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RURAL BANK OF SAN MIGUEL v. MONETARY BOARD

FACTS:

The petitioner, Rural Bank of San Miguel, Inc. (RBSM), is a domestic corporation engaged in banking. The petitioner, Hilario P. Soriano, claims to be the majority stockholder of RBSM's outstanding shares of stock. On January 21, 2000, the respondent Monetary Board (MB) issued Resolution No. 105, prohibiting RBSM from doing business in the Philippines, placing it under receivership, and designating the Philippine Deposit Insurance Corporation (PDIC) as the receiver. This decision was based on the comptrollership/monitoring report as of October 31, 1999, which showed that RBSM is unable to pay its liabilities, cannot continue in business without involving probable losses to depositors and creditors, and failed to infuse additional capital despite being given adequate time to do so.

On January 31, 2000, petitioners filed a petition to nullify Resolution No. 105, but later withdrew it and filed a special civil action for certiorari and prohibition in the Court of Appeals (CA). The CA dismissed the petition, stating that the MB's decision was based on substantial evidence. On June 9, 2000, the MB passed Resolution No. 966, directing the PDIC to proceed with the liquidation of RBSM.

The petitioners argue that Resolution No. 105 was issued without a complete examination of the bank. The main issue in this case is whether a current and complete examination of the bank is required before it can be closed and placed under receivership.

ISSUES:

  1. Whether a current, thorough, and complete examination is required before a bank can be closed under Section 30 of RA 7653.

  2. Whether the closure of a bank under RA 7653 requires an examination or a report.

  3. Whether the Monetary Board (MB) had a sufficient basis to order the closure of the Rural Bank of Santa Maria (RBSM).

RULING:

  1. No, a current, thorough, and complete examination is not required before a bank can be closed under Section 30 of RA 7653. The requirement is to provide a report of the head of the supervising or examining department. The term "report" under Section 30 and the word "examination" used in Section 29 of the old law are not synonymous. "Examination" connotes in-depth analysis, evaluation, inquiry, or investigation while "report" connotes a simple disclosure or narration of facts for informative purposes. The actions of the Monetary Board under Section 30 are final and executory, and may only be restrained or set aside by the court on petition for certiorari on the ground of excess of jurisdiction or grave abuse of discretion.

  2. The closure of a bank under RA 7653 only requires a report, and not an examination. The term "report" has a clear and unambiguous meaning, which is different from "examination." The plain meaning of the statute must be applied without interpretation. Therefore, an examination is no longer necessary before the MB can issue a closure order.

  3. The MB had a sufficient basis to order the closure of RBSM. It relied on the report of the head of the supervising or examining department, which provided detailed facts and findings that RBSM was unable to pay its liabilities and could not continue in business without incurring probable losses. The basis for the closure order did not need to arise from an examination as required in the old law.

PRINCIPLES:

  • The actions of the Monetary Board taken under Section 30 of RA 7653 are final and executory and may not be restrained or set aside by the court except on petition for certiorari on the ground of excess of jurisdiction or grave abuse of discretion.

  • The requirement under Section 30 is to provide a report of the head of the supervising or examining department and not a current, thorough, and complete examination. The term "report" is different from "examination" and connotes a simple disclosure or narration of facts for informative purposes.

  • The plain meaning rule or verba legis must be applied when the words of a statute are clear, plain, and free from ambiguity.

  • The court cannot impose another meaning on a term if it has a clear and definite meaning in the statute.

  • The court may consider the spirit and reason of a statute if a literal meaning would lead to absurdity, contradiction, injustice, or defeat the clear purpose of the lawmakers.

  • The closure of a bank under the law is the prerogative of the legislature, and the court must follow the language of the law and not impose additional requirements not supported by the law.

  • The decision of an administrative body must have a basis and be supported by substantial evidence.

  • The closure of a bank must be summary and expeditious to protect public interest, which is why prior notice and hearing are no longer required under RA 7653.