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SC affirms dismissal of graft case vs. former DBP officers

The Supreme Court has sustained the resolution issued by the Office of the Ombudsman dismissing the graft complaint filed against former officials of the Development Bank of the Philippines and officers of a local textile firm for allegedly obtaining a total of P634.8 million in behest loans.

In its decision, the SC’s Third Division through Associate Justice Marvic Leonen denied the petition filed by the Presidential Commission on Good Government seeking a reversal of the July 31, 2006 resolution and January  21, 2011 order of the Ombudsman.

“As petitioner was unable to substantially prove its allegations, this Court rules that public respondent Office of the Ombudsman did not gravely abuse its discretion in finding that there was no probable cause to charge private respondents with violation of Section 3(e) and (g) of the Anti-Graft and Corrupt Practices Act,” the SC held.

“This Court will not overturn its findings when they are supported by substantial evidence,” it said.

The anti-graft body found no probable cause to indict the officials of the DBP, namely: Cesar Zalamea, Rafael Sison, Alicia Reyes, J.V. De Ocampo, Joseph Edralin and Rodolfo Manalo and  ALFA Integrated Textile Mills, Inc. (ALFA Integrated Textile)  officers Ramon Lee, Johnny Teng, Antonio DM. Lacdao, and Cesar Marcelo  for violation of the provisions  of Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act.

The Ombudsman held that the six loans obtained by ALFA Integrated Textile from Development Bank from 1979 to 1981 were not behest loans.

It also ruled that the PCGG failed to prove that the loans and accommodations in favor of ALFA Integrated Textile, the rehabilitation plan, and the fixed assets sale were grossly or manifestly disadvantageous or prejudicial to the government.

The anti-graft body instead ruled that the acts complained of were done in the exercise of the bank officials’ sound business judgment in DBP’s interest.

In seeking the reversal of the Ombudsman’s ruling, the PCGG argued that the loans to ALFA Integrated Textile have the characteristics of being behest loans since these were secured by inadequate  collaterals, the loans were extended despite the company’s continuous losses and the use of the loan proceeds to pay off existing obligations rather than investing denied DBP the opportunity to recover from the loans.

However, the high court gave more weight to the findings of the Ombudsman that there were sufficient collaterals securing ALFA Integrated Textile’s loans.

The SC also noted that the Ombudsman was correct in holding that the rehabilitation plan that the DBP recommended would not be disadvantageous to the government since its terms and conditions were not contrary to law and actually benefited the government.

“Thus, the records of this case support public respondent Office of the Ombudsman’s finding that Development Bank exercised sound business judgment and acted under existing banking regulations in its loans to ALFA Integrated Textile,” the tribunal said.

“Petitioner failed to show how the risk Development Bank had taken in extending the loans to ALFA Integrated Textile was arbitrary or malicious. Likewise, it was unable to prove the element of undue injury; that is, the losses that would have been unavoidable in the ordinary course of business, as contemplated by Presidential Commission on Good Government,” it added.

Besides, the SC said the PCGG failed to substantiate that the  sale  of ALFA Integrated Textile’s fixed assets worth P462,323,000.00 to Cape Industries, Inc., a company owned by Eduardo Cojuangco, Jr. who was a known crony of the late  President Ferdinand  Marcos for only P100 million, was grossly disadvantageous to the government.

The tribunal also pointed out that the Ombudsman was able to establish that DBP included a repayment schedule of ALFA Integrated Textile’s loans from the bank and other obligations in the contract to sell with Cape Industries.

Topics: Supreme Court , Development Bank of the Philippines , ALFA Integrated Textile , Marvic Leonen
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