Scribd
Upload
381 views2 pages

Rural Bank of Buhi Case Digest

1) The Rural Bank of Buhi refused to undergo an examination by the Rural Banks and Savings and Loan Association, resulting in the suspension of its financial assistance. A subsequent examination found massive irregularities, including loans to unknown and fictitious borrowers. 2) Respondent Consolacion V. Odra recommended placing the bank under receivership. The Monetary Board adopted Resolution No. 583 doing so. 3) The bank filed an injunction arguing this violated due process, which the court rejected, finding that Section 29 of Republic Act No. 265 does not require a hearing before receivership and that such action can be considered an exercise of police power.

Uploaded by

Caitlin Kintanar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
381 views2 pages

Rural Bank of Buhi Case Digest

1) The Rural Bank of Buhi refused to undergo an examination by the Rural Banks and Savings and Loan Association, resulting in the suspension of its financial assistance. A subsequent examination found massive irregularities, including loans to unknown and fictitious borrowers. 2) Respondent Consolacion V. Odra recommended placing the bank under receivership. The Monetary Board adopted Resolution No. 583 doing so. 3) The bank filed an injunction arguing this violated due process, which the court rejected, finding that Section 29 of Republic Act No. 265 does not require a hearing before receivership and that such action can be considered an exercise of police power.

Uploaded by

Caitlin Kintanar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Rural Bank of Buhi, Inc. vs. CA Respondent Consolacion V.

Odra, as receiver,
implemented and carried out said Monetary
Facts:
Board Resolution No. 583 by authorizing deputies
An examination of the books and affairs of Buhi of the receiver to take control, possession and
was ordered conducted by the Rural Banks and charge of Buhi, its assets and liabilities.
Savings and Loan Association (DRBSLA), Central
Bank of the Philippines, which by law, has charge Imelda del Rosario, Manager of herein petitioner
of the supervision and examination of rural banks Buhi, filed a petition for injunction with
and savings and loan associations in the Restraining Order against respondent
Philippines. However, said petitioner refused to Consolacion V. Odra and DRBSLA deputies in the
be examined and as a result thereof, financial Court of First Instance which assailed the action
assistance was suspended. of herein respondent Odra in recommending the
receivership over Buhi as a violation of the
A general examination of the bank's affairs and provisions of Sections 28 and 29 of Republic Act
operations was conducted and there were found No. 265 as amended, and Section 10 of Republic
by DRBSLA massive irregularities in its Act No. 720 (The Rural Banks Act) and as being
operations consisting of loans to unknown and ultra vires and done with grave abuse of
fictitious borrowers. discretion and in excess of jurisdiction.

Respondent, Consolacion V. Odra, submitted a Later on, the Central Bank Monetary Board
report recommending to the Monetary Board of issued a Resolution No. 1514 ordering the
the Central Bank the placing of Buhi under liquidation of the Rural Bank of Buhi.
receivership in accordance with Section 29 of
Republic Act No. 265, as amended, the The judge ruled in favor of the Bank and issued
designation of the Director, DRBSLA, as receiver a writ of execution. The CA however restrained
thereof. The Monetary Board, finding the report the enforcement of execution, citing that the
to be true, adopted Resolution No. 583 placing Judge did not follow the orders, and thus
Buhi, petitioner herein, under receivership. required the Bank to yield to the Central Bank.
Issue: of the due process and equal protection clauses of the
WON due process was observed by the Monetary Board Constitution.
before placing the bank under receivership.
Due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may
Ruling: be subsequent to the closure. One can just imagine the
dire consequences of a prior hearing: bank runs would
Relative thereto, Sec. 29 of Republic Act No. 265 on the be the order of the day, resulting in panic and hysteria.
proceedings upon insolvency provides that there is no In the process, fortunes may be wiped out, and
requirement whether express or implied, that a hearing disillusionment will run the gamut of the entire banking
be first conducted before a banking institution may be community.
placed under receivership. On the contrary, the law is
explicit as to the conditions prerequisite to the action of
the Monetary Board to forbid the institution to do
business in the Philippines and to appoint a receiver to
immediately take charge of the bank's assets and
liabilities. They are: (a) an examination made by the
examining department of the Central Bank; (b) report
by said department to the Monetary Board; and (c)
prima facie showing that the bank is in a condition of
insolvency or so situated that its continuance in
business would involve probable loss to its depositors
or creditors.

It has long been established and recognized in this


jurisdiction that the closure and liquidation of a bank
may be considered as an exercise of police power. Such
exercise may, however, be subject to judicial inquiry
and could be set aside if found to be capricious,
discriminatory, whimsical, arbitrary, unjust or a denial

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy