Republic of the Philippines
Province of Camarines Sur
5th Judicial Region
Branch 58
San Jose, Camarines Sur

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O R D E R

This is a verified petition filed by the Philippine Deposit Insurance Corporation seeking assistance in the liquidation of Rural Bank of Lagonoy (Cam. Sur), Inc., the material allegations of which, in brief, are as follows:

1. RB Lagonoy was a bank organized and existing in accordance with the laws of the Republic of the Philippines with principal place of business address at Relloso Street, Pob. Lagonoy, Camarines Sur

2. On October 14, 2010, pursuant to Monetary Board Resolution No. 1433 of the Banko Sentral ng Pilipinas (BSP for brevity), RB Lagonoy was placed under the receivership of the petitioner, and prohibited from doing business in the Philippines, after determining that RB LAGONOY:

   "is unable to pay its liabilities as they become due in the ordinary course business; has insufficient realizable assets to meet liabilities; and cannot continue in business without involving probable losses to its depositors and creditors and considering the failure of the Board of Directors/management of RB Lagonoy to restore the bank’s financial health and viability despite considerable time given to address the bank’s financial problems, and that the bank had been accorded due process, x x x."

3. Consistent with, and on the strength of said Resolution, petitioner took over the assets and affairs of RB LAGONOY on October 15, 2010.

4. Under Section 30 Republic Act 7653, otherwise known as “The New Central Bank Act,” petitioner, as such Receiver, is mandated, among others, to determine whether the institution may be rehabilitated and otherwise placed in such a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public or be placed under liquidation.

5. Pursuant thereto, on June 13, 2011, petitioner reported to the Monetary Board that RB Lagonoy cannot resume business with safety to its depositors, creditors and the general public.

6. On June 22, 2011, on the basis of the aforementioned Receivership Report, the Monetary Board issued Resolution No. 933 designating petitioner as the liquidator of RB Lagonoy and directing it to proceed with the liquidation of the Bank. x x x

7. Consistent therewith, petitioner hereby submits a copy of the Master Receivership/Liquidation Plan (MRLP), which was duly adopted and approved by its Board of Directors in Resolution No. 2007-12-2007 dated December 20, 2007 for general application in the liquidation of all closed banking institutions.

8. Petitioner anticipates that in the course of the liquidation of RB Lagonoy, disputed claims, issues and other matters material or relevant to its liquidation may arise. Thus, pursuant to the provisions of Section 30, supra, petitioner seeks the assistance of the Honorable Court in the resolution thereof. x x x "

The petition prays that the Court:

"After finding the instant Petition for Assistance in the Liquidation of Rural Bank of Lagonoy (Camarines Sur), Inc., to be sufficient in form and substance, issue an Order: Directing the petitioner to cause the posting in three (3) public places and the one-time publication in a newspaper of general circulation of the Honorable Court’s Order; Setting the date and time for the initial hearing; and Directing those who may have a claim against the assets of the Bank to file their respective claims with the petitioner within ninety (90) days from the date of publication of the above-mentioned Order. Thereafter, upon submission of proof of jurisdictional requirements, that in Order be issued by the Honorable Court giving due course to the instant Petition for Assistance in the Liquidation of Rural Bank of Lagonoy (Camarines Sur), Inc."

Finding the petition to be sufficient in form and substance, the same was set for hearing on February 15, 2012 at which persons or entities who may have an opposition to the petition were directed to appear and show cause why the same should not be granted. The Court likewise directed the publication of the Order setting the same for hearing in a newspaper of general circulation in the Philippines, as well as its posting at a conspicuous place in the Municipal Building of Lagonoy, Camarines Sur, the Lagonoy Public Market, and the Hall of Justice, Regional Trial Court, San Jose, Camarines Sur. The Solicitor General, the Banko Sentral ng Pilipinas and the President/Chairman of the Rural Bank of Lagonoy (Camarines Sur), Inc. were ordered furnished with a copy of the same order, together with the petition and its annexes.

During the hearing set on February 15, 2012, the petitioner commenced the presentation of evidence to prove compliance with jurisdictional requirements by submitting the following exhibits:

Considering, however, that the Order setting the case for hearing was published in a newspaper of general circulation in the province of Camarines Sur only and not in the Philippines as required by the Court, the continuation of the presentation of evidence to prove compliance with jurisdictional requirements was set on April 24, 2012. The Order dated February 15, 2012 was ordered published and posted as earlier required during the initial hearing. The scheduled hearing on April 24, 2012 was reset to June 26, 2012 on account of the illness of the presiding judge.

