I.

SHORT TITLE: State Investment House vs CA

II. FULL TITLE: STATE INVESTMENT HOUSE, INC., petitioner, vs. COURT OF
APPEALS, LOMUYON TIMBER INDUSTRIES, INC., AMANDA
MALONJAO and RUFINO MALONJAO, respondents. G.R. No.
112590. July 12, 2001,
III. PONENTE J. Kapunan

IV. TOPIC: General Banking Law

V. STATEMENT OF FACTS:

On March 9, 1978, Lomuyon Timber Industries, Inc. (hereafter, Lomuyon) agreed to sell
to plaintiff its receivables at a discount on a with recourse basis. It was agreed in that sale that
should a receivable remain unpaid, plaintiff, at its discretion, may impose a penalty fee of 3% per
month. To secure the payment of the receivables, the Malonjaos also executed in favor of plaintiff,
a real estate mortgage over their real property. Pursuant to their agreement, Lomuyon sold to
plaintiff for a total consideration of P2,558,073.75 various receivables consisting of checks.
TCBTC (The Consolidated Bank and Trust Corporation) checks were all drawn by
Amanda Malonjao to the order of payee Lomuyon which in turn, indorsed the checks to
plaintiff. The MBTC (Metropolitan Bank and Trust Company) check was drawn by one Antonietta
Malonjao-Roque to the order of payee Amanda Malonjao who in turn, indorsed said check to
plaintiff.
When plaintiff presented the checks for payment to the drawee banks, the same were
dishonored for having been drawn against insufficient funds except for one check.
Plaintiff made repeated written demands on defendants to make good the checks they indorsed and
to pay the penalty charges it has imposed thereon. Defendants failed to pay the value of the
checks. Plaintiff thus decided to undertake foreclosure of the real estate mortgage.
On October 6, 1982, plaintiff filed with the Provincial Sheriff of Rizal a petition for
extrajudicial foreclosure of real estate mortgage. In said petition, plaintiff alleged among others,
that as of said date, September 28, 1981, defendants outstanding obligation, inclusive of interest
and charges, is P4,809,187.12.
On February 14, 1983, the Provincial Sheriff sold at public auction, defendants mortgaged
properties to plaintiff who was the highest bidder for P4,233,874.00. The following day, the
Provincial Sheriff issued a Certificate of Sale.
On June 27, 1983, plaintiff filed the complaint alleging that after deducting the price of the
mortgaged properties from defendants outstanding obligation, there remains a deficiency. As an
alternative cause of action, plaintiff alleged that it is entitled to recover from the defendant the total
value of the checks amounting to P2,239,237.10. Plaintiff further prayed that it be awarded
exemplary damages, attorney’s fees and litigation expenses.
In their answer, defendants admitted having incurred the obligation with the plaintiff
brought about by the dishonor of the checks. However, defendants contended that plaintiff’s
computation of their outstanding obligation is erroneous. Thus, by way of special affirmative
defenses, defendants alleged that; the complaint states no cause of action; the value of the
mortgaged properties sold at public auction is more than sufficient to cover the obligation of the
defendants; the alleged purchase price of the mortgaged properties sold at public auction is
unconscionably very low; no demand was ever made upon the defendant; and the interest and
charges made by plaintiff is usurious and unconscionable. The trial Court ruled in favor of the
defendants. Upon appeal, the Court of appeals ruled in favor of the defendants and disallowed the
claim for deficiency. The penalty charges were also declared to be unconscionable.
In disallowing the claim for deficiency, the respondent court found that the proceeds of the
auction sale were sufficient to cover the principal obligation of the private respondent including
interest, penalty and other charges. Both the respondent court and the trial court took particular
attention on the penalty charge of 3% a month which was imposed on the principal obligation as a
result of their default in payments. Undaunted by the disallowance of its claim in the August 27,
1992 decision, petitioner reiterated its position in a motion for reconsideration, averring that the
respondent court and the trial court failed to reconcile the figures due it.

VI. STATEMENT OF THE CASE:

On October 6, 1982, plaintiff filed with the Provincial Sheriff of Rizal a petition for
extrajudicial foreclosure of real estate mortgage. In said petition, plaintiff alleged among others,
that as of said date, September 28, 1981, defendants outstanding obligation, inclusive of interest
and charges, is P4,809,187.12. On June 27, 1983, plaintiff filed the complaint alleging that after
deducting the price of the mortgaged properties from defendants outstanding obligation, there
remains a deficiency. As an alternative cause of action, plaintiff alleged that it is entitled to recover
from the defendant the total value of the checks amounting to P2,239,237.10. Plaintiff further
prayed that it be awarded exemplary damages, attorney’s fees and litigation expenses. The trial
Court ruled in favor of the defendants. Upon appeal, the Court of appeals ruled in favor of the
defendants and disallowed the claim for deficiency. The penalty charges were also declared to be
unconscionable.
On August 27, 1992, the respondent court rendered the assailed decision disallowing the
claim for deficiency on the finding that the penalty charges imposed by petitioner on the principal
obligation were highly iniquitous and unconscionable. The subsequent motion for reconsideration
was, likewise, denied. Hence, petitioner filed the instant petition.

VII. ISSUE:
Whether or not there is reversible error committed by the respondent court in ruling that
the petitioner was no longer entitled to recover any deficiency amount after the foreclosure sale on
February 14, 1983.

