In 2003, minority Banco Filipino shareholder and sister of Banco Filipino Vice Chairman Albert C. Aguirre, Ana Marie Aguirre Koruga, asked the Bangko Sentral ng Pilipinas (BSP) to investigate Banco Filipino. She claimed that Banco Filipino's management had:
The minority shareholder, who holds a direct and indirect 10% stake in the bank, sued not just Banco Filipino's board and management but also both the BSP and the Monetary Board to replace the current board and management and place the bank under receivership.
Needless to say, Ms. Koruga's legal efforts to assert her shareholder rights went nowhere despite elevating her claims all the way to the Supreme Court.
Eight years after her first complaint was filed, on March 17, 2011, the BSP declared the bank closed and placed it under receivership. Furthermore, the BSP declared that Banco Filipino had engaged in a "Ponzi Scheme" that funded withdrawals using later deposits. On April 1, 2011, the BSP filed criminal charges against the directors and officers of the bank for numerous violations of central bank laws and unsound banking practices.
Written below is a detailed timeline of the legal process she undertook as well as the resulting legal decisions.
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Koruga, thru counsel, demanded to the members of the board of
directors of Banco Filipino to reverse the loans and the
corresponding payments thereto by dacion en pago which were extended
to the following corporations: a) Glamor World, Inc.; b) Filipino
Vastland, Inc.; c) Filipino Ventures Co.; d) Taurus Land, Inc.; and
e) BF Homes Depot. Koruga averred that these loans, disguised as
purchases of real property of Banco Filipino, were intended to
accommodate Albert Aguirre, the beneficial owner of the foregoing
corporations, while depriving Banco Filipino of its liquidity needs.
- Not getting any response, Kuroga,
in a Letter dated 19 June 2003 tendered a final demand for the board
of directors to comply with the 14 May 2003 letter within five (5)
days.
In a Letter dated
26 May 2003,
Koruga, thru counsel, informed the Board of Directors and the
Corporate Secretary, Francisco A. Rivera, of Banco Filipino that
Koruga would be proceeding to the bank’s premises on
6 June 2003,
in order to inspect the records and all documents related to the
loan obtained by BF Homes Depot.
- In a Letter dated 4 June 2003, the
Corporate Secretary informed Plaintiff’s counsel that the request
for inspection was denied after a meeting held by the executive
committee. The reason cited was that Koruga used previously obtained
information, directly or indirectly, for media purposes which caused
abnormal withdrawal of deposits in December 2002 and continued to
adversely affect the bank up to that time.
- In a Letter addressed to the board
of directors dated 27 June 2003, counsel for Koruga brought to the
board’s attention the letter issued by Defendant Corporate
Secretary dated 4 June 2003 denying Plaintiff the right to inspect
the records, and requested the members to individually confirm if
they authorized Mr. Rivera’s actions and statements.
In a Letter dated
6 June 2003,
Koruga, thru counsel, informed the board of directors that she would
be proceeding to the bank’s premises on
16 June 2003, in order to
inspect the records and all documents related to the loans obtained
by Filipino Vastland, Inc.; Glamor World, Inc.; Taurus Land, Inc.;
and Tierrasud, Inc..
- In a Letter dated 11 June 2003,
the Corporate Secretary informed Koruga that the Executive Committee
did not favorably consider her notice for inspection because the
pertinent records were protected under the confidentiality rules of
the BSP. It was further stated that the committee took note again of
the fact that Koruga improperly used previously obtained
information.
On 20 August 2003, Koruga filed
a COMPLAINT (With Prayer fort Appointment of Mangament Committee and
for Inscription of Records), dated 13 July 2003 and docketed as
Civil Case No. 03-985, against the Board of Directors of Banco
Filipino (“Private Defendants”) and the Members of the Monetary
Board of the Bangko Sentral ng Pilipinas (“Public Defendants”).
The Complaint alleged the following:
- That Private Defendants engaged
in unlawful self-dealing and conflicts of interest in Banco
Filipino’s disguised acquisitions of unsaleable real property that
unduly benefitted Defendant Aguirre, who is the beneficial owner of
the corporations that were granted loan accommodations: BF Home
Depot, Filipino Vastland, Glamor World, Taurus Land, Tierrasud,
Pro-Managers (“Borrower/Dummy Corporations”). As the
corresponding payment of these loans were effected by way of dacion
en pago, Banco Filipino’s cumulative interest income was
effectively diminished;
- That Private Defendants
violated the right of Koruga, as stockholder, to inspect the
corporate records of Banco Filipino;
- That Public Defendants have not
acted on the Plaintiff’s valid , just and actionable complaint
dated April 21 and 23, 2003.
Koruga then prayed for the
following reliefs:
- that Banco Filipino be placed
under conservatorship, and thereafter, receivership, if justified;
- that a management committee be
created;
- that the loans disguised as
acquisitions of unsaleable real estate be rescinded;
On 26 August 2003, summonses were
served upon Defendants Arcenas, Aguirre, Paguio, and Rivera.
Defendant Montano and Banzon filed
their identical Answer Ad Cautelam with Compulsory Counterclaims
(With Prayer to Set Case for Hearing on Special and Affirmative
Defenses) dated 8 September 2003. Defendants argued that:
- the loan applications of the
borrower corporations were subjected to extensive and rigid profile
and credit investigation.
Koruga’s request for inspection
was justifiably denied, as Koruga used previously obtained
information for media purposes that put Banco Filipino in a bad
light, thus triggering massive withdrawals by the public.
Montano likewise prayed for a
hearing on the Special and Affirmative Defenses set in his Answer.
Defendant Abad filed Answer with
Compulsory Counterclaims dated 11 September 2003.
