PCGG vs. Desierto

The Ombudsman's determination of the existence or absence of probable cause will not be interfered with absent a clear showing of grave abuse of discretion, and where the dismissal rests on an exhaustive examination of collateral, capitalization, and behest-loan criteria, certiorari does not lie even if prescription is computed from discovery rather than commission.

On 08 October 1992, then President Fidel V. Ramos issued Administrative Order No. 13 creating the Presidential Ad-Hoc Fact Finding Committee on Behest Loans to inventory behest loans, determine the parties involved, and recommend appropriate actions. Memorandum Order No. 61 dated 09 November 1992 expanded its functions to include inventory and review of all non-performing loans, whether behest or non-behest. Among the accounts referred to its Technical Working Group, coordinated by Atty. Orlando Salvador, were the loans of Basay Mining Corporation from the Philippine National Bank and the Development Bank of the Philippines, which the Group classified as behest loans.

According to the complaint, in 1977 BMC, then still known as CDCP Mining Corporation, obtained from PNB stand-by letters of credit in the amount of US$60 million at P8.00 per US$1 or P480 million through PNB Board Resolution No. 446 dated 15 March 1977, with collateral of P350 million and capital of P83,803,629.00. As of 31 December 1982, the loan was stated at P993,840,000.00 with a low collateral value of P424,240,000.00. CDCP further obtained an additional P20 million loan upon a marginal note of then President Ferdinand E. Marcos on the letter of respondent Rodolfo Cuenca seeking financial assistance, while additional DBP releases were secured by Cuenca's joint and several signature and assignment of part of copper shipment sales proceeds. The corporate name was changed to BMC on 31 December 1981.

The respondents failed to submit any responsive pleading before the Ombudsman, prompting resolution on the evidence on record. The investigation found that the subject accommodations were actually foreign loans from Marubeni Corporation (Tokyo and America), with PNB extending only a guarantee in the form of stand-by letters of credit. It further found that the P618.30 million in unused stand-by and deferred letters of credit had been improperly included in computing the outstanding balance, the real balance being only P342.89 million (P324.89 million at the time of the P20 million release) against properties valued at P424,240,000.00, apart from mortgage of all assets, leasehold mining rights, and equipment to be purchased from loan proceeds. As background to the P20 million release in March 1983, the investigation noted Executive Order 759 creating the Copper Stabilization Fund to finance operating cash flow deficits of primary copper producers, Cuenca's 28 January 1983 advice that CDCP faced bankruptcy with P1.4 billion in assets and over P900 million PNB exposure, and the transfer of the Fund balance to the National Development Corporation that left CDCP's P29.8 million availment unfunded.

• Non-Behest Finding: Petitioner argued that the Ombudsman committed grave abuse of discretion equivalent to lack or excess of jurisdiction in holding that the guarantee loan was not undercollateralized, the borrower was not undercapitalized, there were no direct endorsement nor marginal notes from high government officials, and there were no cronies of then President Marcos among the stockholders and/or officers, having completely disregarded the evidence on said issues.
• Prescription: Petitioner argued that the Ombudsman committed grave abuse of discretion equivalent to lack or excess of jurisdiction in holding that the offenses charged had already prescribed, having completely disregarded the laws and jurisprudence on the issue.

• Remand: Respondent Ombudsman, in lieu of comment, manifested willingness to have the case remanded to the Office of the Ombudsman for preliminary investigation.

• Timeliness of Petition: Whether the petition for certiorari, posted on 05 October 1999 after receipt of the denial of reconsideration on 06 August 1999, was timely filed under Rule 65.
• Prescription: Whether the prescriptive period for violations of Republic Act No. 3019 arising from the behest loans should be computed from commission or from discovery.
• Behest Character and Grave Abuse: Whether the Ombudsman committed grave abuse of discretion in holding that the financial assistance did not qualify as a behest loan and dismissing the complaint.

