Vous êtes sur la page 1sur 9

AMANTE: Under the “independence principle,” banks assume no liability or responsibility for the

TRANSFIELD PHILIPPINES, INC., petitioner, vs. LUZON HYDRO CORPORATION form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for
G.R. No. 146717. November 22, 2004 the general and/or particular conditions stipulated in the documents or superimposed
thereon, nor do they assume any liability or responsibility for the description, quantity,
Facts: weight, quality, condition, packing, delivery, value or existence of the goods represented by
 Respondent Luzon Hydro Corporation entered into a Turnkey Contract. any documents, or for the good faith or acts and/or omissions, solvency, performance or
 Petitioner Transfield, as Turnkey Contractor, undertook to construct, a seventy standing of the consignor, the carriers, or the insurers of the goods, or any other person
Megawatt hydro-electric power station. whomsoever.
 To secure performance of petitioner’s obligation , petitioner opened in favor of LHC The independent nature of the letter of credit may be: (a) independence in toto
two standby letters of credit (securities). where the credit is independent from the justification aspect and is a separate obligation from
 Issuer: Australia and New Zealand Banking Group (ANB) the underlying agreement; or (b) independence may be only as to the justification aspect,
o Security Bank Corporation (SBC) though in both cases the payment may be enjoined if in the light of the purpose of the credit
 Transfield sought multiple extensions due to typhoons etc. the payment of the credit would constitute fraudulent abuse of the credit.
 LHC denied the requests. Transfield’s argument that any dispute must first be resolved by the parties, whether
 The first of the actions was a Request for Arbitration. through negotiations or arbitration, before the beneficiary is entitled to call on the letter of
 Transfield contacted both banks to notify them of the arbitration proceedings and not credit in essence would convert the letter of credit into a mere guarantee.
to furnish the securities to LHC. Jurisprudence has laid down a clear distinction between a letter of credit and a
 Despite the letters of Transfield, however, both banks informed petitioner that they guarantee in that the settlement of a dispute between the parties is not a prerequisite for the
would pay on the Securities if and when LHC calls on them. release of funds under a letter of credit.
 Because of the delay, LHC called on the stand-by letters of credit.
 Transfield filed a Complaint for Injunction, with prayer for temporary restraining order Pursuant to the independence principle the banks were under no obligation to
and writ of preliminary injunction, against herein respondents. determine the veracity of LHC’s certification that default has occurred. Neither were they
 Employing the principle of “independent contract” in letters of credit, the trial court bound by petitioner’s declaration that LHC’s call thereon was wrongful. Respondent banks’
ruled that LHC should be allowed to draw on the Securities for liquidated damages. undertaking was simply to pay once the required documents are presented by the beneficiary.
 The appellate court expressed conformity with the trial court’s decision that LHC could Transfield also invoked the “fraud exception” principle.
call on the securities. The “fraud exception” exists when the beneficiary, for the purpose of drawing on the
*LHC informed the SC that the subject letters of credit had been fully drawn. credit, fraudulently presents to the confirming bank, documents that contain, expressly or by
*Under the contract, there was no stipulation that all disputes must first be settled before the implication, material representations of fact that to his knowledge are untrue. In such a
LHC may call on the securities. situation, injunction is recognized as a remedy.
To be able to declare the call on the Securities wrongful or fraudulent, it is imperative
Issue: Whether or not LHC can collect from the letters of credit despite the pending arbitration to resolve, among others, whether petitioner was in fact guilty of delay in the performance of
case. its obligation.
The SC cannot rule upon the issue of default since it was submitted by the parties to
Ruling: the jurisdiction of the arbitral tribunals pursuant to the terms embodied in their contract.
The independence principle liberates the issuing bank from the duty of ascertaining At any rate, should Transfield finally prove in the pending arbitration proceedings that
compliance by the parties in the main contract. LHC’s draws upon the Securities were wrongful due to the non-existence of the fact of default,
The obligation under the letter of credit is independent of the related and originating contract. its right to seek indemnification for damages it suffered would not normally be foreclosed
In brief, the letter of credit is separate and distinct from the underlying transaction. pursuant to general principles of law
Respondent banks had squarely raised the independence principle to justify their releases of
the amounts due under the Securities.