Defendant Abad filed his Answer
dated 11 September 2003. Defendant also filed his Motion for
Preliminary Hearing on the Jurisdictional Mattes Raised as Grounds
to Warrant Dismissal of the Complaint. Abad moved for a preliminary
hearing on jurisdictional matters raised as Special and Affirmative
Defenses, on the following grounds:
- That the Monetary Board of the BSP
has primary jurisdiction, considering that the subject matter of the
suit relates to and directly affects a banking institution and its
Board of Directors/Management.
- That Koruga violated the rule
against forum shopping, as the Complaint deals with matters and
raises the same issues that are presently pending with the Monetary
Board, pursuant to the letters dated 21 & 23 April 2003 sent by
Koruga to the BSP.
- That the Complaint is a nuisance
or harassment suit, considering that Koruga’s shareholdings in
Banco Filipino is “di minimis” i.e., 0.0115%
- That the complaint is essentially
a petition for mandamus, disguised as an intra-corporate suit, as it
was prayed that the Court issue special orders directed against the
Public Defendants, to act in accordance with their declared duties,
authorities or prerogatives. As certain requirements for a mandamus
case are not complied with, hence, the Complaint should be
dismissed.
- That the Complaint suffers from a
jurisdictional defect as there is non-joinder of the following
indispensable parties, i.e. Banco Filipino, the Borrower
Corporations, and the Monetary Board.
- That there is invalid service of
summons on Defendant Abad
- Defendants Arcenas, Aguirre,
Paguio and Rivera filed their Answer dated 12 September 2003.
Defendants argued:
- that the Court has no jurisdiction
over the persons of the Defendants as there was improper service of
summonses;
- that the instant Complaint is a
harassment or nuisance suit, as can be deduced from the miniscule
shareholdings of Koruga;
- that there is failure to implead
an indispensable party, Banco Filipino, which would be prejudiced in
the event that the reliefs prayed for in the complaint are granted;
- that the grant of the loans lies
within the power of the board of directors and covered by the
“business judgment” rule, by reason of which the courts are not
empowered to intervene;
- that the loans and the
corresponding payments thereof by dacion were evaluated by the Loans
Department and the approving authorities of Banco Filipino in
accordance with its standard procedure and guidelines;
- that the denial to inspect
corporate records was justified as Koruga improperly used previously
obtained information.
- Defendants Samson and Hernandez
filed their Answer Ad Cautelam (With Motion for Preliminary Hearing
on Jurisdictional Matters) dated 12 September 2003. Defendants
contended:
- that jurisdiction lies with the
Monetary Board, considering the reliefs sought by Koruga;
- that Banco Filipino and the
Borrower Corporations, being indispensable parties, were not
impleaded;
- that the court has no jurisdiction
over their persons as there was defective service of summonses;
- that Koruga engaged in forum
shopping;
- that the Complaint is a nuisance
or harassment suit;
- that the Complaint is a veiled
suit for mandamus.
- Public Defendants, thru the Office
of the Solicitor General, filed their Answer dated 18 September
2003. Public Defendants alleged that the Monetary Board had acted
upon the complaint brought by Koruga as a Report of Examination
(ROE) was prepared by the Supervision and Examination Department
(SED) of the BSP. In the ROE, certain exceptions were noted, such as
dacion payments and out of the ordinary expenses. Allegedly, in
accordance with its established procedures, the Reply of Banco
Filipino regarding the noted exceptions in the ROE is currently
being awaited. Public Defendants also put up the following special
and affirmative defenses:
- that only the Monetary Board can
place a bank under conservatorship or receivership;
- that the case is in the nature of
a mandamus suit, and the Monetary Board is being compelled to do
acts which require the exercise of discretion;
- that Koruga violated the doctrine
of exhaustion of administrative remedies as a complaint was filed
before the regular courts without awaiting the outcome of the
Complaint filed before the BSP;
- that the Monetary Board has
primary jurisdiction over the case in view of its expertise or
special knowledge on the monetary and banking system.
- Koruga filed a Request for
Admission and Interrogatories dated 18 September 2003, directed to
Defendants Abad, Samson, Hernandez, Dupasquier, San Lim, &
Buenaventura.
- Koruga filed a Motion for
Production of Documents dated 24 September 2003. The following
documents are sought to be produced or allowed to be
examined/copied:
- Those relating to loans granted by
Banco Filipino to the Borrower Corporations
- Those relating to the Credit
Initiation Process for the Borrower Companies
- Those relating to the Loan
Processing conducted for the loans applied for by the Borrower
Companies.
- Those relating to the Loan Account
Management and Administration of the Borrowing Companies
- Those relating to the Substitution
of Collateral proposed for the security of the loans released in
favor of the Borrower Companies
- Those relating to the Remedial
Management Efforts made and/or proposed for the loans released in
favor of the Borrower Companies
- Those relating to the payment
through dacion en pago proposed and/or accepted by Banco Filipino
for the loans released in favor of the Borrower Companies
- Those relating to the Payment of
the loans made by the Borrower Companies through dacion en pago.
- Those relating to the financial
standing and/or liquidity of Banco Filipino
- Memorandum of Agreement between
the BSP and Banco Filipino concerning the extinguishment of payment
of Banco Filipino’s obligations to the BSP
- Those relating to the Liquidity
Assistance provided by the BSP to Banco Filipino in the year 2002
- Letter dated 06 June 2003, issued
by Banco Filipino’s EVP/Corporate Secretary to BSP Director Candon
B. Guerrero.
Interrogatories dated 24 September
2003 were served upon Defendants Arcenas, Aguirre, Samson, Paguio,
Banzon, Abad, Hernandez, and Rivera, wherein information as to the
property of Banco Filipino Head Office located at 101 Paseo de Roxas
corner de la Rosa Street, Legaspi Village, Makati City, was sought
for. Interrogatories dated 29 September 2003 seeking the same
information were served upon Defendants Tiu, San Lim, &
Dupasquier.
