SPECIAL COMMERCIAL LAWS: CASES failure to furnish the bank with a copy of the ROE violated
its right to due process.
THE NEW CENTRAL BANK ACT (RA 7658)
BSP MONETARY BOARD VS. ANTONIO-
VALENZUELA
FACTS:
Supervision and Examination Department (SED) of the
Bangko Sentral ng Pilipinas (BSP) conducted
examinations of the books of the following banks:
Rural Bank of Parañaque, Inc. (RBPI), Rural Bank of San
Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc.,
Pilipino Rural Bank, Inc., Philippine Countryside Rural
Bank, Inc., Rural Bank of Calatagan (Batangas), Inc.
(now Dynamic Rural Bank), Rural Bank of Darbci, Inc.,
Rural Bank of Kananga (Leyte), Inc. (now First Interstate
Rural Bank), Rural Bank de Bisayas Minglanilla (now
Bank of East Asia), and San Pablo City Development
Bank, Inc.
After the examinations, exit conferences were held with
the officers of the banks wherein SED provided copies of
Lists of Findings containing the deficiencies discovered
during the examinations. Banks were then required to
comment and to undertake the remedial measures which
included the infusion of additional capital. Though the
banks claimed that they made the additional capital
infusions, petitioner Chuchi Fonacier, officer-in-charge
of the SED, sent separate letters to the Board of Directors
of each bank, informing them that the SED found that the
banks failed to carry out the required remedial measures.
In response, the banks requested that they be given time
to obtain BSP approval to amend their Articles of
Incorporation, that they have an opportunity to seek
investors. They requested as well that the basis for the
capital infusion figures be disclosed, and noted that none
of them had received the Report of Examination (ROE)
which finalizes the audit findings. In response, Fonacier
reiterated the banks’ failure to comply with the directive
for additional capital infusions.
RBPI filed a complaint for nullification of the BSP ROE
with application for a TRO and writ of preliminary
injunction before the RTC. Praying that Fonacier, her
subordinates, agents, or any other person acting in her
behalf be enjoined from submitting the ROE or any
similar report to the Monetary Board (MB), or if the ROE
had already been submitted, the MB be enjoined from
acting on the basis of said ROE, on the allegation that the
The rest of the banks followed suit filing complaints with
the RTC substantially similar to that of RBPI.
RTC denied the prayer for a TRO of Pilipino Rural Bank,
Inc. The bank filed a motion for reconsideration the next
day.Respondent Judge Nina Antonio-Valenzuela of
Branch 28 granted RBPI’s prayer for the issuance of a
TRO.
The other banks separately filed motions for
consolidation of their cases in Branch 28, which motions
were granted. Petitioners assailed the validity of the
consolidation of the nine cases before the RTC, alleging
that the court had already prejudged the case by the earlier
issuance of a TRO and moved for the inhibition of
respondent judge. Petitioners filed a motion for
reconsideration regarding the consolidation of the subject
cases.
The Ruling of the RTC
The banks were entitled to the writs of preliminary
injunction prayed for. It held that it had been the practice
of the SED to provide the ROEs to the banks before
submission to the MB. It further held that as the banks are
the subjects of examinations, they are entitled to copies of
the ROEs. The denial by petitioners of the banks’ requests
for copies of the ROEs was held to be a denial of the
banks’ right to due process.
The Ruling of the CA
Petitioners claims grave abuse of discretion on the part of
Judge Valenzuela. The CA ruled that the RTC committed
no grave abuse of discretion when it ordered the issuance
of a writ of preliminary injunction and when it ordered the
consolidation of the 10 cases. It held that petitioners
should have first filed a motion for reconsideration of the
assailed orders, and failed to justify why they resorted to
a special civil action of certiorari instead.
On November 24, 2008, a TRO was issued by this Court,
restraining the CA, RTC, and respondents from
implementing and enforcing the CA Decision. By reason
of the TRO issued by this Court, the SED was able to
submit their ROEs to the MB. The MB then prohibited the
respondent banks from transacting business and placed
them under receivership
ISSUE/S:
1
 a. Whether or not the TRO issued by the RTC
violated section 25 of the New Central Bank
Act that prevented the MB to discharge
functions.
b. Whether or not the respondents are required
to be given copies of the ROEs before
submission of such to the Monetary Board.
RULING:
a. YES, Requisites for preliminary injunctive relief
are: (a) the invasion of right sought to be
protected is material and substantial; (b) the right
of the complainant is clear and unmistakable; and
(c) there is an urgent and paramount necessity for
the writ to prevent serious damage.The twin
requirements of a valid injunction are the
existence of a right and its actual or threatened
violations. Thus, to be entitled to an injunctive
writ, the right to be protected and the violation
against that right must be shown. These
requirements are absent in the present case.
The issuance by the RTC of writs of preliminary
injunction is an unwarranted interference with the powers
of the MB refer to the appointment of a conservator or a
receiver for a bank, which is a power of the MB for which
they need the ROEs done by the supervising or examining
department. The writs of preliminary injunction issued by
the trial court hinder the MB from fulfilling its function
under the law. The actions of the MB under Secs. 29 and
30 of RA 7653 "may not be restrained or set aside by the
court except on petition for certiorari on the ground that
the action taken was in excess of jurisdiction or with such
grave abuse of discretion as to amount to lack or excess
of jurisdiction. The respondent banks have shown no
necessity for the writ of preliminary injunction to prevent
serious damage. The serious damage contemplated by the
trial court was the possibility of the imposition of
sanctions upon respondent banks, even the sanction of
closure. Under the law, the sanction of closure could be
imposed upon a bank by the BSP even without notice and
hearing. This "close now, hear later" scheme is grounded
on practical and legal considerations to prevent
unwarranted dissipation of the bank’s assets and as a valid
exercise of police power to protect the depositors,
creditors, stockholders, and the general public.
Judicial review enters the picture only after the MB has
taken action; it cannot prevent such action by the MB. The
threat of the imposition of sanctions, even that of closure,
does not violate their right to due process, and cannot be
the basis for a writ of preliminary injunction.
The "close now, hear later" doctrine has already been
justified as a measure for the protection of the public
interest.
B. NO,The respondent banks have failed to show
that they are entitled to copies of the ROEs. They can
point to no provision of law, no section in the procedures
of the BSP that shows that the BSP is required to give
them copies of the ROEs. Sec. 28 of RA 7653, provides
that the ROE shall be submitted to the MB; the bank
examined is not mentioned as a recipient of the ROE.
The respondent banks cannot claim a violation of their
right to due process if they are not provided with copies
of the ROEs. The same ROEs are based on the lists of
findings/exceptions containing the deficiencies found by
the SED examiners when they examined the books of the
respondent banks. As found by the RTC, these lists of
findings/exceptions were furnished to the officers or
representatives of the respondent banks, and the
respondent banks were required to comment and to
undertake remedial measures stated in said lists. Despite
these instructions, respondent banks failed to comply with
the SED’s directive.
Respondent banks are already aware of what is required
of them by the BSP, and cannot claim violation of their
right to due process simply because they are not furnished
with copies of the ROEs.
Dispositive Portion:
WHEREFORE, the petition is hereby GRANTED. The
assailed CA Decision is hereby REVERSED. The
assailed order and writ of preliminary injunction of
respondent Judge Valenzuela in Civil Case Nos. 08-
119243, 08-119244, 08-119245, 08-119246, 08-119247,
08-119248, 08-119249, 08-119250, 08-119251, and 08-
119273 are hereby declared NULL and VOID.
2
FIRST INTERNATIONAL BANK V. COURT OF
APPEALS
FACTS:
In the course of its banking operations, the defendant
Producer Bank of the Philippines acquired six parcels of
land with a total area of 101 hectares located at Laguna.
The property used to be owned by BYME Investment and
Development Corporation which had them mortgaged
with the bank as collateral for a loan. The original
plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted
to purchase the property and thus initiated negotiations for
that purpose.Plaintiffs, met with defendant Mercurio
Rivera, Manager of the Property Management
Department of the defendant bank. After the meeting,
plaintiff Janolo made a formal purchase offer to the bank
in the amount of 3.5M but counter offered by
Rivera(Bank) with 5.5M. Janolo revised there offer to
4.25M. but received to response but Luis co and rivera
had a meeting and in the end the offer of Mr. Rivera was
accepted.
