cases in commercial law

8/18/2019 Cases in Commercial Law

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CENTRAL BANK ACT

1. Busuego v CA (G.R. No. 95326. March 11, 1999

Th!s !s a "e#!#!o$ %or rev!e& o$ cer#!orar! u$'er Rue )5 o% #he Rues o% Cour# see*!$g

a reversa o% #he +ec!s!o$1-, 'a#e' e"#e/0er 1), 199, o% #he Cour# o% A""eas !$

CAG.R. C No. 23656.

As cue' %ro/ #he recor's, #he %ac#s o% #he case are as %oo&s4

The 16#h reguar ea/!$a#!o$ o% #he 0oo*s a$' recor's o% #he AL E/"o7eesav!$gs a$' Loa$ Assoc!a#!o$, 8$c. (EALA &as co$'uc#e' %ro/ March 1) #o A"r!

16, 19:: 07 a #ea/ o% CB ea/!$ers hea'e' 07 Be!$'a Ro'r!gue;. <oo&!$g #he

sa!' ea/!$a#!o$, severa a$o/a!es a$' !rreguar!#!es co//!##e' 07 #he here!$

"e#!#!o$ers= EALA>s '!rec#ors a$' o?cers, &ere u$covere', a/o$g &h!ch are4

1. @ues#!o$a0e !$ves#/e$# 8$ a /u#!/!!o$ "eso rea es#a#e "roec# (esaav!e

2. Co$!c# o% !$#eres# !$ #he co$'uc# o% 0us!$ess

3. $&arra$#e' 'ecara#!o$ a$' "a7/e$# o% '!v!'e$'s

). Co//!ss!o$ o% u$sou$' a$' u$sa%e 0us!$ess "rac#!ces.

D$ u7 19, 19::,, Ce$#ra Ba$* (CB u"erv!s!o$ a$' Ea/!$a#!o$ ec#!o$ (E+e"ar#/e$# 8 +!rec#or R!car'o. <. L!r!o se$# a e##er #o #he Boar' o% +!rec#ors o%

EALA !$v!#!$g #he/ #o a co$%ere$ce o$ u7 21, 19:: #o '!scuss su0ec# F$'!$gs

$o#e' !$ #he sa!' 16#h reguar ea/!$a#!o$, 0u# "e#!#!o$ers '!' $o# a##e$' such

co$%ere$ce.



D$ u7 2:, 19::, "e#!#!o$er Re$a#o L!/ &ro#e #he EALA>s Boar' o% +!rec#ors

e"a!$!$g h!s s!'e o$ #he sa!' ea/!$a#!o$ o% EALA>s recor's a$' reues#!$g #ha#

a co"7 o% h!s e##er 0e %ur$!she' #he CB, &h!ch &as %or#&!#h /a'e 07 #he Boar'.2-

D$ u7 29, 19::, EALA>s Boar' o% +!rec#ors se$# #o +!rec#or L!r!o a e##er

co$cer$!$g #he 16#h reguar ea/!$a#!o$ o% EALA>s recor's.

D$ e"#e/0er 9, 19::, #he Mo$e#ar7 Boar' a'o"#e' a$' !ssue' MB Resou#!o$ No.

:5 #he "er#!$e$# "rov!s!o$s o% &h!ch are as %oo&s4

1. To $o#e #he re"or# o$ #he ea/!$a#!o$ o% #he AL E/"o7ees> av!$gs a$' Loa$

Assoc!a#!o$, 8$c. (EALA as o% +ece/0er 31, 19:H, as su0/!##e' !$ a/e/ora$'u/ o% #he +!rec#or, u"erv!s!o$ a$' Ea/!$a#!o$ ec#!o$ (E

+e"ar#/e$# 8, 'a#e' Augus# 19, 19::=

2. To reu!re #he 0oar' o% '!rec#ors o% EALA #o !//e'!a#e7 !$%or/ #he /e/0ers

o% EALA o% #he resu#s o% #he Ce$#ra Ba$* ea/!$a#!o$ a$' #he!r eIec#s o$ #he

F$a$c!a co$'!#!o$ o% #he Assoc!a#!o$=

5. To !$cu'e #he $a/es o% Mr. Ca#a!$o Ba$e;, Mr. Ro/eo Busuego a$' Mr. Re$a#o

L!/ !$ #he ec#or>s &a#ch!s# #o "reve$# #he/ %ro/ ho'!$g res"o$s!0e "os!#!o$s !$

a$7 !$s#!#u#!o$ u$'er Ce$#ra Ba$* su"erv!s!o$=

6. To reu!re EALA #o e$%orce coec#!o$ o% #he over"a7/e$# #o #he !s#a Gra$'e

Ma$age/e$# a$' +eveo"/e$# Cor"ora#!o$ a$' #o reu!re #he accou$#!$g o% 12.2:

/!!o$ u$accou$#e' a$' u$re/!##e' 0a$* oa$ "rocee's a$' 3.9 /!!o$ o#her

u$su""or#e' cash '!s0urse/e$#s %ro/ #he res"o$s!0e '!rec#ors a$' o?cers= or #o

"ro"er7 charge #hese aga!$s# #he!r res"ec#!ve accou$#s, !% $ecessar7=



H. To reu!re #he 0oar' o% '!rec#ors o% EALA #o Fe c!v! a$' cr!/!$a cases aga!$s#

Messrs. Ca#a!$o Ba$e;, Ro/eo Busuego a$' Re$a#o L!/ %or a #he /!s%easa$ce a$'

/a%easa$ce co//!##e' 07 #he/, as &arra$#e' 07 #he ev!'e$ce=

:. To reu!re #he 0oar' o% '!rec#ors o% EALA #o !/"rove #he o"era#!o$s o% #he

Assoc!a#!o$, correc# a v!oa#!o$s $o#e', a$' a'o"# !$#er$a co$#ro /easures #o

"reve$# #he recurre$ce o% s!/!ar !$c!'e$#s as sho&$ !$ A$$e E o% #he su0ec#

/e/ora$'u/ o% #he +!rec#or, E +e"ar#/e$# 8=3-

D$ a$uar7 23, 19:9, "e#!#!o$ers Fe' a e#!#!o$ %or 8$u$c#!o$ &!#h ra7er %or #he8//e'!a#e 8ssua$ce o% a Te/"orar7 Res#ra!$!$g Dr'er)- 'oc*e#e' as C!v! Case No.

@:9161H 0e%ore Bra$ch 1) o% #he Reg!o$a Tr!a Cour# o% @ue;o$ C!#7.

D$ a$uar7 26 19:9, #he sa!' cour# !ssue' a #e/"orar7 res#ra!$!$g or'er5-

e$o!$!$g #he 'e%e$'a$#, #he Mo$e#ar7 Boar' o% #he Ce$#ra Ba$*, ($o& Ba$*o

e$#ra $g !!"!$as %ro/ !$cu'!$g #he $a/es o% "e#!#!o$ers !$ #he &a#ch!s#.

D$ <e0ruar7 1, 19:9, #he sa/e #r!a cour# !ssue' a &r!# o% "re!/!$ar7 !$u$c#!o$6-,co$'!#!o$e' u"o$ #he F!$g 07 "e#!#!o$ers o% a 0o$' !$ #he a/ou$# o% Te$ Thousa$'

(1,. esos each. The Mo$e#ar7 Boar' "rese$#e' a Mo#!o$ %or

Reco$s!'era#!o$H- o% #he sa!' Dr'er, 0u# #he sa/e &as 'e$!e'.

D$ e"#e/0er 11, 19:9, #he #r!a cour# ha$'e' 'o&$ !#s +ec!s!o$,:- '!s"os!$g #hus4

JERE<DRE, u'g/e$# !s here07 re$'ere' 'ecar!$g Mo$e#ar7 Boar' Resou#!o$

No. :5 as vo!' a$' !$e!s#e$#. The &r!# o% "re!/!$ar7 "roh!0!#or7 !$u$c#!o$s !ssue'

o$ <e0ruar7 1, 19:9 !s 'ee/e' "er/a$e$#. Cos#s aga!$s# res"o$'e$#.

The Mo$e#ar7 Boar' a""eae' #he a%oresa!' +ec!s!o$ #o #he Cour# o% A""eas &h!ch

ca/e ou# &!#h a +ec!s!o$9- o% reversa o$ e"#e/0er 1), 199, #he 'ecre#a "or#!o$

o% &h!ch !s #o #he %oo&!$g eIec#4



JERE<DRE, #he 'ec!s!o$ a""eae' %ro/ !s here07 reverse' a$' a$o#her o$e

e$#ere' '!s/!ss!$g #he "e#!#!o$ %or !$u$c#!o$.

