MANILA, Philippines--The owners of BDB Bank Inc. based in Bicol, one of several padlocked just before the holidays, have filed a suit against banking regulators for alleged ?grave abuse of discretion.?

The owners claimed that the bank was unduly stripped off its business license and placed under receivership and liquidation.

In a civil complaint filed with the Court of Appeals last week, the majority stockholders of BDB Bank, formerly known as Bicol Development Bank, sought a temporary restraining order to halt the actions taken by the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC).

They also protested allegations that the bank was affiliated with the bankrupt Legacy group, claiming this was a case of ?mistaken identity.?

?The BSP unlawfully barred BDB Bank Inc. from operating its business, without notice and hearing, to the prejudice of the petitioning stockholders/directors who have been deprived of due process of law,? the petition said.

The case was filed by Oliver Olaybal on his own behalf and as attorney-in-fact of Arsenia Gomez and Albert Jesus Alvarado.

Aside from reversing the BSP order putting the bank out of business, the complainants said the regulators must indemnify BDB for the loss it sustained under the BSP?s ?prompt corrective action? (PCA) for rehabilitation.

?In almost six months from the time the BSP-initiated rehabilitation program was started, BDB sustained losses amounting to P108 million, while the bank sustained losses in the amount of P15.9 million under the previous management,? the petition said.

?BSP has misused the losses sustained by the bank under BSP management, as justification for closing the bank on Dec. 19, 2008.?

They said that the indemnity must be set off against the amount the PDIC would have paid to insured depositors in the meantime.

The petition added that the PDIC must be disqualified as receiver/liquidator due to alleged conflict of interest.

?The petitioners, as stockholders of BDB, stand to be shortchanged in the distribution of the bank?s residual assets, where the liquidator [PDIC] shall be representing the debtor and the creditor,? the petition said.

According to the petition, Olaybal sold BDB Bank Inc. to Fidel Cu, owner of the defunct Golden Seven Bank and Rural Bank of BinMaley Inc. Since then, it was downgraded to the category of rural bank. The two other banks owned by Cu had suffered from a bank run and was placed under PDIC receivership and liquidation.

To avoid suffering the same fate, Cu allegedly arranged the divestment of his family?s controlling shares in BDB in favor of Olaybal and his group, who took over management in October last year.