Tuesday, February 06, 2007 Bank of Cebu stays closed; CA dismisses employees’ petition
THE Bank of Cebu will remain closed until its receivers can get back on their feet.
In a resolution issued last Wednesday, the Court of Appeals (CA) dismissed the certiorari petition that the bank’s common stock shareholders and employees filed to stop the Bangko Sentral ng Pilipinas (BSP) closure order.
Citing three grounds, Associate Justice Romeo Barza of the Cebu City-based 18th CA Division instead upheld the August 2006 BSP Monetary Board resolution that also placed the bank under Philippine Deposit Insurance Corp. (PDIC) control.
But the CA ruling still didn’t discuss what caused the Bank of Cebu to fall into corporate trouble.
“After a careful and judicious review of the facts of the case, together with the applicable laws and jurisprudence in the premises, we find the petition without merit,” Barza said in the ruling that Associate Justices Arsenio Magpale and Prescilla Baltazar-Padilla concurred with.
Ruling
First, the ruling read, the common stock shareholders and the bank employees didn’t have the legal personality to file the petition.
“Sec. 30 of Republic Act 7653, otherwise known as The New Central Bank Act, provides that only the stockholders of record representing the majority of the capital stock of a bank placed under receivership could file an action for annulment of a Monetary Board resolution placing the bank under receivership and prohibiting it from continuing operations,” it said.
The petition does not indicate or show that they constitute the majority of the capital stock, issued and outstanding,” it added.
Second, the petition is also defective because Ricardo Angeles, who signed the certificate of verification and certification of non-forum shopping in behalf of Peninsula Equities and Realty Assets Inc., said to be the majority stockholder, failed to show he had the authority to do so.
In fact, the CA said, there is no evidence that Peninsula is a corporation registered under Philippine laws or that it exists at all.
And lastly, the CA ruled, the certiorari petition should have been filed before the Regional Trial Court (RTC) first.
While the CA and the RTC have concurrent jurisdiction on certiorari petitions, there is a hierarchy among courts and this determines venue, it said. While not an “iron-clad rule,” it generally applies to cases with conflicting factual allegations.
“For this reason, litigants are required to repair to the trial court at first instance to determine the truth or falsity of these contending allegations on the basis of the evidence of the parties,” it ruled.
Closure
The Monetary Board, in an act that subsequently caused panicked depositors to line up outside the bank’s Manalili St. branch, issued the Aug. 31, 2006 resolution that closed The Bank of Cebu and placed it under PDIC receivership.
The resolution was based on a finding that the bank had “insufficient realizable assets, as determined by the Bangko Sentral ng Pilipinas, to meet its liabilities.”
The same findings also said the bank could no longer continue its business without involving probable losses to its depositors or creditors, unless fresh funds are infused.
The Bank of Cebu is registered as a multi-unit private thrift bank. Its stockholders reportedly include Peninsula, the Development Bank of the Philippines, Leandro Cedo, TSK Marketing and the Land Bank of the Philippines.
It reportedly has a paid-up capital of P37 million.
Banks under receivership are taken over by the PDIC, which pays depositors whose accounts don’t go above P250,000, the maximum insurable amount.
Claims for deposits in excess of the amount will be settled together with claims of other ordinary creditors, after preferred claims like government taxes, labor claims, secured credits and trust funds are settled.
But if another institution takes over the ailing bank, the new owner will assume the deposit accounts of the closed financial institution. (KNR)
