Case Summary (G.R. No. 141735)
Key Dates
• August 2, 1973 – PD 264 creates Philippine Amanah Bank (PAB).
• February 1988 – Sawadjaan inspects CAMEC’s collateral properties.
• May 17, 1989 – CAMEC loan matures; extension granted.
• July 1, 1989 – Sawadjaan promoted to Loans Analyst I.
• January 1990 – RA 6848 creates AIIBP, repeals PD 264, transfers assets and personnel.
• June 8, 1993 – AIIBP Board forms Investigating Committee.
• December 13, 1993 – AIIBP Board Resolution No. 2309 dismisses Sawadjaan.
• August 11, 1994 – CSC Resolution No. 94-4483 affirms dismissal.
• April 11, 1995 – CSC denies reconsideration in Resolution No. 95-2754.
• March 30, 1999 – CA decision upholds CSC resolutions.
• December 15, 1999 – CA denies petitioner’s motion for new trial.
• June 8, 2005 – Supreme Court decision.
Applicable Law
• 1987 Philippine Constitution – governs civil service protection and due process for administrative cases.
• Republic Act No. 6848, Sec. 26 – grants AIIBP Board broad managerial powers, including adoption of internal rules.
• Executive Order No. 26 (1992) – directs agencies to adopt procedural rules to expedite administrative cases.
• Administrative Code of 1987, Book V, Sec. 47 – governs appeals from CSC decisions.
• Rule 65, Rules of Court – certiorari remedy for grave abuse of discretion.
• Rule 45, Rules of Court – appeal periods.
Factual Background
Sawadjaan began his career with PAB in 1973, rising from security guard to appraiser/investigator. In February 1988 he inspected two parcels of land offered by Compressed Air Machineries and Equipment Corporation (CAMEC) as security for a ₱5 million loan. Based on his report, the bank approved the loan. When CAMEC defaulted, AIIBP’s subsequent inquiry revealed one title was forged and the other was already mortgaged. AIIBP incurred ₱6 million in losses.
Procedural History
• June 18, 1993 – AIIBP Chairman charges Sawadjaan with dishonesty and imposes preventive suspension.
• September 1993 – Sawadjaan refuses to appear before the Investigating Committee; declared in default.
• December 8, 1993 – Committee finds him guilty of conduct prejudicial to service, recommends six‐month suspension.
• December 13, 1993 – AIIBP Board adopts Resolution No. 2309 dismissing him; later reduces penalty to six months and one day suspension.
• March 29, 1994 – Sawadjaan appeals to the Merit System Protection Board (MSPB).
• August 11, 1994 – CSC dismisses MSPB appeal, affirms dismissal.
• April 11, 1995 – CSC denies motion for reconsideration.
• June 1995 – Petitions Supreme Court for certiorari.
• March 1999 & December 1999 – CA affirms CSC and denies new trial.
Assignments of Error
- AIIBP lacked duly promulgated procedural rules when investigating and disciplining employees.
- CSC lacked jurisdiction, as appeals should lie with MSPB, not CSC.
- Petitioner was not dishonest or prejudicial to service; penalty of dismissal was excessive.
- AIIBP had no valid by-laws and therefore no corporate personality or authority to discipline.
- Procedural motions and allegations of fraud and misrepresentation by AIIBP officers.
Supreme Court’s Analysis
• On procedural rules: RA 6848 sec. 26 authorizes AIIBP Board to adopt internal rules relating to personnel; no requirement for separate disciplinary code before imposing sanctions. EO 26’s mandate to “all administrative agencies” does not bind AIIBP to promulgate additional rules for bank personnel discipline.
• On CSC jurisdiction: CSC Resolution No. 93-2387, pursuant to the Administrative Code, vests CSC with exclusive authority over appeals from administrative cases involving civil service employees; petitioner’s motion for reconsideration before CSC estopped him from contesting that jurisdiction later.
• On corporate personality: Failure to file by-laws within 60 days under RA 6848 does n
Case Syllabus (G.R. No. 141735)
Background and Employment History
- Sappari K. Sawadjaan was among the first employees of the Philippine Amanah Bank (PAB), created by P.D. No. 264 on 2 August 1973.
- He advanced through multiple designations: security guard, settling clerk, bookkeeper, credit investigator, project analyst, appraiser/inspector, and finally loans analyst.
- On 1 July 1989, he was promoted to Loans Analyst I.
- In January 1990, R.A. No. 6848 created the Al-Amanah Islamic Investment Bank of the Philippines (AIIBP), repealing P.D. No. 264, transferring all PAB assets, liabilities, and personnel to AIIBP.
CAMEC Loan Transaction and Appraisal
- In February 1988, Sawadjaan, as appraiser/investigator, inspected properties offered by Compressed Air Machineries and Equipment Corporation (CAMEC) as collateral for a ₱5,000,000 loan.
- Collateral consisted of two parcels under TCT Nos. N-130671 and C-52576.
- Based on his inspection and appraisal report, PAB granted the loan; maturity was 17 May 1989.
- CAMEC requested a 180-day extension but was granted only 120 days.
- Upon default, AIIBP discovered TCT No. N-130671 was spurious and that TCT No. C-52576 was encumbered by a prior mortgage.
- The credit transaction resulted in approximately ₱6,000,000 in losses to the bank.
Administrative Charges and AIIBP Investigation
- On 8 June 1993, AIIBP’s Board of Directors formed an Investigating Committee to probe the CAMEC loan.
- On 18 June 1993, Sawadjaan was charged via memorandum by Chairman Roberto F. De Ocampo with dishonesty and conduct prejudicial to the service and was preventively suspended.
- Sawadjaan refused to submit to the committee’s jurisdiction, alleging partiality, and failed to appear at hearings set for 13 and 17 September 1993.
- On 8 December 1993, the committee found him remiss in duty and recommended six months and one day suspension for conduct prejudicial to the service (not dishonesty, as no personal profit was proven).
AIIBP Board Resolutions and CSC Proceedings
- On 13 December 1993, the AIIBP Board adopted Resolution No. 2309, finding Sawadjaan guilty of dishonesty and/or conduct prejudicial to the service and imposi