Go vs. Bangko Sentral ng Pilipinas

The credit accommodation ceiling prescribed in the second paragraph of Section 83 of Republic Act No. 337 is neither an element of, nor an exception to, the offense defined in the first paragraph; an information charging a bank director or officer for becoming an obligor of the bank without the required written board approval need not allege that the loan exceeded the legal limit.

On August 20, 1999, an Information was filed before the Regional Trial Court of Manila charging Jose C. Go, then Director, President, and Chief Executive Officer of Orient Commercial Banking Corporation, with violation of Section 83 of Republic Act No. 337 (General Banking Act), as amended by Presidential Decree No. 1795. The Information alleged that Go, between June 27, 1996 and September 15, 1997, “borrowed, either directly or indirectly, for himself or as the representative of his other related companies, the deposits or funds of the said banking institution and/or become a guarantor, indorser or obligor for loans from the said bank to others” without the written approval of the majority of the board of directors and without recording or reporting such approval.

• The Information: An Information dated August 20, 1999 charged Jose C. Go, the Director, President and CEO of Orient Commercial Banking Corporation, with violation of Section 83 of RA 337. The accusatory portion alleged that between June 27, 1996 and September 15, 1997, Go “did then and there wilfully, unlawfully and knowingly borrow, either directly or indirectly, for himself or as the representative of his other related companies, the deposits or funds of the said banking institution and/or become a guarantor, indorser or obligor for loans from the said bank to others” involving approximately ₱2.754 billion, without the written approval of the majority of the board of directors and without entering such approval in the corporate records or transmitting a copy to the supervising department.
• Arraignment and Pre-trial: Go pleaded not guilty. The parties participated in pre-trial, marking voluminous evidence, after which the trial court set the case for trial on the merits.
• Motion to Quash: Before trial commenced, Go moved to quash the Information. He argued that the use of “and/or” made the charge fatally vague because Section 83 penalized a director or officer who either borrowed or guaranteed, but not one who acted in both capacities. He further contended that the second paragraph of Section 83 allowed credit accommodations to directors and officers up to an amount equivalent to their outstanding deposits and book value of paid-in capital; thus, the Information’s failure to allege that the amount borrowed or guaranteed exceeded that ceiling meant the acts charged did not constitute an offense.
• RTC and CA Rulings: The RTC found the arguments persuasive and quashed the Information; it later denied reconsideration. The prosecution assailed the orders via certiorari in the CA, which reversed, holding that “and/or” merely stated alternative modes of committing the same offense and that the credit ceiling under the second paragraph was not an exception to the first paragraph. The CA reinstated the Information.

• Vagueness of the Charge: Go argued that by using “and/or,” the Information failed to specify whether he was being charged as a borrower or as a guarantor, or as both, thereby violating his constitutional right to be informed of the nature and cause of the accusation. He maintained that Section 83 penalizes a director or officer only for either borrowing or guaranteeing, but not for simultaneously assuming both roles.
• Failure to Allege Credit Accommodation Limit: Go contended that the second paragraph of Section 83 permits credit accommodations to directors and officers within a specified ceiling, making such accommodations lawful unless the limit is exceeded. He asserted that the Information was defective for not alleging that the amount involved surpassed the authorized limit.

• Sufficiency of “and/or”: The prosecution countered that the term “and/or” merely set forth the different modes by which the offense under Section 83 could be committed, and did not render the Information vague.
• Credit Ceiling Not an Exception: The prosecution argued that the second paragraph of Section 83 imposes a separate borrowing limit whose violation renders the bank—not the director-borrower—liable, and is not an exception to the first paragraph. The absence of an allegation regarding the ceiling was, therefore, immaterial.

• Sufficiency of the Information: Whether the Information sufficiently alleged facts constituting an offense under Section 83 of RA 337.
• Effect of “and/or”: Whether the use of the phrase “and/or” rendered the charge impermissibly vague and violative of the right to be informed.
• Credit Accommodation Limit: Whether the second paragraph of Section 83 provides an exception or an essential element that must be pleaded in the Information.

• Sufficiency of the Information: The Information was held sufficient. Applying the determinative test from People v. Romualdez, the allegations, if hypothetically admitted, established the elements of the offense under the first paragraph of Section 83: (1) Go was a director or officer of Orient Bank; (2) he borrowed deposits or funds of the bank, or became a guarantor, indorser, or obligor for loans to others, for himself or as representative of related companies; and (3) he did so without the written approval of the majority of the board of directors. The averment that Go “wilfully, unlawfully and knowingly” performed those acts without approval sufficiently framed the charge.
• Effect of “and/or”: The phrase “and/or” did not render the charge vague. The essence of the crime is becoming an obligor of the bank without the requisite board approval. The third mode in the law—“in any manner be an obligor for money borrowed from the bank or loaned by it”—operates as a catch-all that covers a director or officer who becomes an obligor whether as borrower, guarantor, or both. Listing the modes in the alternative merely stated the ways the offense could be committed and did not prejudice Go’s ability to mount a defense.
• Credit Accommodation Limit: The ceiling requirement in the second paragraph of Section 83 is neither an exception to the first paragraph nor an element of the offense charged. Section 83 imposes three distinct requirements: (a) approval, (b) reportorial, and (c) ceiling. The approval requirement penalizes the director or officer who becomes an obligor without written board consent; the ceiling requirement is directed at the bank and does not dispense with the need for approval even if the loan is within limits. Thus, the Information need not allege that the credit accommodation exceeded the statutory ceiling.
• Duty to Allow Amendment: The RTC also erred in dismissing the Information outright without first giving the prosecution an opportunity to amend, as mandated by Section 4, Rule 117 of the Rules of Court. The failure to extend that opportunity was an arbitrary exercise of power that independently warranted the CA’s reversal.

