GR 119990; (June, 2004) (Digest)
G.R. No. 119990 ; June 21, 2004
Remberto C. Kara-an, petitioner, vs. Office of the Ombudsman, et al., and Roberto F. De Ocampo, et al., respondents.
FACTS
Petitioner Remberto C. Kara-an, a former officer of the Al-Amanah Islamic Investment Bank, filed a complaint with the Office of the Ombudsman against the bank’s former Chairman and incumbent Board members. He alleged they violated the Anti-Graft and Corrupt Practices Act (RA 3019) by approving in 1986 a loan to Compressed Air Machineries & Equipment Corporation (CAMEC) that was grossly disadvantageous to the government. The specific accusations were that the loan was granted without valid collateral and that a real estate mortgage was approved without cancelling a prior subsisting mortgage or securing the first mortgagee’s consent.
The respondent board members, in their comment, clarified they were not yet members of the Board of Directors in 1986 when the CAMEC loan was approved, detailing their respective commencement dates of directorship from 1989 onwards. The Ombudsman dismissed the complaint, finding no merit. It reasoned that the respondents were not board members during the transaction and, even assuming they were, the Board relied on favorable reports from subordinate officials like the petitioner and could not be expected to verify minute field details personally.
ISSUE
Whether the Office of the Ombudsman committed grave abuse of discretion in dismissing the complaint against the bank’s board members for violation of RA 3019.
RULING
The Supreme Court denied the petition and affirmed the Ombudsman’s resolutions. The Court found no grave abuse of discretion, which implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. The Ombudsman’s finding of lack of merit was based on substantial evidence. Critically, the respondents demonstrated they were not members of the Board of Directors in 1986 when the contested loan was approved; their terms began years later. Thus, they could not be held liable for a board action that predated their membership.
Furthermore, the Court upheld the Ombudsman’s assessment that, under principles of corporate governance, a board of directors acts based on reports and recommendations from subordinate officers. The board cannot be expected to personally investigate every detail of a loan application. The fault, if any, would lie with the responsible subordinate officials who screened the application and prepared the reports. The petitioner, who was the Officer-in-Charge of the relevant branch at the material time, failed to substantiate his allegations against the respondents with convincing evidence. Therefore, the Ombudsman’s dismissal of the complaint was within its discretionary authority and was not tainted with grave abuse.