BANK executives are probably the hardest nuts to crack as sources of information concerning the operations of their own banks. That’s understandable because when you’re in this line of work, discreetness demands that you never give out any information that could be potentially damaging not only to the bank that you serve but also to the stability of the entire banking community.

That explains why bankers are generally tight-lipped. They only want to stay out of trouble or avoid causing any.

Bankers, I daresay, enjoy no freedom of expression at all. They are bound by a sort of omerta or code of silence, (enforced by the Bangko Sentral ng Pilipinas in the name of prudential banking).

Bank lawyers have often had to invoke Section 3 of BSP Circular 477-05, which requires that parties involved in any court dispute over bank funds be kept “absolutely confidential.”

Apparently, the idea is to avoid public discussion of the unresolved issue until the matter is resolved with finality by the courts. Public discussion of such issues has a tendency to get out of hand.

And that is what seems to be happening in the unresolved court cases that started with a dispute over ownership of a bank account in the Bank of the Philippine Islands (BPI) of the once-sequestered firm Philcomsat Holdings Corp. (PHC).

What has complicated matters is the administrative complaint filed by Erlinda I. Bildner against BPI CEO Aurelio Montinola III and Joy B. Rodriguez, BPI branch manager. Bildner, in her administrative complaint filed with the BSP’s Office of Special Investigation (OSI), alleged that BPI had all along been favoring a rival claimant over a PHC account. BPI, it should be pointed out, had been customarily dealing with PHC since 2000 through its management, then headed by Enrique Locsin (Locsin Group).

By 2004 an intracorporate dispute over control of PHC erupted (Bildner Group vs Locsin Group). Bildner filed a case before the Regional Trial Court of Makati. BPI was not a party to the case.

By October 2006 the Makati court decided in favor of the Bildner Group. In February 2007 Bildner notified all PHC bank depositories, BPI included, of the court decision. The group expected all banks to freeze the PHC account.

On the advice of its lawyers, BPI informed the Bildner Group that it could not legally freeze the account without a writ of execution.

In April 2007 the Bildner Group was able to secure a writ of execution. BPI, in compliance, immediately froze the account.

The following day after freezing the account, however, BPI was served a temporary restraining order from the Court of Appeals. BPI had no recourse but to unfreeze the account.

Sometime in August 20, the Bildner Group filed another case, this time against BPI for recovery of the amounts withdrawn by the Locsin Group from the PHC account. The Bildner Group claimed BPI’s actions allowing the withdrawals caused them damage. (Meanwhile, the intracorporate dispute between Bildner and Locsin remained unresolved in the higher court.)

On November 23, 2007, the Bildner Group wrote BPI suggesting that the bank file an interpleader case before the court. BPI, on the advice of its legal department, did not file such an interpleader case as it would have constituted forum-shopping, since the court dispute between Bildner and Locsin remained pending in court. In other words, the issue of who was the proper representative of PHC had yet to be resolved.

On December 17, 2007, BPI received an order from the court enjoining it to stop all further transactions in connection with the PHC accounts. BPI immediately complied. Since then, the PHC accounts have remained frozen.

On July 30, 2008, BPI received a letter from the Bildner Group informing it of a resolution of the Philippine Commission on Good Government confirming the election of the Bildner Group as PHC directors on December 11, 2007. The Locsin Group, however, continued to assert its right to control the PHC accounts.

(This time, BPI was advised by its lawyers that there was no longer a danger for the filing of an interpleader case to be considered as forum-shopping as there was no longer a pending case or legal issue on the election of the Bildner Group. Thus, on August 19, 2008, BPI instituted a complaint for interpleader to determine which of the two groups could rightfully control the PHC accounts with BPI. This case was consolidated with the case filed by the Bildner Group against BPI. The consolidated cases until today have remained unresolved.)

On September 21, 2010, Bildner filed an administrative complaint before the OSI against the directors and officers of BPI for alleged violations of several banking laws in their handling of the PHC accounts.

After an exchange of pleadings, the OSI issued a resolution dated March 3, 2011, clearing the chairman, members and former members of the BPI board of any liability. However, OSI chief Alfonso Penaco said OSI had found a prima facie case against Aurelio Montinola III and BPI Pacific Branch Manager Joy Rodriguez. The OSI also recommended that formal charges be filed against the two before the Supervised Banks Complaints Evaluation Group of the BSP.

BPI lawyers say the OSI decision was unjust and without basis, “replete with conclusions and suppositions, the basis of which cannot be found in the records and, worse, are bereft of common sense.” They add that the OSI obviously disregarded most, if not all, of the arguments raised in Montinola’s defense.

Among other things, Bildner claimed that the BPI conducted its business in an “unsound manner.” As explained by Montinola in his formal reply, the acts penalized by section 56 of Republic Act 8791 are those that pose a risk to a bank’s stability, which he said was not applicable in this case. OSI chief Penaco clearly did not understand the broad intent of this section of the law concerning sound banking practice, Montinola’s lawyers say.

Bildner also took issue with the belated filing of the interpleader case and accused BPI of “negligence,” and used this as the main basis to back up her claim of “unsound and unsafe business practice.”

In effect, Penaco in his decision “sought to supplant the discretion of a party on the legal strategy it deems appropriate and what would be most beneficial, with its own judgment of what he perceives as the correct legal strategy.”

Here, Penaco proposes the “absurd theory” that even if the responsible officers of the bank consulted its lawyers on the legal issues, this was not enough to  discharge their duty of prudence and diligence.

From the foregoing, what I see as the main problem was the fact that the Bildner Group chose to make public the OSI resolution in violation of the BSP edict of absolute confidentiality.

Was there a malicious intent to shame an entire bank and malign the reputation of its officers? And was there also an intention to gain public sympathy to influence the decision of the court on the unresolved court cases?

You be the judge.

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