GAERLAN, J.:
3. The investigation of the OSI revealed that, during the RBKSI examination, specifically on 17 July 2006, Mr. Jamorabo took out an unsecured loan in the amount of P200,000 with RBKSI. He promised RBKSI's president Cornelio T. Falgui [Falgui], and manager, William C. Nero [Nero] (Affidavit, attached as Annex _____ together with all the supporting documents), that he would settle the loan prior to the next BSP general examination of RBKSI, which is conducted every two-year interval, so that the loan would no longer be in RBKSFs books. According to Mr. Nero, Mr. Falgui had wanted to turn down the application, but could not do so because he feared he might offend Mr. Jamorabo. 4. For a loan of such amount, RBKSI would normally require from the borrower a collateral, presentation of documentary proof of income, and credit investigation. Mr. Jamorabo's loan, however, did not undergo the ordinary processes and was approved without him offering a collateral. He convinced Mr. Nero that he would just issue post-dated checks payable to RBKSI. 5. Mr. Jamorabo issued a total of eight personal post-dated checks, six in the amount of P30,000 and two in blank, drawable against his checking account maintained at the Philippine National Bank ("PNB")-Central Bank ("CB") Service Unit-Manila, representing eight payments for his quarterly amortizations of P30,000. The first amortization was due 17 October 2006. 6. It must be emphasized that in the loan documents, Mr. Jamorabo did not indicate his name as the principal borrower but the name of his wife, Marites B. Jamorabo (Marites). He made himself as her co-maker. He, however, was the one who filled out and signed the loan documents, including signing in the name of his wife. Ms. Marites B. Jamorabo neither went to the bank nor signed any loan documents. 7. On 18 July 2006, Mr. Nero deposited, through inter-bank transaction at PNB-Santiago Boulevard Branch, General Santos City, the net proceeds of the loan in the amount of P198,000 into the savings account of Mr. Jamorabo maintained at PNB-CB Service Unit-Manila. 8. When the loan became due, he was able to pay only the first and second amortizations and only after his first check had already "bounced" for the reason that it was drawn against insufficient funds ("DAIF"). His first and second amortizations were due on 17 October 2006 and 17 January 2007, respectively, but he remitted his loan payment only on 9 February 2007 to RBKSI's depositary bank ("Equitable-PCI Bank") via inter-bank deposit at Equitable-PCI Bank in Bacoor, Cavite, and after requesting RBKSI not to deposit his second check. 9. When his third amortization became due, Mr. Jamorabo began calling RBKSI's cashier, Aurora Cagas, advising her not to deposit his check dated 17 April 2007 representing payment for his third amortization. His communication with the bank, however, suddenly stopped even after his check dated 17 July 2007 representing payment for his fourth amortization became due. 10. In September 2007, Mr. Nero decided to deposit in RBKSI's depositary bank Mr. Jamorabo's check dated 17 April 2007 representing payment for his third amortization. The check was dishonored for the reason that Jamorabo's checking account was already closed as of 17 September 2007. Mr. Nero sent a text message to Mr. Jamorabo urging him to pay his loan but Mr. Nero did not receive any reply. Mr. Nero also tried calling Mr. Jamorabo's cellular phone but the same could no longer be contacted. Considering that Mr. Jamorabo's checking account was already closed, Mr. Nero decided not to deposit the rest of Mr. Jamorabo's checks. Mr. Falgui thought of suing Mr. Jamorabo, but he died in July 2008 without a case having been filed. 11. Sometime in December 2008, Mr. Nero received a cell phone call from Mr. Jamorabo using a different number. Mr. Jamorabo informed the manager that he would settle his loan account with RBKSI and instructed the Manager to text to him the outstanding balance of his loan. Mr. Jamorabo also reasoned out that he failed to make good his checks because he was sent for further studies by the BSP to Malaysia. 12. Despite the promise, Mr. Jamorabo did not pay his loan. 13. On 14 to 29 April 2009, the Anti-Money Laundering Specialist Group, SES, conducted a regular examination of RBKSI. Taking this as an opportunity, Mr. Nero divulged Mr. Jamorabo's loan to the examiner-in-charge. The examiner-in-charge informed the manager that Mr. Jamorabo had just retired from the BSP and advised the manager to write a letter to Mr. Willie Asto, Managing Director of Financial Accounting Department of the BSP, requesting assistance in deducting from Mr. Jamorabo's retirement benefits the outstanding balance of his loan amounting to P210,829.49 as of 23 April 2009. 14. The loan is undeniably Mr. Jamorabo's loan even if he deceptively misrepresented that the principal borrower was his wife. As positively disclosed by Mr. Nero, there was no Ms. Marites Jamorabo who appeared in the bank and signed the loan documents. Be that as it may, having signed as a co-maker, in the eyes of the law, he is also considered a principal borrower being jointly and severally liable for payment of the loan. 15. Thus, when he took out the loan on 17 July 2006, during which period the RBKSI was under his examination, he clearly committed a violation of Section 27(d) of R.A. No. 7653. x x x[7]The complaint was docketed as a criminal case[8] and preliminary investigation was conducted thereon. On November 17, 2009, the Ombudsman ordered Jamorabo to submit his counter-affidavit.