11.
On 29 May 1995, pursuant to the recent development,
B) CENTRAL BANK BOARD OF LIQUIDATORS v. BANCO
FILIPINO SAVINGS, GR No. 173399, 2017-02-21
FACTS:
The propriety of the admission of a Second
Amended/Supplemental Complaint. The latter sought to hold
the Bangko Sentral ng Pilipinas (BSP) and its Monetary Board
(MB) liable for causes of action that arose almost 10 years
after the original Complaint was filed against the now defunct
Central Bank of the Philippines (CB).
The Petition for Review on Certiorari under Rule 45 was filed
by the Central Bank Board of Liquidators (CB-BOL). It seeks to
annul the Decision of the Court of Appeals (CA), which
affirmed the Orders of the Regional Trial Court
CA Decision affirmed the ruling of the RTC which had
admitted the Second Amended/Supplemental Complaint filed
by respondent Banco Filipino Savings and Mortgage Bank
(Banco Filipino, or respondent). The CB-BOL alleges that by
admitting the complaint, the RTC erroneously included the
BSP and its MB as new parties to the consolidated civil cases
and raised new causes of action not alleged in the original
Complaint.
1. On 14 February 1963, the MB of the then CB issued MB
Resolution No. 223 allowing respondent Banco Filipino to
operate as a savings bank.
2. On 27 July 1984, the CB issued MB Resolution No. 955
placing Banco Filipino under conservatorship after granting
the latter's loan applications worth billions of pesos.
Respondent bank filed with the RTC Makati a Complaint
against the CB for the annulment of MB Resolution No. 955
3. Thereafter the CB issued MB Resolution No. 75 ordering
the closure of Banco Filipino and placing the latter under
receivership.
4. The Resolution further provided for the takeover of the
assets and liabilities of Banco Filipino for the benefit of its
depositors and creditors, as well as for the termination of its
conservatorship.
5. Banco Filipino filed a Complaint with the RTC Makati
against the MB, assailing the latter's act of placing the bank
under receivership.
6. Because of its impending closure, Banco Filipino filed with
the CA a Petition for Certiorari and Mandamus seeking the
annulment of MB Resolution No. 75
7. The Petition eventually reached the Supreme Court
The CB issued another Resolution placing Banco Filipino under
liquidation. Respondent then filed another Complaint with the
RTC Makati to question the propriety of the liquidation
8. On 11 December 1991, this Court, in an En Banc Decision
nullified MB Resolution No. 75 and ordered the CB and its MB
to reorganize the bank and allow it to resume business.
9. during the pendency of the three consolidated cases
Republic Act (R.A.) No. 7653, or the New Central Bank Act of
1993 took effect
10. Pursuant to the Decision of this Court the BSP reopened
Banco Filipino and allowed it to resume business on 1 July
1994.
Banco Filipino filed a Motion to Admit Attached
Amended/Supplemental Complaint in the three consolidated
cases
12. In its Amended/Supplemental Complaint, respondent
bank sought to substitute the CB-BOL for the defunct CB and
its MB. Respondent also aimed to recover at least P18 billion
in actual damages, litigation expenses, attorney's fees,
interests, and costs of suit against petitioner and individuals
who had allegedly acted with malice and evident bad faith m
placing the bank under conservatorship and eventually closing
it down in 1985.
13. The trial court granted the Motion to Admit filed by Banco
Filipino and accordingly admitted the latter's
Amended/Supplemental Complaint
14.On 25 September 2003, or more than 10 years from the
enactment of R.A. 7653, Banco Filipino again filed a Motion to
Admit Second Amended/Supplemental Complaint in the
consolidated civil cases before the RTC. In that Second
Amended/Supplemental Complaint respondent sought to
include the BSP and its MB as additional defendants
15. Banco Filipino claimed that the BSP employed "coercive
measures" that forced respondent to enter into a
Memorandum of Agreement (MOA) regarding the collection
of advances extended to the latter by the defunct CB. In
addition, respondent also alleged that its present dealings
with the BSP and the MB have become increasingly difficult,
especially in obtaining favorable actions on its requests and
other official dealings.
16. Banco Filipino's Motion to Admit its Second
Amended/Supplemental Complaint was opposed by the CB-
BOL based on the following grounds:
a. Banco Filipino's Second Amended/Supplemental Complaint
was not supported by a board resolution that authorized it to
file the amended or supplemental complaint.
b. The second supplemental complaint raised new and
independent causes of action against a new party - the BSP -
which was not an original party.
c. The second supplemental complaint was violative of the
rule on the joinder of causes of action, because it alleged
those that did not arise from the same contract, transaction
or relation between the parties - as opposed to those alleged
in the complaint sought to be amended or supplemented -
and differed from the causes of action cited in the original
Complaint.
d. The admission of the second supplemental complaint
would expand the scope of the dispute in the consolidated
civil cases to include new causes of action against new parties
like the BSP, resulting in a delay in the resolution of the cases
the RTC granted the Motion to Admit Banco Filipino's Second
Amended/Supplemental Complaint.
Petitioner CB-BOL filed with the CA a Petition for Certiorari
under Rule 65. The CA dismissed the CB-BOL's Petition and
affirmed in toto the trial court's Order pursuant to R.A.
7653, the BSP was the successor in-interest of the old CB.
Further, with the transfer of assets from the CB to the BSP
during the pendency of the subject civil cases, the latter now
became a transferee pendente lite. Therefore, the CA
concluded that there were no new parties impleaded in the
1
civil cases when the Second Amended/Supplemental THIS RULING IS CONFINED TO PROCEDURAL ISSUES.
Complaint was admitted by the trial court.
As mentioned at the outset, the Court will confine its ruling
Petitioner CB-BOL now comes to this Court via a Petition for on this Petition to procedural issues pertaining to the
Review on Certiorari. propriety of the admission of the Second
Amended/Supplemental Complaint. We will not address the
ISSUES:
issues raised by petitioner with regard the findings of the trial
Whether the RTC erred in admitting Banco Filipino's Second and the appellate court that the BSP is the successor-in-
Amended/Supplemental Complaint in the consolidated civil interest of the defunct CB and is considered a transferee
cases before it. pendente lite in the civil cases.
RULING: PRINCIPLES:
The second amendment of the Complaint was improper. 1. Rule 10 of the 1997 Revised Rules of Court allows the
parties to amend their pleadings (a) by adding or striking out
In the instant case, the causes of action subject of the Second
an allegation or a party's name; or (b) by correcting a mistake
Amended/Supplemental Complaint only arose in 1994 well
in the name of a party or rectifying a mistaken or an
after those subject of the original Complaint. The original
inadequate allegation or description in the pleadings for the
Complaint was based on the alleged illegal closure of Banco
purpose of determining the actual merits of the controversy
Filipino effected in 1985 by the defunct CB and its MB.
in the most inexpensive and expeditious manner.
The Second Amended/Supplemental Complaint stemmed
2. The prevailing rule on the amendment of pleadings is one
from the alleged oppressive and arbitrary acts committed by
of liberality, with the end of obtaining substantial justice for
the BSP and its MB against Banco Filipino after respondent
the parties. However, the option of a party-litigant to amend
bank was reopened in 1994. Since the acts or omissions
a pleading is not without limitation. If the purpose is to set
allegedly committed in violation of respondent's rights are
up a cause of action not existing at the time of the filing of
different, they constitute separate causes of action
the complaint, amendment is not allowed. If no right existed
The "acts complained of"' cover not just the conservatorship, at the time the action was commenced, the suit cannot be
receivership, closure, and liquidation of Banco Filipino in 1984 maintained, even if the right of action may have accrued
and 1985, but also the alleged acts of harassment committed thereafter
by the BSP and its MB after respondent bank was reopened in
3. A supplemental pleading only serves to bolster or add
1994. These acts constituted a whole new cause of action.
something to the primary pleading. Its usual function is to set
THE SECOND SUPPLEMENTAL PLEADING WAS IMPROPER. up new facts that justify, enlarge, or change the kind of relief
sought with respect to the same subject matter as that of the
That a supplemental complaint must be founded on the same
original complaint.
cause of action as that raised in the original complaint.
4. In the instant case, Banco Filipino is seeking to join the BSP
Banco Filipino, through the Second Amended/Supplemental
and its MB as parties to the complaint. However, they have
Complaint, attempted to raise new and different causes of
different legal personalities from those of the defunct CB and
action that arose only in 1994. These causes of action had no
its MB: firstly, because the CB was abolished by R.A. 7653,
relation whatsoever to the causes of action in the original
and the BSP created in its stead; and secondly, because the
Complaint, as they involved different acts or omissions,
members of each MB are natural persons. These factors make
transactions, and parties.
the BSP and its MB different from the CB and its MB. Since
THE AMENDMENT/SUPPLEMENT VIOLATES THE RULES ON there are multiple parties involved, the two requirements
JOINDER OF PARTIES AND CAUSES OF ACTION. mentioned in the previous paragraph must be present before
the causes of action and parties can be joined.
