Prescription Periods for Behest Loans: When Does the Clock Start Ticking?

The prosecution of behest loans — loans granted by government financial institutions to crony corporations under Marcos — raises a critical timing question: when does the prescriptive period for criminal charges begin? In Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto (G.R. No. 130140, October 25, 1999), the Supreme Court En Banc ruled that prescription runs from the discovery of the offense, not from the date of the loan transaction itself, when the crime was concealed through conspiracy.

The Case: Philippine Seeds, Inc. and the DBP Loans

The Presidential Ad Hoc Fact-Finding Committee on Behest Loans, created by Administrative Order No. 13 (1992), investigated loans extended by the Development Bank of the Philippines (DBP) to Philippine Seeds, Inc. (PSI) between 1969 and 1978. The Committee found that PSI obtained loans with insufficient collateral, was undercapitalized, and had principal stockholders who were relatives of then-President Marcos.

In March 1996, the Committee filed a criminal complaint with the Ombudsman against PSI's directors and the DBP officials who approved the loans, charging violations of Section 3(e) and (g) of Republic Act No. 3019 (the Anti-Graft and Corrupt Practices Act). The Ombudsman dismissed the complaint on the ground of prescription, counting the period from the dates the loans were granted (1969, 1975, 1978). The Committee elevated the case to the Supreme Court.

The Issue: Discovery or Commission?

The central question: should the prescriptive period for behest loan offenses run from the date of commission of the offense, or from the date of discovery by the State?

The Ombudsman argued that the transactions were evidenced by public instruments and thus "reasonably knowable" to the public. The Committee countered that the loans were concealed through conspiracy between government officials and the borrowers, making discovery impossible at the time.

The Ruling: Discovery Rule Applies

The Supreme Court sided with the Committee. Under Section 2 of Act No. 3326, which governs prescription for violations of special laws, prescription begins to run "from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof."

The Court rejected the Ombudsman's interpretation that "not known" means "not reasonably knowable." The statutory language is clear: if the offense is not known at the time of commission, prescription runs from discovery.

The Court distinguished earlier cases. In People v. Sandiganbayan, prescription ran from the filing of a land patent application because numerous government personnel could have discovered the falsity — there was no conspiracy. Here, the Committee alleged that public officials connived with the loan beneficiaries, making discovery impossible at the time.

The Constitutional Dimension

The Court also clarified an important constitutional point. Section 15, Article XI of the 1987 Constitution provides that the State's right to recover unlawfully acquired properties "shall not be barred by prescription, laches, or estoppel." The Committee argued this made behest loan offenses imprescriptible.

The Court held this provision applies only to civil actions for recovery of ill-gotten wealth, not to criminal prosecutions. The Constitutional Commission's deliberations confirmed this: the phrase "or to prosecute offenses in connection therewith" was deliberately deleted from the final text. Criminal cases under RA 3019 remain subject to prescription.

Practical Takeaways

• The discovery rule protects the State in concealed crimes. When public officials conspire with private parties to hide wrongdoing, prescription does not run until the offense is actually discovered.
• Section 15, Article XI of the Constitution is civil, not criminal. It bars prescription, laches, and estoppel only for civil recovery actions, not for criminal prosecutions under RA 3019.
• Act No. 3326 governs prescription for special laws. Its plain language — "if the same be not known at the time, from the discovery thereof" — controls the computation.
• The Ombudsman must conduct a preliminary investigation before dismissing on prescription grounds. Where the date of discovery is disputed, the investigating officer must receive evidence to resolve that factual issue.
• For behest loan cases, the prescriptive period under RA 3019 (originally 10 years, later 15 years under BP Blg. 195) begins from discovery when the offense was concealed through conspiracy.

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