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G.R. No. 191424 August 7, 2013 controlling interest in RBFI sometime in examination. The ECBI submitted its
ALFEO D. VIVAS, ON HIS BEHALF AND ON January 2006. comments on BSPs consolidated findings and
BEHALF OF THE SHAREHOLDERS OF risk asset classification through a letter, dated
EUROCREDIT COMMUNITY BANK, At the initiative of Vivas and the new April 8, 2008.4
PETITIONER, vs. THE MONETARY BOARD OF management team, an internal audit was
THE BANGKO SENTRAL NG PILIPINAS AND conducted on RBFI and results thereof Sometime in April 2008, the examiners from
THE PHILIPPINE DEPOSIT INSURANCE highlighted the dismal operation of the rural the Department of Loans and Credit of the
CORPORATION, RESPONDENTS. bank. BSP arrived at the ECBI and cancelled the
MENDOZA, J.: rediscounting line of the bank. Vivas
n view of those findings, certain measures appealed the cancellation to BSP.5
This is a petition for prohibition with prayer calculated to revitalize the bank were Thereafter, the Monetary Board (MB) issued
for the issuance of a status quo ante order or allegedly introduced.2 On December 8, 2006, Resolution No. 1255, dated September 25,
writ of preliminary injunction ordering the the Bangko Sentral ng Pilipinas (BSP) issued 2008, placing ECBI under Prompt Corrective
respondents to desist from closing the Certificate of Authority extending the Action (PCA) framework because of the
EuroCredit Community Bank, Incorporated corporate life of RBFI for another fifty (50) following serious findings and supervisory
(ECBI) and from pursuing the receivership years. The BSP also approved the change of concerns noted during the general
thereof. its corporate name to EuroCredit Community examination: 1] negative capital of ?14.674
Bank, Incorporated, as well as the increase in million and capital adequacy ratio of negative
The petition likewise prays that the the number of the members of its BOD, from 18.42%; 2] CAMEL (Capital Asset
management and operation of ECBI be five (5) to eleven (11).3 Management Earnings Liquidity) composite
restored to its Board of Directors (BOD) and rating of "2" with a Management component
its officers. Pursuant to Section 28 of Republic Act (R.A.) rating of "1"; and 3] serious supervisory
No. 7653, otherwise known as The New concerns particularly on activities deemed
The Facts Central Bank Act, the Integrated Supervision unsafe or unsound.6 Vivas claimed that the
Department II (ISD II) of the BSP conducted a BSP took the above courses of action due to
The Rural Bank of Faire, Incorporated (RBFI) general examination on ECBI with the cut-off the joint influence exerted by a certain hostile
was a duly registered rural banking institution date of December 31, 2007. Shortly after the shareholder and a former BSP examiner.7
with principal office in Centro Sur, Sto. Nio, completion of the general examination, an
Cagayan. Record shows that the corporate exit conference was held on March 27, 2008 Through its letter, dated September 30, 2008,
life of RBFI expired on May 31, 2005.1 at the BSP during which the BSP officials and the BSP furnished ECBI with a copy of the
examiners apprised Vivas, the Chairman and Report of Examination (ROE) as of December
Notwithstanding, petitioner Alfeo D. Vivas President of ECBI, as well as the other bank 31, 2007. In addition, the BSP directed the
(Vivas) and his principals acquired the officers and members of its BOD, of the banks BOD and senior management to: 1]
advance findings noted during the said infuse fresh capital of ?22.643 million; 2]
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book the amount of ?28.563 million general condition of ECBI with the cut-off reiterated its demand upon the ECBI BOD to
representing unbooked valuation reserves on date of December 31, 2008, did not push allow the BSP examiners to conduct a general
classified loans and other risks assets on or through. According to Vivas, ECBI asked for examination on June 3, 2009.16
before October 31, 2008; and 3] take the deferment of the examination pending
appropriate action necessary to address the resolution of its appeal before the MB. Vivas In its June 2, 2009 Letter-Reply,17 ECBI asked
violations/exceptions noted in the believed that he was being treated unfairly for another deferment of the examination
examination.8 because the letter of authority to examine due to the pendency of certain unresolved
allegedly contained a clause which pertained issues subject of its appeal before the MB,
Vivas moved for a reconsideration of to the Anti-Money Laundering Law and the and because Vivas was then out of the
Resolution No. 1255 on the grounds of non- Bank Secrecy Act.12 country. The ISD II denied ECBIs request and
observance of due process and arbitrariness. ordered the general examination to proceed
The ISD II, on several instances, had invited The MB, on the other hand, posited that ECBI as previously scheduled.18
the BOD of ECBI to discuss matters pertaining unjustly refused to allow the BSP examiners
to the placement of the bank under PCA from examining and inspecting its books and Thereafter, the MB issued Resolution No.
