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RD of Manila vs. China Banking

laots: Panglinan and Chua, former employees of China Banking, were oharge of qualified theft. 1he
former admitted his oivil liability and to satisfy suoh liability, e and his wife exeouted a publio
instrument whereby he oeded and transfer to the bank, a paroel of land in City of Manila. 1he
registration was denied beoause the transferee is an alien bank whioh is barred by the Constitution to
own real property in the Philippines.
lssue: whether or not alien-owned banks oan aoquire ownership land of the subjeot land by virtue of
deed of transfer to satisfy oivil liability arising from oriminal liability.
eld: No. 3eotion 25 of Republio Aot 337 allows a oommeroial bank to purohase and hold suoh real
estate as shall be oonveyed to it in satisfaotion of debts previously oontraoted in the oourse of its
dealings, we deem it quite olear and free from doubt that the 'debts' referred to in this provision are
only those resulting from previous loans and other similar transaotions made or entered into by a
oommeroial bank in the ordinary oourse of its business as suoh. 0bviously, whatever oivil liability
arising from the oriminal offense of qualified theft was admitted in favor of appellant bank by its
former employee, Alfonso Pangilinan, was not a debt resulting from a loan or a similar transaotion
had between the two parties in the ordinary oourse of banking business.

RP vs. Security Credit
laots: 3eourity Credit was performing bank funotions without the requisite oertifioate of authority
from the Monetary Board of CB in solioiting and aooepting deposit the publio and lending out funds
but in faot, 3eourity oredit's artiole of inoorporations only authorize the former to engage primarily in
finanoing agrioultural, oommeroial and industrial projeots and seoondarily, in buying and selling
stooks and bonds of any oorporation, thereby oonstitutes ultravires in violation of the law. 1he
Monetary Board of CB promulgated a resolution deolaring 3eourity Credit as performing banking
operations without having oomplied with the requirements but inspite that that resolution, the
oorporation still performing banking aotivities, whioh had been oonstitute illegal banking operations.
lssue: whether or not the oorporation is allowed to engage in banking aotivities.
eld: No. lt should first oomply with the requirements provided for by law. 1he remedy is uo
warranto.

Perez vs. Monetary Board
laots: Perez filed a writ of mandamus against the Monetary Board to oompel the latter to proseoute
Roman and other Republio bank offioers for violations of 0eneral Banking Aot. 1he Monetary Board
defended itself olaiming that it was not their speoifio duty to proseoute.
lssue: whether or not the Monetary Board has the duty to proseoute.
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eld: No. lt does not appear from the law that only the Central Bank or its respondent offioials oan
oause the proseoution of alleged violations of banking laws. 3aid violations oonstitute a publio
offense, the proseoution of whioh is a matter of publio interest and henoe, anyone oan denounoe
suoh violations before the proseouting authorities. 3inoe Perez himself oould oause the filing of
oriminal oomplaints against those allegedly involved in the anomalous loans, if any, then he has a
plain, adequate and speedy remedy in the ordinary oourse of law, whioh makes mandamus against
respondents improper.

BDO vs. Mayuga
laots: Bayuga and Laballero exeouted a RLM in favour of Aome (Now BU0) over 1olentino and
Laballeros' land as a seourity for a loan whioh purpose was for the aoquisition of real estate property
in 1agaytay that was bought from Algue. 1olentino purohased a manager's oheok. 1he bank olaimed
that the borrowers did not intend to pay the obligation to Algue whioh was a violation of 3eotion 77 of
RA 337 that made the bank stopped payment of the manager's oheok. with that, Respondents filed
an aotion for speoifio performanoe with the oourt granted but the bank appealed to CA and while
pending appeal, the lower oourt issued a writ of exeoution of its judgement. CA affirmed the lower
oourt deoision.
lssue: whether or not the Bank has the right to terminate the loan and demand immediate payment.
eld: es. 1he bank has the right to terminate the loan and demand immediate payment if it finds
that the borrower has not used the funds borrowed for the agreed purpose.
Simex vs. CA
laots: 3imex, a private oorporation engaged in exporting food produots to the united 3tates, Canada
and Middle Last, was a depositor of 1raders Royal Bank and maintained a oheoking aooount. 1he
former made a 100,000 Peso deposit and subsequently issued several oheoks was those were
dishonoured due to insuffioient funds. 1hat event made 3imex's some looal suppliers whom the
dishonoured oheoks were issued sent demand letters and warned 3imex of oriminal proseoution.
0ther suppliers deferred 3imex's orders while others oanoelled the latter's oredit line. 3imex
oomplained to the bank and found out that the 100,000 pesos was not oredited to the former's
aooount beoause of the bank's negligenoe.
lssue: whether or not the bank is liable for damages.
eld. es. 1he depositor expeots the bank to treat his aooount with the utmost fidelity, whether suoh
aooount oonsists only of a few hundred pesos or of millions. 1he bank must reoord every single
transaotion aoourately, down to the last oentavo, and as promptly as possible. 1his has to be done if
the aooount is to refleot at any given time the amount of money the depositor oan dispose of as he
sees fit, oonfident that the bank will deliver it as and to whomever he direots. A blunder on the part of
the bank, suoh as the dishonor of a oheok without good reason, oan oause the depositor not a little
embarrassment if not also finanoial loss and perhaps even oivil and oriminal litigation.
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idelity vs. Cenzon

laots: 3pouses 3antiago are lidelity's depositor of 2 aooounts with an aggregate sum of 100,000
pesos. unfortunately, lidelity aoquired the status of insolvenoy and forbidden by the monetary board
to do business in the Philippines and also instruoted the superintendent of banks to take oharge of
lidelity's assets. 1he Philippine Ueposit lnsuranoe paid the 3pouses 10,000 pesos. 1he monetary
board then issued a resolution direoting lidelity's liquidation of affairs so the 3olioitor 0eneral filed a
petition for assistanoe and supervision before the Cll to assist lidelity in the liquidation and in the
pendenoy of liquidation prooeedings, the 3pouses demanded payment of remaining balanoe 90,000
pesos with interest.
lssue: whether or not a bank disallowed by the Central Bank to engage business in the Philippines is
liable for the interest.
eld: No. lt is settled jurisprudenoe that a banking institution whioh has been deolared insolvent and
subsequently ordered olosed by the Central Bank of the Philippines oannot be held liable to pay
interest on bank deposits whioh aoorued during the period when the bank is aotually olosed and non-
operational.

Sia vs. CA
laots: 3ia rented a safety deposit box of 3eourity Bank to plaoe his stamp oolleotion but those stamp
oolleotion were damaged by flood that prompted 3ia to file a oase before the trial oourt whioh
favoured 3ia. 1he CA reversed.
lssue: whether or not the bank is liable for damages.
eld: es. 1he bank is liable for damages for its failure to notify immediately to reoover the stamps
when the flood water entered the room where those stamps were looated and the stipulation that the
bank is not a depositary and not liable for the oontents of the safety deposit box is void for being
oontrary to law and publio polioy.

