Documente Academic
Documente Profesional
Documente Cultură
4
RURAL BANK OF BUHI VS. CA
FACTS:
Buhi Bank was a rural bank. Its books were examined by the Rural Banks'
Division of the Central Bank. However, it refused to be examined. As a
consequence, its financial assistance was suspended. Later, a general
examination of the banks affairs and operations were again conducted. The rural
banks division found out massive irregularities in the operations, giving out loans
to unknown and fictitious borrowers, and sums amounting to millions past due to
the Central Bank. There were also promissory notes rediscounted with the
Central Bank for cash.
As a result, the Buhi Bank became insolvent. The division chief, Odra,
recommended that Buhi be placed under receivership. Thus, the Monetary Board
adopted a Resolution # 583, placing the bank under receivership. Odra, the
division chief, was made the receiver. Odra thus implemented the resolution,
authorizing deputies to take control and possession of Buhis assets and
liabilities.
Del Rosario, the Buhi Bank Manager, filed an injunction against the receiver,
arguing that the resolution violated the Rural Banks Act and constitutes gadalej.
The bank claims that there was a violation of due process. They claim that the
bank was not given the chance to deny and disprove the claim of insolvency or
the other grounds and that it was hastily put under receivership.
Later on, the Central Bank Monetary Board ordered the liquidation of the Bank.
The judge ruled in favor of the Bank and issued a writ of execution.
The CA however restrained the enforcement of execution, citing that the Judge
did not follow the orders, and thus required the Bank to yield to the CB.
ISSUE:
Whether or not due process was observed
RULING:
AFFIRMATIVE. CLOSURE VALID.
Under Sec 29 of the RA 265, on proceedings regarding insolvency, there is NO
REQUIREMENT that a hearing be first conducted before a bank may be placed
under receivership. The law explicitly provides that the Monetary Board can
IMMEDIATELY forbid a banking institution from doing business and