framework and other supervisory concerns records, in violation of Sections 25 and 34 of 823,19 dated June 4, 2009, approving the
before making the appropriate R.A. No. 7653. In its letter,13 dated May 8, issuance of a cease and desist order against
recommendations to the MB. The proposed 2009, the BSP informed ECBI that it was ECBI, which enjoined it from pursuing certain
meeting, however, did not materialize due to already due for another annual examination acts and transactions that were considered
postponements sought by Vivas.9 and that the pendency of its appeal before unsafe or unsound banking practices, and
the MB would not prevent the BSP from from doing such other acts or transactions
In its letter, dated February 20, 2009, the BSP conducting another one as mandated by constituting fraud or might result in the
directed ECBI to explain why it transferred Section 28 of R.A. No. 7653. dissipation of its assets.
the majority shares of RBFI without securing
the prior approval of the MB in apparent In view of ECBIs refusal to comply with the On June 10, 2009, the OSI filed with the
violation of Subsection X126.2 of the Manual required examination, the MB issued Department of Justice (DOJ) a complaint for
of Regulation for Banks (MORB).10 Still in Resolution No. 726,14 dated May 14, 2009, Estafa Through Falsification of Commercial
another letter,11 dated March 31, 2009, the imposing monetary penalty/fine on ECBI, and Documents against certain officials and
ISD II required ECBI to explain why it did not referred the matter to the Office of the employees of ECBI. Meanwhile, the MB
obtain the prior approval of the BSP anent the Special Investigation (OSI) for the filing of issued Resolution No. 1164,20 dated August
establishment and operation of the banks appropriate legal action. The BSP also wrote 13, 2009, denying the appeal of ECBI from
sub-offices. a letter,15 dated May 26, 2009, advising ECBI Resolution No. 1255 which placed it under
to comply with MB Resolution No. 771, which PCA framework. On November 18, 2009, the
Also, the scheduled March 31, 2009 general essentially required the bank to follow its general examination of the books and
examination of the books, records and directives. On May 28, 2009, the ISD II records of ECBI with the cut-off date of
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September 30, 2009, was commenced and and desist order of the Monetary Board for (a) It is grave abuse of discretion
ended in December 2009. Later, the BSP acts or transactions which are considered amounting to loss of jurisdiction to
officials and examiners met with the unsafe and unsound banking practices and apply the general law embodied in
representatives of ECBI, including Vivas, and other acts or transactions constituting fraud Section 30 of the New Central Bank
discussed their findings.21 On December 7, or dissipation of the assets of the institution, Act as opposed to the specific law
2009, the ISD II reminded ECBI of the non- and considering the failure of the Board of embodied in Sections 11 and 14 of
submission of its financial audit reports for Directors/management of Eurocredit Bank to the Rural Banks Act of 1992.
the years 2007 and 2008 with a warning that restore the banks financial health and
failure to submit those reports and the viability despite considerable time given to (b) Even if it assumed that Section 30 of
written explanation for such omission shall address the banks financial problems, and the New Central Bank Act is
result in the imposition of a monetary that the bank had been accorded due applicable, it is still the gravest abuse
penalty.22 In a letter, dated February 1, 2010, process, the Board, in accordance with of discretion amounting to lack or
the ISD II informed ECBI of MB Resolution No. Section 30 of Republic Act No. 7653 (The New excess of jurisdiction to execute the
1548 which denied its request for Central Bank Act), approved the law with manifest arbitrariness,
reconsideration of Resolution No. 726. recommendation of ISD II as follows: abuse of discretion, and bad faith,
violation of constitutional rights and
On March 4, 2010, the MB issued Resolution To prohibit the Eurocredit Bank from doing to further execute a mandate well in
No. 27623 placing ECBI under receivership in business in the Philippines and to place its excess of its parameters.