+!ssa#!sFe' &!#h #he sa!' +ec!s!o$ o% #he Cour# o% A""eas, "e#!#!o$ers have co/e #o

#h!s Cour# v!a #he "rese$# "e#!#!o$ %or rev!e& o$ cer#!orar!.

D$ u$e 5, 1992, "e#!#!o$ers Fe' a$ rge$# Mo#!o$ %or #he 8//e'!a#e 8ssua$ce o% a

Te/"orar7 Res#ra!$!$g Dr'er a$'or Jr!# o% re!/!$ar7 8$u$c#!o$ aga!$s# #he

ecre#ar7 o% us#!ce a$' #he C!#7 rosecu#or o% asa71- s#a#!$g #ha# severa

co/"a!$#s &ere o'ge' aga!$s# #he "e#!#!o$ers 0e%ore #he D?ce o% #he C!#7

rosecu#or o% asa7 C!#7 "ursua$# #o Mo$e#ar7 Boar' Resou#!o$ No. :5= #ha# #he

sa!' co/"a!$#s &ere '!s/!sse' 07 #he C!#7 rosecu#or a$' #he '!s/!ssas &erea""eae' #o #he ecre#ar7 o% us#!ce %or rev!e&, so/e o% &h!ch have 0ee$ reverse'

area'7. e#!#!o$ers "ra7e' #ha# a Te/"orar7 Res#ra!$!$g Dr'er a$'or Jr!# o%

re!/!$ar7 8$u$c#!o$ !ssue res#ra!$!$g a$' e$o!$!$g #he ecre#ar7 o% us#!ce a$'

#he C!#7 rosecu#or o% asa7 C!#7 %ro/ "rocee'!$g a$' #a*!$g %ur#her ac#!o$s, a$'

/ore s"ec!a7 %ro/ F!$g 8$%or/a#!o$s !$ 8.. Nos.91:36= 91:31= 91:35= 9

1:32= 912):= 912)9= 9331= 9332= 91:3H= 91:3), "e$'!$g #he F$a

resou#!o$ o% #he case a# 0ar . o&ever, !$ #he Resou#!o$11- 'a#e' e"#e/0er

9, 1992, #he cour# 'e$!e' #he sa!' /o#!o$.

The "e#!#!o$ "oses as !ssues %or resou#!o$.

8

JETER DR NDT TE ET8T8DNER JERE +ER8E+ D< TE8R R8GT TD A NDT8CE

AN+ TE DDRTN8T TD BE EAR+ B TE MDNETAR BDAR+ R8DR TD 8T

8ANCE D< MDNETAR BDAR+ REDLT8DN ND. :5.

88

JETER DR NDT TE REDN+ENT BDAR+ 8 LEGALL BDN+ TD DBERE TE

EENT8AL RE@8REMENT D< +E RDCE D< A AL8+ CARGE, NDT8CE AN+



DDRTN8T TD BE EAR+ 8ND<AR A TE ET8T8DNER> BECT CAE 8

CDNCERNE+.

888

JETER DR NDT MDNETAR BDAR+ REDLT8DN ND. :5 8 NLL AN+ D8+ <DR

BE8NG 8DLAT8E D< ET8T8DNER> R8GT TD +E RDCE.

J!#h res"ec# #o #he Frs# !ssue, #he #r!a cour# sa!'4

The ev!'e$ce su0/!##e' "re"o$'era#es !$ %avor o% "e#!#!o$ers. The 'e"r!va#!o$ o%"e#!#!o$ers> r!gh#s !$ #he Resou#!o$ u$'er/!$es #he co$s#!#u#!o$a guara$#ee o% 'ue

"rocess. e#!#!o$ers &ere $ever $o#!Fe' #ha# #he7 &ere 0e!$g !$ves#!ga#e', /uch so,

#he7 &ere $o# !$%or/e' o% a$7 charges aga!$s# #he/ a$' &ere $o# aIor'e' #he

o""or#u$!#7 #o a''uce cou$#erva!!$g ev!'e$ce so as #o 'eserve #he "u$!#!ve

/easures "ro/uga#e' !$ Resou#!o$ No. :5 o% #he Mo$e#ar7 Boar'. 12-

The %orego!$g '!su!s!#!o$ 07 #he #r!a cour# !s u$#e$a0e u$'er #he %ac#s a$'

c!rcu/s#a$ces o% #he case. e#!#!o$ers &ere 'u7 aIor'e' #he!r r!gh# #o 'ue "rocess