The conservator of the bank was replaced by an Acting
Conservator in the person of defendant Leonida T.
Encarnacion whereby they stated that Rivera’s proposal
was under study yet as of this time by the newly created
committee for submission to the newly designated Acting
Conservator of the bank.
Thereafter transpired was a series of demands by the
plaintiffs for compliance by the bank with what plaintiff
considered as a perfected contract of sale, which demands
were in one form or another refused by the bank. Plaintiffs
through a letter to defendant Rivera tendered payment of
the amount of P5.5 million. Defendants refused to receive
both the payment and the letter. Instead, the parcels of
land involved in the transaction were advertised by the
bank for sale to any interested buyer.
Plaintiffs filed a suit for specific performance with
damages against the bank, Acting Conservator
Encarnacion. The basis of the suit was that the transaction
had with the bank resulted in a perfected contract of sale,
The defendants took the position that there was no such
perfected sale because the defendant Rivera is not
authorized to sell the property, and that there was no
meeting of the minds as to the price.
During the pendency of the proceedings in the Court of
Appeals, Henry Co and several other stockholders of the
Bank filed purportedly a "derivative suit" — with the
Regional Trial Court of Makati against Encarnacion,
Demetria and Janolo "to declare any perfected sale of the
property as unenforceable and to stop Ejercito from
enforcing or implementing the sale"
In his answer, Janolo argued that the Second Case was
barred by litis pendentia by virtue of the case then
pending in the Court of Appeals.
ISSUES:
a. Whether or not there was a perfected contract of
sale between the parties.
b. Whether or not the bank conservator has the
unilateral power to repudiate the authority of the
bank officers and/or to revoke the said contract
RULING:
A. YES, requisites of a valid and perfected contract as
follows: "(1) Consent of the contracting parties; (2)
Object certain which is the subject matter of the
contract; (3) Cause of the obligation which is
established." There is, however, a dispute on the first
and third requisites.
The question of Rivera's authority to act and petitioner's
allegations that the P5.5 million counter-offer was
extinguished by the P4.25 million revised offer of Janolo.
the counter-offer of P4.25 million extinguished the offer
of P5.5 million, Luis Co's reiteration of the said P5.5
million price during the September 28, 1987
meeting revived the said offer. And by virtue of the
September 30, 1987 letter accepting this revived offer,
there was a meeting of the minds, as the acceptance in said
letter was absolute and unqualified.
B. Conservator's alleged authority to revoke or
repudiate the perfected contract of sale was raised for
the first time in this Petition — as this was not
litigated in the trial court or Court of Appeals. As
already stated earlier, issues not raised and/or
ventilated in the trial court, let alone in the Court of
Appeals, "cannot be raised for the first time on
appeal as it would be offensive to the basic rules of
fair play, justice and due process."
In the second place, there is absolutely no evidence that
the Conservator, at the time the contract was perfected,
actually repudiated or overruled said contract of sale. The
Bank's acting conservator at the time, Rodolfo Romey,
never objected to the sale of the property to Demetria and
Janolo. What petitioners are really referring to is the letter
of Conservator Encarnacion, who took over from Romey
3
after the sale was perfected on September 30, 1987 which
unilaterally repudiated — not the contract — but the
authority of Rivera to make a binding offer — and which
unarguably came months after the perfection of the
contract.
third place, while admittedly, the Central Bank law gives
vast and far-reaching powers to the conservator of a bank,
it must be pointed out that such powers must be related to
the "(preservation of) the assets of the bank, (the
reorganization of) the management thereof and (the
restoration of) its viability.
Obviously, therefore, Section 28-A merely gives the
conservator power to revoke contracts that are, under
existing law, deemed to be defective — i.e., void,
voidable, unenforceable or rescissible. Hence, the
conservator merely takes the place of a bank's board of
directors. What the said board cannot do — such as
repudiating a contract validly entered into under the
doctrine of implied authority — the conservator cannot do
either. Ineluctably, his power is not unilateral and he
cannot simply repudiate valid obligations of the Bank. His
authority would be only to bring court actions to assail
such contracts — as he has already done so in the instant
case. simply not be permitted by the Constitution. To rule
otherwise would be to enable a failing bank to become
solvent, at the expense of third parties, by simply getting
the conservator to unilaterally revoke all previous
dealings which had one way or another or come to be
considered unfavorable to the Bank, yielding nothing to
perfected contractual rights nor vested interests of the
third parties who had dealt with the Bank
Dispositive portion:
WHEREFORE, finding no reversible error in the
questioned Decision and Resolution, the Court hereby
DENIES the petition. The assailed Decision is
AFFIRMED. Moreover, petitioner Bank is
REPRIMANDED for engaging in forum-shopping and
WARNED that a repetition of the same or similar acts will
be dealt with more severely. Costs against petitioners.

4
PRODUCERS BANK OF THE PHILIPPINES V.
NATIONAL LABOR RELATIONS COMMISSION
FACTS:
Producers Bank of the Philippines, a banking institution,
has been providing several benefits to its employees.
Among the benefits it had been regularly giving is a mid-
year bonus equivalent to an employee's one-month basic
pay and a Christmas bonus equivalent to an employee's
one whole month salary (basic pay plus allowance)
From 1981 up to 1983, the bank continued giving one
month basic pay as mid-year bonus, one month basic pay
as 13th month pay. In the early part of 1984, the bank was
placed under conservatorship but it still provided the
traditional mid-year bonus; By virtue of an alleged
Monetary Board Resolution No. 1566, bank only gave a
one-half (1/2) month basic pay as compliance of the
13th month pay and none for the Christmas bonus. (Done
by the conservator)
Producers bank employee association filed a petition in
the NLRC charging petitioner with diminution of
benefits, non-compliance with Wage Order No. 6 and
non-payment of holiday pay.
National Labor Relations Commission (NLRC), charging
petitioner with diminution of benefits, non-compliance
with Wage Order No. 6 and non-payment of holiday pay.
Private respondent argues that the mid-year and
Christmas bonuses, by reason of their having been given
for thirteen consecutive years, have ripened into a vested
right and, as such, can no longer be unilaterally withdrawn
by petitioner without violating Article 100 of Presidential
Decree No. 4429 which prohibits the diminution or
elimination of benefits already being enjoyed by the
employees. Although private respondent concedes that
the grant of a bonus is discretionary on the part of the
employer, it argues that, by reason of its long and regular
concession, it may become part of the employee's regular
compensation
On the other hand, petitioner asserts that it cannot be
compelled to pay the alleged bonus differentials due to its
depressed financial condition, as evidenced by the fact
that in 1984 it was placed under conservatorship by the
Monetary Board.
Labor Arbiter de Castro found private respondent's claims
to be unmeritorious and dismissed its complaint. In a
complete reversal, however, the NLRC granted all of
private respondent's claims
Petitioner filed a Motion for Partial Reconsideration,
which was denied by the NLRC. Hence, recourse to this
Court.
ISSUES: Whether or not the reduction in the mid year
and Christmas bonuses by the conservator was justified.
RULING: Yes, a bonus is an amount given ex gratia to
an employee by an employer on account of success in
business or realization of profits. Petitioner bank was
operating on net losses from the years 1984, 1985 and
1986, thus, resulting to its eventual closure in 1987 and
liquidation in 1988. No company should be compelled to
act liberally and confer upon its employees additional
benefits over and above those mandated by law when it is
plagued by economic difficulties and financial losses.
