Case Summary (G.R. No. 254333)
Key Dates
Incorporation and BSP licensing of MaxBank: February 2006.
Initial BSP PCA initiation: March 6, 2008 (Resolution No. 281).
Failure of PCA declared: July 10, 2014.
Re‑initiation to PCA: October 9, 2014 (after change in ownership).
Monetary Board approval of share transfer to third‑party investors and license conversion: November 16, 2017 (Resolution No. 1922).
BSP regular examinations: December 12, 2017–January 23, 2018; February 20–April 16, 2019.
Monetary Board confirmation of unsafe/unsound practices: October 10, 2019 (Resolution No. 1569).
Monetary Board prohibition of business and designation of PDIC as receiver: November 7, 2019 (Resolution No. 1704.C).
Petitioner filed mandamus in Court of Appeals: February 5, 2020.
Supreme Court decision resolving review: January 14, 2025.
Applicable Law and Constitutional Basis
Primary statutory framework: Republic Act No. 7653 (New Central Bank Act of 1993), as amended by Republic Act No. 11211 (2019) — especially Section 30 (grounds and procedure for receivership, liquidation, and the Monetary Board’s power to summarily forbid a bank from doing business) and Section 37 (administrative sanctions, cease‑and‑desist, and right to request a hearing). Secondary statute referenced: Republic Act No. 7906 (Thrift Bank Act of 1995), Section 9 (powers of the Monetary Board in capital deficiency situations). Constitutional basis: 1987 Philippine Constitution (Article XII, section 20) as the decision was issued in 2025 and the 1987 Constitution governs.
Procedural Posture and Reliefs Sought
Aguilar sought: (a) a writ of mandamus directing BSP/Monetary Board/PDIC to apply RA 7906 remedies and to conduct the Section 37 hearing; (b) production of an accurate financial condition/result of operations and a copy of the Report of Examination; and (c) preliminary injunctive relief preventing PDIC liquidation and seeking reinstatement or other protections. The Court of Appeals denied the mandamus petition as procedurally infirm under Rule 65 and held that the proper remedy to contest a Monetary Board closure is certiorari by majority stockholders within ten days. Aguilar then petitioned the Supreme Court by certiorari review.
Core Legal Holdings — Monetary Board Authority and “Close Now, Hear Later”
The Monetary Board, exercising the BSP’s supervisory authority under RA 7653 and the State’s police power, may summarily and without prior hearing forbid a bank from doing business if supported by substantial evidence that the bank (a) has insufficient realizable assets to meet liabilities, and/or (b) cannot continue in business without involving probable losses to depositors or creditors, among enumerated grounds. The statutory scheme contemplates immediate action to protect depositors and the public (“close now, hear later”); due process may occur after closure through judicial review but prior hearing is not required because a prior public proceeding could precipitate runs and further dissipation of assets.
Proper Remedy to Challenge a Monetary Board Closure
Section 30 prescribes that actions of the Monetary Board under receivership/liquidation are final and executory and may be set aside only by petition for certiorari on the ground of excess or grave abuse of discretion amounting to lack or excess of jurisdiction. The petition for certiorari is available exclusively to the stockholders of record representing the majority of the capital stock and must be filed within ten (10) days from receipt by the bank’s board of directors of the order directing receivership, liquidation, or conservatorship. Mandamus is not the correct remedy to compel the Monetary Board to exercise its discretionary powers or to substitute judicial judgment for administrative discretion; mandamus lies only to compel performance of a ministerial duty or to protect an established legal right where no other adequate remedy exists.
Mandamus Standards and Why It Was Inappropriate Here
Under Rule 65 (mandamus) and settled jurisprudence, mandamus issues only where a clear legal right exists and the respondent has a ministerial duty to perform. The Monetary Board’s decision to close a bank is a discretionary, quasi‑judicial exercise entrusted to the Monetary Board; mandamus will not control that discretion. Aguilar’s claims sought review of a discretionary closure and asked for discretionary relief (application of RA 7906 measures, a Section 37 hearing, etc.), not enforcement of a purely ministerial duty. The Court therefore affirmed the Court of Appeals’ conclusion that mandamus was the wrong remedy.