VIII. RULING
No, there is no reversible error committed by the respondent court in ruling that the
petitioner was no longer entitled to recover any deficiency amount after the foreclosure sale on
February 14, 1983. The Court does not find any reversible error committed by the respondent court
in ruling that the petitioner was no longer entitled to recover any deficiency amount after the
foreclosure sale on February 14, 1983. Per Statement of Account dated September 21, 1981, the
obligation of the private respondent was computed to be P4,809,187.12 inclusive of interest and
penalty charges. Since the private respondent failed to fulfill its obligation, petitioner then decided
to foreclose the real estate mortgage on two properties of the private respondent. At the time of the
auction sale on February 14, 1983, the properties were sold in the amount of P4,223,874.00 with
the petitioner as the highest bidder. Deducting this amount from the outstanding obligation of
P4,809,187.12 as stipulated in the Statement of Account, there would therefore be a balance of
only about P575,313.12.
Whether or not the alleged deficiency from the foreclosure sale was P575,313.12 or
P2,601,147.62 as claimed by petitioner was of no moment. The respondent court disallowed the
payment of the deficiency altogether because it found that the principal obligation of the private
respondent would not have ballooned to such a horrendous amount of P4.8M as of September 21,
1991 if not for the penalty charge of 3% per month or 36% per annum.
Contrary to petitioners contention, the respondent court acted in accordance to Article 1229
when it declared that petitioner was no longer entitled to the payment of the deficiency
amount. The disallowance of the payment of deficiency was in effect merely a reduction of the
penalty charges and not as a deletion of the penalties as contended by the petitioner.
Likewise, in the case at bar, the two courts below found the penalty charge of 3% a month
or 36% per annum iniquitous and unconscionable. Petitioner computed the amount of
P4,809,187.12 as the outstanding obligation of the petitioner as of September 21, 1981 after
imposing the 3% penalty charge when petitioner defaulted in their payments. This amount was no
longer questioned and was particularly taken into consideration when the mortgaged properties
were foreclosed and sold at the auction sale in 1983, obtaining a sum of about
P4,223,874.00. These foreclosed properties located in Makati are undoubtedly valuable properties
whose market value has greatly appreciated to substantially satisfy the payment of the outstanding
obligation. Notwithstanding the balance of P575,313.12, petitioner has clearly recouped its
investment and earned more than enough profit in two years (1978-1981) by way of penalty
charges. Although petitioner claims that the penalty charge was well within the banking and
business practice, no proof was adduced thereof. To allow the petitioner to recover the amount of
P6,835,021.21 at the time of the foreclosure sale in 1983, or P7,651,969.41 at the time of the trial
of the case in 1988 which amounts are almost three times more than the original investment of
about P2,558,073.75 is rather unwarranted. While the Court recognizes the right of the parties to
enter into contracts and are expected ro comply with the terms and obligations, this rule is not
absolute. The Court allowed to temper interest rates when necessary.

IX. DISPOSITIVE PORTION

ACCORDINGLY, the judgment appealed from is hereby AFFIRMED.
SO ORDERED.

X: Prepared By: Alyssa Abigael C. Gomez

I. SHORT TITLE: Central Bank vs. De la Cruz

II. FULL TITLE: CENTRAL BANK OF PHILIPPINES petitioners, vs. RAFAEL DE LA

CRUZ, respondent. GR No. 59957, Nov 12, 1990,
III. PONENTE J. Grino-Aquino

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

In 1979, the Department of Rural Banks and Savings and Loan Associations (DRBSLA)
of the Central Bank of the Philippines (or CB) conducted examinations of the books and affairs of
Rural Bank of Libmanan. DRBSLA director, found serious irregularities in its lending and deposit
operations, including false entries and false statements in the bank’s records to give it the
appearance of solidity and soundness which it did not possess. As a result of its questionable
transactions, the bank became insolvent.
In her Memorandum to the Monetary Board, Director Odra recommended, among other
things, that: (1) Libmanan Bank be prohibited from doing business; (2) that it be placed under
receivership in accordance and (3) that the Director of DRBSLA be designated as receiver. Finding
the report to be true, the Monetary Board placed Libmanan Bank under statutory receivership and
designating Director Consolacion V. Odra, as Receiver. Libmanan Bank was informed of the
Monetary Board Resolution, and advised to submit to the Monetary Board an acceptable
reorganization and rehabilitation program. Meanwhile, Director Odra, as receiver, took possession
and control of the assets and records of the rural bank

As Libmanan Bank failed to submit the required acceptable reorganization and

rehabilitation plan, the Monetary Board issued a resolution ordering its liquidation. On August 3,
1981, the Solicitor General, filed in the then Court of First Instance of Camarines Sur, presided
over by respondent Judge Rafael De la Cruz, a petition for Assistance in the Liquidation of
Libmanan Bank. Libmanan Bank, opposed the Central Bank’s petition. On September 23, 1981,
Libmanan Bank filed, a separate complaint for prohibition, mandamus and injunction praying the
Court to enjoin and dismiss the liquidation proceeding on the ground that the Central Bank gravely
abused its discretion in ordering the liquidation of said rural bank.

VI. STATEMENT OF THE CASE:

On August 3, 1981, the Solicitor General, filed in the then Court of First Instance of
Camarines Sur, presided over by respondent Judge Rafael De la Cruz, a petition for Assistance in
the Liquidation of Libmanan Bank. Libmanan Bank, opposed the Central Bank’s petition. On
September 23, 1981, Libmanan Bank filed, a separate complaint for prohibition, mandamus and
injunction praying the Court to enjoin and dismiss the liquidation proceeding on the ground that
the Central Bank gravely abused its discretion in ordering the liquidation of said rural Bank.
Thereafter, Judge De la Cruz declared the CB, Et Al., in default for failure to file a responsive
pleading. He pointed out that "the projected move to bring the court’s denial of the motion to
dismiss to the Supreme Court on certiorari did not stop the period given to the respondents to
answer. “Respondent Judge then granted Libmanan Bank’s ex parte motion dated March 29, 1982
for authority to withdraw money from its bank deposits. Hence, the present recourse.

VII. ISSUES:
Whether or not respondent Judge acted with grave abuse of discretion or without or in
excess of his jurisdiction in issuing the following:
1. restraining order;
2. denying the CB’s Motion to Dismiss; and
3. authorizing Libmanan bank to withdraw money from its bank depositss

VIII. RULING
1. YES, the judge acted with grave abuse of discretion in issuing a restraining order. The authority
for the receivership of Libmanan Bank is found in Section 29 of the Central Bank Act (P.D. 1827).
It is noteworthy that the actions of the Monetary Board in proceedings on insolvency are explicitly
declared by law to be "final and executory." They may not be set aside, or restrained, or enjoined
by the courts, except upon "convincing proof that the action is plainly arbitrary and made in bad
faith" (Salud v. Central Bank of the Philippines, 143 SCRA 590). Respondent Judge acted in plain
disregard of the fourth paragraph of Section 29 of the Central Bank Act, when he restrained the
petitioners from closing and liquidating the Rural Bank of Libmanan, prevented them from
performing their functions, and ordered them to return the management and control of the rural
bank to its board of directors without receiving convincing proof that the action of the CB was
plainly arbitrary and made in bad faith. By using his own standards, instead of the standards set
forth in Section 29 of the law, as basis for issuing a restraining order against the CB, respondent
Judge committed a grave abuse of discretion tantamount to excess, or lack of jurisdiction. It is a
basic procedural postulate that a preliminary injunction should never be used to transfer the
possession or control of a thing to a party who did not have such possession or control at the
inception of the case. Its proper function is simply to maintain the status quo at the commencement
of the action. The status quo at the time of filing Civil Case No. 1309 was that Libmanan Bank
was under the control of the DRBSLA Director, with Consolacion V. Odra, as liquidator appointed
by the Central Bank.