Established by the labor arbiter and the NLRC and
admitted by both parties that petitioner was placed under
conservatorship by the Monetary Board, pursuant to its
authority under Section 28-A of Republic Act No. 265,
Sec.28-A. Appointment of conservator. - Whenever, on
the basis of a report submitted by the appropriate
supervising and examining department, the Monetary
Board finds that a bank is in a state of continuing inability
or unwillingness to maintain a condition of solvency and
liquidity deemed adequate to protect the interest of
depositors and creditors, the Monetary Board may appoint
a conservator to take charge of the assets, liabilities, and
the management of that banking institution, collect all
monies and debts due said bank and exercise all powers
necessary to preserve the assets of the bank, reorganize
the management thereof and restore its viability .He shall
have the power to overrule or revoke "the actions of the
previous management and board of directors of the bank,
any provision of law to the contrary notwithstanding, and
such other powers as the Monetary Board shall deem
necessary.
In such a depressed financial condition, petitioner cannot
be legally compelled to continue paying the same amount
of bonuses to its employees. Thus, the conservator was
justified in reducing the mid-year and Christmas bonuses
of petitioner's employees. To hold otherwise would be to
defeat the reason for the conservatorship which is to
preserve the assets and restore the viability of the
financially precarious bank. Ultimately, it is to the
employees' advantage that the conservatorship achieve its
purposes for the alternative would be petitioner's closure
whereby employees would lose not only their benefits,
but their jobs as well.
5
Vivas vs BSP monetary board
Facts:
Petitioner Vivas and his principals acquired the
controlling interest in Rural Bank Faire, a bank whose
corporate life has already expired. BSP authorized
extending the banks’ corporate life and was later renamed
to EuroCredit Community Bank (ECBI). Through a series
of examinations conducted by the BSP, the findings bore
that ECBI was illiquid, insolvent, and was performing
transactions which are considered unsafe and unsound
banking practices. Consequently ECBI was placed under
receivership. Petitioner contends that the implementation
of the questioned resolution was tainted with arbitrariness
and bad faith, stressing that ECBI was placed under
receivership without due and prior hearing in violation of
his and the bank’s right to due process. The petitioner files
for prohibition with prayer for the issuance of a status quo
ante order or writ of preliminary injunction ordering the
respondents to desist from closing EuroCredit
Community Bank, Incorporated (ECBI) and from
pursuing the receivership thereof. The petition likewise
prays that the management and operation of ECBI be
restored to its Board of Directors (BOD) and its officers.
Issue:
Whether or not ECBI was entitled to due and prior hearing
before its being placed under receivership and whether or
not MB placing bank under conservatorship, receivership
or liquidation may not be restrained or set aside?
Held:
The Court has taken this into account, but it appears from
all over the records that ECBI was given every
opportunity to be heard and improve on its financial
standing. The records disclose that BSP officials and
examiners met with the representatives of ECBI,
including Vivas, and discussed their findings.34 There
were also reminders that ECBI submit its financial audit
reports for the years 2007 and 2008 with a warning that
failure to submit them and a written explanation of such
omission shall result in the imposition of a monetary
penalty.35 More importantly, ECBI was heard on its
motion for reconsideration. For failure of ECBI to
comply, the MB came out with Resolution No. 1548
denying its request for reconsideration of Resolution No.
726. Having been heard on its motion for reconsideration,
ECBI cannot claim that it was deprived of its right under
the Rural Bank Act.
At any rate, if circumstances warrant it, the MB may
forbid a bank from doing business and place it under
receivership without prior notice and hearing.
In the case of Bangko Sentral Ng Pilipinas Monetary
Board v. Hon. Antonio-Valenzuela, the Court reiterated
the doctrine of “close now, hear later,” stating that it was
justified as a measure for the protection of the public
interest. Thus:
The “close now, hear later” doctrine has already been
justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP
when it finds that a bank is in dire straits. Unless adequate
and determined efforts are taken by the government
against distressed and mismanaged banks, public faith in
the banking system is certain to deteriorate to the
prejudice of the national economy itself, not to mention
the losses suffered by the bank depositors, creditors, and
stockholders, who all deserve the protection of the
government.
In Rural Bank of Buhi, Inc. v. Court of Appeals, the Court
also wrote that
x x x due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire
consequences of a prior hearing: bank runs would be the
order of the day, resulting in panic and hysteria. In the
process, fortunes may be wiped out and disillusionment
will run the gamut of the entire banking community.
The doctrine is founded on practical and legal
considerations to obviate unwarranted dissipation of the
bank’s assets and as a valid exercise of police power to
protect the depositors, creditors, stockholders, and the
general public. Swift, adequate and determined actions
must be taken against financially distressed and
mismanaged banks by government agencies lest the
public faith in the banking system deteriorate to the
prejudice of the national economy.
The Monetary Board under R.A. 7653 has been invested
with more power of closure and placement of a bank
under receivership for insolvency or illiquidity or because
of the bank’s continuance in business world probably
results in the loss to depositors or creditors. To address
the growing concerns in the banking industry, the
legislature has sufficiently empowered the Monetary
Board to effectively monitor and supervise and financial
institutions and if circumstances warrant, to forbid them
to do business, to take over their management or to place
6
them under receivership. Thus any act of the Monetary
Board placing bank receivership, conservatorship or
liquidation may not be restrained or set aside except on a
petition for certiorari.
SC:
To begin with, Vivas availed of the wrong remedy. The
MB issued Resolution No. 276, dated March 4, 2010, in
the exercise of its power under R.A. No. 7653. Under
Section 30 thereof, any act of the MB placing a bank
under conservatorship, receivership or liquidation may
not be restrained or set aside except on a petition for
certiorari.
The Petition Should Have Been Filed in the CA. Even if
treated as a petition for certiorari, the petition should have
been filed with the CA. (Doctrine of Hierarchy of Courts)

7
Central Bank vs CA
Facts:
TSB filed a complaint with the Regional Trial
Court of Quezon City, docketed as Civil Case No. Q-
45139, against Central Bank and Ramon V. Tiaoqui to
annul MB Resolution No. 596, with prayer for injunction,
challenging in the process the constitutionality of Sec. 29
of R.A. 269, otherwise known as "The Central Bank
Act,". The resolution was allegedly issued by reason of an
examination submitted by the Supervision and
Examination Sector (SES), Department II, of the Central
Bank (CB) stating that: "that the financial condition of
TSB is one of insolvency and its continuance in business
would involve probable loss to its depositors and
creditors,"
The trial court temporarily restrained petitioners
from implementing MB Resolution No. 596 "until further
orders", thus prompting them to move for the quashal of
the restraining order (TRO) on the ground that it did not
comply with said Sec. 29, i.e., that TSB failed to show
convincing proof of arbitrariness and bad faith on the part
of petitioners;' and, that TSB failed to post the requisite
bond in favor of Central Bank.
On 19 July 1985, acting on the motion to quash
the restraining order, the trial court granted the relief
sought and denied the application of TSB for injunction.
Subsequently, RTC in separate orders denied petitioners'
motion to dismiss and ordered receiver Tiaoqui to restore
the management of TSB to its elected board of directors
and officers, subject to CB comptrollership. Instead of
proceeding to trial, petitioners elevated the twin orders of
the RTC to the Court of Appeals on a petition for
certiorari and prohibition under Rule 65. The CA upheld
the findings of the trial court.
Issue:
WON a Monetary Board resolution placing a
private bank under receivership should be annulled on the
ground of lack of prior notice and hearing.
Held:
No, the subject monetary board resolution in the
case at bar cannot be annulled merely on the ground of
lack of prior notice and hearing.
Under Sec. 29 of R.A. 265, the Central Bank,
through the Monetary Board, is vested with exclusive
authority to assess, evaluate and determine the condition
of any bank, and finding such condition to be one of
insolvency, or that its continuance in business would
involve probable loss to its depositors or creditors, forbid
the bank or non-bank financial institution to do business
in the Philippines; and shall designate an official of the
CB or other competent person as receiver to immediately
take charge of its assets and liabilities. The fourth
paragraph, which was then in effect at the time the action
was commenced, allows the filing of a case to set aside
the actions of the Monetary Board which are tainted with
arbitrariness and bad faith.