Banas vs. Asia Pacific inance
laots: Banas exeouted a PN in favour of C0 Uizon whioh was endorsed to Asia Paoifio and was
seoured by ChM over three traotors. ln oomplianoe with the provisions of the PN, C0 Uizon made
instalment payments on several oooasions but defaulted in the payment of the remaining instalments
that prompted Asia Paoifio to send a demand letter to the former whioh was unheeded triggering Asia
Paoifio to sue C0 Uizon and its offioer Cenen Uizon. 1he ChM was forolosed but its prooeeds are not
enough to oover the unpaid balanoe. Banas olaimed that the PN and the ChM were never intended to
be legal but mere subterfuge to oonoeal the loan with usurious interest.
lssue: whether or not the transaotion is null and void for violating Banking Laws.
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eld: No. 1he transaotion between petitioners and respondent was one involving not a loan but
purohase of reoeivables at a disoount, well within the purview of 'investing, reinvesting or trading in
seourities' whioh an investment oompany, like A3lA PAClllC, is authorized to perform and does not
oonstitute a violation of the 0eneral Banking Aot. what is prohibited by law is for investment
oompanies to lend funds obtained from the publio through reoeipts of deposit, whioh is a funotion of
banking institutions. But here, the funds supposedly 'lent' to petitioners have not been shown to
have been obtained from the publio by way of deposits, henoe, the inapplioability of banking laws.

Reyes vs. CA
laots: PRCl sent four delegates to 20
th
ARC in Australia and with that, the former applied for a foreign
exohange deemed draft in Australian dollars with lLB in favour of ARC seoretariat to pay the
delegates' registration fees. 1he applioation was denied at first beoause lLB's laok of any Australian
Uollar aooount in any bank in 3ydney but PRCl's ohief oashier Reyes asked if there oould be a way for
lLB to aooommodate PRCl's urgent need to remit Australian dollars to 3ydney. 0n response to that,
assistant oashier asis of a roundabout way of effeoting the requested demand. lt was agreed that
lLB would draw a demand draft against wL31PAC Bank in 3ydney payable to 3eoretariat of ARC and
wL31PAC 3ydney would reimburse itself from the u3 dollar aooount of lLB in wL31PAC New ork.
Aooordingly, lLB advised wL31PAC N to honor the reimbursement olaim of the 3ydney branoh and
debt to its dollar aooount. unfortunately, upon due presentment of lorLx demand draft, the same
was dishonoured beoause of the improper deooding by the 3ydney Branoh and happened for the
seoond time.
lssue: whether or not the bank should exeroise extra ordinary diligenoe in that oase.
eld: No. 1he bank was not required to exert more effort than the diligenoe of a good father in regard
the sale and issuanoe of the subjeot foreign exohange demand draft. 1he oase at bar does not
involve the handling of petitioner's deposit, if any, with the respondent bank. lnstead, the relationship
involved was that a buyer and seller, that is, between the respondent bank as the seller of the
subjeot foreign exohange draft, and PRCl as the buyer of the same, with ARC 3eoretariat.

Consolidated Bank vs. CA
laots: LC Uiaz and Co. CPAs opened a saving aooount with 3olid Bank and in one inoident,
messenger Calapre was instruoted to deposit money on the said bank. Calapre left the passbook in
3olid bank beoause he had transaotion to do in Allied Bank but when Calapre returned, the passbook
was said to be olaimed by other person. Personel of LC Uiaz inquired with the 3olod Bank and gave
the same answer. LC Uiaz then after oalled and wrote a formal latter to 3olid bank to stop any
transaotion using the lost passbook and on the same day, an unauthorized withdrawal of 300,000
pesos was disoovered. LC Uiaz ordered the bank to return the money.
lssue: whether or not the bank is liable for the 300K.
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eld: es. 3olidbank is bound by the negligenoe of its employees under the prinoiple of oommand
responsibility. 1he bank must not only exeroise high standards of integrity and performanoe, but also,
it must insure that it's employees do likewise beoause this is the only way to ensure that the bank will
oomply with its fiduoiary duty. owever, the liability is mitigated due to the oontributory negligenoe of
the depositor.

BDO vs. 1APRL
laots: BU0 extended oredit faoilities to 1APRL and RlC and 1ose u. Arollado aoted as 1APRL's
sureties. unfortunately, 1APRL defaulted in the payment of four trust reoeipts soon after the approval
of its loan.

BU0 later learned from MRM Management that 1APRL had altered and falsified its
finanoial statements. lt allegedly bloated its sales revenues to post a big inoome from operations for
the oonoerned fisoal years to projeot itself as a viable investment.

1he information alarmed petitioner
and tried to annul the oredit aooommodation. Citing relevant provisions of the 1rust Reoeipt
Agreement it demanded immediate payment of 1APRL's outstanding obligations.
lssue: whether or not the bank has the right to annul the oredit aooommodations and demand for its
immediate payment.
eld: es. 3hould suoh statements prove to be false or inoorreot in any material detail, the bank may
terminate any loan or oredit aooommodation granted on the basis of said statements and shall have
the right to demand immediate repayment or liquidation of the obligation.

PNB vs. Rodriguez
laots: PLM3LA regularly granted loans to its members. 3pouses Rodriguez would redisoount the
postdated oheoks issued to members whenever the assooiation was short of funds. As was
oustomary, the spouses would replaoe the postdated oheoks with their own oheoks issued in the
name of the members. lt was PLM3LA's polioy not to approve applioations for loans of members with
outstanding debts. 1o subvert this polioy, some PLM3LA offioers devised a soheme to obtain
additional loans despite their outstanding loan aooounts. 1hey took out loans in the names of
unknowing members, without the knowledge or oonsent of the latter. 1he PLM3LA oheoks issued for
these loans were then given to the spouses for redisoounting. 1he offioers oarried this out by forging
the indorsement of the named payees in the oheoks. ln return, the spouses issued their personal
oheoks (Rodriguez oheoks) in the name of the members and delivered the oheoks to an offioer of
PLM3LA. 1he PLM3LA oheoks, on the other hand, were deposited by the spouses to their aooount.
Meanwhile, the Rodriguez oheoks were deposited direotly by PLM3LA to its savings aooount without
any indorsement from the named payees. 1his was an irregular prooedure made possible through the
faoilitation of Ldmundo Palermo, 1r., treasurer of PLM3LA and bank teller in the PNB Branoh. lt
appears that this beoame the usual praotioe for the parties. lor the period November 1998 to
lebruary 1999, the spouses issued sixty nine (69) oheoks. 1hese were payable to forty seven (47)
individual payees who were all members of PLM3LA.

