CASE NO.

ROMEO P. BUSUEGO, CATALINO F. BANEZ and RENATO F. LIM, petitioners, vs. THE
HONORABLE COURT OF APPEALS and THE MONETARY BOARD OF THE CENTRAL BANK OF
THE PHILIPPINES, respondents.

FACTS: A petition for review on certiorari under Rule 45 of the Rules of Court seeking a reversal of the
Decision, dated September 14, 1990, of  the Court of Appeals. The 16th regular examination of the books
and records of the PAL Employees Savings and Loan Association, Inc. ("PESALA") by a team of CB
examiners. Several anomalies and irregularities committed by the herein petitioners; PESALA's directors
and officers, were uncovered, among which are: 1.  Questionable investment In a multi-million peso real
estate project (Pesalaville); 2.  Conflict of interest in the conduct of business; 3.  Unwarranted declaration
and payment of dividends; 4.  Commission of unsound and unsafe business practices.

Central Bank ("CB") Supervision and Examination Section ("SES") sent a letter to the Board of Directors
of PESALA inviting them to a conference to discuss subject findings noted in the said 16th regular
examination, but petitioners did not attend such conference.

On September 9, 1988, the Monetary Board adopted and issued MB Resolution No. 805. It required the
board of directors of PESALA to file civil and criminal cases against Messrs.  Catalino Banez, Romeo
Busuego and Renato Lim for all the misfeasance and malfeasance committed by them, as warranted by
the evidence; It required the board of directors of PESALA to improve the operations of the Association,
correct all violations noted, and adopt internal control measures to prevent the recurrence of similar
incidents;

Petitioners then filed a Petition for Injunction with Prayer for the Immediate Issuance of a Temporary
Restraining Order before the Regional Trial Court of Quezon City. The RTC issued a writ of preliminary
injunction. The Monetary Board presented a Motion for Reconsideration, but the same was denied. The
Board appealed to the CA. CA reversed the decision of the RTC. Dissatisfied with the said Decision of
the Court of Appeals, petitioners present petition for review on certiorari.

ISSUE: WHETHER OR NOT MONETARY BOARD RESOLUTION NO. 805 IS NULL AND VOID FOR
BEING VIOLATIVE OF PETITIONERS' RIGHTS TO DUE PROCESS.

HELD: Petition is DENIED. Decision of the Court of Appeals AFFIRMED. The Central Bank, through the
Monetary Board, is empowered to conduct investigations and examine the records of savings and loan
associations.  If any irregularity is discovered in the process, the Monetary Board may impose appropriate
sanctions, such as suspending the offender from holding office or from being employed with the Central
Bank, or placing the names of the offenders in a watchlist.

The requirement of prior notice is also relaxed under Section 28 (c) of RA 3779 as investigations or
examinations may be conducted with or without prior notice "but always with fairness and reasonable
opportunity for the association or any of its officials to give their side." As may be gathered from the
records, the said requirement was properly complied with by the respondent Monetary Board.

We sustain the ruling of the Court of Appeals that petitioners' suspension was only preventive in nature
and therefore, no notice or, hearing was necessary.  Until such time that the petitioners have proved their
innocence, they may be preventively suspended from holding office so as not to influence the conduct of
investigation, and to prevent the commission of further irregularities.

Neither were petitioners deprived of their lawful calling as they are free to look for another employment so
long as the agency or company involved is not subject to Central Bank control and supervision.  
Petitioners can still practise their profession or engage in business as long as these are not within the
ambit of Monetary Board Resolution No. 805. The court upholds the validity of Monetary Board Resolution
No. 805 and affirms the decision of the respondent court.

CASE NO. 8

ALBERTO V. REYES, WILFREDO B. DOMO-ONG, and HERMINIO C. PRINCIPIO, petitioners, vs.

FACTS: Petitioners are officials of the Bangko Sentral ng Pilipinas (BSP).  Alberto V. Reyes was Deputy
Governor and Head of the Supervision and Examination Sector (SES), Wilfredo B. Domo-ong was
Director of the Department of Rural Banks (DRB), while Herminio Principio was an Examiner of the DRB. 
They filed this petition for review on certiorari of the decision of the Court of Appeals which found them
administratively liable for unprofessionalism under the Code of  Conduct and Ethical Standards on Public
Officials  and Employees and imposed upon each of them a fine equivalent to six months of their salaries.

The case arose from a letter, dated May 19, 1999, which respondent Rural Bank of San Miguel (Bulacan),
Inc. (RBSMI) sent to then BSP Governor Gabriel Singson.  In its letter, RBSMI charged petitioners with
violations of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) and Republic Act No. 6713
(Code of Conduct and Ethical Standards for Public Officials and Employees).  The Monetary Board of the
BSP created a committee to investigate the matter.

