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  1. 1. LANDBANK IN ITS FINEST A Term Paper onEthics in Landbank,a Government BankSubmitted by: MARISSA D. TAN Student / Discussant, MDM 212 PANGASINAN STATE UNIVERSITY – GRADUATE SCHOOL Urdaneta City, PangasinanSubmitted to: PROFESSOR MELITON G. DASSUN, D.P.A. PANGASINAN STATE UNIVERSITY – GRADUATE SCHOOL Urdaneta City, Pangasinan ~1~
  2. 2. TABLE OF CONTENTSIntroduction ........................................................................... 3Chapter I. Business Ethics .............................................. 5Chapter II. Ethical Banking............................................... 8Chapter III. Landbank History – Icons of Ethics ............... 15Chapter IV. Landbank‘s Mission, Vision and Core Values As Ethical Goal ............................................... 22Chapter V. Legal Framework of LBP Code of Conduct .. 26Chapter VI. Conclusion ...................................................... 34Chapter VII. Acknowledgement .......................................... 36Chapter VIII. References ...................................................... 38 ~2~
  3. 3. INTRODUCTION When I started writing this term paper, I do not know where to start or even what to write.The world is full of topics to choose from and ethical issues to discuss of as well. It did took me along time to search what topic should Idiscuss or develop for our Ethics subject. My professorsuggested a topic on Landbank of the Philippines, the institution I work with. The next questionthat went into my mind is what aspect should I discuss in this paper about Landbank? Landbankhas a wide array of interesting matters and issues to discuss relative to our subject matter. Finally,it dawned upon me that if there is a bank in the whole country that could display its ethicalstandards transparently, it would be no other than Landbank of the Philippines because of itsprojects, products and governance that exudes the true meaning of social responsibility and ethicsin the service of the Filipino people and the Republic of the Philippines. Under a democratic country such as the Philippines, the people‘s fundamental faith in theintegrity of political institutions is what holds the system together even under themost difficulttimes. The present situation in the Philippines is a test of this principle.Whether or not the test ispassed with success is a matter yet to be seen. However, atthis stage, what could be gainfully earnedfrom present experience is the knowledgethat people‘s trust seems to lie on the existence of ethicsand accountabilitymechanisms and infrastructure. As shown and proven with quite a measureofsuccess by many studies, ethics and accountability are keys not only to effectivegovernment butalso to effective governance. Besides, it seems everyday, there are new stories about businessesand organizations being accused or investigated for ethical violations. The continuous reports ofcorporate houses falling under the pressure of common unethical practices such as bribery fromcontractors, red tape activities, misappropriation of funds, omission of important public data forself preservation and falsification of public documents has drawn the attention of business leaders,managers, shareholders and business school students from all over the globe and not only in thePhilippines. World over, businessmen, who once considered ethics and morality as hindrances insuccessfully running their organization, are now forced to look towards ethics and morals asguiding forces. These events around the world have heightened everyone‘s awareness of ethicalbusiness practices. The following discussions deal withsome of the initiativesto promote ethics in thePhilippines especially in a government bank like Landbank. Moreover, Landbank is also a business. Business is a financial category that often makesus wonder whether ethics exist because its primary concern is to make profit. Surprisingly, thereis what we call Business Ethics emphasizing the fact that a business can also be moral while makingbillions of profit in its categorical industry. Per observation, companies and business people who ~3~
  4. 4. wish to thrive long-term must adopt sound ethical decision-making practices. Companies andpeople who behave in a socially responsible manner are much more likely to enjoy ultimatesuccess than those whose actions are motivated solely by profits. Knowing the difference betweenright and wrong and choosing what is right is the foundation for ethical decision making. In manycases, doing the right thing often leads to the greatest financial, social and personal rewards in thelong run. ~4~
  5. 5. Chapter I BUSINESS ETHICS According to Christina Gruble, Business Ethics is often defined based on a company‘sgoals, priorities, and how books and resources would define it. I need to define Business Ethicsbecause Landbank of the Philippines is a banking business that makes profit to help thePhilippine government and its projects.Actually, Landbank is one of the top grosser in incomecontribution to our government yet, it still maintains its high ethical standards in the service of theFilipino people. How our organization does it may be enlightened as the discussion progresses. The most widely accepted definition for business ethics says that it is a set of corporatevalues and codes of principles, which may be written or unwritten, by which a company evaluatesits actions and business-related decisions. As the definition goes, ethics business and the criteriafor what is good and what is bad is shaped by a company‘s best practices and long-standing culture.In simplest terms, business ethics refers to the propensity to differentiate right from wrong and theresiliency to choose to do what‘s right in terms of actions and decisions. It applies to theemployees both rank and file and managers as well as the company as a whole. There are two ways that companies can approach and implement the concept businessethics. These two approaches are based on two schools of thought, each providing a differentdefinition for Business Ethics. The first school of thought is shareholder-focused. It maintains that ethical businessdecisions can be made when individuals within the organization and the company as a wholealways keep the best interest of the owners in mind. For those who see business ethics from theshareholders‘ perspective, actions and decisions should be geared towards generating more profit. On the other hand, the stakeholder-focused approach puts premium on corporate socialresponsibility. Under this concept, ethical companies are those that act and decide with the interestof all stakeholders not just the owners in mind. Business ethics here means striking a balance toservice all groups that have an impact on, or are impacted by the company‘s decisions and actions.These stakeholder groups can include the employees, the supply chain, the end consumers,relevant government and non-government organizations, and the community where the companyoperates, among others. Given this, the stakeholder perspective emphasizes the need to makebusiness decisions that will work well for all the stakeholder groups. This is the approach beingimplemented by the Landbank of the Philippines as embodied in its vision and mission as aninstitution. ~5~
  6. 6. According to Ismael D. Tabije, Business Ethics is a form of applied ethics that examinesjust rules and principles within a commercial context; the various moral or ethical problems thatcan arise in a business setting; and any special duties or obligations that apply to persons who areengaged in commerce. Generally speaking, business ethics is a normative discipline, wherebyparticular ethical standards are advocated and then applied. It makes specific judgments about what is right or wrong, which is to say, it makes claimsabout what ought to be done or what ought not to be done. While there are some exceptions,business ethicists are usually less concerned with the foundations of ethics (meta-ethics), or withjustifying the most basic ethical principles, and are more concerned with practical problems andapplications, and any specific duties that might apply to business relationships. Business ethics can be examined from various perspectives, including the perspective ofthe employee, the commercial enterprise, and society as a whole. Very often, situations arise inwhich there is conflict between one and more of the parties, such that serving the interest of oneparty is a detriment to the other(s). For example, a particular outcome might be good for theemployee, whereas, it would be bad for the company, society, or vice versa. Some ethicists see theprincipal role of ethics as the harmonization and reconciliation of conflicting interests. The definition for business ethics varies in every company. The challenge in defining theterm lies in the fact that there is no clear definition of right and wrong. It is true that we have lawsto punish offenses that are necessarily wrong. Unfortunately, these laws do not define and punishwhat is morally right and what is morally wrong. As a result, it is left to individuals and corporatepersons to make their own classifications, and act and decide by these classifications. Companies arrive at these right-wrong classifications based on many different factors.These factors include: the culture within the company, the presence of a formal professional codeof business ethics, the internal system of rewards and recognition, recruitment and humanresources practices, the values system, the way management treats its employees, and the flow ofthe decision-making process. In terms of business ethics, the trend now rapidly favors companies that operate from astakeholder perspective. The theory is that communicating a socially responsible image compelsend-consumers to support the company and its product because of the moral benefit that it givesthem. To be sustainable, it is thus important for decision makers that set the standards for businessethics to expand their horizons beyond the quest for profit. In my opinion, Business Ethics in whatever business category provided must be assertedfrom time to time to check and balance profit with social responsibility and morality. I am alsobeginning to understand why Landbank in its best effort to promote what is morally good in the ~6~