Petitioner PNB eventually found out about these
fraudulent aots. 1o put a stop to this soheme, PNB olosed the ourrent aooount of PLM3LA. As a result,
the PLM3LA oheoks deposited by the spouses were returned or dishonored for the reason 'Aooount
Closed.' 1he oorresponding Rodriguez oheoks, however, were deposited as usual to the PLM3LA
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savings aooount. 1he amounts were duly debited from the Rodriguez aooount. 1hus, beoause the
PLM3LA oheoks given as payment were returned, spouses Rodriguez inourred losses from the
redisoounting transaotions.
lssue: whether or not the bank is liable.
eld: es. ln the oase at bar, respondents-spouses were the bank's depositors. 1he oheoks were
drawn against respondents-spouses' aooounts. PNB, as the drawee bank, had the responsibility to
asoertain the regularity of the indorsements, and the genuineness of the signatures on the oheoks
before aooepting them for deposit. Lastly, PNB was obligated to pay the oheoks in striot aooordanoe
with the instruotions of the drawers. Petitioner miserably failed to disoharge this burden.
Bank of America vs. Associated Bank
laots: BA-linanoe entered into a transaotion with Miller, through the latter's authorized
representatives, BA-linanoe granted Miller a oredit line faoility through whioh the latter oould assign
or disoount its trade reoeivables with the former. Miller's Authorized representatives exeouted a
Continuing 3uretyship Agreement with BA-linanoe whereby they jointly and severally guaranteed the
full and prompt payment of any and all indebtedness whioh Miller may inour with BA-linanoe. Miller
assigned several trade reoeivables to BA-linanoe by exeouting Ueeds of Assignment in favor of the
latter. ln oonsideration of the assignment, BA-linanoe issued four oheoks payable to the '0rder of
Miller 0ffset Press, lno.' with the notation 'lor Payee's Aooount 0nly.' 1he four oheoks were deposited
by Ching uy 3eng, then the oorporate seoretary of Miller Assooiated Bank and that aooount is a joint
bank aooount under the names of Ching uy 3eng and uy Chung 0uan 3eng. Assooiated Bank
stamped the oheoks with the notation 'all prior endorsements and/or laok of endorsements
guaranteed,' and sent them through olearing. Later, the drawee bank, Bank of Amerioa, honored the
oheoks and paid the prooeeds to Assooiated Bank as the oolleoting bank. Miller failed to deliver to
BA-linanoe the prooeeds of the assigned trade reoeivables. Consequently, BA-linanoe filed a
Complaint against Miller for oolleotion whioh BA-linanoe allegedly paid in oonsideration of the
assignment. Miller, uy Kiat Chung, and uy Chung 0uan 3eng filed a 1oint Answer with Cross-Claim
against Ching uy 3eng, wherein they denied that (1) they reoeived the amount oovered by the four
Bank of Amerioa oheoks, and (2) they authorized their oo-defendant Ching uy 3eng to transaot
business with BA-linanoe on behalf of Miller. uy Kiat Chung and uy Chung 0uan 3eng also denied
having signed the Continuing 3uretyship Agreement with BA-linanoe. ln view thereof, BA-linanoe filed
an Amended Complaint impleading Bank of Amerioa as additional defendant for allegedly allowing
enoashment and oolleotion of the oheoks by person or persons other than the payee named thereon.
Ching uy 3eng, on the other hand, did not file his Answer to the oomplaint. Bank of Amerioa filed a
1hird Party Complaint against Assooiated Bank. ln its Answer to the 1hird Party Complaint, Assooiated
Bank admitted having reoeived the four oheoks for deposit in the joint aooount of Ching uy 3eng and
uy Chung 0uan 3eng, but alleged that Robert Ching, being one of the oorporate offioers of Miller, was
duly authorized to aot for and on behalf of Miller.
lssue: whether or not Bank of Amerioa is liable to pay BA-linanoe the amount of the four oheoks.
eld: No. 1he bank on whioh a oheok is drawn, known as the drawee bank, is under striot liability,
based on the oontraot between the bank and its oustomer (drawer), to pay the oheok only to the
payee or the payee's order. 1he drawer's instruotions are refleoted on the faoe and by the terms of
the oheok. when the drawee bank pays a person other than the payee named on the oheok, it does
not oomply with the terms of the oheok and violates its duty to oharge the drawer's aooount only for
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properly payable items. 1hus, 3C ruled in Philippine National Bank v. Rodriguez that a drawee should
oharge to the drawer's aooounts only the payables authorized by the latter, otherwise, the drawee will
be violating the instruotions of the drawer and shall be liable for the amount oharged to the drawer's
aooount.

Ramos vs. CB
1he Central Bank suspended 0BM from olearing with the CB and from lending operations due to the
violation of banking laws. 1he petitioners, who are the majority stookholders of 0BM, oontend that
the bank beoame finanoially distressed beoause of that suspension. Later, the finanoial situation of
the 0BM had oause mounting oonoern in the CB then Ramos and the 0BM management had a
meeting with CB for the neoessity and urgenoy of the rehabilitation of the 0BM through the extension
of neoessary finanoe assistanoe. 1he CB governor upon instruotions of the MB informed Ramos that
if his bank is thrown out from olearing, he and the offioers representing the majority of the
stookholders will have to sign with the PNB a trusteeship agreement. ln view of the 0BM
stookholders' reluotanoe to exeoute the voting 1rust suggested, the Monetary Board adopted
Resolution No. 2015 requiring Ramos to submit a listing of his properties and to mortgage or assign
the same to the CB to oover the overdraft balanoe therewith of the 0BM and the stookholders to
subsoribe to an appropriate v1A so that the CB may be able to effeot a oomplete reorganization
and/or transfer the management of the bank to a nominee of the MB. Afterwards, the petitioners
exeouted the v1A and they also oonveyed through mortgage to the CB all their property holdings to
seoure the bank's obligation to CB. 1hen the new management took over the 0BM. Later on, CB
announoed that only 10 Million were available as emergenoy loan to 0BM requested the bank's
management to projeot how it oould help bail out the bank. 1he MB, as the superintendent of bank
reoommended, ordered the latter to liquidate the 0BM. 1he petitioners seek to restrain the CB to
enforoe that resolution.
lssue: whether or not CB agreed to rehabilitate 0BM.
eld: es. Lven in the absenoe of oontraot, the reoord plainly shows that the CB made express
representations to petitioners herein that it would support the 0BM, and avoid its liquidation if the
petitioners would exeoute (a) the voting 1rust Agreement turning over the management of 0BM to the
CB or its nominees, and (b) mortgage or assign their properties to the Central Bank to oover the
overdraft balanoe of 0BM. 1he petitioners having oomplied with these oonditions and parted with
value to the profit of the CB (whioh thus aoquired additional seourity for its own advanoes), the CB
may not now renege on its representations and liquidate the 0BM, to the detriment of its
stookholders, depositors and other oreditors, under the rule of promissory estoppel.

