G.R. No. 147723; August 22, 2008
PRESIDENTIAL AD HOC FACT-FINDING COMMITTEE ON BEHEST LOANS AND/OR PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioners, vs. HON. ANIANO DESIERTO, ALICIA LL. REYES, LOURDES M. MONTENEGRO, SERAFIN M. MONTENEGRO, BASILIO LIRAG and FELIX LIRAG, respondents.

FACTS

The Presidential Ad Hoc Fact-Finding Committee on Behest Loans (Ad Hoc Committee) referred a case to the Ombudsman against the respondents, who were officers and stockholders of Midland Cement Corporation. The complaint alleged that loans obtained by Midland Cement from the Development Bank of the Philippines (DBP) from 1968 onwards were “behest loans,” characterized by being undercollateralized and extended to an undercapitalized corporation whose officers were alleged cronies of former President Marcos. The complaint further asserted that these transactions caused undue injury to the government, violating the Anti-Graft and Corrupt Practices Act (R.A. No. 3019). The Ombudsman dismissed the complaint for lack of probable cause, finding no evidence of manifest partiality, bad faith, or gross negligence by the DBP officials in approving the loans, and noting that the corporation’s subsequent financial troubles did not automatically imply criminal liability in the loan’s origination.

ISSUE

The core issue is whether the Ombudsman committed grave abuse of discretion in dismissing the criminal complaint for violation of R.A. No. 3019 against the respondents for lack of probable cause.

RULING

The Supreme Court dismissed the petition and upheld the Ombudsman’s dismissal. The Court emphasized the doctrine of separation of powers and the Ombudsman’s constitutional independence in prosecutorial functions. It reiterated that a finding of probable cause is an executive function, and judicial review is limited to determining whether the Ombudsman acted with grave abuse of discretion—a capricious, whimsical, or despotic exercise of judgment equivalent to lack of jurisdiction. The Court found no such abuse. The Ombudsman’s ruling was based on a thorough evaluation of the evidence, concluding that the loan approvals followed DBP’s regular procedures and were supported by board resolutions and appraisals. The mere fact that a loan eventually became non-performing or was labeled “behest” under administrative criteria does not, by itself, establish criminal intent or gross negligence required under R.A. No. 3019. The Ombudsman correctly distinguished between civil liability for a potentially disadvantageous contract and the criminal liability for acts done with manifest partiality, evident bad faith, or gross inexcusable negligence. The Court held that the Ombudsman’s factual findings and conclusion on the absence of probable cause were reasonable and not attended by grave abuse of discretion.