G.R. No. 201069 - Bangko Sentral ng Pilipinas vs. Office of the Ombudsman

Case Summary (G.R. No. 201069)

Procedural Posture

BSP filed a complaint with the Office of the Ombudsman (OMB) on August 11, 2009, alleging violations of Section 27(d) of R.A. No. 7653 and BSP Office Order No. 423, series of 2002, stemming from Jamorabo’s obtaining a P200,000 loan from RBKSI during RBKSI’s regular BSP examination (July 6–22, 2006). The Ombudsman dismissed the complaint for lack of probable cause (Resolution dated February 9, 2011) and denied BSP’s motion for reconsideration (Order dated July 28, 2011). BSP brought a petition for certiorari under Rule 65 to the Supreme Court challenging those OMB issuances.

Facts Relevant to the Allegations

During RBKSI’s examination period, Jamorabo secured from RBKSI an unsecured loan of P200,000 on July 17, 2006. He represented the principal borrower as his wife, Marites, though she never appeared at RBKSI or signed the documents; Jamorabo signed and filled out the documents and was co-maker. RBKSI deposited net proceeds of P198,000 into Jamorabo’s PNB account the following day. Jamorabo issued multiple post-dated personal checks as amortizations but defaulted after paying only the first two installments; some checks bounced and his account was later closed. RBKSI learned of the loan by divulging the transaction to BSP examiners during the next regular examination (April 2009). Jamorabo retired effective December 31, 2008, and subsequently migrated to Canada in April 2010.

Core Legal Issues Presented

Whether a violation of R.A. No. 7653, Section 27(d) gives rise to criminal liability, administrative liability, or both;
Whether Jamorabo may still be administratively sanctioned even though the complaint was filed after his retirement; and
Whether a prima facie case under Section 3(e) of R.A. No. 3019 (anti-graft law) exists against Jamorabo.

Statutory Framework Controlling the Decision

Section 27(d), R.A. No. 7653 (Central Bank Act) originally prohibited BSP personnel from borrowing from any institution subject to BSP supervision or examination unless certain conditions were met, and included an absolute bar on borrowings by personnel of supervising and examining departments. R.A. No. 11211 (amendment enacted February 14, 2019) later removed the absolute prohibition and replaced it with conditional permission: borrowing is allowed if transacted on an arm’s-length basis, fully disclosed to the Monetary Board, and subject to rules prescribed by the Monetary Board. Section 36 of R.A. No. 7653 is a general penal clause providing fines and imprisonment for willful violations of the Act, retained and amplified in the amended text. Administrative rules cited include BSP Office Orders No. 423 (series 2002) and No. 860 (series 2007), and the Uniform Rules on Administrative Cases in the Civil Service (URACCS).

Court’s Holding on Criminal versus Administrative Liability

The Supreme Court held that Section 27(d), read together with Section 36, is a penal provision that gives rise to criminal liability in addition to administrative liability. The Ombudsman erred in treating the alleged violation as exclusively administrative. The Court emphasized the long-established principle that wrongful acts of public officers may create separate civil, criminal, and administrative liabilities.

Retroactivity of R.A. No. 11211 and Its Effect on the Case

Because Section 27(d) is penal in character, the Court applied the favorable-law doctrine (Revised Penal Code, Art. 22) and gave R.A. No. 11211 retroactive effect to benefit Jamorabo. Thus, the absolute prohibition was no longer automatically dispositive; Jamorabo’s loan must be evaluated under the amended threefold requisites—arm’s-length transaction, disclosure to the Monetary Board, and compliance with Monetary Board rules—to determine criminal culpability under the penal clause.

Application: Arm’s-Length Requirement and Disclosure

Under the amended standard, an arm’s-length transaction is one conducted as between strangers so that no conflict of interest or undue influence arises. The Court found prima facie evidence that Jamorabo’s loan failed the arm’s-length test: he approached RBKSI during the bank’s examination; the bank’s president wanted to deny the loan but approved it for fear of offending Jamorabo; the loan bypassed usual credit investigation and collateral requirements and was hastily approved; and Jamorabo used his position and filled loan documents in his wife’s name though she never participated. The Court also found prima facie failure to disclose the loan to the BSP, since BSP only discovered the loan during a subsequent examination in 2009 and Jamorabo’s affidavit did not claim disclosure to superiors. Consequently, the transaction did not meet the amended Section 27(d) requisites.