Before causes of action and parties can be joined in a
complaint involving multiple parties, (1) the right to relief
must arise out of the same transaction or series of
transactions and (2) there must be a question of law or fact
common to all the parties.[64]
In the instant case, Banco Filipino is seeking to join the BSP
and its MB as parties to the complaint. However, they have
different legal personalities from those of the defunct CB
and its MB: firstly, because the CB was abolished by R.A.
7653, and the BSP created in its stead; and secondly,
because the members of each MB are natural persons.
These factors make the BSP and its MB different from the CB
and its MB. Since there are multiple parties involved, the
two requirements mentioned in the previous paragraph
must be present before the causes of action and parties can
be joined.

2
 D) DEVELOPMENT BANK OF PHILIPPINES v. COA, GR No.
88435, 2002-01-16
FACTS:
1. In 1986, the Philippine government, under the
administration of then President Corazon C. Aquino, obtained
from the World Bank an Economic Recovery Loan
The ERL was intended to support the recovery of the
Philippine economy
2. As a condition for granting the loan, the World Bank
required the Philippine government to rehabilitate the DBP
which was then saddled with huge non-performing loans.
The DBP was expected to continue "providing principally
medium and long-term financing to projects with risks higher
than the private sector may be willing to accept under
reasonable terms.
3. The Monetary Board adopted Resolution No. 1079
amending the Central Bank's Manual of Regulations for Banks
and other Financial Intermediaries, in line with the
government's commitment to the World Bank to require a
private external auditor for DBP.
The Audit of a Government-owned or controlled bank by an
external independent auditor shall be in addition to and
without prejudice to that conducted by the Commission on
Audit in the discharge of its mandate under existing law.
4, Pursuant to Central Bank Circular No. 1124 and the
government's commitment to the World Bank, DBP Chairman
Jesus Estanislao wrote the COA seeking approval of the DBP's
engagement of a private external auditor in addition to the
COA.
The COA Chairman's reply stated that:
"x x x the Commission on Audit (COA) will interpose no
objection to your engagement of a private external auditor as
required by the Economic Recovery Program Loan
Agreements xxx
5. However, a change in the leadership of the COA suddenly
reversed the course of events.
COA wrote the Central Bank Governor protesting the Central
Bank's issuance of Circular No. 1124 which allegedly
encroached upon the
COA's constitutional and statutory power to audit
government agencies.
6. That the COA resident auditors were under instructions to
disallow any payment to the private auditor whose services
were unconstitutional, illegal and unnecessary. the DBP paid
the billings of the private auditor in the total amount of
P487,321.14 despite the objection of the COA.
7. To allow private firms to interfere in this governmental
audit domain would be to derogate the Constitutional
supremacy of State audit as the Government's guardian of
the people's treasury, and as the prime advocate of economy
in the use of government resources.'
ISSUES:
Whether or not the constitutional power of the COA to
examine and audit the DBP is exclusive and precludes a
concurrent audit of the DBP by a private external auditor.
RULING:
The DBP's petition is meritorious.
First Issue: Power of COA to Audit under the Constitution
The resolution of the primordial issue of whether or not the
COA has the sole and exclusive power to examine and audit
government banks involves an interpretation of Section 2,
Article IX-D of the 1987 Constitution.
The COA vigorously asserts that under the first paragraph of
Section 2, the COA enjoys the sole and exclusive power to
examine and audit all government agencies, including the
DBP. The COA contends this is similar to its sole and exclusive
authority, under the second paragraph of the same Section,
to define the scope of its audit, promulgate auditing rules and
regulations, including rules on the disallowance of
unnecessary expenditures of government agencies.
The bare language of Section 2, however, shows that the
COA's power under the first paragraph is not declared
exclusive, while its authority under the second paragraph is
expressly declared "exclusive." There is a significant reason
for this marked difference in language.
The clear and unmistakable conclusion from a reading of the
entire Section 2 is that the COA's power to examine and
audit is non-exclusive.
On the other hand, the COA's authority to define the scope
of its audit, promulgate auditing rules and regulations, and
disallow unnecessary expenditures is exclusive.
as the constitutionally mandated auditor of all government
agencies, the COA's findings and conclusions necessarily
prevail over those of private auditors, at least insofar as
government agencies and officials are concerned.
The mere fact that private auditors may audit government
agencies does not divest the COA of its power to examine and
audit the same government agencies. The COA is neither by-
passed nor ignored since even with a private audit the COA
will still conduct its usual examination and audit, and its
findings and conclusions will still bind government agencies
and their officials. A concurrent private audit poses no danger
whatsoever of public funds or assets escaping the usual
scrutiny of a COA audit.
The COA's power to examine and audit government banks
must be reconciled with the Central Bank's power to
supervise the same banks.
The inevitable conclusion is that the COA and the Central
Bank have concurrent jurisdiction, under the Constitution, to
examine and audit government banks.
However, despite the Central Bank's concurrent jurisdiction
over government banks, the COA's audit still prevails over
that of the Central Bank since the COA is the constitutionally
mandated auditor of government banks
Second Issue: Statutes Prohibiting or Authorizing Private
Auditors
The COA argues that Sections 26, 31 and 32 of PD No. 1445,
otherwise known as the Government Auditing Code of the
Philippines, prohibit the hiring of private auditors by
government agencies.
Section 26 is a definition of the COA's "general jurisdiction."
Jurisdiction may be exclusive or concurrent. Section 26 of PD
3
No. 1445 does not state that the COA's jurisdiction is expenditures of government banks since this function belongs
exclusive, and there are other laws providing for concurrent exclusively to the COA.
jurisdiction. Thus Section 26 must be applied in harmony with
3. The Bangko Sentral ng Pilipinas, which succeeded the
Section 58[32] of the General Banking Law of 2000 (RA No.
Central Bank, retained under the 1987 Constitution and the
8791) which authorizes unequivocally the Monetary Board to
General Banking Law of 2000 (RA No. 8791) the same
require banks to hire independent auditors. S
constitutional and statutory power the Central Bank had
Third Issue: Necessity of Private Auditor and under the Freedom Constitution and the General Banking Act
Reasonableness of the Fees (RA No. 337) with respect to the independent audit of banks.
The hiring of a private auditor was not only necessary based This Court has held consistently that the rules and regulations
on the government's loan covenant with the World Bank, it issued by the Central Bank pursuant to its supervisory and
was also necessary because it was mandated by Central Bank regulatory powers have the force and effect of law.
Circular No. 1124 under pain of administrative and penal
sanctions.
Principles:
1. During the deliberations of the Constitutional Commission,
Commissioner Serafin Guingona proposed the addition of the
word "exclusive" in the first paragraph of Section 2, thereby
granting the COA the sole and exclusive power to examine
and audit all government agencies.
However, the Constitutional Commission rejected the
addition of the word "exclusive" in the first paragraph of
Section 2 and Guingona was forced to withdraw his proposal.
Commissioner Christian Monsod explained the rejection in
this manner:
"MR. MONSOD. Earlier Commissioner Guingona, in
withdrawing his amendment to add "EXCLUSIVE" made a
statement about the preponderant right of COA.
"For the record, we would like to clarify the reason for not
including the word. First, we do not want an Article that
would constitute a disincentive or an obstacle to private
investment. There are government institutions with private
investments in them, and some of these investors - Filipinos,
as well as in some cases, foreigners - require the presence of
private auditing firms, not exclusively, but concurrently. So
this does not take away the power of the Commission on
Audit. Second, there are certain instances where private
auditing may be required, like the listing in the stock
exchange. In other words, we do not want this provision to
be an unnecessary obstacle to privatization of these
companies or attraction of investments."
2. The Central Bank has been conducting periodic and special
examination and audit of banks to determine the soundness
of their operations and the safety of the deposits of the
public. Undeniably, THE CENTRAL BANK'S POWER OF
"SUPERVISION" includes the power to examine and audit
banks, as the banking laws have always recognized this power
of the Central Bank Hence, the COA's power to examine and
audit government banks must be reconciled with the Central
Bank's power to supervise the same banks.
The inevitable conclusion is that the COA and the Central
Bank have concurrent jurisdiction, under the Constitution,
to examine and audit government banks.
