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Cronies cleared of behest loans

The Supreme Court has absolved several so-called “cronies” of the late President Ferdinand Marcos, including former Senator Juan Ponce Enrile, of criminal liability over the alleged behest loans granted to a sugar milling company in 1968 by the Philippine National Bank.

The high court’s Second Division denied the petition filed by the  Presidential Commission on Good Government seeking to set aside the resolution issued by the Office of the Ombudsman on Dec. 29, 2006, and the order dated April 21, 2009, that respectively dismissed for lack of probable cause the criminal complaints filed against the respondents.

The high court upheld the resolution of the Ombudsman dismissing the complaint filed in 1968 against PNB directors Enrile, Roberto Benedicto, Antonio Diaz, Ismael Reinoso, Simeon Miranda, Renato Tayag, Juan Trivinio, Cesar Virata, Jose Macario Laurel IV and Jose Leido.

The anti-graft body also cleared Rafael Perez and Felicisimo Gonzalo, both former PNB-Dumaguete branch managers, and the officers of Tolong Sugar Milling Company Inc. (TSMCI) Ramon Escafio, Herminio Teves, Evelina Teves, Lorenzo Teves, Catalino Noel and Lamberto Macias.

“Simply stated, no grave abuse of discretion may be attributed to the Ombudsman merely because of its alleged misappreciation of facts and evidence,” the high court ruled. 

“The petitioner in a certiorari proceeding must clearly demonstrate that the court or tribunal blatantly abused its authority to a point so grave as to deprive it of its very power to dispense justice.”

In its complaint, the PCGG said TSMCI was one of the many companies that was investigated by the Presidential Ad Hoc Fact-Finding Committee’s Technical Working Group for possible prosecution arising from behest loans.

TWG’s examination disclosed that on March 20, 1968, PNB granted TSMCI a stand-by irrevocable unconfirmed letter of credit in the amount of US$27,793,123.45 or P108.91 million to cover the importation of sugar machinery and equipment in connection with TSMCI’s proposed sugar central in Sta. Catalina and Bayawan, Negros Oriental.

The loan was granted under PNB Board Resolution 711 dated March 20, 1968, and was secured by 51.2496 hectares of agricultural land;  machinery and equipment, building and other improvements to be erected and/or installed in the company’s, milling site; 3,000 hectares of central-owned and operated   sugar plantation; and joint and solidary surety executed by TSMCI’s officers.

However, the TWG discovered that at the time of its incorporation on May 10, 1967, TSMCI only had subscribed capital stock amounting to P2,000,000.00, of which only P500,000 was paid-up; that it only had capitalization in the amount of Pl0,000,000.00; that the land covered by the loans were appraised by PNB Dumaguete Branch at P22,350.00 only; and that the two parcels were not titled or registered in the name of TSMCI.

The PCGG claimed that the TWG’s findings showed that TSMCI’s account was a behest loan.

In dismissing the complaint, the Ombudsman held that the PNB board “exercised proper caution to ensure the chances of payment and that the loan was not under-collateralized,” contrary to the allegations by the PCGG.

It said that the PNB board even required TSMCI to increase its paid-up capital as one of the conditions for the grant of the loan.

Likewise, it said that in October 1967, the PNB-Dumaguete Branch had appraised the real properties offered by TSMCI as security at P111,172,493.80, which was more than sufficient to cover the amount of the loan.

In its petition before the high court, the PCGG insisted that the PNB board should not have approved the loan, stressing that the two tracts of land offered as security were not registered in the name of the borrower, thus TSMCI could not have validly constituted a mortgage thereon.

It said that had the respondents PNB directors truly exercised caution to ensure repayment of the loan, they would have realized that the borrower was a newly formed corporation, under-capitalized, and offered unacceptable collaterals.

But in upholding the Ombudsman’s dismissal of the complaint, the high court held that the complaint filed by the PCGG failed to sufficiently establish that the loan obtained by TSMCI should be considered a behest loan.

“The PCGG merely highlighted the alleged scandalous disproportion of the assets and collateral offered by TSMCI with the amount of the loan without even stating the alleged acts committed by the respondents that constituted or exhibited manifest partiality, evident bad faith or inexcusable negligence,” the high court ruled.

Topics: Supreme Court , "cronies" , Ferdinand Marcos , Juan Ponce Enrile , Philippine National Bank
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