Busuego vs. Court of Appeals o Petitioner Lim had a letter explaining his side of the controversy.

It
G.R. No. 95326 was forwarded to the MB, which the latter considered in adopting MB
March 11, 1999 Reso. 805
o PESALA’s BoD’s letter explaining the board’s side of the controversy
Doctrine: Preventive Suspensions; Where the suspension of certain officers and was properly considered
directors of a savings and loan association is only preventive in nature, no notice or  Therefore, petitioner’s cannot complain of deprivation of their right to due
hearing is necessary, and until such time that they shall have proved their innocence, process
they may be preventively suspended from holding office so as not to influence the o they were given ample opportunity by the Monetary Board to air their
conduct of investigation, and to prevent the commission of further irregularities submission and defenses as to the findings of irregularity during the
examination
FACTS:
 The 16th regular examination the books and records of the PAL Employees 2. MB, AS AN ADMINISTRATIVE AGENCY, IS LEGALLY BOUND TO OBSERVE DUE
Savings and Loan Association, Inc. (“PESALA”) was conducted by CB examiners PROCESS, ALTHOUGH THEY ARE FREE FROM THE RIGIDITY OF CERTAIN
o Several anomalies and irregularities committed by PESALA’s directors PROCEDURAL REQUIREMENTS
and officers, among which are:  Adamson, Inc v. Amores
 Questionable investment in a multi-million peso real estate o While administrative tribunals exercising quasi-judicial functions are
project; Conflict of interest in business; unwarranted free from the rigidity of certain procedural requirements they are
declaration and payment of dividends; commission of bound by law and practice to observe the fundamental and essential
unsound business practices requirements of due process in justiciable cases…
 CB Supervision and Examination Section (CB SES) sent a letter to BoD of o there is no denial of procedural due process as long as the parties are
PESALA inviting them in a conference to discuss the findings of the given the opportunity to be heard
examination.  Furthermore, RA 3779, delineating the powers of MV over saving and loan
o But petitioners did not attend the conference. associations, require observance of due process in the exercise of its powers
 Then, the Monetary Board issued a MB Resolution No. 805 o (c) To conduct at least once every year, and whenever necessary, any
o ordering, among other, the names of petitioners Banez, Busuego, and inspection, examination or investigation of the books and records…
Lim be included in the watchlist to prevent them from holding but always with fairness and reasonable opportunity for the
responsible positions in any institution under CB supervision association or any of its officials to give their side of the case
o requiring BoD of PESALA to file civil and criminal case against o (d) After proper notice and hearing, to suspend a savings and loan
petitioners herein association for violation of law
 TC: held that MB Reso No. 805 void o (f) To decide, after appropriate notice and hearings any controversy
 CA: reversed as to the rights or obligations of the savings and loan association, its
directors, officers, stockholders and members
ISSUE:
1. WON petitioners were deprived of notice and opportunity to be heard by 3. MB RESOLUTION NO. 805 IS VALID
the MB prior to its issuance of MB Reso No. 805  Petitioners contend that with the resolution, “they are now barred from being
2. Won MB is legally bound to observe the essential requirements of Due elected or designated as officers again of PESALA, and are likewise prevented
Process from future engagements or employments in all institutions under the
3. WON the MB Resolution No. 805 is null and void for being violative of supervision of the Central Bank thereby virtually depriving them of the
petitioner’s rights to due process. opportunity to seek employments in the filed they excel”
HELD: o According to them, the Monetary Board is not vested with “the
authority to disqualify persons from occupying positions in
1. PETITIONERS WERE DULY AFFORDED THEIR RIGHT TO DUE PROCESS BY THE institutions under the supervision of the Central Bank without
MB proper notice and hearing” nor is it vested with authority “to file
 Circumstances to be considered: civil and criminal cases against its officers/directors for
o Petitioners were invited by CB SES to a conference, but they did not suspected fraudulent acts.”
attend  PETITIONER’S CONTENTION IS UNMERITORIOUS
 o CB of PH (BSP), through MB, is the government agency charged with
the responsibility of administering the monetary, banking and credit
system of the country and is granted the power of supervision and
examinationover banks and non-bank financial institutions
performing quasi-banking functions of which savings and loan
associations, such as PESALA
 Under RA 3779 “Savings and Loan Association Act”
o MB is authorized to
 Conduct regular yearly examinations of the books and
records of savings and loan associations,
 Suspend a savings and loan association for violation of law,
 Decide any controversy over the obligations and duties of
directors and officers
 Take remedial measures
 From the foregoing, it is clear that the CB, through MB is empowered to
conduct investigations and examine the records of savings and loan
associations.
o If any irregularity is discovered in the process, the Monetary
Board may impose appropriate sanctions:
 such as suspending the offender from holding office or from
being employed with the Central Bank, or
 placing the names of the offenders in a watchlist.
 The ruling of CA is correct that petitioner’s suspension was only
preventive in nature and therefore, no notice or hearing was necessary
o Until such time that the petitioners have proved their innocence, they
may be preventively suspended from holding office so as not to
influence the conduct of investigation, and to prevent the commission
of further irregularities.
o Neither were petitioners deprived of their lawful calling as they are
free to look for another employment
 So long as the company involved is not subject to CB control
or supervision
 They can still practise their profession or engage in business
 As long as not within the ambit of MB Reso No 805

DISPOSITION: Petition DENIED