14. DAMASO P. PEREZ and REPUBLIC BANK, ETC., ET AL., petitioners-appellants, vs.

MONETARY
BOARD, THE SUPERINTENDENT OF BANKS, CENTRAL BANK OF THE PHILIPPINES and SECRETARY
OF JUSTICE, respondents-appellees. AURORA R. RECTO, MIGUEL CANIZARES, LEON ANCHETA,
PABLO ROMAN, VICTORIA B. ROMAN and NORBERTO J. QUISUMBING, intervenors-appellees.

FACTS:

Damaso Perez, for himself and in a derivative capacity on behalf of the Republic Bank, instituted
mandamus proceedings in the Court of First Instance of Manila against the Monetary Board, the
Superintendent of Banks, the Central Bank and the Secretary of Justice. His object was to
compel these respondents to prosecute, among others, Pablo Roman and several other Republic
Bank officials for violations of the General Banking Act and the Central Bank Act, and for
falsification of public or commercial documents in connection with certain alleged anomalous
loans amounting to P1,303,400.00 authorized by Roman and the other bank officials.

Respondents, Monetary Board, the Superintendent of Banks, the Central Bank and the Secretary
of Justice their respective answers, the propriety of mandamus. The Secretary of Justice claimed
that it was not their specific duty to prosecute the persons denounced by Perez.

ISSUE:

WON the respondents may be compelled by mandamus to prosecute criminally the alleged
violators of banking laws? (NO)

RULING:

NO. Respondents may not be compelled by mandamus to prosecute alleged criminal violations
of banking laws. Although the Central Bank and its respondent officials may have the duty under
the Central Bank Act and the General Banking Act to cause the prosecution of those alleged
violators, yet the Court find nothing in said laws that imposes a clear, specific duty on the former
to do the actual prosecution of the latter. The Central Bank is a government corporation created
principally to administer the monetary and banking system of the Republic, not a prosecution
agency like the fiscal's office. Being an artificial person, The Central Bank is limited to its
statutory powers and the nearest power to which prosecution of violators of banking laws may
be attributed is its power to sue and be sued. But this corporate power of litigation evidently
refers to civil cases only.

Central Bank and its officers have already done what they can by referring the matter to the
special prosecutors of the Department of Justice for prosecution and investigation. Moreover, it
is a settled rule that mandamus will not lie to compel a prosecuting officer, like the Secretary of
Justice, to prosecute a case in court.

Violations of banking laws constitute a public offense, the prosecution of which is a matter of
public interest and hence, anyone even private individuals can denounce such violations before
the prosecuting authorities. Since Perez himself could cause the filing of criminal complaints
against those allegedly involved in the anomalous loans, if any, then he has a plain, adequate
and speedy remedy in the ordinary course of law, which makes mandamus against respondents
improper.

WHEREFORE, the order of dismissal appealed from is, as it is hereby, AFFIRMED. Costs against
petitioner-appellant Perez. So ordered.

33. 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:

This is a petition for prohibition with prayer for the issuance of a status quo ante order or writ of
preliminary injunction ordering the respondents to desist from closing ECBI and from pursuing
the receivership thereof.

Petitioner Vivas and his principals acquired the controlling interest in Rural Bank Faire, a bank
whose corporate life has already expired. BSP authorized extending the banks’ corporate life
and was later renamed to EuroCredit Community Bank (ECBI). Pursuant to Section 28 of
Republic Act (R.A.) No. 7653, otherwise known as The New Central Bank Act, the Integrated
Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI.

Pursuant to Section 28 of Republic Act (R.A.) No. 7653, otherwise known as The New Central
Bank Act, the Integrated Supervision Department II (ISD II) of the BSP conducted a general
examination on ECBI.

Thereafter, the Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008,
placing ECBI under Prompt Corrective Action (PCA) framework because of serious findings and
supervisory concerns. The findings bore that ECBI was illiquid, insolvent, and was performing
transactions which are considered unsafe and unsound banking practices. On the basis of the
examination findings the MB issued Resolution No. 276 placing ECBI under receivership.

Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance of
due process and arbitrariness.

Vivas submits that the respondent committed grave abuse of discretion. Petitioner argues that it
has not committed any financial fraud and, hence, its placement under receivership was
unwarranted and improper. He contends that the implementation of the questioned resolution
was tainted with arbitrariness and bad faith, stressing that ECBI was placed under receivership
without due and prior hearing in violation of his and the bank’s right to due process.

ISSUES:

1. WON the Monetary Board committed grave abuse of discretion by issuing Resolution No. 276
placing ECBI under receivership? (NO)

2. WON ECBI was entitled to due and prior hearing before its being placed under receivership?
(NO)

RULING:

1. The MB Committed No Grave Abuse of Discretion

Vivas argues that implementation of the questioned resolution was tainted with arbitrariness
and bad faith, stressing that ECBI was placed under receivership without due and prior hearing,
invoking Section 11 of R.A. No. 7353 which states that the BSP may take over the management
of a rural bank after due hearing.

The Court has taken this into account, but it appears from all over the records that 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. There 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.

