55 PDIC v. Stockholders of Intercity Savings & Loan Bank GR No. 181556 December 14, 2009

Note.
—Tax refunds are in the nature of tax exemptions, and as such they
are regarded as in derogation of sovereign authority and to be
construed strictissimi juris against the person or entity claiming the
exemption. (Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc.,
309 SCRA 87 [1999])
——o0o——
G.R. No. 181556. December 14, 2009.*
IN RE: PETITION FOR ASSISTANCE IN THE LIQUIDATION OF

INTERCITY SAVINGS AND LOAN BANK, INC.,
PHILIPPINE DEPOSIT INSURANCE CORPORATION,

petitioner, vs. STOCKHOLDERS OF INTERCITY SAVINGS AND LOAN
BANK, INC., respondents.
Statutes; Statutory Construction; Whether a statute has retroactive effect is

undeniably a pure question of law.—Indeed, PDIC’s appeal to the appellate court raised
the lone issue of whether Section 12 of RA 9302 may be applied retroactively in order to
award surplus dividends to Intercity Bank creditors, which was, as stated above, what
the parties had stipulated upon as the sole legal issue in PDIC’s Motion for Approval of
the Final Distribution of Assets and Termination of the Liquidation Proceedings.
Whether a statute has retroactive effect is undeniably a pure question of law. PDIC
should thus have directly appealed to this Court by filing a petition for review
on certiorari under Rule 45, not an ordinary appeal with the appellate court under Rule
41. The appellate court did not err, thus, in holding that PDIC availed of the wrong
mode of appeal.
_______________
* FIRST DIVISION.
216
Same; Same; Statutes are prospective and not retroactive in their operation, they being
the formulation of rules for the future, not the past. Hence, the legal maxim lex de futuro,
judex de praeterito—the law provides for the future, the judge for the past.—A perusal of
RA 9302 shows that nothing indeed therein authorizes its retroactive application. In
fact, its effectivity clause indicates a clear legislative intent to the contrary: Section
28. Effectivity Clause.—This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two (2) newspapers of
general circulation. Statutes are prospective and not retroactive in their operation, they
being the formulation of rules for the future, not the past. Hence, the legal maxim lex de
futuro, judex de praeterito—the law provides for the future, the judge for the past, which
is articulated in Article 4 of the Civil Code: “Laws shall have no retroactive effect, unless
the contrary is provided.” The reason for the rule is the tendency of retroactive
legislation to be unjust and oppressive on account of its liability to unsettle vested rights
or disturb the legal effect of prior transactions.
Legal Research; Foreign Judgments; Resort to foreign jurisprudence is proper only if
no local law or jurisprudence exists to settle the controversy.—En passant, PDIC’s
citation of foreign jurisprudence that supports the award of surplus dividends is
unavailing. Resort to foreign jurisprudence is proper only if no local law or
jurisprudence exists to settle the controversy. And even then, it is only persuasive.
PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.
Balane, Tamase, Alampay Law Office for petitioner.
Danilo C. Cunanan for respondents.
CARPIO-MORALES, J.:
The Central Bank of the Philippines, now known as Bangko Sentral ng
Pilipinas, filed on June 17, 1987 with the Regional Trial Court (RTC) of Makati
a Petition for Assis-
217
tance in the Liquidation of Intercity Savings and Loan Bank, Inc. (Intercity
Bank) alleging that, inter alia, said bank was already insolvent and its
continuance in business would involve probable loss to depositors, creditors and
the general public.1
Finding the petition sufficient in form and substance, the trial court gave it
due course.2 Petitioner Philippine Deposit Insurance Corporation (PDIC) was
eventually substituted as the therein petitioner, liquidator of Intercity Bank.3
In the meantime, Republic Act No. 9302 (RA 9302)4 was enacted, Section 12
of which provides:
“SECTION 12. Before any distribution of the assets of the closed bank in
accordance with the preferences established by law, the Corporation shall periodically
charge against said assets reasonable receivership expenses and subject to approval by
the proper court, reasonable liquidation expenses, it has incurred as part of the cost of
receivership/liquidation proceedings and collect payment therefor from available assets.
After the payment of all liabilities and claims against the closed bank, the
Corporation shall pay any surplus dividends at the legal rate of interest, from date
of takeover to date of distribution, to creditors and claimants of the closed bank in
accordance with legal priority before distribution to the shareholders of the closed
bank.” (emphasis supplied)
Relying thereon, PDIC filed on August 8, 2005 a Motion for Approval of the
Final Distribution of Assets and Termination
_______________
1 Records, pp. 1-7.