Atienza: Delica:
ARCENAS vs MARELLA Rural Bank of San Miguel and Hilario Soriano
G.R. No. 169053 June 19, 2009 vs. Monetary Board, Bangko Sentral ng Pilipinas, and PDIC
G.R. No. 150886 February 16, 2007
FACTS:
Ana Kuroga is a minority stockholder of Banco Filipino Savings and Mortgage Bank. She filed Facts:
a complaint in Makati RTC against the BOD of Banco Filipino and the members of the Monetary Rural Bank of San Miguel (RBSM) was a domestic corporation engaged in banking.
Board of the BSP for violation of the Corporation Code, inspection of records by a stockholder, Hilario B. Soriano claims to be the majority stockholder of its outstanding shares of stock. To
for receivership and for the creation of a management committee. The acts complained of are assist its impaired liquidity and operations, the RBSM was granted emergency loans in the
as follows: aggregate amount of P375Million. The LBP advised RBSM that it will terminate the clearing of
 Engaging in unsafe, unsound and fraudulent banking practices; RBSM’s failure to replenish its Special Clearing Demand Deposit with LBP. BSP interceded not
 Granting and approving loans and/or loaned sums of money to six dummy borrower to terminate to protect the interests of RBSM’s depositors and creditors. After a year, LBP finally
corporations; terminated the clearing facility of RBSM. Out of P26.189M, P12.6M was not used to service
 Diminishing the future cumulative interest income by the bank and a decline in its withdrawals. RBSM declared a bank holiday. The BSP designated Ms. Cabais as comptroller to
liquidity position; examine the books and records of RBSM. Based on Ms. Cabais’ report on the total obligations
 Giving favorable treatment to Borrower Corporations of RBSM, Director Domod-ong made a report to the MB. MB issued Resolution No. 105
 Unlawful refusal to allow petitioner from inspecting or accessing the corporate prohibiting RBSM from doing business in the Philippines, placing under receivership and
records designating PDIC as receiver. MB passed Resolution No. 966 directing PDIC to proceed with the
Arcenas et al moved for the dismissal of the case alleging that the trial court has no jurisdiction liquidation of RBSM under Section 30 of RA 7653. RBSM and Hilario filed a petition for certiorari
over it. and prohibition in the RTC to nullify Resolution No. 105.

ISSUE: Issue:
Which body has the jurisdiction over the case? Whether or not Section 30 of RA 7653 and applicable jurisprudence require a current
and complete examination of the bank before it can be closed and placed under receivership.
RULING:
The BSP has the jurisdiction over the case. The acts complained of pertain to the Arguments:
conduct of Banco Filipino’s banking business. The law vests in the BSP the supervision over RBSM and Hilario
operations and activities of banks. The New Central Bank Act provides: Section 25. Supervision  R.N. 105 was bereft of any basis since no complete examination had been conducted
and Examination.—The Bangko Sentral shall have supervision over, and conduct periodic or before its issuance.
special examinations of, banking institutions and quasi-banks, including their subsidiaries and  “Report” under Section 30 refers to the report on the examination of the bank which,
affiliates engaged in allied activities. The authority to determine whether the bank is engaged under Section 29, must be made to the MB after examination.
in unsafe and unsound banking practices is also vested to the Monetary Board. Sec. 30 of the  MB, BSP, PDIC
GBL provides that the Monetary Board has the exclusive authority to appoint a receiver. The  RA 7653 merely requires as report of the head of the supervising or examining
term “exclusively” connotes that only the Monetary Board can resolve the issue of whether a department.
bank is to be placed under receivership and, upon an affirmative finding, it also has authority to  “Report” in Section 30 and “Examination” in Section 29 of the old law are not
appoint a receiver. This is further affirmed by the fact that the law allows the Monetary Board synonymous.
to take action “summarily and without need for prior hearing.” The court’s jurisdiction can only
be invoked after the Monetary Board had taken action in the matter and only on the ground Ruling:
that the action was taken was in excess of jurisdiction or with grave abuse of discretion as to
amount to lack or excess of jurisdiction.