07 #he Mo$e#ar7 Boar', !# a""ear!$g #ha#4

1. e#!#!o$ers &ere !$v!#e' 07 +!rec#or L!r!o #o a co$%ere$ce sche'ue' %or u7 21,

19:: #o '!scuss #he F$'!$gs /a'e !$ #he 16#h reguar ea/!$a#!o$ o% EALA>s

recor's. e#!#!o$ers '!' $o# a##e$', sa!' co$%ere$ce=

2. e#!#!o$er Re$a#o L!/>s e##er o% u7 2:, 19:: #o EALA>s Boar' o% +!rec#ors,

e"a!$!$g h!s s!'e o% #he co$#rovers7, &as %or&ar'e' #o #he Mo$e#ar7 Boar' &h!ch

#he a##er co$s!'ere' !$ a'o"#!$g Mo$e#ar7 Boar' Resou#!o$ No. :5= a$'

3. EALA>s Boar' o% +!rec#or>s e##er, 'a#e' u7 29, 19::, #o #he Mo$e#ar7 Boar',

e"a!$!$g #he Boar'>s s!'e o% #he co$#rovers7, &as "ro"er7 co$s!'ere' !$ #he

a'o"#!o$ o% Mo$e#ar7 Boar' Resou#!o$ No. :5.



e#!#!o$ers #here%ore ca$$o# co/"a!$ o% 'e"r!va#!o$ o% #he!r r!gh# #o 'ue "rocess, as

#he7 &ere g!ve$ a/"e o""or#u$!#7 07 #he Mo$e#ar7 Boar' #o a!r #he!r u0/!ss!o$

a$' 'e%e$ses as #o #he F$'!$gs o% !rreguar!#7 'ur!$g #he sa!' 16#h reguar

ea/!$a#!o$. The esse$ce o% 'ue "rocess !s #o 0e aIor'e' a reaso$a0e o""or#u$!#7#o 0e hear' a$' #o su0/!# a$7 ev!'e$ce o$e /a7 have !$ su""or# o% h!s 'e%e$se.

13- Jha# !s oIe$s!ve #o 'ue "rocess !s #he 'e$!a o% #he o""or#u$!#7 #o 0e hear'.

1)- e#!#!o$ers hav!$g ava!e' o% #he!r o""or#u$!#7 #o "rese$# #he!r "os!#!o$ #o #he

Mo$e#ar7 Boar' 07 #he!r e##erse"a$a#!o$, #he7 &ere $o# 'e$!e' 'ue "rocess15-.

e#!#!o$ers c!#e A$g T!0a7 v. C8R16- a$' asser# #ha# #he %oo&!$g reu!s!#es o%

"roce'ura 'ue "rocess &ere $o# o0serve' 07 #he Mo$e#ar7 Boar'4

1. The r!gh# #o a hear!$g, &h!ch !$cu'es #he r!gh# #o "rese$# o$e>s case a$' su0/!#

ev!'e$ce !$ su""or# #hereo%=

2. The #r!0u$a /us# co$s!'er #he ev!'e$ce "rese$#e'=

3. The 'ec!s!o$ /us# have so/e#h!$g #o su""or# !#se%=

). The ev!'e$ce /us# 0e su0s#a$#!a=

5. The 'ec!s!o$ /us# 0e re$'ere' o$ #he ev!'e$ce "rese$#e' a# #he hear!$g, or a#

eas# co$#a!$e' !$ #he recor' a$' '!scose' #o #he "ar#!es aIec#e'=

6. The #r!0u$a or 0o'7 or a$7 o% !#s u'ges /us# ac# or !#s or h!s o&$ !$'e"e$'e$#

co$s!'era#!o$ o% #he a& a$' %ac#s o% #he co$#rovers7 a$' $o# s!/"7 acce"# #he v!e&o% a su0or'!$a#e !$ arr!v!$g a# a 'ec!s!o$=

H. The 0oar' or 0o'7 shou', !$ a co$#rovers!a ues#!o$s, re$'er !#s 'ec!s!o$ !$

such a /a$$er #ha# #he "ar#!es #o #he "rocee'!$gs ca$ *$o& #he var!ous !ssues

!$vove', a$' #he reaso$ %or #he 'ec!s!o$ re$'ere'.