- Koruga filed a Manifestation and
Motion Ad Cautelam dated 29 September 2003 stating that the
Interrogatories dated 24 September 2003 were served upon the
Defendants and that such service is without prejudice to the Motion
to Declare Defendants in Default dated 18 September 2003, as the
Answer dated 12 September 2003 was not verified and there was no
showing that Defendants Arcenas, Paguio and Rivera were authorized
by Defendant Aguirre to represent him in the case
Koruga made a Request for Subpoena
Duces Tecum dated
30 September 2003 for Jason Martinez, a reporter
of “Biznews Financial Gazette” to appear at the hearing on
10
October 2003 and to produce the Report of Examiners (ROE) of the BSP
concerning Banco Filipino.
- Defendants Arcenas, Aguirre,
Paguio and Rivera filed a Motion to Quash Subpoena dated 6 October
2003, contending that a subpoena cannot be used for discovery, and
that the issuance of a subpoena duces tecum is an exercise of
jurisdiction by the court, which it does not have in the first
place.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Opposition to Motion for Production
of Documents dated 30 September 2003. Defendants argued that
discovery was premature as the court had to resolve first the issues
pertaining to its jurisdiction and the Complaint’s susceptibility
to dismissal.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Opposition to Motion to Declare
Defendants in Default dated 30 September 2003, alleging that they
had not been properly served with summons. Hence, the reglementary
period for filing an Answer did not yet commenced against them.
Defendants Samson and Hernandez
filed their Motion to Quash Subpoena and Opposition (To: Motion for
Production of Documents addressed to public defendants) dated 1
October 2003. Defendants argued that the jurisdictional objections
raised in their Answer Ad Cautelam must first be resolved, and that
the production of the subject documents is prohibited by law by
reason of the sensitive nature of information relating to banks.
Koruga filed her Consolidated
Comment/Opposition (to Motions for Preliminary Hearing dated 08, 11
and 12 September 2003) dated 2 October 2003, wherein she argued that
the preliminary hearing on Special and Affirmative defenses prayed
for by Defendants Banzon, Abad, Samson, and Hernandez is in the
nature of a Motion to Dismiss which is a prohibited pleading under
the Intra-Corporate Rules.
Public Defendants filed their
Opposition to Motion for Production (Re Report of Examination) dated
2 October 2003, wherein they averred that the copies of the ROE has
already been transmitted to the Corporate Secretary of Banco
Filipino, and that accordingly, the request for its production
should be directed to the authorized repository of the Bank’s
records, communications and correspondences, and not to Public
Defendants. Public Defendants also alleged that the ROE is
confidential in nature.
Defendant Tiu filed his Answer
with Compulsory Counterclaims dated 5 October 2003, wherein he
alleged that he had voiced his opposition to the payment of the
loans by way of dacion en pago, especially when the corporations
involved are perceived to be sister companies. As to the violation
of Koruga’s right to inspection, Tiu countered that he was not a
member of the Executive Committee that denied the request.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Motion to Resolve Grounds for
Dismissal dated
6 October 2003, wherein they asked the court to
resolve the issues raised in their Answer, as these are already ripe
for adjudication.
Defendants Samson and Hernandez
filed their Objections (To: Request for Admission and
Interrogatories) dated 6 October 2003, wherein the Defendants
questioned the court’s jurisdiction and pointed out that the
Complaint’s susceptibility to dismissal. Defendants also alleged
that the admissions sought are prohibited by law.
Koruga filed her Plaintiff’s
Reply to Public Defendants’/Monetary Board’s “Opposition to
Motion for Production (Re: Report of Examination)” dated 02
October 2003 dated 9 October 2003, wherein she argued that the
subject documents are covered by the right of the people to
information for these are official records or paper pertaining to
official acts.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Opposition to Motion for Production
of Documents dated 9 October 2003, wherein they contended that
before any discovery may be undertaken the issues raised in their
Answer must first be resolved, that Koruga’s resort to discovery
is premature, and that the motion seeking production of documents is
tantamount to a fishing expedition.
Defendants Aguirre, Arcenas,
Paguio, and Rivera filed their Opposition to Motion Ad Cautelam (To
Serve Interrogatories) dated 9 October 2003. Defendants once again
pointed out the alleged that the court lack jurisdiction over their
persons by reason of the defective service of summonses.
Defendant Tommy Pea San Lim filed
his Answer dated 9 October 2003, wherein he alleged that he is not
one of the erring directors referred to in the Complaint as he
either registered his objections to, or abstained from voting on,
the corporate acts complained of.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Comment on/Opposition to Plaintiff’s
Latest Motion for Production of Documents dated October 15 2003,
wherein Defendants averred once again that before any discovery may
be undertaken it was expedient upon the trial court to resolve the
issues that were raised in their Answer.
Defendant Banzon filed his
Objection to Interrogatories dated 15 October 2003, wherein he
averred that the interrogatories are premature, as there is still
one pending incident yet to be resolved by the trial court, at least
insofar as he is concerned, i.e. the Motion to Set Case for
Preliminary Hearing on the Special and Affirmative Defenses.
Defendant Banzon filed his Motion
to Suspend Proceedings dated 16 October 2003, in view of the several
pending incidents before the court, i.e. Koruga’s Motion for the
Production of Documents, Motion to Declare Defendants in Default,
and Interrogatories; and the Defendants’ Motions to Set Case for
Preliminary Hearing. Banzon also submitted that the issue of whether
the case is a harassment or nuisance suit must first be threshed out
by the court.
Public Defendants filed their
Consolidated Opposition and Motion to Quash (Re Requests for
Admissions and Interrogatories) dated 20 October 2003, wherein they
argued that the subject documents are confidential and that the
Monetary Board is the one vested with jurisdiction over the subject
matter of the Complaint. Public Defendants also averred that they
were currently looking into the alleged irregularities complained
of.
Defendant Dupasquier filed his
Comment and/or Opposition (To Plaintiff’s Request for Written
Interrogatories dated 13 October 2003) with Motion to Strike
(Plaintiff’s Pre-mature and Improper Request for Written
Interrogatories dated 13 October 2003) dated 24 October 2003.