On June 26, 2012, the petitioner marked the following additional documentary exhibits:

With the admission of Exhibits A to M aforementioned and their derivatives, the petitioner was allowed to present evidence.

Regierex Cascolan, the Supervising Management Specialist of the PDIC, was presented as the lone witness for the petitioner PDIC. He testified that he had been with the corporation for 13½ years. He is the designated assisting deputy receiver or liquidator of closed banks. As such, he assists in the implementation of closure orders, represents closed banks in courts and quasi-bodies, testifies for and in behalf of closed banks, and acts as the custodian of bank records. He was designated as the assisting deputy liquidator for the Rural Bank of Lagonoy (Bank) last January 11, 2012 per Special Order No. 03 (Exh. N). He was then authorized by PDIC to represent the Bank in this case (Exh. M) by PDIC because as statutory receiver of closed banks, it has a mandate to recover the bank’s assets and pay out obligations.

He explained that the Bank was placed under receivership by the Monetary Board on October 14, 2010 per Monetary Board Resolution No. 1433 (Exh. A) because it was unable to pay its liabilities as they became due in the ordinary course of business. It has insufficient realizable assets to meet its liabilities and cannot continue in business without involving probable losses to its depositors and creditors. The Board of Directors/Management of the Bank failed to restore its financial health and viability despite considerable time given to address its financial problem. After being placed under receivership, the bank was placed under liquidation by the Monetary Board under Resolution No. 933 (Exh. D) dated June 22, 2011 because it was determined that the Bank cannot be rehabilitated; neither can the bank resume business with safety to its depositors, creditors and the general public. The Monetary Board based its resolution on the Receivership Report of the PDIC (Exh. C). The assets of the Bank were valued at P2.37 Million. Per the said report, the Bank’s liabilities amounted to P14.46 Million. “Additional Capitalization of P15,992,440.32 is needed to meet the P3.9 Million minimum capital requirements for a rural banks in a 3rd class municipality”. The petitioner then recommended that the Bank cannot be rehabilitated and should placed under liquidation.

Section 30 of Republic Act 7653, otherwise known as the New Central Bank Act outlines the proceedings in receivership and liquidation of banks and quasi-banks. It states:

In the instant case, it was determined that the Bank: a) is unable to pay its liabilities as they become due in the ordinary course of business, b) has insufficient realizable assets to meet its liabilities, and c) cannot continue in business without involving probable losses to its depositors and creditors.

The petitioner was then designated as receiver pursuant to Section 30 of R. A. 7653.

In a letter dated June 13, 2011 addressed to the Monetary Board (Exh. B), the Officer-In-Charge of PDIC informed the Board that it has been determined that the Bank “at its present financial condition, cannot resume business with safety to its depositors, creditors, and the general public and therefore recommended to place the bank under liquidation."

Under the same Section 30 of the New Central Bank Act:

From the evidence presented, jurisdiction over the petition has been acrequired by the Court. Petitioner has likewise shown by such evidence that all requirements of the proceedings in receivership and liquidation of banks had been properly complied with.

WHEREFORE, in view of the foregoing, the petition for Assistance in the Liquidation of Rural Bank of Lagonoy (Cam. Sur), Inc., is hereby APPROVED AND GIVEN DUE COURSE. All persons who may have a claim or claims against the bank are ordered to file their claims with this Court, which is the liquidation court, and also with herein petitioner PDIC, the liquidator. The petitioner is directed to inform and furnish this Court with the list of claims against the Rural Bank of Lagonoy (Cam. Sur.), Inc., for purposes of allowing or disallowing such claim or claims. Thereafter, the liquidator is ordered to submit to the Court the distribution plan specifies in detail the total amount for distribution to creditors whose claims were earlier allowed for the Court’s approval.

Furthermore, the petitioner is hereby ordered to cause the posting of this Decision in the premises of the closed bank and the publication thereof once in a newspaper of general circulation in the Philippines.

SO ORDERED.

In Chamber, 24 January 2013, San Jose, Camarines Sur.