No. It is well settled that the closure of a bank may be considered as an exercise of BSP liquidator of RBBI caused the filing with the RTC of a Petition for Assistance in the
police power. The action of the MB on this matter is final and executor. RA 265 was expressly Liquidation of RBBI, the Monetary Board transferred to herein petitioner Philippine Deposit
repealed by RA 7653. In RA 7652, only a “report of the head of the supervising or examining Insurance Corporation (PDIC) the receivership/liquidation of RBBI.The respondent Bureau of
department” is necessary. This court cannot look or impose another meaning on the term Internal Revenue (BIR), through Atty. Justo Reginaldo, manifested that PDIC should secure a tax
“report” or to construe it as synonymous with “examination”. From the words used in Section clearance certificate from the appropriate BIR Regional Office, pursuant to Section 52(C) of
30, it is clear that RA 7653 no longer requires that an examination be made before the MB can Republic Act No. 842. PDIC argues that the closure of banks under Section 30 of the New Central
issue a closure order. The purpose of the law is to make the closure of a bank summary and Bank Act is summary in nature and procurement of tax clearance as required under Section
expeditious in order to protect public interest. This is also why prior notice and hearing are no 52(C) of the Tax Code of 1997 is not a condition precedent.
longer required for a bank can be closed.
MB had sufficient basis to justify the closure of RBSM. It relied on the report of Mr. Issue:
Domo-ong that: Whether or not a bank ordered closed and placed under receivership by the Monetary
1. RBSM was unable to pay its liabilities as they become due in the ordinary course of business; Board of the BSP still needs to secure a tax clearance certificate
and
2. RBSM could not continue in business without incurring probable loss to its depositors and Held:
creditors. Section 52(C) of the Tax Code of 1997 and the BIR-SEC Regulations No. 1 regulate the
In short, MB and BSP complied with all the requirements of RA 7653. By relying on a relations only as between the SEC and the BIR, making a certificate of tax clearance a prior
report before placing a bank under receivership, the MB and BSP did not only follow the letter requirement before the SEC could approve the dissolution of a corporation. In Spec. Proc. No.
of the law, they were also faithful to its spirit, which was to act expeditiously. Accordingly, the 91-SP-0060 pending before the RTC, RBBI was placed under receivership and ordered liquidated
issuance of Resolution No. 105 was untainted with arbitrariness. by the BSP, not the SEC; and the SEC is not even a party in the said case, although the BIR is.
WHEREFORE, the petition is DENIED. This Court cannot find any basis to extend the SEC requirements for dissolution of a corporation
to the liquidation proceedings of RBBI before the RTC when the SEC is not even involved therein.
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
Macala: of a receiver under the Revised Rules of Court but shall not, with the exception of administrative
In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., expenditures, pay or commit any act that will involve the transfer or disposition of any asset of
PDIC vs. Bureau of Internal Revenue the institution: Provided, That the receiver may deposit or place the funds of the institution in
non-speculative investments. The receiver shall determine as soon as possible, but not later
Facts: than ninety (90) days from take over, whether the institution may be rehabilitated or otherwise
Rural Bank of Bokod (Benguet), Inc. (RBBI) conducted a special examination of RBBI was placed in such a condition that it may be permitted to resume business with safety to its
conducted by the Supervision and Examination Sector (SES) Department III of what is now the depositors and creditors and the general public: Provided, That any determination for the
Bangko Sentral ng Pilipinas (BSP),4 wherein various loan irregularities were uncovered. In a resumption of business of the institution shall be subject to prior approval of the Monetary
letter, dated 20 May 1986, the SES Department III required the RBBI management to infuse Board.
fresh capital into the bank, within 30 days from date of the advice, and to correct all the Under the Corporation Code, the SEC may dissolve a corporation, upon the filing of a verified
exceptions noted. However, up to the termination of the subsequent general examination complaint and after proper notice and hearing, on grounds provided by existing laws, rules, and
conducted by the SES Department III, no concrete action was taken by the RBBI management. regulations. Upon receipt by the corporation of the order of suspension from the SEC, it is
A memorandum and report, dated 28 August 1990, were submitted by the Director of the SES required to notify and submit a copy of the said order, together with its final tax return, to the
Department III concluding that the RBBI remained in insolvent financial condition and it can no BIR. The SEC is also required to furnish the BIR a copy of its order of suspension. The BIR is
longer safely resume business with the depositors, creditors, and the general public. supposed to issue a tax clearance to the corporation within 30 days from receipt of the
foregoing documentary requirements. The SEC shall issue the final order of dissolution only
after the corporation has submitted its tax clearance; or in case of involuntary dissolution, the
SEC may proceed with the dissolution after 30 days from receipt by the BIR of the documentary submission to the newly designated Acting Conservator. Demetria and Janolo made series of
requirements without a tax clearance having been issued. The corporation is allowed to demands for compliance of the bank on what they considered as a perfected contract of sale.
continue as a body corporate for three years after its dissolution, for the purpose of prosecuting It was only then that Producers Bank, through Acting Conservator Encarnation refused to
and defending suits by or against it, to settle and close its affairs, and to dispose of and convey receive both payment and letters. Thus, Janolo & Demetria filed a suit for specific performance
its property and distribute its assets, but not for the purpose of continuing its business. The with damages against Producers Bank, Rivera, & Acting Conservator Encarnacion.
corporation may undertake its own liquidation, or at any time during the said three years, it
may convey all of its property to trustees for the benefit of its stockholders, members, creditors, Issue:
and other persons in interest. Whether or not a Conservator may revoke the perfected and enforceable contract.