Pursuant to the MB’s directive in Resolution No. 96, an examination team conducted a special
examination on RBSMI. RBSMI president Hilario Soriano claims that he was pressured on March 4, 1997
into issuing a memorandum to the bank employees authorizing petitioner Principio and Ms. Reyes to
review the bank’s accounting and internal control system.  He likewise claims that petitioner Reyes urged
him (Soriano) to consider selling the bank.  Soriano says that through a telephone introduction made by
petitioner Reyes the day before, met with Exequiel Villacorta, President and Chief Executive Officer of TA
Bank.  In his sworn affidavit, Villacorta confirmed that he and Soriano indeed met to discuss a possible
corporate combination of RBSMI and TA Bank. The talks between TA Bank and RBSMI never got past
the exploratory stage. Their discussions were cut short as Soriano wanted a “sell-out,” while Villacorta
was interested in a “buy-in.”

Soriano continues: Around the last week of May, petitioner Reyes asked him (Soriano) whether he
wanted another buyer.  When told that he did, petitioner Reyes introduced Soriano by telephone to
Benjamin P. Castillo of the Export and Industry Bank (EIB).  Hence, he and Castillo met on June 26,
1997, but their talks ended then and there because, as per his affidavit dated July 12, 1999, Castillo
alleged that Soriano insisted on an RBSMI sell-out while he wanted a mere EIB buy-in and take-over of
the management.

Meanwhile, on June 13, 1997, the MB approved Resolution No. 724 noting the Report on the examination
of RBSMI submitted by  petitioner Domo-ong. After a thorough review of the records, we find that
complainant has not substantiated its allegations of respondents’ unprofessionalism. It has failed to
present sufficient factual and legal bases to administratively charge respondents with the violation of any
provision of R.A. No. 3019 and/or R.A. No. 6713.  The acts complained of were done by respondents in
the performance of their official duties.

This Committee respectfully recommends that upon the approval of these findings, the monetary Board of
the Bangko Sentral ng Pilipinas dismiss the complaint for lack of merit.”
The MB adopted the recommendation of the Ad Hoc Committee, prompting RBSMI to appeal to the Court
of Appeals the dismissal of the complaint as well as the denial of its motion for reconsideration and
supplemental motion to vacate or reconsider.  On December 14, 2001, the Court of Appeals reversed. 

Petitioners filed a motion for reconsideration. The motion was denied. Hence, this petition for review.

ISSUE: Whether or not the findings of fact of the Ad Hoc Committee as approved by the Monetary Board
of the BSP in its Resolution No. 257 was not accorded due consideration by the Court of Appeals despite
the fact that said findings of fact are supported by substantial evidence.

HELD: The decision of the Court of Appeals dated December 14, 2001 is AFFIRMED with
MODIFICATIONS.  Petitioner Alberto V. Reyes is ordered to pay a fine equivalent to two (2) months
salary, while petitioner Wilfredo B Domo-ong is fined in an amount equivalent to one (1) month salary. 
Petitioner Herminio C. Principio is found not  administratively liable.

In any case, an inquiry was conducted by an investigating committee especially formed upon RBSMI’s
request.  But the committee was unable to determine the source of the leak.  We have to presume that
the said committee had performed its tasks with regularity and good faith, and thus it is entitled to due
respect for its findings.

RBSMI claims that during one of the BSP training seminars, the bank was used as a case study albeit not
specifically mentioned in the training materials.  The Court of Appeals found that “the derision against
RBSMI in the seminar materials is truly an additional pound of salt to RBSMI’s already wounded
reputation.” Petitioners allege that the seminar was for bank examiners who were bound not to reveal any
confidential information they learned in the performance of their duties.  They further claim that there is no
evidence showing that petitioners Reyes and Domo-ong were the ones who distributed and used the
materials or that they harbored any ill will against the bank to employ such means.

We agree with the foregoing ruling of the Court of Appeals.  In introducing Soriano to the presidents of TA
Bank and EIB Bank, petitioner Reyes was clearly not acting in his official capacity.   It is enough that he
brought the parties together to discuss the possibility of a sale in order for him to be found guilty of
brokering.  Petitioner Reyes did not have to be paid for what he did in order to be considered to have
committed a breach of the requirement of propriety expected of a BSP official.   The circulars presented by
petitioner Reyes indicate that it is indeed BSP’s policy to promote mergers and consolidations by
providing incentives for banks who would undergo such corporate combinations.  But nowhere in these
circulars is it stated that BSP officials should take an active role in bringing parties together for the
possibility of a buy-in or sell-out.

By and large, therefore, we find that while there may have been some irregularities and badges of
unprofessionalism which can be held against petitioners, these are not so grave as to merit the imposition
of the penalty of fine equal to six months salary imposed by the appellate court.  The modification of the
Court of Appeals decision is proper.