2 Id., at p. 22.
3 Id., at p. 84.
4 AN ACT AMENDING REPUBLIC ACT NO. 3591, AS AMENDED, OTHERWISE KNOWN AS THE “CHARTER OF
THE PHILIPPINE DEPOSIT INSURANCE CORPORATION” AND FOR OTHER PURPOSES; APPROVED ON JULY 27, 2004.
218
of the Liquidation Proceedings,5 praying that an Order be issued for:
1. The reimbursement of the liquidation fees and expenses incurred and/or

advanced by herein petitioner, PDIC, in the amount of P3,795,096.05;
2. The provision of P700,000.00 for future expenses in the implementation of this
distribution and the winding-up of the liquidation of Intercity Savings and Loan Bank,
Inc.;
3. The write-off of assets in the total amount of P8,270,789.99, as set forth in par. 2.1
hereof;
4. The write-off of liabilities in the total amount of P1,562,185.35, as set forth in par.
8 hereof;
5. The Final Project of Distribution of Intercity Savings and Loan Bank as set forth
in Annex “Q” hereof;
6. Authorizing petitioner to hold as trustee the liquidating and surplus dividends
allocated in the project of distribution for creditors who shall have a period of three (3)
years from date of last notice within which to claim payment therefor. After the lapse of
said period, unclaimed payments shall be escheated to the Republic of the Philippines in
accordance with Rule 91 of the Rules of Court;
7. Authorizing the disposal of all the pertinent bank records in accordance with
applicable laws, rules and regulations after the lapse of one (1) year from the approval of
the instant Motion.”
By Order of July 5, 2006,6 Branch 134 of the Makati RTC granted the
motion except the above-quoted paragraphs 5 and 6 of its prayer, respectively
praying for the approval of the Final Project of Distribution and for authority
for PDIC “to hold as trustee the liquidating and surplus dividends allocated . . .
for creditors” of Intercity Bank.
In granting the motion, the trial court resolved in the negative the sole issue
of whether Section 12 of RA 9302 should be applied retroactively in order to
entitle Intercity Bank credi-
_______________
5 Records, pp. 304-314.

6 Id., at pp. 432-435.
219
tors to surplus dividends, it otherwise holding that to so resolve would run

counter to prevailing jurisprudence and unduly prejudice Intercity Bank
shareholders, the creditors having been paid their principal claim in 2002 or
before the passage of RA 9302 in 2004.
PDIC appealed to the Court of Appeals7 before which respondent
Stockholders of Intercity Bank (the Stockholders) moved to dismiss the appeal,
arguing principally that the proper recourse should be to this Court through a
petition for review on certiorari since the question involved was purely one of
law.8
By Resolution of October 17, 2007,9 the appellate court dismissed the appeal,
sustaining in the main the position of the Stockholders. Its Motion for
Reconsideration having been denied by Resolution dated January 24,
2008,10 PDIC filed the present Petition for Review on Certiorari.
PDIC contends that the appellate court disregarded the issue of the trial
court’s disapproval of the payment of additional liquidating dividends to
Intercity Bank creditors, which involved a question of fact that entailed a
review of the evidence; that the prayer for surplus dividends involved another
question of fact as there must first be a factual finding that all claims against
Intercity Bank have been paid; and that there having been previously approved
but unclaimed liquidating dividends, the denial of its prayer for appointment
as trustee therefor resulted in an anomalous situation where no one has the
authority to handle them until they are claimed.11

