"02 07 16 MR crim"
Republic of the Philippines OFFICE OF THE OMBUDSMAN EVALUATION AND PRELIMINARY INVESTIGATION BUREAU Ombudsman Building, Agham Road Government Center, North Triangle Diliman, Quezon City TEODORO C. BORLONGAN, Complainant, - versus - OMB-0-00-1651 (ADM-0-00-0867) RAFAEL B. BUENAVENTURA, FOR: Violation of Art. 171(4) & (5) Governor of the Revised Penal Code; Section 3(e) ALBERTO V. REYES, of RA 3019; and Sec. 16, of RA 7653 Deputy Governor MA. DOLORES B. YUVIENCO, Managing Director CANDON B. GUERRERO, Director JUAN DE ZUNIGA, JR., General Counsel TOMAS S. AURE, JR., Officer-in-Charge All of the Bangko Sentral ng Pilipinas BSP Complex, Roxas Boulevard Ermita, Manila Respondents. X============================================================================X MOTION FOR RECONSIDERATION COMPLAINANT TEODORO C. BORLONGAN, by counsel, respectfully moves for the reconsideration of the Order of this Honorable Office dated 24 June 2002 which Complainant received on July 9, 2002, but which counsel has not yet received to-date, on the grounds that: I NEW PIECES OF EVIDENCE HAVE BEEN DISCOVERED WHICH, WHEN CONSIDERED, WOULD MATERIALLY AFFECT THE CONCLUSION OF THIS OFFICE; II THERE WERE SERIOUS ERRORS OF LAW COMMITTED BY THIS OFFICE WHICH, IF NOT CORRECTED, WOULD BE PREJUDICIAL TO THE COMPLAINANT AND THE PUBLIC; AND III THERE WERE PROCEDURAL IRREGULARITIES COMMITTED BY THIS OFFICE THAT WERE PREJUDICIAL TO THE INTEREST OF THE COMPLAINANT. PREFATORY STATEMENT Lest the Honorable Office be misled into thinking that the instant action is for the purpose of questioning the decision of the Monetary Board ordering the closure of Urban Bank, Inc.(UBI) and its related companies, complainant is compelled to reiterate and/or clarify the basis of this action. The Complaint herein does not charge the Monetary Board for the closure of UBI, Urbancorp Development Bank (UDB), and Urbancorp Investments, Inc. (UII). As is clear from the Complaint, it is the criminal liability of respondents that is brought up in issue, specifically for: (1) falsification by a public officer under Article 171(4) of RA 3815, Revised Penal Code; (2) committing corrupt practices under section 3(e) of RA 3019, Anti-Graft and Corrupt Practices Act; and (3) violation of Sec 16 of R.A 7653, the New Central Bank Act. Said acts are in relation to the preparation of the three (3) BSP-SES (Supervision and Examination Sector) Reports that recommended their closure of UBI, UDB and UII. The Honorable Office should therefore ascertain whether or not there is probable cause to hold respondents liable for falsification and violation of the Anti-Graft and Corrupt Practices Act. All of the abovementioned issues would fall within the jurisdiction of this Honorable Office, despite its finding to the contrary. DISCUSSION I. NEW PIECES OF EVIDENCE HAVE BEEN DISCOVERED WHICH, WHEN CONSIDERED, WOULD MATERIALLY AFFECT THE CONCLUSION OF THIS OFFICE. Since the filing of the instant case, complainant Teodoro C. Borlongan unearthed additional pieces of evidence that glaringly point to a probable cause to hold respondents liable for the crimes charged. It bears stressing that complainant was not given the opportunity of filing a Reply-Affidavit in the instant proceedings, despite the clear tenor of the Rules of Procedure of this Office. Some of the admissions in respondents' Counter-Affidavits may therefore be said to constitute new evidence insofar as complainant is concerned. As far as complainant knows, some of the declarations of respondents in the instant case are novel and entirely new, hence these are newly discovered. This Office may consider the following new pieces of evidence: NEW EVIDENCE NO. 1 – BSP CIRCULAR NO. 156 PROVES RESPONDENTS’ FALSIFICATION AND PERJURY IN STATING THAT UBI WAS CAPITAL-DEFICIENT. In their Counter-Affidavits, respondents averred to the truthfulness of the three SES Reports. This Office may recall that in order to bolster the recommendation for the closure of Urban Bank, Inc. (UBI), it was alleged in the SES Report that UBI's capital deficiency was one of three financial bases to depict UBI's “precarious” financial condition. UBI’s alleged capital deficiency was stated also in the counter-affidavits of respondents Buenaventura, Reyes, and Aure. In their Supplement to Opposition dated 22 October 2001 (Paragraph 3), respondents Reyes and Aure stated: "3. No untruthful statement allowed.- The three (3) SES Reports, which Respondents allegedly conspired among themselves to falsify, were actually based on verified findings of the BSP. . .. xxx xxx xxx "3.2. UBI’s capital deficiency known to the Monetary Board prior to UBI closure…" In the SES Report on UBI, UBI’s capital was stated as amounting to P2.184 to P2.201 billion from January to March 2000, allegedly short of the P2.400 billion minimum capital required by BSP. Complainant calls the attention of the Honorable Office to BSP Circular No. 156 dated 19 March 1998 (hereto attached as Annex "A"), providing for the applicable capital requirement of banks at the time of UBI’s closure. BSP Circular No. 156 stated: "Commercial banks which are existing…are hereby allowed the following time frame within which to meet the minimum capital requirement: P2.000 billion on or before December 24, 1998 P2.400 billion on or before December 31, 1999 P2.800 billion on or before December 31, 2000. 2 xxx xxx xxx "Provided further, That commercial banks which are listed in the Philippine Stock Exchange…shall have an additional six (6) month period to meet the minimum capital requirement." (Emphasis supplied) The BSP Circular leaves no room for interpretation: While UBI’s required minimum capital was only P2.000 billion, it was not capital-deficient at the time of its closure. In fact, as a publicly-listed bank, UBI was entitled to an additional period of six (6) months from 31 December 1999 within which to meet the increased minimum capital requirement. That UBI is a publicly listed bank is evidenced in UBI’s audited financial statements, attached hereto as Annex "B". At the time of UBI's closure, said Circular was still in effect and had not been superseded by any other circular or issuance of the BSP. Respondents ignored BSP Circular No. 156 which granted publicly-listed banks additional time to meet the increased capital requirement, and falsely stated in the SES Report that UBI was deemed capital-deficient. This was insisted on by respondents in their respective Counter-Affidavits. Despite