Banco Filipino sues BSP

Source: The Manila Times

Banco Filipino Savings and Mortgage Bank is suing the Bangko Sentral ng Pilipinas and its Monetary Board for financial damages resulting from the thrift bank's closure in 1985 by the then-Central Bank of the Philippines.

In a statement on Thursday, Banco Filipino said it filed the case because the central bank "has been exploring loopholes in the law to evade paying the liabilities of its predecessor."

The Bangko Sentral ng Pilipinas took over the functions of the defunct Central Bank after the passage of the New Central Bank Act of 1993. A Board of Liquidators was created to administer and dispose of the old Central Bank's assets and liabilities not assumed by the new central bank.

The Board is supposed to have a life span of 25 years, or to exist until it has liquidated all liabilities assumed from the old Central Bank.

In its statement Banco Filipino said its P18.8-billion damage suit against the old Central Bank and its Monetary Board had been pending since the new law created the Bangko Sentral ng Pilipinas.

Banco Filipino was "compelled to implead the new central bank and the Monetary Board as respondents in the cases to speed up settlement of the damage claims in favor of the [thrift bank]," the statement read.

The thrift bank's lawyers noted that 10 years have passed since the Board of Liquidators was organized, and "at the rate the proceedings are going, the instant case may not be resolved with finality in the remaining 15 years of the lifetime of the [board]."

If the central bank fails to resolve the case within the board's lifetime, the Banco Filipino lawyers said, the thrift bank would have to file a fresh case against the central bank.

Given the above, "impleading the [central bank] and its Monetary Board as defendants in the charges would provide 'full and complete relief' to their client," the lawyers said.

The Board of Liquidators' liabilities to Banco Filipino arose from a Supreme Court ruling on December 11, 1991, which found the old Central Bank guilty of illegally closing the thrift bank at the time.

Examination report

Meanwhile Banco Filipino minority shareholders want monetary authorities to give them a copy of an examination report detailing the Bangko Sentral's findings on the operation of the thrift bank.

The bank's minority shareholders, led by Ana Maria A. Koruga, asked the Regional Trial Court of Makati City to compel the Monetary Board, led by Bangko Sentral Governor Rafael B. Buena-ventura, "to produce and permit the inspection and copying and photographing of the Report of Examination since October 31, 2002."

In their petition the shareholders said copies of the report were sent on September 4 to the Banco Filipino corporate secretary, Francisco A. Rivera.

The report allegedly details the loans and borrowers that are the subject of a legal case filed by Koruga and company.

This case, which Koruga lodged against Banco Filipino officers, led by its chair and president, Teodoro O. Arcenas Jr., concerns allegations that the thrift bank's management "cannibalized" its assets.

Under Section 27 of the Central Bank Act of 1993, Bangko Sentral ng Pilipinas officers and personnel are forbidden to disclose the results of a central bank examination of any bank to parties other than the subject bank's board of directors and officers.

The law allows for an exception, however, when a court orders the central bank to give it a copy of the examination report.

Koruga and company filed the motion for production of the report on September 19, or a day after another newspaper published an article detailing some of the findings of an alleged audit report conducted by the central bank comptroller in Banco Filipino.

The thrift bank has since denied the existence of the audit report. In an earlier statement, it quoted the central bank comptroller as saying it issued no audit report on the thrift bank.