The Supreme Court has clarified the application of prescription periods in cases involving violations of the Anti-Graft and Corrupt Practices Act (RA 3019), particularly in the context of behest loans. The Court ruled that for offenses where the illegal nature of the act is not immediately apparent, the prescriptive period begins to run from the date of discovery of the violation, not from the date of the commission of the act itself. This decision underscores the importance of timely investigations and the challenges in prosecuting offenses that are concealed or not easily detectable.

Behest Loans and the Ticking Clock: PCGG vs. the Ombudsman

This case revolves around loans granted to Resorts Hotel Corporation (RHC) during the Marcos regime, which the Presidential Commission on Good Government (PCGG) alleged were behest loans, meaning they were granted under terms manifestly disadvantageous to the government. The PCGG filed a complaint against officers of RHC and the Development Bank of the Philippines (DBP) for violations of the Anti-Graft and Corrupt Practices Act. The Ombudsman dismissed the complaint, citing prescription, leading the PCGG to seek recourse from the Supreme Court. The central legal question is: When does the prescriptive period for these offenses begin—at the time of the transaction or upon discovery of the illegality?

The Supreme Court, in examining this issue, considered the relevant provisions of law. RA 3019, Section 11 states that offenses punishable under this law prescribe in ten years, a period later extended to fifteen years by Batas Pambansa (BP) Blg. 195. However, the Court clarified that the longer prescriptive period applies only to crimes committed after the effectivity of BP Blg. 195. Since the alleged crimes occurred between 1969 and 1977, the ten-year prescriptive period under RA 3019 applies. Furthermore, RA 3019 is silent on the reckoning point, which necessitates turning to Act No. 3326.

Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceeding for its investigation and punishment, xxx.

Act No. 3326 provides two possible starting points for the prescriptive period: the day of the commission of the violation or, if unknown at the time, from the discovery of the violation and the institution of judicial proceedings. The Court has interpreted “discovery” to mean discovery of the unlawful nature of the act. This interpretation prevents the absurd situation where the prescriptive period begins and is interrupted simultaneously. The Court emphasized that the phrase “from the discovery thereof and the institution of judicial proceeding for its investigation” should be read as “from the discovery thereof and until the institution of judicial proceedings for its investigation.”

The Supreme Court referred to previous cases involving behest loans, such as Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto, where it ruled that the prescriptive period should be computed from the date of discovery. The Court acknowledged the difficulty for the State to know of the violation at the time of the transaction due to the connivance between public officials and beneficiaries. However, this principle does not apply universally, as illustrated in Republic v. Cojuangco, Jr., where the Court found that information about the questioned investment was not suppressed, and the action could have been instituted earlier.

The Court articulated the following guidelines for determining the reckoning point for the period of prescription of violations of RA 3019:

1. As a general rule, prescription begins to run from the date of the commission of the offense.
2. If the date of the commission of the violation is not known, it shall be counted from the date of discovery thereof.
3. In determining whether the general rule or the exception applies, the availability or suppression of information relative to the crime should be determined.
   • If the necessary information is readily available to the public, the general rule applies.
   • If information is suppressed, possibly through connivance, the exception applies, and the period of prescription is reckoned from the date of discovery.

In the case at bar, the Court determined that the second mode applies because behest loans are, by their nature, concealed. Thus, the prescriptive period began on January 4, 1993, when the Presidential Ad Hoc Fact-Finding Committee reported its findings. Consequently, the PCGG’s filing of the Affidavit-Complaint on January 6, 2003, was beyond the ten-year prescriptive period. The Court affirmed the Ombudsman’s dismissal of the complaint, stating that prescription had already set in.

FAQs

What was the key issue in this case?	The key issue was determining when the prescriptive period begins for violations of the Anti-Graft and Corrupt Practices Act, specifically in the context of behest loans. The Court had to decide whether it starts from the date of the transaction or the date of discovery of the illegality.
What are behest loans?	Behest loans are loans granted under terms manifestly disadvantageous to the government, often involving cronies or associates of those in power. These loans typically involve inadequate collateral, undercapitalized borrowers, or other irregularities.
What is the prescriptive period for violations of RA 3019?	The prescriptive period is generally ten years, but it was extended to fifteen years by Batas Pambansa Blg. 195 for crimes committed after the law took effect. However, the ten-year period applies in this case because the alleged offenses occurred between 1969 and 1977.
When does the prescriptive period begin to run?	The prescriptive period begins to run either from the date of the commission of the violation or, if the violation was not known at the time, from the date of its discovery. The latter applies when information about the violation is suppressed or concealed.
What did the Court mean by “discovery” in this context?	“Discovery” refers to the discovery of the unlawful nature of the act, not merely the act itself. This means that the prescriptive period starts when the aggrieved party becomes aware that the act constitutes a violation of the law.
Why did the Court apply the “discovery” rule in this case?	The Court applied the “discovery” rule because behest loans are often concealed, making it difficult to detect the illegality at the time of the transaction. The connivance between public officials and beneficiaries further suppresses information.
When was the violation discovered in this case?	The violation was discovered on January 4, 1993, when the Presidential Ad Hoc Fact-Finding Committee reported its findings and conclusions regarding the RHC loans to the President. This date marked the start of the prescriptive period.
What was the effect of applying the “discovery” rule in this case?	Applying the “discovery” rule meant that the PCGG’s Affidavit-Complaint, filed on January 6, 2003, was filed after the ten-year prescriptive period had already lapsed. This led to the dismissal of the complaint due to prescription.

This case serves as a reminder of the importance of timely investigations and prosecutions in cases involving corruption and irregularities in government transactions. While the “discovery” rule provides some leeway in situations where offenses are concealed, it also underscores the need for vigilance and proactive efforts to uncover illegal activities within the bounds of the law.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: PRESIDENTIAL COMMISISON ON GOOD GOVERNMENT (PCGG) VS. THE HONORABLE OMBUDSMAN CONCHITA CARPIO-MORALES, ET AL., G.R. No. 206357, November 25, 2014