THIRD DIVISION
|
BANGKO SENTRAL NG
PILIPINAS MONETARY BOARD and CHUCHI FONACIER, Petitioners, -
versus - HON. NINA G.
ANTONIO-VALENZUELA, in her capacity as Regional Trial Court Judge of Manila,
Branch 28; RURAL BANK OF PARAÑAQUE, INC.; 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 OF
BISAYAS MINGLANILLA (now BANK OF EAST ASIA); and SAN PABLO CITY DEVELOPMENT
BANK, INC., Respondents. |
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G.R. No. 184778 Present: YNARES-SANTIAGO,
J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: October 2, 2009 |
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D E C I S I O N
VELASCO, JR., J.:
The Case
This is a Petition for Review on Certiorari
under Rule 45 with Prayer for Issuance of a Temporary Restraining Order (TRO)/Writ
of Preliminary Injunction, questioning the Decision dated September 30, 2008[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 103935. The CA Decision upheld the Order[2]
dated June 4, 2008 of the Regional Trial Court (RTC), Branch 28 in Manila, issuing
writs of preliminary injunction 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, and the Order dated May 21, 2008 that consolidated the civil
cases.
The Facts
In September of 2007, the 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 (
After the examinations, exit
conferences were held with the officers or representatives of the banks wherein
the SED examiners provided them with copies of Lists of Findings/Exceptions
containing the deficiencies discovered during the examinations. These banks were then required to comment and
to undertake the remedial measures stated in these lists within 30 days from their
receipt of the lists, which remedial measures 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. They also requested meetings with the BSP
audit teams to reconcile audit figures.
In response, Fonacier reiterated the banks’ failure to comply with the
directive for additional capital infusions.
On May 12, 2008, the RBPI filed a
complaint for nullification of the BSP ROE with application for a TRO and writ
of preliminary injunction before the RTC docketed as Civil Case No. 08-119243
against Fonacier, the BSP, Amado M. Tetangco, Jr., Romulo L. Neri, Vicente B.
Valdepenas, Jr., Raul A. Boncan, Juanita D. Amatong, Alfredo C. Antonio, and
Nelly F. Villafuerte. RBPI prayed 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 failure to furnish the
bank with a copy of the ROE violated its right to due process.
The 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., Rural
Bank of Darbci, Inc., Rural Bank of
On May 13, 2008, the RTC denied the
prayer for a TRO of Pilipino Rural Bank, Inc.
The bank filed a motion for reconsideration the next day.
On May 14, 2008, Fonacier and the BSP
filed their opposition to the application for a TRO and writ of preliminary
injunction in Civil Case No. 08-119243 with the RTC. 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. Judge Valenzuela set the
complaint of Rural Bank of
On May 16, 2008, San Pablo City
Development Bank, Inc. filed a similar complaint against the same defendants
with the RTC, and this was docketed as Civil Case No. 08-119273 that was later
on consolidated with Civil Case No. 08-119243.
Petitioners filed an Urgent Motion to Lift/Dissolve the TRO and an Opposition
to the earlier motion for reconsideration of Pilipino Rural Bank, Inc.
On May 19, 2008, Judge Valenzuela
issued an Order granting the prayer for the issuance of TROs for the other
seven cases consolidated with Civil Case No. 08-119243. On May 21, 2008, Judge Valenzuela issued an
Order denying petitioners’ motion for reconsideration regarding the
consolidation of cases in Branch 28. On
May 22, 2008, Judge Valenzuela granted the urgent motion for reconsideration of
Pilipino Rural Bank, Inc. and issued a TRO similar to the ones earlier issued.
On May 26, 2008, petitioners filed a
Motion to Dismiss against all the complaints (except that of the San Pablo City
Development Bank, Inc.), on the grounds that the complaints stated no cause of
action and that a condition precedent for filing the cases had not been
complied with. On May 29, 2008, a
hearing was conducted on the application for a TRO and for a writ of
preliminary injunction of San Pablo City Development Bank, Inc.
The Ruling of the RTC
After the parties filed their
respective memoranda, the RTC, on June 4, 2008, ruled that 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 dispositive portion of the RTC’s order
reads:
WHEREFORE, the Court rules as follows:
1) Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Rural Bank of Paranaque Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
2) Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Rural Bank of San Jose (Batangas), Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
3) Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Rural Bank of Carmen (Cebu), Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
4) Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Pilipino Rural Bank Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
5) Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Philippine Countryside Rural Bank Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
6) Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Dynamic Bank Inc. (Rural Bank of Calatagan) is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
7) Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Rural Bank of DARBCI, Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
8) Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Rural Bank of Kananga Inc. (First Intestate Bank), is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
9) Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff Banco Rural De Bisayas Minglanilla (Cebu) Inc. (Bank of East Asia) is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.
