AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILIPPINES, PETITIONER, VS. THE HONORABLE CIVIL SERVICE COMMISSION AND NAPOLEON M. MALBUN, RESPONDENTS.

Petitioner Al-Amanah Islamic Investment
Bank of the Philippines, formerly Philippine Amanah
Bank (PAB) accuses public respondent Civil Service Commission (CSC) of grave
abuse of discretion in imposing the minimum penalty of suspension of one (1)
year under CSC Memorandum Circular No. 8, s. 1970 on private respondent Napoleon M. Malbun,
the Branch Manager of the bank in Cagayan de Oro City.  The bank
deemed the penalty incommensurate with the CSC’s
finding that the private respondent was guilty of a serious grave misconduct.

The facts of the case are not disputed.  They are stated in the CSC’s
Resolution No. 90-1014, to wit:

“Respondent/Appellant Malbun was
formally charged by the then PAB Acting President Farouk A. Carpizo
for Neglect of Duty, Inefficiency and Incompetence arising from the alleged
unauthorized and illegal encashment of commercial checks drawn against uncleared and unfunded deposits.  Said checks were all deposited, through a
series of several deposits, in the Savings Account of one Portri
Gandarosa in the PAB, Cagayan
de Oro Branch. 
The transactions under question covered the period from January 28, 1986 to September 5, 1986.  The alleged deposits were allegedly approved
by the former Cashier, Zenaida B. Sayson
and all withdrawals were made and approved by the said branch accountant and
approved by the Respondent/Appellant as Branch Manager.  Be it noted, that during those times of the
alleged commission of the said irregularities, Respondent/Appellant Malbun was then the Manager of the Cagayan de Oro Branch.

The then PAB Acting President created an Investigating Committee,
which after due notice and hearing, submitted the following findings and
recommendation, as follows:

‘There is no proof that respondent
Malbun
tolerated the anomalies nor is there any showing that he benefited
directly or indirectly from the transactions to the detriment of the bank and
therefore he is presumed to have acted in good faith.  But for his failure to give a convincing
proof that he exercised due care and diligence like a good father of a family
in the performance of his duties, respondent Napoleon M. Malbun
is hereby found guilty of NEGLECT OF DUTY.

x x
x x                                         x x
x x                                      x x x x

Respondent joined the bank on April 16, 1974. 
Under the Civil Service Rules, Neglect of Duty is a light offense.  Credited in his favor are three (3)
mitigating circumstances (length of service, first offense and good faith) with no aggravating circumstances, hence, the
imposable penalty would be the minimum for light offense.  (Reprimand or fine or
suspension from one to ten days in its minimum period.).’

Upon receipt of the report of
the Investigating Committee, the same was referred by the then PAB Acting
President to the Corporate Secretary, Atty. Ernesto Duran for comment and
recommendation, who recommended that Respondent/Appellant Malbun
should be charged of either Misconduct or Conduct Prejudicial to the Best
Interest of the Bank; that
nevertheless, even under the charge of Neglect of Duty for which he was found
guilty by the Investigating Committee, a higher penalty is imposable under CSC
Memorandum Circular No. 8, s. 1970; that Malbun must
also be found guilty of violating the Central Bank’s Manual of Regulations for
Banks and other Financial Intermediaries; and that contrary to the findings of
the Investigating Committee that there are no aggravating circumstances, abuse
of confidence should be considered against him.

The then PAB Acting President submitted both the Report of the
Investigating Committee and the recommendation of Atty. Duran to the PAB Board
of Directors for appropriate action.

The PAB Board of Directors, in its Resolution No. 1714-K, dated
March 7, 1989, resolved to approve the finding of the Investigating Committee
that Respondent/Appellant Malbun is guilty of Neglect
of Duty with an imposable penalty of ‘Forced Resignation without prejudice to
Reinstatement.’

Respondent/Appellant Malbun appealed to
the MSPB, which found out and ruled, as follows:

‘After a careful and thorough evaluation of all the records of the
case, this Board agrees with the findings of the Investigating Committee that
there is no proof that respondent-appellant Malbun
tolerated the anomalies nor is there any showing that he benefited directly or
indirectly from the transactions to the detriment of the Bank and therefore is
presumed to have acted in good faith. 
However, for his failure to exercise due care and diligence of a good
father of a family in the performance of his duties and observance of his obligation,
respondent Malbun is hereby found guilty of Neglect
of Duty and is hereby meted the penalty of suspension for six (6) months
notwithstanding the presence of mitigating circumstances of length of service
considering that the Bank suffered loss of money.  Loss or abuse of confidence cannot be
considered as an aggravating circumstance being analogous to the other grave
circumstances as contended by the Acting President of the Philippine Amanah Bank.” (Rollo, pp.
35-37)

x x
x                                           x
x x                                         x x
x