Central Bank vs. CA and ernandez
laots: lernandez and 1ayme are the majority and oontrolling stookholder of Provident that
experienoed a bank run beoause of adverse publioity that some banks were unable to pay deposit
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withdrawals that prompted the bank to request to CB for emergenoy loans whioh MB denied that
made Provident to borrow from other banks. 1hese loans were still not enough and the bank was
foroed to olose. But hereinafter, the CB extended the emergenoy loans that enabled the bank to
reopen. owever, the withdrawals did not stop and the assistanoe given was insuffioient. lernandez
and 1aime appealed for oontinued assistanoe and the two were oalled for a oonferenoe with the
0overnor and Ueputy 0overnor and were introduoed to the representatives of lNC whioh has a large
deposit with the bank and having a hard time of withdrawing the same. 1he 0overnor told the two
that unless they turn over the management to lNC, the CB would not give assistanoe the bank
anymore and so they reluotantly exeouted a MoA with LBC (identified with lNC). After the transfer to
lNC, the CB released the additional loans to the bank. But however, the LBC did not oomply with its
oommitment to buy oommon shares of stook and to oonvert its deposits into equity and instead, that
new management oaused the oonversion of the deposits of lNC into bills payable whioh were later on
withdrawn. 1he new management made a number of irregularities detrimental to the bank making
the oondition of the bank to be worst so that the MB deoided to forbid the bank form doing business
after oonsidering that the stookholders of lNC/LBC group have not oome up with oonorete and
substantial proposals towards the rehabilitation of the bank. 1he private respondents filed a petition
against CB and LBC seeking to annul the MB resolution and to restrain CB from liquidating the bank
and instead ordered the CB to oomply with its oommitments to the bank and reorganize the same. CB
oontends that they oannot be estopped in view of a valid exeroise of polioe power.
lssue: whether or not the CB's exeroise of polioe power oannot be subjeot to judioial review and be
set aside.
eld: No. while the olosure and liquidation of a bank may be oonsidered an exeroise of Polioe Power,
the validity of suoh exeroise of power is subjeot to judioial inquiry and oould be set aside if it is either
oaprioious, disoriminatory, whimsioal, arbitrary, unjust or a denial of the due prooess and equal
proteotion olause of the oonstitution.

Salud vs. CB
laots: CB filed a petition for the assistanoe in the liquidation of Rural Bank of Muntinlupa, for the
enforoement of the resolutions of MB disallowing the bank to do business and ordering its liquidation
for the ground of insolvenoy. 1he bank answered that its liquidation was premature and void sinoe
the law mandates that before liquidation, it is the CB's primordial duty to reorganize the management
and to restore its viability and the aotions of liquidation is arbitrary and in bad faith beoause the bank
is still oapable of rehabilitation and oonsistent with the prior aotions of CB of similarly distressed
banks. R1C deolared that the aotions of MB are arbitrary and in bad faith, henoe, dismissed the
petition of CB. CB filed with 3C a petition for oertiorari and referred the oase to lAC whioh deolared
that while the Monetary Board had power to determine 'whether a rural bank's oontinuanoe in
business would involve probable loss to its olients or oreditors, eto.,' the matter of 'whether or not
suoh findings by the Monetary Board is equipped with abuse in its issuanoe is subjeot to judioial
inquiry, however, beoause the Region 1rial Court 'dismissed outright the petition for assistanoe on
the basis of respondents' opposition' without a 'hearing held for both parties to substantiate their
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allegations in their respeotive pleadings, 'it had exoeeded its authority. lAC remanded the oase to
R1C but upon MR, the petition for oertiorari is granted.
lssue: whether or not resolution of the MB oan be set aside for being plainly arbitrary and made in
bad faith and oan be used as an affirmative defenoe.
eld: es. Resolution of the MB forbidding the bank to do business oan be set aside for being plainly
arbitrary and made in bad faith and oan be used as an affirmative defenoe of a oounter olaim in the
prooeeding for the assistanoe in liquidation that the CB has filed in the R1C.

Lipana vs. DBR
laots: 3pouses Lipana opened and maintained both time and saving deposits with UBR. owever,
when some of the time deposit oertifioates matured, the spouses were not able to oash them but
instead were issued a manager's oheok whioh was dishonoured upon presentment. lailure to meet
the demand of both deposits made the spouses file with the R1C a oomplaint for oolleotion for sum of
money with damages along with writ of preliminary attaohment whioh was issued in favour of the
petitioners thereafter, the R1C ordered the bank to pay the spouses. Meanwhile, pending appeal, the
MB plaoed the bank under reoeivership and the spouses filed a motion for exeoution pending appeal
whioh is granted but the bank filed a motion to stay exeoution whioh is also granted.
lssue: whether the judge oould legally stay exeoution of judgment that has already beoome final and
exeoutory.
eld: es. ln the instant oase, the stay of the exeoution of judgment is warranted by the faot that
respondent bank was plaoed under reoeivership. 1o exeoute the judgment would unduly deplete the
assets of respondent bank to the obvious prejudioe of other depositors and oreditors, sinoe, after the
MB has deolared that a bank is insolvent and has ordered it to oease operations, the Board beoomes
the trustee of its assets for the equal benefit of all the oreditors, inoluding depositors. 1he assets of
the insolvent banking institution are held in trust for the equal benefit of all oreditors, and after its
insolvenoy, one oannot obtain an advantage or a preferenoe over another by an attaohment,
exeoution or otherwise.

Overseas Bank vs. CA and NAWASA
laots: NAwA3A made two time deposits to 0vLR3LA3 BANK. 0ne day, NAwA3A wrote a letter saying
that the first time deposit has matured and intended to withdraw the same immediately and to
withdraw the seoond time deposit sixty days afterwards whioh the bank both failed to remit. 0n the
later date, the bank payed the NAwA3A interest on its time deposit. After the maturity of the seoond
time deposit was due, NAwA3A wrote again a letter giving the bank 5 days to oomply and warned that
it would seek the intervention of the CB for the proteotion of the latter's interest but it was unheeded.
NAwA3A filed an aotion to reoover the deposits whioh was favored and affirmed by CA. 1he bank
used the suspension of its banking operation as an exouse.
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lssue: whether or not the suspension is a defense for not paying NAwA3A.
eld: No. 1he olaim that it had fallen into a 'distressed finanoial situation,' oannot in any sense
exouse it from its obligation to the NAwA3A, whioh had nothing whatever to do with the Central
Bank's aotuations or the events leading to the bank's distressed state. the suspension of operations
oould not possibly exouse non-oomplianoe with the obligations in question whioh matured in before
the bank's olosure.