10) Re: Civil Case No. 08-119273. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff San Pablo City Development Bank, Inc. is directed to post a bond executed to the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or any other similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in connection with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.[3]
The Ruling of the CA
Petitioners then brought the matter to
the CA via a petition for certiorari under Rule 65 claiming grave abuse of discretion
on the part of Judge Valenzuela when she issued the orders dated May 21, 2008
and June 4, 2008.
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.
The CA also found that aside from the
technical aspect, there was no grave abuse of discretion on the part of the
RTC, and if there was a mistake in the assessment of evidence by the trial
court, that should be characterized as an error of judgment, and should be
correctable via appeal.
The CA held that the principles of
fairness and transparency dictate that the respondent banks are entitled to
copies of the ROE.
Regarding the consolidation of the 10
cases, the CA found that there was a similarity of facts, reliefs sought, issues
raised, defendants, and that plaintiffs and defendants were represented by the
same sets of counsels. It found that the
joint trial of these cases would prejudice any substantial right of
petitioners.
Finding that no grave abuse of
discretion attended the issuance of the orders by the RTC, the CA denied the
petition.
On November 24, 2008, a TRO was issued
by this Court, restraining the CA, RTC, and respondents from implementing and
enforcing the CA Decision dated September 30, 2008 in CA-G.R. SP No. 103935.[4]
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 under Section 53 of Republic
Act No. (RA)
8791[5] and Sec.
30
of RA
7653[6]
through MB Resolution No. 1616 dated
December 9, 2008; Resolution Nos. 1637 and 1638 dated December 11, 2008; Resolution
Nos. 1647, 1648, and 1649 dated December 12, 2008; Resolution Nos. 1652 and
1653 dated December 16, 2008; and Resolution Nos. 1692 and 1695 dated December
19, 2008, with the Philippine Deposit Insurance Corporation as the appointed
receiver.
Now we resolve the main petition.
Grounds in Support of Petition
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT VIOLATED SECTION 25 OF THE NEW CENTRAL BANK ACT AND EFFECTIVELY HANDCUFFED THE BANGKO SENTRAL FROM DISCHARGING ITS FUNCTIONS TO THE GREAT AND IRREPARABLE DAMAGE OF THE COUNTRY’S BANKING SYSTEM;
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE ENTITLED TO BE FURNISHED COPIES OF THEIR RESPECTIVE ROEs BEFORE THE SAME IS SUBMITTED TO THE MONETARY BOARD IN VIEW OF THE PRINCIPLES OF FAIRNESS AND TRANSPARENCY DESPITE LACK OF EXPRESS PROVISION IN THE NEW CENTRAL BANK ACT REQUIRING BSP TO DO THE SAME
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DEPARTING FROM WELL-ESTABLISHED PRECEPTS OF LAW AND JURISPRUDENCE
A. THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED RESORT TO PETITION FOR CERTIORARI UNDER RULE 65 INSTEAD OF FIRST FILING A MOTION FOR RECONSIDERATION
B. RESPONDENT BANKS’ ACT OF RESORTING IMMEDIATELY TO THE COURT WAS PREMATURE SINCE IT WAS MADE IN UTTER DISREGARD OF THE PRINCIPLE OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDY
C. THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION BY THE REGIONAL TRIAL COURT WAS NOT ONLY IMPROPER BUT AMOUNTED TO GRAVE ABUSE OF DISCRETION[7]
Our Ruling
The petition is meritorious.
In Lim v. Court of Appeals it
was stated:
The 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.
As such, a writ of preliminary injunction may be issued only upon clear showing of an actual existing right to be protected during the pendency of the principal action. 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.[8]
These requirements are absent in the present case.
In granting the writs of preliminary injunction, the trial court held
that the submission of the ROEs to the MB before the respondent banks would
violate the right to due process of said banks.
This is erroneous.
