View full case

BANGKO SENTRAL NG PILIPINAS MONETARY BOARD v. NINA G. ANTONIO-VALENZUELA

FACTS:

This case involves a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a Temporary Restraining Order (TRO)/Writ of Preliminary Injunction. The case questions the Decision of the Court of Appeals (CA) in CA-G.R. SP No. 103935, which upheld the Order of the Regional Trial Court (RTC) in Manila. The RTC issued writs of preliminary injunction in Civil Case Nos. 08-119243 to 08-119251 and 08-119273, and consolidated the civil cases.

In September 2007, the Bangko Sentral ng Pilipinas (BSP) conducted examinations of several rural banks. After the examinations, deficiencies were discussed in exit conferences, including the requirement for additional capital infusion. Letters were sent to the banks informing them of their failure to comply with the required remedial measures.

The Rural Bank of Parañaque, Inc. (RBPI) filed a complaint for nullification of the BSP Report of Examination (ROE) with application for a TRO and writ of preliminary injunction. Other rural banks filed similar complaints and motions for consolidation of their cases. The RTC granted RBPI's prayer for a TRO and consolidated the cases.

The petitioners, Fonacier and the BSP, opposed the application for a TRO and writ of preliminary injunction in Civil Case No. 08-119243. They questioned the validity of consolidating the cases and alleged that the court had already prejudged the case by issuing a TRO in favor of RBPI. The RTC denied their motion for reconsideration regarding the consolidation of cases.

Additional banks filed similar complaints and the RTC granted their prayer for TROs. The petitioners filed a Motion to Dismiss against all the complaints (except for one), arguing that the complaints were premature and violated their right to due process.

The case involves several rural banks that filed separate complaints against the defendants for allegedly violating their right to due process. The complaints stemmed from the denial of the plaintiffs' request for copies of the Reports of Examination (ROEs) and the alleged violation of the procedure in the submission of the ROEs to the Monetary Board (MB).

The plaintiffs sought the issuance of writs of preliminary injunction to enjoin the defendants from submitting the ROEs or any similar report to the MB and from acting on the basis of said report. The defendants filed separate motions to dismiss, arguing that the complaints failed to state a cause of action and that a condition precedent had not been complied with.

The RTC ruled in favor of the plaintiffs and granted their applications for preliminary injunction. The RTC held that the denial of the plaintiffs' request for copies of the ROEs amounted to a denial of their right to due process.

The RTC ordered the plaintiffs to post a bond and upon approval, issued writs of preliminary injunction enjoining the defendants from submitting the ROEs or any similar report to the MB, as well as from acting on the basis of said report.

The case involves multiple civil cases filed by different rural banks against the defendants who are members of the Monetary Board (MB) and the BSP Governor. The plaintiffs sought to enjoin and restrain the submission and acting upon the Report of Examination or any similar report prepared in connection with the examination conducted on the plaintiff banks. The RTC ordered the plaintiffs to post a bond and issued writs of preliminary injunction enjoining and restraining the defendants from submitting the report or acting on the basis of said report.

The plaintiffs obtained an injunction from the RTC preventing the defendants from acting on the report. The defendants filed a petition for certiorari before the CA, claiming a grave abuse of discretion on the part of the RTC. The CA ruled that the RTC did not commit any grave abuse of discretion and upheld the issuance of the injunction and the consolidation of the cases. The CA also held that the respondent banks were entitled to copies of the report. The petitioners then filed a petition before the Supreme Court, raising various grounds in support of their position. A TRO was later issued by the Supreme Court, restraining the implementation of the CA decision.

The Monetary Board then placed the respondent banks under receivership. The main petition was brought before the Supreme Court for resolution.

ISSUES:

  1. Whether the respondent banks are entitled to copies of the Reports of Examination (ROEs) and if the issuance of the writs of preliminary injunction is a valid interference with the powers of the Monetary Board (MB).

  2. Whether the respondent banks' right to due process was violated by allowing them to view the ROEs and act upon them to prevent sanctions.

  3. Whether the "close now, hear later" doctrine violates the right to due process.

RULING:

  1. The petition is meritorious. The respondent banks have failed to show that they are entitled to copies of the ROEs. Sec. 28 of RA 7653 does not require the BSP to give them copies of the ROEs. The respondent banks cannot claim a violation of their right to due process if they are not provided with copies of the ROEs since they were already furnished with lists of findings/exceptions containing the deficiencies found by the examiners. The issuance of the writs of preliminary injunction is an unwarranted interference with the powers of the MB under Secs. 29 and 30 of RA 7653. The respondent banks have shown no necessity for the writ of preliminary injunction to prevent serious damage. The writ of preliminary injunction cannot prevent the MB from taking action, including imposing sanctions upon the respondent banks.

  2. The respondent banks' right to due process was not violated by allowing them to view the ROEs and act upon them. The closure of a bank is considered an exercise of police power and the action of the Monetary Board (MB) on this matter is final and executory. The respondent banks cannot prevent their closure by the MB through a writ of preliminary injunction based on a claim of lack of due process. Their remedy is a subsequent one to determine if the closure was attended by grave abuse of discretion.

  3. The "close now, hear later" doctrine is justified as a measure for the protection of the public interest. Swift action is necessary when a bank is in dire straits to protect the banking system and prevent damage to depositors, creditors, and stockholders. The threat of sanctions, including closure, does not violate the right to due process and cannot be the basis for a writ of preliminary injunction.

PRINCIPLES:

  • The requisites for preliminary injunctive relief are: (a) invasion of a material and substantial right, (b) clear and unmistakable right of the complainant, and (c) urgent and paramount necessity for the writ to prevent serious damage. (Lim v. Court of Appeals)

  • A writ of preliminary injunction may be issued only upon a clear showing of an actual existing right to be protected during the pendency of the principal action. (Lim v. Court of Appeals)

  • The twin requirements of a valid injunction are the existence of a right and its actual or threatened violations. (Lim v. Court of Appeals)

  • The right to be protected and the violation against that right must be shown to be entitled to an injunctive writ. (Lim v. Court of Appeals)

  • The issuance of the writs of preliminary injunction is an unwarranted interference with the powers of the MB under Secs. 29 and 30 of RA 7653. (Central Bank of the Philippines v. Court of Appeals)

  • The closure of a bank may be considered an exercise of police power.

  • The closure of a bank by the MB is subject to judicial inquiry and can be set aside if found to be in excess of jurisdiction or with grave abuse of discretion.

  • The "close now, hear later" doctrine is justified as a measure for the protection of the public interest.

  • The grant or denial of an injunction rests on the sound discretion of the court but should be made with caution and in accordance with law.

  • The requirement for the issuance of a writ of preliminary injunction must be proved, including invasion of rights, clear and unmistakable right to copies of relevant documents, and necessity to prevent serious damage.