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[G.R. NO. 133756 : July 4, 2008]


[G.R. NO. 133757 : July 4, 2008]




Before this Court are two special civil actions for certiorari under Rule 65 of the Rules of Court which were consolidated per Resolution dated 15 December 2004. The petitioner in G.R. No. 133756, which is the Presidential Ad-Hoc Committee on Behest Loans, represented by Atty. Orlando Salvador, seeks to set aside the public respondent Ombudsman's 12 August 1997 and 16 February 1998 Orders, both of which dismissed the case against private respondents Ulpiano Tabasondra, Enrique Herbosa, Zosimo Malabanan, Arsenio Lopez, Romeo Reyes, Heradeo Cuballa, Nilo Roa, Benigno del Rio and Juan Trivino for violation of Section 3(e) and (g) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). The petitioner in G.R. No. 133757, the Presidential Commission on Good Government (PCGG), seeks the reversal of two Orders of the Office of the Ombudsman dated 28 November 1997 and 17 February 1998, dismissing two complaints filed by petitioner against private respondents Placido L. Mapa, Benjamin Romualdez, Jose R. Tengco, Jr., Rafael A. Sison, Alejandro Melchor, Rosario B. Olivares, Alejandro Maramag, Evelyn J. Nicasio, Tuynita Soriano, Jose T. Abundo and Caridad E. Orpiada for violation of Section 3(e) and (g) of Republic Act No. 3019, and the Order dated 17 February 1998, denying petitioner's motion for reconsideration.

On 8 October 1992, then President Fidel V. Ramos issued Administrative Order No. 13 creating the Presidential Ad-Hoc Fact Finding Committee on Loans (Committee) which was tasked to inventory all behest loans, determine the parties involved and recommend whatever appropriate actions to be pursued thereby. President Ramos later issued Memorandum Order No. 61, dated 9 November 1992, expanding the functions of the Committee to include the inventory and review of all non-performing loans, whether behest or non-behest. Under the said memorandum, the following criteria may be used as a frame of reference in determining a behest loan:

A. It is undercollaterized (sic);

b. The borrower corporation is undercapitalized;

c. Direct or indirect endorsement by high government officials like presence of marginal notes;

d. Stockholders, officers or agents of the borrower corporation are identified as cronies;

e. Deviation of use of loan proceeds from the purpose intended;

f. Use of corporate layering;

g. Non-feasibility of the project for which financing is being sought; andcralawlibrary

h. Extra-ordinary speed in which the loan release was made.

Moreover, a behest loan may be distinguished from a non-behest loan in that while both may involve civil liability for non-payment or non-recovery, the former may likewise entail criminal liability.1

Several loan accounts were referred to petitioner Committee for its investigation, with Atty. Orlando Salvador as its coordinator. Among them were the loans of the Coco-Complex Philippines, Inc. (CCPI) from the Philippine National Bank (PNB) and that of the Philippine Journalists, Inc. (PJI) from the Development Bank of the Philippines (DBP). The Committee classified these loans as behest loans, prompting the PCGG to file a complaint with the Office of the Ombudsman against the Board of Directors of the two banks, as well as against the officers and stockholders of CCPI and PJI, for violation of Section 3(e) and (g) of Republic Act No. 3019.

[G.R. NO. 133756

This case arose from the Sworn Statement filed before the Office of the Ombudsman by Atty. Orlando L. Salvador on 23 June 1997, accusing the officers and board members of PNB,2 namely: Ulpiano Tabasondra, Enrique Herbosa, P.O. Domingo and Zosimo Malabanan; and the stockholders and officers of CCPI, namely: Arsenio Lopez, Romeo Reyes, Heradeo Cuballa, Nilo Roa, Benigno del Rio and Juan Trivino, for violation of Section 3(e) and (g) of Republic Act No. 3019, as amended. The case was docketed as OMB-0-97-1138. The complaint originated from the guarantee loan application of CCPI, a domestic corporation primarily incorporated for manufacturing coconut oil, in the total amount of P9,277,080.00 for the purchase of an oil mill to be supplied by Krupp of Germany. On 17 January 1968, the loan application was approved. According to petitioner, the loan granted to CCPI was without sufficient collateral and that CCPI had no sufficient capital to be entitled to the amount of the loan considering that at the time the loan was granted, CCPI's existing assets amounted only to P495,300 and its paid-up capital amounted to P2,111,000.00 as of 31 December 1969.

