GR 76118; (March, 1993) (Digest)
G.R. No. 76118 March 30, 1993
THE CENTRAL BANK OF THE PHILIPPINES and RAMON V. TIAOQUI, petitioners, vs. COURT OF APPEALS and TRIUMPH SAVINGS BANK, respondents.
FACTS
Based on examination reports from its Supervision and Examination Sector indicating that the financial condition of Triumph Savings Bank (TSB) was one of insolvency and that its continuance in business would involve probable loss to its depositors and creditors, the Monetary Board (MB) of the Central Bank (CB) issued Resolution No. 596 on May 31, 1985. The resolution ordered the closure of TSB, forbade it from doing business, placed it under receivership, and appointed Ramon V. Tiaoqui as receiver, who assumed office on June 3, 1985. On June 11, 1985, TSB filed a complaint with the Regional Trial Court (RTC) of Quezon City to annul MB Resolution No. 596, challenging the constitutionality of Section 29 of R.A. 265 (The Central Bank Act) for authorizing takeover without prior notice and hearing. The RTC initially issued a temporary restraining order but later quashed it. Petitioners CB and Tiaoqui filed a motion to dismiss the complaint for failure to state a cause of action and lack of legal capacity of TSB to sue except through its receiver. On November 11, 1985, the RTC denied the motion to dismiss and ordered receiver Tiaoqui to restore TSB’s management to its elected board and officers, subject to CB comptrollership. Petitioners elevated the case to the Court of Appeals via certiorari, which affirmed the RTC’s orders. Petitioners then filed the present petition for review.
ISSUE
May a Monetary Board resolution placing a private bank under receivership be annulled on the ground of lack of prior notice and hearing? Specifically: (1) Is the absence of prior notice and hearing constitutive of arbitrariness and bad faith sufficient to annul such a resolution? (2) Do the owners and former officers of a bank placed under receivership retain the capacity to sue in its name?
RULING
No. The Supreme Court ruled that the absence of prior notice and hearing does not, by itself, constitute arbitrariness and bad faith sufficient to annul a Monetary Board resolution placing a bank under receivership. The Court held that Section 29 of R.A. 265 does not contemplate prior notice and hearing before a bank may be directed to stop operations and placed under receivership. The legislative intent is to prevent unnecessary delay and further dissipation of bank assets. The actions of the Monetary Board are final and executory but are subject to judicial review within ten days after the receiver takes charge. For such actions to be set aside, there must be convincing proof, after hearing, that they are plainly arbitrary and made in bad faith. The mere allegation of lack of prior hearing is not equivalent to an allegation of arbitrariness and bad faith. Furthermore, upon the issuance of a receivership order, the bank’s corporate powers are suspended, and it can no longer sue except through its appointed receiver. The former management loses the authority to act for the bank. The Court of Appeals’ decision was reversed, and the RTC was directed to dismiss Civil Case No. Q-45139.