2. Yes, respondent judge erred in denying the Central Bank’s motion to dismiss the complaint for
prohibition and mandamus filed by Libmanan. This Court ruled in previous cases that a bank’s
claim that the resolution of the Monetary Board under Section 29 is plainly arbitrary and done in
bad faith should be asserted as an affirmative defense or counter-claim in the proceedings for
assistance in liquidation. It may be filed as a separate action if no petition for assistance in
liquidation has been instituted yet. Since the Central Bank’s petition for assistance in liquidation
had been filed on August 3, 1981, the Libmanan Bank’s filing on September 23, 1981 of a
complaint for prohibition and mandamus attacking the Central Bank’s resolution appointing a
receiver and liquidator for the bank should have been asserted as a counterclaim in instead of as a
separate special civil action for prohibition against the Central Bank. The separate action should
have been either dismissed or consolidated.

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

IX. DISPOSITIVE PORTION

WHEREFORE, the petition for certiorari is GRANTED. The questioned orders dated
January 15, 1982, January 29, 1982, March 1, 1982, March 31, 1982 and April 20, 1982 (Annexes
A, B, C, D & E, respectively) of respondent Judge Rafael De la Cruz of the then Court of First
Instance of Camarines Sur, Branch III, in Civil Case No. 1309 are REVERSED AND SET ASIDE.
The temporary restraining order issued by this Court on July 19, 1982 is hereby made permanent.
Respondent Court is ordered to dismiss Civil Case No. 1309. This order is immediately executory.
Costs against respondent Rural Bank of Libmanan.

SO ORDERED..

X: Prepared By: Alyssa Abigael C. Gomez

I. SHORT TITLE: UCPB vs. Ganzon

II. FULL TITLE: UNITED COCONUT PLANTERS BANK, JERONIMO U.

KILAYKO, LORENZO V. TAN, ENRIQUE L. GANA, JAIME W.
JACINTO and EMILY R. LAZARO, petitioners,
vs. E. GANZON, INC., Respondent. G.R. No. 168859 June 30, 2009,

III. PONENTE: J. Chico-Nazario

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

Beginning 1995 to 1998, EGI availed itself of credit facilities from UCPB to
finance its business expansion. To secure said credit facilities, EGI mortgaged to UCPB its
condominium unit inventories in EGI Rufino Plaza.

Initially, EGI was able to make periodic amortization payments of its loans to
UCPB. When the negative effects of the Asian economic crisis on the property development sector
finally caught up with the corporation in the middle of 1998, EGI started defaulting in its payment
of amortizations, thus, making all of its obligations due and demandable. Subsequently, EGI was
declared in default by UCPB. Thereafter, UCPB stopped sending EGI monthly statements of its
accounts.

In 1999, EGI and UCPB explored the possibility of using the mortgaged condominium unit
inventories of EGI in EGI Rufino Plaza as payment for the loans of EGI to UCPB. Upon agreeing
on the valuation of said mortgaged properties, EGI and UCPB entered into a Memorandum of
Agreement (MOA) in settlement of the loans of EGI from UCPB. Based on this MOA, the
outstanding loan obligations of EGI with UCPB amounted to P915,838,822.50, inclusive of all
interest, charges and fees. UCPB, through its corporate officers, assured EGI that the said amount
already represented the total loan obligations of EGI to UCPB. UCPB proceeded to foreclose some
of the properties of EGI listed in the MOA. The foreclosure proceeds of said properties amounted
only to P723,592,000.00, less than the value of the properties of EGI stipulated in its amended
MOA with UCPB.

UCPB applied the entire foreclosure proceeds of P723,592,000.00 to the principal amount
of the loan obligations of EGI but there was still an unpaid balance of P192,246,822.50. On 8 May
2001, some of the other properties of EGI at EGI Rufino Plaza, valued at P166,127,369.50, were
transferred by way of dacion en pago to UCPB. However, during the signing of the transaction
papers for the dacion en pago, EGI Senior Vice-President, Layug, noticed that said papers stated
that the remaining loan balance of EGI in the amount of P192,246,822.50 had increased
to P226,963,905.50. The increase was allegedly due to the addition of the transaction costs
amounting to P34,717,083.00. EGI complained to UCPB about the increase, yet UCPB did not
take any action on the matter.

This prompted EGI President Engineer Eulalio Ganzon (Ganzon) and Senior Vice-
President Layug to review their files to verify the figures on the loan obligations of EGI as
computed by UCPB. In the process, they discovered the UCPB Internal Memorandum dated 22
February 2001, signed by UCPB corporate officers. The said Internal Memorandum presented two
columns, one with the heading ACTUAL and the other DISCLOSED TO EGI. The figures in the
two columns were conflicting. The figures in the DISCLOSED TO EGI column computed the
unpaid balance of the loan obligations of EGI to be P226,967,194.80, the amount which UCPB
actually made known to and demanded from EGI. The figures in the ACTUAL column calculated
the remaining loan obligations of EGI to be only P146,849,412.58.

Consequently, EGI wrote UCPB a letter which included, among other demands, the refund
by UCPB to EGI of the over-payment of P83,000,000.00; return to EGI of all the remaining
Condominium Certificates of Title (CCTs) in the possession of UCPB; and cost of damage to EGI
for the delay in the release of its certificates of title.

In response, UCPB explained that the ACTUAL column in its Internal Memorandum
dated 22 February 2001 contained the same amounts reflected or recorded in its financial
statements, in accordance with the Manual of Accounts for Banks, Manual of Regulations for
Banks and BSP Circular No. 202, Series of 1999. In contrast, the DISCLOSED TO EGI column
showed the total amount still due from EGI, including the total principal, interests, transaction and
other costs after the foreclosure, whether reflected in the financial books of UCPB or not. Further,
UCPB maintained that the difference in the figures in the two columns was because BSP Circular
No. 202 and Section X305.4 of the Manual of Regulations for Bank disallowed banks from
accruing in its books interest on loans which had become non-performing.
Despite the explanation of UCPB, EGI insisted that the figures appearing in the ACTUAL
column of the formers Internal Memorandum dated 22 February 2001 revealed the true and actual
amount of its loan obligations to UCPB, P146,849,412.58.

