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3. Banco Filipino Savings & Mortgage Bank vs. Monetary Board, G.R. No. 81304. December 11, 1991.

*
Central Bank of the Philippines BF HOMES DEVELOPMENT CORPORATION, petitioner, vs. THE COURT OF
APPEALS, CENTRAL BANK AND CARLOTA P. VALENZUELA, respondents.
G.R. No. 70054. December 11, 1991.*
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. THE G.R. No. 90473. December 11, 1991.*
MONETARY BOARD, CENTRAL BANK OF THE PHILIPPINES, JOSE B. EL GRANDE DEVELOPMENT CORPORATION, petitioner, vs. THE COURT OF
FERNANDEZ, CARLOTA P. VALENZUELA, ARNULFO B. AURELLANO AND APPEALS, THE EXECUTIVE JUDGE of the Regional Trial Court of Cavite, CLERK
RAMON V. TIAOQUI, respondents. OF COURT and ExOfficio Sheriff ADORACION VICTA, BANCO FILIPINO SAVINGS
AND MORTGAGE BANK, CARLOTA P. VALENZUELA AND SY CIP, SALAZAR,
G.R. No. 68878. December 11, 1991.* HERNANDEZ AND GATMAITAN, respondents.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. Remedial Law; Jurisdiction; Generally, courts have no supervising power
INTERMEDIATE APPELLATE COURT AND CELESTINA S. PAHIMUNTUNG, over the proceedings and actions of the administrative departments of the
assisted by her husband, respondents. government, exceptions.—It is a well-recognized principle that administrative and
G.R. Nos. 77255–58. December 11,1991.* discretionary functions may not be interfered with by the courts. In general, courts
TOP MANAGEMENT PROGRAMS CORPORATION AND PILAR DEVELOPMENT have no supervising power over the proceedings and actions of the administrative
CORPORATION, petitioners, vs.THE COURT OF APPEALS, The Executive Judge of departments of the government. This is generally true with respect to acts
the Regional Trial Court of Cavite, Ex-Officio Sheriff REGALADO E. EUSEBIO, 769
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, CARLOTA P. VALENZUELA VOL. 204, DECEMBER 11, 1991 769
AND SYCIP, SALAZAR, HERNANDEZ AND GATMAITAN, respondents.
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central
G.R. No. 78766. December 11, 1991.*
EL GRANDE CORPORATION, petitioner, vs. THE COURT OF APPEALS, THE Bank of the Philippines
EXECUTIVE JUDGE OF The Regional Trial Court and Ex-Officio Sheriff REGALADO involving the exercise of judgment or discretion, and findings of fact. But when
E. EUSEBIO, BANCO FILIPINO SAVINGS AND MORTGAGE BANK, CARLOTA P. there is a grave abuse of discretion which is equivalent to a capricious and whimsical
VALENZUELA AND SYCIP, SALAZAR, FELICIANO AND HERNANDEZ, exercise of judgment or where the power is exercised in an arbitrary or despotic
respondents. manner, then there is a justification for the courts to set aside the administrative
determination reached.
G.R. No. 78767. December 11,1991.* Commercial Law; Banks and Banking; Section 29 of Republic Act No. 265
METROPOLIS DEVELOPMENT CORPORATION, petitioner, vs. COURT OF known as the Central Bank Act provides the person designated as receiver to
APPEALS, CENTRAL BANK OF THE PHILIP-PINES, JOSE B. FERNANDEZ, JR., immediately take charge of the bank’s assets and liabilities, administer the same for
CARLOTA P. the benefit of its creditors and represent the bank personally or through counsel as
________________ he may retain in all actions or proceedings for or against the institution and to bring
* EN BANC.
and foreclose mortgages in the name of the bank.—Section 29 of the Republic Act No.
768 265, as amended, known as the Central Bank Act, provides that when a bank is
768 SUPREME COURT REPORTS ANNOTATED forbidden to do business in the Philippines and placed under receivership, the person
designated as receiver shall immediately take charge of the bank’s assets and
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
liabilities, as expeditiously as possible, collect and gather all the assets and
the Philippines administer the same for the benefit of its creditors, and represent the bank
VALENZUELA, ARNULFO AURELLANO AND RAMON TIAOQUI, respondents. personally or through counsel as he may retain in all actions or proceedings for or
against the institution, exercising all the powers necessary for these purposes
G.R. No. 78894. December 11, 1991.*
including, but not limited to, bringing and foreclosing mortgages in the name of the
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. COURT OF
bank. If the Monetary Board shall later determine and confirm that the banking
APPEALS, THE CENTRAL BANK OF THE PHILIPPINES, JOSE B. FERNANDEZ,
institution is insolvent or cannot resume business with safety to depositors, creditors
JR., CARLOTA P. VALENZUELA, ARNULFO B. AURELLANO AND RAMON
and the general public, it shall, if public interest requires, order its liquidation and
TIAOQUI, respondents.
appoint nu liquidator who shall take over and continue the functions of the receiver
G.R, No. 81303. December 11,1991.* previously appointed by Monetary Board. The liquidator may, in the name of the
PILAR DEVELOPMENT CORPORATION, petitioner, vs.COURT OF APPEALS, HON. bank and with the assistance of counsel as he may retain, institute such actions as
MANUEL M. COSICO, in his capacity as Presiding Judge of Branch 136 of the may be necessary in the appropriate court to collect and recover accounts and assets
Regional Trial Court of Makati, CENTRAL BANK OF THE PHILIPPINES AND of such institution or defend any action filed against the institution.
CARLOTA P. VALENZUELA, respondents.

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Same; Same; Same; Pendency of G.R. No. 70054 did not diminish the powers VOL. 204, DECEMBER 11, 1991 771
and authority of the designated liquidator to effectuate and carry on the
administration of the bank.—When the issue on the validity of the closure and Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central
receivership of Banco Filipino bank was raised in G.R. No. 70054, the pendency of the Bank of the Philippines
case did not diminish the powers and authority of the designated liquidator to bank is insolvent or can no longer resume business with safety to its depositors,
effectuate and carry on the administration of the bank. In fact when We adopted a creditors and the general public, it shall, if public interest will be served, order its
resolution on August 25, 1985 and issued a restraining order to respondents Monetary liquidation.
Board and Central Bank, We enjoined merely Same; Same; Same; Same; Mandatory requirements to be complied with
770 before a bank found to be insolvent is ordered closed and forbidden to do business in
7 SUPREME COURT REPORTS ANNOTATED the Philippines.—There is no question that under Section 29 of the Central Bank Act,
70 the following are the mandatory requirements to be complied with before a bank
found to be insolvent is ordered closed and forbidden to do business in the
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Philippines: Firstly, an examination shall be conducted by the head of the appropriate
Bank of the Philippines supervising or examining department or his examiners or agents into the condition of
further acts of liquidation. Such acts of liquidation, as explained in Sec. 29 of the bank; secondly, it shall be disclosed in the examination that the condition of the
the Central Bank Act are those which constitute the conversion of the assets of the bank is one of insolvency, or that its continuance in business would involve probable
banking institution to money or the sale, assignment or disposition of the same to loss to its depositors or creditors; thirdly, the department head concerned shall
creditors and other parties for the purpose of paying the debts of such institution. We inform the Monetary Board in writing, of the facts; and lastly, the Monetary Board
did not prohibit however acts such as receiving collectibles and receivables or paying shall find the statements of the department head to be true.
off creditors’ claims and other transactions pertaining to normal operations of a Same; Same; Same; Same; Same; The examination contemplated in Section
bank. 29 of the CB Act as a mandatory requirement was not completely and fully complied
Same; Same; Same; In G.R. Nos. 68878, 77255–68, 78766 and 90473, the with.—It is evident from the foregoing circumstances that the examination
liquidator by himself or through counsel has the authority to bring actions for contemplated in Sec. 29 of the CB Act as a mandatory requirement was not
foreclosure of mortgages executed by debtors in favor of the bank.—Clearly, in G.R. completely and fully complied with. Despite the existence of the partial list of findings
Nos. 68878, 77255–68, 78766 and 90473, the liquidator by himself or through in the examination of the bank, there were still highly significant items to be weighed
counsel has the authority to bring actions for foreclosure of mortgages executed by and determined such as the matter of valuation reserves, before these can be
debtors in favor of the bank. In G.R. No. 81303, the liquidator is likewise authorized considered in the financial condition of the bank. It would be a drastic move to
to resist or defend suits instituted against the bank by debtors and creditors of the conclude prematurely that a bank is insolvent if the basis for such conclusion is
bank and by other private persons. Similarly, in G.R. No. 81304, due to the lacking and insufficient, especially if doubt exists as to whether such bases or findings
aforestated reasons, the Central Bank cannot be compelled to fulfill financial faithfully represent the real financial status of the bank.
transactions entered into by Banco Filipino when the operations of the latter were Same; Same; Same; Same; The power and authority of the Monetary Board to
suspended by reason of its closure. The Central Bank possesses those powers and close banks and liquidate them thereafter when public interest so requires is an
functions only as provided for in Sec. 29 of the Central Bank Act. exercise of the police power of the state.—We recognize the fact that it is the
Same; Same; Same; Court held that the closure and receivership of petitioner responsibility of the Central Bank of the Philippines to administer the monetary,
bank which was ordered by respondent Monetary Bank on January 25, 1985 is null banking and credit system of the country and that its powers and functions shall be
and void.—While We recognize the actual closure of Banco Filipino and the exercised by the Monetary Board pursuant to Rep. Act No. 265, known as the Central
consequent legal effects thereof on its operations, We cannot uphold the legality of its Bank Act. Consequently, the power and authority of the Monetary Board to close
closure and thus, find the petitions in G.R. Nos. 70054, 78767 and 78894 impressed banks and liquidate them thereafter when
with merit. We hold that the closure and receivership of petitioner bank, which was 772
ordered by respondent Monetary Board on January 25, 1985, is null and void. 7 SUPREME COURT REPORTS ANNOTATED
Same; Same; Same; The Monetary Board may order the cessation of 72
operation of a bank in the Philippines and place it under receivership upon a finding
of insolvency or when its continuance in business would involve probable loss to its Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central
depositors or creditors.—Based on the aforequoted provision, the Monetary Board Bank of the Philippines
may order the cessation of operations of a bank in the Philippines and place it under public interest so requires is an exercise of the police power of the state. Police
receivership upon a finding of insolvency or when its continuance in business would power, however, may not be done arbitratrily or unreasonably and could be set aside
involve probable loss to its depositors or creditors. If the Monetary Board shall if it is either capricious, discriminatory, whimsical, arbitrary, unjust or is tantamount
determine and confirm within sixty (60) days that the to a denial of due process and equal protection clauses of the Constitution.
771
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Same; Same; Same; Same; Section 29 of RA 265 does not require a previous capabilities with which to repay such huge indebtedness, and can operate without loss
hearing before the Monetary Board implements the closure of a bank.—However, as to its many depositors and creditors.
to the requirement of notice and hearing, Sec. 29 of RA 265 does not require a GRIÑO-AQUINO, J., Dissenting opinion
previous hearing before the Monetary Board implements the closure of a bank, since Same; Same; Same; Court has neither the authority nor the competence to
its action is subject to judicial scrutiny as provided for under the same law. determine whether or not and under what conditions BF should be reorganized and
Same; Same; Same; Same; Administrative due process does not mean that the reopened.—This Court has neither the authority nor the competence to determine
other important principles may be dispensed with.—Notwithstanding the foregoing, whether or not, and under what conditions, BF should be reorganized and reopened.
administrative due process does not mean that the other important principles may be That decision should be made by the Central Bank and the Monetary Board, not by
dispensed with, namely: the decision of the administrative body must have something this Court
to support itself and the evidence must be substantial. Substantial evidence is more Same; Same; Same; Same; Dissenter does not find that the CB’s Resolution
than a mere scintilla. It means such relevant evidence as a reasonable mind might No. 75 ordering BF to cease banking operation and placing it under receivership
accept as adequate to support a conclusion. was plainly arbitrary and made in bad faith.—In the light of the results of the
Same; Same; Insolvency; Test of insolvency laid down in Section 29 of the examination of BF by the Teodoro and Tiaoqui teams, I do not find that the CB’s
Central Bank Act is measured by determining whether the realizable assets of a Resolution No. 75 ordering BF to cease banking operations and placing it under
bank are less than its liabilities.—The test of insolvency laid down in Section 29 of the receivership was “plainly arbitrary and made in bad faith.” The receivership was
Central Bank Act is measured by determining whether the realizable assets of a bank justified because BF was insolvent and its continuance in business would cause loss to
are less than its liabilities. Hence, a bank is solvent if the fair cash value of all its its depositors and creditors.
assets, realizable within a reasonable time by a reasonable prudent person, would PETITION to review the decision of the Court of Appeals.
equal or exceed its total liabilities exclusive of stock liability; but if such fair cash value 774
so realizable is not sufficient to pay such liabilities within a reasonable time, the bank 774 SUPREME COURT REPORTS ANNOTATED
is insolvent. (Gillian v. State, 194 N.E. 360, 363, 207 Ind. 661). Stated in other words,
the insolvency of a bank occurs when the actual cash market value of its assets is Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
insufficient to pay its liabilities, not considering capital stock and surplus which are the Philippines
not liabilities for such purpose. The facts are stated in the opinion of the Court.
Same; Same; Same; Same; Court believes that the closure of the petitioner Panganiban, Benitez, Barinaga & Bautista Law Offices collaborating counsel
bank was arbitrary and committed with grave abuse of discretion.—ln view of the for petitioner.
foregoing premises, We believe that the closure of the petitioner bank was arbitrary Florencio T. Domingo, Jr. and Crisanto S. Cornejo for intervenors.
and committed with grave abuse of discretion. Granting in gratia argumenti that the MEDIALDEA, J.:
closure was This refers to nine (9) consolidated cases concerning the legality of the closure and
773 receivership of petitioner Banco Filipino Savings and Mortgage Bank (Banco Filipino
VOL. 204, DECEMBER 11, 1991 773 for brevity) pursuant to the order of respondent Monetary Board. Six (6) of these
cases, namely, G.R. Nos. 68878, 77255–58, 78766, 81303, 81304 and 90473 involve
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central
the common issue of whether or not the liquidator appointed by the respondent
Bank of the Philippines Central Bank (CB for brevity) has the authority to prosecute as well as to defend suits,
based on justified grounds to protect the public, the fact that petitioner bank and to foreclose mortgages for and in behalf of the bank while the issue on the validity
was suffering from serious financial problems should not automatically lead to its of the receivership and liquidation of the latter is pending resolution in G.R. No.
liquidation. Section 29 of the Central Bank provides that a closed bank may be 70054. Corollary to this issue is whether the CB can be sued to fulfill financial
reorganized or otherwise placed in such a condition that it may be permitted to commitments of a closed bank pursuant to Section 29 of the Central Bank Act On the
resume business with safety to its depositors, creditors and the general public other hand, the other three (3) cases, namely, G.R. Nos. 70054, which is the main
MELENCIO-HERRERA, J., Dissenting opinion case, 78767 and 78894 all seek to annul and set aside M.B. Resolution No. 75 issued
Same; Same; Same; The matter of reopening, reorganization, or by respondents Monetary Board and Central Bank on January 25, 1985.
rehabilitation of BF is not within the competence of the Court to ordain but is better The antecedent facts of each of the nine (9) cases are as follows:
addressed to the Monetary Board and the Central Bank.—The matter of reopening, G.R. No. 68878
reorganization or rehabilitation of BF is not within the competence of this Court to This is a motion for reconsideration, filed by respondent Celestina Pahimuntung, of
ordain but is better addressed to the Monetary Board and the Central Bank the decision promulgated by this Court on April 8, 1986, granting the petition for
considering the latter’s enormous infusion of capital into BF to the tune of review on certiorari and reversing the questioned decision of respondent appellate
approximately P3.5 Billion in total accommodations, after a thorough assessment of court, which annulled the writ of possession issued by the trial court in favor of
whether or not BF is, indeed, possessed, as it stoutly contends, of sufficient assets and petitioner.

