Crucillo v. Office of the Ombudsman
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) filed a charge against board members/officers of Phil-Asia Food Industries Corporation (PAFICO) and the Development Bank of the Philippines (DBP) for corrupt practices, specifically alleging a "behest" loan extended by DBP to PAFICO to finance its soybeans processing plant project. Petitioners Dino A. Crucillo (Manager of DBP’s Agricultural Projects Department I) and Jose R. Tengco, Jr. (member of DBP’s Board of Governors) were among those charged. Procedural History: The case underwent several reviews within the Office of the Ombudsman (OOMB). Initially, the case was dismissed, then a motion for reconsideration was granted, leading to an information filed with the Sandiganbayan. However, the Sandiganbayan ordered the OOMB to conduct a preliminary investigation for petitioners. A subsequent resolution recommended dismissal based on res judicata, citing a prior OOMB case (TBP Case No. 87-02388). The PCGG moved for reconsideration, and the new Ombudsman, Simeon V. Marcelo, granted it, finding probable cause for violation of Section 3(e) and (g) of R.A. No. 3019. Petitioners' motion for reconsideration was denied, leading to the present petitions for certiorari. The Petition: Petitioners sought the annulment of the Ombudsman's resolutions finding probable cause, arguing that the case was barred by res judicata and that the findings of the Ombudsman were manifestly erroneous and baseless, constituting grave abuse of discretion.
Issue(s)
Whether the Ombudsman committed grave abuse of discretion amounting to lack of jurisdiction in issuing the assailed resolutions, and whether the case is barred by res judicata. Whether the loan granted by DBP to PAFICO was a "behest loan" under R.A. No. 3019. Whether petitioners acted with manifest partiality or evident bad faith in granting the loan.
Ruling
The Supreme Court granted the petitions, reversed and set aside the assailed Ombudsman Order and Resolution, made permanent the Temporary Restraining Order, and ordered the Ombudsman to file a motion for withdrawal of the Information against the petitioners.
Ratio Decidendi
On the issue of grave abuse of discretion and res judicata: The Court found that the Ombudsman committed grave abuse of discretion. The principle of res judicata was applicable because there was substantial identity of parties and cause of action. The prior case, TBP Case No. 87-02388, already passed upon the issue of whether the subject loan was a behest loan and concluded that it was not, finding no basis for indicting DBP Board members for manifest partiality or evident bad faith. The subsequent case, OMB Case No. 0-96-0794, involved the same loan transaction and substantially the same parties, including those in privity with DBP and PAFICO. The Ombudsman's reversal of previous dismissals by its predecessors, without sufficient justification and by ignoring prior final resolutions, constituted grave abuse of discretion. The Court emphasized that administrative decisions, like judicial ones, should become final to prevent endless litigation. On the nature of the loan as a "behest loan": The Court found that the Ombudsman's theory that the loan was behest due to undercapitalization and undercollateralization was not sufficiently proven. While PAFICO's paid-up capital was low, DBP's Board of Governors approved conditions for increasing it and maintaining a 70:30 debt/equity ratio, which PAFICO met. The release of loan proceeds was also slow, taking 27 months, which did not indicate unusual speed. The Php 40 Million DBP infusion was an equity investment in preferred shares, not a loan to plug collateral deficiency, and the loan itself was adequately collateralized within the bank's lending policy. The Court noted that the loan terms, including interest and penalties, were standard and not outrageously one-sided. On manifest partiality or evident bad faith: The Court held that the elements of manifest partiality or evident bad faith, required for a violation of Section 3(e) of R.A. No. 3019, were not established. The information alleged conspiracy, but there was no positive and direct evidence of conspiracy or corrupt intent on the part of the petitioners. Petitioner Crucillo's role was evaluative, not approving, and petitioner Tengco's participation in passing a resolution did not automatically imply guilt. The Court reiterated that evident bad faith implies a dishonest purpose or moral obliquity, and manifest partiality denotes a plain bent to favor one side. These were not demonstrated by the facts, which showed a comprehensive evaluation of the loan application and terms designed to protect the bank's interest. The Court concluded that proceeding with the prosecution would be oppressive and a case of harassment.
Main Doctrine
The Ombudsman committed grave abuse of discretion in finding probable cause for violation of Section 3(e) and (g) of R.A. No. 3019 against petitioners, as the issue of whether the loan was a behest loan had already been resolved with finality in a prior case, and the elements of evident bad faith or manifest partiality were not sufficiently established.