Case Summary (G.R. No. 150886)
Petitioner
RBSM and Hilario P. Soriano, in his capacity as majority stockholder, challenged the Monetary Board’s Resolution No. 105 placing the bank under receivership and prohibiting it from doing business.
Respondent
The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC), designated as receiver under RA 7653.
Key Dates
– November 10, 1999 & December 31, 1999: BSP comptroller submitted financial condition reports.
– January 4, 2000: RBSM declared a bank holiday.
– January 21, 2000: Monetary Board issued Resolution No. 105.
– February 7–8, 2000: Petition for certiorari moved from RTC Malolos to Court of Appeals.
– March 28, 2000 & November 13, 2001: CA dismissed petition.
– June 9, 2000: MB adopted Resolution No. 966 directing PDIC to liquidate RBSM.
– February 16, 2007: Supreme Court decision.
Applicable Law
– 1987 Philippine Constitution (due process and police power)
– Republic Act No. 7653 (New Central Bank Act), Section 30 (receivership proceedings)
– Republic Act No. 265 (repealed), Section 29 (insolvency proceedings)
– Republic Act No. 8791 (General Banking Law, not yet in effect at the relevant time)
Factual and Procedural Background
BSP examiners’ reports as of October 31 and December 31, 1999, showed RBSM’s liabilities exceeded realizable assets, a growing deficit, insufficient cash on hand, and unaccounted funds siphoned to related entities. After RBSM unilaterally declared a bank holiday, the Monetary Board, acting on the Department of Rural Banks Supervision and Examination Sector report, issued Resolution No. 105 without prior hearing, placed RBSM under PDIC receivership, and later, through Resolution No. 966, ordered its liquidation.
Issue
Whether Section 30 of RA 7653 requires a current and complete examination by BSP examiners before a bank may be closed and placed under receivership, or whether a report by the head of the supervising or examining department suffices.
Legal Analysis
Under Section 30 of RA 7653, upon a report from the supervising or examining department head that a bank (a) cannot pay liabilities as they mature or (b) cannot continue without probable losses to depositors or creditors, the Monetary Board may summarily forbid the bank from doing business and designate PDIC as receiver. This summary authority, final and executory, is subject only to certiorari for grave abuse of discretion. The term “report” in Section 30 is unambiguous and differs from the “examination” required under the repealed RA 265, Section 29. The legislature consciously replaced “examination” with “report” to expedite bank closures in the public interest, eliminating prior notice and hearing to prevent runs and pani
...continue readingCase Syllabus (G.R. No. 150886)
Facts
- Rural Bank of San Miguel, Inc. (RBSM) is a domestic banking corporation organized in 1962 with 15 branches in Bulacan as of 2000.
- Hilario P. Soriano asserts he is the majority stockholder of RBSM.
- Beginning November 18, 1998, Land Bank of the Philippines (LBP) threatened to terminate RBSM’s check-clearing facility due to frequent losses and failure to replenish its special deposit.
- The Bangko Sentral ng Pilipinas (BSP) interceded to protect depositors, but LBP terminated clearing effective December 29, 1999.
- RBSM obtained emergency loans totaling ₱375 million; the final tranche of ₱26.189 million (approved December 28, 1999) was intended solely for depositor withdrawals.
- Treasury records show ₱12.6 million of that tranche was not used for withdrawals and remained unaccounted for; instead, payments were made to companies owned or controlled by Soriano and other RBSM officers.
- On January 4, 2000, RBSM declared a bank holiday, closing all branches and denying BSP access to examine its books and records.
- BSP comptroller Zenaida Cabais submitted two reports (as of October 31 and December 31, 1999) showing:
- Total liabilities: ₱1,076,863,000 → ₱1,009,898,000
- Realizable assets: ₱898,588,000 → ₱796,930,000
- Deficit: ₱178,275,000 → ₱212,968,000
- Cash on hand: ₱101,441,547 → ₱8,266,450
- Required capital infusion: ₱252,120,000; actual infusion (December 20, 1999): ₱5,000,000
- Based on these findings, Wilfredo B. Domo-ong of the BSP’s Department of Rural Banks Supervision and Examination Sector reported on January 20, 2000 that RBSM was insolvent and recommended receivership.
Resolution No. 105 (January 21, 2000)
- The Monetary Board (MB) of the BSP issued Resolution No. 105:
- Prohibited RBSM from doing business in the Philippines.
- Placed RBSM under receivership pursuant to Section 30, Republic Act No. 7653.
- Designated Philippine Deposit Insurance Corporation (PDIC) as receiver.
- Basis of the resolution:
- RBSM’s inability to pay its liabilities in the ordinary course.
- RBSM’s potential to incur probable losses to depositors and creditors.
- Failure to infuse adequate fresh capital despite notice.
Procedural History
- January 31, 2000: Petitioners filed a certiorari and prohibition petition in RTC Malolos, Branch 22, to annul Resolution No. 105.
- February 7, 2000: Petitio