Dupasquier argued that the legal issues raised in his Answer should
be resolved first before discovery requests are granted, and that
the matters sought to be discovered are privileged in nature.
- Koruga filed her Plaintiff’s
Consolidated Reply to the Respective Oppositions of Defendants to
Plaintiff’s Resort to Various Modes of Discovery dated 21 November
2003, wherein she argued:
- that the BSP has no jurisdiction
to adjudicate rights of stockholders;
- that the BSP is not empowered to
grant the following reliefs prayed for in the Complaint: a) to award
damages, b) to pierce the corporate veils of the Borrower
Corporations, and c) to require restitution;
- that service of summonses at the
principal office of Banco Filipino was proper, considering that the
Defendants were being sued in their respective capacities as
directors and/or officers;
- that Banco Filipino need not be
impleaded as an indispensable party, as only the acts of the Private
Defendants are complained of under the Intra-Corporate Rules;
- that the Borrower Corporations
need not be impleaded, as no injury would be caused if the Court
would grant Koruga’s prayer of “mutual restitution between
Banco Filipino and the Borrower Corporations;
- that the Complaint does not
present a nuisance or harassment suit, as there is a bona fide
intra-corporate controversy, with Koruga being prevented from
exercising her right as a stockholder to inspect the corporate books
and records of Banco Filipino;
- that Koruga, as a stockholder, is
entitled to examine the Report of Examination transmitted to Banco
Filipino, which forms part of its “corporate books and records”
- that the Defendants’ claim of
confidentiality are bare and sweeping.
Defendant Banzon filed his
Manifestation (to Plaintiff’s Consolidated Reply) dated
10
December 2003, wherein he reiterated the following arguments: a)
that there was defective service of summons; b) that Banco Filipino
is an indispensable party and therefore should have been impleaded;
c) that the instant case is a nuisance suit and should be dismissed.
Defendant thus prayed that Koruga’s resort to various modes of
discovery be denied and that the pending issue of whether the
Complaint is a nuisance suit be resolved first before the trial
court further proceed with the case.
- Koruga filed Counter-Manifestation
to Banzon’s “Manifestation” (dated 10 December 2003) dated 19
January 2004.
On 24 February 2004, Koruga filed
her Motion to Admit Supplemental Complaint. In her Supplemental
Complaint dated 23 February 2004, Defendant Aguirre was once again
linked to five additional Borrower Corporations: Acamac, Acamac
Finance, Ekistics, Southland, and Tierra Hermosa, which had obtained
loans from Banco de Oro in the accumulated principal amount of Php
250 million as of February 1985. In 1993, Banco de Oro waived the
pertinent interests, charges, and penalties thereby benefitting
Aguirre in the amount of P775.70 million or nearly 20% of Banco
Filipino’s capital. Koruga went on to allege that Aguirre, when he
became Vice-President of Banco Filipino in 1998, unduly exercised
influence in order for the loans of the additional 5 borrower
corporations be restructured, of which he still had beneficial
ownership. Thus, Koruga prayed that the Court issue an Order:
- that the approval and
restructuring of the loans of the five additional borrower companies
and the waiver of penalties, interests and charges be declared as
violations of banking laws against self-dealing and self-interest;
- that Aguirre be directed to
reimburse the amounts released in connection with the restructuring
of the loans, and the waiver of penalties, interests and charges;
- that Mr. Aguirre be disqualified
from further acting as a director of Banco Filipino.
Defendants Banzon and Montano
filed their Opposition (To Motion to Admit Supplemental Complaint)
dated
8 March 2004, wherein they argued that Koruga’s motion
should be denied because the questioned transactions purportedly
happened years before the filing of the Complaint.
Defendants Arcenas, Aguirre,
Paguio and Rivera filed their Opposition to Motion to Admit
Supplemental Complaint dated 9 March 2004. Aside from other
technical grounds, Defendants assailed the motion on due process
considerations, as the five additional borrower corporations, which
corporate veils are sought to be pierced, are not impleaded.
Defendants also sought the court to first resolve the previous
issues e.g. lack of jurisdiction of the court and propriety of the
Complaint to be dismissed, which were raised in their Answer, before
the trial court act on Koruga’s Supplemental Complaint.
Defendants Samson and Hernandez
filed their Opposition (Re: Plaintiff’s Motion to Admit
Supplemental Complaint) dated
12 March 2004. Aside from the
arguments already stated in the Opposition of Defendants Arcenas, et
al., they set up the defense of res judicata, as the grievances
presented in the Koruga’s Supplemental Complaint were already
ventilated in the 1991 case of Banco Filipino Savings & Mortgage
Bank vs. Monetary Board (204 SCRA 767 [1991]), wherein the Supreme
Court found that “there was no showing whatsoever that the bank
had persisted in committing unlawful bank practices and that the
respondent Board had attempted to take effective action on the
bank’s alleged activities.”
On 30 March 2004, Koruga filed a
Motion for Leave to Withdraw Supplemental Complaint, manifesting
therein that the allegations in the Supplemental Complaint are now
intended to be treated as evidentiary matters in support of the
allegations set forth in the main Complaint.
Thru an Order dated 19 August
2004, the Court denied the two Motions for Preliminary Hearing
separately filed by: a) Defendant Abad, and b) Defendants Samson and
Fernandez. Said motions asked the court to conduct preliminary
hearings on the affirmative defenses raised in their respective
Answers. The trial court found merit in Koruga’s argument that the
conduct of such a preliminary hearing is tantamount to filing a
motion to dismiss, which is prohibited under the Interim Rules of
Procedure Governing Intra-corporate Disputes.
On 24 August 2004, the trial court
issued a Notice, setting the pre-trial conference on 28 October
2004.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed a Manifestation and Motion dated 28
September 2004, wherein they prayed that the Court first resolve
their Motion to Resolve Grounds for Dismissal and hold in abeyance,
for the meantime, the conduct of the pre-trial conference for
practical reasons, because the proceedings would be void in the
event that the Court is found to be without jurisdiction.