Subsequently, on 10 February 1972, CCPI allegedly obtained an additional loan for restructuring and equity conversion of its outstanding obligation up to 1972 without sufficient collaterals and adequate capital to ensure not only the viability of its operation but its ability to repay all its loans, to wit:




1. Restructuring increase from DM 7.4 M to DM 12.2 M


DM 4.8 million

2. Equity conversion


P7.07 million

3. Equity conversion


P14.2 million

4. Credit Line with PNB


P4.5 million

5. Guarantee Loan



Petitioner also alleged that per Statement of Deficiency as of 31 March 1992, the outstanding obligation of CCPI to the bank amounted to P205,889,545.76. According to petitioner, these transactions entered into by CCPI and the bank violated Section 3(e) and (g) of Republic Act No. 3019 and the aforementioned officers of DBP and CCPI were the ones responsible.

In an Order dated 12 August 1997, the Office of the Ombudsman dismissed the complaint on the sole ground of prescription, viz:

The respondents are being charged with violation of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act. In Section 11 of said law, it is provided that "All offenses punishable under this Act shall prescribe in fifteen years." In the instant case, the last date of the loan obtained by CCPI was on February 10, 1972. This complaint was filed on June 23, 1997 and with due consideration to our laws on prescription, the offense allegedly committed by respondents had already prescribed. Generally, the period of prescription commences to run from the day on which the crime is discovered by the offended party, the authorities or their agents. However, in People v. Dinsay (C.A.,40 O.G.,12th Supp. 50), "if there is nothing that was concealed or needed to be discovered, because the entire series of transactions was by public instruments, duly recorded, the crime of estafa committed in connection with said transaction was known to the offended party when it was committed and the period of prescription commenced to run from the date of its commission". In this case, since the transactions have been duly recorded and by public instruments, the period of prescription ran from the date of its commission, i.e., from February 10, 1992. When this was filed on June 23, 1997, fifteen years had already elapsed and, hence, it has already prescribed.4 (Emphasis supplied.)

Petitioner filed a motion for reconsideration of the said order which was dismissed by the Office of the Ombudsman based again on prescription of the crime per its Order dated 16 February 1998, ratiocinating:

After reviewing the record of the instant case, the undersigned finds no reversible error in the Order of August 12, 1997. The period of prescription is reckoned from February 10, 1972 (final loan release) and June 23, 1997 the time of the filing of the complaint in this Office.

x x x

Premises considered x x x the instant Motion for Reconsideration [is] DENIED.5

On 18 May 1998, petitioner filed the instant petition assailing the Ombudsman's Orders dated 12 August 1997 and 16 February 1998 and raising this single issue:


Petitioner argues that the right of the State to recover behest loans as ill-gotten wealth does not prescribe pursuant to Article XI, Section 15, of the 1987 Constitution and that the Court of Appeals' ruling in People v. Dinsay7 is not a controlling doctrine to be followed in the instant case since decisions of the Court of Appeals have only a persuasive character. Petitioner stresses that the ruling in Dinsay is not applicable to the case under consideration because the former involved a prosecution for estafa in that the accused disposed of his property claiming that it was free from any lien or encumbrance despite the fact that a notice of lis pendens was registered with the Registry of Deeds. The sale, cancellation of the accused's title, and issuance of a new title to the buyer could not have been concealed from the offended parties or their lawyers because these transactions took place when the civil case involving the said property and the offended parties was in progress. Also, Dinsay involved private parties, while the instant case involves the Government and public officers.

