THE Sandiganbayan has found Surigao del Sur Rep. Prospero Pichay Jr. guilty on three counts of graft in relation to allegations of mishandling P780 million in Local Water Utilities Administration (LWUA) funds while sitting as its chairman in 2009.
In a 66-page decision promulgated June 7, 2022, the anti-graft court’s Fourth Division pronounced Pichay guilty of gross inexcusable negligence, together with co-accused deputy administrator Wilfredo Feleo Jr., for the irregular acquisition of a 60 percent stake in Express Savings Bank Inc. (ESBI) for P80 million, making a P300 million deposit into the bank, and giving a capital infusion of P400 million to shore up the failing bank.
Likewise, the court held that the defendants caused undue injury to the government when they ignored the requirements for prior approval of the Office the President, the Department of Finance (DOF), the Bangko Sentral ng Pilipinas (BSP) — Monetary Board (MB), and the Office of the Government Corporate Counsel (OGCC) as provided under RA 8791 or the General Banking Law of 2000 and Administrative Order No. 59.
“The prosecution was able to present sufficient evidence to prove that the irregular transactions carried out by the accused LWUA officials… were committed with gross inexcusable negligence. Ultimately, the absence of the requisite MB approval resulted in losses on the part of the government in the total amount of P780 million,” the Sandiganbayan ruled.
Pichay and Feleo were meted six to ten years imprisonment for each count of graft or a total of 18 to 30 years, with perpetual disqualification from holding public office in the future.
However, the court acquitted them on a separate charge of violation of the Manual of Regulation for Banks (MORB) in relation to RA 7653 or the New Central Bank Act, noting that the criminal offense only applies to bank officials and cannot be a basis for criminal liability of LWUA officers.
Charges against two other LWUA executives, Board of Trustees member Enrique Senen Montilla III and acting administrator Daniel Landingin, were dismissed on account of their deaths while the cases were on trial.
Reacting to the Sandiganbayan’s decision, Pichay said he is now discussing with his lawyers the next course of action “but definitely, I am determined to exhaust all possible legal remedies accorded to me by law.”
“The constitutional right to be presumed innocent until proven guilty can be overthrown only by proof beyond reasonable doubt. Well-entrenched in jurisprudence is the rule that the burden of proof lies with the prosecution. This is a case of conspiracy for allegedly violating Section 3(e) of Republic Act 3019. Originally, there were 22 accused in this case which is why the recent decision of the Sandiganbayan came as a surprise,” he said.
Pichay pointed out that “even the dispositive portion of the decision admits that no civil liability is adjudged against me in view of the fact that LWUA public funds invested in ESBI is under receivership and liquidation of the PDIC.”
“So it is baffling: how can there be undue injury to the government?” said the outgoing lawmaker who lost his re-election bid to incoming Rep. Romeo Momo.
In convicting Pichay and Feleo, the court swept aside their contentions of having acted in good faith, noting that multiple reminders were issued by various government agencies that warned them against the purchase of a controlling stake in ESBI without the nod of the OP, the DOF, and the Monetary Board of the BSP.
It cited an opinion from the OGCC dated October 16, 2018, a letter dated April 17, 2009 by then BSP deputy governor Nestor Espanilla Jr., a letter dated June 4, 2009 from then DOF undersecretary Jeremias Paul Jr., and an advice in July 2009 from the BSP — all cautioning Pichay that acquiring majority ownership of an existing bank “requires prior Monetary Board approval, DOF endorsement or clearance, and approval from the Office of the President.”
The Office of the Ombudsman had originally filed a total of eight charges against Pichay on July 13, 2016 consisting of three counts graft, three counts of malversation of public funds, one count of violation of RA 8791 or the General Banking Law of 2000, and one count of violation of the Manual of Regulation for Banks (MORB) in relation to RA 7653 or the New Central Bank Act.
In a resolution dated October 18, 2016, the Sandiganbayan dismissed all malversation charges and the case for violation of the General Banking law against all accused on a finding of lack of probable cause. — With Wendell Vigilia