VI. STATEMENT OF THE CASE:

Based on the possession by EGI of the UCPB Internal Memorandum dated 22 February
2001, UCPB filed a criminal case for theft and/or discovery of secrets against EGI President
Ganzon and Senior Vice-President Layug, but the said case was dismissed.
On 5 November 2002, EGI, also on the basis of the UCPB Internal Memorandum dated 22
February 2001, EGI filed with the BSP an administrative complaint against UCPB, et al., for the
commission of irregularities and conducting business in an unsafe or unsound manner but the same
was also dismissed. EGI filed a Motion for Reconsideration and a Supplemental Motion for
Reconsideration of the afore-quoted letter-decision of the BSP Monetary Board. The BSP
Monetary Board denied both motions in its letter as there was no sufficient basis to grant the same.
 EGI then filed a Petition for Review under Rule 43 of the 1997 Revised Rules of Civil
Procedure with the Court of Appeals raising the sole issue of whether the Bangko Sentral ng
Pilipinas erred in dismissing the administrative complaint filed by EGI against UCPB, et al.

On 14 October 2004, the Court of Appeals rendered its assailed Decision granting the
Petition for Review of EGI, thus, setting aside the BSP letter-decision dated 16 September
2003 and remanding the case to the BSP Monetary Board for further proceedings.
Aggrieved by the 14 October 2004 Decision and 7 July 2005 Resolution of the Court of
Appeals, UCPB, et al. comes before this Court, via a Petition for Review on Certiorari under Rule
45 of the 1997 Revised Rules of Civil Procedure.
UCPB, et al., aver that the Court of Appeals has no appellate jurisdiction over decisions, orders
and/or resolutions of the BSP Monetary Board on administrative matters. The BSP Monetary
Board is not among the quasi-judicial agencies enumerated under Rule 43 of the 1997 Revised
Rules of Civil Procedure, over which the Court of Appeals has appellate jurisdiction.
VII. ISSUE:
Whether or not the appellate court has jurisdiction over the decisions of the of the BSP
monetary Board

VIII. RULING
Yes, the appellate court has jurisdiction over the decisions of the of the BSP monetary
Board.

Truly, there is nothing in Republic Act No. 7653 or in Republic Act No. 8791 which
explicitly allows an appeal of the decisions of the BSP Monetary Board to the Court of
Appeals. However, this shall not mean that said decisions are beyond judicial review.

A perusal of Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1, Rule
43 of the 1997 Revised Rules of Civil Procedure reveals that the BSP Monetary Board is not
included among the quasi-judicial agencies explicitly named therein, whose final judgments,
orders, resolutions or awards are appealable to the Court of Appeals. Such omission, however,
does not necessarily mean that the Court of Appeals has no appellate jurisdiction over the
judgments, orders, resolutions or awards of the BSP Monetary Board.

It bears stressing that Section 9(3) of Batas Pambansa Blg. 129, as amended, on the
appellate jurisdiction of the Court of Appeals, generally refers to quasi-judicial agencies,
instrumentalities, boards, or commissions. The use of the word including in the said provision,
prior to the naming of several quasi-judicial agencies, necessarily conveys the very idea of non-
exclusivity of the enumeration. The principle of expressio unius est exclusio alterius does not
apply where other circumstances indicate that the enumeration was not intended to be exclusive,
or where the enumeration is by way of example only.
Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely
mentions several quasi-judicial agencies without exclusivity in its phraseology. The enumeration
of the agencies therein mentioned is not exclusive. The introductory phrase [a]mong these agencies
are preceding the enumeration of specific quasi-judicial agencies only highlights the fact that the
list is not meant to be exclusive or conclusive. Further, the overture stresses and acknowledges
the existence of other quasi-judicial agencies not included in the enumeration but should be
deemed included.

A quasi-judicial agency or body is an organ of government other than a court and other
than a legislature, which affects the rights of private parties through either adjudication or rule-
making. The very definition of an administrative agency includes its being vested with quasi-
judicial powers. The ever increasing variety of powers and functions given to administrative
agencies recognizes the need for the active intervention of administrative agencies in matters
calling for technical knowledge and speed in countless controversies which cannot possibly be
handled by regular courts. A "quasi-judicial function" is a term which applies to the action,
discretion, etc., of public administrative officers or bodies, who are required to investigate facts,
or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for
their official action and to exercise discretion of a judicial nature.

Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial

powers or functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is an
independent central monetary authority and a body corporate with fiscal and administrative
autonomy, mandated to provide policy directions in the areas of money, banking and credit. It has
power to issue subpoena, to sue for contempt those refusing to obey the subpoena without
justifiable reason, to administer oaths and compel presentation of books, records and others,
needed in its examination, to impose fines and other sanctions and to issue cease and desist
order. Section 37 of Republic Act No. 7653, in particular, explicitly provides that the BSP
Monetary Board shall exercise its discretion in determining whether administrative sanctions
should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary
Board must conduct some form of investigation or hearing regarding the same.

Having established that the BSP Monetary Board is indeed a quasi-judicial body exercising
quasi-judicial functions; then as such, it is one of those quasi-judicial agencies, though not
specifically mentioned in Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1,
Rule 43 of the 1997 Revised Rules of Civil Procedure, are deemed included therein.Therefore, the
Court of Appeals has appellate jurisdiction over final judgments, orders, resolutions or awards of
the BSP Monetary Board on administrative complaints against banks and quasi-banks, which the
former acquires through the filing by the aggrieved party of a Petition for Review under Rule 43
of the 1997 Revised Rules of Civil Procedure.

IX. DISPOSITIVE PORTION

WHEREFORE, premises considered, the Petition for Review on Certiorari of United

Coconut Planters Bank, Jeronimo U. Kilayko, Lorenzo V. Tan, Enrique L. Gana, Jaime W. Jacinto
and Emily R. Lazaro, in G.R. No. 168859; as well as the Petition for Review on Certiorari of E.
Ganzon, Inc. in G.R. No. 168897, are hereby DENIED. The Decision dated 14 October 2004 and
Resolution dated 7 July 2005 of the Court of Appeals in CA-G.R. SP No. 81385 are
hereby AFFIRMED in toto. No costs.