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, or the New Central Bank
Act, which governs examinations of banking institutions, 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. Respondent banks were held by
the CA to be entitled to copies of the ROEs prior to or simultaneously with their
submission to the MB, on the principles of fairness and transparency. Further,
the CA held that if the contents of the ROEs are essentially the same as those
of the lists of findings/exceptions provided to said banks, there is no reason
not to give copies of the ROEs to the banks. This is a flawed conclusion, since
if the banks are already aware of the contents of the ROEs, they cannot say
that fairness and transparency are not present. If sanctions are to be imposed
upon the respondent banks, they are already well aware of the reasons for the sanctions,
having been informed via the lists of findings/exceptions, demolishing that
particular argument. The ROEs would then be superfluities to the respondent
banks, and should not be the basis for a writ of preliminary injunction. Also,
the reliance of the RTC on Banco Filipino
v. Monetary Board[9] is
misplaced. The petitioner in that case
was held to be entitled to annexes of the Supervision and Examination Sector’s
reports, as it already had a copy of the reports themselves. It was not the
subject of the case whether or not the petitioner was entitled to a copy of the
reports. And the ruling was made after the petitioner bank was ordered closed,
and it was allowed to be supplied with annexes of the reports in order to
better prepare its defense. In this
instance, at the time the respondent banks requested copies of the ROEs, no
action had yet been taken by the MB with regard to imposing sanctions upon said
banks.
The issuance by the RTC of writs of preliminary injunction is an
unwarranted interference with the powers of the MB. Secs. 29 and 30 of RA 7653[10]
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 writs of preliminary injunction order are
precisely what cannot be done under the law by preventing the MB from taking
action under either Sec. 29 or Sec. 30 of RA 7653.
As to the third requirement, 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. The apparent lack of procedural due process
would not result in the invalidity of action by the MB. This was the ruling in Central Bank of the
The trial court required the MB to respect the respondent banks’ right to
due process by allowing the respondent banks to view the ROEs and act upon them
to forestall any sanctions the MB might impose.
Such procedure has no basis in law and does in fact violate the “close
now, hear later” doctrine. We held in Rural Bank of San Miguel, Inc. v. Monetary
Board, Bangko Sentral ng Pilipinas:
It is well-settled that the closure of a bank may be
considered as an exercise of police power.
The action of the MB on this matter is final and executory. 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.[12]
The respondent banks cannot—through seeking a writ of preliminary
injunction by appealing to lack of due process, in a roundabout manner— prevent
their closure by the MB. Their remedy,
as stated, is a subsequent one, which will determine whether the closure of the
bank was attended by grave abuse of discretion.
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. 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.[13]
The respondent banks have failed to show their entitlement to the writ of
preliminary injunction. It must be
emphasized that an application for injunctive relief is construed strictly
against the pleader.[14] The respondent banks cannot rely on a simple
appeal to procedural due process to prove entitlement. The requirements for the
issuance of the writ have not been proved.
No invasion of the rights of respondent banks has been shown, nor is
their right to copies of the ROEs clear and unmistakable. There is also no necessity for the writ to
prevent serious damage. Indeed the
issuance of the writ of preliminary injunction tramples upon the powers of the
MB and prevents it from fulfilling its functions. There is no right that the writ of
preliminary injunction would protect in this particular case. In the absence of a clear legal right, the
issuance of the injunctive writ constitutes grave abuse of discretion.[15] In the absence of proof of a legal right and
the injury sustained by the plaintiff, an order for the issuance of a writ of
preliminary injunction will be nullified.[16]
Courts are hereby reminded to take greater care in issuing injunctive
relief to litigants, that it would not violate any law. The grant of a preliminary injunction in a
case rests on the sound discretion of the court with the caveat that it should
be made with great caution.[17]
Thus, the issuance of the writ of preliminary injunction must have basis in and
be in accordance with law. All told,
while the grant or denial of an injunction generally rests on the sound
discretion of the lower court, this Court may and should intervene in a clear
case of abuse.[18]
WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision
dated September 30, 2008 in CA-G.R. SP No. 103935 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.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE
CONCUR:
Associate Justice
Chairperson
Associate Justice Associate Justice
DIOSDADO M. PERALTA
Associate Justice
I attest 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.
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson’s Attestation, 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
Chief Justice
[1] Penned by Associate Justice Apolinario D. Bruselas, Jr. and concurred in by Associate Justices Bienvenido L. Reyes and Mariflor P. Punzalan Castillo.
