Vivas v. Monetary Board

VIVAS v.
MONETARY BOARD (2013) obtain the prior approval of the BSP anent
the establishment and operation of the
MENDOZA,J.
bank’s sub-offices.
Prohibition According to the MB, ECBI unjustly refused
I.FACTS to allow the BSP examiners from examining
and inspecting its books and records. The
The Rural Bank of Faire, Incorporated bank was subsequently ordered to pay a
(RBFI) was a duly registered rural banking monetary fine. ECBI insisted on a deferment
institution. Record shows that the corporate of the examination pending unresolved
life of RBFI expired on May 31, 2005. issues in an earlier MB ruling.
Notwithstanding, petitioner Alfeo D. Vivas
(Vivas) and his principals acquired the Due to the various non-compliance with the
controlling interest in RBFI sometime in directives of the BSP, a complaint for Estafa
January 2006. The Bangko Sentral ng and Through Falsification of Commercial
Pilipinas (BSP) issued a Certificate of Documents was filed against certain officials
Authority extending the corporate life of of the ECBI.
RBFI for another fifty (50) years. The BSP
also approved the change of its corporate On March 4, 2010, the MB issued
name to EuroCredit Community Bank Inc. Resolution No. 276 placing ECBI under
receivership in accordance with the
(ECBI).
recommendation of the ISD:
Pursuant to RA. 7653 (New Central Bank
Act),the Integrated Supervision Department a) To prohibit the ECBI from doing
II (ISD II) of the BSP conducted a general business in the Philippines and to
examination on ECBI with the cut-off date of place its assets and affairs under
December 31, 2007. (From this point on, the receivership; and
BSP conducted consecutive examinations
on the bank). BSP ordered the bank to b) To designate the Philippine Deposit
Insurance Corporation as Receiver
infuse fresh capital and address the
of the bank.
violations/exception in the findings of the
examination.
Assailing MB Resolution No. 276, Vivas
On several instances, the BSP had invited filed this petition for prohibition before this
the BOD of ECBI to discuss matters Court, ascribing grave abuse of discretion to
pertaining to the placement of the bank the MB.
under Prompt Corrective Action and other
II. ISSUE
supervisory concerns before making the
appropriate recommendations to the
WON there was grave abuse of discretion
Monetary Board (MB). The proposed
by the Monetary Board – NO
meeting, however, did not materialize due to
postponements sought by Vivas.
III.RATIO
The BSP directed ECBI to explain why it
transferred the majority shares of RBFI The petition must fail.
without securing the prior approval of the
MB in apparent violation of the Manual of 1.Vivas availed of the wrong remedy.
Regulation for Banks (MORB). Further, BSP
required ECBI to explain why it did not
Under RA No. 7653, any act of the MB prohibition does not lie to restrain an act
placing a bank under conservatorship, that is already a fait accompli.
receivership or liquidation may not be
restrained or set aside except on a petition 3.The petition should have been filed in
for certiorari. the CA.
2.Prohibition is already unavailing [topic] Even if treated as a petition for certiorari,

the petition should have been filed with the
Granting that a petition for prohibition is CA Section 4 of Rule 65 reads: If it involves
allowed, it is already an ineffective remedy the acts or omissions of a quasi-judicial
under the circumstances obtaining. agency, unless otherwise provided by law or
these Rules, the petition shall be filed in and
Prohibition or a "writ of prohibition" is cognizable only by the Court of Appeals.
that process by which a superior court
prevents inferior courts, tribunals, officers, The MB is a quasi-judicial agency was
or persons from usurping or exercising a already settled and reiterated in the case of
jurisdiction with which they have not been Bank of Commerce v. Planters
vested by law, and confines them to the Development Bank.
exercise of those powers legally conferred.
4.Doctrine of hierarchy of courts.
Its purpose is to restrain subordinate courts,
tribunals or persons from exercising Even in the absence of such provision, the
jurisdiction over matters not within its petition is also dismissible because it simply
cognizance or exceeding its jurisdiction in ignored the doctrine of hierarchy of courts.
matters of which it has cognizance. In our True, the SC, the CA and the RTC have
jurisdiction, the rule on prohibition is original concurrent jurisdiction to issue writs
enshrined in Section 2, Rule 65 of the of certiorari, prohibition and mandamus. The
Rules on Civil Procedure. concurrence of jurisdiction, however, does
not grant the party seeking any of the
Indeed, prohibition is a preventive remedy extraordinary writs the absolute freedom to
seeking that a judgment be rendered which file a petition in any court of his choice. The
would direct the defendant to desist from petitioner has not advanced any special or
continuing with the commission of an act important reason which would allow a direct
perceived to be illegal. As a rule, the proper resort to this Court. Under the Rules of
function of a writ of prohibition is to prevent Court, a party may directly appeal to this
the doing of an act which is about to be Court only on pure questions of law. In the
done. It is not intended to provide a case at bench, there are certainly factual
remedy for acts already accomplished. issues as Vivas is questioning the findings
of the investigating team.
Though couched in imprecise terms, this
petition for prohibition apparently seeks to 5. In any event, the MB committed no
prevent the acts of closing of ECBI and grave abuse of discretion in the issuance
placing it under receivership. Resolution No. of the assailed Resolution No. 276.
276, however, had already been issued by
the MB and the closure of ECBI and its The thrust of Vivas’ argument is that ECBI
placement under receivership by the PDIC did not commit any financial fraud and,
were already accomplished. Apparently, the hence, its placement under receivership
remedy of prohibition is no longer was unwarranted and improper. He asserts
appropriate. Settled is the rule that that, instead, the BSP should have taken
over the management of ECBI.
Based on records, ECBI was given every
opportunity to be heard and improve on its
financial standing. The records disclose that
BSP officials and examiners met with the
representatives of ECBI, including Vivas,
and discussed their findings.3There were
also reminders that ECBI submit its financial
audit reports for the years 2007 and 2008
with a warning that failure to submit them
and a written explanation of such omission
shall result in the imposition of a monetary
penalty.
Accordingly, the MB can immediately

implement its resolution prohibiting a
banking institution to do business in the
Philippines and, thereafter, appoint the
PDIC as receiver. The procedure for the
involuntary closure of a bank is summary
and expeditious in nature. Such action of
the MB shall be final and executory, but
may be later subjected to a judicial scrutiny
via a petition for certiorari to be filed by the
stockholders of record of the bank
representing a majority of the capital stock.
IV.DISPOSITIVE
PETITION FOR PROHIBITIONIS DENIED.

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VIVAS v.

2.Prohibition is already unavailing [topic] Even if treated as a petition for certiorari,

Accordingly, the MB can immediately

PETITION FOR PROHIBITIONIS DENIED.

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