Case Digest (G.R. No. 88353)
Facts:
In Central Bank of the Philippines v. Producers Bank of the Philippines (G.R. Nos. 88353 & 92943, May 8, 1992), the Monetary Board of the Central Bank (CB), acting under Sections 28-A and 29 of R.A. No. 265 (as amended), placed Producers Bank of the Philippines (PBP) under conservatorship on January 20, 1984, after CB examiners discovered over P300 million in dubious uncollateralized loans made by PBP management, resulting in a mounting overdraft with the CB that reached P143.955 million by January 17, 1984. PBP’s capital was only P140.544 million. The CB demanded recapitalization and conversion of its overdraft into an emergency loan secured by real property. PBP failed to comply and its overdraft swelled to P1.023 billion by June 1987. On July 3 and August 7, 1987, the Monetary Board issued Resolutions Nos. 649 and 751 proposing a comprehensive rehabilitation plan and giving PBP one week to accept—or face “appropriate alternative action,” including exclusion from the clearinghCase Digest (G.R. No. 88353)
Facts:
- Background and Consolidation
- In April 1983, Central Bank (CB) examiners discovered that Producers Bank of the Philippines (PBP) had extended “fictitious,” unsecured DOSRI loans totaling ~₱300 million, despite a paid-in capital of only ₱140 million.
- Publicized reports triggered a bank run in August 1983; PBP’s overdraft with the CB rose from ₱74 million (Aug 29, 1983) to ₱143.955 million by January 17, 1984.
- Conservatorship and Rehabilitation Efforts
- Pursuant to Sec. 28-A of R.A. No. 265, the Monetary Board (MB) placed PBP under conservatorship on January 20, 1984 (MB Res. No. 164).
- From 1984 to mid-1987, CB and PBP’s principal stockholder (Producers Properties, Inc.) negotiated proposals under MB Resolutions No. 169, 490 and 584 for capital infusion, conversion of overdrafts into collateralized emergency loans, and installment payments; no agreement was reached.
- MB Resolutions Nos. 649 & 751 (1987)
- Res. 649 (July 3, 1987) proposed a rehabilitation plan assigning PBP’s overdraft claims to PDIC in exchange for issuance of preferred, non-voting shares convertible upon sale to private investors, subject to capital infusion and collateral conditions.
- Res. 751 (Aug 7, 1987) directed CB management to notify PBP—via its representative Henry Co—that it must accept the plan within one week or face “appropriate alternative action,” including exclusion from CB clearing operations.
- Trial Court Proceedings (Civil Case No. 17692)
- On August 27, 1987, PBP (and later PPI) filed suit against CB, MB, CB Governor, and conservator, seeking:
- Judicial nullification of MB Res. 649 & 751;
- Damages for alleged losses of ₱108.48 million (plus goodwill/profits); and
- TRO/preliminary injunction preventing implementation of the resolutions.
- August 31, 1987 – TRO issued. September 21, 1987 – preliminary injunction granted upon ₱2 million bond. October 27, 1987 – motion to dismiss denied.
- Court of Appeals and Supreme Court Review
- CB petitioned CA (G.R. No. 88353) in January 1988; CA dismissed petition October 6, 1988, and denied reconsideration May 17, 1989.
- Conservator petitioned CA (C.A.-G.R. SP No. 16972; G.R. No. 92943) in January 1989 to annul contempt orders; CA dismissed January 17, 1990, denied reconsideration April 2, 1990.
- On January 21, 1991, the Supreme Court consolidated G.R. Nos. 88353 & 92943 for review under Rule 45.
Issues:
- Jurisdiction over Civil Case No. 17692
- Whether suit filed without conservator’s approval and not by majority stockholders within 10 days (Sec. 29, CB Act).
- Whether action barred by failure to pay proper docket fees (Manchester doctrine).
- Preliminary Injunction
- Whether trial court gravely abused discretion by prejudging merits and enjoining CB from implementing MB Res. 649 & 751.
- Contempt Orders (G.R. No. 92943)
- Whether contempt rulings against the conservator were void for lack of hearing and for being based on null orders.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)