Tuesday 11 December, 2018
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SC affirms liquidation of defunct Exportbank: Monetary Board can rely on PDIC findings of insolvency

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The Supreme Court (SC) has upheld the Monetary Board’s (MB) April 2013 order to liquidate the now-defunct Export and Industry Bank (Exportbank).

In a recent 9-page decision, the SC 2nd Division denied the appeal of several majority stockholders on the Court of Appeals’ (CA) January 2014 decision that first affirmed the MB liquidation order.

The lost case was filed by Apex Bancrights Holdings, Inc., Lead Bancfund Holdings, Inc, Asia Wide Refreshments Corporation, Medco Asia Investment Corporation, Zest-O Corporation, Harmony Bancshares Holdings, Inc., Excalibur Holdings, Inc., and Alfredo M. Yao.

It may be recalled that MB ordered Exportbank’s liquidation, after the option of rehabilitation fell through when no bidder expressed interest in taking over the insolvent bank.

The stockholders argued the MB should have made its own independent finding instead of merely relying on the conclusion of the Philippine Deposit Insurance Corporation (PDIC), which took over the bank after it was placed under receivership in April 2012.

The SC, however, found this argument “untenable” as Section 30 of the New Central Bank Act only required the MB to notify the bank’s board of directors that rehabilitation is no longer feasible and direct the PDIC to proceed with liquidation.

“Suffice it to say that if the law had indeed intended that the Monetary Board make a separate and distinct factual determination before it can order the liquidation of a bank or quasi-bank, then there should have been a provision to that effect,” read the decision penned by Associate Justice Estela Perlas-Bernabe.

The bank encountered financial difficulties after merging in September 2001 with the struggling Urban Bank, Inc. (UBI), and Urbancorp Investments, Inc. (UII).

Banco de Oro Universal Bank (BDO) initially expressed interest in acquiring Exportbank, but this was derailed because the former was unwilling to assume the latter’s legal liabilities. Exportbank’s worsening financial condition led its leadership to submit to the control of the Bangko Sentral ng Pilipinas (BSP) in April 2012.

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