Singian, Jr. vs. Sandiganbayan

The denial of a demurrer to evidence will not be disturbed on certiorari absent a clear showing of grave abuse of discretion amounting to lack or excess of jurisdiction; where the prosecution presents competent or sufficient evidence establishing a prima facie case, the accused must adduce defense evidence, and questions on the presence or absence of elements of the crime are evidentiary matters properly resolved after trial on the merits.

Petitioner Gregorio Singian, Jr. was the Executive Vice-President of Integrated Shoes, Inc. (ISI), a corporation engaged in the shoe manufacturing business. He was related by marriage to ISI's incorporators and officers: Leticia Teodoro was his mother-in-law, Francisco Teodoro his father-in-law, and Marfina Teodoro-Singian his wife. Between 1972 and 1980, ISI obtained a series of loan accommodations from the Philippine National Bank (PNB), a government financing institution. The Presidential Ad Hoc Fact-Finding Committee on Behest Loans, created under Presidential Memorandum Order No. 61, investigated these loans and characterized the ISI account as a behest loan for lacking sufficient collateral and being obtained with undue haste. The criminal cases had previously reached the Supreme Court in Singian, Jr. vs. Sandiganbayan (514 Phil. 536 [2005]), where the Court ruled on petitioner's motion for re-determination of probable cause.

On January 18, 1972, Integrated Shoes, Inc. (ISI) applied for a five-year confirmed irrevocable deferred letter of credit amounting to US$2,500,000.00 (₱16,287,500.00) with the Philippine National Bank (PNB) to finance the purchase of a complete line of machinery and equipment for a new shoe factory in Bataan. The application was recommended to the PNB Board of Directors by then Senior Vice-President Constantino Bautista. On January 27, 1972, the PNB approved the loan, subject to stipulations requiring collateral in the form of a second mortgage on a 10,367-square meter lot with improvements, machinery and equipment to be imported under the letter of credit, and assignment of US$0.50 per pair of shoes from ISI's export sales. The loan was further conditioned on joint and several signatures of Francisco J. Teodoro, Leticia T. Teodoro, Marfina T. Singian, Tomas Teodoro, and Gregorio Singian, Jr.; an increase in ISI's authorized capital from ₱1,098,750.00 to ₱5,000,000.00; and submission of additional collateral if the appraised value of new machinery proved insufficient.

Thereafter, ISI obtained a series of additional loan accommodations from PNB: ₱1,500,000.00 on February 10, 1972 for raw materials; ₱1,000,000.00 on January 18, 1973 as export advance; ₱1,500,000.00 on March 21, 1973 as export advance; ₱600,000.00 on March 6, 1974 as credit line; ₱2,500,000.00 renewed on December 15, 1976; ₱5,000,000.00 on November 19, 1978 as export advance; ₱1,500,000.00 on August 4, 1980 as export advance; and ₱7,000,000.00 on December 15, 1980 also as export advance. The Presidential Ad Hoc Fact-Finding Committee on Behest Loans subsequently examined these accounts and found that the loans bore characteristics of behest loans, specifically for not having been secured with sufficient collateral and for having been obtained with undue haste.

On March 20, 1996, Atty. Orlando Salvador, a PCGG consultant detailed with the Ad Hoc Committee, filed a sworn complaint with the Office of the Ombudsman against PNB officials Panfilo Domingo, Constantino Bautista, and Domingo Ingco, and ISI officers Francisco Teodoro, Leticia Teodoro, Marfina Singian, Tomas Teodoro, and Gregorio Singian, Jr., for violation of Section 3(e) and (g) of RA 3019. Eighteen Informations were eventually filed before the Sandiganbayan, docketed as Criminal Case Nos. 26297-26314, each loan being the subject of two informations—one for each paragraph of Section 3. The Informations charged that the PNB officials, while in the performance of their official functions, conspired with ISI officers, including petitioner as Executive Vice-President, in causing undue injury to the government and giving unwarranted benefits to ISI by granting loans despite ISI's lack of sufficient capitalization and adequate collateral, and in entering into transactions grossly and manifestly disadvantageous to the government.

