Prescription and Probable Cause: Protecting Public Officials From Stale Charges

The Supreme Court recently affirmed the Office of the Ombudsman's dismissal of criminal charges against former Philippine National Bank (PNB) directors and officers in a case involving alleged behest loans. The ruling in Presidential Commission on Good Government v. Gutierrez (G.R. No. 189800, July 9, 2018) clarifies two important points of criminal procedure: how prescription periods apply to offenses under the Anti-Graft and Corrupt Practices Act, and what evidence is needed to establish probable cause against corporate directors.

Background of the Case

The case arose from loans granted by PNB to Bicolandia Sugar Development Corporation (BISUDECO) from 1971 to 1985. The Presidential Commission on Good Government (PCGG) alleged these were behest loans—transactions that were undercollateralized and made to an undercapitalized borrower.

In 1994, a Presidential Ad Hoc Fact-Finding Committee submitted a Terminal Report classifying the BISUDECO loans as behest loans. More than a decade later, in January 2005, the PCGG filed a complaint with the Ombudsman against the private respondents for violations of Sections 3(e) and 3(g) of Republic Act No. 3019.

The Ombudsman dismissed the complaint on two grounds: prescription and lack of probable cause. The PCGG challenged this dismissal before the Supreme Court via a petition for certiorari, arguing grave abuse of discretion.

The Issue

The central question was whether the Ombudsman committed grave abuse of discretion in dismissing the complaint on grounds of prescription and lack of probable cause.

Prescription Periods Under RA 3019

Section 11 of RA 3019 originally provided a 10-year prescription period for all offenses under the law. This was increased to 15 years by Batas Pambansa Bilang 195, which took effect on March 16, 1982.

The Court applied the rule from People v. Pacificador: when determining which prescriptive period applies, the period more favorable to the accused must be adopted. The longer 15-year period cannot be given retroactive effect to acts committed before 1982, as doing so would violate the prohibition against ex post facto laws.

For the prescription period's starting point, the Court applied Section 2 of RA 3326, which provides that prescription begins to run from the day of the commission of the violation, or if not known at the time, from its discovery. Citing prior behest loan cases, the Court applied the "blameless ignorance" doctrine—the prescriptive period runs only upon discovery of the facts that support a cause of action.

In this case, the discovery date was April 4, 1994, when the Terminal Report was submitted to the President. Since the PCGG filed its complaint on January 28, 2005, the 10-year period had already lapsed for loans transacted from 1971 to 1981. However, for loans from 1982 to 1985, the 15-year period under BP 195 applied, making those claims timely.

Probable Cause Against Corporate Directors

The Court then addressed whether the Ombudsman properly found no probable cause. The PCGG's basis for implicating the respondents was their membership on PNB's Board of Directors during the relevant periods.

The Court rejected this approach. Citing Kara-an v. Office of the Ombudsman, the Court ruled that approval of a loan during a director's incumbency does not automatically establish probable cause absent a showing of personal participation in any irregularity. The complaint failed to allege specific acts by each respondent, and the PCGG merely provided lists of board members without proof of individual participation.

The Court also noted that the PCGG's affiant appeared to lack personal knowledge of the allegations, as no one executed an affidavit attesting to the complaint's contents.

Corporate Liability Principles

The Court emphasized that a corporation has a separate personality from those who represent it. Under Section 31 of the Corporation Code, directors become personally liable only when they willfully and knowingly vote for or assent to patently unlawful acts, or are guilty of gross negligence or bad faith. The PCGG failed to allege particular acts constituting such conduct.

Since there was no probable cause to charge the public officers, the private respondents who acted as BISUDECO officers were likewise cleared of criminal liability.

Practical Takeaways

• Prescription favors the accused. When prescription periods are amended, the shorter period in effect at the time of the offense applies if it is more favorable to the accused.
• Discovery triggers prescription for concealed crimes. For offenses that can be concealed, such as behest loans, the prescriptive period runs from discovery, not commission.
• Board membership alone is insufficient. A director's position on a board at the time of a transaction does not, by itself, establish probable cause for graft charges.
• Specific allegations are required. Complaints must allege the particular acts constituting the offense; vague references to board membership amount to a "fishing expedition."
• Courts defer to the Ombudsman. Absent grave abuse of discretion, courts will not interfere with the Ombudsman's determination of probable cause.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.