9/8/21, 10:44 PM Borlongan vs Reyes : 161276 : January 31, 2005 : Atty Abjelina-Soriano : Third Division

[G.R. No. 161276. January 31, 2005]

BORLONGAN vs. REYES

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JAN 31 2005.

G.R. No. 161276 (Teodoro C. Borlongan vs. Alberto V. Reyes, Ma. Dolores B. Yuviengco, Candon B. Guerrero and Tomas S. Aure,
Jr.)

At bar is this petition for review on certiorari filed by petitioner  Teodoro C. Borlongan, assailing the  decision dated 18
September 2003[1] of the Court of Appeals in CA-G.R. SP No. 72234, reversing and setting aside the Orders dated 2 July 2002
and 30 July 2002 of the Ombudsman in OMB-ADM-0-00-0867 which respectively declared herein respondents guilty of simple
neglect of duty, and denied both parties' separate motions for reconsideration.

In a complaint-affidavit filed with Office of the Ombudsman and thereat docketed as OMB-ADM-0-00-0867, petitioner Teodoro C.
Borlongan, former president and chief executive officer of Union Bank, Inc. (UBI), administratively charged herein respondent
officials of the Bangko Sentral ng Pilipinas (BSP), for allegedly falsifying statement of facts in the BSP  Supervision and
Examination Sector (SES) reports and tendering incorrect and inaccurate reports and opinions to conjure false grounds for the
closure of UBI and Urbancorp Development Bank and placing them under receivership, to the detriment of their shareholders,
officers and employees.

In an Order dated 2 July 2002,[2]  the Ombudsman found respondents guilty of simple neglect of duty and imposed upon them
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the penalty of one (1) month and one (1) day suspension without pay. In a subsequent Order dated  30 July 2002,[3] the cralaw

Ombudsman denied both parties' motions for reconsideration.

Therefrom, both parties interposed separate appellate recourses to the Court of Appeals.

Respondents were the first to appeal via a petition for review, which was docketed in the Court of Appeals as CA-G.R. SP No.
72234 and raffled off to its 17th Division.

For his part, petitioner, also thru a petition for review, questioned before the Court of Appeals the Ombudsman's absolution of the
BSP Governor and its General Counsel from his affidavit-complaint, and sought the imposition of a graver penalty against the
herein respondents. Docketed as CA-G.R. SP No. 72270, petitioner's appeal landed to the 5th Division of the appellate court.

Initially, petitioner filed a motion to consolidate the two (2) cases. Later, however, he not only withdrew said motion but even
vigorously opposed the consolidation.

Unconsolidated, the two (2) cases proceeded separately. And, as it turned out, the two (2) divisions of the Court of Appeals
rendered conflicting decisions.

Thus, in a decision dated 13 August 2003,[4] the 5th Division modified the questioned orders of the Ombudsman by finding
the herein respondents, including the BSP Governor, guilty of gross neglect of duty and imposing on each of them the penalty of
one (1) year suspension without pay.

On the other hand, the 17th Division, in a decision dated 18 September 2003,[5] reversed and set aside the same assailed
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orders of the Ombudsman and dismissed the administrative complaints against the herein respondents.

Petitioner filed a motion for reconsideration, imploring the 17th  Division to set aside its September 18,2003 decision for being
inconsistent with the August 13, 2003 decision of the 5th Division in CA-G.R. SP No. 72270.

In a Resolution dated 17 December 2003,[6]  the 17th Division denied petitioner's motion for reconsideration, and, in the process,
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castigated petitioner for his refusal to have the two (2) cases consolidated:

Without a consolidation, there is no rule of law or jurisprudence that prevents us, the 17th Division, from deciding SP 72234
according to our own independent judgment, any more than the 5th  Division can be prevented from ruling upon SP 72270
according to their own independent judgment.

The records show that respondent had, indeed, filed with us a motion to consolidate SP 72270 with our SP 72234. But for reasons
only known to him, he withdrew the motion for consolidation. He even said that the 5th  Division had eventually denied the
consolidation of the case with us, again for reasons we do not know.

Under these circumstances, without a consolidation, both divisions will have to decide their own cases, and any resulting conflict
in the decisions on similar issues of fact and law will have to be resolved ultimately by the Supreme Court as the supreme arbiter
of all justiciable controversies in this jurisdiction.