Contrary to the notion of private respondent, Sec. 29 does
not contemplate prior notice and hearing before a bank
may be directed to stop operations and placed under
receivership. When par. 4 (now par. 5, as amended by
E.O. 289) provides for the filing of a case within ten (10)
days after the receiver takes charge of the assets of the
bank, it is unmistakable that the assailed actions should
precede the filing of the case. Plainly, the legislature could
not have intended to authorize "no prior notice and
hearing" in the closure of the bank and at the same time
allow a suit to annul it on the basis of absence thereof.
In the early case of Rural Bank of Lucena, Inc. v. Arca
[1965], We held that a previous hearing is nowhere
required in Sec. 29 nor does the constitutional
requirement of due process demand that the correctness
of the Monetary Board's resolution to stop operation and
proceed to liquidation be first adjudged before making the
resolution effective. It is enough that a subsequent judicial
review be provided.
Even in Banco Filipino, We reiterated that Sec. 29 of R.A.
265 does not require a previous hearing before the
Monetary Board can implement its resolution closing a
bank, since its action is subject to judicial scrutiny as
provided by law.
Sec. 29 does not altogether divest a bank or a non-bank
financial institution placed under receivership of the
opportunity to be heard and present evidence on
arbitrariness and bad faith because within ten (10) days
from the date the receiver takes charge of the assets of the
bank, resort to judicial review may be had by filing an
appropriate pleading with the court. Respondent TSB did
in fact avail of this remedy by filing a complaint with the
RTC of Quezon City on the 8th day following the
takeover by the receiver of the bank's assets on 3 June
1985.
8
This "close now and hear later" scheme is grounded on
practical and legal considerations to prevent unwarranted
dissipation of the bank's assets and as a valid exercise of
police power to protect the depositors, creditors,
stockholders and the general public.
In Rural Bank of Buhi, Inc. v. Court of Appeals, We stated
that —
. . . due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire
consequences of a prior hearing: bank runs would be the
order of the day, resulting in panic and hysteria. In the
process, fortunes may be wiped out and disillusionment
will run the gamut of the entire banking community.
We stressed in Central Bank of the Philippines v. Court
of Appeals that —
. . . the banking business is properly subject to reasonable
regulation under the police power of the state because of
its nature and relation to the fiscal affairs of the people
and the revenues of the state (9 CJS 32). Banks are
affected with public interest because they receive funds
from the general public in the form of deposits. Due to the
nature of their transactions and functions, a fiduciary
relationship is created between the banking institutions
and their depositors. Therefore, banks are under the
obligation to treat with meticulous care and utmost
fidelity the accounts of those who have reposed their trust
and confidence in them (Simex International [Manila],
Inc., v. Court of Appeals, 183 SCRA 360 [1990]).
It is then the Government's responsibility to see to it that
the financial interests of those who deal with the banks
and banking institutions, as depositors or otherwise, are
protected. In this country, that task is delegated to the
Central Bank which, pursuant to its Charter (R.A. 265, as
amended), is authorized to administer the monetary,
banking and credit system of the Philippines. Under both
the 1973 and 1987 Constitutions, the Central Bank is
tasked with providing policy direction in the areas of
money, banking and credit; corollarily, it shall have
supervision over the operations of banks (Sec. 14, Art.
XV, 1973 Constitution, and Sec. 20, Art. XII, 1987
Constitution). Under its charter, the CB is further
authorized to take the necessary steps against any banking
institution if its continued operation would cause
prejudice to its depositors, creditors and the general
public as well. This power has been expressly recognized
by this Court.
The procedure prescribed in Sec. 29 is truly
designed to protect the interest of all concerned, i.e., the
depositors, creditors and stockholders, the bank itself, and
the general public, and the summary closure pales in
comparison to the protection afforded public interest. At
any rate, the bank is given full opportunity to prove
arbitrariness and bad faith in placing the bank under
receivership, in which event, the resolution may be
properly nullified and the receivership lifted as the trial
court may determine.
In sum, appeal to procedural due process cannot
just outweigh the evil sought to be prevented; hence, We
rule that Sec. 29 of R.A. 265 is a sound legislation
promulgated in accordance with the Constitution in the
exercise of police power of the state. Consequently, the
absence of notice and hearing is not a valid ground to
annul a Monetary Board resolution placing a bank under
receivership. The absence of prior notice and hearing
cannot be deemed acts of arbitrariness and bad faith.
Thus, an MB resolution placing a bank under
receivership, or conservatorship for that matter, may only
be annulled after a determination has been made by the
trial court that its issuance was tainted with arbitrariness
and bad faith. Until such determination is made, the status
quo shall be maintained, i.e., the bank shall continue to be
under receivership.
RTC: The trial court temporarily restrained petitioners
from implementing MB Resolution No. 596 "until further
orders", thus prompting them to move for the quashal of
the restraining order (TRO) on the ground that it did not
comply with said Sec. 29, i.e., that TSB failed to show
convincing proof of arbitrariness and bad faith on the part
of petitioners;' and, that TSB failed to post the requisite
bond in favor of Central Bank.
On 19 July 1985, acting on the motion to quash the
restraining order, the trial court granted the relief sought
and denied the application of TSB for injunction.
Subsequently, RTC in separate orders denied petitioners'
motion to dismiss and ordered receiver Tiaoqui to restore
the management of TSB to its elected board of directors
and officers, subject to CB comptrollership.
CA: upheld the findings of the trial court.
SC: PREMISES considered, the Decision of the Court of
Appeals in CA-G.R. SP No. 07867 is AFFIRMED, except
insofar as it upholds the Order of the trial court of 11
November 1985 directing petitioner RAMON V.
TIAOQUI to restore the management of TRIUMPH
9
SAVINGS BANK to its elected Board of Directors and
Officers, which is hereby SET ASIDE.
Let this case be remanded to the Regional Trial Court of
Quezon City for further proceedings to determine whether
the issuance of Resolution No. 596 of the Monetary Board
was tainted with arbitrariness and bad faith and to decide
the case accordingly.

10
Villanueva vs CA
FACTS:
The petitioner herein, the original owner of the
disputed lots sought the help of one Jose Viudez, the then
Officer-in-Charge of the PVB branch in Makati if she
could obtain a loan from said bank. However, she was
swayed to execute a deed of sale covering said lots in
favour of Viudez and Andres Sebastian. New titles were
issued in the name of the PVB after the disputed lots were
foreclosed for failure to pay the loan granted in the name
of Andres Sebastian. Miguela Villanueva sought to
repurchase the lots from the PVB after being informed
that the lots were about to be sold at auction. On the other
hand, Private respondent herein, offered to purchase said
lots. Ong did not receive any notice of the approval of his
offer. It was only when he returned from the U.S and
inquired about the status of his bid that he came to know
of the approval. The PVB the was placed under
receivership pursuant to Monetary Board (MB)
Resolution No. 334 and later, under liquidation pursuant
to MB Resolution No. 612. Afterwards, a petition for
liquidation was filed with the RTC.
Ong tendered the sum of P100,000.00 representing the
balance of the purchase price of the litigated lots. An
employee of the PVB received the amount conditioned
upon approval by the Central Bank liquidator. Later, he
filed an action for specific performance against the
Central Bank. Villanueva also filed her claim in the
liquidation proceeding. The RTC ruled for petitioner but
the CA held for Ong contending that the approval of
Ong’s offer constitutes an acceptance, which resulted to a
perfected contract of sale. Thus, he has a better right over
the disputed lots.
ISSUE:
w/n the who has the better right over the
property?
Held:
It must be recalled that the PVB was placed under
receivership after a finding that it was insolvent, illiquid,
and could not operate profitably, and that its continuance
in business would involve probable loss to its depositors
and creditors. The PVB was then prohibited from doing
business in the Philippines, and the receiver appointed
was directed to "immediately take charge of its assets and
liabilities, as expeditiously as possible collect and gather
all the assets and administer the same for the benefit of its
creditors, exercising all the powers necessary for these
purposes." upon the insolvency of a bank a receiver
therefor is appointed, the assets of the bank pass beyond
its control into the possession and control of the receiver
whose duty it is to administer the assets for the benefit of
the creditors of the bank. Thus, the appointment of a
receiver operates to suspend the authority of the bank and
of its directors and officers over its property and effects,
such authority being reposed in the receiver, and in this
respect, the receivership is equivalent to an injunction to
restrain the bank officers from intermeddling with the
property of the bank in any way. Section 29 of the Central
Bank Act.
