PHILIPPINE JURISPRUDENCE - FULL TEXT The Lawphil Project - Arellano Law Fo n!

ation "#R# No# $%%&' Dece()er **+ *,,* -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1 23# 0.NETAR4 -.ARD Rep )lic o5 the Philippine3 SUPRE0E C.URT 0anila EN -ANC "#R# No# $%%&' Dece()er **+ *,,* -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ petitioner+ 23# THE 0.NETAR4 -.ARD+ CENTRAL -AN1 .F THE PHILIPPINES+ J.SE -# FERNANDE6+ CARL.TA P# /ALEN6UELA+ ARNULF. -# AURELLAN. an! RA0.N /# TIA.7UI+ re3pon!ent3# "#R# No# 899$9 Dece()er **+ *,,* -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ petitioner+ 23# H.N# INTER0EDIATE APPELLATE C.URT an! CELESTINA S# PAHI0UNTUN"+ a33i3te! ): her h 3)an!+ re3pon!ent3# "#R# No# $$;&&-&9 Dece()er **+ *,,* T.P 0ANA"E0ENT PR."RA0S C.RP.RATI.N AND PILAR DE/EL.P0ENT C.RP.RATI.N+ petitioner3+ 23# THE C.URT .F APPEALS+ The E<ec ti2e J !=e o5 the Re=ional Trial Co rt o5 Ca2ite+ E<-.55icio Sheri55 RE"ALAD. E# EUSE-I.+ -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ CARL.TA P# /ALEN6UELA AND S4CIP+ SALA6AR+ HERNANDE6 AND "AT0AITAN+ re3pon!ent3# "#R# No# $9$88 Dece()er **+ *,,* EL "RANDE C.RP.RATI.N+ petitioner+ 23# THE C.URT .F APPEALS+ THE EXECUTI/E JUD"E o5 The Re=ional Trial Co rt an! E<-.55icio Sheri55 RE"ALAD. E# EUSE-I.+ -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ CARL.TA P# /ALEN6UELA AND S4CIP+ SALA6AR+ FELICIAN. AND HERNANDE6+ re3pon!ent3# "#R# No# $9$8$ Dece()er **+ *,,* 0ETR.P.LIS DE/EL.P0ENT C.RP.RATI.N+ petitioner+ 23# C.URT .F APPEALS+ CENTRAL -AN1 .F THE PHILIPPINES+ J.SE -# FERNANDE6+ JR#+ CARL.TA P# /ALEN6UELA+ ARNULF. AURELLAN. AND RA0.N TIA.7UI+ re3pon!ent3# "#R# No# $99,' Dece()er **+ *,,* -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ petitioner 23# C.URT .F APPEALS+ THE CENTRAL -AN1 .F THE PHILIPPINES+ J.SE -# FERNANDE6+ JR#+ CARL.TA P# /ALEN6UELA+ ARNULF. -# AURELLAN. AND RA0.N TIA.7UI+ re3pon!ent3# "#R# No# 9*>%> Dece()er **+ *,,* PILAR DE/EL.P0ENT C.RP.RATI.N+ petitioner 23#

C.URT .F APPEALS+ H.N# 0ANUEL 0# C.SIC.+ in hi3 capacit: a3 Pre3i!in= J !=e o5 -ranch *>8 o5 the Re=ional Trial Co rt o5 0a?ati+ CENTRAL -AN1 .F THE PHILIPPINES AND CARL.TA P# /ALEN6UELA+ re3pon!ent3# "#R# No# 9*>%' Dece()er **+ *,,* -F H.0ES DE/EL.P0ENT C.RP.RATI.N+ petitioner+ 23# THE C.URT .F APPEALS+ CENTRAL -AN1 AND CARL.TA P# /ALEN6UELA+ re3pon!ent3# "#R# No# ,%'$> Dece()er **+ *,,* EL "RANDE DE/EL.P0ENT C.RP.RATI.N+ petitioner+ 23# THE C.URT .F APPEALS+ THE EXECUTI/E JUD"E o5 the Re=ional Trial Co rt o5 Ca2ite+ CLER1 .F C.URT an! E<-.55icio Sheri55 AD.RACI.N /ICTA+ -ANC. FILIPIN. SA/IN"S AND 0.RT"A"E -AN1+ CARL.TA P# /ALEN6UELA AND S4CIP+ SALA6AR+ HERNANDE6 AND "AT0AITAN+ re3pon!ent3# Pan=ani)an+ -enite@+ -arina=a A -a ti3ta Law .55ice3 colla)oratin= co n3el 5or petitioner# Florencio T# Do(in=o+ Jr# an! Cri3anto S# Cornejo 5or inter2enor3#

0EDIALDEA+ J#Bp Thi3 re5er3 to nine C,D con3oli!ate! ca3e3 concernin= the le=alit: o5 the clo3 re an! recei2er3hip o5 petitioner -anco Filipino Sa2in=3 an! 0ort=a=e -an? C-anco Filipino 5or )re2it:D p r3 ant to the or!er o5 re3pon!ent 0onetar: -oar!# Si< C8D o5 the3e ca3e3+ na(el:+ "#R# No3# 899$9+ $$;&&-89+ $9$88+ 9*>%>+ 9*>%' an! ,%'$> in2ol2e the co((on i33 e o5 whether or not the liE i!ator appointe! ): the re3pon!ent Central -an? CC- 5or )re2it:D ha3 the a thorit: to pro3ec te a3 well a3 to !e5en! 3 it3+ an! to 5oreclo3e (ort=a=e3 5or an! in )ehal5 o5 the )an? while the i33 e on the 2ali!it: o5 the recei2er3hip an! liE i!ation o5 the latter i3 pen!in= re3ol tion in "#R# No# $%%'# Corollar: to thi3 i33 e i3 whether the C- can )e 3 e! to 5 l5ill 5inancial co((it(ent3 o5 a clo3e! )an? p r3 ant to Section ;, o5 the Central -an? Act# .n the other han!+ the other three C>D ca3e3+ na(el:+ "#R# No3# $%%&'+ which i3 the (ain ca3e+ $9$8$ an! $99,' all 3ee? to ann l an! 3et a3i!e 0#-# Re3ol tion No# $& i33 e! ): re3pon!ent3 0onetar: -oar! an! Central -an? on Jan ar: ;&+ *,9&#

The antece!ent 5act3 o5 each o5 the nine C,D ca3e3 are a3 5ollow3B "#R No# 899$9 Thi3 i3 a (otion 5or recon3i!eration+ 5ile! ): re3pon!ent Cele3tina Pahi( nt n=+ o5 the !eci3ion pro( l=ate! ): thi3Co rt on April 9+ *,98+ =rantin= the petition 5or re2iew on certiorari an! re2er3in= the E e3tione! !eci3ion o5 re3pon!ent appellate co rt+ which ann lle! the writ o5 po33e33ion i33 e! ): the trial co rt in 5a2or o5 petitioner# The re3pon!ent-(o2ant conten!3 that the petitioner ha3 no (ore per3onalit: to contin e pro3ec tin= the in3tant ca3e con3i!erin= that petitioner )an? wa3 place! n!er recei2er3hip 3ince Jan ar: ;&+ *,9& ): the Central -an? p r3 ant to the re3ol tion o5 the 0onetar: -oar!# "#R# No3# $$;&&-&9 Petitioner3 Top 0ana=e(ent Pro=ra(3 Corporation CTop 0ana=e(ent 5or )re2it:D an! Pilar De2elop(ent Corporation CPilar De2elop(ent 5or )re2it:D are corporation3 en=a=e! in the ) 3ine33 o5 !e2elopin= re3i!ential 3 )!i2i3ion3# Top 0ana=e(ent o)taine! a loan o5 P'+9>8+%%% 5ro( -anco Filipino a3 e2i!ence! ): a pro(i33or: note !ate! Jan ar: $+ *,9; pa:a)le in three :ear3 5ro( !ate# The loan wa3 3ec re! ): real e3tate (ort=a=e in it3 2ario 3 propertie3 in Ca2ite# Li?ewi3e+ Pilar De2elop(ent o)taine! loan3 5ro( -anco Filipino )etween *,9; an! *,9>

in the principal a(o nt3 o5 P8+%%%+%%%+ P$+>$%+%%% an! P&+>%%+%%% with (at rit: !ate3 on Dece()er ;9+ *,9'+ Jan ar: &+ *,9& an! Fe)r ar: *8+ *,9'+ re3pecti2el:# To 3ec re the loan+ Pilar De2elop(ent (ort=a=e! to -anco Filipino 2ario 3 propertie3 in Da3(ariFa3+ Ca2ite# .n Jan ar: ;&+ *,9&+ the 0onetar: -oar! i33 e! a re3ol tion 5in!in= -anco Filipino in3ol2ent an! na)le to !o ) 3ine33 witho t lo33 to it3 cre!itor3 an! !epo3itor3# It place! -anco Filipino n!er recei2er3hip o5 Carlota /alen@ ela+ Dep t: "o2ernor o5 the Central -an?# .n 0arch ;;+ *,9&+ the 0onetar: -oar! i33 e! another re3ol tion placin= the )an? n!er liE i!ation an! !e3i=natin= /alen@ ela a3 liE i!ator# -: 2irt e o5 her a thorit: a3 liE i!ator+ /alen@ ela appointe! the law 5ir( o5 S:cip+ Sala@ar+ et al# to repre3ent -anco Filipino in all liti=ation3# .n 0arch ;8+ *,9&+ -anco Filipino 5ile! the petition 5or certiorari in "#R# No# $%%&' E e3tionin= the 2ali!it: o5 the re3ol tion3 i33 e! ): the 0onetar: -oar! a thori@in= the recei2er3hip an! liE i!ation o5 -anco Filipino# In a re3ol tion !ate! A = 3t ;,+ *,9&+ thi3 Co rt in "#R# No# $%%&' re3ol2e! to i33 e a te(porar: re3trainin= or!er+ e55ecti2e ! rin= the 3a(e perio! o5 >% !a:3+ enjoinin= the re3pon!ent3 5ro( e<ec tin= 5 rther act3 o5 liE i!ation o5 the )an?G that act3 3 ch a3 recei2in= collecti)le3 an! recei2a)le3 or pa:in= o55 cre!itor3H clai(3 an! other tran3action3 pertainin= to nor(al operation3 o5 a )an? are not enjoine!# The Central -an? i3 or!ere! to !e3i=nate a co(ptroller 5or -anco Filipino# S )3eE entl:+ Top 0ana=e(ent 5aile! to pa: it3 loan on the ! e !ate# Hence+ the law 5ir( o5 S:cip+ Sala@ar+ et al# actin= a3 co n3el 5or -anco Filipino n!er a thorit: o5 /alen@ ela a3 liE i!ator+ applie! 5or e<tra-j !icial 5oreclo3 re o5 the (ort=a=e o2er Top 0ana=e(entH3 propertie3# Th 3+ the E<-.55icio Sheri55 o5 the Re=ional Trial Co rt o5 Ca2ite i33 e! a notice o5 e<tra-j !icial 5oreclo3 re 3ale o5 the propertie3 on Dece()er *8+ *,9&# .n Dece()er ,+ *,9&+ Top 0ana=e(ent 5ile! a petition 5or inj nction an! prohi)ition with the re3pon!ent appellate co rt !oc?ete! a3 CA-"#R# SP No# %$9,; 3ee?in= to enjoin the Re=ional Trial Co rt o5 Ca2ite+ the e<o55icio 3heri55 o5 3ai! co rt an! S:cip+ Sala@ar+ et al# 5ro( procee!in= with 5oreclo3 re 3ale# Si(ilarl:+ Pilar De2elop(ent !e5a lte! in the pa:(ent o5 it3 loan3# The law 5ir( o5 S:cip+ Sala@ar+ et al# 5ile! 3eparate application3 with the e<-o55icio 3heri55 o5 the Re=ional Trial Co rt o5 Ca2ite 5or the e<tra-j !icial 5oreclo3 re o5 (ort=a=e o2er it3 propertie3# Hence+ Pilar De2elop(ent 5ile! with the re3pon!ent appellate co rt a petition 5or prohi)ition with pra:er 5or the i33 ance o5 a writ o5 preli(inar: inj nction !oc?ete! a3 CA-"#R SP No3# %9,8;-8' 3ee?in= to enjoin the 3a(e re3pon!ent3 5ro( en5orcin= the 5oreclo3 re 3ale o5 it3 propertie3# CA-"#R# SP No3# %$9,; an! %9,8;-8' were con3oli!ate! an! jointl: !eci!e!# .n .cto)er >%+ *,98+ the re3pon!ent appellate co rt ren!ere! a !eci3ion !i3(i33in= the a5ore(entione! petition3# Hence+ thi3 petition wa3 5ile! ): the petitioner3 Top 0ana=e(ent an! Pilar De2elop(ent alle=in= that Carlota /alen@ ela+ who wa3 appointe! ): the 0onetar: -oar! a3 liE i!ator o5 -anco Filipino+ ha3 no a thorit: to procee! with the 5oreclo3 re 3ale o5 petitioner3H propertie3 on the =ro n! that the re3ol tion o5 the i33 e on the 2ali!it: o5 the clo3 re an! liE i!ation o5 -anco Filipino i3 3till pen!in= with thi3 Co rt in "#R# $%%&'# "#R# No# $9$88 Petitioner El "ran!e De2elop(ent Corporation CEl "ran!e 5or )re2it:D i3 en=a=e! in the ) 3ine33 o5 !e2elopin= re3i!ential 3 )!i2i3ion3# It wa3 e<ten!e! ): re3pon!ent -anco Filipino a cre!it acco((o!ation to 5inance it3 ho 3in= pro=ra(# Hence+ petitioner wa3 =rante! a loan in the a(o nt o5 P9+%>'+*>%#%% 3ec re! ): real e3tate (ort=a=e3 on it3 2ario 3 e3tate3 locate! in Ca2ite# .n Jan ar: *&+ *,9&+ the 0onetar: -oar! 5or)a!e -anco Filipino to !o ) 3ine33+ place! it n!er recei2er3hip an! !e3i=nate! Dep t: "o2ernor Carlota /alen@ ela a3 recei2er# .n 0arch ;;+ *,9&+ the 0onetar: -oar! con5ir(e! -anco FilipinoH3 in3ol2enc: an! !e3i=nate! the recei2er Carlota /alen@ ela a3 liE i!ator# Ihen petitioner El "ran!e 5aile! to pa: it3 in!e)te!ne33 to -anco Filipino+ the latter thr it3 liE i!ator+ Carlota /alen@ ela+ initiate! the 5oreclo3 re with the Cler? o5 Co rt an! E<-o55icio 3heri55 o5 RTC Ca2ite# S )3eE entl:+ on 0arch >*+ *,98+ the e<-o55icio 3heri55 i33 e! the notice o5 e<tra-j !icial 3ale o5 the (ort=a=e! propertie3 o5 El "ran!e 3che! le! on April >%+ *,98#

In or!er to 3top the p )lic a ction 3ale+ petitioner El "ran!e 5ile! a petition 5or prohi)ition with the Co rt o5 Appeal3 alle=in= that re3pon!ent Carlota /alen@ ela co l! not procee! with the 5oreclo3 re o5 it3 (ort=a=e! propertie3 on the =ro n! that thi3 Co rt in "#R# No# $%%&' i33 e! a re3ol tion !ate! A = 3t ;,+ *,9&+ which re3traine! Carlota /alen@ ela 5ro( actin= a3 liE i!ator an! allowe! -anco Filipino to re3 (e )an?in= operation3 onl: n!er a Central -an? co(ptroller# .n 0arch ;+ *,9$+ the Co rt o5 Appeal3 ren!ere! a !eci3ion !i3(i33in= the petition# Hence thi3 petition 5or re2iew on certiorari wa3 5ile! alle=in= that the re3pon!ent co rt erre! when it hel! in it3 !eci3ion that altho =h Carlota P# /alen@ ela wa3 re3traine! ): thi3 Honora)le Co rt 5ro( e<erci3in= act3 in liE i!ation o5 -anco Filipino Sa2in=3 A 0ort=a=e -an?+ 3he wa3 not le=all: precl !e! 5ro( 5oreclo3in= the (ort=a=e o2er the propertie3 o5 the petitioner thro =h co n3el retaine! ): her 5or the p rpo3e# "#R# No# 9*>%> .n No2e()er 9+ *,9&+ petitioner Pilar De2elop(ent Corporation CPilar De2elop(ent 5or )re2it:D 5ile! an action a=ain3t -anco Filipino+ the Central -an? an! Carlota /alen@ ela 5or 3peci5ic per5or(ance+ !oc?ete! a3 Ci2il Ca3e No# *;*,*# It appear3 that the 5or(er (ana=e(ent o5 -anco Filipino appointe! 7 i3 ()in= A A33ociate3 a3 co n3el 5or -anco Filipino# .n J ne *;+ *,98 the 3ai! law 5ir( 5ile! an an3wer 5or -anco Filipino which con5e33e! j !=(ent a=ain3t -anco Filipino# .n J ne *$+ *,98+ petitioner 5ile! a 3econ! a(en!e! co(plaint# The Central -an? an! Carlota /alen@ ela+ thr the law 5ir( S:cip+ Sala@ar+ Hernan!e@ an! "at(aitan 5ile! an an3wer to the co(plaint# .n J ne ;>+ *,98+ S:cip+ et al#+ actin= 5or all the !e5en!ant3 incl !in= -anco Filipino (o2e! that the an3wer 5ile! ): 7 i3 ()in= A A33ociate3 5or !e5en!ant -anco Filipino )e e<p n=e! 5ro( the recor!3# De3pite oppo3ition 5ro( 7 i3 ()in= A A33ociate3+ the trial co rt =rante! the (otion to e<p n=e in an or!er !ate! 0arch *$+ *,9$# Petitioner Pilar De2elop(ent (o2e! to recon3i!er the or!er ) t the (otion wa3 !enie!# Petitioner Pilar De2elop(ent 5ile! with the re3pon!ent appellate co rt a petition 5or certiorari an! (an!a( 3 to ann l the or!er o5 the trial co rt# The Co rt o5 Appeal3 ren!ere! a !eci3ion !i3(i33in= the petition# A petition wa3 5ile! with thi3 Co rt ) t wa3 !enie! in a re3ol tion !ate! 0arch ;;+ *,99# Hence+ thi3 in3tant (otion 5or recon3i!eration# "#R# No# 9*>%' .n J l: ,+ *,9&+ petitioner -F Ho(e3 Incorporate! C-F Ho(e3 5or )re2it:D 5ile! an action with the trial co rt to co(pel the Central -an? to re3tore petitionerH3G 5inancin= 5acilit: with -anco Filipino# The Central -an? 5ile! a (otion to !i3(i33 the action# Petitioner -F Ho(e3 in a 3 pple(ental co(plaint i(plea!e! a3 !e5en!ant Carlota /alen@ ela a3 recei2er o5 -anco Filipino Sa2in=3 an! 0ort=a=e -an?# .n April 9+ *,9&+ petitioner 5ile! a 3econ! 3 pple(ental co(plaint to which re3pon!ent3 5ile! a (otion to !i3(i33# .n J l: ,+ *,9&+ the trial co rt =rante! the (otion to !i3(i33 the 3 pple(ental co(plaint on the =ro n!3 C*D that plainti55 ha3 no contract al relation with the !e5en!ant3+ an! C;D that the Inter(e!iate Appellate Co rt in a pre2io 3 !eci3ion in AC-"#R# SP# No# %'8%, ha! 3tate! that -anco Filipino ha3 )een or!ere! clo3e! an! place! n!er recei2er3hip pen!in= liE i!ation+ an! th 3+ the contin ation o5 the 5acilit: 3 e! 5or ): the plainti55 ha3 )eco(e le=all: i(po33i)le an! the 3 it ha3 )eco(e (oot# The or!er o5 !i3(i33al wa3 appeale! ): the petitioner to the Co rt o5 Appeal3# .n No2e()er '+ *,9$+ the re3pon!ent appellate co rt !i3(i33e! the appeal an! a55ir(e! the or!er o5 the trial co rt# Hence+ thi3 petition 5or re2iew on certiorari wa3 5ile!+ alle=in= that the re3pon!ent co rt erre! when it 5o n! that the pri2ate re3pon!ent3 3ho l! not )e the one3 to re3pon! to the ca 3e o5 action a33erte! ): the petitioner an! the petitioner !i! not ha2e an: ca 3e o5 action a=ain3t the re3pon!ent3 Central -an? an! Carlota /alen@ ela# "#R# No# ,%'$>

Petitioner El "ran!e De2elop(ent Corporation CEl "ran!e 5or )re2it:D o)taine! a loan 5ro( -anco Filipino in the a(o nt o5 P9+%>'+*>%#%%+ 3ec re! ): a (ort=a=e o2er it3 5i2e parcel3 o5 lan! locate! in Ca2ite which were co2ere! ): Tran35er Certi5icate o5 Title No3# T-9;*9$+ T-*%,%;$+ T-*>;9,$+ T-*'9>$$+ an! T-$,>$* o5 the Re=i3tr: o5 Dee!3 o5 Ca2ite# Ihen -anco Filipino wa3 or!ere! clo3e! an! place! n!er recei2er3hip in *,9&+ the appointe! liE i!ator o5 -F+ thr it3 co n3el S:cip+ Sala@ar+ et al# applie! with the e<-o55icio 3heri55 o5 the Re=ional Trial Co rt o5 Ca2ite 5or the e<traj !icial 5oreclo3 re o5 the (ort=a=e con3tit te! o2er petitionerH3 propertie3# .n 0arch ;'+ *,98+ the e<o55icio 3heri55 i33 e! a notice o5 e<traj !icial 5oreclo3 re 3ale o5 the propertie3 o5 petitioner# Th 3+ petitioner 5ile! with the Co rt o5 Appeal3 a petition 5or prohi)ition with pra:er 5or writ o5 preli(inar: inj nction to enjoin the re3pon!ent3 5ro( 5oreclo3in= the (ort=a=e an! to n lli5: the notice o5 5oreclo3 re# .n J ne *8+ *,9,+ re3pon!ent Co rt o5 Appeal3 ren!ere! a !eci3ion !i3(i33in= the petition# Not 3ati35ie! with the !eci3ion+ petitioner 5ile! the in3tant petition 5or re2iew on certiorari# "#R# No# $%%&' -anco Filipino Sa2in=3 an! 0ort=a=e -an? wa3 a thori@e! to operate a3 3 ch n!er 0#-# Re3ol tion No# ;;> !ate! Fe)r ar: *'+ *,8># It co((ence! operation3 on J l: ,+ *,8'# It ha3 ei=ht:-nine C9,D operatin= )ranche3+ 5ort:-3i< C'8D o5 which are in 0anila+ with (ore than three C>D (illion !epo3itor3# A3 o5 J l: >*+ *,9'+ the li3t o5 3toc?hol!er3 3howe! the (ajor 3toc?hol!er3 to )eB 0etropoli3 De2elop(ent Corporation+ Ape< 0ort=a=e an! Loan3 Corporation+ Filipino - 3ine33 Con3 ltant3+ Ti Fa(il: "ro p+ L-H Inc# an! Anthon: A= irre# Petitioner -an? ha! an appro2e! e(er=enc: a!2ance o5 P**,#$ (illion n!er 0#-# Re3ol tion No# 9>, !ate! J ne ;,+ *,9'# Thi3 wa3 a =(ente! with a P> )illion cre!it line n!er 0#-# Re3ol tion No# ,>' !ate! J l: ;$+ *,9'# .n the 3a(e !ate+ re3pon!ent -oar! i33 e! 0#-# Re3ol tion No# ,&& placin= petitioner )an? n!er con3er2ator3hip o5 -a3ilio E3tani3lao# He wa3 later replace! ): "il)erto Teo!oro a3 con3er2ator on A = 3t *%+ *,9'# The latter 3 )(itte! a report !ate! Jan ar: 9+ *,9& to re3pon!ent -oar! on the con3er2ator3hip o5 petitioner )an?+ which report 3hall hereina5ter )e re5erre! to a3 the Teo!oro report# S )3eE entl:+ another report !ate! Jan ar: ;>+ *,9& wa3 3 )(itte! to the 0onetar: -oar! ): Ra(on TiaoE i+ Special A33i3tant to the "o2ernor an! Hea!+ SES Depart(ent II o5 the Central -an?+ re=ar!in= the (ajor 5in!in=3 o5 e<a(ination on the 5inancial con!ition o5 petitioner -F a3 o5 J l: >*+ *,9'# The report+ which 3hall )e re5erre! to herein a3 the TiaoE i Report containe! the 5ollowin= concl 3ion an! reco((en!ationB The e<a(ination 5in!in=3 a3 o5 J l: >*+ *,9'+ a3 3hown earlier+ in!icate one o5 in3ol2enc: an! illiE i!it: an! 5 rther con5ir(3 the a)o2e concl 3ion o5 the Con3er2ator# All the 5ore=oin= pro2i!e3 3 55icient j 3ti5ication 5or 5or)i!!in= the )an? 5ro( en=a=in= in )an?in=# Fore=oin= con3i!ere!+ the 5ollowin= are reco((en!e!B *# For)i! the -anco Filipino Sa2in=3 A 0ort=a=e -an? to !o ) 3ine33 in the Philippine3 e55ecti2e the )e=innin= o5 o55ice Jan ar: *,9&+ p r3 ant to Sec# ;, o5 R#A No# ;8&+ a3 a(en!e!G ;# De3i=nate the Hea! o5 the Con3er2ator Tea( at the )an?+ a3 Recei2er o5 -anco Filipino Sa2in=3 A 0ort=a=e -an?+ to i((e!iatel: ta?e char=e o5 the a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 all the cre!itor3+ an! e<erci3e all the power3 nece33ar: 5or the3e p rpo3e3 incl !in= ) t not li(ite! to )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?# ># The -oar! o5 Director3 an! the principal o55icer3 5ro( Senior /ice Pre3i!ent3+ a3 li3te! in the attache! Anne< JAJ )e incl !e! in the watchli3t o5 the S per2i3ion an! E<a(ination Sector ntil 3 ch ti(e that the: 3hall ha2e cleare! the(3el2e3#

'# Re5er to the Central -an?H3 Le=al Depart(ent an! .55ice o5 Special In2e3ti=ation the report on the 5in!in=3 on -anco Filipino 5or in2e3ti=ation an! po33i)le pro3ec tion o5 !irector3+ o55icer3+ an! e(plo:ee3 5or acti2itie3 which le! to it3 in3ol2ent po3ition# Cpp- 8*-8;+ RolloD .n Jan ar: ;&+ *,9&+ the 0onetar: -oar! i33 e! the a33aile! 0- Re3ol tion No# $& which or!ere! the clo3 re o5 -F an! which 5 rther pro2i!e3B A5ter con3i!erin= the report !ate! Jan ar: 9+ *,9& o5 the Con3er2ator 5or -anco Filipino Sa2in=3 an! 0ort=a=e -an? that the contin ance in ) 3ine33 o5 the )an? wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! a5ter !i3c 33in= an! 5in!in= to )e tr e the 3tate(ent3 o5 the Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector CSESD Depart(ent II a3 recite! in hi3 (e(oran! ( !ate! Jan ar: ;>+ *,9&+ that the -anco Filipino Sa2in=3 A 0ort=a=e -an? i3 in3ol2ent an! that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! in p r3 ance o5 Sec# ;, o5 RA ;8&+ a3 a(en!e!+ the -oar! !eci!e!B *# To 5or)i! -anco Filipino Sa2in=3 an! 0ort=a=e -an? an! all it3 )ranche3 to !o ) 3ine33 in the Philippine3G ;# To !e3i=nate 0r3# Carlota P# /alen@ ela+ Dep t: "o2ernor a3 Recei2er who i3 here): !irectl: 2e3te! with j ri3!iction an! a thorit: to i((e!iatel: ta?e char=e o5 the )an?H3 a33et3 an! lia)ilitie3+ an! a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+ e<erci3in= all the power3 nece33ar: 5or the3e p rpo3e3 incl !in= ) t not li(ite! to+ )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?G ># To !e3i=nate 0r# Arn l5o -# A rellano+ Special A33i3tant to the "o2ernor+ an! 0r# Ra(on /# TiaoE i+ Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector Depart(ent II+ a3 Dep t: Recei2er3 who are li?ewi3e here): !irectl: 2e3te! with j ri3!iction an! a thorit: to !o all thin=3 nece33ar: or proper to carr: o t the 5 nction3 entr 3te! to the( ): the Recei2er an! otherwi3e to a33i3t the Recei2er in carr:in= o t the 5 nction3 2e3te! in the Recei2er ): law or 0onetar: -oar! Re3ol tion3G '# To !irect an! a thori@e 0ana=e(ent to !o all other thin=3 an! carr: o t all other (ea3 re3 nece33ar: or proper to i(ple(ent thi3 Re3ol tion an! to 3a5e= ar! the intere3t3 o5 !epo3itor3+ cre!itor3 an! the =eneral p )licG an! &# In con3eE ence o5 the 5ore=oin=+ to ter(inate the con3er2ator3hip o2er -anco Filipino Sa2in=3 an! 0ort=a=e -an?# Cpp# *%-**+ Rollo+ /ol# ID .n Fe)r ar: ;+ *,9&+ petitioner -F 5ile! a co(plaint !oc?ete! a3 Ci2il Ca3e No# ,8$& with the Re=ional Trial Co rt o5 0a?ati to 3et a3i!e the action o5 the 0onetar: -oar! placin= -F n!er recei2er3hip# .n Fe)r ar: ;9+ *,9&+ petitioner 5ile! with thi3 Co rt the in3tant petition 5or certiorari an! (an!a( 3 n!er R le 8& o5 the R le3 o5 Co rt 3ee?in= to ann l the re3ol tion o5 Jan ar: ;&+ *,9& a3 (a!e witho t or in e<ce33 o5 j ri3!iction or with =ra2e a) 3e o5 !i3cretion+ to or!er re3pon!ent3 to 5 rni3h petitioner with the report3 o5 e<a(ination which le! to it3 clo3 re an! to a55or! petitioner -F a hearin= prior to an: re3ol tion that (a: )e i33 e! n!er Section ;, o5 R#A# ;8&+ al3o ?nown a3 Central -an? Act# .n 0arch *,+ *,9&+ Carlota /alen@ ela+ a3 Recei2er an! Arn l5o A rellano an! Ra(on TiaoE i a3 Dep t: Recei2er3 o5 -anco Filipino 3 )(itte! their report on the recei2er3hip o5 -F to the 0onetar: -oar!+ in co(pliance with the (an!ate o5 Sec# ;, o5 R#A# ;8& which pro2i!e3 that the 0onetar: -oar! 3hall !eter(ine within 3i<t: C8%D !a:3 5ro( !ate o5 recei2er3hip o5 a )an? whether 3 ch )an? (a: )e reor=ani@e!Kper(itte! to re3 (e ) 3ine33 or or!ere! to )e liE i!ate!# The report containe! the 5ollowin= reco((en!ationB In 2iew o5 the 5ore=oin= an! con3i!erin= that the con!ition o5 the )an?in= in3tit tion contin e3 to )e one o5 in3ol2enc:+ i#e#+ it3 reali@a)le a33et3 are in3 55icient to (eet all it3 lia)ilitie3 an! that the )an? cannot re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ other cre!itor3 an! the =eneral p )lic+ it i3 reco((en!e! thatB *# -anco Filipino Sa2in=3 A 0ort=a=e -an? )e liE i!ate! p r3 ant to para=raph >+ Sec# ;, o5 RA No# ;8&+ a3 a(en!e!G ;# The Le=al Depart(ent+ thro =h the Solicitor "eneral+ )e a thori@e! to 5ile in the proper co rt a petition 5or a33i3tance in th liE i!ation o5 the -an?G ># The Stat tor: Recei2er )e !e3i=nate! a3 the LiE i!ator o5 3ai! )an?G an!

