THE Court of Appeals (CA) has lifted the writ of preliminary injunction issued by the regional trial court (RTC) in Makati City enjoining the Bangko Sentral ng Pilipinas (BSP) from bidding out, selling and disposing the assets of the now-defunct Banco Filipino Savings and Mortgage Bank.
In a three-page decision penned by Associate Justice Edwin Sorongon, the CA’s Former Fifteenth Division set aside the October 17, 2016, order issued by Judge Joselito Villarosa, presiding judge of Branch 66 of the Makati City RTC, in favor of Ekistics Philippines Inc., a stockholder of Banco Filipino. The trial court, in the order, granted Ekistics’s petition for the issuance of an injunction to stop the BSP from disposing its assets.
Court records showed that Banco Filipino was incorporated on June 25, 1964, with a term of 50 years, or until June 25, 2014.
It was closed in 1985 but was reopened nine years later, after the SC declared the closure illegal and directed the BSP to allow the bank to resume its business operations.
But, on March 17, 2011, the Monetary Board of the BSP placed Banco Filipino under the receivership of the Philippine Deposit Insurance Corp. (PDIC) and then ordered its liquidation on October 27, 2011, after determining that it cannot continue its business without involving probable losses to its depositors and creditors.
However, the trial court suspended the bank’s liquidation proceedings upon the petition filed by some of its stockholders.
While the liquidation proceedings were suspended, the BSP published on its web site an invitation to bid for the sale of certain properties, which included those of Banco Filipino.
Ekistics then sought the trial court’s issuance of a writ of injunction against the BSP’s move, which it granted.
But the appellate court held that Villarosa committed grave abuse of discretion in issuing the injunction, considering that the requisites for its issuance were not present.
“We carefully studied the argument and evidence presented by the parties and found that Ekistics was not entitled to the grant of preliminary injunction for two reasons: first, the alleged right sought to be protected by it was not established; and second, the requirement of grave irreparable injury was absent,” the CA said in nullifying the trial court’s order.
The CA explained that Ekistics has no clear and unmistakable right, since its claim to the corporate property of Banco Filipino as a stockholder is “inchoate.”
It explained that the right of a stockholder to his share in the corporate property is “merely inchoate because it is contingent on the presence of remaining assets after the corporation has settled all debts and liabilities upon its liquidation.”
The CA further said there can be no distribution of assets among the stockholders without first paying corporate creditors in view of the trust-fund doctrine, which provides that “the capital stock, property and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors.”
“Therefore, Ekistics only possesses inchoate interest over the properties of Banco Filipino, a mere expectancy conditioned upon the presence of remaining corporate assets upon its liquidation, which certainly falls short of the clear legal right requirement set by law before an injunctive writ may be issued. In the absence of a clear legal right, the issuance of the writ constitutes grave abuse of discretion,” the decision read.
The CA also found as untenable the argument of Ekistics that the dissipation of the assets of Banco Filipino will certainly cause damage to it, since the issue on the propriety of the bank’s closure is still pending appeal.
It noted that Ekistics failed to establish a clear and unmistakable right to be protected.
“The possibility of irreparable damage without proof of an actual existing right is not a ground for injunction,” the appellate court stated.
The CA noted said the injury feared by Ekistics entails the loss of its investments and incurring costs of the litigation, which it might be forced to commence to recover its investments in the event that its appeal would be granted. “Clearly, these claims are purely monetary, which are certainly capable of pecuniary estimation. All told, the issuance of a preliminary injunction is not warranted.”
Concurring with the ruling were Associate Justices Ricardo Rosario and Maria Filomena Singh.