G.R. No. 191424; August 7, 2013
ALFEO D. VIVAS, ON HIS BEHALF AND ON BEHALF OF THE SHAREHOLDERS OF EUROCREDIT COMMUNITY BANK, PETITIONER, vs. THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS AND THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, RESPONDENTS.

FACTS

Petitioner Alfeo D. Vivas, on behalf of EuroCredit Community Bank, Inc. (ECBI), filed a petition for prohibition to challenge the Monetary Board (MB) Resolution No. 276 dated March 4, 2010, which prohibited ECBI from doing business and placed it under receivership, with the Philippine Deposit Insurance Corporation (PDIC) designated as receiver. ECBI was formerly the Rural Bank of Faire, Inc., whose corporate life was extended by the Bangko Sentral ng Pilipinas (BSP) in 2006. A BSP general examination as of December 31, 2007, revealed serious supervisory concerns, including negative capital and a poor CAMEL rating. Consequently, the MB placed ECBI under Prompt Corrective Action (PCA) via Resolution No. 1255 dated September 25, 2008, and directed capital infusion and corrective measures. ECBI, through Vivas, moved for reconsideration, alleging denial of due process and arbitrariness. Subsequently, ECBI refused to allow a scheduled general examination in 2009, leading the MB to impose a monetary penalty and issue a cease and desist order. A later examination as of September 30, 2009, found ECBI unable to pay liabilities, with insufficient realizable assets, unable to continue without losses to depositors/creditors, and in willful violation of the cease and desist order. Despite being given time to address its problems, ECBI failed to restore its financial health. The MB, based on these findings and after according due process, issued the assailed resolution placing ECBI under receivership.

ISSUE

Whether the Monetary Board committed grave abuse of discretion in issuing Resolution No. 276, which prohibited ECBI from doing business and placed it under receivership.

RULING

No, the Monetary Board did not commit grave abuse of discretion. The Supreme Court dismissed the petition and affirmed the MB’s resolution. The Court held that the MB’s action was a valid exercise of its regulatory powers under Section 30 of Republic Act No. 7653 (The New Central Bank Act). The law grants the MB broad authority to summarily and without prior hearing forbid a bank from doing business and place it under receivership upon finding any of the conditions specified in the law, such as inability to pay liabilities, insufficiency of realizable assets, or willful violation of banking laws. The MB’s findings—that ECBI was unable to pay its liabilities, had insufficient realizable assets, could not continue without losses to depositors/creditors, and had willfully violated a cease and desist order—were supported by examination reports and established facts. The Court emphasized that the MB’s determination on these matters is factual and conclusive, not subject to judicial review absent proof of arbitrariness or bad faith. The requirement of due process in this context is satisfied by giving the bank an opportunity to be heard on the corrective actions required during the PCA period, which ECBI was accorded but failed to utilize effectively. The petition, being one for prohibition, was also an improper remedy as it sought to enjoin an act already consummated (the closure and receivership). The extraordinary writ of prohibition lies only for the prevention of future acts, not to undo past acts.