their presumed knowledge of said Circular and of the fact that UBI was a publicly-listed bank, respondents, either in gross inexcusable negligence, obvious partiality, or utter bad faith, found UBI to be capital deficient. Actually, respondents Buenaventura, Reyes and Aure must be found liable for perjury. The foregoing further suggests a manifest intention to suppress BSP Circular No. 156. NEW EVIDENCE NO. 2 – SGV-AUDITED FINANCIAL STATEMENTS PROVES THAT UBI PROVIDED SUBSTANTIAL LOAN-LOSS RESERVES TO MEET PAST-DUE LOANS. AURE’S PERJURY /ASSERTION OF A FALSITY. UBI provided more than sufficient loan-loss reserves to cushion UBI’s past-due loans, a fact known to respondents when they prepared the SES Report but which they maliciously concealed. The ratio of UBI's past- due loans exceeding industry average in December 1999 to February 2000 was cited as a one of three bases employed to highlight UBI’s “precarious” financial condition. Loan-loss reserves are funds taken from (deducted from) a bank’s income or capital surplus and are set- aside to meet potential losses from probable bad loans. On 22 November 1999, BSP-SES required UBI to provide a total of P572-million (P558.3-million plus P13.3-million in specific and general reserves, respectively) in such reserves for loans and other risk assets, based on its 1999 examination of the bank’s loan portfolio (Annex “C” hereof). Instead, UBI voluntarily provided P920-million in reserves, or sixty-one percent (61%) more than what BSP required. The amount of P920-million in loss-reserves is clearly stated in UBI’s audited financial statements as of 31 December 1999, and contained in the Independent Public Accountants’ Report by Sycip Gorres Velayo and Company (SGV) dated 25 February 2000 (Annex “B”). The same amount in loss-reserves is likewise stated in UBI’s Report to BSP on Compliance with General Loan Loss Provision as of 31 March 2000 (Annex “D” hereof). The attention of the Honorable Office is called to BSP’s receiving stamp-mark on said Report (Annex “D”). The Department of Commercial Banks II received said Report on 14 April 2000. It may be noted that said Report was received two (2) weeks prior to the preparation of the subject SES Report, and by no less than Aure's own department. In his Counter-Affidavit (Paragraph 184.108.40.206), respondent Aure misleads the Honorable Office and attempts to obfuscate the facts regarding UBI’s loss-reserves by crossing incongruous dates of booking, reporting, and accounting effectivity. From the evidence herewith submitted and from Aure’s own admissions, the facts clearly are: 1. UBI provided enormous loss-reserves, more than what BSP had required as a result of BSP’s examination of UBI and as contained in BSP’s Report of Examination with covering letter dated 22 November 1999; 2. The loss-reserves in the amount of Php 920 million are indicated in the SGV-audited financial statements of UBI as of 31 December 1999, copy of which BSP received. 3 3. Aure’s own department was in receipt of UBI’s Report to BSP indicating the excess loss-reserves, two weeks prior to preparation of the SES Reports. 4. In citing in the relatively high past-due loans depicting UBI’s “precarious” financial condition, respondents purposely and maliciously omitted, with bad faith or evident partiality, this material and offsetting fact in the SES Report. Respondent Aure is guilty of having declared a falsity for declaring in his Counter-Affidavit (Paragraph 220.127.116.11) that “Borlongan’s claim in his Complaint-Affidavit hat the non-performing loans had adequate reserves greater than that required by BSP is erroneous…Likewise, Borlongan’s claim that UBI provided P920 million as of 31 December 1999… is also false.” NEW EVIDENCE NO. 3 – RESPONDENTS IGNORED AND CONCEALED FACTS SHOWING UBI’S TRUE LIQUIDITY. EVENTS BETRAY THEIR PARTIALITY IN SES REPORT. The SES Report on UBI cited UBI's alleged chronic illiquidity ostensibly to support UBI's closure. In their Counter-Affidavits, respondents Buenaventura, Reyes and Aure stated that the BSP and Monetary Board had long known the “precarious financial condition” of UBI, citing their actions since 1998. The Honorable Office may note that like the SES Reports, said respondents' counter-affidavits are eerily one-sided and totally ignores other reports and findings to the contrary. The attention of the Honorable Office is called to the following counter-circumstances of UBI’s financial condition that respondents maliciously concealed or inexcusably ignored, and the events that betray their malice and partiality: 1. In 1998 just prior to UBI’s voluntary downgrade from an expanded commercial bank to a regular commercial bank, BSP cited UBI for its overall performance in solvency, liquidity, and management. The SLIM (Solvency, Liquidity, and Management) rating was BSP’s tool to measure a bank's health as against the entire expanded commercial banking system. BSP rated UBI with a score of 82.89 points, as against industry average of 76.09 points. This means that BSP rated UBI’s financial position to be better than more than half of the other universal banks in the country, in terms of solvency, liquidity and management. 2. In 1999, BSP-SES conducted a thorough, regular examination of UBI. In its Final Report of Examination which SES provided UBI only in November 1999 (Annex “C”), said report concluded: OVERALL CONCLUSION: Urban Bank, Inc. showed satisfactory financial condition as of March 31, 1999… For the last three (3) years, its operations continued to be profitable despite recent financial turmoil in the Southeast Asian region. It managed to maintain its solvency and liquidity during the period under review… Bank’s composite CAMELS rating of “3” indicated that UBI may be vulnerable to business fluctuations and other outside economic factors but failure is unlikely. Bank had substantially complied with banking laws, BSP rules and regulations except for some violations/exceptions and weaknesses detailed in Annex A. 3. In 1999, UBI granted a Php 3-billion one-year loan facility to the National Food Authority (NFA), to finance its food procurement and inventory. In that year, Urban booked Php2.4 billion of loans to NFA, about Php2.0 billion of which was lent in December 1999, making UBI one of the largest, if not the largest, private lenders to NFA during that year. This fact was known by respondent Buenaventura, who sits as member of the NFA Council. 