Petitioner likewise theorizes that the nature of behest loans calls for the application of the "discovery rule," i.e., when the gravamen of the cause of action is fraud, the statute of limitations does not begin to run against the injured person until discovery of the facts constituting the fraud or until, by reasonable diligence, such facts may have been discovered. Such rule is an exception to the general rule that the statute of limitations begins to run from the commission of the offense or when the crime is complete and not from the date the crime is discovered.

Petitioner notes that the Revised Penal Code adopts the "discovery rule" for prescription of offenses. Article 91 thereof states that "the period of prescription shall commence to run from the day on which the crime is discovered by the offended party, the authorities or their agents x x x." The Revised Penal Code, being suppletory in application to special laws such as Republic Act No. 3019, should govern the instant case.

Making use of the "discovery rule" and the Revised Penal Code in a suppletory manner, petitioner argues that, considering the discovery of the behest loan and the other related transactions during the evaluation of the pertinent documents by the Committee, the cause of action against respondents for violation of Section 3(e) and (g) of Republic Act No. 3019 has not yet prescribed.

Lastly, petitioner insists that even assuming that the "discovery rule" does not apply, nevertheless, on account of the principle of "equitable tolling," prescription has not yet set in for the offenses with which respondents in OMB-0-97-1138 were charged. This principle is based on the doctrine "contra non valentem agere nulla currit praescriptio," i.e., "no prescription shall run against a person unable to bring an action." The Committee was unable to bring the action, for the cause therefor was not known or reasonably known to it owing to the fact that (1) the loans, being behest, were concealed; (2) both parties to the loan transactions were in conspiracy to perpetrate the fraud against the State; and (3) the loans were granted at the time when then President Ferdinand E. Marcos was at the threshold of his authority and no one dared question, much less investigate, any of his orders.

In the meantime, this Court, on 25 October 1999, rendered a decision in G.R. No. 130140 entitled, "Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto," another case which involved the grant of an alleged behest loan by a government financial institution to a private corporation. The Court, in said case, resolved the issue of prescription of crimes relative to one of the behest loan cases filed with the Committee. The Court categorically enunciated that the prescriptive period for offenses involving behest loans, which the Committee charged the responsible persons with had not yet prescribed. It also directed the Office of the Ombudsman to conduct a preliminary investigation.

The ruling of this Court in G.R. No. 130140 prompted the Office of the Ombudsman to conduct a preliminary investigation of the instant case which was docketed as OMB-0-97-1138. The Office of the Ombudsman eventually dismissed the instant case against private respondents in a Resolution dated 16 October 2000 opining that the Board of Directors of the National Investment and Development Corporation, which approved the loan in favor of CCPI, should be the one indicted and not the private respondents. Petitioner filed a motion for reconsideration which was denied in an Order dated 27 February 2001. Dissatisfied, petitioner elevated anew the case to this Court questioning the finding that private respondents could not have been responsible for the crime charged. Said case which is docketed as G.R. No. 148269, is still pending.

In his Comment dated 23 October 2003, private respondent Enrique M. Herbosa urged this Court to dismiss the herein case for being moot and academic since the Office of the Ombudsman had already conducted the appropriate preliminary investigation on the merits after this Court settled the issue of prescription.

The Court agrees with private respondent Herbosa that this case has been rendered moot and academic. It is a rule of universal application, almost, that courts of justice constituted to pass upon substantial rights will not consider questions in which no actual interests are involved; they decline jurisdiction of moot cases.8 And where the issue has become moot and academic, there is no justiciable controversy, so that a declaration thereon would be of no practical use or value.9 There is no actual substantial relief to which petitioner would be entitled, and which would be negated by the dismissal of the petition.