Standing and the Statutory 10‑Day Rule
Section 30 confines judicial review to majority stockholders of record and imposes a strict 10‑day reglementary period. Aguilar, a nominal shareholder and former officer, was not a majority stockholder of record and filed beyond the ten‑day window. The statutory limitation serves to prevent incumbent boards and officers from frustrating closure orders and to vest decision whether to litigate in majority shareholders who have the principal economic stake. The Supreme Court reaffirmed that the statutory prescription is valid and that compliance with its party and temporal requirements is mandatory.
Challenge to the Constitutionality of Section 30
Petitioner argued Section 30 unconstitutionally intrudes on the Supreme Court’s rule‑making power by limiting the mode of judicial contest, the party with standing, and the period to litigate. The Court rejected the collateral attack: (1) Aguilar raised the constitutional question only conditionally and collaterally after failing to meet Section 30 requirements; (2) statutes are presumptively constitutional, and petitioner failed to demonstrate clear and unequivocal breach of the Constitution; (3) Congress may lawfully define the jurisdiction of administrative agencies and conditions for judicial review, including temporal and party limitations. The Court therefore upheld Section 30’s constitutionality.
Due Process Claims — Section 37 and Request for Report of Examination
Aguilar asserted denial of due process because he was not afforded a Section 37 administrative hearing or a copy of the Report of Examination. The Court held: (a) Section 37 (administrative sanctions and the right to request a hearing) is distinct from Section 30 closure proceedings — Section 37 contemplates administrative sanctions and a hearing for those sanctions but does not require a pre‑closure hearing under Section 30; (b) there is no statutory ministerial duty obligating BSP to furnish a bank a copy of the Report of Examination, consistent with prior precedent (BSP v. Valenzuela); and (c) the statutory closure framework contemplates post‑closure judicial inquiry rather than mandatory prior provision of the full Report of Examination or pre‑closure hearings.
Factual Findings and Substantial Evidence Supporting Closure
The Monetary Board’s Resolution No. 1704.C relied on BSP examination findings and departmental memoranda summarizing multiple supervisory concerns as of 31 December 2018 and subsequent supervisory correspondence. Key factual findings included: negative adjusted capital and negative capital adequacy ratio; chronic net losses and accumulated deficit; insufficient estimated realizable value of assets vis‑à‑vis liabilities (negative net realizable value); continued unsafe or unsound banking practices (hazardous lending, servicing deposits outside bank premises, AML/CFT weaknesses); weak board and management oversight; failure of investor commitments and capital infusions; and material discrepancies regarding the source and composition of capital infusions. The Monetary Board concluded that losses were likely to persist and that continuation of MaxBank’s operations would involve probable losses to depositors and creditors.
Standard of Review and Deference to Monetary Board Findings
The Court reiterated the established rule that the Monetary Board’s factual determinations are accorded great weight and will not be disturbed
...continue readingCase Syllabus (G.R. No. 254333)
Parties and Nature of the Case
- Petitioner: Josef‑Dax Aguilar — a nominal shareholder, former director, and former President & Chief Executive Officer of Maximum Savings Bank, Inc. (MaxBank).
- Respondents: Bangko Sentral ng Pilipinas (BSP), the Monetary Board (MB), and the Philippine Deposit Insurance Corporation (PDIC).
- Relief sought: Petition for Review on Certiorari to reverse and set aside the Court of Appeals Decision and Resolution that denied petitioner’s Petition for Mandamus with a Prayer for Writ of Preliminary Injunction.
- Underlying action challenged: Monetary Board Resolution No. 1704.C (November 7, 2019) prohibiting MaxBank from doing business in the Philippines and designating PDIC as receiver; and related BSP administrative actions including the revocation of MB Resolution No. 1922.