Petitioner was arraigned on January 27, 2004 and pleaded not guilty. Several co-accused died during the proceedings—Bautista before arraignment, Ingco on October 6, 2007, and Domingo on June 26, 2008—resulting in the dismissal of cases against them. The Sandiganbayan also dismissed Criminal Case Nos. 26306-26314 on April 29, 2005. Trial on the remaining cases proceeded, with the prosecution presenting nine witnesses and extensive documentary evidence, including the Fourteenth Report of the Ad Hoc Committee classifying the ISI account as a behest loan, ISI's SEC documents showing its capitalization and financial status, deeds of undertaking and assignment, chattel mortgages, and certificates of increase of capital stock. The prosecution's evidence showed that ISI's subscribed capital stock was only ₱1.6 million as of 1973, with paid-up capital of ₱1,298,750.00, while its indebtedness had risen to ₱16,360,000.00; that ISI last increased its authorized capital stock to ₱7,000,000.00 on April 27, 1973; and that by 1983, ISI's debt to PNB amounted to ₱71,847,217.00, against which the government was able to foreclose properties amounting to only ₱3 million. After the prosecution rested its case, petitioner filed a demurrer to evidence, which the Sandiganbayan denied on August 5, 2010, finding that the prosecution sufficiently established the essential elements of the offense charged. The denial of reconsideration on November 18, 2010 prompted the present petition.

• Lack of Conspiracy: Petitioner argued that the prosecution failed to adduce evidence of conspiracy to defraud the government because his co-accused from PNB had no power to approve the alleged behest loans; that all members of the PNB Board of Directors who directed PNB's affairs should have been impleaded, not only Domingo and Ingco; and that no evidence showed he exercised any influence over the PNB Board or that the accused colluded with each other.
• Loans Not Behest Loans: Petitioner maintained that the subject loans were not undercollateralized, ISI was not undercapitalized as its authorized capital stock and paid-up capital were timely increased, and that the loans could not be characterized as behest loans because the presence of at least two criteria out of the eight enumerated in Presidential Memorandum Order No. 61 is required. He contended that the loan agreements contained provisions beneficial to the government, including guarantees of repayment, interest, penalties, and the right of PNB to designate a comptroller in ISI.
• No Personal Participation: Petitioner argued that he had nothing to do with the application and grant of the questioned loans, as he was never a member of ISI's Board of Directors—which alone had the power to approve and obtain loans and give collateral—nor a stockholder of ISI. He claimed no evidence showed that as Executive Vice-President he participated in ISI's loan transactions or actively participated in the crimes charged.
• Altered Deed of Undertaking: Petitioner asserted that his indictment was based solely on the Deed of Undertaking, which was altered such that his name was stricken out and "Gregorio T. Teodoro" was inserted instead; that the obligations under the deed were assumed by ISI and ISI had already fully complied with them.
• Inadmissibility of Ad Hoc Committee Documents: Petitioner claimed that the Executive Summary and Fourteenth Report of the Ad Hoc Committee are inadmissible as hearsay, being mere copies of photocopies in PCGG custody, prepared by individuals who had no personal knowledge of the facts and circumstances.
• Denial of Due Process: Petitioner justified his resort to certiorari on the ground that the collective acts of the prosecution and the Sandiganbayan constituted a denial of his constitutional right to due process.

• Prima Facie Case Established: The prosecution asserted that the Sandiganbayan did not commit grave abuse of discretion, arguing that all elements under Section 3(g) exist to hold petitioner liable, and that petitioner was part of the conspiracy to defraud the government as evidenced by his participation and signature in the Deed of Undertaking, the terms of which ISI violated and PNB failed to enforce.
• Conspiracy Inferred from Pattern of Events: Respondent argued that conspiracy may be inferred from the frequency of the loans or closeness of dates granted, the quantity of loans, PNB's failure to verify and take action on ISI's failure to put up additional capitalization and collateral, and PNB's eventual failure to collect full payment. Respondent noted that without ISI putting up additional capitalization or collateral, PNB kept granting loans, such that by 1973 ISI's indebtedness already rose to ₱16,360,000.00 while its capital stock stood at only ₱7 million.
• Petitioner's Intimate Connection with ISI: Respondent emphasized that petitioner is intimately connected with ISI's incorporators and officers—Leticia Teodoro is his mother-in-law, Francisco Teodoro his father-in-law, and Marfina Teodoro-Singian his wife—and that as signatory to the Deed of Undertaking, petitioner assumed the obligations of a surety.
• Matters of Defense: Respondent contended that petitioner's arguments in his demurrer constitute matters of defense which should be passed upon only after trial on the merits.
• Careful Examination by Sandiganbayan: The PCGG asserted that the Sandiganbayan arrived at its conclusion after careful examination of the record and evidence, justifying a finding sustaining petitioner's indictment.

• Conspiracy: Whether the first element of Section 3(g) of RA 3019 is absent because the public officers responsible for granting the loans were never charged, accused, or included in the Informations, negating the existence of conspiracy.
• Overt Act: Whether, assuming conspiracy attended the grant of the questioned loans, there is any overt act attributable to petitioner that justifies his inclusion in the prosecution's conspiracy dragnet.
• Admissibility of Evidence: Whether the prosecution's Exhibits "C" (also marked as Exhibit "RR") and "QQ," which the prosecution used to make it appear that the credit accommodations are behest loans, have any probative value and are admissible, or are blatantly hearsay.