More importantly, ECBI was heard on its motion for reconsideration. For failure of ECBI to
comply, the MB came out with Resolution No. 1548 denying its request for reconsideration of
Resolution No. 726. Having been heard on its motion for reconsideration, ECBI cannot claim that
it was deprived of its right under the Rural Bank Act.
2. The MB may forbid a bank from doing business and place it under receivership without prior
notice and hearing under Section 30 of R.A. No. 7653.

In the case of Bangko Sentral Ng Pilipinas Monetary Board v. Hon. Antonio-Valenzuela, the Court
reiterated the doctrine of “close now, hear later,” stating that it was justified as a measure for
the protection of the public interest. Thus:

The “close now, hear later” doctrine has already been justified as a measure for the protection
of the public interest. Swift action is called for on the part of the BSP when it finds that a bank is
in dire straits. Unless adequate and determined efforts are taken by the government against
distressed and mismanaged banks, public faith in the banking system is certain to deteriorate to
the prejudice of the national economy itself, not to mention the losses suffered by the bank
depositors, creditors, and stockholders, who all deserve the protection of the government.

In Rural Bank of Buhi, Inc. v. Court of Appeals, the Court also wrote that

x x x due process does not necessarily require a prior hearing; a hearing or an opportunity to be
heard may be subsequent to the closure. One can just imagine the dire consequences of a prior
hearing: bank runs would be the order of the day, resulting in panic and hysteria. In the process,
fortunes may be wiped out and disillusionment will run the gamut of the entire banking
community.

The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation
of the bank’s assets and as a valid exercise of police power to protect the depositors, creditors,
stockholders, and the general public. Swift, adequate and determined actions must be taken
against financially distressed and mismanaged banks by government agencies lest the public
faith in the banking system deteriorate to the prejudice of the national economy.

WHEREFORE, the petition for prohibition is DENIED.

55. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. FIDEL PURISIMA, etc.,
and HON. VICENTE ERICTA and JOSE DEL FIERO, etc., respondents.

FACTS:

Manuel Caturla, special agent of the Bureau of Customs, was accused by BIR before the
Tanodbayan of having allegedly acquired property manifestly out of proportion to his salary and
other lawful income, in violation of the “AntiGraft and Corrupt Practices Act.” In the course of
the preliminary investigation thereof, the Tanodbayan issued a subpoena duces tecum to the
Banco Filipino Savings & Mortgage Bank (BF Bank), commanding its representative to appear at
the Office of the Tanodbayan and furnish the latter with duly certified copies of the records of
the loans, savings and time deposits and other banking transactions appearing in the names of
Caturla, his wife, their children and friends.

BF Bank took over from Caturla in the effort to nullify the subpoenae. It filed a complaint for
declaratory relief with the CFI of Manila, praying for a judicial declaration as to whether its
compliance with the subpoenae duces tecum would constitute an infringement of the provisions
of Sections 2 and 3 of R.A. No. 1405 in relation to Section 8 of R.A. No. 3019.

It further argues that subpoenae in question are in the nature of "fishing expeditions" or
"general warrants" since they authorize indiscriminate inquiry into bank records; that, assuming
that such an inquiry is allowed as regards public officials under investigation for a violation of
the Anti-Graft & Corrupt Practices Act, it is constitutionally impermissible with respect to private
individuals or public officials not under investigation on a charge of violating said Act.

ISSUE:
WON the “Law on Secrecy of Bank Deposits” prohibit production by subpoena duces tecum of
bank records of transactions by or in the names of the wife, children and friends of the accused.
(NO)

RULING:

No. The Law on Secrecy of Bank Deposit does not prohibit production by subpoena of bank
records of transactions of the spouse, children and friends of the accused.

The provisions of R.A. No. 1405 subject of BF’s declaratory action, read as follows: Sec. 2. All
deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and
its instrumentalities, are hereby considered as of an absolutely confidential nature and may not
be examined, inquired or looked into by any person, government official, bureau or office,
EXCEPT upon written permission of the depositor, or in cases of impeachment, or upon order of
a competent court in cases of bribery or dereliction of duty of public officials, or in cases where
the money deposited or invested is the subject matter of litigation.

While Republic Act No. 1405 provides that bank deposits are “absolutely confidential and
therefore may not be examined, inquired or looked into,” except in those cases enumerated
therein, the Anti-Graft Law directs in mandatory terms that bank deposits “shall be taken into
consideration in the enforcement of this section, notwithstanding any provision of law to the
contrary.” The only conclusion possible is that section 8 of the Anti-Graft Law is intended to
amend section 2 of Republic Act No. 1405 by providing an additional exception to the rule
against the disclosure of bank deposits.

Congress clearly intended to provide an additional ground for the examination of bank deposits
for without such provision, the prosecutors would be hampered if not altogether frustrated in
the prosecution of those charged with having acquired unexplained wealth while in public office.

Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason
is seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. This policy expresses the notion that a public office is a public trust and any person
who enters upon its discharge does so with the full knowledge that his life, so far as relevant to
his duty, is open to public scrutiny.

The petition for certiorari is DISMISSED.