Borlongan v. Reyes 2.
by: Faderguya Ruling:
G.R. No. 161276 | Supervision of BSP
Note: No explicit mention of power of supervision of BSP, but the case shows
an example of how the monetary board and BSP supervise banks.
FACTS:
1. Petitioner Teodoro Borlongan, the former president and CEO of Union
Bank (UB) filed a complaint-affidavit with the Ombudsman alleging
that:
a. the respondent officials of Bangko Sentral (BSP) falsified
statement of facts in the BSP Supervision and Examination
Sector (SES) reports; and
b. They tendered incorrect and inaccurate reports and opinions
to conjure false grounds for the closure of UB and placing
them under receivership.
2. The Ombudsman issued an order finding the respondents guilty of
simple neglect of duty.
3. Petitioner appealed to the CA questioning the ombudsman’s
absolution of the BSP governor and its general counsel (apparently
there was a separate case for this one). He also sought the imposition
of a graver penalty for the respondents.
4. The two petitions before the CA were not consolidated, and the CA
rendered conflicting decisions:
a. 1st Decision (5th division): Included BSP governor; found
guilty for gross neglect of duty.
b. 2nd decision (17th division): reversed the order of ombudsman
finding the respondent officials of BSP guilty of simple
neglect of duty.
5. CA created a special division which amended the 1st decision to make
it uniform with the 2nd decision. In short, the BSP governor was
absolved from liability.
ISSUE:
1. Whether the acts of respondent amounts to nglect of duty – NO.
1. The acts of the respondents is not characterized by simple or gross
neglect of duty.
2. The SES reports prepared submitted to the Monetary Board were a
compendium of long years of monitoring by BSP of a problem bank.
It was assembled for over a period of 15 hours, thus, the data therein
were patiently collected and analyzed.
3. UB was being monitored since 1999. During this period, it was
observed that the bank could not meet the minimum capital
requirement (3.5 Billion) for a universal bank. Prior to its closure, it
was bombarded by liquidity problems. It also declared a bank holiday
which is an indication of its decreasing ability to meet its obligations.
4. The reports reflected the fact that UB’s top management including
petitioner provided the BSP information that its situation is worsening.
They also made constant reports showing that it was unable to pay its
liabilities when they become due.
5. Under the New Central Bank Act, the monetary board can place a bank
under receivership, summarily without hearing, upon a report of the
supervision and examination department of BSP.
a. When a bank is unable to pay its liabilities as they become due
in the ordinary course of business, the monetary board may
summarily and without need for prior hearing forbid the
institution from doing business in the PH and designate the
PDIC as receiver.
6. Based from above, it is clear that there was a valid reason for the
Monetary Board to place UB under receivership.
7. With respect to the administrative liability of the respondents, the
Court held that the reports made were merely recommendatory and it
is not the final action that creates the rights and duties which affects
the interest of third parties. What is actionable is not the report made
but the decision of the monetary board to place UB under receivership.
Dispositive: WHEREFORE, the instant petition is hereby DENIED DUE
COURSE. SO ORDERED.