4. In addition in 1999, UBI lent Php921-million of mortgage loans to the housing sector under the guaranty of the government’s Home Insurance and Guaranty Corporation (HIGC), benefiting some 30 developers and countless homebuyers. For that year, UBI became one of the largest, if not the largest, lenders under the HIGC program (Annex “E” hereof). 5. In the month of January 2000, UBI was one among the large bank lenders in the interbank loan market, in terms of net daily average for the whole month. This fact and UBI’s other lending activities in March and April 2000 were stated in the Complaint (Vide Page 15) 4 6. Yet, during a run caused by BSP’s irresponsible and malicious statements to media about UBI’s downgrading, UBI and UII made good about Php3 billion of withdrawals in the 5 weeks prior to their closure. And even at the time of closure, UBI still had about Php2 billion left in liquid and non-risk assets. It did not borrow a single centavo from BSP or Philippine Deposit Insurance Corporation (PDIC). 7. It therefore is highly questionable that the SES Report would recommend permanent closure for reason of illiquidity, after UBI declared a temporary bank holiday to halt the run (Annex C of Complaint). As clearly stated in UBI’s letter to respondent Buenaventura dated 25 April 2000 (Annex B of Complaint): "Dear Governor Buenaventura: "Please be informed that in view of media reports of our downgrading to a thrift bank which created liquidity problems, Urban Bank is declaring a bank holiday effective at the close of business hours today April 25, 2000." 8. In a congressional hearing investigating into UBI’s closure and conducted by the House Committee on Good Government on 6 December 2000, Reyes was asked, “Kapagka nagkaroon ng crisis of confidence, there is no bank in the whole world that can stand a large scale bank run, di po ba?” Reyes answered, “That’s right.” 9. In his Counter-Affidavit (Paragraph 4.2.4), Reyes stated: “The legal basis for the closure of UBI is its illiquidity which became apparent when Borlongan and Bartolome asked for emergency assistance.” Yet after UBI’s closure, BSP granted enormous liquidity assistance to numerous banks such as Philippine Bank of Communication, International Exchange Bank, Philippine National Bank, and Equitable-PCI Bank which likewise suffered from illiqudity and requested for emergency assistance from BSP. These banks were not recommended closed by BSP-SES. NEW EVIDENCE NO. 4 - UBI AND UDB WERE THE ONLY BANKS CLOSED BECAUSE OF ILLIQUIDITY. REYES’ AND AURE’S PERJURY TO COVER-UP THIS FACT. In their defense that the immediate closure of UBI and UDB because of illiquidity was regular and precedented, Respondents Reyes and Aure cited four (4) small rural banks that were ordered closed by the Monetary Board and the SES memoranda (reports) that recommended their closure because of similar liquidity problems. “Notably, the closure of UBI for illiquidity is not without precedent. Earlier other banks were also closed by the Monetary Board for incurring liquidity problems. “The closure of UBI for illiquidity arising from a bank holiday was not the first closure undertaken by the Monetary Board. On several occasions, the Monetary Board had placed a bank under receivership because of illiquidity but not on the basis of insolvency. In the years 1999 and 2000, the following banks were placed by the BSP under receivership on the ground of illiquidity, to wit: Rural Bank of Santander (Cebu), Inc.; Rural Bank of Gumaca (Quezon), Inc.; Rural Bank of Bocaue (Bulacan), Inc.; and Rural Bank of San Teodoro, Inc. Copies of the Memoranda recommending the closure of the above-enumerated banks under receivership due to illiquidity are herewith attached as ANNEXES 1, 1-A, 1-B, and 1-C, and made integral parts hereof.” (Supplement to Opposition by Reyes and Aure, dated 22 October 2001, Paragraph 5) Unfortunately for respondents, Reyes and Aure did them all in by incriminatingly identifying banks that would only prove that respondents had discriminatory and capricious intentions to close UBI with UDB and UII. Excerpts of the four (4) SES memoranda (reports) that recommended closure of these banks are as follows: 1. Rural Bank of Santander (Cebu), Inc. SES Report dated September 6, 2000. “The bank has insufficient realizable assets, as determined by the Bangko Sentral ng Pilipinas, to meet its liabilities. Net realizable assets as of March 31, 2000 is P14.951 million less than liabilities of P67.180 million.” xxx xxx xxx “In a meeting held on August 24, 2000, it was emphasized that infusion of fresh capital should be adequate to cover capital deficiency and solve the liquidity problems… 5 “On August 28, 2000, the (BSP) Department received Resolution No. 27 dated August 25, 2000 adopted by the (rural bank’s) board of directors and controlling stockholders voluntarily surrendering the operation/affairs of the bank.” 2. Rural Bank of Gumaca (Quezon), Inc. SES Report dated August 9, 2000. “The bank has insufficient realizable assets, as determined by the Bangko Sentral ng Pilipinas, to meet its liabilities. Net realizable assets as of April 30, 2000 is computed as follows (in million) … (P9.644).” xxx xxx xxx “The realizable value of the bank’s assets is P11.218 million less than its liabilities to be settled. Realizable value after considering appraisal increment of P1.574 million on ROPOA would still be less than the liabilities by P9.644 million.” xxx xxx xxx “In our (BSP) letter dated May 23, 2000, the bank was given a final deadline of June 15, 2000 to correct the serious findings noted in the April 30, 2000 special examination, particularly the infusion of fresh capital to correct the deficiency. Bank management failed to infuse the required capital within the June 15, 2000 deadline.” “In a letter dated July 6, 2000, the (rural bank’s) Board of Directors was reminded of management’s inaction on the directives as contained in the May 23, 2000 letter; and that said inaction would be taken to mean as disinterest on its part to rehabilitate the bank; and that BSP would have to take action as mandated by law.” 3. Rural Bank of Bocaue (Bulacan), Inc. SES Report dated August 16, 2000 “Findings in the general examination as of January 31, 2000 disclosed that the bank has insufficient realizable assets to meet its liabilities …” xxx xxx xxx “The bank has insufficient realizable assets, as determined by the Bangko Sentral to meet its liabilities. The bank’s net realizable assets is computed as … (P39.269).” xxx xxx xxx “The bank was granted a liquidity loan of P100 million on June 5, 2000 (MB Resolution No. 927). A total of P17.023 million has been released …” xxx xxx xxx “In a meeting held at the BSP last April 7, 2000 and attended by one bank officer and the legal counsel, the bank was enjoined to infuse fresh funds of at least P53.146 million within 30 days from April 7, 2000.” “The bank was advised to consider inviting new investors to rehabilitate the bank within 30 days if present stockholders are not in a position to infuse fresh funds.” 