[5]
SECTION 53. Other Banking Services.—In addition to the operations specifically authorized
in this Act, a bank may perform the following services:
53.1. Receive in custody funds,
documents and valuable objects;
53.2. Act as financial agent and
buy and sell, by order of and for the account of their customers, shares,
evidences of indebtedness and all types of securities;
53.3. Make collections and
payments for the account of others and perform such other services for their
customers as are not incompatible with banking business;
53.4. Upon prior approval of the
Monetary Board, act as managing agent, adviser, consultant or administrator of
investment management/advisory/consultancy accounts; and
53.5. Rent out safety deposit
boxes.
The bank shall perform the services permitted under
Subsections 53.1, 53.2, 53.3 and 53.4 as depositary or as an agent.
Accordingly, it shall keep the funds, securities and other effects which it receives
duly separate from the bank’s own assets and liabilities.
The Monetary Board may regulate the operations
authorized by this Section in order to ensure that such operations do not
endanger the interests of the depositors and other creditors of the bank.
In case a bank or quasi-bank notifies the Bangko
Sentral or publicly announces a bank holiday, or in any manner suspends the
payment of its deposit liabilities continuously for more than thirty (30) days,
the Monetary Board may summarily and without need for prior hearing close such
banking institution and
place it under receivership of the Philippine Deposit Insurance Corporation.
[6]
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 quasibank:
(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) by the Bangko Sentral, 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.
For a quasi-bank, any person of recognized competence
in banking or finance may be designed as receiver.
The receiver shall immediately gather and take charge
of all the assets and liabilities of the institution, administer the same for
the benefit of its creditors, and exercise the general powers of a receiver
under the Revised Rules of Court but shall not, with the exception of
administrative expenditures, pay or commit any act that will involve the
transfer or disposition of any asset of the institution: Provided, That the
receiver may deposit or place the funds of the institution in nonspeculative investments.
The receiver shall determine as soon as possible, but not later than ninety (90)
days from take over, whether the institution may be rehabilitated or otherwise
placed in such a condition so that it may be permitted to resume business with
safety to its depositors and creditors and the general public: Provided, That
any determination for the resumption of business of the institution shall be
subject to prior approval of the Monetary Board.
If the receiver determines that the institution cannot
be rehabilitated or permitted to resume business in accordance with the next
preceding paragraph, the Monetary Board shall notify in writing the board of
directors of its findings and direct the receiver to proceed with the
liquidation of the institution. The receiver shall:
1. file ex parte with the
proper regional trial court, and without requirement of prior notice or any other
action, a petition for assistance in the liquidation of the institution
pursuant to a liquidation plan adopted by the Philippine Deposit Insurance
Corporation for general application to all closed banks. In case of quasi-banks,
the liquidation plan shall be adopted by the Monetary Board. Upon acquiring
jurisdiction, the court shall, upon motion by the receiver after due notice,
adjudicate disputed claims against the institution, assist the enforcement of
individual liabilities of the stockholders, directors and officers, and decide
on other issues as may be material to implement the liquidation plan adopted.
The receiver shall pay the cost of the proceedings from the assets of the
institution.
2. convert the assets of the
institutions to money, dispose of the same to creditors and other parties, for
the purpose of paying the debts of such institution in accordance with the
rules on concurrence and preference of credit under the Civil Code of the
Philippines and he may, in the name of the institution, and with the assistance
of counsel as he may retain, institute such actions as may be necessary to
collect and recover accounts and assets of, or defend any action against, the
institution. The assets of an institution under receivership or liquidation shall
be deemed in custodia legis in the hands of the receiver and shall, from
the moment the institution was placed under such receivership or liquidation,
be exempt from any order of garnishment, levy, attachment, or execution.
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. The designation of a conservator
under Section 29 of this Act or the appointment of a receiver under this
section shall be vested exclusively with the Monetary Board. Furthermore, the
designation of a conservator is not a precondition to the designation of a
receiver.
[10] SECTION 29. Appointment of Conservator.—Whenever, on the basis of a report
submitted by the appropriate supervising or examining department, the Monetary
Board finds that a bank or a quasi-bank is in a state of continuing inability
or unwillingness to maintain a condition of liquidity deemed adequate to
protect the interest of depositors and creditors, the Monetary Board may
appoint a conservator with such powers as the Monetary Board shall deem
necessary to take charge of the assets, liabilities, and the management
thereof, reorganize the management, collect all monies and debts due said
institution, and exercise all powers necessary to restore its viability. The
conservator shall report and be responsible to the Monetary Board and shall
have the power to overrule or revoke the actions of the previous management and
board of directors of the bank or quasi-bank.