accordance with the recommendation of the assets and affairs under receivership; and
ISD II which reads: (c) The power delegated in favor of the
To designate the Philippine Deposit Insurance Bangko Sentral ng Pilipinas to place
On the basis of the examination findings as of Corporation as Receiver of the bank. rural banks under receiverships is
30 September 2009 as reported by the unconstitutional for being a
Integrated Supervision Department (ISD) II, in Assailing MB Resolution No. 276, Vivas filed diminution or invasion of the powers
its memorandum dated 17 February 2010, this petition for prohibition before this Court, of the Supreme Court, in violation of
which findings showed that the Eurocredit ascribing grave abuse of discretion to the MB Section 2, Article VIII of the Philippine
Community Bank, Inc. a Rural Bank for prohibiting ECBI from continuing its Constitution.24
(Eurocredit Bank) (a) is unable to pay its banking business and for placing it under
liabilities as they become due in the ordinary receivership. The petitioner presents the Vivas submits that the respondents
course of business; (b) has insufficient following committed grave abuse of discretion when
realizable assets to meet liabilities; (c) cannot they erroneously applied Section 30 of R.A.
continue in business without involving ARGUMENTS: No. 7653, instead of Sections 11 and 14 of the
probable losses to its depositors and Rural Bank Act of 1992 or R.A. No. 7353. He
creditors; and (d) has willfully violated a cease argues that despite the deficiencies,
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inadequacies and oversights in the conduct of Vivas Availed of the Wrong Remedy Granting that a petition for prohibition is
the affairs of ECBI, it has not committed any allowed, it is already an ineffective remedy
financial fraud and, hence, its placement To begin with, Vivas availed of the wrong under the circumstances obtaining.
under receivership was unwarranted and remedy. The MB issued Resolution No. 276,
improper. He posits that, instead, the BSP dated March 4, 2010, in the exercise of its Prohibition or a "writ of prohibition" is that
should have taken over the management of power under R.A. No. 7653. Under Section 30 process by which a superior court prevents
ECBI and extended loans to the financially thereof, any act of the MB placing a bank inferior courts, tribunals, officers, or persons
distrained bank pursuant to Sections 11 and under conservatorship, receivership or from usurping or exercising a jurisdiction with
14 of R.A. No. 7353 because the BSPs power liquidation may not be restrained or set aside which they have not been vested by law, and
is limited only to supervision and except on a petition for certiorari. Pertinent confines them to the exercise of those
management take-over of banks. portions of R.A. 7653 read: powers legally conferred.

He contends that the implementation of the Section 30. Its office is to restrain subordinate courts,
questioned resolution was tainted with tribunals or persons from exercising
arbitrariness and bad faith, stressing that x x x x. jurisdiction over matters not within its
ECBI was placed under receivership without cognizance or exceeding its jurisdiction in
due and prior hearing in violation of his and The actions of the Monetary Board taken matters of which it has cognizance.26
the banks right to due process. He adds that under this section or under Section 29 of this
respondent PDIC actually closed ECBI even in Act shall be final and executory, and may not In our jurisdiction, the rule on prohibition is
the absence of any directive to this effect. be restrained or set aside by the court except enshrined in Section 2, Rule 65 of the Rules
Lastly, Vivas assails the constitutionality of on petition for certiorari on the ground that on Civil Procedure, to wit:
Section 30 of R.A. No. 7653 claiming that said the action taken was in excess of jurisdiction
provision vested upon the BSP the unbridled or with such grave abuse of discretion as to Sec. 2. Petition for prohibition - When the
power to close and place under receivership amount to lack or excess of jurisdiction. The proceedings of any tribunal, corporation,
a hapless rural bank instead of aiding its petition for certiorari may only be filed by the board, officer or person, whether exercising
financial needs. He is of the view that such stockholders of record representing the judicial, quasi-judicial or ministerial
power goes way beyond its constitutional majority of the capital stock within ten (10) functions, are without or in excess of its or his
limitation and has transformed the BSP to a days from receipt by the board of directors of jurisdiction, or with grave abuse of discretion
sovereign in its own "kingdom of banks."25 the institution of the order directing amounting to lack or excess of jurisdiction,
receivership, liquidation or conservatorship. and there is no appeal or any other plain,
The Courts Ruling speedy, and adequate remedy in the ordinary
x x x x. [Emphases supplied] course of law, a person aggrieved thereby
The petition must fail. may file a verified petition in the proper
Prohibition is already unavailing court, alleging the facts with certainty and
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praying that the judgment be rendered that is already a fait accompli. (French A these Rules, the petition shall be filed in and
commanding the respondent to desist from thing that has already happened or been cognizable only by the Court of Appeals.
further proceedings in the action or matter decided before those affected hear about it, [Emphases supplied]
specified therein, or otherwise granting such leaving them with no option but to accept).
incidental reliefs as the law and justice 29 That the MB is a quasi-judicial agency was
require. already settled and reiterated in the case of
The Petition Should Have Been Filed in the Bank of Commerce v. Planters Development
x x x x. CA Bank And Bangko Sentral Ng Pilipinas.30

Indeed, prohibition is a preventive remedy Even if treated as a petition for certiorari, the Doctrine of Hierarchy of Courts
seeking that a judgment be rendered which petition should have been filed with the CA.
would direct the defendant to desist from Section 4 of Rule 65 reads: Even in the absence of such provision, the
continuing with the commission of an act petition is also dismissible because it simply
perceived to be illegal.27 Section 4. When and where petition filed. ignored the doctrine of hierarchy of courts.