  7. 7. banking industry, had to continuously advertise, conduct seminars and disseminate informationon strict adherence to Landbank‘s Code of Conduct at all times. This is because we need to bereminded that our service has to comply with the highest ethical standards our institution hadbestowed upon us as a company mission, in order to attain its goals the right way. This shouldbe seen in our behavior in public, the way we do public service and how we obey the bank rulesand regulations without strict supervision. According to Leanne Hoagland-Smith, asserting values or ethics and beliefs to thebehaviors is critical because this action helps to ensure consistency and transparency.Inconsistency, however is probably the greatest challenge any individual or business faces. Possiblythe greatest obstacle to asserting values to behaviors resides within each individual. No one wantsto point the finger at someone else. Yet, if individuals do not assert the agreed positive corebusiness values and ethics then the results of the past will continue to be manifested. What thisalso suggests is each individual may need to become a better self-leader who is more self-aware,more self-regulated and more motivated. For when we can assert the values to the behaviors whileour individual behaviors are still emotionally aware of the feelings of others, then those positivecore values will remain strong throughout the organization and within each individual. ~7~
  8. 8. Chapter II ETHICAL BANKING The assertions and definitions in the previous chapter tackle a general point of view onethics in the business world but Landbank is a bank. What makes it different with otherbusinesses? What kind of ethical standards a bank must follow? How does it form its own Codeof Conduct? These are the questions that came into my mind as I continuously dissect the topic Ihave chosen to develop. The essence of Ethical Banking may be the answer to the abovequestions. Historically banks have been viewed solely as financial institutions, which should concernthemselves with all things financial. Morality has not entered the equation. This public view hasallowed banks significant leeway with concern to ethical standards. This is because they have notbeen associated with the actions taken by the businesses they lend to. Banks have also stated that areason for not mounting the new challenges that sustainability presents is that such inspectionwould require interference in the activities of clients. (Jeucken 2002) However, with changingsocial demands, and as more is known about the effects that banks can have through their lendingpolicies, banks have begun to feel pressure from the general public, NGOs, governments, and thelike to go beyond conventional business management. For example in the mid 1990s theCooperative Bank asked 6,000 customers what their thoughts were on ethical banking; 84%responded that it was a good idea. (Harvey 1995) In fact the cooperative bank was formed inresponse to the growing consumer base looking for ethically oriented banks. There is a potentialfor banks to create environmentally and socially conscious business practices. In general all banks play an intermediary role in the economy; because of this thepossibility for banks to contribute to sustainable development is potentially profound. (Jeucken2002) Banks have extensive and efficient credit approval systems, which gives them a comparativeadvantage in knowledge (regarding sector-specific information, legislation and marketdevelopments). {Jeucken&Bouma 1999} Banks are well seasoned and well equipped to weighrisks and attach a price to these risks; because of this banks can fulfill an important role in reducingthe information asymmetry between market parties, for example between the business andconsumers. This is important not just to consumers but also to depositors. When depositors allowa bank to invest for them they are able to assume that the bank will know which investments willmaximize their returns. Conventional banks are legally bound to maximize return for their clients.If clients are concerned with more than simple return (i.e. the costs of the return on other areassuch as society and the environment) then they may need to turn to an ethical bank to find ways inwhich they can garner return while keeping to their own moral concerns. ~8~
  9. 9. Through their intermediary role, banks may be able to support progress towardsustainability by society as a whole—for example, by adopting a ‗carrot-and-stick‘ approach, whereenvironmental and social front-runners would pay less interest than the market price for borrowingcapital, while environmental laggards would pay a much higher interest rate. Banks can alsodevelop more sustainable products, such as environmental, social, or ethical investment funds. Inaddition, there is great scope for banks to improve their internal environmental performance.(Jeucken&Bouma 1999) In creating environmental and social screens, banks can promotesocially/environmentally-geared companies and penalize those who do not conform to thesestandards. However it is important that these different possibilities (i.e. social/environmentalscreens, ethical products, and internal environmental practices) be used as a package. If not, thereis a danger that banks could simply do the things that make them look the most ethical (i.e.advertise their recycling program) while not changing other areas that would have a larger impact.If the changes are solely driven by customers, the bank will be pressured to offer preferentialtreatment to what depositors deem as desirable, but will have limited ability to punish undesirableaction. Governmental regulation, initiated by an informed and involved public would be aneffective way to ensure that all banks follow socially accepted morals and ethics. Ethical banks excel in community involvement, as do other financial institutions such ascredit unions. Community involvement is not limited to ethical banks as conventional banks alsopartake in such actions. The following are a few examples of community involvement done byethical banks, credit unions, and conventional banks: Affordable housing projects (LandbankProvident Fund Housing Loan for employees and Easy Home Loan for clients and depositors) Many banks/credit unions try to increase financial literacy in the community Give local scholarships & sponsorships. Financially support community events (Municipal and church fiestas) Environment is a key focus amongst ethical banks (in this field specially called sustainabilityor green banks) as well as amongst many conventional banks that wish to appear more ethicallyoriented or that see switching to more environmental practices to be to their advantage. Some viewthis move as green washing. In general bankers "consider themselves to be in a relativelyenvironmentally friendly industry (in terms of emissions and pollution). However, given theirpotential exposure to risk, they have been surprisingly slow to examine the environmentalperformance of their clients. A stated reason for this is that such an examination would ‗requireinterference‘ with a clients activities. (Jeucken 2002) While the desire to not meddle in thebusiness of the client is valid, one could also note that banks are required to interfere in thebusiness of their clients regularly to ensure that the clients‘ business plan is viable before issuingthem a loan. The kind of analysis that all banks partake in is termed a single bottom line analysis(this analysis only considers financial performance). It is arguable whether or not performing a ~9~
  10. 10. triple bottom line analysis (an analysis that takes into account environmental, social, and financialperformance) would be any more intrusive.Internal vs. external banking ethics Conventional banks deal with mostly internal ethics, ethical banks add to internalconcerns by applying external ethics. Internal ethics are concerned with the well being of employees, employee and customersatisfaction, benefits, wages, unionization, fair sex and race representation, and the banksenvironmental standing. Environmentally the potential combined effect of banks switching to moreenvironmentally friendly practices (i.e. less paper use, less electrical use, solar power, energyefficient light bulbs, more conscientious employee travel policies with concern to commuting andair travel) is huge. However when compared with many other sectors of the economy banks do notincur the same burden of energy, water and paper use. (.Jeucken&Bouma 1999) Many timessuch energy efficient changes are not based on moral concern but on cost efficiency. External ethics are concerned with the wider ramifications of banks actions. External ethicslooks at the impacts that their business practices, such as who they loan to or invest in, will have onsociety and the environment. In applying external ethics, one looks at how the products of bankscan be used unethically, for example how borrowers use the money that is lent out by the bank. In general banks are reluctant to broaden the scope of their external ethics policies becauseit would require that the bank interfere with the activities of its clients and/or screen its potentialclients. External ethics can be seen as much more important than internal ethics because thepotential that the bank has internally to cause huge societal or environmental damage is minimalwhereas many companies that banks fund have great potential to cause widespread damage.Internal ethics, such as switching to energy efficient light bulbs, are relatively insignificant if thebank is, for example, simultaneously funding the unsustainable harvest of natural resources. Ethical banking is a relatively new sector; along with this fact come problems. Theseproblems fall under two categories; the first concerns depositors, and the second concerns ethicalbanks. In the first category lies the problem of really knowing how ethical banks measure orqualify their ethical policies. This is insufficient. Even when given the opportunity to view anaccountability report it is difficult to truly understand what their screening processes are. "TheEthical Policy requires that all business accounts are screened at the time of account opening bythe staff person dealing with the member. Social and environmental risks of larger businessbanking loans (non-credit-scored loans) are assessed at the time of the loan application, guided bythe Ethical Policy and Lending Policies." ~ 10 ~
