MANILA, Philippines - The Court of Appeals (CA) has junked a bid of the Bangko Sentral ng Pilipinas (BSP) to proceed with the auction of consolidated assets of Banco Filipino Savings and Mortgage Bank worth over P10 billion.
In a 21-page ruling, the special fifth division of the appellate court affirmed the writ of preliminary injunction issued by Makati RTC Branch 66 last March enjoining the implementation of a memorandum of agreement (MOA) signed by the BSP and Banco Filipino in December last year.
The CA, through Associate Justice Sesinando Villon, junked a petition of BSP and ruled that Makati RTC Judge Joselito Villarosa did not commit grave abuse of discretion in temporarily stopping the auction.
“We find that there was adequate justification for the respondent judge’s issuance of the assailed injunctive writ. Significantly, the rule is well-entrenched that the issuance of the writ of preliminary injunction rests upon the sound discretion of the trial court,” the appeals court stressed.
The CA explained that a preliminary injunction is merely temporary — subject to the final resolution of the main case. It also dismissed the assertion of the BSP that the trial court had already disposed the main case on the merits without trial with the issuance of the writ.
“The assailed injunctive writ is not a judgment on the merits of the case for a writ of preliminary injunction is generally based solely on initial and incomplete evidence,” it added.
Records show that the RTC issued the injunction based on the complaint for declaration of nullity of contract with extremely urgent application for temporary restraining order and/or writ of preliminary injunction filed with the Makati RTC on Nov. 28, 2008 by Banco Filipino against the implementation of the agreement.
Judge Villarosa ruled that the “intended auction of the acquired properties” owned by Banco Filipino is substantial to its established right to continue business with safety to its creditors, depositors, and the general public.
It declared that the threat of auctioning its assets would surely cause serious damage to the bank’s finances and eventual destruction leading to its closure.
Under the MOA, the bank ceded over 1,900 parcels of prime properties with a total area of 70.5 hectares to the BSP to avail itself of emergency loans needed not only in its reopening but also to service another bank run.
The bank stressed that despite BSP’s acceptance and collection of the payment of advances from the old Central Bank, it refused to assume liability of the Central Bank under the final and executory decision of the Supreme Court on Dec. 11, 1991 which found that its closure and receivership were done arbitrarily and with grave abuse of discretion.
In the same ruling, the Court directed the Central Bank and the Monetary Board to reorganize Banco Filipino and allow the latter to resume operations
Banco Filipino noted that BSP has barred it from selling or redeeming the properties subject of dacion en pago (payment in kind) under the MOA, a practice it previously allowed.
Worse, the BSP threatened to put the properties at public auction.
In a resolution issued last year, the SC affirmed the decision of the CA allowing the Makati RTC to proceed with the trial of the P18.8-billion damage suit filed by Banco Filipino in connection with its illegal closure.
The appellate court, in the said decision, upheld the lower court’s ruling that that the BSP is the successor-in-interest of then Central Bank which continues to exist as the CB-BOL to, among other things, answer all cases filed against the defunct CB.
Prior to its closure, Banco Filipino had 89 operating branches and three million depositors. In 1983, it experienced heavy withdrawals of deposits and after a year it was forced to declare a bank holiday.
In 1985, Banco Filipino was padlocked by the CB then headed by Governor Jose “Jobo” Fernandez, due to alleged insolvency. In the same year, the bank was placed under CB receivership.
The bank then filed a petition before the SC maintaining that the CB’s order of closure was illegal.