Republic v. Desierto
REITERATIONFacts
The Antecedents: In 1984, the Development Bank of the Philippines (DBP), facing liquidity problems, decided to sell its equity holdings in the Maranao Hotel Resort Corporation (MHRC), which owned the Century Park Sheraton Hotel. The DBP Board of Governors initially offered these shares for US$8.33 million. Subsequently, Lucio Tan expressed interest in purchasing these holdings and established Sipalay Trading Corporation (STC) for this purpose. STC offered to buy the shares for US$8.5 million, and DBP accepted this offer, with the balance payable within five years. The Republic of the Philippines, through the Presidential Commission on Good Government (PCGG), alleged that the private respondents conspired and acted fraudulently in selling DBP's equity in MHRC to STC, a newly formed and undercapitalized firm, for a price allegedly disadvantageous to the government, thereby violating Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). Procedural History: The Presidential Commission on Good Government (PCGG) filed a complaint against the private respondents for violation of Section 3(e) of Republic Act No. 3019. The Ombudsman, after reviewing the case, issued a Resolution on September 5, 1997, dismissing the complaint. The Ombudsman found that the DBP officials acted in good faith and in the best interest of the government, considering the prevailing economic conditions and the lack of other interested buyers after PCI abandoned its negotiations. The Ombudsman concluded that the sale was not tainted with conspiracy, manifest partiality, evident bad faith, or gross inexcusable negligence, and that the DBP's actions should be lauded rather than condemned as criminal. The Petition: The Republic of the Philippines, through the PCGG, filed the instant petition for certiorari and mandamus, arguing that the Ombudsman committed grave abuse of discretion, acting whimsically, capriciously, arbitrarily, and oppressively in dismissing the complaint. The petitioner contends that the facts clearly infer that the respondents, acting in conspiracy, caused undue injury to the government through manifest partiality, evident bad faith, or gross inexcusable negligence. The sole issue before the Supreme Court is whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the complaint for lack of probable cause.
Issue(s)
Whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the petitioner's complaint for violation of Section 3(e) of Republic Act No. 3019. Whether the sale of DBP's equity holdings in MHRC to STC caused undue injury to the government or gave unwarranted benefits, advantage, or preference to STC through manifest partiality, evident bad faith, or gross inexcusable negligence.
Ruling
The petition is DISMISSED. The Resolution of the Ombudsman dated September 5, 1997, dismissing petitioner's complaint against private respondents in OMB Case No. 0-91-0382 is AFFIRMED.
Ratio Decidendi
On the issue of whether the Ombudsman committed grave abuse of discretion: The Court held that the Ombudsman committed no grave abuse of discretion in dismissing the complaint. Grave abuse of discretion implies a capricious and whimsical exercise of judgment so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. The Ombudsman correctly found that some essential elements of the offense charged under Section 3(e) of R.A. No. 3019 were not present, thus, there was no arbitrariness or despotism in his decision. The Court will not interfere with the Ombudsman's powers unless there is a compelling reason, such as grave abuse of discretion. On the issue of whether the sale of DBP's equity holdings caused undue injury or unwarranted benefits: The Court affirmed the Ombudsman's findings that the DBP officials acted in good faith and in the sound exercise of judgment. Considering the prevailing socio-economic crisis in 1983-1984 following Senator Aquino's assassination, DBP faced severe liquidity problems and had to sell assets, including its shares in MHRC. The book value of these shares was P340.7 million, but they were burdened with uncollected interests and penalties. After evaluation, DBP staff recommended selling the shares for at least P150 million, a recommendation adopted by the DBP Board of Governors. PCI had abandoned its negotiations, and STC was the only interested buyer. The selling price agreed upon with STC was virtually the same figure approved by the DBP Board. Therefore, the DBP officials did not give "unwarranted benefits, advantage, or preference" to STC, as there was no showing of favoritism over other bidders. "Bad faith" was also not imputed, as it requires a dishonest purpose or conscious doing of a wrong, and there was no evidence of corrupt motive or material benefit received by the DBP officials from the sale.
Main Doctrine
The Ombudsman committed no grave abuse of discretion in dismissing a complaint for violation of Section 3(e) of R.A. No. 3019 where the evidence did not establish the essential elements of undue injury or unwarranted benefits, advantage, or preference, particularly in the context of prevailing adverse economic conditions that necessitated the sale of assets by a government financial institution.