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The respondent-movant contends that the petitioner has no more personality to of Cavite issued a notice of extra-judicial foreclosure sale of the properties on
continue prosecuting the instant case considering that petitioner bank was placed December 16, 1985.
under receivership On December 9, 1985, Top Management filed a petition for injunction and
775 prohibition with the respondent appellate court docketed as CA-G.R. SP No. 07892
VOL. 204, DECEMBER 11, 1991 775 seeking to enjoin the Regional Trial Court of Cavite, the ex-officio sheriff of said court
and Sycip, Salazar, et al. from proceeding with foreclosure sale. Similarly, Pilar
Banco Filipino Savings & Mortgage Bank vs.4 Monetary Board, Central Bank of Development defaulted in the payment of its loans. The law firm of Sycip, Salazar, et
the Philippines al. filed separate applications with the ex-officio sheriff of the Regional Trial Court of
since January 26, 1986 by the Central Bank pursuant to the resolution of the Cavite for the extra-judicial foreclosure of mortgage over its properties.
Monetary Board. Hence, Pilar Development filed with the respondent appellate court a petition for
prohibition with prayer for the issuance of a writ of preliminary injunction docketed
G.R. Nos. 77255–58 as CA-G.R. SP Nos. 08962–64 seeking to enjoin the same respondents from enforcing
Petitioners Top Management Programs Corporation (Top Management for brevity) the foreclosure sale of its properties. CA-G.R. SP Nos. 07892 and 08962–64 were
and Pilar Development Corporation (Pilar Development for brevity) are corporations consolidated and jointly decided.
engaged in the business of developing residential subdivisions. On October 30, 1986, the respondent appellate court rendered a decision
Top Management obtained a loan of P4,836,000 from Banco Filipino as dismissing the aforementioned petitions.
evidenced by a promissory note dated January 7, 1982 payable in three years from Hence, this petition was filed by the petitioners Top Management and Pilar
date. The loan was secured by real estate mortgage in its various properties in Cavite. Development alleging that Carlota Valenzuela, who was appointed by the Monetary
Likewise, Pilar Development obtained loans from Banco Filipino between 1982 and Board as liquidator of Banco Filipino, has no authority to proceed with the foreclosure
1983 in the principal amounts of P6,000,000, P7,370,000 and P5,300,000 with sale of petitioners’ properties on the ground that the resolution of the issue on the
maturity dates on December 28,1984, January 5, 1985 and February 16,1984, validity of the closure and liquidation of Banco Filipino is still pending with this Court
respectively. To secure the loan, Pilar Development mortgaged to Banco Filipino in G.R. 70054.
various properties in Dasmariñas, Cavite.
On January 25, 1985, the Monetary Board issued a resolution finding Banco G.R. No. 78766
Filipino insolvent and unable to do business without loss to its creditors and Petitioner El Grande Development Corporation (El Grande for brevity) is engaged in
depositors. It placed Banco Filipino under receivership of Carlota Valenzuela, Deputy the business of developing residential subdivisions. It was extended by respondent
Governor of the Central Bank. Banco Filipino a
On March 22, 1985, the Monetary Board issued another resolution placing the 777
bank under liquidation and designating Valenzuela as liquidator. By virtue of her VOL. 204, DECEMBER 11, 1991 777
authority as liquidator, Valenzuela appointed the law firm of Sycip, Salazar, et al. to
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
represent Banco Filipino in all litigations.
On March 26, 1985, Banco Filipino filed the petition for certiorari in G.R. No. the Philippines
70054 questioning the validity of the resolutions issued by the Monetary Board credit accommodation to finance its housing program. Hence, petitioner was granted
authorizing the receivership and liquidation of Banco Filipino. a loan in the amount of P8,034,130,00 secured by real estate mortgages on its various
In a resolution dated August 29, 1985, this Court in G.R. No. 70054 resolved to estates located in Cavite.
issue a temporary restraining order, effective during the same period of 30 days, On January 15, 1985, the Monetary Board forbade Banco Filipino to do business,
enjoining the respondents from executing further acts of liquidation of the bank; that placed it under receivership and designated Deputy Governor Carlota Valenzuela as
acts such as receiving collectibles and receivables or paying off creditors’ claims and receiver. On March 22, 1985, the Monetary Board confirmed Banco Filipino’s
other transactions pertaining to normal operations of a bank are not enjoined. The insolvency and designated the receiver Carlota Valenzuela as liquidator.
Central Bank is When petitioner El Grande failed to pay its indebtedness to Banco Filipino, the
776 latter thru its liquidator, Carlota Valenzuela, initiated the foreclosure with the Clerk of
776 SUPREME COURT REPORTS ANNOTATED Court and Ex-officio sheriff of RTC Cavite. Subsequently, on March 31, 1986, the
exofficio sheriff issued the notice of extra-judicial sale of the mort-gaged properties of
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of El Grande scheduled on April 30, 1986.
the Philippines In order to stop the public auction sale, petitioner El Grande filed a petition for
ordered to designate a comptroller for Banco Filipino. prohibition with the Court of Appeals alleging that respondent Carlota Valenzuela
Subsequently, Top Management failed to pay its loan on the due date. Hence, the could not proceed with the foreclosure of its mortgaged properties on the ground that
law firm of Sycip, Salazar, et al. acting as counsel for Banco Filipino under authority of this Court in G.R. No. 70054 issued a resolution dated August 29, 1985, which
Valenzuela as liquidator, applied for extra-judicial foreclosure of the mortgage over restrained Carlota Valenzuela from acting as liquidator and allowed Banco Filipino to
Top Management’s properties. Thus, the Ex-Officio Sheriff of the Regional Trial Court resume banking operations only under a Central Bank comptroller.
Page 4 of 23
On March 2, 1987, the Court of Appeals rendered a decision dismissing the 779
petition. VOL. 204, DECEMBER 11, 1991 779
Hence this petition for review on certiorari was filed alleging that the respondent
court erred when it held in its decision that although Carlota P. Valenzuela was Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
restrained by this Honorable Court from exercising acts in liquidation of Banco the Philippines
Filipino Savings 6, Mortgage Bank, she was not legally precluded from foreclosing the tion, and thus, the continuation of the facility sued for by the plaintiff has become
mortgage over the properties of the petitioner through counsel retained by her for the legally impossible and the suit has become moot.
purpose. The order of dismissal was appealed by the petitioner to the Court of Appeals. On
G.R. No. 81303 November 4, 1987, the respondent appellate court dismissed the appeal and affirmed
On November 8, 1985, petitioner Pilar Development Corporation (Pilar Development the order of the trial court.
for brevity) filed an action against Banco Filipino, the Central Bank and Carlota Hence, this petition for review on certiorari was filed, alleging that the respondent
Valenzuela for specific performance, docketed as Civil Case No. 12191. It court erred when it found that the private respondents should not be the ones to
778 respond to the cause of action asserted by the petitioner and the petitioner did not
have any cause of action against the respondents Central Bank and Carlota
778 SUPREME COURT REPORTS ANNOTATED
Valenzuela,
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
G.R. No. 90473
the Philippines Petitioner El Grande Development Corporation (El Grande for brevity) obtained a
appears that the former management of Banco Filipino appointed Quisumbing 6, loan from Banco Filipino in the amount of P8,034,1 30.00, secured by a mortgage
Associates as counsel for Banco Filipino. On June 12,1986 the said law firm filed an over its five parcels of land located in Cavite which were covered by Transfer
answer for Banco Filipino which confessed judgment against Banco Filipino. Certificate of Title Nos. T-82187, T-109027, T-132897, T-148377, and T-79371 of the
On June 17, 1986, petitioner filed a second amended complaint. The Central Bank Registry of Deeds of Cavite.
and Carlota Valenzuela, thru the law firm Sycip, Salazar, Hernandez and Gatmaitan When Banco Filipino was ordered closed and placed under receivership in 1985,
filed an answer to the complaint. the appointed liquidator of BF, thru its counsel Sycip, Salazar, et al. applied with the
On June 23, 1986, Sycip, et al., acting for all the defendants including Banco ex-officio sheriff of the Regional Trial Court of Cavite for the extrajudicial foreclosure
Filipino moved that the answer filed by Quisumbing 6, Associates for defendant of the mortgage constituted over petitioner’s properties. On March 24, 1986, the ex-
Banco Filipino be expunged from the records. Despite opposition from Quisumbing 6, officio sheriff issued a notice of extrajudicial foreclosure sale of the properties of
Associates, the trial court granted the motion to expunge in an order dated March 17, petitioner.
1987. Petitioner Pilar Development moved to reconsider the order but the motion was Thus, petitioner filed with the Court of Appeals a petition for prohibition with
denied. prayer for writ of preliminary injunction to enjoin the respondents from foreclosing
Petitioner Pilar Development filed with the respondent appellate court a petition the mortgage and to nullify the notice of foreclosure.
for certiorari and mandamus to annul the order of the trial court. The Court of On June 16, 1989, respondent Court of Appeals rendered a decision dismissing
Appeals rendered a decision dismissing the petition. A petition was filed with this the petition.
Court but was denied in a resolution dated March 22, 1988. Hence, this instant Not satisfied with the decision, petitioner filed the instant petition for review on
motion for reconsideration. certiorari.
G.R. No. 81304 G.R. No. 70054
On July 9, 1985, petitioner BF Homes Incorporated (BF Homes for brevity) filed an Banco Filipino Savings and Mortgage Bank was authorized to
action with the trial court to compel the Central Bank to restore petitioner’s financing 780
facility with Banco Filipino. 780 SUPREME COURT REPORTS ANNOTATED
The Central Bank filed a motion to dismiss the action. Petitioner BF Homes in a
supplemental complaint impleaded as defendant Carlota Valenzuela as receiver of Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Banco Filipino Savings and Mortgage Bank. the Philippines
On April 8, 1985, petitioner filed a second supplemental complaint to which operate as such under M.B. Resolution No. 223 dated February 14, 1963. It
respondents filed a motion to dismiss. commenced operations on July 9, 1964. It has eighty-nine (89) operating branches,
On July 9, 1985, the trial court granted the motion to dismiss the supplemental forty-six (46) of which are in Manila, with more than three (3) million depositors.
complaint on the grounds (1) that plaintiff has no contractual relation with the As of July 31, 1984, the list of stockholders showed the major stockholders to be:
defendants, and (2) that the Intermediate Appellate Court in a previous decision Metropolis Development Corporation, Apex Mortgage and Loans Corporation,
in ACG.R. SP. No. 04609 had stated that Banco Filipino has been ordered closed and Filipino Business Consultants, Tiu Family Group, LBH Inc. and Anthony Aguirre.
placed under receivership pending liquida-

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Petitioner Bank had an approved emergency advance of P119.7 million under M.B. Head, Supervision and Examination Sector (SES) Department II as recited in his
Resolution No. 839 dated June 29, 1984. This was augmented with a P3 billion credit memorandum dated January 23, 1985, that the Banco Filipino Savings 6, Mortgage
line under M.B. Resolution No. 934 dated July 27, 1984. Bank is insolvent and that its continuance in business would involve probable loss to
On the same date, respondent Board issued M.B. Resolution No. 955 placing its depositors and creditors, and in pursuance of Sec. 29 of R.A. 265, as amended, the
petitioner bank under conservatorship of Basilio Estanislao. He was later replaced by Board decided:
Gilberto Teodoro as conservator on August 10, 1984. The latter submitted a report 1. 1.To forbid Banco Filipino Savings and Mortgage Bank and all its branches to
dated January 8, 1985 to respondent Board on the conservatorship of petitioner bank, do business in the Philippines;
which report shall hereinafter be referred to as the Teodoro report. 2. 2.To designate Mrs. Carlota P. Valenzuela, Deputy Governor as Receiver who
Subsequently, another report dated January 23, 1985 was submitted to the is hereby directly vested with jurisdiction and authority to immediately
Monetary Board by Ramon Tiaoqui, Special Assistant to the Governor and Head, SES take charge of the bank’s assets and liabilities, and as expeditiously as
Department II of the Central Bank, regarding the major findings of examination on possible collect and gather all the assets and administer the same for the
the financial condition of petitioner BF as of July 31, 1984. The report, which shall be benefit of its creditors, exercising all the powers necessary for these
referred to herein as the Tiaoqui Report contained the following conclusion and purposes including but not limited to, bringing suits and foreclosing
recommendation: mortgagee in the name of the bank;
“The examination findings as of July 31, 1984, as shown earlier, indicate one of 3. 3.To designate Mr. Arnulfo B. Aurellano, Special Assistant to the Governor,
insolvency and illiquidity and further confirms the above conclusion of the and Mr. Ramon V. Tiaoqui, Special Assistant to the Governor and Head,
Conservator. Supervision and Examination Sector Department II, as Deputy Receivers
“All the foregoing provides sufficient justification for forbidding the bank from who are likewise hereby directly vested with jurisdiction and authority to
engaging in banking. do all things necessary or proper to carry out the functions entrusted to
“Foregoing considered, the following are recommended: them by the Receiver and other
1. 1.Forbid the Banco Filipino Savings 6, Mortgage Bank to do business in the 782
Philippines effective the beginning of office January 1985, pursuant to Sec. 782 SUPREME COURT REPORTS ANNOTATED
29 of (R.A. No. 265, as amended;
2. 2.Designate the Head of the Conservator Team at the bank, as Receiver of Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Banco Filipino Savings & Mortgage Bank, to immediately take charge of the the Philippines
assets and liabilities, as expeditiously as possible collect and gather all the 1. wise to assist the Receiver in carrying out the functions vested in the
assets and ad Receiver by law or Monetary Board Resolutions;
781 2. 4.To direct and authorize Management to do all other things and carry out
VOL. 204, DECEMBER 11, 1991 781 all other measures necessary or proper to implement this Resolution and to
safeguard the interests of depositors, creditors and the general public; and
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
3. 5.In consequence of the foregoing, to terminate the conservatorship over
the Philippines Banco Filipino Savings and Mortgage Bank.” (pp. 10- 11, Rollo, Vol. I)
1. minister the same for the benefit of all the creditors, and exercise all the On February 2, 1985, petitioner BF filed a complaint docketed as Civil Case No.
powers necessary for these purposes including but not limited to bringing 9675 with the Regional Trial Court of Makati to set aside the action of the Monetary
suits and foreclosing mortgages in the name of the bank. Board placing BF under receivership.
2. 3.The Board of Directors and the principal officers from Senior Vice On February 28, 1985, petitioner filed with this Court the instant petition for
Presidents, as listed in the attached Annex ‘A' be included in the watchlist certiorari and mandamus under Rule 65 of the Rules of Court seeking to annul the
of the Supervision and Examination Sector until such time that they shall resolution of January 25, 1985 as made without or in excess of jurisdiction or with
have cleared themselves. grave abuse of discretion, to order respondents to furnish petitioner with the reports
3. 4.Refer to the Central Bank’s Legal Department and Office of Special of examination which led to its closure and to afford petitioner BF a hearing prior to
Investigation the report on the findings on Banco Filipino for investigation any resolution that may be issued under Section 29 of R.A. 265, also known as Central
and possible prosecution of directors, officers, and employees for activities Bank Act.
which led to its insolvent position.” (pp. 61–62, Rollo) On March 19, 1985, Carlota Valenzuela, as Receiver and Arnulfo Aurellano and
On January 25, 1985, the Monetary Board issued the assailed MB Resolution No. 75 Ramon Tiaoqui as Deputy Receivers of Banco Filipino submitted their report on the
which ordered the closure of BF and which further provides: receivership of BF to the Monetary Board, in compliance with the mandate of Sec. 29
“After considering the report dated January 8, 1985 of the Conservator for Banco of R.A. 265 which provides that the Monetary Board shall determine within sixty (60)
Filipino Savings and Mortgage Bank that the continuance in business of the bank days from date of receivership of a bank whether such bank may be
would involve probable loss to its depositors and creditors, and after discussing reorganized/permitted to resume business or ordered to be liquidated. The report
and finding to be true the statements of the Special Assistant to the Governor and contained the following recommendation:

