G.R. No. 204568-83 - Limbo vs. People

Herman G. Limbo, a high-ranking public officer and Assistant Department Manager of the Philippine National Bank – Cagayan de Oro Branch (PNB-CDO), and Cecilia Li, a bank client with privileged credit lines, stand as the principal accused.
The consolidated petitions, filed under Rule 45 of the Rules of Court, assailed the Sandiganbayan’s earlier decisions which found them guilty for allegedly violating Section 3(e) of Republic Act No. 3019.
Other co-accused involved include high-ranking bank officers, low-ranking employees, and “valued clients” of PNB-CDO, whose checks were processed through a scheme that ultimately caused injury to government funds.

The accused were charged with allowing unwarranted benefits by authorizing the encashment of checks drawn by Cecilia Li and other valued clients prior to their proper clearing.
The offense centers on the practice known as check kiting—that is, drawing on uncollected or unfunded deposits to secure payments, thereby artificially inflating available funds and causing lost interest income and undue injury to the government.
Specific criminal cases (Nos. 25400–25415) detailed various check transactions involving different amounts, check numbers, dates of issuance and presentation, and reasons for the checks’ returns (e.g., “insufficient funds,” “account closed,” or “payment stopped”).

Bank officers (e.g., Ceferino Jimenez, a member of the PNB Task Force-Kiting, Vis-Min Group) who investigated the matter and established the improper practice.
COA Auditor Carolina Diez, who in the Special Audit Report (covering 1 December 1994 to 30 April 1995) explained the different types of checks ("On Us" and "Out-of-Town") and highlighted the irregularity in allowing out-of-town checks for encashment.
Philip Pagutayao-Ahmee, whose testimony addressed the due execution and custody of banking documents at PNB-Limketkai.

Losses from check kiting amounting to over P112 million.
A systemic violation of PNB’s policies and Bangko Sentral ng Pilipinas (BSP) regulations through the improper allowance of direct encashments of out-of-town checks.
Instances where coins of unfunded checks were cleared, credited to client accounts prior to official clearing, and then eventually dishonored—resulting not only in financial loss but also in a breach of official duties.

Documentary evidence recorded the procedures followed by Limbo (e.g., writing “encashment” on checks, initialing, dating, and endorsement by tellers) which were crucial in establishing his role in authorizing these transactions.
The prosecution also established that the scheme allowed the Valued Clients to obtain funds and additional privileges, such as manager’s checks and telegraphic transfers, despite the underlying checks being unfunded.

The cases were consolidated due to the commonality of facts and evidence.
Both Limbo and Li pleaded not guilty to the charges, asserting that their acts were within the scope of established banking practices.

Limbo argued that his actions were in conformity with long-standing practices at PNB-CDO and that he acted under instructions via a Memorandum.
Li maintained that her obligations—arising from discounted lines and secured credit facilities—were restructured and that the alleged improper “encashments” were actually accommodated under the existing banking arrangements.
Additional witnesses for the defense, including Elizabeth Diaz (personal assistant of Li) and retired bank employee Eulogio Bona, provided explanations regarding the nature of banking accommodations granted to valued clients.

Whether Herman G. Limbo, in approving the encashment of out-of-town and other bank checks prior to their clearance, acted in excess of his official authority and in violation of established bank policies, BSP regulations, and Section 3(e) of RA 3019.
Whether the practice of allowing immediate encashment of checks—resulting in the unauthorized use of funds before actual clearing (i.e., check kiting)—constituted a criminal offense through manifest partiality, evident bad faith, or gross inexcusable negligence.
Whether the prosecution’s evidence sufficiently established beyond reasonable doubt the commission of the acts charged against both Limbo and Li, particularly in relation to the proper definition and ordinary meaning of “encashment.”
Whether the variance between the allegations in the Information (which described “encashment” of checks) and the evidence presented (which indicated crediting of accounts, procurement of manager’s checks, and telegraphic transfers) undermined the criminal liability of the accused.
Whether administrative findings (such as those from the NLRC regarding Limbo’s dismissal) should have binding effect on the determination of criminal liability under RA 3019.