The Supreme Court has sustained the decision of the Court of Appeals stopping the release of up to P25 billion in financial assistance and other regulatory reliefs filed by the defunct Banco Filipino Savings and Mortgage Bank.
In a 26-page decision, the SC’s Third Division through Associate Justice Marvic Leonen denied the petition filed by Banco Filipino seeking the implementation of the order issued by the Makati City Regional Trial Court in October 28, 2010.
The RTC ruling had enjoined the Bangko Sentral ng Pilipinas 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 lower court subsequently granted Banco Filipino’s application for a writ of preliminary mandatory and preventive injunction and directed 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.
In its ruling, the SC turned down Banco Pilipino’s petition to reverse the CA decision issued on July 28, 2011 on the ground that Banco Filipino, being a closed bank under receivership can only sue or be sued through its receiver, the Philippine Deposit Insurance Corp.
The high court also ruled that BSP’s Monetary Board is a quasi-judicial agency and under the Rules of Court petitions for certiorari against a quasi-judicial agency are recognizable only by the Court of Appeals.
The SC explained 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 asset of the bank to prevent the assets’ dissipation, which includes, the power to file an answer suits that threaten to dissipate the closed bank’s assets, the high tribunal explained.
“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 pointed out.
The SC junked the claim of the Banco Filipino that it was not 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 appellate court was not yet final since the Monetary Board filed a timely motion for reconsideration.
Besides, the SC added, the CA eventually came out with an amended decision in 2012 confirming its 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 Corp. Thus, Philippine Deposit Insurance Corp.’s participation in all suits involving the insolvent bank is necessary and imbued with the public interest,” the SC ruled.
The high court also ruled that pursuant to Article XII, Section 20 of the Constitution, Congress constituted Bangko Sentral as an independent central monetary authority, which is vested with quasi-judicial powers, 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 said.
The SC also pointed out 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 that became the basis for RTC Judge Joselito C. Villarosa to order the release of P25 billion financial assistance and other regulatory reliefs in favor of the bank.
The CA emphasized that 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 has 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.
Because of this, the appellate court’s ruled that Banco Filipino’s contention that its case is likewise cognizable by the Makati RTC is “untenable.”
Court records showed 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 closure in 1985 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.