In a decisive move to recover ill-gotten wealth from the Marcos era, the Supreme Court sided with the Presidential Ad-Hoc Fact-Finding Committee on Behest Loans (FFCBL). The Court reversed the Ombudsman’s decision, mandating the filing of charges against private respondents involved in a questionable loan transaction between Agretronics, Incorporated and the Development Bank of the Philippines (DBP). This ruling reinforces the government’s ability to pursue cases of corruption and recover misappropriated funds, even when bureaucratic obstacles and time constraints seem insurmountable, underscoring the principle that the pursuit of justice should not be easily thwarted by procedural technicalities.
Can ‘Extraordinary Speed’ and Cronyism Unearth a Behest Loan?
This case stems from Administrative Order No. 13, issued by President Fidel V. Ramos in 1992, which established the Presidential Ad Hoc Committee on Behest Loans. The committee was tasked with investigating loans granted by government-owned banks under suspicious circumstances. A key point of reference was Presidential Memorandum Order No. 61, which defined the characteristics of a “behest loan”, including being undercollateralized, involving undercapitalized borrowers, and displaying extraordinary speed in processing. These criteria helped the committee identify transactions that might have been influenced by high government officials or favored cronies, potentially to the detriment of the Philippine government.
Acting on its mandate, the Committee investigated loan transactions between Agretronics, Inc. and the DBP, identifying several characteristics indicative of a behest loan. This led to a complaint filed with the Ombudsman against respondents Angel, Jose, and Jose Manuel Romualdez for violations of the Anti-Graft and Corrupt Practices Act. The Committee argued that Agretronics was undercapitalized, the loan approval was unusually swift, the loan was undercollateralized, and the Romualdezes were closely associated with then-President Marcos as nephews of the former First Lady. However, the Ombudsman dismissed the complaint, citing a lack of probable cause and the prescription of the offense.
The Ombudsman reasoned that the extraordinary speed of loan approval wasn’t substantiated. It further stated the loan wasn’t grossly disadvantageous to the government, as safety measures were in place to protect the bank’s interest. He cited that the loan of $2,866,667 (equivalent to P21,500,000 at $1.00: P7.50) was secured by first mortgages on various assets and joint and several signatures, which according to him, negates claims of damage to the government. Finally, the Ombudsman posited that the offense had prescribed under Section 11 of R.A. 3019, as amended. The Committee, however, argued that the Ombudsman committed grave abuse of discretion in dismissing the complaint, emphasizing the characteristics of a behest loan that the transactions exhibited.
The Supreme Court disagreed with the Ombudsman’s assessment. The Court underscored that the Ombudsman’s role is not to try the case but to determine the existence of probable cause. A finding of probable cause simply requires a suspect to stand trial and isn’t a pronouncement of guilt. Considering the evidence presented, the Court found that the Ombudsman did gravely abuse his discretion when he found a lack of probable cause and declared that the offense had prescribed. The Supreme Court emphasized that preliminary investigation isn’t for an exhaustive display of evidence, but the presentation of evidence that could engender a well-grounded belief that an offense has been committed.
Addressing the conflicting claims about whether the loan was undercollateralized, the Court noted that conflicting claims should be resolved in a full trial. In fact, there’s no need for the presence of all enumerated characteristics of a behest loan under Memorandum Order No. 61; a few will suffice. Considering the membership of the Committee, its recommendation should be given great weight, as they are undoubtedly experts in the field of banking. Also, as of June 1986, Agretronics’ total obligation to DBP was P154,969,000.00. Upon foreclosure, the government only realized P1,942,000.00. This demonstrated that the loan’s non-payment was, by itself, sufficient evidence of damage to the government. Therefore, the Court found that probable cause existed and the case should proceed to trial.
Most importantly, the Court found that the offense had not prescribed. It reaffirmed the doctrine that, in cases involving violations of R.A. No. 3019 committed prior to the February 1986 EDSA Revolution, the prescriptive period commences from the date of discovery of the offense, not the date of its commission. In this case, the violation was deemed discovered on June 14, 1996, when the complaint was filed with the Ombudsman after an exhaustive investigation. Since filing a complaint for preliminary investigation tolls the prescriptive period, there was no legal impediment to filing the corresponding information in Court.
FAQs
| What was the key issue in this case? | The key issues were whether the Ombudsman gravely abused his discretion in dismissing the complaint against the Romualdezes for violation of the Anti-Graft and Corrupt Practices Act and whether the offense had prescribed. |
| What is a behest loan? | A behest loan, as defined under Memorandum Order No. 61, exhibits characteristics like undercollateralization, undercapitalization of the borrower, direct or indirect endorsement by high government officials, and cronyism. It often involves non-feasibility of the project, extraordinary speed in loan release, and deviation from the intended use of loan proceeds. |
| What is the role of the Ombudsman in preliminary investigations? | The Ombudsman’s role in preliminary investigations is to determine whether there is probable cause to file an information in court against the accused. This is not a trial; it simply establishes whether there is sufficient evidence to proceed with a full trial. |
| How is the prescriptive period for offenses under R.A. No. 3019 determined? | For offenses committed prior to the February 1986 EDSA Revolution, the prescriptive period is reckoned from the date of discovery of the offense, not from the date of commission. This is due to the difficulty of discovering such offenses during the Marcos regime. |
| What evidence did the Presidential Ad Hoc Committee on Behest Loans present? | The Committee presented evidence indicating undercapitalization of Agretronics, extraordinary speed in loan release, undercollateralization of the loan, and the Romualdezes’ association with President Marcos, all suggesting the loan was a behest loan. |
| What was the Court’s basis for finding probable cause? | The Court found that a reasonably discreet and prudent man, particularly someone with expertise in the banking sector, would believe that an offense had been committed by the Romualdezes. |
| What does it mean for the prescriptive period to be tolled? | Tolling the prescriptive period means that the running of the period is suspended or stopped. In this case, the prescriptive period was tolled upon the filing of the complaint with the Ombudsman, preventing the offense from prescribing. |
| Why was the expertise of the Presidential Ad Hoc Committee on Behest Loans considered important? | The Court considered the Committee’s expertise important because its members had special knowledge and experience in the banking sector. This enabled them to determine whether standard banking practices were followed and whether the loan bore the earmarks of a behest loan. |
| What was the actual damage suffered by the government due to the loan? | The actual damage suffered by the government was substantial because the amount Agretronics was obliged to pay back to DBP was P154,969,000.00, and upon foreclosure, the government only realized P1,942,000.00. The substantial loss suffered was enough proof of damage to the government. |
The Supreme Court’s decision underscores the importance of holding public officials accountable and recovering ill-gotten wealth, while emphasizing that procedural technicalities, such as prescription, should not obstruct the pursuit of justice. The case serves as a potent reminder of the government’s resolve to address corruption and protect the interests of its citizens by recovering public funds misappropriated through questionable loan transactions.
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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: THE PRESIDENTIAL AD-HOC FACT-FINDING COMMITTEE ON BEHEST LOANS (FFCBL) VS. HON. OMBUDSMAN ANIANO A. DESIERTO, G.R. No. 136225, April 23, 2008