In an Order dated 18 October
2004, the trial court denied Defendant Arcenas, Aguirre, Paguio, and
Rivera’s Manifestation and Motion, and deferred resolution of the
affirmative defenses raised by the Defendants. The trial court
reasoned that if a preliminary hearing on the affirmative defenses
would be conducted, it is as if a Motion to Dismiss was filed, which
is a prohibited pleading under the Interim Rules of Procedure on
Intra-corporate Controversies.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed a Motion for Reconsideration (of the Order
dated 18 October 2004) dated 9 November 2004. Defendants argued that
although a motion to dismiss is a prohibited pleading, there is no
prohibition in the Interim Rules for the trial court to resolve
grounds for a motion to dismiss pleaded in their Answer. Hence, the
Court may rule on such grounds.
On
6 October 2004, Defendants
Arcenas, Aguirre and Paguio filed a Motion to Resolve Grounds for
Dismissal, wherein they moved the trial court to resolve the
following issues raised in their Answer: a) lack of jurisdiction
over their person; b) lack of jurisdiction over the subject matter
of the action; c) forum shopping; and d) instant case is a nuisance
or harassment suit.
Defendants Banzon and Montano
filed their Joint Manifestation [Re: Unresolved Pre-trial Issues
Raised as Special and Affirmative Defenses] and Joint Comment [Re:
Manifestation and Motion of Defendants Arcenas, Aguirre, Paguio, and
Rivera] dated
8 October 2004, wherein they averred that the setting
of the pre-trial conference is premature, considering that there are
still pending and unresolved prejudicial issues, such as: a) whether
or not Koruga’s suit is a harassment or nuisance suit; b) whether
or not Koruga violated the rule against forum shopping.
Defendants Banzon and Montano
filed their Joint Pre-trial Brief dated
20 October 2004.
Defendants Samson and Hernandez
filed their Pre-trial Brief (ad cautelam) dated 22 October 2004.
Defendant Tiu filed his Pre-trial
Brief on 23 October 2004.
On 25 October 2004, Koruga filed
her Pre-trial Brief, enumerating therein her proposed issues: a)
whether she is entitled to an inspection of the books of Banco
Filipino; b) Whether the assets of Banco Filipino have been
dissipated; c) Whether a Management Committee should be organized;
d) Whether public defendants may and/or should be compelled to
impose administrative measures on private defendants such as
disqualification or suspension, or place Banco Filipino under
receivership or conservatorship; e) Whether plaintiff is entitled to
damages as prayed for.
Public Defendants filed their
Pre-trial Brief. Among their proposed issues are the following: a)
Whether or not the trial court has jurisdiction to compel the
Monetary Board to place Banco Filipino under conservatorship or
receivership without violating the principle of separation of
powers; b) Whether or not the Honorable Court has jurisdiction to
compel the Monetary Board to preventively suspend any of the Private
Defendants or disqualify any of them from serving as directors or
officers of Banco Filipino.
Defendant Lim filed his Pre-trial
Brief dated
8 November 2004.
In an Order dated
11 November
2004, the trial court rescheduled the pre-trial conference to
14
December 2004.
- Thru a Constancia dated 14
December 2004, the trial court reset the pre-trial conference to
January 27 and February 10, 2005
Defendants Banzon and Montano
filed their Joint Reiteration of Manifestation dated 8 October 2004
[re: Unresolved Pre-trial Issues Raised as Special and Affirmative
Defenses]’ and Joint Comment [Re: Motion for Reconsideration of
Defendants Arcenas, Aguirre, Paguio and Rivera dated 9 November
2004] dated 25 November 2004. Defendants reiterated that the motion
to resolve the issue of whether the Complaint is a nuisance or
harassment suit, is allowed under the Interim Rules of Procedure for
Intra-Corporate Controversies.
In an Order dated
18 January 2005,
the trial court denied the Motion for Reconsideration of Defendants
Arcenas, Aguirre, Paguio, and Rivera, subject of which is the Order
dated
18 October 2004, as the issues raised by Defendants have
already been passed upon.
In an Order dated 18 January 2005,
the trial court denied the Motion for Reconsideration of Defendants
Samson and Hernandez, subject of which is the Order dated 19 August
2004. The court noted that the grounds relied upon by Defendants
revolves around the propriety of conducting a preliminary hearing
prior to the pre-trial conference. The court then declared once
again that when a preliminary hearing is conducted, it is as if a
motion to dismiss was filed, and such motion is prohibited under the
Interim Rules.
In an Order dated 18 January 2005,
the trial court denied Defendant Banzon and Montano’s prayer to
set the case for preliminary hearing on the affirmative defenses set
forth in their Answers ad Cautelam.
In an Order dated 18 January 2005,
the trial court deferred action on Koruga’s Motion for Production
of Document until after the pre-trial conference.
In an Order dated 18 January 2005,
the trial court denied Koruga’s Motion to Declare Defendants in
Default.
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Pre-trial Brief dated
25 January
2005.
On
22 February 2005, the trial
court issued a Notice of Pre-trial, setting the case for pre-trial
on
June 2 and
9, 2005.
Defendants filed a Manifestation
and Motion dated 4 March 2005 stating that they have a pending
application for a Writ of Preliminary Injunction with the Court of
Appeals.
Koruga, thru counsel, wrote a
letter to the Philippine Stock Exchange (PSE) and the Securities and
Exchange Commission (SEC) dated 23 May 2005, pointing out the
failure of Banco Filipino to submit its annual audited financial
statements and to hold its annual stockholders’ meeting for the
last three years. The PSE, in its letter dated 6 June 2005, informed
Koruga that it already issued an indefinite trading suspension on
the shares of Banco Filipino on 20 December 2002, pending
clarification on the implementation of a previous board and
stockholders’ resolution on its capital increase through a rights
issuance. The SEC, on its part, stated that:
- it has imposed an aggregate
penalty of P324,024.78 on Banco Filipino for its failure to file its
2002 and 2003 annual reports.
