JOSE GO
VS. BANGKO SENTRAL NG PILIPINAS
G.R. No. 178429
October 23, 2009
Brion, J.
FACTS:
Jose Go, the Director and the President and Chief Executive Officer of
the Orient Commercial Banking Corporation (Orient Bank) was charged before the
RTC for violation of Section 83 of RA 337 or the General Banking Act. Go
allegedly borrowed the deposits/funds of the Orient Bank and/or acting as
guarantor, indorser of obligor for loans to other persons. He then used the
borrowed deposits/funds in facilitating and granting and/or of credit
lines/loans to the New Zealand Accounts loans in the total amount of PHP
2,754,905,857. He completed the alleged transaction without the written
approval of the majority of the Board of Directors of said Orient Bank.
Go
then filed a motion to quash the Information. He averred that the use of the
word "and/or" meant that he was charged for being either a borrower
or a guarantor, or for being both. Thus the charge do not constitute an
offense. That the Section 83 of RA 337 penalized only directors and officers
xxx who acted either as borrower or as guarantor, but not as both. Also that
the Information did not constitute an offense since the information failed to
state the amount he purportedly borrowed. According to Go, the second paragraph
of Section 83, serves as an exception to the first paragraph which allows the
banks to extend credit accommodations to their directors, officers, and
stockholders, provided it is "limited to an amount equivalent to the
respective outstanding deposits and book value of the paid-in capital
contribution in the bank."
ISSUE/S:
1) Whether or not the allegation that Go
acted as borrower or gurantor rendered the information defective? NO
2) Whether or not the failure to state
that Go borrowed beyond the limit of his outstanding deposits and book value of
the paid-in capital contribution in the bank rendered the Information
defective? NO
RULING:
The
following elements of violation of Section 83 of RA 337 which must be present
to constitute a violation of its first paragraph:
1. the offender is a director or officer
of any banking institution;
2. the offender, either directly or
indirectly, for himself or as representative or agent of another, performs any
of the following acts:
a. he borrows any of the deposits or
funds of such bank; or
b. he becomes a guarantor, indorser,
or surety for loans from such bank to others, or
c. he becomes in any manner an obligor
for money borrowed from bank or loaned by it;
3. the offender has performed any of
such acts without the written approval of the majority of the directors of the
bank, excluding the offender, as the director concerned.
The
language of the law is broad enough to encompass either act of borrowing or
guaranteeing, or both. Banks were not created for the benefit of their
directors and officers; they cannot use the assets of the bank for their own
benefit, except as may be permitted by law. Congress has thus deemed it
essential to impose restrictions on borrowings by bank directors and officers
in order to protect the public, especially the depositors. Hence, when the law
prohibits directors and officers of banking institutions from becoming in any
manner an obligor of the bank (unless with the approval of the board), the
terms of the prohibition shall be the standards to be applied to
directors’transactions such as those involved in the present case.
Credit
accommodation limit is not an exception nor is it an element of the offense as
contrary to Go’s claims.
Section
83 of RA 337 actually imposes three restrictions: approval, reportorial, and
ceiling requirements.
The
approval requirement (found in the first sentence of the first paragraph of the
law) refers to the written approval of the majority of the bank’s board of
directors required before bank directors and officers can in any manner be an
obligor for money borrowed from or loaned by the bank. Failure to secure the
approval renders the bank director or officer concerned liable for prosecution
and, upon conviction, subjects him to the penalty provided in the third
sentence of first paragraph of Section 83.
The
reportorial requirement, on the other hand, mandates that any such approval
should be entered upon the records of the corporation, and a copy of the entry
be transmitted to the appropriate supervising department. The reportorial
requirement is addressed to the bank itself, which, upon its failure to do so,
subjects it to quo warranto proceedings under Section 87 of RA 337.
The
ceiling requirement under the second paragraph of Section 83 regulates the
amount of credit accommodations that banks may extend to their directors or
officers by limiting these to an amount equivalent to the respective
outstanding deposits and book value of the paid-in capital contribution in the
bank. Again, this is a requirement directed at the bank. In this light, a
prosecution for violation of the first paragraph of Section 83, such as the one
involved here, does not require an allegation that the loan exceeded the legal
limit. Even if the loan involved is below the legal limit, a written approval
by the majority of the bank’s directors is still required; otherwise, the bank
director or officer who becomes an obligor of the bank is liable. Compliance
with the ceiling requirement does not dispense with the approval requirement.
Evidently,
the failure to observe the three requirements under Section 83 paves the way
for the prosecution of three different offenses, each with its own set of
elements. A successful indictment for failing to comply with the approval
requirement will not necessitate proof that the other two were likewise not
observed.
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