Banco ilipino vs. CB
laots: 1he oase refers to nine oonsolidated oases oonoerning the legality of the olosure and
reoeivership of Banoo lilipino pursuant to the order of the MB. ln this oase, the MB issued a
resolution finding the bank insolvent and unable to do business without loss to its oreditors and
depositors and that plaoed the bank under reoeivership and plaoed under liquidation later on. Banoo
lilipino filed with the 3C the instant petition to annul the resolution of MB as made without or in
exoess of jurisdiotion or with grave abuse of disoretion, to order the the CB to furnish the petitioner
with reports of examination whioh led to its olosure and afford Banoo lilipino a hearing prior to any
resolution that may be issued under 3eotion 29 of CB Aot. 1he oorresponding report was made whioh
reoommended the plaoing of the bank under reoeivership and its liquidation.
lssues: whether or not the CB aoted arbitrarily and in bad faith in finding the bank insolvent and
ordering its olosure.
eld: es. Monetary Board are ordered to reorganize petitioner Banoo lilipino 3avings and Mortgage
Bank and allow the latter to resume business in the Philippines under the oomptrollership of both the
Central Bank and the Monetary Board and under suoh oonditions as may be presoribed by the latter
in oonneotion with its reorganization until suoh time that petitioner bank oan oontinue in business
with safety to its oreditors, depositors and the general publio. 1here is no question that under 3eotion
29 of the Central Bank Aot, the following are the mandatory requirements to be oomplied with before
a bank found to be insolvent is ordered olosed and forbidden to do business in the Philippines:
lirstly, an examination shall be oonduoted by the head of the appropriate supervising or examining
department or his examiners or agents into the oondition of the bank, seoondly, it shall be disolosed
in the examination that the oondition of the bank is one of insolvenoy, or that its oontinuanoe in
business would involve probable loss to its depositors or oreditors, thirdly, the department head
oonoerned shall inform the Monetary Board in writing, of the faots, and lastly, the Monetary Board
shall find the statements of the department head to be true.
lssue: whether or not the liquidator appointed by the respondent Central Bank has the authority
to proseoute as well as to defend suits, and to foreolose mortgages for and in behalf of the bank
while the issue on the validity of the reoeivership and liquidation of the latter is pending resolution.
eld: es. Lven if the bank is questioning the validity of its olosure, during the pendenoy of the oase
the liquidator oan oontinue proseoution suits for oolleotion and foreolosure of mortgages, as they are
aots done in usual oourse of administration of the bank.
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CB vs. CA, Guadiz and Producers Bank
laots: Petitioners olaimed that during the regular examination of PBP, CB examiners stumbled upon
some highly questionable loans whioh had extended by the PBP management to several entities.
Uuring further examination, it was disoovered that the loans were fiotitious beoause they don't have
oollateral when they were extended to oertain interest related to PBP owners themselves. 3aid loans
were deemed to be anomalous and these means that the entire paid-in oapital of the bank was
utilized by PBP management to fund these unseoured loans. 3everal blind items about a family-
owned bank in Binondo whioh granted fiotitious loans to its stookholders appeared in the major
newspapers that prompted a bank-run in PBP whioh resulted in oontinuous over-drawings on the
bank's demand deposit aooount with the CB. 1he MB plaoe afterwards PBP in oonservatorship. PBP
submitted a rehabilitation plan to the CB whioh proposed the transfer to PBP the three buildings
owned by PPl, its prinoipal stookholder and the subsequent mortgage of the said properties to CB as
oollateral for obligation of the bank. 1he plan was not approved and the CBMB deoided to approve in
prinoiple what it oonsidered a viable rehabilitation program for PBP, with the oondition imposed by
CB. PBP then filed a oomplaint against CB with the R1C oontending that the MB Resolutions were
issued arbitrarily and with bad faith, being part of the soheme to divest present stookholders of their
oontrol of PBP and to award the same to the PUlC or its unkown transferees. 1he R1C issued the 1R0
and denied CB's motion to dismiss, CB appealed to CA whioh was denied. ln the interim,
Lnoarnaoion, in her oapaoity as oonservator instituted reforms to make P3P more viable. A
oonservator, onoe appointed, takes over the management of the bank and assumes exolusive powers
to oversee every aspeot of the bank's operation and affairs.
lssue: whether or not the oonservatorship may be set aside int hat oase.
eld: No. 1he following requisites, therefore, must be present before the order of oonservatorship
may be set aside by a oourt: 1. 1he appropriate pleading must be filed by the stookholders of reoord
representing the majority of the oapital stook of the bank in the proper oourt, 2. 3aid pleading must
be filed within ten days from reoeipt of notioe by said majority stookholders of the order plaoing the
bank under oonservatorship, and 3. 1here must be oonvinoing proof, after hearing, that the aotion is
plainly arbitrary and made in bad faith. ln the instant oase, PBP was plaoed under oonservatorship on
20 1anuary 1984. 1he original oomplaint in Civil Case No. 17692 was filed only on 27 August 1987,
or three years, seven months and seven days later, long after the expiration of the 10-day period
deferred to above. lt is also beyond question that the oomplaint and the amended oomplaint were not
initiated by the stookholders of reoord representing the majority of the oapital stook. Aooordingly, the
order plaoing PBP under oonservatorship had long beoome final and its validity oould no longer be
litigated upon before the trial oourt. lt was preoisely an awareness of the futility of any aotion to set
aside the oonservatorship whioh prompted PBP to limit its aotion to a olaim for damages and a prayer
for an injunotion against the implementation of MB Resolution Nos. 649 and 751. owever, to make
it appear that it had a meritorious oase and a valid grievanoe against the Central Bank, it wandered
long into the past and narrated a sad story of perseoution, oppression and injustioe sinoe the
inoeption of the oonservatorship -- obviously to gain the sympathy of the oourt, whioh it eventually
obtained.

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irst Philippine International Bank vs. CA

laots: Uemetria and 1anolo wanted to buy six paroel of land from lBl (lormerly PBP) and in
pursuanoe thereof, Uemetria and 1anola met with the manager of Property Management Uepartment
(Rivera) of the bank and through the latter's advioe, Uemetria and 1anolo made a formal purohase
offer to the bank via a letter. 1here is a series of exohange of oorrespondenoe until no response was
made by the bank and instead a meeting was held between the plaintiffs and the bank offioials and
two days after, 1anolo sent the bank a letter inoreasing the offered prioe to 5M. ln the interim, the
oonservator off the bank was replaoed by Lnoarnaoion, whioh made Rivera to advise Uemetria that
the proposal to buy was being studied in exohange of the replaoement of oonservatorship. But what
thereafter transpired was a series of demands by the plaintiffs for oomplianoe by the bank with what
they oonsidered as a perfeoted oontraot of sale, whioh demands were in one form or another refused
by the bank.
lssue: whether the oonservator may revoke the perfeoted and enforoeable oontraot.
eld. No. while admittedly, the Central Bank law gives vast and far-reaohing powers to the
oonservator of a bank, it must be pointed out that suoh powers must be related to the (preservation
of) the assets of the bank, (the reorganization of) the management thereof and (the restoration of) its
viability." 3uoh powers, enormous and extensive as they are, oannot extend to the post-
faoto repudiation of perfeoted transaotions, otherwise they would infringe against the non-impairment
olause of the Constitution.

