disaster preparedness

Palace shrugs off CA ruling on Banco Filipino

Rappler.com

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Malacanang has kept silent over the Court of Appeals ruling directing the BSP to reopen Banco Filipino despite President Aquino's previous strong reaction on moves to block regulatory actions against the bank

MANILA, Philippines – Despite President Aquino’s previous strong reaction on a local judge’s ruling to block regulatory actions against Banco Filipino Savings and Mortgage Bank, Malacanang has kept silent over the recent Court of Appeals ruling directing the central bank to reopen the troubled mid-sized bank.

At a news briefing on Thursday, February 2, Deputy Presidential Spokesperson Abigail Valte declined to say if President Aquino is disappointed with the appellate court’s ruling.

“At this point we will leave the BSP (Bangko Sentral ng Pilipinas) to do what is necessary. They are the primary [government body] in this case. We will defer to whatever action that they would take,” Valte said.

In a 50-page decision written by Associate Justice Agnes Reyes-Carpio and released on February 1, the court said respondents BSP, the Monetary Board and the Philippine Deposit Insurance Corp. (PDIC) committed “grave abuse of discretion” and violated Banco Filipino’s right to due process when they implemented Monetary Board Resolution  372-A on March 17, 2011.

The resolution placed the bank under receivership and barred it from continuing its business operations in the country due to “unsound banking practices,” including a Ponzi-like scheme or the fraudulent practice of using new deposits to pay old ones.

Banco Filipino lawyers had argued that the bank was not insolvent–a position that would have been supported if BSP agreed to extend a P25 billion financial assistance.   

The CA ruling required BSP to extend that P25 billion.

In April 2011, a few weeks after the BSP ordered the Banco Filipino closed and placed under the receivership of the state deposit insurer, Philippine Deposit Insurance System (PDIC), President Aquino twitted in his speech that a local judge who issued decisions favoring Banco Filipino barred the BSP from doing its regulatory functions.

Meron pong reklamo ang Bangko Sentral, nabigyan sila ng injunction na hindi nila mabigyan ng regulatory or hindi nila ma-perform ‘yung kanilang regulatory functions over Banco Filipino (The BSP complained that they could not perform their regulatory functions over Banco Filipino due to a court injunction,” he said.

He was likely referring to Makati regional trial court Judge Joselito Villarosa who ruled in 2010 that BSP must immediately release the financial assistance to Banco Filipino without delay.

Paano naman po ang ating banking system kung parati na lang pong pababayaan ang mali, bahala ang PDIC (state insurer) maghanap ng paraan bayaran ‘yung mga nag-deposit dito? (What will happen to our banking system if we always allow the wrong to prevail? Should the PDIC always have to shoulder the cost of paying the depositors?)” Aquino said.

Aquino was then giving an ad-libbed speech to a judges association.

The PDIC has already released insured amounts to Banco Filipino depositors, complicating the implementation of the CA ruling.

The BSP said they are mulling their next steps.

The Banco Filipino has been a thorn on the side of the BSP for over 2 decades. Majority of the BSP governors and officials who ruled against the bank were sued in court.

The Aguirre family controls Banco Filipino. – Rappler.com

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