G.R. No. 194159 October 21, 2015
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner, vs. MA. MERCEDITAS NAVARRO-GUTIERREZ (as then Ombudsman), DON M. FERRY, JOSE R. TENGCO, JR., ROLANDO M. ZOSA, CESAR C. ZALAMEA, OFELIA I. CASTELL, and RAFAEL A. SISON, Public Respondents, RODOLFO M. CUENCA, MANUEL I. TINIO, and ANTONIO R. ROQUE, Private Respondents.

FACTS

The Presidential Commission on Good Government (PCGG) filed an affidavit-complaint charging former officers/directors of the Development Bank of the Philippines (DBP) and former officers/stockholders of National Galleon Shipping Corporation (Galleon) with violating Sections 3(e) and (g) of Republic Act No. 3019 . The complaint alleged that the DBP granted behest loans and guarantees to Galleon. The Presidential Ad Hoc Fact-Finding Committee on Behest Loans, using criteria from Memorandum Order No. 61, found the loans possessed characteristics of behest loans: Galleon was undercapitalized; the loans were undercollateralized; Galleon’s major stockholders were known cronies of President Ferdinand Marcos; and loan documents bore marginal notes of President Marcos. Specific findings included: DBP approved guarantees of US$90,280,000 for Galleon via Board Resolution No. 3002, which stated the accommodation “shall be undertaken at the behest of the Philippine Government”; Galleon failed to meet a condition to raise its paid-up capital but DBP still granted the guarantees; despite arrearages and accumulating obligations, DBP approved further accommodations and released collaterals, resulting in a significant collateral deficiency. The Ombudsman dismissed the complaint for lack of probable cause, finding the PCGG’s evidence—consisting mostly of executive summaries and technical reports—to be hearsay and of little probative value, and noting the failure to present primary documents like the loan agreement or board resolutions. The PCGG filed a petition for certiorari.

ISSUE

Whether or not the Office of the Ombudsman gravely abused its discretion in finding no probable cause to indict the respondents for violating Sections 3(e) and (g) of R.A. No. 3019 .

RULING

Yes, the Ombudsman committed grave abuse of discretion. The Supreme Court granted the petition. The Court held that while it generally refrains from interfering with the Ombudsman’s discretion on probable cause, it may review such actions when there is grave abuse of discretion. Grave abuse implies a capricious and whimsical exercise of judgment. The Ombudsman’s dismissal was based on the premise that the PCGG’s documents were hearsay. However, for purposes of determining probable cause in a preliminary investigation, the rules of evidence are not strictly applied; affidavits and hearsay evidence can be considered as long as there is reasonable ground to believe a crime was committed. The PCGG submitted substantial evidence, including the Ad Hoc Committee’s report and DBP board resolutions, which on their face indicated the loans were granted under questionable circumstances fitting the criteria for behest loans. The Ombudsman’s insistence on the original loan documents at the preliminary investigation stage was a too-strict application of the rules. The collective facts presented—the “behest” notation, undercapitalization, undercollateralization, the identity of the borrowers as alleged cronies, and the presence of Marcos’s marginal notes—were sufficient to engender a well-founded belief that a crime had been committed, warranting a finding of probable cause for further investigation or trial. The case was remanded to the Ombudsman for further proceedings.