G.R. No. 131397 ; January 31, 2006
Republic of the Philippines (through the Presidential Commission on Good Government), Petitioner, vs. Hon. Aniano Desierto, Ombudsman, Imelda R. Marcos, Lucio C. Tan, Harry C. Tan, Benjamin S. Jimenez, Leoncio M. Giron, Fermin O. Hebron and Joel C. Ibay (Members of the Board of Directors, Sipalay Corporation), Don M. Ferry (Former Member of the Board of Governors of the Development Bank of the Philippines) and Estela M. Ladrido (then Acting Executive Officer of DBP), Respondents.

FACTS

The Presidential Commission on Good Government (PCGG) filed a complaint before the Ombudsman against private respondents for alleged violation of Section 3(e) of R.A. No. 3019 (Anti-Graft Law). The complaint stemmed from the 1985 sale by the Development Bank of the Philippines (DBP) of its equity holdings in Maranao Hotel Resort Corporation (MHRC), owner of Century Park Sheraton Hotel, to Sipalay Trading Corporation (STC). DBP, facing liquidity issues, initially offered the shares for US$8.33 million. After a prior offer fell through, STC, a corporation with an authorized capital of P5 million, purchased the holdings for US$8.5 million. PCGG alleged the sale was grossly disadvantageous, causing undue injury to the government, as the shares were purportedly worth P340.7 million but sold for only about P150 million, and that respondents conspired to accumulate ill-gotten wealth.
Private respondents, including Lucio Tan and DBP officials, countered that the sale was a legitimate business decision made in good faith to address DBP’s financial crisis. They denied any conspiracy or fraudulent intent, asserting that the transaction was aboveboard and that the post-EDSA DBP administration found no irregularities. The Ombudsman dismissed the complaint, finding no probable cause and lauding the DBP Board’s actions as an attempt to save the bank and the hotel, ultimately protecting government interest.

ISSUE

Whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the complaint for lack of probable cause for violation of Section 3(e) of R.A. No. 3019 .

RULING

The Supreme Court dismissed the petition and affirmed the Ombudsman’s Resolution. The Court held that the Ombudsman did not commit grave abuse of discretion. The determination of probable cause is an executive function within the Ombudsman’s discretion, and courts will not interfere absent a clear showing of arbitrariness. For a violation of Section 3(e), the elements are: (1) the accused is a public officer or a private person charged in conspiracy; (2) the act was done in the performance of official duties; (3) it caused undue injury to any party or gave unwarranted benefit; and (4) such injury or benefit was caused through manifest partiality, evident bad faith, or gross inexcusable negligence.
The Ombudsman correctly found that essential elements were absent. The sale was a business judgment made during a financial crisis to generate liquidity, not an act of manifest partiality or bad faith. The price was negotiated and comparable to prior offers. There was no evidence of conspiracy between the private buyers and the DBP officials, nor proof that the officials acted with gross negligence. The Ombudsman’s finding that the DBP Board acted to protect the government’s interest was reasonable. Thus, the dismissal for lack of probable cause was not arbitrary, capricious, or oppressive.