Presidential Ad Hoc Fact-Finding Committee v. Desierto
REITERATIONFacts
The Antecedents: Midland Cement Corporation (Midland Cement) obtained a foreign guarantee loan of USD 18.5 million (P110 million) from the Development Bank of the Philippines (DBP) in 1968. Between 1971 and 1982, Midland Cement entered into ten successive agreements for additional loans or restructuring. DBP became the majority stockholder in 1972 and owned 92.89% of Midland Cement by 1981. In 1986, Midland Cement's properties were sold for P171,825,000.00, despite an outstanding balance exceeding P1 billion. Procedural History: On October 8, 1992, the Ad Hoc Fact-finding Committee on Behest Loans was created. On February 25, 1998, the Committee referred Midland Cement's accounts to the Ombudsman for preliminary investigation regarding violations of R.A. No. 3019, banking laws, and other penal statutes. A complaint-affidavit was filed, alleging that the loans were behest loans due to being under-collateralized, the corporation being under-capitalized, gross violation of loan agreements, and the officers being cronies of the President. The Ombudsman's Evaluation and Preliminary Investigation Bureau (EPIB) initially found no behest loans. However, the Special Prosecution Officer recommended dismissal due to prescription, as the offenses were committed between 1968 and 1982, and the complaint was filed in 1998, exceeding the 15-year prescriptive period for R.A. No. 3019. Ombudsman Desierto approved the dismissal on January 29, 1999. The Ad Hoc Committee filed a Motion to Revive/Reinstate, citing a previous Supreme Court decision. Respondent Alicia Ll. Reyes filed a counter-affidavit asserting her limited involvement and sufficient collateralization. On October 25, 2000, the EPIB recommended dismissal for insufficiency of evidence, which Ombudsman Desierto approved. A motion for reconsideration was denied. The Petition: The Presidential Ad Hoc Fact-finding Committee on Behest Loans and/or Presidential Commission on Good Government (PCGG) filed a petition for certiorari, alleging grave abuse of discretion by the Ombudsman in dismissing the complaint, particularly noting the contradiction between the 1998 finding of probable cause and the 2000 finding of insufficient evidence.
Issue(s)
Whether the Ombudsman committed grave abuse of discretion in dismissing the complaint for violation of R.A. No. 3019. Whether the loans extended to Midland Cement Corporation were behest loans. Whether the offenses charged have prescribed.
Ruling
The petition is DISMISSED. The Supreme Court upheld the Ombudsman's resolution dismissing the complaint for insufficiency of evidence, finding no grave abuse of discretion. The Court reiterated its policy of non-interference with the Ombudsman's determination of probable cause absent compelling reasons.
Ratio Decidendi
On the Ombudsman's Discretion and Grave Abuse of Discretion: The Supreme Court affirmed its policy of non-interference with the Ombudsman's exercise of discretion in prosecuting or dismissing a complaint, absent good and compelling reasons. The Court found no grave abuse of discretion in the Ombudsman's change of stance from the 1998 resolution to the 2000 resolution, explaining that the latter considered additional evidence, specifically the counter-affidavit of respondent Reyes, which provided a more complete picture of the transactions. The initial evaluation was based solely on the complainant's affidavit, while the subsequent evaluation incorporated controverting evidence, leading to a more informed decision. On Whether the Loans Were Behest Loans: The Court found that the loans were not behest loans. The initial loan was sufficiently collateralized by a first mortgage on all assets, assignment of mining claims and quarry rights, pledge of common shares, assignment of subscription receivables, and joint and several signatures. The subsequent loans, obtained after DBP became the majority stockholder and eventually owner of Midland Cement, were considered transactions to infuse fresh capital and protect DBP's investment, rather than behest loans. The Court noted that DBP's takeover changed the nature of the transactions, making them necessary business decisions to salvage its investment, not acts of undue favor. On Prescription: While the Court acknowledged that the prescriptive period for R.A. No. 3019 is fifteen (15) years, it found the issue of prescription to be ultimately immaterial given its finding that the Ombudsman correctly determined the absence of probable cause. The Court also clarified that prescription is reckoned from the time of discovery of the offense, not necessarily from the commission. It found that the discovery of the alleged anomalous transactions could reasonably be placed within the period following the constitution of the Ad Hoc Committee in 1992, thus the filing in 1998 was likely within the prescriptive period if the elements of the offense were present. However, since the substantive issue of probable cause was resolved against the petitioners, the prescription issue became moot.
Main Doctrine
The Supreme Court will generally defer to the Ombudsman's determination of whether probable cause exists to file criminal charges, especially in behest loan cases, absent compelling reasons. The Court will not substitute its own judgment for that of the Ombudsman in the exercise of his investigative and prosecutory powers.