RURAL
BANK OF SAN MIGUEL, G.R. No. 150886
INC.
and HILARIO P. SORIANO,
in
his capacity as majority
stockholder in the Rural Bank
of
San Miguel, Inc.,
Petitioners,
Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA
and
GARCIA, JJ.
MONETARY
BOARD, BANGKO
SENTRAL
NG PILIPINAS and
PHILIPPINE
DEPOSIT
INSURANCE
CORPORATION,
Respondents. Promulgated:
February 16, 2007
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CORONA, J.:
This is a petition for review on certiorari[1] of a
decision[2] and
resolution[3] of the
Court of Appeals (CA) dated March 28, 2000 and November 13, 2001, respectively,
in CA-G.R. SP No. 57112.
Petitioner Rural Bank of San Miguel,
Inc. (RBSM) was a domestic corporation engaged in banking. It started
operations in 1962 and by year 2000 had 15 branches in Bulacan.[4] Petitioner Hilario
P. Soriano claims to be the majority stockholder of
its outstanding shares of stock.[5]
On January 21, 2000, respondent
Monetary Board (MB), the governing board of respondent Bangko
Sentral ng Pilipinas (BSP), issued Resolution No. 105 prohibiting RBSM
from doing business in the Philippines, placing it under receivership and
designating respondent Philippine Deposit Insurance Corporation (PDIC) as
receiver:
On the basis
of the comptrollership/monitoring report as of October 31, 1999 as reported by
Mr. Wilfredo B. Domo-ong,
Director, Department of Rural Banks, in his memorandum dated January 20, 2000,
which report showed that [RBSM] (a) is unable to pay its liabilities as they
become due in the ordinary course of business; (b) cannot continue in business
without involving probable losses to its depositors and creditors; that the
management of the bank had been accordingly informed of the need to infuse
additional capital to place the bank in a solvent financial condition and was
given adequate time within which to make the required infusion and that no
infusion of adequate fresh capital was made, the Board decided as follows:
1. To prohibit the bank from doing business in
the Philippines and to place its assets and affairs under receivership in
accordance with Section 30 of [RA 7653];
2.
To designate the [PDIC] as receiver of the bank;
xxx xxx xxx[6]
On January 31, 2000, petitioners
filed a petition for certiorari and prohibition in the Regional Trial Court
(RTC) of Malolos, Branch 22 to nullify and set aside
Resolution No. 105.[7] However, on February 7, 2000, petitioners
filed a notice of withdrawal in the RTC and, on the same day, filed a special
civil action for certiorari and prohibition in the CA. On February 8, 2000, the RTC dismissed the
case pursuant to Section 1, Rule 17 of the Rules of Court.[8]
The CA’s findings of facts were as
follows.
To assist its
impaired liquidity and operations, the RBSM was granted emergency loans on
different occasions in the aggregate amount of P375 [million].
As early as
November 18, 1998, Land Bank of the Philippines (LBP) advised RBSM that it will
terminate the clearing of RBSM’s checks in view of
the latter’s frequent clearing losses and continuing failure to replenish its
Special Clearing Demand Deposit with LBP.
The BSP interceded with LBP not to terminate the clearing arrangement of
RBSM to protect the interests of RBSM’s depositors
and creditors.
After a year, or on
November 29, 1999, the LBP informed the BSP of the termination of the clearing
facility of RBSM to take effect on December 29, 1999, in view of the clearing
problems of RBSM.
On
December 28, 1999, the MB approved the release of P26.189 [million]
which is the last tranche of the P375 million
emergency loan for the sole purpose of servicing and
meeting the withdrawals of its depositors.
Of the P26.180 million, xxx P12.6 million xxx was not used
to service withdrawals [and] remains unaccounted for as admitted by [RBSM’s Treasury Officer and Officer-in-Charge of
Treasury]. Instead of servicing
withdrawals of depositors, RBSM paid Forcecollect
Professional Solution, Inc. and Surecollect
Professional, Inc., entities which are owned and controlled by Hilario P. Soriano and other RBSM
officers.
On January 4,
2000, RBSM declared a bank holiday. RBSM
and all of its 15 branches were closed from doing business.
Alarmed
and disturbed by the unilateral declaration of bank holiday, [BSP] wanted to
examine the books and records of RBSM but encountered problems.
Meanwhile, on
November 10, 1999, RBSM’s designated comptroller, Ms.
Zenaida Cabais of the BSP,
submitted to the
Department of Rural Banks, BSP, a Comptrollership Report on her
findings on the financial condition and operations of the bank as of October
31, 1999. Another set of findings was
submitted by said comptroller [and] this second report reflected the financial
status of RBSM as of December 31, 1999.
