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Who has the BF Retirement trust fund?

(Article published in the Jun 8,2011 issue of Manila Standard Today) 

 In my heart there will always be room is for labor; for I am a follower of Johnny Tan of the Federation of Free Workers who was mentored by Walter Hogan, who was a member of Ignatio de Loyola’s special action force formed to walk in the footsteps of Jesus the Nazaroan, who was the son of Joseph the carpenter.  I am thus one with my brothers in the labor movement who want to know, as I am sure the employees of Banco Filipino also do, exactly where the Banco Filipino retirement trust fund had gone.      

The money in the bank’s retirement trust does not belong to Banco Filipino, much less to the bank’s management.  Instead, it belongs to the employees of Banco Filipino.  The Supreme Court in the case of Metropolitan Bank & Trust Company, Inc. v. The Board of Trustees of Riverside Mills Corporation Provident and Retirement Fund, et al, G.R. No. 176959, promulgated on September 8, 2010 (and which I featured in this column in the third week of October last year) has made that proposition settled law.

The Supreme Court in Riverside Mills reiterated its understanding of retirement plans, enunciated in Conir v. CA, CTA and GCL Retirement Plan (207 SCRA 487) and ruled: “employees’ trusts or benefit plans are intended to provide economic assistance to employees upon the occurrence of certain contingencies, particularly old age retirement, death, sickness or disability.  They give security against certain hazards to which members of the Plan may be exposed.  They are independent and additional sources of protection for the working group and established for their exclusive benefit and for no other purpose.”


 It is time, I submit, to give life to that law for the sake of the nearly 750 employees of Banco Filipino whose lives and right to work were adversely affected by the closure of their workplace for sins not their own.  But, first, they must have the answer to where their money is right now and pose that question to whomever they think has or ought to have the answer. 

 And who could that keeper of the secret be?

 Certainly, not the Bangko Sentral whom they recently picketed, under ill-advice, if not malicious manipulation, Asking the Bangko Sentral to account for the whereabouts of their retirement plans funds is barking at the wrong tree.

 In Banco Filipino, the Banco Sentral, whose job it is to safeguard the good health of the banking system as a whole, was confronted by incontrovertible evidence that those who called the shots in the bank had caused it to carry P8.4 billions in liabilities, way below what its assets could bear.

 Banco Filipino, the Bangko Sentral found, was so badly managed that over the years it accumulated losses of P12 billion.  Those losses were largely due to the fact that the bank’s management engaged in the sure-loss practice of borrowing at above market interest rates (way higher than what prudent institutional borrowers in the market were willing to pay) in order to fund loans to companies that were owned and/or controlled by the bank’s major stockholders -- a practice most meretricious, if not incestuous – companies which did not pay their loans back.

 Banco Filipino also was caught red-handed in fancy booking keeping to hide the fact that is was deep in the red. It recorded its losses as part of its assets and not, as dictated by international accounting standards, nay even Philippine accounting standards, as diminutions of its equity. 

 At the same time, Banco Filipino went into a spree of paying consultants and lawyers exhorbitant fees.  In 2010 alone, fees to consultants and lawyers amounted to almost 300 million pesos, way in excess of the money Banco Filipino had earned.  

 In the face of such smelly anomaly, Bangko Sentral had no choice but to put a halt to Banco Filipino’s operations.  Like a surgeon who is confronted by rotting flesh, festered with gangrene, in the limb of a patient, the Bangko Sentral, in fulfillment of its duty, had to put the scalpel straight down and all the way to the bone in order to cut off the offending part that threatened to pollute, contaminate and infect the whole.  Just as amputation of the part is the remedy, albeit admittedly drastic, that is sometimes necessary to save the whole body, Bangko Sentral closure of Bangko Pilipino was simply to right the wrong of sinful management.

 This is precisely why the Court of Appeals, in case of Metropolitan Development Corporation et al. v. BSP, CA-GR SP No. 118599, promulgated May 10, 2011), refused to issue the temporary restraining order sought by Bangko Filipino against the Bangko Sentral.  “Swift action”, the court held, “is called for on the part of the respondents [Bangko Sentral] when they find that a bank is in dire straits.  Unless adequate and determined efforts are taken by the government against distressed and mismanaged banks, public faith in the banking system is certain to deteriorate to the prejudice of the national economy itself, not to mention the losses suffered by the bank depositors, creditors, and stockholders, who all deserve the protection of the government.”

 Clearly, then the Bangko Sentral, which is in charge of the big picture, is not the entity to ask on the detail of the BF retirement trust fund’s whereabouts.  BF employees ire must be trained and their bile poured on those who had charge of the retirement trust funds.