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G.R. No. 81846 March 10, 1988

Republic of the Philippines
G.R. No. 81846 March 10, 1988

Pursuant to its authority under the Central Bank Act, the Monetary Board of the
Central Bank adopted on May 22,1987, Resolution No. 505(i) placing the Manila
Banking Corporation (Manila Bank) under receivership after finding that the had
bank had become insolvent. On May 29, 1987, Manila Bank filed in the regional
trial court of Manila a complaint to set aside the resolution and secured on July
14, 1987, after hearing, a writ of preliminary injunction against its enforcement
upon posting by the plaintiff of a bond in the sum of P10,000,000.00. On July
16,1987, the Central Bank moved for the lifting of the injunction, posting a
counterbond of P20,000,000.00 in accordance with Section 29 of the Central Bank
Act. The motion was denied, prompting the Central Bank to elevate the matter to
the Court of Appeals, where the trial court was sustained by a 3-2 vote of the
special ninth division. The Central Bank then came to this Court on certiorari
under Rule 65' to challenge the decision of the Court of Appeals as tainted with
grave abuse of discretion.
We reverse.
The applicable law is Section 29 which clearly expresses the mandate and
intention of the legislature. The language is plain and unequivocal, leaving no
doubt that the court is under obligation . to dissolve the injunction once the
counterbond in the required amount is posted. Commenting on injunctions in
general under Rule 58 of the Rules of Court, Chief Justice Moran observed that "a
wide latitude is given by this provision to the trial judge to grant, refuse, continue,
modify or dissolve the injunction as justice may require."
By contrast, Section 29
of the Central Bank Act grants no similar discretion, being cast in a quite different
and peremptory tenor, thus:
SEC. 29. ... The restraining order or injunction shall be refused or if granted, shall
be dissolved upon filing by the Central Bank of a bond, which shall be in the form
of cash or Central Bank cashier's check, in an amount twice the amount of the
bond of the petitioner or plaintiff conditioned that it will pay the damages which the
petitioner or plaintiff may suffer by the refusal or the dissolution of the injunction.
... .
It is axiomatic that the word "shall" imports a mandatory sense as distinguished
from the discretion that is allowed by use of the word "may."
Although this is not
an absolute rule, the exception does not apply in the case at bar in view of the
urgency of the measure contemplated in Section 29 and the adverse
consequences that are sure to follow if the injunction is not lifted and the bank is
allowed to reopen. After its earlier closure had been announced to the public, its
depositors will be frantically pounding at its doors to recover their money. A bank
run is inevitable. The old management will be reinstated to pursue the policies
that made the bank insolvent in the first place. The purpose of the receivership
will be frustrated. It is clearly for the purpose of guarding against such
eventualities that the law makes it obligatory upon the court to dissolve the
injunction once the required counterbond is posted by the Central Bank, as was
done in this case.
Parenthetically, it may not be amiss to note at note point that, as Manila Bank has
itself admitted, it received, before it was closed, emergency loans from the
Central Bank in the sum of P6.2 billion. Even this astronomical amount was
There is here no derogation of judicial power, considering the imperative reasons
for the provision. Neither is due process violated for there are urgent situations,
such as the one before us, where notice and hearing may be validly dispensed
It should also be stressed that at the time the above-cited provision was
incorporated in the Central Bank Act in 1976,
the procedural rules promulgated
by the Supreme Court could be repealed, altered or supplemented by the
Congress under Article X, Section 5(5), of the 1973 Constitution.
The private respondent's claim of arbitrariness in the adoption of the resolution in
question is not for the Court to decide as it is not a trier of facts. This is a matter
to be resolved by the court a quo in the light of the evidence to be adduced by the
parties during the trial on the merits of this case. Suffice it now for the Court to
reiterate that the factual findings of administrative agencies in their areas of
expertise are entitled to great respect as long as they are based on substantial
While this does not mean that these findings may not be rejected by
the courts if found to be arbitrary or oppressive, such a step should be taken with
the utmost caution and only on the basis of the strongest and most convincing
proof .

WHEREFORE, the petition is GRANTED, without prejudice to the writing of an
extended opinion, the Decision of February 5, 1988, promulgated by the
respondent court, and the Orders of the trial court dated July 14, 1987, and July
27, 1987, are SET ASIDE. The writ of preliminary injunction dated July 14, 1987, is
DISSOLVED. The temporary restraining order issued by this Court on February
16, 1988, is made PERMANENT This resolution is immediately executory. Paras,
Feliciano and Padilla, JJ., took no part.

1 Moran, Rules of Court, Vol. III, p. 90,1980 ed.
2 Buzabal v. Salvador, 84 SCRA 176 citing Dizon v. Encarnacion 9 SCRA 714.
3 Ynot v. Intermediate Appellate Court, 148 SCRA 659; Suntay v. People, 101 Phil. 833 17 C.J. 1224.
4 P.D. 1007, Sec. 1, Sept. 22, 1976.
5 Police Commission v. Lood, 127 SCRA 757; Rosario Bros., Inc. v. Ople, 131 SCRA 72; Ignacio v. C.A., 96
SCRA 648; Alba Patio de Makati v. Alba Patio de Makati Employees Association, 128 SCRA 253.
6 Manuel v. Villena, 37 SCRA 745; Ozaeta v. Oil Industry Commission, 49 SCRA 409; Del Mar v. Philippine
Veterans Adm., 51 SCRA 340; Imbong v. Mendoza, 55 SCRA 95.
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