FIRST DIVISION

[G.R. No. 112584. May 23, 1997]

DOMINGO INGCO, ERNESTO MAGBOO and HERMINIO

ALCASID, petitioners, vs. SANDIGANBAYAN, respondent.

DECISION
VITUG, J.:

Petitioners Domingo Ingco, Ernesto Magboo and Herminio Alcasid have

lodged the instant civil action of certiorari and prohibition, with prayer for
temporary restraining order, to nullify the resolutions,  dated 07 October
[1]

1993  and 08 November 1993,  of the Sandiganbayan which denied petitioners'
[2] [3]

motion to quash the information and motion for a reconsideration of the denial.
The case began when, on 26 May 1987, Domingo Ingco, a former Vice-
President of the Philippine National Bank ("PNB"), was charged, along with top
officials of Cresta Monte Shipping Corporation, namely, its Chairman of the
Board of Directors Ernesto Magboo and its President Herminio Alcasid, by
PNB before the Presidential Blue Ribbon Committee with violation of Republic
Act No. 3019 ("Anti-Graft and Corrupt Practices Act"). The matter was at once
referred to the Office of the Ombudsman.
In a resolution,  dated 22 June 1993, the Committee on Behest Loans under
[4]

the Office of the Special Prosecutor in the Office of the Ombudsman made a
narration of its factual findings; viz:

"Cresta Monte Shipping Corporation is a domestic corporation registered with

the Securities and Exchange Commission on October 3, 1976 and whose
primary purpose is to engage in the domestic and/or overseas cargo and
passenger shipping business.

"Its officers and directors included Ernesto S. Magboo as Chairman of the

Board of Directors and controlling stockholder; Herminio Alcasid as President
and General Manager; Mario Ramos, Nora Roasa and Nelson Magboo as
directors.

"The Corporation started operations sometime in July 1977. At the time of the
filing of the instant complaint, it maintaineud and operated nine vessels which
carried logs, lumber and wood products, copper, iron ore, heavy machineries
and general cargo to Southeastern Asian countries.

"Sometime in 1977 and 1978, it obtained two (2) loan accommodations from
the Philippine National Bank, which are now the subject of the instant
complaint.

"Through Board Resolution No. 703 dated September 22, 1977, PNB extended
a loan accommodation to Cresta Monte in the amount of US$5,910,000.00 to be
utilized for the purchase of two cargo vessels from Japan. Said loan was secured
by 1) a Guaranty Loan of the National Investment and Development
Corporation (NIDC) as approved under its Board Resolution No. 223 dated
December 22, 1976 amounting to US$7.8M; and 2) the joint and several
signatures of Ernesto Magboo and Herminio Alcasid and their spouses.

"Meanwhile, the aforementioned NIDC loan was secured by 1) a chattel

mortgage on the second-hand vessel to be purchased from the proceeds of the
said loan, at an acquisition price of US$1.89 Million (P14,150,430.00); 2) the
joint and several signatures of Ernesto Magboo and Herminio Alcasid and their
spouses; and 3) a pledge of 100% shares of stocks.

"Subsequently, per Board Resolution No. 642 dated March 27, 1978, PNB again
approved Cresta Monte's request for PNB to advance the amount of US$7.5
Million to be remitted to the Bank of Tokyo, Shimbashi Branch, Tokyo, Japan
for the account of Liberation Maritime Carriers Co. Ltd. to cover the purchase
price of two brand-new oceangoing vessels with the unit cost of US$3.75
Million. Said loan was similarly secured by 1) a Guaranty by the NIDC in the
amount of US$7.8 Million approved under its Board Resolution No. 223 dated
December 22, 1976; and 2) the joint and several signatures of Ernesto Magboo
and Herminio Alcasid and their spouses.

"On the other hand, the NIDC loan was secured by 1) a chattel mortgage on
second-hand vessels at an acquisition cost of US$1.89 Million or P14.175
Million (P7.50 = $1); 2) a chattel mortgage on two cargo vessels (M/V Amasia
and M/V Kusonaki Maru) at an acquisition cost of US$5.91 Million or P44.325
Million; and 3) the joint and several signatures of Ernesto Magboo and
Herminio Alcasid and their spouses. The value of the collateral security
totaled P58.500 Million.