4. Rural Bank of San Teodoro, Inc. SES Report dated September 2, 1999 “The book value of the bank’s assets is less than its liabilities by P17.185 million (as of February 28, 1999).” xxx xxx xxx “Despite a P32.938 million drawdown from its approved emergency loan of P50.000 million (approved by the M.B. in its Res. No. 091 [P20 million] dated January 21, 1998, and No. 980 [P30 million] dated July 8, 1998), the bank has not been able to contain the continuing demands for withdrawal.” xxx xxx xxx “In our letters of February 9 and 15, 1999, the bank was given up to February 28, 1999 to have the rehabilitation in place, otherwise Section 30 of R.A. 7653 shall be applied. Again, in our letter of March 30, 1999, management was informed that it has been given sufficient time within which to rehabilitate the bank.” “In our (BSP) letter of May 12, 1999 informing the bank of the results of the special examination as of February 28, 1999, we reiterated to management that it has been given enough time within which to rehabilitate the bank but none has ever materialized. The bank was warned that the persisting and untenable condition leaves BSP with no recourse but to implement Section 30 of R.A. 7653.” From the contents of the SES reports, it is obvious that all these four (4) banks were INSOLVENT 6 (meaning, the liabilities of the bank exceed its assets). Insolvency is a clear unequivocal basis under Section 30(b) of RA 7653 New Central Bank Act to close a bank and place it under receivership, to wit: “(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities”. Yet, UBI and UDB were not found to be insolvent at the time of their closure, as is evident in their respective SES reports. In the fifty two (52) years of the old and new Central Bank Acts (R.A. 265 and 7653), it appears that this is the FIRST TIME that a bank (or, for that matter, two banks) was ever closed for reason of only illiquidity, a fact that respondents attempted to conceal by their PERJURY. The truth is, the recommendation to close UBI and UDB because of illiquidity was irregular, unprecedented, and without valid basis. Respondents clearly made such recommendation out of gross inexcusable negligence, manifest partiality or utter bad faith. In the light of false and misleading testimonies, respondents Reyes and Aure should therefore be additionally charged with perjury. Furthermore, respondents Reyes and Aure insult our intelligence by citing three (3) banks that were ordered closed AFTER UBI’s and UDB’s closure. It is also apparent from the SES Reports that it took several months before the SES finally recommended the closure of these four banks. In the case of UBI and UDB, it only took the respondents less than 24 hours to recommend immediate closure. Furthermore, it is apparent that there were discussions and conferences between these four banks and BSP regarding the latter’s findings, as they were accorded due process. In the case of UBI and UDB, there was no conference or discussion about the SES findings in their reports, when respondents made their recommendations to the Monetary Board. Furthermore, it is apparent that these four banks were given the opportunity to correct their deficiencies based on the SES findings. In the case of UBI and UDB, no opportunity was given to them to correct any deficiencies, as respondents made their immediate recommendations of radical closure to the Monetary Board. NEW EVIDENCE NO. 5 – CENTRAL BANK MANUAL PROVES THAT RESPONDENTS VIOLATED ESTABLISHED PROCEDURES IN PREPARING SES REPORTS TO MONETARY BOARD. The Supervision and Examination Sector (SES) and its personnel are bound by the examination standards and procedures established by the BSP. These standards and procedures are properly documented in the Central Bank Manual of Examination Procedures (Annex “F” hereof), excerpts of which are quoted hereunder: CENTRAL BANK MANUAL OF EXAMINATION PROCEDURES: BANK EXAMINER’S CODE OF CONDUCT. (Page 3) x x x 17. Prepare yourself with details of findings before conferring with officials of the institution at the termination of the examination. Conduct the conference with an open mind and in the most dignified manner. Avoid arguments and take note of their explanations or reasons to exceptions noted. 18. Complete and submit your report within a reasonable period. GENERAL INSTRUCTIONS C. PLANNING AND ORGANIZING EXAMINATIONS. (Page 7) The Examiner-in-Charge undertakes the overall supervision of the examination. He directs the examination so as to attain its objectives most efficiently. His primary duties and responsibilities are as follows: x x x 6. Summarizes examination findings noted. 7. Leads the conference with officers/directors of the institution on exceptions/deficiencies noted. 8. Prepares the examination report. (Page 7) L. CONDUCTING EXAMINATIONS 7 4. Concluding the examination. (Page 14) All working papers together with a list of exceptions/deficiencies noted should be turned-over by assisting examiners to the examiner-in-charge for review and compilation. Follow-up of previous examination findings should be undertaken by the examiner-in-charge. Assisting examiners should refrain from conferring about their findings with any of the institution’s officers or employees. They should leave this to the examiner-in-charge to avoid confusion and embarrassments. A pre-closing conference led by the examiner-in-charge should be held with the officers/representatives of the institution on findings/exceptions. The minutes of the conference may be made part of the report to the Monetary Board. A copy of the summary of findings/violations should be furnished the institution examined so that corrective action may be taken by them as soon as possible. Respondents flagrantly violated their own Central Bank Manual of Examination Procedures when they prepared the SES Reports on UBI, UDB and UII in at least four (4) major points: 1. As admitted in his Counter-Affidavit (Paragraphs 18.104.22.168 to 22.214.171.124), respondent Aure himself prepared the SES Report on UBI. Under the Manual of Examination Procedures, the report should have been prepared by the examiner-in-charge of UBI, and not by the department head who would have to review said report. (In the case of UII and UDB, the SES Reports were prepared by the examiners-in-charge Aurora Inumerable and Dominador Migue, respectively. See paragraphs 5, 7 & 11 of Guerrero’s Counter-Affidavit.) 