In contrast, the Monetary Board may summarily and without need for prior hearing,
forbid the banking corporation from doing business in the Philippines, for causes enumerated Arguments:
in Section 30 of the New Central Bank Act; and appoint the PDIC as receiver of the bank. PDIC Producers Bank (FPIB): The Conservator can unilaterally repudiate authority of bank officers
shall immediately gather and take charge of all the assets and liabilities of the closed bank and and/or revoke the contract of sale between Producers Bank (FPIB) and Demetria & Janolo
administer the same for the benefit of its creditors. The summary nature of the procedure for (Ejercito).
the involuntary closure of a bank is especially stressed in Section 30 of the New Central Bank Demetria & Janolo: The contract of sale has been perfected.
Act, which explicitly states that the actions of the Monetary Board under the said Section or
Section 29 shall be final and executory, and may not be restrained or set aside by the court Ruling:
except on a Petition for Certiorari filed by the stockholders of record of the bank representing No.
a majority of the capital stock. PDIC, as the appointed receiver, shall file ex parte with the proper Section 28-A of R.A. 265 merely gives the conservator power to revoke contracts that
RTC, and without requirement of prior notice or any other action, a petition for assistance in are, under existing law, deemed to be defective—the conservator merely takes the place of a
the liquidation of the bank. The bank is not given the option to undertake its own liquidation. bank’s board of directors, and what the said board cannot do, the conservator cannot do either.
His authority would be only to bring court actions to assail such contracts.
The Banks repudiation, through Conservator Encarnacion, of Rivera’s authority and
action came only on May 12, 1988 or more than seven (7) months after Janolos acceptance.
Montecillo: There is absolutely no evidence that the Conservator, at the time the contract was perfected,
First Philippine International Bank vs. Court of Appeals actually repudiated or overruled said contract of sale.
G.R. No. 115849 January 24, 1996. 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,
Facts: the reorganization of the management thereof and the restoration of its viability.

First Philippine International Bank (formerly Producers Bank) acquired six parcels of land
previously owned by BYME Investment Corporation with a total area of 101 hectares. Upon
suggestion of BYME, Demetria & Janolo met with Mercurio Rivera (Manager of the Bank) to buy Ona:
the said property. First, Janolo made a formal purchase offer to the bank in the amount of P3.5 Central Bank of the Philippines vs. Court of Appeals
million. Then, Producers bank, through Rivera, made a counter-offer in the amount of P5.5
million. As such, Janolo amended its previous offer to the bank in the amount of P4.250 million. FACTS:
After that Janolo received no response from the bank. Janolo sent another letter accepting the Examination report submitted by the SES of the CB that the Triumph Savings Bank (TSB) is
offer to purchase in the amount of P5.5 million. On Oct. 12, 1987 the conservator of the bank insolvent and would cause probable loss to its creditors and depositors.
was replaced by an Acting Conservator. After the replacement, Rivera (the Bank Manager) sent
a letter to Demetria that their proposal is still under study of the newly created committee for
ISSUE: Whether or not Sec. 29 of R.A. 265 is unconstitutional as it violates procedural due acting president, Vicente Puyat, started to scout investors who could finance the completion of
process the building. The Laureano group offered to lease the building and wanted to be given an
exclusive option to purchase the building. The offer was accepted and the building was
Arguments subleased to petitioner, Abacus Real Estate. When Abacus expressed its desire to exercise its
CENTRAL BANK AND TIAOQUI exclusive option to purchase the building, Manila Bank refused to honor it. Abacus insists that
CB has the power to take over a bank even if without prior notice and hearing given to the the option to purchase the lot and building granted to it by Puyat was binding upon Manila
bank. Bank. On the other hand, the bank insists that Puyat had no authority to act for Manila bank, as
Prior hearing and notice not required as it will only cause unnecessary delay which will it was already placed under receivership by the Central Bank at the time of the granting of the
prejudice depositors and creditors of TSB. exclusive option to purchase.