The
findings of the comptroller on the financial state of RBSM as
of October 31, 1999 in comparison with the financial condition as of December
31, 1999 is summed up pertinently as follows:
FINANCIAL CONDITION OF RBSM
As of Oct. 31, 1999 As of Dec. 31,
1999
Total obligations/
Liabilities P1,076,863,000.00 1,009,898,000.00
Realizable Assets
898,588,000.00 796,930,000.00
Deficit 178,275,000.00 212,968,000.00
Cash on Hand
101,441.547.00 8,266,450.00
Required Capital
Infusion P252,120,000.00
Capital
Infusion P5,000,000.00
(On Dec. 20, 1999)
Actual Breakdown of Total Obligations:
1)
Deposits of 20,000 depositors – P578,201,000.00
2)
Borrowings from BSP – P320,907,000.00
3)
Unremitted withholding and gross receipt taxes
– P57,403,000.00.[9]
Based
on these comptrollership reports, the director of the Department of Rural Banks
Supervision and Examination Sector, Wilfredo B. Domo-ong, made a report to the MB dated January 20, 2000.[10] The MB,
after evaluating and deliberating on the findings and recommendation of the
Department of Rural Banks Supervision and Examination Sector, issued Resolution
No. 105 on January 21, 2000.[11] Thereafter, PDIC implemented the closure order
and took over the management of RBSM’s assets and
affairs.
In
their petition[12]
before the CA, petitioners claimed that respondents MB and BSP committed grave
abuse of discretion in issuing Resolution No. 105. The petition was dismissed by the CA on March
28, 2000. It held, among others, that
the decision of the MB to issue Resolution No. 105 was based on the findings
and recommendations of the Department of Rural Banks Supervision and
Examination Sector, the comptroller reports as of October 31, 1999 and December
31, 1999 and the declaration of a bank holiday.
Such could be considered as substantial evidence.[13]
Pertinently,
on June 9, 2000, on the basis of reports prepared by PDIC stating that RBSM could
not resume business with sufficient assurance of protecting the interest of its depositors,
creditors and the general public, the MB passed Resolution No. 966 directing
PDIC to proceed with the liquidation of RBSM under Section 30 of RA 7653.[14]
Hence
this petition.
It is
well-settled that the closure of a bank may be considered as an exercise of
police power.[15]
The action of the MB on this matter is final and executory.[16] Such
exercise may nonetheless be subject to judicial inquiry and can be set aside if
found to be in excess of jurisdiction or with such grave abuse of discretion as
to amount to lack or excess of jurisdiction.[17]
Petitioners
argue that Resolution No. 105 was bereft of any basis considering that no
complete examination had been conducted before it was issued. This case essentially boils down to one core
issue: whether Section 30 of RA 7653
(also known as the New Central Bank Act) and applicable jurisprudence require a
current and complete examination of the bank before it can be closed and
placed under receivership.
Section 30 of RA 7653 provides:
SECTION 30. Proceedings in Receivership and Liquidation. —
Whenever, upon report of the head of the supervising or examining department,
the Monetary Board finds that a bank or quasi-bank:
(a) is unable to
pay its liabilities as they become due in the ordinary course of business:
Provided, That this shall not include inability to pay caused by extraordinary
demands induced by financial panic in the banking community;
(b) has
insufficient realizable assets, as determined by the [BSP] to meet its
liabilities; or
(c) cannot continue
in business without involving probable losses to its depositors or creditors;
or
(d) has willfully violated a cease and
desist order under Section 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and without
need for prior hearing forbid the institution from doing business in the
Philippines and designate the Philippine Deposit Insurance Corporation as
receiver of the banking institution.
xxx xxx xxx
The
actions of the Monetary Board taken under this section or under Section 29 of
this Act shall be final and executory, and 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
petition for certiorari may only be filed by the stockholders of record
representing the majority of the capital stock within ten (10) days from
receipt by the board of directors of the institution of the order directing
receivership, liquidation or conservatorship. (Emphasis supplied)
xxx xxx xxx
Petitioners
contend that there must be a current, thorough and complete examination before
a bank can be closed under Section 30 of RA 7653. They argue that this section should be
harmonized with Sections 25 and 28 of the same law:
SECTION 25. Supervision and Examination. — The [BSP] shall have
supervision over, and conduct periodic or special examinations of,
banking institutions and quasi-banks, including their subsidiaries and
affiliates engaged in allied activities.
