SC nixes AMA Bank closure order

MANILA  -Depositors of AMA Rural Bank of Mandaluyong Inc. may have to wait longer to get back their money, even as the Supreme Court ruled in a resolution dated March 1 that the Monetary Board’s (MB) order to close and liquidate the bank was indeed null and void.

The highest policy-making body of the Bangko Sentral ng Pilipinas (BSP), through MB Resolution No. 1705.D dated Nov. 7, 2019, prohibited AMA Bank from doing business in the country and directed Philippine Deposit Insurance Corp. (PDIC) as receiver to proceed with its takeover and liquidation.

However, the resolution of the Supreme Court’s  First Division, which was circulated only on March 30, upheld a decision of the Court of Appeals dated Sept. 7, 2020, saying that the MB’s order was “unwarranted as it is not based on the grounds provided by law.”

According to the MB’s closure order, AMA Bank’s violations included granting of irregular/questionable loans to borrowers; entering into other related practices/transactions that give unwarranted benefits to directors, officers, stockholders and related interests and are grossly disadvantageous to the bank; and other related practices/transactions of making entries that will result in the misstatement of accounts.

BSP shuts down AMA group’s bank

Vague and unclear

The Supreme Court, however, described these cited violations as generic terms and catch-all phrases that were vague and unclear.

“Indeed, the totality of circumstances reveals the tangible efforts on the part of AMA Bank to comply with the directives of BSP,” the SC said, adding that the order for the closure of the bank was “too harsh.”

“It bears stressing that while BSP is granted with regulatory powers needed in the exercise of its supervision over the operation of banks, such powers must be exercised within the metes and bounds of law,” the tribunal said.

When sought for comment, the BSP declined to give any, saying that it has not received an official copy of the two-month old resolution.

“As such, we will defer making a statement until after we have had the opportunity to study the Supreme Court decision,” the BSP said.

Meanwhile, representatives of AMA Bank could not be reached as of this writing. AMA Bank is part of the AMA Group of Companies led by businessman Amable Aguiluz V.

According to the Rural Bankers Association of the Philippines, AMA Bank has not been active with the group since the MB closure order was issued.

According to PDIC, AMA Bank has 12 branches across the country in addition to its head office in Mandaluyong City.

PDIC said that as of June 30, 2019, AMA Bank had 8,434 deposit accounts with total deposit liabilities of P1.4 billion, of which P1.3 billion are insured deposits—they are P500,000 or less.

In an advisory dated Jan. 16, 2023, PDIC told depositors to hold on to their passbooks, certificates of time deposits, checkbooks, ATM cards, bank statements, etc., and other documents pertaining to their deposit accounts maintained with AMA Bank.

—Ronnel W. Domingo

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