BSP contests CA order to reopen Orient Bank

The Bangko Sentral ng Pilipinas (BSP) is contesting the order of the Court of Appeals (CA) to reopen Orient Bank saying the ruling was not yet final and executory, and thus, could not be enforced.

BSP general counsel Juan de Zuniga Jr. said the BSP has grounds to seek reconsideration of the CA ruling.

Zuniga clarified the CA ruling, saying: "What the court ordered was the annulment of the liquidation of the bank and the orders of the Regional Trial Court of Manila which dismissed the petition of Orient Bank chairman and president Jose C. Go."

Zuniga added that the receivership of the bank remains since the CA did not lift it "inasmuch as it was the bank itself which voluntarily declared a bank holiday."

The Philippine Deposit Insurance Corp. (PDIC) is also challenging the CA order and has decided to elevate the case directly to the Supreme Court (SC).

PDIC president Norberto Nazareno said the state insurer is confident it can overturn the CA order.

The CA said in its order that the BSP and PDIC acted in haste in ordering a liquidation of Orient Bank. It noted that the ad hoc committee tasked to review the bank’s case came out with his findings just 24 hours after the bank submitted its revised rehabilitation plan.

The BSP ordered the closure of Orient Bank on Oct. 14, 1998 and placed it under receivership with the PDIC which subsequently decided to liquidate the bank on grounds its owners led by Jose Go mismanaged it.

The PDIC said then that Orient Bank was insolvent with liabilities of about P7 billion, exceeding its assets of over P1 billion. The liabilities also included P2.9 billion in trapped deposits of thousands of depositors.

Orient Bank experienced heavy withdrawals in early 1998, prompting it to declare a bank holiday on Feb. 14.

The PDIC and BSP then seized the assets of the failed bank. Tycoon Lucio Tan, who owns majority of Philippine National Bank, acquired Orient Bank through another one of his banks, Allied Banking Corp. in the bidding conducted by PDIC. All of Orient Bank’s 52 branches were transferred to Allied Bank.

Nazareno said he could not possibly see how Orient Bank intends to regain its assets, adding that PDIC completed payment of the insured deposits of Orient bank while uninsured deposits were turned over to Allied Bank.

Sixty counts of estafa and/or falsification are now pending with the Manila RTC involving the total amount of P1.6 billion. A DOSRI criminal charge was also filed with the court against Go involving the amount of P2.7 billion.