Reyes v.

Rural Bank of San Miguel

424 SCRA 135 (2004)
Distinction between a contract of agency and brokerage

 Bangko Sentral ng Pilipinas (BSP) conducted an investigation of the Rural Bank of San Miguel
(RBSMI), due to the fact that that RBSMI had a history of major violations.
o In the course of the investigation, the appointed investigator noted about 20 serious
violations of RBSMI.
o The Monetary Board required RBSMI to submit a written explanation of the findings of the
investigator.
 Around the same time, petitioner Reyes, Deputy Governor of the BSP, started urging Soriano
(RBSMI president) to consider selling the bank, and introduced him to a certain Villacorta – a possible
buyer.
o Negotiations fell through immediately, but Reyes continued to introduce him to other
possible buyers.
 Subsequently, the BSP issued a Resolution ordering RBSMI to correct major exceptions noted and to
remit to the BSP the amount of 2,538,483 pesos as fines and penalties for incurring deficiencies in
reserves against deposit liabilities.
 A letter complaint was then lodged by Rural Bank of San Miguel (RBSMI) against petitioners Reyes
and Domo-ong charging them with a violation of the Code of Conduct and Ethical Standards for
Public Officials and Employees (RA 6713) for:
o Brokering
o Using RBSMI as a case study in seminars about banks in distressed financial condition
o Imposition of the penalty without factual basis
 Decision of the SC in March 2003 found the Deputy Governor Reyes and Director Domo-ong liable
for violating the standards of professionalism in RA 6713.
o Used the distressed financial condition of the Rural Bank of San Miguel (RBSMI) as subject
of a case study in of the BSP seminars and they did the brokering of the sale of RBSMI.
 This resolution deals with the Motion for Reconsideration filed by both Reyes and Domo-ong from
the March 2003. It is anchored on the ff. grounds:
o It was not under their authority that such seminars were conducted but under that of
another department and other officials of BSP.
o They did not do any act considered “brokering” in the sale of RBSMI.

ISSUES + RULING:

Were the officers liable for the seminars just because such were conducted under their auspices? No.
 Culpability of the officers in the assailed case was not grounded on established fact but mere
inference that the assailed seminars were conducted under their auspices.
 It was only assumed that they exercised supervision and control over the persons responsible for
organizing such seminars.
 When it is shown now that, on the contrary, it was the Bangko Sentral ng Pilipinas Institute,
which is in the control of another deputy governor which is charged with such seminars.

Did the petitioners violate RA 6713? No.

 The acts of Reyes do not constitute brokering.
o Broker: One who is engaged, for others, on a commission, negotiating contracts
relative to property with the custody of which he has no concern, never acting in his
own name but one who employed him, the negotiator between other parties.
o It is clear that the act of brokerage indicates the performance of certain acts for
monetary consideration of compensation.
  All that he did was to introduce RBSMI’s President to the presidents of other banks. Never
financially interested.
o The meetings never go past the exploratory stages, as the parties wanted different
things.
o Reyes was not personally involved in the transaction, since he did not know what the
other parties wanted.

Motion for Reconsideration is meritorious.