HOWEVER, despite the Central Bank's concurrent jurisdiction
over government banks, the COA's audit still prevails over
that of the Central Bank since the COA is the constitutionally
mandated auditor of government banks. And in matters
falling under the second paragraph of Section 2, Article IX-D
of the Constitution, the COA's jurisdiction is exclusive. Thus,
the Central Bank is devoid of authority to allow or disallow

4
 E) UNION BANK OF PHILIPPINES v. SECURITIES,
GR No. 138949, 2001-06-06
FACTS:
1. Petitioner, through its General Counsel and Corporate
Secretary, sought the opinion of Chairman Perfecto Yasay, Jr.
of respondent Commission as to the applicability and
coverage of the Full Material Disclosure Rule on banks
contending that said rules, in effect, amend Section 5 (a) (3)
of the Revised Securities Act which exempts securities
issued or guaranteed by banking institutions from the
registration requirement
2. In reply thereto the respondent informed petitioner that
while the requirements of registration do not apply to
securities of banks which are exempt under Section 5(a) (3) of
the Revised Securities Act, however, banks with a class of
securities listed for trading on the Philippine Stock
Exchange, Inc. are covered by certain Revised Securities Act
Rules governing the filing of various reports with respondent
Commission
Not satisfied, petitioner informed Chairman Yasay that they
will refer the matter to the Philippine Stock Exchange for
clarification.
3. Respondent Commission wrote petitioner, enjoining the
latter to show cause why it should not be penalized for its
failure to submit a Proxy/Information Statement in
4. In violation of respondent Commission's `Full Material
Disclosure Rule.' petitioner wrote respondent Commission
disputing the assessment.
5. Respondent issued the assailed Order (violation of full
material disclosure rule)
6. Petitioner then elevated its case to the Court of Appeals
which, as already stated, affirmed the questioned Orders.
To begin with, it is already well-settled that the construction
given to a statute by an administrative agency charged with
the interpretation and application of that statute is entitled to
great respect and should be accorded great weight by the
courts, unless such construction is clearly shown to be in
sharp conflict with the governing statute or the Constitution
and other laws.
ISSUES:
A. Whether or not petitioner is required to comply with the
respondent SEC's full disclosure rules.
B. Whether or not the SEC's full disclosure rules are contrary
to and effectively amend section 5(a)(3) of the Revised
Securities Act.
RULING:
The Petition is not meritorious.
FIRST ISSUE: APPLICABILITY OF THE ASSAILED RSA
IMPLEMENTING RULES
Because its securities are exempt from the registration
requirements under Section 5(a)(3) of the Revised Securities
Act, petitioner argues that it is not covered by RSA
Implementing Rule 11(a)-1, which requires the filing of
annual, quarterly, current predecessor and successor reports;
Rule 34(a)-1, which mandates the filing of proxy statements
and forms of proxy; and Rule 34(c)-1, which obligates the
submission of information statements.
This provision exempts from registration the securities issued
by banking or financial institutions mentioned in the law.
Nowhere does it state or even imply that petitioner, as a
listed corporation, is exempt from complying with the reports
required by the assailed RSA Implementing Rules.
"However, the exemption from the registration requirement
enjoyed by petitioner does not necessarily connote that it is
exempted from the other reportorial requirements.”
The said Rules do not amend Section 5(a)(3) of the Revised
Securities Act, because they do not revoke or amend the
exemption from registration of the securities enumerated
thereunder. They are reasonable regulations imposed upon
petitioner as a banking corporation trading its securities in
the stock market.
PRINCIPLES:
1. The mere fact that petitioner, in regard to its banking
functions, is already subject to the supervision of the Bangko
Sentral ng Pilipinas does not exempt the former from
reasonable disclosure regulations issued by the Securities and
Exchange Commission
2. These regulations -- imposed on petitioner as a banking
institution listed in the stock market -- are meant to assure
full, fair and accurate information for the protection of
investors. Imposing such regulations is a function within the
jurisdiction of the SEC.
3. pursuant to their regulatory authority, respondent
Securities and Exchange Commission adopted the policy
of full material disclosure' where all companies, listed or
applying for listing, are required to divulge truthfully and
accurately, all material information about themselves and the
securities they sell, for the protection of the investing public,
and under pain of administrative, criminal and civil sanctions.
While the employment of the full material disclosure policy is
sanctioned and recognized by the laws, nonetheless, the
Revised Securities Act sets substantial and procedural
standards which a proposed issuer of securities must satisfy.
4. Section 5(a)(3) of the said Act reads:
"Sec 5. Exempt Securities. (a) Except as expressly provided,
the requirement of registration under subsection (a) of
Section four of this Act shall not apply to any of the following
classes of securities xxxx
(3) Any security issued or guaranteed by any banking
institution authorized to do business in the Philippines, the
business of which is substantially confined to banking, or a
financial institution licensed to engage in quasi-banking, and
is supervised by the Central Bank.
It must be emphasized that petitioner is a commercial
banking corporation listed in the stock exchange. Thus, it
must adhere not only to banking and other allied special laws,
but also to the rules promulgated by Respondent SEC, the
government entity tasked not only with the enforcement of
the Revised Securities Act, but also with the supervision of all
corporations, partnerships or associations which are grantees
of government-issued primary franchises and/or licenses or
permits to operate in the Philippines.
5. That petitioner is under the supervision of the Bangko
Sentral ng Pilipinas (BSP) and the Philippine Stock Exchange
5
(PSE) does not exempt it from complying with the continuing
disclosure requirements embodied in the assailed Rules.
Petitioner, as a bank, is primarily... subject to the control of
the BSP; and as a corporation trading its securities in the
stock market, it is under the supervision of the SEC. It must
be pointed out that even the PSE is under the control and
supervision of respondent. THERE IS NO OVER-SUPERVISION
HERE. EACH REGULATING AUTHORITY OPERATES WITHIN
THE SPHERE OF ITS POWERS. That stringent requirements are
imposed is understandable, considering the paramount
importance given to the interests of the investing public.

6
 F) JESUS ARMANDO A.R. TARROSA v. GABRIEL C. SINGSON, The seven (7) members are:
GR No. 111243, 1994-05-25
(a) The Governor of the Bangko Sentral, who shall be the
FACTS: Chairman of the Monetary Board. The Governor of the
Bangko Sentral shall be head of a department and his
1. A petition for prohibition filed by petitioner as a
appointment shall be subject to confirmation by the
"taxpayer," questioning the appointment of respondent
Commission on Appointments. Whenever the
Gabriel Singson as Governor of the Bangko Sentral Ng
Pilipinas for not having been confirmed by the Commission Governor is unable to attend a meeting of the Board, he shall
on Appointments. The petition seeks to enjoining respondent designate a Deputy Governor to act as his alternate:
Singson from the performance of his functions as such official Provided, That in such event, the Monetary Board shall
until his appointment is confirmed by the Commission on designate one of its members as acting Chairman x x x"
Appointments (Underlining supplied).
2. Petitioner argues that respondent Singson's appointment is 2. Sevilla v. Court of Appeals, 209 SCRA 637 (1992), we held
null and void since it was not submitted for confirmation to that the petitioner therein, who did not aver that he was
the Commission on Appointments. entitled to the office of the City Engineer of Cabanatuan City,
could not bring the action for quo warranto to oust the
3. The petition is anchored on the provisions of Section 6 of
respondent from said office as a mere usurper.
R.A. No. 7653. The Governor of the Bangko Sentral shall be
head of a department and his appointment shall be subject to Likewise in Greene v. Knox, 175 N.Y. 432 (1903), 67 N.E. 910,
confirmation by the Commission on Appointments it was held that the question of title to an office, which must
be resolved in a quo warranto proceeding, may not be
4. IN THEIR COMMENT, respondents claim that Congress
determined in a suit to restrain the payment of salary to the
exceeded its legislative powers in requiring the confirmation
person holding such office, brought by someone who does
by the Commission on Appointments of the appointment of
not claim to be the one entitled to occupy the said office.
the Governor of the Bangko Sentral
It is obvious that the instant action was improvidently
Respondents also aver that the Bangko Sentral has its own
brought by petitioner. To uphold the action would encourage
budget and accordingly, its budgetary requirements are not
every disgruntled citizen to resort to the courts, thereby
subject to the provisions of the General Appropriations Act.
causing incalculable mischief and hindrance to the efficient
ISSUES: operation of the governmental machinery
Whether or not Singson’s appointment was proper
RULING:
We dismiss the petition.
The instant petition is in the nature of a quo warranto
proceeding as it seeks the ouster of respondent Singson and
alleges that the latter is unlawfully holding or exercising the
powers of Governor of the Bangko Sentral.