  11. 11. This statement does not give the reader the information/he needs to understand the criteriaused in assessing clients. Another issue in this category is that of codes. Many ethical banks as wellas conventional banks voluntarily join larger bodies that put forth certain regulations that,according to the rules set by the body, should be followed by members. Such outside bodies couldact as overarching institutions that could guarantee a certain level of conformance with certainregulations. Civil Service is a sample of this larger bodies of institution. Depositors who use ethicalbanks do not have this assurance because there is no external regulatory body that sets minimumacceptable legal standards. In the second category ethical banks face obstacles such as losing business and consumersupport to conventional banks, and having to regulate above and beyond the present internationallegal systems. According to Cowton, C. J., and P. Thompson, "banks that had signed the United NationsEnvironment Programme (UNEP) Statement, a voluntary industry code that promulgatedenvironmental stewardship, transparency, and sustainable development, did not act significantlydifferent than the non-signatories. They concluded that, for codes to be more effective; regulators,monitors, and methods of enforcement need to be in place. (Cowton&Tompson 2000) Thisproblem is similar to the problems faced by the fair trade movement. Both the fair trademovement and ethical banks rely on people to pay extra for known ethical goods. There is a limitto how much more people will pay for that guarantee, after that point further initiatives willundercut the banks income and therefore are likely to not be followed. Losing business to banks that do not screen so strictly is a problem for ethical banks. Manytimes ethical banks must work with much lower budgets because of this. Ethical banks exclusion ofunethical borrowers often results in the borrowers going to other banks, this brings up theimportance of industry wide regulations. One way of raising the industry wide regulations would befor citizens to apply pressure on banks. Without this rise it is difficult to impede unethicalbusinesses from finding a bank to finance their projects. A rise in regulations that deal with moraltopics is not out of the question. The current industry wide codes, for example, prohibit thefinancing of illegal drug production. This reflects the prominent societal morals against such drugs.Credit and court investigations are employed by Landbank to keep up with these standards as anethical bank especially in marketing bank products and services. Ethical banks cannot solely rely upon the legal system to determine whether or not apotential client has acted unethically or whether or not their future plans are unethical. This isbecause of the wide range of laws throughout the world. While a business may be lawful in theinternational setting, this does not mean that the laws were up to the moral standards in which thebank originates. For example, extensive pollution and labor laws that would not be consideredlawful in many developed countries are allowed in many lesser-developed countries. ~ 11 ~
  12. 12. Judging what is ethical Claiming to be an "ethical" bank requires an objective way to determine what is ethical.Popular ethical theories that could be used include those of Mill, Kant and Aristotle.John Stuart Mill The premise of John Stuart Mills utilitarian ethical theory is that an action is of moralimportance if it contributes to the overall happiness of all people. Therefore, in Mills perspective abank would be moral if it tended "to promote happiness".(p. 10)Mill 1957 If the conduct of thebank in question acts in way that produces the greatest amount of happiness for the greatestamount of people then it will be acting morally according to Mill. Because the banking sector is solarge, complex and far-reaching in its effects it is difficult to judge the happiness of everyoneaffected by the conduct of banks in general or by certain banks in particular. However it is mucheasier to see how alternative conduct could produce and/or promote much greater happiness. Forexample through the act of generous philanthropy in forms such as giving back to communities,employees, members, environmental/development groups, etc. could increase happiness.Donation to DEPED of P4,000,000.00 is Landbank‘s way of sharing its blessings to createhappiness. Similarly lending to businesses that treat employees fairly and are concerned with suchpublic goods as the environment would also be considered ethical according to Mill. Given thatthings such as global warming, air pollution, water contamination, and soil pollution negativelyaffect large groups of the population, if not all of the population (in the case of global warming),banks that chose to partake in the above examples could be viewed as contributing to the overallhappiness of all people and would hence have moral value. In line with this Landbank promotedits Linis Month and Environment friendly surroundings for all units is another small way ofshowing ethics because it contributes to the health and well being of our depositors andemployees.Immanuel Kant According to Immanuel Kants Categorical Imperative, morality lies in actions not inoutcomes. With this knowledge one could propose that the act of lending money is not in and ofitself immoral and according to Kants perspective banks should not be judged as moral orimmoral based on the outcomes of their lending. However the second formulation of Kantscategorical imperative states: "act in such a way that you always treat humanity, whether in your ownperson or in the person of any other, never simply as a means, but always at the same time as anend" (pg. 66–67)Kant 1956. Based on this formula one could argue that unethical lending on thepart of banks either commercially (to corporations that will likely incur losses because they act in afashion that will soon be unlawful, e.g. pollute excessively, use child labour, etc.) or to individuals(who, for example, would be financially unable to repay the loan, ex. the American mortgage crisistoday) is treating its clients as merely means for financial gain rather than as ends in themselves. ~ 12 ~
  13. 13. This interpretation portrays banks that lend without screening their clients to see if they would besupporting practices or purchases that would ultimately lead to the clients‘ failure as unethical.Aristotle For Aristotle, lawfulness is important in the measurement of morality, as is equality andjustice. Whether an action is or is not in accordance with the law is an important measurement ofmorality for Aristotle. Many banks do business in accordance with the law in all practices. Theymay also specifically seek to do business with law-abiding clients. Nevertheless this can beproblematic, as laws vary internationally. This means that a bank could be viewed as ethical evenwhile funding clients who lawfully conduct business in harmful manners. However thismeasurement is challenged by Aristotles statement: "what is just in transactions is somethingequitable, and what is unjust is something inequitable" (p. 84)Aristotle 2002. This means that abank needs to take into account the unjust/inequitable behavior of its borrowers to qualify as anethical bank. For example, lending to a law-abiding corporation that does not pay its employees asufficient living wage would be immoral.Bank regulations and the free market The argument against regulating banks is that the regulations would violate the properfunctioning of the free market economy. Severyn T. Bruyn disputes this argument in his article"The Moral Economy".Bryun 1999 In fact, morals were supposed to be a natural part of theworkings of the market economy. He believed that economic transactions should be the result ofmutual agreement and should involve morality and friendship. He stated that selfishness couldobstruct the market economy from running morally. If interpersonal relationships did not play apart, then the interdependency experienced by individuals could vanish and unfair play based ongreed and mistrust would exist. Bruyn discusses todays society as one that has lost its basic moralsin the market. He states that there is a need for a reigniting of civil society. (Bryun 1999)Originally, civil society was assumed to be naturally able to regulate the morality of the market, butwith the great distances between individuals involved in transactions as time has passed,governments became the prime regulators of morality in economic exchanges. In recent historygovernments have been pressured to stop interfering in the economy. This has allowed bodiessuch as corporations, which operate immorally or at best amorally, to create extremely damagingoutcomes without legal or societal penalty. Bruyn promotes the resurrection of civil society, callingsociety to demand fair practices and to regulate the morality of the economy. One way peoplecould influence civil society would be to act as economic regulators by choosing to do businesswith banks that do not finance corporations such as the aforementioned.[citation needed] Rudolf Steiner suggested that capitalism has the task of funding economic initiatives; capitalshould be directed into directions productive for society. He proposed that rather than pricesbeing set through either the total control of government regulation, or the total lack of control of a ~ 13 ~
  14. 14. free market, each industry could have self-regulating associations of producers, wholesale and retailbusinesses, and consumers. These associations would determine prices fair to all three groups.The state would not interfere with purely economic decisions but would be responsible forprotecting human rights (this could include a minimum wage and safety in the workplace) andequality of its citizens rights. Hence, inLandbank a review in its human resources managementare conducted annually in the course of history to gauge its fair practices in dealing with itsemployees and measuring each unit‘s way of promoting Landbank‘s ethical standards in handlingthe banking business.How it came that the Landbank‘s Code of Conduct was formed formanagement and employees, shall also be discussed as a review of the past shall be conducted inthe next chapter. ~ 14 ~