"In the instant complaint, PNB charges Domingo Ingco with conspiring with the
other respondents in having the loan applications approved even without a
project feasibility study and notwithstanding the fact that the credit rating
submitted by the Credit Department showed more adverse comments. It further
alleged that the collaterals offered by Cresta Monte were deficient. PNB
likewise charged the officers and directors of Cresta Monte with persuading and
inducing respondent Ingco to recommend the approval of the loans under
disadvantageous terms and conditions.

"In his Counter-Affidavit, respondent Domingo Ingco denied the imputation of

conspiracy with the other respondents. He further declared that contrary to the
allegation in the complaint, the commercial viability of the project was
thoroughly evaluated by the Credit Department which thereafter gave the
company a rating of 'B-1,' meaning good quality. He likewise stated that he
cannot be faulted for the alleged failure to require the Magboo and Alcasid
spouses to submit their joint and several signatures since the implementation of
approved loans as well as the compliance with the requirements devolved on the
operating department, which is the International Department. He also asserted
that there was no collateral deficiency on the part of Cresta Monte at the time
when the loans were granted and that the NIDC had the recognized stature and
capacity to act as guarantor for the loans. Moreover, the loans were granted with
the proper safeguards and conditions to protect PNB's interests and with the
approval of the Monetary Board after evaluation by the Central Bank." [5]

On the basis of the foregoing, the Committee arrived at its following

assessments and inferences, to wit:

"The allegations in the complaint hinge on a single issue, namely, whether the
loan accommodations extended by PNB to Cresta Monte were in the nature of
behest loans granted by a government financial institution to a select
corporation which ultimately caused prejudice to the Government or were
manifestly disadvantageous to it.

xxx xxx xxx

"A review of the records of the case reveals that Domingo Ingco, in his capacity
as Sr. Vice-President of PNB, recommended to the Board of Directors of the
PNB, and the latter approved the release of the loans for $5.91M in September
1977 and $7.5M in March 1987 (should be 1978) in favor of Cresta Monte. Said
loans were secured only by the Guaranty of NIDC and the Joint and Solidary
Signatures of Messrs. Ernesto S. Magboo and Herminio M. Alcasid and their
respective spouses. It must be remembered that NIDC is but a wholly-owned
subsidiary of the PNB. The President of the PNB and all the members of the
PNB Board of directors are also the President and members of the NIDC Board
of Directors, respectively. Considering above information, it would appear that
the guarantee made by NIDC to PNB with respect to Cresta Monte's loan is but
illusory. It is as if one creditor extended a loan in favor of a particular debtor
with a guarantee/assurance coming from the same creditor. This is tantamount
to having no guaranty being submitted at all. For PNB's sake and interest, PNB's
management should have required Cresta Monte a security/guaranty emanating
from credible private lending institutions and not from its own subsidiary
corporations. Moreover, with respect to the $7.5M loan, records are clear that
said loan was released to Cresta Monte without the requisite Joint and Solidary
Signatures of Messrs. Ernesto S. Magboo and Herminio M. Alcasid and their
respective spouses, which were submitted only a year after the approval and
implementation of said loan. It is basic in banking procedure that upon approval
of the loan by the board, the covering Board Resolution is forwarded to the
operative department for the proper documentation of the account and the
compliance by the borrower with all the terms and conditions imposed on the
approved loan, including the submission of the Joint and Solidary Signatures of
the borrower.

xxx xxx xxx

Based on our earlier observation, it is very clear that PNBs loan to Cresta Monte
Shipping Corporation amounting to US$13.4M falls within the category of a
behest loan.Evidently, there was pressure and instructions from high
government officials for the release of said loan. This is so because in spite of
the many risks and deficiencies attendant to the approval of the loan, as
discussed above, the owners of Cresta Monte Shipping Corporation were still
able to obtain the loan and at concessionary lending terms at that.