Likewise, the Court refrains from passing upon the
constitutionality of Section 6, R.A. No. 7653 in deference to
the principle that bars a judicial inquiry into a constitutional
question unless the resolution thereof is indispensable for the
determination of the case
However for the information of all concerned, we call
attention to our decision in Calderon v. Carale, 208 SCRA 254
(1992), with Justice Isagani A. Cruz dissenting, where we ruled
that Congress cannot by law expand the confirmation
powers of the Commission on Appointments and require
confirmation of appointment of other government officials
not expressly mentioned in the first sentence of Section 16
of Article VII of the Constitution.
PRINCIPLES:
1. SEC. 6. Composition of the Monetary Board.
The powers and functions of the Bangko Sentral shall be
exercised by the Bangko Sentral Monetary Board, hereafter
referred to as the Monetary Board, composed of seven (7)
members appointed by the
President of the Philippines for a term of six (6) years.

7
 G) CENTRAL BANK EMPLOYEES ASSOCIATION v. BANGKO
SENTRAL NG PILIPINAS, GR No. 148208, 2004-12-15
FACTS:
1. Almost eight years after the effectivity of R.A. No. 7653,
petitioner Central Bank (now BSP) Employees Association, Inc.
filed a petition for prohibition against BSP and the Executive
Secretary of the Office of the President, to restrain
respondents from... further implementing the last proviso in
Section 15(c), Article II of R.A. No. 7653, on the ground that it
is unconstitutional.
2. Article II, Section 15(c) of R.A. No. 7653 provides:
A compensation structure, based on job evaluation studies
and wage surveys and subject to the Board's approval, shall
be instituted as an integral component of the Bangko
Sentral's human resource development program: Provided,
That the Monetary Board shall make its own system conform
as closely as possible with the principles provided for under
Republic Act No. 6758 [Salary Standardization Act]. Provided,
however, that compensation and wage structure of
employees whose positions fall under salary grade 19 and
below shall be in accordance with the rates prescribed under
Republic Act No. 6758.
3. The thrust of petitioner's challenge is that the above
proviso makes an unconstitutional cut between two classes of
employees in the BSP, viz: (1) the BSP officers or those
exempted from the coverage of the Salary Standardization
Law (SSL)
(exempt class); and (2) the rank-and-file (Salary Grade [SG]
19 and below), or those not exempted from the coverage of
the SSL (non-exempt class)
4. Respondent BSP, in its comment, contends that the
provision does not violate the equal protection clause and
can stand the constitutional test, provided it is construed in
harmony with other provisions of the same law, such as
"fiscal and administrative autonomy of BSP," and the
mandate of the Monetary Board to "establish professionalism
and excellence at all levels in accordance with sound
principles of management."
Issues:
Whether the last paragraph of Section 15(c), Article II of R.A.
No. 7653, runs afoul of the constitutional mandate that "No
person shall be denied the equal protection of the laws."
Ruling:
UNDER THE PRESENT STANDARDS OF EQUAL PROTECTION,
SECTION 15(c), ARTICLE II OF R.A. NO. 7653 IS VALID.
In the case at bar, it is clear in the legislative deliberations
that the exemption of officers (SG 20 and above) from the SSL
was intended to address the BSP's lack of competitiveness in
terms of attracting competent officers and executives. It was
not intended to discriminate against the rank-and-file. If the
end-result did in fact lead to a disparity of treatment between
the officers and the rank-and-file in terms of salaries and
benefits, the discrimination or distinction has a rational basis
and is not palpably, purely, and entirely arbitrary in the
legislative sense.
THE ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS -
EXEMPTING ALL OTHER RANK-AND-FILE EMPLOYEES OF GFIs
FROM THE SSL - RENDERS THE CONTINUED APPLICATION OF
THE CHALLENGED PROVISION A VIOLATION OF THE EQUAL
PROTECTION CLAUSE.
While R.A. No. 7653 started as a valid measure well within the
legislature's power, we hold that the enactment of
subsequent laws exempting all rank-and-file employees of
other GFIs (Government Financial Institution e.g. GSIS)
leeched all validity out of the challenged proviso.
Thus, eleven years after the amendment of the BSP charter,
the rank-and-file of seven other GFIs were granted the
exemption that was specifically denied to the rank-and-file of
the BSP. And as if to add insult to petitioner's injury, even the
Securities and Exchange
Commission (SEC) was granted the same blanket exemption
from the SSL in 2000
The above-mentioned subsequent enactments, however,
constitute significant changes in circumstance that
considerably alter the reasonability of the continued
operation of the last proviso of Section 15(c), Article II of
Republic Act No. 7653, thereby exposin the proviso to more
serious scrutiny. This time, the scrutiny relates to the
constitutionality of the classification - albeit made indirectly
as a consequence of the passage of eight other laws -
between the rank-and-file of the BSP and the seven other
GFIs.
The classification must not only be reasonable, but must also
apply equally to all members of the class. The proviso may be
fair on its face and impartial in appearance but it cannot be
grossly discriminatory in its operation, so as practically to
make unjust distinctions between persons who are without
differences.
In fine, the "policy determination" argument may support
the inequality of treatment between the rank-and-file and
the officers of the BSP, but it cannot justify the inequality of
treatment between BSP rank-and-file and other GFIs' who
are similarly situated. It fails to appreciate that what is at
issue in the second level of scrutiny is not the declared policy
of each law per se, but the oppressive results of Congress'
inconsistent and unequal policy towards the BSP rank-and-file
and those of the seven other
XXXX It is precisely the fact that as regards the exemption
from the SSL, there are no characteristics peculiar only to the
seven GFIs or their rank-and-file so as to justify the exemption
which BSP rank-and-file employees were denied (not to
mention the anomaly of the SEC getting one). The distinction
made by the law is not only superficial, but also arbitrary. It is
not based on substantial distinctions that make real
differences between the BSP rank-and-file and the seven
other GFIs.
In the case at bar, the challenged proviso operates on the
basis of the salary grade or officer-employee status. It is akin
to a distinction based on economic class and status, with the
higher grades as recipients of a benefit specifically withheld
from the lower grades. Officers of the BSP now receive higher
compensation packages that are competitive with the
industry, while the poorer, low-salaried employees are
limited to the rates prescribed by the SSL. The implications
are quite disturbing: BSP rank-and-file employees are paid the
strictly regimented rates of the SSL while employees higher in
8
rank - possessing higher and better education and 5. Courts are not confined to the language of the statute
opportunities for career advancement - are given higher under challenge in determining whether that statute has any
compensation packages to entice them to stay. Considering discriminatory effect. A statute nondiscriminatory on its face
that majority, if not all, the rank-and-file employees consist may be grossly discriminatory in its operation. Though the law
of people whose status and rank in life are less and limited, itself be fair on its face and impartial in appearance, yet, if it is
especially in terms of job marketability, it is they - and not the applied and administered by public authority with an evil eye
officers - who have the real economic and financial need for and unequal hand, so as practically to make unjust and illegal
the adjustment This is in accord with the policy of the discriminations between persons in similar circumstances,
material to their rights, the denial of equal justice is still
Constitution "to free the people from poverty, provide
within the prohibition of the Constitution.
adequate social services, extend to them a decent standard of
living, and improve the quality of life for all." Any act of
Congress that runs counter to this constitutional desideratum
deserves strict scrutiny by this Court before it can pass
muster.
PRINCIPLES:
1. It is settled in constitutional law that the "equal protection"
clause does not prevent the Legislature from establishing
classes of individuals or objects upon which different rules
shall operate
2. The guaranty of equal protection of the laws is not a
guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely
as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of
rights. The Constitution does not require that things which
are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid
discrimination as to things that are different. It does not
prohibit legislation which is limited either in the object to
which it is directed or by the territory within which it is to
operate.
3. Congress is allowed a wide leeway in providing for a valid
classification. The equal protection clause is not infringed by
legislation which applies only to those persons falling within a
specified class. If the groupings are characterized by
substantial distinctions that make real differences, one class
may be treated and regulated differently from another. The
classification must also be germane to the purpose of the law
and must apply to all those belonging to the same class.
Moreover, it is a fundamental and familiar teaching that all
reasonable doubts should be resolved in favor of the
constitutionality of a statute. An act of the legislature,
approved by the executive, is presumed to be within
constitutional limitations. To justify the nullification of a law,
there must be a clear and unequivocal breach of the
Constitution, not a doubtful and equivocal breach.
4. The constitutionality of a statute cannot, in every instance,
be determined by a mere comparison of its provisions with
applicable provisions of the Constitution, since the statute
may be constitutionally valid as applied to one set of facts
and invalid in its application to another.