Factual Background — Corporate History and Supervisory Actions
- MaxBank was incorporated and licensed as a thrift bank by the BSP in February 2006.
- BSP placed MaxBank under the Prompt Corrective Action (PCA) framework: first initiation by Monetary Board Resolution No. 281 on March 6, 2008 due to management and supervisory concerns; a failure of PCA declared on July 10, 2014 for not meeting minimum capital; re‑initiation on October 9, 2014 after shareholdings acquired by Numoni Group.
- Numoni Group and subsequent majority owners (Oppacher Group) repeatedly failed to infuse required capital. In 2017 Oppacher Group entered a share purchase agreement to transfer 100% of MaxBank shares to three newly incorporated third‑party investors (Unicorn Wing Investments Limited, Century Merit Global Limited, and DLO Holdings Philippines Inc.).
- Monetary Board Resolution No. 1922 (November 16, 2017) had approved the sale/transfer to the third‑party investors and changed MaxBank's license from microfinance‑oriented thrift bank to regular thrift bank.
- BSP conducted a regular examination of MaxBank from December 12, 2017 to January 23, 2018, with an exit conference on January 31, 2018; examination findings documented critically deficient capital, deficient asset quality, high and increasing credit risk, deficient management, critically deficient earnings, unsatisfactory liquidity, inadequate market‑risk sensitivity, high operational/compliance risk, and vulnerabilities under AML laws, among other matters.
- BSP provided directives requiring MaxBank to strengthen IT risk management and operational risk management, and to comply with outstanding commitments.
- Aguilar began his employment at MaxBank as Strategic Business Director on December 10, 2018 and became President & CEO on December 17, 2018.
- BSP again conducted a regular examination from February 20, 2019 to April 16, 2019; Advanced Report of Examination Findings were issued March 21 and April 16, 2019; an exit conference with bank executives followed.
- MaxBank submitted replies and supplemental justifications repeatedly (May 3, 2019 and various letters through October 14, 2019); BSP evaluated those replies and, via letters of August 1, 2019 and October 4, 2019, communicated the results of the evaluation to MaxBank.
- Monetary Board Resolution No. 1569 (October 10, 2019) confirmed unsafe and unsound practices; BSP communicated directions to cease certain banking practices on October 15 and October 18, 2019.
- Monetary Board Resolution No. 1704.C (November 7, 2019) prohibited MaxBank from doing business under Section 30(b) and (c) of RA No. 7653 (as amended) and designated PDIC as receiver; BSP denied certain requests by MaxBank on November 8, 2019 (e.g., opportunity to defend under Section 37, copy of Report of Examination, and access to documents) and revoked Resolution No. 1922 approving the transfer of shares to third‑party investors.
- Aguilar sent letters on November 11 and 12, 2019 seeking reconsideration and opportunity to be heard; subsequent letters were noted without action by BSP.
Procedural History Prior to Supreme Court Petition
- On February 5, 2020, Aguilar filed a Petition for Mandamus with a Prayer for Writ of Preliminary Injunction in the Court of Appeals seeking: (a) implementation of RA No. 7906 Section 9 and Section 13 of that Act regarding capital deficiency and alleged violations; (b) due process via a hearing mandated by Section 37 of RA No. 7653; and (c) submission of accurate financial condition and/or results of operations of MaxBank.
- Court of Appeals Decision (September 3, 2020): denied the petition for mandamus as procedurally infirm under Rule 65, Section 3 of the Rules of Court; held that Aguilar lacked standing, that mandamus was the wrong remedy, that Section 30 authorized Monetary Board closure, and that Aguilar failed to prove entitlement to injunctive relief.
- Court of Appeals Resolution (November 24, 2020): denied Motion for Reconsideration for lack of merit.
