Yolanda’s ledger

Although the fertilizer maker whose Leyte plant was flattened by super typhoon “Yolanda” in 2013 had long been a prized borrower, and although the government’s own institutions were waiting at the gate with claims running past a billion pesos, it was the Supreme Court that finally decided who would be left standing, as Nosy Tarsee, who has been tailing the case since before the first creditor filed a claim, is delighted to report.

Consider first the state-owned lender that, because its dollar claim was converted to pesos at a rate fixed years earlier, now finds its expected windfall shrunken, after the greenback kept climbing after the rate was frozen.

The bank had argued that the currency of the contract was sacred, but the justices observed that a debtor with no fault in its own misfortune could not be made to carry an obligation that ballooned with the exchange rate, particularly when the bank itself had conceded that the dollar was behaving unpredictably.

“Sacred, perhaps,” Nosy Tarsee sniffed, “but not immune to a typhoon.”

Meanwhile, the state-owned development bank, which had pleaded that a 50-percent cut would make it harder to pay back its own depositors, learned that the Court regarded such haircuts as an accepted feature of rehabilitation and that the constitutional protection of contracts bends when the common good is at stake.

The bank was not left empty-handed, however, because it had made a payment of more than P20 million before the rehabilitation case was filed, and since nobody proved it meant to defraud other creditors, the Court ordered the money returned.

Nosy Tarsee, who is rarely impressed by anything a bank does, allowed that this was “the only tidy ending in the whole mess.”

As for the ports authority, which hoped to collect some P174 million in wharfage dues from a company that, according to an economic zone opinion, owed nothing, it lost the argument without ever really having it.

The petition fell not on the merits but on a pile of procedural missteps, including a premature petition for certiorari and an annex that went missing, which the justices noted could have been mere inadvertence or something less innocent, a distinction that Nosy Tarsee, ever the skeptic, declined to resolve.

Perhaps the most intriguing thread concerns the foreign trader that, while the creditors were still arguing among themselves, was granted a first-ranking mortgage over the very machinery already pledged to the banks.

Though the lenders protested that their security had been quietly shifted from under them, the Court replied that their preferred status mattered only if the company was liquidated, a point that, as Nosy Tarsee put it, “will not comfort any lender who thought a lien was worth framing.”

Since the rehabilitation judge had confirmed a plan that creditors never got to vote on, a flaw the appellate court had already called out, the case goes back to the trial court in Tacloban to be resolved with utmost dispatch.