Page 6 of 23
“In view of the foregoing and considering that the condition of the banking institution istrative due process had been observed by the respondent Monetary Board, may be
continues to be one of insolvency, i.e., its realizable assets are insufficient to meet all expedited by Judge Manuel Cosico who now presides the court vacated by Judge
its liabilities and that the bank cannot resume business with safety to its depositors, Ricardo Francisco, who was elevated to the Court of Appeals, there being no legal
other creditors and the general public, it is recommended that: impediment or justifiable reason to bar the former from conducting such hearing.
1. 1.Banco Filipino Savings 6, Mortgage Bank be liquidated pursuant to Hence, this Court directed Judge Manuel Cosico to expedite the hearing and submit
paragraph 3, Sec. 29 of RA No. 265, as amended; his report to this Court.
2. 2.The Legal Department, through the Solicitor General, be au On February 20, 1988, Judge Manuel Cosico submitted his report to this Court
783 with the recommendation that the resolutions of respondents Monetary Board and
VOL. 204, DECEMBER 11, 1991 783 Central Bank authorizing the closure and liquidation of petitioner BF be upheld.
On October 21,1988, petitioner BF filed an urgent motion to reopen hearing to
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of which respondents filed their comment on December 16, 1988. Petitioner filed their
the Philippines reply to respondent’s comment of January 11,1989. After having deliberated on the
1. thorized to file in the proper court a petition for assistance in the liquidation grounds raised in the pleadings, this Court in its resolution dated August 3, 1989
of the Bank; declared that its intention as expressed in its resolution of August 29, 1985 had not
2. 3.The Statutory Receiver be designated as the Liquidator of said bank; and been faithfully adhered to by the herein petitioner and respondents. The
3. 4.Management be instructed to inform the stockholders of Banco Filipino aforementioned resolution had ordered a hearing on the reports that Ied respondents
Savings 6, Mortgage Bank of the Monetary Board’s decision to liquidate the to order petitioner’s closure and its alleged preplanned liquidation. This Court noted
Bank. (p. 167, Rollo, Vol. I) that during the referral hearing however, a different scheme was followed.
On July 23, 1985, petitioner filed a motion before this Court praying that a restraining Respondents merely submitted to the commissioner their findings on the
order or a writ of preliminary injunction be issued to enjoin respondents from causing examinations conducted on petitioner, affidavits of the private respondents relative to
the dismantling of BF signs in its main office and 89 branches. This Court issued a the findings, their reports to the Monetary Board and several other documents in
resolution on August 8, 1985 ordering the issuance of the aforesaid temporary support of their position while petitioner had merely submitted objections to the
restraining order. findings of respondents, counter-affidavits of its officers and also documents to prove
On August 20, 1985, the case was submitted for resolution. its claims. Although the records disclose that both parties had not waived cross-
In a resolution dated August 29, 1985, this Court Resolved to direct the examination of their deponents, no such cross-examination has been conducted. The
respondents Monetary Board and Central Bank to hold hearings at which the reception of evidence in the form of affidavits was followed throughout, until the
petitioner should be heard, and to terminate such hearings and submit its resolution commissioner submitted his report and recommendations to the Court. This Court
within thirty (30) days. This Court further resolved to issue a temporary restraining also held that the documents pertinent to the resolution of the instant petition are the
order enjoining the respondents from executing further acts of liquidation of a bank. Teodoro Report, Tiaoqui Report, Valenzuela, Aurellano and Tiaoqui Report and the
Acts such as receiving collect-ibles and receivables or paying off creditors’ claims and supporting documents which were
other transactions pertaining to normal operations of a bank were not enjoined. The 785
Central Bank was also ordered to designate a comptroller for the petitioner BF. This VOL. 204, DECEMBER 11, 1991 785
Court also ordered the consolidation of Civil Cases Nos. 8108, 9676 and 10183 in
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Branch 136 of the Regional Trial Court of Makati.
However, on September 12, 1985, this Court in the meantime suspended the the Philippines
hearing it ordered in its resolution of August 29, 1985. made as the bases by the reporters of their conclusions contained in their respective
On October 8, 1985, this Court submitted a resolution ordering Branch 136 of the reports. This Court also Resolved in its resolution to re-open the referral hearing that
Regional Trial Court of Makati then presided over by Judge Ricardo Francisco to was terminated after Judge Cosico had submitted his report and recommendation
conduct the hearing contemplated in the resolution of August 29, 1985 in the most with the end in view of allowing petitioner to complete its presentation of evidence
expeditious manner and to submit its resolution to this Court. and also for respondents to adduce additional evidence, if so minded, and for both
In the Court’s resolution of February 19, 1987, the Court stated that the hearing parties to conduct the required cross-examination of witnesses/deponents, to be done
contemplated in the resolution of August 29, 1985, which is to ascertain whether within a period of three months. To obviate all doubts on Judge Cosico’s impartiality,
substantial admin- this Court designated a new hearing commissioner in the person of former Judge
784 Consuelo Santiago of the Regional Trial Court, Makati, Branch 149 (now Associate
784 SUPREME COURT REPORTS ANNOTATED Justice of the Court of Appeals).
Three motions for intervention were filed in this case as follows: First, in G.R. No.
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of 70054 filed by Eduardo Rodriguez and Fortunato M. Dizon, stockholders of petitioner
the Philippines bank for and on behalf of other stockholders of petitioner; second, in G.R. No. 78894,
filed by the same stockholders, and, third, again in G.R. No. 70054 by BF Depositors’

Page 7 of 23
Association and others similarly situated. This Court, on March 1,1990, denied the G.R. No. 78767
aforesaid motions for intervention. On February 2, 1985, Banco Filipino filed a complaint with the trial court docketed
On January 28, 1991, the hearing commissioner, Justice Consuelo Santiago of the as Civil Case No. 9675 to annul the resolution of the Monetary Board dated January
Court of Appeals submitted her report and recommendation (to be hereinafter called, 25, 1985, which ordered the closure of the bank and placed it under receivership.
“Santiago Report”) on the following issues stated therein as follows: On February 14, 1985, the Central Bank and the receivers filed a motion to dismiss
1. “1)Had the Monetary Board observed the procedural requirements laid down the complaint on the ground that the
in Sec. 29 of R.A. 265, as amended to justify the closure of the Banco 787
Filipino Savings and Mortgage Bank?
2. “2)On the date of BF’s closure (January 25, 1985) was its condition one of VOL. 204, DECEMBER 11, 1991 787
insolvency or would its continuance in business involve probable loss to its Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
depositors or creditors?”
The commissioner after evaluation of the evidence presented, found and the Philippines
recommended the following: receivers had not authorized anyone to file the action. In a supplemental motion to
1. “1.That the TEODORO and TIAOQUI reports did not establish, in dismiss, the Central Bank cited the resolution of this Court dated October 15, 1985
accordance with Sec. 29 of the R.A. 265, as amended, BF’s insolvency as of in G.R. No. 65723 entitled, “Central Bank et al. v. Intermediate Appellate Court”
July 31, 1984 or that its continuance in business thereafter would involve whereby We held that a complaint questioning the validity of the receivership
probable loss to its depositors or creditors. On the contrary, the evidence established by the Central Bank becomes moot and academic upon the initiation of
indicates that BF was solvent on July 31, 1984 and that on January 25, liquidation proceedings.
1985, the day it was closed, its insolvency was While the motion to dismiss was pending resolution, petitioner herein Metropolis
786 Development Corporation (Metropolis for brevity) filed a motion to intervene in the
aforestated civil case on the ground that as a stockholder and creditor of Banco
786 SUPREME COURT REPORTS ANNOTATED Filipino, it has an interest in the subject of the action.
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of On July 19, 1985, the trial court denied the motion to dismiss and also denied the
motion for reconsideration of the order later filed by Central Bank. On June 5, 1985,
the Philippines
the trial court allowed the motion for intervention.
1. not clearly es tablished; Hence, the Central Bank and the receivers of Banco Filipino filed a petition for
2. “2.That consequently, BF’s closure on January 25, 1985, not having satisfied certiorari with the respondent appellate court alleging that the trial court committed
the requirements prescribed under Sec. 29 of RA 265, as amended, was null grave abuse of discretion in not dismissing Civil Case No. 9675.
and void. On March 17, 1986, the respondent appellate court rendered a decision annulling
3. “3.That accordingly, by way of correction, BF should be allowed to re-open and getting aside the questioned orders of the trial court, and ordering the dismissal
subject to such laws, rules and regulations that apply to its situation.” of the complaint filed by Banco Filipino with the trial court as well as the complaint in
Respondents thereafter filed a motion for leave to file objections to the Santiago intervention of petitioner Metropolis Development Corporation.
Report. In the same motion, respondents requested that the report and Hence this petition was filed by Metropolis Development Corporation questioning
recommendation be set for oral argument before the Court. On February 7, 1991, this the decision of the respondent appellate court.
Court denied the request for oral argument of the parties.
On February 25, 1991, respondents filed their objections to the Santiago Report. G.R. No. 78894
On March 5, 1991, respondents submitted a motion for oral argument alleging that On February 2, 1985, a complaint was filed with the trial court in the name of Banco
this Court is confronted with two conflicting reports on the same subject, one Filipino to annul the resolution of the Monetary Board dated January 25, 1985 which
upholding on all points the Monetary Board’s closure of petitioner, (Cosico Report ordered the closure of Banco Filipino and placed it under receivership. The receivers
dated February 19,1988) and the other (Santiago Report dated January 25, 1991) appointed by the Monetary Board were Carlota Valenzuela, Arnulfo Aurellano and
holding that petitioner’s closure was null and void because petitioner’s insolvency was Ramon Tiaoqui.
not clearly established before its closure; and that such a hearing on oral argument On February 14, 1985, the Central Bank and the receivers filed a motion to dismiss
will therefore allow the parties to directly confront the issues before this Court. the complaint on the ground that the
On March 12,1991 petitioner filed its opposition to the motion for oral argument. 788
On March 20,1991, it filed its reply to respondents’ objections to the Santiago Report. 788 SUPREME COURT REPORTS ANNOTATED
On June 18, 1991, a hearing was held where both parties were heard on oral
argument before this Court. The parties, having submitted their respective Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
memoranda, the case is now submitted for decision. the Philippines
receiver had not authorized anyone to file the action.

Page 8 of 23
On March 22, 1985, the Monetary Board placed the bank under liquidation and Sec. 29 of the Central Bank Act are those which constitute the conversion of the assets
designated Valenzuela as liquidator and Aurellano and Tiaoqui as deputy liquidators. of the banking institution to money or the sale, assignment or disposition of the same
The Central Bank filed a supplemental motion to dismiss which was denied. to creditors and other parties for the purpose of paying the debts of such institution.
Hence, the latter filed a petition for certiorari with the respondent appellate court to We did not prohibit however acts such as receiving collectibles and receivables or
set aside the order of the trial court denying the motion to dismiss. On March 17, paying off creditors’ claims and other transactions pertaining to normal operations
1986, the respondent appellate court granted the petition and dismissed the of a bank. There is no doubt that the prosecution of suits for collection and the
complaint of Banco Filipino with the trial court foreclosure of mortgages against debtors of the bank by the liquidator are among the
Thus, this petition for certiorari was filed with the petitioner contending that a usual and ordinary transactions pertaining to the administration of a bank. Neither
bank which has been closed and placed under receivership by the Central Bank under did Our order in the same resolution dated August 25, 1985 for the designation by the
Section 29 of RA 265 could file suit in court in its name to contest such acts of the Central Bank of a comptroller for Banco Filipino alter the powers and functions of the
Central Bank, without the authorization of the CB-appointed receiver. liquidator insofar as the management of the assets of the bank is concerned. The mere
After deliberating on the pleadings in the following cases: duty of the comptroller is to supervise accounts and finances undertaken by the
1. 1.In G.R. No. 68878, the respondent’s motion for reconsideration; liquidator and to determine the propriety of the latter’s expenditures incurred in
2. 2.In G.R. Nos. 77255–58, the petition, comment, reply, rejoinder and sur- behalf of the bank. Notwithstanding this, the liquidator is still empowered under the
rejoinder; law to continue the functions of the
3. 3.In G.R. No. 78766, the petition, comment, reply and rejoinder; 790
4. 4.In G.R. No. 81303, the petitioner’s motion for reconsideration; 790 SUPREME COURT REPORTS ANNOTATED
5. 5.In G.R. No. 81304, the petition, comment and reply;
6. 6.Finally, in G.R. No. 90473, the petition, comment and reply, Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
We find the motions for reconsideration in G.R. Nos. 68878 and 81303 and the the Philippines
petitions in G.R. Nos. 77255–58, 78766, 81304 and 90473 devoid of merit. receiver in preserving and keeping intact the assets of the bank in substitution of its
Section 29 of the Republic Act No. 265, as amended known as the Central Bank former management, and to prevent the dissipation of its assets to the detriment of
Act, provides that when a bank is forbidden to do business in the Philippines and the creditors of the bank. These powers and functions of the liquidator in directing the
placed under receivership, the person designated as receiver shall immediately take operations of the bank in place of the former management or former officials of the
charge of the bank’s assets and liabilities, as expeditiously as possible, collect and bank include the retaining of counsel of his choice in actions and proceedings for
gather all the assets and administer the same for the benefit of its creditors, and purposes of administration.
represent the bank personally or through counsel as he may retain in all actions or Clearly, in G.R. Nos. 68878, 77255–58, 78766 and 90473, the liquidator by
proceedings for or against the institution, exercising all the powers necessary for himself or through counsel has the authority to bring actions for foreclosure of
these purposes including, but not limited to, bringing and foreclosing mortgages in mortgages executed by debtors in favor of the bank. In G.R. No. 81303, the liquidator
the name of the bank. If the is likewise authorized to resist or defend suits instituted against the bank by debtors
789 and creditors of the bank and by other private persons. Similarly, in G.R. No. 81304,
VOL. 204, DECEMBER 11, 1991 789 due to the aforestated reasons, the Central Bank cannot be compelled to fulfill
financial transactions entered into by Banco Filipino when the operations of the latter
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
were suspended by reason of its closure. The Central Bank possesses those powers
the Philippines and functions only as provided for in Sec. 29 of the Central Bank Act.
Monetary Board shall later determine and confirm that the banking institution is While We recognize the actual closure of Banco Filipino and the consequent legal
insolvent or cannot resume business with safety to depositors, creditors and the effects thereof on its operations, We cannot uphold the legality of its closure and thus,
general public, it shall, if public interest requires, order its liquidation and appoint find the petitions in G.R. Nos. 70054, 78767 and 78894 impressed with merit. We
a liquidator who shall take over and continue the functions of the receiver previously hold that the closure and receivership of petitioner bank, which was ordered by
appointed by Monetary Board. The liquidator may, in the name of the bank and with respondent Monetary Board on January 25, 1985, is null and void.
the assistance of counsel as he may retain, institute such actions as may be necessary It is a well-recognized principle that administrative and discretionary functions
in the appropriate court to collect and recover accounts and assets of such institution may not be interfered with by the courts. In general, courts have no supervising power
or defend any action filed against the institution. over the proceedings and actions of the administrative departments of the
When the issue on the validity of the closure and receivership of Banco Filipino government. This is generally true with respect to acts involving the exercise of
bank was raised in G.R. No. 70054, the pendency of the case did not diminish the judgment or discretion, and findings of fact. But when there is a grave abuse of
powers and authority of the designated liquidator to effectuate and carry on the discretion which is equivalent to a capricious and whimsical exercise of judgment or
administration of the bank. In fact when We adopted a resolution on August 25, 1985 where the power is exercised in an arbitrary or despotic manner, then there is a
and issued a restraining order to respondents Monetary Board and Central Bank, We justification for the courts to set aside the administrative determination reached (Lim,
enjoined merely further acts of liquidation. Such acts of liquidation, as explained in