Court’s Directives on Criminal Prosecution

Because the transaction failed to satisfy the amended statutory requisites and Section 36 is a penal provision, the Court concluded there was a prima facie case under Section 27(d) in relation to Section 36. It ordered the Ombudsman to file the necessary information for violation of Section 27(d) in relation to Section 36 against Jamorabo in the proper court, reversing the Ombudsman’s dismissal insofar as it absolved Jamorabo of criminal liability.

Administrative Liability Despite Retirement

The Court found that Jamorabo’s voluntary retirement, occurring December 31, 2008 (before the filing of the OMB complaint), was suspiciously timed and likely intended to pre-empt administrative charges that would result from discovery of the illicit loan at the bank’s next examination. The jurisprudential rule distinguishing when separation bars administrative proceedings was applied: voluntary separation intended to evade administration proceedings may not bar continuing administrative action, whereas an involuntary or long-past separation generally does. Given the facts (retirement shortly before the next examination, prior application for immigration, migration to Canada after settlement, and other indicia of calculated avoidance), the Court held that the Ombudsman committed grave abuse of discretion in concluding Jamorabo could not be administratively sanctioned. The Court or

Case Syllabus (G.R. No. 201069)

Procedural Posture

Petition for certiorari under Rule 65 of the Rules of Court filed by Bangko Sentral ng Pilipinas (BSP) challenging two issuances of the Office of the Ombudsman in Case No. OMB-C-C-09-0465-I:
- February 9, 2011 Resolution dismissing BSP’s complaint against Benjamin M. Jamorabo for lack of probable cause; and
- July 28, 2011 Order denying BSP’s motion for reconsideration.
BSP filed its complaint before the Ombudsman on August 11, 2009.
Ombudsman required respondent Jamorabo to submit counter-affidavit on November 17, 2009; Jamorabo complied on December 10, 2009 with his affidavit and those of witnesses.
BSP filed the present petition in the Supreme Court on April 3, 2012.
Respondents were ordered to file comments on June 18, 2012; only the Office of the Ombudsman complied. Jamorabo’s comment was dispensed with after discovery that he migrated to Canada on April 14, 2010 and did not intend to return.
Decision of the Supreme Court rendered June 16, 2021, First Division.

Parties and Roles

Petitioner: Bangko Sentral ng Pilipinas (BSP), the constitutionally mandated central monetary authority established under R.A. No. 7653.
Private respondent: Benjamin M. Jamorabo, former Bank Officer I in BSP’s Supervision and Examination Sector (SES), later referred to as co-maker on loan documents.
Other relevant parties: Officers of Rural Bank of Kiamba, Sarangani, Inc. (RBKSI) — President Cornelio T. Falgui (deceased) and Manager William C. Nero — and RBKSI cashier Aurora Cagas.
Office of the Ombudsman: investigated and dismissed the complaint; filed comments in the Supreme Court proceedings.

Core Facts and Chronology (as pleaded and found in the record)

