G.R. No. 168332 - Koruga vs. Arcenas, Jr.

Case Summary (G.R. No. 168332)

Petitioner and Respondents (Formal)

G.R. No. 168332: Petitioner — Ana Maria A. Koruga; Respondents — Teodoro O. Arcenas, Jr., Albert C. Aguirre, Cesar S. Paguio, Francisco A. Rivera, and the Court of Appeals, Third Division. G.R. No. 169053: Petitioners — Teodoro O. Arcenas, Jr., Albert C. Aguirre, Cesar S. Paguio, and Francisco A. Rivera; Respondents — Hon. Sixto Marella, Jr. (Presiding Judge, Branch 138, RTC Makati) and Ana Maria A. Koruga.

Key Dates

Key Procedural and Chronological Dates

August 20, 2003: Koruga filed complaint in RTC Makati (Branch 138).
September 12, 2003: Arcenas et al. filed an Answer raising jurisdictional and other defenses.
October 18, 2004: RTC denied defendants’ motion seeking preliminary hearing and dismissal.
January 18, 2005: RTC denied motion for reconsideration.
February 9, 2005: CA issued 60-day TRO enjoining further RTC proceedings.
April 18, 2005: CA issued Resolution granting writ of preliminary injunction (bond P500,000).
July 20, 2005: CA issued Decision denying petition of Arcenas et al. and remanding case to RTC.
March 13, 2006: Supreme Court issued TRO enjoining RTC proceedings (bond P50,000).
July 5, 2006: Supreme Court denied motion to lift TRO.
June 19, 2009: Final Supreme Court Decision resolving the consolidated petitions.

Applicable Law and Constitutional Basis

Applicable Constitution: 1987 Philippine Constitution (decision date after 1990). Statutory and regulatory sources relied upon in the decision include: the Corporation Code (Sections 31–34, 74–75), the Interim Rules of Procedure on Intra-Corporate Controversies, Rule 59 of the 1997 Rules of Civil Procedure, the General Banking Law of 2000 (Republic Act No. 8791) and the New Central Bank Act (Republic Act No. 7653), including specific provisions on BSP supervision and Monetary Board powers (e.g., Sections 25, 29, 30, 36, 37, 56).

Nature of the Complaint

Subject Matter of the RTC Complaint

Koruga’s complaint alleged: (1) violations of Sections 31–34 of the Corporation Code (self-dealing and conflicts of interest by directors); (2) denial of her statutory right as a stockholder to inspect corporate records under Sections 74–75; and (3) prayed for receivership and creation of a management committee relying on Rule 59 RCP, the Interim Rules, the General Banking Law, and the New Central Bank Act. The factual allegations centered on unsafe, unsound, and allegedly fraudulent banking practices, including approval of loans to allegedly “dummy” corporations, dacion en pago transactions, and interlocking interests.

Procedural Posture in the Trial Court and Court of Appeals

RTC and CA Proceedings Leading to the Supreme Court

Arcenas et al. raised multiple defenses in their Answer, including lack of subject‑matter jurisdiction, lack of personal jurisdiction, forum-shopping, and nuisance/harassment. The RTC denied their motion and motion for reconsideration, prompting Arcenas et al. to petition the Court of Appeals for certiorari and prohibition and to seek injunctive relief. The CA issued a TRO and subsequently, by April 18, 2005 resolution, a writ of preliminary injunction (pending bond). The CA later (July 20, 2005) denied the petition and remanded the case to the RTC to proceed. Koruga then filed a petition for certiorari in the Supreme Court (G.R. No. 168332) challenging the CA’s April 18, 2005 resolution; Arcenas et al. filed a petition for review on certiorari under Rule 45 (G.R. No. 169053) seeking reversal of the CA’s July 20, 2005 decision.

Procedural Issues Addressed by the Supreme Court

Verification, Forum‑Shopping Certification and Related Formalities

Arcenas et al. contended the Petition (G.R. No. 168332) should be dismissed for defective verification and certification against forum-shopping because only a facsimile was initially attached and the document allegedly lacked proper authentication from the Philippine Consulate. The Supreme Court found that Koruga’s counsel had explained the circumstance and later filed the original notarized and authenticated document (Compliance submitted September 5, 2005). The Court accepted the compliance and treated the procedural objection as satisfied.

Primary Legal Issue

Controlling Legal Issue: Which Forum Has Jurisdiction — RTC or BSP?

The dispositive legal question was whether the RTC had jurisdiction to hear and adjudicate Koruga’s complaint — particularly the receivership/management committee relief and allegations of unsafe or unsound banking practices — or whether jurisdiction rested exclusively with the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).

