Lectures &

News & Views

Law &



Trust Products
& Practice

About the Guru


Email Feedback

Guest Register










The naked truth about behest

(Article published in the Oct 19,2011 issue of Manila Standard Today) 

The Honourable Roberto V. Ongpin, in his paid advertisement carried in two broad sheets last week, projects his belief that the issue of his DBP loans as having been “behest” has been disposed of. “Based on the pronouncements of several Presidents of the country and bolstered by several Supreme Court decisions”, RVO claims, “there is simply no way that a loan which has been paid and caused no injury and on the contrary made a ton of money for DBP can be called “behest.”  Not so fast Sir.  And I suggest that my readers, if any, take a look at the Supreme Court’s recent decision, Presidential Ad Hoc Fact-Finding Committee on Behest Loans, et al v. Hon. Aniano A. Desierto, as Ombudsman, et al. G.R. No. 135715, promulgated April 13, 2011.

Possibly the latest to date on the matter of behest loans, the Supreme Court indicated in that case what it thought was odious about a behest loan. Quoting from the concurring and dissenting opinion of Justice Puno in Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto, G.R. No. 130140, promulgated October 25, 1999, Supreme Court described it as having “bled white the economy of the country,” as “one of the excesses of the authoritarian regime that led to the EDSA revolution,” and “a serious evil that the 1987 Constitution aimed to extirpate.”   Not to be taken lightly, the Supreme Court seems to say.


The April 13, 2011 decision involved a Guarantee Loan Accommodation applied for by Mindanao Coconut Oil Mills (MINCOCO) with the National Investment and Development Corporation (NIDC) on May 10, 1976.  The borrower MINCOCO was undercapitalized and under-collateralized; nevertheless, the loan was approved on June 23, or less than two months after being applied for.    

MINCOCO was not able to pay on time.  “When MINCOCO’s mortgage liens were about to be foreclosed by the government banks due its outstanding obligations, Eduardo Cojuangco issued a memorandum dated 18 July 1983, bearing the late President Ferdinand E. Marcos’ marginal note, disallowing the foreclosure...The government banks were not able to recover any amount...and President Marcos’ marginal note was construed by the NIDC to have effectively released MINCOCO, including its owners, from all its financial liabilities.”  

Ombudsman Aniano A. Desierto, whose resolution the Supreme Court reversed, made the following comments on why he did not consider the loan of MINCOCO a behest loan. “Being undercapitalized, standing alone”, he maintained, “is meaningless.  The approval of the loan/guarantees was still based on sound lending practice, otherwise MINCOCO would have been disqualified from obtaining the same...”  In other words, if the loan was not good, it would not have been approved.  But it was approved, therefore, it was good.  Never mind, “undercapitalized.” On the fact of one of the stockholders of MINCOCO was a crony of the late President Marcos, he claimed that “no evidenced was adduced to prove the same, hence remains a bare allegation.”  In other words, “Prove it!”

And finally, he had a startling (if not weird) interpretation of what the marginal notation of then President Marcos meant.  He claimed, “suffice it to state that these marginal notes, if they meant endorsement as defined under Memorandum Order No. 61, endorsed the recommendation regarding the mortgage liens of the government banks of the Mothballed Coconut Oil Mills and not the approval/grant of the loans/guarantees in 1976.”  The marginal note, in effect, endorsed the idea of letting the defaulters go scot free, but not the prior loans/guarantees granted to the defaulting borrowers.

The Supreme Court, while conceding to the Ombudsman its constitutionally mandated independence, nevertheless, maintained that “while the Ombudsman enjoys as it must, complete independence, it cannot and must not lose track of the law, which it is bound to uphold and obey.”

On the Ombudsman’s understanding of President Marcos’ behest, the Supreme Court was very polite; but it nevertheless condemnatory of intervention from Marcos.  It said, “As the Ombudsman admitted, when MINCOCO’s mortgage liens were about to be foreclosed by the government banks, the late President Marcos intervened and through a marginal note, in connivance with the NIDC’s officers, waived the liabilities of its owners to the detriment of the government.  It behoves the Court that while the Ombudsman admitted this fact, it saw nothing wrong in President Marcos’ intervention, and the involvement therein of the NIDC’s officers.  This intervention alone, by no less than the highest official of the land, waiving a multi-million peso liability of a private corporation, should have alarmed the Ombudsman.”  In other words, the mere fact that a behest was handed down from high above is, by itself, if only at the level of determining probable cause, already indicative of possible irregularity in the loan transaction. 

Apparently, as in the case of the MINCOCO loan, a behest never comes by itself; it always comes with clothes and ornaments, designed to destract the lender from the defects of a loan proposal.  The Supreme Court and said: “The waiver of MINCOCO’s multi-peso loan should have been enough basis in finding that probably Section 3(e) of Republic Act No. 3019 was violated...the fact that NIDC extended a loan guarantee to MINCOCO, despite its being undercapitalized and under-collateralized, should have been enough ground in finding probable cause...More importantly, the finding of the Committee that MINCOCO ...was under-collateralized and undercapitalized; its officers were identified as cronies; President Marcos had marginal note, effectively waiving the government’s right to foreclose MINCOCO’s mortgage liens; and, NIDC approved MINCOCO’s Guarantee Loan Accommodation in an extraordinary speed of one month, should have been accorded a proper modicum of respect by the Ombudsman.”

In other words, if it looks like a duck, walks like a duck, and quacks like a duck, the Ombudsman should at least determine whether or not it is really a duck. 

It is therefore clear based on these guidelines from the Supreme Court, that if, before the Office of the Ombudsman, the accusers of the Honourable Ongpin can show by the evidence in their arsenal that his loans, not withstanding their having been paid in full, nevertheless did have features that made them like MINCOCO’s ill-stared credit accommodations, then the question of their having been being behest (and therefore effected by those in DBP and their co-conspirators, as, at least prima facie, in violation of the Anti-Graft and Corrupt Practices Act) is alive and well. 

And the person at whose behest the Ongpin loans were granted, is likely to be eventually, exposed stark naked.