Khan v. Office of the Ombudsman
REITERATIONFacts
The Antecedents: Private respondents Rosauro Torralba and Celestino Bandala filed a complaint before the Deputy Ombudsman (Visayas) against petitioners Ismael G. Khan, Jr. and Wenceslao L. Malabanan, then officers of Philippine Airlines (PAL). The complaint alleged that petitioners used their positions in PAL to secure a contract for Synergy Services Corporation, a corporation in which they were shareholders, violating Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). Procedural History: Petitioners filed an omnibus motion to dismiss, arguing that the Ombudsman lacked jurisdiction because PAL was a private entity and they were not public officers. The Deputy Ombudsman denied the motion, ruling that PAL was a government-owned or controlled corporation (GOCC) due to government acquisition of its controlling stock and that petitioners were public officers under RA 3019. Petitioners appealed to the Ombudsman, who dismissed the appeal, affirming the Deputy Ombudsman's ruling. The Petition: Petitioners assailed the orders of the Deputy Ombudsman and the Ombudsman, claiming they acted without jurisdiction and with grave abuse of discretion in proceeding with the investigation, as they were officers of a private corporation and not public officers subject to RA 3019. They argued that the Ombudsman's jurisdiction over GOCCs is limited to those with original charters, that the case of Quimpo v. Tanodbayan was not applicable, and that RA 3019 only pertains to public officers.
Issue(s)
Whether the Ombudsman has jurisdiction over officers of Philippine Airlines (PAL) for alleged violations of Republic Act No. 3019, considering PAL's status as a corporation originally organized under the general corporation law. Whether officers of PAL, a corporation whose controlling stock was acquired by the government due to conversion of unpaid loans and not to perform governmental functions, are considered public officers within the purview of Republic Act No. 3019, especially in light of the 1987 Constitution's requirement of an 'original charter' for GOCCs under the Ombudsman's jurisdiction.
Ruling
The petition is GRANTED. The orders dated July 13, 1989, and February 22, 1996, of the Deputy Ombudsman (Visayas) and the Ombudsman, respectively, are SET ASIDE and ANNULLED. Public respondents are restrained from proceeding with the investigation or prosecution of the complaint against petitioners for violation of RA 3019.
Ratio Decidendi
On the jurisdiction of the Ombudsman over PAL officers: The Supreme Court held that the Ombudsman's jurisdiction over government-owned or controlled corporations (GOCCs) is confined only to those with original charters, as provided by Article XI, Section 13(2) of the 1987 Constitution. While PAL's controlling stock was acquired by the government, it was originally organized as a private corporation under the general corporation law and did not possess an "original charter." Therefore, the Ombudsman lacked the authority to investigate or prosecute its officers under RA 3019. The ruling in Juco v. National Labor Relations Commission was cited, clarifying that "with original charter" refers to corporations chartered by special law, distinguishing them from those organized under the Corporation Code. Consequently, PAL officers could not be investigated by the Ombudsman under the constitutional provision. On the applicability of Quimpo v. Tanodbayan and the nature of government control over PAL: The Court distinguished the present case from Quimpo. In Quimpo, the government acquired PETROPHIL to perform governmental functions related to oil, which was decisive in sustaining the Tanodbayan's jurisdiction. In contrast, the government acquired the controlling interest in PAL due to the conversion of unpaid loans from GSIS, and no governmental functions were involved. Furthermore, Quimpo was decided under the 1973 Constitution, which had a broader definition of "government-owned or controlled corporations" without the qualification of "original charter" present in the 1987 Constitution. The 1987 Constitution explicitly limits the Ombudsman's jurisdiction to GOCCs "with original charter."
Main Doctrine
The Ombudsman's jurisdiction over government-owned or controlled corporations (GOCCs) is confined only to those with original charters. Officers of GOCCs not created by special law, even if government-acquired, are not considered public officers for purposes of investigation and prosecution under Republic Act No. 3019.