It is indubitably clear that the strong recommendation and direction made by

Senior Vice-President Domingo Ingco, who conspired and confederated with
Ernesto Magboo and Herminio Alcasid, were chiefly responsible for the grant
of the loans to Cresta Monte under manifestly and grossly disadvantageous
terms and conditions which resulted in undue damage and prejudice caused to
the PNB. Needless to say, the violation of some of the warranties, pre-requisite
terms and conditions of the loans should have merited their disapproval but as
previously discussed, all these were overlooked when the loans were granted. In
this respect, respondents Ingco, Magboo and Alcasid are indictable for
Violation of Sec. 3(e) in relation to Sec. 3(g) of R.A. No. 3019.
[6]

Accordingly, on 21 July 1993, an information  was filed with the

[7]

Sandiganbayan for violation of Section 3(e), in relation to Section 3(g), of R.A.

3019, as amended, against herein petitioners. The inculpatory statements in the
information read:

That on or about September 22, 1977 and March 27, 1978, and for some time
prior or subsequent thereto, in the City of Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above named accused, Domingo Ingco,
being then the Senior Vice-President of the Philippine National Bank, a
government-owned bank, and hence a public officer, while in the performance
of his official functions, taking advantage of his position and conspiring and
confederating with Ernesto Magboo and Herminio Alcasid, both private
individuals, being then the Chairman of the Board of Directors and the
President and General Manager, respectively, of Cresta Monte Shipping
Corporation, a private corporation engaged in the maritime industry and duly
organized and registered in accordance with Philippine law, did then and there
willfully, unlawfully, criminally and with evident bad faith and manifest
partiality cause undue injury to the Government in the following
manner: accused Domingo Ingco favorably recommended the approval of the
applications for loan of Cresta Monte Shipping Corporation in the amount of
US$5.91 Million and US$7.5 Million and the subsequent release of such loans
notwithstanding the fact that Cresta Monte had a capitalization of only P1
Million; that the loans were guaranteed only by the National Investment
Development Corporation, a subsidiary of the Philippine National Bank; that
the joint and several signatures of accused Ernesto Magboo and Herminio
Alcasid and their spouses were not given in violation of the terms and
conditions of the guaranty loan by NIDC; that a project feasibility study was not
conducted to evaluate the commercial viability of the proposed undertaking
covered by the aforesaid loans; that the Credit Rating submitted by the PNB
Credit Department contained adverse comments; and that the collaterals offered
by Cresta Monte Shipping Corporation were deficient, thereby allowing the
Government to enter into a manifestly and grossly disadvantageous contract,
and as a result of the grant of said loans and their subsequent release in
complete disregard of the aforementioned factors which should have justified
their disapproval, undue injury and damage was consequently caused to the
Government by the default of Cresta Monte Shipping Corporation in the
payment of its loan obligations, thereby leaving an unpaid balance of P511.437
Million as of March 31, 1986. [8]

Petitioners moved for the quashal  of the information on the ground, inter
[9]

alia, that the facts alleged in the information did not constitute an offense under
the invoked law, and that the offense charged, in any case, had already
prescribed. Expectedly, the motion was opposed by the prosecution.
On 07 October 1993, the Sandiganbayan denied the motion to quash; it
likewise turned down the motion for a reconsideration of the denial.
The appeal hinges on the resolution of two main issues, i.e., (1) whether or
not the offense has already prescribed, and (2) whether or not the facts charged
under the information indeed constitute an offense.
On the issue of prescription, the Court affirms the holding of the
Sandiganbayan that the offense has not as yet prescribed.  Although, it is true
[10]

that more than ten years have elapsed from the time of the alleged commission
of the offense on 22 September 1977 and/or 27 March 1978 to the date of
filing of the information on 21 July 1993, the then  applicable 10-year
[11]

prescriptive period has, however, been effectively suspended by the filing of the
complaint on 26 May 1987 with the Ombudsman. In Llenes vs. Dicdican,  the [12]