“After a review of the facts and documents submitted
pertaining to the instant appeal, the Commission finds Respondent/Appellant Malbun guilty not only
of ‘Gross Neglect of Duty,’ which is a less grave offense under CSC Memorandum
Circular No. 8, s. 1970 but also of ‘Grave Misconduct and Conduct Prejudicial
to the Best interest of the Service’ which are grave offenses under the same
Memorandum Circular.  In this regard, as
correctly alleged by the then PAB Acting President Carpizo
in his ‘Comment on Appellant’s Appeal to the MSPB’ dated July 26, 1989, thus:

‘The appellant is fully aware that his previous position as Branch
Manager of Cagayan de Oro
is lodged with very high responsibility. 
The exercise of his responsibilities is not merely ministerial but laden
with decision making.  Out there, in his
own branch, he is a little president whose actuation and decision must be
endowed with great prudence and care lest incompetence and inefficiency will
result into financial loss.  x x x x x.

True, it is the Branch Cashier, Zenaida Sayson, that
solely approved the series of withdrawals against unfunded deposits.  But the appellant was fully aware that under
the Bank’s Manual on Signing Authority, a Branch Cashier is authorized to
approve cash withdrawals up to P5,000.00 and beyond
such amount the approval of the Branch Manager is required.  x x
x x x.

The series of unauthorized withdrawals made upon the sole authority
of the Cashier ranges from a minimum withdrawn amount of P10,000.00
to a maximum amount of P86,500.00 blatantly beyond the authority of the
Cashier.  And what was aggravating was
the fact that it was committed thirteen (13) times under the very nose of the
appellant from 28 January 1986
up to 05 September 1986.  Yet due to the sheer incompetence, appellant
even approved the series of accountant’s blocking sheets containing and showing
the unauthorized withdrawals made by the Branch Cashier.  x x
x x x.

x x
x                                           x
x x                                                     x x x

The argument of the appellant that the approval of the Accountant’s
blocking sheets does not mean approval of the irregular transactions is flimsy
and incongruous with the Bank’s Job Description Manual which provides that:

I.   Basic Function of the
Branch Manager

Assumes
direct control, responsibility for and supervision over activities and business
affairs of the Branch.

II.  Responsibilities

Reviews daily
transactions and results of operations; analyzes trends in deposit,
withdrawals, clearing operations; cash position, fund transfers, loaning grants
and collection.

From the foregoing, it is crystal clear therefore that the function
and responsibilities of a Branch Manager is (sic) not merely ministerial but
laden with decision-making and analysis of transactions and results of
operation, particularly those involving money matters.

In the instant case, when the appellant was then a Branch Manager,
he was expected and presumed to have read, reviewed and analyzed the contents
of the Accountant’s blocking sheets containing the anomalous transactions
including the supporting proof sheets and withdrawal slips made on the unfunded
deposits.  But the appellant was remiss
in observing even the ordinary care and prudence in the discharge of his
function and responsibilities.  How can
he argue that his approval of the Accountant’s blocking sheet does not mean he
approved of the irregular transaction, when under the Bank’s Job Description
Manual, he is responsible and duty bound to review daily transactions and
results of operations, analyze trends in deposit withdrawals, clearing operations,
cash position, fund transfers, loan grants and collections which were all
reflected, stated and contained in the Accountant’s blocking sheets.

‘By affixing his signature in the Accountant’s blocking sheets
which contain and carry the irregular transactions he is grossly incompetent
and negligent in the observance and discharge of his duties and
responsibilities spelled out in the Bank’s Job Description Manual.’

Be it noted that the Investigating Committee, the PAB Board of
Directors and the MSPB are one in their findings that Respondent/Appellant Malbun is guilty of ‘Neglect of Duty.’ However, based on
the facts and circumstances of the instant case vis-a-vis
CSC Memorandum Circular No. 8, s. 1970, which does not penalize ‘Neglect of
Duty’ but ‘Gross Neglect of Duty’ as a less grave offense, respondent/appellant
Malbun should have been charged and found guilty of
‘Gross Neglect of Duty.’ Nevertheless, considering that he is now found guilty
of the said offense by this Commission based on the aforesaid allegations, he
should also be penalized for ‘Serious/Grave Misconduct’ and ‘Conduct
Prejudicial to the interest of the Banking System.’ The Supreme Court in the
case of Oyao v. Pabatao (78
SCRA 93) ruled that a transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by the public
officer is a Serious Misconduct. A Serious or Grave Misconduct is a grave
offense under the said CSC Memorandum Circular No. 8, s. 1970.  Be that as it may, considering the existence
of the two (2) mitigating circumstances of length of service in the government
service and first offense and the aggravating circumstance of abuse of
confidence, the minimum of the penalty for grave offense under CSC Memorandum
Circular No. 8, s. 1970 of suspension of one (1) year is imposable.” (Rollo, pp. 38-40)

The petitioner bank filed a motion for reconsideration of the
aforesaid resolution stating therein that the circumstance of prior conviction
of the private respondent in 1979 for “neglect of duty as charged and upon
suspension from the service for four (4) months effective upon receipt of this
approval, xxx” (Rollo, p. 11) should be considered in
determining the proper penalty (which should be dismissal) to be imposed on the
private respondent.

