BANGKO SENTRAL NG PILIPINAS MONETARY FACTS

BOARD and CHUCHI FONACIER, Petitioners, vs. Supervision and Examination Department (SED)
HON. NINA G. ANTONIO-VALENZUELA, in her of the Bangko Sentral ng Pilipinas (BSP)
capacity as Regional Trial Court Judge of conducted examinations of the books of the
Manila, Branch 28; RURAL BANK OF following banks:
PARAÑAQUE, INC.; RURAL BANK OF SAN JOSE
(BATANGAS), INC.; RURAL BANK OF CARMEN Rural Bank of Parañaque, Inc. (RBPI), Rural Bank
(CEBU), INC.; PILIPINO RURAL BANK, INC.; of San Jose (Batangas), Inc., Rural Bank of
PHILIPPINE COUNTRYSIDE RURAL BANK, INC.; Carmen (Cebu), Inc., Pilipino Rural Bank, Inc.,
RURAL BANK OF CALATAGAN (BATANGAS), Philippine Countryside Rural Bank, Inc., Rural
INC. (now DYNAMIC RURAL BANK); RURAL Bank of Calatagan (Batangas), Inc. (now
BANK OF DARBCI, INC.; RURAL BANK OF Dynamic Rural Bank), Rural Bank of Darbci, Inc.,
KANANGA (LEYTE), INC. (now FIRST Rural Bank of Kananga (Leyte), Inc. (now First
INTERSTATE RURAL BANK); RURAL BANK OF Interstate Rural Bank), Rural Bank de Bisayas
BISAYAS MINGLANILLA (now BANK OF EAST Minglanilla (now Bank of East Asia), and San
ASIA); and SAN PABLO CITY DEVELOPMENT Pablo City Development Bank, Inc.
BANK, INC.
G.R. No. 184778, THIRD DIVISION, October 2, After the examinations, exit conferences were
2009, Velasco Jr., J held with the officers of the banks wherein SED
provided copies of Lists of Findings containing
The issuance by the RTC of writs of preliminary the deficiencies discovered during the
injunction is an unwarranted interference with examinations. Banks were then required to
the powers of the MB refer to the appointment comment and to undertake the remedial
of a conservator or a receiver for a bank, which measures which included the infusion of
is a power of the MB for which they need the additional capital. Though the banks claimed
ROEs done by the supervising or examining that they made the additional capital infusions,
department. The writs of preliminary injunction petitioner Chuchi Fonacier, officer-in-charge of
issued by the trial court hinder the MB from the SED, sent separate letters to the Board of
fulfilling its function under the law. The "close Directors of each bank, informing them that the
now, hear later" scheme is grounded on SED found that the banks failed to carry out the
practical and legal considerations to prevent required remedial measures. In response, the
unwarranted dissipation of the bank’s assets banks requested that they be given time to
and as a valid exercise of police power to obtain BSP approval to amend their Articles of
protect the depositors, creditors, stockholders, Incorporation, that they have an opportunity to
and the general public. seek investors. They requested as well that the
basis for the capital infusion figures be
Moreover, the respondent banks have failed to disclosed, and noted that none of them had
show that they are entitled to copies of the received the Report of Examination (ROE)
ROEs. They can point to no provision of law, no which finalizes the audit findings. In response,
section in the procedures of the BSP that shows Fonacier reiterated the banks’ failure to comply
that the BSP is required to give them copies of with the directive for additional capital
the ROEs. Sec. 28 of RA 7653, provides that the infusions.
ROE shall be submitted to the MB; the bank
examined is not mentioned as a recipient of the RBPI filed a complaint for nullification of the
ROE. BSP ROE with application for a TRO and writ of
preliminary injunction before the RTC. Praying
that Fonacier, her subordinates, agents, or any preliminary injunction and when it ordered the
other person acting in her behalf be enjoined consolidation of the 10 cases. It held that
from submitting the ROE or any similar report petitioners should have first filed a motion for
to the Monetary Board (MB), or if the ROE had reconsideration of the assailed orders, and
already been submitted, the MB be enjoined failed to justify why they resorted to a special
from acting on the basis of said ROE, on the civil action of certiorari instead.
allegation that the failure to furnish the bank
with a copy of the ROE violated its right to due On November 24, 2008, a TRO was issued by
process. this Court, restraining the CA, RTC, and
respondents from implementing and enforcing
The rest of the banks followed suit filing the CA Decision. By reason of the TRO issued by
complaints with the RTC substantially similar to this Court, the SED was able to submit their
