Petitioner Central Bank and conservator claims that during the regular examination of herein respondent Producers Bank of the Philippines (PBP) it stumbled upon some highly questionable loans which the latter extended to PBP owners themselves without collateral. At the height of controversy of discovering these anomalous loans, it triggered a bank-run in PBP which resulted in continuous over-drawings on the bank’s demand deposit account with the CB. The over-drawings’ continued increase prompted the MB to place PBP under conservatorship. PBP failing to submit a rehabilitation plan, the MB proposed its own which it considers as viable but PBP made no response. A few days later, PBP filed a complaint before the RTC contending that its placement under conservatorship was unwarranted, ill-motivated, illegal, utterly unnecessary and unjustified and that the appointed conservators committed bank frauds and abuses. RTC ruled all the way in favor of PBP. Hence petitioners filed separate petitions which were then consolidated before the Court.
Whether or not PBP was deprived of due process before being placed under conservatorship
The fact that PBP is grossly overdrawn on its reserve account with the CB (up to P1.233 billion as of 13 February 1990) is not disputed by PBP. This enormous overdraft evidences the patent inability of the bank’s management to keep PBP liquid. This fact alone sufficiently justifies the remedial measures taken by the Monetary Board.
MB Resolutions Nos. 649 and 751 were not promulgated to arbitrarily divest the present stockholders of control over PBP, as is claimed by the latter. The same contemplates an effective and viable plan to revive and restore PBP. It is to be noted that before issuing these resolutions, the MB gave the management of PBP ample opportunity to submit a viable rehabilitation plan for the bank. MB Resolution Nos. 751 merely reiterated the requirement set forth in Resolution No. 649 for PBP to identify and submit the list of new stockholders who will infuse new capital into the bank for CB approval. In this Resolution, the MB gave PBP’s stockholders one (1) week from notice within which to signify their acceptance or rejection of the proposed rehabilitation plan.
The foregoing resolutions refer to a recommended rehabilitation plan. What was conveyed to PBP was a mere proposal. There was nothing in the resolutions to indicate that the plan was mandatory. On the contrary, PBP was given a specific period within which to accept or reject the plan. And, as petitioners correctly pointed out, the plan was not self-implementing. The warning given by the MB that should said proposal be rejected, the CB “will take appropriate alternative actions on the matter,” does not make the proposed rehabilitation plan compulsory. Whether or not there is a rehabilitation plan agreed upon between PBP and the MB, the CB is authorized under R.A. No. 265 to take appropriate measures to protect the interest of the bank’s depositors as well as of the general public.
There is nothing objectionable to the actions of the MB. We, therefore, find to be completely without legal or evidentiary basis the contention that the impugned resolutions are arbitrary, illegal and made in bad faith.