[9] On December 10, 2009, Jamorabo complied with the anti-graft agency's order by submitting his own affidavit together with the affidavits of his witnesses, his wife Marites, and his sister-in-law, Honeyve Montecalvo.[10] In dismissing the complaint, the Ombudsman ruled that a violation of R.A. No. 7653, Section 27(d) and BSP Office Order No. 423, series of 2002 does not entail criminal liability; hence Jamorabo can only be held administratively liable. However, since Jamorabo had already retired from government service on December 31, 2008,[11] before the complaint was filed, he cannot be sanctioned anymore.[12] The anti-graft agency also ruled that Jamorabo cannot be held liable for violating Section 3(e) of R.A. No. 3019 because the BSP failed to prove any injury, loss or damage to the government caused by Jamorabo's acts, since he was able to pay the loan in full.[13] Finally, the Ombudsman held that the officers of RBKSI were also at fault for approving Jamorabo's loan application. Given the high standards of diligence expected from banks, RBKSI's officers should have exercised extreme caution in processing Jamorabo's loan application. Furthermore, they reported the incident only in 2009; almost three years after Jamorabo availed of the loan.[14]
SEC. 27. Prohibitions. — In addition to the prohibitions found in Republic Act Nos. 3019 and 6713, personnel of the Bangko Sentral are hereby prohibited from:Nevertheless, the provision, as amended, maintains the general rule in R.A. No. 7653: BSP personnel cannot borrow loans from entities that are subject to the BSP's supervision or examination, unless the conditions set forth in the provision are met. To penalize violations thereof, R.A. No. 7653 contains a general penal clause, which is essentially retained in R.A. No. 11211, viz.:
x x x x
(d) borrowing from any institution subject to supervision or examination by the Bangko Sentral unless said borrowing is transacted on an arm's length basis, fully disclosed to the Monetary Board, and shall be subject to such rules and regulations as the Monetary Board may prescribe.
Original text | As amended |
Section 36. Proceedings Upon Violation of This Act and Other Banking
Laws, Rules, Regulations, Orders or Instructions. – Whenever a bank or
quasi-bank, or whenever any person or entity willfully violates this Act
or other pertinent banking laws being enforced or implemented by the
Bangko Sentral or any order, instruction, rule or regulation issued by
the Monetary Board, the person or persons responsible for such violation shall unless otherwise provided in this Act be punished
by a fine of not less than Fifty thousand pesos (P50,000.00) nor more
than Two hundred thousand pesos (P200,000.00) or by imprisonment of not
less than two (2) years nor more than ten (10) years, or both, at the
discretion of the court. |
SEC. 36. Proceedings upon Violation of This Act and Other Banking Laws,
Rules, Regulations, Orders or Instructions. – Whenever a bank,
quasi-bank, including their subsidiaries and affiliates engaged in
allied activities or other entity which under this Act or special laws
is subject to Bangko Sentral supervision or whenever anv person or entity willfully violates this Act
or other pertinent banking laws being enforced or implemented by the
Bangko Sentral or any order, instruction, rule or regulation issued by
the Monetary Board, the person or persons responsible for such violation shall unless otherwise provided in this Act be punished
by a fine of not less than Fifty thousand pesos (P50,000.00) nor more
than Two million pesos (P2,000,000.00) or by imprisonment of not less
than two (2) years nor more than ten (10) years, or both, at the
discretion of the court. |
The notion of dealings at arm's length featured in the somewhat related doctrine of "undue influence" that was developed in the courts of equity. A description of this doctrine is given by Lord Penzance in Parfitt v. Lawless where he says:Clearly, the arm's length standard adopted in Section 27(d) means that BSP personnel must transact with BSP-examined institutions in such a way that they will not be able to utilize their position to gain undue influence with, or more favorable terms from, the target institution.[36] In this case, there is prima facie evidence of Jamorabo's violation of the arm's-length standard in his dealing with RBKSI. RBKSI's general manager, Nero, positively identified Jamorabo as the prime mover behind the loan. Jamorabo approached Nero during RBKSI's examination period and told the latter that he wanted to "avail for himself" a loan of P200,000.00.[37] Since the amount was beyond Nero's authority to approve, he accompanied Jamorabo to meet with RBKSI's president, Falgui, who wanted to deny the loan application but was afraid to do so, for fear of offending Jamorabo.[38] Jamorabo personally filled out and signed the loan documents, but wrote in his wife's name as principal borrower. Jamorabo's wife, the supposed principal borrower, never went to RBKSI to personally process her supposed application.[39] Nero suggested that Jamorabo designate one of his co-examiners as a co-maker, but Jamorabo flatly stated that his colleagues will not agree to do so.