'# 0ana=e(ent )e in3tr cte! to in5or( the 3toc?hol!er3 o5 -anco Filipino Sa2in=3 A 0ort=a=e -an? o5 the 0onetar: -oar!H3 !eci3ion liE i!ate the -an?# Cp# *8$+ Rollo+ /ol# ID .n J l: ;>+ *,9&+ petitioner 5ile! a (otion )e5ore thi3 Co rt pra:in= that a re3trainin= or!er or a writ o5 preli(inar: inj nction )e i33 e! to enjoin re3pon!ent3 5ro( ca 3in= the !i3(antlin= o5 -F 3i=n3 in it3 (ain o55ice an! 9, )ranche3# Thi3 Co rt i33 e! a re3ol tion on A = 3t 9+ *,9& or!erin= the i33 ance o5 the a5ore3ai! te(porar: re3trainin= or!er# .n A = 3t ;%+ *,9&+ the ca3e wa3 3 )(itte! 5or re3ol tion# In a re3ol tion !ate! A = 3t ;,+ *,9&+ thi3 Co rt Re3ol2e! !irect the re3pon!ent3 0onetar: -oar! an! Central -an? hol! hearin=3 at which the petitioner 3ho l! )e hear!+ an! ter(inate 3 ch hearin=3 an! 3 )(it it3 re3ol tion within thirt: C>%D !a:3# Thi3 Co rt 5 rther re3ol2e! to i33 e a te(porar: re3trainin= or!er enjoinin= the re3pon!ent3 5ro( e<ec tin= 5 rther act3 o5 liE i!ation o5 a )an?# Act3 3 ch a3 recei2in= collecti)le3 an! recei2a)le3 or pa:in= o55 cre!itor3H clai(3 an! other tran3action3 pertainin= to nor(al operation3 o5 a )an? were no enjoine!# The Central -an? wa3 al3o or!ere! to !e3i=nate co(ptroller 5or the petitioner -F# Thi3 Co rt al3o or!ere! th con3oli!ation o5 Ci2il Ca3e3 No3# 9*%9+ ,8$8 an! *%*9> in -ranch *>8 o5 the Re=ional Trial Co rt o5 0a?ati# Howe2er+ on Septe()er *;+ *,9&+ thi3 Co rt in the (eanti(e 3 3pen!e! the hearin= it or!ere! in it3 re3ol tion o5 A = 3t ;,+ *,9&# .n .cto)er 9+ *,9&+ thi3 Co rt 3 )(itte! a re3ol tion or!er in= -ranch *>8 o5 the Re=ional Trial Co rt o5 0a?ati the pre3i!e! o2er ): J !=e Ricar!o Franci3co to con! ct the hear in= conte(plate! in the re3ol tion o5 A = 3t ;,+ *,9& in the (o3t e<pe!itio 3 (anner an! to 3 )(it it3 re3ol tion to thi3 Co rt# In the Co rtH3 re3ol tion o5 Fe)r ar: *,+ *,9$+ the Co rt 3tate! that the hearin= conte(plate! in the re3ol tion o5 A = 3t ;,+ *,9&+ which i3 to a3certain whether 3 )3tantial a!(ini3trati2e ! e proce33 ha! )een o)3er2e! ): the re3pon!ent 0onetar: -oar!+ (a: )e e<pe!ite! ): J !=e 0an el Co3ico who now pre3i!e3 the co rt 2acate! ): J !=e Ricar!o Franci3co+ who wa3 ele2ate! to the Co rt o5 Appeal3+ there )ein= no le=al i(pe!i(ent or j 3ti5ia)le rea3on to )ar the 5or(er 5ro( con! ctin= 3 ch hearin=# Hence+ thi3 Co rt !irecte! J !=e 0an el Co3ico to e<pe!ite the hearin= an! 3 )(it hi3 report to thi3 Co rt# .n Fe)r ar: ;%+ *,99+ J !=e 0an el Co3ico 3 )(itte! hi3 report to thi3 Co rt with the reco((en!ation that the re3ol tion3 o5 re3pon!ent3 0onetar: -oar! an! Central -an? a thori@in= the clo3 re an! liE i!ation o5 petitioner -P )e phel!# .n .cto)er ;*+ *,99+ petitioner -F 5ile! an r=ent (otion to reopen hearin= to which re3pon!ent3 5ile! their co((ent on Dece()er *8+ *,99# Petitioner 5ile! their repl: to re3pon!entH3 co((ent o5 Jan ar: **+ *,9,# A5ter ha2in= !eli)erate! on the =ro n!3 rai3e! in the plea!in=3+ thi3 Co rt in it3 re3ol tion !ate! A = 3t >+ *,9, !eclare! that it3 intention a3 e<pre33e! in it3 re3ol tion o5 A = 3t ;,+ *,9& ha! not )een 5aith5 ll: a!here! to ): the herein petitioner an! re3pon!ent3# The a5ore(entione! re3ol tion ha! or!ere! a healin= on the report3 that le! re3pon!ent3 to or!er petitionerH3 clo3 re an! it3 alle=e! pre-planne! liE i!ation# Thi3 Co rt note! that ! rin= the re5erral hearin= howe2er+ a !i55erent 3che(e wa3 5ollowe!# Re3pon!ent3 (erel: 3 )(itte! to the co((i33ioner their 5in!in=3 on the e<a(ination3 con! cte! on petitioner+ a55i!a2it3 o5 the pri2ate re3pon!ent3 relati2e to the 5in!in=3+ their report3 to the 0onetar: -oar! an! 3e2eral other !oc (ent3 in 3 pport o5 their po3ition while petitioner ha! (erel: 3 )(itte! o)jection3 to the 5in!in=3 o5 re3pon!ent3+ co nter-a55i!a2it3 o5 it3 o55icer3 an! al3o !oc (ent3 to pro2e it3 clai(3# Altho =h the recor!3 !i3clo3e that )oth partie3 ha! not wai2e! cro33-e<a(ination o5 their !eponent3+ no 3 ch cro33-e<a(ination ha3 )een con! cte!# The reception o5 e2i!ence in the 5or( o5 a55i!a2it3 wa3 5ollowe! thro =ho t+ ntil the co((i33ioner 3 )(itte! hi3 report an! reco((en!ation3 to the Co rt# Thi3 Co rt al3o hel! that the !oc (ent3 pertinent to the re3ol tion o5 the in3tant petition are the Teo!oro Report+ TiaoE i Report+ /alen@ ela+ A rellano an! TiaoE i Report an! the 3 pportin= !oc (ent3 which were (a!e a3 the )a3e3 ): the reporter3 o5 their concl 3ion3 containe! in their re3pecti2e report3# Thi3 Co rt al3o Re3ol2e! in it3 re3ol tion to re-open the re5erral hearin= that wa3 ter(inate! a5ter J !=e Co3ico ha! 3 )(itte! hi3 report an! reco((en!ation with the en! in 2iew o5 allowin= petitioner to co(plete it3 pre3entation o5 e2i!ence an! al3o 5or re3pon!ent3 to a!! ce a!!itional e2i!ence+ i5 3o (in!e!+ an! 5or )oth partie3 to con! ct the reE ire! cro33-e<a(ination o5 witne33e3K!eponent3+ to )e !one within a perio! o5 three (onth3# To o)2iate all !o )t3 on J !=e Co3icoH3 i(partialit:+ thi3 Co rt !e3i=nate! a new hearin= co((i33ioner in the per3on o5 5or(er J !=e Con3 elo Santia=o o5 the Re=ional Trial Co rt+ 0a?ati+ -ranch *', Cnow A33ociate J 3tice o5 the Co rt o5 Appeal3D#

Three (otion3 5or inter2ention were 5ile! in thi3 ca3e a3 5ollow3B Fir3t+ in "#R# No# $%%&' 5ile! ): E! ar!o Ro!ri= e@ an! Fort nate 0# Di@on+ 3toc?hol!er3 o5 petitioner )an? 5or an! on )ehal5 o5 other 3toc?hol!er3 o5 petitionerG 3econ!+ in "#R# No# $99,'+ 5ile! ): the 3a(e 3toc?hol!er3+ an!+ thir!+ a=ain in "#R# No# $%%&' ): -F Depo3itor3H A33ociation an! other3 3i(ilarl: 3it ate!# Thi3 Co rt+ on 0arch *+ *,,%+ !enie! the a5ore3ai! (otion3 5or inter2ention# .n Jan ar: ;9+ *,,*+ the hearin= co((i33ioner+ J 3tice Con3 elo Santia=o o5 the Co rt o5 Appeal3 3 )(itte! her report an! reco((en!ation Cto )e hereina5ter calle!+ JSantia=o ReportJD on the 5ollowin= i33 e3 3tate! therein a3 5ollow3B lD Ha! the 0onetar: -oar! o)3er2e! the proce! ral reE ire(ent3 lai! !own in Sec# ;, o5 R#A# ;8&+ a3 a(en!e! to j 3ti5: th clo3 re o5 the -anco Filipino Sa2in=3 an! 0ort=a=e -an?L ;D .n the !ate o5 -FH3 clo3 re CJan ar: ;&+ *,9&D wa3 it3 con!ition one o5 in3ol2enc: or wo l! it3 contin ance in ) 3ine33 in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3L The co((i33ioner a5ter e2al ation o5 the e2i!ence pre3ente! 5o n! an! reco((en!e! the 5ollowin=B *# That the TE.D.R. an! TIA.7UI report3 !i! not e3ta)li3h in accor!ance with See# ;, o5 the R#A# ;8&+ a3 a(en!e!+ -FH3 in3ol2enc: a3 o5 J l: >*+ *,9' or that it3 contin ance in ) 3ine33 therea5ter wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3# .n the contrar:+ the e2i!ence in!icate3 that -F wa3 3ol2ent on J l: >*+ *,9' an! that on Jan ar: ;&+ *,9&+ the !a: it wa3 clo3e!+ it3 in3ol2enc: wa3 not clearl: e3ta)li3he!G ;# That con3eE entl:+ -FH3 clo3 re on Jan ar: ;&+ *,9&+ not ha2in= 3ati35ie! the reE ire(ent3 pre3cri)e! n!er Sec# ;, o5 RA ;8&+ a3 a(en!e!+ wa3 n ll an! 2oi!# ># That accor!in=l:+ ): wa: o5 correction+ -F 3ho l! )e allowe! to re-open 3 )ject to 3 ch law3+ r le3 an! re= lation3 that appl: to it3 3it ation# Re3pon!ent3 therea5ter 5ile! a (otion 5or lea2e to 5ile o)jection3 to the Santia=o Report# In the 3a(e (otion+ re3pon!ent3 reE e3te! that the report an! reco((en!ation )e 3et 5or oral ar= (ent )e5ore the Co rt# .n Fe)r ar: $+ *,,*+ thi3 Co rt !enie! the reE e3t 5or oral ar= (ent o5 the partie3# .n Fe)r ar: ;&+ *,,*+ re3pon!ent3 5ile! their o)jection3 to the Santia=o Report# .n 0arch &+ *,,*+ re3pon!ent3 3 )(itte! a (otion 5or oral ar= (ent alle=in= that thi3 Co rt i3 con5ronte! with two con5lictin= report3 on the 3a(e 3 )ject+ one phol!in= on all point3 the 0onetar: -oar!H3 clo3 re o5 petitioner+ CCo3ico Report !ate! Fe)r ar: *,+ *,99D an! the other CSantia=o Report !ate! Jan ar: ;&+ *,,*D hol!in= that petitionerH3 clo3 re wa3 n ll an! 2oi! )eca 3e petitionerH3 in3ol2enc: wa3 not clearl: e3ta)li3he! )e5ore it3 clo3 reG an! that 3 ch a hearin= on oral ar=r (ent will there5ore allow the partie3 to !irectl: con5ront the i33 e3 )e5ore thi3 Co rt# .n 0arch *;+ *,,* petitioner 5ile! it3 oppo3ition to the (otion 5or oral ar= (ent# .n 0arch ;%+ *,,*+ it 5ile! it3 repl: to re3pon!ent3H o)jection3 to the Santia=o Report# .n J ne *9+ *,,*+ a hearin= wa3 hel! where )oth partie3 were hear! on oral ar= (ent )e5ore thi3 Co rt# The partie3+ ha2in= 3 )(itte! their re3pecti2e (e(oran!a+ the ca3e i3 now 3 )(itte! 5or !eci3ion# "#R# No# $9$8$ .n Fe)r ar: ;+ *,9&+ -anco Filipino 5ile! a co(plaint with the trial co rt !oc?ete! a3 Ci2il Ca3e No# ,8$& to ann l the re3ol tion o5 the 0onetar: -oar! !ate! Jan ar: ;&+ *,9&+ which or!ere! the clo3 re o5 the )an? an! place! it n!er recei2er3hip# .n Fe)r ar: *'+ *,9&+ the Central -an? an! the recei2er3 5ile! a (otion to !i3(i33 the co(plaint on the =ro n! that the recei2er3 ha! not a thori@e! an:one to 5ile the action# In a 3 pple(ental (otion to !i3(i33+ the Central -an? cite! the re3ol tion o5 thi3 Co rt !ate! .cto)er *&+ *,9& in "#R# No# 8&$;> entitle!+ JCentral -an? et al# 2# Inter(e!iate Appellate Co rtJ where): Ie hel! that a co(plaint E e3tionin= the 2ali!it: o5 the recei2er3hip e3ta)li3he! ): the Central -an? )eco(e3 (oot an! aca!e(ic pon the initiation o5 liE i!ation procee!in=3# Ihile the (otion to !i3(i33 wa3 pen!in= re3ol tion+ petitioner herein 0etropoli3 De2elop(ent Corporation C0etropoli3 5or )re2it:D 5ile! a (otion to inter2ene in the a5ore3tate! ci2il ca3e on the =ro n! that a3 a 3toc?hol!er an! cre!itor o5 -anco Filipino+ it ha3 an intere3t in the 3 )ject o5 the action#

.n J l: *,+ *,9&+ the trial co rt !enie! the (otion to !i3(i33 an! al3o !enie! the (otion 5or recon3i!eration o5 the or!er later 5ile! ): Central -an?# .n J ne &+ *,9&+ the trial co rt allowe! the (otion 5or inter2ention# Hence+ the Central -an? an! the recei2er3 o5 -anco Filipino 5ile! a petition 5or certiorari with the re3pon!ent appellate co rt alle=in= that the trial co rt co((itte! =ra2e a) 3e o5 !i3cretion in not !i3(i33in= Ci2il Ca3e No# ,8$&# .n 0arch *$+ *,98+ the re3pon!ent appellate co rt ren!ere! a !eci3ion ann llin= an! 3ettin= a3i!e the E e3tione! or!er3 o5 the trial co rt+ an! or!erin= the !i3(i33al o5 the co(plaint 5ile! ): -anco Filipino with the trial co rt a3 well a3 the co(plaint in inter2ention o5 petitioner 0etropoli3 De2elop(ent Corporation# Hence thi3 petition wa3 5ile! ): 0etropoli3 De2elop(ent Corporation E e3tionin= the !eci3ion o5 the re3pon!ent appellate co rt# "#R# No# $99,' .n Fe)r ar: ;+ *,9&+ a co(plaint wa3 5ile! with the trial co rt in the na(e o5 -anco Filipino to ann l the re3ol tion o the 0onetar: -oar! !ate! Jan ar: ;&+ *,9& which or!ere! the clo3 re o5 -anco Filipino an! place! it n!er recei2er3hip# The recei2er3 appointe! ): the 0onetar: -oar! were Carlota /alen@ ela+ Arn l5o A rellano an! Ra(on TiaoE i# .n Fe)r ar: *'+ *,9&+ the Central -an? an! the recei2er 5ile! a (otion to !i3(i33 the co(plaint on the =ro n! that the recei2er ha! not a thori@e! an:one to 5ile the action# .n 0arch ;;+ *,9&+ the 0onetar: -oar! place! the )an? n!er liE i!ation an! !e3i=nate! /alen@ ela a3 liE i!ator an! A rellano an! TiaoE i a3 !ep t: liE i!ator3# The Central -an? 5ile! a 3 pple(ental (otion to !i3(i33 which wa3 !enie!# Hence+ the latter 5ile! a petition 5or certiorari with the re3pon!ent appellate co rt to 3et a3i!e the or!er o5 the trial co rt !en:in= the (otion to !i3(i33# .n 0arch *$+ *,98+ the re3pon!ent appellate co rt =rante! the petition an! !i3(i33e! the co(plaint o5 -anco Filipino with the trial co rt# Th 3+ thi3 petition 5or certiorari wa3 5ile! with the petitioner conten!in= that a )an? which ha3 )een clo3e! an! place! n!er recei2er3hip ): the Central -an? n!er Section ;, o5 RA ;8& co l! 5ile 3 it in co rt in it3 na(e to conte3t 3 ch act3 o5 the Central -an?+ witho t the a thori@ation o5 the C--appointe! recei2er# A5ter !eli)eratin= on the plea!in=3 in the 5ollowin= ca3e3B *# In "#R# No# 899$9+ the re3pon!entH3 (otion 5or recon3i!erationG ;# In "#R# No3# $$;&&-&9+ the petition+ co((ent+ repl:+ rejoin!er an! 3 r-rejoin!erG ;# In "#R# No# $9$88+ the petition+ co((ent+ repl: an! rejoin!erG ># In "#R# No# 9*>%>+ the petitionerH3 (otion 5or recon3i!erationG '# In "#R#No# 9*>%'+ the petition+ co((ent an! repl:G &# Finall:+ in "#R# No# ,%'$>+ the petition co((ent an! repl:# Ie 5in! the (otion3 5or recon3i!eration in "#R# No3# 899$9 an! 9*>%> an! the petition3 in "#R# No3# $$;&&-&9+ $9$88+ 9*>%' an! ,%'$> !e2oi! o5 (erit# Section ;, o5 the Rep )lic Act No# ;8&+ a3 a(en!e! ?nown a3 the Central -an? Act+ pro2i!e3 that when a )an? i3 5or)i!!en to !o ) 3ine33 in the Philippine3 an! place! n!er recei2er3hip+ the per3on !e3i=nate! a3 recei2er 3hall i((e!iatel: ta?e char=e o5 the )an?H3 a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le+ collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+ an! repre3ent the )an? per3onall: or thro =h co n3el a3 he (a: retain in all action3 or procee!in=3 5or or a=ain3t the in3tit tion+ e<erci3in= all the power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?# I5 the 0onetar: -oar! 3hall later !eter(ine an! con5ir( that )an?in= in3tit tion i3 in3ol2ent or cannot re3 (e ) 3ine33 3a5et: to !epo3itor3+ cre!itor3 an! the =eneral p )lic+ it 3hall+ p )lic intere3t reE ire3+ or!er it3 liE i!ation an! appoint a liE i!ator who 3hall ta?e o2er an! contin e the 5 nction3 o5 recei2er

pre2io 3l: appointe! ): 0onetar: -oar!# The liE i! 5or (a:+ in the na(e o5 the )an? an! with the a33i3tance co n3el a3 he (a: retain+ in3tit te 3 ch action3 a3 (a: nece33ar: in the appropriate co rt to collect an! reco2er a co nt3 an! a33et3 o5 3 ch in3tit tion or !e5en! an: action 5t a=ain3t the in3tit tion# Ihen the i33 e on the 2ali!it: o5 the clo3 re an! recei2er3hip o5 -anco Filipino )an? wa3 rai3e! in "#R# No# $%%&'+ pen!enc: o5 the ca3e !i! not !i(ini3h the power3 an! a thorit: o5 the !e3i=nate! liE i!ator to e55ect ate an! carr: on the a (ini3tration o5 the )an?# In 5act when Ie a!opte! a re3ol te on A = 3t ;&+ *,9& an! i33 e! a re3trainin= or!er to re3pon!ent3 0onetar: -oar! an! Central -an?+ Ie enjoine! (e 5 rther act3 o5 liE i!ation# S ch act3 o5 liE i!ation+ a3 e<plaine! in Sec# ;, o5 the Central -an? Act are tho3e which con3tit te the con2er3ion o5 the a33et3 o5 the )an?in= in3tit tion to (one: or the 3ale+ a33i=n(ent or !i3po3ition o5 the 3 to cre!itor3 an! other partie3 5or the p rpo3e o5 pa:in= !e)t3 o5 3 ch in3tit tion# Ie !i! not prohi)it howe2er act3 a a3 recei2in= collecti)le3 an! recei2a)le3 or pa:in= o55 cre!it3 clai(3 an! other tran3action3 pertainin= to nor(al operate o5 a )an?# There i3 no !o )t that the pro3ec tion o5 3 it3 collection an! the 5oreclo3 re o5 (ort=a=e3 a=ain3t !e)tor3 the )an? ): the liE i!ator are a(on= the 3 al an! or!inar: tran3action3 pertainin= to the a!(ini3tration o5 a )an?# their !i! . r or!er in the 3a(e re3ol tion !ate! A = 3t ;&+ *,9& 5or the !e3i=nation ): the Central -an? o5 a co(ptroller -anco Filipino alter the power3 an! 5 nction3G o5 the liE i! in3o5ar a3 the (ana=e(ent o5 the a33et3 o5 the )an? i3 concerne!# The (ere ! t: o5 the co(ptroller i3 to 3 per2i3e co nt3 an! 5inance3 n!erta?en ): the liE i!ator an! to ! (ine the propriet: o5 the latterH3 e<pen!it re3 inc rre! )ehal5 o5 the )an?# Notwith3tan!in= thi3+ the liE i!ator i3 e(powere! n!er the law to contin e the 5 nction3 o5 recei2er i3 pre3er2in= an! ?eepin= intact the a33et3 o5 the )an? in 3 )3tit tion o5 it3 5or(er (ana=e(ent+ an! to pre2ent the !i33ipation o5 it3 a33et3 to the !etri(ent o5 the cre!itor3 o5 the )an?# The3e power3 an! 5 nction3 o5 the liE i!ator in !irectin= the operation3 o5 the )an? in place o5 the 5or(er (ana=e(ent or 5or(er o55icial3 o5 the )an? incl !e the retainin= o5 co n3el o5 hi3 choice in action3 an! procee!in=3 5or p rpo3e3 o5 a!(ini3tration# Clearl:+ in "#R# No3# 899$9+ $$;&&-&9+ $9$88 an! ,%'$>+ the liE i!ator ): hi(3el5 or thro =h co n3el ha3 the a thorit: to )rin= action3 5or 5oreclo3 re o5 (ort=a=e3 e<ec te! ): !e)tor3 in 5a2or o5 the )an?# In "#R# No# 9*>%>+ the liE i!ator i3 li?ewi3e a thori@e! to re3i3t or !e5en! 3 it3 in3tit te! a=ain3t the )an? ): !e)tor3 an! cre!itor3 o5 the )an? an! ): other pri2ate per3on3# Si(ilarl:+ in "#R# No# 9*>%'+ ! e to the a5ore3tate! rea3on3+ the Central -an? cannot )e co(pelle! to 5 l5ill 5inancial tran3action3 entere! into ): -anco Filipino when the operation3 o5 the latter were 3 3pen!e! ): rea3on o5 it3 clo3 re# The Central -an? po33e33e3 tho3e power3 an! 5 nction3 onl: a3 pro2i!e! 5or in Sec# ;, o5 the Central -an? Act# Ihile Ie reco=ni@e the act al clo3 re o5 -anco Filipino an! the con3eE ent le=al e55ect3 thereo5 on it3 operation3+ Ie cannot phol! the le=alit: o5 it3 clo3 re an! th 3+ 5in! the petition3 in "#R# No3# $%%&'+ $9$8$ an! $99,' i(pre33e! with (erit# Ie hol! that the clo3 re an! recei2er3hip o5 petitioner )an?+ which wa3 or!ere! ): re3pon!ent 0onetar: -oar! on Jan ar: ;&+ *,9&+ i3 n ll an! 2oi!# It i3 a well-reco=ni@e! principle that a!(ini3trati2e an! !i3cretionar: 5 nction3 (a: not )e inter5ere! with ): the co rt3# In =eneral+ co rt3 ha2e no 3 per2i3in= power o2er the procee!in=3 an! action3 o5 the a!(ini3trati2e !epart(ent3 o5 the =o2ern(ent# Thi3 i3 =enerall: tr e with re3pect to act3 in2ol2in= the e<erci3e o5 j !=(ent or !i3cretion+ an! 5in!in=3 o5 5act# - t when there i3 a =ra2e a) 3e o5 !i3cretion which i3 eE i2alent to a capricio 3 an! whi(3ical e<erci3e o5 j !=(ent or where the power i3 e<erci3e! in an ar)itrar: or !e3potic (anner+ then there i3 a j 3ti5ication 5or the co rt3 to 3et a3i!e the a!(ini3trati2e !eter(ination reache! CLi(+ Sr# 2# Secretar: o5 A=ric lt re an! Nat ral Re3o rce3+ L-;8,,%+ A = 3t >*+ *,$%+ >' SCRA $&*D The j ri3!iction o5 thi3 Co rt i3 calle! pon+ once a=ain+ thro =h the3e petition3+ to n!erta?e the !elicate ta3? o5 a3certainin= whether or not an a!(ini3trati2e a=enc: o5 the =o2ern(ent+ li?e the Central -an? o5 the Philippine3 an! the 0onetar: -oar!+ ha3 co((itte! =ra2e a) 3e o5 !i3cretion or ha3 acte! witho t or in e<ce33 o5 j ri3!iction in i33 in= the a33aile! or!er# Co ple! with thi3 ta3? i3 the ! t: o5 thi3 Co rt not onl: to 3tri?e !own act3 which 2iolate con3tit tional protection3 or to n lli5: a!(ini3trati2e !eci3ion3 contrar: to le=al (an!ate3 ) t al3o to pre2ent act3 in e<ce33 o5 a thorit: or j ri3!iction+ a3 well a3 to correct (ani5e3t a) 3e3 o5 !i3cretion co((itte! ): the o55icer or tri) nal in2ol2e!# The law applica)le in the !eter(ination o5 the3e i33 e3 i3 Section ;, o5 Rep )lic Act No# ;8&+ a3 a(en!e!+ al3o ?nown a3 the Central -an? Act+ which pro2i!e3B SEC# ;,# Procee!in=3 pon in3ol2enc:# M Ihene2er+ pon e<a(ination ): the hea! o5 the appropriate 3 per2i3in= or e<a(inin= !epart(ent or hi3 e<a(iner3 or a=ent3 into the con!ition o5 an: )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3+ it 3hall )e !i3clo3e! that the con!ition o5 the 3a(e i3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3+ it 3hall )e the ! t: o5 the !epart(ent hea! concerne! 5orthwith+ in writin=+ to in5or( the 0onetar: -oar! o5 the