The petition shall be filed not later than sixty True, the Court, the CA and the RTC have
As a rule, the proper function of a writ of (60) days from notice of the judgment, order original concurrent jurisdiction to issue writs
prohibition is to prevent the doing of an act or resolution. In case a motion for of certiorari, prohibition and mandamus. The
which is about to be done. It is not intended reconsideration or new trial is timely filed, concurrence of jurisdiction, however, does
to provide a remedy for acts already whether such motion is required or not, the not grant the party seeking any of the
accomplished.28 sixty (60) day period shall be counted from extraordinary writs the absolute freedom to
notice of the denial of said motion. file a petition in any court of his choice. The
Though couched in imprecise terms, this petitioner has not advanced any special or
petition for prohibition apparently seeks to The petition shall be filed in the Supreme important reason which would allow a direct
prevent the acts of closing of ECBI and Court or, if it relates to the acts or omissions resort to this Court. Under the Rules of Court,
placing it under receivership. of a lower court or of a corporation, board, a party may directly appeal to this Court only
officer or person, in the Regional Trial Court on pure questions of law.31 In the case at
Resolution No. 276, however, had already exercising jurisdiction over the territorial area bench, there are certainly factual issues as
been issued by the MB and the closure of as defined by the Supreme Court. It may also Vivas is questioning the findings of the
ECBI and its placement under receivership be filed in the Court of Appeals whether or investigating team.
by the PDIC were already accomplished. not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in Strict observance of the policy of judicial
Apparently, the remedy of prohibition is no aid of its appellate jurisdiction. If it involves hierarchy demands that where the issuance
longer appropriate. Settled is the rule that the acts or omissions of a quasi-judicial of the extraordinary writs is also within the
prohibition does not lie to restrain an act agency, unless otherwise provided by law or competence of the CA or the RTC, the special
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action for the obtainment of such writ must extended to rural banks, in imposing a provisions of Sections 32, 33 and 34 of
be presented to either court. As a rule, the uniform accounting system and manner of Republic Act No. 265, as amended.
Court will not entertain direct resort to it keeping the accounts and records of rural
unless the redress desired cannot be banks; in instituting periodic surveys of loan x x x x.
obtained in the appropriate lower courts; or and lending procedures, audits, test-check of
where exceptional and compelling cash and other transactions of the rural The thrust of Vivas argument is that ECBI did
circumstances, such as cases of national banks; in conducting training courses for not commit any financial fraud and, hence,
interest and with serious implications, justify personnel of rural banks; and, in general, in its placement under receivership was
the availment of the extraordinary remedy of supervising the business operations of the unwarranted and improper. He asserts that,
writ of certiorari, prohibition, or mandamus rural banks. instead, the BSP should have taken over the
calling for the exercise of its primary management of ECBI and extended loans to
jurisdiction.32 The judicial policy must be The Central Bank shall have the power to the financially distrained bank pursuant to
observed to prevent an imposition on the enforce the laws, orders, instructions, rules Sections 11 and 14 of R.A. No. 7353 because
precious time and attention of the Court. and regulations promulgated by the the BSPs power is limited only to supervision
Monetary Board, applicable to rural banks; to and management take-over of banks, and not
The MB Committed No Grave Abuse of require rural banks, their directors, officers receivership.