Sec. 29. Proceedings upon insolvency. —
Whenever, upon examination by the head of the
appropriate supervising or examining department or his
examiners or agents into the condition of any bank or non-
bank financial intermediary performing quasi-banking
functions, it shall be disclosed that the condition of the
same is one of insolvency, or that its continuance in
business would involve probable loss to its depositors or
creditors, shall be the duty of the department head
concerned forthwith, in writing, to inform the Monetary
Board of the facts. The Board may, upon finding the
statements of the department head to be true, forbid the
institution to do business in the Philippines and designate
an official of the Central Bank or a person of recognized
competence in banking or finance as receiver to
immediately take charge of its assets and liabilities, as
expeditiously as possible collect and gather all the assets
and administer the same for the benefit of its creditors . .
. exercising all the powers necessary for these purposes. .
..
The assets of an institution under receivership or
liquidation shall be deemed in custodia legis in the hands
of the receiver or liquidator and shall, from the moment
of such receivership or liquidation, be exempt from any
order of garnishment, levy, attachment, or execution.
In a nutshell, the insolvency of a bank and the
consequent appointment of a receiver restrict the bank's
capacity to act, especially in relation to its property,
Applying Article 1323 of the Civil Code, Ong's offer to
purchase the subject lots became ineffective because the
PVB became insolvent before the bank's acceptance of the
offer came to his knowledge. Hence, the purported
contract of sale between them did not reach the stage of
11
perfection. Corollarily, he cannot invoke the resolution of
the bank approving his bid as basis for his alleged right to
buy the disputed properties. Nor may the acceptance by
an employee of the PVB of Ong's payment of
P100,000.00 benefit him since the receipt of the payment
was made subject to the approval by the Central Bank
liquidator of the PVB thus:
The Court of Appeals therefore erred when it held
that Ong had a better right than the petitioners to the
purchase of the disputed lots.
RTC: rule in favor of the petitioner
CA: rule in favor of Ong
SC: CA erred when it held that Ong had a better right than
the petitioners to the purchase of the disputed lots

12
Central Bank vs Dela Cruz
FACTS: The Rural Bank of Libmanan started operations
in 1965 under and by virtue of Republic Act No. 720,
otherwise known as the Rural Banks’ Act.
In 1979, the Department of Rural Banks and Savings and
Loan Associations (DRBSLA) of the Central Bank of the
Philippines (or CB) conducted examinations of the books
and affairs of Libmanan Bank DRBSLA director, found
serious irregularities in its lending and deposit operations,
including false entries and false statements in the bank’s
records to give it the appearance of solidity and soundness
which it did not possess). As a result of its questionable
transactions, the bank became insolvent.
In her Memorandum to the Monetary Board, Director
Odra recommended, among other things, that: (1)
Libmanan Bank be prohibited from doing business; (2)
that it be placed under receivership in accordance and (3)
that the Director of DRBSLA be designated as receiver.
Finding the report to be true, the Monetary Board placed
Libmanan Bank under statutory receivership and
designating Director Consolacion V. Odra, as Receiver.
Libmanan Bank was informed of the Monetary Board
Resolution, and advised to submit to the Monetary Board
an acceptable reorganization and rehabilitation program.
Meanwhile, Director Odra, as receiver, took possession
and control of the assets and records of the rural bank.
As Libmanan Bank failed to submit the required
acceptable reorganization and rehabilitation plan, the
Monetary Board issued a resolution ordering its
liquidation. On August 3, 1981, the Solicitor General,
filed in the then Court of First Instance of Camarines Sur,
presided over by respondent Judge Rafael De la Cruz, a
petition for Assistance in the Liquidation of Libmanan
Bank. Libmanan Bank, opposed the Central Bank’s
petition. On September 23, 1981, Libmanan Bank filed, a
separate complaint for prohibition, mandamus and
injunction praying the Court to enjoin and dismiss the
liquidation proceeding on the ground that the Central
Bank gravely abused its discretion in ordering the
liquidation of said rural Bank.chanroblesvirtualawlibrary
On January 15, 1982, respondent Judge issued an
order, restraining the respondent Central Bank from
"closing the petitioner (rural) bank and from performing
its customary banking business; to restore the control and
management of the bank to its Board of Directors; and to
desist from liquidating its assets until ordered otherwise
by this Court". On February 15, 1982, the Central Bank
filed a Motion to Dismiss on the ground that respondent
Judge had no jurisdiction over a special civil action for
prohibition, mandamus and injunction against the Central
Bank and that the petition was defective in form because
it was not properly verified. The motion was denied. On
March 19, 1982, the Central Bank filed in the Supreme
Court a Motion for Extension to file a petition
for certiorari, prohibition and mandamus, and a separate
manifestation in the lower court notifying Judge De la
Cruz of the CB’s intention to elevate the case to this
Court.
Thereafter, Judge De la Cruz declared the CB, Et
Al., in default for failure to file a responsive pleading. He
pointed out that "the projected move to bring the court’s
denial of the motion to dismiss to the Supreme Court
on certiorari did not stop the period given to the
respondents to answer."Respondent Judge then granted
Libmanan Bank’s ex parte motion dated March 29, 1982
for authority to withdraw money from its bank
deposits..com : virtual law library
Hence, the present recourse.
ISSUE: Whether or not respondent Judge acted with
grave abuse of discretion or without or in excess of his
jurisdiction in issuing the
1. restraining order;
2. denying the CB’s Motion to Dismiss; and
3. authorizing Libmanan bank to withdraw money
from its bank deposits?chanrob1es virtual 1aw library
RULING:
1. YES, the judge acted with grave abuse of discretion
in issuing a restraining order. The authority for the
receivership of Libmanan Bank is found in Section 29 of
the Central Bank Act (P.D. 1827), which
provides:jgc:chanrobles.com.ph:
"SECTION 29. — Proceedings upon insolvency
paragraph 4
xxx"The provisions of any law to the contrary
notwithstanding the actions of the Monetary Board under
this Section and the second paragraph of Section 34 of this
Act shall be final and executory, and can be set aside by
the court only if there is convincing proof that the action
is plainly arbitrary and made in bad faith. No restraining
order or injunction shall be issued by the court
13
enjoining the Central Bank from implementing its
actions under this Section and the second paragraph
of Section 34 of this Act, unless there is convincing
proof that the action of the Monetary Board is plainly
arbitrary and made in bad faith and the petitioner or
plaintiff files with the clerk or judge of the court in
which the action is pending a bond executed in favor
of the Central Bank, in an amount to be fixed by the
Court. The restraining order or injunctions shall be
refused or, if granted, shall be dissolved upon filing by the
Central Bank of a bond, which shall be in the form of cash
or Central Bank cashier’s check, in an amount twice the
amount of the bond of the petitioner or plaintiff
conditioned that it will pay the damages which the
petitioner or plaintiff may suffer by the refusal or the
dissolution of the injunction. The provisions of Rule 58 of
the New Rules of Court insofar as they are applicable and
not inconsistent with the provisions of this Section shall
govern the issuance and dissolution of the restraining
order or injunction contemplated in this Section..
It is noteworthy that the actions of the Monetary Board in
proceedings on insolvency are explicitly declared by law
to be "final and executory." They may not be set aside, or
restrained, or enjoined by the courts, except upon
"convincing proof that the action is plainly arbitrary and
made in bad faith" (Salud v. Central Bank of the
Philippines, 143 SCRA 590).
