Presidential Commission on Good Government v. Office of the Ombudsman
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) filed a complaint before the Office of the Ombudsman (OMB) against public officials of the Development Bank of the Philippines (DBP) and private individuals associated with Philippine Pigment and Resin Corporation (PPRC). The complaint alleged violations of Sections 3(e) and (g) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). The complaint stemmed from the alleged granting of behest loans by DBP to PPRC, specifically two foreign currency loans totaling US$1,596,822.00. The PCGG contended that these loans were under-collateralized and granted to an undercapitalized corporation, leading to significant losses for the government. Procedural History: The OMB conducted a preliminary investigation and directed the respondents to file counter-affidavits. Only two respondents submitted theirs. The PCGG filed a consolidated reply. Subsequently, the OMB issued a Resolution dated April 29, 2008, dismissing the complaint for lack of probable cause. The OMB also ruled that the acts committed prior to the issuance of Memorandum Order No. 61 (dated November 9, 1992) could not be subject to its provisions. The PCGG's motion for reconsideration was denied in an undated Order. The Petition: The PCGG filed a petition for certiorari under Rule 65 of the Rules of Court, assailing the OMB's Resolution and Order, arguing that the OMB committed grave abuse of discretion and acted without or in excess of jurisdiction in dismissing the complaint.
Issue(s)
Whether the OMB committed grave abuse of discretion and/or acted without or in excess of jurisdiction in dismissing petitioner's complaint for alleged lack of probable cause. Whether the foreign currency loans granted by DBP to PPRC constituted violations of Section 3(e) and (g) of Republic Act No. 3019.
Ruling
The petition is without merit. The Supreme Court affirmed the Resolution of the Office of the Ombudsman finding no probable cause to indict the private respondents for violation of Section 3(e) and (g) of Republic Act No. 3019, as amended, and dismissed the case.
Ratio Decidendi
On the issue of whether the OMB committed grave abuse of discretion and/or acted without or in excess of jurisdiction in dismissing the complaint for alleged lack of probable cause: The Court held that the OMB did not commit grave abuse of discretion. The petitioner failed to point out with certainty and definiteness the specific acts of the private respondents that constituted "manifest partiality," "evident bad faith," or "gross inexcusable negligence." Furthermore, the petitioner did not provide a sufficient basis for its conclusion that "unwarranted benefits" were accorded to and "manifest partiality" was bestowed by the DBP to PPRC. The Court agreed with the OMB's finding that the elements of evident bad faith, manifest partiality, and/or gross inexcusable negligence were lacking. The petitioner also failed to prove that the questioned foreign currency loans were grossly and manifestly disadvantageous to the government. On the issue of whether the foreign currency loans granted by DBP to PPRC constituted violations of Section 3(e) and (g) of Republic Act No. 3019: The Court found that the elements for violation of Section 3(e) and (g) of RA 3019 were not sufficiently established. The OMB's findings, which the Court adopted, indicated that PPRC's project was deserving of financial assistance based on several documented reasons, including its registration as a preferred project, the reputable principals of the company, its good credit standing with DBP and another major creditor (PDCP), and its projected profitability. The approval of the loans was considered a collective act of the DBP Board of Governors in the exercise of sound business judgment, which is protected by a legal presumption and not contested by the petitioner. The Court reiterated that members of the board who act in good faith within their authority are not personally liable for the consequences of their acts, which are attributable to the corporation alone. The Court also noted that the unpaid account in 1987, nearly ten years after the loan approval in 1978, could not be solely attributed to the respondents' actions, as intervening economic circumstances and currency revaluation/devaluation, beyond their control, contributed to the situation. The Court also clarified that Memorandum Order No. 61 could not be applied retroactively to loans granted before its issuance, as this would violate Article 366 of the Revised Penal Code. The Court also cited jurisprudence upholding the validity of including after-acquired properties in mortgage contracts and the requirement for additional equity contributions from the borrower.
Main Doctrine
The Office of the Ombudsman did not commit grave abuse of discretion in dismissing a complaint for violation of Section 3(e) and (g) of RA 3019 for lack of probable cause, where the evidence presented failed to establish manifest partiality, evident bad faith, or gross inexcusable negligence, and did not sufficiently prove that the loan transactions were grossly and manifestly disadvantageous to the government. The business judgment rule presumes that decisions made by corporate directors in good faith are valid and not subject to judicial scrutiny.