Page 9 of 23
Sr. v. Secretary of Agriculture and Natural Resources, L-26990, August 31, 1970, 34 “If the Monetary Board shall determine and confirm within the said period that
SCRA the bank or non-bank financial intermediary performing quasi-banking functions is
791 insolvent or cannot resume business with safety to its depositors, creditors, and the
VOL. 204, DECEMBER 11, 1991 791 general public, it shall, if the public interest requires, order its liquidation, indicate
the manner of its liquidation and approve a liquidation plan which may, when
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of warranted, involve disposition of any or all assets in consideration for the assumption
the Philippines of equivalent liabilities. The liquidator designated as hereunder provided shall, by the
751). Solicitor General, file a petition in the regional trial court reciting the proceedings
The jurisdiction of this Court is called upon, once again, through these petitions, which have been taken and praying the assistance of the court in the liquidation of
to undertake the delicate task of ascertaining whether or not an administrative agency such institutions. The court shall have jurisdiction in the same proceedings to assist in
of the government, like the Central Bank of the Philippines and the Monetary Board, the adjudication of the disputed claims against the bank or non-bank financial
has committed grave abuse of discretion or has acted without or in excess of intermediary performing quasi-banking functions and in the enforcement of
jurisdiction in issuing the assailed order. Coupled with this task is the duty of this individual liabilities of the stockholders and do all that is necessary to preserve the
Court not only to strike down acts which violate constitutional protections or to assets of such institutions and to implement the liquidation plan approved by the
nullify administrative decisions contrary to legal mandates but also to prevent acts in Monetary Board. The Monetary Board shall designate an official of the Central bank
excess of authority or jurisdiction, as well as to correct manifest abuses of discretion or a person of recognized competence in banking or finance, as liquidator who shall
committed by the officer or tribunal involved. take over and continue the functions of the receiver previously appointed by the
The law applicable in the determination of these issues is Section 29 of Republic Monetary Board under this Section. The liquidator shall, with all convenient speed,
Act No. 265, as amended, also known as the Central Bank Act, which provides: convert the assets of the banking institutions or non-bank financial intermediary
“SEC. 29. Proceedings upon insolvency.—Whenever, upon examination by the head performing quasi-banking functions to money or sell, assign or otherwise dispose of
of the appropriate supervising or examining department or his examiners or agents the same to creditors and other parties for the purpose of paying the debts of such
into the condition of any bank or non-bank financial intermediary performing quasi- institution and he may, in the name of the bank or non-bank financial intermediary
banking functions, it shall be disclosed that the condition of the same is one of performing quasi-banking functions and with the assistance of counsel as he may
insolvency, or that its continuance in business would involve probable loss to its retain, institute such actions as may be necessary in the appropriate court to collect
depositors or creditors, it shall be the duty of the department head concerned and recover accounts and assets of such institution or defend any action filed against
forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon the institution: Provided, However, That after having reasonably established all
finding the statements of the department head to be true, forbid the institution to do claims against the institution, the liquidator may, with the approval of the court, effect
business in the Philippines and designate an official of the Central Bank or a person of partial payments of such claims for assets of the institution in accordance with their
recognized competence in banking or finance, as receiver to immediately take charge legal priority.
of its assets and liabilities, as expeditiously as possible collect and gather all the assets “The assets of an institution under receivership or liquidation shall be deemed
and administer the same for the benefits of its creditors, and represent the bank in custodia legis in the hands of the receiver or liquidator and shall from the moment
personally or through counsel as he may retain in all actions or proceedings for or of such receivership or liquida
against the institution, exercising all the powers necessary for these purposes 793
including, but not limited to, bringing and foreclosing mortgages in the name of the VOL. 204, DECEMBER 11, 1991 793
bank or non-bank financial intermediary performing quasi-banking functions.
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
“The Monetary Board shall thereupon determine within sixty days whether the
institution may be reorganized or otherwise placed in such a condition so that it may the Philippines
be permitted to resume business with safety to its depositors and creditors and the tion, be exempt from any order of garnishment, levy, attachment, or execution.
general public and shall prescribe the conditions under which such resumption of busi “The provisions of any law to the contrary notwithstanding, the actions of the
792 Monetary Board under this Section, Section 28-A, and the second paragraph of
792 SUPREME COURT REPORTS ANNOTATED Section 34 of this Act shall be final and executory, and can be set aside by a court only
if there is convincing proof, after hearing, that the action is plainly arbitrary and made
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of in bad faith: Provided, That the same is raised in an appropriate pleading filed by the
the Philippines stockholders of record representing the majority of the capital stock within ten (10)
ness shall take place as well as the time for fulfillment of such conditions. In such days from the date the receiver, takes charge of the assets and liabilities of the bank or
case, the expenses and fees in the collection and administration of the assets of the non-bank financial intermediary performing quasi-banking functions or, in case of
institution shall be determined by the Board and shall be paid to the Central Bank out conservatorship or liquidation, within ten (10) days from receipt of notice by the said
of the assets of such institution. majority stockholders of said bank or non-bank financial intermediary of the order of
its placement under conservatorship or liquidation. No restraining order or injunction

Page 10 of 23
shall be issued by any court enjoining the Central Bank from implementing its actions depositors or creditors; thirdly, the department head concerned shall inform the
under this Section and the second paragraph of Section 34 of this Act in the absence Monetary Board in writing, of the facts; and lastly, the Monetary Board shall find the
of any convincing proof that the action of the Monetary Board is plainly arbitrary and statements of the department head to be true.
made in bad faith and the petitioner or plaintiff files a bond, executed in favor of the Anent the first requirement, the Tiaoqui report, submitted on January 23, 1985,
Central Bank, in an amount to be fixed by the court. The restraining order or revealed that the finding of insolvency of petitioner was based on the partial list of
injunction shall be refused or, if granted, shall be dissolved upon filing by the Central exceptions and findings on the regular examination of the bank as of July 31, 1984
Bank of a bond, which shall be in the form of cash or Central Bank cashier’s check, in conducted by the Supervision and Examination Sector II of the
an amount twice the amount of the bond of the petitioner or plaintiff conditioned that 795
it will pay the damages which the petitioner or plaintiff may suffer by the refusal or VOL. 204, DECEMBER 11, 1991 795
the dissolution of the injunction. The provisions of Rule 58 of the New Rules of Court
insofar as they are applicable and not inconsistent with the provisions of this Section Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
shall govern the issuance and dissolution of the restraining order or injunction the Philippines
contemplated in this Section. Central Bank (p. 1, Tiaoqui Report).
“x x x.” On December 17, 1984, this list of exceptions and findings was submitted to the
Based on the aforequoted provision, the Monetary Board may order the cessation of petitioner bank (p. 6, Tiaoqui Report). This was attached to the letter dated December
operations of a bank in the Philippines and place it under receivership upon a finding 17, 1984, of examiner-in-charge Dionisio Domingo of SES Department II of the
of insolvency or when its continuance in business would involve probable loss to its Central Bank to Teodoro Arcenas, president of petitioner bank, which disclosed that
depositors or creditors. If the Monetary Board shall determine and confirm within the examination of the petitioner bank as to its financial condition as of July 31, 1984
sixty (60) days that the bank is insolvent or can no longer resume business with safety was not yet completed or finished on December 17, 1984 when the Central Bank
to its depositors, creditors and the general public, it shall, if public interest will be submitted the partial list of findings of examination to the petitioner bank. The letter
served, order its liquidation. reads:
794 “In connection with the regular examination of your institution as of July 31, 1984, we
794 SUPREME COURT REPORTS ANNOTATED are submitting herewith a partial list of our exceptions/findings for your comments.
“Please be informed that we have not yet officially termina ted our
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
examination (tentatively scheduled last December 7, 1984) and that we are still
the Philippines awaiting for the unsubmitted replies to our previous letters/
Specifically, the basic question to be resolved in G.R. Nos. 70054, 78767 and 78894 is requests. Moreover, other findings /observations are still being summarized
whether or not the Central Bank and the Monetary Board acted arbitrarily and in bad including the classification of loans and other risk assets. These shall be submitted to
faith in finding and thereafter concluding that petitioner bank is insolvent, and in you in due time” (p. 810, Rollo, Vol. III; emphasis ours).
ordering its closure on January 25, 1985. It is worthy to note that a conference was held on January 21, 1985 at the Central
As We have stated in Our resolution dated August 3, 1989, the documents Bank between the officials of the latter and of petitioner bank. What transpired and
pertinent to the resolution of these petitions are the Teodoro Report, Tiaoqui Report, what was agreed upon during the conference was explained in the Tiaoqui report
and the Valenzuela, Aurellano and Tiaoqui Report and the supporting documents “x x x The discussion centered on the substantial exposure of the bank to the various
made as bases by the supporters of their conclusions contained in their respective entities which would have a relationship with the bank; the manner by which some
reports. We will focus Our study and discussion however on the Tiaoqui Report and bank funds were made indirectly available to several entities within the group; and
the Valenzuela, Aurellano and Tiaoqui Report. The former recommended the closure the unhealthy financial status of these firms in which the bank was additionally
and receivership of petitioner bank while the latter report made the recommendation exposed through new funds or refinancing accommodation including accrued interest.
to eventually place the petitioner bank under liquidation. This Court shall likewise “Queried in the impact of these clean loans, on the bank solvency, Mr. Dizon (BF
take into consideration the findings contained in the reports of the two Executive Vice President) intimated that, collectively, these corporations have large
commissioners who were appointed by this Court to hold the referral hearings, undeveloped real estate properties in the suburbs which can be made answerable for
namely the report by Judge Manuel Cosico submitted February 20,1988 and the the unsecured loans as well as the Central Bank’s credit accommodations. A formal
report submitted by Justice Consuelo Santiago on January 28,1991. reply of the bank would still be forthcoming.” (pp. 58–59, Rollo, Vol. I; emphasis
There is no question that under Section 29 of the Central Bank Act, the following ours)
are the mandatory requirements to be complied with before a bank found to be 796
insolvent is ordered closed and forbidden to do business in the Philippines: Firstly, an 796 SUPREME COURT REPORTS ANNOTATED
examination shall be conducted by the head of the appropriate supervising or
examining department or his examiners or agents into the condition of the bank; Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
secondly, it shall be disclosed in the examination that the condition of the bank is one the Philippines
of insolvency, or that its continuance in business would involve probable loss to its

