FACTS:

In this case, Eurocredit Community Bank, Inc. (ECBI) requested a deferment of a general examination by the BSP examiners due to unresolved issues pending appeal before the Monetary Board (MB) and the unavailability of one of its officials, Vivas. The request was denied, and the examination proceeded as scheduled.

Subsequently, the MB approved a cease and desist order against ECBI, prohibiting certain acts and transactions deemed as unsafe or unsound banking practices, and acts constituting fraud or asset dissipation. The Office of Special Investigation (OSI) filed a complaint for Estafa Through Falsification of Commercial Documents against certain ECBI officials and employees.

The MB also denied ECBI's appeal and placed it under the Prompt Corrective Action framework. A general examination of ECBI's books and records was conducted, and findings were discussed between BSP officials and ECBI representatives. The ISD II reminded ECBI to submit financial audit reports, and the request for reconsideration of a MB resolution was denied.

On March 4, 2010, the MB issued a resolution placing ECBI under receivership due to its inability to pay liabilities, insufficient assets, inability to continue the business without probable losses to depositors and creditors, and willful violation of a cease and desist order.

In response, Vivas filed a petition for prohibition before the Supreme Court, arguing that the MB's application of the general law under the New Central Bank Act instead of the specific law under the Rural Banks Act of 1992 amounted to grave abuse of discretion. Vivas also questioned the constitutionality of the power of the BSP to place rural banks under receivership, and alleged violations of due process in the implementation of the resolution.

Additionally, this case involves a constitutional challenge against the establishment of the Bangko Sentral ng Pilipinas (BSP) and the Monetary Board. The petitioners argue that the creation of the BSP and the powers conferred upon it by the law go beyond the constitutional limitations, effectively transforming the BSP into a sovereign entity operating as a separate kingdom of banks.

They allege that the BSP's power to issue currency, regulate the banking system, and supervise banks violates the constitutional provision that "the monetary authority shall be the Bangko Sentral ng Pilipinas." They assert that the BSP's power to issue currency should have been limited to the printing and minting of money, and not the authority to control the entire banking system.

The respondents, on the other hand, contend that the establishment of the BSP is in accordance with the Constitution and is essential to the stability and growth of the country's economy.

ISSUES:

1. Whether Vivas availed of the wrong remedy in filing a petition for prohibition instead of a petition for certiorari.

2. Whether the petition for prohibition is already ineffective under the circumstances of the case.

3. Whether the petition should have been filed with the Court of Appeals instead of the Supreme Court.

4. Whether the petitioner properly observed the doctrine of hierarchy of courts in filing the petition.

5. Whether the Monetary Board (MB) committed grave abuse of discretion in issuing Resolution No. 276 placing the Eastern Coast Bank, Inc. (ECBI) under receivership.

6. Whether ECBI should have been placed under management take-over instead of receivership pursuant to Section 11 of Republic Act No. 7353 (R.A. No. 7353).

7. Whether the implementation of Resolution No. 276 was tainted with arbitrariness and bad faith.

8. Whether or not the "close now, hear later" doctrine is justified as a measure for the protection of public interest.

9. Whether or not the Monetary Board (MB) is empowered to immediately implement its resolution and appoint the Philippine Deposit Insurance Corporation (PDIC) as receiver without prior hearing.

10. Whether or not the delegation of power to the MB to close and place a financially troubled bank under receivership is an undue delegation of legislative power.

11. Whether or not there was an undue delegation of legislative authority in the issuance of R.A. No. 7653.

RULING:

1. Yes, Vivas availed of the wrong remedy. The actions of the Monetary Board placing a bank under conservatorship, receivership, or liquidation may only be restrained or set aside through a petition for certiorari.

2. Yes, the petition for prohibition is already ineffective under the circumstances of the case. Prohibition is a preventive remedy seeking to prevent the commission of an act, but in this case, the act of closing the bank and placing it under receivership had already been accomplished.

3. Yes, the petition should have been filed with the Court of Appeals. The petition for certiorari should have been filed with the Regional Trial Court exercising jurisdiction over the territorial area or with the Court of Appeals which has jurisdiction over acts or omissions of quasi-judicial agencies.

4. Yes, the petitioner did not properly observe the doctrine of hierarchy of courts. Even if there is concurrence of jurisdiction, the special action for the obtainment of extraordinary writs should be presented to either the Court of Appeals or the Regional Trial Court before resorting to the Supreme Court. Only pure questions of law may be directly appealed to the Supreme Court.

5. No grave abuse of discretion can be attributed to the MB for the issuance of Resolution No. 276.

6. ECBI could be placed under receivership without prior notice and hearing if the circumstances warrant it.

7. ECBI was given the opportunity to be heard on its motion for reconsideration, thus it cannot claim it was deprived of its rights.

8. Yes. The "close now, hear later" doctrine has been justified as a measure for the protection of public interest. Swift action is necessary to protect the interest of depositors, creditors, and stockholders, and to prevent a deterioration of public faith in the banking system.

9. Yes. The MB is empowered to immediately implement its resolution and appoint the PDIC as receiver without prior hearing. The MB, under R.A. No. 7653, has been invested with the power of closure and placement of a bank under receivership for reasons of insolvency, illiquidity, or potential loss to depositors or creditors. Prior hearing is not necessary as the law entrusts the MB with the determination of whether statutory grounds for closure are present.

10. No. The delegation of power to the MB to close and place a financially troubled bank under receivership is not an undue delegation of legislative power. It is a valid exercise of police power to protect the interest of depositors, creditors, stockholders, and the general public. The constitutionality of Section 30 of R.A. No. 7653 cannot be collaterally attacked and any challenge must be made in a direct proceeding.

11. There was no undue delegation of legislative authority in the issuance of R.A. No. 7653.

PRINCIPLES:

• The Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate lower courts, or where exceptional and compelling circumstances justify the availment of the extraordinary remedy of writ of certiorari, prohibition, or mandamus.

• The MB has the power to supervise and manage rural banks, including placing limits on credit, prescribing interest rates, and imposing accounting systems and procedures.

• The MB may take over the management of a rural bank after due hearing in accordance with Section 11 of R.A. No. 7353.

• The MB may place a bank under receivership without prior notice and hearing if the bank is unable to pay its liabilities, lacks sufficient assets to meet its liabilities, cannot continue in business without probable losses to depositors or creditors, or has willfully violated a cease and desist order involving fraud or asset dissipation.

• A special law should prevail over a general law only if there is a conflict. In this case, R.A. No. 7653 is a later law and under said act, the MB has the authority to place a bank under receivership.

• The "close now, hear later" doctrine is justified as a measure for the protection of public interest in banking laws.

• The MB has the power to immediately implement its resolution and place a financially troubled bank under receivership without prior hearing, in order to protect the interest of depositors, creditors, and stockholders.

• The delegation of power to the MB to close and place a financially troubled bank under receivership is a valid exercise of police power and does not violate the non-delegation of legislative power.

• The power to make laws cannot be delegated.

• What can be delegated is the discretion to determine how the law may be enforced, not what the law shall be.

• There are two tests to determine whether there is a valid delegation of legislative power: the completeness test and the sufficient standard test.

• Under the completeness test, the law must be complete in all its terms and conditions when it leaves the legislature.

• Under the sufficient standard test, there must be adequate guidelines or stations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running riot.