5act3# The -oar! (a:+ pon 5in!in= the 3tate(ent3 o5 the !epart(ent hea! to )e tr e+ 5or)i! the in3tit tion to !o ) 3ine33 in the Philippine3 an! !e3i=nate an o55icial o5 the Central -an? or a per3on o5 reco=ni@e! co(petence in )an?in= or 5inance+ a3 recei2er to i((e!iatel: ta?e char=e o5 it3 a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5itH3 o5 it3 cre!itor3+ an! repre3ent the )an? per3onall: or thro =h co n3el a3 he (a: retain in all action3 or procee!in=3 5or or a=ain3t the in3tit tion+ e<erci3in= all the power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3# The 0onetar: -oar! 3hall there pon !eter(ine within 3i<t: !a:3 whether the in3tit tion (a: )e reor=ani@e! or otherwi3e place! in 3 ch a con!ition 3o that it (a: )e per(itte! to re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3 an! cre!itor3 an! the =eneral p )lic an! 3hall pre3cri)e the con!ition3 n!er which 3 ch re3 (ption o5 ) 3ine33 3hall ta?e place a3 well a3 the ti(e 5or 5 l5ill(ent o5 3 ch con!ition3# In 3 ch ca3e+ the e<pen3e3 an! 5ee3 in the collection an! a!(ini3tration o5 the a33et3 o5 the in3tit tion 3hall )e !eter(ine! ): the -oar! an! 3hall )e pai! to the Central -an? o t o5 the a33et3 o5 3 ch in3tit tion# I5 the 0onetar: -oar! 3hall !eter(ine an! con5ir( within the 3ai! perio! that the )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3 i3 in3ol2ent or cannot re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ cre!itor3+ an! the =eneral p )lic+ it 3hall+ i5 the p )lic intere3t reE ire3+ or!er it3 liE i!ation+ in!icate the (anner o5 it3 liE i!ation an! appro2e a liE i!ation plan which (a:+ when warrante!+ in2ol2e !i3po3ition o5 an: or all a33et3 in con3i!eration 5or the a33 (ption o5 eE i2alent lia)ilitie3# The liE i!ator !e3i=nate! a3 here n!er pro2i!e! 3hall+ ): the Solicitor "eneral+ 5ile a petition in the re=ional trial co rt recitin= the procee!in=3 which ha2e )een ta?en an! pra:in= the a33i3tance o5 the co rt in the liE i!ation o5 3 ch in3tit tion3# The co rt 3hall ha2e j ri3!iction in the 3a(e procee!in=3 to a33i3t in the a!j !ication o5 the !i3p te! clai(3 a=ain3t the )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3 an! in the en5orce(ent o5 in!i2i! al lia)ilitie3 o5 the 3toc?hol!er3 an! !o all that i3 nece33ar: to pre3er2e the a33et3 o5 3 ch in3tit tion3 an! to i(ple(ent the liE i!ation plan appro2e! ): the 0onetar: -oar!# The 0onetar: -oar! 3hall !e3i=nate an o55icial o5 the Central )an? or a per3on o5 reco=ni@e! co(petence in )an?in= or 5inance+ a3 liE i!ator who 3hall ta?e o2er an! contin e the 5 nction3 o5 the recei2er pre2io 3l: appointe! ): the 0onetar: -oar! n!er thi3 Section# The liE i!ator 3hall+ with all con2enient 3pee!+ con2ert the a33et3 o5 the )an?in= in3tit tion3 or non)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction to (one: or 3ell+ a33i=n or otherwi3e !i3po3e o5 the 3a(e to cre!itor3 an! other partie3 5or the p rpo3e o5 pa:in= the !e)t3 o5 3 ch in3tit tion an! he (a:+ in the na(e o5 the )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3 an! with the a33i3tance o5 co n3el a3 he (a: retain+ in3tit te 3 ch action3 a3 (a: )e nece33ar: in the appropriate co rt to collect an! reco2er acco nt3 an! a33et3 o5 3 ch in3tit tion or !e5en! an: action 5ile! a=ain3t the in3tit tionB Pro2i!e!+ Howe2er+ That a5ter ha2in= rea3ona)l: e3ta)li3he! all clai(3 a=ain3t the in3tit tion+ the liE i!ator (a:+ with the appro2al o5 the co rt+ e55ect partial pa:(ent3 o5 3 ch clai(3 5or a33et3 o5 the in3tit tion in accor!ance with their le=al priorit:# The a33et3 o5 an in3tit tion n!er recei2er3hip or liE i!ation 3hall )e !ee(e! in c 3to!ia le=i3 in the han!3 o5 the recei2er or liE i!ator an! 3hall 5ro( the (o(ent o5 3 ch recei2er3hip or liE i!ation+ )e e<e(pt 5ro( an: or!er o5 =arni3h(ent+ le2:+ attach(ent+ ore<ec tion# The pro2i3ion3 o5 an: law to the contrar: notwith3tan!in=+ the action3 o5 the 0onetar: -oar! n!er thi3 Section+ Section ;9-A+ an the 3econ! para=raph o5 Section >' o5 thi3 Act 3hall )e 5inal an e<ec tor:+ an! can )e 3et a3i!e ): a co rt onl: i5 there i3 con2ince proo5+ a5ter hearin=+ that the action i3 plainl: ar)itrar: an! (a!e in )a! 5aithB Pro2i!e!+ That the 3a(e i3 rai3e! in an appropriate plea!in= 5ile! ): the 3toc?hol!er3 o5 recor! repre3entin= the (ajorit: o5 th capital 3toc? within ten C*%D !a:3 5ro( the !ate the recei2er ta?e char=e o5 the a33et3 an! lia)ilitie3 o5 the )an? or non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3 or+ in ca3e o5 con3er2ator3hip or liE i!ation+ within ten C*%D !a:3 5ro( receipt o5 notice ): the 3ai! (ajorit: 3toc?hol!er3 o5 3ai! )an? or non-)an? 5inancial inter(e!iar: o5 the or!er o5 it3 place(ent n!er con3er2ator3hip o liE i!ation# No re3trainin= or!er or inj nction 3hall )e i33 e! ): an co rt enjoinin= the Central -an? 5ro( i(ple(entin= it3 action3 n!er thi3 Section an! the 3econ! para=raph o5 Section >' o5 thi3 Act in th a)3ence o5 an: con2incin= proo5 that the action o5 the 0onetar: -oar! i3 plainl: ar)itrar: an! (a!e in )a! 5aith an! the petitioner or plainti55 5ile3 a )on!+ e<ec te! in 5a2or o5 the Central -an?+ in an a(o nt )e 5i<e! ): the co rt# The re3trainin= or!er or inj nction 3hall )e re5 3e! or+ i5 =rante!+ 3hall )e !i33ol2e! pon 5ilin= ): the Central -an? o5 a )on!+ which 3hall )e in the 5or( o5 ca3h or Central -an? ca3hierH3 chec?+ in an a(o nt twice the a(o nt o5 the )on! o5 th petitioner or plainti55 con!itione! that it will pa: the !a(a=e3 which the petitioner or plainti55 (a: 3 55er ): the re5 3al or the !i33ol tion o5 the inj nction# The pro2i3ion3 o5 R le &9 o5 the New R le3 o5 Co rt in3o5ar a3 the: are applica)le an! not incon3i3tent with the pro2i3ion o5 thi3 Section 3hall =o2ern the i33 ance an! !i33ol tion o5 the re 3trainin= or!er or inj nction conte(plate! in thi3 Section#

<<< <<< <<< -a3e! on the a5oreE ote! pro2i3ion+ the 0onetar: -oar! (a: or!er the ce33ation o5 operation3 o5 a )an? in the Philippine an! place it n!er recei2er3hip pon a 5in!in= o5 in3ol2enc: or when it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 it3 !epo3itor3 or cre!itor3# I5 the 0onetar: -oar! 3hall !eter(ine an! con5ir( within 3i<t: C8%D !a:3 that the )an? i3 in3ol2ent or can no lon=er re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ cre!itor3 an! the =eneral p )lic+ it 3hall+ i5 p )lic intere3t will )e 3er2e!+ or!er it3 liE i!ation# Speci5icall:+ the )a3ic E e3tion to )e re3ol2e! in "#R# No3# $%%&'+ $9$8$ an! $99,' i3 whether or not the Central -an? an! the 0onetar: -oar! acte! ar)itraril: an! in )a! 5aith in 5in!in= an! therea5ter concl !in= that petitioner )an? i3 in3ol2ent+ an! in or!erin= it3 clo3 re on Jan ar: ;&+ *,9&# A3 Ie ha2e 3tate! in . r re3ol tion !ate! A = 3t >+ *,9,+ the !oc (ent3 pertinent to the re3ol tion o5 the3e petition3 are the Teo!oro Report+ TiaoE i Report+ an! the /alen@ ela+ A rellano an! TiaoE i Report an! the 3 pportin= !oc (ent3 (a!e a3 )a3e3 ): the 3 pporter3 o5 their concl 3ion3 containe! in their re3pecti2e report3# Ie will 5oc 3 . r 3t !: an! !i3c 33ion howe2er on the TiaoE i Report an! the /alen@ ela+ A rellano an! TiaoE i Report# The 5or(er reco((en!e! the clo3 re an! recei2er3hip o5 petitioner )an? while the latter report (a!e the reco((en!ation to e2ent all: place the petitioner )an? n!er liE i!ation# Thi3 Co rt 3hall li?ewi3e ta?e into con3i!eration the 5in!in=3 containe! in the report3 o5 the two co((i33ioner3 who were appointe! ): thi3 Co rt to hol! the re5erral hearin=3+ na(el: the report ): J !=e 0an el Co3ico 3 )(itte! Fe)r ar: ;%+ *,99 an! the report 3 )(itte! ): J 3tice Con3 elo Santia=o on Jan ar: ;9+ *,,*# There i3 no E e3tion that n!er Section ;, o5 the Central -an? Act+ the 5ollowin= are the (an!ator: reE ire(ent3 to )e co(plie! with )e5ore a )an? 5o n! to )e in3ol2ent i3 or!ere! clo3e! an! 5or)i!!en to !o ) 3ine33 in the Philippine3B Fir3tl:+ an e<a(ination 3hall )e con! cte! ): the hea! o5 the appropriate 3 per2i3in= or e<a(inin= !epart(ent or hi3 e<a(iner3 or a=ent3 into the con!ition o5 the )an?G 3econ!l:+ it 3hall )e !i3clo3e! in the e<a(ination that the con!ition o5 the )an? i3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3G thir!l:+ the !epart(ent hea! concerne! 3hall in5or( the 0onetar: -oar! in writin=+ o5 the 5act3G an! la3tl:+ the 0onetar: -oar! 3hall 5in! the 3tate(ent3 o5 the !epart(ent hea! to )e tr e# Anent the 5ir3t reE ire(ent+ the TiaoE i report+ 3 )(itte! on Jan ar: ;>+ *,9&+ re2eale! that the 5in!in= o5 in3ol2enc: o5 petitioner wa3 )a3e! on the partial li3t o5 e<ception3 an! 5in!in=3 on the re= lar e<a(ination o5 the )an? a3 o5 J l: >*+ *,9' con! cte! ): the S per2i3ion an! E<a(ination Sector II o5 the Central -an? o5 the Philippine3Central -an? Cp# *+ TiaoE i ReportD# .n Dece()er *$+ *,9'+ thi3 li3t o5 e<ception3 an! 5in!in= wa3 3 )(itte! to the petitioner )an? Cp# 8+ TiaoE i ReportD Thi3 wa3 attache! to the letter !ate! Dece()er *$+ *,9'+ o5 e<a(iner-in-char=e Dioni3io Do(in=o o5 SES Depart(ent II o5 the Central -an? to Teo!oro Arcena3+ pre3i!ent o5 petitione )an?+ which !i3clo3e! that the e<a(ination o5 the petitioner )an? a3 to it3 5inancial con!ition a3 o5 J l: >*+ *,9' wa3 not :et co(plete! or 5ini3he! on Dece()er *$+ *,9' when the Central -an? 3 )(itte! the partial li3t o5 5in!in=3 o5 e<a(ination to th petitioner )an?# The letter rea!3B In connection with the re= lar e<a(ination o5 :o r in3tit tion a o5 J l: >*+ *,9'+ we are 3 )(ittin= herewith a partial li3t o5 o r e<ception3K5in!in=3 5or :o r co((ent3# Plea3e )e in5or(e! that we ha2e not :et o55iciall: ter(inate! o r e<a(ination Ctentati2el: 3che! le! la3t Dece()er $+ *,9'D an! that we are 3till awaitin= 5or the n3 )(itte! replie3 to o r pre2io 3 letter3 reE e3t3# 0oreo2er+ other 5in!in=3K o)3er2ation3 are 3till )ein= 3 ((ari@e! incl !in= the cla33i5ication o5 loan3 an! other ri3? a33et3# The3e 3hall )e 3 )(itte! to :o in ! e ti(e Cp# 9*%+ Rollo+ /ol# IIIG e(pha3i3 o r3D# It i3 worth: to note that a con5erence wa3 hel! on Jan ar: ;*+ *,9& at the Central -an? )etween the o55icial3 o5 the latter an o5 petitioner )an?# Ihat tran3pire! an! what wa3 a=ree! pon ! rin= the con5erence wa3 e<plaine! in the TiaoE i report# ### The !i3c 33ion centere! on the 3 )3tantial e<po3 re o5 the )an? to the 2ario 3 entitie3 which wo l! ha2e a relation3hip with the )an?G the (anner ): which 3o(e )an? 5 n!3 were (a!e in!irectl: a2aila)le to 3e2eral entitie3 within the =ro pG an! the nhealth 5inancial 3tat 3 o5 the3e 5ir(3 in which the )an? wa3 a!!itionall: e<po3e! thro =h new 5 n!3 or re5inancin= acco((o!ation incl !in= accr e! intere3t#

7 erie! in the i(pact o5 the3e clean loan3+ on the )an? 3ol2enc: 0r# Di@on C-F E<ec ti2e /ice Pre3i!entD inti(ate! that+ collecti2el: the3e corporation3 ha2e lar=e n!e2elope! real e3tate propertie3 in the 3 ) r)3 which can )e (a!e an3wera)le 5or the n3ec re! loan3 a well a3 the Central -an?H3 cre!it acco((o!ation3# A 5or(al repl: o5 the )an? wo l! 3till )e 5orthco(in=# Cpp# &9-&,+ Rollo+ /ol# IG e(pha3i3 o r3D Clearl:+ TiaoE i )a3e! hi3 report on an inco(plete e<a(ination o5 petitioner )an? an! o tri=htl: concl !e! therein that the latterH3 5inancial 3tat 3 wa3 one o5 in3ol2enc: or illiE i!it:# He arri2e! at the 3ai! concl 3ion 5ro( the 5ollowin= 5act3B that a3 o5 J l: >*+ *,9'+ total capital acco nt3 con3i3tin= o5 pai!-in capital an! other capital acco nt3 3 ch a3 3 rpl 3+ 3 rpl 3 re3er2e3 an! n!i2i!e! pro5it3 a==re=ate! P>&*#9 (illionG that capital a!j 3t(ent3+ howe2er+ wipe! o t the capital acco nt3 an! place! the )an? with a capital !e5icienc: a(o ntin= to P>>'#,&8 (illionG that the )i==e3t a!j 3t(ent which contri) te! to the !e5icit i3 the pro2i3ion 5or e3ti(ate! lo33e3 on acco nt3 cla33i5ie! a3 !o )t5 l an! lo33 which wa3 co(p te! at P8%%#' (illion p r3 ant to the e<a(ination# Thi3 pro2i3ion i3 al3o ?nown a3 2al ation re3er2e3 which wa3 3et p or !e! cte! a=ain3t the capital acco nt3 o5 the )an? in arri2in= at the latterH3 5inancial con!ition# TiaoE i howe2er a!(it3 the in3 55icienc: an! nrelia)ilit: o5 the 5in!in=3 o5 the e<a(iner a3 to the 3ettin= p o5 reco((en!e! 2al ation re3er2e3 5ro( the a33et3 o5 petitioner )an?# He 3tate!B The reco((en!e! 2al ation re3er2e3 a3 )a3e3 5or !eter(inin= the 5inancial 3tat 3 o5 the )an? wo l! nee! to )e !i3c 33e! with the )an?+ con3i3tent with 3tan!ar! e<a(ination proce! re+ 5or which the )an? wo l! in t rn repl:# Al3o+ the e<a(ination ha3 not )een o55iciall: ter(inate!# Cp# $# TiaoE i reportG p# &,+ Rollo+ /ol# ID In hi3 te3ti(on: in the 3econ! re5erral hearin= )e5ore J 3tice Santia=o+ TiaoE i te3ti5ie! that on Jan ar: ;*+ *,9&+ he (et with o55icer3 o5 petitioner )an? to !i3c 33 the a!2ance! 5in!in=3 an! e<ception3 (a!e ): 0r# Dioni3io Do(in=o which co2ere! $%N-9%N o5 the )an?H3 loan port5olioG that at that (eetin=+ Fort nato Di@on C-FH3 E<ec ti2e /ice Pre3i!entD 3ai! that a3 re=ar!3 the n3ec re! loan3 =rante! to 2ario 3 corporation3+ 3ai! corporation3 ha! lar=e n!e2elope! real e3tate propertie3 which co l! )e an3wera)le 5or the 3ai! n3ec re! loan3 an! that a repl: 5ro( -F wa3 5orthco(in=+ that he CTiaoE iD howe2er prepare! hi3 report !e3pite the a)3ence o5 3 ch repl:G that he )elie2e!+ a3 in 5act it i3 3tate! in hi3 report+ that !e3pite the (eetin= on Jan ar: ;*+ *,9&+ there wa3 3till a nee! to !i3c 33 the reco((en!e! 2al ation re3er2e3 o5 petitioner )an? an!G that he howe2er+ !i! not wait an:(ore 5or a !i3c 33ion o5 the reco((en!e! 2al ation re3er2e3 an! in3tea! prepare! hi3 report two !a:3 a5ter Jan ar: ;*+ *,9& Cpp# >>*>->>*'+ RolloD# Recor!3 5 rther 3how that the e<a(ination o5 petitioner )an? wa3 o55iciall: ter(inate! onl: when Central -an? E<a(ination-char=e Dioni3io Do(in=o 3 )(itte! hi3 5inal report o5 e<a(ination on 0arch '+*,9&# It i3 e2i!ent 5ro( the 5ore=oin= circ (3tance3 that the e<a(ination conte(plate! in Sec# ;, o5 the C- Act a3 a (an!ator: reE ire(ent wa3 not co(pletel: an! 5 ll: co(plie! with# De3pite the e<i3tence o5 the partial li3t o5 5in!in=3 in the e<a(ination o5 the )an?+ there were 3till hi=hl: 3i=ni5icant ite(3 to )e wei=he! an! !eter(ine! 3 ch a3 the (atter o5 2al ation re3er2e3+ )e5ore the3e can )e con3i!ere! in the 5inancial con!ition o5 the )an?# It wo l! )e a !ra3tic (o2e to concl !e pre(at rel: that a )an? i3 in3ol2ent i5 the )a3i3 5or 3 ch concl 3ion i3 lac?in= an! in3 55icient+ e3peciall: i5 !o )t e<i3t3 a3 to whether 3 ch )a3e3 or 5in!in=3 5aith5 ll: repre3ent the real 5inancial 3tat 3 o5 the )an?# The act ation o5 the 0onetar: -oar! in clo3in= petitioner )an? on Jan ar: ;&+ *,9& )arel: 5o r !a:3 a5ter a con5erence with the latter on the e<a(iner3H partial 5in!in=3 on it3 5inancial po3ition i3 al3o 2iolati2e o5 what wa3 pro2i!e! in the C- 0an al o5 E<a(ination Proce! re3# Sai! (an al pro2i!e3 that onl: a5ter the e<a(ination i3 concl !e!+ 3ho l! a pre-clo3in= con5erence le! ): the e<a(iner-in-char=e )e hel! with the o55icer3Krepre3entati2e3 o5 the in3tit tion on the 5in!in=3Ke<ception+ an! a cop: o5 the 3 ((ar: o5 the 5in!in=3K2iolation3 3ho l! )e 5 rni3he! the in3tit tion e<a(ine! 3o that correcti2e action (a: )e ta?en ): the( a3 3oon a3 po33i)le C0an al o5 E<a(ination Proce! re3+ "eneral In3tr ction+ p# *'D# It i3 har! to n!er3tan! how a perio! o5 5o r !a:3 a5ter the con5erence co l! )e a rea3ona)le opport nit: 5or a )an? to n!erta?e a re3pon3i2e an! correcti2e action on the partial li3t o5 5in!in=3 o5 the e<a(iner-in-char=e# Ie reco=ni@e the 5act that it i3 the re3pon3i)ilit: o5 the Central -an? o5 the Philippine3 to a!(ini3ter the (onetar:+ )an?in= an! cre!it 3:3te( o5 the co ntr: an! that it3 power3 an! 5 nction3 3hall )e e<erci3e! ): the 0onetar: -oar! p r3 ant to Rep# Act No# ;8&+ ?nown a3 the Central -an? Act# Con3eE entl:+ the power an! a thorit: o5 the 0onetar: -oar! to clo3e )an?3 an! liE i!ate the( therea5ter when p )lic intere3t 3o reE ire3 i3 an e<erci3e o5 the police power o5 the 3tate# Police power+ howe2er+ (a: not )e !one ar)itratril: or nrea3ona)l: an! co l! )e 3et a3i!e i5 it i3 either capricio 3+ !i3cri(inator:+ whi(3ical+ ar)itrar:+ nj 3t or i3 tanta(o nt to a !enial o5 ! e proce33 an! eE al protection cla 3e3 o5 the Con3tit tion CCentral -an? 2# Co rt o5 Appeal3+ No3# L-&%%>*->;+ J l: ;$+ *,9*+ *%8 SCRA *'>D#

In the in3tant ca3e+ the )a3ic 3tan!ar!3 o5 3 )3tantial ! e proce33 were not o)3er2e!# Ti(e an! a=ain+ Ie ha2e hel! in 3e2eral ca3e3+ that the proce! re o5 a!(ini3trati2e tri) nal3 ( 3t 3ati35: the 5 n!a(ental3 o5 5air pla: an! that their j !=(ent 3ho l! e<pre33 a well-3 pporte! concl 3ion# In the cele)rate! ca3e o5 An= Ti)a: 2# Co rt o5 In! 3trial Relation3+ 8, Phil# 8>&+ thi3 Co rt lai! !own 3e2eral car!inal pri(ar: ri=ht3 which ( 3t )e re3pecte! in a procee!in= )e5ore an a!(ini3trati2e )o!:# Howe2er+ a3 to the reE ire(ent o5 notice an! hearin=+ Sec# ;, o5 RA ;8& !oe3 not reE ire a pre2io 3 hearin= )e5ore the 0onetar: -oar! i(ple(ent3 the clo3 re o5 a )an?+ 3ince it3 action i3 3 )ject to j !icial 3cr tin: a3 pro2i!e! 5or n!er the 3a(e law CR ral -an? o5 -ato 2# IAC+ "#R# No# 8&8';+ .cto)er *&+ *,9'+ R ral -an? 2# Co rt o5 Appeal3+ "#R# 8*89,+ J ne ;%+ *,99+*8; SCRA ;99D# Notwith3tan!in= the 5ore=oin=+ a!(ini3trati2e ! e proce33 !oe3 not (ean that the other i(portant principle3 (a: )e !i3pen3e! with+ na(el:B the !eci3ion o5 the a!(ini3trati2e )o!: ( 3t ha2e 3o(ethin= to 3 pport it3el5 an! the e2i!ence ( 3t )e 3 )3tantial# S )3tantial e2i!ence i3 (ore than a (ere 3cintilla# It (ean3 3 ch rele2ant e2i!ence a3 a rea3ona)le (in! (i=ht accept a3 a!eE ate to 3 pport a concl 3ion CAn= Ti)a: 23# CIR+ 3 praD# Hence+ where the !eci3ion i3 (erel: )a3e! pon piece3 o5 !oc (entar: e2i!ence that are not 3 55icientl: 3 )3tantial an! pro)ati2e 5or the p rpo3e an! concl 3ion the: are pre3ente!+ the 3tan!ar! o5 5airne33 (an!ate! in the ! e proce33 cla 3e i3 not (et# In the ca3e at )ar+ the concl 3ion arri2e! at ): the re3pon!ent -oar! that the petitioner )an? i3 in an illiE i! 5inancial po3ition on Jan ar: ;>+ *,9&+ a3 to j 3ti5: it3 clo3 re on Jan ar: ;&+ *,9& cannot )e =i2en wei=ht an! 5inalit: a3 the report it3el5 a!(it3 the ina!eE ac: o5 it3 )a3i3 to 3 pport it3 concl 3ion# The 3econ! reE ire(ent pro2i!e! in Section ;,+ R#A# ;8& )e5ore a )an? (a: )e clo3e! i3 that the e<a(ination 3ho l! !i3clo3e that the con!ition o5 the )an? i3 one o5 in3ol2enc:# A3 to the concept o5 whether the )an? i3 3ol2ent or not+ the re3pon!ent3 conten! that n!er the Central -an? 0an al o5 E<a(ination Proce! re3+ Central -an? e<a(iner3 ( 3t reco((en! 2al ation re3er2e3+ when warrante!+ to )e 3et p or !e! cte! a=ain3t the corre3pon!in= a33et acco nt to !eter(ine the )an?H3 tr e con!ition or net worth# In the ca3e o5 loan acco nt3+ to which practicall: all the E e3tione! 2al ation re3er2e3 re5er+ the (an al pro2i!e3 thatB *# For !o )t5 l loan3+ or loan3 the lti(ate collection o5 which i3 !o )t5 l an! in which a 3 )3tantial lo33 i3 pro)a)le ) t not :et !e5initel: a3certaina)le a3 to e<tent+ 2al ation re3er2e3 o5 5i5t: per cent C&%ND o5 the acco nt3 3ho l! )e reco((en!e! to )e 3et p# ;# For loan3 cla33i5ie! a3 lo33+ or loan3 re=ar!e! ): the e<a(iner a3 a)3ol tel: ncollecti)le or worthle33+ 2al ation re3er2e3 o5 one h n!re! percent C*%%ND o5 the acco nt3 3ho l! )e reco((en!e! to )e 3et p Cp# 9+ .)jection3 to Santia=o reportD# The 5ore=oin= criteria 3e! ): re3pon!ent3 in !eter(inin= the 5inancial con!ition o5 the )an? i3 )a3e! on Section & o5 RA >>$+ ?nown a3 the "eneral -an?in= Act which 3tate3B Sec# &# The 5ollowin= ter(3 3hall )e hel! to )e 3:non:(o 3 an! interchan=ea)leB ### 5# Uni(paire! Capital an! S rpl 3+ JCo()ine! capital acco nt3+J an! JNet worth+J which ter(3 3hall (ean 5or the p rpo3e3 o5 thi3 Act+ the total o5 the J ni(paire! pai!-in capital+ 3 rpl 3+ an! n!i2i!e! pro5it3 net o5 3 ch 2al ation re3er2e3 a3 (a: )e reE ire! ): the Central -an?#J There i3 no !o )t that the Central -an? Act 2e3t3 a thorit: pon the Central -an? an! 0onetar: -oar! to ta?e char=e an! a!(ini3ter the (onetar: an! )an?in= 3:3te( o5 the co ntr: an! thi3 a thorit: incl !e3 the power to e<a(ine an! !eter(ine the 5inancial con!ition o5 )an?3 5or p rpo3e3 pro2i!e! 5or ): law+ 3 ch a3 5or the p rpo3e o5 clo3 re on the =ro n! o5 in3ol2enc: 3tate! in Section ;, o5 the Central -an? Act# - t e<pre33 =rant3 o5 power to p )lic o55icer3 3ho l! )e 3 )jecte! to a 3trict interpretation+ an! will )e con3tr e! a3 con5errin= tho3e power3 which are e<pre33l: i(po3e! or nece33aril: i(plie! CFlo:! 0eche(+ Treati3e on the Law o5 P )lic .55ice3 an! .55icer3+ p# >>&D# In thi3 ca3e+ there can )e no clearer e<planation o5 the concept o5 in3ol2enc: than what the law it3el5 3tate3# Sec# ;, o5 the Central -an? Act pro2i!e3 that in3ol2enc: n!er the Act+ 3hall )e n!er3too! to (ean that Jthe reali@a)le a33et3 o5 a )an? or a non-)an? 5inancial inter(e!iar: per5or(in= E a3i-)an?in= 5 nction3 a3 !eter(ine! ): the Central -an? are in3 55icient to (eet it3 lia)ilitie3#J