xxx xxx
xxx
SECTION 28. Examination and Fees. — The supervising and
examining department head, personally or by deputy, shall examine the books
of every banking institution once in every twelve (12) months, and at such
other time as the Monetary Board by an affirmative vote of five (5) members may
deem expedient and to make a report on the same to the Monetary Board: Provided that there shall be an interval of
at least twelve (12) months between annual examinations. (Emphasis supplied)
xxx xxx
xxx
According
to the petitioners, it is clear from these provisions that the “report of the
supervising or examining department” required under Section 30 refers to the
report on the examination of the bank which, under Section 28, must be made to
the MB after the supervising or examining head conducts an examination mandated
by Sections 25 and 28.[18] They
cite Banco Filipino Savings & Mortgage
Bank v. Monetary Board, Central Bank of the Philippines[19] wherein
the Court ruled:
There
is no question that under Section 29 of the Central Bank Act, the following are
the mandatory requirements to be complied with before a bank found to be
insolvent is ordered closed and forbidden to do business in the Philippines: Firstly,
an examination shall be conducted by the head of the appropriate supervising or
examining department or his examiners or agents into the condition of the bank;
secondly, it shall be disclosed in the examination that the condition of the
bank is one of insolvency, or that its continuance in business would involve
probable loss to its depositors or creditors; thirdly, the department head
concerned shall inform the Monetary Board in writing, of the facts; and lastly,
the Monetary Board shall find the statements of the department head to be true.[20] (Emphasis supplied)
Petitioners
assert that an examination is necessary and not a mere report, otherwise the
decision to close a bank would be arbitrary.
Respondents counter that RA 7653 merely requires a report of
the head of the supervising or examining department. They maintain that the term “report” under
Section 30 and the word “examination” used in Section 29 of the old law are not
synonymous. “Examination” connotes in-depth analysis, evaluation, inquiry or
investigation while “report” connotes a simple disclosure or narration of facts
for informative purposes.[21]
Petitioners’ contention has no merit. Banco
Filipino and other cases petitioners cited[22] were
decided using Section 29 of the old law (RA 265):
SECTION 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, it 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
benefits of its creditors, and represent the bank personally or through counsel
as he may retain in all actions or proceedings for or against the institution,
exercising all the powers necessary for these purposes including, but not
limited to, bringing and foreclosing mortgages in the name of the bank or
non-bank financial intermediary performing quasi-banking functions. (Emphasis supplied)
xxx xxx
xxx
Thus in Banco Filipino,
we ruled that an “examination [conducted] by the head of the appropriate
supervising or examining department or his examiners or agents into the
condition of the bank”[23] is
necessary before the MB can order its closure.
However,
RA 265, including Section 29 thereof, was expressly repealed by RA 7653 which took
effect in 1993. Resolution No. 105 was
issued on January 21, 2000. Hence,
petitioners’ reliance on Banco Filipino which
was decided under RA 265 was misplaced.
In RA 7653, only a “report of
the head of the supervising or examining department” is necessary. It is an established rule in statutory
construction that where the words of a statute are clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted
interpretation:[24]
This
plain meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the
valid presumption that the words employed by the legislature in a statute
correctly express its intention or will and preclude the court from construing
it differently. The legislature is presumed to know the meaning of the words,
to have used words advisedly, and to have expressed its intent by use of such
words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there
should be no departure.[25]
The word “report” has a definite and
unambiguous meaning which is clearly different from “examination.” A report, as
a noun, may be defined as “something that gives information” or “a usually detailed account or
statement.”[26]
On the other hand, an examination is “a search, investigation or scrutiny.”[27]
This Court cannot look for or impose
another meaning on the term “report” or to construe it as synonymous with
“examination.” From the words used in Section 30, it is clear that RA 7653 no
longer requires that an examination be made before the MB can issue a closure
order. We cannot make it a requirement in the absence of legal basis.
Indeed, the court may consider the
spirit and reason of the statute, where a literal meaning would lead to
absurdity, contradiction, injustice, or would defeat the clear purpose of the
lawmakers.[28] However, these problems are not present
here. Using the literal meaning of
“report” does not lead to absurdity, contradiction or injustice. Neither does it defeat the intent of the
legislators. The purpose of the law is
to make the closure of a bank summary and expeditious in order to protect
public interest. This is also why prior
notice and hearing are no longer required before a bank can be closed.[29]
Laying down the requisites for the
closure of a bank under the law is the prerogative of the legislature and what
its wisdom dictates. The lawmakers could
have easily retained the word “examination” (and in the process also preserved
the jurisprudence attached to it) but they did not and instead opted to use the
word “report.” The insistence on an
examination is not sanctioned by RA 7653 and we would be guilty of judicial
legislation were we to make it a requirement when such is not supported by the
language of the law.
What is being raised here as grave
abuse of discretion on the part of the respondents was the lack of an
examination and not the supposed arbitrariness with which the conclusions of
the director of the Department of Rural Banks Supervision and Examination
Sector had been reached in the report which became the basis of Resolution No.
105.