In this case, the issues presented by the petition, i.e., whether the offenses subject of the criminal complaint have prescribed and whether the prescriptive period should be reckoned from the date of the commission of the offense or from the date of discovery thereof, have already been settled by the Court in G.R. No. 130140 on 25 October 1999 in Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto. As a result of said ruling in G.R. No. 130140, the Office of the Ombudsman set aside the questioned Orders dated 12 August 1997 and 16 February 1998 and thereafter conducted the preliminary investigation. There is no use in passing upon the merits of this case, the one involved in G.R. No. 148269, which is still pending. Notably, the issue of the existence of probable cause, or lack of it, is not the subject of the instant petition.

[G.R. NO. 133757

This case originated from the Sworn Statement dated 8 September 1997, signed by PCGG Consultant Atty. Orlando L. Salvador. In the said sworn statement or complaint, it was alleged that two industrial loans were granted by DBP in favor of the PJI. The first was in the amount of US$1,745,000.00 approved under DBP Board Resolution No. 3634 dated 15 September 1976; and the second was for US$124,140.00, approved under DBP Board Resolution No. 2753 dated 13 September 1978.10 In the complaint, it was alleged that the first loan was without sufficient collateral, as PJI had no sufficient capital to be entitled to the amount of the loan, considering that at the granting of the loan, PJI did not offer existing assets except for the assets to be acquired out of the proceeds from the loan, and that its paid-up capital amounted only to P100,000.00.11 All these notwithstanding, PJI obtained the second loan without sufficient collaterals and adequate capital to ensure the viability of its operations and its ability to repay its loans.12 It was also alleged that as of 30 June 1986, PJI had an outstanding and unpaid balance of P58,850,000.00. Furthermore, it averred that respondent Benjamin "Kokoy" Romualdez, the brother-in-law of then President Ferdinand E. Marcos, was the alleged owner of PJI and that PJI funds were used by respondent Benjamin Romualdez for his personal use.13

According to the complaint, the two industrial loans can be categorized as behest loans, since the same were not sufficiently secured, the grantee was undercapitalized, and the stockholders and officers of PJI were identified as cronies.

Based on these findings, the PCGG filed two cases with the Office of the Ombudsman for violation of Section 3(e) and (g) of Republic Act No. 3019.

The following former DBP officers were alleged to be the ones responsible for the approval of the behest loans: (1) Placido L. Mapa, Chairman; (2) Jose R. Tengco, Jr., full-time Governor; (3) Rafael A. Sison, full-time Governor; (4) Alejandro Melchor, part-time Governor; and (5) Alice Ll. Reyes, Manager of Industrial Projects Department. In addition to Benjamin Romualdez, the following PJI Officers were also indicted: (1) Rosario Olivares, President and Chairman; (2) Alejandro Maramag, Vice-President and General Manager; (3) Evelyn Nicasio, Assistant Treasurer and OIC, Purchasing Department; (4) Tuynita Soriano, Accounting Manager; (5) Jose T. Abundo, Chief Accountant; and (6) Caridad Orpiada, Cashier.

In an Order dated 28 November 1997, Graft Investigation Officer II Fe Q. Palmiano-Salvador recommended the dismissal of the cases on the grounds that the cases are barred by prescription and that the complainant's allegations that the loans were insufficiently secured were contradicted by the evidence on record. Said recommendation was approved by then Ombudsman Aniano A. Desierto on 12 December 1997.

Dissatisfied, petitioner filed a motion for reconsideration on 26 January 1998.

In an Order dated 17 February 1998, Graft Investigation Officer II Fe Q. Palmiano-Salvador recommended the denial of petitioner's motion for reconsideration.

The Ombudsman approved the recommendation denying the motion for reconsideration, and made some clarifications in his marginal note that the cases were being dismissed on the basis of insufficiency of evidence, and not because of prescription, thus:

For insufficiency of evidence [the recommendation for dismissal is approved], not on the ground of prescription. For clarity, however, the constitutional rule of imprescriptibility of actions for recovery of ill-gotten wealth obviously does not apply to the right of the state to impose penalty on persons violating its laws. The same is waivable in favor of persons alleged to have committed an offense.14

Stressing that the Ombudsman committed grave abuse of discretion amounting to lack of or in excess of his jurisdiction, petitioner filed the instant special civil action for certiorari praying for the annulment and setting aside of the Ombudsman's Orders dated 28 November 1997 and 17 February 1998, dismissing the charges against respondents.