A statute valid at one time may become void at another time
because of altered circumstances. Thus, if a statute in its
practical operation becomes arbitrary or confiscatory, its
validity, even though affirmed by a former adjudication, is
open to inquiry and investigation in the light of changed
conditions.

9
 H) UNITED COCONUT PLANTERS BANK v. E. GANZON,
GR No. 168859, 2009-06-30
FACTS:
1. United Coconut Planters Bank (UCPB) is a universal bank
duly organized and existing under Philippine Laws.
2. On the other hand, EGI is a corporation duly organized and
existing under Philippine laws and engaged in real estate
construction and development business.
3. EGI availed itself of credit facilities from UCPB to finance its
business expansion. To secure said credit facilities, EGI
mortgaged to UCPB its condominium unit inventories
4. EGI started defaulting in its payment of amortizations, thus,
making all of its obligations due and demandable.
Subsequently, EGI was declared in default by UCPB.
5. EGI and UCPB explored the possibility of using the
mortgaged condominium unit inventories
6. Upon agreeing on the valuation of said mortgaged
properties, EGI and UCPB entered into a Memorandum of
Agreement (MOA) on 28 December 1998 in settlement of the
loans of EGI from UCPB.
7. UCPB proceeded to foreclose some of the properties of EGI
listed in the MOA.
Per the Certificate of Sale dated 13 April 2000, the foreclosure
proceeds of said properties amounted only to
P723,592,000.00, less than the value of the properties of EGI
stipulated in its amended MOA with UCPB.
8. After deducting the said amount from the total loan
obligations of EGI, there was still an unpaid balance of
P192,246,822.50.
9. However, during the signing of the transaction papers for
the dacion en pago
EGI Senior Vice-President noticed that said papers stated
that the remaining loan balance of EGI in the amount of
P192,246,822.50 had increased to P226,963,905.50.
10. This prompted EGI President Engineer Eulalio Ganzon
(Ganzon) to review their files to verify the figures on the loan
obligations of EGI they discovered the UCPB Internal
Memorandum signed by UCPB corporate officers. The said
Internal Memorandum presented two columns, one with the
heading "ACTUAL" and the other "DISCLOSED TO EGI." The
figures in the two columns were conflicting. The figures in the
"DISCLOSED TO EGI" column computed the unpaid balance of
the loan obligations of EGI to be P226,967,194.80, the
amount which UCPB actually made known to and demanded
from EGI. The figures in the "ACTUAL" column calculated the
remaining loan obligations of EGI to be only P146,849,412.58.
11. Response, UCPB explained that the "ACTUAL" column in
its Internal Memorandum dated 22 February 2001 contained
the same amounts reflected or recorded in its financial
statements, in accordance with the Manual of Accounts for
Banks, Manual of Regulations for Banks and BSP Circular No.
202, Series of 1999. In contrast, the "DISCLOSED TO EGI"
column showed the total amount still due from EGI, including
the total principal, interests, transaction and other costs after
the foreclosure, whether reflected in the financial books of
UCPB or not.
12. EGI, also on the basis of the UCPB Internal Memorandum
with the BSP an administrative complaint against UCPB, et al.,
for violation of Sections 36 and 37, Article IV of Republic Act
No. 7653, in relation to Section 55.1(a) of Republic Act No.
8791; and for the commission of irregularities and conducting
business in an unsafe or unsound manner.
13. In a letter-decision the BSP Monetary Board dismissed the
administrative complaint of EGI
14. EGI then filed a Petition for Review under Rule 43 of the
1997 Revised Rules of Civil Procedure with the Court of
Appeals raising the sole issue of "whether the Bangko Sentral
ng Pilipinas erred in dismissing the administrative complaint
filed by EGI against UCPB
15. The Court of Appeals rendered its assailed Decision
granting the Petition for Review of EGI, thus, setting aside the
BSP letter-decision dated 16 September 2003 and remanding
the case to the BSP Monetary Board for further proceedings.
16. UCPB, et al moved for the reconsideration
EGI also filed a Partial Motion for Reconsideration of the
same Court of Appeals Decision, with the prayer that the
appellate court, instead of still remanding the case to the BSP
Monetary Board for further proceedings, already direct the
latter to impose the applicable administrative sanctions upon
UCPB,
17. Court of Appeals denied for lack of merit both the Motion
for Reconsideration of UCPB, et al. and the Motion for Partial
Reconsideration of EGI.
18. UCPB, et al. aver that the Court of Appeals has no
appellate jurisdiction over decisions, orders and/or
resolutions of the BSP Monetary Board on administrative
matters. The BSP Monetary Board is not among the quasi-
judicial agencies enumerated under Rule 43 of the 1997
Revised Rules of Civil Procedure and maintain that the
findings of fact of administrative bodies like the BSP
Monetary Board are accorded great respect, if not finality,
especially if supported by substantial evidence. Such findings
are to be respected by the courts, especially in the absence of
grave abuse of discretion or grave errors by the BSP
Monetary Board.
ISSUES:
(1) Issue of jurisdiction of the Court of Appeals over appeals
of decisions, orders and/or resolutions of the BSP Monetary
Board on administrative matters
(2) Whether the Court of Appeals erred in holding that the
BSP Monetary Board summarily dismissed the administrative
complaint of EGI against UCPB,
RULING:
Truly, there is nothing in Republic Act No. 7653 or in Republic
Act No. 8791 which explicitly allows an appeal of the
decisions of the BSP Monetary Board to the Court of Appeals.
However, this shall not mean that said decisions are beyond
judicial review.
Section 9(3) of Batas Pambansa Blg. 129, otherwise known
as The Judiciary Reorganization Act of 1980
Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards
or commissions
10
A perusal of Section 9(3) of Batas Pambansa Blg. 129, as findings are not supported by substantial evidence, the Court
amended, and Section 1, Rule 43 of the 1997 Revised Rules of can make its own independent evaluation of the facts.
Civil Procedure reveals that the BSP Monetary Board is not
Principles:
included among the quasi-judicial agencies explicitly named
therein, whose final judgments, orders resolutions or awards 1. A quasi-judicial agency or body is an organ of government
are appealable to the Court of Appeals. Such omission, other than a court and other than a legislature, which affects
however, does not necessarily mean that the Court of the rights of private parties through either adjudication or
Appeals has no appellate jurisdiction over the judgments, rule-making.
orders, resolutions or awards of the BSP Monetary Board.
2. The very definition of an administrative agency includes its
Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil being vested with quasi-judicial powers. The ever increasing
Procedure merely mentions several quasi-judicial agencies variety of powers and functions given to administrative
without exclusivity in its phraseology. The enumeration of agencies recognizes the need for the active intervention of
the agencies therein mentioned is not exclusive. The administrative agencies in matters calling for technical
introductory phrase "AMONG THESE AGENCIES ARE" knowledge and speed in countless controversies which
PRECEDING THE ENUMERATION OF SPECIFIC QUASI- cannot possibly be handled by regular courts.
JUDICIAL AGENCIES ONLY HIGHLIGHTS THE FACT THAT THE
3. A "quasi-judicial function" is a term which applies to the
LIST IS NOT MEANT TO BE EXCLUSIVE OR CONCLUSIVE.
action, discretion, etc., of public administrative officers or
Further, the overture stresses and acknowledges the
bodies, who are required to investigate facts, or ascertain
existence of other quasi-judicial agencies not included in the
the... existence of facts, hold hearings, and draw conclusions
enumeration but should be deemed included.
from them, as a basis for their official action and to exercise
Undoubtedly, the BSP Monetary Board is a quasi-judicial discretion of a judicial nature.
agency exercising quasi-judicial powers or functions. As aptly
observed by the Court of Appeals, the BSP Monetary Board is
an independent central monetary authority and a body
corporate with fiscal and administrative autonomy, mandated
to provide policy directions in the areas of money, banking
and credit. It has power to issue subpoena, to sue for
contempt those refusing to obey the subpoena without
justifiable reason, to administer oaths and compel
presentation of books, records and others, needed in its
examination, to impose fines and other sanctions and to issue
cease and desist order then as such, it is one of those quasi-
judicial agencies, though not specifically mentioned in
Section 9(3) of Batas Pambansa Blg. 129, as amended, and
Section 1 Rule 43 of the 1997 Revised Rules of Civil
Procedure, are deemed included therein.
Therefore, the Court of Appeals has appellate jurisdiction
over final judgments, orders, resolutions or awards of the BSP
Monetary Board on administrative complaints against banks
and quasi-banks.