RULING: ISSUE/S:
1. No, Sec. 29 of R.A. 265 is constitutional 1. Whether or not Manila Bank’s acting President, Vicente G. Puyat is authorized to grant
Contrary to the argument of TSB, Sec. 29 does not require prior notice and hearing the exclusive option to purchase.
before a bank may be directed to stop operations and placed under receivership. 2. Whether or not the receiver, Atty. Renan Santos may approve the exclusive option to
Previous hearing is not required and the Monetary Board Resolution cannot be stopped with purchase.
the use of the constitutional requirement of due process .
RULING:
2. “Close now and hear later” scheme is grounded on practical and legal consideration to 1. NO.
prevent unwarranted dissipation of the bank’s assets There can be no quibbling that respondent Manila Bank was under receivership, pursuant to
Valid exercise of police power to protect the public. Central Bank’s MB Resolution No. 505 dated May 22, 1987, at the time the late Vicente G. Puyat
granted the “exclusive option to purchase”to the Laureano group of investors. Owing to this
3. Procedural rights invoked by TSB must not take precedence over the substantive interests defining reality, the appellate court was correct in declaring that Vicente G. Puyat was without
of the depositors, creditors, and stockholders over the assets of the bank. authority to grant the exclusive option to purchase the lot and building in question.
Sec. 29 is designed to protect the interest of all concerned. As held in Villanueva vs. CA:
Procedural due process cannot outweigh the evil sought to be prevented
. . . the assets of the bank pass beyond its control into the possession and control of the receiver
4. Does not have the same facts as the Banco Filipino case 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
Perez: intermeddling with the property of the bank in any way.
ABACUS REAL ESTATE DEVELOPMENT CENTER, INC.vs. THE MANILA BANKING With respondent bank having been already placed under receivership, its officers, inclusive of
CORPORATION its acting president, Vicente G. Puyat, were no longer authorized to transact business in
G.R. No. 162270 April 6, 2005 connection with the bank’s assets and property. Clearly then, the “exclusive option to purchase”
granted by Vicente G. Puyat was and still is unenforceable against Manila Bank.
FACTS:
The bank started to construct a 14-storey building on their land. However, the bank 2. NO.
encountered financial difficulties which rendered it unable to finish construction of the building. Even assuming, in gratia argumenti, that Atty. Renan Santos, Manila Bank’s receiver,
The Central Bank ordered the closure of the bank and placed it under receivership.The bank’s approved the “exclusive option to purchase” granted by Vicente G. Puyat, the same would still
be of no force and effect.
Section 29 of the Central Bank Act, as amended provides: Report -> Insolvent, BF must be put into receivership.
…..shall designate an official of the Central Bank as receiver to immediately take charge of its • January 23, 1985 - Tiaoqui Report (CB officer) recommended receivership on BF as well.
assets and liabilities, as expeditiously as possible collect and gather all the assets and administer • January 25, 1985 - Order of Closure of BF.
the same for the benefit of its creditors, exercising all the powers necessary for these purposes 1. Forbid BF to do Business
including, but not limited to, bringing suits and foreclosing mortgages in the name of the 2. Designate Valenzuela as Receiver and Aurellano as Deputy
banking institution. 3. Terminate Conservatorship over BF
Clearly, the receiver appointed by the Central Bank to take charge of the properties of • March 19, 1985 - Valenzuela Report - recommends BF to Liquidated.
Manila Bank only had authority to administer the same for the benefit of its creditors. Granting • January 20, 1988 - Judge Cosico Report - Upheld closure and liquidation.
or approving an “exclusive option to purchase” is not an act of administration, but an act of • January 28, 1991 - Santiago Report during the trial, recommends otherwise.
strict ownership, involving, as it does, the disposition of property of the bank. Not being an act 1. Teodoro and Tiaoqui reports not substantial for closure / liquidation.
of administration, the so-called “approval” by Atty. Renan Santos amounts to no approval at all, 2. BF’s closure is null and void.
a bank receiver not being authorized to do so on his own. 3. BF should be allowed to reopen.
• June 18, 1991 - Oral Arguments in light of conflicting reports and thereafter submitted for
decision.

Reyes: Issues:
Banco Filipino v. Monetary Board 1. Whether or not the receiver/ liquidator has the authority to prosecute, defend suits and to
Facts: foreclose mortgages in behalf of the bank while the issue on the validity of the receivership and
• 9 Consolidated Cases: liquidation is still pending.
