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  • Salud Vs Central Bank

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    Caroline A. Legaspino
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    The document discusses a case between the Central Bank of the Philippines and the Rural Bank of Muntinlupa regarding the liquidation of the Rural Bank. The Central Bank issued resolutions forbidding the Rural Bank from doing business and designating a receiver to take charge of its assets. The Rural Bank opposed the liquidation, arguing the action was arbitrary. The Regional Trial Court ruled in favor of the Rural Bank, finding it had more assets than liabilities. The Central Bank appealed. The Supreme Court held that while the Central Bank's resolutions are generally final, the court can set them aside if shown to be arbitrary or in bad faith. The Regional Trial Court has jurisdiction to determine if the action was arbitrary when ruling on a

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    8. Salud vs Central Bank

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    The document discusses a case between the Central Bank of the Philippines and the Rural Bank of Muntinlupa regarding the liquidation of the Rural Bank. The Central Bank issued resolutions forbidding the Rural Bank from doing business and designating a receiver to take charge of its assets. The Rural Bank opposed the liquidation, arguing the action was arbitrary. The Regional Trial Court ruled in favor of the Rural Bank, finding it had more assets than liabilities. The Central Bank appealed. The Supreme Court held that while the Central Bank's resolutions are generally final, the court can set them aside if shown to be arbitrary or in bad faith. The Regional Trial Court has jurisdiction to determine if the action was arbitrary when ruling on a

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    © All Rights Reserved
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    60 views2 pages

    Salud Vs Central Bank

    Uploaded by

    Caroline A. Legaspino
    The document discusses a case between the Central Bank of the Philippines and the Rural Bank of Muntinlupa regarding the liquidation of the Rural Bank. The Central Bank issued resolutions forbidding the Rural Bank from doing business and designating a receiver to take charge of its assets. The Rural Bank opposed the liquidation, arguing the action was arbitrary. The Regional Trial Court ruled in favor of the Rural Bank, finding it had more assets than liabilities. The Central Bank appealed. The Supreme Court held that while the Central Bank's resolutions are generally final, the court can set them aside if shown to be arbitrary or in bad faith. The Regional Trial Court has jurisdiction to determine if the action was arbitrary when ruling on a

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    of 2

    E.

    Duties of a Receiver

    APOLLO M. SALUD, as Attorney-in-Fact for its Stockholders, in his behalf and for and in behalf
    of the Rural Bank of Muntinlupa, Inc., Hon. VICENTE R. CAMPOS, Presiding Judge, Regional Trial
    Court, National Capital Region, Br. CLXIV, petitioners, vs. CENTRAL BANK OF THE PHILIPPINES,
    AND CONSOLACION V. ODRA, in her capacity as Liquidator of the Rural Bank of Muntinlupa,
    Inc., respondents.

    Resolutions of the Monetary Board forbidding banking institutions to do business; or


    appointing a receiver to take charge of the bank’s assets and liabilities; or determining
    whether the banking institutions may be rehabilitated, or should be liquidated and
    appointing a liquidator towards this end are by law final and executory. But they can be set
    aside by the court on one specific ground, and that is, if there is convincing proof that the
    action is plainly arbitrary and made in bad faith.

    Facts:    Central Bank issued two resolutions. The first one forbids the Rural Bank of Muntinlupa
    (RBM) from doing business and designates Consolacion Odra as its receiver. The second one
    orders the liquidation of RBM after confirmation that it was insolvent and cannot resume
    business. Central Bank the filed a petition for assistance in the liquidation of RBM based on Sec.
    29 of the Central Bank Act. RBM assailed that the resolution ordered by the Monetary Board is
    tainted with arbitrariness because RBM is still capable of rehabilitation.

    RBM opposed the liquidation and alleged that the action of the Monetary Board was premature
    and void since there was no prior effort to reorganize the management of the bank and restore
    its viability and that it was made arbitrarily and in bad faith. Central Bank contends that the
    court in which the petition for assistance in liquidation is filed has no jurisdiction to resolve the
    issue of arbitrariness. Such issue can only be raised in a separate action. Central Bank then filed
    a petition for assistance in the liquidation before the RTC. RBM filed an opposition which was
    treated as a motion to dismiss. The Regional Trial Court, treating the opposition of the bank as a
    motion to dismiss, ruled in favor of it and declared the action of the Monetary Board arbitrary
    after finding that the bank had more assets than liabilities.

    After the RTC ruled in favor of RBM and after failing in two attempts to have this Order
    reconsidered, the Central Bank and its Liquidator instituted in this Court a special civil action of
    certiorari and mandamus, under Rule 65 of the Rules of Court, praying that the Regional Trial
    Court's orders be annulled because "issued without or in excess of jurisdiction or with grave
    abuse of discretion," and that it be compelled to grant their application for assistance. The
    petition was referred to the Intermediate Appellate Court. The IAC remanded the case to the
    RTC but upon motion for reconsideration, IAC declared the ruling of the RTC null and void.
    Hence, this petition.
    Issue:    Whether the action of the Monetary Board is within the jurisdiction of the Regional
    Trial Court and may rule on its validity based on arbitrariness and bad faith.
    Held:    Resolutions of the Monetary Board forbidding banking institutions to do business; or
    appointing a receiver to take charge of the bank’s assets and liabilities; or determining whether
    the banking institutions may be rehabilitated, or should be liquidated and appointing a
    liquidator towards this end are by law final and executory. But they can be set aside by the
    court on one specific ground, and that is, if there is convincing proof that the action is plainly
    arbitrary and made in bad faith. The Central Bank concedes this power in the court, but insists
    that that setting aside cannot be done in the same proceeding for assistance in liquidation,
    but in a separate action instituted specifically for the purpose. However, there is no provision
    of law which expressly or even by implication imposes the requirement for a separate
    proceeding exclusively occupied with adjudicating this issue . Moreover, to declare the issue as
    beyond the scope of matters cognizable in a proceeding for assistance in liquidation would be
    to engender that multiplicity of proceedings which the law abhors. Hence, such action may be
    asserted as an affirmative defense of a counterclaim in the proceeding for assistance in
    liquidation that the Central Bank has filed in the Regional Trial Court. 

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