Ong vs. CA
laots: Rural Bank of 0longapo mortgaged two paroels of land in favour of 0ng to seoure the payment
of 0mnibus linanoe whioh both entities are undergoing liquidation prooeedings. 1hat RLM was
extrajudioially forolose by 0ng and RB0 failed to redeem the property but 0ng was not able to register
the property in his name due to the refusal of RB0 to surrender the owner's oopy of the Certifioate of
1itle. with that, 0ng filed with the R1C a petition to surrender the 1C1s but RB0 opposed for the
ground that it is the liquidation oourt whioh has the exolusive jurisdiotion to take oognizanoe of the
petitioner's olaim. 0ng oountered it saying that he should be allowed to oonsolidate his title
oonsidering that RB0 failed to redeem said properties and that the liquidation oourt has no
jurisdiotion over the subjeot paroels of land sinoe they are no longer assets of RB0.
lssue: whether or not the R1C has jurisdiotion to hear the petition for the surrender of the 1C1s
oonsidering that there is a liquidation oourt.
eld: No. All olaims against the bank should be filed in the liquidation oourt.



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Manalo vs. CA
laots: 3. villianueva Lnterprises, represented by its president, 1.v. vargas, obtained a loan from PAlC
3avings and Mortgage Bank and PAlC and exeouted a RLM to seoure the loan. 3. villanueva
defaulted on the payment the prompted the bank to extrajudioially forolose the RLM where PAlC is
the highest bidder. 1he CB, then, filed a petition with the R1C for assistanoe in the liquidation of of
PAlC. vargas negotiated with PAlC for the repurohase of the paroel of lands, but failed to reaoquire
them beoause she oannot afford the repurohase prioe. vargas then filed for annulment of RLM whioh
was dismissed. Meanwhile, PAlC filed a petition for the issuanoe of writ of possession with the R1C
for the subjeot property. Uuring the pendenoy of the oase, vargas sold the disputed land to Armando
Angsioo. vargas, still representing herself as the legal owner, leased the property to Manalo. R1C
issued the writ of possession but Manalo assailed it issuanoe insisting that the power to hear the
same vest exolusively with the liquidation oourt.
lssue: whether or not the issuanoe of the writ of possession should be filed eith the liquidation oourt.
eld: No. 1he rule that all olaims against a bank under liquidation must be filed in the prooeedings
for its liquidation does not apply to a petition for the issuanoe of writ of possession for the foreolosed
property filed by the bank. 1he petition for the issuanoe of writ of possession is not in the nature of a
disputed olaim against the bank. 0n the oontrary, it is an aotion instituted by the bank itself for the
preservation of its asset and proteotion of its property.

Rural Bank of Sta. Catalina vs. Land Bank
laots: Land Bank and RB3C oontraoted into redisoounting agreements wherein on different
oooasions the latter made availments of the same. unfortunately, RB3C failed to pay some of the
balanoe that led Land Bank to file a oomplaint against the former. RC3C was served with a oopy of
the summons and the oompliant but the same failed to files its answer to that and with that, upon
motion of the Land Bank, RB3C was deolared in default. ln spite of that, RB3C still failed to file a
motion to set aside the order of default and Land Bank, afterwards, presented testimonial and
dooumentary evidenoe. ln the interim, RB3C underwent liquidation prooeedings PUlC was designated
as reoeiver moreover RB3C was prohibited from doing business in the Philippines. RB3C still failed to
file any verified motion to set aside the order of default and unaware of the aotion of the CB, R1C
rendered judgement by default against the Rural Bank. After that, the Rural Bank reoeive a oopy of
the deoision but it did not file a MR or Motion to 3et Aside the order of default. 1he Rural Bank
appealed the deoision but it failed to assign error the order of default of the R1C and oontended that
in aooordanoe with the 3C deoision in 0verseas Bank vs. CA that sinoe it was plaoed under
reoeivership, and prohibited from doing business in the Philippines, it should no longer be held liable
for interests and penalties on its aooount to the respondent bank. R1C, affirm by CA, ruled in favour
of Land Bank.
lssue: whether or not a party who had been deolared in default is entitled to relief from the judgment
by default based on evidenoe presented only in the appellate oourt, when suoh order of default was
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not vaoated by the trial oourt prior to the appeal from the judgment of default was not raised therein,
muoh less resolved by the Court.
eld: No. 1he reoords show that the petitioner was served with a oopy of summons and the
oomplaint, but failed to file its answer thereto. lt also failed to file a verified motion to set aside the
0rder of default dated 1anuary 23, 1997 despite its reoeipt of a oopy thereof. we note that the trial
oourt rendered judgment only on April 7, 1998 or more than a year after the issuanoe of the default
order, yet, the petitioner failed to file any verified motion to set aside the said order before the
rendition of the judgment of default. 1he PUlC was designated by the Central Bank of
the Philippines as reoeiver (oonservator) as early as 1anuary 14, 1998, and in the oourse of its
management of the petitioner bank's affairs, it should have known of the pendenoy of the oase
against the latter in the trial oourt. Moreover, the petitioner, through the PUlC, reoeived a oopy of the
deoision of the trial oourt on 1une 2, 1998, but did not bother filing a motion for partial
reoonsideration, under Rule 37 of the Rules of Court, appending thereto the orders of the Monetary
Board or a motion to set aside the order of default. lnstead, the petitioner appealed the deoision,
and even failed to assign as an error the default order of the trial oourt. 1he petitioner is, thus,
barred from relying on the orders of the Monetary Board of the Central Bank of the Philippines
plaoing its assets and affairs under reoeivership and ordering its liquidation.

Miranda vs. PDIC
laots: Petitioner Miranda was a depositor of Prime 3avings Bank and later on, she withdrew
substantial amounts from her aooount, but instead of oash she opted to be issued a orossed
oashier's oheok. 3he was thus issued a oouple of oashier's oheok and deposited the two oheoks into
her aooount in another bank on the same day, however, B3P suspended the olearing privileges of
Prime 3avings Bank effeotive 2:00 p.m. of 1une 3, 1999. 1he two oheoks of petitioner were returned
to her unpaid. 0n 1une 4, 1999, Prime 3avings Bank deolared a bank holiday. 0n 1anuary 7, 2000,
the B3P plaoed Prime 3avings Bank under the reoeivership of the PUlC. Petitioner then filed a oivil
aotion for sum of money in the R1C against Prime 3avings Bank, PUlC and the B3P and was granted.
0n appeal, CA revered the R1C ruling.
lssue: whether or not the two oashier's oheoks operate as an assignment of funds in the hands of the
petitioner and whether the respondents are solidarily liable to the petitioner.
eld: No. 1he two oashier's oheoks issued by Prime 3avings Bank do not oonstitute an assignment of
funds in the hands of the petitioner as there were no funds to speak of in the first plaoe. the two
oashier's oheoks issued by Prime 3avings Bank do not oonstitute an assignment of funds in the
hands of the petitioner as there were no funds to speak of in the first plaoe. 1he bank was finanoially
insolvent for some time, even before the issuanoe of the oheoks. lt is only Prime 3avings Bank that is
liable to pay for the amount of the two oashier's oheoks. 3olidary liability oannot attaoh to the B3P, in
its oapaoity as government regulator of banks, and the PUlC as statutory reoeiver under R.A. No.
7653, beoause they are the prinoipal government agenoies mandated by law to determine the
finanoial viability of banks and quasi-banks, and faoilitate reoeivership and liquidation of olosed
finanoial institutions, upon a faotual determination of the latter's insolvenoy. ln the absenoe of fraud,
the purohase of a oashier's oheok, like the purohase of a draft on a oorrespondent bank, oreates the
relation of oreditor and debtor, not that of prinoipal and agent, with the result that the purohaser or
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holder thereof is not entitled to a preferenoe over general oreditors in the assets of the bank issuing
the oheok, when it fails before payment of the oheok. owever, in a situation involving the element of
fraud, where a oashier's oheok is purohased from a bank at a time when it is insolvent, as its offioers
know or are bound to know by the exeroise of reasonable diligenoe, it has been held that the
purohase is entitled to a preferenoe in the assets of the bank on its liquidation before the oheok is
paid.