Supreme Court’s Rationale on Jurisdiction

BSP’s Exclusive Jurisdiction and Supervisory Authority over Banks

The Court analyzed the nature of Koruga’s allegations and concluded they were directed at the conduct of Banco Filipino’s banking operations (loans, dacion en pago, interlocking transactions), matters squarely within BSP regulatory and supervisory competence. The New Central Bank Act and the General Banking Law vest the Monetary Board and BSP with exclusive power to examine, supervise, and take summary corrective action concerning banks, including appointment of conservators or designation of the Philippine Deposit Insurance Corporation as receiver. Sections 29 and 30 of the New Central Bank Act expressly vest the designation of conservator or receiver exclusively in the Monetary Board and make actions under those sections final and executory; they may only be restrained by the courts on certiorari limited to excess of jurisdiction or grave abuse of discretion. The Court emphasized statutory provisions (e.g., Section 36 on restrictions on bank exposure to insiders; Section 56 on determining unsafe or unsound business) and the administrative sanctions regime in Section 37, reinforcing BSP’s comprehensive regulatory scheme.

Primacy of Special Law over General Law

Corporation Code Claims Subsumed by Bank Regulatory Regime

The Court explained that while the Corporation Code governs directors’ duties generally, the New Central Bank Act and related banking laws are special laws regulating banking institutions. Between a general law (Corporation Code) and a special law (banking statutes), the special law prevails (generalia specialibus non derogant). Consequently, alleged violations of self‑dealing and conflicts of interest by bank directors are matters to be addressed primarily under the banking regulatory framework administered by the BSP and Monetary Board.

Evidence of BSP Action and Timing Considerations

BSP’s Ongoing Examination and Preclusion of RTC Action Prior to Monetary Board Decision

The record showed that Koruga had written the Monetary Board and that the BSP had already been investigating Banco Filipino (an October 2002 Report of Examination and subsequent Monetary Board Resolution No. 1034 directing Banco Filipino to comment and subjecting the bank to potential remedial action). Because the Monetary Board had not yet concluded its administrative action at the time Koruga filed in RTC, the Court held that RTC jurisdiction could only be invoked after the Monetary Board had acted, and then only on certiorari limited to instances of excess of jurisdiction or grave abuse of discretion as provided by Section 30. The Court indicated that the appropriate course was for the Monetary Board to determine the matters raised and, if aggrieved, stockholders representing a majority of capital stock could seek judicial relief in the limited manner prescribed by statute.

Standing and Who May Seek Judicial Review

Stockholder Standing under Section 30 —

Case Syllabus (G.R. No. 168332)

Procedural Posture and Nature of the Proceedings

Two petitions before the Supreme Court arising from a single complaint filed by Ana Maria A. Koruga against Banco Filipino’s Board of Directors and members of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).
G.R. No. 168332: Petition for Certiorari under Rule 65 filed by Koruga seeking annulment of the Court of Appeals (CA) Resolution dated April 18, 2005 that granted a writ of preliminary injunction in favor of Teodoro O. Arcenas, Jr., Albert C. Aguirre, Cesar S. Paguio, and Francisco A. Rivera (collectively, Arcenas, et al.).
G.R. No. 169053: Petition for Review on Certiorari under Rule 45 filed by Arcenas, et al. seeking to set aside the CA Decision dated July 20, 2005 which denied their petition and remanded the case to the RTC.
The underlying complaint (Civil Case No. 03-985) was filed August 20, 2003 in the Regional Trial Court (RTC) of Makati City, Branch 138 (Presiding Judge Sixto Marella, Jr.).
Procedural events included: defendants’ Answer and motion to dismiss for lack of jurisdiction and other grounds (filed Sept. 12, 2003); RTC denial of defendants’ Manifestation and Motion (Oct. 18, 2004) and denial of reconsideration (Jan. 18, 2005); CA issuance of a 60-day TRO (Feb. 9, 2005); CA Resolution issuing writ of preliminary injunction (Apr. 18, 2005) conditioned on a P500,000 bond; CA Decision (July 20, 2005) denying the petition and remanding the case; Supreme Court TRO (Mar. 13, 2006) enjoining RTC on filing of P50,000 bond; Supreme Court later made TRO permanent and ultimately dismissed/remanded as detailed below.
The two petitions were consolidated by the Supreme Court (motion granted Sept. 26, 2005).