• Timeliness of Petition: Yes. The petition was considered timely filed by retroactive application of A.M. No. 00-2-03-SC effective 01 September 2000, which counts the 60-day period from notice of denial of reconsideration, procedural laws being retroactive.
• Prescription: Discovery governs. Where public officials allegedly connived with loan beneficiaries, making State knowledge well-nigh impossible at commission, prescription under Act No. 3326 runs from discovery, not commission.
• Behest Character and Grave Abuse: No. No grave abuse attended the dismissal, the Ombudsman's exhaustive finding that undercollateralization and other behest criteria were absent being supported by the record and insulated by prosecutorial independence.

• Timeliness of Petition: Petitioner received the resolution on 08 April 1999, moved for reconsideration on 12 April 1999, and received the denial on 06 August 1999, such that under the former Section 65 the petition should have been filed on 02 October 1999 but was posted only on 05 October 1999. Because procedural laws apply retroactively, A.M. No. 00-2-03-SC, effective 01 September 2000 and providing a fresh 60-day period from notice of denial of reconsideration, rendered the filing timely.
• Prescription: Following Presidential Ad-Hoc Fact Finding Committee on Behest Loans vs. Desierto, the phrase if the same be not known in Section 2 of Act No. 3326 was applied according to its clear and unambiguous language, rejecting a restrictive reasonably knowable construction. Since connivance between officials and beneficiaries prevented contemporaneous State knowledge, the period was to be computed from discovery of the commission.
• Behest Character and Grave Abuse: Even treating accommodations/guarantees as loans under Administrative Order No. 13, undercollateralization was negated because the real outstanding balance was only P342.89 million (P324.89 million when the P20 million was released) after excluding P618.30 million in unused letters of credit, far below the P424,240,000.00 property value, supplemented by mortgage of all assets, mining rights, and equipment purchased from proceeds. To qualify as behest under Memorandum Order No. 61, two or more criteria — undercollateralization, crony ownership/officership, and direct or indirect endorsement such as a marginal note — must concur; sufficient collateral defeated the first, the P20 million purpose was to avert CDCP bankruptcy and further PNB loss amid the Copper Stabilization Fund transfer to NDC rather than to favor Cuenca, and endorsement alone could not qualify the loan absent other criteria. Absent compelling reason, interference with the Ombudsman's wide investigatory and prosecutory latitude was unwarranted, and remand was refused where the merits had evidently and thoroughly been examined, making further proceedings an unnecessary and prolonged anguish.

• Ombudsman independence and judicial non-interference — The prosecution of offenses committed by public officers is vested in the Office of the Ombudsman, endowed by the Constitution and Republic Act No. 6770 with wide latitude of investigatory and prosecutory powers virtually free from legislative, executive or judicial intervention. Applied here to sustain dismissal of the behest-loan complaint absent compelling reason or grave abuse, following Espinosa vs. Office of the Ombudsman, Knecht vs. Desierto, and Alba vs. Nitorreda.
• Prescription from discovery in connived R.A. No. 3019 violations — Under Section 2 of Act No. 3326, where public officials connived or conspired with beneficiaries so that State knowledge at commission was well-nigh impossible, the prescriptive period is computed from discovery of the commission and not from commission, with if the same be not known given its plain meaning of lack of knowledge. Applied here pursuant to Presidential Ad-Hoc Fact Finding Committee on Behest Loans vs. Desierto to correct the Ombudsman's prescription ruling, though dismissal was still sustained on the merits.
• Behest-loan qualification requiring concurrence of criteria — To qualify as a behest loan under Memorandum Order No. 61, two or more of the stated criteria must be present, including (a) undercollateralization, (b) stockholders, officers or agents identified as cronies of then President Marcos, and (c) direct or indirect endorsement by high government officials such as a marginal note. Applied here to hold that the P20 million loan, being sufficiently collateralized and prompted by legitimate rescue purpose, was not behest despite presidential endorsement.
• Retroactive application of procedural rules — Procedural laws apply retroactively, including the amendment extending the Rule 65 filing period. Applied here to treat as timely a petition filed beyond the old remaining-period rule but within the 60-day-from-denial rule under A.M. No. 00-2-03-SC, following Martinez vs. People, Diu vs. Court of Appeals, and People vs. Sumilang.
• No remand after thorough Ombudsman examination — When the merits of the complaint have evidently and thoroughly been examined by the Ombudsman, respondents should not be subjected to unnecessary and prolonged anguish through remand. Applied here to deny the Ombudsman's offer of remand, following PCGG vs. Desierto.

