By Rey Panaligan
The Supreme Court (SC) has cleared several former officials of the Development Bank of the Philippines (DBP) in connection with the P634.8 million in so-called behest loans granted to a textile company from 1979 to 1981.
Cleared of alleged violations of the Anti-Graft and Corrupt Practices Act were former DBP officials Cesar Zalamea, Rafael Sison, Alicia Reyes, J.V. de Ocampo, Joseph Edralin, and Rodolfo Manalo.
Also cleared were ALFA Integrated Textile Mills, Inc. (ALFA Integrated Textile) officers Ramon Lee, Johnny Teng, Antonio DM. Lacdao, and Cesar Marcelo.
The SC decision, written by Associate Justice Marvic Mario Victor G. Leonen, upheld the 2006 and 2011 rulings of the Office of the Ombudsman (OMB). It dismissed the petition filed by the Presidential Commission on Good Government (PCGG).
In dismissing the graft complaints, the OMB ruled that the PCGG failed to prove that the loans and accommodations in favor of ALFA Integrated Textile, the rehabilitation plan, and the sale of fixed assets were grossly or manifestly disadvantageous or prejudicial to the government.
In fact, the OMB said that the acts subject of the complaints were done in the exercise of the officials’ sound business judgment in the interest of DBP.
In its petition, PCGG claimed that the loans granted to ALFA Integrated Textile have the characteristics of being behest loans since these were secured by inadequate collaterals and extended despite the company’s continuous losses.
It also alleged that the loans were used to pay off existing obligations rather than investing the loan proceeds and thus deprived the DBP the opportunity to recover from the loans.
In dismissing PCGG’s petition, the SC ruled that the OMB 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 beneficial to the government.
“Thus, the records of this case support public respondent Office of the Ombudsman’s finding that DBP exercised sound business judgment and acted under existing banking regulations in its loans to ALFA Integrated Textile,” it said.
“Petitioner (PCGG) 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 stressed.
At the same time, the SC said that the PCGG failed to prove that the sale of ALFA Integrated Textile’s fixed assets worth P462.32 million to Cape Industries, Inc., a company owned by Eduardo Cojuangco, Jr., for only P100 million, was grossly disadvantageous to the government.
It said the OMB was able to prove 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.
“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. This Court will not overturn its findings when they are supported by substantial evidence,” the SC ruled.