G.R. No. 154499 ; March 14, 2003
ALBERTO V. REYES, WILFREDO B. DOMO-ONG, and HERMINIO C. PRINCIPIO, petitioners, vs. RURAL BANK OF SAN MIGUEL (BULACAN), INC., represented by HILARIO P. SORIANO, President and Principal Stockholder, respondent.

FACTS

Petitioners, officials of the Bangko Sentral ng Pilipinas (BSP), were charged by respondent Rural Bank of San Miguel (RBSMI) with violations of the Anti-Graft and Corrupt Practices Act and the Code of Conduct and Ethical Standards for Public Officials and Employees. The charges stemmed from the BSP’s examination and supervision of RBSMI. An investigation followed a 1999 letter from RBSMI to the BSP Governor. The bank had a history of major violations dating to 1995. In 1996, an examination team led by petitioner Principio found 20 serious exceptions and deficiencies. The Monetary Board (MB) subsequently required RBSMI to explain these findings and placed the bank under monitoring. Petitioners were accused of unprofessional conduct, including allegedly pressuring RBSMI’s president to sell the bank and introducing him to potential buyers, and conducting excessive examinations.
The BSP’s Ad Hoc Committee found petitioners administratively liable for “unprofessionalism.” The Court of Appeals affirmed this finding, imposing on each petitioner a fine equivalent to six months of their salaries. Petitioners sought review by the Supreme Court.

ISSUE

Whether the Court of Appeals erred in finding petitioners administratively liable for unprofessionalism and in imposing the penalty of a fine equivalent to six months’ salary.

RULING

The Supreme Court modified the decision of the Court of Appeals. The Court found that while petitioners committed acts constituting “unprofessionalism,” the penalty imposed was not commensurate with the infractions. The legal logic centered on the nature of their duties and the evidence presented. Petitioner Reyes, as Deputy Governor, exhibited unprofessionalism by initiating contact between RBSMI’s president and officers of other banks, creating a conflict of interest that compromised the BSP’s role as an impartial regulator. Petitioner Domo-ong, as Director, committed a lesser degree of unprofessionalism by allowing an examiner to conduct a special examination on the bank where his sister was employed, violating BSP circulars on conflict of interest.
However, the Court exonerated petitioner Principio, the examiner. It ruled that his participation in subsequent “special examinations” was justified as monitoring activity mandated by the MB to verify the correction of previously found violations, not as harassing, successive examinations. The Court held the appellate court’s penalty of a six-month salary fine was too severe. It modified the penalties to a fine equivalent to two months’ salary for Reyes and one month’s salary for Domo-ong, while absolving Principio of liability. The decision balanced accountability for ethical lapses against the context of their regulatory functions.