that of RBPI. ROEs to the MB. The MB then prohibited the
respondent banks from transacting business
RTC denied the prayer for a TRO of Pilipino and placed them under receivership
Rural Bank, Inc. The bank filed a motion for
reconsideration the next day.Respondent Judge ISSUES
Nina Antonio-Valenzuela of Branch 28 granted a. Whether or not the TRO issued by the RTC
RBPI’s prayer for the issuance of a TRO. violated section 25 of the New Central Bank Act
that prevented the MB to discharge functions.
The other banks separately filed motions for
consolidation of their cases in Branch 28, which b. Whether or not the respondents are required
motions were granted. Petitioners assailed the to be given copies of the ROEs before
validity of the consolidation of the nine cases submission of such to the Monetary Board.
before the RTC, alleging that the court had
already prejudged the case by the earlier RULING
issuance of a TRO and moved for the inhibition (A.) YES, Requisites for preliminary injunctive
of respondent judge. Petitioners filed a motion relief are: (a) the invasion of right sought to be
for reconsideration regarding the consolidation protected is material and substantial; (b) the
of the subject cases. right of the complainant is clear and
unmistakable; and (c) there is an urgent and
The RTC ruled that the banks were entitled to paramount necessity for the writ to prevent
the writs of preliminary injunction prayed for. It serious damage.The twin requirements of a
held that it had been the practice of the SED to valid injunction are the existence of a right and
provide the ROEs to the banks before its actual or threatened violations. Thus, to be
submission to the MB. It further held that as entitled to an injunctive writ, the right to be
the banks are the subjects of examinations, protected and the violation against that right
they are entitled to copies of the ROEs. The must be shown. These requirements are absent
denial by petitioners of the banks’ requests for in the present case.
copies of the ROEs was held to be a denial of
the banks’ right to due process. The issuance by the RTC of writs of preliminary
injunction is an unwarranted interference with
Petitioners claims grave abuse of discretion on the powers of the MB refer to the appointment
the part of Judge Valenzuela. The CA ruled that of a conservator or a receiver for a bank, which
the RTC committed no grave abuse of discretion is a power of the MB for which they need the
when it ordered the issuance of a writ of ROEs done by the supervising or examining
department. The writs of preliminary injunction The respondent banks cannot claim a violation
issued by the trial court hinder the MB from of their right to due process if they are not
fulfilling its function under the law. The actions provided with copies of the ROEs. The same
of the MB under Secs. 29 and 30 of RA 7653 ROEs are based on the lists of
"may not be restrained or set aside by the court findings/exceptions containing the deficiencies
except on petition for certiorari on the ground found by the SED examiners when they
that the action taken was in excess of examined the books of the respondent banks.
jurisdiction or with such grave abuse of As found by the RTC, these lists of
discretion as to amount to lack or excess of findings/exceptions were furnished to the
jurisdiction. The respondent banks have shown officers or representatives of the respondent
no necessity for the writ of preliminary banks, and the respondent banks were required
injunction to prevent serious damage. The to comment and to undertake remedial
serious damage contemplated by the trial court measures stated in said lists. Despite these
was the possibility of the imposition of instructions, respondent banks failed to comply
sanctions upon respondent banks, even the with the SED’s directive.
sanction of closure. Under the law, the sanction Respondent banks are already aware of what is
of closure could be imposed upon a bank by the required of them by the BSP, and cannot claim
BSP even without notice and hearing. This violation of their right to due process simply
"close now, hear later" scheme is grounded on because they are not furnished with copies of
practical and legal considerations to prevent the ROEs.
unwarranted dissipation of the bank’s assets
and as a valid exercise of police power to
protect the depositors, creditors, stockholders,
and the general public.

Judicial review enters the picture only after the

(B) NO, The respondent banks have failed to