The absence of an examination before
the closure of RBSM did not mean that there was no basis for the closure
order. Needless to say, the decision of
the MB and BSP, like any other administrative body, must have something to
support itself and its findings of fact must be supported by substantial evidence. But it is clear
under RA 7653 that the basis need not arise from an examination as required in
the old law.
We
thus rule that the MB had sufficient basis to arrive at a sound conclusion that
there were grounds that would justify RBSM’s
closure. It relied on the report of Mr.
Domo-ong, the head of the supervising or examining
department, with the findings that: (1) RBSM was unable to pay its liabilities
as they became due in the ordinary course of business and (2) that it could not
continue in business without incurring probable losses to its depositors and
creditors.[30]
The report was a 50-page memorandum detailing the facts supporting those
grounds, an extensive chronology of events revealing the multitude of problems
which faced RBSM and the recommendations based on those findings.
In short, MB and BSP complied with all
the requirements of RA 7653. By relying on a report before placing a bank under
receivership, the MB and BSP did not only follow the letter of the law, they
were also faithful to its spirit, which was to act expeditiously. Accordingly, the issuance of Resolution No.
105 was untainted with arbitrariness.
Having dispensed with the issue
decisive of this case, it becomes unnecessary to resolve the other minor issues
raised.[31]
WHEREFORE, the petition is hereby DENIED.
The March 28, 2000
decision and November 13, 2001 resolution of the
Court of Appeals
in CA-G.R. SP No. 57112 are AFFIRMED.
Costs against
petitioners.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
ANGELINA
SANDOVAL-GUTIERREZ
Associate Justice
|
ADOLFO S. AZCUNA
Associate Justice
|
CANCIO C. GARCIA
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the above decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
[1] Under Rule 45 of the Rules of Court.
[2] Penned by Associate Justice Eugenio S. Labitoria (now retired) and concurred in by Associate Justices Bernardo P. Abesamis (now retired) and Elvi John S. Asuncion of the Thirteenth Division of the Court of Appeals; rollo, pp. 32-50.
[3] Id., pp. 52-57.
[4] Id., pp. 6 and 33.
[5] Id., p. 6.
[6] Id., p. 93.
[7] Docketed as Civil Case No. 66-M-2000; id. p. 187.
[8] Id.,
p. 38. Section 1, Rule 17 states:
Dismissal upon notice by plaintiff. — A complaint may be dismissed by the plaintiff by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim.
[9] Id., pp. 33-36.
[10] Id., pp. 375-426.
[11] Id., pp. 33-37.
[12] Under Rule 65 of the Rules of Court.
[13] Rollo, p. 43.
[14] Id., p. 172.
[15] Rural Bank of Buhi, Inc. v. Court of Appeals, G.R. No. L-61689, 20 June 1988, 162 SCRA 288, 303.
[16] Section 30, RA 7653.
[17] Id.
[18] Rollo, pp. 13-14.
[19] G.R. No. 70054, 11 December 1991, 204 SCRA 767.
[20] Id., p. 794.
[21] Rollo, pp. 368-369.
[22] Supra note 15, at 302; and Central Bank of the Philippines v. Court of Appeals, G.R. No. 76118, 30 March 1993, 220 SCRA 536, 548.
[23] Supra note 19 at 794.
[24] National Food Authority (NFA) v. Masada Security Agency, Inc., G.R. No. 163448, 8 March 2005, 453 SCRA 70, 79; Philippine National Bank v. Garcia, Jr., G.R. No. 141246, 9 September 2002, 388 SCRA 485, 487, 491.
[25] National Food Authority (NFA) v. Masada Security Agency, Inc., id., citations omitted.
[26] Webster’s Third New International Dictionary (1993).
[27] Id.
[28] Ursua v. Court of Appeals, G.R. No. 112170, 10 April 1996, 256 SCRA 147, 152, citations omitted.
[29] Central Bank of the Philippines v. Court of Appeals, supra note 22, at 544; Banco Filipino Savings & Mortgage Bank v. Monetary Board, Central Bank of the Philippines, supra note 19 at 798; Rural Bank of Buhi, Inc. v. Court of Appeals, supra note 22,z at 303.
In Rural Bank of Buhi, we stated:
x x x [D]ue 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.
[30] Incidentally, the declaration of a bank holiday (done by RBSM in January 4, 2000) is also a ground for the closure of a bank by the MB under Section 53 of RA 8791 or the General Banking Law of 2000. However, RA 8791 became effective only on June 13, 2000 and consequently is not applicable to this case.
[31] 1) Whether petitioner Hilario P. Soriano has legal personality to file this petition;
2) Whether petitioners are guilty of forum shopping;
3) Whether petitioners failed to formally offer their evidence/documents in the CA; rollo, pp. 326, 330, 364.