2. No conference with UBI, UDB nor UII was conducted by BSP. Under the Manual of Examination Procedures, the required due process would have enabled UBI, UDB and UII to reply to SES findings. (In the case of the four banks cited by Reyes and Aure, BSP held such conferences as indicated in their SES reports.) 3. BSP did not provide UBI, UDB nor UII with a summary of the SES findings/violations. The SES Reports were given five (5) months after, and only upon demand by complainant’s counsel. Under the Manual of Examination Procedures, such summary or report should have been provided to the institutions (In the case of the four banks cited by Reyes and Aure, these banks were informed of the findings as indicated in their SES reports). 4. BSP did not give any time or opportunity to UBI, UDB and UII to take action to correct any deficiencies. Under the Manual of Examination Procedures, a summary of findings/violations is provided precisely “so that corrective action may be taken by them as soon as possible”. By recommending immediate closure, respondents shut-out any possibility for the institutions’ shareholders and management to work-out any remedies. (In the case of the four banks cited by Reyes and Aure, the banks were given several months to take corrective action as indicated in their SES reports.) It is impossible for respondents to ignore the Central Bank Manual. As experienced officers of BSP with long years of bank examination to boot, it devolved upon each of the respondents to ensure that the rules therein are observed. NEW EVIDENCE NO. 6 -- BROTONEL’S AFFIDAVIT SHOWS INCONSISTENT ANNEXES TO SES REPORT, AND AVAILABLE INFORMATION MALICIOUSLY OMITTED. In the related case no. OMB-0-01-0089 Defensor vs Buenaventura, the counter-affidavit of Antonio M. Brotonel (Annex “G”) was submitted. Brotonel, who was Manager of Division 2 under Aure’s Department of Commercial Banks II Counter-Affidavit, stated: "I had no difficulty of preparing the financial data and gathering other information about UBI on April 25, 2000 considering that Division 2 had already the available financial data as of April 18, 2000 which was submitted by Mr. Aure Jr. to the Deputy Governor, Supervision and Examination Sector, so that it only requires updating the financial position of the UBI from April 18 to April 25, 2000. Besides, the Report of Examination of Urban Bank as of March 31, 1999 was already finished. xxx xxx xxx "As a matter of fact the source of financial data and reports were picked up or taken from various reports submitted by UBI to BSP as shown in the matrix of the source documents supporting the memorandum to the MB on April 26, 2000 and copy of which is hereto 8 attached as Annex “2”… The Annex “2” that Brotonel attached to his affidavit is a document entitled: URBAN BANK, INCORPORATED MEMORANDUM TO THE MONETARY BOARD April 26, 2000 Said document contained a list or “matrix of source documents supporting the memorandum to the MB on April 26, 2000”. It listed the source documents supposedly annexed to the SES memorandum (report) on UBI. However, the annexes enumerated in Brotonel’s matrix are inconsistent or not the same as the annexes actually attached to the SES report on UBI, as summarized in a comparative table below: Annex letter Annex document Document actually annexed to assigned per Brotonel’s matrix SES Report on UBI Annex A Letter of Urban Bank-List of Urban branches Adjusted Capital Position- Jan, Feb, Mar 2000 Annex B Manual of regulations Sec X106 bank capital; Compliance with Reserve Requirements on Urban’s consolidated statement of condition Jan, Deposit Liabilities, Feb 3 to Apr 19 2000 Feb, Mar 2000; Urban’s report on compliance with loan loss provision Jan, Feb, Mar 2000; BSP’s report of examination Mar 31 1999; MB resolution 256, Feb 16 2000 allowing URDI earnings as part of capital Annex C Large Loan Accounts as of Latest Regular Examination, Mar 31 1999 Annex C & D BSP’s report on interbank loan transactions Jan, Feb, Mar 2000; Urban’s onsolidated daily report of condition Jan-Apr 2000; BSP’s printout statement of account showing overdraft, runtime Apr 26 2000 08:40:48. Annex D BSP’s statement of overdrawings Liquid Assets- Feb, Mar 2000 Annex E BSP’s status of loan portfolio Dec, Jan, Feb2000 Top 20 Stockholders, Dec 31 1999 Annex E-1 Senior Officers & Members of the Board of Directors, Dec 31 1999 Annex F Details of classified accounts per BSP’s exam report Mar 31 1999; Urban’s report on credit and equities exposure P1-million-up Dec 31 1999; Urban’s consolidated statement of condition Dec 31 1999 Annex G Urban’s deposits insured by PDIC Feb 29 2000; Urban’s CDRC Jan-Mar 2000 Annex H Urban’s CSOC Feb, Mar 2000 Annex I Urban’s CSOC Feb 2000 Annex J New Central Bank Act Sec 30 proceedings in receivership and liquidation Unmarked Urban’s letter to BSP on bank holiday; BSP’s letter to PDIC placing UDB under receivership; Zuniga’s legal opinion Given the inconsistencies, it appears that the SES Report was altered or substituted. In addition, Brotonel’s affidavit establishes the fact that certain documents, hereunder identified, were accessed by and made 9 part of the diligence effort by respondents in preparing the SES Report on UBI. Inspite of respondents’ possession of vital information contained in these documents AT THE TIME that the Report was being prepared, reviewed, signed and accepted, respondents omitted such information that would counter their findings in the SES Report on UBI: 1. BSP’s Manual of Regulations Sec X106 on bank capital would show that UBI, as a publicly-listed bank, would have six (6) more months to meet the increased minimum capital of P2.4 billion. 2. UBI’s Report on Compliance with Loan Loss Provision as of March 2000 would show that UBI provided enormous loan-loss reserves to meet the possible losses from a higher past-due ratio. 