Facts:

This case involves the Bangko Sentral ng Pilipinas (BSP), represented by the Monetary Board and their OIC, Chuchi Fonacier, as petitioners against various rural banks and Judge Nina G. Antonio-Valenzuela as the respondent. The events unfolded after examinations of several banks by the BSP's Supervision and Examination Department (SED) in September 2007. These examinations revealed deficiencies in compliance and led to stipulations for remedial actions, including capital infusion, which the banks contended they executed. However, the BSP maintained that the banks failed to comply adequately. In May 2008, the Rural Bank of ParaAaque, Inc. (RBPI) initiated a legal battle seeking to nullify the BSP's Report of Examination (ROE) on grounds of due process violations, claiming they were never provided copies of the ROEs prior to their submission to the Monetary Board. Following this, similar cases were filed by other rural banks, pleading for writs of preliminary injunction to

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Facts:

Examination and Findings by the Bangko Sentral’s Supervision and Examination Department (SED)

• In September 2007, the SED of the Bangko Sentral ng Pilipinas (BSP) conducted examinations of the books of several banks, including:

- Rural Bank of ParaAaque, Inc. (RBPI) - Rural Bank of San Jose (Batangas), Inc. - Rural Bank of Carmen (Cebu), Inc. - Pilipino Rural Bank, Inc. - Philippine Countryside Rural Bank, Inc. - Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank) - Rural Bank of DARBCI, Inc. - Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank) - Rural Bank de Bisayas Minglanilla (now Bank of East Asia) - San Pablo City Development Bank, Inc. - Copies of Lists of Findings/Exceptions were provided, which detailed deficiencies discovered during the examination. - The banks were given 30 days to comment and undertake remedial measures, including the infusion of additional capital.

SED’s Subsequent Communications and Bank Responses

• Chuchi Fonacier, officer-in-charge of the SED, sent separate letters to the Board of Directors of each bank, stating that the banks had failed to carry out the required remedial measures.
• In response, the banks:

- Requested additional time to obtain BSP approval for amending their Articles of Incorporation. - Sought an explanation of the capital infusion figures. - Noted that they had not received the Report of Examination (ROE) which finalizes the audit findings. - Requested meetings with the BSP audit teams to reconcile audit figures.

Filing of Complaints and Proceedings in Regional Trial Court (RTC)

• On May 12, 2008, RBPI filed a complaint for nullification of the BSP ROE with an application for a Temporary Restraining Order (TRO) and writ of preliminary injunction.

- The complaint was docketed as Civil Case No. 08-119243 against Fonacier, the BSP, and several individual defendants. - RBPI prayed to enjoin Fonacier (and her aides) from submitting the ROE to the Monetary Board (MB), arguing that denying the bank a copy of the ROE violated its right to due process. - One bank’s application for a TRO was denied, and that bank subsequently filed a motion for reconsideration. - Fonacier and the BSP filed opposition to the TRO applications. - RTC Judge Nina Antonio-Valenzuela granted RBPI’s TRO and later consolidated the cases. - Subsequent motions, including an urgent motion to lift/dissolve the TRO, were filed by petitioners.

Court of Appeals (CA) Proceedings and Intervention

• Petitioners submitted a petition for certiorari under Rule 65 before the CA, alleging grave abuse of discretion by Judge Valenzuela in issuing the TRO orders and consolidating the cases.
• The CA ruled that:

- The RTC had committed no grave abuse of discretion in ordering the issuance of the writ of preliminary injunction. - Petitioners should have filed a motion for reconsideration, rather than resorting immediately to a petition for certiorari. - The principles of fairness and transparency entitled the respondent banks to copies of the ROEs.

Implementation by the Monetary Board and Subsequent Regulatory Actions

• As a result of the TRO issued by the Supreme Court, the SED was able to submit the ROEs to the MB.
• The MB then took regulatory measures against the respondent banks by:

- Prohibiting the banks from transacting business. - Placing the banks under receivership pursuant to Section 53 of RA 8791 and Section 30 of RA 7653. - Issuing several resolutions (from December 9 to December 19, 2008) with the Philippine Deposit Insurance Corporation appointed as the receiver.

Issue:

Whether the writs of preliminary injunction issued by the RTC—directing that ROEs not be submitted or acted upon by the MB—violated the banks’ right to due process.

• Did failure to furnish the banks with copies of the ROEs constitute a denial of due process?
• Is there a statutory requirement obliging the BSP to provide such copies under the New Central Bank Act (RA 7653)?

Whether the consolidation of the 10 civil cases by the RTC prejudged the merits of the underlying issues.

• Was the consolidation proper given the similarity of facts, reliefs sought, and parties involved?
• Did the consolidated proceeding improperly foreclose the petitioners’ rights?

Whether the petitioners should have first resorted to filing a motion for reconsideration of the RTC’s orders before seeking certiorari.

• Did the petitioners’ bypassing of primary administrative remedies amount to a premature resort to certiorari under Rule 65?

Whether the issuance of the writ of preliminary injunction improperly interfered with the regulatory functions of the MB.

• Did the TRO unjustifiably encumber the MB’s power to supervise and, if necessary, impose sanctions—including receivership—on distressed banks?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)