G.R. No. 158150 - Agriex Co., Ltd. vs. Villanueva

Petitioners: Emerito M. Ramos, Susana B. Ramos, Emerito B. Ramos, Jr., Josefa Ramos de la Rama, Horacio de la Rama, Antonio B. Ramos, Filomena Ramos Ledesma, Rodolfo Ledesma, Victoria Ramos Tanjuatco, and Teofilo Tanjuatco, who are the majority and controlling stockholders of the Overseas Bank of Manila (OBM).
Respondent: The Central Bank of the Philippines (CB), acting through its Monetary Board and its superintendent, which oversees bank operations under the Central Bank Act (Republic Act No. 265).

OBM was duly organized as a commercial banking corporation and began operations on January 6, 1964.
The bank became financially distressed after facing a suspension from clearing operations by the CB and was subjected to penalties, including excessive interest on overdrawings (12% per annum) and on reserve deficiencies (36% per annum).
These penalties, along with alleged fines and irregular transactions (e.g., unrecorded time deposits and diversion of funds through accounts controlled by bank officials), aggravated OBM’s troubled financial condition.

In response to its financial difficulties, petitioners sought remedial assistance:

Meetings and negotiations were held between OBM’s management (led by petitioner Emerito Ramos, Sr.) and CB officials, including Governor Andres Castillo.
CB officials indicated that failure to meet regulatory requirements (e.g., clearing balance, proper capital) would result in liquidation or takeover by another bank such as the Philippine National Bank (PNB).

To prevent liquidation, the CB insisted that the petitioners execute a Voting Trust Agreement which would:

Transfer voting rights of the shares held by petitioners to the CB-appointed trustee (the Superintendent of Banks).
Serve as a mechanism for rehabilitating, normalizing, and stabilizing OBM by reorganizing its management.

Petitioners, in compliance with CB’s conditions to avert liquidation, executed the Voting Trust Agreement on November 20, 1967, and also mortgaged their private properties to secure OBM’s obligations.
Despite these measures, no adequate financial assistance was extended; instead, CB resorted to further resolutions.

Following negotiations and the execution of the trust agreement, CB adopted several resolutions:

Resolution No. 1263 (adopted on July 30, 1968) which excluded OBM from clearing with the CB.
Resolution No. 1290 (adopted on August 1, 1968) authorizing its nominee Board of Directors to suspend OBM’s operations.
Later, Resolution No. 1333 (adopted on August 13, 1968) ordering the liquidation of OBM under Section 29 of the Central Bank Act.

The petitioners argued that these measures violated the CB’s earlier commitment to rehabilitate OBM as expressly represented in the Voting Trust Agreement and in numerous correspondences.
Central Bank’s affirmative defenses included:

Denial of being a contractual party to the Voting Trust Agreement.
Justification based on statutory limitations that prevented extension of additional loans due to regulatory restrictions.
Complaint of alleged irregularities and non-compliance by OBM with banking laws (e.g., diversion of deposits, unrecorded transactions).

While petitioners maintained that the CB’s representations and commitments created enforceable obligations, the CB attempted to shift the remedy to the Court of First Instance by invoking jurisdictional and statutory provisions under Section 29.

CB representatives made express representations of support and indicated readiness to provide financial aid (citing similar past assistance given to Republic Bank).
Petitioners complied with conditions (executing the trust and mortgaging properties) in reliance on these promises.

Despite these representations, the CB delayed financial assistance for months, increasing interest penalties and leaving OBM in dire financial straits.
The overall sequence of events revealed a conflict between the CB’s initial promises of rehabilitation and its subsequent actions leading to OBM’s liquidation.

Whether the Supreme Court had jurisdiction to restrain the implementation of CB’s resolutions (Nos. 1263, 1290, and later 1333), despite the claim that the matter fell within the exclusive original jurisdiction of the Court of First Instance under Section 29 of the Central Bank Act.

Whether the CB’s representations and insistence on executing the Voting Trust Agreement constituted a binding promise to rehabilitate, normalize, and stabilize OBM.
Whether the CB’s subsequent adoption of resolutions for liquidation was in breach of the obligations undertaken by its own officers as reflected in the trust agreement and the related correspondences.

Whether Resolutions Nos. 1263, 1290, and 1333 were legally valid or were adopted in abuse of discretion and in excess of the CB’s jurisdiction.
Whether the CB’s delay in extending adequate financial assistance amounted to a deliberate evasion of its contractual commitments and statutory duties.

Whether the CB should be estopped from reneging on its representations and commitments after petitioners relied upon them to their detriment by executing the trust agreement and mortgaging their properties.