  15. 15. Chapter III LANDBANK HISTORY – ICONS OF ETHICS The story of the Landbank of the Philippines is the story of the Filipino farmer andPhilippine countryside development. The journey began when President DiosdadoMacapagal provided the vision and leadershipfor the passage of Republic Act No. 3844 on August 8, 1963, otherwise known as the AgriculturalLand Reform Code of the Philippines with an initial authorized capitalization of P1.5 Billion.Under the intent of the law, hailed by President Macapagal as an act to emancipate the Filipinofarmer, Landbank was ―to provide timely and adequate financial support to all phases of AgraraianReform‖. Its initial function was to finance the acquisition and distribution of agricultural estatesfor division and resale of small landholders as well as the purchase of the landholdings by theagricultural lessees. Landbank came into being with great aspirations, as it gave meaning anddirection to the lives of its intended clientele, the Filipino farmer, while offering investmentalternatives to former landholders in their quest for more progressive role in the country‘seconomic development. On July 21, 1973, under PD No. 251, LBP was granted universal or expanded commercialbanking powers and established LANDBANK as thefirst universal bank in the country with asocial mandate to spur countryside development. Its authorized capitalization was increased to P3Billion. With the strengthening of Landbank, President Marcos reconstituted the Board ofDirectors. He appointed Cesar EA Virata, then Secretary of Finance and BasilioEstanislao asPresident. Mr. Cesar EA Virata was recognized by his peers as principled man. He was the epitomeof an honest and uncompromising technocrat. He was a soft-spoken gentlemen whose humilitystood out in the corridors of powers that he started walking at an early age. It was to the sharp-minded and conscientious Virata that President Marcos gave the privilege of crafting thereorganization plan of Landbank. Mr. Basilio M. Estanislao, on the other hand, was a man of humble origins who rosethrough the ranks at the Central Bank of the Philippines. Equally forthright as a Central Bankofficial ever mindful of his role as a ―bank regulator‖, although relaxed and amiable in demeanor.Mr. Estanislao was a prudent, honest, hands-on President. He had a passion for the farmers thatcould not be seen in anyone else during his time. As the Bank‘s manpower grew, Estanislaoendeavored to create a corporate culture appropriate to the Bank and its mission. For Him, ~ 15 ~
  16. 16. money was not everything. He wanted the staff to realize that money won‘t buy them happiness.What will make the staff happy is achievement. He was successful in this part because when hedeclared a moratorium on promotions and salary increases, the staff did not complain. On July 8, 1982, Executive Order No. 816 was issued abolishing the Agricultural CreditAdministration (ACA) and its functions (loans to small farmers) were transferred to LBP. When President Corazon Aquino appointed Deogracias ―Sonny‖ Vistan as President andCEO of Landbank seven months after the People Power Revolution of 1986, the 42 – year oldbanker brought with him his youth, vigor and his experience from one of the world‘s best bankinginstitutions. These attributes turned out to be assets in an environment that required progressivethinking and energetic action, along with strategic approaches essential to the growth of Landbank.Philippines then, was reeling from an economic crisis, partly brought about by recent politicalturmoil, with the international economic situation of rising oil prices aggravating the local problem.In spite of the country‘s situation, Landbank was able to maintain a very clean and healthy financialcondition. To Mr. Vistan, Landbank was not an abused bank. Compared with other governmentfinancial institutions, Landbank was outstanding and unblemished. It even scored high incredibility in the international banking sector, thus, uplifting ethical banking standards in theforeign scene. On June 10, 1988, Congress passed Republic Act No. 6657 which instituted theConmprehensive Agrarian Reform Program with LBP as its financial intermediary. It was at thispoint when the Garchitorena Land Scam that involved another agrarian government institutiontook place. Having seen the loophole in the valuation of agricultural lands, the President of thePhilippines issued Executive Order 405 which transferred the primary responsibility ofdetermining land valuation and compensation for all lands covered by CARP to Landbank of thePhilippines. It was then that LBP President Vistan created the Land Valuation and LandownersCompensation Office nationwide. When President Fidel V. Ramos appointed Mr. Jesli A. Lapus at age 42 as President of thetheLandbank of the Philippines, Lapus had been away from the corporate scene for a few years.Serving the government would not be a new experience since he was the Undersecretary of theDepartment of Agrarian Reform during the administration of President Corazon C. Aquino. Hewas known to be the ―Management Whiz Kid in the ASEAN,‖ as he was named by theinternational magazine, Asian Finance. At the outset, LBP President Jesli A. Lapus realized that Landbank was one place whereyou could not put a purely social-minded person. The bank will collapse if this happens.Likewise, if a purely profit-oriented manager shall be placed, the bank will lose sight of its primarymandate which is to do Agrarian Reform-based development in the countryside. He dreamed ofmaking Landbank accessible to both the farmers and the private sector like a one-stop shop so he ~ 16 ~
  17. 17. created the Unified Systems Project units where the bank was able to offer both agrarian andcommercial banking services under one roof in all 77 provinces. LBP President Jesli A. Lapus further looked into the welfare of the officers and staff of thebank who, for years, had to contend with an uncompetitive salary. He tried to convinced thecongressmen by making his point that Landbank spends P200,000.00 per person in his annualtraining, only to lose them because he could not raise their salary considering the fact thatLandbank is not asking from the budget of the national coffers. The year 1995 saw LBPundergoing major changes with the passage of RA 7907 or Amended LBP Charter on February23, 1995. Its authorized capital stock was increased from P3 Billion to P9 Billion. The increase insalary gave Mr. Lapus the opportunity to address the human component of management, histrademark approach to solving corporate crises and increasing productivity. At the same time, theCharter amendment allowed him the flexibility to accomplish structural integrity, which to him,was imperative to the growth of the Bank. When Mr. Lapus joined Landbank in 1992, hetransformed it into an institution in which he would feel at home through agrarian projects,cooperativism and salary boosting. He dreamt big and all those big dreams came true forLandbank before he left. Mr. Florido P. Casuela then took his place. Even as a young man, he had always wantedto help others, especially those who needed a better deal in life. If his predecessors were insistenton the practice of professionalism, LBP President Casuela raised the bar when it came topunctuality. He reported for work at a time security guards were leaving and arriving for a changeof shift and utility men were only about to open doors. Reporting for work early also meant thatMr. Casuela could check what everyone most likely took for granted. Under Mr. Casuela‘s time, the World Bank approved the US$ 150 million CountrysideLoan Fund III. Landbank was also tapped as a settlement bank of the Bureau of Treasury‘s SmallInvestors Program. On August 25, 1998, the authorized capitalization of LBP was increased toP25 Billion by the Department of Finance and the President of the Philippines. What Mr. Casuela imparted to his fellow Landbankers were not sophisticated managementmodels or mind-boggling paradigms that could have raked in billions of pesos for Landbank.What he shared was the need to reaffirm the basic values that, in the end, would matter most, asLandbank seeks to fulfill its mandate to help the poor and the needy in the countryside. LBP President Margarito B. Teves was an appointee of President Joseph Estrada. He wastrained as an economist and not as a banker. Not knowing enough how a bank should bemanaged, Mr. Teves presented to the Landbankers his ―90-10‖ formula style of managementwhich meant he would rely on Landbankers to provide 90 percent of the knowledge, solutions,creativity, and work, while he would be responsible for contributing the remaining 10 percent ~ 17 ~
  18. 18. management and economic expertise. After a year, the income of the Bank soared to P751million from P228 million in the same period of the preceding year. As he realized that mostsmall borrowers, especially farmers and fisherfolk, are very creditworthy much more than theirwealthier counterparts sometimes he made a focus on loans and attained the special status forLandbank as the largest lender to the country‘s countryside financial institutions. It‘s approved lineduring his time was P9.4 billion in 2005. The bank also accredited 440 CFI‘s nationwide. Mr. Teves realized that the foundation of highly effective organization lies in the quality ofits people. When he left, he recommended a successor who would continue to serve Landbankwith the same luster and dedication. The next President had to be someone who would continueto lead the Bank with honor, dignity and deeply rooted commitment to the good of the people,especially the farmers and fisherfolk in the Philippine countryside. Mr. Teves‘ last act as presidentwas to recommend Madame Gilda E. Pico as the next President and CEO of the Bank. With atough, capable yet compassionate woman at the helm, whose aim in life is to serve, the saga ofsuccess that is the Landbank journey continues. Inspiring leadership, competence, and a good heart define who Gilda Elepano Pico is as ahuman being and as the eighth President of the Landbank of the Philippines. Madame Pico‘sbrand of leadership inspires in the men and women of Landbank a collective response marked bytheir unwavering support, dedication, integrity, and excellence in the performance of their dutiesand responsibilities as they fulfill the mandate of the institution. It is this dynamic synergy,characterized by mutual respect, concern, teamwork and cooperation espoused by Madame Piconot only among the staff and officers, but between Landbankers and their