The Ombudsman did not act with grave abuse of discretion when he dismissed the charges against respondents.

The Ombudsman has the power to investigate and prosecute any act or omission of a public officer or employee when such act or omission appears to be illegal, unjust, improper or inefficient.15 In fact, the Ombudsman has the power to dismiss a complaint without going through a preliminary investigation, since he is the proper adjudicator of the question as to the existence of a case warranting the filing of information in court.16 The Ombudsman has discretion to determine whether a criminal case, given its facts and circumstances, should be filed or not. This is basically his prerogative.17

In recognition of this power, the Court has been consistent not to interfere with the Ombudsman's exercise of his investigatory and prosecutory powers.18

Various cases held that it is beyond the ambit of this Court to review the exercise of discretion of the Office of the Ombudsman in prosecuting or dismissing a complaint filed before it. Such initiative and independence are inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and preserver of the integrity of the public service.19 chanrobles virtual law library

The rationale underlying the Court's ruling has been explained in numerous cases. The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely swamped if they would be compelled to review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant. In order to insulate the Office of the Ombudsman from outside pressure and improper influence, the Constitution as well as Republic Act No. 6770 saw fit to endow that office with a wide latitude of investigatory and prosecutory powers, virtually free from legislative, executive or judicial intervention.20 If the Ombudsman, using professional judgment, finds the case dismissible, the Court shall respect such findings unless they are tainted with grave abuse of discretion.21

Grave abuse of discretion is the capricious and whimsical exercise of judgment on the part of the public officer concerned, equivalent to an excess or lack of jurisdiction. The abuse of discretion 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.22

The Ombudsman, after a meticulous scrutiny of the evidence, found no sufficient ground to engender a well-founded belief that the complained transactions are behest loans and that respondents cannot be held liable under Republic Act No. 3019. The Ombudsman explained his reasons, based on evidence, for finding that there was no probable cause to indict respondents. First, there were sufficient collaterals and securities for the first loan of US$1,745,000.00 (its then peso equivalent was P13,087,500.00) such as: (1) the chattel mortgage on machinery with the appraised value at P27,700,000.00; (2) the assignment of 670 voting rights of 670 common shares with a par value of P100.00 per share; (3) the amendment of the Articles of Incorporation to include the P5,000,000.00 authorized preferred stock of PJI, and the P3,300,000.00 loan of Graphics Marketing to be converted to preferred shares; and (4) the joint and several signatures of Roberto Garcia and Rosario Olivares, PJI Chairman and President, respectively. Second, the succeeding loan amounting to US$124,140.00 was collateralized by the following: (1) the first mortgage on assets to be acquired with the appraised value of P28,900,000.00; (2) the joint and several signatures of Roberto Garcia and Rosario Olivares; and (3) the fact that the DBP was given a representation by one director in the PJI and the former can designate the Comproller in the PJI. The Ombudsman's findings that the loans had ample collaterals read:

Going further, the undersigned is dazzled by the series of conclusions reached by the reviewing Memorandum x x x that these are insufficiently secured loans and may still be prosecuted, contrary to the facts revealed after an exhaustive review of the records hereunder illustrated for clarity, namely:



Doc. Evidence

Page #

x x x x


4) The questioned loans were under-collaterized

It was NOT only with sufficient collaterals but there were still additional securities

Summary Profile Sec. 78, Gen. Banking Act

p. 15 & 173, Records


Collaterals offered for the first loan were:

Summary Profile

p. 15, Records


"1. C/M on machinery and equipment with A/V P27.7 million.