• Test for sufficiency of an information (People v. Romualdez) — In resolving a motion to quash grounded on insufficiency of allegations, the test is whether the facts alleged in the information, if hypothetically admitted, would establish the essential elements of the offense as defined by law, without considering matters aliunde. The information need only state ultimate facts; evidentiary and other details belong to trial.
• Elements of violation of the first paragraph of Section 83, RA 337 — (1) The offender is a director or officer of any banking institution; (2) the offender, directly or indirectly, for himself or as representative of another, (a) borrows deposits or funds of the bank, (b) becomes a guarantor, indorser, or surety for loans from the bank to others, or (c) in any manner becomes an obligor for money borrowed from or loaned by the bank; and (3) the act is done without the written approval of the majority of the bank’s directors (excluding the director concerned). The third mode serves as a catch-all covering any situation where the director or officer becomes an obligor.
• Distinction among approval, reportorial, and ceiling requirements under Section 83 — The first paragraph’s first sentence imposes an “approval requirement,” non-compliance with which subjects the director/officer to criminal penalty. The second sentence imposes a “reportorial requirement” directed at the bank, whose violation may trigger quo warranto proceedings under Section 87. The second paragraph imposes a “ceiling requirement” that regulates the amount of credit accommodations banks may extend to directors/officers; it is likewise a bank-directed obligation and does not define an exception to, or an element of, the offense under the first paragraph.
• Duty to allow amendment before quashal — Under Section 4, Rule 117 of the Rules of Court, when a motion to quash is based on the ground that the facts charged do not constitute an offense, the court must give the prosecution an opportunity to correct the defect by amendment; the information may be dismissed only if the prosecution fails to make the amendment or if the amended information remains defective.

• “The determinative test in appreciating a motion to quash xxx is the sufficiency of the averments in the information, that is, whether the facts alleged, if hypothetically admitted, would establish the essential elements of the offense as defined by law without considering matters aliunde.”
• “The essence of the crime is becoming an obligor of the bank without securing the necessary written approval of the majority of the bank’s directors.”
• “The third mode, by declaring that ‘[no director or officer of any banking institution shall xxx] in any manner be an obligor for money borrowed from the bank or loaned by it,’ in fact serves a catch-all phrase that covers any situation when a director or officer of the bank becomes its obligor.”
• “Even if the loan involved is below the legal limit, a written approval by the majority of the bank’s directors is still required; otherwise, the bank director or officer who becomes an obligor of the bank is liable. Compliance with the ceiling requirement does not dispense with the approval requirement.”

• People v. Romualdez, G.R. No. 166510, July 23, 2008 — Followed; established the determinative test for a motion to quash based on insufficiency of allegations.
• Lazarte v. Sandiganbayan, G.R. No. 180122, March 13, 2009 — Cited for the rule that the facts necessary in an information are determined by reference to the definition and elements of the specific crime.
• Ramos v. Court of Appeals, G.R. No. 117416, December 8, 2000, 347 SCRA 463 — Cited to support the legislative intent behind Section 83: ensuring that loans to bank directors and officers are above board and protecting depositors.

• Section 83, Republic Act No. 337 (General Banking Act), as amended by Presidential Decree No. 1795 — The provision penalizes a bank director or officer who, without written board approval, borrows deposits or funds or becomes a guarantor, indorser, or obligor; the Court interpreted its first paragraph as defining the offense, with the second paragraph imposing a separate ceiling requirement directed at the bank.
• Section 14(2), Article III, 1987 Constitution — Right of the accused to be informed of the nature and cause of the accusation; the Information sufficiently informed Go of the charge.
• Section 9, Rule 110, Rules of Court — Requires that the information state the acts or omissions constituting the offense in ordinary and concise language sufficient to enable the accused to understand the charge and the court to render judgment.
• Sections 3(a) and 4, Rule 117, Rules of Court — Grounds for a motion to quash (facts charged do not constitute an offense) and the mandatory requirement that the prosecution be given the opportunity to amend a defective information before it may be quashed.

Leonardo A. Quisumbing (Chairperson), Antonio T. Carpio, Conchita Carpio Morales, and Roberto A. Abad. (Note: The Lawphil text appended a separate concurring opinion by Justice Abad in an unrelated case involving PEZA; the decision in Go v. Bangko Sentral ng Pilipinas reflects unanimous concurrence without separate opinions.)