESSETH: WHEREAS, there are now pending before the courts two (2) cases involving the Republic Bank and the Government, namely: (a) "Central Bank vs. Court of Appeals, et al.,"

G.R. No. L-38224, which is pending before the Supreme Court on an appeal taken by the Central Bank from adverse decisions of the Court of First Instance of Manila ("Pablo R. Roman vs. Central Bank," Civil Case No. 68685) and the Court of Appeals (CA-G.R. No. 49144-R); and (b) "Republic of the Philippines vs. Republic Bank," Civil Case No. 89689, which is pending before the Court of First Instance of Manila; WHEREAS, the mere pendency of these cases imperils the continued operation of Republic Bank; worse, judgment for the Government in these cases would most likely result in the collapse of the Republic Bank, which occurrence would adversely affect the entire banking system and require the payment by the Philippine Deposit Insurance Corporation of a sizeable sum on its insurance liabilities (specially so since the bulk of deposits in Republic Bank P10,000.00 and less; WHEREAS, since the institution of the action entitled "Pablo R. Roman vs. Central Bank,"

Civil Case No. 68685 before the Court of First Instance of Manila, the decision in which case is now pending appeal before the Supreme Court (G.R. No. L-38224), Republic Bank has demonstrated its desire to meet its obligations and its ability to do business with relative safety to its clients; thus, Republic Bank has paid as of June 30, 1974 the amount of P41.023 million to the Central Bank on the principal of its emergency loans and from January 30, 1970 to June 30, 1974, P18.90 million to the National Treasurer on the deposits of the National Government, which latter amount has all been applied to interest; WHEREAS, taking into account the above, the financial condition of Republic Bank, the broader interests of the entire banking system, as well as the economy of the nation, the parties to the above-mentioned cases have agreed on a compromise agreement, the conditions of which are set forth herein below; NOW THEREFORE, for and in consideration of the foregoing premises, the Central Bank of the Philippines, the Republic Bank, the respondent shareholders in G.R. No. L-38224, and the Republic of the Philippines, through the Secretary of Finance, have agreed as follows: (a) The Republic Bank shall pay to the Central Bank and the National Government upon approval of this agreement the following: To the Central Bank In Million 1.

Outstanding principal of Central Bank emergency loans P25.830 2. By way of interest on emergency advances of the Central Bank and penalty on reserve deficiency, both as of June 30, 1974 4.035 and an additional amount of P625.98 per day as interest from July 1, 1974 up to the date of approval of this agreement; and, thereafter, Republic Bank shall pay interest on the emergency advances at the rate of twelve per cent (12%) per annum and such amounts which may be imposed by the Central Bank by way of penalty on reserve deficiency, both amounts to be likewise subject to paragraph (i) of this agreement, until the subscription by DBP to shares of stock in Republic Bank is made as provided therein. To the National Government 1.

Outstanding time deposits of the National Treasurer P32.998 2. By way of interest on matured time deposit of the National Government as of June 30, 1974 4.588 and an additional amount of P5,921.26 per day as interest from July 1, 1974 to September 30, 1974; and, for as long as the subscription by DBP to shares of stock in Republic Bank as provided in sub-paragraph (i) hereof is not effected, an additional amount of P6,006.38 per day as interest from October 1, 1974 until December 31, 1974, and, thereafter, the interest payments shall be computed at the rate of 5.75% per annum, compounded quarterly. Total (Exclusive of additional amounts as above indicated)