2. Joint and several signatures of Roberto Garcia and Rosario Olivares, PJI Chairman and President respectively.


3. Assignment of 672 of voting shares-common stocks.


4. Amendment of Article of Incorporation to include P5 million Authorized Preferred Stock, and P3.3 million loan of Graphics Marketing Corporation to be converted to Preferred shares (of CCRDC)."


Collaterals offered for second loan were:

Summary Profile

p. 15, Records.


"1. First Mortgage on assets to be acquired with appraised value of P28.9 million.


2. Joint and several signatures of Roberto Garcia and Rosario Olivares in the meantime.


3. DBP to be represented by one director and to designate Comptroller, if necessary.


Third, the Ombudsman also found that contrary to petitioner's allegation, PJI was sufficiently capitalized as evidenced by its article of incorporation. Fourth, the questioned loans in 1976 and 1978 were granted in view of the Project Profile (Project Study) considered by the different Departments of DBP and were reviewed by the Industrial Projects Department of the same bank, which established the financial and economic viability of PJI's loans or projects. The subject loans were properly evaluated; and the World Bank, Asian Development Bank, Board of Investments, National Economic Development Authority, and other agencies were consulted on the PJI project.

We have carefully examined the records of the case, the findings of the Ombudsman, and the opposing views of the parties. We find that the petition miserably fails to show that the Ombudsman gravely abused his discretion. On the contrary, the Ombudsman's resolutions are based on substantial evidence. In dismissing petitioner's cases against the respondents, we cannot say that the Ombudsman committed grave abuse of discretion so as to call for the exercise of our supervisory powers over him. As long as there is substantial evidence in support of the Ombudsman's decision, that decision will not be overturned.23 Such is the case here.

WHEREFORE, premises considered, the consolidated petitions are hereby DISMISSED for lack of merit. G.R. No. 133756 is DISMISSED for being moot and academic. The 28 November 1997 and 17 February 1998 Orders of the Office of the Ombudsman in G.R. No. 133757 dismissing the complaints against the respondents therein are hereby AFFIRMED.


Ynares-Santiago, J., Chairperson, Austria-Martinez, Nachura, Reyes, JJ., concur.


1 Rollo of G.R. No. 133756, p. 437.

2 Per petitioner's Amended Petition; id. at 433-457.

3 Id. at 31-32.

4 Id. at 86.

5 Id. at 94-95.

6 Id. at 441.

7 C.A., 40 O.G., 12th Supp. 50.

8 Lim v. Ang, G.R. No. 152429, 18 March 2005, 453 SCRA 802, 811.

9 Id.

10 Rollo of G.R. No. 133757, Vol. 1, p. 94.

11 Id.

12 Id. at 95.

13 Id. at 96.

14 Id. at 30.

15 Pres. Ad Hoc Fact Finding Com. on Behest Loans v. Ombudsman Desierto, 415 Phil. 135, 142 (2001).

16 Id.

17 Pres. Ad Hoc Fact Finding Com. on Behest Loans v. Ombudsman Desierto, supra note 14.

18 Venus v. Hon. Desierto, 358 Phil. 675, 695 (1998).

19 Chan v. Court of Appeals, G.R. No. 159922, 28 April 2005, 457 SCRA 502, 517; Knecht v. Hon. Desierto, 353 Phil. 494, 505-506; Fuentes, Jr. v. Office of the Ombudsman; G.R. No. 164865, 11 November 2005, 474 SCRA 779, 789; Cabrera v. Marcelo, G.R. No. 157419-20, 13 December 2004, 446 SCRA 207, 214-215.

20 Id.

21 Id.

22 Perez v. Office of the Ombudsman, G.R. No. 131445, 27 May 2004, 429 SCRA 357, 361-362.

23 Tan v. Office of the Ombudsman, 356 Phil. 626, 636 (1998), citing Olivarez v. Ombudsman, G.R. No. 118533, 4 October 1995, 248 SCRA 700, 709-710; Cruz, Jr. v. People, G.R. No. 110436, 27 June 1994, 233 SCRA 439, 450-451.

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