THIS COURT RULES IN THE NEGATIVE AND AFFIRMS THE
FINDING OF THE COURT OF APPEALS THAT THE BSP
MONETARY BOARD DID, INDEED, SUMMARILY DISMISS
ADMINISTRATIVE COMPLAINT OF EGI AGAINST
UCPB, Given the gravity and seriousness of the charges of EGI
against UCPB, et al. the sweeping statement of the BSP
Monetary Board that it was inclined to dismiss the complaint
of EGI based on the evaluation made by its Supervision and
Examination Department I and Office of the General Counsel
and Legal Services, is simply insufficient and unsatisfactory.
Further, in resolving the matter before it, the BSP Monetary
Board never considered the UCPB Internal Memorandum
which was the heart of the administrative complaint of EGI
against UCPB, et al.
Although, as a general rule, findings of facts of an
administrative agency, which has acquired expertise in the
particular field of its endeavor, are accorded great weight on
appeal, such rule cannot be applied with respect to the
assailed findings of the BSP Monetary Board in this case.
Rather, what applies is the recognized exception that if such

11
 I) MONETARY BOARD v. PHILIPPINE VETERANS BANK,
GR No. 189571, 2015-01-21
FACTS:
1. Respondent established a pension loan product for bona
fide veterans or their surviving spouses, as well as salary loan
product for teachers and low-salaried employees pursuant to
its mandate under Republic Act (RA) Nos. 3518[3] and
7169[4] to provide financial assistance to veterans and
teachers.
2. Respondent devised a program by charging a premium in
the form of a higher fee known as Credit Redemption Fund
(CRF) from said borrowers. Resultantly, Special Trust Funds
were established by respondent for the pension loans of the
veteran-borrowers, salary loans of teachers and low-salaried
employees. These trust funds were, in turn, managed by
respondent's Trust and Investment Department, with
respondent as beneficiary.
3. An examination was conducted by the Supervision and
Examination Department (SED) II of the Bangko Sentral ng
Pilipinas (BSP). It found, among other things, that
respondent's collection of premiums from the proceeds of
various salary and pension loans of borrowers to guarantee
payment of outstanding loans violated Section 54 of RA No.
8791[5] which states that banks shall not directly engage in
insurance business as insurer.
The BSP notified respondent about the Insurance
Commission's opinion that the CRF is a form of insurance.
Thus, respondent was requested to discontinue the collection
of said fees.
4. Petitioners issued Monetary Board (MB) Resolution No.
1139 directing respondent's Trust and Investment
Department to return to the borrowers all the balances of the
CRF respondent requested reconsideration of said MB
Resolution. However, the same was denied
5. Accordingly, respondent filed a Petition for Declaratory
Relief with the RTC. The RTC dismissed respondent's petition
for declaratory relief
6. Almost a year later, respondent filed a Motion to Admit its
Motion for Reconsideration against said order alleging that it
did not receive a copy thereof
Despite the foregoing, the RTC allowed respondent's motion
for reconsideration and required petitioners to file their
answer.
In a Decision dated June 15, 2009, the RTC of Makati City
granted respondent's petition for declaratory relief
ISSUES:
The issue is whether or not the petition for declaratory relief
is proper.
RULING:
We rule in the negative.
The Court in CJH Development Corporation v. Bureau of
Internal Revenue,
held that in the same manner that court decisions cannot be
the proper subjects of a petition for declaratory relief,
decisions of quasi-judicial agencies cannot be subjects of a
petition for declaratory relief for the simple reason that if a
party is not agreeable to a decision either on questions of law
or of fact, it may avail of the various remedies provided by
the Rules of Court.
In view of the foregoing, the decision of the BSP Monetary
Board cannot be a proper subject matter for a petition for
declaratory relief since it was issued by the BSP Monetary
Board in the exercise of its quasi-judicial powers or
functions.
The nature of the BSP Monetary Board as a quasi-judicial
agency, and the character of its determination of whether or
not appropriate sanctions may be imposed upon erring banks,
as an exercise of quasi-judicial function
A priori, having established that the BSP Monetary Board is
indeed a quasi-judicial body exercising quasi-judicial
functions, then its decision in MB Resolution No. 1139 cannot
be the proper subject of declaratory relief.
Lastly, also worth noting is the fact that the court a quo's
Order dated September 24, 2007, which dismissed
respondent's petition for declaratory relief, had long become
final and executory.
Principles:
1. Section 1, Rule 63 of the Rules of Court governs petitions
for declaratory relief, viz.:
SECTION 1. Who may file petition. Any person interested
under a deed, will, contract or other written instrument,
whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental regulation
may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his
rights or duties, thereunder.
2. Declaratory relief is defined as an action by any person
interested in a deed, will, contract or other written
instrument, executive order or resolution, to determine any
question of construction or validity arising from the
instrument, executive order or regulation, or statute; and for
a declaration of his rights and duties thereunder. The only
issue that may be raised in such a petition is the question of
construction or validity of provisions in an instrument or
statute.
3. Undoubtedly, the BSP Monetary Board is a quasi-judicial
agency exercising quasi-judicial powers or functions. As aptly
observed by the Court of Appeals, the BSP Monetary Board is
an independent central monetary authority and a body
corporate with fiscal and administrative autonomy, mandated
to provide policy directions in the areas of money, banking,
and credit. It has the power to issue subpoena, to sue for
contempt those refusing to obey the subpoena without
justifiable reason, to administer oaths and compel
presentation of books, records and. others, needed in its
examination, to impose fines and other sanctions and to issue
cease and desist order.
Section 37 of Republic Act No. 7653, in particular, explicitly
provides that the BSP Monetary Board shall exercise its
discretion in determining whether administrative sanctions
should be imposed on banks and quasi-banks, which
necessarily implies that the BSP Monetary Board must
conduct some form of investigation or hearing regarding the
same.
12
 J) CENTRAL BANK OF PHILIPPINES and TIAQOUI v. CA AND
TRIUMPH SAVINGS BANK, GR No. 76118,
1993-03-30
FACTS:
1. Based on examination reports submitted by the
Supervision and Examination Sector (SES), Department II, of
the Central Bank (CB) that the financial condition of TSB is
one of insolvency and its continuance in business would
involve probable loss to its depositors and creditors,
2. The Monetary Board (MB) issued Resolution No. 596
ordering the closure of TSB, forbidding it from doing business
in the Philippines, placing it under receivership, and
appointing Ramon V. Tiaoqui as receiver.
3. TSB filed a complaint with the Regional Trial Court of
Quezon City against Central Bank and Ramon V. Tiaoqui to
annul MB Resolution No. 596 with prayer for injunction,
challenging in the process the constitutionality of Sec. 29 of
R.A. 269, otherwise known as "The Central Bank Act," as
amended, insofar as it authorizes the Central Bank to take
over a banking institution even if it is not charged with
violation of any law or regulation, much less found guilty
thereof.
4. The trial court granted the relief sought and denied the
application of TSB for injunction. Thereafter, Triumph Savings
Bank filed with us a petition for certiorari under Rule 65 of
the Rules of Court
5. The RTC in separate orders denied petitioners' motion to
dismiss and ordered receiver Tiaoqui to restore the
management of TSB to its elected board of directors and
officers, subject to CB controllership petitioners elevated the
twin orders of the RTC to the Court of Appeals.
6. Petitioners' motion to dismiss was premised on two
grounds, namely, that the complaint failed to state a cause of
action and that the Triumph Savings Bank was without
capacity to sue except through its appointed receiver.
COURT OF APPEALS
It would be best should private respondent be given the
chance to show and prove arbitrariness and bad faith in the
issuance of the questioned resolution, especially so in the
light of the statement of private respondent that neither the
bank itself nor its officials were even informed of any charge
of violating banking laws.
"In regard to lack of capacity to sue on the part of Triumph
Savings Bank, we view such argument as being specious, for if
we get the drift of petitioners' argument, they mean to
convey the impression that only the CB appointed receiver
himself may question the CB... resolution appointing him as
such. This may be asking for the impossible, for it cannot be
expected that the master, the CB, will allow the receiver it has
appointed to question that very appointment.
Petitioners claim that it is the essence of Sec. 29 of R.A. 265
that prior notice and hearing in cases involving bank closures
should not be required since in all probability a hearing would
not only cause unnecessary delays but also provide bank
"insiders" and stockholders the opportunity to further
dissipate the bank's resources, create liabilities for the bank
up to the insured amount and even destroy evidence of fraud
or irregularity in the bank's operations to the prejudice of its
depositors and creditors.
ISSUES:
Whether absence of prior notice and hearing may be
considered acts of arbitrariness and bad faith sufficient to
annul a Monetary Board resolution enjoining a bank from
doing business and placing it under receivership.
RULING:
Contrary to the notion of private respondent, Sec. 29 does
not contemplate prior notice and hearing before a bank may
be directed to stop operations and placed under receivership.
