BANCO FILIPINO SAVINGS AND MORTGAGE BANK, vs. THE MONETARY BOARD, CENTRAL BANK OF THE PHILIPPINES, JOSE B. FERNANDEZ, CARLOTA P. VALENZUELA, ARNULFO B. AURELLANO and RAMON V. TIAOQUI .
- G.R. Number: G.R. No. 70054
- Promulgated: 1991-12-11
- Ponente: Medialdea, J.
Doctrine
Judicial review of administrative closure: the Court must determine whether an administrative agency acted with grave abuse of discretion or without/excess of jurisdiction; it should prevent acts in excess of authority.
Test of bank insolvency under Section 29: measured by whether realizable assets' fair cash value, within reasonable time by a prudent person, is less than liabilities; valuation reserves materially affect this determination.
The Monetary Board must, within sixty days of receivership, determine reorganization or liquidation and prescribe conditions for resumption; factual assessments (examination reports) are central to that determination.
Facts
Nine consolidated cases challenge legality of Banco Filipino's closure and receivership ordered by the Monetary Board; several cases questioned receiver's authority to sue and foreclose while validity of receivership was pending in G.R. No. 70054.
Receivers submitted a report to the Monetary Board on 19 March 1985, as required by Section 29, recommending actions; examination reports and valuation reserves were critical to assessing solvency.
Disputed accounting figures: assets and liabilities as of end-1984, and valuation reserve omissions (P600.5 million) affected determinations of net worth and insolvency.
Petitioner sought writs of certiorari and mandamus to annul the Monetary Board's 25 January 1985 order, to obtain examination reports, and to require a hearing under Section 29 of R.A. 265.
Issues
Whether the Central Bank and the Monetary Board acted arbitrarily, in bad faith, or without/in excess of jurisdiction in finding Banco Filipino insolvent and ordering its closure on 25 January 1985.
Whether the receivers or Central Bank have authority to prosecute, defend suits, and foreclose mortgages on behalf of the bank while validity of receivership is pending.
Ruling
The Court denied motions/petitions in several consolidated cases but GRANTED petitions in G.R. Nos. 70054, 78767 and 78894, annulling and setting aside the Central Bank/Monetary Board order dated 25 January 1985; ordered reorganization under CB/Monetary Board comptrollership.
The Court limited its role to determining whether the Monetary Board's actions were plainly arbitrary or in bad faith, not to ordain reorganization conditions, leaving operational details to the Monetary Board and Central Bank.
Keywords
G.R. No. 70054, Banco Filipino Savings and Mortgage Bank, Monetary Board, Central Bank of the Philippines, closure and receivership, receivership, liquidation, Monetary Board Resolution No. 75, Section 29 of the Central Bank Act, liquidator, foreclose mortgages, petition for review on certiorari, writ of possession, insolvent, extra-judicial foreclosure, promissory note, real estate mortgage, petition for certiorari, temporary restraining order, december