Respondent Judge acted in plain disregard of the fourth
paragraph of Section 29 of the Central Bank Act, when he
restrained the petitioners from closing and liquidating the
Rural Bank of Libmanan, prevented them from
performing their functions, and ordered them to return the
management and control of the rural bank to its board of
directors (p. 51, Rollo) without receiving convincing
proof that the action of the CB was plainly arbitrary and
made in bad faith. As stated therein, the basis of the
questioned order dated January 15, 1982,
were:chanrob1es virtual 1aw library
1. that he did not receive any of petitioners’ formal
motions for extension of time to file their responsive
pleading;
2. that he had read the petition filed in Civil Case No.
1309; and
3. that there were good reasons shown in said petition (p.
52, Rollo).
By using his own standards, instead of the standards set
forth in Section 29 of the law, as basis for issuing a
restraining order against the CB, respondent Judge
committed a grave abuse of discretion tantamount to
excess, or lack of jurisdiction. We held in Rural Bank of
Buhi, Inc. v. Court of Appeals (162 SCRA 288, 291)
Respondent Judge acted with grave abuse of discretion in
issuing the contested order dated January 15, 1982
enjoining the CB liquidator from closing the rural bank
and requiring it to restore the management and control of
the bank to its board of directors. It is a basic procedural
postulate that a preliminary injunction should never
be used to transfer the possession or control of a thing
to a party who did not have such possession or control
at the inception of the case (Lasala v. Fernandez, 5
SCRA 79; Emilia v. Bado, 28 SCRA 183). Its proper
function is simply to maintain the status quo at the
commencement of the action. The status quo at the time
of filing Civil Case No. 1309 was that Libmanan Bank
was under the control of the DRBSLA Director, with
Consolacion V. Odra, as liquidator appointed by the
Central Bank.
2. Yes, Respondent Judge erred in denying the Central
Bank’s motion to dismiss the complaint for
prohibition and mandamus (Civil Case No. 1309) filed
by Libmanan Bank (Annex C, p. 71, Rollo). This Court in
the case of Rural Bank of Buhi, Inc. v. Court of Appeals
(162 SCRA 288) and Salud v. Central Bank of the Phils.
143 SCRA 590), ruled that a bank’s claim that the
resolution of the Monetary Board under Section 29 is
plainly arbitrary and done in bad faith should be asserted
as an affirmative defense or counter-claim in the
proceedings for assistance in liquidation. It may be filed
as a separate action if no petition for assistance in
liquidation has been instituted yet.
". . . a banking institution’s claim that a resolution of the
Monetary Board under Section 29 of the Central Bank Act
should be set aside as plainly arbitrary and made in bad
faith, may be asserted as an affirmative defense (Sections
1 and 4[b], Rule 6, Rules of Court) or a counterclaim
(Section 6, Rule 6; Section 2, Rule 72 of the Rules of
Court) in the proceedings for assistance in liquidation or
as a cause of action in a separate and distinct action where
the latter was filed ahead of the petition for assistance in
liquidation (Central Bank v. Court of Appeals, 106 SCRA
143).
14
Since the Central Bank’s petition for assistance in
liquidation had been filed on August 3, 1981 (Civil Case
No. SP-111, Court of First Instance of Camarines Sur,
Branch III), the Libmanan Bank’s filing on September 23,
1981 of a complaint for prohibition and mandamus
attacking the Central Bank’s resolution appointing a
receiver and liquidator for the bank should have been
asserted as a counterclaim in SP-111 (p. 39-40, Rollo),
instead of as a separate special civil action for prohibition
against the Central Bank. The separate action should have
been either dismissed or consolidated with SP-111 for the
law abhors multiplicity of suits. Failure of Libmanan
Bank to assert in SP-111 the defense that the Monetary
Board’s receivership and liquidation resolution was
"arbitrary and made in bad faith," constitutes a waiver of
that defense conformably with the rule of "Waiver of
Defense," i.e., that "defenses and objections not pleaded
either in a motion to dismiss or in the answer are
(generally) deemed waived," or the "Omnibus Motion
Rule," providing that "a motion attacking a pleading or a
proceeding shall include all objections then available, and
all objections not so included shall be deemed waived"
(Salud v. Central Bank of the Phils., 143 SCRA
590).chanrobles virtual lawlibrary

3. Yes, Respondent Judge abused his discretion in

authorizing the Libmanan Bank to withdraw funds
from its deposits in other banks. The Rural Bank had
become insolvent as a result of mismanagement, frauds,
irregularities and violations of banking laws, rules, and
regulations by its officers (p. 62, Rollo). Its remaining
assets should therefore be conserved to pay its creditors.
Allowing the Rural Bank to withdraw its deposits in other
banks would result in the further diminution and
dissipation of its assets to the prejudice of its depositors
and creditors, and to the unlawful advantage of the very
officers who brought about the bank’s insolvency.

WHEREFORE, the petition for certiorari is GRANTED.

15
UCPB vs. Ganzon
Facts:
Beginning 1995 to 1998, EGI availed itself of credit
facilities from UCPB to finance its business
expansion. To secure said credit facilities, EGI mortgaged
to UCPB its condominium unit inventories
in EGI Rufino Plaza.
Initially, EGI was able to make periodic amortization
payments of its loans to UCPB. When the negative effects
of the Asian economic crisis on the property development
sector finally caught up with the corporation in the middle
of 1998, EGI started defaulting in its payment of
amortizations, thus, making all of its obligations due and
demandable. Subsequently, EGI was declared in default
by UCPB. Thereafter, UCPB stopped sending EGI
monthly statements of its accounts.
In 1999, EGI and UCPB explored the possibility of using
the mortgaged condominium unit inventories of EGI
in EGI Rufino Plaza as payment for the loans of EGI to
UCPB. Upon agreeing on the valuation of said mortgaged
properties, EGI and UCPB entered into a Memorandum
of Agreement (MOA) in settlement of the loans of EGI
from UCPB. Based on this MOA, the outstanding loan
obligations of EGI with UCPB amounted
to P915,838,822.50, inclusive of all interest, charges and
fees. UCPB, through its corporate officers, assured EGI
that the said amount already represented the total loan
obligations of EGI to UCPB.
On 18 January 2000, EGI and UCPB executed an
Amendment of Agreement to reflect the true and correct
valuation of the properties of EGI listed in the MOA that
would be transferred to UCPB in settlement of the total
loan obligations of the former with the latter. The
properties of EGI to be used in paying for its debt with
UCPB were valued at P904,491,052.00.
According to the MOA and its amendments, titles to the
properties of EGI shall be transferred to UCPB by the
following modes: (1) foreclosure of mortgage; (2) dacion
en pago; (3) creation of a holding company; and (4) use
of other alternatives as may be deemed appropriate by
UCPB.
UCPB proceeded to foreclose some of the properties of
EGI listed in the MOA. The foreclosure proceeds of said
properties amounted only to P723,592,000.00, less than
the value of the properties of EGI stipulated in its
amended MOA with UCPB.
UCPB applied the entire foreclosure proceeds
of P723,592,000.00 to the principal amount of the loan
obligations of EGI but there was still an unpaid balance
of P192,246,822.50.
On 8 May 2001, some of the other properties of EGI
at EGI Rufino Plaza, valued at P166,127,369.50, were
transferred by way of dacion en pago to
UCPB. However, during the signing of the transaction
papers for the dacion en pago, EGI Senior Vice-
President, Layug, noticed that said papers stated that the
remaining loan balance of EGI in the amount
of P192,246,822.50 had increased
to P226,963,905.50. The increase was allegedly due to
the addition of the transaction costs amounting
to P34,717,083.00. EGI complained to UCPB about the
increase, yet UCPB did not take any action on the matter.
This prompted EGI President Engineer Eulalio Ganzon
(Ganzon) and Senior Vice-President Layug to review
their files to verify the figures on the loan obligations of
EGI as computed by UCPB. In the process, they
discovered the UCPB Internal Memorandum dated 22
February 2001, signed by UCPB corporate officers. The
said Internal Memorandum presented two columns, one
with the heading ACTUAL and the other DISCLOSED
TO EGI. The figures in the two columns were
conflicting. The figures in the DISCLOSED TO EGI
column computed the unpaid balance of the loan
obligations of EGI to be P226,967,194.80, the amount
which UCPB actually made known to and demanded from
EGI. The figures in the ACTUAL column calculated the
remaining loan obligations of EGI to be
only P146,849,412.58.