3. BSP’s Report on Interbank Loan Transactions for January 2000 would show UBI had substantial liquidity evident from its large consistent interbank lending activites during the month. BSP’s Report for March 2000 would show that UBI still managed to lend on certain days during the month. NEW EVIDENCE NO. 7 – THE ENTIRE FILE OF UBI’S STATEMENTS OF ACCOUNT WILL PROVE YUVIENCO’S DECEPTION REGARDING THE AUTHENTICITY OF CERTAIN STATEMENTS. In her Counter-Affidavit (Paragraph 16-17), respondent Yuvienco claimed that three (3) of UBI’s Statements of Account (Annexes F-4, F-5 and F-6) provided in the Complaint were “altered and falsified” because they did not “bear the three asterisks (***) which follows the transaction in every ledger abstract sent out indicating the end of the document”. These three statements were dated 4/26/00 1:59PM, 4/26/00 6:37PM, and 4/25/00 4:56PM, respectively. The attention of the Honorable Ombudman is called that there were twenty (20) Statements of Account, received from 17 to 27 April 2000, that were annexed to the Complaint. It should be questionable that, of the several statements without the (***) asterisks, respondent Yuvienco selected only three to have been falsified. Additionally, this Honorable Office is invited to subpoena the ENTIRE similar Statements of Account on file with UBI for the whole year 1999 and 2000. They should number over 400 statements including the 20 statements in the Complaint, and will show the numerous statements without the (***) asterisks. It may be noted that all these statements, including the 20 statements in the Complaint, are print-outs of electronic mail, as ACTUALLY received by UBI’s PC-terminal.. Statements are received, over dial-up telephone lines, from BSP’s PC-server that employs “Lotus cc:Mail” software application. What were actually sent and received would therefore be contained as mail-formats in the electronic storage of these two PC’s. NEW EVIDENCE NO. 8 – SIX MORE PIECES OF EVIDENCE PROVE GUERRERO’S PERJURY AND THE NON-EXISTENCE OF 08:46 FAX. THE FAX WAS FALSIFIED TO MAKE IT APPEAR THAT THE SES REPORTS WERE SUBMITTED TO THE MONETARY BOARD WHEN IT MET ON APRIL 26 2000. The first page of the SES Report on UDB made reference to UDB’s letter dated 26 April 2000 and attached as “Annex A” to said Report. However, BSP received said letter at its Roxas Boulevard offices at exactly 10:18am, as evidenced by BSP’s own receiving time-stamp on the letter (Annex “H” hereof).. Respondents therefore could have prepared the Report after 10:18AM, signed and delivered it to Manila Golf Club in Forbes Park, Makati, by which time the Monetary Board meeting would have already been adjourned. In his Counter-Affidavit (Paragraph 9-13), respondent Guerrero stated that he had received the letter earlier by fax “at exactly 8:46AM” of 26 April 2000, and it was therefore the fax that Guerrero annexed to the Report. “On the same morning, at exactly 8:46AM, I received a faxed letter dated April 26, 2000 from Ms. Phebe F. Cabildo, President of UDB, informing BSP that UDB had also decided to declare a bank holiday on the same day… I forwarded the faxed letter to Ms. Mandapat, who called the Deputy Governor over the telephone to advise him of the same… Thereafter, Ms. Mandapat instructed Mr. Migue to prepare a Memorandum on UDB… At about 9:30AM of April 26, 2000, the original and a duplicate copy of the Memorandum on UDB were also placed in a sealed envelope and personally delivered by Mr. Migue to Ms. Haboc of the office of the Deputy Governor, who turned over said envelope to Mr. Ahorro for delivery to Deputy Governor Reyes at the Manila Golf Club at Makati City.” 10 The truth is that no such fax was sent by UDB nor UBI. SIX (6) VITAL PIECES OF EVIDENCE, herewith attached, prove the non-existence of the alleged fax and the PERJURY of respondent Guerrero: 1. The sworn affidavit of Atty. Justina Callangan, UDB’s corporate secretary, who stated that she signed the letter at almost 10:00AM. Therefore it is impossible for respondents to have received a 8:46AM fax of UDB’s letter bearing her signature (Annex “I” hereof). 2. The sworn affidavit of Atty. Corazon Bejasa, UBI’s Legal Head, who stated that she prepared and initialed said letter at about 9:30am before forwarding it to Callangan for her signature. Likewise, it is impossible for respondents to have received a 8:46AM fax of UDB’s letter bearing her initial (Annex “J” hereof). 3. The sworn affidavit of Mr. Prudeno Natividad, UBI’s Systems Head, who described several technical details and facts such as, among others, that all fax machines of UBI and “URBANBANKFAXCENTER” imprint their fax headers (consisting of sender’s information) only on top of the transmitted document, and not at the bottom (Annex “K” hereof). 4. The physical evidence of the 8:46AM fax itself, submitted by respondents in Case no. OMB-0-01-0089 (Defensor vs Buenaventura). Six (6) unique markings on the fax’s face prove that said markings were not made under an authentic fax transmission (Annex “L” with markings for visual aid): a. There are two fax headers, one on top and one at the bottom. b. There are two different times: The time in the top header was “09:00”; the bottom header was “08:46”. (Worse for respondents, it was the bottom time that Guerrero stated in his counter-affidavit that he allegedly received the fax.) c. The sender’s name “URBANBANKFAXCENTER” was imprinted in the top header; however the sender’s number “8879900” was imprinted in the bottom header. d. The top and bottom headers are not parallel to each other. e. The vertical fax markings appear to be perpendicular to the bottom header but not to the top header. f. There is a distinct 90-degree corner created by the “fax markings” in the upper left-hand of the fax.. 5. The physical evidence of an authentic fax from URBANBANKFAXCENTER, unwittingly submitted by respondents for comparison in the aforementioned case. Said authentic fax contained physical features absent in the 8:46AM fax, further proving that said 8:46AM fax was indeed fabricated. Moreover, the authentic fax was consistent with the technical information in Natividad’s affidavit (Annex “M” with markings for visual aid): a. There was only one fax header, and it was the top header. b. The sender’s number “8879900” was imprinted in the top header and therefore would not have been printed twice or elsewhere in the fax, much less in the bottom header. 