[40] Jamorabo admits that he took out the loan during RBKSI's examination period but claims that his team had already finished the examination when he approached Nero to inquire about availing a loan with RBKSI.[41] Furthermore, the loan did not undergo the bank's standard credit investigation and security procedure, for it was not backed by real security;[42] and was hastily approved. Per Jamorabo's narration, he approached Nero about taking out a loan with RBKSI after the actual examination of RBKSI had ended on July 16, 2006,[43]and the loan was approved the next day, on July 17, 2006.[44] Taken together, the timing and the circumstances surrounding the loan transaction indicate that Jamorabo's position as examiner-in-charge of RBKSI unduly influenced the speedy facilitation thereof, in violation of the arm's-length principle.In equity persons standing in certain relations to one another-such as parent and child, man and wife, doctor and patient, attorney and client, confessor and penitent, guardian and ward-are subject to certain presumptions when transactions between them are brought in question; and if a gift or contract made in favour of him who holds the position of influence is impeached by him who is subject to that influence, the Courts of equity cast upon the former the burthen of proving that the transaction was fairly conducted as if between strangers.The courts of equity have refused to limit the relationships from which the presumption of abuse of position or confidence might arise. The doctrine of undue influence in equity also applies to situations involving strangers outside any special relationship. For instance, where a mortgagor of property has conveyed to a mortgagee and is infirm and illiterate and has no independent legal advice "the onus of justifying the transaction, and shewing that it was a right and fair transaction, is thrown upon the mortgagee." The noteworthy point about the use of the phrase "not at arm's length" in equity was that it referred to a straight tug-of-war between one subject and another and was not a three-way affair between two subjects and the state itself. The purpose of equitable intervention into these transactions was to prevent one subject from taking unfair advantage of another subject. Where transactions were tainted with the suggestion of undue influence the party on whom the onus was cast might bring in adequate evidence to the contrary in order to support the transaction.[35]
To recall, we have held in the past that a public official's resignation does not render moot an administrative case that was filed prior to the official's resignation. In Pagano v. Nazarro, Jr., we held that:As clearly illustrated by the foregoing passage, Andutan upholds the general rule that the separation of a public officer from the government service forecloses the filing of administrative charges against such public officer.[52] The continuing validity and binding effect of administrative proceedings after the resignation or voluntary separation of the respondent public officer is based not on the availability of accessory penalties but on the bad faith attendant to such resignation or voluntary separation. Contrary to the BSP's assertion, Pagano and Baquerfo do not depart from these principles. In Pagano and Baquerfo the administrative charges were filed before the erring public officers resigned, and this Court held that their resignation did not serve as a bar to the continuation of administrative proceedings against them, since the jurisdiction of the administrative tribunal had already attached even before the respondents were separated from the service.[53] In Andutan, the administrative case against Andutan was filed more than one year after his separation from the service; hence, the Court ruled that he can no longer be administratively charged.In Office of the Court Administrator v. Juan x x x, this Court categorically ruled that the precipitate resignation of a government employee charged with an offense punishable by dismissal from the service does not render moot the administrative case against him. Resignation is not a way out to evade administrative liability when facing administrative sanction. The resignation of a public servant does not preclude the finding of any administrative liability to which he or she shall still be answerable x x x.Likewise, in Baquerfo v. Sanchez, we held:Cessation from office of respondent by resignation x x x or retirement x x x neither warrants the dismissal of the administrative complaint filed against him while he was still in the service x x x nor does it render said administrative case moot and academic x x x. The jurisdiction that was this Court's at the time of the filing of the administrative complaint was not lost by the mere fact that the respondent public official had ceased in office during the pendency of his case x x x. Respondent's resignation does not preclude the finding of any administrative liability to which he shall still be answerable x x x.However, the facts of those cases are not entirely applicable to the present case. In the above-cited cases, the Court found that the public officials - subject of the administrative cases - resigned, either to prevent the continuation of a case already filed or to pre-empt the imminent filing of one. Here, neither situation obtains.