Court has underscored what should now be the settled rule on this question; viz:

"The matter of interruption of the prescriptive period due to the filing of the
complaint or information had been the subject of conflicting decisions of this
Court. In People vs. Tayco (73 Phil. 509), People vs. Del Rosario (110 Phil.
476), and People vs. Coquia (8 SCRA 349), this Court held that it is the filing
of the complaint or information with the proper court, viz., the court having
jurisdiction over the crime, which interrupts the running of the period of
prescription. On the other hand, in the first case of People vs. Olarte (108 Phil.
756), a case for libel, this Court held that the filing of the complaint with the
justice of the peace court even for preliminary investigation purposes only
interrupts the running of the statute of limitations.

"However, the decision of 28 February 1967 of this Court in the second case
of People vs. Olarte (19 SCRA 494) resolved once and for all what should be
the doctrine, viz., that the filing of the complaint with the municipal trial court
even for purposes of preliminary investigation only suspends the running of the
prescriptive period. x x x

"Then, in its decision of 30 May 1983 in Francisco vs. Court of Appeals (122

SCRA 538), this Court not only reiterated Olarte of 1967 but also broadened its
scope by holding that the filing of the complaint in the fiscal's office for
preliminary investigation also suspends the running of the prescriptive period. x
xx

"This Court reiterated Francisco in its resolution of 1 October 1993

in Calderon-Bargas vs. Regional Trial Court of Pasig, Metro Manila (227
SCRA 56)."

Summing up, the Court made the following observations and thereupon
concluded:

"A public officer, as distinguished from a government `employee,' is a person

whose duties involve the exercise of discretion in the performance of the
functions of government. The petitioner, being an Education Supervisor II of
the Regional Office of Region VII of the DECS, is a public officer. The
Ombudsman-Visayas then has authority to conduct preliminary investigation of
the private respondent's complaint against the petitioner for grave oral
defamation. Undoubtedly, the rationale of the first Olarte case, reiterated as the
controlling doctrine in the second Olarte case, which was broadened in
Francisco and reiterated in Calderon-Bargas, must apply to complaints filed
with the Office of the Ombudsman against public officers and employees for
purposes of preliminary investigation. Accordingly, the filing of the private
respondent's complaint for grave oral defamation against the petitioner with the
Ombudsman-Visayas tolled the running of the period of prescription of the said
offense."[13]

The complaint filed on 26 May 1987 before the Ombudsman, in fine, is

deemed to have tolled the running of the prescriptive period, and thus the filing
of the information on 21 July 1993, following the approval by the Ombudsman
on 12 July 1993 of the resolution recommending the prosecution of herein
petitioners, must perforce be held to be well within the ten-year prescriptive
period.
Turning now to the second issue, respondent Sandiganbayan downgraded
the motion to quash with this ratiocination:

"The facts charged in the information do constitute the offense of Violation of

Section 3(e), in relation to Section 3(g) of Republic Act No. 3019, since the
accused are alleged to have acted in conspiracy when they initially applied for
loans to Cresta Monte Shipping Corporation out of PNB funds and which were
granted/approved upon recommendations which were supposedly irregular,
improper and prejudicial to the Government. What is only required is for an
information to describe and charge an indictable offense which is likewise
required to be clearly specified and designated, to wit, it should contain all the
essential elements constituting the particular offense.

"Under Section 3(e) of Rep. Act No. 3019, as amended, two of the requisite
elements are that the alleged violations thereof is attended by evident bad faith
and manifest partiality and which caused undue injury to the Government,
which elements are recited in the information, similarly as under Section 3(g),
Ibid, wherein the essential elements go into the execution of contracts and
transactions alleged to be manifestly and grossly disadvantageous to the
Government, irregardless (sic) of personal gain or profit, and which are likewise
alleged."[14]

Section 3(a) of Rule 117 of the Revised Rules of Court authorizes the
quashal of an information when the facts therein averred do not amount to an
offense. The fundamental test in reflecting on the viability of a motion to quash
under this particular ground is whether or not the facts asseverated, if
hypothetically admitted, would establish the essential elements of the crime
defined in the law.  In this examination, matters aliunde are not considered.
[15]