Hence+ the contention o5 the Central -an? that a )an?H3 tr e 5inancial con!ition i3 3:non:(o 3 with the ter(3 J ni(paire! capital an! 3 rpl 3+J Jco()ine! capital acco nt3J an! net worth a5ter !e! ctin= 2al ation re3er2e3 5ro( the capital+ 3 rpl 3 an! nretaine! earnin=3+ citin= Sec# & o5 RA >>$ i3 (i3place!# Fir3tl:+ it i3 clear 5ro( the law that a 3ol2ent )an? i3 one in which it3 a33et3 e<cee! it3 lia)ilitie3# It i3 a )a3ic acco ntin= principle that a33et3 are co(po3e! o5 lia)ilitie3 an! capital# The ter( Ja33et3J incl !e3 capital an! 3 rpl 3J CE<le: 2# Harri3+ ;8$ p# ,$%+ ,$>+ *;8 1an#+ >%;D# .n the other han!+ the ter( JcapitalJ incl !e3 co((on an! pre5erre! 3toc?+ 3 rpl 3 re3er2e3+ 3 rpl 3 an! n!i2i!e! pro5it3# C0an al o5 E<a(ination Proce! re3+ Report o5 E<a(ination on Depart(ent o5 Co((ercial an! Sa2in=3 -an?3+ p# >-CD# I5 2al ation re3er2e3 wo l! )e !e! cte! 5ro( the3e ite(3+ the re3 lt wo l! (erel: )e the networth or the ni(paire! capital an! 3 rpl 3 o5 the )an? appl:in= Sec# & o5 RA >>$ ) t not the total 5inancial con!ition o5 the )an?# Secon!l:+ the 3tate(ent o5 a33et3 an! lia)ilitie3 i3 3e! in )alance 3heet3# -an?3 3e 3tate(ent3 o5 con!ition to re5lect the a(o nt3+ nat re an! chan=e3 in the a33et3 an! lia)ilitie3# The Central -an? 0an al o5 E<a(ination Proce! re3 pro2i!e3 a 5or(at or chec?li3t o5 a 3tate(ent o5 con!ition to )e 3e! ): e<a(iner3 a3 = i!e in the e<a(ination o5 )an?3# The 5or(at en (erate3 the ite(3 which will co(po3e the a33et3 an! lia)ilitie3 o5 a )an?# A33et3 incl !e ca3h an! tho3e ! e 5ro( )an?3+ loan3+ !i3co nt3 an! a!2ance3+ 5i<e! a33et3 an! other propert: owne! or acE ire! an! other (i3cellaneo 3 a33et3# The a(o nt o5 loan3+ !i3co nt3 an! a!2ance3 to )e 3tate! in the 3tate(ent o5 con!ition a3 pro2i!e! 5or in the (an al i3 co(p te! a5ter !e! ctin= 2al ation re3er2e3 when !ee(e! nece33ar:# .n the other han!+ lia)ilitie3 are co(po3e! o5 !e(an! !epo3it3+ ti(e an! 3a2in=3 !epo3it3+ ca3hierH3+ (ana=erH3 an! certi5ie! chec?3+ )orrowin=3+ ! e to hea! o55ice+ )ranche3G an! a=encie3+ other lia)ilitie3 an! !e5erre! cre!it3 C0an al o5 E<a(ination Proce! re+ p# ,D# The a(o nt3 3tate! in the )alance 3heet3 or 3tate(ent3 o5 con!ition incl !in= the co(p tation o5 2al ation re3er2e3 when j 3ti5ie!+ are )a3e! howe2er+ on the a33 (ption that the )an? or co(pan: will contin e in ) 3ine33 in!e5initel:+ an! there5ore+ the networth 3hown in the 3tate(ent i3 in no 3en3e an in!ication o5 the a(o nt that (i=ht )e reali@e! i5 the )an? or co(pan: were to )e liE i!ate! i((e!iatel: CPrentice Hall Enc:clope!ic Dictionar: o5 - 3ine33 Finance+ p# '9D# F rther+ )a3e! on re3pon!ent3H 3 )(i33ion3+ the allowance 5or pro)a)le lo33e3 on loan3 an! !i3co nt3 repre3ent3 the a(o nt 3et p a=ain3t c rrent operation3 to pro2i!e 5or po33i)le lo33e3 ari3in= 5ro( noncollection o5 loan3 an! a!2ance3+ an! thi3 acco nt i3 al3o re5erre! to a3 2al ation re3er2e Cp# ,+ .)jection3 to Santia=o reportD# Clearl:+ the 3tate(ent o5 con!ition which contain3 a pro2i3ion 5or reco((en!e! 2al ation re3er2e3 3ho l! not )e 3e! a3 the lti(ate )a3i3 to !eter(ine the 3ol2enc: o5 an in3tit tion 5or the p rpo3e o5 ter(ination o5 it3 operation3# Re3pon!ent3 ac?nowle!=e that n!er the 3ai! C- (an al+ C- e<a(iner3 ( 3t reco((en! 2al ation re3er2e3+ when warrante!+ to )e 3et p a=ain3t the corre3pon!in= a33et acco nt Cp# 9+ .)jection3 to Santia=o reportD# TiaoE i hi(3el5+ a3 a thor o5 the report reco((en!in= the clo3 re o5 petitioner )an? a!(it3 that the 2al ation re3er2e3 3ho l! 3till )e !i3c 33e! with the petitioner )an? in co(pliance with 3tan!ar! e<a(ination proce! re# Hence+ 5or the 0onetar: -oar! to nilaterall: !e! ct an ncertain a(o nt a3 2al ation re3er2e3 5ro( the a33et3 o5 a )an? an! to concl !e there5ro( witho t 3 55icient )a3i3 that the )an? i3 in3ol2ent+ wo l! )e totall: nj 3t an! n5air# The te3t o5 in3ol2enc: lai! !own in Section ;, o5 the Central -an? Act i3 (ea3 re! ): !eter(inin= whether the reali@a)le a33et3 o5 a )an? are lea3 than it3 lia)ilitie3# Hence+ a )an? i3 3ol2ent i5 the 5air ca3h 2al e o5 all it3 a33et3+ reali@a)le within a rea3ona)le ti(e ): a rea3ona)le pr !ent per3on+ wo l! eE al or e<cee! it3 total lia)ilitie3 e<cl 3i2e o5 3toc? lia)ilit:G ) t i5 3 ch 5air ca3h 2al e 3o reali@a)le i3 not 3 55icient to pa: 3 ch lia)ilitie3 within a rea3ona)le ti(e+ the )an? i3 in3ol2ent# C"illian 2# State+ *,' N#E# >8%+ >8>+ ;%$ In!# 88*D# State! in other wor!3+ the in3ol2enc: o5 a )an? occ r3 when the act al ca3h (ar?et 2al e o5 it3 a33et3 i3 in3 55icient to pa: it3 lia)ilitie3+ not con3i!erin= capital 3toc? an! 3 rpl 3 which are not lia)ilitie3 5or 3 ch p rpo3e CE<le: 2# Harri3+ ;8$ p# ,$%+ ,$>+*;8 1an# >%;G Ale<an!er 2# Llewell:n+ 0o# App#+ $% S#I# ;n **&+**$D# In arri2in= at the co(p tation o5 reali@a)le a33et3 o5 petitioner )an?+ re3pon!ent3 3e! it3 )oo?3 which n!o )te!l: are not re5lecti2e o5 the act al ca3h or 5air (ar?et 2al e o5 it3 a33et3# Thi3 i3 not the proper proce! re conte(plate! in Sec# ;, o5 the Central -an? Act# E2en the C- 0an al o5 E<a(ination Proce! re3 !oe3 not con5ine e<a(ination o5 a )an? 3olel: with the !eter(ination o5 the )oo?3 o5 the )an?# The latter i3 part o5 a !itin= which 3ho l! not )e con5 3e! with e<a(ination# E<a(ination apprai3e3 the 3o n!ne33 o5 the in3tit tionH3 a33et3+ the E alit: an! character o5 (ana=e(ent an! !eter(ine3 the in3tit tionH3 co(pliance with law3+ r le3 an! re= lation3# A !it i3 a !etaile! in3pection o5 the in3tit tionH3 )oo?3+ acco nt3+ 2o cher3+ le!=er3+ etc# to !eter(ine the recor!in= o5 all a33et3 an! lia)ilitie3# Hence+ e<a(ination concern3 it3el5 with re2iew an! apprai3al+ while a !it concern3 it3el5 with 2eri5ication CC- 0an al o5 E<a(ination Proce! re3+ "eneral In3tr ction3+ p# &D# Thi3 Co rt howe2er+ i3 not in the po3ition to !eter(ine how ( ch ca3h or (ar?et 2al e 3hall

)e a33i=ne! to each o5 the a33et3 an! lia)ilitie3 o5 the )an? to !eter(ine their total reali@a)le 2al e# The proper !eter(ination o5 the3e (atter3 ): 3in= the act al ca3h 2al e criteria )elon=3 to the 5iel! o5 5act-5in!in= e<perti3e o5 the Central -an? an! the 0onetar: -oar!# Notwith3tan!in= the 5act that the 5i= re3 arri2e! at ): the re3pon!ent -oar! a3 to a33et3 an! lia)ilitie3 !o not tr l: in!icate their reali@a)le 2al e a3 the: were (erel: )a3e! on )oo? 2al e+ Ie will howe2er+ ta?e a loo? at the 5i= re3 pre3ente! ): the TiaoE i Report in concl !in= in3ol2enc: a3 o5 J l: >*+ *,9' an! at the 5i= re3 pre3ente! ): the C- a thori@e! !ep t: recei2er an! ): the /alen@ ela+ A rellano an! TiaoE i Report which reco((en!e! the liE i!ation o5 the )an? ): rea3on o5 in3ol2enc: a3 o Jan ar: ;&+*,9&# The TiaoE i report !ate! Jan ar: ;>+ *,9&+ which wa3 )a3e! on partial e<a(ination 5in!in=3 on the )an?H3 con!ition a3 o5 J l: >*+ *,9'+ 3tate3 that total lia)ilitie3 o5 P&+;9;#* (illion e<cee!3 total a33et3 o5 P'+,'$#; (illion a5ter !e! ctin= 5ro( the a33et3 2al ation re3er2e3 o5 P8*;#; (illion# Since+ a3 Ie ha2e e<plaine! in o r pre2io 3 !i3c 33ion that 2al ation re3er2e3 can not )e le=all: !e! cte! a3 there wa3 no tr th5 l an! co(plete e2al ation thereo5 a3 a!(itte! ): the TiaoE i report it3el5+ then an a!j 3t(ent o5 the 5i= re3 win 3how that the lia)ilitie3 o5 P&+;9;#* (illion will not e<cee! the total a33et3 which will a(o nt to P&+&&,#' i5 the 8*;#; (illion allotte! to 2al ation re3er2e3 will not )e !e! cte! 5ro( the a33et3# There can )e no )a3i3 there5ore 5or )oth the concl 3ion o5 in3ol2enc: an! 5or the !eci3ion o5 the re3pon!ent -oar! to clo3e petitioner )an? an! place it n!er recei2er3hip# Concernin= the 5inancial po3ition o5 the )an? a3 o5 Jan ar: ;&+ *,9&+ the !ate o5 the clo3 re o5 the )an?+ the con3oli!ate! 3tate(ent o5 con!ition thereo5 a3 o5 the a5ore3ai! !ate 3hown in the /alen@ ela+ A rellano an! TiaoE i report on the recei2er3hip o5 petitioner )an?+ !ate! 0arch *,+ *,9&+ in!icate3 that total lia)ilitie3 o5 '+&'%#9' (illion !oe3 not e<cee! the total a33et3 o5 '+,9*#&> (illion# Li?ewi3e+ the con3oli!ate! 3tate(ent o5 con!ition o5 petitioner )an? a3 o5 Jan ar: ;&+ *,9& prepare! ): the Central -an? A thori@e! Dep t: Recei2er Arte(io Cr @ 3how3 that total a33et3 a(o ntin= to P'+,9*+&;;+,,8#;; e2en e<cee!3 total lia)ilitie3 a(o ntin= to P'+&'%+9>8+9>'#*&# -a3e! on the 5ore=oin=+ there wa3 no 2ali! rea3on 5or the /alen@ ela+ A rellano an! TiaoE i report to 5inall: reco((en! the liE i!ation o5 petitioner )an? in3tea! o5 it3 reha)ilitation# Ie ta?e note o5 the e<ha 3ti2e 3t !: an! 5in!in=3 o5 the Co3ico report on the petitioner )an?H3 ha2in= en=a=e! in n3a5e+ n3o n! an! 5ra ! lent )an?in= practice3 ): the =rantin= o5 h =e n3ec re! loan3 to 3e2eral 3 )3i!iarie3 an! relate! co(panie3# Ie !o not 3ee+ howe2er+ that thi3 ha3 an: (aterial )earin= on the 2ali!it: o5 the clo3 re# Section >' o5 the RA ;8&+ Central -an? Act e(power3 the 0onetar: -oar! to ta?e action n!er Section ;, o5 the Central -an? Act when a )an? Jper3i3t3 in carr:in= on it3 ) 3ine33 in an nlaw5 l or n3a5e (anner#J There wa3 no 3howin= what3oe2er that the )an? ha! per3i3te! in co((ittin= nlaw5 l )an?in= practice3 an! that the re3pon!ent -oar! ha! atte(pte! to ta?e e55ecti2e action on the )an?H3 alle=e! acti2itie3# D rin= the perio! 5ro( J l: ;$+ *,9' p to Jan ar: ;&+ *,9&+ when petitioner )an? wa3 n!er con3er2ator3hip no o55icial o5 the )an? wa3 e2er pro3ec te!+ 3 3pen!e! or re(o2e! 5or an: participation in n3a5e an! n3o n! )an?in= practice3+ an! neither wa3 the entire (ana=e(ent o5 the )an? replace! or 3 )3tit te!# In 5act+ in her te3ti(on: ! rin= the 3econ! re5erral hearin=+ Carlota /alen@ ela+ C- Dep t: "o2ernor+ te3ti5ie! that the rea3on 5or petitioner )an?H3 clo3 re wa3 not n3o n!+ n3a5e an! 5ra ! lent )an?in= practice3 ) t the alle=e! in3ol2enc: po3ition o5 the )an? CTSN+ A = 3t >+ *,,%+ p# >>*8+ Rollo+ /ol# /IIID# Finall:+ another circ (3tance which point to the 3ol2enc: o5 petitioner )an? i3 the =rantin= ): the 0onetar: -oar! in 5a2or o5 the 5or(er a cre!it line in the a(o nt o5 P> )illion alon= with the placin= o5 petitioner )an? n!er con3er2ator3hip ): 2irt e o5 0#-# Re3ol tion No# ,&& !ate! J l: ;$+ *,9'# Thi3 pa2e! the wa: 5or the reopenin= o5 the )an? on A = 3t *+ *,9' a5ter a 3el5-i(po3e! )an? holi!a: on J l: ;>+ *,9'# .n e(er=enc: loan3 an! a!2ance3+ Section ,% o5 RA ;8& pro2i!e3 two t:pe3 o5 e(er=enc: loan3 that can )e =rante! ): the Central -an? to a 5inanciall: !i3tre33e! )an?B Sec# ,%# ### In perio!3 o5 e(er=enc: or o5 i((inent 5inancial panic which !irectl: threaten (onetar: an! )an?in= 3ta)ilit:+ the Central -an? (a: =rant )an?in= in3tit tion3 e<traor!inar: a!2ance3 3ec re! ): an: a33et3 which are !e5ine! a3 accepta)le ): ): a conc rrent 2ote o5 at lea3t 5i2e (e()er3 o5 the 0onetar: -oar!# Ihile 3 ch a!2ance3 are o t3tan!in=+ the !e)tor in3tit tion (a: not e<pan! the total 2ol (e o5 it3 loan3 or in2e3t(ent3 witho t the prior a thori@ation o5 the 0onetar: -oar!# The Central -an? (a:+ at it3 !i3cretion+ li?ewi3e =rant a!2ance3 to )an?in= in3tit tion3+ e2en ! rin= nor(al perio!3+ 5or the p rpo3e o5 a33i3tin= a )an? in a precario 3 5inancial con!ition or n!er 3erio 3 5inancial pre33 re3 )ro =ht a)o t ): n5ore3een e2ent3+ or e2ent3 which+ tho =h 5ore3eea)le+ co l! not )e pre2ente! ): the )an? concerne!# Pro2i!e!+ howe2er+ That the 0onetar: -oar! ha3 a3certaine! that the )an? i3 not in3ol2ent an! ha3 clearl: reali@a)le a33et3 to 3ec re the a!2ance3# Pro2i!e!+ 5 rther+ That a conc rrent 2ote o5 at lea3t 5i2e (e()er3 o5 the 0onetar: -oar! i3 o)taine!# CE(pha3i3 o r3D

The 5ir3t para=raph o5 the a5oreE ote! pro2i3ion conte(plate3 a 3it ation where the whole )an?in= co(( nit: i3 con5ronte! with 5inancial an! econo(ic cri3i3 =i2in= ri3e to 3erio 3 an! wi!e3prea! con5 3ion a(on= the p )lic+ which (a: e2ent all: threaten an! =ra2el: prej !ice the 3ta)ilit: o5 the )an?in= 3:3te(# Here+ the e(er=enc: or 5inancial con5 3ion in2ol2e3 the whole )an?in= co(( nit: an! not one )an? or in3tit tion onl:# The 3econ! 3it ation on the other han!+ pro2i!e3 5or a 3it ation where the Central -an? =rant3 a loan to a )an? with ncertain 5inancial con!ition ) t not in3ol2ent# A3 alle=e! ): the re3pon!ent3+ the 5ollowin= are the rea3on3 o5 the Central -an? in appro2in= the re3ol tion =rantin= the P> )illion loan to petitioner )an? an! the latterH3 reopenin= a5ter a )rie5 3el5-i(po3e! )an?in= holi!a:B IHEREAS+ the clo3 re ): -anco Filipino Sa2in=3 an! 0ort=a=e -an? o5 it3 -an?in= o55ice3 on it3 own initiati2e ha3 wor?e! 3erio 3 har!3hip3 on it3 !epo3itor3 an! ha3 a55ecte! con5i!ence le2el3 in the )an?in= 3:3te( re3 ltin= in a 5eelin= o5 apprehen3ion a(on= !epo3itor3 an! nnece33ar: !epo3it with!rawal3G IHEREAS+ the Central -an? i3 char=e! with the 5 nction o5 a!(ini3terin= the )an?in= 3:3te(G IHEREAS+ the reopenin= o5 -anco Filipino wo l! reE ire a!!itional cre!it re3o rce3 5ro( the Central -an? a3 well a3 an in!epen!ent (ana=e(ent accepta)le to the Central -an?G IHEREAS+ it i3 the !e3ire o5 the Central -an? to rapi!l: !i55 3e the ncertaint: that pre3entl: e<i3t3G ### C0#-# 0in# No# >& !ate! J l: ;$+ *,9' cite! in Re3pon!ent3H .)jection3 to Santia=o Report+ p# ;8G p# >>9$+ Rollo+ /ol# IXG E(pha3i3 o r3D# A per 3al o5 the 5ore=oin= JIherea3J cla 3e3 n(i3ta?a)l: 3how that the clear rea3on 5or the !eci3ion to =rant the e(er=enc: loan to petitioner )an? wa3 that the latter wa3 3 55erin= 5ro( 5inancial !i3tre33 an! 3e2ere )an? Jr nJ a3 a re3 lt o5 which it clo3e! on J l: ;>+ *,9' an! that the relea3e o5 the 3ai! a(o nt i3 in accor!ance with the Central -an?H3 5 ll 3 pport to (eet -anco FilipinoH3 !epo3itor3H with!rawal reE ire(ent3 CE<cerpt3 o5 (in te3 o5 (eetin= on 0- 0in# No# >&+ p# ;&+ Rollo+ /ol# IXD# Nothin= therein 3how3 that an e<traor!inar: e(er=enc: 3it ation e<i3t3 a55ectin= (o3t )an?3+ not onl: a3 re=ar!3 petitioner )an?# Thi3 Co rt there): 5in!3 that the =rant o5 the 3ai! e(er=enc: loan wa3 inten!e! 5ro( the )e=innin= to 5all n!er the 3econ! para=raph o5 Section ,% o5 the Central -an? Act+ which co l! not ha2e occ rre! i5 the petitioner )an? wa3 not 3ol2ent# Ihere notwith3tan!in= ?nowle!=e o5 the irre= laritie3 an! n3a5e )an?in= practice3 alle=e!l: co((itte! ): the petitioner )an?+ the Central -an? e2en =rante! 5inancial 3 pport to the latter an! place! it n!er con3er2ator3hip+ 3 ch act ation (ean3 that petitioner )an? co l! 3till )e 3a2e! 5ro( it3 5inancial !i3tre33 ): a!eE ate ai! an! (ana=e(ent re5or(+ which wa3 reE ire! ): Central -an?H3 ! t: to (aintain the 3ta)ilit: o5 the )an?in= 3:3te( an! the pre3er2ation o5 p )lic con5i!ence in it CRa(o3 2# Central -an?+ No# L-;,>&;+ .cto)er '+ *,$*+ '* SCRA &8&D# In 2iew o5 the 5ore=oin= pre(i3e3+ Ie )elie2e that the clo3 re o5 the petitioner )an? wa3 ar)itrar: an! co((itte! with =ra2e a) 3e o5 !i3cretion# "rantin= in =ratia ar= (enti that the clo3 re wa3 )a3e! on j 3ti5ie! =ro n!3 to protect the p )lic+ the 5act that petitioner )an? wa3 3 55erin= 5ro( 3erio 3 5inancial pro)le(3 3ho l! not a to(aticall: lea! to it3 liE i!ation# Section ;, o5 the Central -an? pro2i!e3 that a clo3e! )an? (a: )e reor=ani@e! or otherwi3e place! in 3 ch a con!ition that it (a: )e per(itte! to re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ cre!itor3 an! the =eneral p )lic# Ie are aware o5 the Central -an?H3 concern 5or the 3a5et: o5 -anco FilipinoH3 !epo3itor3 a3 well a3 it3 cre!itor3 incl !in= it3el5 which ha! =rante! 3 )3tantial 5inancial a33i3tance p to the ti(e o5 the latterH3 clo3 re# - t there are alternati2e3 to per(anent clo3 re an! liE i!ation to 3a5e= ar! tho3e intere3t3 a3 well a3 tho3e o5 the =eneral p )lic 5or the 5ail re o5 -anco Filipino or an: )an? 5or that (atter (a: )e 2iewe! a3 an irre2er3i)le !ecline o5 the co ntr:H3 entire )an?in= 3:3te( an! lti(atel:+ it (a: re5lect on the Central -an?H3 own 2ia)ilit:# For one thin=+ the Central -an? an! the 0onetar: -oar! 3ho l! e<erci3e 3trict 3 per2i3ion o2er -anco Filipino# The: 3ho l! ta?e all the nece33ar: 3tep3 not 2iolati2e o5 the law3 that will 5 ll: 3ec re the repa:(ent o5 the total 5inancial a33i3tance that the Central -an? ha! alrea!: =rante! or wo l! =rant in the 5 t re# ACC.RDIN"L4+ !eci3ion i3 here): ren!ere! a3 5ollow3B *# The (otion 5or recon3i!eration in "#R# No3# 899$9 an! 9*>%>+ an! the petition3 in "#R# No3# $$;&&-&9+ $9$88+ 9*>%' an! ,%'$> are DENIEDG

;# The petition3 in "#R# No# $%%&'+ $9$8$ an! $99,' are "RANTED an! the a33aile! or!er o5 the Central -an? an! the 0onetar: -oar! !ate! Jan ar: ;&+ *,9& i3 here): ANNULLED AND SET ASIDE# The Central -an? an! the 0onetar: -oar! are or!ere! to reor=ani@e petitioner -anco Filipino Sa2in=3 an! 0ort=a=e -an? an! allow the latter to re3 (e ) 3ine33 in the Philippine3 n!er the co(ptroller3hip o5 )oth the Central -an? an! the 0onetar: -oar! an! n!er 3 ch con!ition3 a3 (a: )e pre3cri)e! ): the latter in connection with it3 reor=ani@ation ntil 3 ch ti(e that petitioner )an? can contin e in ) 3ine33 with 3a5et: to it3 cre!itor3+ !epo3itor3 an! the =eneral p )lic# S. .RDERED# Nar2a3a+ C#J#+ " tierre@+ Jr#+ Cr @+ -i!in an! Re=ala!o+ JJ#+ conc r# Para3+ Feliciano+ Pa!illa+ Da2i!e+ Jr# an! Nocon+ JJ#+ too? no part#

Separate .pinion3

0ELENCI.-HERRERA+ J#+ !i33entin=B I join 0(e# J 3tice Carolina "# AE ino in her !i33ent an! 2ote to !en: the pra:er+ in "#R# No# $%%&'+ to ann l 0onetar: -oar! Re3ol tion No# $& placin= -anco Filipino C-FD n!er recei2er3hip# E2en a33 (in= that the -F wa3 not+ a3 alle=e!+ in a literal 3tate o5 in3ol2enc: at the ti(e o5 the pa33a=e o5 3ai! Re3ol tion+ there wa3 a 5in!in= in the Teo!oro report that+ )a3e! on that -an?H3 illiE i!it:+ to ha2e allowe! it to contin e in operation wo l! ha2e (eant pro)a)le lo33 to !epo3itor3 an! cre!itor3# That i3 al3o a =ro n! 5or placin= the )an? n!er recei2er3hip+ a3 a 5ir3t 3tep+ p r3 ant to Section ;, o5 the Central -an? Act CRep# Act No# ;8&+ a3 a(en!e!D# The clo3 re o5 -F+ there5ore+ can not )e 3ai! to ha2e )een ar)itrar: or (a!e in )a! 5aith# There wa3 3 55icient j 3ti5ication+ con3i!erin= it3 ina)ilit: to (eet the hea2: with!rawal3 ): it3 !epo3itor3 an! to pa: it3 lia)ilitie3 a3 the: 5ell ! e+ to 5or)i! the )an? 5ro( 5 rther en=a=in= in )an?in=# The (atter o5 reopenin=+ reor=ani@ation or reha)ilitation o5 -F i3 not within the co(petence o5 thi3 Co rt to or!ain ) t i3 )etter a!!re33e! to the 0onetar: -oar! an! the Central -an? con3i!erin= the latterH3 enor(o 3 in5 3ion o5 capital into -F to the t ne o5 appro<i(atel: P>#& -illion in total acco((o!ation3+ a5ter a thoro =h a33e33(ent o5 whether or not -F i3+ in!ee!+ po33e33e!+ a3 it 3to tl: conten!3+ o5 3 55icient a33et3 an! capa)ilitie3 with which to repa: 3 ch h =e in!e)te!ne33+ an! can operate witho t lo33 to it3 (an: !epo3itor3 an! cre!itor3#

"RIO.-A7UIN.+ J#+ !i33entin=B Altho =h the3e nine C,D -anco Filipino C-FD ca3e3 ha2e )een con3oli!ate! n!er one ponencia+ all o5 the( e<cept one+ rai3e i33 e3 nrelate! to the recei2er3hip an! liE i!ation o5 3ai! )an?# In 5act+ two o5 the3e ca3e3 C"#R# No# 899$9 an! 9*>%>D ha2e alrea!: )een !eci!e! ): thi3 Co rt an! are onl: awaitin= the re3ol tion o5 the (otion3 5or recon3i!eration 5ile! therein# .nl: "#R# No# $%%&' J-anco Filipino Sa2in=3 an! 0ort=a=e -an? C-FD 23# the 0onetar: -oar! C0-D+ Central -an? o5 the Philippine3 CC-D+ et al#+J i3 an ori=inal action 5or (an!a( 3 an! certiorari 5ile! in thi3 Co rt ): 5or(er o55icial3 o5 -F to ann l the 0onetar: -oar! Re3ol tion No# $& !ate! Jan ar: ;&+ *,9& Cor!erin= the clo3 re o5 -anco Filipino P-FQ an! appointin= Carlota /alen@ ela a3 recei2er o5 the )an?D on the =ro n! that the re3ol tion wa3 i33 e! Jwitho t a55or!in= -F a hearin= on the report3J on which the 0onetar: -oar! )a3e! it3 !eci3ion to clo3e the )an?+ hence+ witho t Ja!(ini3trati2e ! e proce33#J+ The pra:er o5 the petition rea!3B IHEREF.RE+ petitioner re3pect5 ll: pra:3 that a writ o5 (an!a( 3 )e i33 e! co((an!in= re3pon!ent3 i((e!iatel: to 5 rni3h it copie3 o5 the report3 o5 e<a(ination o5 -F e(plo:e! ): re3pon!ent 0onetar: -oar! to 3 pport it3 Re3ol tion o5 Jan ar: ;&+ *,9& an! therea5ter to a55or! it a hearin= prior to an: re3ol tion that (a: )e i33 e! n!er Section ;, o5 R#A# ;8&+ (eanwhile ann llin= 3ai! Re3ol tion o5 Jan ar: ;&+ *,9& ): writ o5 certiorari a3 (a!e witho t or in e<ce33 o5j ri3!iction or with =ra2e a) 3e o5 !i3cretion#