X: Prepared By: Alyssa Abigael C. Gomez

I. SHORT TITLE: Sps. Lipana vs. Development Bank of Rizal

II. FULL TITLE: SPOUSES ROMEO LIPANA and MILAGROS

LIPANA, petitioners, vs. DEVELOPMENT BANK OF
RIZAL, respondent. G.R. No. 73884 September 24, 1987,
III. PONENTE: J. PARAS

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

During the period from 1982 to January, 1984, herein petitioners opened and maintained
both time and savings deposits with Development Bank of Rizal all in the aggregate amount of
P939,737.32. When some of the Time Deposit Certificates matured, petitioners were not able to
cash them but instead were issued a manager's check which was dishonored upon presentment.
Demands for the payment of both time and savings deposits were made but the bank did not
respond. The petitioners filed with the Regional Trial Court of Pasig a Complaint with Prayer for
Issuance of a Writ of Preliminary Attachment for collection of a sum of money with damages. The
respondent Judge ordered the issuance of a writ of attachment. Thereafter, judgment was rendered
in favor of the petitioners.
Meanwhile the Monetary Board issued a resolution finding that the condition of respondent
bank was one of insolvency and that its continuance in business would result in probable loss to
its depositors and creditors. Consequently, the bank was placed under receivership. Thereafter, the
petitioners filed a Motion for Execution Pending Appeal. The respondent judge ordered the
issuance of a writ of execution. However, the bank filed for a Stay of execution and the same was
granted.

VI. STATEMENT OF THE CASE:

The petitioners filed with the Regional Trial Court of Pasig a Complaint with Prayer for
Issuance of a Writ of Preliminary Attachment for collection of a sum of money with damages. The
respondent Judge ordered the issuance of a writ of attachment. Thereafter, judgment was rendered
in favor of the petitioners. Thereafter, the petitioners filed a Motion for Execution Pending Appeal.
The respondent judge ordered the issuance of a writ of execution. However, the bank filed for a
Stay of execution and the same was granted. Later on, the petitioners filed a Motion to Lift Stay
of Execution it was opposed by respondent bank and in an order, respondent judge denied the said
motion. Hence, the instant petition. The petition was given due course and the parties were required
to file their respective memoranda which they subsequently complied with.

VII. ISSUE:

1. Whether or not respondent judge could legally stay execution of judgment that has
already become final and executory.
VIII. RULING
Yes, the judge may do so.
The rule that once a decision becomes final and executory, it is the ministerial duty of the
court to order its execution, admits of certain exceptions as in cases of special and exceptional
nature where it becomes imperative in the higher interest of justice to direct the suspension of its
execution; whenever it is necessary to accomplish the aims of justice; or when certain facts and
circumstances transpired after the judgment became final which could render the execution of the
judgment unjust.
In the instant case, the stay of the execution of judgment is warranted by the fact that
respondent bank was placed under receivership. To execute the judgment would unduly deplete
the assets of respondent bank to the obvious prejudice of other depositors and creditors, since, as
aptly stated in Central Bank of the Philippines vs. Morfe (63 SCRA 114), after the Monetary Board
has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the
trustee of its assets for the equal benefit of all the creditors, including depositors. The assets of the
insolvent banking institution are held in trust for the equal benefit of all creditors, and after its
insolvency, one cannot obtain an advantage or a preference over another by an attachment,
execution or otherwise.

IX. DISPOSITIVE PORTION

WHEREFORE, PREMISES CONSIDERED, the instant petition is hereby DISMISSED.

SO ORDERED.

X: Prepared By: Alyssa Abigael C. Gomez

I.SHORT TITLE: Overseas Bank vs. CA

II. FULL TITLE: OVERSEAS BANK OF MANILA, petitioner, vs.

COURT OF APPEALS and NATIONAL WATERWORKS AND
SEWERAGE AUTHORITY, respondents. G.R. No. L-45866 April 19,
1989,

III. PONENTE: J. Narvasa

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

A contract of sale was executed between NAWASA and Bonifacio Regalado. By the
authority of NAWASA’s Board of Directors, the purchase price was placed under time deposit
with Overseas Bank for a period of six months. This was made so that refund may quickly be given
to Regalado in the event that his contract with NAWASA be disapproved by the Office of the
President. A second payment was made and the same was also placed under time deposit with
Overseas Bank but this time, the maturity date is after twelve months. Thereafter, NAWASA wrote
a letter to the bank to request the withdrawal of the first time deposit which has already matured.
They also manifested that they would withdraw the second one after 60 days.

Despite demands the bank failed to remit the value of the time deposit. However, they were
able to pay the interest. Upon the maturity of the second time deposit, NAWASA sent demand
letters to the bank but there was no response. NAWASA wrote a letter to Central Bank regarding
the issue. Central Bank ordered the bank to transfer the said funds to Philippine National Bank or
to Development Bank of the Philippines. Still, the bank did not respond. On August 1968, the
Central bank released an order of suspension of operations to Overseas Bank.

VI. STATEMENT OF THE CASE:

NAWASA thus brought suit to recover its deposits and damages. The Overseas Bank failed
to file its answer despite service of summons; it was declared in default; the Court received
NAWASA's evidence ex parte and on the basis thereof, thereafter rendered judgment by default.
The Overseas Bank made no effort whatever to have the order of default lifted, or to have the
judgment by default reconsidered. After being served with notice of the judgment, it i simply
brought the case up to the Court of Appeals.

The Court of Appeals, in its own judgment dated January 26, 1 1977, declared the appeal to be
without merit and affirmed the decision against Overseas Bank. The petitioner bank now asks this
Court through a petition for review on certiorari to reverse the judgment by default of the Court of
First Instance and the affirming judgment of the Court of Appeals.
VII. ISSUE:
Whether or not the order of default be reversed

VIII. RULING:

No, it should not be reversed.

The first argument advanced by the Overseas Bank is that as of July 30,1 968, by reason
of "punitive action taken by the Central Bank," it had been prevented from undertaking banking
operations "which would have generated funds to pay not only its depositors and creditors but
likewise, the interests due on the deposits." The argument is palpably without merit. There is in
the first place absolutely no evidence of these facts in the record: and this is simply because the
petitioner bank had made no effort whatever to set aside the default order against it so that it could
present evidence in its behalf before the Trial Court. Moreover, the suspension of operations which
took place in August, 1968, could not possibly excuse non-compliance with the obligations in
question which matured in 1966. Again, the claim that the Central Bank, by suspending the
Overseas Bank's banking operations, had made it impossible for the Overseas Bank to pay its
debts, whatever validity might be accorded thereto, or the further claim that it had fallen into a
"distressed financial situation," cannot in any sense excuse it from its obligation to the NAWASA,
which had nothing whatever to do with the Central Bank's actuations or the events leading to the
bank's distressed state.
Also futile is the petitioner's invocation of this Court's decision in G.R. No. L-29352,
"Emerita M. Ramos, et al. v. Central Bank," promulgated October 4, 1971 and subsequent
resolutions 11 ordering the "rehabilitation, normalization and stabilization of the Overseas Bank
of Manila," and allegedly approving the rehabilitation plan and a proposed procedure for the
payment of the bank's obligations. Obviously, the failure of the Court of Appeals to apply such a
rehabilitation program to the case cannot be error, as the petitioner deposits since the program was
approved after the Appellate Court had rendered judgment. Furthermore, that rehabilitation
program or procedure of payment does not in any way negate or diminish the indebtedness of the
Overseas Bank to the NAWASA incurred in 1966, for conceding full faith and credit to such a
prescribed procedure of payment, it constitutes no obstacle to determining the principal and
interests of the debts at issue at this time.