Consequently, EGI wrote UCPB a letter which included,
among other demands, the refund by UCPB to EGI of the
over-payment of P83,000,000.00; return to EGI of all the
remaining Condominium Certificates of Title (CCTs) in
the possession of UCPB; and cost of damage to EGI for
the delay in the release of its certificates of title.
In response, UCPB explained that the ACTUAL column
in its Internal Memorandum dated 22 February
2001 contained the same amounts reflected or recorded in
its financial statements, in accordance with the Manual of
Accounts for Banks, Manual of Regulations for
Banks and BSP Circular No. 202, Series of 1999. In
contrast, the DISCLOSED TO EGI column showed the
total amount still due from EGI, including the total
principal, interests, transaction and other costs after the
foreclosure, whether reflected in the financial books of
16
UCPB or not. Further, UCPB maintained that the
difference in the figures in the two columns was because
BSP Circular No. 202 and Section X305.4 of the Manual
of Regulations for Bank disallowed banks from accruing
in its books interest on loans which had become non-
performing.
Despite the explanation of UCPB, EGI insisted that the
figures appearing in the ACTUAL column of the formers
Internal Memorandum dated 22 February 2001 revealed
the true and actual amount of its loan obligations to
UCPB, P146,849,412.58.
Based on the possession by EGI of the UCPB Internal
Memorandum dated 22 February 2001, UCPB filed a
criminal case for theft and/or discovery of secrets against
EGI President Ganzon and Senior Vice-President Layug,
but the said case was dismissed.
On 5 November 2002, EGI, also on the basis of the UCPB
Internal Memorandum dated 22 February 2001, EGI filed
with the BSP an administrative complaintagainst
UCPB, et al., for the commission of irregularities and
conducting business in an unsafe or unsound manner but
the same was also dismissed.
EGI filed a Motion for Reconsideration and a
Supplemental Motion for Reconsideration of the
aforequoted letter-decision of the BSP Monetary
Board. The BSP Monetary Board denied both motions in
its letter as there was no sufficient basis to grant the same.
EGI then filed a Petition for Review under Rule 43 of the
1997 Revised Rules of Civil Procedure with the Court of
Appeals raising the sole issue of whether the Bangko
Sentral ng Pilipinas erred in dismissing the administrative
complaint filed by EGI against UCPB, et al.
On 14 October 2004, the Court of Appeals rendered its
assailed Decision granting the Petition for Review of EGI,
thus, setting aside the BSP letter-decision dated 16
September 2003 and remanding the case to the BSP
Monetary Board for further proceedings.
Aggrieved by the 14 October 2004 Decision and 7 July
2005 Resolution of the Court of Appeals, UCPB, et al.
comes before this Court, via a Petition for Review
on Certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure.
UCPB, et al., aver that the Court of Appeals has no
appellate jurisdiction over decisions, orders and/or
resolutions of the BSP Monetary Board on administrative
matters. The BSP Monetary Board is not among the
quasi-judicial agencies enumerated under Rule 43 of the
1997 Revised Rules of Civil Procedure, over which the
Court of Appeals has appellate jurisdiction.
Issue: WON the appellate court has jurisdiction over
the decisions of the of the BSP monetary Board
RULING: Yes, the appellate court has jurisdiction
over the decisions of the of the BSP monetary Board
Truly, there is nothing in Republic Act No. 7653 or in
Republic Act No. 8791 which explicitly allows an appeal
of the decisions of the BSP Monetary Board to the Court
of Appeals. However, this shall not mean that said
decisions are beyond judicial review.
Section 9(3) of Batas Pambansa Blg. 129, otherwise
known as The Judiciary Reorganization Act of 1980, as
amended, reads:
SEC. 9. Jurisdiction. The Court of Appeals shall exercise:
xxxx
(3) Exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including
the Securities and Exchange Commission, the Social
Security Commission, the Employees Compensation
Commission and the Civil Service
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions
of this Act, and of subparagraph (1) of the third paragraph
and subparagraph 4 of the fourth paragraph of Section 17
of the Judiciary Act of 1948. (Emphasis ours.)
In accordance with the afore-quoted provision, Rule 43 of
the 1997 Revised Rules of Civil Procedure, on Appeals
from the Court of Tax Appeals and Quasi-Judicial
Agencies to the Court of Appeals, defines its scope as
follows:
SECTION 1. Scope. - This Rule shall apply to
appeals from judgments or final orders of the Court of
Tax Appeals and from awards, judgments, final orders
or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions.
Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and
Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission,
17
Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657,
Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions
Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary
arbitrators authorized by law. (Emphasis ours.)
A perusal of Section 9(3) of Batas Pambansa Blg. 129, as
amended, and Section 1, Rule 43 of the 1997 Revised
Rules of Civil Procedure reveals that the BSP Monetary
Board is not included among the quasi-judicial agencies
explicitly named therein, whose final judgments, orders,
resolutions or awards are appealable to the Court of
Appeals. Such omission, however, does not necessarily
mean that the Court of Appeals has no appellate
jurisdiction over the judgments, orders, resolutions or
awards of the BSP Monetary Board.
It bears stressing that Section 9(3) of Batas Pambansa Blg.
129, as amended, on the appellate jurisdiction of the Court
of Appeals, generally refers to quasi-judicial agencies,
instrumentalities, boards, or commissions. The use of the
word including in the said provision, prior to the naming
of several quasi-judicial agencies, necessarily conveys the
very idea of non-exclusivity of the enumeration. The
principle of expressio unius est exclusio alterius does not
apply where other circumstances indicate that the
enumeration was not intended to be exclusive, or where
the enumeration is by way of example only.
Similarly, Section 1, Rule 43 of the 1997 Revised Rules
of Civil Procedure merely mentions several quasi-judicial
agencies without exclusivity in its phraseology. The
enumeration of the agencies therein mentioned is not
exclusive. The introductory phrase [a]mong these
agencies are preceding the enumeration of specific quasi-
judicial agencies only highlights the fact that the list is not
meant to be exclusive or conclusive. Further, the overture
stresses and acknowledges the existence of other quasi-
judicial agencies not included in the enumeration but
should be deemed included.
A quasi-judicial agency or body is an organ of
government other than a court and other than a legislature,
which affects the rights of private parties through either
adjudication or rule-making. The very definition of an
administrative agency includes its being vested with
quasi-judicial powers. The ever increasing variety of
powers and functions given to administrative agencies
recognizes the need for the active intervention of
administrative agencies in matters calling for technical
knowledge and speed in countless controversies which
cannot possibly be handled by regular courts. A "quasi-
judicial function" is a term which applies to the action,
discretion, etc., of public administrative officers or
bodies, who are required to investigate facts, or ascertain
the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action
and to exercise discretion of a judicial nature.
Undoubtedly, the BSP Monetary Board is a quasi-judicial
agency exercising quasi-judicial powers or functions. As
aptly observed by the Court of Appeals, the BSP
Monetary Board is an independent central monetary
authority and a body corporate with fiscal and
administrative autonomy, mandated to provide policy
directions in the areas of money, banking and credit. It has
power to issue subpoena, to sue for contempt those
refusing to obey the subpoena without justifiable
reason, to administer oaths and compel presentation of
books, records and others, needed in its examination, to
impose fines and other sanctions and to issue cease and
desist order. Section 37 of Republic Act No. 7653, in
particular, explicitly provides that the BSP Monetary
Board shall exercise its discretion in determining whether
administrative sanctions should be imposed on banks and
quasi-banks, which necessarily implies that the BSP
Monetary Board must conduct some form of investigation
or hearing regarding the same.