Co$#rar7 #o "e#!#!o$ers> aega#!o$, !# a""ears #ha# #he reu!s!#es o% "roce'ura 'ue

"rocess &ere co/"!e' &!#h 07 #he Mo$e#ar7 Boar' 0e%ore !# !ssue' #he ues#!o$e'

Mo$e#ar7 Boar' Resou#!o$ No. :5. <!rs#7, #he "e#!#!o$ers &ere !$v!#e' #o a

co$%ere$ce #o '!scuss #he F$'!$gs ga#here' 'ur!$g #he 16#h reguar ea/!$a#!o$ o%EALA>s recor's. (The reu!re/e$# o% a hear!$g !s co/"!e' &!#h as o$g as #here

&as a$ o""or#u$!#7 #o 0e hear', a$' $o# $ecessar!7 #ha# a$ ac#ua hear!$g &as

co$'uc#e'.1H- eco$'7, #he Mo$e#ar7 Boar' co$s!'ere' #he ev!'e$ce "rese$#e'.

Th!r'7, %our#h7 a$' F%#h7, Mo$e#ar7 Boar' Resou#!o$ No. :5 &as a'o"#e' o$ #he

0as!s o% sa!' F$'!$gs u$ear#he' 'ur!$g #he 16#h reguar ea/!$a#!o$ o% EALA>s

recor's a$' 'er!ve' %ro/ #he e##erco//e$#s su0/!##e' 07 #he "ar#!es. !#h7, #he

/e/0ers o% #he Mo$e#ar7 Boar' ac#e' !$'e"e$'e$#7 o$ #he!r o&$ !$ !ssu!$g su0ec#

Resou#!o$, "ac!$g re!a$ce o$ #he sa!' F$'!$gs /a'e 'ur!$g #he 16#h reguar

ea/!$a#!o$. Las#7, #he reaso$ %or #he !ssua$ce o% Mo$e#ar7 Boar' Resou#!o$ No.

:5 !s rea'!7 a""are$#, &h!ch !s #o "reve$# %ur#her !rreguar!#!es %ro/ 0e!$g

co//!##e' a$' #o "rosecu#e #he o?c!as res"o$s!0e #here%or.

J!#h res"ec# #o #he seco$' !ssue, #here !s #e$a0!!#7 !$ "e#!#!o$ers> co$#e$#!o$ #ha#

#he Mo$e#ar7 Boar', as a$ a'/!$!s#ra#!ve age$c7, !s ega7 0ou$' #o o0serve 'ue

"rocess, a#hough #he7 are %ree %ro/ #he r!g!'!#7 o% cer#a!$ "roce'ura reu!re/e$#s.

As he' !$ A'a/so$ a$' A'a/so$, 8$c. v. A/ores1:-4

Jh!e a'/!$!s#ra#!ve #r!0u$as eerc!s!$g uas!u'!c!a %u$c#!o$s are %ree %ro/ #he

r!g!'!#7 o% cer#a!$ "roce'ura reu!re/e$#s #he7 are 0ou$' 07 a& a$' "rac#!ce #o

o0serve #he %u$'a/e$#a a$' esse$#!a reu!re/e$#s o% 'ue "rocess !$ us#!c!a0e

cases "rese$#e' 0e%ore #he/. o&ever, #he s#a$'ar' o% 'ue "rocess #ha# /us# 0e

/e# !$ a'/!$!s#ra#!ve #r!0u$as ao&s a cer#a!$ a#!#u'e as o$g as #he ee/e$# o%

%a!r$ess !s $o# !g$ore'. e$ce, #here !s $o 'e$!a o% 'ue "rocess &here recor's sho&

#ha# hear!$gs &ere he' &!#h "r!or $o#!ce #o a'verse "ar#!es. Bu# eve$ !$ #he

a0se$ce o% "rev!ous $o#!ce, #here !s $o 'e$!a o% "roce'ura 'ue, "rocess as o$g as

#he "ar#!es are g!ve$ #he o""or#u$!#7 #o 0e hear'.