- Petitioner filed present Petition before the Supreme Court on December 3, 2020; followed by further pleadings and motions: Motion to Admit Ex Abundanti Ad Cautelam (Sept. 20, 2021), respondents’ Comments (Sept. 3, 2021 and Sept. 15, 2021), petitioner’s Consolidated Reply (Dec. 19, 2023), and other filings noted in the record; Supreme Court issued decision on January 14, 2025.
Reliefs Sought and Core Contentions of Petitioner
- Petitioner sought: mandamus compelling BSP, Monetary Board, and PDIC to (1) apply RA No. 7906 Section 9 and Section 13 as to capital deficiency; (2) provide due process via a Section 37 hearing; and (3) provide accurate financial statements and Report of Examination.
- Petitioner’s principal arguments:
- The Court of Appeals erred in dismissing the petition on procedural grounds.
- Section 30 of RA No. 7653 (as amended) is unconstitutional because it restricts manner (certiorari only), persons who may complain (stockholders of record representing majority of capital stock), and the 10‑day period to file — allegedly encroaching on the Supreme Court's rule‑making power and modifying Rules 43 and 65.
- Ten (10) days is too short to challenge a closure, especially when officers lose access to bank records upon closure.
- He was deprived of livelihood, honor, and reputation and thus has standing.
- He was denied due process (insufficient opportunity; exit conference inadequate; denial of access to Report of Examination).
- The Report of Examination contained faulty assumptions and misrepresentations (e.g., treatment of deposits for stock subscription, alleged sequencing of emails and photos, characterization of FX risk/FX losses despite reported FX profit).
- More recent financials (July–September 2019) and managerial changes demonstrated improved solvency and profitability, including claimed net incomes for July and August 2019 and alleged excess assets figures, which petitioner argued made the closure unlawful and based on illogical accounting.
Respondents’ Principal Defenses and Assertions
- Respondents contended dismissal was proper on both procedural and substantive grounds: mandamus was the wrong remedy and the Court of Appeals resolved the case judiciously on the merits.
- Respondents’ main arguments:
- Mandamus cannot compel discretionary acts and cannot substitute for the remedy expressly provided by law; proper remedy for challenging closure is certiorari by majority stockholders.
- Even if treated as certiorari, petitioner lacks standing and failed to file within the 10‑day period required by Section 30.
- Petitioner was a nominal shareholder and filed almost three months after receiving certified copy of Resolution No. 1704.C (received Nov. 8, 2019; petition filed Feb. 5, 2020).
- Requests for reconsideration did not toll the 10‑day period.
- Petitioner failed to prove ministerial duty on BSP to provide copies of the Report of Examination or to afford a Section 37 hearing prior to closure; Section 37 applies to administrative sanctions and is distinct from Section 30 emergency closure.
- Monetary Board acted within its supervisory authority and pursuant to findings, substantial evidence, and the BSP’s mandate to protect depositors, creditors, and the financial system; closure was supported by evidence of unsafe/unsound practices, capital deficiency, chronic losses, violations of MORB Section 274, foreign stockholding limits, and potential AML/CFT deficiencies.
- PDIC asserted petitioner is not a real party in interest and that PDIC performed ministerial duties as receiver.
Issues Presented to the Supreme Court
- Whether the Court of Appeals correctly dismissed Aguilar’s petition for mandamus as the wrong remedy.
- Whether petitioner has standing to challenge MaxBank’s closure under Section 30 of RA No. 7653, as amended by RA No. 11211; if not, whether Section 30 (as amended) is constitutional.
- Whether petitioner was denied due process — specifically, applicability of Section 37 and entitlement to a copy of the Report of Examination.
- Whether MaxBank’s closure under Monetary Board Resolution No. 1704.C had factual and legal basis (i.e., whether there was grave abuse of discretion amounting to lack or excess of jurisdiction).
Governing Statutory and Doctrinal Law Cited
- Republic Act No. 7653 (1993), as amended by RA No. 11211 (2019), Section 30 (Proceedings in Receivership and Liquidation) — provides grounds permitting the Monetary Board to summarily forbid a bank from