G.R. No. 273001 - Philippine Deposit Insurance Corporation vs. Apolonia L. Ilio and Arlan T. Jurado

The Philippine Deposit Insurance Corporation (PDIC), as the statutory receiver of LBC Development Bank (LBC Bank), filed an administrative complaint against certain directors and officers of LBC Bank and its affiliate, LBC Express, Inc. (LBC Express).
The contested individuals include interlocking directors Santiago G. Araneta, Juan Carlos G. Araneta, Fernando G. Araneta, Carlos G. Araneta, Joseph Jeffrey B. Rodriguez, and LBC Bank officers Ma. Eliza G. Berenguer (Chairman and CEO), Ofelia F. Cuevas (Head of Treasury), Apolonia L. Ilio (Head of Finance), and Arlan T. Jurado (Treasury Department cashier).

Since 2005, LBC Bank and LBC Express had a Remittance Service Agreement (RSA), where LBC Bank provided remittance transaction services and LBC Express paid service fees.
Monthly billing statements for service fees were prepared and signed by Jurado and countersigned by Cuevas.
PDIC alleged the LBC Bank's Board and officers failed to enforce payment of service fees from 2005 to 2011, causing unpaid fees to balloon to approximately PHP 1.82 billion, excluding interests and penalties.
PDIC contended this failure caused material losses and undue injury to LBC Bank’s depositors and creditors.

Respondent Ilio claimed the Finance Department was not responsible for billing or collection and questioned the accuracy of the alleged unpaid fees.
Respondent Jurado acknowledged preparing billing statements but claimed collection was not the Treasury Department's responsibility and denied involvement in RSA negotiation or execution.

By Resolution dated September 14, 2017, OSI-BSP found prima facie case against Berenguer and interlocking directors for omitting or failing to enforce collection of fees, constituting unsafe banking practices.
The complaint against Cuevas, Ilio, and Jurado was dismissed for insufficiency of evidence.
OSI-BSP cited that officers cannot be expected to do what is not approved or directed by the Board of Directors per Section 142.3 of the 2016 Manual of Regulations for Banks (MorB).

PDIC and certain directors moved for reconsideration which OSI-BSP denied in March 2018.
PDIC appealed to the BSP Monetary Board which, in a Resolution dated January 22, 2021, affirmed OSI-BSP’s ruling, denying PDIC’s appeal for lack of merit.
The BSP Monetary Board emphasized that corporate powers, including enforcement of contracts, are exercised by the Board of Directors, and found no evidence Cuevas, Ilio, or Jurado had authority to bring collection suits.

The CA, in Decision dated November 13, 2023, affirmed the BSP Monetary Board’s Resolution, dismissing PDIC’s Petition for Review.
It held that bank officers cannot be faulted for policies adopted by the Board, presumed made in accordance with sound governance.
The CA noted Cuevas regularly informed the Board of unpaid fees, but the Board took no action.
PDIC’s failure to produce evidence showing Ilio or Jurado’s responsibility for collection led to the denial.
The CA denied reconsideration in March 2024.

PDIC claims officers have fiduciary obligations to the public independent of Board policies.
Even if Ilio and Jurado had no authority to enforce RSAs, failure to report unpaid fees allegedly constitutes prima facie grounds for administrative liability.

Whether the Court of Appeals erred in affirming the BSP Monetary Board’s Resolution that dismissed administrative charges against respondents Ilio and Jurado for violation of Section 21(f) of the PDIC Charter, in relation to BSP Circular Nos. 341 and 640.