1. Gr. No. 68878 - Granting Writ of Possession against Celestine Pahimuntung. 2. Whether or not the Closure and Liquidation of Banco Filipino is valid?
2. Gr. No. 77255-68 - Foreclosure of properties of Top Management Programs Corp. and
Pilar Development Corp. (Loan) Held:
3. Gr. No.78766 - Foreclosure of properties of El Grande Devt. Corp. (Credit 1. Yes, the receiver/ liquidator has the authority to prosecute, defend suits and to foreclose
Accommodation) mortgages in behalf of the bank while the issue on the validity of the receivership and
4. Gr. No.81303 - Confession of judgement for Pilar Dev’t Corp. (Loan) liquidation is still pending.
5. Gr. No. 81304 - BF Homes files for restoration of financing facilities of BF. Section 29 of the Central Bank Act, provides that when a bank is forbidden to do business in the
6. Gr. No. 90473 - Foreclosure of properties of El Grande Devt. Corp. (Loan) Philippines and placed under receivership, the person designated as receiver shall
ALL CASES ABOVE CONTENDS THAT BF HAS NO MORE POWER TO FORECLOSE, RESIST OR immediately take charge of the bank's assets and liabilities, as expeditiously as possible, collect
DEFEND SUITS INSTITUTED AGAINST IT. and gather all the assets and administer the same for the benefit of its creditors, and represent
7. Gr. No.70054 - Validity of Receivership and Liquidation of BF. the bank personally or through counsel as he may retain in all actions or proceedings for or
8. Gr. No.78767 - Validity of Receivership and Liquidation of BF. against the institution, exercising all the powers necessary for these purposes including, but not
9. Gr. No.78894 - Validity of Receivership and Liquidation of BF. limited to, bringing and foreclosing mortgages in the name of the bank. If the Monetary Board
shall later determine and confirm that banking institution is insolvent or cannot resume
MAIN CASE: business safety to depositors, creditors and the general public, it shall, public interest requires,
• July 9, 1964 - Banco Filipino(BF) commenced operations. order its liquidation and appoint a liquidator who shall take over and continue the functions of
• June 29, 1984 - Emergency Advance and P3B credit line given to BF and placed under receiver previously appointed by Monetary Board. The liquidator for may, in the name of the
conservatorship bank and with the assistance counsel as he may retain, institute such actions as may necessary
• August 10, 1984 - BF placed under conservatorship by Gilberto Tedoro, which resulted to in the appropriate court to collect and recover a counts and assets of such institution or defend
Teodoro any action ft against the institution.
2. No. The closure and liquidation of BF is invalid. Under Section 29 of the Central Bank Act, the submitted to the RD because of the refusal of RBO to surrender the titles of the properties.
following are the mandatory requirements to be complied with before a bank found to be Consequently, Ong filed with the Regional Trial Court (RTC) Quezon City a petition for the
insolvent is ordered closed and forbidden to do business in the Philippines: surrender of TCT Nos. 13769 and 13770 against RBO.
1. 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; Issue: Whether or not the RTC Quezon City has jurisdiction over the petition for the surrender
2. it shall be disclosed in the examination that the condition of the bank is one of of titles filed by Ong against RBO which is a bank undergoing a liquidation proceeding.
insolvency, or that its continuance in business would involve probable loss to its depositors or
creditors; Held: No.
3. the department head concerned shall inform the Monetary Board in writing, of the Section 29, par.3 of R.A. 265 as amended by P.D. 1287 provides –
facts; “If the Monetary Board shall determine and confirm (within 60 days) that the bank x x x is
4. the Monetary Board shall find the statements of the department head to be true. insolvent or cannot resume business with safety to its depositors, creditors, and the general
Tiaoqui based his report on an incomplete examination of petitioner bank and public, it shall, if the public interest requires, order its liquidation, indicate the manner of its
outrightly concluded therein that the latter's financial status was one of insolvency or illiquidity. liquidation and approve a liquidation plan. The Central Bank shall, by the Solicitor General, file
It is evident from the foregoing circumstances that the examination contemplated in a petition in the Court of First Instance reciting the proceedings which have been taken and
Sec. 29 of the CB praying the assistance of the court in the liquidation of such institution. The court shall have
Act as a mandatory requirement was not completely and fully complied with. Despite jurisdiction in the same proceedings to adjudicate disputed claims against the bank x x x and
the existence of the partial list of findings in the examination of the bank, there were still highly enforce individual liabilities of the stockholders and do all that is necessary to preserve the
significant items to be weighed and determined such as the matter of valuation reserves, before assets of such institution and to implement the liquidation plan approved by a monetary board.”
