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In defense of the non-party litigant

(Article published in the Nov 4, 2009 issue of Manila Standard Today)  

 It seemed no more than a gentle, though nevertheless firm reminder that the Supreme Court, early last month, gave to the courts below:

 “Courts are hereby reminded to take greater care in issuing injunctive relief to litigants, that it would not violate any law.  The grant of a preliminary injunction in a case rests on the sound discretion of the court with the caveat that it should be made with great caution.  Thus, the issuance of the writ of preliminary injunction must have basis in and be in accordance with law.  All told, while the grant or denial of an injunction generally rests on the sound discretion of the lower court, this Court may and should intervene in a clear case of abuse.”

 Although worlds apart in facts and law, the famous American case of Roe vs Wade and the affirmation made by the Philippine Supreme Court of the regulator’s special competence made in what we may refer to, with literary license and unlawyerlike freedom, as the case of RoE vs Lade (short for “Result of Examination against Legacy and De Los Angeles”) share something in common.  They both were in favor of an unseen litigant: in Roe vs Wade it was the woman in the street (not necessarily “of the street”) putting in her own hands her welfare and the life of the baby she carries; in RoE vs Lade, it was the depositor whom both bank and regulator profess to protect.


Bangko Sentral ng Pilipinas, et al vs Hon. Nina G. Antonio-Valenzuela, et al, G.R. No. 184778, promulgated October 2, 2009 was on its face a procedural matter, the simple question of whether injunctive relief is in order.  Ten Legacy rural banks, loosely speaking, owned and/or controlled by Celso de los Angeles, separately went to court to stop the Supervision and Examination Department of the BSP from submitting to the Monetary Board (MB) the results of its examinations (“RoEs”) of the suing banks, or, if a submission had already been made, to stop the MB from acting on it. 

 To gain the ear of the court, the rural banks had to claim that their rights were in serious danger of being violated.  That imminent violation was thus alleged to consist in, substantially, having been deprived of the opportunity to take the necessary corrective measures by reason of their not having been shown what was written in the RoEs.  Such allegation, remaining stark naked, would hardly attract judicial interest.  Thus, it had to be clothed, as it was, with the categorization that such deprivation was a violation of the banks’ right to due process.  Thus, by a sleigh of hand within the bag of tricks even of first year law students, what was simply a procedural matter was clothed with accouterments of seeming substance.

 The Supreme Court, speaking through Justice Presbitero J. Velasco, Jr., easily saw through the trick.  It pointed out that the rural banks of Celso de Los Angeles were actually made aware by the BSP examiners of what were found deficient in the banks’ operation.  The banks were given by the examiners a list of their findings (the negative ones are technically called “exceptions”) and were told to comment and to undertake specific remedial measures.  This process is usually in the course of what is known in bank audit practice as “exit interview”, indicative of a usually short conversation at the exit (or end of the examination process) at the time that the examiners and the bank examined bid each other good-bye.

 The RoEs were simply the official memoranda prepared by the examiners after they had gone back to their offices at the BSP addressed to their superiors ultimately at the MB.  That report’s function was to relay to the MB in a formal manner what had already been taken up with the rural banks themselves.  Hence, not having been shown the RoEs was not equivalent to not knowing what was written on them.  Ergo, there was no need for the rural banks to set their eyes on them.

 It was precisely because giving the De los Angeles rural banks, or any of examined bank for that matter, a copy of the RoE would have been an exercise in superfluity that Section 28 of the RA 7653 (the new Central Bank Act) limited itself to requiring the submission of the RoE to the MB and refrained from mandating the furnishing of copies to the banks examined.  The bankers, by the time the RoE reach the MB already know, or ought to have known by then, what was coming to them.

 It was because the De los Angeles rural banks already knew what was coming to them that moved them to disrupt the flow of negative information to the regulator and interdict the report by invoking the injunctive discretion of the courts.  The motivation was clearly to delay the banging of the gavel and to buy (figuratively, certainly; literally, I have no view) time in the hope of some miracle happening that would save the collapse of what was increasing being exposed as a house of cards.  In the process, the unseen party in interest, i.e. the hapless bank depositor is put at risk, if not subjected to great prejudice.  That eventuality the Supreme Court could not tolerate happen.  Hence, the court’s intervention in what to it seemed a clear case of abuse by the lower courts.