So a3 to e<pe!ite procee!in=3+ petitioner pra:3 that the a33e33(ent o5 the !a(a=e3 re3pon!ent3 3ho l! pa: it )e !e5erre! an! re5erre! to co((i33ioner3# Petitioner pra:3 5or 3 ch other re(e!: a3 the Co rt (a: !ee( j 3t an! eE ita)le in the pre(i3e3# 7 e@on Cit: 5or 0anila+ Fe)r ar: ;9+ *,9&# Cp# 9+ Rollo I-D an! the pra:er o5 the S pple(ent to Petition rea!3B IHEREF.RE+ in a!!ition to it3 pra:er 5or (an!a( 3 an! certiorari containe! in it3 ori=inal petition+ petitioner re3pect5 ll: pra:3 that Section3 ;9-A an! ;, o5 the Central -an? charter CR#A# ;8&D incl !in= it3 a(en!ator: Pre3i!ential Decree3 No3# $;+ *$$*+ *9;$ an! *,>$ )e ann lle! a3 ncon3tit tional# 7 e@on Cit: 5or 0anila+ 0arch '+ *,9&# Cp# **-"+ Rollo I#D The other ei=ht C9D ca3e3 (erel: in2ol2e tran3action3 o5 -F with thir! per3on3 an! certain Jrelate!J corporation3 which ha! !e5a lte! on their loan3 an! 3o =ht to prohi)it the e<traj !icial 5oreclo3 re o5 the (ort=a=e3 on their propertie3 ): the recei2er o5 -F# The3e ei=ht C9D ca3e3 areB *# "#R# No# 899$9 J-F 23# Inter(e!iate Appellate Co rt an! Cele3tina Pahi( tan=J in2ol2e3 the repo33e33ion ): -F o5 a ho 3e an! lot which the ) :er CPahi( tan=D clai(e! to ha2e co(pletel: pai! 5or on the in3tall(ent plan# The appellate co rtH3 j !=(ent 5or the ) :er wa3 re2er3e! ): thi3 Co rt# The ) :erH3 (otion 5or recon3i!eration i3 awaitin= re3ol tion ): thi3 Co rtG ;# "#R# No3# $$;&&-&9+ JTop 0ana=e(ent Pro=ra(3 Corporation an! Pilar De2elop(ent Corporation 23# Co rt o5 appeal3+ et al#J CCA-"#R# SP No# %$9,;D an! JPilar De2elop(ent Corporation 23# E<ec ti2e J !=e+ RTC+ Ca2iteJ CCA-"#R# SP No3# %9,8;8'D i3 a con3oli!ate! petition 5or re2iew o5 the Co rt o5 Appeal3H joint !eci3ion !i3(i33in= the petition3 5or prohi)ition in which the petitioner3 3ee? to pre2ent the recei2erKliE i!ator o5 -F 5ro( e<traj !iciall: 5oreclo3in= the P'#9 (illion (ort=a=e on Top 0ana=e(entH3 propertie3 an! the P*9-8$ (illion (ort=a=e on Pilar De2elop(ent propertie3# The Co rt o5 Appeal3 !i3(i33e! the petition3 on .cto)er >%+ *,98 on the =ro n! that Jthe 5 nction3 o5 the liE i!ator+ a3 recei2er n!er Section ;, CR#A# ;8&D+ incl !e ta?in= char=e o5 the in3ol2entH3 a33et3 an! a!(ini3terin= the 3a(e 5or the )ene5it o5 it3 cre!itor3 an! o5 )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?GJ ># "#R# No# $9$88+ JEl "ran!e Corporation 23# Co rt o5 Appeal3+ et al#+J i3 an appeal 5ro( the Co rt o5 Appeal3H !eci3ion in CA-"#R# SP No# %99%, !i3(i33in= El "ran!eH3 petition 5or prohi)ition to pre2ent the 5oreclo3 re o5 -FH3 P9 (illion (ort=a=e on El "ran!eH3 propertie3G '# "#R# No# $99,'+ J-anco Filipino Sa2in=3 an! 0ort=a=e -an? 23# Co rt o5 Appeal3+ et al#J i3 an appeal o5 -F3 ol! (ana=e(ent C 3in= the na(e o5 -FD 5ro( the !eci3ion o5 the Co rt o5 Appeal3 in CA-"#R# SP No# %$&%> entitle!+ JCentral -an?+ et al# 23# J !=e 6oilo A= inal!o+ et alJ !i3(i33in= the co(plaint o5 J-FJ to ann l the recei2er3hip+ 5or no 3 it (a: )e )ro =ht or !e5en!e! in the na(e o5 the )an? e<cept ): it3 recei2erG &# "#R# No# 9$98$+ J0etropoli3 De2elop(ent Corporation 23# Co rt o5 Appeal3J C5or(erl: AC-"#R# No# %$&%>+ JCentral -an?+ et al# 23# Honora)le 6oilo A= inal!o+ et al#HD i3 an appeal o5 the inter2enor C0etropoli3D 5ro( the 3a(e Co rt o5 Appeal3H !eci3ion 3 )ject o5 "#R# No# $99,'+ which al3o !i3(i33e! 0etropoli3H co(plaint in inter2ention on the =ro n! that a 3toc?hol!er C0etropoli3D (a: not )rin= 3 it in the na(e o5 -F while the latter i3 n!er recei2er3hip+ witho t the a thorit: o5 the recei2erG 8# "#R# No# 9*>%>+ JPilar De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#J i3 an appeal 5ro( the !eci3ion !ate! .cto)er ;;+ *,9$ o5 the Co rt o5 Appeal3 in CA-"#R# SP No# *;>89+ JPilar De2elop(ent Corporation+ et al# 23# Honora)le 0an el Co3ico+ et al#+J !i3(i33in= the petition 5or certiorari a=ain3t J !=e 0an el Co3ico+ -r# *>8+ RTC+ 0a?ati+ who !i3(i33e! the co(plaint 5ile! ): Pilar De2elop(ent Corporation a=ain3t -F+ 5or 3peci5ic per5or(ance o5 certain !e2eloper contract3# An an3wer 5ile! ): Nor)erto 7 i3 ()in= an! A33ociate3+ a3 -FH3 3 ppo3e! co n3el+ 2irt all: con5e33e! j !=(ent in 5a2or o5 Pilar De2elop(ent# .n (otion o5 the recei2er+ the an3wer wa3 e<p n=e! an! the co(plaint wa3 !i3(i33e!# .n a petition 5or certiorari in thi3 Co rt+ we hel! thatB JA3 liE i!ator o5 -F ): 2irt e o5 a 2ali! appoint(ent 5ro( the Central -an?+ pri2ate re3pon!ent Carlota /alen@ ela ha3 the a thorit: to !irect the operation o5 the )an? in 3 )3tit tion o5 the 5or(er (ana=e(ent+ which a thorit: incl !e3 the retainer o5 co n3el to repre3ent it in )rin=in= or re3i3tin= 3 it3 in connection with 3 ch liE i!ation an!+ in the ca3e at )ar+ to ta?e the proper 3tep3 to pre2ent coll 3ion+ to the prej !ice o5 the le=iti(ate cre!itor3+ )etween -F an! the petitioner3 herein which appear to )e owne! an!

controlle! ): the 3a(e intere3t controllin= -FJ Cp# ',+ RolloD# The petitioner3H (otion 5or recon3i!eration o5 that !eci3ion i3 pen!in= re3ol tion# $# "#R# No# 9*>%'+ J-F Ho(e3 De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#J i3 an appeal 5ro( the !eci3ion !ate! No2e()er '+ *,9$ o5 the Co rt o5 Appeal3 in CA-"#R# C/ No# %9&8& a55ir(in= the trial co rtH3 or!er !i3(i33in= -F Ho(e3H action to co(pel the Central -an? to re3tore the 5inancin= 5acilitie3 o5 -F+ )eca 3e the plainti55 C-F Ho(e3D ha3 no ca 3e o5 action a=ain3t the C-# 9# "#R# No# ,%'$>+ JEl "ran!e De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#+J i3 a petition to re2iew the !eci3ion !ate! J ne 8+ *,9, in CA-"#R# SP No# %98$8 !i3(i33in= El "ran!eH3 petition 5or prohi)ition to 3top 5oreclo3 re procee!in=3 a=ain3t it ): the recei2er o5 -F# A3 pre2io 3l: 3tate!+ "#R# No# $%%&' J-F 23# 0onetar: -oar!+ et al#+J i3 an ori=inal 3pecial ci2il action 5or certiorari an! (an!a( 3 5ile! in thi3 Co rt ): the ol! (ana=e(ent o5 -F+ thro =h their co n3el+ N#J# 7 i3 ()in= A A33ociate3+ 3in= the na(e o5 the )an? an! pra:in= 5or the ann l(ent o5 0- Re3ol tion No# $& which or!ere! the clo3 re o5 -F an! place! it n!er recei2er3hip# It i3 a J5or (-3hoppin=J ca3e )eca 3e it wa3 5ile! here on Fe)r ar: ;9+ *,9& three wee?3 a5ter the: ha! 5ile! on Fe)r ar: ;+ *,9& Ci2il Ca3e No# ,8$& J-anco Filipino 23# 0onetar: -oar!+ et al#J in the Re=ional Trial Co rt o5 0a?ati+ -r# *'> Cpre3i!e! o2er ): J !=e 6oilo A= inal!oD 5or the 3a(e p rpo3e o5 3ec rin= a !eclaration o5 the n llit: o5 0- Re3ol tion No# $& !ate! Jan ar: ;&+ *,9&# .n A = 3t ;&+ *,9&+ thi3 Co rt or!ere! the tran35er an! con3oli!ation o5 Ci2il Ca3e No# ,8$8 Cto ann l the recei2er3hipD 5ro( -r# *'> to -r# *>8 CJ !=e 0an el Co3icoD o5 the 0a?ati Re=ional Trial Co rt where Ci2il Ca3e No# 9*%9 Cto ann l the con3er2ator3hipD an! Ci2il Ca3e No# *%*9> Cto ann l the liE i!ationD o5 -F were an! are 3till pen!in=# All the3e three C>D ca3e3 were archi2e! on J ne >%+ *,99 ): J !=e Co3ico pen!in= the re3ol tion o5 "#R# No# $%%&' ): thi3 Co rt# -eca 3e o5 (: pre2io 3 participation+ a3 a 5or(er (e()er o5 the Co rt o5 Appeal3+ in the !i3po3ition o5 AC"#R# No# %;8*$ Cnow "#R# No# 899$9D an! AC-"#R# SP No# %$&%> Cnow "#R# No3# $9$8$ an! $99,'D+ I a( ta?in= no part in "#R# No3# 899$9+ $9$8$ an! $99,'# It (a: )e (entione! in thi3 connection that neither in AC"#R# SP No# %;8*$+ nor in AC-"#R# SP No# %$&%>+ !i! the Co rt o5 Appeal3 r le on the con3tit tionalit: o5 Section3 ;9-A an! ;, o5 Rep )lic Act ;8& CCentral -an? ActD+ a3 a(en!e!+ an! the 2ali!it: o5 0- Re3ol tion No# $&+ 5or tho3e i33 e3 were not rai3e! in the Co rt o5 Appeal3# I conc r with the ponencia in3o5ar a3 it !enie3 the (otion 5or recon3i!eration in "#R# No# 9*>%>+ an! !i3(i33e3 the petition3 5or re2iew in "#R# No3# $$;&&-&9+ $9$88+ 9*>%'+ an! ,%'$># I re3pect5 ll: !i33ent 5ro( the (ajorit: opinion in "#R# No# $%%&' ann llin= an! 3ettin= a3i!e 0- Re3ol tion No# $& an! or!erin= the re3pon!ent3+ Central -an? o5 the Philippine3 an! the 0onetar: -oar! M to reor=ani@e petitioner -anco Filipino Sa2in=3 an! 0ort=a=e -an?+ an! allow the latter to re3 (e ) 3ine33 in the Philippine3 n!er the co(ptroller3hip o5 )oth the Central -an? an! the 0onetar: -oar! an! n!er 3 ch con!ition3 a3 (a: )e pre3cri)e! ): the latter ntil 3 ch ti(e that petitioner )an? can contin e in ) 3ine33 with 3a5et: to it3 cre!itor3+ !epo3itor3 an! the =eneral p )lic# 5or I )elie2e that thi3 Co rt ha3 neither the a thorit: nor the co(petence to !eter(ine whether or not+ an! n!er what con!ition3+ -F 3ho l! )e reor=ani@e! an! reopene!# That !eci3ion 3ho l! )e (a!e ): the Central -an? an! the 0onetar: -oar!+ not ): thi3 Co rt# All that we (a: !eter(ine in thi3 ca3e i3 whether the action3 o5 the Central -an? an! the 0onetar: -oar! in clo3in= -F an! placin= it n!er recei2er3hip were Jplainl: ar)itrar: an! (a!e in )a! 5aith# Section ;, o5 Rep )lic Act No# ;8& pro2i!e3B Section ;,# Procee!in=3 pon in3ol2enc:# M Ihene2er+ pon e<a(ination ): the hea! o5 the appropriate 3 per2i3in= an! e<a(inin= !epart(ent or hi3 e<a(iner3 or a=ent3 into the con!ition o5 an: )an?in= in3tit tion+ it 3hall )e !i3clo3e! that the con!ition o5 the 3a(e i3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3+ it 3hall )e the ! t: o5 the !epart(ent hea! concerne! 5orthwith+ in writin=+ to in5or( the 0onetar: -oar! o5 the 5act3+ an! the -oar! (a:+ pon 5in!in= the 3tate(ent3 o5 the !epart(ent hea! to )e tr e+ 5or)i! the in3tit tion to !o ) 3ine33 in the Philippine3 an! 3hall !e3i=nate an o55icial o5 the Central -an? a3 recei2er to i((e!iatel: ta?e char=e o5 it3 a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+

e<erci3in= all the power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?in= in3tit tion# The 0onetar: -oar! 3hall there pon !eter(ine within 3i<t: !a:3 whether the in3tit tion (a: )e reor=ani@e! or otherwi3e place! in 3 ch a con!ition 3o that it (a: )e per(itte! to re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3 an! cre!itor3 an! the =eneral p )lic an! 3hall pre3cri)e the con!ition3 n!er which 3 ch re3 (ption o5 ) 3ine33 3hall ta?e place a3 well a3 the ti(e 5or 5 l5ill(ent o5 3 ch con!ition3# In 3 ch ca3e+ the e<pen3e3 an! 5ee3 in the collection an! a!(ini3tration o5 the a33et3 o5 the in3tit tion 3hall )e !eter(ine! ): the -oar! an! 3hall )e pai! to the Central -an? o t o5 the a33et3 o5 3 ch )an?in= in3tit tion# I5 the 0onetar: -oar! 3hall !eter(ine an! con5ir( within the 3ai! perio! that the )an?in= in3tit tion i3 in3ol2ent or cannot re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ cre!itor3 an! the =eneral p )lic+ it 3hall+ i5 the p )lic intere3t reE ire3+ or!er it3 liE i!ation+ in!icate the (anner o5 it3 liE i!ation an! appro2e a liE i!ation plan# The Central -an? 3hall+ ): the Solicitor "eneral+ 5ile a petition in the Co rt o5 Fir3t In3tance+ recitin= the procee!in=3 which ha2e )een ta?en an! pra:in= the a33i3tance o5 the co rt in the liE i!ation o5 the )an?in= in3tit tion3# The co rt 3hall ha2e j ri3!iction in the 3a(e procee!in=3 to a!j !icate !i3p te! clai(3 a=ain3t the )an? an! en5orce in!i2i! al lia)ilitie3 o5 the 3toc?hol!er3 an! !o all that i3 nece33ar: to pre3er2e the a33et3 o5 the )an?in= in3tit tion an! to i(ple(ent the liE i!ation plan appro2e! ): the 0onetar: -oar!# The 0onetar: -oar! 3hall !e3i=nate an o55icial o5 the Central -an? a3 liE i!ator who 3hall ta?e o2er the 5 nction3 o5 the recei2er pre2io 3l: appointe! ): the 0onetar: -oar! n!er thi3 3ection# The liE i!ator 3hall+ with all con2enient 3pee!+ con2ert the a33et3 o5 the )an?in= in3tit tion to (one: or 3ell+ a33i=n or otherwi3e !i3po3e o5 the 3a(e to cre!itor3 an! other partie3 5or the p rpo3e o5 pa:in= the !e)t3 o5 3 ch )an? an! he (a:+ in the na(e o5 the )an?in= in3tit tion+ in3tit te 3 ch action3 a3 (a: )e nece33ar: in the appropriate co rt to collect an! reco2er acco nt3 an! a33et3 o5 the )an?in= in3tit tion# The pro2i3ion3 o5 an: law to the contrar: notwith3tan!in=+ the action3 o5 the 0onetar: -oar! n!er thi3 3ection an! the 3econ! para=raph o5 Section >' o5 thi3 Act 3hall )e 5inal an! e<ec tor:+ an! can )e 3et a3i!e ): the co rt onl: i5 there i3 con2incin= proo5 that theaction i3 plainl: ar)itrar: an! (a!e in )a! 5aith# No re3trainin= or!er or inj nction 3hall )e i33 e! ): the co rt enjoinin= the Central -an? 5ro( i(ple(entin= it3 action3 n!er thi3 3ection an! the 3econ! para=raph o5 Section >' o5 thi3 Act+ nle33 there i3 con2incin= proo5 that the action o5 the 0onetar: -oar! i3 plainl: ar)itrar: an! (a!e in )a! 5aith an! the petitioner or plainti55 5ile3 with the cler? or j !=e o5 the co rt in which the action i3 pen!in= a )on! e<ec te! in 5a2or o5 the Central -an?+ in an a(o nt to )e 5i<e! ): the co rt# The re3trainin= or!er or inj nction 3hall )e re5 3e! or+ i5 =rante!+ 3hall )e !i33ol2e! pon 5ilin= ): the Central -an? o5 a )on!+ which 3hall )e in the 5or( o5 ca3h or Central -an? ca3hierH3 chec?+ in an a(o nt twice the a(o nt o5 the )on! o5 the petitioner or plainti55+ con!itione! that it will pa:the which the petitioner or plainti55 (a: 3 55er ): the re5 3alor the !i33ol tion o5 the inj nction# The pro2i3ion3 o5 R le &9 o5 the new R le3 o5 Co rt in3o5ar a3 the: are applica)le an! not incon3i3tent with the pro2i3ion3 o5 thi3 3ection 3hall =o2ern the i33 ance an! !i33ol tion o5 the re3trainin= or!er or inj nction conte(plate! in thi3 3ection# In3ol2enc:+ n!er thi3 Act+ 3hall )e n!er3too! to (ean the ina)ilit: o5 a )an?in= in3tit tion to pa: it3 lia)ilitie3 a3 the: 5all ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33+ pro2i!e!+ howe2er+ that thi3 3hall not incl !e the ina)ilit: to pa: o5 an otherwi3e non-in3ol2ent )an? ca 3e! ): e<tra-or!inar: !e(an!3 in! ce! ): 5inancial panic co((onl: e2i!ence! ): a r n on the )an?3 in the )an?in= co(( nit:# The !eter(inati2e 5actor in the clo3 re+ recei2er3hip+ an! liE i!ation o5 a )an? i3 the 5in!in=+ pon e<a(ination ): the SES o5 the Central -an?+ that it3 con!ition Ji3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3#J CSec# ;,+ R#A# ;8&#D It 3ho l! )e pointe! o t that in3ol2enc: i3 not the onl: 3tat tor: =ro n! 5or the clo3 re o5 a )an?# The other =ro n! i3 when Jit3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3# Ia3 -F in3ol2ent i#e#+ na)le to pa: it3 lia)ilitie3 a3 the: 5ell ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33+ on an! 5or 3o(e ti(e )e5ore Jan ar: ;&+ *,9& when the 0onetar: -oar! i33 e! Re3ol tion No# $& clo3in= the )an? an! placin= it n!er recei2er3hipL Io l! it3 contin e! operation in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3L The an3wer to )oth E e3tion3 i3 :e3# -oth the con3er2ator "il)ert3 Teo!oro an! the hea! o5 the SES CS per2i3ion an! E<a(ination SectorD Ra(on /# TiaoE i opine! that -FH3 contin ance in ) 3ine33 wo l! ca 3e pro)a)le lo33 to !epo3itor3 an! cre!itor3# TiaoE i 5 rther cate=oricall: 5o n! that -F wa3 in3ol2ent# Ih: wa3 thi3 3oL

The Teo!oro an! TiaoE i report3 a3 well a3 the report o5 the recei2er3+ Carlota /alen@ ela+ Arn l5o -# A rellano an! Ra(on /# TiaoE i+ 3howe! that 3ince the en! o5 No2e()er *,9> -F ha! alrea!: )een inc rrin= Jchronic re3er2e !e5iciencie3H an! e<periencin= 3e2ere liE i!it: pro)le(3# So ( ch 3o+ that it ha! )eco(e Ja 3 )3tantial )orrower in the call loan3 (ar?etJ an! in J ne *,9' it o)taine! a P>% (illion e(er=enc: loan 5ro( the Central -an?# Cp# ;+ Recei2erH3 Report#D A!!itional e(er=enc:t loan3 Ca total o5 P**,#$ (illion3D were e<ten!e! ): the Central -an? to -F that (onth C0- Re3# No# 9>, !ate! J ne ;,+*,9'D# .n J l: *;+ *,9'+ -F3 chair(an+ Anthon: A= irre+ o55ere! to Jt rn o2er the a!(ini3tration o5 the a55air3 o5 the )an?J to the Central -an? CA= irreH3 letter to "o2ernor Jo3e Fernan!e@+ Anne< $ o5 0ani5e3tation !ate! 0a: >+*,,*D# .n J l: ;>+*,9'+ na)le to (eet hea2: !epo3it with!rawal3+ -FH3 (ana=e(ent (ot proprio+ witho t o)tainin= the con5or(it: o5 the Central -an?+ clo3e! the )an? an! !eclare! a )an? holi!a:# .n J l: ;$+ *,9'+ the C-+ re3pon!in= to -F3 plea3 5or a!!itional 5inancial a33i3tance+ =rante! -F a P> )illion cre!it line C0- Re3# No# ,>' o5 J l: ;$+ *,9'D to ena)le it to reopen an! re3 (e ) 3ine33 on A = 3t *+ *,9'# P;#>8%* )illion3 o5 the cre!it line were a2aile! o5 ): the en! o5 *,9' e<cl 3i2e o5 an o2er!ra5t o5 P,>;#' (illion3 Cp# ;+ TiaoE i ReportD# Total acco((o!ation3 =rante! to -F a(o nte! to P>#'*;; )illion3 Cp# *,+ Co3ico ReportD# Pre3 (a)l: to a33 re that the 5inancial a33i3tance wo l! )e properl: 3e!+ the 0- appointe! -a3ilio E3tani3lao a3 con3er2ator o5 the )an?# A con3er2ator3hip tea( o5 $9 e<a(iner3 an! acco ntant3 wa3 a33i=ne! at the )an? to ?eep trac? o5 it3 acti2itie3 an! a3certain it3 5inancial con!ition Cp# 9+ TiaoE i ReportD# E3tani3lao re3i=ne! a5ter two wee?3 5or health rea3on3# He wa3 3 ccee!e! ): "il)erto Teo!oro a3 con3er2ator in A = 3t+ *,9' p to Jan ar: 9+ *,9&# -e3i!e3 the con3er2ator3hip tea(+ Teo!oro hire! 5inancial con3 ltant3 0e33r3# Tir3o "# Santillan+ Jr# an! Plori!o P# Ca3 ela to (a?e an anal:3i3 o5 -FH3 5inancial con!ition# Teo!oro al3o en=a=e! the acco ntin= 5ir( o5 S:cip+ "orre3+ /ela:o an! Co(pan: to (a?e an a33et e2al ation# The Philippine Apprai3al Co(pan: CPACD apprai3e! -F3 real e3tate propertie3+ acE ire! a33et3+ an! collateral3 hel!# .n Jan ar: ,+ *,9&+ Teo!oro 3 )(itte! hi3 Report# Three wee?3 later+ on Jan ar: ;>+ *,9&+ TiaoE i al3o 3 )(itte! hi3 Report# -oth report3 3howe!that+ in 2iolation o5 Section >$ o5 the "eneral -an?in= Act CR#A#>>$DB ; *# -F ha! )een contin all: !e5icient in liE i!it: re3er2e3 CTeo!oro ReportD# The )an? ha! )een e<periencin= a 3e2ere !rop in liE i!it: le2el3# The ratio o5 liE i! a33et3 to !epo3it3 an! )orrowin=3 pl n=e! 5ro( a)o t ;%N at en!-*,9>+ to a)o t 9#8N ): en!-0a: *,9'+ ( ch )elow the 3tat tor: reE ire(ent3 o5 ;'N 5or !e(an! !epo3it3K!epo3it 3 )3tit te3 an! *'N 5or 3a2in=3 an! ti(e !epo3it3# Cp# ;+ TiaoE i Report#D ;# De5iciencie3 in a2era=e !ail: le=al re3er2e3 ro3e 5ro( P8>#% (illion ! rin= the wee? o5 No2e()er ;*-;&+ *,9> to a hi=h o5 P'>&#, (illion ! rin= the wee? o5 J ne **-*&+ *,9' Cpp# ;->+ TiaoE i ReportD# Acc ( late! penaltie3 on re3er2e !e5iciencie3 a(o nte! to P>$#' (illion ): J l: >*+ an! ro3e to P'9 (illion ): the en! o5 *,9'# CTiaoE i Report#D ># Depo3it le2el3+ which were at P>+9'& (illion at en!-0a: l,9' Cit3 la3t Jnor(alJ (onthD+ !roppe! to P,>& (illion at the en! o5 No2e()er *,9' or a lo33 o5 P;+,*% (illion# Thi3 repre3ente! an a2era=e (onthl: lo33 o5 P'9& (illion 23# an a2era=e (onthl: =ain o5 P;8 (illion ! rin= the 5ir3t & (onth3 o5 *,9'# Cpp# ;->+ TiaoE i Report#D '# Depo3it3 ha! !ecline! at the rate o5 P;% (illion ! rin= the (onth o5 Dece()er *,9'+ ) t e<pen3e3 o5 a)o t P*$ (illion per (onth were reE ire! to (aintain the )an?H3 operation# Cp# 8+ Teo!oro Report#D &# -a3e! on the projecte! o tloo?+ the -an?H3 a2era=e :iel! on a33et3 o5 *8#>N p#a#+ wa3 in3 55icient to (eet the a2era=e co3t o5 5 n!3 o5 *,#&N p#a# an! operatin= e<pen3e3 o5 '#9N p#a# Cp# & Teo!oro Report#D 8# An i(pr !entl: lar=e proportion o5 a33et3 were loc?e! into lon=-ter( application3# CTeo!oro Report#D $# -F o2ere<ten!e! it3el5 in len!in= to the real e3tate in! 3tr:+ co((ittin= a3 ( ch a3 &;N o5 it3 pe3o !epo3it3 to it3 a55iliate3 or Jrelate! acco nt3J to which it contin e! len!in= e2en when it wa3 alrea!: 3 55erin= 5ro( liE i!it: 3tre33e3# CTeo!oro Report#D Thi3 wa3 !one in 2iolation o5 Section >9 o5 the "eneral -an?in= Act CR#A# >>$D# > 9# D rin= the perio! o5 (ar?e! !ecline in liE i!it: le2el3 the loan port5olio =rew ): P'*$#> (illion in the 5ir3t 5i2e (onth3 o5 *,9' M an! ): another P*%&#l (illion in the ne<t two (onth3# Cpp# ;->+ TiaoE i Report#D