But for the respondent to make it appear as if we are to blame for the conflict between the two divisions of the Court, after the
respondent refused to consolidate the cases before us, is absurd and comical. Absurd, because he is saying in so many words that
we should not exercise an independent judgment in our case anymore after the 5th Division happened to decide its case ahead of
us and comical, because he has reduced the adjudicative process into a race between the cases. If we had only known that this
was the kind of ballgame he wanted us to observe, we would have considered our case submitted for decision a long time ago,
immediately after he filed his comment, and bar the parties from filling replies, memoranda and other pleadings as a waste of our
time. This is how things would turn out if we pursued his line of thinking ad absurdum.
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9/8/21, 10:44 PM Borlongan vs Reyes : 161276 : January 31, 2005 : Atty Abjelina-Soriano : Third Division

To repeat, the respondent refused to have his case in the 5th Division consolidated before us. If he is to fault anyone now for the
consequence of this non-consolidation, he should point all his fingers to himself.

Later, or on June 14, 2004, the former 5th Division of the Court of Appeals, this time acting as a Special Division of Five in
connection with the motions for reconsideration therein pending, came out with an Amended Decision,[7] amending the earlier cralaw

decision of 12 August 2003 in CA-G.R. SP No. 72270 by dismissing the administrative complaint against all the respondents
therein. Petitioner elevated the same Amended Decision to this Court via a petition for review on certiorari in G.R. No. 163765.

In a Resolution promulgated on July 26, 2004,[8]  the Court, thru its Third Division, denied the petition in G.R. No. 163765 "for
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failure of the petitioner to show that a reversible error had been committed by the appellate court". In a subsequent Resolution
promulgated on  October 1, 2004, the Court denied petitioner's motion for reconsideration with finality "as no substantial
arguments were raised to warrant a reconsideration thereof".

Meanwhile, on  February 13, 2004, petitioner filed the instant petition for review on certiorari, this time assailing the  18
September 2003 decision of the 17th Decision of the Court of Appeals in CA-G.R. SP No. 72234.

Perusal of the present petition reveals that it raises substantially the same issues already passed upon by the two (2) Divisions of
the Court of Appeals and by this Court, no less, in G.R. No. 163765.

Chanting the same tone, the recourse is unavailing.

In Philippine Retirement Authority vs. Rupa,[9]  we laid down the standard definition of simple neglect of duty, as a disregard of a
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duty resulting from carelessness or indifference.

Here, we find that neither gross nor simple neglect of duty characterized the acts of the respondents. The subject SES reports
prepared by respondents and submitted to the Monetary Board were anything but haphazardly or negligently made. As it were,
the reports were a compendium of long years of monitoring by the BSP of a problem bank, and assembled over a period of 15
hours after the respondents were instructed to do so. The data contained therein had been patiently collected and analyzed.

Record reveals that UBI was being monitored by BSP officials for years. Respondent Dolores Yuvienco had supervised the bank
directly since 1999 as Director of DCB II

UBI had since given up its status as an expanded commercial bank and reverted to an ordinary commercial bank because it could
not meet the P3.5 billion minimum capital requirement for a universal bank. For two (2) months prior to its closure, Urban Bank
had been besieged by liquidity problems, and its declaration of a bank holiday on April 25 only confirmed its decreasing ability to
meet obligations on time.

Section 30(a) of RA 7653, otherwise known as the New Central Bank Act, is relevant. Under that law, the Monetary Board may
execute measures such those taken in this case, summarily and without need of prior hearing:

Sec.  30. Proceedings in Receivership and Liquidation. -Whenever, upon report of the head of the supervising and examining
department, the Monetary Board finds that the Bank or quasi-bank:

(a)     is unable to pay its liabilities as they become due in the ordinary course of business:Provided, that this shall not
include inability to pay caused by extraordinary demands induced by financial panic in the banking community;

(b)     has insufficient realizable asset, as determined by the Bangko Sentral to meet its liabilities; or

(c)     cannot continue in business without involving probable losses to its creditors; or

(d)     has willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which
amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing business in the Philippines and designate the
Philippine Deposit Insurance Corporation as receiver of the Banking institution. xxx. (Emphasis supplied)

Pertinent, too, is Section 53 of Republic Act No. 8791,[10]  since it underscores the summary character of the MB's initiative of
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placing a bank under receivership. It provides that in case a bank or quasi-banknotifies the BSP or publicly announces a bank
holiday, or in any manner suspends the payment of its deposit liabilities continuously for more than 30 days, the MB may
summarily and without need of prior hearing close such banking institution and place it under receivership of the PDIC.