Page 11 of 23
Clearly, Tiaoqui based his report on an incomplete examination of petitioner bank especially if doubt exists as to whether such bases or findings faithfully represent the
and outrightly concluded therein that the latter’s financial status was one of real financial status of the bank.
insolvency or illiquidity. He arrived at the said conclusion from the following facts: The actuation of the Monetary Board in closing petitioner bank on January 25,
that as of July 31, 1984, total capital accounts consisting of paid-in capital and other 1985 barely four days after a conference with the latter on the examiners’ partial
capital accounts such as surplus, surplus reserves and undivided profits aggregated findings on its financial position is also violative of what was provided in the CB
P351.8 million; that capital adjustments, however, wiped out the capital accounts and Manual of Examination Procedures. Said manual provides that only after the
placed the bank with a capital deficiency amounting to P334.956 million; that the examination is concluded, should a pre-closing conference led by the examiner-in-
biggest adjustment which contributed to the deficit is the provision for estimated charge be held with the officers/representatives of the institution on the
losses on accounts classified as doubtful and loss which was computed at P600.4 findings/exception, and a copy of the summary of the findings/violations should be
million pursuant to the examination. This provision is also known as valuation furnished the institution examined so that corrective action may be taken by them as
reserves which was set up or deducted against the capital accounts of the bank in soon as possible (Manual of Examination Procedures, General Instruction, p. 14). It is
arriving at the latter’s financial condition. hard to understand how a period of four days after the conference could be a
Tiaoqui however admits the insufficiency and unreliability of the findings of the reasonable opportunity for a bank to undertake a responsive and corrective action on
examiner as to the setting up of recommended valuation reserves from the assets of the partial list of findings of the examiner-in-charge.
petitioner bank. He stated: We recognize the fact that it is the responsibility of the Central Bank of the
“The recommended valuation reserves as bases for determining the financial status Philippines to administer the monetary, banking and credit system of the country and
of the bank would need to be discussed with the bank, consistent with standard that its powers and functions shall be exercised by the Monetary Board pursu-
examination procedure, for which the bank would in turn reply. Also, the 798
examination has not been officially terminated. (p. 7. Tiaoqui report; p. 798 SUPREME COURT REPORTS ANNOTATED
59, Rollo, Vol. I)
In his testimony in the second referral hearing before Justice Santiago, Tiaoqui Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
testified that on January 21, 1985, he met with officers of petitioner bank to discuss the Philippines
the advanced findings and exceptions made by Mr. Dionisio Domingo which covered ant to Rep, Act No. 265, known as the Central Bank Act. Consequently, the power and
70%-80% of the bank’s loan portfolio; that at that meeting, Fortunato Dizon (BF’s authority of the Monetary Board to close banks and liquidate them thereafter when
Executive Vice President) said that as regards the unsecured loans granted to various public interest so requires is an exercise of the police power of the state. Police power,
corporations, said corporations had large undeveloped real estate properties which however, may not be done arbitratrily or unreasonably and could be set aside if it is
could be answerable for the said unsecured loans and that a reply from BF was either capricious, discriminatory, whimsical, arbitrary, unjust or is tantamount to a
forthcoming; that he (Tiaoqui) however prepared his report despite the absence of denial of due process and equal protection clauses of the Constitution (Central Bank v.
such reply; that he believed, as in fact it is stated in his report, that despite the Court of Appeals, Nos. L-50031–32, July 27, 1981, 106 SCRA 143).
meeting on January 21, 1985, there was still a need to discuss the recommended In the instant case, the basic standards of substantial due process were not
valuation reserves of petitioner bank and; observed. Time and again, We have held in several cases, that the procedure of
797 administrative tribunals must satisfy the fundamentals of fair play and that their
VOL. 204, DECEMBER 11, 1991 797 judgment should express a well-supported conclusion.
In the celebrated case of Ang Tibay v. Court of Industrial Relations, 69 Phil. 635,
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
this Court laid down several cardinal primary rights which must be respected in a
the Philippines proceeding before an administrative body.
that he however, did not wait anymore for a discussion of the recommended valuation However, as to the requirement of notice and hearing, Sec. 29 of RA 265 does not
reserves and instead prepared his report two days after January 21, 1985 (pp. 3313– require a previous hearing before the Monetary Board implements the closure of a
3314, Rollo). bank, since its action is subject to judicial scrutiny as provided for under the same law
Records further show that the examination of petitioner bank was officially (Rural Bank of Bato v. IAC, G.R No. 65642, October 15, 1984, Rural Bank v. Court of
terminated only when Central Bank Examinerin-charge Dionisio Domingo submitted Appeals, G.R. 61689, June 20,1988,162 SCRA 288).
his final report of examination on March 4, 1985. Notwithstanding the foregoing, administrative due process does not mean that
It is evident from the foregoing circumstances that the examination contemplated the other important principles may be dispensed with, namely: the decision of the
in Sec. 29 of the CB Act as a mandatory requirement was not completely and fully administrative body must have something to support itself and the evidence must be
complied with. Despite the existence of the partial list of findings in the examination substantial. Substantial evidence is more than a mere scintilla. It means such relevant
of the bank, there were still highly significant items to be weighed and determined evidence as a reasonable mind might accept as adequate to support a conclusion (Ang
such as the matter of valuation reserves, before these can be considered in the Tibay vs. CIR, supra). Hence, where the decision is merely based upon pieces of
financial condition of the bank. It would be a drastic move to conclude prematurely documentary evidence that are not sufficiently substantial and probative for the
that a bank is insolvent if the basis for such conclusion is lacking and insufficient, purpose and conclusion they are pre-sented, the standard of fairness mandated in the

Page 12 of 23
due process clause is not met. In the case at bar, the conclusion arrived at by the imposed or necessarily implied (Floyd Mechem, Treatise on the Law of Public Offices
respondent Board that the petitioner bank is in an illiquid and Officers, p. 335).
799 In this case, there can be no clearer explanation of the concept of insolvency than
VOL. 204, DECEMBER 11, 1991 799 what the law itself states. Sec. 29 of the Central Bank Act provides that insolvency
under the Act, shall be understood to mean that “the realizable assets of a bank or a
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of non-bank financial intermediary performing quasi-banking functions as determined
the Philippines by the Central Bank are insufficient to meet its liabilities.”
financial position on January 23, 1985, as to justify its closure on January 25, 1985 Hence, the contention of the Central Bank that a bank’s true financial condition is
cannot be given weight and finality as the report itself admits the inadequacy of its synonymous with the terms “unimpaired capital and surplus,” “combined capital
basis to support its conclusion. accounts” and net worth after deducting valuation reserves from the capital, surplus
The second requirement provided in Section 29, R.A. 265 before a bank may be and unretained earnings, citing Sec. 5 of RA 337 is misplaced,
closed is that the examination should disclose that the condition of the bank is one of Firstly, it is clear from the law that a solvent bank is one in which its assets exceed
insolvency. its liabilities. It is a basic accounting principle that assets are composed of liabilities
As to the concept of whether the bank is solvent or not, the respondents contend and capital. The term “assets” includes capital and surplus” (Exley v. Harris, 267 p.
that under the Central Bank Manual of Examination Procedures, Central Bank 970, 973, 126 Kan., 302). On the other hand, the term “capital” includes common and
examiners must recommend valuation reserves, when warranted, to be set up or preferred stock, surplus reserves, surplus and undivided profits. (Manual of
deducted against the corresponding asset account to determine the bank’s true Examination Procedures, Report of Examination on Department of Commercial and
condition or net worth. In the case of loan accounts, to which practically all the Savings Banks, p. 3-C). If valuation reserves would be deducted from these items, the
questioned valuation reserves refer, the manual provides that: result would merely be the networth or the unimpaired capital and surplus of the
1. 1.For doubtful loans, or loans the ultimate collection of which is doubtful and bank applying Sec. 5 of RA 337 but not the total financial condition of the bank.
in which a substantial loss is probable but not yet definitely ascertainable Secondly, the statement of assets and liabilities is used in balance sheets. Banks
as to extent, valuation reserves of fifty per cent (50%) of the accounts use statements of condition to reflect the amounts, nature and changes in the assets
should be recommended to be setup. and liabilities. The Central Bank Manual of Examination Procedures provides a
2. 2.For loans classified as loss, or loans regarded by the examiner as absolutely format or checklist of a statement of condition to be used by examiners as guide in the
uncollectible or worthless, valuation reserves of one hundred percent examination of banks. The, format
(100%) of the accounts should be recommended to be set up (p. 8, 801
Objections to Santiago report). VOL. 204, DECEMBER 11, 1991 801
The foregoing criteria used by respondents in determining the financial condition of
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
the bank is based on Section 5 of RA 337, known as the General Banking Act which
states: the Philippines
“Sec. 5. The following terms shall be held to be synonymous and interchangeable: enumerates the items which will compose the assets and liabilities of a bank. Assets
xxx include cash and those due from banks, loans, discounts and advances, fixed assets
f. ‘Unimpaired Capital and Surplus/ ‘Combined capital accounts/ and ‘Net worth,’ and other property owned or acquired and other miscellaneous assets. The amount of
which terms shall mean for the purposes of this Act , the total of the ‘unimpaired paid- loans, discounts and advances to be stated in the statement of condition as provided
in capital, surplus, and undivided profits net of such valuation reserves as may be for in the manual is computed after deducting valuation reserves when deemed
required by the Central Bank.” necessary. On the other hand, liabilities are composed of demand deposits, time and
There is no doubt that the Central Bank Act vests authority upon the Central Bank savings deposits, cashier’s, manager’s and certified checks, borrowings, due to head
and Monetary Board to take charge and administer the monetary and banking system office, branches and agencies, other liabilities and deferred credits (Manual of
of the country and this authority includes the power to examine and deter- Examination Procedure, p. 9). The amounts stated in the balance sheets or statements
800 of condition including the computation of valuation reserves when justified, are based
800 SUPREME COURT REPORTS ANNOTATED however, on the assumption that the bank or company will continue in business
indefinitely, and therefore, the networth shown in the statement is in no sense an
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of indication of the amount that might be realized if the bank or company were to be
the Philippines liquidated immediately (Prentice Hall Encyclopedic Dictionary of Business Finance,
mine the financial condition of banks for purposes provided for by law, such as for the p. 48). Further, based on respondents’ submissions, the allowance for probable losses
purpose of closure on the ground of insolvency stated in Section 29 of the Central on loans and discounts represents the amount set up against current operations to
Bank Act. But express grants of power to public officers should be subjected to a strict provide for possible losses arising from non-collection of loans and advances, and this
interpretation, and will be construed as conferring those powers which are expressly account is also referred to as valuation reserve (p. 9, Objections to Santiago report).
Clearly, the statement of condition which contains a provision for recommended

Page 13 of 23
valuation reserves should not be used as the ultimate basis to determine the solvency Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
of an institution for the purpose of termination of its operations.
Respondents acknowledge that under the said CB manual, CB examiners must the Philippines
recommend valuation reserves, when warranted, to be set up against the will however, take a look at the figures presented by the Tiaoqui Report in concluding
corresponding asset account (p, 8, Objections to Santiago report). Tiaoqui himself, as insolvency as of July 31, 1984 and at the figures presented by the CB authorized
author of the report recommending the closure of petitioner bank admits that the deputy receiver and by the Valenzuela, Aurellano and Tiaoqui Report which
valuation reserves should still be discussed with the petitioner bank in compliance recommended the liquidation of the bank by reason of insolvency as of January 25,
with standard examination procedure. Hence, for the Monetary Board to unilaterally 1985.
deduct an uncertain amount as valuation reserves from the assets of a bank and to The Tiaoqui report dated January 23, 1985, which was based on partial
conclude therefrom without sufficient basis that the bank is insolvent, would be examination findings on the bank’s condition as of July 31, 1984, states that total
totally unjust and unfair. liabilities of P5,282.1 million exceeds total assets of P4,947.2 million after deducting
802 from the assets valuation reserves of P612.2 million. Since, as We have explained in
our previous discussion that valuation reserves can not be legally deducted as there
802 SUPREME COURT REPORTS ANNOTATED
was no truthful and complete evaluation thereof as admitted by the Tiaoqui report
Banco Filipino Savings & Mortgage Bank us. Monetary Board, Central Bank of itself, then an adjustment of the figures will show that the liabilities of P5,282.1
the Philippines million will not exceed the total assets which will amount to P5,559.4 if the 612.2
million allotted to valuation reserves will not be deducted from the assets. There can
The test of insolvency laid down in Section 29 of the Central Bank Act is measured by
be no basis therefore for both the conclusion of insolvency and for the decision of the
determining whether the realizable assets of a bank are less than its liabilities. Hence,
respondent Board to close petitioner bank and place it under receivership.
a bank is solvent if the fair cash value of all its assets, realizable within a reasonable
Concerning the financial position of the bank as of January 25, 1985, the date of
time by a reasonable prudent person, would equal or exceed its total liabilities
the closure of the bank, the consolidated statement of condition thereof as of the
exclusive of stock liability; but if such fair cash value so realizable is not sufficient to
aforesaid date shown in the Valenzuela, Aurellano and Tiaoqui report on the
pay such liabilities within a reasonable time, the bank is insolvent. (Gillian v. State,
receivership of petitioner bank, dated March 19, 1985, indicates that total liabilities of
194 N.E. 360, 363, 207 Ind. 661). Stated in other words, the insolvency of a bank
4,540.84 million does not exceed the total assets of 4,981.53 million. Likewise, the
occurs when the actual cash market value of its assets is insufficient to pay its
consolidated statement of condition of petitioner bank as of January 25, 1985
liabilities, not considering capital stock and surplus which are not liabilities for such
prepared by the Central Bank Authorized Deputy Receiver Artemio Cruz shows that
purpose (Exley v. Harris, 267 p. 970, 973, 126 Kan. 302; Alexander v. Llewellyn, Mo.
total assets amounting to P4,981,522,996.22 even exceeds total liabilities amounting
App., 70 S.W. 2n 115, 117).
to P4,540,836,834.15. Based on the foregoing, there was no valid reason for the
In arriving at the computation of realizable assets of petitioner bank, respondents
Valenzuela, Aurellano and Tiaoqui report to finally recommend the liquidation of
used its books which undoubtedly are not reflective of the actual cash or fair market
petitioner bank instead of its rehabilitation.
value of its assets. This is not the proper procedure contemplated in Sec. 29 of the
We take note of the exhaustive study and findings of the Cosico report on the
Central Bank Act. Even the CB Manual of Examination Procedures does not confine
petitioner bank’s having engaged in unsafe, unsound and fraudulent banking
examination of a bank solely with the determination of the books of the bank. The
practices by the granting of huge unsecured loans to several subsidiaries and related
latter is part of auditing which should not be confused with examination. Examination
804
appraises the soundness of the institution’s assets, the quality and character of
management and determines the institution’s compliance with laws, rules and 804 SUPREME COURT REPORTS ANNOTATED
regulations.Audit is a detailed inspection of the institution’s books, accounts, Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
vouchers, ledgers, etc. to determine the recording of all assets and liabilities. Hence,
examination concerns itself with review and appraisal, while audit concerns itself with the Philippines
verification (CB Manual of Examination Procedures, General Instructions, p. 5). This companies, We do not see, however, that this has any material bearing on the validity
Court however, is not in the position to determine how much cash or market value of the closure. Section 34 of the RA 265, Central Bank Act empowers the Monetary
shall be assigned to each of the assets and liabilities of the bank to determine their Board to take action under Section 29 of the Central Bank Act when a bank “persists
total realizable value. The proper determination of these matters by using the actual in carrying on its business in an unlawful or unsafe manner.” There was no showing
cash value criteria belongs to the field of fact-finding expertise of the Central Bank whatsoever that the bank had persisted in committing unlawful banking practices and
and the Monetary Board. Notwithstanding the fact that the figures arrived at by the that the respondent Board had attempted to take effective action on the bank’s alleged
respondent Board as to assets and liabilities do not truly indicate their realizable value activities, During the period from July 27, 1984 up to January 25, 1985, when
as they were merely based on book value, We petitioner bank was under conservatorship no official of the bank was ever
803 prosecuted, suspended or removed for any participation in unsafe and unsound
banking practices, and neither was the entire management of the bank replaced or
VOL. 204, DECEMBER 11, 1991 803
substituted. In fact, in her testimony during the second referral hearing, Carlota

