Supreme Court junks Banco Filipino intra-corporate rap

MANILA, Philippines - The Supreme Court (SC) has junked a criminal complaint filed by a minority stockholder of Banco Filipino Savings and Mortgage Bank against its board of directors and members of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) for allegedly engaging in unsafe and fraudulent banking practices.

In a 21-page decision penned by Associate Justice Antonio Eduardo Nachura, the third division of the High Court has reversed a July 20, 2005 ruling of the Court of Appeals (CA) that ordered the Makati regional trial court to hear the intra-corporate dispute which stemmed from the complaint filed by BF minority stockholder Ana Maria Aguirre-Koruga against Teodoro Arcenas Jr., president and chairman of BF; Albert Aguirre, brother of the complainant and bank’s vice chairman; Francisco Rivera, corporate secretary; and BF director Cesar Paguio.

In the ruling promulgated last June 19 but was released last Friday, the Court stressed that the case should fall under the jurisdiction of the BSP and not the RTC as it cited section 25 of the New Central Bank Act, which gives the BSP the authority to supervise operations and activities of banks.

In her complaint, Koruga accused the respondents of approving loans of several dummy borrower corporations known to have close ties and indirectly controlled by the directors and accepting payment of loans with property instead of cash resulting to the decline in it liquidity position.

She accused them specifically of violating sections 31 to 34 of the Corporation Code which prohibit self-dealing and conflict of interest of directors and officers; invoked her right to inspect the corporation’s records under Section 74 of the Corporation Code and prayed for receivership and creation of a management committee pursuant to the Rules of Civil Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate Controversies, the General Banking Law of 2000, and the New Central Bank Act.

Koruga claimed that the accused misappropriated P6 billion of the bank’s funds by unlawfully releasing loans to borrower corporations despite their lack of financial capacity to justify the loans.

Furthermore, the Court said the authority to determine whether a bank is conducting business in an unsafe manner is also vested in the Monetary Board under Section 56 of The General Banking Law of 2000.

On the other hand, the SC said the under Section 37 of the New Central Bank Act, the Monetary Board has the power to impose administrative sanctions on the erring bank.

It stressed that under sections 29 and 30 of the said law, the power to appoint a receiver exclusively belongs to the Monetary Board.

“From the foregoing disquisition, there is no doubt that the RTC has no jurisdiction to hear and decide a suit that seeks to place Banco Filipino under receivership,” the SC said.