The Supreme Court’s decision in Presidential Ad Hoc Fact-Finding Committee on Behest Loans vs. Ombudsman Aniano A. Desierto addresses the complexities of prosecuting offenses related to ‘behest loans,’ particularly concerning prescription periods and the Ombudsman’s discretionary powers. The Court clarified that the prescriptive period for offenses under R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) begins from the discovery of the violation, not necessarily from the date of commission. This ruling upholds the Ombudsman’s authority to investigate and prosecute cases of public misconduct, while also setting parameters for when such investigations can be initiated, especially in cases involving hidden or concealed transactions.

The Case of Apparel World: When Does the Clock Start Ticking on Corruption?

This case arose from a complaint filed by the Presidential Ad Hoc Fact-Finding Committee on Behest Loans against several individuals, including Panfilo O. Domingo, Francisco Teodoro, and Leticia Teodoro, for alleged violations of Section 3(e) and (g) of R.A. No. 3019. The complaint centered on a loan granted to Apparel World, Inc. (Apparel) by the Philippine National Bank (PNB) in 1974. The committee alleged that the loan was a ‘behest loan,’ approved with insufficient collateral and undue haste, thereby causing damage to the government. The Ombudsman dismissed the complaint, citing prescription and arguing that the administrative orders classifying the loan as a ‘behest loan’ were ex post facto laws. This dismissal prompted the committee to seek recourse with the Supreme Court.

The central legal issue before the Supreme Court was whether the Ombudsman erred in dismissing the complaint based on prescription and the application of ex post facto principles. At the heart of the matter was the interpretation of Section 2 of Act No. 3326, which governs the commencement of the prescriptive period for offenses under special laws, such as R.A. No. 3019. The committee argued that the prescriptive period should begin from the discovery of the offense, as the alleged violations were not immediately apparent. The Ombudsman, on the other hand, contended that prescription began from the date the loan was granted, as the transaction was a matter of public record.

The Supreme Court sided with the committee, emphasizing the importance of the ‘discovery rule’ in cases involving hidden or concealed offenses. The Court cited previous jurisprudence, stating:

“x x x it was well-nigh impossible for the State, the aggrieved party, to have known the violations of R. A. No. 3019 at the time the questioned transactions were made because, as alleged, the public officials concerned connived or conspired with the ‘beneficiaries of the loans.’ Thus, we agree with the COMMITTEE that the prescriptive period for the offenses with which the respondents in OMB-0-96-0968 were charged should be computed from the discovery of the commission thereof and not from the day of such commission.”

This underscores that when public officials collude to conceal their illegal acts, the State’s ability to discover the offense is significantly hampered. Therefore, the prescriptive period should not begin until the offense is discovered. Building on this principle, the Court rejected the Ombudsman’s interpretation that the phrase ‘if the same be not known’ in Section 2 of Act No. 3326 means ‘is not reasonably knowable.’ The Court reasoned that such an interpretation would defeat the intent of the law, which is written in clear and unambiguous language.

Despite ruling in favor of the committee on the issue of prescription, the Supreme Court ultimately upheld the Ombudsman’s dismissal of the complaint. The Court emphasized the broad discretionary powers of the Ombudsman to investigate and prosecute cases of public misconduct. Citing Republic Act No. 6770, the Court noted that the Ombudsman has the authority to investigate any act or omission of a public officer or employee that appears to be illegal, unjust, improper, or inefficient.

Moreover, the Court acknowledged that it has consistently refrained from interfering with the Ombudsman’s exercise of investigatory and prosecutory powers. As the Court explained in Alba v. Nitorreda:

“it is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint filed before it. Such initiative and independence are inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and preserver of the integrity of the public service”.

This deference to the Ombudsman’s discretion is rooted in both respect for the constitutional powers granted to the office and practical considerations of judicial efficiency.

In this particular case, the Supreme Court found that the Ombudsman’s decision to dismiss the complaint was based on substantial evidence. The Ombudsman had determined that the committee failed to provide sufficient evidence to establish a violation of R.A. No. 3019. Specifically, the Ombudsman noted that the committee did not adequately value Apparel’s property and thus erred in concluding that the loan lacked sufficient collateral. The Ombudsman also reasoned that the fact that Apparel’s mortgages were foreclosed in 1983, while President Marcos was still in power, undermined the claim that Francisco Teodoro was a crony of the President.

The Court reiterated that it would not overturn the Ombudsman’s decision as long as it is supported by substantial evidence. Even though the loan was processed quickly, the Ombudsman’s investigation revealed that a panel from the lending bank had studied and endorsed the loan application, indicating compliance with banking laws and procedures. The Supreme Court concluded that the Ombudsman did not act with grave abuse of discretion in dismissing the charges against the respondents.

FAQs

What was the key issue in this case?	The key issue was whether the prescriptive period for offenses under R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) should be computed from the date of the offense or from the date of its discovery. The Supreme Court ruled that the prescriptive period begins from the discovery of the offense, especially in cases involving hidden or concealed transactions.
What is a ‘behest loan’?	A ‘behest loan’ generally refers to a loan granted under irregular circumstances, often involving political influence or cronyism, and characterized by insufficient collateral or other irregularities that disadvantage the government. These loans are often associated with the Marcos era in the Philippines.
What is the ‘discovery rule’ in prescription?	The ‘discovery rule’ states that the prescriptive period for an offense begins to run from the time the offense is discovered, rather than from the date of its commission. This rule is particularly relevant in cases where the offense is concealed or difficult to detect.
What is the role of the Ombudsman in the Philippines?	The Ombudsman is an independent government official responsible for investigating and prosecuting cases of corruption, abuse of power, and other forms of misconduct by public officials. The Ombudsman’s office plays a crucial role in promoting transparency and accountability in government.
What is R.A. No. 3019?	R.A. No. 3019, also known as the Anti-Graft and Corrupt Practices Act, is a law in the Philippines that prohibits certain acts of public officials that constitute graft and corruption. It aims to promote integrity and ethical conduct in government service.
What is the significance of Act No. 3326?	Act No. 3326 governs the prescription of offenses penalized by special laws, such as R.A. No. 3019. It specifies when the prescriptive period begins and how it may be interrupted.
What does ‘grave abuse of discretion’ mean?	‘Grave abuse of discretion’ refers to an act by a government official or body that is so arbitrary, capricious, or whimsical as to amount to a virtual refusal to perform the duty enjoined or to act in contemplation of law. It is a high threshold that must be met to justify judicial intervention.
Why did the Supreme Court uphold the Ombudsman’s decision despite disagreeing on the prescription issue?	The Supreme Court upheld the Ombudsman’s decision because it found that the Ombudsman’s dismissal of the complaint was based on substantial evidence. The Court emphasized that it would not interfere with the Ombudsman’s discretionary powers as long as there was a reasonable basis for the decision.

This case reinforces the principle that the prescriptive period for offenses begins upon discovery, not necessarily commission, especially when dealing with concealed acts. The Supreme Court’s ruling underscores the broad discretionary powers of the Ombudsman in investigating and prosecuting public officials, while also emphasizing the importance of substantial evidence in supporting such decisions. This delicate balance ensures accountability while respecting the independence of the Ombudsman’s office.

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 AD HOC FACT-FINDING COMMITTEE ON BEHEST LOANS v. OMBUDSMAN ANIANO A. DESIERTO, G.R. No. 135482, August 14, 2001