- Banco Filipino paid the same
amount on 12 November 2003 and on 13 July 2004, but still failed to
submit said reports.
- For such failure, a show cause
letter was sent to Banco Filipino on 6 May 2005.
- Banco Filipino’s secondary
license could not be suspended since its equity shares were exempt
securities under Section 5 of the Revised Securities Act.
- other administrative actions
against Banco Filipino are being considered
Koruga filed her Ex Parte Motion
to Set Case for Pre-trial dated
1 August 2005, wherein she alleged
that there was no more legal impediment for the resumption of the
proceedings, as the Court of Appeals already lifted the Writ of
Injunction issued on
09 May 2005 and remanded the case to the trial
court for further proceedings.
On 22 August 2005, Koruga filed a
Manifestation stating that the trial court can now proceed with the
setting of the pre-trial as the filing of the Petition for Review by
Defendants Arcenas, et al. contesting the CA Decision does not stay
the trial court proceedings. Koruga also contended that the concept
of “judicial courtesy”, relied upon by Defendants, no longer
applies as Section 7, Rule 65 of the 1997 Rules of Civil Procedure
states that such petition “shall not interrupt the course of the
principal case unless a restraining order or a writ of preliminary
injunction has been issued against the public respondent from
further proceeding in the case.”
In an Order dated 25 August 2005,
the trial court set the case for pre-trial conference on 20 October
2005, in the event that there is no order or resolution by the
Supreme Court restraining the trial court from taking further
proceedings in the case.
Defendant Abad filed her Pre-trial
Brief dated
19 October 2005.
On 14 November 2005, Koruga filed
her Opposition to Urgent Motion to Reset Pre-Trial Date. Koruga
pointed out the snail-pace of the proceedings, as two years had
already passed since the filing of the Complaint and yet not even a
single pre-trial hearing had been held. Koruga then cited the
reasons for the delays as: a) the accommodation of the court to
Atty. Aportadera’s request for the re-setting of the pre-trial; b)
the filing of a Petition for Certiorari by Defendants Arcenas,
Aguirre, Paguio, and Rivera. Koruga then prayed that Atty.
Aportadera’s another request for the postponement of the
Pre-trial, premised on his scheduled trip to the US, be denied as
being clearly dilatory.
On
1 December 2005, the pre-trial
conference was held. In the course thereof, an Order was given in
open court directing Koruga to file a motion within 10 days
regarding matters which she averred to be appropriate subjects of
summary proceedings. In view thereof, the trial court suspended the
pre-trial conference for the meantime.
On 16 January 2006, Koruga filed
her First Motion for Separate Judgment, in line with her
manifestation during the pre-trial conference that there are certain
subject matters which are already ripe for a summary proceeding,
such as Defendants’ failure to submit the audited financial
statements for 2002, 2003, 2004. Koruga pointed out Defendants’
lame excuse on why Banco Filipino cannot furnish its financial
statements. Allegedly, the auditors of Banco Filipino had not yet
submitted the same. Koruga argued that Defendants cannot pass the
blame to their auditors as the Manual of Regulations for Banks
explicitly provides a period within which said reports must be
filed. Koruga then prayed that the audited financial statements for
the fiscal year 2002 be released.
- Defendants Arcenas, Aguirre,
Paguio, and Rivera filed their Opposition to First Motion for
Separate Judgment dated 30 January 2006, arguing therein that
rendition of a separate judgment will not be proper as Defendants’
evidence relating to the issue of the release of the audited
financial statements still has to be presented to the court.
Defendants also argued that it is Banco Filipino, which was not even
impleaded in the Complaint, that has the obligation under the Manual
of Regulations for Banks and the General banking Law, to submit the
audited financial statements to the BSP, and not the Defendants as
members of the Board of Directors, as Banco Filipino has a separate
juridical personality.
- Defendants Banzon, Montano, and
Abad filed their Opposition to Plaintiff’s First Motion for
Separate Judgment [Dated January 11, 2006], dated 3 February 2006.
Defendants argued that:
- such motion was premature and
improper, as a summary judgment is only possible after the pre-trial
stage;
- that a genuine issue exists as to
obviate rendition of a summary judgment;
- that Koruga has no cause of
action, as Banco Filipino’s obligation to submit audited financial
statements pertains to the BSP, and not to Koruga;
- that the obligation to submit
audited financial statements rests on Banco Filipino, and not on
Defendants, who are only directors and officers of Banco Filipino.
On
26 January 2006, Koruga filed a
Second Motion for Separate Judgment regarding the issue of her right
to inspect and/or reproduce the corporate records of Banco Filipino.
Koruga averred that the Defendants’ refusal to allow inspection
and reproduction as premised on the allegation that she improperly
used previously acquired information, is unsubstantiated. Koruga
cited the case of Gokongwei vs. Securities and Exchange Commission
(GR No. L-45911,
April 11, 1979), where the Supreme Court held that
the burden of proof to show that inspection is improper rests on the
corporation. Koruga then prayed that a partial judgment be rendered
ordering Private Defendants to permit her to inspect and copy all
documents relating to any loans or collateral pertinent to the 6
borrower corporations.
- Defendants Arcenas, Aguirre,
Paguio and Rivera filed their Opposition to Second Motion for
Separate Judgment 31 January 2006, arguing that a summary judgment
will not be proper as it is premature, considering that the Court
still had to evaluate Defendants’ evidence as to their allegation
that Koruga’s improper used previously obtained information.
Defendants also averred that they have evidence to substantiate such
claim.
