Alberto Reyes, Wilfredo Domo-Ong, & Herminio Principio vs. Rural Bank Of San Miguel (Bulacan), Inc.

, represented by Hilario P. Soriano, President & Principal Stockholder (2003) Mendoza, J. Facts:

Petitioners are officials of the Bangko Sentral (BSP). At that time Reyes was Deputy Governor and Head of the Supervision and Examination Sector (SES), Domo-ong was Director of the Department of Rural Banks (DRB), while Principio was an Examiner of the DRB. There is a bank: Rural Bank. It had a history of major violations. It underwent periodic examination by the BSP. The examination team headed by Principio noted 20 serious violations and deficiencies. Upon a Rural Bank Director (Rose Ilagan) request, she was furnished a list of the violations found by Principio. This was, however, was unreadable making it impossible to immediately react. The Rural bank had an exit conference. It was during this conference that the members of the board were given clear copies of the violations. Rural Bank asked for 30 days more. The copy of Principios report, signed by Reyes, was submitted to the Monetary Board after review by Domo-ong. Acting on this, the Monetary Board issued Res No. 96 requiring Rural Bank to explain in writing and also directed the DRB to monitor Alberto Reyes until the violations have been corrected. Another examination team, headed by Principio assisted by a certain Carmelita Reyes, conducted an examination on Rural Bank o During this examination, Rural Bank president Soriano claims that he was pressured into issuing a memo to the bank employees authorizing Principio and Ms. Reyes to review the banks accounting and internal control system. Then later, Alberto Reyes urged him (Soriano) to consider selling the bank. o Through a telephone, Alberto Reyes introduced Soriano to TA Bank President Exequiel Villacorta. They met to discuss a possible corporate combination of their banks but they were not able to agree on terms. Villacorta wanted a sell out Soriano wanted a buy in. o Alberto Reyes asked him (Soriano) whether he wanted another buyer and introduced Soriano to Castillo of the Export & Industry Bank (EIB). They met and again, the talks ended for the same reason. Meanwhile, the Monetary Board approved Res No. 72412 and, noting the Domo-ong review, ordered Rural Bank to correct the violations within 30 days and to remit to the BSP P2mil fines. Soriano submitted Rural Banks answers and authorized the BSP to debit its demand deposit with theP2m. 6 months after Res No. 96, Rural Bank wrote Domo-ong wanting to clarify some issues on the monitoring to be done. Domo-ong explained that considering that monitoring simply means overseeing, observing or keeping track of the corrective measures being made by the bank, he does not see any reason for apprehensions and that as soon as the violations have been corrected, then the DRB can recommend the lifting of the monitoring. There were some major violations which remained uncorrected. The Monetary Board again ordered DRB to continue the monitoring of Rural Bank.. Rural Bank asked for the reversal of the P2mil penalty to be debited on its demand deposit because at that time he was under a state of extreme pressure to sell the bank at a low price. Later on, Rural Bank was granted an emergency loan and so Rural Bank Chairman and Soriano wrote the Monetary Board to release of the emergency loans. Rural Bank claims that this letter was leaked to the press and The Manila wrote the article "2 rural banks seek emergency loans Soriano asked for an inquiry into the alleged leak which can be traced to BSP. After investigation, BSP informed Rural Bank of the inability to determine the source of information. Rural Bank charged petitioners with violating RA 3019 (Anti-Graft and Corrupt Practices Act) and RA 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees). Rural Bank addressed the letter (charging petitioners) to BSP Governor Singson.

Issue/held: Did Alberto Reyes commit any act of unprofessionalism by reason of his alleged "illegal and unethical act of brokering the sale of Rural Bank? YES. Ratio: (Related to brokerage) The CA ruled (and the SC agrees): o Alberto Reyes cannot escape administrative liability for the charge of having displayed undue interest in brokering the sale of petitioner Rural Bank. His acts are unprofessional as he concerned himself with transactions that had nothing to do with his official function as BSP Deputy Governor. o It is not correct to say that Alberto Reyes did no brokering simply because he was not paid. There is no law which defines brokering, in terms of payment. It is enough that Alberto Reyes introduced and brought the parties together to try to talk about a sale. A brokers duty is mainly to bring the prospective buyers and sellers together. The circulars presented by Reyes indicate that it is indeed BSPs policy to promote mergers and consolidations by providing incentives for banks who would undergo such corporate combinations. HOWEVER, these circulars did not stated that BSP officials should take an active role in bringing parties together for the possibility of a buy-in or sell-out. o Section 4 (A)(b) of RA 6713 states: Norms of Conduct of Public Officials and Employees. - (A) Every public official and employee shall observe the following as standards of personal conduct in the discharge and execution of official duties: .... (b) Professionalism - Public officials and employees shall perform and discharge their duties with the highest degree of excellence, professionalism, intelligence and skill. They shall enter public service with utmost devotion and dedication to duty. They shall endeavor to discourage wrong perceptions of their roles as dispensers or peddlers of undue patronage. Soriano was not subjected to undue pressure since he was also interested in selling the bank. Still, Reyess active participation in looking for possible buyers for Rural Bank was a violation of the standards of professionalism.

Penalty imposed: fine equivalent to 6 months salary to a fine of 2 months salary for Reyes and 1 month salary for Domo-ong. Proncipio is exonerated of the Administrative charges.