• "xxx 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." — States the controlling prescription rule for connived behest-loan violations, rejecting computation from commission.
• "The prosecution of offenses committed by public officers is vested in the Office of the Ombudsman. To insulate the Office from outside pressure and improper influence, the Constitution as well as RA 6770 has endowed it with wide latitude of investigatory and prosecutory powers virtually free from legislative, executive or judicial intervention. This Court consistently refrains from interfering with the exercise of its powers, and respects the initiative and independence inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and the preserver of the integrity of public service." — Defines the canonical deference doctrine insulating Ombudsman probable-cause determinations from judicial interference.
• "The Court has more than once declared its reluctance to interfere in the investigatory and prosecutory powers of the Ombudsman absent any compelling reason." — Anchors the refusal to overturn the exhaustive dismissal despite the corrected prescription view.

• Presidential Ad-Hoc Fact Finding Committee on Behest Loans vs. Desierto, 317 SCRA 272 — Controlling precedent for prescription; followed to hold that R.A. No. 3019 violations involving alleged connivance prescribe from discovery, not commission.
• Espinosa vs. Office of the Ombudsman, G.R. No. 135775, 19 October 2000 — Reiterated authority for Ombudsman independence and non-interference; relied upon to sustain dismissal absent grave abuse.
• PCGG vs. Desierto, G.R. No. 140358, 08 December 2000 — Precedent against remand after thorough Ombudsman examination; applied to deny remand despite Ombudsman's willingness.
• Knecht vs. Desierto, 291 SCRA 292 — Cited as prior declaration of reluctance to interfere with Ombudsman investigatory and prosecutory powers.
• Alba vs. Nitorreda, 254 SCRA 753 — Cited as prior declaration of reluctance to interfere with Ombudsman investigatory and prosecutory powers.
• Martinez vs. People, G.R. No. 132852, 31 May 2000 — Cited with Diu vs. Court of Appeals and People vs. Sumilang for retroactive application of procedural laws supporting timeliness.
• Diu vs. Court of Appeals, 251 SCRA 472 — Cited as authority for retroactive application of procedural laws.
• People vs. Sumilang, 77 Phil. 764 — Cited as authority for retroactive application of procedural laws.

• Section 3(e and g), Republic Act No. 3019 — The anti-graft provisions charged against bank directors and Cuenca over the BMC loans; the complaint was dismissed for failure to establish behest character and probable cause.
• Section 2, Act No. 3326 — Governs prescription where violation is not known at commission; construed by its plain lack-of-knowledge meaning to compute the R.A. No. 3019 period from discovery where connivance prevented earlier State knowledge.
• Section 65 / Section 4, Rule 65, 1997 Rules of Civil Procedure, as amended by A.M. No. 00-2-03-SC — Governs when and where certiorari is filed, as amended to allow filing not later than 60 days from notice of denial of reconsideration; applied retroactively to deem the 05 October 1999 posting timely.
• Administrative Order No. 13 — Created the Presidential Ad-Hoc Fact Finding Committee on Behest Loans to inventory behest loans and identify parties; the source of the referral and classification that led to the Ombudsman complaint.
• Memorandum Order No. 61 — Expanded review to non-performing behest or non-behest loans and supplied the behest-loan criteria requiring concurrence of two or more factors; applied to find the P20 million loan not behest.
• Executive Order No. 759 — Established rules for the Copper Stabilization Fund to finance operating cash flow deficits of primary copper producers; cited as legitimate context negating favoritism in the additional PNB loan.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr., Sandoval-Gutierrez, JJ., concur.