The Ombudsman's general assertion that Andutan pre-empted the filing of a case against him by resigning, since he "knew for certain that the investigative and disciplinary arms of the State would eventually reach him" is unfounded. First, Andutan's resignation was neither his choice nor of his own doing; he was forced to resign. Second, Andutan resigned from his DOF post on July 1, 1998, while the administrative case was filed on September 1, 1999, exactly one (1) year and two (2) months after his resignation. The Court struggles to find reason in the Ombudsman's sweeping assertions in light of these facts.
What is clear from the records is that Andutan was forced to resign more than a year before the Ombudsman filed the administrative case against him. Additionally, even if we were to accept the Ombudsman's position that Andutan foresaw the filing of the case against him, his forced resignation negates the claim that he tried to prevent the filing of the administrative case.
Having established the inapplicability of prevailing jurisprudence, we turn our attention to the provisions of Section VI of CSC Memorandum Circular No. 38. We disagree with the Ombudsman's interpretation that "[a]s long as the breach of conduct was committed while the public official or employee was still in the service x x x a public servant's resignation is not a bar to his administrative investigation, prosecution and adjudication." If we agree with this interpretation, any official - even if he has been separated from the service for a long time - may still be subject to the disciplinary authority of his superiors, ad infinitum. We believe that this interpretation is inconsistent with the principal motivation of the law - which is to improve public service and to preserve the public's faith and confidence in the government, and not the punishment of the public official concerned. Likewise, if the act committed by the public official is indeed inimical to the interests of the State, other legal mechanisms are available to redress the same.
The possibility of imposing
accessory penalties does no
t negate the Ombudsman's
lack of jurisdiction.
The Ombudsman suggests that although the issue of Andutan's removal from the service is moot, there is an "irresistible justification" to "determine whether or not there remains penalties capable of imposition, like bar from re-entering the public service and forfeiture of benefits." Otherwise stated, since accessory penalties may still be imposed against Andutan, the administrative case itself is not moot and may proceed despite the inapplicability of the principal penalty of removal from office.
We find several reasons that militate against this position.
First, although we have held that the resignation of an official does not render an administrative case moot and academic because accessory penalties may still be imposed, this holding must be read in its proper context. In Pagano v. Nazarro, Jr., indeed, we held:A case becomes moot and academic only when there is no more actual controversy between the parties or no useful purpose can be served in passing upon the merits of the case x x x. The instant case is not moot and academic, despite the petitioner's separation from government service. Even if the most severe of administrative sanctions - that of separation from service - may no longer be imposed on the petitioner, there are other penalties which may be imposed on her if she is later found guilty of administrative offenses charged against her, namely, the disqualification to hold any government office and the forfeiture of benefits. x x xReading the quoted passage in a vacuum, one could be led to the conclusion that the mere availability of accessory penalties justifies the continuation of an administrative case. This is a misplaced reading of the case and its ruling.
Esther S. Pagano - who was serving as Cashier IV at the Office of the Provincial Treasurer of Benguet - filed her certificate of candidacy for councilor four days after the Provincial Treasurer directed her to explain why no administrative case should be filed against her. The directive arose from allegations that her accountabilities included a cash shortage of P1,424,289.99. She filed her certificate of candidacy under the pretext that since she was deemed ipso facto resigned from office, she was no longer under the administrative jurisdiction of her superiors. Thus, according to Pagano, the administrative complaint had become moot.