The CSC, however, refused to consider this “prior
conviction” of the private respondent on the ground that this is not a
newly discovered evidence and that the petitioner in its exercise of reasonable
diligence could have discovered and produced the document during the hearing
conducted or could have presented the same in its appeal to the Merit Systems
Protection Board (MSPB) as well as in the Commission.

In a resolution dated November
14, 1991, we gave due course to the petition.

The petition is impressed
with merit.

Section 695 of the Revised Administrative Code of 1917 provides
that a civil service subordinate officer or employee, may for neglect of duty
or violation of reasonable office regulations x x x be removed from the service.  Moreover, Memorandum Circular No. 8, Series
of 1970 of the Civil Service Commission (Guidelines in the Application of
Penalties) provides the penalties for grave offenses, to wit:

“1. 
Transfer or demotion in rank or salary from two to three grades
or suspension for one year in its minimum period.

 2.  Forced resignation without prejudice to
reinstatement to forced resignation with prejudice to reinstatement in its
medium period.

 3.  Dismissal in its maximum period.”

The following are considered mitigating circumstances:

“1.  Physical illness

 2.  Good
faith

 3. 
Length of service in the government.

 4.  Analogous
circumstances.”

The Civil Service Commission considered as mitigating
circumstances:  (1) length of service,
and (2) first offense.  The CSC also
considered abuse of confidence as aggravating circumstance.

The records show that the private respondent joined the bank on April 16, 1974.  He committed the offense in 1986.  Hence, there is no dispute that length of
service in the government can be considered a mitigating circumstance in his
favor.

However, we do not agree that the mitigating circumstance of first
offense can be considered in favor of the private respondent.

It is to be noted that the private respondent was found guilty of
approving a series of accountant’s blocking sheets containing and showing
thirteen (13) transgressions of the branch cashier wherein the latter approved
unauthorized withdrawal against unfunded deposits ranging from P10,000.00 to P86,570.00 which are beyond the P5,000,00 limit
that a branch cashier is authorized to approve as regards cash withdrawals to
the detriment of the petitioner bank.  In
fact, the petitioner bank lost P597,450.05 as a result
of these unauthorized withdrawals.  Under
these circumstances, we cannot categorize the private respondent’s grave
misconduct as first offense.  The private respondent committed thirteen
(13) offenses at different times.  The
private respondent’s repeated transgressions, standing alone, warrant
dismissal.  Thus, we ruled in the case of
Philippine National Bank
v. Intermediate Appellate Court (187 SCRA
757 [1990]):

“The Court of Appeals reduced the penalty from dismissal to
suspension for six (6) months without pay by reason of mitigating
circumstances–good faith and disparity between the penalties imposed on the
respondent and on other implicated offenders. 
While it may indeed be questionable that other persons were not as
severely punished, (unfortunately they are beyond the court’s reach),
petitioner’s repeated violations (92 times), standing alone, merit
dismissal.  In Policarpio v. Fajardo (Adm.
Matter No. P-312, 78 SCRA 210), gross misconduct in office by a sheriff
was punished by dismissal from the service with forfeiture of all
benefits.  This was reiterated in Abdulwahid v. Reyes (Adm. Matter No P-902 & 926, Jan. 31, 1978; Antonio v. Diaz, Adm.
Matter No. P-1568, 94 SCRA 890), where a deputy sheriff found guilty of serious
misconduct in office was likewise dismissed. 
Good faith cannot be appreciated in favor of private respondent
considering the repeated violations.” (at p. 762)

Moreover, we agree with the petitioner that “prior
conviction” should have been considered by the Commission in imposing the
proper penalty on the private respondent although it was presented only in the
petitioner’s motion for reconsideration/motion for new trial.