Anent the sufficiency of the information, Section 6, Rule 110, of the Rules of
[16]

Court requires, inter alia, that the information must state the acts or omissions
so complained of as constitutive of the offense.
 Petitioners have been charged with having violated Section 3(e), in relation
to Section 3(g), of R.A. No. 3019. These provisions read:

Sec. 3. Corrupt Practices of Public Officers. - In addition to acts or omissions of

public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

e. Causing any undue injury to any party, including the Government, or giving
any private party any unwarranted benefits, advantage or preference in the
discharge of his official administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence. This provision
shall apply to officers and employees of offices or government corporations
charged with the grant of licenses or permits or other concessions.

xxx xxx xxx

g. Entering, on behalf of the Government, into any contract or transaction

manifestly and grossly disadvantageous to the same, whether or not the public
officer profited or will profit thereby.

Under Section 3(e), the elements of the offense are: (1) That the accused are
public officers or private persons charged in conspiracy with them; (2) that said
public officers commit the prohibited acts during the performance of their
official duties or in relation to their public positions; (3) that they cause undue
injury to any party, whether the Government or a private party; (4) that such
injury is caused by giving unwarranted benefits, advantage or preference to such
parties; and (5) that the public officers have acted with manifest partiality,
evident bad faith or gross inexcusable negligence.  To determine the culpability
[17]

of an accused in relation, in turn, to Section 3(g) of the law, it needs to be

established (1) that the accused is a public officer; (2) that he entered into a
contract or transaction on behalf of the government; and (3) that such contract
or transaction is grossly and manifestly disadvantageous to the government.
The information against Domingo Ingco expressed that he had favorably
recommended the approval of the application for loan of Cresta Monte
Shipping Corporation in the amount of US $5.91 million and US $7.5 million,
notwithstanding that: [a] Cresta Monte had a capitalization of only P1 million;
[b] no project feasibility study was conducted; [c] the PNB Credit Department
submitted an adverse comment; and [d] the collaterals for the loans were
deficient.With regard to the other petitioners, Ernesto Magboo and Herminio
Alcasid, the information alleged that their joint and several signatures and those
of their spouses, in violation of the terms and conditions of the loan, were not
given.
In gist, the information would have it that petitioner Ingco should be made
criminally liable for the grant by the PNB of the loans to Cresta Monte under
what had been so claimed as manifestly and grossly disadvantageous terms and
conditions to the banks damage and prejudice. Petitioner Ingco might have been
a ranking official of PNB but, unassailably, he neither had the title nor the
authority to conclude and bind the bank to the questioned transactions. Like any
other corporate banking institution, PNBs affairs were directed and its
properties managed and preserved and its corporate powers exercised by
itsBoard of Directors. [18]

Concomittantly, it was the President of the Bank who had the power and
duty to execute all contracts and to enter into all authorized transactions in
behalf of the Bank.  Ingcos role was confined to a mere evaluation and study of
[19]

the loan applications and thereafter to make his report and give his
recommendation to the Board of Directors. The Board certainly was under no
obligation or compulsion to approve and to favorably act on the
recommendation.
It is probable, evident in retrospect, that Ingco has had a wrong appreciation
of and even a poor assessment on the loan application of Monte Cresta, but it is
not much more than an error of judgment. It would be hard to accept, let alone
to render a firm verdict, that such an error, to which all public officials are, at
one time or another, susceptible of making in their years of service to the
government, would constitute the crime contemplated in Section 3(e), in
relation to Section 3(g), of R.A. No. 3019.
Neither of petitioners Magboo and Alcasid is a public officer. Independently
of Ingco, they cannot be prosecuted under the provisions of the law in
question. The remedy of the PNB against them would lie elsewhere.
WHEREFORE, the petition is GRANTED, and the questioned resolutions,
dated 07 October 1993 and 08 November 1993, are hereby also SET ASIDE.No
costs.
SO ORDERED.