these can be considered in the financial condition of the bank. It would be a drastic move to As can be gleaned from the provision, the court shall have jurisdiction in the same
conclude prematurely that a bank is insolvent if the basis for such conclusion is lacking and proceedings to adjudicate disputed claims against the bank. Moreover, it was held in the case
insufficient, especially if doubt exists as to whether such bases or findings faithfully represent of Hernandez v. Rural Bank of Lucena, Inc. that all claims against the insolvent bank should be
the real financial status of the bank. filed in the liquidation proceeding.
The conclusion arrived at by the Board cannot be given weight and finality as the report To vindicate his claim, Ong further argued that his petition before the RTC of QC cannot be
itself admits the inadequacy of its basis to support its conclusion. considered a disputed claim for there is no pending action filed before any court or agency
which contests his rights over the properties. Contrary to Ong’s argument, it is not necessary
that a claim be initially disputed in a court or agency before it is filed with the liquidation court.
As stated in the Hernandez case, the disputed claim in the above-quoted provision connotes
that – in the course of the liquidation, contentious cases might arise wherein a full-dress hearing
Robis: would be required and legal issues would have to resolved. Hence, it would be necessary in
Ong v. CA (G.R. No. 112830. February 1, 1996) justice to all concerned that the RTC x x x assist and supervise the liquidation x x x act as umpire
Bellosillo, J. or arbitrator in the allowance and disallowance of claims.
Therefore, the RTC of Quezon City did not have jurisdiction over the petition without prejudice
Facts: to Ong’s right to file his claim before the RTC of Olongapo wherein the liquidation proceeding
The Rural Bank of Olongapo, Inc. (RBO) was the owner of two parcels of land situated was lodged.
in Tagaytay City described in TCT No. 13769 and TCT No. 13770. The said properties were
mortgaged by RBO in favor of Jerry Ong to guarantee the payment of Omnibus Finance, Inc.
Omnibus failed to settle its obligations with Ong. In effect, the mortgaged properties were
extrajudicially foreclosed in favor of Ong. Failure of RBO and Omnibus to redeem the foreclosed
properties, Ong executed an Affidavit of Consolidation of Ownership which has not been
VIVAS vs. MB and PDIC bank when specifically authorized to do so by the Monetary Board after due hearing process
G.R. No. 191424 August 7, 2013 until a new board of directors and officers are elected and qualified…”
The BSP should have taken over the management of ECBI and extended loans to the
FACTS: financially distrained bank pursuant to Sections 11 and 14 of R.A. No. 7353 because the BSP’s
- Vivas, together with his principals are holders of the controlling interest of the Rural Bank of power is limited only to supervision and management take-over of banks, and not receivership.
Faire, Inc. (RBFI), later known as EuroCredit Community Bank, Inc. (ECBI). VIVAS’ CONTENTION ABOVE IS ERRONEOUS!
- Vivas filed this present petition for prohibition with prayer to order a writ of injunction for the - MB may forbid a bank from doing business and place it under receivership without prior
respondent to desist from closing ECBI and placing it under receivership. notice and hearing. Section 30 of R.A. No. 7653 provides, viz:
Upon the general examination of the books and records by the MB, it issued Resolution
No. 276 placing ECBI under receivership, based on the following findings that ECBI: Sec. 30. Proceedings in Receivership and Liquidation. – Whenever, upon report of the head of
1. is unable to pay its liabilities as they become due in the ordinary course of business; the supervising or examining department, the Monetary Board finds that a bank or quasi-bank:
2. has insufficient realizable assets to meet liabilities; (a) is unable to pay its liabilities as they become due in the ordinary course of business:
3. cannot continue in business without involving probable losses to its depositors and creditors; Provided, That this shall not include inability to pay caused by extraordinary demands
4. has willfully violated a cease and desist order of the Monetary Board for acts or transactions induced by financial panic in the banking community;
which are considered unsafe and unsound banking practices and other acts or transactions (b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
constituting fraud or dissipation of the assets of the institution; liabilities; or
5. failure of the Board of Directors/management of Eurocredit Bank to restore the bank’s (c) cannot continue in business without involving probable losses to its depositors or
financial health and viability despite considerable time given to address the bank’s financial creditors; or
problems; and (d) has wilfully violated a cease and desist order under Section 37 that has become final,
6. that the bank had been accorded due process involving acts or transactions which amount to fraud or a dissipation of the assets of the
Thus MB in accordance with Section 30 of Republic Act No. 7653 approved the institution; in which cases, the Monetary Board may summarily and without need for prior
recommendations of ISD II: hearing forbid the institution from doing business in the Philippines and designate the
a. To prohibit the Eurocredit Bank from doing business in the Philippines and to place its Philippine Deposit Insurance Corporation as receiver of the banking institution.
