Presidential Commission on Good Government v. Gutierrez
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) filed an Affidavit-Complaint against officials of the Development Bank of the Philippines (DBP) and officers of Continental Manufacturing Corporation (Continental Manufacturing) for alleged violations of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). The complaint stemmed from various loans and guaranty accommodations granted by DBP to Continental Manufacturing, which the PCGG alleged were "behest loans." These included an initial loan of P43,586,693.93, a P28 million credit facility increased to P30 million, a US$2 million interim currency loan, and a P25 million guaranty for Continental Manufacturing's obligation to Citibank. The PCGG cited the 17th Fortnightly Report of the Presidential Ad Hoc Fact-Finding Committee on Behest Loans, which concluded that these accommodations were behest loans due to undercapitalization, undercollateralization, and the borrower being a "crony" of the Marcos administration. Procedural History: The Office of the Ombudsman (Ombudsman) dismissed the PCGG's Affidavit-Complaint for lack of probable cause in a Resolution dated June 28, 2006. The Ombudsman found that the loans were not behest loans, were granted in the exercise of sound business judgment, and were not disadvantageous to the government. The PCGG's motion for reconsideration was denied by the Ombudsman in an Order dated January 28, 2009. The Petition: The PCGG filed a Petition for Certiorari before the Supreme Court, seeking to reverse the Ombudsman's dismissal of its complaint. The PCGG argued that the Ombudsman gravely abused its discretion by disregarding the findings of the Committee on Behest Loans and substituting its own judgment, and by requiring proof beyond reasonable doubt instead of establishing probable cause.
Issue(s)
Whether the Office of the Ombudsman committed grave abuse of discretion in dismissing the Affidavit-Complaint for lack of probable cause. Whether the loans and guaranty accommodations granted by the Development Bank of the Philippines to Continental Manufacturing Corporation constituted "behest loans" under Republic Act No. 3019.
Ruling
The Supreme Court dismissed the Petition and affirmed the Resolution and Order of the Office of the Ombudsman, finding no grave abuse of discretion in its dismissal of the Affidavit-Complaint for lack of probable cause.
Ratio Decidendi
On the issue of grave abuse of discretion by the Office of the Ombudsman: The Court reiterated that the Ombudsman is endowed with a wide latitude of investigatory and prosecutory prerogatives, and its determination of probable cause is accorded great respect. Interference by the Supreme Court is warranted only when there is grave abuse of discretion, which means the exercise of judgment or power was so capricious, whimsical, arbitrary, or despotic as to amount to a lack or excess of jurisdiction. In this case, the Ombudsman conducted an evaluation of the evidence, considered the explanations of the respondents, and provided a basis for its finding of no probable cause. The Court found that the Ombudsman did not act whimsically or capriciously, thus, its finding of probable cause is respected. On whether the loans constituted "behest loans" and violated the Anti-Graft and Corrupt Practices Act: The Court found that the Ombudsman did not err in concluding that the loans were not behest loans. The Ombudsman gave credence to DBP's explanation that the loans were granted in the exercise of sound business judgment and were subjected to intensive studies and evaluation, as evidenced by DBP's Office Correspondences. These correspondences detailed the terms and conditions, securities, and the rationale for the loans, including the need to sustain Continental Manufacturing's operations to prevent employee dislocation and to support industries dependent on its products. The Court noted that the elements of Section 3(e) and (g) of R.A. 3019 were not sufficiently established. Specifically, there was no showing of manifest partiality, evident bad faith, or gross inexcusable negligence, nor was there proof of undue injury to the government or that the transactions were manifestly and grossly disadvantageous to the government. The Court emphasized that DBP's charter mandates it to grant credit facilities for rehabilitation, and the loans were granted after careful evaluation and consideration of securities, negating the elements of the offenses charged. Furthermore, the Court noted that the obligation was eventually settled, and DBP even earned from the transaction, contradicting the claim of injury to the government.
Main Doctrine
The Office of the Ombudsman's determination of probable cause is accorded great respect and will not be interfered with by the Supreme Court unless tainted with grave abuse of discretion. The Court will not substitute its own judgment for that of the Ombudsman, especially when the latter has considered the evidence and explained the basis for its findings.