The Supreme Court, in Prime Savings Bank v. Spouses Santos, reiterated a fundamental principle of Philippine remedial law: interlocutory orders, or those that do not fully resolve all issues in a case, cannot be immediately appealed. This ruling underscores the importance of adhering to proper procedural channels, ensuring that appeals are taken only from final judgments to prevent piecemeal litigation and promote judicial efficiency. A party aggrieved by an interlocutory order must generally await the final resolution of the case before seeking appellate review. Ignoring this rule can lead to the dismissal of an appeal, as it did in this case, emphasizing the need for legal practitioners to choose the correct mode of appeal.

Prime Savings Bank: A Case of Premature Appeal and Procedural Missteps

The case began with a complaint filed by Spouses Roberto and Heidi Santos against Engr. Edgardo Torcende and Prime Savings Bank, seeking the rescission of a sale and real estate mortgage. While this case was ongoing, Prime Savings Bank was placed under receivership and subsequently liquidation by the Bangko Sentral ng Pilipinas (BSP), with the Philippine Deposit Insurance Corporation (PDIC) acting as the statutory liquidator. The Regional Trial Court (RTC) initially ruled in favor of the Spouses Santos, leading to a notice of garnishment against Prime Savings Bank. The bank, under liquidation, sought to lift the garnishment, leading to a series of conflicting orders from the RTC. This culminated in Prime Savings Bank filing a Petition for Certiorari with the Court of Appeals (CA) to prevent the execution of the judgment. As part of this petition, they sought a Temporary Restraining Order (TRO) or Writ of Preliminary Injunction (WPI), which the CA denied, leading to the present Supreme Court case.

The Supreme Court’s decision rested on the fundamental distinction between interlocutory and final orders. An interlocutory order is one that does not dispose of a case completely but leaves something to be decided upon. In contrast, a final order fully resolves all issues in a case, leaving nothing more for the court to do. The assailed Resolutions of the CA, which denied Prime Savings Bank’s application for a TRO and/or WPI, were deemed interlocutory because they did not resolve the main issue of whether the RTC’s order allowing execution and garnishment was proper. The Court emphasized that Rule 45 of the Rules of Court, which Prime Savings Bank invoked, is applicable only to appeals from judgments or final orders.

“It is a hornbook principle that Rule 45 of the Rules of Court governs appeals from judgments or final orders, not interlocutory orders. An interlocutory order cannot be the subject of appeal until final judgment is rendered for one party or the other.”

This principle is rooted in the policy against piecemeal appeals, which can cause unnecessary delays and multiply litigation. Allowing appeals from every interlocutory order would disrupt the orderly administration of justice and burden appellate courts with fragmented cases. The correct remedy to challenge an interlocutory order is generally a petition for certiorari under Rule 65 of the Rules of Court, alleging grave abuse of discretion amounting to lack or excess of jurisdiction. However, even if the Court were to treat the Petition as one under Rule 65, it would still fail because the main Certiorari Petition before the CA had already been decided in favor of Prime Savings Bank, rendering the issue of the TRO moot.

Moreover, the Supreme Court highlighted the effect of placing a bank under liquidation. Section 30 of Republic Act No. 7653, the New Central Bank Act, provides that assets of an institution under receivership or liquidation are in custodia legis and exempt from garnishment, levy, attachment, or execution. This provision aims to protect the assets of the bank for the benefit of its depositors and creditors, ensuring equitable distribution during liquidation proceedings. The RTC’s initial order lifting the writ of execution recognized this principle, but its subsequent reversal was the subject of the CA petition that ultimately favored Prime Savings Bank.

The Supreme Court’s decision underscores the importance of understanding the nuances of remedial law and choosing the correct procedural remedy. While the initial error was in appealing an interlocutory order, the subsequent resolution of the main case in favor of Prime Savings Bank ultimately rendered the issue moot. This highlights the interconnectedness of legal proceedings and the potential for even procedural missteps to be rendered inconsequential by later events. Lawyers must, however, diligently assess the nature of court orders and pursue the appropriate remedies to protect their clients’ interests effectively.

Building on this principle, the Supreme Court has consistently held that petitions questioning interlocutory orders should be filed under Rule 65, alleging grave abuse of discretion. This approach contrasts with appeals under Rule 45, which are reserved for final judgments. The distinction is crucial because the grounds for review and the procedural requirements differ significantly. Failing to recognize this distinction can lead to the dismissal of a case, regardless of the underlying merits.

In this context, it is also essential to understand the implications of placing a financial institution under receivership or liquidation. The New Central Bank Act grants the Monetary Board of the BSP broad powers to regulate and supervise banks to maintain financial stability. When a bank is deemed insolvent or incapable of meeting its obligations, the BSP can place it under receivership and eventually liquidation. This process involves the appointment of a receiver or liquidator, typically the PDIC, who takes control of the bank’s assets and liabilities. The primary goal is to protect depositors and creditors by ensuring an orderly and equitable distribution of the bank’s remaining assets.

FAQs

What was the key issue in this case?	The key issue was whether the Court of Appeals correctly denied Prime Savings Bank’s application for a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction (WPI), which was ancillary to its main petition for certiorari.
Why was Prime Savings Bank’s petition dismissed?	The petition was dismissed because it was filed under Rule 45, which is for appeals of final judgments, not interlocutory orders. Additionally, the main case had already been decided in favor of Prime Savings Bank, rendering the issue moot.
What is an interlocutory order?	An interlocutory order is a court order that does not fully resolve all the issues in a case, leaving further matters to be decided. It is distinct from a final judgment, which completely disposes of the case.
What is the proper remedy for challenging an interlocutory order?	The proper remedy for challenging an interlocutory order is generally a petition for certiorari under Rule 65 of the Rules of Court, alleging grave abuse of discretion.
What is the significance of placing a bank under liquidation?	When a bank is placed under liquidation, its assets are considered in custodia legis and are generally exempt from garnishment or execution to protect the interests of depositors and creditors.
What does custodia legis mean?	Custodia legis means “under the custody of the law.” In this context, it refers to the assets of a bank under receivership or liquidation, which are protected from attachment or execution.
Who is the PDIC in this case?	The Philippine Deposit Insurance Corporation (PDIC) acted as the statutory liquidator for Prime Savings Bank after it was placed under liquidation by the Bangko Sentral ng Pilipinas.
What is the role of the Monetary Board of the BSP?	The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has the authority to regulate and supervise banks, including the power to place them under receivership or liquidation when necessary to maintain financial stability.

In conclusion, the Supreme Court’s decision in Prime Savings Bank v. Spouses Santos serves as a reminder of the importance of adhering to proper procedural rules and understanding the distinctions between different types of court orders. It reinforces the principle that interlocutory orders are not immediately appealable and that the correct remedy is generally a petition for certiorari under Rule 65. The decision also highlights the special status of banks under liquidation and the protections afforded to their assets for the benefit of depositors and creditors.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Prime Savings Bank, G.R. No. 208283, June 19, 2019