The conservator should be competent and knowledgeable
in bank operations and management.
The conservatorship shall not exceed one (1) year.
The conservator shall receive remuneration to be fixed
by the Monetary Board in an amount not to exceed two-thirds (2/3) of the salary
of the president of the institution in one (1) year, payable in twelve (12)
equal monthly payments: Provided, That, if at any time within one-year period,
the conservatorship is terminated on the ground that the institution can
operate on its own, the conservator shall receive the balance of the
remuneration which he would have received up to the end of the year; but if the
conservatorship is terminated on other grounds, the conservator shall not be
entitled to such remaining balance. The Monetary Board may appoint a
conservator connected with the Bangko Sentral, in which case he shall not be
entitled to receive any remuneration or emolument from the Bangko Sentral
during the conservatorship. The expenses attendant to the conservatorship shall
be borne by the bank or quasi-bank concerned.
The Monetary Board shall terminate the conservatorship
when it is satisfied that the institution can continue to operate on its own
and the conservatorship is no longer necessary. The conservatorship shall
likewise be terminated should the Monetary Board, on the basis of the report of
the conservator or of its own findings, determine that the continuance in
business of the institution would involve probable loss to its depositors or
creditors, in which case the provisions of Section 30 shall apply.
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) by the Bangko Sentral, 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.
For a quasi-bank, any person of recognized competence
in banking or finance may be designed as receiver.
The receiver shall immediately gather and take charge
of all the assets and liabilities of the institution, administer the same for
the benefit of its creditors, and exercise the general powers of a receiver
under the Revised Rules of Court but shall not, with the exception of
administrative expenditures, pay or commit any act that will involve the
transfer or disposition of any asset of the institution: Provided, That the
receiver may deposit or place the funds of the institution in nonspeculative
investments. The receiver shall determine as soon as possible, but not later
than ninety (90) days from take over, whether the institution may be
rehabilitated or otherwise placed in such a condition so that it may be
permitted to resume business with safety to its depositors and creditors and
the general public: Provided, That any determination for the resumption of
business of the institution shall be subject to prior approval of the Monetary
Board.
If the receiver determines that the institution cannot
be rehabilitated or permitted to resume business in accordance with the next
preceding paragraph, the Monetary Board shall notify in writing the board of
directors of its findings and direct the receiver to proceed with the
liquidation of the institution. The receiver shall:
1. file ex parte with the proper regional trial
court, and without requirement of prior notice or any other action, a petition
for assistance in the liquidation of the institution pursuant to a liquidation
plan adopted by the Philippine Deposit Insurance Corporation for general
application to all closed banks. In case of quasi-banks, the liquidation plan
shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the court
shall, upon motion by the receiver after due notice, adjudicate disputed claims
against the institution, assist the enforcement of individual liabilities of
the stockholders, directors and officers, and decide on other issues as may be
material to implement the liquidation plan adopted. The receiver shall pay the cost
of the proceedings from the assets of the institution.
2. convert the assets of the institutions to money,
dispose of the same to creditors and other parties, for the purpose of paying
the debts of such institution in accordance with the rules on concurrence and
preference of credit under the Civil Code of the Philippines and he may, in the
name of the institution, and with the assistance of counsel as he may retain,
institute such actions as may be necessary to collect and recover accounts and
assets of, or defend any action against, the institution. The assets of an
institution under receivership or liquidation shall be deemed in custodia
legis in the hands of the receiver and shall, from the moment the
institution was placed under such receivership or liquidation, be exempt from
any order of garnishment, levy, attachment, or execution.
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. The designation of a conservator
under Section 29 of this Act or the appointment of a receiver under this
section shall be vested exclusively with the Monetary Board. Furthermore, the
designation of a conservator is not a precondition to the designation of a
receiver.
[13] Philippine Veterans Bank Employees Union-NUBE v. Philippine Veterans Bank, G.R. No. 67125, August 24, 1990, 189 SCRA 14, 28.
[14] Marquez v. Presiding Judge (Hon. Ismael B. Sanchez), RTC Br. 58, Lucena City, G.R. No. 141849, February 13, 2007, 515 SCRA 577, 594.