- Defendants Banzon, Montano and
Abad filed their Opposition to Plaintiff’s Second Motion for
Separate Judgment [Dated January 11, 2006], dated 3 February 2006,
arguing therein that rendition of a partial judgment is appropriate
only after the pre-trial stage. Defendants also contended that a
genuine issue exists to preclude rendition of a summary judgment, as
Koruga’s right to inspect the corporate records of Banco Filipino
was vehemently disputed by the Defendants as reflected in their
Pre-trial Briefs and their declarations in the Pre-trial
conferences. Defendants posited that such issue should be threshed
out in a full-blown trial.
In an Order dated 19 January 2006,
the trial court set the next pre-trial conference on 16 March 2006.
Defendants Samson and Hernandez
filed their Consolidated Opposition (Re: Plaintiff’s Motions for
Separate Judgment) -with- Counter-Motion for Separate Judgment on
Prejudicial Issues Raised in the Answer dated
9 February 2006.
Defendants argued that:
- the two motions for separate
judgment are prohibited pleadings under A.M. No. 01-2-04-SC.
- the two motions merge into one the
supposed separate personalities of Banco Filipino, which is not even
impleaded in the Complaint, and its directors/officers
- there cannot be a separate
judgment as there is a genuine issue
- By reason of her miniscule
shareholdings, Koruga’s right to inspection was justifiably denied
in accordance with the case of Gonzales vs. Philippine National Bank
(G.R. No. L-33320, May 30, 1983 [122 SCRA 489]), wherein the
Supreme Court emphasized that those invoking inspection rights must
be acting in good faith and for a legitimate purpose.
In their Counter-Motion,
Defendants asked the Court to first resolve the multiple
jurisdictional defects in the Complaint, which are the proper
subjects of a separate judgment as these only involve questions of
law.
Public Defendants filed their
Comment dated 16 February 2006 stating that the relief sought (1st
and 2nd motion for inspection of corporate records and issuance of
financial statements) is a provisional remedy which could not be
granted by the trial court as the BSP is the one that has
jurisdiction over the main case. Public Defendants also alleged that
under the New Central Bank Act and the General Banking law of 2000,
the Monetary Board of the BSP does not authorize the performance of
the acts sought out by the motions of Koruga.
On
28 February 2006, Koruga filed
a Motion, for the purpose of having the trial court allow the use of
discovery procedures i.e. deposition of Witnesses Tomas Gomez, and
Jerome and Joseph Velhagen. Koruga prayed that the trial court issue
an Order requesting the DFA to render assistance in the taking of
said depositions.
- Defendants Banzon, Montano, and
Abad filed their Opposition to: Plaintiff’s Motion [Dated February
27, 2006] dated 2 March 2006, pointing out that Koruga failed to
state the purpose, the grounds relied upon, and the relevancy for
the intended deposition taking.
- Defendants Arcenas, Aguirre,
Paguio and Rivera filed their Opposition to Motion (Dated February,
2006) dated 8 March 2006. Defendants argued that the contemplated
deposition taking is not sanctioned by the Rules of Court, as
deposition is a pretrial discovery device by which one party asks
oral questions of the other party or of a witness of the other
party. Defendants pointed out that the witnesses are that of the
plaintiff, Koruga, and neither the adverse parties to the plaintiff
nor witnesses of her adverse party. Defendants added that the
presentation of testimonial evidence shall be done in open court.
Defendants also complained about the expenses and other difficulties
that their counsel will incur to travel to the US if the deposition
would be push sanctioned.
- Defendants Samson and Hernandez
filed their Opposition (Re: Plaintiff’s Motion dated 27 February
2006) dated 10 March 2006, averring that before Koruga could file
further motions or ask for further reliefs, their Consolidated
Opposition (Re: Plaintiff’s Motion for Separate Judgment) with
Counter-Motion for Separate Judgment on Separate Judgment on
Prejudicial Issues Raised in the Answer should be resolved first, as
the pending incidents of the case are already piling up. Defendants
also brought to the attention of the court the two petitions pending
with the Supreme Court and thus asked for the trial court’s
deference to proceed with the case.
Proceedings before the Court of
Appeals
Defendants Arcenas, Aguirre,
Paguio, and Rivera filed a Petition under Rule 65 with the Court of
Appeals dated
31 January 2005 and docketed as CA-G.R. SP No. 88422,
assailing the 18 October 2004 and 18 January 2005 interlocutory
orders of the trial court. The Petition alleged that the Respondent
Judge:
Petitioners also applied for the
issuance of a Writ of Preliminary Injunction, allegedly to prevent a
“run on the bank” and its eventual closure. Petitioners stressed
that the trial court must first resolve the grounds for dismissal
raised in their respective Answers before any resort to discovery
will be granted by the trial court, as doing so is tantamount to an
exercise of jurisdiction, which the trial court is alleged to be
wanting of.
On 9 February 2005, thru a
Resolution, the Court of Appeals issued a Temporary Restraining
Order (TRO), effective for 60 days, enjoining the Respondent Judge
from conducting further proceedings in Civil Case No. 03-985, as
doing so will probably result in a violation of the rights of
Petitioners (the Defendants in Civil Case No. 03-985) and that to
avoid the findings of the Court of Appeals from being renered
ineffectual.
Koruga filed her Comment to the
Petition on 7 March 2005 and stated therein that the trial court did
not commit grave abuse of discretion because the 18 October 2004 and
18 January 2005 Orders of the trial court were in compliance with
the Interim Rules which prohibits the filing of a motion to dismiss.
The holding of a preliminary hearing is tantamount to a filing of a
motion to dismiss.
Defendants Banzon and Montano
filed a Manifestation with Motion for Leave to be Joined as
Co-petitioners dated 7 March 2005. Defendants moved to be joined as
Co-Petitioners with Petitioners Arcenas, Aguirre, Paguio and Rivera.
Koruga filed her Opposition to the
Manifestation and Motion dated
31 March 2005, stating therein the
following grounds as to why the Petitioner’s application for a
Writ of Preliminary Injunction should be denied, to wit:
The Court of Appeals, in a
Resolution dated 18 April 2005, granted the Writ of Preliminary
Injunction, in order not to render ineffectual the final resolution
that may be arrived at by said Court.