6. The physical evidence of the “Annex A” document which was marked as such by respondents and actually annexed to the SES Report on UDB (Annex J of Complaint). Said SES Annex was not the 8:46AM fax, but rather the original-received copy of UDB’s letter, which respondents received at 10:18 A.M (Annex “N”, with markings for visual aid). The above evidence have been submitted before the Honorable Ombudsman in Case No. OMB-0-01- 0614, entitled Tabios vs. Buenaventura et al., for falsification and perjury. The above evidence establish more than probable cause that Guerrero perjured himself regarding the existence of the fax. Indeed, if the fax never existed, then the SES Report could not have been made before 10:18AM and delivered in time for the Monetary Board meeting that convened at the Manila Golf Club at 10:45AM. Respondents clearly falsified the Report to make it appear that it existed, when in fact it did not, at the time that the Monetary Board met. 11 II. THERE WERE SERIOUS ERRORS OF LAW COMMITTED BY THIS OFFICE WHICH, IF NOT CORRECTED, WOULD BE PREJUDICIAL TO THE COMPLAINANT AND THE PUBLIC. With all due respect to this Honorable Office, it must be pointed out that this is a criminal case. Complainant is well aware of the provision in Republic Act No. 7653 providing for the procedure in questioning orders of closure by the Monetary Board. Clearly, if complainant had wanted to question the propriety of the closure order of the MB, recourse would have been made through the appropriate judicial channels. However, this is a criminal case instituted by the complainant against the respondents for acts they have committed in the performance of their duties as public officers. The foregoing finding manifests the inability of this Office to follow through the issues that it identified for itself. In so doing, the real issues in the case, and perhaps the purpose of the preliminary investigation, were all but ignored. At the risk of being redundant, complainant re-emphasizes that it is not pretended in the Complaint that the closure of UBI, UDB and UII is disputed. Consequently, the ruling of the Honorable Office is off-tangent and diverges from the issue on hand. Actually, the ruling of the Honorable Ombudsman in the parallel administrative case (OMB-ADM-0-00- 0867) was more in point: It discerned that some of respondents bore a measure of responsibility in preparing the disputed SES reports. In the Order dated 2 July 2002, the Honorable Ombudsman found that the SES reports prepared by Reyes, Yuvienco, Guerrero and Aure were “haphazardly and negligently done”. This Office well knows that its responsibility of the Ombudsman, as the case of any prosecutor, is to determine probable cause. The overwhelming evidence of falsification of the SES Reports, including perjury of respondents in their counter-affidavits, is more than sufficient to sustain a finding of probable cause. If the Honorable Office is of the mind that the presumption of a reasonable doubt had not been sufficiently overcome, such view is incorrect; that is for the courts to determine. If the Honorable Office finds the instant case to be in substance, one for disputing the closure of UBI, UDB and UII, such finding is incorrect. A determination of the issue, i.e. probable cause, is not a daunting task. It is in fact, simple. A handwritten note in the Resolution, presumably written by Assistant Ombudsman Pelagio Apostol, stated: “The declaration of bank holiday is an admission that the bank suffered liquidity problems. Whether or not its inability to pay occurred in the ordinary course of business is an issue which cannot be determined in the instant case but in a certiorari (filed) before the regular court.” The Hon. Apostol appears to completely miss the point. With all due respect to the Hon. Apostol, the Complaint herein does not charge the Monetary Board for the closure of UBI, UDB and UII. It specifically charges BSP officials responsible for the criminal falsification of the SES Reports with manifest partiality, bad faith and/or gross negligence, thereby causing undue injury to other parties including the complainant. As aptly stated Page 7 of the Resolution, the two issues in this criminal case are -- (1) whether the respondents may be charged for falsification of the three SES Reports, under Art.171(4) and (5) of the Revised Penal Code; and (2) whether respondents caused undue injury in the discharge of their official and administrative functions, thereby violating section 3(e) of R.A. 3019. With regard to the first issue, there are two facets of falsification that are raised in the herein case: 1. That the Reports contained falsified statements and findings; and 2. That the Reports were falsified to make it appear that they were submitted to the Monetary Board when the latter met in the morning of 26 April 2000. Several pieces of evidence supporting both facets of the falsification are contained in the Complaint, over and above the new evidence submitted in the herein pleading to prove respondents’ perjury in their Counter- Affidavits. On the first issue, this Honorable Office dismissed the Complaint without even a discussion of the merits or lack of merit of the evidence. Anent the second issue, it was stated in the Resolution stated that “the exercise of the judgment to put a bank under receivership is vested exclusively with the Monetary Board. This means that the findings of the responsible officials of the Central Bank are only recommendatory, for until the subject Reports and recommendations are actually approved by the MB, they remain just that, mere reports and recommendations with no action thereon.” 12 This Honorable Office erred in its Resolution, which opens itself to subtle implications. With such Resolution, does the Honorable Ombudsman insinuate that it is legal, just and moral for government officials to make incorrect or false recommendations, based on evident partiality, bad faith, or gross negligence, simply because they are recommendatory? The attention of the Honorable Ombudsman may be called to the following statements of the Supreme Court in People of the Philippines vs. Court of Appeals (135 SCRA 372): “But the law does not only punish acts committed outside the scope of an official's authority but also those done in the performance of his official functions which are tainted with graft or patent irregularities. Section 3, par. (e) of the Act is explicit when it punishes as a corrupt practice any act of public functionary "in causing any undue injury to any party, including the government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. “‘In other words, the act treated thereunder partakes of the nature of a malum