Having established that the BSP Monetary Board is
indeed a quasi-judicial body exercising quasi-judicial
functions; then as such, it is one of those quasi-judicial
agencies, though not specifically mentioned in Section
9(3) of Batas Pambansa Blg. 129, as amended, and
Section 1, Rule 43 of the 1997 Revised Rules of Civil
Procedure, are deemed included therein.Therefore, the
Court of Appeals has appellate jurisdiction over final
judgments, orders, resolutions or awards of the BSP
Monetary Board on administrative complaints against
banks and quasi-banks, which the former acquires
through the filing by the aggrieved party of a Petition for
Review under Rule 43 of the 1997 Revised Rules of Civil
Procedure.
18
WHEREFORE, premises considered, the Petition for
Review on Certiorari of United Coconut Planters Bank,
Jeronimo U. Kilayko, Lorenzo V. Tan, Enrique L. Gana,
Jaime W. Jacinto and Emily R. Lazaro, in G.R. No.
168859; as well as the Petition for Review
on Certiorari of E. Ganzon, Inc. in G.R. No. 168897, are
hereby DENIED. The Decision dated 14 October
2004 and Resolution dated 7 July 2005 of the Court of
Appeals in CA-G.R. SP No. 81385 are
hereby AFFIRMED in toto. No costs.

19
Salvacion vs. Central Bank
FACTS:
On February 4, 1989, Greg Bartelli y Northcott, an
American tourist, coaxed and lured petitioner Karen
Salvacion, then 12 years old to go with him to his
apartment. Therein, Greg Bartelli detained Karen
Salvacion for four days, and was able to rape the child
once on February 4, and three times each day on February
5, 6, and 7, 1989. On February 7, 1989, after policemen
and people living nearby, rescued Karen, Greg Bartelli
was arrested and detained at the Makati Municipal
Jail. The policemen recovered from Bartelli several dollar
checks and a dollar account in China Banking Corp. A
criminal case for illegal detention was filed against him
and a civil case for damages with preliminary attachment.
However, Greg was able to escape from jail.
Meanwhile, in Civil Case, the Judge issued an Order
granting the application of herein petitioners, for the
issuance of the writ of preliminary attachment.
On March 1, 1989, the Deputy Sheriff of Makati served
a Notice of Garnishment on China Banking
Corporation. In a letter dated March 13, 1989 to the
Deputy Sheriff of Makati, China Banking Corporation
invoked Republic Act No. 1405 as its answer to the notice
of garnishment served on it. On March 15, 1989, Deputy
Sheriff of Makati Armando de Guzman sent his reply to
China Banking Corporation saying that the garnishment
did not violate the secrecy of bank deposits since the
disclosure is merely incidental to a garnishment properly
and legally made by virtue of a court order which has
placed the subject deposits in custodia legis. In answer to
this letter of the Deputy Sheriff of Makati, China Banking
Corporation, in a letter dated March 20, 1989, invoked
Section 113 of Central Bank Circular No. 960 to the effect
that the dollar deposits of defendant Greg Bartelli are
exempt from attachment, garnishment, or any other order
or process of any court, legislative body, government
agency or any administrative body, whatsoever.
This prompted the counsel for petitioners to make an
inquiry with the Central Bank in a letter dated April 25,
1989 on whether Section 113 of CB Circular No. 960 has
any exception or whether said section has been repealed
or amended since said section has rendered nugatory the
substantive right of the plaintiff to have the claim sought
to be enforced by the civil action secured by way of the
writ of preliminary attachment as granted to the plaintiff
under Rule 57 of the Revised Rules of Court. The Central
Bank that there is no exceptions to the said rule and there
were also no amendments on the same.
The trial court ruled in favor of the petitioners. Salvacion
tried to execute the judgment on the dollar deposit of
Bartelli with the China Banking Corp. but the latter
refused arguing that Section 11 of Central Bank Circular
No. 960 exempts foreign currency deposits from
attachment, garnishment, or any other order or process of
any court, legislative body, government agency or any
administrative body whatsoever. Salvacion therefore filed
this action for declaratory relief in the Supreme Court.
Issue: Should Section 113 of Central Bank Circular
No. 960 and Section 8 of R.A. 6426, as amended by
P.D. 1246, otherwise known as the Foreign Currency
Deposit Act be made applicable to a foreign transient?
RULING: NO
Petitioner deserves to receive the damages awarded to her
by the court. But this petition for declaratory relief can
only be entertained and treated as a petition for mandamus
to require respondents to honor and comply with the writ
of execution in Civil Case No. 89-3214.
The Court has no original and exclusive jurisdiction over
a petition for declatory relief.[2] However, exceptions to
this rule have been recognized. Thus, where the petition
has far-reaching implications and raises questions that
should be resolved, it may be treated as one for
mandamus.[3]
Here is a child, a 12-year old girl, who in her belief that
all Americans are good and in her gesture of kindness by
teaching his alleged niece the Filipino language as
requested by the American, trustingly went with said
stranger to his apartment, and there she was raped by said
American tourist Greg Bartelli. Not once, but ten
times. She was detained therein for four (4) days. This
American tourist was able to escape from the jail and
avoid punishment. On the other hand, the child, having
received a favorable judgment in the Civil Case for
damages in the amount of more than P1,000,000.00,
which amount could alleviate the humiliation, anxiety,
and besmirched reputation she had suffered and may
continue to suffer for a long, long time; and knowing that
this person who had wronged her has the money, could
not, however get the award of damages because of this
unreasonable law. This questioned law, therefore makes
futile the favorable judgment and award of damages that
she and her parents fully deserve. As stated by the trial
court in its decision,
20
If Karens sad fate had happened to anybodys own kin, it We definitely cannot have both ways and rest in the belief
would be difficult for him to fathom how the incentive for that we have served the ends of justice.
foreign currency deposit could be more important than his
IN VIEW WHEREOF, the provisions of Section 113 of
childs right to said award of damages; in this case, the
CB Circular No. 960 and PD No. 1246, insofar as it
victims claim for damages from this alien who had the
amends Section 8 of R.A. 6426 are hereby held to
gall to wrong a child of tender years of a country where
be INAPPLICABLE to this case because of its peculiar
he is mere visitor. This further illustrates the flaw in the
circumstances. Respondents are hereby REQUIRED to
questioned provisions.
COMPLY with the writ of execution issued in Civil Case
It is worth mentioning that R.A. No. 6426 was enacted in No. 89-3214, Karen Salvacion, et al. vs. Greg Bartelli y
1983 or at a time when the countrys economy was in a Northcott, by Branch CXLIV, RTC Makati and to
shambles; when foreign investments were minimal and RELEASE to petitioners the dollar deposit of respondent
presumably, this was the reason why said statute was Greg Bartelli y Northcott in such amount as would satisfy
enacted. But the realities of the present times show that the judgment.
the country has recovered economically; and even if not,
the questioned law still denies those entitled to due SO ORDERED.
process of law for being unreasonable and
oppressive. The intention of the questioned law may be
good when enacted. The law failed to anticipate the
inquitous effects producing outright injustice and
inequality such as as the case before us.
In fine, the application of the law depends on the extent
of its justice. Eventually, if we rule that the questioned
Section 113 of Central Bank Circular No. 960 which
exempts from attachment, garnishment, or any other order
or process of any court. Legislative body, government
agency or any administrative body whatsoever, is
applicable to a foreign transient, injustice would result
especially to a citizen aggrieved by a foreign guest like
accused Greg Bartelli. This would negate Article 10 of the
New Civil Code which provides that in case of doubt in
the interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice to
prevail. Ninguno non deue enriquecerse tortizerzmente
con damo de otro. Simply stated, when the statute is silent
or ambiguous, this is one of those fundamental solutions
that would respond to the vehement urge of
conscience. (Padilla vs. Padilla, 74 Phil. 377)
It would be unthinkable, that the questioned Section 113
of Central Bank No. 960 would be used as a device by
accused Greg Bartelli for wrongdoing, and in so doing,
acquitting the guilty at the expense of the innocent.
Call it what it may but is there no conflict of legal policy
here? Dollar against Peso? Upholding the final and
executory judgment of the lower court against the Central
Bank Circular protecting the foreign depositor? Shielding
or protecting the dollar deposit of a transient alien
depositor against injustice to a national and victim of a
crime? This situation calls for fairness legal tyranny.
21