Eve$ ec#!o$ 2:, (c a$' (', o% Re"u0!c Ac# No. 3HH9 (RA 3HH9 'e!$ea#!$g #he

"o&ers o% #he Mo$e#ar7 Boar' over sav!$gs a$' oa$ assoc!a#!o$s, reu!re

o0serva$ce o% 'ue "rocess !$ #he eerc!se o% !#s "o&ers4



(c To co$'uc# a# eas# o$ce ever7 7ear, a$' &he$ever $ecessar7, a$7 !$s"ec#!o$,

ea/!$a#!o$ or !$ves#!ga#!o$ o% #he 0oo*s, a$' recor's, 0us!$ess aIa!rs,

a'/!$!s#ra#!o$, a$' F$a$c!a co$'!#!o$ o% a$7 sav!$gs a$' oa$ assoc!a#!o$ &!#h or

&!#hou# "r!or $o#!ce 0u# a&a7s &!#h %a!r$ess a$' reaso$a0e o""or#u$!#7 %or #heassoc!a#!o$ or a$7 o% !#s o?c!as #o g!ve #he!r s!'e o% #he case.

(' A%#er "ro"er $o#!ce a$' hear!$g, #o sus"e$' a sav!$gs a$' oa$ assoc!a#!o$ %or

v!oa#!o$ o% a&, %or u$sa%e a$' u$sou$' "rac#!ces or %or reaso$ o% !$sove$c7.

.

(% To 'ec!'e, a%#er a""ro"r!a#e $o#!ce a$' hear!$gs a$7 co$#rovers7 as #o #he r!gh#s

or o0!ga#!o$s o% #he sav!$gs a$' oa$ assoc!a#!o$, !#s '!rec#ors, o?cers,

s#oc*ho'ers a$' /e/0ers u$'er !#s char#er, a$', 07 or'er, #o e$%orce #he sa/e=

(!#a!cs su""!e'

A$e$# #he #h!r' !ssue, "e#!#!o$ers #heor!;e #ha# Mo$e#ar7 Boar' Resou#!o$ No. :5 !s$u a$' vo!' %or 0e!$g v!oa#!ve o% "e#!#!o$ers> r!gh# #o 'ue "rocess. To su""or# #he!r

s#a$ce, #he7 c!#e #he #r!a cour#>s ru!$g, #o &!#4

A rea'!$g o% Mo$e#ar7 Boar' Resou#!o$ No. :5 '!scoses #ha# !# !/"oses

a'/!$!s#ra#!ve sa$c#!o$s aga!$s# "e#!#!o$ers. 8$ %ac#, !# 'oes $o# o$7 "e$a!;e

"e#!#!o$ers 07 !$cu'!$g #he/ !$ #he &a#ch!s# #o "reve$# #he/ %ro/ ho'!$g

res"o$s!0e "os!#!o$s !$ a$7 !$s#!#u#!o$ u$'er Ce$#ra Ba$* su"erv!s!o$,> !# /a$'a#es

#he EALA Boar' o% +!rec#ors as &e #o Fe C!v! a$' Cr!/!$a charges aga!$s# #he/

>%or a #he /!s%easa$ce a$' /a%easa$ce co//!##e' 07 #he/, as &arra$#e' 07 #heev!'e$ce.> Mo$e#ar7 Boar' Resou#!o$ No. :5 v!r#ua7 'e"r!ves "e#!#!o$ers #he!r

res"ec#!ve ga!$%u e/"o7/e$#, a$' a# #he sa/e #!/e /ar*s #he/ %or u'!c!a

"rosecu#!o$. The cruc!a ues#!o$ here !s #ha# &ere "e#!#!o$ers aIor'e' 'ue "rocess

!$ #he !$ves#!ga#!o$s co$'uc#e' &h!ch "ro/"#e' #he !ssua$ce o% Mo$e#ar7 Boar'

Resou#!o$ No. :5



EC. 2:. u"erv!sor7 "o&ers over sav!$gs a$' oa$ assoc!a#!o$s. 8$ a''!#!o$ #o

&ha#ever "o&ers have 0ee$ co$%erre' 07 #he %orego!$g "rov!s!o$s, #he Mo$e#ar7

Boar' sha have #he "o&er #o eerc!se #he %oo&!$g4

(c To co$'uc# a# eas# o$ce ever7 7ear, a$' &he$ever $ecessar7, a$7 !$s"ec#!o$,

ea/!$a#!o$ or !$ves#!ga#!o$ o% #he 0oo*s a$' recor's, 0us!$ess aIa!rs,

a'/!$!s#ra#!o$, a$' F$a$c!a co$'!#!o$ o% a$7 sav!$gs a$' oa$ assoc!a#!o$ &!#h or

&!#hou# "r!or $o#!ce 0u# a&a7s &!#h %a!r$ess a$' reaso$a0e o""or#u$!#7 %or #he

assoc!a#!o$ or a$7 o% !#s o?c!as #o g!ve #he!r s!'e o% #he case. Jhe$ever a$

!$s"ec#!o$, ea/!$a#!o$ or !$ves#!ga#!o$ !s co$'uc#e' u$'er #h!s gra$# o% "o&er, #he