This authority is beyond review by the courts except on a petition for certiorari. Here, it is worth to note even the Ombudsman
found significant evidence to rationalize the decision of the Monetary Board to place UBI under receivership.

Likewise, we agree with the appellate court's 17th  Division in its ratiocination that it is illogical to hold the respondents
administratively liable for the preparation of reports that are, in their nature, merely recommendatory and have to be acted upon
by superior officials. The reports were not the final action that creates right and duties and affects the interest and fortunes of
third parties. Courts do not interfere with any administrative measure prior to its completion or finality, and when they do, what is
actionable is not the recommendation but the decision of the official with the competence under the law to issue it.[11] cralaw

The subject reports are only between the Monetary Board and the BSP officials who prepared and endorsed them and may be
rejected, modified or accepted by the Monetary Board. As far as this case is concerned, the legal obligations of diligence and good
faith that BSP officials owe to the public under Section 16 of the New Central Act start with the official acts of the Monetary Board
which, rightly or wrong, are the cause of loss or injury to third parties, not any preparatory report or recommendation.

As earlier noted, UBI's own top management, specifically Bartolome III, its chairman of the Board, and the petitioner himself, its
president, continually provided the BSP the picture of the worsening situation of UBI in the four (4) weeks from March 20, 2000
to April 25, 2000, leading to UBI's unilateral declaration of a bank holiday on April 25, 2000.[12]  Their constant reporting showed
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9/8/21, 10:44 PM Borlongan vs Reyes : 161276 : January 31, 2005 : Atty Abjelina-Soriano : Third Division
that UBI was "unable to pay its liabilities as they become due in the ordinary course of business; (or that it) has insufficient
realizable assets, as determined by the Bangko Sentral, to meet its liabilities."[13]  While other factors might have weighed in the
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analysis of UBI's financial liquidity and in the preparation of the inevitable Supervisor and Examination Sector (SES) reports, the
MB considered the constant reports of UBI's own top management as the best proof of its dire liquidity status.

Petitioner would have this Court review and reverse factual findings of the Court of Appeals. This, of course, the Court cannot and
will not do. Review of factual findings of the appellate court is not a function ordinarily undertaken by this Court, the rule
admitting only a few exceptions recognized in decisional law. The principle is consistent with Rule 45 of the Rules of Court which
categorically provides that a petition for review on certiorari must raise "only questions of law which must be distinctly set forth"
in the petition. Even then, the review sought will be denied if the questions raised are "too unsubstantial to require consideration"
or if the Court is not convinced of the existence of "special and important reasons" to warrant review, of which none exists in this
case.

All told, we find that no reversible error was committed by the 17th Division of Court of Appeals when it reversed and set aside
the July 2, 2002 and July 30, 2002 Orders of the Ombudsman in OMB-ADM-0-00-0867.

WHEREFORE, the instant petition is hereby DENIED DUE COURSE.

SO ORDERED.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO

Asst. Clerk of Court

Endnotes:
[1]  Penned by Associate Justice Mario L. Guariña III, concurred in by Associate Justices Martin S.
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Villarama Jr. and Jose c. Reyes Jr. of the Seventeenth Division.

[3]  Rollo, pp. 146-153.

[4] Rollo, pp. 269-286.

[5]  Rollo, pp. 84-86.

[6]  Rollo, pp. 99-101.

[7]  Rollo, pp. 921-940.

[8] Rollo, p. 920.

[9]  363 SCRA 480 [2001].

[10] cralaw The General Banking Law of 2000.

[12]
  Buenaventura's motion for reconsideration chronicled at pp. 14-17 the details of the 4 weeks immediately
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preceding UBI's declaration of the bank holiday; Rollo, 1017-1020.

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