Koruga v. Arcenas, Et. Al, G.R. No. 168332

Koruga v. Arcenas, et. al, G.R. No.
168332, June 19, 2009
FACTS:
Koruga, a minority stockholder of Banco Filipino Savings and Mortgage Bank, filed a complaint
before RTC alleging the following: (1) violation of Sections 31 to 34 of the Corporation Cod e ("Code")
which prohibit self-dealing and conflicts of interest of directors and officers; and (2) the right of a
stockholder to inspect the records of a corporation (including 􏰃financial statements) under Sections 74
and 75 of the Code, as implemented by the Interim Rules.
ISSUE(S):
WON the RTC has jurisdiction over Koruga’s complaint.
RULING:
NO, it is the BSP that has jurisdiction over the case.
Koruga's Complaint charged defendants with violation of Sections 31 to 34 of the Corporation
Code, prohibiting self-dealing and confl􏰆ict of interest of directors and o􏰅fficers; invoked her right to
inspect the corporation's records under Sections 74 and 75 of the Corporation Code; and prayed for
Receivership and Creation of a Management Committee, pursuant to Rule 59 of the Rules of Civil
Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate
Controversies, the General Banking Law of 2000, and the New Central Bank Act.
It is clear that the acts complained of pertain to the conduct of Banco Filipino's banking business.
Banks are affected with public interest because they receive funds from the general public in the form of
deposits. It is the Government's responsibility to see to it that the 􏰃financial interests of those who deal
with banks and banking institutions, as depositors or otherwise, are protected. In this country, that task is
delegated to the BSP, which pursuant to its Charter, is authorized to administer the monetary, banking,
and credit system of the Philippines. It is further authorized to take the necessary steps against any
banking institution if its continued operation would cause prejudice to its depositors, creditors and the
general public as well.
The law vests in the BSP the supervision over operations and activities of banks, as provided for
under Sec. 25 of the New Central Bank Act. Specifically, the BSP's supervisory and regulatory powers
include: (1) The conduct of examination to determine compliance with laws and regulations if the
circumstances so warrant as determined by the Monetary Board; (2) Overseeing to ascertain that laws and
Regulations are complied with; (3) Regular investigation which shall not be oftener than once a year from
the last date of examination to determine whether an institution is conducting its business on a safe or
sound basis: Provided, That the defi􏰃ciencies/irregularities found by or discovered by an audit shall be
immediately addressed;….(4) Inquiring into the solvency and liquidity of the institution…
Whether the loans authorized by the Directors are covered by the prohibition on self-dealing is a
matter for the BSP to determine. These are not ordinary intra-corporate matters; rather, they involve
banking activities which are, by law, regulated and supervised by the BSP. It is well-settled in both law
and jurisprudence that the Central Monetary Authority, through the Monetary Board, is vested with
exclusive authority to assess, evaluate and determine the condition of any bank.
The General Banking Law of 2000 speci􏰃fically deals with loans contracted by bank directors or
officers. Section 36 provides that, “The Monetary Board may regulate the amount of loans, credit
accommodations and guarantees that may be extended, directly or indirectly, by a bank to its directors,
offi􏰅􏰅cers, stockholders and their related interests, as well as investments of such bank in enterprises
owned or controlled by said directors, o􏰅􏰅fficers, stockholders and their related interests.”
Furthermore, the authority to determine whether a bank is conducting business in an unsafe or
unsound manner is also vested in the Monetary Board, as provided for in Sec. 56 of the General Banking
Law of 2000.
The New Central Bank Act also grants the Monetary Board the power to impose administrative
sanctions on the erring bank, as provided for in Sec. 37 of the New Central Bank Act.
Furthermore, it is the Monetary Board that exercises exclusive jurisdiction over proceedings for
receivership of banks. Section 30 is the provision that says the "appointment of a receiver under this
section shall be vested exclusively with the Monetary Board." The term "exclusively" connotes that only
the Monetary Board can resolve the issue of whether a bank is to be placed under receivership and, upon
an affi􏰅rmative fi􏰃nding, it also has authority to appoint a receiver.
The court's jurisdiction could only have been invoked after the Monetary Board had taken action
on the matter and only on the ground that the action taken was in excess of jurisdiction or with such grave
abuse of discretion as to amount to lack or excess of jurisdiction.
Finally, there is one other reason why Koruga's complaint before the RTC cannot prosper. Given
her own admission — and the same is likewise supported by evidence — that she is merely a minority
stockholder of Banco Filipino, she would not have the standing to question the Monetary Board's action.
Section 30 of the New Central Bank Act provides that, “The petition for certiorari may only be fi 􏰃led by
the stockholders of record representing the majority of the capital stock within ten (10) days from receipt
by the board of directors of the institution of the order directing receivership, liquidation or
conservatorship.”
All the foregoing discussion yields the inevitable conclusion that the CA erred in upholding the
jurisdiction of, and remanding the case to, the RTC.

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Koruga v. Arcenas, et. al, G.R. No.

168332, June 19, 2009

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