"erso$ au#hor!;e' #o 'o so /a7 se!;e 0oo*s a$' recor's a$' *ee" #he/ u$'er h!s

cus#o'7 a%#er g!v!$g "ro"er rece!"#s #here%or= /a7 /a*e a$7 /ar*!$g or $o#a#!o$ o$

a$7 "a"er, recor', 'ocu/e$# or 0oo* #o sho& #ha# !# has 0ee$ ea/!$e' a$'

ver!Fe' a$' /a7 "a'oc* or sea sheves, vau#s, sa%es, rece"#aces or s!/!ar

co$#a!$ers a$' "roh!0!# #he o"e$!$g #hereo% &!#hou# Frs# secur!$g au#hor!#7 #here%or,

%or as o$g as /a7 0e $ecessar7 !$ co$$ec#!o$ &!#h #he !$ves#!ga#!o$ or ea/!$a#!o$

0e!$g co$'uc#e'. The o?c!a o% #he Ce$#ra Ba$* !$ charge o% sav!$gs a$' oa$

assoc!a#!o$s a$' h!s 'e"u#!es are here07 au#hor!;e' #o a'/!$!s#er oa#hs #o a$7

'!rec#or, o?cer or e/"o7ee o% a$7 assoc!a#!o$ u$'er #he su"erv!s!o$ o% #he

Mo$e#ar7 Boar'=

(' A%#er "ro"er $o#!ce a$' hear!$g, #o sus"e$' a sav!$gs a$' oa$ assoc!a#!o$ %or

v!oa#!o$ o% a&, %or u$sa%e a$' u$sou$' "rac#!ces or %or reaso$ o% !$sove$c7. The

Mo$e#ar7 Boar' /a7 !*e&!se, u"o$ #he "roo% #ha# a sav!$gs a$' oa$ assoc!a#!o$ or

!#s 0oar' or '!rec#ors or o?cers are co$'uc#!$g a$' /a$ag!$g !#s aIa!rs !$ a /a$$er

co$#rar7 #o a&s, or'ers, !$s#ruc#!o$s, rues a$' regua#!o$s "ro/uga#e' 07 #he

Mo$e#ar7 Boar' or !$ a /a$$er su0s#a$#!a7 "reu'!c!a #o #he !$#eres# o% #he

gover$/e$#, 'e"os!#ors or cre'!#or, #a*e over #he /a$age/e$# o% #he sav!$gs a$'oa$ assoc!a#!o$ a%#er 'ue hear!$g, u$#! a $e& 0oar' o% '!rec#ors a$' o?cers are

eec#e' a$' ua!Fe' &!#hou# "reu'!ce #o #he "rosecu#!o$ o% #he "erso$s

res"o$s!0e %or such v!oa#!o$s. The /a$age/e$# 07 #he Mo$e#ar7 Boar' sha 0e

&!#hou# e"e$se #o #he sav!$gs a$' oa$ assoc!a#!o$, ece"# such as !s ac#ua7

$ecessar7 %or !#s o"era#!o$, "e$'!$g #he eec#!o$ a$' ua!Fca#!o$ o% a $e& 0oar' o%



'!rec#ors a$' o?cers #o #a*e #he "ace o% #hose res"o$s!0e %or #he v!oa#!o$ or ac#s

co$#rar7 #o #he !$#eres# o% #he gover$/e$#, 'e"os!#ors or cre'!#ors=

(% To 'ec!'e, a%#er a""ro"r!a#e $o#!ce a$' hear!$gs a$7 co$#rovers7 as #o #he r!gh#s