prohibitum; it is the commission of the act as defined by the law, not the character or effect thereof that determines whether or not the provision has been violated. And the construction would be in consonance with the announced purpose for which R.A. 3019 was enacted, which is the repression of certain acts of public officers and private persons constituting graft or corrupt practices or which may lead thereto. Note that the law does not merely contemplate repression of acts that are unlawful or corrupt per se, but even of those that may lead or result in graft and corruption. Thus, to require for conviction under the Anti-Graft and Corruption Practices Act that the validity of the contract or transaction be first proved would be to enervate, if not defeat, the intention of the Act. For what would prevent the officials from entering into those kinds of transactions against which Republic Act No. 3019 is directed, and then deliberately omit the observance of certain formalities just to provide a convenient leeway to avoid the clutches of the law in the event of discovery and consequent prosecution?’” (Citing Luciano vs Estrella, 34 SCRA 780) (Underscoring supplied) Regardless therefore of whether or not the subject SES reports were prepared under a mere recommendatory capacity by respondents, it is still crystal clear that for so long as an act or omission punishable as a crime is committed, a criminal action may be instituted against a public officer. In rendering its Resolution of 24 June 2002, this Honorable Office seems to have overlooked this circumstance. It cannot divest itself of the jurisdiction to determine probable cause as against herein respondents. III. THERE WERE PROCEDURAL IRREGULARITIES COMMITTED BY THIS OFFICE THAT WERE PREJUDICIAL TO THE INTEREST OF THE COMPLAINANT. A review of the proceedings in the instant case readily reveals certain irregularities, which if not rectified, would prejudice the rights of complainant. The records of the case would show: 1. In an Order dated 26 March 2001, the Honorable Ombudsman approved the conduct of a preliminary investigation on the herein case. 2. In an Order dated 27 April 2001, this Honorable Office ordered respondents to file their Counter- Affidavits within ten (10) days from receipt thereof. Said Order categorically stated that “Failure to file the counter-affidavits within the aforesaid period shall be deemed a waiver of respondents’ right to submit controverting evidence…” 3. In an Order dated 29 May 2001, the Honorable Ombudsman Desierto denied respondents’ Motion for Reconsideration and upheld the Order dated 26 March 2001. 4. Complainant through counsel filed a Manifestation and Motion dated 15 October 2001 before this Honorable Office. Said pleading manifested, among others, that respondents filed their Counter- Affidavits several months after the issuance of the Order of 29 May 2001. Complainant therein moved 13 “that the case be deemed submitted for resolution without the counter-affidavits”, and that “in the remote event that this Office admits the counter-affidavits of the respondents although belatedly filed, that Complainant be granted a period of 10 days from notice within which to file his Reply Affidavit thereto”. 5. Complainant did not file a Reply Affidavit, pending decision or order by this Honorable Office on said motion, and which decision or order, if there be any, he did not receive. 6. The Honorable Ombudsman issued a Resolution dated 24 June 2001 dismissing the Complaint, citing statements from respondents’ Counter-Affidavits. Inexplicably, complainant was not given the opportunity of filing a reply-affidavit to refute respondents’ Counter-Affidavits, which contained perjurious, false and misleading statements. Thereby, he was deprived of an opportunity to refute/controvert the allegations of respondents in their Counter-Affidavits. It is patent that the Honorable Ombudsman gravely erred in dismissing the Complaint. Complainant’s Motion, in particular, his reservation of filing a reply-affidavit and tacking of new evidence were verily ignored. It would be reasonable to suppose that before the Honorable Ombudsman resolved to dismiss the Complaint, fairness would have required a resolution of said Motion. Complainant was utterly left in the dark, so to speak. Meanwhile, he was deprived of an opportunity to refute respondents’ Counter-Affidavits. Inasmuch as the Honorable Ombudsman overlooked complainant’s Manifestation and Motion, it also appears that certain other pieces of evidence submitted with said pleading, were overlooked. No mention of the pleading was made in the Resolution, nor was the evidence included in said pleading adverted to in the Resolution. These piece of evidence are herein re-submitted, together with several other new evidence in this Motion for Reconsideration. Rather than waylay these crucial pieces of evidence as it had done in the past, fairness should plod this Office to reconsider them. PRAYER WHEREFORE, it is respectfully prayed of this Honorable Office that the Order dated 24 June 2002 be reconsidered in that a finding of probable cause for violation of Article 171(4) and (5) of the Revised Penal Code, Section 3(e) of Republic Act No. 3019, and Section 16 of Republic Act No. 7653 be made against respondents Rafael B. Buenaventura, Alberto V. Reyes, Ma. Dolores B. Yuvienco. Candon B. Guerrero, Juan de Zuniga, Jr. and Tomas S. Aure, Jr. Such other relief and remedy are likewise prayed for. Pasig City for Quezon City, 16 July 2002. CHATO & ELEAZAR Counsel for Complainant 8th Floor Strata 2000 Bldg., Emerald Avenue Ortigas Center, Pasig City By: WILFREDO M. CHATO PTR No. 0831620/1-09-02/Pasig City IBP No. 549461/1-09-02/Makati City GERARDO J. DE LEON PTR No. 0831625/1-09-02/Pasig City IBP No. 549466/1-09-02/Pasig City Copy furnished: YNGSON & ASSOCIATES LAW OFFICES Counsel for Respondents Alberto V. Reyes and Tomas S. Aure, Jr. 7/F Strata 2000 Bldg. Emerald Avenue, Ortigas Centre Pasig City 14 ONGKIKO KALAW MANHIT & ACORDA LAW OFFICES Counsel for Respondents Juan de Zuniga, Jr. and Candon B. Guerrero 4/F Cacho-Gonzales Bldg. 101 Aguirre Street, Legaspi Village Makati City FRANCISCO DONATO VILLANUEVA Counsel for Respondent Ma. Dolores B. Yuvienco Rm. 518-A Five Storey Executive Bldg. Bangko Sentral ng Pilipinas Manila ATTY. REYNALDO GERONIMO Counsel for Respondent Rafael B. Buenaventura Romulo Mabanta Law Offices 30th Flr., Citibank Tower Citibank Plaza, 8741 Paseo de Roxas Makati City 15