clientele and partners,that motivates them to achieve effective results. With Madame Pico steering the organizationforward, as she instills in the Board of Directors, officers and staff oneness in purpose, Landbankcontinues to be the largest government bank and the fourth largest bank in the country. Shebelieved that effective leadership at any time depends on strong relationships built on a genuineconcern for others. Madame Pico is known to consistently exhibit a calm and purposefuldemeanor during difficult times for the Bank, thus fostering a sense of reassurance that thesituation is under control and everything will turn out right. In times of crisis, Madame Pico makessure to be on top of the situation, and if the distance would allow it, she goes to the branch thatneeds her support. She makes it a point to visit employees in their times of extreme need, likewhen their communities are badly hit by a typhoon. It‘s also a way of showing that care and help ison the way. It‘s her presence, more than the money or goods that Landbank can give that matters.She looks at the holistic person and relates to both men and women as more than a co-worker, butas a friend, a family member, and a fellow citizen whose life she touches. Such an attitude andapproach to relationships can only come from a transformational leader who brings about positivechanges in individuals, in the institution and the Bank‘s clientele. The reach and scope of herinfluence thus contribute substantially to the growth of a just and humane society. By keeping trueto her authentic self, she easily and effortlessly transcends self-interest for the greater good. ~ 18 ~
  19. 19. Coming from the prominent Elepanos of Calamba, Madame Pico grew up with siblingswho received utmost care from their parents, tempered with discipline and a sense of values thatfocused on good education, dignity of hard work and honesty in one‘s dealings. She graduatedfrom College of the Holy Spirit. She joined Lanbank in 1981 as its Assistant Vice President forManagement and Operation of the Audit Department (MOAD), considering the fact that shealready rose from the ranks at Commercial Bank and Trust Company where she started as aclerk,then handled remittances, became a new accounts teller, then senior audit clerk, next EDPprogrammer and then stepped up to Manager. Her last post was as Assistant Vice President of theAuditing Division of Commercial Bank before she applied for Landbankon 1981. In 1986, she was promoted as Vice President of the Audit and Technology Group, anappropriate appointment for a Certified Public Accountant who also has an eligibility as anelectronic data processing programmer. President Vistan entrusted her the crafting andimplementation of the audit rating system which was used in evaluating performance of units andemployees. She also organized the Credit Review Department and the Rural Banking AuditDepartment to review the loan portfolio of Landbank and to review operations of cooperativesand rural banks. In 1989, she was promoted Senior Vice-President of the Operations Sectorsupervising the Controllership Group, Audit Group, Administrative Services and Special AssetsGroup, Technology Management Group, Facilities Management and Engineering Group andManpower and Special Services Group. During the time of President Casuela, when the Aisan financial crisis was still at its height,she doubled her efforts to effectively manage Landbank‘s general and administrative expenses, andadopted belt-tightening measures that contributed to sustaining their overall profitability. When Madame Pico finally became the Landbank President, she immediately conducteddialogues with farmers, rural bankers, and cooperative members who opened her eyes further andmade her realize that farmers and fisherfolk have so little in life. For her, if Landbank would nothelp them, then she wondered who else would help them? She was certain that other banks wouldnot even touch them. She then decided as Landbank President that her remaining years withLandbankwould be the years that she would certainly help them. What followed was the creationof programs that would strengthen the conduits of loans and assistance to farmer. She put up aDevelopment Advocacy Fund of P1 billion; set up the Agricultural Guaranty and Fund Pool ofP4.48 billion; Calamity Assistance Program; and Rice and Corn Productivity Program. She alsodirected Landbank to invest in Unsecured Subordinated Debt Issuances of CFIs, where shereduced the interest rates for farmers to benefit further. Today, Madame Pico continues to be a model of principled and effective leadership.Being results-oriented, she always gives her staff a timetable and expects them to produce results atthe time specified. Madame Pico also values a two-way communication with the officers and staff.To keep them informed she delivers a quarterly thematic ―State of the Bank Address‖ focused on ~ 19 ~
  20. 20. the latest Bank accomplishments, programs and challenges. In the same way she alsocommunicates to clients through her speeches in conferences and conventions she got invited to.This is also her way of personally relating to clients howLandbank had helped them through crisisunscarred all these years. For her, as the first woman President of Landbank, it is important toshow the world how ethical banking can be in the very essence of Landbank operations. In one ofher an excerpt from one of her speeches , she stresses the importance of Ethics in the workplace:58th Annual National Convention and Corporate Meeting (Part I)Banking on Best Practices: A sure way to successby LANDBANK President and CEO Gilda E. PicoMay 25, 2011SMX Convention Center Pillar #2: Development of Institutional values and principles ―Developing your institutional values and principles is fundamental for any successful organization. Your mission statement, values, and code of ethics are the "North Star", the beacon by which you set your compasses and align your strategies. They best represent what your rural bank is about, and define what it is and what it is not. I would assume that you all have your vision, mission, and values statements. But it is not enough to just have them on paper or framed and posted on your walls. You should constantly revisit them to make sure that you are on the right path or if the path you have set is indeed the one you wish to tread. Do your statements define your bank? Remember that your vision statement should reflect the essence of your organization, and should contain what it envisions in terms of growth, values, employees, and contributions to society as a whole. The mission statement, on the other hand, should be a more precise declaration of a business strategy and developed from the customers perspective in accordance with the vision of the organization. Your mission should answer these questions: What do we do? How do we do it? For whom do we do it? A periodical mission review helps your organization get back to basics and make sure that you have not skewed your activities to meet the needs of other stakeholders more than your actual clients. The values statements, meanwhile, should reflect the core ideology and embody the values that the organization lives and breathes. And finally, a code of ethics should be established to ensure that all directors, management and employees abide by the same ~ 20 ~
  21. 21. standards of conduct, and as a requisite in guaranteeing the balanced rights and interests of all stakeholders involved.‖ Consistent with its mandate as a development financial institution, LANDBANK has sincetaken the lead in extending timely financial and development support to small farmers andfisherfolk, micro and small and medium enterprises, agri-infrastructure, agri—business, agri-relatedand environment projects which it considers its priority sectors. Madame Pico and all her workforce makes sure that consistency in the performance of their duties and responsibilities to ensurethat the service execution is being carried out and passed on even to newcomers through trainings. With its strong network of more than 340 branches nationwide complemented by thestrategic partnerships it has forged with key development players, the bank‘s credit delivery systemis able to penetrate almost 90 percent of the country‘s total number of municipalities. Even while aggressively pursuing its mandate, it has been able to strike the ideal balance byachieving and sustaining profitable banking operations. To date, LANDBANK ranks among thecountry‘s top five banks in terms of assets, loans, deposits and capital. Its sustained financialviability has continuously enabled it to become one of the biggest contributors to the government‘srevenue generation efforts and one of the most active partners in supporting its flagshipdevelopment programs. ~ 21 ~
  22. 22. Chapter IVLANDBANK‘S MISSION, VISION AND CORE VALUES AS ETHICAL GOALOUR VISION: LANDBANK shall be the dominant financial institution in countryside development,committed to the highest standards of ethics and excellence in the service of the Filipino people.OUR MISSION: We shall continue to provide timely financial and technical support for our farmers,fisherfolk and other priority sectors. We shall deliver innovative products and services that are consonant with ecologicalenhancement and effectively address our clients‘ needs. We shall embody professionalism and integrity, providing our employees with a workenvironment that encourages growth and rewards excellence. LANDBANK is committed to improving the lives of all its stakeholders and working withthem to lead the country to economic prosperity.OUR CORE VALUES: SOCIAL RESPONSIBILITY Patriotism, love of country, service to community, concern for environment, customersatisfaction, man for others and caring ~ 22 ~
