Atty. Julius Gregory Delgado
“BEGAY VS. OFFICE OF THE SPECIAL INVESTIGATION – BANGKO SENTRAL NG PILIPINAS, ET AL.”, G.R. NO. 237664 (AUGUST 3, 2022): INTERPRETATION OF BSP CIRCULAR NO. 477 (RULES OF PROCEDURE ON ADMINISTRATIVE CASES INVOLVING DIRECTORS AND OFFICERS OF BANKS, QUASI-BANKS AND TRUST ENTITIES)
The case stems from an administrative complaint of petitioner Willy Fred Begay (“petitioner Begay”) against the Bank of San Luis (Pampanga), Inc. (“respondent Bank”) and its officers for allegedly conducting business in an unsafe and unsound manner in violation of the General Banking Law of 2000 in relation to the New Central Bank Act, Truth in Lending Act, Tax Reform Act of 1997 and the Corporation Code. This is because the Bank called on petitioner Begay’s debts and foreclosed the mortgaged properties. In denying the administrative complaint, the Office of the Special Investigation of the Bangko Sentral ng Pilipinas (“respondent OSI”) held that petitioner Begay failed to establish: (1) that respondent Bank and its officers conducted its business in an unsafe and unsound manner; (2) that petitioner Begay was the sole owner of the subject loans; (3) that his loans exceeded 25% of net worth of respondent Bank; and (4) that respondents officers had participation in the alleged simulated sale between Begay and Gumangan, Bautita and Novero. Petitioner Begay filed a motion for reconsideration but was denied by respondent OSI.
Petitioner Begay filed a Petition for Certiorari before the Court of Appeals which was dismissed because he availed of a wrong remedy and he failed to perfect his appeal seasonably. The Court of Appeals held that he could have filed a Petition for Review under Rule 43 of the Rules of Court questioning the respondent OSI Resolutions pursuant to Section 1, Rule VII of BSP Circular No. 477, Series of 2005 (Rules of Procedure on Administrative Cases Involving Directors and Officers of Banks, Quasi-Banks and Trust Entities). Petitioner Begay’s motion for reconsideration was likewise denied by the Court of Appeals.
When the case reached the Supreme Court, on the first issue on the procedural aspect, the Court held that the Court of Appeals erred when it held that petitioner Begay should have filed a Petition for Review under Rule 43 of the Rules of Court as stated in BSP Circular No. 477. Under BSP Circular No. 477, Petition for Review under Rule 43 may be filed to question the rulings of the Monetary Board in reviewing the recommendation of the Hearing Officer or Hearing Panel to be designated by the Supervised Banks Complaints Evaluation Group (“SBCEG) of the BSP. The formal charge before the SBCEG is lodged by the OSI upon finding a prima facie case after preliminary investigation.
In the instant case, respondent OSI did not find prima facie case and dismissed outright the administrative case against respondent Bank and its officers pursuant to Section 2, Rule III of BSP Circular No. 477. However, the Supreme Court, nonetheless, held that Petition for Certiorari under Rule 65 of the Rules of Court is not the proper remedy either since there is still an available remedy for petitioner Begay, i.e., refile the case before respondent OSI since it was dismissed without prejudice.
On the second issue which is the substantive aspect, the Supreme Court held that there is no cogent reason to disturb the findings of respondent OSI as factual findings of administrative bodies charged with their specific field of expertise, are afforded great weight by the courts, and in the absence of substantial showing that such findings were made from an erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability of the government structure, should not be disturbed. The Court further held:
“A careful perusal of the assailed OSI Resolutions would show that the conclusion of the OSI that there was no prima facie case against herein respondents was founded on substantial evidence. Both Resolutions clearly expressed the grounds upon which the complaint was dismissed. Moreover, it bears noting that the issues raised by Begay in the present Petition with regard to the ownership of the loans extended by the Bank, the total amount of these loans, and whether the such amount exceeded the limit on the Single Borrower’s Limit provided by law, and whether the respondents’ actions constituted unsafe or unsound banking practices, contain factual questions that are outside the coverage of a Rule 45 petition.”
The Supreme Court dismissed the Petition for Review under Rule 45 of the Rules of Court as the said remedy presupposes only questions of law and does not entail re-evaluation of evidence of respondent OSI. The jurisdiction of the Court under Rule 45 is limited only to errors of law as the Supreme Court is not a trier of facts.