_______________
7 Id., at pp. 441, 451.

8 CA Rollo, pp. 12-17.
9 Penned by Associate Justice Ricardo R. Rosario, with the concurrence of Associate Justices
Rebecca De Guia-Salvador and Magdangal M. De Leon; Id., at pp. 86-96.
10 Id., at pp. 146-147.
11 Vide Petition, Rollo, pp. 3-36.
220
The Stockholders, for their part, maintain that only a question of law was
brought to the appellate court, the parties having stipulated in the trial court
that the sole issue for determination was whether RA 9302 may be applied
retroactively; that the payment of additional liquidating dividends should be
deemed approved since they never opposed it and the trial court specifically
disapproved only the payment of surplus dividends; and that in any event, RA
9302 cannot be given retroactive effect absent a provision therein providing for
it.12
The petition lacks merit.
Indeed, PDIC’s appeal to the appellate court raised the lone issue of whether
Section 12 of RA 9302 may be applied retroactively in order to award surplus
dividends to Intercity Bank creditors, which was, as stated above, what the
parties had stipulated upon as the sole legal issue in PDIC’s Motion for
Approval of the Final Distribution of Assets and Termination of the Liquidation
Proceedings.
Whether a statute has retroactive effect is undeniably a pure question of
law. PDIC should thus have directly appealed to this Court by filing a petition
for review on certiorari under Rule 45, not an ordinary appeal with the
appellate court under Rule 41. The appellate court did not err, thus, in holding
that PDIC availed of the wrong mode of appeal.13In the interest of justice,
however, and in order to write finis to this controversy, the Court relaxes the
rules and decides the petition on the merits.14
_______________
12 Vide Comment, Id., at pp. 241-256.

13 Quezon City vs. ABS-CBN Broadcasting Corporation, G.R. No. 166408, October 6, 2008, 567
SCRA 496, 507.
14 Vide Municipality of Pateros vs. Court of Appeals, G.R. No. 157714, June 16, 2009, 589 SCRA
130.
221
A perusal of RA 9302 shows that nothing indeed therein authorizes its

retroactive application. In fact, its effectivity clause indicates a clear legislative
intent to the contrary:
“Section 28. Effectivity Clause.—This Act shall take effect fifteen (15) days
following the completion of its publicationin the Official Gazette or in two (2)
newspapers of general circulation.” (emphasis supplied)
Statutes are prospective and not retroactive in their operation, they being
the formulation of rules for the future, not the past. Hence, the legal maxim lex
de futuro, judex de praeterito—the law provides for the future, the judge for the
past, which is articulated in Article 4 of the Civil Code: “Laws shall have no
retroactive effect, unless the contrary is provided.” The reason for the rule is
the tendency of retroactive legislation to be unjust and oppressive on account of
its liability to unsettle vested rights or disturb the legal effect of prior
transactions.15
En passant, PDIC’s citation of foreign jurisprudence that supports the award
of surplus dividends is unavailing. Resort to foreign jurisprudence is proper
only if no local law or jurisprudence exists to settle the controversy. And even
then, it is only persuasive.16
WHEREFORE, the petition is DENIED.
SO ORDERED.
Leonardo-De Castro, Bersamin and Villarama, Jr., JJ., concur.
Puno (C.J.), No part.
_______________
15 Curata vs. Philippine Ports Authority, G.R. Nos. 154211-12, June 22, 2009, 590 SCRA 214.
16 Vide Philippine Airlines, Inc. vs. Court of Appeals, G.R. No. 54470, May 8, 1990, 185 SCRA
110, 121.
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55 PDIC v. Stockholders of Intercity Savings & Loan Bank GR No. 181556 December 14, 2009

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Note.

G.R. No. 181556. December 14, 2009.*

IN RE: PETITION FOR ASSISTANCE IN THE LIQUIDATION OF

PHILIPPINE DEPOSIT INSURANCE CORPORATION,

Statutes; Statutory Construction; Whether a statute has retroactive effect is

PETITION for review on certiorari of a decision of the Court of Appeals.

1 Records, pp. 1-7.

of the Liquidation Proceedings,5 praying that an Order be issued for:

1. The reimbursement of the liquidation fees and expenses incurred and/or

5 Records, pp. 304-314.

tors to surplus dividends, it otherwise holding that to so resolve would run

7 Id., at pp. 441, 451.

12 Vide Comment, Id., at pp. 241-256.

A perusal of RA 9302 shows that nothing indeed therein authorizes its

Leonardo-De Castro, Bersamin and Villarama, Jr., JJ., concur.

Puno (C.J.), No part.

© Copyright 2021 Central Book Supply, Inc. All rights reserved.

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