,# The loan port5olio 3too! at P>#8$, )illion at the en! o5 J l: *,9'+ &8#;N o5 it channele! to co(panie3 who3e 3toc?hol!er3+ !irector3 an! o55icer3 were relate! to the o55icer3+ !irector3+ an! 3o(e 3toc?hol!er3 o5 -F# Cp# 9+ TiaoE i Report#D Here a=ain -F 2iolate! the "eneral -an?in= Act CR#A# >>$D# ' *%# So(e o5 the loan3 were 3e! to acE ire pre5erre! 3toc?3 o5 -F# -etween Septe()er *$+ *,9> an! Fe)r ar: *%+ *,9'+ P',#, (illion o5 pre5erre! non-con2erti)le 3toc?3 were i33 e!# A)o t 9&N or P';#' (illion wa3 pai! o t o5 the procee!3 o5 loan3 to 3toc?hol!er3K )orrower3 with relation3hip to the )an? CAnne< DD# Aro n! P*9#9 (illion were i33 e! in the na(e o5 an entit: other than the p rcha3er o5 the 3toc?3# CTiaoE i Report#D **# Loan3 a(o ntin= to 3o(e P8,#> (illion were =rante! 3i(pl: to pa:-o55 ol! loan3 incl !in= accr e! intere3t+ a3 an acco((o!ation 5or the !irect (at rin= loan3 o5 3o(e 5ir(3 an! a3 a wa: o5 pa:in=-o55 loan3 o5 other )orrower 5ir(3 which ha2e their own cre!it line3 with the )an?# The3e helpe! to (a?e otherwi3e !elinE ent loan3 appear Jc rrentJ an! !ecepti2el: Ji(pro2e!J the E alit: o5 the loan port5olio# CTiaoE i Report#D *;# E<a(ination o5 the collateral3 5or the loan acco nt3 o5 8> (ajor )orrower3 an! >; other 3electe! )orrower3 a3 o5 J l: >*+ *,9'+ 3howe! thatB CaD ;+8&9 TCTH3 which -F e2al ate! to )e worth P*+'9$ (illion were apprai3e! ): PAC to )e worth onl: P*+*,8 (illion+ hence+ !e5icient ): P;,* (illion# C)D .ther propertie3 Ccollateral3D 3 ppo3e!l: worth P$** (illion co l! not )e e2al ate! ): PAC )eca 3e the !etail3 3 )(itte! ): the )an? were in3 55icientG CcD Ihile P8$' (illion in loan3 were 3 ppo3e!l: = arantee! ): the Ho(e Financin= Corporation CHFICD+ the latter con5ir(e! onl: P';$ (illion# P;'$ (illion in loan3 were not = arantee! ): HFC# CTeo!oro Report#D C!D Per S"/H3 report+ loan3 totallin= P*#99; (illion incl !in= accr e! intere3t+ were 3ec re! ): collateral worth onl: Pl#&' )illion# Hence+ -F3 n3ec re! e<po3 re a(o nte! to P&98#; (illion# -F Ho(e3+ Inc#+ a relate! co(pan: which ha3 5ile! with the SEC a petition 5or 3 3pen3ion o5 pa:(ent3+ owe3 P&%; (illion to -F# *># -F ha! )een 3 55erin= hea2: lo33e3# M aD For the ele2en C**D (onth3 en!e! No2e()er >%+ *,9'+ the e3ti(ate! net lo33 wa3 P>$;#8 0illionG )D For the twel2e C*;D (onth3 5ro( No2e()er *,9'+ the projecte! net lo33 wo l! )e P>,%#$ 0illion an! wo l! contin e na)ate!G Cp# ;+ Teo!oro ReportD cD Aro n! $*#$N o5 the total acco((o!ation3 o5 P;#%8$$ )illion3 to the relate!Klin?e! entitie3 were a!2er3el: cla33i5ie!# Clo3e to >>#$N or P8,$#* (illion3 were clean loan3 or a=ain3t PN3 Cpro(i33or: note3D o5 the3e entitie3# .5 the latter+ &;#8N were cla33i5ie! a3 lo33#J CP# &+ TiaoE i Report#D !D The )an?H3 5inancial con!ition a3 o5 !ate o5 e<a(ination+ a5ter 3ettin= p the a!!itional 2al ation re3er2e3 o5 P8*;#; (illion3 an! acc ( late! net lo33 o5 P'9#; (illion3+ in!icate3 one o5 in3ol2enc:# Total lia)ilitie3 o5 P&+;9;#* (illion e<cee!3 total a33et3 o5 P'+,'$#; (illion ): 8#9N# Total capital acco nt o5 P>>'#, (illionD i3 !e5icient ): P>;;#$ (illion a=ain3t the (ini( ( capital reE ire! o5 P8&$#8 (illion CAnne< FD# Capital to ri3? a33et3 ratio i3 ne=ati2e *%#>9N# eD Total loan3 an! in2e3t(ent port5olio a(o nte! to P>+,*'#> (illion3 C=ro33D+ o5 which P*,'#% (illion3 or &#%N were pa3t ! e an! P*+8&$#* (illion3 or ';#>N were a!2er3el: cla33i5ie! CS )3tan!ar! M P*+%**#' (illion3G Do )t5 l M P;$'#8 (illion3 an! Lo33 M P>$*#* (illion3D# Acco nt3 a!2er3el: cla33i5ie! incl !e! n(at re! loan o5 Pl+'9;#% (illion to entitie3 relate! with each other an! to the )an?+ 3e2eral o5 which 3howe! !i3tre33e! con!ition3# Cp# $+ TiaoE i Report#D Teo!oroH3 concl 3ion wa3 that Jthe contin ance o5 the )an? in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3#J He reco((en!e! Jthat the 0onetar: -oar! ta?e a (ore e55ecti2e an! re3pon3i)le action to protect the !epo3itor3 an! cre!itor3 ### in the li=ht o5 the )an?H3 wor3enin= con!ition#J Cp# &+ Teo!oro Report#D .n Jan ar: ;>+ *,9&+ TiaoE i 3 )(itte! hi3 report to the 0onetar: -oar!+ Li?e Teo!oro+ TiaoE i )elie2e! that the principal ca 3e o5 the )an?H3 5ail re wa3 that in 2iolation o5 the "eneral -an?in= Law an! C- r le3 an! re= lation3+ -FH3 (ajor 3toc?hol!er3+ !irector3 an! o55icer3+ thro =h their Jrelate!J co(panie3B Ci#e# co(panie3

owne! or controlle! ): the( o5 their relati2e3D ha! )een J)orrowin=J h =e ch n?3 o5 the (one: o5 the !epo3itor3# Hi3 Concl 3ion an! Reco((en!ation3 wereB The Con3er2ator+ in hi3 report to the 0onetar: -oar! !ate! Jan ar: 9+ *,9&+ ha3 3tate! that the contin ance o5 the )an? in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3# It ha3 reco((en!e! that a (ore e55ecti2e action )e ta?en to protect !epo3itor3 an! cre!itor3# The e<a(ination 5in!in=3 a3 o5 J l: >*+ *,9' a3 3hown earlier+ in!icate one o5 in3ol2enc: an! illiE i!it: an! 5 rther con5ir(3 the a)o2e concl 3ion o5 the Con3er2ator# All the 5ore=oin= pro2i!e3 3 55icient j 3ti5ication 5or 5or)i!!in= the )an? 5ro( 5 rther en=a=in= in )an?in=# Fore=oin= con3i!ere!+ the 5ollowin= are reco((en!e!B *# For)i! the -anco Filipino Sa2in=3 A 0ort=a=e -an? to !o ) 3ine33 in the Philippine3 e55ecti2e the )e=innin= o5 o55ice on Jan ar:+ *,9&+ p r3 ant to Sec# ;, o5 R#A# No# ;8&+ a3 a(en!e!G ;# De3i=nate the Hea! o5 the Con3er2ator Tea( at the )an?+ a3 Recei2er o5 -anco Filipino Sa2in=3 A 0ort=a=e -an?+ to i((e!iatel: ta?e char=e o5 the a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 all the cre!itor3+ an! e<erci3e all the power3 nece33ar: 5or the3e p rpo3e3 incl !in= ) t not li(ite! to )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?# ># The -oar! o5 !irector3 an! the principal o55icer3 5ro( Senior /ice Pre3i!ent+ a3 li3te! in the attache! Anne< JAJ )e incl !e! in the watchli3t o5 the S per2i3ion an! E<a(ination Sector ntil 3 ch ti(e that the: 3hall ha2e cleare! the(3el2e3# '# Re5er to the Central -anle3 Le=al Depart(ent an! .55ice o5 Special In2e3ti=ation the report on the 5in!in=3 on -anco Filipino 5or in2e3ti=ation an! po33i)le pro3ec tion o5 !irector3+ o55icer3 an! e(plo:ee3 5or acti2itie3 which le! to it3 in3ol2ent po3ition#J Cpp# ,-*%+ TiaoE i Report#D .n Jan ar: ;&+ *,9& or two !a:3 a5ter the 3 )(i33ion o5 TiaoE iH3 Report+ an! three wee?3 a5ter it recei2e! Teo!oroH3 Report+ the 0onetar: -oar!+ then co(po3e! o5B Chair(anB Jo3e -# Fernan!e@+ Jr# C- "o2ernor 0e()er3B *# Ce3ar E#A# /irata+ Pri(e 0ini3ter A Conc rrentl: 0ini3ter o5 Finance ;# Ro)erto /# .n=pin+ 0ini3ter o5 Tra!e A In! 3tr: A Chair(an o5 -oar! o5 In2e3t(ent ># /icente -# /al!epeFa3+ Jr#+ 0ini3ter o5 Econo(ic Plannin= A Director "eneral o5 NEDA '# Ce3ar A# - ena2ent ra+ Pre3i!ent o5 Filipina3 Shell Petrole ( Corp# Cp# >$+ Ann al Report *,9&D i33 e! Re3ol tion No# $& clo3in= -F an! placin= it n!er recei2er3hip# The 0- Re3ol tion rea!3 a3 5ollow3B A5ter con3i!erin= the report !ate! Jan ar: 9+ *,9& o5 the Con3er2ator 5or -anco Filipino Sa2in=3 an! 0ort=a=e -an? that the contin ance in ) 3ine33 o5 the )an? wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! a5ter !i3c 33in= an! 5in!in= to )e tr e the 3tate(ent3 o5 the Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector CSESD Depart(ent II+ a3 recite! in hi3 (e(oran! ( !ate! Jan ar: ;>+ *,9&# that the -anco Filipino Sa2in=3 an! 0ort=a=e -an? i3 in3ol2ent an! that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! in p r3 ance o5 Section ;, o5 R#A# No# ;8&+ a3 a(en!e!+ the -oar! !eci!e!B *# To 5or)i! -anco Filipino Sa2in=3 an! 0ort=a=e -an? an! all it3 )ranche3 to !o ) 3ine33 in the Philippine3G ;# To !e3i=nate 0r3# Carlota P# /alen@ ela+ Dep t: "o2ernor+ a3 Recei2er who i3 here): !irectl: 2e3te! with j ri3!iction an! a thorit: to i((e!iatel: ta?e char=e o5 the )an?H3 a33et3 an! lia)ilitie3+ an! a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+ e<erci3in= all

the- power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?G ># To !e3i=nate 0r# Arn l5o -# A rellano+ Special A33i3tant to the "o2ernor+ an! 0r# Ra(on /# TiaoE i+ Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector Depart(ent II# a3 Dep t: Recei2er3 who are li?ewi3e here): !irectl: 2e3te! with j ri3!iction an! a thorit: to !o all thin=3 nece33ar: or proper to carr: o t the 5 nction3 entr 3te! to the( ): the Recei2er an! otherwi3e to a33i3t the Recei2er in carr:in= o t the 5 nction3 2e3te! in the Recei2er ): law or 0onetar: -oar! re3ol tion3G '# To !irect an! a thori@e 0ana=e(ent to !o all other thin=3 an! carr: o t all other (ea3 re3 nece33ar: or proper to i(ple(ent thi3 Re3ol tion an! to 3a5e= ar! the intere3t3 o5 !epo3itor3Kcre!ition an! the =eneral p )licG an! &# In con3eE ence o5 the 5ore=oin=+ to ter(inate the con3er2ator3hip o2er -anco Filipino Sa2in=3 an! 0ort=a=e -an?# Cpp# *;8-*;$+ Rollo I#D .n 0arch *,+*,9&+ the recei2er+ Carlota /alen@ ela+ an! the !ep t: recei2er3+ Arn l5o -# A rellano an! Ra(on /# TiaoE i+ 3 )(itte! a report to the 0onetar: -oar! a3 reE ire! in Section ;,+ ;n! para=raph o5 R#A# ;8& which pro2i!e3 that within 3i<t: C8%D !a:3 5ro( !ate o5 the recei2er3hip+ the 0onetar: -oar! 3hall !eter(ine whether the )an? (a: )e reor=ani@e! an! per(itte! to re3 (e ) 3ine33+ or )e liE i!ate!# The recei2er3 reco((en!e! that -F )e place! n!er liti=ation# For+ a(on= other thin=3+ the: 5o n! thatB *# -F ha! )een 3 55erin= a capital !e5icienc: o5 P>>8#& (illion a3 o5 J l: >*+ *,9' Cpp# ; an! '+ Recei2er3H ReportD# ;# The )an?H3 wee?l: re3er2e !e5iciencie3 a2era=e! P*'8#8$ (illion 5ro( No2e()er ;&+ *,9> p to 0arch *8+ *,9'+ ri3in= to a pea? o5 P>>9#%, (illion ntil J l: ;$+ *,9'# It3 re3er2e !e5iciencie3 a=ain3t !epo3it3 an! !epo3it 3 )3tit te3 )e=an on the wee? en!in= J ne *&+ *,9' p to Dece()er $+ *,9'+ with a2era=e !ail: re3er2e !e5iciencie3 o5 P;#,9 (illion# ># E3ti(ate! lo33e3 or J nhoo?e! 2al ation re3er2e3J 5or loan3 to entitie3 with relation3hip3 to certain 3toc?hol!erK!irector3 an! o55icer3 o5 the )an? a(o nte! to P8%%#& (illion# Co()ine! with other a!j 3t(ent3 in the a(o nt o5 P$>#; (illion+ the: will entirel: wipe o t the )an?H3 entire capital acco nt an! lea2e a capital !e5icienc: o5 P>>8#& (illion# The )an? wa3 alrea!: in3ol2ent on J l: >*+ *,9'# The capital !e5icienc: increa3e! to P,%9#' (illion a3 o5 Jan ar: ;8+ *,9& on acco nt o5 nhoo?e! penaltie3 5or !e5iciencie3 in le=al re3er2e3 CP',#%$ (illionD+ nhoo?e! intere3t on o2er!rawin=3+ e(er=enc: a!2ance o5 P&8,#', (illion 5ro( Central -an?+ an! a!!itional 2al ation re3er2e3 o5 P*;'#& (illion# Cpp# >-'+ Recei2er3H Report#D The Recei2er3 5 rther note! that M A5ter -F wa3 clo3e! a3 o5 Jan ar: ;&+ *,9&+ there were no collection3 5ro( loan3 =rante! to 5ir(3 relate! to each other an! to -F cla33i5ie! a3 J!o )t5 lJ or Jlo33+J there were no 3 )3tantial i(pro2e(ent3 on other loan3 cla33i5ie! J!o )t5 lJor Jlo33GJ there wa3 no 5 rther increa3e in the 2al e o5 a33et3 owne!KacE ire! 3 pporte! ): new apprai3al3 an! there wa3 no in5 3ion o5 a!!itional capital 3 ch that the e3ti(ate! reali@a)le a33et3 o5 -F re(aine! at P>+,%,#;>+ C(illion3D while the total lia)ilitie3 a(o nte! to P&+*&,#'' C(illion3D# Th 3+ -F re(ain3 in3ol2ent with e3ti(ate! !e5icienc: to cre!itor3 o5 Pl+;&%#;* C(illion3D# 0oreo2er+ there were no e55ort3 on the part o5 the 3toc?hol!er3 o5 the )an? to i(pro2e it3 5inancial con!ition an! the po33i)ilit: o5 reha)ilitation ha3 )eco(e (ore re(ote# CP# 9+ Recei2er3H Report#D In the li=ht o5 the re3 lt3 o5 the e<a(ination o5 -F ): the Teo!oro an! TiaoE i tea(3+ I !o not 5in! that the C-H3 Re3ol tion No# $& or!erin= -F to cea3e )an?in= operation3 an! placin= it n!er recei2er3hip wa3 Jplainl: ar)itrar: an! (a!e in )a! 5aith#J The recei2er3hip wa3 j 3ti5ie! )eca 3e -F wa3 in3ol2ent an! it3 contin ance in ) 3ine33 wo l! ca 3e lo33 to it3 !epo3itor3 an! cre!itor3# In3ol2enc:+ a3 !e5ine! in Rep# Act ;8&+ (ean3 Hthe ina)ilit: o5 a )an?in= in3tit tion to pa: it3 lia)ilitie3 a3 the: 5all ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33# Since J ne *,9'+ -F ha! )een na)le to (eet the hea2: ca3h with!rawal3 o5 it3 !epo3itor3 an! pa: it3 lia)ilitie3 to it3 cre!itor3+ the )i==e3t o5 the( )ein= the Central -an?+ hence+ the 0onetar: -oar! correctl: 5o n! it3 con!ition to )e one o5 in3ol2enc:# All the !i3c 33ion in the Santia=o Report concernin= the )an?H3 a33et3 an! lia)ilitie3 a3 !eter(inant3 o5 -FH3 3ol2enc: or in3ol2enc: i3 irrele2ant an! incon3eE ential+ 5or n!er Section ;, o5 Rep# Act# ;8&+ a )an?H3 in3ol2enc: i3 not !eter(ine! ): it3 e<ce33 o5 lia)ilitie3 o2er a33et3+ ) t ): it3 Jina)ilit: to pa: it3 lia)ilitie3 a3

the: 5all ! e in the or!inar: co r3e o5 ) 3ine33J an! it wa3 a) n!antl: 3hown that -F wa3 na)le to pa: it3 lia)ilitie3 to !epo3itor3 5or o2er a 3i<-(onth-perio! )e5ore it wa3 place! n!er recei2er3hip# E2en i5 a33et3 an! lia)ilitie3 were to )e 5actore! into a 5or( la 5or !eter(inin= whether or not -F wa3 alrea!: in3ol2ent on or )e5ore Jan ar: ;&+ *,9&+ the re3 lt wo l! )e no !i55erent# The )an?H3 a33et3 a3 o5 the en! o5 *,9' a(o nte! to P'#9,* )illion3 Cnot P8 )illion3D accor!in= to the Report 3i=ne! an! 3 )(itte! to the C- ): -FH3 own pre3i!ent+ an! it3 total lia)ilitie3 were P'#'$9 )illion3 Cp# &9+ Co3ico ReportD# Ihile A= irreH3 Report 3howe! -F ahea! with a net worth o5 P'*;#,8* (illion3+ 3ai! report !i! not (a?e an: pro2i3ion 5or e3ti(ate! 2al ation re3er2e3 a(o ntin= to P8%%#& (illion3+ C&%N o5 5ace 2al e o5 !o )t5 l loan3 an! *%%N o5 5ace 2al e o5 lo33 acco nt3D which -F ha! =rante! to it3 relate!Klin?e! co(panie3# The e3ti(ate! 2al ation re3er2e3 o5 P8%%#& (illion3 pl 3 -FH3 a!(itte! lia)ilitie3 o5 P'#'$9 )illion3+ p t to=ether+ wo l! wipe o t -F3 reali@a)le a33et3 o5 P'#9,* )illion3 an! con5ir( it3 in3ol2ent con!ition to the t ne o5 P*9$#&>9 (illion3# -FH3 an! J !=e Cnow CA J 3ticeD Con3 elo 4# Santia=oH3 ar= (ent that 2al ation re3er2e3 3ho l! not )e con3i!ere! )eca 3e the (atter wa3 not !i3c 33e! ): TiaoE i with -F o55icial3 i3 not well ta?en 5orB C*D The recor!3 o5 the !e5a ltin= !e)tor3 were in the po33e33ion o5 -F# C;D The Ja!2er3el: cla33i5ie!J loan3 were in 5act incl !e! in the Li3t o5 E<ception3 an! Fin!in=3 Co5 irre= laritie3 an! 2iolation3 o5 law3 an! C- r le3 an! re= lation3D prepare! ): the SES+ a cop: o5 which wa3 5 rni3he! -F on Dece()er * $+ *,9'G C>D A con5erence on the (atter wa3hel! on Jan ar: ;l+ *,9& with 3enior o55icial3 o5 -F hea!e! ): E/P F# Di@on+# Cpp# *'-*&+ Co3ico Report#D -F !i! not 5or(all: prote3t a=ain3t the C-3 e3ti(ate o5 2al ation re3er2e3# The C- co l! not wait 5ore2er 5or -F to re3pon! 5or the C- ha! to act with rea3ona)le pro(ptne33 to protect the !epo3itor3 an! cre!itor3 o5 -F )eca 3e the )an? contin e! to operate# C'D S )3eE ent e2ent3 pro2e! correct the SES cla33i5ication o5 the loan acco nt3 a3 J!o )t5 lJ or Jlo33H )eca 3e a3 o5 Jan ar: ;&+ *,9& none o5 the loan3+ e<cept three+ ha! )een pai! either partiall: or in 5 ll+ e2en i5 the: ha! alrea!: (at re! Cp# &>+ Co3ico ReportD# The reco((en!e! pro2i3ion 5or 2al ation re3er2e3 o5 P8%%#& (illion3 5or J!o )t5 lJ an! Jlo33J acco nt3 wa3 a proper 5actor to con3i!er in the capital a!j 3t(ent3 o5 -F an! wa3 in accor!ance with acco ntin= r le3# For+ i5 the ncollecti)le loan acco nt3 wo l! )e entere! in the a33et3 col (n a3 Jrecei2a)le3+J witho t a corre3pon!in= entr: in the lia)ilitie3 col (n 5or e3ti(ate! lo33e3 or 2al ation re3er2e3 ari3in= 5ro( their ncollecta)ilit:+ the re3 lt wo l! )e a =ra2el: !i3torte! pict re o5 the 5inancial con!ition o5 -F# -FH3 3tran=e ar= (ent that it wa3 not in3ol2ent 5or otherwi3e the C- wo l! not ha2e =i2en it 5inancial a33i3tance !oe3 not (erit 3erio 3 con3i!eration 5or preci3el: -F nee!e! 5inancial a33i3tance )eca 3e it wa3 in3ol2ent# TiaoE iH3 a!(i33ion that the e<a(ination o5 -F ha! Jnot :et )een o55iciall: ter(inate!J when he 3 )(itte! hi3 report on Jan ar: ;>+ *,9& !i! not (a?e the action o5 the 0onetar: -oar! o5 clo3in= the )an? an! appointin= recei2er3 5or it+ Hplainl: ar)itrar: an! in )a! 5aith#J For what ha! )een e<a(ine! ): the SES wa3 (ore than eno =h to warrant a 5in!in= that the )an? wa3 Jin3ol2ent an! co l! not contin e in ) 3ine33 witho t pro)a)le lo33 to it3 !epo3itor3 or cre!itor3+J an! what ha! not )een e<a(ine! wa3 ne=li=i)le an! wo l! not ha2e (ateriall: altere! the re3 lt# In an: e2ent+ the o55icial ter(ination o5 the e<a(ination with the 3 )(i33ion ): the Chie5 E<a(iner o5 hi3 report to the 0onetar: -oar! in 0arch *,9&+ !i! not contra!ict+ ) t in 5act con5ir(e!+ the 5in!in=3 in the TiaoE i Report# The re3pon3i)ilit: o5 a!(ini3terin= the Philippine (onetar: an! )an?in= 3:3te(3 i3 2e3te! ): law in the Central -an? who3e ! t: it i3 to 3e the power3 =rante! to it n!er the law to achie2e the o)jecti2e+ a(on= other3+ o5 (aintainin= (onetar: 3ta)ilit: in the co ntr: CSec# ;+ Rep# Act ;8&D# I !o not thin? it wo l! )e proper an! a!2i3a)le 5or thi3 Co rt to inter5ere with the C-H3 e<erci3e o5 it3 prero=ati2e an! ! t: to !i3cipline )an?3 which ha2e per3i3tentl: en=a=e! in ille=al+ n3a5e+ n3o n! an! 5ra ! lent )an?in= practice3 ca 3in= tre(en!o 3 lo33e3 an! ni(a=ina)le an<iet: an! prej !ice to !epo3itor3 an! cre!itor3 an! =eneratin= wi!e3prea! !i3tr 3t an! lo33 o5 con5i!ence in the )an?in= 3:3te(# The !a(a=e to the )an?in= 3:3te( an! to the !epo3itin= p )lic i3 )i==er when the )an?+ li?e -anco Filipino+ i3 )i=# Iith 9, )ranche3 nationwi!e+ '8 o5 the( in 0etro 0anila alone+ p (pin= the har!-earne! 3a2in=3 o5 > (illion !epo3itor3 into the )an?+ -F ha! no rea3on to =o )an?r pt i5 it were properl: (ana=e!# The Central -an? ha! to in5 3e al(o3t P>#& )illion3 into the )an? in it3 en!ea2or to 3a2e it# - t e2en thi3 5inancial a33i3tance wa3 (i3 3e!+ 5or in3tea! o5 3ati35:in= the !epo3itor3H !e(an!3 5or the with!rawal o5 their (one:+ -F channele! an! !i2erte! a 3 )3tantial portion o5 the 5in!3 into the co55er3 o5 it3

relate!Klin?e! co(panie3# Up to thi3 ti(e+ it3 o55icer3+ !irector3 an! (ajor 3toc?hol!er3 ha2e neither repai! the Central -an?H3 P>#8 )illion 5inancial a33i3tance+ nor p t p a!eE ate collateral3 there5or+ nor 3 )(itte! a cre!i)le plan 5or the reha)ilitation o5 the )an?# Ihat a thorit: ha3 thi3 Co rt to reE ire the Central -an? to reopen an! reha)ilitate the )an?+ an! in e55ect ri3? (ore o5 the "o2ern(entH3 (one: in the (ori) n! )an?L I re3pect5 ll: 3 )(it that !eci3ion i3 5or the Central -an?+ not 5or thi3 Co rt+ to (a?e# IHEREF.RE+ I 2ote to !i3(i33 the petition 5or certiorari an! (an!a( 3 in "#R# No# $%%&' 5or lac? o5 (erit# Ro(ero+ J#+ conc r3#

R Separate .pinion3 0ELENCI.-HERRERA+ J#+ !i33entin=B I join 0(e# J 3tice Carolina "# AE ino in her !i33ent an! 2ote to !en: the pra:er+ in "#R# No# $%%&'+ to ann l 0onetar: -oar! Re3ol tion No# $& placin= -anco Filipino C-FD n!er recei2er3hip# E2en a33 (in= that the -F wa3 not+ a3 alle=e!+ in a literal 3tate o5 in3ol2enc: at the ti(e o5 the pa33a=e o5 3ai! Re3ol tion+ there wa3 a 5in!in= in the Teo!oro report that+ )a3e! on that -an?H3 illiE i!it:+ to ha2e allowe! it to contin e in operation wo l! ha2e (eant pro)a)le lo33 to !epo3itor3 an! cre!itor3# That i3 al3o a =ro n! 5or placin= the )an? n!er recei2er3hip+ a3 a 5ir3t 3tep+ p r3 ant to Section ;, o5 the Central -an? Act CRep# Act No# ;8&+ a3 a(en!e!D# The clo3 re o5 -F+ there5ore+ can not )e 3ai! to ha2e )een ar)itrar: or (a!e in )a! 5aith# There wa3 3 55icient j 3ti5ication+ con3i!erin= it3 ina)ilit: to (eet the hea2: with!rawal3 ): it3 !epo3itor3 an! to pa: it3 lia)ilitie3 a3 the: 5ell ! e+ to 5or)i! the )an? 5ro( 5 rther en=a=in= in )an?in=# The (atter o5 reopenin=+ reor=ani@ation or reha)ilitation o5 -F i3 not within the co(petence o5 thi3 Co rt to or!ain ) t i3 )etter a!!re33e! to the 0onetar: -oar! an! the Central -an? con3i!erin= the latterH3 enor(o 3 in5 3ion o5 capital into -F to the t ne o5 appro<i(atel: P>#& -illion in total acco((o!ation3+ a5ter a thoro =h a33e33(ent o5 whether or not -F i3+ in!ee!+ po33e33e!+ a3 it 3to tl: conten!3+ o5 3 55icient a33et3 an! capa)ilitie3 with which to repa: 3 ch h =e in!e)te!ne33+ an! can operate witho t lo33 to it3 (an: !epo3itor3 an! cre!itor3#