Jamorabo was assigned to conduct the regular BSP examination of RBKSI from July 5 or 6 to July 22, 2006; the specific interaction occurred on July 17, 2006.
On July 17, 2006, while RBKSI was under examination, Jamorabo obtained an unsecured loan of P200,000 from RBKSI.
Loan documents listed Jamorabo’s wife, Marites B. Jamorabo, as principal borrower and Jamorabo as co-maker; Marites did not appear at the bank and did not sign the loan documents; Jamorabo filled out and signed the loan documents and signed in his wife’s name.
Loan approval allegedly bypassed normal bank requirements: no collateral, no standard credit investigation, and no documentary proof of income; Jamorabo persuaded manager Nero to accept post-dated personal checks instead of real security.
Jamorabo issued eight personal post-dated checks: six of P30,000 each and two blank checks, representing quarterly amortizations; first amortization due October 17, 2006.
On July 18, 2006, net proceeds of P198,000 were deposited into Jamorabo’s PNB savings account by inter-bank transaction.
When payments fell due, the first check bounced for being drawn against insufficient funds (DAIF); Jamorabo eventually paid the first and second amortizations only after remitting payment on February 9, 2007 and requesting the bank not to deposit the second check.
Subsequent checks were not honored: third amortization check dated April 17, 2007 was dishonored because Jamorabo’s checking account was closed as of September 17, 2007; manager Nero received no response to collection efforts and thereafter decided not to deposit remaining checks.
RBKSI’s president Falgui died in July 2008 without filing suit against Jamorabo.
Jamorabo told RBKSI in December 2008 by phone that he would settle the loan and claimed he failed to make checks good because he was sent by BSP to Malaysia for further studies; nevertheless, he did not pay.
Sometime in June 2008 Jamorabo had already started applying for a Canadian Permanent Resident Visa; he voluntarily retired from BSP effective December 31, 2008 and later migrated to Canada on April 14, 2010 with no intention of returning.
During the next regular BSP examination of RBKSI on April 14–29, 2009, manager Nero divulged Jamorabo’s loan to the examiner-in-charge; RBKSI requested BSP assistance to deduct outstanding loan balance from Jamorabo’s retirement benefits.
According to affidavits of Marites and Honeyve Montecalvo, the loan was fully paid on December 1, 2009.

Complaint Allegations and Ombudsman Findings

BSP’s complaint alleged violation of Section 27(d) of R.A. No. 7653 and BSP Office Order No. 423 (series of 2002) for Jamorabo’s obtaining the loan while examining RBKSI.
Ombudsman’s February 9, 2011 Resolution dismissed the complaint, holding:
- Violation of R.A. No. 7653, Section 27(d) and BSP Office Order No. 423 does not entail criminal liability and thus only administrative liability could attach; but Jamorabo had already retired on December 31, 2008, so he could not be sanctioned administratively.
- No violation of Section 3(e) of R.A. No. 3019 because BSP failed to prove any injury, loss, or damage to the government as the loan was paid in full.
- RBKSI officers were at fault for approving the loan and reporting it only in 2009 — nearly three years later — given banking standards of diligence.
Ombudsman denied BSP’s motion for reconsideration in its July 28, 2011 Order and affirmed the dismissal.

Issues Presented to the Supreme Court

What liabilities arise from a violation of R.A. No. 7653, Section 27(d)?
Can Jamorabo still be held administratively liable even if the complaint was filed after his retirement from government service?
Is there a prima facie case under Section 3(e) of R.A. No. 3019 against Jamorabo?

Governing Statutory Provisions and Amendments (as cited)

R.A. No. 7653 (The New Central Bank Act): Section 27(d) originally prohibited BSP personnel from borrowing from institutions subject to BSP supervision or examination, with a stricter proviso absolutely prohibiting borrowing by supervising and examining department personnel from banks under their supervision or examination.
Section 36 of R.A. No. 7653 provides penal sanctions for willful violations of the Act or orders/instructions of the Monetary Board; the original penalty structure was fines of P50,000 to P200,000 or imprisonment of two to ten years, or both.
R.A. No. 11211 (enacted February 14, 2019) amended Section 27(d) to remove the absolute ban and allow borrowings if:
- transacted on an arm’s-length basis;
- fully disclosed to the Monetary Board; and
- subject to rules and regulations prescribed by the Monetary Board.
R.A. No. 11211 also amended Section 36 to increase the potential fine up to Two million pesos (P2,000,000.00) while retaining imprisonment of two to ten years.
The Uniform Rules on Administrative Cases in the Civil Service (URACCS), Section 50 paragraph A: grave misconduct is a ground for dismissal; contracting loans from persons with whom the employee’s office has business relations is among prohibited acts.

Supreme Court’s Disposition (Holding)

The petition is partially meritorious.
The Supreme Court reversed and set aside the Ombudsman’s February 9, 2011 Resolution and July 28, 2011 Order insofar as they absolved Jamorabo of criminal and administrative liability for violation of Section 27(d) in relation to Section 36 of R.A. No. 7653.
The Office of the Ombudsman was ordered to:
1. File before the proper court the necessary information for violation of Section 27(d) in