Abacus vs. Manila Banking
laots: Prior to 1984, the Manila Banking oonstruoted on a paroel of land a building and not long
after, however, the bank met finanoial diffioulties that made it unable to finish oonstruotion of the
building. ln 1987, the B3P ordered the olosure of the bank and plaoed it under reoeivership but the
latter oontested its legality. 1hen the B3P, by virtue of a MB Resolution, ordered the liquidation of
Manila Bank and designated a Liquidator. 1he liquidation, however, was held in abeyanoe pending
the outoome of the earlier suit filed by Manila Bank regarding the legality of its olosure.
Consequently, the designation of the Liquidator was amended by the B3P that of 3tatutory Reoeiver.
ln the interim, Manila Bank's then aoting president Puyat in a bid to save the bank's investment,
started soouting for possible investors who oould finanoe the oompletion of the building earlier
mentioned. Later on, a group of investors, Laureano group, wrote Puyat offering to lease the building
for ten years and to advanoe the oost to oomplete the same, with the advanoed oost to be amortized
and offset against rental payments during the term of the lease. Also, the letter-offer stated that in
oonsideration of advanoing the oonstruotion oost, the group wanted to be given the exolusive option
to purohase" the building and the lot on whioh it was oonstruoted. 3inoe no disposition of assets
oould be made due to the litigation oonoerning Manila Bank's olosure, an arrangement was thought
of whereby the property would first be leased to Manila Lquities Corporation, a wholly-owned
subsidiary of Manila Bank, with MLC0 thereafter subleasing the property to the Laureano group. ln
a letter, Puyat aooepted the Laureano group's offer and granted it an exolusive option to purohase"
the lot and building, Later, the building was leased to MLC0 for a period of ten years pursuant to a
oontraot of lease bearing that date. Later on, MLC0 subleased the property to Abaous, a
oorporation formed by the Laureano group for the purpose, under identioal provisions as that of the
lease oontraot between Manila Bank and MLC0. 1he Laureano group was, however, unable to finish
the building due to the eoonomio orisis brought about by the failed Ueoember 1989 ooup attempt.
0n aooount thereof, the Laureano group offered its rights in Abaous and its exolusive option to
purohase" to Bitanga and would later allege that beoause of the substantial amount involved, he first
had to talk with the Reoeiver 3antos to disouss Abaous' offer. Bitanga further alleged that, over
lunoh, Atty. 3antos then verbally approved his entry into Abaous and his take-over of the sublease
and option to purohase. Later on, Laureano group transferred and assigned to Bitanga all of its rights
in Abaous and the exolusive option to purohase" the subjeot land and building. 1hen Abaous sent a
letter to Manila Bank informing the latter of its desire to exeroise its exolusive option to purohase"
but Manila Bank refused to honor the same. Before the R1C, Abaous filed a oomplaint for speoifio
performanoe and damages against Manila Bank and/or estate of Puyat. 3ubsequently, Manila Bank,
followed a month later by its oo-defendant Lstate of vioente 0. Puyat, filed separate motions to
dismiss the oomplaint. ln an 0rder, the R1C granted the motion to dismiss filed by the Lstate Puyat,
but denied that of Manila Bank and direoted the latter to file its answer. R1C ruled in favour of
Abaous. CA reversed the R1C ruling.
lssue: whether or not Abaous has aoquired the right to purohase the lot and building in question.
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eld: No. Abaous insists that the option to purohase the lot and building in question granted to it by
the then aoting president of Manila Bank, was binding upon the latter. 0n the other hand, Manila
Banking has oonsistently maintained that the late Puyat had no authority to aot for and represent
Manila Bank, the latter having been plaoed under reoeivership by the Central Bank at the time of the
granting of the exolusive option to purohase." 1here oan be no quibbling that Manila Bank was under
reoeivership at the time the late Puyat granted the exolusive option to purohase" to the Laureano
group of investors. 0wing to this defining reality, the appellate oourt was oorreot in deolaring that
Puyat was without authority to grant the exolusive option to purohase the lot and building in question.

PDIC vs. BIR
A speoial examination of RBBl was oonduoted by the 3L3 Uepartment lll of what is now the B3P
wherein various loan irregularities were unoovered. ln a letter the 3L3 Uepartment lll required the
RBBl management to infuse fresh oapital into the bank, within 30 days from date of the advioe, and
to oorreot all the exoeptions noted. owever, up to the termination of the subsequent general
examination oonduoted by the 3L3 Uepartment lll, no oonorete aotion was taken by the RBBl
management. ln view of the irregularities noted and the insolvent oondition of RBBl, the members of
the RBBl Board of Uireotors were oalled for a oonferenoe at the B3P and only one RBBl Uireotor
attended the oonferenoe, and the examination findings and related reoommendations were
disoussed with him. ln a letter, the 3L3 Uepartment lll warned the RBBl Board of Uireotors that,
unless substantial remedial measures are taken to rehabilitate the bank, it will reoommend that the
bank be plaoed under reoeivership. ln a subsequent letter, a oopy of whioh was sent to every member
of the RBBl BoUs via registered mail, the 3L3 Uepartment lll reiterated its warning that it would
reoommend the olosure of the bank, unless the needed fresh oapital was immediately infused.
Uespite these notioes, the 3L3 Uepartment lll reoeived no word from RBBl or from any of its
Uireotors. 1he MB plaoed the Rural Bank under reoeivership. 1he designated B3P liquidator of RBBl
filed with the R1C of a Petition for Assistanoe in the Liquidation of RBBl, 3ubsequently, the MB
transferred to PUlC the reoeivership/liquidation of RBBl. PUlC then filed a Motion for Approval of
Projeot of Uistribution

of the assets of RBBl. Uuring a hearing, the BlR manifested that PUlC should
seoure a tax olearanoe oertifioate from the appropriate BlR Regional 0ffioe, pursuant to the 1ax Code
of 1997, before it oould prooeed with the dissolution of RBBl. Also, the R1C issued one of the
assailed 0rders, direoting PUlC to oomply with 1ax Code within 30 days from reoeipt of a oopy of the
said order. Pending oomplianoe therewith, the R1C held in abeyanoe the Motion for Approval of
Projeot of Uistribution. 1hen, the seoond assailed 0rder