When par. 4 (now par. 5, as amended by E.O. 289) provides
for the filing of a case within ten (10) days after the receiver
takes charge of the assets of the bank, it is unmistakable that
the assailed actions should precede the filing of the case.
Plainly, the legislature could not have intended to authorize
"no prior notice and hearing" in the closure of the bank and
at the same time allow a suit to annul it on the basis of
absence thereof.
in the early case of Rural Bank of Lucena, Inc. v. Arca [1965].
We held that a previous hearing is nowhere required in Sec.
29 nor does the constitutional requirement of due process
demand that the correctness of the
Monetary Board's resolution to stop operation and proceed
to liquidation be first adjudged before making the resolution
effective. It is enough that a subsequent judicial review be
provided
It may be emphasized that Sec. 29 does not altogether divest
a bank or a non-bank financial institution placed under
receivership of the opportunity to be heard and present
evidence on arbitrariness and bad faith because within ten
(10) days from the date the receiver takes charge of the
assets of the bank, resort to judicial review may be had by
filing an appropriate pleading with the court. Respondent
TSB did in fact avail of this remedy by filing a complaint with
the RTC of Quezon City on the 8th day following the takeover
by the receiver of the bank's assets.
Unless adequate and determined efforts are taken by the
government against distressed and mismanaged banks, public
faith in the banking system is certain to deteriorate to the
prejudice of the national economy itself, not to mention the
losses suffered by the bank depositors, creditors, and
stockholders, who all deserve the protection of the
government. The government cannot simply cross its arms
while the assets of a bank are being depleted through
mismanagement or irregularities. It is the duty of the Central
Bank in such an event to step in and salvage the remaining
resources of the bank so that they may not continue to be
dissipated or plundered by those entrusted with their
management.
As regards the second ground, to rule that only the receiver
may bring suit in behalf of the bank is, to echo the
respondent appellate court, "asking for the impossible, for it
cannot be expected that the master, the CB, will allow the
receiver it has appointed to question... that very
appointment." Consequently, only stockholders of a bank
could file an action for annulment of a Monetary Board
resolution placing the bank under receivership and
prohibiting it from continuing operations.[
13
Principles:
1. It did not allege ultimate facts showing that the action was
plainly arbitrary and made in bad faith which are the only
grounds for the annulment of Monetary Board resolutions
placing a bank under conservatorship, and that TSB was
without legal capacity to sue except through its receiver
This "close now and hear later" scheme is grounded on
practical and legal considerations to prevent 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.
2. In RURAL BANK OF BUHI, INC. V. COURT OF APPEALS,
We stated that -
"x x x due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire
consequences of a prior hearing: bank runs would be the
order of the day,... resulting in panic and hysteria. In the
process, fortunes may be wiped out and disillusionment will
run the gamut of the entire banking community."
The procedure prescribed in Sec. 29 is truly designed to
protect the interest of all concerned, i.e., the depositors,
creditors and stockholders, the bank itself, and the general
public, and the summary closure pales in comparison to the
protection afforded public interest.
3. At any rate, the bank is given full opportunity to prove
arbitrariness and bad faith in placing the bank under
receivership, in which event, the resolution may be properly
nullified and the receivership lifted as the trial court may
determine.
Consequently, only stockholders of a bank could file an action
for annulment of a Monetary Board resolution placing the
bank under receivership and prohibiting it from continuing
operations. In requiring that only the stockholders of record
representing the majority of the capital stock may bring the
action to set aside a resolution to place a bank under
conservatorship is to ensure that it be not frustrated or
defeated by the incumbent Board of Directors or officers who
may immediately resort to court action to prevent its
implementation or enforcement. It is presumed that such a
resolution is directed principally against acts of said Directors
and officers which place the bank in a state of continuing
inability to maintain a condition of liquidity adequate to
protect the interest of depositors and creditors. Indirectly, it
is likewise intended to protect and safeguard the rights and
interests of the stockholders.

14
ALFEO D. VIVAS v. MONETARY BOARD OF BANGKO SENTRAL
NG PILIPINAS, GR No. 191424, 2013-08-07
FACTS:
1. The Rural Bank of Faire, Incorporated (RBFI) was a duly
registered rural banking institution. Record shows that the
corporate life of RBFI expired on May 31, 2005.
2. Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his
principals acquired the controlling interest in RBFI.The Bangko
Sentral ng Pilipinas (BSP) issued the Certificate of Authority
extending the corporate life of RBFI for another fifty (50)
years.
3. Sometime in April 2008, the examiners from the
Department of Loans and Credit of the BSP arrived at the ECBI
and cancelled the rediscounting line of the bank.
4. Vivas appealed the cancellation to BSP.
5. Thereafter, the Monetary Board (MB) issued Resolution
No. 1255 placing ECBI under Prompt Corrective Action (PCA)
framework because of the following serious findings and
supervisory concerns noted during the general examination:
negative capital of 14.674 million and capital adequacy ratio
of negative 18.42%;
6. Vivas moved for a reconsideration of Resolution No. 1255
on the grounds of non-observance of due process and
arbitrariness.
7. In view of ECBI's refusal to comply with the required
examination, the MB issued Resolution No. 726, Imposing
monetary penalty/fine on ECBI, and referred the matter to
the Office of the Special Investigation (OSI) for the filing of
appropriate legal action.
8. On March 4, 2010, the MB issued Resolution No. 276
placing ECBI under receivership in accordance with the
recommendation of the ISD II findings showed that the
Eurocredit Community Bank, Inc. a Rural Bank (Eurocredit
Bank)
(a)is unable to pay its liabilities as they become due in the
ordinary course of business;
(b) has insufficient realizable assets to meet liabilities;
(c) cannot continue in business without involving probable
losses to its depositors and creditors; and
(d) Has willfully violated a cease and desist order of the
Monetary Board for acts or transactions which are considered
unsafe and unsound banking practices and other acts or
transactions constituting fraud or dissipation of the assets of
the institution,
and considering the failure of the Board
ofDirectors/management of Eurocredit Bank to restore the
bank's financial health and viability despite considerable time
given to address the bank's financial problems
9. Vivas submit that the respondents committed grave abuse
of discretion when they erroneously applied Section 30 of
R.A. No. 7653, instead of Sections 11 and 14 of the Rural Bank
Act of 1992 or R.A. No. 7353.
RULING:
The petition must fail.
To begin with, Vivas availed of the wrong remedy. The MB
issued Resolution No. 276, dated March 4, 2010, in the
exercise of its power under R.A. No. 7653. Under Section 30
thereof, any act of the MB placing a bank under
conservatorship, receivership or liquidation may not be
restrained or set aside except on a petition for certiorari.
Indeed, prohibition is a preventive remedy seeking that a
judgment be rendered which would direct the defendant to
desist from continuing with the commission of an act
perceived to be illegal. As a rule, the proper function of a writ
of prohibition is to prevent the doing of an act which is about
to be done. It is not intended to provide a remedy for acts
already accomplished.
Though couched in imprecise terms, this petition for
prohibition apparently seeks to prevent the acts of closing of
ECBI and placing it under receivership. Resolution No. 276,
however, had already been issued by the MB and the closure
of ECBI and its placement under receivership by the PDIC
were already accomplished. Apparently, the remedy of
prohibition is no longer appropriate. Settled is the rule that
prohibition does not lie to restrain an act that is already a fait
accompli.
THE MB COMMITTED NO GRAVE ABUSE OF DISCRETION
In any event, no grave abuse of discretion can be attributed
to the MB for the issuance of the assailed Resolution No. 276.
The Court has taken this into account, but it appears from all
over the records that ECBI was given every opportunity to be
heard and improve on its financial standing. The records
disclose that BSP officials and examiners met with the
representatives of ECBI, including Vivas, and discussed their
findings.
Principles:
1. The actions of the Monetary Board taken under this
section or under Section 29 of this Act shall be final and
executory, and may not be restrained or set aside by the
court except on petition for certiorari on the ground that the
action taken was in excess of jurisdiction or with such grave
abuse of discretion as to amount to lack or excess of
jurisdiction.
2. The petition for certiorari may only be filed by the
stockholders of record representing the majority of the
capital stock within ten (10) days from receipt by the board of
directors of the institution of the order directing receivership,
liquidation or conservatorship.
3. At any rate, if circumstances warrant it, the MB may forbid
a bank from doing business and place it under receivership
without prior notice and hearing. Section 30 of R.A. No. 7653
provides, viz:
Sec. 30. Proceedings in Receivership and Liquidation.