  23. 23. TRUST Equity, openness, and fairness EXCELLENCE Leadership, quality, initiative, innovative, competence PROFESSIONALISM Integrity, mutual respect, teamwork, dedication, commitment and loyalty The Constitution declares that a public office is a public trust. The Land Bank of thePhilippines, being a government-owned corporation is a public office. Our ability to secure andmaintain our strong position in the banking industry depends – to a great extent – on the trust andconfidence of our clients, business partners, other stakeholders and the general public. We recognize that this kind of relationship that is founded on trust entails responsibilitiesfrom the people working for our organization. As such, employees are expected to strive toconsciously adhere to the following work principles consistent with our organization‘s vision andmission as well as our core values: *As civil servants, we are accountable to the people, we serve by committing to respond totheir needs with efficiency, genuine concern and professionalism.‖ *We put value on honesty and integrity in our day to day business dealings in the same waythat uphold these principles in our personal lives.‖ *We uphold truth and justice by playing an active role in stamping out corruption andunfair business practices that taint the image of the institution and the whole bureaucracy.‖ *We treat our clients and colleagues with respect always mindful of their rights as humanbeings.‖ *We lead simple and modest lifestyles even as we continue to take pride to work in theservice of the nation.‖ What had been discussed in the History of Landbank and exhibited by Landbank‘s Iconsof Ethics, is better understood through the Mission, the Vision and the Core Values ofLandbank. ~ 23 ~
  24. 24. We are Landbankers because we were brought up by Landbank based on the above corevalues. It is instilled in us from the very first day we got employed through our orientations andtrainings how to help our institution carry out our social mission without sacrificing the efficiencyand effectiveness in the quality of our services. Landbank is not a perfect organization. We have our share of ethics related cases. Itcould not also be denied that it is a fact that increasing incidents in the workplace have pushedour organization and other institutions to either implement or actively promote code of ethics thatact as a set of guide posts to helps practitioners understand expected behavior. For example, Booz Allen Hamilton has implemented a code of ethics and trainingprogram that highlight clear expectations of employee behavior in terms of the organizations corevalues and adhered standards. "These guidelines basically enable security professionals to recognize how they need to actin circumstances that require an ethics decision," Smith says. For example: Someone borrows anID card because they forgot theirs. What could go wrong? How should employees behave? Whatsthe correct action to take?‖ This document should clearly outline expected behavior of employees based on the valuesand standards of the organization. In the case of Booz Allen, these codes clearly spell out what isacceptable employee behavior, for instance, in the event an employee receives personallyidentified information from a client, or how the employee can protect confidential clientinformation. "Whats important to the organization and how they would like to be viewed by othercompanies is what defines their ethical behavior," Smith adds. Samples from Booz Allens business code of ethics: "Protecting Confidential Client Information: The best way to protect client information is tonot take possession of it. Each of us must restrict receipt of client information to only informationthat is reasonable necessary to propose or conduct an engagement even if greater informationaccess is offered. Your obligation to maintain the confidentiality and security of client informationcontinues not only during and after the engagement ends, but also during and after youremployment with the firm..." "Employee Personal Data : Each of us must exercise extra caution when handling anemployees personal data. We do not disclose current or former employees personal data to thirdparties other than confirmation of employment dates and position without prior written consent ~ 24 ~
  25. 25. from the employee or former employee unless the information is required to fulfill a legitimatebusiness need- such as employee benefits or as required by law..." Ethical Training Smith also recommends organizations offer refresher courses regularly on codes of ethicsto professionals. These courses will act as a positive reminder to them that ethical behavior isexpected and mandated by the organizations culture. Other options organizations have used: •Scenario-Based Training: Moretti goes through scenario-based training every six monthsin his multinational banking institution. The emphasis is on how professionals need to operate andfollow basic information security principles and financial industry guidelines. For example, thetraining outlines a scenario of a professionals access to sensitive data and provides guidelines topractitioners on how they need to handle data and follow the rules of sharing, distributing andstoring this information. "Over the last five years these courses are getting better," Moretti says. "Professionals likeme now understand that we are the ambassadors for ethical behavior and should activelyencourage other employees to adhere to it." •Affiliation with a Professional Association: As a manager of a security group, Morettiprefers hiring a certified professional who has demonstrated the capability of operating within acertain code of ethics. Professional associations like (ISC)2 and ISACA usually follow a strict codeof ethics that helps security practitioners maintain their professional standards. "If you areaccredited an information security certification, you are actively encouraged to go through trainingon ethics and are also reviewed by your other peers in the industry, as a result you build a strongethical awareness." If this is a picture of how other institutions and organizations arrive to their present code ofethics and their own regulated code of conduct, Landbank, being a government owned andcontrolled corporationemanates its own Code of Conduct with a constitutional legal basis as afoundational arm for its creation. It has a legal framework because it works hand in hand with ourPhilippine Government. This is better discussed in the following chapter. ~ 25 ~
  26. 26. Chapter V LEGAL FRAMEWORK OF LBP CODE OF CONDUCT The 1987 Constitution of the Philippines provides the basis of ethical and accountablebehavior in the public sector. Section 1 of Article XI states that: Public office is a public trust. Public officers and employees must at all times beaccountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency,act with patriotism and justice, and lead modest lives. This provision requires every public officialand employee to exhibit and live certain values while in government service. In addition, the Statehas been mandated by the Constitution to ―maintain honesty and integrity in the public service andtake positive and effective measures against graft and corruption‖. In 1989, the Philippine legislature passed Republic Act No. 6713, a law embodying theCode of Conduct and Ethical Standards for Public Officials and Employees. The Code spells outin fine detail the do‘s and don‘ts for government officials and employees in and out of theworkplace. These do‘s and don‘ts are encapsulated in the eight norms of conduct to be observedby all government officials and employees. These norms or standards are: • Commitment to public interest • Professionalism • Justness and sincerity • Political neutrality • Responsiveness to the public • Nationalism and patriotism • Commitment to democracy • Simple living The Code, likewise, introduced some reforms in the administrative systems like givingheads of agencies the responsibility of ensuring there is a value development program for theiremployees; continuing studies on work systems and procedures with the end in view of improvingthe delivery if public services; and, mandating the designation of a resident Ombudsman in everydepartment, office and agency. Incentives and rewards system has also been put in place.Another comprehensive law passed to address and curb the commission of malfeasance ingovernment is Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act. In Section 1 of this law, it states that: ~ 26 ~
  27. 27. It is the policy of the Philippine Government, in line with the principle that apublicoffice is a public trust, to repress certain acts of public officer and privatepersons alikewhich constitute graft and corrupt practices which may lead thereto. This law specifieseleven (11) instances of corrupt practices in addition to acts oromissions already penalized by existing laws.Political Commitment The legal infrastructure that prescribes ethical conduct of; public servantsisreinforced by political commitment. This political commitment, while difficulttobenchmark, has been demonstrated by some policy pronouncements. Quitesignificantare the ten-point action agenda of the present Administration and theMedium-TermDevelopment Plan (2000 2004) or AngatPinoy 2004 which embodythe framework for thecountry‘s socioeconomic development. The agenda and the MTDP place the implementation of a sustained trainingandorientation program on anti-graft and corrupt practices and laws, and on theEthicalStandards Act of Public Officials and Employees among theAdministration‘spriorities to reduce graft and corruption and exact high standards of ethicsingovernment. Proceeding from this, departments and agencies of the executivebranchhave set up and implemented various programs that aim to eliminatebureaucratic red tape.One-stop action centers are now being promoted andinstitutionalized in the agencies.Oversight Institutions The legal infrastructure and political commitment are supportedandcomplemented by the existence of oversight institutions. The creation of theoversightinstitutions that deal with issues of ethics, accountability, graft andcorruption are mandatedby the Constitution. The common feature of theseinstitutions is they enjoy a substantivedegree of fiscal autonomy in the sense that theyare not subject to the fiscal controls of theexecutive. The budget is directly releasedto these institutions and the heads are authorizedto realign savings from their budget.They also have quasi-judicial powers in that they canadjudicate and decide cases andenforce their own decisions, including the imposition ofsanctions which may includesuspension from office or even dismissal from governmentservice. In the Philippines, the three constitutionally mandated oversight institutions arethe Civil Service Commission, the Office of the Ombudsman and the Commission onAudit. The Civil Service Commission is the central personnel agency of the government. ~ 27 ~