Page 14 of 23
Valenzuela, CB Deputy Governor, testified that the reason for petitioner bank’s “WHEREAS, the reopening of Banco Filipino would require additional credit
closure was not unsound, unsafe and fraudulent banking practices but the alleged resources from the Central Bank as well as an independent management acceptable to
insolvency position of the bank (TSN, August 3, 1990, p. 3315, Rollo,Vol. VIII). the Central Bank;
Finally, another circumstance which point to the solvency of petitioner bank is the “WHEREAS, it is the desire of the Central Bank to rapidly diffuse the uncertainty
granting by the Monetary Board in favor of the former a credit line in the amount of that presently exists;
P3 billion along with the placing of petitioner bank under conservatorship by virtue of “x x x.” (M.B. Min. No, 35 dated July 27, 1984 cited in Respondents’ Objections to
M.B. Resolution No. 955 dated July 27, 1984. This paved the way for the reopening of Santiago Report, p. 26; p. 3387, ‘Rollo,Vol. IX; Emphasis ours).
the bank on August 1,1984 after a selfimposed bank holiday on July 23, 1984. A perusal of the foregoing “Whereas” clauses unmistakably show that the clear reason
On emergency loans and advances, Section 90 of RA 265 provides two types of for the decision to grant the emergency loan to petitioner bank was that the latter was
emergency loans that can be granted by the Central Bank to a financially distressed suffering
bank: 806
“Sec. 90. x x x. In periods of emergency or of imminent financial panic which directly 806 SUPREME COURT REPORTS ANNOTATED
threaten monetary and banking stability, the Central Bank may grant banking
institutions extraordinary advances secured by any assets which are defined as Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
acceptable security by a concurrent vote of at least five members of the Monetary the Philippines
Board, While such advances are outstanding, the debtor institution may not expand from financial distress and severe bank “run” as a result of which it closed on July 23,
the total volume of its loans or investments without the prior authorization of the 1984 and that the release of the said amount is in accordance with the Central Bank’s
Monetary Board.” full support to meet Banco Filipino’s depositors’ withdrawal requirements (Excerpts
“The Central Bank may, at its discretion, likewise grant advances to banking of minutes of meeting on MB Min. No. 35, p. 25, Rollo, Vol. IX). Nothing therein
institutions, even during normal periods, for the purpose of assisting a bank in a shows that an extraordinary emergency situation exists affecting most banks, not only
precarious financial condition or under serious as regards petitioner bank. This Court thereby finds that the grant of the said
805 emergency loan was intended from the beginning to fall under the second paragraph
VOL. 204, DECEMBER 11, 1991 805 of Section 90 of the Central Bank Act, which could not have occurred if the petitioner
bank was not solvent. Where notwithstanding knowledge of the irregularities and
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
unsafe banking practices allegedly committed by the petitioner bank, the Central
the Philippines Bank even granted financial support to the latter and placed it under conservatorship,
financial pressures brought about by unforeseen events, or events which, though such actuation means that petitioner bank could still be saved from its financial
foreseeable, could not be prevented by the bank concerned. Provided, however, That distress by adequate aid and management reform, which was required by Central
the Monetary Board has ascertained that the bank is not insolvent and has clearly Bank’s duty to maintain the stability of the banking system and the preservation of
realizable assets to secure the advances. Provided, further, That a concurrent vote of public confidence in it (Ramos v. Central Bank, No. L-29352, October 4, 1971, 41
at least five members of the Monetary Board is obtained.” (Emphasis ours) SCRA 565).
The first paragraph of the aforequoted provision contemplates a situation where the In view of the foregoing premises, We believe that the closure of the petitioner
whole banking community is confronted with financial and economic crisis giving rise bank was arbitrary and committed with grave abuse of discretion. Granting in gratia
to serious and widespread confusion among the public, which may eventually argumenti that the closure was based on justified grounds to protect the public, the
threaten and gravely prejudice the stability of the banking system. Here, the fact that petitioner bank was suffering from serious financial problems should not
emergency or financial confusion involves the whole banking community and not one automatically lead to its liquidation. Section 29 of the Central Bank provides that a
bank or institution only. The second situation on the other hand, provides for a closed bank may be reorganized or otherwise placed in such a condition that it may be
situation where the Central Bank grants a loan to a bank with uncertain financial permitted to resume business with safety to its depositors, creditors and the general
condition but not insolvent. public.
As alleged by the respondents, the following are the reasons of the Central Bank in We are aware of the Central Bank’s concern for the safety of Banco Filipino’s
approving the resolution granting the P3 billion loan to petitioner bank and the depositors as well as its creditors including itself which had granted substantial
latter’s reopening after a brief self-imposed banking holiday: financial assistance up to the time of the latter’s closure. But there are alternatives to
“WHEREAS, the closure by Banco Filipino Savings and Mortgage Bank of its permanent closure and liquidation to safeguard those interests as well as those of the
Banking offices on its own initiative has worked serious hardships on its general public for the failure of Banco Filipino or any bank for that matter may be
depositors and has affected confidence levels in the banking system resulting in a viewed as an irreversible decline of the country’s entire banking system and
feeling of apprehension among depositors and unnecessary deposit withdrawals; 807
“WHEREAS, the Central Bank is charged with the function of administering the VOL. 204, DECEMBER 11, 1991 807
banking system;
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of

Page 15 of 23
the Philippines and to pay its liabilities as they fell due, to forbid the bank from further engaging in
banking.
ultimately, it may reflect on the Central Bank’s own viability. For one thing, the
The matter of reopening, reorganization or rehabilitation of BF is not within the
Central Bank and the Monetary Board should exercise strict supervision over Banco
competence of this Court to ordain but is better addressed to the Monetary Board and
Filipino. They should take all the necessary steps not violative of the laws that will
the Central Bank considering the latter’s enormous infusion of capital into BF to the
fully secure the repayment of the total financial assistance that the Central Bank had
tune of approximately P3.5 Billion in total accommodations, after a thorough
already granted or would grant in the future.
assessment of whether or not BF is, indeed, possessed, as it stoutly contends, of
ACCORDINGLY, decision is hereby rendered as follows:
sufficient assets and capabilities with which to repay such huge indebtedness, and can
1. 1.The motion for reconsideration in G.R. Nos. 68878 and 81303, and the
operate without loss to its many depositors and creditors.
petitions in G.R. Nos. 77255–58, 78766, 81304 and 90473 are DENIED;
GRlÑO-AQUINO, J., Dissenting in part.
2. 2.The petitions in G.R. No. 70054, 78767 and 78894 are GRANTED and the
Although these nine (9) Banco Filipino (BF) cases have been consolidated under
assailed order of the Central Bank and the Monetary Board dated January
one ponencia, all of them except one, raise issues unrelated to the receivership and
25, 1985 is hereby ANNULLED AND SET ASIDE. The Central Bank and the
liquidation of said bank, In fact, two of these cases (G.R. No. 68878 and 81303) have
Monetary Board are ordered to reorganize petitioner Banco Filipino
already been decided by this Court and are only awaiting the resolution of the motions
Savings and Mortgage Bank and allow the latter to resume business in the
for reconsideration filed therein. Only G.R. No, 70054 “Banco Filipino Savings and
Philippines under the comptrollership of both the Central Bank and the
Mortgage Bank (BF) vs. the Monetary Board (MB), Central Bank of the Philippines
Monetary Board and under such conditions as may be prescribed by the
(CB), et al.," is an original action for mandamus and
latter in connection with its reorganization until such time that petitioner
809
bank can continue in business with safety to its creditors, depositors and
the general public. VOL. 204, DECEMBER 11, 1991 809
SO ORDERED. Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Narvasa (C.J.), Gutierrez, Jr., Cruz, Bidin and Regalado, JJ., concur.
Melencio-Herrera, J., See dissent. the Philippines
Paras, J., No part. Son is one of the lawyers. certiorari filed in this Court by former officials of BF to annul the Monetary Board
Feliciano, J., No part. One of parties represented by my former firm. Resolution No. 75 dated January 25, 1985 (ordering the closure of Banco Filipino [BF]
Padilla, J., No part; former director of Bank of P.I. which at one time and appointing Carlota Valenzuela as receiver of the bank) on the ground that the
negotiated for the acquisition of Banco Filipino. resolution was issued “without affording BF a hearing on the reports” on which the
Griño-Aquino, J., Please see my separate dissenting opinion. Monetary Board based its decision to close the bank, hence, without “administrative
Davide, Jr., J., No part as one of the counsels was a former partner in a due process"1 The prayer of the petition reads:
Cebu-based law firm. “WHEREFORE, petitioner respectfully prays that a writ of mandamus be issued
Romero, J., I join in the dissent of J. Aquino. commanding respondents immediately to furnish it copies of the reports of
Nocon, J., No part. Did not participate in the deliberations. examination of BF employed by respondent Monetary Board to support its Resolution
808 of January 25, 1985 and thereafter to afford it a hearing prior to any resolution that
may be issued under Section 29 of R.A. 265, meanwhile annulling said Resolution of
808 SUPREME COURT REPORTS ANNOTATED
January 25, 1985 by writ of certiorari as made without or in excess of jurisdiction or
Banco Filipino Savings & Mortgage Bank vs, Monetary Board, Central Bank of with grave abuse of discretion.
the Philippines “So as to expedite proceedings, petitioner prays that the assessment of the
damages respondents should pay it be deferred and referred to commissioners.
MELENCIO-HERRERA, J., Dissenting:
“Petitioner prays for such other remedy as the Court may deem just and equitable
I join Mme. Justice Carolina G. Aquino in her dissent and vote to deny the prayer,
in the premises.
in G.R. No. 70054, to annul Monetary Board Resolution No. 75 placing Banco Filipino
“Quezon City for Manila, February 28, 1985." (p. 8, Rollo I.)
(BF) under receivership.
and the prayer of the Supplement to Petition reads:
Even assuming that the BF was not, as alleged, in a literal state of insolvency at
“WHEREFORE, in addition to its prayer for mandamus and certiorari contained in its
the time of the passage of said Resolution, there was a finding in the Teodoro report
original petition, petitioner respectfully prays that Sections 28-A and 29 of the Central
that, based on that Bank’s illiquidity, to have allowed it to continue in operation
Bank charter (R.A. 265) including its amendatory Presidential Decrees Nos. 72, 1771,
would have meant probable loss to depositors and creditors. That is also a ground for
1827 and 1937 be annulled as unconstitutional.
placing the bank under receivership, as a first step, pursuant to Section 29 of the
“Quezon City for Manila, March 4, 1985." (p. 11-G, Rollo I.)
Central Bank Act (Rep. Act No. 265, as amended). The closure of BF, therefore, can
The other eight (8) cases merely involve transactions of BF with third persons and
not be said to have been arbitrary or made in bad faith. There was sufficient
certain “related” corporations which had defaulted an their loans and sought to
justification, considering its inability to meet the heavy withdrawals by its depositors

