Court reverses rule on Banco Filipino reopening

The Court of Appeals has reversed its decision ordering the reopening of Banco Filipino Savings and Mortgage Bank, saying the move of the regulators to shut down the bank had basis.

In a decision issued on Friday, the CA said the Bangko Sentral ng Pilipinas and Philippine Deposit Insurance Corp. were able to provide evidence that Banco Filipino had turned insolvent and that its continued operation could put money of depositors at risk.

The court also said that contrary to claims of officials of Banco Filipino, regulators were proven to have given notice to and held documented discussions with officials of the bank regarding the then pending move to close it. As such, the CA said, claims that the bank was shut down without due process had no basis.

Banco Filipino was ordered closed by the Monetary Board of the BSP and placed under PDIC receivership in March last year.

The decision of the BSP was based on its findings that the bank was insolvent as its liabilities had surpassed its assets, and that it could no longer conduct regular business without putting at risk the money of depositors.

Officials of Banco Filipino, however, went to court to contest the decision of the BSP. The thrift bank said its closure was done in haste, and said the BSP owed it P25 billion in financial assistance as stated in an old business-recovery plan for the bank.

In its decision on January 27 this year, the CA ruled in favor of Banco Filipino. The court ordered the central bank to reopen Banco Filipino and to extend the P25-billion financial assistance to aid in the strengthening of the bank.

Last Friday, however, the CA reversed this ruling, saying that the findings of government entities, like the BSP, should be given more weight especially if such findings were backed by sufficient evidence. In this case, the CA said, the BSP and PDIC were able to present sufficient evidence of the insolvency of Banco Filipino and proof that due process was observed in the closure of the bank.

“We find it apt to stress the time-honored principle that factual findings of administrative agencies are generally accorded respect and even finality, if such findings are supported by substantial evidence,” the CA said in its new decision penned by Associate Justice Noel G. Tijam.

Moreover, the CA cited documented “pre-exit conference,” or meetings, between BSP representatives and officials of Banco Filipino before the bank was closed down.

“Clearly then, there was observance of due process, materially dispelling the claim that there was undue haste in placing Banco Filipno under receivership,” the CA also said.