  28. 28. Under Section 3, Article IX-B of the Constitution, the CSC is mandated to―establishcareer service and adopt measures to promote morale, efficiency,integrity,responsiveness, progressiveness, and courtesy in the civil service.‖ It is also taskedto―institutionalize a management climate conducive to public accountability.‖ CSC‘seffortinvolves in enforcing ethics and accountability of line agencies basicallyinvolves threeapproaches. One approach is regulatory, the other, corrective, and thelast one,developmental. The first approach addresses compliance of-agencies withpolicies andstandards on HRD systems set by the CSC. For instance, CSCprescribes qualificationstandards for each and every position in the Philippinegovernment. Non-compliance withthe QS by agencies in the processing ofappointments of their staff results in the disapprovalby the CSC of such appointments. But, apart from the substantive requirements for practically all kinds ofpersonnelactions such as the publication requirement and the promotion and selectionboardprocesses. Non-compliance with the procedural requirements constitutes groundforcorrective or even punitive action. The second approach deals with disciplinaryactionsagainst official or employee for infractions committed in relation to theperformance ofhis/her official functions. The Administrative Code of 1987 orExecutive Order No. 292outlines the various acts that are subject to administrativedisciplinary proceedings.However, administrative discipline is not a function within-the exclusive jurisdiction ofCSC. Agency heads as well as the Office of theOmbudsman also have the authority toproceed against erring government officialsand employees. The third approach isdevelopmental and will be discussed later inthe succeeding paragraph. The Office of the Ombudsman acts as a prosecutor against those charged with theviolation of RA 3019, RA 6713 and the law against ill-gotten wealth, among others.It ismandated to investigate and prosecute the criminal liability of public officialsandemployees involved in graft and corruption. The Commission on Audit is the fiscal watchdog of the government. COAisresponsible for ensuring legal and proper disbursement of public funds andpreventingirregular, unnecessary, or extravagant expenditures or usage of public funds. Italsohas quasi-judicial powers. All these oversight institutions enforce accountability ethic in government.Active Citizenry Market principle is at work in government operations. This simply means that ~ 28 ~
  29. 29. the services provided by the government are dictated, to a large extent, by the need of the people. Some mechanisms by which the extent, type and adequacy of services are gauged are feedback surveys and the practice of benchmarking. The CSC has relied on MamamayanMuna, Hindi Mamaya Na! Program(translated as Citizens First, Not Later) as source of client feedback. The program isa government- wide campaign of the CSC that not only provides measure of clientsatisfaction but also addresses the need for behavioral reforms in the bureaucracy,particularly in the manner by which civil servants deal with the public. Since theformal launching in 1994, the program has gained wide acceptance by the public. By reviewing the number and subject matter of complaints received under theprogram, the CSC has been able to determine the centers of excellence in government.On the other hand, the performance of agencies that received the highest complaintsare continuously being monitored. Promoting Ethics and Accountability in the Public Sector There have been numerous initiatives in promoting ethics and accountability inthe public sector. As shown in the earlier discussions, all the above mechanismsfocus on exacting as well as developing ethics and accountability consciousness ingovernment officials and employees. The emphasis in the discussion are the various developmental initiatives, which are withinthe area of knowledge and competence of Landbank as it works with Civil Service in implementing the right ethics in a banking workplace. Landbank‘s Code of Conduct is the very heart of ethical standards that guides all officersand staff of the institution. As a whole, the Code of Conduct in return is a conglomeration ofvarious executive orders, presidential decrees and republic acts being passed by our governmentsto be followed by all public servants. However, it does not exempt its employees from beingcovered by the following laws as they are the legal framework that serves as the central processingunit and foundation of the Code of Conduct of the Landbank of the Philippines. The followinglaws are the legal basis of Landbank‘s Code of Conduct:THE ANTI-GRAFT AND CORRUPTION LAWSRA No. 1379 - An Act Declaring Forfeiture in Favor of the State Any Property Found to havebeen Unlawfully Acquired by Any Public Officer or EmployeeArticle XI 1987 Philippine Constitution - Accountability of Public Officers ~ 29 ~
  30. 30. RA No. 3019 - Anti-Graft and Corrupt Practices ActRA No. 6713 - An Act Establishing a Code of Conduct and Ethical Standards for Public Officialsand Employees, To Uphold the Time-Honored Principle of Public Office being a Public Trust,Granting Incentives and Rewards for Exemplary Service, Enumerating Prohibited Acts andTransactions and Providing Penalties for Violations Thereof and for Other PurposesImplementing Rules of RA No. 6713 - Rules Implementing the Code of Conduct and EthicalStandards for Public Officials and EmployeesRevised Penal Code (Title II) - Crime Against the Fundamental Laws of the State Revised PenalCode (Title VII)RA No. 7080 - An act Defining and penalizing the Crime of PlunderRA No. 9485 - An Act to improve Efficiency in the Delivery of Government Service to the Publicby Reducing Bureaucratic Red Tape, Preventing Graft and Corruption, and Providing PenaltiesPD No. 749 - Granting Immunity from Prosecution to Givers of Bribes and other Gifts and totheir Accomplices in Bribery and other Graft Cases Against Public OfficersPD No. 46 - Making it punishable for Public Officials and Employees to Receive, and for PrivatePersons to Give Gifts on any Occasion, including Christmas Finally, the primary basis for decisions made involving disciplinary actions on ethical issuesconcerning the bank as an institution and as a government corporation is the Landbank of thePhilippines Code of Conduct for Employees as stipulated:CODE OF CONDUCT FOR EMPLOYEES: 1. Statement of Principles The Constitution declares that a public office is a public trust. The Landbank of thePhilippines, being a government-owned corporation, is a public office. Our ability to secure andmaintain our strong position in the banking industry depends – to a great extent – on the trust andconfidence of our clients, business partners, other stakeholders and the general public. 2. Purpose: ~ 30 ~
  31. 31. The Code of Conduct for Landbank Employees is written : 2.1. To provide guidance for all employees to enable them to conduct themselves in a manner that will merit and inspire public trust and confidence consistent with Landbank‘s core values of social responsibility, trust, excellence and professionalism; and at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism, and justice and lead modest lives; 2.2. To comply with Section 3(3) of the BangkoSentralngPilipinas (BSP) Circular No. 283 series of 2001 which states in part: ―To conduct affairs of the institution with high degree of integrity, the Board of Directors should prescribe corporate values, codes of conduct, and other standards of appropriate behavior for itself, the senior management and other employees‖ 3. Scope of the Code This Code applies to all employees of the Landbank of the Philippines (LBP), regardlessof rank, whether permanent, temporary, co-terminus or directly hired contractuals. The term―employee‖ as it is used in the Code includes such individuals.Section 1: Performance of Duties LANDBANK employees shall at all times perform official duties properly and diligently.They shall commit themselves exclusively to the business and responsibilities of their office duringworking hours unless, otherwise, properly allowed under the existing laws, rules and regulations.Section 2: Confidentiality of Information LANDBANK employees shall maintain the confidentiality of all information acquired bythem or entrusted to them by the Bank, its customers or business partners and are prohibited frommaking unauthorized disclosure of the same.Section 3: Conflict of Interest LANDBANK employees shall avoid conflict of interest in performing official duties.A conflict of interest exists when: ● the Bank employee‘s objective ability or independence of judgment in performingofficial duties is impaired or may reasonably appear to be impaired by the personal concerns of aBank employee or of his / her family and relatives which run counter to the objectives of the Bank; ~ 31 ~
  32. 32. or when the official act results to unwarranted personal benefit on his / her part of his / her familyand relatives. ●the Bank employee‘s private interest interferes in any way with the interests of the Bankas a wholeSection 4: Sexual Harassment or Misconduct LANDBANK employees shall strictly comply with the existing laws, rules and regulationson sexual harassment as defined below and other inappropriate or improper acts against fellowemployees regardless of rand and consistently exercise prudence, respect and care in theirinteraction with one another and the general public. Sexual Harassment as defined under CSC Administrative Disciplinary Rules on SexualHarassment Cases (CSC Resolution No. 01-0940) is an ―act, or series of acts, involving anyunwelcome sexual advance, request, or demand for sexual favor or other verbal or physicalbehavior of sexual nature committed by a government employee or official in a work-related,training, or education-related environment.‖Section 5: Complaints and Grievances LANDBANK and its employees shall handle complaints and grievances in accordancewith the Bank‘s formal Grievance Procedure in line with the Grievance Machinery of the CivilService Commission.Section 6: Employee Discipline and Accountability LANDBANK employees shall have a duty to adhere to this Code and to report violations.The Bank shall impose strict implementation of policies to ensure employee discipline. Any violation of this Code shall be acted upon in accordance with the pertinent provisionsof the Bank‘s Rules on Administrative Disciplinary Cases and Civil Service Law, rules, andregulations. 4. Incorporation of Other RulesAll pertinent laws, rules, and regulations of the Civil Service, BangkoSentralngPilipinas,Commission on Audit, and other government regulatory agencies and the internal issuances of theBank governing or regulating the conduct of public officers and employees are deemedincorporated in this Code. ~ 32 ~