Page 16 of 23
prohibit the extrajudicial foreclosure of the mortgages on their properties by the 6. G.R. No. 81303, “Pilar Development Corporation vs. Court of Appeals, et al.” is
receiver of BF. These eight (8) cases are: an appeal from the decision dated October 22, 1987 of the Court of Appeals in CA-
1. G.R. No. 68878 “BF vs. Intermediate Appellate Court and Celestina G.R. SP No. 12368, “Pilar Development Corporation, et al. vs, Honorable Manuel
Pahimutang” involves the repossession by BF of a Cosico, et al.," dismissing the petition for certiorari against Judge Manuel Cosico, Br.
________________ 136, RTC, Makati, who dismissed the complaint filed by Pilar Development
1 P. 3, Petition. Corporation against BF, for specific performance of certain developer contracts. An
810 answer filed by Norberto Quisumbing and Associates, as BF’s supposed counsel,
810 SUPREME COURT REPORTS ANNOTATED virtually confessed judgment in favor of Pilar Development. On motion of the
receiver, the answer was expunged and the complaint was dismissed. On a petition for
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of certiorari in this Court, we held that: “As liquidator of BF by virtue of a valid
the Philippines appointment from the Central Bank, private respondent Carlota Valenzuela has the
house and lot which the buyer (Pahimutang) claimed to have completely paid for on authority to direct the operation of the bank in substitution of the former
the installment plan. The appellate court’s judgment for the buyer was reversed by management, which authority includes the retainer of counsel to represent it in
this Court. The buyer’s motion for reconsideration is awaiting resolution by this bringing or resisting suits in connection with such liquidation and, in the case at bar,
Court; to take the proper steps to prevent collusion, to the prejudice of the legitimate
2. G.R. Nos. 77255–58, ‘Top Management Programs Corporation and Pilar creditors, between BF and the petitioners herein which appear to be owned and
Development Corporation us. Court of Appeals, et al.” (CA-G.R, SP No. 07892) controlled by the same interest controlling BF" (p. 49, Rollo). The petitioners’ motion
and “Pilar Development Corporation vs. Executive Judge, RTC, Cavite”(CA-G.R. SP for reconsideration of that decision is pending resolution.
Nos. 08962–64) is a consolidated petition for review of the Court of Appeals’ joint 7. G.R. No. 81304, “BF Homes Development Corporation vs. Court of Appeals, et
decision dismissing the petitions for prohibition in which the petitioners seek to al.” is an appeal from the decision dated November 4, 1987 of the Court of Appeals
prevent the receiver/liquidator of BF from extrajudicially foreclosing the P4.8 million in CA-G.R. CV No. 08565 affirming the trial court’s order dismissing BF Homes’
mortgage on Top Management’s properties and the P18.67 million mortgage on Pilar action to compel the Central Bank to restore the financing facilities of BF, because the
Development properties. The Court of Appeals dismissed the petitions on October 30, plaintiff (BF Homes) has no cause of action against the CB.
1986 on the ground that “the functions of the liquidator, as receiver under Section 29 8. G.R. No. 90473, “El Grande Development Corporation vs. Court of Appeals, et
(R.A. 265), include taking charge of the insolvent’s assets and administering the same al.” is a petition to review the decision dated June 6, 1989 in CA-G.R. SP No.
for the benefit of its creditors and of bringing suits and foreclosing mortgages in the 08676dismissing El Grande’s petition for prohibition to stop foreclosure proceed-
name of the bank;” 812
3. G.R. No. 78766, “El Grande Corporation vs. Court of Appeals, et al.," is an 812 SUPREME COURT REPORTS ANNOTATED
appeal from the Court of Appeals’ decision in CA-G.R. SP No. 08809 dismissing El
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Grande’s petition for prohibition to prevent the foreclosure of BF’s P8 million
mortgage on El Grande’s properties; the Philippines
4. G.R. No. 78894, “Banco Filipino Savings and Mortgage Bank vs. Court of ings against it by the receiver of BF.
Appeals, et al.” is an appeal of BF’s old management (using the name of BF) from the As previously stated, G.R. No. 70054 “BF vs. Monetary Board, et al.," is an
decision of the Court of Appeals in CA-G.R, SP No. 07503entitled, “Central Bank, et original special civil action for certiorari and mandamus filed in this Court by the old
al. vs. Judge Zoilo Aguinaldo, et al.” dismissing the complaint of “BF" to annul the management of BF, through their counsel, N.J. Quisumbing 6, Associates, using the
receivership, for no suit may be brought or defended in the name of the bank except name of the bank and praying for the annulment of MB Resolution No, 75 which
by its receiver; ordered the closure of BF and placed it under receivership. It is a “forum-shopping”
5. G.R. No. 87867, “Metropolis Development Corporation vs. Court of case because it was filed here on February 28, 1985 three weeks after they had filed on
Appeals” (formerly AC-G.R. No. 07503, “Central Bank, et al. vs. Honorable Zoilo February 2, 1985 Civil Case No. 9675 “Banco Filipino vs. Monetary Board, et al.” in
Aguinaldo, et al.”) is an appeal of the intervenor (Metropolis) from the same Court of the Regional Trial Court of Makati, Br. 143 (presided over by Judge Zoilo Aguinaldo)
Appeals’ decision subject of G.R. No. 78894, which also dismissed Metropolis’ for the same purpose of securing a declaration of the nullity of MB Resolution No. 75
811 dated January 25, 1985.
VOL. 204, DECEMBER 11, 1991 811 On August 25, 1985, this Court ordered the transfer and consolidation of Civil
Case No. 9675 (to annul the receivership) from Br. 143 to Br. 136 (Judge Manuel
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of Cosico) of the Makati Regional Trial Court where Civil Case No. 8108 (to annul the
the Philippines conservatorship) and Civil Case No. 10183 (to annul the liquidation) of BF were and
complaint in intervention on the ground that a stockholder (Metropolis) may not are still pending. All these three (3) cases were archived on June 30, 1988 by Judge
bring suit in the name of BF while the latter is under receivership, without the Cosico pending the resolution of G.R. No. 70054 by this Court.
authority of the receiver;
Page 17 of 23
Because of my previous participation, as a former member of the Court of business shall take place as well as the time for fulfillment of such conditions. In such
Appeals, in the disposition of AC-G.R. No. 02617 (now G.R. No. 68878) and AC-G.R. case, the expenses and fees in the collection and administration of the assets of the
SP No. 07503 (now G.R. Nos. 78767 and 78894), I am taking no part in G.R. Nos. institution shall be determined by the Board and shall be paid to the Central Bank out
68878, 78767 and 78894. It may be mentioned in this connection that neither in AC- of the assets of
G.R. SP No. 02617, nor in AC-G.R. SP No. 07503, did the Court of Appeals rule on the 814
constitutionality of Sections 28-A and 29 of Republic Act 265 (Central Bank Act), as 814 SUPREME COURT REPORTS ANNOTATED
amended, and the validity of MB Resolution No. 75, for those issues were not raised in
the Court of Appeals. Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
I concur with the ponencia insofar as it denies the motion for reconsideration the Philippines
in G.R. No. 81303, and dismisses the petitions for review in G.R. Nos. 77255–58, such banking institution.
78766, 81304, and 90473. “If the Monetary Board shall determine and confirm within the said period that
I respectfully dissent from the majority opinion in G.R. No. 70054 annulling and the banking ins titution is insolvent or cannot resume business with safety to its
setting aside MB Resolution No. 75 and ordering the respondents, Central Bank of the depositors, creditors and the general public, it shall, if the public interest requires,
Philippines and the Monetary Board— order its liquidation, indicate the manner of its liquidation and approve a liquidation
813 plan. The Central Bank shall, by the Solicitor General, file a petition in the Court of
VOL. 204, DECEMBER 11, 1991 813 First Instance, reciting the proceedings which have been taken and praying the
assistance of the court in the liquidation of the banking institutions. The court shall
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
have jurisdiction in the same proceedings to adjudicate disputed claims against the
the Philippines bank and enforce individual liabilities of the stockholders and do all that is necessary
“to reorganize petitioner Banco Filipino Savings and Mortgage Bank, and allow the to preserve the assets of the banking institution and to implement the liquidation plan
latter to resume business in the Philippines under the comptrollership of both the approved by the Monetary Board. The Monetary Board shall designate an official of
Central Bank and the Monetary Board and under such conditions as may be the Central Bank as liquidator who shall take over the functions of the receiver
prescribed by the latter until such time that petitioner bank can continue in business previously appointed by the Monetary Board under this section. The liquidator shall,
with safety to its creditors, depositors and the general public.” with all convenient speed, convert the assets of the banking institution to money or
for I believe that this Court has neither the authority nor the competence to determine sell, assign or otherwise dispose of the same to creditors and other parties for the
whether or not, and under what conditions, BF should be reorganized and reopened, purpose of paying the debts of such bank and he may, in the name of the banking
That decision should be made by the Central Bank and the Monetary Board, not by institution, institute such actions as may be necessary in the appropriate court to
this Court. collect and recover accounts and assets of the banking institution.
All that we may determine in this case is whether the actions of the Central Bank “The provisions of any law to the contrary notwithstanding, the actions of the
and the Monetary Board in closing BF and placing it under receivership were “plainly Monetary Board under this section and the second paragraph of Section 34 of this
arbitrary and made in bad faith.” Act shall be final and executory, and can be set aside by the court only if there is
Section 29 of Republic Act No. 265 provides: convincing proof that the action is plainly arbitrary and made in bad faith. No
“Section 29. Proceedings upon insolvency.—Whenever, upon examination by the restraining order or injunction shall be issued by the court enjoining the Central Bank
head of the appropriate supervising and examining department or his examiners or from implementing its actions under this section and the second paragraph of Section
agents into the condition of any banking institution, it shall be disclosed that the 34 of this Act, unless there is convincing proof that the action of the Monetary Board
condition of the same is one of insolvency, or that its continuance in business would is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the
involve probable loss to its depositors or creditors, it shall be the duty of the clerk or judge of the court in which the action is pending a bond executed in favor of
department head concerned forthwith, in writing, to inform the Monetary Board of the Central Bank, in an amount to be fixed by the court. The restraining order or
the facts, and the Board may, upon finding the statements of the department head to injunction shall be refused or, if granted, shall be dissolved upon filing by the Central
be true, forbid the institution to do business in the Philippines and shall designate an Bank of a bond, which shall be in the form of cash or Central Bank cashier’s check, in
official of the Central Bank as receiver to immediately take charge of its assets and an amount twice the amount of the bond of the petitioner or plaintiff, conditioned
liabilities, as expeditiously as possible collect and gather all the assets and administer that it will pay the damages which the petitioner or plaintiff may suffer by the refusal
the same for the benefit of its creditors, exercising all the powers necessary for these or the dissolution of the injunction. The provisions of Rule 58 of the new Rules of
purposes including, but not limited to, bringing suits and foreclosing mortgages in the Court insofar as they are applicable and not inconsistent with the provisions of this
name of the banking institution. section shall govern the issuance and
“The Monetary Board shall thereupon determine within sixty days whether the 815
institution may be reorganized or otherwise placed in such a condition so that it may VOL. 204, DECEMBER 11, 1991 815
be permitted to resume business with safety to its depositors and creditors and the
general public and shall prescribe the conditions under which such resumption of Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of

Page 18 of 23
the Philippines examiners and accountants was assigned at the bank to keep track of its activities and
ascertain its financial condition (p. 8, Tiaoqui Report):
dissolution of the restraining order or injunction contemplated in this section.
Estanislao resigned after two weeks for health reasons. He was succeeded by
Insolvency, under this Act, shall be understood to mean the inability of a banking
Gilberto Teodoro as conservator in August, 1984 up to January 8, 1985.
institution to pay its liabilities as they fall due in the usual and ordinary course of
Besides the conservatorship team, Teodoro hired financial consultants Messrs.
business, provided, however, that this shall not include the inability to pay of an
Tirso G. Santillan, Jr. and Plorido P. Casuela to make an analysis of BF’s financial
otherwise non-insolvent bank caused by extra-ordinary demands induced by financial
condition. Teodoro also engaged the accounting firm of Sycip, Gorres, Velayo and
panic commonly evidenced by a run on the banks in the banking community.”
Company to make an asset evaluation, The Philippine Appraisal Company (PAC)
The determinative factor in the closure, receivership, and liquidation of a bank is the
appraised BF’s real estate properties, acquired assets, and collaterals held. On
finding, upon examination by the SES of the Central Bank, that its condition “is one of
January 9, 1985, Teodoro submitted his Report. Three weeks later, on January 23,
insolvency, or that its continuance in business would involve probable loss to its
1985, Tiaoqui also submitted his Report. Both reports showed that, in violation of
depositors and creditors.” (Sec. 29, R.A. 265.) It should be pointed out that insolvency
Section 37 of the General Banking Act (R.A. 337):2
is not the only statutory ground for the closure of a bank. The other ground is when
________________
“its continuance in business would involve probable loss to its depositors and 2 Sec. 37. All savings and mortgage banks shall maintain on deposit with the
creditors.”
Central Bank of the Philippines such reserves against their deposit liabilities as the
Was BF insolvent i.e., unable to pay its liabilities as they fell due in the usual and
Monetary Board shall determine in accordance with the pertinent provisions of the
ordinary course of business, on and for some time before January 25, 1985 when the
Central Bank Act.
Monetary Board issued Resolution No. 75 closing the bank and placing it under
817
receivership? Would its continued operation involve probable loss to its depositors
and creditors? VOL. 204, DECEMBER 11, 1991 817
The answer to both questions is yes. Both the conservator Gilberto Teodoro and Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
the head of the SES (Supervision and Examination Sector) Ramon V. Tiaoqui opined
that BF’s continuance in business would cause probable loss to depositors and the Philippines
creditors. Tiaoqui further categorically found that BF was insolvent. Why was this so? 1. 1.BF had been continually deficient in liquidity reserves (Teodoro Report).
The Teodoro and Tiaoqui reports as well as the report of the receivers, Carlota The bank had been experiencing a severe drop in liquidity levels. The ratio
Valenzuela, Arnulfo B. Aurellano and Ramon V. Tiaoqui, showed that since the end of of liquid assets to deposits and borrowings plunged from about 20% at
November 1983 BF had already been incurring “chronic reserve deficiencies” and end-1983, to about 8.6% by end-May 1984, much below the statutory
experiencing severe liquidity problems. So much so, that it had become “a substantial requirements of 24% for demand deposits/deposit substitutes and 14% for
borrower in the call loans market” and in June 1984 it obtained a P30 million savings and time deposits. (p. 2, Tiaoqui Report.)
emergency loan from the Central Bank. (p. 2, Receiver’s Report.) Additional 2. 2.Deficiencies in average daily legal reserves rose from P63.0 million. during
emergency loans (a total of P119.7 millions) were extended by the Central the week of November 21–26, 1983 to a high of P435.9 million during the
816 week of June 11–15, 1984 (pp. 2–3, Tiaoqui Report). Accumulated penalties
on reserve deficiencies amounted to P37.4 million by July 31, and rose to
816 SUPREME COURT REPORTS ANNOTATED
P48 million by the end of 1984. (Tiaoqui Report.)
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of 3. 3.Deposit levels, which were at P3,845 million at end-May 1984 (its last
the Philippines “normal” month), dropped to P935 million at the end of November 1984 or
a loss of P2,910 million. This represented an average monthly loss of P485
Bank to BF that month (MB Res. No. 839 dated June 29,1984). On July 12,1984, BF’s
million vs. an average monthly gain of P26 million during the first 5
chairman, Anthony Aguirre, offered to “turn over the administration of the affairs of
months of 1984. (pp. 2–3, Tiaoqui Report.)
the bank” to the Central Bank (Aguirre’s letter to Governor Jose Fernandez, Annex 7
4. 4.Deposits had declined at the rate of P20 million during the month of
of Manifestation dated May 3, 1991). On July 23, 1984, unable to meet heavy deposit
December 1984, but expenses of about P17 million per month were
withdrawals, BF’s management motu proprio,without obtaining the conformity of the
required to maintain the bank’s operations. (p. 5, Teodoro Report.)
Central Bank, closed the bank and declared a bank holiday. On July 27, 1984, the CB,
5. 5.Based on the projected outlook, the Bank’s average yield on assets of 16.3%
responding to BF’s pleas for additional financial assistance, granted BF a P3 billion
p.a., was insufficient to meet the average cost of funds of 19.5% p.a. and
credit line (MB Res. No. 934 of July 27, 1984) to enable it to reopen and resume
operating expenses of 4.8% p.a. (p. 5 Teodoro Report.)
business on August 1,1984. P2.3601 billions of the credit line were availed of by the
6. 6.An imprudently large proportion of assets were locked into long-term
end of 1984 exclusive of an overdraft of P932.4 millions (p. 2, Tiaoqui Report). Total
applications. (Teodoro Report)
accommodations granted to BF amounted to P3.4122 billions (p. 19, Cosico Report).
7. 7.BF overextended itself in lending to the real estate industry, committing as
Presumably to assure that the financial assistance would be properly used, the MB
much as 52% of its peso deposits to its affiliates or “related accounts” to
appointed Basilio Estanislao as conservator of the bank. A conservatorship team of 78
which it continued lending even when it was already suffering from

Page 19 of 23
liquidity stresses. (Teodoro Report.) This was done in violation of Section 4 Sec. 83, No director or officer of any banking institution shall, either directly or