We rejected Pagano's position on the principal ground "that the precipitate resignation of a government employee charged with an offense punishable by dismissal from the service does not render moot the administrative case against him. Resignation is not a way out to evade administrative liability when facing administrative sanction." Our position that accessory penalties are still imposable - thereby negating the mootness of the administrative complaint - merely flows from the fact that Pagano preempted the filing of the administrative case against her. It was neither intended to be a stand-alone argument nor would it have justified the continuation of the administrative complaint if Pagano's filing of candidacy/resignation did not reek of irregularities. Our factual findings in Pagano confirm this, viz.:At the time petitioner filed her certificate of candidacy, petitioner was already notified by the Provincial Treasurer that she needed to explain why no administrative charge should be filed against her, after it discovered the cash shortage of P1,424,289.99 in her accountabilities. Moreover, she had already filed her answer. To all intents and purposes, the administrative proceedings had already been commenced at the time she was considered separated from service through her precipitate filing of her certificate of candidacy. Petitioner's bad faith was manifest when she filed it, fully knowing that administrative proceedings were being instituted against her as part of the procedural due process in laying the foundation for an administrative case. x x xPlainly, our justification for the continuation of the administrative case - notwithstanding Pagano's resignation - was her "bad faith" in filing the certificate of candidacy, and not the availability of accessory penalties.[51]
The CZ Pistol was discovered missing during the hearing on 7 May 2003 in the criminal case for Parricide when the defense counsel requested the production of the CZ Pistol. It was only on 19 May 2003 that respondent confessed that he took the CZ Pistol with its magazine and cartridges. During the investigation on the missing CZ Pistol, respondent failed to appear despite notices sent to him. Respondent's refusal to appear before the investigating judge, and his precipitate resignation from the service, are clear indicia of guilt. Respondent's act of taking the CZ Pistol constitutes dishonesty and grave misconduct. Under Section 22, Rule IV of the Civil Service Rules, dishonesty and grave misconduct are grave offenses punishable by dismissal from the service even if it is the first offense. Respondents resignation does not render the case moot. Resignation is not a way out to evade administrative liability when a court personnel is facing administrative sanction.[57]In the present case, it is undisputed that Jamorabo voluntarily retired from government service effective December 31, 2008,[58] or a mere four (4) months before RBKSI's next regular examination on April 2009.[59] Having failed to fulfill his personal promise to RBKSI president Falgui that the loan would be settled prior to the next regular examination of RBKSI, Jamorabo suddenly separated himself from government service before the said examination. Having been a bank examiner for 21 years,[60] it is reasonable to presume that Jamorabo knew of RBKSI's upcoming regular examination, and that he was wise to the possibility of RBKSI reporting the still unpaid loan to the BSP in the course thereof. This is bolstered by the report of the BSP's Investigation and Intelligence Division finding that Jamorabo had started applying for a Canadian Permanent Resident Visa as early as June 2008.[61]Given the suspicious timing and the circumstances surrounding his voluntary retirement from the service, coupled with his actual departure from the Philippines in April 2010,[62] barely four months after the loan was finally settled by his wife and sister-in-law,[63] this Court finds that Jamorabo's voluntary separation from government service was calculated to pre-empt the charges that will inevitably result from the discovery of the illicit loan he entered into. As it turned out, RBKSI did report the loan to the BSP in the very next examination period; and the complaint against Jamorabo was filed shortly thereafter. All told, the Ombudsman committed grave abuse of discretion in ruling that Jamorabo could no longer be held administratively liable. Likewise, the Ombudsman also committed grave abuse of discretion when it docketed Jamorabo's case as a purely criminal investigation, without pursuing the administrative aspect thereof. The Ombudsman must therefore proceed with the determination of Jamorabo's administrative liability for violation of the Central Bank Act and other pertinent government regulations in connection with the loan he contracted with RBKSI.
As for the alleged giving of unwarranted benefits to the bank, this Office finds the same unmeritorious. There was no showing of any concrete benefit given to the Rural Bank of Kiamba, Inc. at the time respondent's loan was granted. The bank officers' silence or inaction over the matter resulting in the non-discovery of the loan, cannot be considered an unwarranted benefit but rather an irregular act or lapse of judgment on their part.[69]It bears repeating that both Nero and Falgui – who were the general manager and the president of RBKSI, respectively – objected to Jamorabo's loan application.[70] As alleged in Nero's affidavit, Falgui only approved the loan out of fear of offending Jamorabo.[71] Furthermore, RBKSI did not really gain the benefit of escaping detection since it reported the loan to the BSP in the course of its next regular examination.