• Conspiracy: No grave abuse of discretion. The Sandiganbayan found sufficient evidence of conspiracy from the frequency and quantity of loans, PNB's failure to enforce capitalization and collateral requirements, and its inaction in collecting payment, which indicia the Sandiganbayan was competent to assess at the demurrer stage.
• Overt Act: No grave abuse of discretion. Petitioner's signature on the Deed of Undertaking and his position as Executive Vice-President of ISI constituted competent evidence of participation in the loan transactions, sufficient at the demurrer stage to establish a prima facie case.
• Admissibility of Evidence: No grave abuse of discretion. The admissibility and probative value of the Ad Hoc Committee documents are evidentiary matters of defense best ventilated during a full-blown trial, not resolved on certiorari from a demurrer ruling.

• Conspiracy: The standard for resolving a demurrer to evidence is whether there is competent or sufficient evidence to sustain the indictment or support a verdict of guilt—not whether guilt has been proven beyond reasonable doubt. The Sandiganbayan found that PNB and ISI entered into several loan transactions and that conspiracy was established through four factors: (1) the frequency of the loans or closeness of dates granted, (2) the quantity of loans granted, (3) PNB's failure to verify and take action on ISI's failure to put up additional capitalization and collateral, and (4) PNB's eventual absence of action to collect full payment. The Sandiganbayan noted that the first two loans were granted within two months, the first being ₱16,287,500.00 when ISI's capital stock was only ₱1,000,000.00, followed by additional loans in 1973, 1974, 1976, 1978, and 1980. ISI last increased its authorized capital stock to ₱7,000,000.00 on April 27, 1973, when its indebtedness was already ₱16,360,000.00. The inaction of PNB to notify ISI to further increase its capital and ISI's corresponding inaction indicated conspiracy between the accused. The Court found no showing that the Sandiganbayan's conclusions on the sufficiency of evidence were manifestly mistaken, and held that the presence or absence of the elements of the crime is evidentiary in nature and a matter of defense best passed upon after a full-blown trial.

• Overt Act: The Sandiganbayan found that petitioner's name appears on the Deed of Undertaking, contrary to petitioner's assertion that it was altered and his name stricken out. The Court noted that petitioner never denied his position as Executive Vice-President of ISI, which would undeniably give him participation in its transactions, especially loan accommodations. The Court had previously ruled, in the earlier Singian, Jr. vs. Sandiganbayan disposition, that while the power to increase capitalization and offer collateral is lodged with the Board of Directors, officers other than board members can be held criminally liable if it can be proven they participated in the criminal acts, and there was evidence that petitioner participated in the loan transactions when he signed the undertaking. The Court held that whether the Deed of Undertaking was altered or the signature is genuine are factual matters that can only be resolved upon proof presented during trial, as the Supreme Court is not a trier of facts.

• Admissibility of Evidence: The Court held that the validity and merits of a party's defense or accusation, as well as the admissibility of testimonies and evidence, are better ventilated during trial proper. The characterization of the loans as behest loans and the admissibility of the Ad Hoc Committee documents are matters of defense that petitioner must tackle during the presentation of his defense. The Court emphasized that at the demurrer stage, the inquiry is limited to whether there is competent or sufficient evidence to sustain the indictment; it is premature to conclusively rule on the admissibility or probative value of specific exhibits. The appropriate recourse from an order denying a demurrer to evidence, absent grave abuse of discretion, is for the court to proceed with trial, after which the accused may appeal from the judgment rendered.

• Demurrer to Evidence — Standard of Review — A demurrer to evidence is an objection that the evidence produced by the adversary is insufficient in point of law, whether true or not, to make out a case or sustain the issue. The court, in passing upon a demurrer, is merely required to ascertain whether there is competent or sufficient evidence to sustain the indictment or to support a verdict of guilt. Sufficient evidence is such evidence in character, weight, or amount as will legally justify the judicial or official action demanded, and must prove (a) the commission of the crime and (b) the precise degree of participation therein by the accused. The resolution of a demurrer is left to sound judicial discretion, and a lower court's denial shall not be disturbed unless grave abuse of discretion amounting to lack or excess of jurisdiction is shown. The appropriate recourse from a denial of demurrer, absent grave abuse, is to proceed with trial and appeal from the judgment.

• Grave Abuse of Discretion — Grave abuse of discretion is the capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction. The abuse must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. Mere allegations of abuse will not suffice.