38 of the General Banking Act (R.A. 337).3 indirectly, for himself or as the representative or agent of others, borrow any of the
________________ deposits of funds of such bank x x x.
3 Sec. 38. Whenever there is a call by depositors of a savings bank for repayment 819
of their deposits and the call so made shall result in reducing its legal reserves below VOL. 204, DECEMBER 11, 1991 819
the amount required by the Monetary Board, such bank shall not make any new loans
or investment of the funds of depositors or earnings of such funds until the call of the Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
depositors has been satisfied and its legal reserves have been restored to the required the Philippines
minimum. 1. ing accrued interest, were secured by collateral worth only P1.54 billion.
818 Hence, BF’s unsecured exposure amounted to P586.2 million. BF Homes,
818 SUPREME COURT REPORTS ANNOTATED Inc., a related company which has filed with the SEC a petition for
suspension of payments, owes P502 million to BF.
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
13. BF had been suffering heavy losses.—
the Philippines 1. a)For the eleven (11) months ended November 30, 1984, the estimated net
1. 8.During the period of marked decline in liquidity levels the loan loss was P372.6 Million;
portfolio grew by P417.3 million in the first five months of 1984—and by 2. b)For the twelve (12) months from November 1984, the projected net loss
another P105.1 million in the next two months. (pp. 2–3, Tiaoqui Report.) would be P390.7 Million and would continue unabated; (p. 2, Teodoro
2. 9.The loan portfolio stood at P3.679 billion at the end of July 1984, 56.2% of Report)
it channeled to companies whose stockholders, directors and officers were 3. c)Around 71.7% of the total accommodations of P2.0677 billions to the
related to the officers, directors, and some stockholders of BF. (p. 8, related/linked entities were adversely classified. Close to 33.7% or P697.1
Tiaoqui Report.) Here again BF violated the General Banking Act (R.A. millions were clean loans or against PNs (promissory notes) of these
337).4 entities. Of the latter, 52.6% were classified as loss.” (p. 5, Tiaoqui Report)
3. 10.Some of the loans were used to acquire preferred stocks of BF. Between 4. d)The bank’s financial condition as of date of examination, after setting up
September 17, 1983 and February 10,1984, P49.9 million of preferred non- the additional valuation reserves of P612.2 millions and accumulated net
convertible stocks were issued. About 85% or P42.4 million was paid out of loss of P48.2 millions, indicates one of insolvency. Total liabilities of
the proceeds of loans to stockholders/ borrowers with relationship to the P5,282.1 million exceeds total assets of P4,947.2 million by 6.8%. Total
bank (Annex D). Around P18.8 million were issued in the name of an entity capital account of P334.9 million) is deficient by P322.7 million against the
other than the purchaser of the stocks. (Tiaoqui Report.) mini-mum capital required of P657.6 million (Annex F). Capital to risk
4. 11.Loans amounting to some P69.3 million were granted simply to pay-off assets ratio is negative 10.38%.
old loans including accrued interest, as an accommodation for the direct 5. e)Total loans and investment portfolio amounted to P3,914.3 millions
maturing loans of some firms and as a way of paying-off loans of other (gross), of which P194.0 millions or 5.0% were past due and P1,657.1
borrower firms which have their own credit lines with the bank. These millions or 42.3% were adversely classified (Substandard—P1,011.4
helped to make otherwise delinquent loans appear “current” and millions; Doubtful—P274.6 millions and Loss—P371.1 millions). Accounts
deceptively “improved” the quality of the loan portfolio. (Tiaoqui Report.) adversely classified included unmatured loan of P1,482.0 million to entities
5. 12.Examination of the collaterals for the loan accounts of 63 major related with each other and to the bank, several of which showed distressed
borrowers and 32 other selected borrowers as of July 31, 1984, showed conditions.” (p. 7, Tiaoqui Report.)
that: Teodoro’s conclusion was that “the continuance of the bank in business would involve
1. (a)2,658 TCT’s which BF evaluated to be worth P1,487 million were probable loss to its depositors and creditors.” He recommended “that the Monetary
appraised by PAC to be worth only P1,196 million, hence, deficient by P291 Board take a more effective and responsible action to protect the depositors and
million, creditors x x x in the light of the bank’s worsening condition.” (p. 5, Teodoro Report.)
2. (b)Other properties (collaterals) supposedly worth P711 million could not be On January 23, 1985, Tiaoqui submitted his report to the Monetary Board. Like
evaluated by PAC because the details submitted by the bank were Teodoro, Tiaoqui believed that the prin-
insufficient; 820
3. (c)While P674 million in loans were supposedly guaranteed by the Home 820 SUPREME COURT REPORTS ANNOTATED
Financing Corporation (HFC), the latter confirmed only P427 million. P247
million in loans were not guaranteed by HPC. (Teodoro Report.) Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
4. (d)Per SGV’s report, loans totalling P1.882 million includ- the Philippines
________________ cipal cause of the bank’s failure was that in violation of the General Banking Law and
CB rules and regulations, BF’s major stockholders, directors and officers, through
Page 20 of 23
their “related” companies: (i.e. companies owned or controlled by them of their issued Resolution No. 75 closing BF and placing it under receivership. The MB
relatives) had been “borrowing” huge chunks of the money of the depositors. His Resolution reads as follows:
Conclusion and Recommendations were: “After considering the report dated January 8, 1985 of the Conservator for Banco
“The Conservator, in his report to the Monetary Board dated January 8, 1985, has Filipino Savings and Mortgage Bank that the continu-ance in business of the bank
stated that the continuance of the bank in business would involve probable loss to its would involve probable loss to its depositors and creditors, and after discussing and
depositors and creditors. It has recommended that a more effective action be taken to finding to be true the statements of the Special Assistant to the Governor and Head,
protect depositors and creditors. Supervision and Examination Sector (SES) Department II, as recited in his
“The examination findings as of July 31, 1984 as shown earlier, indicate one memorandum dated January 23, 1985, that the Banco Filipino Savings and Mortgage
of insolvency and illiquidity and further confirms the above conclusion of the Bank is insolvent and that its continuance in business would involve probable loss to
Conservator. its depositors and creditors, and in pursuance of Section 29 of R.A. No. 265, as
“All the foregoing provides sufficient justification for forbidding the bank from amended, the Board decided:
further engaging in banking. 1. “1.To forbid Banco Filipino Savings and Mortgage Bank and all its branches
“Foregoing considered, the following are recommended: to do business in the Philippines;
1. “1.Forbid the Banco Filipino Savings 6, Mortgage Bank to do business in the 2. “2.To designate Mrs. Carlota P. Valenzuela, Deputy Governor, as Receiver
Philippines effective the beginning of office on January, 1985, pursuant to who is hereby directly vested with jurisdiction and authority to
Sec. 29 of R.A. No. 265, as amended; immediately take charge of the bank’s assets and liabilities, and as
2. “2.Designate the Head of the Conservator Team at the bank, as Receiver of expeditiously as possible collect and gather all the assets and administer
Banco Filipino Savings 6, Mortgage Bank, to immediately take charge of the same for the benefit of its creditors, exercising all the powers necessary
the assets and liabilities, as expeditiously as possible collect and gather all for these purposes including, but not limited to, bringing suits and
the assets and administer the same for the benefit of all the creditors, and foreclosing mortgages in the name of the bank;
exercise all the powers necessary for these purposes including but not 3. “3.To designate Mr. Arnulfo B. Aurellano, Special Assistant to the Governor,
limited to bringing suits and foreclosing mortgages in the name of the and Mr. Ramon V. Tiaoqui, Special Assistant to the Governor and Head,
bank. Supervision and Examination Sector Department II, as Deputy Receivers
3. “3.The Board of directors and the principal officers from Senior Vice who are likewise
President, as listed in the attached Annex ‘A' be included in the watchlist of 822
the Supervision and Examination Sector until such time that they shall 822 SUPREME COURT REPORTS ANNOTATED
have cleared themselves.
4. “4.Refer to the Central Bank’s Legal Department and Office of Special Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
Investigation the report on the findings on Banco Filipino for investigation the Philippines
and possible prosecution of directors, officers and employees for activities 1. hereby directly vested with jurisdiction and authority to do all things
which led to its insolvent position.” (pp. 9–10, Tiaoqui Report.) necessary or proper to carry out the functions entrusted to them by the
On January 25, 1985 or two days after the submission of Tiaoqui’s Report, and three Receiver and otherwise to assist the Receiver in carrying out the functions
weeks after it received Teodoro’s vested in the Receiver by law or Monetary Board resolutions;
821 2. “4.To direct and authorize Management to do all other things and carry out
VOL. 204, DECEMBER 11, 1991 821 all other measures necessary or proper to implement this Resolution and to
safeguard the interests of depositors/creditors and the general public; and
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
3. “5.In consequence of the foregoing, to terminate the conservatorship over
the Philippines Banco Filipino Savings and Mortgage Bank.” (pp. 126–127, Rollo l.)
Report, the Monetary Board, then composed of: On March 19, 1985, the receiver, Carlota Valenzuela, and the deputy receivers,
Chairman: Jose B. Fernandez, Jr. Arnulfo B. Aurellano and Ramon V. Tiaoqui, submitted a report to the Monetary
CB Governor Board as required in Section 29, 2nd paragraph of R.A. 265 which provides that
Members: within sixty (60) days from date of the receivership, the Monetary Board shall
1. 1.Cesar E.A. Virata, Prime Minister 6, Concurrently Minister of Finance determine whether the bank may be reorganized and permitted to resume business,
2. 2.Roberto V. Ongpin, Minister of Trade 6, Industry 6, Chairman of Board of or be liquidated. The receivers recommended that BF be placed under litigation. For,
Investment among other things, they found that:
3. 3.Vicente B. Valdepeñas, Jr., Minister of Economic Planning 6, Director 1. 1.BF had been suffering a capital deficiency of P336.5 million as of July 31,
General of NEDA 1984 (pp. 2 and 4, Receivers’ Report).
4. 4.Cesar A. Buenaventura, President of Filipinas Shell Petroleum Corp. (p. 37, 2. 2.The bank’s weekly reserve deficiencies averaged P1 46.67 million from
Annual Report 1985) November 25, 1983 up to March 16,1984, rising to a peak of P338.09

Page 21 of 23
million until July 27, 1984. Its reserve deficiencies against deposits and 824 SUPREME COURT REPORTS ANNOTATED
deposit substitutes began on the week ending June 15, 1984 up to
December 7, 1984, with average daily reserve deficiencies of P2.98 million. Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
3. 3.Estimated losses or “unbooked valuation reserves” for loans to entities the Philippines
with relationships to certain stockholders/ directors and officers of the placed under receivership.
bank amounted to P600.5 million. Combined with other adjustments in the Even if assets and liabilities were to be factored into a formula for determining
amount of P73.2 million, they will entirely wipe out the bank’s entire whether or not BF was already insolvent on or before January 25, 1985, the result
capital account and leave a capital deficiency of P336.5 million. The bank would be no different. The bank’s assets as of the end of 1984 amounted to P4.891
was already insolvent on July 31, 1984. The capital deficiency increased to billions (not P6 billions) according to the Report signed and submitted to the CB by
P908.4 million as of January 25, 1985 on account of unbooked penalties for BF’s own president, and its total liabilities were P4.478 billions (p. 58, Cosico Report).
deficiencies in legal reserves (P49.07 million), unbooked interest on While Aguirre’s Report showed BF ahead with a net worth of P412.961 millions, said
overdrawings, emergency ad report did not make any provision for estimated valuation reserves amounting to
823 P600.5 millions, (50% of face value of doubtful loans and 100% of face value
VOL. 204, DECEMBER 11, 1991 823 of loss accounts) which BF had granted to its related/linked companies. The
estimated valuation reserves of P600.5 millions plus BF’s admitted liabilities of
Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
P4.478 billions, put together, would wipe out BF’s realizable assets of P4.891 billions
the Philippines and confirm its insolvent condition to the tune of P187.538 millions.
1. vance of P569.49 million from Central Bank, and additional valuation BF’s and Judge (now CA Justice) Consuelo Y. Santiago’s argument that valuation
reserves of P124.5 million. (pp. 3–4, Receivers’ Report.) reserves should not be considered because the matter was not discussed by Tiaoqui
The Receivers further noted that— with BF officials is not well taken for:
“After BF was closed as of January 25, 1985, there were no collections from loans 1. (1)The records of the defaulting debtors were in the possession of BF.
granted to firms related to each other and to BF classified as ‘doubtful’ or ‘loss,’ there 2. (2)The “adversely classified” loans were in fact included in the List of
were no substantial improvements on other loans classified ‘doubtful’ or loss;’ there Exceptions and Findings (of irregularities and violations of laws and CB
was no further increase in the value of assets owned/acquired supported by new rules and regulations) prepared by the SES, a copy of which was furnished
appraisals and there was no infusion of additional capital such that the estimated BF on December 17, 1984;
realizable assets of BF remained at P3,909.23, (millions) while the total liabilities 3. (3)A conference on the matter was held on January 21, 1985 with senior
amounted to P5,159.44 (millions). Thus, BF remains insolventwith estimated officials of BF headed by EVP F. Dizon,. (pp. 14–15, Cosico Report.) BF did
deficiency to creditors of P1,250.21 (millions), not formally protest against the CB’s estimate of valuation reserves. The CB
“Moreover, there were no efforts on the part of the stockholders of the bank to could not wait forever for BF to respond for the CB had to act with
improve its financial condition and the possibility of rehabilitation has become more reasonable promptness to protect the depositors and creditors of BF
remote.” (p. 8, Receivers’ Report.) because the bank continued to operate.
In the light of the results of the examination of BF by the Teodoro and Tiaoqui teams, 4. (4)Subsequent events proved correct the SES classification of the loan
I do not find that the CB’s Resolution No. 75 ordering BF to cease banking operations accounts as “doubtful” or “loss” because as of January 25, 1985 none of the
and placing it under receivership was “plainly arbitrary and made in bad faith.” The loans, except three, had been paid either partially or in full, even if they had
receivership was justified because BF was insolvent and its continuance in business already matured (p. 53, Cosico Report).
would cause loss to its depositors and creditors. Insolvency, as defined in Rep. Act Act 825
265, means “the inability of a banking institution to pay its liabilities as they fall due VOL. 204, DECEMBER 11, 1991 825
in the usual and ordinary course of business. Since June 1984, BF had been unable to
meet the heavy cash withdrawals of its depositors and pay its liabilities to its Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of
creditors, the biggest of them being the Central Bank, hence, the Monetary Board the Philippines
correctly found its condition to be one of insolvency. The recommended provision for valuation reserves of P600.5 millions for “doubtful”
All the discussion in the Santiago Report concerning the bank’s assets and and “loss” accounts was a proper factor to consider in the capital adjustments of BF
liabilities as determinants of BF’s solvency or insolvency is irrelevant and and was in accordance with accounting rules. For, if the uncollectible loan accounts
inconsequential, for under Section 29 of Rep. Act. 265, a bank’s insolvency is not would be entered in the assets column as “receivables,” without a corresponding entry
determined by its excess of liabilities over assets, but by its “inability to pay its in the liabilities column for estimated losses or valuation reserves arising from their
liabilities as they fall due in the ordinary course of business” and it was abundantly uncollectability, the result would be a gravely distorted picture of the financial
shown that BF was unable to pay its liabilities to depositors for over a six-month- condition of BF.
period before it was
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BF’s strange argument that it was not insolvent for otherwise the CB would not
have given it financial assistance does not merit serious consideration for precisely BF
needed financial assistance because it was insolvent.
Tiaoqui’s admission that the examination of BF had “not yet been officially
terminated” when he submitted his report on January 23, 1985 did not make the
action of the Monetary Board of closing the bank and appointing receivers for it,
“plainly arbitrary and in bad faith.” For what had been examined by the SES was more
than enough to warrant a finding that the bank was “insolvent and could not continue
in business without probable loss to its depositors or creditors,” and what had not
been examined was negligible and would not have materially altered the result. In any
event, the official termination of the examination with the submission by the Chief
Examiner of his report to the Monetary Board in March 1985, did not contradict, but
in fact confirmed, the findings in the Tiaoqui Report,
The responsibility of administering the Philippine monetary and banking systems
is vested by law in the Central Bank whose duty it is to use the powers granted to it
under the law to achieve the objective, among others, of maintaining monetary
stability in the country (Sec. 2, Rep. Act 265). I do not think it would be proper and
advisable for this Court to interfere with the CB’s exercise of its prerogative and duty
to discipline banks which have persistently engaged in illegal, unsafe, unsound and
fraudulent banking practices causing tremendous losses and unimaginable anxiety
and prejudice to depositors and creditors and generating widespread distrust and loss
of confidence in the banking system. The damage to the banking system and to the
depositing public is bigger when the bank, like Banco
826
826 SUPREME COURT REPORTS ANNOTATED
GSIS vs. Civil Service Commission
Filipino, is big. With 89 branches nationwide, 46 of them in Metro Manila alone,
pumping the hard-earned savings of 3 million depositors into the bank, BF had no
reason to go bankrupt if it were properly managed. The Central Bank had to infuse
almost P3.5 billions into the bank in its endeavor to save it. But even this financial
assistance was misused, for instead of satisfying the depositors’ demands for the
withdrawal of their money, BF channeled and diverted a substantial portion of the
funds into the coffers of its related/linked companies. Up to this time, its officers,
directors and major stockholders have neither repaid the Central Bank’s P3.5 billion
financial assistance, nor put up adequate collaterals therefor, nor submitted a credible
plan for the rehabilitation of the bank. What authority has this Court to require the
Central Bank to reopen and rehabilitate the bank, and in effect risk more of the
Government’s money in the moribund bank? I respectfully submit that that decision
is for the Central Bank, not for this Court, to make.
WHEREFORE, I vote to dismiss the petition for certiorari and mandamus in G.R.
No. 70054 for lack of merit.
Motion for reconsideration in G.R. Nos. 68878 and 81303, and petitions in G.R.
Nos. 77255–58, 78766, 81304 and 90473, denied; petitions in G.R. Nos. 70054, 76767
and 78894, granted and the order annulled and set aside.
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