assets and affairs under receivership; and - Accordingly, there is no conflict which would call for the application of the doctrine that
b. To designate the Philippine Deposit Insurance Corporation as Receiver of the bank. a special law should prevail over a general law. RA 7653 is a later law which expanded the power
of the MB over banks, including rural banks.
ISSUES: - "CLOSE NOW, HEAR LATER" doctrine has already been justified as a measure for the
I. WON there is grave abuse of discretion on the part of MB in placing ECBI under receivership protection of the public interest. Swift action is called for on the part of the BSP when it finds
II. WON petition for prohibition is the proper remedy that a bank is in dire straits. Unless adequate and determined efforts are taken by the
III. WON there is undue delegation of power such that the legislature granted the MB with government against distressed and mismanaged banks, public faith in the banking system is
unrestrained power to closed down financially troubled banks and placed it under receivership 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
HELD: the government.
I. On WON there is grave abuse of discretion on the part of MB in placing ECBI under - The doctrine is founded on practical and legal considerations to obviate unwarranted
receivership dissipation of the bank’s assets and as a valid exercise of police power to protect the depositors,
- Vivas invokes Sec 11 of RA 7352 (Rural Act of 1992) creditors, stockholders, and the general public. Swift, adequate and determined actions must
“… upon proof that the rural bank or its Board of Directors, or officers are conducting be taken against financially distressed and mismanaged banks by government agencies lest the
and managing the affairs of the bank in a manner contrary to laws, orders, instructions, rules public faith in the banking system deteriorate to the prejudice of the national economy.
and regulations promulgated by the Monetary Board or in a manner substantially prejudicial to - Accordingly, the MB can immediately implement its resolution prohibiting a banking
the interest of the Government, depositors or creditors, to take over the management of such institution to do business in the Philippines and appoint the PDIC as receiver. The procedure for
the involuntary closure of a bank is summary and expeditious in nature. Such action of the MB place them under receivership. The legislature has clearly spelled out the reasonable
shall be final and executory, but may be later subjected to a judicial scrutiny via a petition for parameters of the power entrusted to the MB and assigned to it only the manner of enforcing
certiorari to be filed by the stockholders of record of the bank representing a majority of the said power. In other words, the MB was given a wide discretion and latitude only as to how the
capital stock. Obviously, this procedure is designed to protect the interest of all concerned, that law should be implemented in order to attain its objective of protecting the interest of the
is, the depositors, creditors and stockholders, the bank itself and the general public. The public, the banking industry and the economy.
protection afforded public interest warrants the exercise of a summary closure

II. On WON petition for prohibition is a proper remedy


- 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. Pertinent portions of R.A. 7653 read:
Section 30. –… 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.
As a rule, the proper function of a writ of prohibition is to prevent the doing of an act
which is about to be done. It is not intended to provide a remedy for acts already accomplished.
In this case, Vivas seeks to prevent the acts of closing of ECBI and placing it under
receivership. The resolution on the matter had already been issued by the MB and the closure
of ECBI and its placement under receivership by the PDIC were already accomplished
- Even if treated as a petition for certiorari, the petition should have been filed with the
CA

III. … On WON there is undue delegation of power


- In this case, under the two tests, there was no undue delegation of legislative authority
in the issuance of R.A. No. 7653.
COMPLETENESS TEST: the law must be complete in all its terms and conditions when it
leaves the legislature such that when it reaches the delegate the only thing he will have to do is
enforce it
SUFFICIENT STANDARD TEST: there must be adequate guidelines or stations in the law
to map out the boundaries of the delegate's authority and prevent the delegation from running
riot.
- To address the growing concerns in the banking industry, the legislature has sufficiently
empowered the MB to effectively monitor and supervise banks and financial institutions and, if
circumstances warrant, to forbid them to do business, to take over their management or to