"RIO.-A7UIN.+ J#+ !i33entin=B Altho =h the3e nine C,D -anco Filipino C-FD ca3e3 ha2e )een con3oli!ate! n!er one ponencia+ all o5 the( e<cept one+ rai3e i33 e3 nrelate! to the recei2er3hip an! liE i!ation o5 3ai! )an?# In 5act+ two o5 the3e ca3e3 C"#R# No# 899$9 an! 9*>%>D ha2e alrea!: )een !eci!e! ): thi3 Co rt an! are onl: awaitin= the re3ol tion o5 the (otion3 5or recon3i!eration 5ile! therein# .nl: "#R# No# $%%&' J-anco Filipino Sa2in=3 an! 0ort=a=e -an? C-FD 23# the 0onetar: -oar! C0-D+ Central -an? o5 the Philippine3 CC-D+ et al#+J i3 an ori=inal action 5or (an!a( 3 an! certiorari 5ile! in thi3 Co rt ): 5or(er o55icial3 o5 -F to ann l the 0onetar: -oar! Re3ol tion No# $& !ate! Jan ar: ;&+ *,9& Cor!erin= the clo3 re o5 -anco Filipino P-FQ an! appointin= Carlota /alen@ ela a3 recei2er o5 the )an?D on the =ro n! that the re3ol tion wa3 i33 e! Jwitho t a55or!in= -F a hearin= on the report3J on which the 0onetar: -oar! )a3e! it3 !eci3ion to clo3e the )an?+ hence+ witho t Ja!(ini3trati2e ! e proce33#J+ The pra:er o5 the petition rea!3B IHEREF.RE+ petitioner re3pect5 ll: pra:3 that a writ o5 (an!a( 3 )e i33 e! co((an!in= re3pon!ent3 i((e!iatel: to 5 rni3h it copie3 o5 the report3 o5 e<a(ination o5 -F e(plo:e! ): re3pon!ent 0onetar: -oar! to 3 pport it3 Re3ol tion o5 Jan ar: ;&+ *,9& an! therea5ter to a55or! it a hearin= prior to an: re3ol tion that (a: )e i33 e! n!er Section ;, o5 R#A# ;8&+ (eanwhile ann llin= 3ai! Re3ol tion o5 Jan ar: ;&+ *,9& ): writ o5 certiorari a3 (a!e witho t or in e<ce33 o5j ri3!iction or with =ra2e a) 3e o5 !i3cretion# So a3 to e<pe!ite procee!in=3+ petitioner pra:3 that the a33e33(ent o5 the !a(a=e3 re3pon!ent3 3ho l! pa: it )e !e5erre! an! re5erre! to co((i33ioner3# Petitioner pra:3 5or 3 ch other re(e!: a3 the Co rt (a: !ee( j 3t an! eE ita)le in the pre(i3e3# 7 e@on Cit: 5or 0anila+ Fe)r ar: ;9+ *,9&# Cp# 9+ Rollo I-D

an! the pra:er o5 the S pple(ent to Petition rea!3B IHEREF.RE+ in a!!ition to it3 pra:er 5or (an!a( 3 an! certiorari containe! in it3 ori=inal petition+ petitioner re3pect5 ll: pra:3 that Section3 ;9-A an! ;, o5 the Central -an? charter CR#A# ;8&D incl !in= it3 a(en!ator: Pre3i!ential Decree3 No3# $;+ *$$*+ *9;$ an! *,>$ )e ann lle! a3 ncon3tit tional# 7 e@on Cit: 5or 0anila+ 0arch '+ *,9&# Cp# **-"+ Rollo I#D The other ei=ht C9D ca3e3 (erel: in2ol2e tran3action3 o5 -F with thir! per3on3 an! certain Jrelate!J corporation3 which ha! !e5a lte! on their loan3 an! 3o =ht to prohi)it the e<traj !icial 5oreclo3 re o5 the (ort=a=e3 on their propertie3 ): the recei2er o5 -F# The3e ei=ht C9D ca3e3 areB *# "#R# No# 899$9 J-F 23# Inter(e!iate Appellate Co rt an! Cele3tina Pahi( tan=J in2ol2e3 the repo33e33ion ): -F o5 a ho 3e an! lot which the ) :er CPahi( tan=D clai(e! to ha2e co(pletel: pai! 5or on the in3tall(ent plan# The appellate co rtH3 j !=(ent 5or the ) :er wa3 re2er3e! ): thi3 Co rt# The ) :erH3 (otion 5or recon3i!eration i3 awaitin= re3ol tion ): thi3 Co rtG ;# "#R# No3# $$;&&-&9+ JTop 0ana=e(ent Pro=ra(3 Corporation an! Pilar De2elop(ent Corporation 23# Co rt o5 appeal3+ et al#J CCA-"#R# SP No# %$9,;D an! JPilar De2elop(ent Corporation 23# E<ec ti2e J !=e+ RTC+ Ca2iteJ CCA-"#R# SP No3# %9,8;8'D i3 a con3oli!ate! petition 5or re2iew o5 the Co rt o5 Appeal3H joint !eci3ion !i3(i33in= the petition3 5or prohi)ition in which the petitioner3 3ee? to pre2ent the recei2erKliE i!ator o5 -F 5ro( e<traj !iciall: 5oreclo3in= the P'#9 (illion (ort=a=e on Top 0ana=e(entH3 propertie3 an! the P*9-8$ (illion (ort=a=e on Pilar De2elop(ent propertie3# The Co rt o5 Appeal3 !i3(i33e! the petition3 on .cto)er >%+ *,98 on the =ro n! that Jthe 5 nction3 o5 the liE i!ator+ a3 recei2er n!er Section ;, CR#A# ;8&D+ incl !e ta?in= char=e o5 the in3ol2entH3 a33et3 an! a!(ini3terin= the 3a(e 5or the )ene5it o5 it3 cre!itor3 an! o5 )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?GJ ># "#R# No# $9$88+ JEl "ran!e Corporation 23# Co rt o5 Appeal3+ et al#+J i3 an appeal 5ro( the Co rt o5 Appeal3H !eci3ion in CA-"#R# SP No# %99%, !i3(i33in= El "ran!eH3 petition 5or prohi)ition to pre2ent the 5oreclo3 re o5 -FH3 P9 (illion (ort=a=e on El "ran!eH3 propertie3G '# "#R# No# $99,'+ J-anco Filipino Sa2in=3 an! 0ort=a=e -an? 23# Co rt o5 Appeal3+ et al#J i3 an appeal o5 -F3 ol! (ana=e(ent C 3in= the na(e o5 -FD 5ro( the !eci3ion o5 the Co rt o5 Appeal3 in CA-"#R# SP No# %$&%> entitle!+ JCentral -an?+ et al# 23# J !=e 6oilo A= inal!o+ et alJ !i3(i33in= the co(plaint o5 J-FJ to ann l the recei2er3hip+ 5or no 3 it (a: )e )ro =ht or !e5en!e! in the na(e o5 the )an? e<cept ): it3 recei2erG &# "#R# No# 9$98$+ J0etropoli3 De2elop(ent Corporation 23# Co rt o5 Appeal3J C5or(erl: AC-"#R# No# %$&%>+ JCentral -an?+ et al# 23# Honora)le 6oilo A= inal!o+ et al#HD i3 an appeal o5 the inter2enor C0etropoli3D 5ro( the 3a(e Co rt o5 Appeal3H !eci3ion 3 )ject o5 "#R# No# $99,'+ which al3o !i3(i33e! 0etropoli3H co(plaint in inter2ention on the =ro n! that a 3toc?hol!er C0etropoli3D (a: not )rin= 3 it in the na(e o5 -F while the latter i3 n!er recei2er3hip+ witho t the a thorit: o5 the recei2erG 8# "#R# No# 9*>%>+ JPilar De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#J i3 an appeal 5ro( the !eci3ion !ate! .cto)er ;;+ *,9$ o5 the Co rt o5 Appeal3 in CA-"#R# SP No# *;>89+ JPilar De2elop(ent Corporation+ et al# 23# Honora)le 0an el Co3ico+ et al#+J !i3(i33in= the petition 5or certiorari a=ain3t J !=e 0an el Co3ico+ -r# *>8+ RTC+ 0a?ati+ who !i3(i33e! the co(plaint 5ile! ): Pilar De2elop(ent Corporation a=ain3t -F+ 5or 3peci5ic per5or(ance o5 certain !e2eloper contract3# An an3wer 5ile! ): Nor)erto 7 i3 ()in= an! A33ociate3+ a3 -FH3 3 ppo3e! co n3el+ 2irt all: con5e33e! j !=(ent in 5a2or o5 Pilar De2elop(ent# .n (otion o5 the recei2er+ the an3wer wa3 e<p n=e! an! the co(plaint wa3 !i3(i33e!# .n a petition 5or certiorari in thi3 Co rt+ we hel! thatB JA3 liE i!ator o5 -F ): 2irt e o5 a 2ali! appoint(ent 5ro( the Central -an?+ pri2ate re3pon!ent Carlota /alen@ ela ha3 the a thorit: to !irect the operation o5 the )an? in 3 )3tit tion o5 the 5or(er (ana=e(ent+ which a thorit: incl !e3 the retainer o5 co n3el to repre3ent it in )rin=in= or re3i3tin= 3 it3 in connection with 3 ch liE i!ation an!+ in the ca3e at )ar+ to ta?e the proper 3tep3 to pre2ent coll 3ion+ to the prej !ice o5 the le=iti(ate cre!itor3+ )etween -F an! the petitioner3 herein which appear to )e owne! an! controlle! ): the 3a(e intere3t controllin= -FJ Cp# ',+ RolloD# The petitioner3H (otion 5or recon3i!eration o5 that !eci3ion i3 pen!in= re3ol tion# $# "#R# No# 9*>%'+ J-F Ho(e3 De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#J i3 an appeal 5ro( the !eci3ion !ate! No2e()er '+ *,9$ o5 the Co rt o5 Appeal3 in CA-"#R# C/ No# %9&8& a55ir(in= the trial co rtH3 or!er !i3(i33in= -F Ho(e3H action to co(pel the Central -an? to re3tore the 5inancin= 5acilitie3 o5 -F+ )eca 3e the plainti55 C-F Ho(e3D ha3 no ca 3e o5 action a=ain3t the C-#

9# "#R# No# ,%'$>+ JEl "ran!e De2elop(ent Corporation 23# Co rt o5 Appeal3+ et al#+J i3 a petition to re2iew the !eci3ion !ate! J ne 8+ *,9, in CA-"#R# SP No# %98$8 !i3(i33in= El "ran!eH3 petition 5or prohi)ition to 3top 5oreclo3 re procee!in=3 a=ain3t it ): the recei2er o5 -F# A3 pre2io 3l: 3tate!+ "#R# No# $%%&' J-F 23# 0onetar: -oar!+ et al#+J i3 an ori=inal 3pecial ci2il action 5or certiorari an! (an!a( 3 5ile! in thi3 Co rt ): the ol! (ana=e(ent o5 -F+ thro =h their co n3el+ N#J# 7 i3 ()in= A A33ociate3+ 3in= the na(e o5 the )an? an! pra:in= 5or the ann l(ent o5 0- Re3ol tion No# $& which or!ere! the clo3 re o5 -F an! place! it n!er recei2er3hip# It i3 a J5or (-3hoppin=J ca3e )eca 3e it wa3 5ile! here on Fe)r ar: ;9+ *,9& three wee?3 a5ter the: ha! 5ile! on Fe)r ar: ;+ *,9& Ci2il Ca3e No# ,8$& J-anco Filipino 23# 0onetar: -oar!+ et al#J in the Re=ional Trial Co rt o5 0a?ati+ -r# *'> Cpre3i!e! o2er ): J !=e 6oilo A= inal!oD 5or the 3a(e p rpo3e o5 3ec rin= a !eclaration o5 the n llit: o5 0- Re3ol tion No# $& !ate! Jan ar: ;&+ *,9&# .n A = 3t ;&+ *,9&+ thi3 Co rt or!ere! the tran35er an! con3oli!ation o5 Ci2il Ca3e No# ,8$8 Cto ann l the recei2er3hipD 5ro( -r# *'> to -r# *>8 CJ !=e 0an el Co3icoD o5 the 0a?ati Re=ional Trial Co rt where Ci2il Ca3e No# 9*%9 Cto ann l the con3er2ator3hipD an! Ci2il Ca3e No# *%*9> Cto ann l the liE i!ationD o5 -F were an! are 3till pen!in=# All the3e three C>D ca3e3 were archi2e! on J ne >%+ *,99 ): J !=e Co3ico pen!in= the re3ol tion o5 "#R# No# $%%&' ): thi3 Co rt# -eca 3e o5 (: pre2io 3 participation+ a3 a 5or(er (e()er o5 the Co rt o5 Appeal3+ in the !i3po3ition o5 AC"#R# No# %;8*$ Cnow "#R# No# 899$9D an! AC-"#R# SP No# %$&%> Cnow "#R# No3# $9$8$ an! $99,'D+ I a( ta?in= no part in "#R# No3# 899$9+ $9$8$ an! $99,'# It (a: )e (entione! in thi3 connection that neither in AC"#R# SP No# %;8*$+ nor in AC-"#R# SP No# %$&%>+ !i! the Co rt o5 Appeal3 r le on the con3tit tionalit: o5 Section3 ;9-A an! ;, o5 Rep )lic Act ;8& CCentral -an? ActD+ a3 a(en!e!+ an! the 2ali!it: o5 0- Re3ol tion No# $&+ 5or tho3e i33 e3 were not rai3e! in the Co rt o5 Appeal3# I conc r with the ponencia in3o5ar a3 it !enie3 the (otion 5or recon3i!eration in "#R# No# 9*>%>+ an! !i3(i33e3 the petition3 5or re2iew in "#R# No3# $$;&&-&9+ $9$88+ 9*>%'+ an! ,%'$># I re3pect5 ll: !i33ent 5ro( the (ajorit: opinion in "#R# No# $%%&' ann llin= an! 3ettin= a3i!e 0- Re3ol tion No# $& an! or!erin= the re3pon!ent3+ Central -an? o5 the Philippine3 an! the 0onetar: -oar! M to reor=ani@e petitioner -anco Filipino Sa2in=3 an! 0ort=a=e -an?+ an! allow the latter to re3 (e ) 3ine33 in the Philippine3 n!er the co(ptroller3hip o5 )oth the Central -an? an! the 0onetar: -oar! an! n!er 3 ch con!ition3 a3 (a: )e pre3cri)e! ): the latter ntil 3 ch ti(e that petitioner )an? can contin e in ) 3ine33 with 3a5et: to it3 cre!itor3+ !epo3itor3 an! the =eneral p )lic# 5or I )elie2e that thi3 Co rt ha3 neither the a thorit: nor the co(petence to !eter(ine whether or not+ an! n!er what con!ition3+ -F 3ho l! )e reor=ani@e! an! reopene!# That !eci3ion 3ho l! )e (a!e ): the Central -an? an! the 0onetar: -oar!+ not ): thi3 Co rt# All that we (a: !eter(ine in thi3 ca3e i3 whether the action3 o5 the Central -an? an! the 0onetar: -oar! in clo3in= -F an! placin= it n!er recei2er3hip were Jplainl: ar)itrar: an! (a!e in )a! 5aith# Section ;, o5 Rep )lic Act No# ;8& pro2i!e3B Section ;,# Procee!in=3 pon in3ol2enc:# M Ihene2er+ pon e<a(ination ): the hea! o5 the appropriate 3 per2i3in= an! e<a(inin= !epart(ent or hi3 e<a(iner3 or a=ent3 into the con!ition o5 an: )an?in= in3tit tion+ it 3hall )e !i3clo3e! that the con!ition o5 the 3a(e i3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 or cre!itor3+ it 3hall )e the ! t: o5 the !epart(ent hea! concerne! 5orthwith+ in writin=+ to in5or( the 0onetar: -oar! o5 the 5act3+ an! the -oar! (a:+ pon 5in!in= the 3tate(ent3 o5 the !epart(ent hea! to )e tr e+ 5or)i! the in3tit tion to !o ) 3ine33 in the Philippine3 an! 3hall !e3i=nate an o55icial o5 the Central -an? a3 recei2er to i((e!iatel: ta?e char=e o5 it3 a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+ e<erci3in= all the power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?in= in3tit tion# The 0onetar: -oar! 3hall there pon !eter(ine within 3i<t: !a:3 whether the in3tit tion (a: )e reor=ani@e! or otherwi3e place! in 3 ch a con!ition 3o that it (a: )e per(itte! to re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3 an! cre!itor3 an! the =eneral p )lic an! 3hall pre3cri)e the con!ition3 n!er which 3 ch re3 (ption o5 ) 3ine33 3hall ta?e place a3 well a3 the ti(e 5or 5 l5ill(ent o5 3 ch con!ition3# In 3 ch ca3e+ the e<pen3e3 an! 5ee3 in the

collection an! a!(ini3tration o5 the a33et3 o5 the in3tit tion 3hall )e !eter(ine! ): the -oar! an! 3hall )e pai! to the Central -an? o t o5 the a33et3 o5 3 ch )an?in= in3tit tion# I5 the 0onetar: -oar! 3hall !eter(ine an! con5ir( within the 3ai! perio! that the )an?in= in3tit tion i3 in3ol2ent or cannot re3 (e ) 3ine33 with 3a5et: to it3 !epo3itor3+ cre!itor3 an! the =eneral p )lic+ it 3hall+ i5 the p )lic intere3t reE ire3+ or!er it3 liE i!ation+ in!icate the (anner o5 it3 liE i!ation an! appro2e a liE i!ation plan# The Central -an? 3hall+ ): the Solicitor "eneral+ 5ile a petition in the Co rt o5 Fir3t In3tance+ recitin= the procee!in=3 which ha2e )een ta?en an! pra:in= the a33i3tance o5 the co rt in the liE i!ation o5 the )an?in= in3tit tion3# The co rt 3hall ha2e j ri3!iction in the 3a(e procee!in=3 to a!j !icate !i3p te! clai(3 a=ain3t the )an? an! en5orce in!i2i! al lia)ilitie3 o5 the 3toc?hol!er3 an! !o all that i3 nece33ar: to pre3er2e the a33et3 o5 the )an?in= in3tit tion an! to i(ple(ent the liE i!ation plan appro2e! ): the 0onetar: -oar!# The 0onetar: -oar! 3hall !e3i=nate an o55icial o5 the Central -an? a3 liE i!ator who 3hall ta?e o2er the 5 nction3 o5 the recei2er pre2io 3l: appointe! ): the 0onetar: -oar! n!er thi3 3ection# The liE i!ator 3hall+ with all con2enient 3pee!+ con2ert the a33et3 o5 the )an?in= in3tit tion to (one: or 3ell+ a33i=n or otherwi3e !i3po3e o5 the 3a(e to cre!itor3 an! other partie3 5or the p rpo3e o5 pa:in= the !e)t3 o5 3 ch )an? an! he (a:+ in the na(e o5 the )an?in= in3tit tion+ in3tit te 3 ch action3 a3 (a: )e nece33ar: in the appropriate co rt to collect an! reco2er acco nt3 an! a33et3 o5 the )an?in= in3tit tion# The pro2i3ion3 o5 an: law to the contrar: notwith3tan!in=+ the action3 o5 the 0onetar: -oar! n!er thi3 3ection an! the 3econ! para=raph o5 Section >' o5 thi3 Act 3hall )e 5inal an! e<ec tor:+ an! can )e 3et a3i!e ): the co rt onl: i5 there i3 con2incin= proo5 that theaction i3 plainl: ar)itrar: an! (a!e in )a! 5aith# No re3trainin= or!er or inj nction 3hall )e i33 e! ): the co rt enjoinin= the Central -an? 5ro( i(ple(entin= it3 action3 n!er thi3 3ection an! the 3econ! para=raph o5 Section >' o5 thi3 Act+ nle33 there i3 con2incin= proo5 that the action o5 the 0onetar: -oar! i3 plainl: ar)itrar: an! (a!e in )a! 5aith an! the petitioner or plainti55 5ile3 with the cler? or j !=e o5 the co rt in which the action i3 pen!in= a )on! e<ec te! in 5a2or o5 the Central -an?+ in an a(o nt to )e 5i<e! ): the co rt# The re3trainin= or!er or inj nction 3hall )e re5 3e! or+ i5 =rante!+ 3hall )e !i33ol2e! pon 5ilin= ): the Central -an? o5 a )on!+ which 3hall )e in the 5or( o5 ca3h or Central -an? ca3hierH3 chec?+ in an a(o nt twice the a(o nt o5 the )on! o5 the petitioner or plainti55+ con!itione! that it will pa:the which the petitioner or plainti55 (a: 3 55er ): the re5 3alor the !i33ol tion o5 the inj nction# The pro2i3ion3 o5 R le &9 o5 the new R le3 o5 Co rt in3o5ar a3 the: are applica)le an! not incon3i3tent with the pro2i3ion3 o5 thi3 3ection 3hall =o2ern the i33 ance an! !i33ol tion o5 the re3trainin= or!er or inj nction conte(plate! in thi3 3ection# In3ol2enc:+ n!er thi3 Act+ 3hall )e n!er3too! to (ean the ina)ilit: o5 a )an?in= in3tit tion to pa: it3 lia)ilitie3 a3 the: 5all ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33+ pro2i!e!+ howe2er+ that thi3 3hall not incl !e the ina)ilit: to pa: o5 an otherwi3e non-in3ol2ent )an? ca 3e! ): e<tra-or!inar: !e(an!3 in! ce! ): 5inancial panic co((onl: e2i!ence! ): a r n on the )an?3 in the )an?in= co(( nit:# The !eter(inati2e 5actor in the clo3 re+ recei2er3hip+ an! liE i!ation o5 a )an? i3 the 5in!in=+ pon e<a(ination ): the SES o5 the Central -an?+ that it3 con!ition Ji3 one o5 in3ol2enc:+ or that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3#J CSec# ;,+ R#A# ;8&#D It 3ho l! )e pointe! o t that in3ol2enc: i3 not the onl: 3tat tor: =ro n! 5or the clo3 re o5 a )an?# The other =ro n! i3 when Jit3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3# Ia3 -F in3ol2ent i#e#+ na)le to pa: it3 lia)ilitie3 a3 the: 5ell ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33+ on an! 5or 3o(e ti(e )e5ore Jan ar: ;&+ *,9& when the 0onetar: -oar! i33 e! Re3ol tion No# $& clo3in= the )an? an! placin= it n!er recei2er3hipL Io l! it3 contin e! operation in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3L The an3wer to )oth E e3tion3 i3 :e3# -oth the con3er2ator "il)ert3 Teo!oro an! the hea! o5 the SES CS per2i3ion an! E<a(ination SectorD Ra(on /# TiaoE i opine! that -FH3 contin ance in ) 3ine33 wo l! ca 3e pro)a)le lo33 to !epo3itor3 an! cre!itor3# TiaoE i 5 rther cate=oricall: 5o n! that -F wa3 in3ol2ent# Ih: wa3 thi3 3oL The Teo!oro an! TiaoE i report3 a3 well a3 the report o5 the recei2er3+ Carlota /alen@ ela+ Arn l5o -# A rellano an! Ra(on /# TiaoE i+ 3howe! that 3ince the en! o5 No2e()er *,9> -F ha! alrea!: )een inc rrin= Jchronic re3er2e !e5iciencie3H an! e<periencin= 3e2ere liE i!it: pro)le(3# So ( ch 3o+ that it ha! )eco(e Ja 3 )3tantial )orrower in the call loan3 (ar?etJ an! in J ne *,9' it o)taine! a P>% (illion e(er=enc: loan 5ro( the Central -an?# Cp# ;+ Recei2erH3 Report#D A!!itional e(er=enc:t loan3 Ca total o5 P**,#$ (illion3D were e<ten!e! ): the Central -an? to -F that (onth C0- Re3# No# 9>, !ate! J ne ;,+*,9'D# .n J l: *;+ *,9'+ -F3 chair(an+ Anthon: A= irre+ o55ere! to Jt rn o2er the a!(ini3tration o5 the a55air3 o5 the )an?J to the Central -an? CA= irreH3 letter to "o2ernor Jo3e Fernan!e@+ Anne< $ o5 0ani5e3tation !ate! 0a: >+*,,*D# .n J l:

;>+*,9'+ na)le to (eet hea2: !epo3it with!rawal3+ -FH3 (ana=e(ent (ot proprio+ witho t o)tainin= the con5or(it: o5 the Central -an?+ clo3e! the )an? an! !eclare! a )an? holi!a:# .n J l: ;$+ *,9'+ the C-+ re3pon!in= to -F3 plea3 5or a!!itional 5inancial a33i3tance+ =rante! -F a P> )illion cre!it line C0- Re3# No# ,>' o5 J l: ;$+ *,9'D to ena)le it to reopen an! re3 (e ) 3ine33 on A = 3t *+ *,9'# P;#>8%* )illion3 o5 the cre!it line were a2aile! o5 ): the en! o5 *,9' e<cl 3i2e o5 an o2er!ra5t o5 P,>;#' (illion3 Cp# ;+ TiaoE i ReportD# Total acco((o!ation3 =rante! to -F a(o nte! to P>#'*;; )illion3 Cp# *,+ Co3ico ReportD# Pre3 (a)l: to a33 re that the 5inancial a33i3tance wo l! )e properl: 3e!+ the 0- appointe! -a3ilio E3tani3lao a3 con3er2ator o5 the )an?# A con3er2ator3hip tea( o5 $9 e<a(iner3 an! acco ntant3 wa3 a33i=ne! at the )an? to ?eep trac? o5 it3 acti2itie3 an! a3certain it3 5inancial con!ition Cp# 9+ TiaoE i ReportD# E3tani3lao re3i=ne! a5ter two wee?3 5or health rea3on3# He wa3 3 ccee!e! ): "il)erto Teo!oro a3 con3er2ator in A = 3t+ *,9' p to Jan ar: 9+ *,9&# -e3i!e3 the con3er2ator3hip tea(+ Teo!oro hire! 5inancial con3 ltant3 0e33r3# Tir3o "# Santillan+ Jr# an! Plori!o P# Ca3 ela to (a?e an anal:3i3 o5 -FH3 5inancial con!ition# Teo!oro al3o en=a=e! the acco ntin= 5ir( o5 S:cip+ "orre3+ /ela:o an! Co(pan: to (a?e an a33et e2al ation# The Philippine Apprai3al Co(pan: CPACD apprai3e! -F3 real e3tate propertie3+ acE ire! a33et3+ an! collateral3 hel!# .n Jan ar: ,+ *,9&+ Teo!oro 3 )(itte! hi3 Report# Three wee?3 later+ on Jan ar: ;>+ *,9&+ TiaoE i al3o 3 )(itte! hi3 Report# -oth report3 3howe!that+ in 2iolation o5 Section >$ o5 the "eneral -an?in= Act CR#A#>>$DB ; *# -F ha! )een contin all: !e5icient in liE i!it: re3er2e3 CTeo!oro ReportD# The )an? ha! )een e<periencin= a 3e2ere !rop in liE i!it: le2el3# The ratio o5 liE i! a33et3 to !epo3it3 an! )orrowin=3 pl n=e! 5ro( a)o t ;%N at en!-*,9>+ to a)o t 9#8N ): en!-0a: *,9'+ ( ch )elow the 3tat tor: reE ire(ent3 o5 ;'N 5or !e(an! !epo3it3K!epo3it 3 )3tit te3 an! *'N 5or 3a2in=3 an! ti(e !epo3it3# Cp# ;+ TiaoE i Report#D ;# De5iciencie3 in a2era=e !ail: le=al re3er2e3 ro3e 5ro( P8>#% (illion ! rin= the wee? o5 No2e()er ;*-;&+ *,9> to a hi=h o5 P'>&#, (illion ! rin= the wee? o5 J ne **-*&+ *,9' Cpp# ;->+ TiaoE i ReportD# Acc ( late! penaltie3 on re3er2e !e5iciencie3 a(o nte! to P>$#' (illion ): J l: >*+ an! ro3e to P'9 (illion ): the en! o5 *,9'# CTiaoE i Report#D ># Depo3it le2el3+ which were at P>+9'& (illion at en!-0a: l,9' Cit3 la3t Jnor(alJ (onthD+ !roppe! to P,>& (illion at the en! o5 No2e()er *,9' or a lo33 o5 P;+,*% (illion# Thi3 repre3ente! an a2era=e (onthl: lo33 o5 P'9& (illion 23# an a2era=e (onthl: =ain o5 P;8 (illion ! rin= the 5ir3t & (onth3 o5 *,9'# Cpp# ;->+ TiaoE i Report#D '# Depo3it3 ha! !ecline! at the rate o5 P;% (illion ! rin= the (onth o5 Dece()er *,9'+ ) t e<pen3e3 o5 a)o t P*$ (illion per (onth were reE ire! to (aintain the )an?H3 operation# Cp# 8+ Teo!oro Report#D &# -a3e! on the projecte! o tloo?+ the -an?H3 a2era=e :iel! on a33et3 o5 *8#>N p#a#+ wa3 in3 55icient to (eet the a2era=e co3t o5 5 n!3 o5 *,#&N p#a# an! operatin= e<pen3e3 o5 '#9N p#a# Cp# & Teo!oro Report#D 8# An i(pr !entl: lar=e proportion o5 a33et3 were loc?e! into lon=-ter( application3# CTeo!oro Report#D $# -F o2ere<ten!e! it3el5 in len!in= to the real e3tate in! 3tr:+ co((ittin= a3 ( ch a3 &;N o5 it3 pe3o !epo3it3 to it3 a55iliate3 or Jrelate! acco nt3J to which it contin e! len!in= e2en when it wa3 alrea!: 3 55erin= 5ro( liE i!it: 3tre33e3# CTeo!oro Report#D Thi3 wa3 !one in 2iolation o5 Section >9 o5 the "eneral -an?in= Act CR#A# >>$D# > 9# D rin= the perio! o5 (ar?e! !ecline in liE i!it: le2el3 the loan port5olio =rew ): P'*$#> (illion in the 5ir3t 5i2e (onth3 o5 *,9' M an! ): another P*%&#l (illion in the ne<t two (onth3# Cpp# ;->+ TiaoE i Report#D ,# The loan port5olio 3too! at P>#8$, )illion at the en! o5 J l: *,9'+ &8#;N o5 it channele! to co(panie3 who3e 3toc?hol!er3+ !irector3 an! o55icer3 were relate! to the o55icer3+ !irector3+ an! 3o(e 3toc?hol!er3 o5 -F# Cp# 9+ TiaoE i Report#D Here a=ain -F 2iolate! the "eneral -an?in= Act CR#A# >>$D# ' *%# So(e o5 the loan3 were 3e! to acE ire pre5erre! 3toc?3 o5 -F# -etween Septe()er *$+ *,9> an! Fe)r ar: *%+ *,9'+ P',#, (illion o5 pre5erre! non-con2erti)le 3toc?3 were i33 e!# A)o t 9&N or P';#' (illion wa3 pai! o t o5 the procee!3 o5 loan3 to 3toc?hol!er3K )orrower3 with relation3hip to the )an? CAnne< DD# Aro n! P*9#9 (illion were i33 e! in the na(e o5 an entit: other than the p rcha3er o5 the 3toc?3# CTiaoE i Report#D