IX. DISPOSITIVE PORTION:

WHEREFORE, the petition for review on certiorari is DENIED and the judgment of the
Court of Appeals subject thereof is AFFIRMED in toto, as being in accord with the facts and the
applicable law.
SO ORDERED.

X: Prepared By: Alyssa Abigael C. Gomez

I.SHORT TITLE: Banco Filipino vs. Monetary Board

II. FULL TITLE: BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner,
vs.
THE MONETARY BOARD, CENTRAL BANK OF THE
PHILIPPINES, JOSE B. FERNANDEZ, CARLOTA P.
VALENZUELA, ARNULFO B. AURELLANO and RAMON V.
TIAOQUI, respondents.

G.R. No. 68878 December 11, 1991

BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT and CELESTINA S.
PAHIMUNTUNG, assisted by her husband,respondents.

G.R. No. 77255-58 December 11, 1991

TOP MANAGEMENT PROGRAMS CORPORATION AND PILAR

DEVELOPMENT CORPORATION, petitioners,
vs.
THE COURT OF APPEALS, The Executive Judge of the Regional
Trial Court of Cavite, Ex-Officio Sheriff REGALADO E. EUSEBIO,
BANCO FILIPINO SAVINGS AND MORTGAGE BANK,
CARLOTA P. VALENZUELA AND SYCIP, SALAZAR,
HERNANDEZ AND GATMAITAN, respondents.

G.R. No. 78766 December 11, 1991

EL GRANDE CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, THE EXECUTIVE JUDGE of The
Regional Trial Court and Ex-Officio Sheriff REGALADO E.
EUSEBIO, BANCO FILIPINO SAVINGS AND MORTGAGE BANK,
CARLOTA P. VALENZUELA AND SYCIP, SALAZAR,
FELICIANO AND HERNANDEZ, respondents.

G.R. No. 78767 December 11, 1991

METROPOLIS DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES,
 JOSE B. FERNANDEZ, JR., CARLOTA P. VALENZUELA,
ARNULFO AURELLANO AND RAMON TIAOQUI, respondents.

G.R. No. 78894 December 11, 1991

BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner

vs.
COURT OF APPEALS, THE CENTRAL BANK OF THE
PHILIPPINES, JOSE B. FERNANDEZ, JR., CARLOTA P.
VALENZUELA, ARNULFO B. AURELLANO AND RAMON
TIAOQUI, respondents.

G.R. No. 81303 December 11, 1991

PILAR DEVELOPMENT CORPORATION, petitioner

vs.
COURT OF APPEALS, HON. MANUEL M. COSICO, in his capacity
as Presiding Judge of Branch 136 of the Regional Trial Court of
Makati, CENTRAL BANK OF THE PHILIPPINES AND CARLOTA
P. VALENZUELA,respondents.

G.R. No. 81304 December 11, 1991

BF HOMES DEVELOPMENT CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, CENTRAL BANK AND CARLOTA P.
VALENZUELA, respondents.

G.R. No. 90473 December 11, 1991

EL GRANDE DEVELOPMENT CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, THE EXECUTIVE JUDGE of the
Regional Trial Court of Cavite, CLERK OF COURT and Ex-Officio
Sheriff ADORACION VICTA, BANCO FILIPINO SAVINGS AND
MORTGAGE BANK, CARLOTA P. VALENZUELA AND SYCIP,
SALAZAR, HERNANDEZ AND GATMAITAN, respondents., G.R.
No. 70054 December 11, 1991

III: PONENTE: J. Medialdea

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

This case involves 9 consolidated cases. The first six cases involve the common issue of
whether or not the liquidator appointed by the respondent Central Bank has the authority to
prosecute as well as to defend suits, and to foreclose mortgages for and in behalf of the bank while
the issue on the validity of the receivership and liquidation of the latter is pending resolution in
G.R. No. 7004. On the other hand, the other three (3) cases, namely, G.R. Nos. 70054, which is
the main case, 78767 and 78894 all seek to annul and set aside M.B. Resolution No. 75 issued by
respondents Monetary Board and Central Bank on January 25, 1985.

G.R. Nos. 70054

Banco Filipino Savings and Mortgage Bank commenced operations on July 9, 1964. It has
89 operating branches with more than 3 million depositors. It has an approved emergency advance
of P119.7 million. The Monetary Board placed Banco Filipino Savings and Mortgage Bank under
conservatorship of Basilio Estanislao. He was later replaced by Gilberto Teodoro as conservator
on August 10, 1984. Gilberto Teodoro submitted a report dated January 8, 1985 to respondent The
Monetary Board on the conservatorship of the bank. Subsequently, another report dated January
23, 1985 was submitted to the Monetary Board by Ramon Tiaoqui regarding the major findings of
examination on the financial condition of Banco Filipino Savings and Mortgage Bank as of July
31, 1984, finding the bank one of insolvency and illiquidity and provides sufficient justification
for forbidding the bank from engaging in banking. The Monetary Board ordered the closure of
Banco Filipino and designated Mrs. Carlota P. Valenzuela as Receiver.

Banco Filipino filed a complaint with the RTC to set aside the action of the Monetary Board
placing the bank under receivership and filed with the SC the petition for certiorari and mandamus.
Carlota Valenzuela, as Receiver and Arnulfo Aurellano and Ramon Tiaoqui as Deputy Receivers
of Banco Filipino submitted their report on the receivership of the bank to the Monetary Board,
finding that the condition of the banking institution continues to be one of insolvency, i.e., its
realizable assets are insufficient to meet all its liabilities and that the bank cannot resume business
with safety to its depositors, other creditors and the general public, and recommends the liquidation
of the bank. Banco Filipino filed a motion before the SC praying that a restraining order or a writ
of preliminary injunction be issued to enjoin respondents from causing the dismantling of Banco
Filipino signs in its main office and 89 branches. The SC ordered the issuance of the temporary
restraining order. The SC directed the Monetary Board and Central Bank hold hearings at which
the Banco Filipino should be heard.

