Press Release
July 19, 2006


Senate Minority Leader Aquilino Nene Q. Pimentel, Jr. (PDP-Laban) today opined that the Bangko Sentral ng Pilipinas is legally bound to pay the liabilities that it inherited as a result of the closure of the Banco Filipino 21 years ago upon order of the then Central Bank of the Philippines which was subsequently declared illegal by the Supreme Court.

Pimentel disagreed with the reasoning of the BSP that it should not be made to assume the liabilities of the now-defunct CB based on the flimsy excuse that it is an entirely different entity.

The BSP can claim they are not the Central Bank, only technically speaking. But the liabilities of the CB should be assumed by or through them because their predecessors were the ones who incurred those liabilities, he said.

In 1985, the Banco Filipino, owned by the Aguirre family, was padlocked by the CB then headed by Governor Jose Jobo Fernandez, due to alleged insolvency. In the same year, the bank was placed under CBs receivership.

But in 1991, the Supreme Court held that the closure of Banco Filipino, which at that time was the countrys biggest savings bank in terms of resources, was illegal. This paved the way for the banks reopening.

To make up for its losses, Banco Filipino sued the BSP for damages to the tune of P18.8 billion.

In its damage suit, the Banco Filipino impleaded the CB Board of Liquidators which was tasked to administer and liquidate CB assets and liabilities not transferred to the Bangko Sentral, along with the BSP and policy-making Monetary Board as co-defendants.

Pimentel said the BSP should stop evading the settlement of its liabilities to the Banco Filipino, citing the fact that the Supreme Court itself directed this central monetary authority to pay the damage claim of the complainant-bank.

They have been evading the obligation in so many instances, but that would not do. That is not right, the minority leader said.

Its just like a father who incurs debt and then dies. Do not tell me that his children, even if this is the debt of their parents, are not obligated to pay for those debts, because the estate of the father will answer for the debt.

Pimentel noted a Court of Appeals decision which declared as final its ruling that as a successor-in-interests of the Central Bank, the BSP should be impleaded as co-defendant in the damage suit lodged by Banco Filipino. This decision paved the way for the Makati Regional Trial Court to proceed with the adjudication of the Banco Filipinos damage suit.

The senator said it is unfortunate that the case has remained unsolved after 21 years of litigation, to the detriment of owners and stockholders of Banco Filipino, as well as its depositors. The inordinate delay in the resolution of the case will qualify it for the Guinness Book of Records, he said.

At the time of its closure in 1985, Banco Filipino had P4 billion in assets about three million depositors and 89 branches nationwide.

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