Whenever, upon report of the head of the supervising or
examining department, the Monetary Board finds that a bank
or quasi-bank:
(a) is unable to pay its liabilities as they become due in the
ordinary course of business: Provided, That this shall not
include inability to pay caused by extraordinary demands
induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the
Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable
losses to its depositors or creditors; or
15
(d) has wilfully violated a cease and desist order under
Section 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of the
assets of the institution; in which cases, the Monetary Board
may summarily and without need for prior... hearing forbid
the institution from doing business in the Philippines and
designate the Philippine Deposit Insurance Corporation as
receiver of the banking institution. [Emphases supplied.]
4. The "close now, hear later" doctrine has already been
justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP when
it finds that a bank is in dire straits. Unless adequate and
determined efforts are taken by the government against
distressed and mismanaged banks, public faith in the banking
system is certain to deteriorate to the prejudice of the
national economy itself, not to mention the losses suffered by
the bank depositors, creditors, and stockholders, who all
deserve... the protection of the government
5. Vivas' attempt to assail the constitutionality of Section 30
of R.A. No. 7653 constitutes collateral attack on the said
provision of law. Nothing is more settled than the rule that
the constitutionality of a statute cannot be collaterally
attacked as constitutionality issues must be pleaded directly
and not collaterally. A collateral attack on a presumably valid
law is not permissible. Unless a law or rule is annulled in a
direct proceeding, the legal presumption of its validity stands.

16
 PRODUCERS BANK OF PHILIPPINES v. NLRC AND "In the third place, while admittedly, the Central Bank law
PRODUCERS BANK EMPLOYEES ASSOCIATION, gives vast and far-reaching powers to the conservator of a
GR No. 118069, 1998-11-16 bank, it must be pointed out that such powers must be
FACTS: related to the '(preservation of)' the assets of the banks, (the
reorganization of) the management thereof and (the
1. Petitioner was placed by the then Central Bank of the
restoration of) its viability.' Such powers, enormous and
Philippines (now Bangko Sentral ng Pilipinas) under a
extensive as they are, cannot extend to the post-facto
conservator for the purpose of protecting its assets.
repudiation of perfected transactions, otherwise they would
2. Then the private respondents sought the implementation infringe against the non-impairment clause of the
of the CBA regarding the retirement plan. Constitution.
3. The acting conservator of the petitioner expressed her
objection to such plan, resulting in an impasse between the
petitioner bank and the private respondent union.
4. Private respondent, to resolve the issue, decided to file a
case against the petitioner for unfair labor practice and for
flagrant violation of the CBA provisions.
5. Labor Arbiter dismissed private respondent's complaint
Finds that the enforcement of the resolutions would not
redound for the best interest of the Bank in accordance with
the conservatorship program, he may not be faulted by such
inaction or action.
6. Private respondent union interposed an appeal before the
NLRC.
7. reversed the findings of the Labor Arbiter, consequently,
the NLRC ordered the petitioner to implement the provisions
of the CBA which were disallowed by the conservator
RULING:
Obviously, therefore, Section 28-A merely gives the
conservator power to revoke contracts that are, under
existing law, deemed to be defective - i.e., void, voidable,
unenforceable or rescissible. Hence, the conservator merely
takes the place of a bank's board of directors.
What the said board cannot do - such as repudiating a
contract validly entered into under the doctrine of implied
authority - the conservator cannot do either. Ineluctably, his
power is not unilateral and he cannot simply repudiate valid
obligations of the Bank. His authority would be only to bring
court actions to assail such contracts - as he has already done
so in the instant case. A contrary understanding of the law
would simply not be permitted by the Constitution neither by
common sense.
To rule otherwise would be to enable a failing bank to
become solvent, at the expense of third parties, by simply
getting the conservator to unilaterally revoke all previous
dealings which had one way or another come to be
considered unfavorable to the Bank, yielding nothing to
perfected contractual rights nor vested interests of the third
parties who had dealt with the Bank."
It bears repeating that apart from the non-impairment clause,
what is also well-settled, to the point of being trite, is the
principle that when the conflicting interests of labor and
capital are weighed on the scales of social justice, the
dominant influence of the latter must be counter-balanced
by the sympathy and compassion the law must accord the
under-privileged worker.
PRINCIPLES:
1. In a similar case involving the petitioner and the acts of its
conservator, we already ruled that:

17
 PROVIDENT SAVINGS BANK V. CA
(G.R. NO. 97218)
FACTS:
Spouses Guarin obtained a loan from petitioner bank and as a
security, executed a REM in its favor over a parcel of land.
Then petitioner bank was placed under receivership until it
was set aside. Guarin signified its willingness to pay its
obligation in exchange for the mortgaged title. Petitioner
bank could not release said title as it also served as security
for another loan obtained by Guarin for his corporation.
Private respondent Chua wrote petitioner bank saying that
the mortgaged property was offered to him as payment of
judgment he obtained against the Guarins. The Guarins sold
the property to Chua with the latter assuming the obligations.
Chua tried to pay the loan but petitioner would not release
the title unless the second loan of Guarin was also settled.
ISSUE:
Whether or not a bank being placed under receivership
interrupts the prescription of actions it may institute.
RULING: YES.
When a bank is prohibited to do business by the Central Bank
and a receiver is appointed for such bank, that bank would
not be able to do new business, i.e., to grant new loans or to
accept new deposits.
Having arrived at the conclusion that the foreclosure is part of
bank’s business activity which could not have been pursued
by the receiver then because of the circumstances discussed
in the Central Bank case, we are thus convinced that the
prescriptive period was legally interrupted by fuerza mayor in
1972 on account on the prohibition imposed by the Monetary
Board against petitioner from transacting business, until the
directive of the board was nullified in 1981. Indeed, the
period during which the obligee was prevented by a caso
fortuito from enforcing his right is not reckoned against him
(Article 1154, New Civil Code). When prescription is
interrupted, all the benefits acquired so far from the
possession cease and when prescription starts anew, it will be
entirely a new one. This concept should not be equated with
suspension where the past period is included in the
computation being added to the period after prescription is
resumed. Consequently, when the closure of was set aside in
1981, the period of ten years within which to foreclose under
Article 1142 of the New Civil Code began to run again and,
therefore, the action filed on August 21, 1986 to compel
petitioner to release the mortgage carried with it the
mistaken notion that petitioner’s own suit foreclosure had
prescribed.
FIDELITY SAVINGS AND MORTGAGE BANK V. CENZON
(G.R. NO. L-46208)
FACTS:
Respondent spouses Santiago maintained a savings and time
deposit with petitioner bank. The Monetary Board found
petitioner bank to be insolvent and ordered for its assets to
be taken charged of by the Acting Superintendent. The PDIC
paid spouses for their deposits with petitioner bank but there
was still a remaining balance. The Monetary Board then
directed the liquidation of the affairs of petitioner bank and a
subsequent petition for assistance and supervision in
liquidation was filed in the court. The liquidation proceedings
still pending, respondent spouses sent demand letters to
petitioner bank for the payment of their deposits. The court
found in favor of respondent spouses.
ISSUE:
Whether or not petitioner bank may be adjudged to pay
interest on unpaid deposits even after its closure by the
Central Bank by reason of insolvency.
RULING: NO.
It is settled jurisprudence that a banking institution which has
been declared insolvent and subsequently ordered closed by
the Central Bank of the Philippines cannot be held liable to
pay interest on bank deposits which accrued during the
period when the bank is actually closed and non-
operational. In The Overseas Bank of Manila vs. Court of
Appeals and Tony D. Tapia, we held that:
It is a matter of common knowledge, which We take judicial
notice of, that what enables a bank to pay stipulated interest
on money deposited with it is that thru the other aspects of
its operation it is able to generate funds to cover the payment
of such interest. Unless a bank can lend money, engage in
international transactions, acquire foreclosed mortgaged
properties or their proceeds and generally engage in other
banking and financing activities from which it can derive
income, it is inconceivable how it can carry on as a depository
obligated to pay stipulated interest. Conventional wisdom
dictates this inexorable fair and just conclusion. And it can be
said that all who deposit money in banks are aware of such a
simple economic proposition. Consequently, it should be
deemed read into every contract of deposit with a bank that
the obligation to pay interest on the deposit ceases the
moment the operation of the bank is completely suspended
by the duly constituted authority, the Central Bank.
From the aforecited authorities, it is manifest that petitioner
cannot be held liable for interest on bank deposits which
accrued from the time it was prohibited by the Central Bank
to continue with its banking operations. The order, therefore,
of the Central Bank as receiver/liquidator of petitioner bank
allowing the claims of depositors and creditors to earn
interest up to the date of its closure is in line with the
doctrine laid down in the jurisprudence above cited.
18