VI. STATEMENT OF THE CASE:

This refers to nine (9) consolidated cases concerning the legality of the closure and
receivership of petitioner Banco Filipino Savings and Mortgage Bank (Banco Filipino for brevity)
pursuant to the order of respondent Monetary Board. Six (6) of these cases, namely, G.R. Nos.
68878, 77255-68, 78766, 81303, 81304 and 90473 involve the common issue of whether or not
the liquidator appointed by the respondent Central Bank (CB for brevity) has the authority to
prosecute as well as to defend suits, and to foreclose mortgages for and in behalf of the bank while
the issue on the validity of the receivership and liquidation of the latter is pending resolution in
G.R. No. 7004. Corollary to this issue is whether the CB can be sued to fulfill financial
commitments of a closed bank pursuant to Section 29 of the Central Bank Act. On the other hand,
the other three (3) cases, namely, G.R. Nos. 70054, which is the main case, 78767 and 78894 all
seek to annul and set aside M.B. Resolution No. 75 issued by respondents Monetary Board and
Central Bank on January 25, 1985.

VII. ISSUES:
1. Whether or not the liquidator appointed by the respondent Central Bank has the
authority to prosecute as well as to defend suits, and to foreclose mortgages for and in
behalf of the bank while the issue on the validity of the receivership and liquidation of
the latter is pending resolution in G.R. No. 7004
2. Whether or not the Central Bank and the Monetary Board acted arbitrarily and in bad
faith in finding and thereafter concluding that petitioner bank is insolvent, and in
ordering its closure on January 25, 1985.

VIII. RULING:

1. Yes, the liquidator appointed by the respondent Central Bank has the authority to prosecute as
well as to defend suits, and to foreclose mortgages for and in behalf of the bank while the issue on
the validity of the receivership and liquidation of the latter is pending resolution in G.R. No. 7004.
When the issue on the validity of the closure and receivership of Banco Filipino bank was raised
in G.R. No. 70054, pendency of the case did not diminish the powers and authority of the
designated liquidator to effectuate and carry on the administration of the bank. In fact when We
adopted a resolute on August 25, 1985 and issued a restraining order to respondents Monetary
Board and Central Bank, We enjoined further acts of liquidation. Such acts of liquidation, as
explained in Sec. 29 of the Central Bank Act are those which constitute the conversion of the assets
of the banking institution to money or the sale, assignment or disposition of the s to creditors and
other parties for the purpose of paying debts of such institution. We did not prohibit however acts
a as receiving collectibles and receivables or paying off credits claims and other transactions
pertaining to normal operate of a bank.

There is no doubt that the prosecution of suits collection and the foreclosure of mortgages
against debtors the bank by the liquidator are among the usual and ordinary transactions pertaining
to the administration of a bank. their did Our order in the same resolution dated August 25, 1985
for the designation by the Central Bank of a comptroller Banco Filipino alter the powers and
functions; of the liquid insofar as the management of the assets of the bank is concerned. The mere
duty of the comptroller is to supervise counts and finances undertaken by the liquidator and to d
mine the propriety of the latter's expenditures incurred behalf of the bank. Notwithstanding this,
the liquidator is empowered under the law to continue the functions of receiver is preserving and
keeping intact the assets of the bank in substitution of its former management, and to prevent the
dissipation of its assets to the detriment of the creditors of the bank. These powers and functions
of the liquidator in directing the operations of the bank in place of the former management or
former officials of the bank include the retaining of counsel of his choice in actions and
proceedings for purposes of administration. Clearly, in G.R. Nos. 68878, 77255-58, 78766 and
90473, the liquidator by himself or through counsel has the authority to bring actions for
foreclosure of mortgages executed by debtors in favor of the bank. In G.R. No. 81303, the
liquidator is likewise authorized to resist or defend suits instituted against the bank by debtors and
creditors of the bank and by other private persons. Similarly, in G.R. No. 81304, due to the
aforestated reasons, the Central Bank cannot be compelled to fulfill financial transactions entered
into by Banco Filipino when the operations of the latter were suspended by reason of its closure.
The Central Bank possesses those powers and functions only as provided for in Sec. 29 of the
Central Bank Act.

2. Yes, the Monetary Board acted arbitrarily and in bad faith in finding and thereafter concluding
that petitioner bank is insolvent, and in ordering its closure on January 25, 1985. 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. Anent the first requirement, the Tiaoqui report, submitted on January 23, 1985,
revealed that the finding of insolvency of petitioner was based on the partial list of exceptions and
findings on the regular examination of the bank as of July 31, 1984 conducted by the Supervision
and Examination Sector II of the Central Bank of the Philippines Central Bank. Clearly, Tiaoqui
based his report on an incomplete examination of petitioner bank and outrightly concluded therein
that the latter's financial status was one of insolvency or illiquidity. It is evident from the foregoing
circumstances that the examination contemplated in Sec. 29 of the CB Act as a mandatory
requirement was not completely and fully complied with. Despite the existence of the partial list
of findings in the examination of the bank, there were still highly significant items to be weighed
and determined such as the matter of valuation reserves, before these can be considered in the
financial condition of the bank.

It would be a drastic move to conclude prematurely that a bank is insolvent if the basis for
such conclusion is lacking and insufficient, especially if doubt exists as to whether such bases or
findings faithfully represent the real financial status of the bank. The actuation of the Monetary
Board in closing petitioner bank on January 25, 1985 barely four days after a conference with the
latter on the examiners' partial findings on its financial position is also violative of what was
provided in the CB Manual of Examination Procedures. Said manual provides that only after the
examination is concluded, should a pre-closing conference led by the examiner-in-charge be held
with the officers/representatives of the institution on the findings/exception, and a copy of the
summary of the findings/violations should be furnished the institution examined so that corrective
action may be taken by them as soon as possible (Manual of Examination Procedures, General
Instruction, p. 14). It is hard to understand how a period of four days after the conference could be
a reasonable opportunity for a bank to undertake a responsive and corrective action on the partial
list of findings of the examiner-in-charge. In the instant case, the basic standards of substantial due
process were not observed. Time and again, We have held in several cases, that the procedure of
administrative tribunals must satisfy the fundamentals of fair play and that their judgment should
express a well-supported conclusion.

In view of the foregoing premises, We believe that the closure of the petitioner bank was
arbitrary and committed with grave abuse of discretion. Granting in gratia argumenti that the
closure was based on justified grounds to protect the public, the fact that petitioner bank was
suffering from serious financial problems should not automatically lead to its liquidation. Section
29 of the Central Bank provides that a closed bank may be reorganized or otherwise placed in such
a condition that it may be permitted to resume business with safety to its depositors, creditors and
the general public.

