The case is one of many that was filed in separate petitions by Urban Bank president Teodoro Borlongan against BSP deputy governor Alberto Reyes and examiners Ma. Dolores Yuvienco, Candon Guerrero and Tomas Aure Jr.
This particular case, however, is separate from the case filed against BSP governor Rafael Carlos Buenaventura, although the four BSP officials were also named.
The case against Buenaventura led to a one year and one day suspension order handed down by another division of the Court of Appeals and it is still on appeal before the Supreme Court.
The CA’s decision stemmed from an earlier ruling of the Ombudsman that declared the four ranking BSP officials "guilty of submitting haphazardly and negligently-done reports" that served as the basis of the closure of Urban Bank. But the CA, in its Sept. 18 decision, reversed the order of the Ombudsman.
In a 14-page decision issued by the CA’s 7th Division, Associate Justice Mario Guarina commended Reyes, Yuvienco, Guerrero and Aure for "silent heroism" and for "having the political will to enforce the law beyond personal ties or convenience."
According to the CA, Borlongan had taken extraordinary effort to expose, malign and destroy the BSP reports but had failed to convince them.
"To begin with, it is a tenuous proposition to hold the petitioners administratively liable for the preparation of reports that are, in their nature, recommendatory and have to be acted upon by superior officials," the CA ruling stated.
"As far as this case is concerned, the legal obligations of diligence and good faith that BSP officials owe to the public start with the official acts of the Monetary Board which, rightly or wrongly, are the cause of loss or injury to third parties, not any preparatory report or recommendation," it added.
The CA pointed out that the seriousness and urgency with which the BSP had to act in some cases to protect the public interest was the reason why the BSP had been given an almost free hand in this measure.
The appellate court further declared that it found "no substantial evidence to support the charge that the BSP reports were haphazardly and negligently done."
The Ombudsman, according to the CA, focused on the idea of the bank’s insolvency when the basis of the recommendation to shut down was its illiquidity.
The CA said the BSP argued correctly that the bank was illiquid because it did not have the available cash to meet the withdrawals of depositors and insolvent if its realizable assets were less than all its liabilities.
"It’s not as if the problems of the Urban Bank came to it in one fell swoop," the CA said, pointing to records showing that the BSP had been monitoring the bank for years, leading to its downgrade from the status of an expanded commercial bank to an ordinary commercial bank.
The CA pointed out that "at the close of the banking hours on April 25, Urban Bank was overdrawn by P913 million."
"At a time when indecision and hesitation have become the order of the day in our society and government, the decisiveness shown by the BSP in this case shows that our people have not yet lost the political will to enforce the law and protect the public interest beyond personal ties or convenience," the CA decision said.