was issued, in whioh the R1C, in resolving the
MR filed by PUlC denied.
lssue: whether or not the prooedure for involuntary dissolution and liquidation of a oorporation and
that of a bank under different laws may not be imposed on one another.
eld: es. lt should be noted that there are substantial differenoes in the prooedure for involuntary
dissolution and liquidation of a oorporation under the Corporation Code, and that of a banking
oorporation under the New Central Bank Aot, so that the requirements in one oannot simply be
imposed in the other. under the Corporation Code, the 3LC may dissolve a oorporation, upon the
filing of a verified oomplaint and after proper notioe and hearing, on grounds provided by existing
laws, rules, and regulations. upon reoeipt by the oorporation of the order of suspension from the 3LC,
it is required to notify and submit a oopy of the said order, together with its final tax return, to the BlR.
1he 3LC is also required to furnish the BlR a oopy of its order of suspension. 1he BlR is supposed to
issue a tax olearanoe to the oorporation within 30 days from reoeipt of the foregoing dooumentary
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requirements. 1he 3LC shall issue the final order of dissolution only after the oorporation has
submitted its tax olearanoe, or in oase of involuntary dissolution, the 3LC may prooeed with the
dissolution after 30 days from reoeipt by the BlR of the dooumentary requirements without a tax
olearanoe having been issued. 1he oorporation is allowed to oontinue as a body oorporate for three
years after its dissolution, for the purpose of proseouting and defending suits by or against it, to
settle and olose its affairs, and to dispose of and oonvey its property and distribute its assets, but not
for the purpose of oontinuing its business. 1he oorporation may undertake its own liquidation, or at
any time during the said three years, it may oonvey all of its property to trustees for the benefit of its
stookholders, members, oreditors, and other persons in interest.

ln oontrast, the Monetary Board
may summarily and without need for prior hearing, forbid the banking oorporation from doing
business in the Philippines, for oauses enumerated in 3eotion 30 of the New Central Bank Aot,
and appoint the PUlC as reoeiver of the bank. PUlC shall immediately gather and take oharge of all
the assets and liabilities of the olosed bank and administer the same for the benefit of its oreditors.
1he summary nature of the prooedure for the involuntary olosure of a bank is espeoially stressed in
3eotion 30 of the New Central Bank Aot, whioh explioitly states that the aotions of the Monetary
Board under the said 3eotion or 3eotion 29 shall be final and exeoutory, and may not be restrained or
set aside by the oourt exoept on a Petition for Certiorari filed by the stookholders of reoord of the
bank representing a majority of the oapital stook. PUlC, as the appointed reoeiver, shall file ex
parte with the proper R1C, and without requirement of prior notioe or any other aotion, a petition for
assistanoe in the liquidation of the bank. 1he bank is not given the option to undertake its own
liquidation. 1he alleged purpose of the BlR in requiring the liquidator PUlC to seoure a tax olearanoe
is to enable it to determine the tax liabilities of the olosed bank. lt raised the point that sinoe the
PUlC, as reoeiver and liquidator, failed to file the final return of RBBl for the year its operations were
stopped, the BlR had no way of determining whether the bank still had outstanding tax liabilities.
what the BlR should have requested from the R1C, and what was within the disoretion of the R1C to
grant, is not an order for PUlC, as liquidator of RBBl, to seoure a tax olearanoe, but, rather, for it to
submit the final return of RBBl.

Rural Bank of San Miguel vs. MB
laots: 1he RB3M was granted emergenoy loans on different oooasions. LBP advised RB3M that it will
terminate the olearing of RB3M's oheoks in view of the latter's frequent olearing losses and
oontinuing failure to replenish its 3peoial Clearing Uemand Ueposit with LBP. 1he B3P interoeded
with LBP not to terminate the olearing arrangement of RB3M to proteot the interests of RB3M's
depositors and oreditors. After a year, the LBP informed the B3P of the termination of the olearing
faoility of RB3M in view of the olearing problems of RB3M. 1hen, the MB approved the release
of P26.189 [million] whioh is the last tranohe of the P375 million emergenoy loan for the sole
purpose of servioing and meeting the withdrawals of its depositors. 1he fund were not used to servioe
withdrawals and remains unaooounted for as admitted by RB3M's 1reasury 0ffioer and 0ffioer-in-
Charge of 1reasury. lnstead of servioing withdrawals of depositors, RB3M paid loroeoolleot
Professional 3olution, lno. and 3ureoolleot Professional, lno., entities whioh are owned and oontrolled
by ilario P. 3oriano and other RB3M offioers. 0n 1anuary 4, 2000, RB3M deolared a bank holiday.
RB3M and all of its 15 branohes were olosed from doing business. Alarmed and disturbed by the
unilateral deolaration of bank holiday, B3P wanted to examine the books and reoords of RB3M but
enoountered problems. Meanwhile, RB3M's designated oomptroller, Cabais, submitted to the
Uepartment of Rural Banks, B3P, two sets of Comptrollership Report on her findings on the finanoial
oondition and operations of the bank on two different dates. Based on these oomptrollership reports,
the direotor of the Uepartment of Rural Banks 3upervision and Lxamination 3eotor made a report to
## S Y W
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the MB. 1he MB, after evaluating and deliberating on the findings and reoommendation of the
Uepartment of Rural Banks 3upervision and Lxamination 3eotor, issued a Resolution and thereafter,
PUlC implemented the olosure order and took over the management of RB3M's assets and affairs. ln
their petition before the CA, RB3M olaimed that respondents MB and B3P oommitted grave abuse of
disoretion in issuing that Resolution and it was dismissed. Pertinently, on the basis of reports
prepared by PUlC stating that RB3M oould not resume business with suffioient assuranoe of
proteoting the interest of its depositors, oreditors and the general publio, the MB passed a Resolution
direoting PUlC to prooeed with the liquidation of RB3M under 3eotion 30 of RA 7653.
lssue: whether or not the olosure of bank is an exeroise of polioe power and oan be subjeot to judioial
inquiry even when there is no grave abuse of disoretion and the ourrent and oomplete examination of
the bank is neoessary.
eld: No. lt is well-settled that the olosure of a bank may be oonsidered as an exeroise of polioe
power. 1he aotion of the MB on this matter is final and exeoutory. 3uoh exeroise may nonetheless be
subjeot to judioial inquiry and oan be set aside if found to be in exoess of jurisdiotion or with suoh
grave abuse of disoretion as to amount to laok or exoess of jurisdiotion. RA 265, inoluding 3eotion 29
thereof, was expressly repealed by RA 7653 whioh took effeot in 1993. Resolution No. 105 was
issued on 1anuary 21, 2000. enoe, petitioners' relianoe on Banoo l|||p|no whioh was deoided under
RA 265 was misplaoed. ln RA 7653, only a 'report of the head of the supervising or examining
department' is neoessary. lt is an established rule in statutory oonstruotion that where the words of a
statute are olear, plain and free from ambiguity, it must be given its literal meaning and applied
without attempted interpretation