On 20 July 2005, the Court of
Appeals promulgated its Decision in CA-G.R. SP No. 88422. The Court
found that respondent judge did not commit grave abuse of discretion
in issuing the assailed Order dated 18 October 2004, and thus
remanded the case to the court a quo for further proceedings. The
Court of Appeals ratiocinated that under the Interim Rules, a Motion
to dismiss is a prohibited pleading, and a preliminary hearing on
the grounds therefore alleged as defenses in a defendant’s answer
would be a convenient way to circumvent this explicit prohibition
under the Interim Rules. The Court further stated that while grounds
for a motion to dismiss under the Rules of Court may be included as
defenses in a defendant’s answer, the Interim rules, unlike the
Rules of Court, does not provide that a preliminary hearing may be
had thereon. With the conduct of a preliminary hearing not being a
matter of right but rather subject to the discretion of the court,
respondent judge had no duty to conduct a preliminary hearing on
petitioners’ ground for dismissal.
Proceedings before the Supreme Court
Prior to the Court of Appeal’s
promulgation of its Decision, Koruga filed a Petition for Certiorari
and Prohibition dated
20 June 2005 and docketed as SC G.R. No.
168332. Koruga alleged that the Court of Appeals gravely abused its
discretion when it issued the Writ of Preliminary Injunction,
without factual or legal basis, because:
- Arcenas, Aguirre, Paguio, and
Rivera filed their Comment on the Petition dated 17 August 2005.
- Banzon and Montano filed their
Comment dated 27 January 2006, averring that Koruga’s petition is
now moot and academic in view of the Court of Appeal’s Decision in
CA-G.R. SP No. 88422 which dissolved the writ of preliminary
injunction.
- Koruga filed her Reply (to the
Comment of Banzon and Montano) dated 20 June 2006.
Arcenas, Aguirre, Paguio and
Rivera filed before the Supreme Court their Petition for Review on
Certiorari dated 12 August 2005 and docketed as S.C. GR No. 169053,
which assailed the 20 July 2005 Decision of the Court of Appeals.
They alleged that such Decision constitutes a denial of due process
when the Court of Appeals did not find grave abuse of discretion on
the part of the trial court in: (a) exercising jurisdiction by
simply refusing to resolve clearly valid objections thereto; (b) not
dismissing the case on grounds of litis pendentia and forum
shopping; (c) finding that the case below is not a
harassment/nuisance suit, without any discussion whatsoever of the
reasons for such finding.
Koruga filed a Manifestation and
Motion for Consolidation of SC GR No. 168332 and SC GR No. 169053
dated 24 August 2005. In a Resolution dated 26 September 2005, the
Supreme Court ordered said consolidation.
Arcenas, Aguirre, Paguio, and
Rivera filed their Motion for Resolution (of the Application for
Temporary Restraining Order And/Or Writ of Preliminary Injunction)
dated
8 March 2006. They averred that the need for such resolution
of their application for a TRO and/or writ of preliminary injunction
is grounded on the trial court’s Order dated
25 August 2005
wherein it signified its intention to proceed with the case if there
is no Order or Resolution from the Supreme Court barring it from
doing so.
The Supreme Court, thru a
Resolution dated 13 March 2006, issued a Temporary Restraining Order
(TRO), commanding the RTC Presiding Judge to desist from proceeding
with the hearing of Civil Case No. 03-985.
Koruga filed a Motion to Lift
Temporary Restraining Order dated 3 May 2006, stating therein that
there is no basis for the issuance of the TRO, as there was no
material allegation of irreparable injury or a bank run or damages
in the amount of Php 1.4 billion.
Arcenas, et al. filed their
Opposition (to Motion to Lift Temporary Restraining Order) dated
22
June 2006.
On
5 July 2006, the Supreme Court,
in a Resolution, denied Koruga’s Motion to Lift Temporary
Restraining Order.
In a Resolution dated 6 September
2006, the Supreme Court directed all parties to submit their
respective Memoranda. Arcenas, et al. filed their Memorandum dated 5
December 2006. Koruga filed her Memorandum dated 14 December 2006.
Banzon and Montano filed their Memorandum dated 12 January 2007.
On 19 June 2009, the Supreme
Court promulgated its Decision and held that Koruga’s Petition in
GR No. 168332 has become moot and academic, as the assailed writ of
preliminary injunction issued by the Court of Appeals on 18 April
2005, had effectively been dissolved by the Court of Appeal in its
Decision promulgated on 20 July 2005. The Supreme Court also found
that the BSP has jurisdiction over the case, as the acts complained
of relate to the conduct of the banking business of Banco Filipino.
The Supreme Court recognized that it is the BSP delegated by the
Government with the task of ensuring that the financial interests of
those who deal with banks and banking institutions, as depositors or
otherwise, are amply protected. Citing the charter of the BSP, the
Supreme Court stated that the BSP is the instrumentality of the
government authorized to administer the monetary, banking, and
credit system of the Philippines. The Decision also noted that the
BSP is empowered to undertake the necessary actions against any
banking institution if its continued operation would cause prejudice
to its depositors, creditors, or the general public. In consequence,
the Supreme Court set aside the Decision of the Court of Appeals
dated 20 July 2005 in CA-G.R. SP No. 88422, made permanent the
Temporary Restraining Order issued on 13 March 2006, and dismissed
Civil Case No. 03-985 pending before the Regional Trial Court of
Makati City.
Koruga filed a Motion for
Reconsideration and Motion to Inhibit dated 28 July 2009, grounded
on the argument that the RTC has jurisdiction as the case involves
an intra-corporate controversy. Koruga moved that the ponente
inhibit himself, given his close relationship with Amelita
Villarosa, a Banco Filipino Officer.
On
19 June 2009, Entry of Judgment
was made.
