Banco Filipino sues BSP over P18.8-B damage claim

Banco Filipino Savings and Mortgage Bank formally sued yesterday the Bangko Sentral ng Pilipinas (BSP) and its Monetary Board (MB) for financial damages it suffered as a result of an illegal closure order issued in 1985 by the defunct Central Bank of the Philippines.

In a press statement, Banco Filipino said it took the move amid observations that the BSP which took over the functions of the old central bank following enactment of the New Central Bank Act in 1993 has been exploring loopholes in the law to evade paying the liabilities of its predecessor.

When the new law took effect on July 6, 1993, Banco Filipino’s P18.8-billion damage suits against the CB and the Monetary Board were already pending.

Banco Filipino legal counsels Filemon Fernandez, Francisco Rivera and Manuel Tomacruz said they were compelled to implead the BSP and the MB as respondents in the case to speed up settlement of the damage claims in favor of Banco Filipino.

In their supplemental motion submitted to the Makati Regional Trial Court, the lawyers pointed out that under the new law, the Central Bank will exist as CB Board of Liquidators for a maximum of 25 years.

Underscoring the urgency of resolving their complaint, the lawyers said 10 years "have already elapsed 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 CB Board of Liquidators, in which event, the principal source of relief for the plaintiff may have already ceased to exist and the proceeding against the successor-in-interest or transferee pendente lite – Bangko Sentral ng Pilipinas – at that time may again entail lengthy proceedings."

The lawyers stressed that impleading the BSP and its MB as defendants in the charges would provide "full and complete relief" to their client.

The Supreme Court, in a ruling handed down on Dec. 11, 1991 declared that the closure of Banco Filipino was illegal, having been carried out "arbitrarily and with grave abuse of discretion." After a two-year delay, the bank eventually reopened in July 1994.

However, then Central Bank Governor Jose Cuisia Jr. allegedly imposed stiff conditions for the reopening, prompting Banco Filipino stockholders to sue him for graft and corruption.

Banco Filipino subsequently lodged the P18.8-billion damage suit against the BSP and certain CB officials led by the late former CB Governor Jose "Jobo" Fernandez.

The defendants filed a series of motions in a bid to quash the charges against them, but were invariably dismissed by the court for lack of merit.