(Article published in the
issue of Manila Standard Today)
In the eye of the storm of accusations and counter-accusations hurled between the top incumbent officials of the Development Bank of the Philippines (DBP), on the one side, and the Honourable Roberto V. Ongpin (RVO) and his friends who were with the DBP, is the issue of whether the loan granted by DBP way back 2009 to Delta Ventures Resources, Inc. was a “behest loan”. That precise question, with the Ombudsman having given due course to the accusers’ complaint-affidavit and having afforded, I assume by now, RVO and his friends the opportunity to respond, is presently sub judice and cannot properly be commented on. However, there is no legal impediment for this corner, whose mission is to try to give to the layman, as it had tried to do since the time of Quisa Ocampo’s testimony at the ERAP impeachment proceedings on the Jose Velarde signature, an understanding of the words of legal art often invoked in the discussions and the nuaces of conflicting legal argumentation, to go into a brief discussion of the concept, in general, of a “behest loan”.
not really a bad word. Shakespeare used “behest”, in the singular, only in
one work, Cymbeline, in one scene (Act V. Scene 4) in one line (line 3324).
The character Cicilium Leonatus tells his companions, “The marble pavement
closes; he’s enter’d/His radiant root. Away! And to be blest/ Let us with
great care perform his great behest.” The behest Cicilium Leonatus was
referring to was Jove’s command for them to keep quiet, or else. In the
plural, the Bard used it only twice. In the familiar Romeo and Juliet, Act
IV, Scene 2, Juliet tells her father, “Where have I learn’d me to repent the
sin of disobedient opposition to you and your behests...”(line 2514). And
in the Rape of Lucrece, the question is posed, “Why should the worm intrude
the maiden bud? Or hateful cuckoos hatch in sparrows’ nests? Or toads infect
fair founts with venom mad? Or tyrant folly lurk in gentle breasts? Or kings
be breakers of their own behests?” In any case, however, the term is not
tainted with evil design; definitely authoritative, yes, but certainly not,
per se, malevolent.
In the Philippines, however, “behest” has had a bad press. It was married to “loan” and the union brought forth, not just numerous cases in court, but also disgraceful offspring. On 08 October 1992, then President Fidel V. Ramos issued Administrative Order No. 13 creating what is known as the Presidential Ad Hoc Fact-Finding Committee on Behest loans. Using as its moorings Section 28 of Article II of the 1987 Constitution, which launched the general policy of the State “of full public disclosure of all its transactions involving public interest” and Section 15 of Article XI that declared as not subject to prescription “the right of the State to recover properties unlawfully acquired by public officials or employees”, Administrative Order No. 13 addressed the “allegations of loans, guarantees, and other forms of financial accommodations granted, directly or indirectly, by government-owned and controlled bank or financial institutions, at the behest, command or urging by previous government officials to the disadvantage and detriment of the Philippine government and the Filipino people” by creating an Ad Hoc Committee composed of representatives of various offices and agencies in the government.
The task of the Ad Hoc Committee was to (a) “inventory all behest loans, identify the lenders and borrowers,...(b) identify the borrowers who were granted ‘friendly’ waivers as well as the government officials who granted those waivers; determine the validity of those waivers; and (c) determine the courses of action that the government should take to recover those loans and to recommend appropriate actions...”
One month later, on 09 November 1992, the Ad Hoc Committee was, by Memorandum Order No. 61, given criteria that “may be utilized as a frame of reference in determining a behest loan.” These are “(1) it is under-collateralized; (2) the borrower corporation is undercapitalized; (3) direct or indirect endorsement by high government officials like presence of marginal notes; (4) stockholders, officers or agents of the borrower corporation are identified as cronies; (5) deviation of use of loan proceeds from the purpose intended; (6) use of corporate layering; (7) non-feasibility of the project for which financing is being sought; and (8) extraordinary speed in which the loan release was made.”
The Memorandum Order distinguished a behest loan from a non-behest (albeit non-performing loan) “in that while both may involve civil liability for non-payment or non-recovery, the former may likewise entail criminal liability.”
Where would the criminal liability come from? It would arise when the behest loan is effected by acts which, by themselves, constitute a felony punishable by law. These acts could relate to any and every stage of the loan processing, from the submission of the application for credit (such as falsification of documents supporting the application), to internal processing by the bank itself (such as misrepresentation of the results of credit investigation), and all the way to the release and utilization of the proceeds (such diversion of part of the proceeds as kickback to the bank officials).
The most common crime imputed to those responsible for behest loans granted by government financial institutions however, is violation of the Anti-Graft and Corrupt Practices Act (R.A. 3019), specifically Section 3(e) and (g) thereof. Section 3(e) considers unlawful the “causing undue injury to any party, including the Government or giving 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. Section 3(g), in turns, also considers corrupt the “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.”
It would be interesting to watch how the RVO Behest Loan Case will play out. Abangan ang susunod na kabanata.