Presidential Commission on Good Governance v Ombudsman; G.R. No. 193176; February 24, 2016; Perlas-B

FACTS:

Presidential Commission on Good Governance was created as a Presidential Ad Hoc Fact Finding Committee under Ramos administration to investigate alleged loans granted by PNB during the Marcos years. PNB granted loans to Hercules Minerals and Oils, Inc, domestic corporation engaged in mining copper ores to produce copper concentrates, with the help of recommendation from then President Marcos. Sometime in 1982, HMOI ceased operations. Consequently, it was unable to meet its overdue and maturing obligations with PNB. Nonetheless, despite stoppage of its operations, PNB granted another loan to HMOI amounting to P650,000.00. By this time, the Total PNB Exposure had already ballooned to P203,610,000.00, while its collateral was only P94,656,000.00.

PCGG filed a case against respondents PNB Board of Directors for their participation in the said loans by virtue of Sec 3 of RA 3019. PCGG contended that the loans extended by PNB to HMOI were in the nature of behest loans, being characterized by the following: (a) the loans were undercollateralized; (b) the borrower corporation was undercapitalized; (c) the stockholders, officers, or agents of the borrower corporation are identified as cronies; and (d) the extra-ordinary speed in which the loan release was made. It asseverated that because PNB unduly accommodated HMOI, as evidenced by said loans which were grossly disadvantageous to the government, as well as the public, respondents must be prosecuted under Section 3 (e) and (g) of RA 3019. One of the respondents said that the 10 year prescriptive period under RA 3019 had already elapsed from the time of the action. The ombudsman ruled that the prescribed period had not yet elapsed. However, it ruled in favor of the respondents saying that PCGG’s argument on undercollateralized loans were specious due to lack of documentation that HMOI exaggerated the value.

ISSUE:

Whether or not private respondents violated RA 3019.

RULING:

Yes.

Violation of Section 3 (e) of RA 3019 requires that there be injury caused by giving unwarranted benefits, advantages or preferences to private parties who conspire with public officers. Its elements are: (1) that the accused are public officers or private persons charged in conspiracy with them; (2) that said public officers commit the prohibited acts during the performance of their official duties or in relation to their public positions; (3) that they caused undue injury to any party, whether the Government or a private party; (4) that such injury is caused by giving unwarranted benefits, advantage or preference to such parties; and (5) that the public officers have acted with manifest partiality, evident bad faith or gross inexcusable negligence. On the other hand, Section 3 (g) of RA 3019 does not require the giving of unwarranted benefits, advantages or preferences to private parties who conspire with public officers, its core element being the engagement in a transaction or contract that is grossly and manifestly disadvantageous to the government. The elements of the offense are: (1) that the accused is a public officer; (2) that he entered into a contract or transaction on behalf of the government; and (3) that such contract or transaction is grossly and manifestly disadvantageous to the government.

The fact that PNB appeared to be unduly exposing its finances by extending iniquitous loans to HMOI, despite the latter being undercapitalized and, notwithstanding the inadequacy of the collaterals being offered to secure the loans, should have been sufficient basis for the Ombudsman to find probable cause. The HMOI loans appear to bear the badges of a behest loan, as indicated by the following circumstances: HMOI was undercapitalized, the loans extended to it by PNB were undercollateralized, its officers were identified as "cronies," President Marcos had a marginal note/endorsement on Atayde's March 10, 1981 letter which facilitated the approval of another loan in favor of HMOI, and the loans were approved with extraordinary speed. The PCGG failed to submit independent valuation of the properties. This lack is not sufficient to dismiss the case for insufficiency of evidence to establish mere probable cause. To be sure, preliminary investigation is not the occasion for the full and exhaustive display of the parties' evidence. It is for the presentation of such evidence only as may engender a well-founded belief that an offense has been committed and that the accused is probably guilty thereof. The validity and merits of a party's accusation or defense, as well as admissibility of testimonies and evidence, are better ventilated during the trial proper.