It is true that the document showing the private respondent’s
prior conviction in 1979 is not a newly discovered evidence but “forgotten
evidence” considering that the same already existed or was available
before or during the trial which was known and obtainable by the petitioner
bank and could have been presented were it not for the oversight or
forgetfulness of the petitioner (Tumang v. Court of
Appeals, 172 SCRA 328 [1989]), and therefore, applying rigid technical rules,
such document is not admissible as evidence against the private
respondent.  However, administrative
agencies like the Civil Service Commission exercising quasi-judicial functions
are free from the rigidity of certain procedural requirements.  (Esquig v. Civil
Service Commission, 188 SCRA 166 [1990]) We rule that in the case of the
document showing prior conviction of the private respondent, such should have
been admitted considering that it is a public document and within the judicial
notice of the Commission.  Section 12(4)
of Chapter 3, Book VII of the Revised Administrative Code of 1987 provides:

“Sec. 12. Rules of
Evidence. –

In a contested case:

(1)  x x

(2) 
x x

(3) 
x x

(4) the agency may
take judicial notice of judicially cognizable facts and of generally cognizable
technical or scientific facts within its specialized knowledge.  The parties shall be notified and afforded an
opportunity to contest the facts so noticed.” (Official Gazette, Vol. 83,
No. 39, p. 171)

The Commission is the central personnel agency of the
government.  It is the repository of all
government appointments as well as all records of final decisions in
administrative cases against government employees.  Hence, it is deemed to have judicial notice
of such prior conviction of the private respondent.  What the Commission should have done,
therefore, was to notify the private respondent to rebut such document.  At any rate, the records reveal that the
document showing prior conviction of the private respondent is
indisputable.  Necessarily, even if we
consider the private respondent’s repeated violations as one offense,
the admission of this document would readily reveal that this is not his first
offense.

But the Commission also applied CSC Memorandum Circular No. 6,
Series of 1991, to wit:

“x x x
[I]n the appreciation of any mitigating circumstances in favor of the
respondent in an administrative case and/or aggravating circumstances against
him, the same must be invoked or pleaded by the proper party, otherwise the
said circumstances shall not be considered in the determination of the proper
penalty to be imposed against the respondent concerned.” (Rollo, pp. 56-57)

to the instant
case.  The Commission held that the Memorandum
Circular should be applied retroactively insofar as it benefits the respondent
but it would not be applied to increase the penalty imposable to the private
respondent otherwise this will be tantamount to violating the prohibition on ex-post
facto law as the Memorandum was issued after the commission of the
offense.

The records show that the Circular was filed with the University
of the Philippines Law
Center only on May 17, 1991. 
Section 4, Chapter 2, Book VII of the Revised Administrative Code of 1987
provides that “x x each rule shall become effective fifteen (15) days from
the date of filing x x x.”
The Commission issued its resolution on March
21, 1991.  Verily, the
Commission erred in applying the said circular insofar as it benefited the
private respondent.  The Memorandum
Circular was not yet in effect at the time. 
The well-entrenched principle is that “a statute operates
prospectively only and not retroactively, unless the legislative intent the contrary is made manifest either
by the express terms
of the statute or by necessary
implication.” (Nilo v.
Court of Appeals, 128 SCRA 519 [1984] cited in Puzon
v. Abellera, 169 SCRA 789 [1989]).  We rule that the same principle is applicable
to administrative rules and regulations issued by the government agencies in
their duty to implement laws.  The
Memorandum Circular does not in indicate that it should be applied
retroactively, hence the general rule that a statute operates prospectively
must be followed.

With the foregoing considerations, the only remaining mitigating circumstance in favor of the private respondent is length of
service.  This is, however, offset by the aggravating circumstance of abuse of
confidence found by the Commission. 
Under these circumstances, we rule
that the proper penalty for the
repeated offenses committed by the private respondent against the beneficial
interest of the petitioner is dismissal from the government service with
forfeiture of benefits.

And finally, the Civil Service Commission totally ignored the fact
that the respondent is a Bank Manager who is in charge of daily transactions
involving millions of pesos.  There is a tremendous difference between the
degree of responsibility, care,
and trustworthiness expected of a clerk or ordinary employee in the bureaucracy
and that required of bank managers, cashiers, finance officers, and other
officials directly handling large sums of money and properties.

The standards in the interpretation of good faith, due care,
diligence of a good father of a family, neglect of duty, grave misconduct and
conduct prejudicial to the interest of the service are not rigid or inflexible
terms to be applied like the bed of Procrustes
without considering attendant circumstances. 
Certainly, a bank manager who did not learn from an earlier four months
suspension for neglect of duty in 1979 and who allowed kiting operations under
his very nose to happen in 1986 until his bank lost P597,450.05
should not be returned to his former position as Bank Manager.  There is no room for negligence and
carelessness in managing a bank.

WHEREFORE, the instant petition is GRANTED.  The questioned Resolutions of the Civil
Service Commission are REVERSED and SET ASIDE. 
Private respondent NAPOLEON M. MALBUN is ordered DISMISSED from the
government service with forfeiture of benefits.

SO ORDERED.

Melencio-Herrera, Cruz, Paras, Feliciano, Padilla, Bidin,
Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero, and Nocon, JJ., concur.

Narvasa, C.J., on leave.

Bellosillo, J., no part. Did not participate in deliberations.