MANILA, Philippines - The Court of Appeals (CA) has reversed its earlier decision favoring Banco Filipino Savings and Mortgage Bank in its case against bank regulators which shut down its operations in 2010 after being found insolvent to meet depositor obligations.
In an 18-page decision dated Nov. 21, CA’s special seventh division set aside its ruling last January 27 which ordered the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to reopen Banco Filipino and extend financial assistance worth P25 billion.
“Unless the Banco Filipino can specify its independent and strong financial commitment to address its present predicament, we do not see any cogent reason to sustain its sought rehabilitation, much less its re-opening, at this time,” the decision penned by Associate Justice Noel Tijam said.
Associate Justices Ramon Cruz and Eduardo Peralta Jr. concurred with the order.
Banco Filipino representatives could not be immediately reached for comment.
In its decision, the appellate court said BSP, through its policy making Monetary Board (MB), acted in good faith and within the bounds of the law when it issued MB Resolution 372-A closing down Banco Filipino.
It also reversed its earlier findings that Banco Filipino was not properly informed about the result of BSP’s examination that led to its closure, three days after the thrift bank declared a bank holiday.
The court said under Republic Act 7653 or the New Central Bank Act of 1993, only MB members are required to view bank examination results.
“Neither is the BSP required to furnish the bank concerned of its findings and report, or, in this case, that Banco Filipino can cry afoul for non-receipt thereof,” it explained.
BSP’s findings should “also hold water” than Banco Filipino’s own appraisal of its financial status, CA said, since the examination from which the results were inferred is duly mandated by law.
Moreover, the court said it was Banco Filipino which supplied the information assessed by BSP in the performance of its duties, making such documents “undisputed” as far as the case is concerned.
“The fact remains that the findings of the BSP-MB’s Supervision and Examination Department was a result of statutory duty and based on the very representations of Banco Filipino itself,” the court said.
“To a significant degree, this amounts to judicial admission which does not require further proof,” it added.
Separately, PDIC’s own examination justifies BSP’s findings that showed Banco Filipino being insolvent with the amount of its liabilities higher than that of its assets.
The decision stated that based on PDIC’s findings, Banco Filipino had assets worth P11.77 billion and liabilities amounting to P23.02 billion when it was put under the state deposit insurer’s receivership in March 15, 2011.
It also had P15 billion worth of deposits from 177,652 clients, all of which are covered by the maximum deposit insurance of P500,000, BSP data showed.
In stopping Banco Filipino’s operations, the central bank said the bank’s management failed to restore the lender’s financial health “despite considerable time given to address its financial problems, and after according the Bank the requisite due process.”
This was not the first time Banco Filipino was padlocked. In 1985, BSP also shuttered the bank due to insolvency. But the Supreme Court, in a 1991 ruling, ruled the closure illegal paving the way for Banco Filipino’s re-opening in 1994.