• Private Persons Liable Under Section 3(g), RA 3019 — Private persons may be charged with violation of Section 3(g) of RA 3019 if they conspired with the public officer, in consonance with the avowed policy of the Anti-Graft and Corrupt Practices Act to repress certain acts of public officers and private persons alike which may constitute graft or corrupt practices or which may lead thereto.

• Evidentiary Nature of Defenses at Demurrer Stage — The presence or absence of the elements of the crime is evidentiary in nature and is a matter of defense that may be passed upon after a full-blown trial on the merits. The validity and merits of a party's defense or accusation, as well as admissibility of testimonies and evidence, are better ventilated during trial proper. Claims and defenses in a demurrer to evidence can best be tackled during trial, where the accused has the opportunity to present evidence.

• "The resolution of a demurrer to evidence should be left to the exercise of sound judicial discretion. A lower court's order of denial shall not be disturbed, that is, the appellate courts will not review the prosecution's evidence and precipitately decide whether such evidence has established the guilt of the accused beyond a reasonable doubt, unless accused has established that such judicial discretion has been gravely abused, thereby amounting to a lack or excess of jurisdiction." — This passage states the controlling standard for appellate review of a demurrer denial, defining the boundary between permissible judicial discretion and reviewable grave abuse.

• "the presence or absence of the elements of the crime is evidentiary in nature and is a matter of defense that may be passed upon after a full-blown trial on the merits" — This formulation articulates the doctrine that at the demurrer stage, the Court does not definitively rule on the presence or absence of crime elements, reserving such determination for trial.

• "True, the power to increase capitalization and to offer or give collateral to secure indebtedness are lodged with the corporation's [B]oard of [D]irectors. However, this does not mean that the officers of the corporation other than the [B]oard of [D]irectors cannot be made criminally liable for their criminal acts if it can be proven that they participated therein." — This passage, quoted from the Court's earlier disposition in the same case, establishes that corporate officers who are not board members may still be held criminally liable if their participation in the criminal acts is proven.

• Singian, Jr. vs. Sandiganbayan, 514 Phil. 536 (2005) — The Court's prior disposition in the same criminal cases, where it ruled on petitioner's motion for re-determination of probable cause. The Court relied on its earlier rulings there—that petitioner's participation in the loan transactions was shown by his signing of the Deed of Undertaking, that sufficiency of collateral is a matter of defense for trial, and that absence of conspiracy is evidentiary in nature—to support the conclusion that the issues raised in the demurrer are matters of defense.
• Soriquez vs. Sandiganbayan (Fifth Division), 510 Phil. 709 — Cited for the definition of a demurrer to evidence and the standard that the court is merely required to ascertain whether there is competent or sufficient evidence to sustain the indictment, and for the rule that denial of a demurrer shall not be disturbed absent grave abuse of discretion.
• Alarilla vs. Sandiganbayan, 393 Phil. 143 (2000) — Cited for the doctrine that the resolution of a demurrer to evidence should be left to sound judicial discretion and that the appropriate recourse from a denial is to proceed with trial and appeal from the judgment.
• Go vs. Sandiganbayan, G.R. No. 172602, April 16, 2009, 585 SCRA 404 — Cited for the proposition that private persons may be charged with violation of Section 3(g) of RA 3019 if they conspired with the public officer.
• Nava vs. Palattao, 531 Phil. 345 (2006) — Cited for the elements of Section 3(g) of RA 3019: (1) the accused is a public officer; (2) the public officer entered into a contract or transaction on behalf of the government; and (3) the contract or transaction was grossly and manifestly disadvantageous to the government.

• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Penalizes causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. The Informations under this provision charged petitioner and co-accused with conspiring to cause undue injury to the government and giving unwarranted benefits to ISI by granting loans despite ISI's lack of sufficient capitalization and adequate collateral. Cases under this provision (Criminal Case Nos. 26306-26314) were dismissed by the Sandiganbayan on April 29, 2005.
• Section 3(g), Republic Act No. 3019 — Penalizes entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby. The Court found that the Sandiganbayan properly determined that all three elements were established: petitioner conspired with PNB officials, PNB and ISI entered into several loan transactions, and the transactions were grossly and manifestly disadvantageous to the government.
• Presidential Memorandum Order No. 61 (November 9, 1992) — Cited by petitioner for the eight criteria used to characterize loans as behest loans, requiring the presence of at least two criteria. Petitioner argued the loans could not be behest loans because they did not meet this threshold; the Court treated this as a matter of defense for trial.

Brion (Acting Chairperson), Abad, Perez, and Perlas-Bernabe, JJ., concurred.