Latest ruling keeps Banco Filipino shut

Which is which?

Earlier this month, the Court of Appeals declared the closure of Banco Filipino (BF) illegal and ordered the Bangko Sentral ng Pilipinas (BSP) to reopen Banco Filipino Savings and Mortgage Bank and give it a P25-billion financial rehabilitation package.

Now, a ruling by another division of the appellate court seems to say just the opposite.

The latest ruling from the court’s Former Special 10th Division denied a motion to reconsider an October 2011 ruling overturning Makati Regional Trial Court Judge Joselito Villarosa’s temporary restraining order (TRO) on the closure of Banco Filipino and  directing  the BSP to support the bank’s multibillion-peso business and recovery plan.

The latest ruling, penned by Associate Justice Hakim Abdulwahid, said the court saw no reason to overturn the earlier ruling that found  the Makati judge to have committed grave abuse of discretion and showed “undue haste” when he issued a  TRO on Oct. 28, 2010, which barred the BSP from performing its regulatory functions over the bank.

Associate Justices Noel Tijam and Ricardo Rosario concurred in the ruling, saying that Villarosa had no juristiction over the case.

“For lack of jurisdiction, the (Makati court) is ordered to stop and desist from continuing with the proceedings…other than to dismiss the said case,” the court ruled.

Banco Filipino had argued that it was entitled to financial assistance based on a 1991 Supreme Court decision which ordered the reopening and reorganization of Banco Filipino after its closure in 1985.

The BSP and the Monetary Board had sought the appellate court’s intervention.

Abdulwahid wrote: “To be sure, the Supreme Court did not intend to dictate how Banco Filipino should be reorganized and what (the BSP) should do under the premises in the process or reorganizing (the bank).”

The new ruling, dated February 14, comes barely two weeks after the court’s Former Special 14th Division ordered the BSP to reopen Banco Filipino and provide the P25-billion rehabilitation fund. In that decision, Justice Agnes Reyes-Carpio ruled that the closure of Banco Filipino by the BSP was illegal. Concurring justices were Vicente Veloso and Normandie Pizarro.

The Special 14th Division had ordered the BSP to release funds to Banco Filipino within 30 days, saying the central bank and the Philippine Deposit Insurance Corp.  committed grave abuse of discretion and violated BF’s right to due process when they placed the bank under receivership.

The BSP placed Banco Filipino under receivership on March 17, 2011, after it was reported to be insolvent.

Banco Filipino claimed it became insolvent due to the BSP’s failure to release its rehabilitation fund and the  publicity it generated.