  33. 33. 5. Effectivity: This Code shall take effect upon approval by the Bank‘s Board of Directors. 6. Distribution of the CodeThe Code shall be distributed to all employees of the Bank. Each employee shall sign and submit a Code of Conduct Compliance Certificate to thePersonnel Administration Department (PAD) upon employment. Incumbent employees shallsubmit the Code of Conduct Compliance Certificate within 30 calendar days from receipt of theCode. By signing, we are somewhat bound by contract to serve and any false move will be aground for disciplinary action and possible dismissal in spite of what is commonly known asSecurity of Tenure in the service of the government. The same strict rules had set Landbank apart from an ordinary government institution.There may be isolated cases but in general, Landbank can be viewed as a banking institutionknown internationally for its ethical banking standards and procedures. Moreover it is also agovernment owned and controlled corporation that balances profit with its social mission andresponsibility. Any employee belonging to this organization is as proud of their membership asthey are of their citizenship. It is also because of this that merely hearing the name of theinstitution commands respect, dignity and credibility as its protective armor in the outside world. ~ 33 ~
  34. 34. Chapter VI CONCLUSION Spurred by corporate scandals and surveys showing how little employees trust their CEOsand other senior executives, many companies are required to establish codes of ethics governingthe way they operate. As a businessperson, I am ultimately responsible for my actions. I must bethe person who decides if I should act ethically or not. I could not just act because of other‘sinfluence because each one of us has a mind to logically discern our actions, a conscience to listento and free will to decide. Knowing what is ethical, in my own mind, is essential. Morality has a top selling definitionin terms of Landbank: That which is selfish is immoral and that which is unselfish is moral.Every selfish deed therefore hampers our path towards attaining a goal and every unselfish activitytakes us to the goal of enrichment in life and ethical behavior. However, far more difficult thanknowing what is right is doing what is right. Doing the right thing is not always easy because thepath of ethical behavior and actions is invariably the longer and more difficult path to follow thanthe unethical routine, but it is always right and it bears satisfying results more enduring success. The last 49 years saw the diversity of Landbank as a group. Yet, everyone is bound bycommon values such as respect for one another, social responsibility, trust, excellence andprofessionalism. Everyone work hard and play hard. Everyone also draws immense fulfillmentfrom being part of an institution with a social mission. This term paper on Landbank In Its Finest is actually the story of all the people behind itssuccess. The success of the institution is the success of the men and women who are committingthe best years of their lives to the cause of countryside development. The success of Landbank-Urdaneta Branch for example is led by its tireless and dedicated Leader and Unit Manager, Mr.Jethro M. Martinez who devotes most his time constantly marketing the institution‘s best and mostrequested products in the banking industry, diligentlychecks and coaches his officers and staffwhile consistently boosting their morals and making them feel that everyone is very important inthe success of the unit.Together with Mr. Johnny R. Lim, our Assistant Department Manager andMrs. Editha C. Caron, our Operations Supervisor, they area team who, like our President Gilda E.Pico, follows the succession scheme where as one officer moves to next rung of the organizationalladder, a number of Landbankers are to prepare in taking the vacated positions with justevaluations. They do not foster ―palakasan‖ and ―favoritism‖. They treat everyone fairly as theychallenge their staff to exhibit their potentials and abilities by giving them opportunities to showtheir real worth through diverse as much as prolonged assignments, exposure to critical situations,and on-the-job learning enhancement activities. ~ 34 ~
  35. 35. What Landbank is today is the fruition of dreams and visions that, not too long ago,inspired the pioneers and succeeding leaders, officers and staff to give their best and utmost to theinstitution that allowed them the privilege and honor of serving their country and its people,especially the farmers and fisherfolk, the cooperatives and the micro, small and mediumenterprises. The journey that started 49 years ago continues progressively because Landbank remainsto be the home of visionaries, dreamers and achievers. When the best and the brightest of acountry are inspiredby the nobility of their mission, their coming together is an appointment withdestiny. Not theirs or that of the institution, but of the Philippines. The future is for those whoknow where they are going and how they intend to get there. At Landbank, the personal values and visions of the staff and officers collectively create anorganizational and corporate culture geared to the attainment of the Bank‘s mission. A dynamicinteraction within the organization and with the various stakeholders, especially clients in thecountryside, enhances and strengthens working relationships and partnerships that ultimatelyredound to effectiveness and efficiency in the delivery of services. Clearly said, happy, fulfilled,committed and principle-centered individuals comprise a successful service-oriented institution. Landbank is not just about tellers, cashiers, managers, accountants, marketing officers, firstvice presidents, senior vice presidents, and executive vice presidents. Neither is Landbank solelythe domain of its presidents and boards of directors. Landbank is about visionaries, innovators,creators, workers, builders and leaders. Landbank has many faces and facets, and they are best seen, understood, and appreciatedin the joys, pleasures, triumphs, angst, and challenges that Landbankers experience from day today. ~ 35 ~
  36. 36. Chapter VII ACKNOWLEDGEMENT Gratitude can be expressed in many ways but the easiest manner would be to acknowledgeeveryone‘s contribution and support in the making of this term paper because without them, Ibelieve that I might not have been able to finish this particular requirement in my graduate studies. I expressly thank first and foremost, God, for enlightening me, giving me strength andguiding me through ideas that suddenly pop into my mind in the wee hours of dawn as I face mycomputer without reserve nor without knowing as well where to start and what to write. WithoutHim, this would not be possible. He gave me the time and the wisdom I need to finish a termpaper that would certainly serve its purpose. To my Unit Manager, Mr. Jethro M. Martinez, whom I first conferred with before writingmy term paper and asked permission to use Landbank data already made known to the public forthe organization of the ideas I want to project, thank you very much. I hope I was able to projectLandbank In Its Genuine Finest through my term paper. For all its worth, I learned to love myinstitution and the people I work with more than before. I express this with honesty and sincerity. To my professor, Mr. Meliton G. Dassun, whom I continuously pleaded for extension ofterm paper deadlines because I forgot about the part where I have to write a term paper to passhis subject, thank you very much for patiently waiting and giving me a chance. A true teacher Ilook up to and hope to continuously mentor me through my graduate studies because I aspire tobe a consultant someday. To my fellow officemates and colleagues in the graduate school, whom I continuouslylaugh with to ease the tiredness and tension and who find ways to understand my ever changingmoods which I often feel as a result of waking up early, thank you dear friends. I will try to makeit up to all of you now that I have finished my term paper. To the writers of my references, whom I continuously refer this particular subject matter to,by dissecting their articles and analyzing the facts before fully borrowing their ideas and data, mydeep gratitude I offer to all of you, if you only knew. You are all an instruments in thedevelopment of my term paper because your ideas are so much related to one another and eachconcluding statements open new ideas and new matters for discussion as I progress in my chapters.You are all quoted in my term paper as I progress in each paragraph. Thank you for making myresearch possible. ~ 36 ~
  37. 37. To the inventor of the internet who has an edge for creating a bottomless hole forinformation and data that could be dug deeper and deeper, I salute you. You opened portals ofinformation I know so little of. It is therefore, with deep love, happiness and pride that I was able to present to all myreaders, a culmination of all the ideas I could gather and all the wonderful facts and figures I couldresearch as I celebrate the 49th year of Landbank in this term paper of mine entitled ―Landbank InIts Finest‖. ~ 37 ~
  38. 38. Chapter VIII REFERENCESQuoted Paragraphs from Business Ethics by Rajiv K. MishraArticles from the Landbank Employees‘ HandbookExcerpts from the Civil Service Commission Documentations through the Internet Civil ServiceWebsiteExtractions from subject matter related topics in our Ethics Module at PSU GS MDM 212Ethical Banking Discussions in the Internet at Wisegeek websiteBusiness Ethics Discussion in the Internet at Wikipedia WebsiteVarious journals from the Internet regarding Ethics in the Banking Industry, already cited in thequoted paragraphs.Actual Samples from Everyday Banking Tasks as per observations and personal experiencesQuoted Paragraphs from the Coffee Book of Landbank of the Philippines by Maria Rosa NievaCarrion Buck, MNSA of Seagull Philippines Incorporated.WWW.LANDBANK.COM website for the speeches, facts and figures advertised in the net ~ 38 ~