Allegations and Reliefs Sought by Petitioner (Koruga)

Alleged violations of Sections 31–34 of the Corporation Code prohibiting self-dealing and conflicts of interest by directors and officers of Banco Filipino.
Specific factual allegations included:
- Engagement in unsafe, unsound, and fraudulent banking practices jeopardizing the bank, shareholders (including Koruga), and depositors.
- Granting loans to six “dummy” borrower corporations lacking financial capacity at time of loan approval.
- Approval and acceptance of dacion en pago (payment of loans with property instead of cash), resulting in diminished future interest income and reduced liquidity.
- Giving favorable treatment to borrower corporations with interlocking directors/officers and interlocking ownerships.
- Misappropriation, misapplication, or ratified misappropriations of almost P1.6 billion of the bank’s funds to the prejudice of the petitioner, other depositors, and the public.
Asserted stockholder rights: denial of stockholder inspection of corporate records (including financial statements) under Sections 74 and 75 of the Corporation Code and the Interim Rules.
Prayer for receivership and creation of a management committee invoking:
- Rule 59 of the 1997 Rules of Civil Procedure,
- Section 5.2 of R.A. No. 8799,
- Rule 1, Sections 1(a)(1) and 1(a)(2), Rule 7 and Rule 9 of the Interim Rules,
- The General Banking Law of 2000 and the New Central Bank Act.

Defendants’ (Arcenas, et al.) Responses and Affirmative Defenses

Filed Answer (Sept. 12, 2003) raising lack of jurisdiction of the trial court to take cognizance of the case.
Filed Manifestation and Motion seeking dismissal on grounds of:
- Lack of jurisdiction over the subject matter,
- Lack of jurisdiction over the persons of the defendants,
- Forum-shopping (existence of another pending case before the BSP Monetary Board),
- That the action was a nuisance/harassment suit.
Requested the trial court to rule on affirmative defenses, dismiss the intra-corporate case, and set the matter for preliminary hearing.
Alleged irregularities regarding the Verification and Certification Against Forum-Shopping attached to Koruga’s petition (alleged facsimile; notarization/execution in Seattle, Washington; lack of consular certification).

Trial Court Rulings Prior to CA Intervention

RTC (Branch 138) Order dated October 18, 2004 denied defendants’ Manifestation and Motion, reasoning that a preliminary hearing on affirmative defenses is proscribed by the Interim Rules of Procedure on Intracorporate Controversies; the court deferred resolution of affirmative defenses.
RTC denied reconsideration of the October 18, 2004 Order on January 18, 2005.

Court of Appeals Actions

Arcenas, et al. sought relief from the CA by Petition for Certiorari and Prohibition under Rule 65 with prayer for TRO and writ of preliminary injunction.
CA issued a 60‑day TRO on February 9, 2005 enjoining Judge Marella from conducting further proceedings in the RTC case.
After the TRO lapsed, CA issued a Resolution on April 18, 2005 ordering issuance of a writ of preliminary injunction (to preserve the effectiveness of any final resolution) upon posting of a P500,000 bond.
CA later, in a Decision dated July 20, 2005, denied the petition, found no grave abuse of discretion by the RTC, and remanded the case to the RTC for further proceedings and to determine validity of service of summons.

Supreme Court Petitions, Reliefs Sought, and Procedural Challenges Before the High Court

Koruga’s certiorari petition (G.R. No. 168332) sought to restrain the CA from implementing the April 18, 2005 Resolution and to have the injunction permanently set aside, alleging the CA acted without factual or legal basis.
Arcenas, et al.’s petition (G.R. No. 169053) sought to set aside the CA July 20, 2005 Decision, arguing among others that: (i) the RTC lacked jurisdiction due to improper service of summons; (ii) the action is a nuisance or harassment suit; (iii) pending Monetary Board proceedings (forum-shopping); and (iv) jurisdiction over the subject matter is vested in the BSP.
Procedural challenge raised by Arcenas, et al. concerning Koruga’s initial submission of a facsimile of the Verification and Certification Against Forum-Shopping executed abroad; Koruga later filed the original notarized and authenticated verification, which the Supreme Court found satisfactory.

Issues Presented to the Supreme Court

Primary legal question: Which body has jurisdiction over the Koruga Complaint — the Regional Trial Court (RTC) or the Bangko Sentral ng Pilipinas (BSP)/Monetary Board?
Ancillary procedural issues:
- Whether the CA erred in issuing the writ of preliminary injunction (April 18, 2005) and whether relief was now moot or academic.
- Whether Koruga’s petition was defective due to an initial facsimile Verification and Certification Against Forum-Shopping executed abroad.
- Whether Koruga, as a minority stockholder, had standing to invoke remedies under the New Central Bank Act (specifically to file certiorari against Monetary Board action which the Act limits to majority stockholders in certain contexts).

Relevant Statutory Provisions and Doctrinal Authorities Cited

Corporation Code: Sections 31–34 (liability of directors; self-dealing; contracts with interlocking directors; disloyalty), Sections 74–75 (stockholder inspection rights referenced by complaint).
Interim Rules of Procedure on Intra-Corporate Controversies (A.M. No. 01-2-04-SC dated April 1, 2001) cited in procedural context.
Rule 59, 1997 Rules of Civil Procedure (receivership) referenced by petitioner.
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