G.R. No. 169196 & G.R. No. 169198, July 6, 2011
PETRA C. MARTINEZ, in her capacity as General Manager, Claveria Agri-Based Multi-Purpose Cooperative, Inc., Petitioner, vs. FILOMENA L. VILLANUEVA, Respondent.

OFFICE OF THE OMBUDSMAN, Petitioner, vs. FILOMENA L. VILLANUEVA, Respondent.

FACTS

Petitioner Petra C. Martinez is the General Manager of Claveria Agri-Based Multi-Purpose Cooperative, Inc. (CABMPCI). Respondent Filomena L. Villanueva is the Assistant Regional Director of the Cooperative Development Authority (CDA), Regional Office No. 02. On May 19, 1998, respondent obtained a ₱50,000 loan from CABMPCI, approved by Martinez. On June 13, 1998, respondent obtained another loan for ₱1,000,000, returning ₱500,000 five days later. On July 19, 1999, CABMPCI issued Official Receipt No. 141084 to respondent indicating receipt of ₱764,865.25 for payment of loans, interest, and fines. On the same day, Martinez issued a certification stating respondent had fully paid her loan. Also on July 19, 1999, respondent’s husband, Armando Villanueva, obtained a ₱780,000 loan from CABMPCI, approved by Martinez.
Martinez claims the Villanueva spouses requested the transfer of respondent’s loans to Armando’s name so respondent’s name would not appear as a borrower, given her CDA position. Martinez acceded, issuing the receipt and certification without actual payment. Respondent contends her husband obtained the loan in his personal capacity.
After Armando failed to pay, CABMPCI filed a collection case against him. The RTC ruled in favor of CABMPCI. Armando filed a petition with the CA, which nullified the RTC decision, ruling the obligation was settled based on the official receipt. Martinez then filed an administrative complaint with the Office of the Deputy Ombudsman for Luzon against respondent for violation of Section 7(d) of R.A. No. 6713 (Code of Conduct and Ethical Standards). The Deputy Ombudsman found respondent liable for grave misconduct, initially recommending dismissal but later modifying the penalty to six months suspension without pay. Respondent filed a petition for review with the CA, which reversed the Ombudsman’s order, leading to these consolidated petitions.

ISSUE

Whether the Court of Appeals erred in reversing the Office of the Ombudsman’s finding that respondent is administratively liable for grave misconduct for violating R.A. No. 6713 by obtaining loans from a cooperative she regulates.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petitions and affirmed the CA Decision. The Court held that respondent, as a CDA official, was not prohibited from obtaining loans from CABMPCI. The governing law is R.A. No. 6938 (Cooperative Code of the Philippines). Article 26 of R.A. No. 6938 provides that any natural person who meets the qualifications in the cooperative’s by-laws is eligible for membership. The only specific disqualification for CDA officials under the Cooperative Code is in Article 28, which bars them from being elected or appointed to any position in a cooperative. There is no provision disqualifying them from becoming members or availing of a cooperative’s services, such as loans. The prohibition in Section 7(d) of R.A. No. 6713 against soliciting or accepting loans from persons within the official’s regulatory authority must yield to the specific provisions of the later and special law, R.A. No. 6938, which expressly allows membership and its attendant benefits. Furthermore, the Court found that Martinez, as General Manager, approved the loans and issued documents indicating payment, and failed to substantiate her claim of undue influence by respondent. Thus, respondent cannot be held administratively liable.