PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG) V. RENATO D. TAYAG,
ET AL.
FACTS:
The case involves a petition for certiorari filed with
the Court, seeking to invalidate a resolution by the
Office of the Ombudsman and an order that denied
the Presidential Commission on Good Government's
(PCGG) motion for reconsideration.
The dispute centers around the Bicolandia Sugar
Development Corporation (BISUDECO), a domestic
corporation engaged in sugarcane milling.
BISUDECO sought a loan from the Philippine
National Bank (PNB) involving a stand-by letter of
credit. Despite having insufficient capital and
collateral, BISUDECO's loan request was
conditionally approved, subject to specific conditions.
When BISUDECO failed to meet the conditions, it
requested modifications, including a reduced initial
deposit and changes to collateral. PNB approved
these modifications, allowing BISUDECO additional
time to increase its authorized capital, modifying
signature requirements, and altering deposit terms.
The court documents provide a detailed account of
the modifications made by PNB, involving changes in
capitalization, collateral, deposit amounts, and other
terms. The petitioner alleges that the Office of the
Ombudsman's resolution dismissing the complaint
against various individuals involved in the case was
erroneous.
Bicolandia Sugar Development Corporation (BISUDECO), a
domestic corporation, sought loans from the Philippine National
Bank (PNB) in the 1970s and 1980s. The loans were allegedly
behest loans, characterized by inadequate collateral and
undercapitalization. PCGG filed a complaint against several
individuals, including private respondents who were members of
PNB's Board of Directors, accusing them of violating Sections
3(e) and (g) of R.A. No. 3019 (Anti-Graft and Corrupt Practices
Act).
The Ombudsman dismissed the complaint, citing lack of
probable cause and prescription. PCGG argued that private
respondents' membership on the PNB Board during the relevant
period justified their indictment.
ISSUE:
Whether the Ombudsman acted with grave abuse of
discretion in dismissing PCGG's complaint based on
lack of probable cause and prescription.
RULING:
The Supreme Court upheld the Ombudsman's
dismissal of the complaint. To establish probable
cause for violation of Section 3(e), there must be
specific allegations of personal participation in the
prohibited acts, but PCGG's complaint failed to
provide such details. Membership on the PNB Board
alone is insufficient to establish probable cause.
Regarding Section 3(g), the court clarified that
personal liability attaches to directors or officers
under specific circumstances, such as willful and
knowing participation in unlawful acts, gross
negligence, or bad faith. The lack of specific
allegations in the complaint rendered it a mere
fishing expedition.
The court emphasized that it should not interfere with
the Ombudsman's discretion in determining probable
cause unless grave abuse of discretion is shown.
The petition for certiorari was dismissed, and the
Ombudsman's resolution and order were affirmed.
NOTES:
● Allegations of personal participation in prohibited
acts are essential to establish probable cause for
violations of the Anti-Graft and Corrupt Practices
Act.
● Membership on a board alone is insufficient to
warrant indictment.
● Personal liability of directors or officers requires
specific circumstances of unlawful acts, gross
negligence, or bad faith.
● Courts generally do not interfere with the
Ombudsman's discretion unless grave abuse of
discretion is demonstrated.
● the concept of "Separate Juridical Personality"
involves the liability of directors or officers of a
corporation for acts committed by the
corporation. The case discusses the principle that
a corporation has a distinct legal personality
separate from its directors or officers. This
principle is significant in determining the personal
liability of individuals in their capacity as directors
or officers for actions taken on behalf of the
corporation.

In the case, the Court reiterated that personal liability
attaches to directors or officers under specific
circumstances, such as willful and knowing
participation in unlawful acts, gross negligence, or
bad faith. Membership on a board alone is
insufficient to establish personal liability. The Court
emphasized that directors or officers can only be
held personally liable if they have directly participated
in or benefited from the prohibited acts, and mere
membership on a board does not automatically make
them culpable for the corporation's actions.
This topic highlights the legal distinction between the
corporate entity and its individual officers or directors,
emphasizing that the liability of these individuals
requires a showing of personal involvement or
misconduct beyond their role as corporate
representatives. It underscores the importance of
observing the boundaries of separate juridical
personalities in determining legal responsibility.
The case revolves around the dismissal of a complaint by the
Presidential Commission on Good Government (PCGG) against
several individuals for alleged violations related to loans granted
to Bicolandia Sugar Development Corporation (BISUDECO) by the
Philippine National Bank (PNB).
Key points:
Overall, the court upheld the Ombudsman's dismissal of the
complaint due to both prescription and lack of probable cause.
The court explained the application of the prescriptive period
based on the date of discovery and emphasized that courts
generally respect the Ombudsman's discretion in determining
probable cause.
In summary, the case involves charges against private
respondents for violation of Sections 3(e) and (g) of R.A. No. 3019
(Anti-Graft and Corrupt Practices Act). To establish an indictment
under Section 3(e), the following elements must concur: (1) the
accused is a public officer or a private person in conspiracy with
a public officer; (2) undue injury is caused to a party, whether the
government or a private party; (3) the accused commits the
prohibited acts during official duties or related to public positions;
(4) the injury is caused by unwarranted benefits, advantage, or
preference; and (5) there is manifest partiality, evident bad faith,
or gross negligence.
Regarding Section 3(g), the elements are: (1) the accused is a
public officer; (2) he/she enters into a contract or transaction on
behalf of the government; and (3) the contract or transaction is
manifestly and grossly disadvantageous to the government,
regardless of whether the public officer profited.
Private respondents argued that the complaint failed to specify
their individual or collective liability as Directors of PNB. The
PCGG claimed probable cause based on their membership in the
PNB Board during the loan transactions. However, the court held
that membership alone was insufficient to establish probable
cause.
The court ruled that personal liability attaches to directors or
officers under certain circumstances, such as willful and knowing
participation in patently unlawful acts, gross negligence, or bad
faith. Since the PCGG failed to specify the acts of private
respondents constituting the offense, and there was no showing
of their personal participation in any irregularity, there was no
probable cause to hold them liable.

Transfer of Rights: In 1987, PNB's rights and interests were
transferred to the Philippine Government, including the account of
BISUDECO.
Behest Loans Finding: In 1994, the Presidential Ad Hoc Fact
Finding Committee determined that the loans given to BISUDECO
were "behest loans" due to insufficient collateral and
undercapitalization.
The court emphasized that the Ombudsman's determination of
probable cause should generally not be interfered with, and the
lack of specific allegations in the complaint amounted to a fishing
expedition. The court dismissed the petition for certiorari and
affirmed the Ombudsman's resolution and order.

Complaint and Dismissal: In 2005, PCGG filed a complaint

against the individuals for violation of anti-graft laws. The
Ombudsman dismissed the complaint in 2006, citing lack of
probable cause and prescription.

Prescription Analysis: The court examined the prescriptive period

for the offenses, concluding that for loans granted before the
amendment of the law in 1982, the ten-year period applied. For
loans after 1982, the fifteen-year period was used. The court
determined that the complaints regarding loans from 1971 to 1981
were already barred by prescription, while those from 1982 to
1985 were within the prescriptive period.

Discovery Date: The prescriptive period was deemed to begin

running from the date of discovery, which was determined as
April 4, 1994, when a Terminal Report was submitted classifying
the loans as "behest loans."

Probable Cause: The Ombudsman dismissed the complaint

because it found insufficient evidence to establish probable cause
for the alleged crimes. The complaint did not clearly identify the
individual or collective participation of the respondents in the
alleged acts.