IX. DISPOSITIVE PORTION:

ACCORDINGLY, decision is hereby rendered as follows:

1. The motion for reconsideration in G.R. Nos. 68878 and 81303, and the petitions in G.R. Nos.
77255-58, 78766, 81304 and 90473 are DENIED;
2. The petitions in G.R. No. 70054, 78767 and 78894 are GRANTED and the assailed order of the
Central Bank and the Monetary Board dated January 25, 1985 is hereby ANNULLED AND SET
ASIDE. The Central Bank and the Monetary Board are ordered to reorganize petitioner Banco
Filipino Savings and Mortgage Bank and allow the latter to resume business in the Philippines
under the comptrollership of both the Central Bank and the Monetary Board and under such
conditions as may be prescribed by the latter in connection with its reorganization until such time
that petitioner bank can continue in business with safety to its creditors, depositors and the general
public.
SO ORDERED.

X: Prepared By: Alyssa Abigael C. Gomez

I.SHORT TITLE: Rural Bank of San Miguel vs. Monetary Board

II. FULL TITLE: RURAL BANK OF SAN MIGUEL, INC. and HILARIO P. SORIANO,
in his capacity as majority stockholder in the Rural Bankof San Miguel,
Inc., Petitioners,
vs.
MONETARY BOARD, BANGKO SENTRAL NG PILIPINAS and
PHILIPPINE DEPOSIT INSURANCE
CORPORATION, Respondents. G.R. No. 150886 February 16, 2007,

III: PONENTE: J. Corona

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

Petitioner Rural Bank of San Miguel, Inc. (RBSM) was a domestic corporation engaged in
banking. 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, , 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. RBSM filed
a petition for certiorari and prohibition to nullify the resolution placing it under receivership.
The Regional Trial Court and the Court of Appeals (CA) dismissed the petition. The CA
found that RBSM was granted with emergency loans as a last trenche. The emergency loan was
for the sole purpose of servicing and meeting withdrawals but RBSM did not use it for that purpose.
Thereafter, RBSM declared a bank holiday which prompted BSP to ecamine its books. The
Comptroller report was submitted before the MB and based on that, a closure and liquidation order
was issued.
RBSM now argues that the resolution ordering the closure and liquidation of RBSM is void
because there was no prior complete examination but merely a report.

VI. STATEMENT OF THE CASE:

 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. 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. In their
petition 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.

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.

Hence this petition.

VII. ISSUE:

Whether or not Sec. 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.

VIII. RULING:

No, a current and complete examination of the bank before it can be closed and placed
under receivership is not necessary.
The argument of RBSM was in accordance with the ruling in Banco Filipino vs. Monetary
Board. However, RBSM’s reliance on such ruling is misplaced because the case was decided using
Sec. 29 of the old law, RA 265. 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" 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. 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."2 On the other hand, an examination is
"a search, investigation or scrutiny."
 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.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

IX. DISPOSITIVE PORTION:

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.

X: Prepared By: Alyssa Abigael C. Gomez

I.SHORT TITLE: Salud vs. Central Bank of the Philippines

II. FULL TITLE: APOLLO M. SALUD, as Attorney-in-Fact for its Stockholders, in his
behalf and for and in behalf of the Rural Bank of Muntinlupa, Inc.,
Hon. VICENTE R. CAMPOS, Presiding Judge, Regional Trial Court,
National Capital Region, Br. CLXIV, petitioners,
vs.
CENTRAL BANK OF THE PHILIPPINES, AND CONSOLACION V.
ODRA, in her capacity as Liquidator of the Rural Bank of Muntinlupa,
Inc., respondents. G.R. No. L-17620 August 19, 1986,
III: PONENTE: J. Narvasa

IV. TOPIC: The New Central Bank Act

V. STATEMENT OF FACTS:

Central Bank issued two resolutions. The first one forbids the Rural Bank of Muntinlupa
(RBM) from doing business and designates Consolacion Odra as its receiver. The second one
orders the liquidation of RBM after confirmation that it was insolvent and cannot resume business.
Central Bank the filed a petition for assistance in the liquidation of RBM based on Sec. 29 of the
Central Bank Act. RBM assailed that the resolution ordered by the Monetary Board is tainted with
arbitrariness because RBM is still capable of rehabilitation. Central Bank contends that the court
in which the petition for assistance in liquidation is filed has no jurisdiction to resolve the issue of
arbitrariness. Such issue can only be raised in a separate action.

VI. STATEMENT OF THE CASE:

Central Bank the filed a petition for assistance in the liquidation before the RTC. RBM
filed an opposition which was treated as a motion to dismiss. RTC ruled in favor of RBM. Failing
in two attempts to have this Order reconsidered, 7 the Central Bank and its Liquidator instituted in
this Court a special civil action of certiorari and mandamus, under Rule 65 of the Rules of Court,
praying that the Regional Trial Court's orders be annulled because "issued without or in excess of
jurisdiction or with grave abuse of discretion," and that it be compelled to grant their application
for assistance. The petition was referred to the Intermediate Appellate Court. The IAC remanded
the case to the RTC but upon motion for reconsideration, IAC declared the ruling of the RTC null
and void. Hence, this petition.

VII. ISSUE:
Whether or not a separate action is necessary to determine the issue on arbitrariness of the
Monetary Board’s order placing a bank under receivership and liquidation

VIII. RULING:

No, a separate action is not necessary.

 This Court perceives no reason whatever why a banking institution's claim that a resolution
of the Monetary Board under Section 29 of the Central Bank Act should be set aside as plainly
arbitrary and made in bad faith cannot be asserted as an affirmative defense or a counterclaim in
the proceeding for assistance in liquidation, but only as a cause of action in a separate and distinct
action. Nor can this Court see why "a full-blown hearing" on the issue is possible only if it is
asserted as a cause of action, but not when set up by way of an affirmative defense, or a
counterclaim. There is no provision of law which expressly or even by implication imposes the
requirement for a separate proceeding exclusively occupied with adjudicating this issue. Moreover,
to declare the issue as beyond the scope of matters cognizable in a proceeding for assistance in
liquidation would be to engender that multiplicity of proceedings which the law abhors.

IX. DISPOSITIVE PORTION:

WHEREFORE, the Resolutions of the Intermediate Appellate Court in AC-G.R. No. SP-
03808 dated January 4, 1985 and July 23, 1985 are set aside, and the Decision dated November
22, 1984 is reinstated and affirmed. No costs.
SO ORDERED.

X: Prepared By: Alyssa Abigael C. Gomez