or o0!ga#!o$s o% #he sav!$gs a$' oa$ assoc!a#!o$, !#s '!rec#ors, o?cers,

s#oc*ho'ers a$' /e/0ers u$'er !#s char#er, a$', 07 or'er, #o e$%orce #he sa/e=

( To co$'uc# such !$ves#!ga#!o$s, #a*e such re/e'!a /easures, eerc!se a "o&ers

&h!ch are $o& or /a7 herea%#er 0e co$%erre' u"o$ !# 07 Re"u0!c Ac# Nu/0ere' T&o

u$'re' s!#7Fve !$ #he e$%orce/e$# o% #h!s eg!sa#!o$, a$' !/"ose u"o$

assoc!a#!o$s, &he#her s#oc* or $o#!s#oc* #he!r '!rec#ors a$'or o?cers

a'/!$!s#ra#!ve sa$c#!o$s u$'er ec#!o$s 3)A or 3)B o% Re"u0!c Ac# T&o u$'re'

s!#7Fve, as a/e$'e'.

<ro/ #he %orego!$g, !# !s gea$a0e #ha# #he Ce$#ra Ba$*, #hrough #he Mo$e#ar7

Boar', !s e/"o&ere' #o co$'uc# !$ves#!ga#!o$s a$' ea/!$e #he recor's o% sav!$gsa$' oa$ assoc!a#!o$s. 8% a$7 !rreguar!#7 !s '!scovere' !$ #he "rocess, #he Mo$e#ar7

Boar' /a7 !/"ose a""ro"r!a#e sa$c#!o$s, such as sus"e$'!$g #he oIe$'er %ro/

ho'!$g o?ce or %ro/ 0e!$g e/"o7e' &!#h #he Ce$#ra Ba$*, or "ac!$g #he $a/es

o% #he oIe$'ers !$ a &a#ch!s#.

The reu!re/e$# o% "r!or $o#!ce !s aso reae' u$'er ec#!o$ 2: (c o% RA 3HH9 as

!$ves#!ga#!o$s or ea/!$a#!o$s /a7 0e co$'uc#e' &!#h or &!#hou# "r!or $o#!ce 0u#

a&a7s &!#h %a!r$ess a$' reaso$a0e o""or#u$!#7 %or #he assoc!a#!o$ or a$7 o% !#s

o?c!as #o g!ve #he!r s!'e. As /a7 0e ga#here' %ro/ #he recor's, #he sa!'reu!re/e$# &as "ro"er7 co/"!e' &!#h 07 #he res"o$'e$# Mo$e#ar7 Boar'.

Je sus#a!$ #he ru!$g o% #he Cour# o% A""eas #ha# "e#!#!o$ers> sus"e$s!o$ &as o$7

"reve$#!ve !$ $a#ure a$' #here%ore, $o $o#!ce or, hear!$g &as $ecessar7. $#! such

#!/e #ha# #he "e#!#!o$ers have "rove' #he!r !$$oce$ce, #he7 /a7 0e "reve$#!ve7



sus"e$'e' %ro/ ho'!$g o?ce so as $o# #o !$ue$ce #he co$'uc# o% !$ves#!ga#!o$,

a$' #o "reve$# #he co//!ss!o$ o% %ur#her !rreguar!#!es.

Ne!#her &ere "e#!#!o$ers 'e"r!ve' o% #he!r a&%u ca!$g as #he7 are %ree #o oo* %or

a$o#her e/"o7/e$# so o$g as #he age$c7 or co/"a$7 !$vove' !s $o# su0ec# #o

Ce$#ra Ba$* co$#ro a$' su"erv!s!o$. e#!#!o$ers ca$ s#! "rac#!se #he!r "ro%ess!o$ or

e$gage !$ 0us!$ess as o$g as #hese are $o# &!#h!$ #he a/0!# o% Mo$e#ar7 Boar'

Resou#!o$ No. :5.

A #h!$gs s#u'!e'7 co$s!'ere', #he cour# u"ho's #he va!'!#7 o% Mo$e#ar7 Boar'

Resou#!o$ No. :5 a$' a?r/s #he 'ec!s!o$ o% #he res"o$'e$# cour#.

JERE<DRE, #he "e#!#!o$ !s +EN8E+, a$' #he assa!e' +ec!s!o$ 'a#e' e"#e/0er 1),

199 o% #he Cour# o% A""eas A<<8RME+. No "ro$ou$ce/e$# as #o cos#s.

D DR+ERE+.

Ro/ero, (Cha!r/a$, !#ug, a$ga$!0a$, a$' Go$;agaRe7es, ., co$cur.

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