**# Loan3 a(o ntin= to 3o(e P8,#> (illion were =rante! 3i(pl: to pa:-o55 ol! loan3 incl !in= accr e! intere3t+ a3 an acco((o!ation 5or the !irect (at rin= loan3 o5 3o(e 5ir(3 an! a3 a wa: o5 pa:in=-o55 loan3 o5 other )orrower 5ir(3 which ha2e their own cre!it line3 with the )an?# The3e helpe! to (a?e otherwi3e !elinE ent loan3 appear Jc rrentJ an! !ecepti2el: Ji(pro2e!J the E alit: o5 the loan port5olio# CTiaoE i Report#D *;# E<a(ination o5 the collateral3 5or the loan acco nt3 o5 8> (ajor )orrower3 an! >; other 3electe! )orrower3 a3 o5 J l: >*+ *,9'+ 3howe! thatB CaD ;+8&9 TCTH3 which -F e2al ate! to )e worth P*+'9$ (illion were apprai3e! ): PAC to )e worth onl: P*+*,8 (illion+ hence+ !e5icient ): P;,* (illion# C)D .ther propertie3 Ccollateral3D 3 ppo3e!l: worth P$** (illion co l! not )e e2al ate! ): PAC )eca 3e the !etail3 3 )(itte! ): the )an? were in3 55icientG CcD Ihile P8$' (illion in loan3 were 3 ppo3e!l: = arantee! ): the Ho(e Financin= Corporation CHFICD+ the latter con5ir(e! onl: P';$ (illion# P;'$ (illion in loan3 were not = arantee! ): HFC# CTeo!oro Report#D C!D Per S"/H3 report+ loan3 totallin= P*#99; (illion incl !in= accr e! intere3t+ were 3ec re! ): collateral worth onl: Pl#&' )illion# Hence+ -F3 n3ec re! e<po3 re a(o nte! to P&98#; (illion# -F Ho(e3+ Inc#+ a relate! co(pan: which ha3 5ile! with the SEC a petition 5or 3 3pen3ion o5 pa:(ent3+ owe3 P&%; (illion to -F# *># -F ha! )een 3 55erin= hea2: lo33e3# M aD For the ele2en C**D (onth3 en!e! No2e()er >%+ *,9'+ the e3ti(ate! net lo33 wa3 P>$;#8 0illionG )D For the twel2e C*;D (onth3 5ro( No2e()er *,9'+ the projecte! net lo33 wo l! )e P>,%#$ 0illion an! wo l! contin e na)ate!G Cp# ;+ Teo!oro ReportD cD Aro n! $*#$N o5 the total acco((o!ation3 o5 P;#%8$$ )illion3 to the relate!Klin?e! entitie3 were a!2er3el: cla33i5ie!# Clo3e to >>#$N or P8,$#* (illion3 were clean loan3 or a=ain3t PN3 Cpro(i33or: note3D o5 the3e entitie3# .5 the latter+ &;#8N were cla33i5ie! a3 lo33#J CP# &+ TiaoE i Report#D !D The )an?H3 5inancial con!ition a3 o5 !ate o5 e<a(ination+ a5ter 3ettin= p the a!!itional 2al ation re3er2e3 o5 P8*;#; (illion3 an! acc ( late! net lo33 o5 P'9#; (illion3+ in!icate3 one o5 in3ol2enc:# Total lia)ilitie3 o5 P&+;9;#* (illion e<cee!3 total a33et3 o5 P'+,'$#; (illion ): 8#9N# Total capital acco nt o5 P>>'#, (illionD i3 !e5icient ): P>;;#$ (illion a=ain3t the (ini( ( capital reE ire! o5 P8&$#8 (illion CAnne< FD# Capital to ri3? a33et3 ratio i3 ne=ati2e *%#>9N# eD Total loan3 an! in2e3t(ent port5olio a(o nte! to P>+,*'#> (illion3 C=ro33D+ o5 which P*,'#% (illion3 or &#%N were pa3t ! e an! P*+8&$#* (illion3 or ';#>N were a!2er3el: cla33i5ie! CS )3tan!ar! M P*+%**#' (illion3G Do )t5 l M P;$'#8 (illion3 an! Lo33 M P>$*#* (illion3D# Acco nt3 a!2er3el: cla33i5ie! incl !e! n(at re! loan o5 Pl+'9;#% (illion to entitie3 relate! with each other an! to the )an?+ 3e2eral o5 which 3howe! !i3tre33e! con!ition3# Cp# $+ TiaoE i Report#D Teo!oroH3 concl 3ion wa3 that Jthe contin ance o5 the )an? in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3#J He reco((en!e! Jthat the 0onetar: -oar! ta?e a (ore e55ecti2e an! re3pon3i)le action to protect the !epo3itor3 an! cre!itor3 ### in the li=ht o5 the )an?H3 wor3enin= con!ition#J Cp# &+ Teo!oro Report#D .n Jan ar: ;>+ *,9&+ TiaoE i 3 )(itte! hi3 report to the 0onetar: -oar!+ Li?e Teo!oro+ TiaoE i )elie2e! that the principal ca 3e o5 the )an?H3 5ail re wa3 that in 2iolation o5 the "eneral -an?in= Law an! C- r le3 an! re= lation3+ -FH3 (ajor 3toc?hol!er3+ !irector3 an! o55icer3+ thro =h their Jrelate!J co(panie3B Ci#e# co(panie3 owne! or controlle! ): the( o5 their relati2e3D ha! )een J)orrowin=J h =e ch n?3 o5 the (one: o5 the !epo3itor3# Hi3 Concl 3ion an! Reco((en!ation3 wereB The Con3er2ator+ in hi3 report to the 0onetar: -oar! !ate! Jan ar: 9+ *,9&+ ha3 3tate! that the contin ance o5 the )an? in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3# It ha3 reco((en!e! that a (ore e55ecti2e action )e ta?en to protect !epo3itor3 an! cre!itor3# The e<a(ination 5in!in=3 a3 o5 J l: >*+ *,9' a3 3hown earlier+ in!icate one o5 in3ol2enc: an! illiE i!it: an! 5 rther con5ir(3 the a)o2e concl 3ion o5 the Con3er2ator#

All the 5ore=oin= pro2i!e3 3 55icient j 3ti5ication 5or 5or)i!!in= the )an? 5ro( 5 rther en=a=in= in )an?in=# Fore=oin= con3i!ere!+ the 5ollowin= are reco((en!e!B *# For)i! the -anco Filipino Sa2in=3 A 0ort=a=e -an? to !o ) 3ine33 in the Philippine3 e55ecti2e the )e=innin= o5 o55ice on Jan ar:+ *,9&+ p r3 ant to Sec# ;, o5 R#A# No# ;8&+ a3 a(en!e!G ;# De3i=nate the Hea! o5 the Con3er2ator Tea( at the )an?+ a3 Recei2er o5 -anco Filipino Sa2in=3 A 0ort=a=e -an?+ to i((e!iatel: ta?e char=e o5 the a33et3 an! lia)ilitie3+ a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 all the cre!itor3+ an! e<erci3e all the power3 nece33ar: 5or the3e p rpo3e3 incl !in= ) t not li(ite! to )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?# ># The -oar! o5 !irector3 an! the principal o55icer3 5ro( Senior /ice Pre3i!ent+ a3 li3te! in the attache! Anne< JAJ )e incl !e! in the watchli3t o5 the S per2i3ion an! E<a(ination Sector ntil 3 ch ti(e that the: 3hall ha2e cleare! the(3el2e3# '# Re5er to the Central -anle3 Le=al Depart(ent an! .55ice o5 Special In2e3ti=ation the report on the 5in!in=3 on -anco Filipino 5or in2e3ti=ation an! po33i)le pro3ec tion o5 !irector3+ o55icer3 an! e(plo:ee3 5or acti2itie3 which le! to it3 in3ol2ent po3ition#J Cpp# ,-*%+ TiaoE i Report#D .n Jan ar: ;&+ *,9& or two !a:3 a5ter the 3 )(i33ion o5 TiaoE iH3 Report+ an! three wee?3 a5ter it recei2e! Teo!oroH3 Report+ the 0onetar: -oar!+ then co(po3e! o5B Chair(anB Jo3e -# Fernan!e@+ Jr# C- "o2ernor 0e()er3B *# Ce3ar E#A# /irata+ Pri(e 0ini3ter A Conc rrentl: 0ini3ter o5 Finance ;# Ro)erto /# .n=pin+ 0ini3ter o5 Tra!e A In! 3tr: A Chair(an o5 -oar! o5 In2e3t(ent ># /icente -# /al!epeFa3+ Jr#+ 0ini3ter o5 Econo(ic Plannin= A Director "eneral o5 NEDA '# Ce3ar A# - ena2ent ra+ Pre3i!ent o5 Filipina3 Shell Petrole ( Corp# Cp# >$+ Ann al Report *,9&D i33 e! Re3ol tion No# $& clo3in= -F an! placin= it n!er recei2er3hip# The 0- Re3ol tion rea!3 a3 5ollow3B A5ter con3i!erin= the report !ate! Jan ar: 9+ *,9& o5 the Con3er2ator 5or -anco Filipino Sa2in=3 an! 0ort=a=e -an? that the contin ance in ) 3ine33 o5 the )an? wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! a5ter !i3c 33in= an! 5in!in= to )e tr e the 3tate(ent3 o5 the Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector CSESD Depart(ent II+ a3 recite! in hi3 (e(oran! ( !ate! Jan ar: ;>+ *,9&# that the -anco Filipino Sa2in=3 an! 0ort=a=e -an? i3 in3ol2ent an! that it3 contin ance in ) 3ine33 wo l! in2ol2e pro)a)le lo33 to it3 !epo3itor3 an! cre!itor3+ an! in p r3 ance o5 Section ;, o5 R#A# No# ;8&+ a3 a(en!e!+ the -oar! !eci!e!B *# To 5or)i! -anco Filipino Sa2in=3 an! 0ort=a=e -an? an! all it3 )ranche3 to !o ) 3ine33 in the Philippine3G ;# To !e3i=nate 0r3# Carlota P# /alen@ ela+ Dep t: "o2ernor+ a3 Recei2er who i3 here): !irectl: 2e3te! with j ri3!iction an! a thorit: to i((e!iatel: ta?e char=e o5 the )an?H3 a33et3 an! lia)ilitie3+ an! a3 e<pe!itio 3l: a3 po33i)le collect an! =ather all the a33et3 an! a!(ini3ter the 3a(e 5or the )ene5it o5 it3 cre!itor3+ e<erci3in= all the- power3 nece33ar: 5or the3e p rpo3e3 incl !in=+ ) t not li(ite! to+ )rin=in= 3 it3 an! 5oreclo3in= (ort=a=e3 in the na(e o5 the )an?G ># To !e3i=nate 0r# Arn l5o -# A rellano+ Special A33i3tant to the "o2ernor+ an! 0r# Ra(on /# TiaoE i+ Special A33i3tant to the "o2ernor an! Hea!+ S per2i3ion an! E<a(ination Sector Depart(ent II# a3 Dep t: Recei2er3 who are li?ewi3e here): !irectl: 2e3te! with j ri3!iction an! a thorit: to !o all thin=3 nece33ar: or proper to carr: o t the 5 nction3 entr 3te! to the( ): the Recei2er an! otherwi3e to a33i3t the Recei2er in carr:in= o t the 5 nction3 2e3te! in the Recei2er ): law or 0onetar: -oar! re3ol tion3G

'# To !irect an! a thori@e 0ana=e(ent to !o all other thin=3 an! carr: o t all other (ea3 re3 nece33ar: or proper to i(ple(ent thi3 Re3ol tion an! to 3a5e= ar! the intere3t3 o5 !epo3itor3Kcre!ition an! the =eneral p )licG an! &# In con3eE ence o5 the 5ore=oin=+ to ter(inate the con3er2ator3hip o2er -anco Filipino Sa2in=3 an! 0ort=a=e -an?# Cpp# *;8-*;$+ Rollo I#D .n 0arch *,+*,9&+ the recei2er+ Carlota /alen@ ela+ an! the !ep t: recei2er3+ Arn l5o -# A rellano an! Ra(on /# TiaoE i+ 3 )(itte! a report to the 0onetar: -oar! a3 reE ire! in Section ;,+ ;n! para=raph o5 R#A# ;8& which pro2i!e3 that within 3i<t: C8%D !a:3 5ro( !ate o5 the recei2er3hip+ the 0onetar: -oar! 3hall !eter(ine whether the )an? (a: )e reor=ani@e! an! per(itte! to re3 (e ) 3ine33+ or )e liE i!ate!# The recei2er3 reco((en!e! that -F )e place! n!er liti=ation# For+ a(on= other thin=3+ the: 5o n! thatB *# -F ha! )een 3 55erin= a capital !e5icienc: o5 P>>8#& (illion a3 o5 J l: >*+ *,9' Cpp# ; an! '+ Recei2er3H ReportD# ;# The )an?H3 wee?l: re3er2e !e5iciencie3 a2era=e! P*'8#8$ (illion 5ro( No2e()er ;&+ *,9> p to 0arch *8+ *,9'+ ri3in= to a pea? o5 P>>9#%, (illion ntil J l: ;$+ *,9'# It3 re3er2e !e5iciencie3 a=ain3t !epo3it3 an! !epo3it 3 )3tit te3 )e=an on the wee? en!in= J ne *&+ *,9' p to Dece()er $+ *,9'+ with a2era=e !ail: re3er2e !e5iciencie3 o5 P;#,9 (illion# ># E3ti(ate! lo33e3 or J nhoo?e! 2al ation re3er2e3J 5or loan3 to entitie3 with relation3hip3 to certain 3toc?hol!erK!irector3 an! o55icer3 o5 the )an? a(o nte! to P8%%#& (illion# Co()ine! with other a!j 3t(ent3 in the a(o nt o5 P$>#; (illion+ the: will entirel: wipe o t the )an?H3 entire capital acco nt an! lea2e a capital !e5icienc: o5 P>>8#& (illion# The )an? wa3 alrea!: in3ol2ent on J l: >*+ *,9'# The capital !e5icienc: increa3e! to P,%9#' (illion a3 o5 Jan ar: ;8+ *,9& on acco nt o5 nhoo?e! penaltie3 5or !e5iciencie3 in le=al re3er2e3 CP',#%$ (illionD+ nhoo?e! intere3t on o2er!rawin=3+ e(er=enc: a!2ance o5 P&8,#', (illion 5ro( Central -an?+ an! a!!itional 2al ation re3er2e3 o5 P*;'#& (illion# Cpp# >-'+ Recei2er3H Report#D The Recei2er3 5 rther note! that M A5ter -F wa3 clo3e! a3 o5 Jan ar: ;&+ *,9&+ there were no collection3 5ro( loan3 =rante! to 5ir(3 relate! to each other an! to -F cla33i5ie! a3 J!o )t5 lJ or Jlo33+J there were no 3 )3tantial i(pro2e(ent3 on other loan3 cla33i5ie! J!o )t5 lJor Jlo33GJ there wa3 no 5 rther increa3e in the 2al e o5 a33et3 owne!KacE ire! 3 pporte! ): new apprai3al3 an! there wa3 no in5 3ion o5 a!!itional capital 3 ch that the e3ti(ate! reali@a)le a33et3 o5 -F re(aine! at P>+,%,#;>+ C(illion3D while the total lia)ilitie3 a(o nte! to P&+*&,#'' C(illion3D# Th 3+ -F re(ain3 in3ol2ent with e3ti(ate! !e5icienc: to cre!itor3 o5 Pl+;&%#;* C(illion3D# 0oreo2er+ there were no e55ort3 on the part o5 the 3toc?hol!er3 o5 the )an? to i(pro2e it3 5inancial con!ition an! the po33i)ilit: o5 reha)ilitation ha3 )eco(e (ore re(ote# CP# 9+ Recei2er3H Report#D In the li=ht o5 the re3 lt3 o5 the e<a(ination o5 -F ): the Teo!oro an! TiaoE i tea(3+ I !o not 5in! that the C-H3 Re3ol tion No# $& or!erin= -F to cea3e )an?in= operation3 an! placin= it n!er recei2er3hip wa3 Jplainl: ar)itrar: an! (a!e in )a! 5aith#J The recei2er3hip wa3 j 3ti5ie! )eca 3e -F wa3 in3ol2ent an! it3 contin ance in ) 3ine33 wo l! ca 3e lo33 to it3 !epo3itor3 an! cre!itor3# In3ol2enc:+ a3 !e5ine! in Rep# Act ;8&+ (ean3 Hthe ina)ilit: o5 a )an?in= in3tit tion to pa: it3 lia)ilitie3 a3 the: 5all ! e in the 3 al an! or!inar: co r3e o5 ) 3ine33# Since J ne *,9'+ -F ha! )een na)le to (eet the hea2: ca3h with!rawal3 o5 it3 !epo3itor3 an! pa: it3 lia)ilitie3 to it3 cre!itor3+ the )i==e3t o5 the( )ein= the Central -an?+ hence+ the 0onetar: -oar! correctl: 5o n! it3 con!ition to )e one o5 in3ol2enc:# All the !i3c 33ion in the Santia=o Report concernin= the )an?H3 a33et3 an! lia)ilitie3 a3 !eter(inant3 o5 -FH3 3ol2enc: or in3ol2enc: i3 irrele2ant an! incon3eE ential+ 5or n!er Section ;, o5 Rep# Act# ;8&+ a )an?H3 in3ol2enc: i3 not !eter(ine! ): it3 e<ce33 o5 lia)ilitie3 o2er a33et3+ ) t ): it3 Jina)ilit: to pa: it3 lia)ilitie3 a3 the: 5all ! e in the or!inar: co r3e o5 ) 3ine33J an! it wa3 a) n!antl: 3hown that -F wa3 na)le to pa: it3 lia)ilitie3 to !epo3itor3 5or o2er a 3i<-(onth-perio! )e5ore it wa3 place! n!er recei2er3hip# E2en i5 a33et3 an! lia)ilitie3 were to )e 5actore! into a 5or( la 5or !eter(inin= whether or not -F wa3 alrea!: in3ol2ent on or )e5ore Jan ar: ;&+ *,9&+ the re3 lt wo l! )e no !i55erent# The )an?H3 a33et3 a3 o5 the en! o5 *,9' a(o nte! to P'#9,* )illion3 Cnot P8 )illion3D accor!in= to the Report 3i=ne! an! 3 )(itte! to the C- ): -FH3 own pre3i!ent+ an! it3 total lia)ilitie3 were P'#'$9 )illion3 Cp# &9+ Co3ico ReportD# Ihile A= irreH3 Report 3howe! -F ahea! with a net worth o5 P'*;#,8* (illion3+ 3ai! report !i! not (a?e an: pro2i3ion 5or e3ti(ate! 2al ation re3er2e3 a(o ntin= to P8%%#& (illion3+ C&%N o5 5ace 2al e o5 !o )t5 l loan3 an! *%%N o5 5ace 2al e

o5 lo33 acco nt3D which -F ha! =rante! to it3 relate!Klin?e! co(panie3# The e3ti(ate! 2al ation re3er2e3 o5 P8%%#& (illion3 pl 3 -FH3 a!(itte! lia)ilitie3 o5 P'#'$9 )illion3+ p t to=ether+ wo l! wipe o t -F3 reali@a)le a33et3 o5 P'#9,* )illion3 an! con5ir( it3 in3ol2ent con!ition to the t ne o5 P*9$#&>9 (illion3# -FH3 an! J !=e Cnow CA J 3ticeD Con3 elo 4# Santia=oH3 ar= (ent that 2al ation re3er2e3 3ho l! not )e con3i!ere! )eca 3e the (atter wa3 not !i3c 33e! ): TiaoE i with -F o55icial3 i3 not well ta?en 5orB C*D The recor!3 o5 the !e5a ltin= !e)tor3 were in the po33e33ion o5 -F# C;D The Ja!2er3el: cla33i5ie!J loan3 were in 5act incl !e! in the Li3t o5 E<ception3 an! Fin!in=3 Co5 irre= laritie3 an! 2iolation3 o5 law3 an! C- r le3 an! re= lation3D prepare! ): the SES+ a cop: o5 which wa3 5 rni3he! -F on Dece()er * $+ *,9'G C>D A con5erence on the (atter wa3hel! on Jan ar: ;l+ *,9& with 3enior o55icial3 o5 -F hea!e! ): E/P F# Di@on+# Cpp# *'-*&+ Co3ico Report#D -F !i! not 5or(all: prote3t a=ain3t the C-3 e3ti(ate o5 2al ation re3er2e3# The C- co l! not wait 5ore2er 5or -F to re3pon! 5or the C- ha! to act with rea3ona)le pro(ptne33 to protect the !epo3itor3 an! cre!itor3 o5 -F )eca 3e the )an? contin e! to operate# C'D S )3eE ent e2ent3 pro2e! correct the SES cla33i5ication o5 the loan acco nt3 a3 J!o )t5 lJ or Jlo33H )eca 3e a3 o5 Jan ar: ;&+ *,9& none o5 the loan3+ e<cept three+ ha! )een pai! either partiall: or in 5 ll+ e2en i5 the: ha! alrea!: (at re! Cp# &>+ Co3ico ReportD# The reco((en!e! pro2i3ion 5or 2al ation re3er2e3 o5 P8%%#& (illion3 5or J!o )t5 lJ an! Jlo33J acco nt3 wa3 a proper 5actor to con3i!er in the capital a!j 3t(ent3 o5 -F an! wa3 in accor!ance with acco ntin= r le3# For+ i5 the ncollecti)le loan acco nt3 wo l! )e entere! in the a33et3 col (n a3 Jrecei2a)le3+J witho t a corre3pon!in= entr: in the lia)ilitie3 col (n 5or e3ti(ate! lo33e3 or 2al ation re3er2e3 ari3in= 5ro( their ncollecta)ilit:+ the re3 lt wo l! )e a =ra2el: !i3torte! pict re o5 the 5inancial con!ition o5 -F# -FH3 3tran=e ar= (ent that it wa3 not in3ol2ent 5or otherwi3e the C- wo l! not ha2e =i2en it 5inancial a33i3tance !oe3 not (erit 3erio 3 con3i!eration 5or preci3el: -F nee!e! 5inancial a33i3tance )eca 3e it wa3 in3ol2ent# TiaoE iH3 a!(i33ion that the e<a(ination o5 -F ha! Jnot :et )een o55iciall: ter(inate!J when he 3 )(itte! hi3 report on Jan ar: ;>+ *,9& !i! not (a?e the action o5 the 0onetar: -oar! o5 clo3in= the )an? an! appointin= recei2er3 5or it+ Hplainl: ar)itrar: an! in )a! 5aith#J For what ha! )een e<a(ine! ): the SES wa3 (ore than eno =h to warrant a 5in!in= that the )an? wa3 Jin3ol2ent an! co l! not contin e in ) 3ine33 witho t pro)a)le lo33 to it3 !epo3itor3 or cre!itor3+J an! what ha! not )een e<a(ine! wa3 ne=li=i)le an! wo l! not ha2e (ateriall: altere! the re3 lt# In an: e2ent+ the o55icial ter(ination o5 the e<a(ination with the 3 )(i33ion ): the Chie5 E<a(iner o5 hi3 report to the 0onetar: -oar! in 0arch *,9&+ !i! not contra!ict+ ) t in 5act con5ir(e!+ the 5in!in=3 in the TiaoE i Report# The re3pon3i)ilit: o5 a!(ini3terin= the Philippine (onetar: an! )an?in= 3:3te(3 i3 2e3te! ): law in the Central -an? who3e ! t: it i3 to 3e the power3 =rante! to it n!er the law to achie2e the o)jecti2e+ a(on= other3+ o5 (aintainin= (onetar: 3ta)ilit: in the co ntr: CSec# ;+ Rep# Act ;8&D# I !o not thin? it wo l! )e proper an! a!2i3a)le 5or thi3 Co rt to inter5ere with the C-H3 e<erci3e o5 it3 prero=ati2e an! ! t: to !i3cipline )an?3 which ha2e per3i3tentl: en=a=e! in ille=al+ n3a5e+ n3o n! an! 5ra ! lent )an?in= practice3 ca 3in= tre(en!o 3 lo33e3 an! ni(a=ina)le an<iet: an! prej !ice to !epo3itor3 an! cre!itor3 an! =eneratin= wi!e3prea! !i3tr 3t an! lo33 o5 con5i!ence in the )an?in= 3:3te(# The !a(a=e to the )an?in= 3:3te( an! to the !epo3itin= p )lic i3 )i==er when the )an?+ li?e -anco Filipino+ i3 )i=# Iith 9, )ranche3 nationwi!e+ '8 o5 the( in 0etro 0anila alone+ p (pin= the har!-earne! 3a2in=3 o5 > (illion !epo3itor3 into the )an?+ -F ha! no rea3on to =o )an?r pt i5 it were properl: (ana=e!# The Central -an? ha! to in5 3e al(o3t P>#& )illion3 into the )an? in it3 en!ea2or to 3a2e it# - t e2en thi3 5inancial a33i3tance wa3 (i3 3e!+ 5or in3tea! o5 3ati35:in= the !epo3itor3H !e(an!3 5or the with!rawal o5 their (one:+ -F channele! an! !i2erte! a 3 )3tantial portion o5 the 5in!3 into the co55er3 o5 it3 relate!Klin?e! co(panie3# Up to thi3 ti(e+ it3 o55icer3+ !irector3 an! (ajor 3toc?hol!er3 ha2e neither repai! the Central -an?H3 P>#8 )illion 5inancial a33i3tance+ nor p t p a!eE ate collateral3 there5or+ nor 3 )(itte! a cre!i)le plan 5or the reha)ilitation o5 the )an?# Ihat a thorit: ha3 thi3 Co rt to reE ire the Central -an? to reopen an! reha)ilitate the )an?+ an! in e55ect ri3? (ore o5 the "o2ern(entH3 (one: in the (ori) n! )an?L I re3pect5 ll: 3 )(it that !eci3ion i3 5or the Central -an?+ not 5or thi3 Co rt+ to (a?e# IHEREF.RE+ I 2ote to !i3(i33 the petition 5or certiorari an! (an!a( 3 in "#R# No# $%%&' 5or lac? o5 (erit# Ro(ero+ J#+ conc r3#

R Footnote3 "riFo-AE ino+ !i33entin= B * P# >+ Petition# ; Sec# >$# All 3a2in=3 an! (ort=a=e )an?3 3hall (aintain on !epo3it with the Central -an? o5 the Philippine3 3 ch re3er2e3 a=ain3t their !epo3it lia)ilitie3 a3 the 0onetar: -oar! 3hall !eter(ine in accor!ance with the pertinent pro2i3ion3 o5 the Central -an? Act# > Sec# >9# Ihene2er there i3 a call ): !epo3itor3 o5 a 3a2in= )an? 5or repa:(ent o5 their !epo3it3 an! the call 3o (a!e 3hall re3 lt in re! cin= it3 le=al re3er2e3 )elow the a(o nt reE ire! ): the 0onetar: -oar!+ 3 ch )an? 3hall not (a?e an: new loan3 or in2e3t(ent % the 5 n!3 o5 !epo3itor3 or earnin=3 o5 3 ch 5 n!3 ntil the call o5 the !epo3itor3 ha3 )een 3ati35ie! an! it3 le=al re3er2e3 ha2e )een re3tore! to the reE ire! (ini( (# ' Sec- 9># No !irector or o55icer o5 an: )an?in= in3tit tion 3hall+ either !irectl: or in!irectl:+ 5or hi(3el5 or a3 the repre3entati2e or a=ent o5 other3+ )orrow an: o5 the !epo3it3 o5 5 n!3 o5 3 ch )an? ### # The Lawphil Project - Arellano Law Fo n!ation