Supreme Court approves prosecution of Jose Go over Orient Bank scam

MANILA, Philippines - The Supreme Court (SC) has given a Manila City trial court the go-signal in the prosecution of banker Jose Go for allegedly approving guarantees to loans and borrowing at least P2.75 billion in deposits of his bank, the now defunct Orient Commercial Banking Institution, without the written approval of the majority of the bank’s board of directors.

In a 13-page decision, the second division of the High Court ordered Manila City RTC Branch 26 to proceed hearing the case as it junked the petition for review of Go seeking to nullify a decision of the Court of Appeals (CA) issued in October 2006 that reversed an earlier ruling of the lower court quashing the information filed against the businessman.

In his petition, Go, also owner of the controversial Ever Gotesco shopping mall in Caloocan City, contested that the CA erred in reversing the trial court’s ruling that the complaint against him was not only vague but also did not constitute an offense.

The lower court agreed with Go’s contention that the information for violation of Section 83 of R.A. 337 (General Banking Act) filed against him by the Bangko Sentral ng Pilipinas penalized only directors and officers of banking institutions who acted either as borrower or as a guarantor, but not as both.

Go had argued that the second paragraph of Section 83 allowed banks to extend credit accommodations to their directors, officers, and stockholders, provided it is “limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contribution in the bank.”

He stressed that extending credit accommodations to bank officers and stockholders is not prohibited, unless the amount exceeds the legal limit.

Since the information failed to state that the amount he purportedly borrowed and/or guarantied was beyond the limit set by law, Go insisted that his acts did not constitute a violation of the banking laws.

Go protested the prosecution’s “shotgun approach” as it violates his constitutional right to be informed of the nature and cause of the accusations against him.

But the SC was not convinced by Go’s arguments. The High Court ruled that Section 83 of R.A. 337 generally prohibits a bank director or officer from becoming an obligor of the bank without securing the necessary written approval of the majority of the bank’s directors.

“To make a distinction between the act of borrowing and guarantying is therefore unnecessary because in either situation, the director or officer concerned becomes an obligor of the bank against whom the obligation is juridically demandable,” the Court explained in the ruling penned by Associate Justice Arturo Brion.

Even assuming that the information filed against Go does not constitute an offense, the Court stressed that it was erroneous for the Manila RTC to immediately dismiss the case without giving the prosecution a chance to amend the complaint.

Section 4 of Rule 117 of the Rules of Criminal Procedure, according to the Court, requires that the prosecution should be given a chance to correct the defect and the court can order the dismissal if the prosecution failed to do so.

“The RTC’s failure to provide the prosecution this opportunity constitutes an arbitrary exercise of power that was correctly addressed by the CA through the certiorari petition. This defect in the RTC’s action on the case, while not central to the issue before us, strengthens our conclusion that this criminal case should be resolved through full-blown trial on the merits,”

Concurring in the decision were Associate Justices Leonardo Quisumbing, Antonio Carpio, Conchita Carpio-Morales and Roberto Abad.

The complaint, which was filed on Aug. 20, 1999 before the sala of Judge Oscar Barrientos of Manila RTC, Branch 26, stemmed from allegation that Go, then the director and the president and chief executive officer of Orient Bank, of “unlawfully borrowing the deposits of the said bank and/or become a guarantor for loans from said bank to others and using the borrowed funds in facilitating and granting credit lines to the New Zealand Accounts loans in the total amount of P2.75 billion without the written approval of majority of the board of directors.”