Discretion and agents to conduct and manage the affairs
of the rural banks in a lawful and orderly Vivas argues that implementation of the
In any event, no grave abuse of discretion can manner; and, upon proof that the rural bank questioned resolution was tainted with
be attributed to the MB for the issuance of or its Board of Directors, or officers are arbitrariness and bad faith, stressing that
the assailed Resolution No. 276. conducting and managing the affairs of the ECBI was placed under receivership without
bank in a manner contrary to laws, orders, due and prior hearing, invoking Section 11 of
Vivas insists that the circumstances of the instructions, rules and regulations R.A. No. 7353 which states that the BSP may
case warrant the application of Section 11 of promulgated by the Monetary Board or in a take over the management of a rural bank
R.A. No. 7353, which provides: manner substantially prejudicial to the after due hearing.33 He adds that because
interest of the Government, depositors or R.A. No. 7353 is a special law, the same
Sec. 11. The power to supervise the operation creditors, to take over the management of should prevail over R.A. No. 7653 which is a
of any rural bank by the Monetary Board as such bank when specifically authorized to do general law.
herein indicated shall consist in placing limits so by the Monetary Board after due hearing
to the maximum credit allowed to any process until a new board of directors and The Court has taken this into account, but it
individual borrower; in prescribing the officers are elected and qualified without appears from all over the records that ECBI
interest rate, in determining the loan period prejudice to the prosecution of the persons was given every opportunity to be heard and
and loan procedures, in indicating the responsible for such violations under the improve on its financial standing. The records
manner in which technical assistance shall be disclose that BSP officials and examiners
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met with the representatives of ECBI, inability to pay caused by extraordinary The Court, in several cases, upheld the power
including Vivas, and discussed their findings. demands induced by financial panic in the of the MB to take over banks without need
banking community; for prior hearing.
There were also reminders that ECBI submit
its financial audit reports for the years 2007 (b) has insufficient realizable assets, as It is not necessary inasmuch as the law
and 2008 with a warning that failure to determined by the Bangko Sentral, to meet entrusts to the MB the appreciation and
submit them and a written explanation of its liabilities; or determination of whether any or all of the
such omission shall result in the imposition of statutory grounds for the closure and
a monetary penalty. More importantly, ECBI (c) cannot continue in business without receivership of the erring bank are present.
was heard on its motion for reconsideration. involving probable losses to its depositors or
For failure of ECBI to comply, the MB came creditors; or The MB, under R.A. No. 7653, has been
out with Resolution No. 1548 denying its invested with more power of closure and
request for reconsideration of Resolution No. (d) has wilfully violated a cease and desist placement of a bank under receivership for
726. Having been heard on its motion for order under Section 37 that has become final, insolvency or illiquidity, or because the banks
reconsideration, ECBI cannot claim that it was involving acts or transactions which amount continuance in business would probably
deprived of its right under the Rural Bank Act. to fraud or a dissipation of the assets of the result in the loss to depositors or creditors.
institution; in which cases, the Monetary
Close Now, Hear Later Board may summarily and without need for In the case of Bangko Sentral Ng Pilipinas
prior hearing forbid the institution from Monetary Board v. Hon. Antonio-
At any rate, if circumstances warrant it, the doing business in the Philippines and Valenzuela, the Court reiterated the
MB may forbid a bank from doing business designate the Philippine Deposit Insurance doctrine of "close now, hear later," stating
and place it under receivership without prior Corporation as receiver of the banking that it was justified as a measure for the
notice and hearing. Section 30 of R.A. No. institution. [Emphases supplied.] protection of the public interest. Thus:
7653 provides, viz:
x x x x. The "close now, hear later" doctrine has
Sec. 30. Proceedings in Receivership and already been justified as a measure for the
Liquidation. Whenever, upon report of the Accordingly, there is no conflict which would protection of the public interest.
head of the supervising or examining call for the application of the doctrine that a
department, the Monetary Board finds that a special law should prevail over a general law. Swift action is called for on the part of the BSP
bank or quasi-bank: when it finds that a bank is in dire straits.
It must be emphasized that R.A .No. 7653 is
(a) is unable to pay its liabilities as they a later law and under said act, the power of Unless adequate and determined efforts are
become due in the ordinary course of the MB over banks, including rural banks, taken by the government against distressed
business: Provided, That this shall not include was increased and expanded. and mismanaged banks, public faith in the
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banking system is certain to deteriorate to Accordingly, the MB can immediately result in the incurrence of additional losses to
the prejudice of the national economy itself, implement its resolution prohibiting a the prejudice of its depositors and creditors.
not to mention the losses suffered by the banking institution to do business in the
bank depositors, creditors, and Philippines and, thereafter, appoint the On top of these, it was found that ECBI had
stockholders, who all deserve the protection PDIC as receiver. The procedure for the willfully violated the cease-and-desist order
of the government. involuntary closure of a bank is summary and of the MB issued in its June 24, 2009
expeditious in nature. Such action of the MB Resolution, and had disregarded the BSP
In Rural Bank of Buhi, Inc. v. Court of shall be final and executory, but may be later rules and directives.
