THE Supreme Court has upheld a ruling by the Court of Appeals barring the release of up to P25 billion in financial assistance and other regulatory reliefs to the defunct Banco Filipino Savings and Mortgage Bank.
In a 26-page ruling penned by Associate Justice Marvic Leonen, the SC’s Third Division denied Banco Filipino’s petition seeking the implementation of the order issued by the Regional Trial Court in Makati City on October 28, 2010.
The Makati RTC had enjoined the Bangko Sentral ng Pilipinas (BSP) and the Monetary Board from “employing acts inimical to the enforcement of Banco Filipino’s approved business plan” and from enforcing other regulatory measures that are intended to coerce the bank in agreeing to withdraw its suits against the BSP and MB.
The Makati RTC subsequently granted Banco Filipino’s application for a writ of preliminary mandatory and preventive injunction, and directed the BSP and MB to immediately implement the bank’s business plan by releasing its P25-billion financial assistance package and other regulatory reliefs without delay.
The Court, however, denied Banco Pilipino’s petition to reverse the CA ruling issued on July 28, 2011, on two grounds.
First, the SC said Banco Filipino, being a closed bank under receivership, can only sue or be sued through its receiver, the Philippine Deposit Insurance Corp. (PDIC).
The second ground, according to the Court, is that the BSP’s Monetary Board is a quasi-judicial agency and under the Rules of Court petitions for certiorari against a quasi-judicial agency are cognizable only by the Court of Appeals.
The SC pointed out that under Republic Act No. 7653, when the Monetary Board finds a bank insolvent, it may “summarily and without need for prior hearing forbid the institution from doing business in the country and designate the PDIC as receiver of the banking institution.”
As a trustee of the insolvent bank, the PDIC conserves and manages the assets of the bank to prevent their dissipation, which includes, the power to file and answer suits that threaten to dissipate the closed bank’s assets.
“Petitioner’s suit concerned its Business Plan, a matter that could have affected the status of its insolvency. Philippine Deposit insurance Corporation’s participation would have been necessary, as it had the duty to conserve the petitioner’s assets and to examine any possible liability that petitioner might undertake under the Business Plan,” the SC explained.
The Court did not give merit to Banco Filipino’s claim that it was not yet a closed bank at the time it filed the petition on April 10, 2012, since the CA found its closure to have been illegal.
However, the SC said the CA decision was not yet final since the Monetary Board filed a timely motion for reconsideration.
The SC added that the CA eventually came out with an amended decision in 2012 confirming BF’s status as a closed bank.
“When banks become insolvent, depositors are secure in the knowledge that they can still recoup some part of their savings through Philippine Deposit Insurance Corporation. Thus, Philippine Deposit Insurance Corporation’s participation in all suits involving the insolvent bank is necessary and imbued with the public interest,” the SC said.
Meanwhile, the Court said pursuant to Article XII, Section 20 of the Constitution, Congress constituted the BSP as an independent central monetary authority, vested with quasijudicial power which it exercises through the Monetary Board.
“Bangko Sentral’s Monetary Board is a quasi-judicial agency. Its decisions, resolutions and orders are the decisions, resolutions and orders of a quasi-judicial agency. Any action filed against the Monetary Board is an action against a quasi-judicial agency,” the Court ruled.
The SC added that the Rules of Court categorically provide that petitions for certiorari involving acts or omissions of a quasi judicial agency “shall be filed in and cognizable only by the Court of Appeals.”
In its July 28, 2011 decision, the appellate court ordered the dismissal of Civil Case No. 10-1042 filed by Banco Filipino against the BSP and the MB, and which became the basis for RTC Judge Joselito C. Villarosa to order the release of the P25-billion financial assistance and other regulatory reliefs in favor of the bank.
The CA said the RTC has no jurisdiction over the case filed by Banco Filipino assailing MB Resolution No. 1668.
It noted that the bank filed the case before the Makati RTC on October 20, 2010, or after the SC had ruled that petitions for writs of certiorari, prohibition or mandamus under Rule 65 of the Revised Rules of Court against the acts and omissions of quasi-judicial agencies should be filed with the appellate court for procedural uniformity.
Thus, the CA stressed, Banco Filipino’s contention that its case is likewise cognizable by the Makati RTC is “untenable.”
It may be recalled that on December 4, 2009, the MB issued Resolution No. 1668 that granted Banco Filipino’s request for a P25-billion financial assistance and certain regulatory reliefs.
However, it set several conditions for the assistance, particularly the withdrawal by Banco Filipino of all its cases filed against the BSP and the MB in connection with its 1985 closure — that had been declared illegal and arbitrary by the Supreme Court.
Banco Filipino refused to comply with the conditions stipulated in Resolution No. 1668.
When the MB withheld the release of the financial assistance, Banco Filipino filed Civil Case No. 10-1042 which the Makati City RTC granted in favor of the bank, and directed the respondents BSP and MB to release the financial assistance intended for the petitioner.