Appeals, the Court also wrote that subjected to a judicial scrutiny via a petition
for certiorari to be filed by the stockholders For said reasons, the MB was forced to issue
x x x due process does not necessarily require of record of the bank representing a majority the assailed Resolution No. 276 placing ECBI
a prior hearing; a hearing or an opportunity of the capital stock. under receivership. In addition, the MB
to be heard may be subsequent to the stressed that it accorded ECBI ample time
closure. One can just imagine the dire Obviously, this procedure is designed to and opportunity to address its monetary
consequences of a prior hearing: bank runs protect the interest of all concerned that is, problem and to restore and improve its
would be the order of the day, resulting in the depositors, creditors and stockholders, financial health and viability but it failed to
panic and hysteria. In the process, fortunes the bank itself and the general public. The do so.
may be wiped out and disillusionment will protection afforded public interest warrants
run the gamut of the entire banking the exercise of a summary closure. In light of the circumstances obtaining in this
community.39 case, the application of the corrective
In the case at bench, the ISD II submitted its measures enunciated in Section 30 of R.A.
The doctrine is founded on practical and memorandum, dated February 17, 2010, No. 7653 was proper and justified.
legal considerations to obviate unwarranted containing the findings noted during the
dissipation of the banks assets and as a valid general examination conducted on ECBI with Management take-over under Section 11 of
exercise of police power to protect the the cut-off date of September 30, 2009. R.A. No. 7353 was no longer feasible
depositors, creditors, stockholders, and the considering the financial quagmire that
general public. Swift, adequate and The memorandum underscored the inability engulfed ECBI showing serious conditions of
determined actions must be taken against of ECBI to pay its liabilities as they would fall insolvency and illiquidity.
financially distressed and mismanaged banks due in the usual course of its business, its
by government agencies lest the public faith liabilities being in excess of the assets held. Besides, placing ECBI under receivership
in the banking system deteriorate to the would effectively put a stop to the further
prejudice of the national economy. Also, it was noted that ECBIs continued draining of its assets.
banking operation would most probably
No Undue Delegation of Legislative Power
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prerogative of the legislature. This legislature has clearly spelled out the
Lastly, the petitioner challenges the prerogative cannot be abdicated or reasonable parameters of the power
constitutionality of Section 30 of R.A. No. surrendered by the legislature to the entrusted to the MB and assigned to it only
7653, as the legislature granted the MB a delegate."43 the manner of enforcing said power. In other
broad and unrestrained power to close and words, the MB was given a wide discretion
place a financially troubled bank under "There are two accepted tests to determine and latitude only as to how the law should be
receivership. whether or not there is a valid delegation of implemented in order to attain its objective
legislative power, viz, the completeness test of protecting the interest of the public, the
He claims that the said provision was an and the sufficient standard test. Under the banking industry and the economy.
undue delegation of legislative power. The first test, the law must be complete in all its
contention deserves scant consideration. terms and conditions when it leaves the WHEREFORE, the petition for prohibition is
legislature such that when it reaches the DENIED.
Preliminarily, Vivas attempt to assail the delegate the only thing he will have to do is
constitutionality of Section 30 of R.A. No. enforce it. Under the sufficient standard test, SO ORDERED.
7653 constitutes collateral attack on the said there must be adequate guidelines or
provision of law. Nothing is more settled than stations in the law to map out the boundaries
the rule that the constitutionality of a statute of the delegate's authority and prevent the
cannot be collaterally attacked as delegation from running riot. Both tests are
constitutionality issues must be pleaded intended to prevent a total transference of
directly and not collaterally.41 A collateral legislative authority to the delegate, who is
attack on a presumably valid law is not not allowed to step into the shoes of the
permissible. Unless a law or rule is annulled legislature and exercise a power essentially
in a direct proceeding, the legal presumption legislative."44
of its validity stands.42
In this case, under the two tests, there was no
Be that as it may, there is no violation of the undue delegation of legislative authority in
non-delegation of legislative power. The the issuance of R.A. No. 7653. To address the
rationale for the constitutional proscription is growing concerns in the banking industry, the
that "legislative discretion as to the legislature has sufficiently empowered the
substantive contents of the law cannot be MB to effectively monitor and supervise
delegated. What can be delegated is the banks and financial institutions and, if
discretion to determine how the law may be circumstances warrant, to forbid them to do
enforced, not what the law shall be. The business, to take over their management or
ascertainment of the latter subject is a to place them under receivership. The