G.R. No. 198366, June 26, 2019
Republic of the Philippines, represented by the Presidential Commission on Good Government, Petitioner, vs. The Honorable Ombudsman, Ramon C. Lee, Johnny Teng, Antonio DM. Lacdao, and Cesar R. Marcelo (as members of the Board of Directors of Alfa Integrated Textile Mills, Inc.), Cesar Zalamea, Alicia Ll. Reyes, J.V. De Ocampo, Joseph Ll. Edralin, and Rodolfo Manalo (former members of the Board of Governors of the Development Bank of the Philippines), Respondents.

FACTS

The Presidential Commission on Good Government (PCGG) filed a complaint before the Office of the Ombudsman against officers of the Development Bank of the Philippines (DBP) and Alfa Integrated Textile Mills, Inc. (ALFA) for alleged violation of the Anti-Graft and Corrupt Practices Act. The PCGG alleged that six loans extended by DBP to ALFA between 1979 and 1981 were “behest loans,” having been granted with undue favor. The Presidential Ad Hoc Fact-Finding Committee on Behest Loans, applying criteria from a presidential memorandum, found the loans exhibited positive behest characteristics, such as undercollateralization, undercapitalization of the borrower, and a marginal note from former President Ferdinand Marcos approving a rehabilitation plan.
The Ombudsman dismissed the complaint for lack of probable cause. It found that the PCGG failed to substantiate its allegations with clear evidence. The Ombudsman ruled that the loans were sufficiently collateralized, noting the appraised value of the properties exceeded the loan amounts. It also found no proof that the DBP officers acted with manifest partiality, bad faith, or gross negligence in approving the loans, as the credit approvals followed regular bank procedures. The PCGG filed a petition for certiorari before the Supreme Court, arguing the Ombudsman committed grave abuse of discretion.

ISSUE

Did the Office of the Ombudsman commit grave abuse of discretion in dismissing the complaint and finding no probable cause to charge the respondents?

RULING

No, the Ombudsman did not commit grave abuse of discretion. The Supreme Court emphasized that the determination of probable cause is an executive function within the Ombudsman’s constitutionally mandated investigatory and prosecutorial powers. Judicial review of such findings is limited to instances of grave abuse of discretion, which implies a capricious, whimsical, or despotic exercise of judgment equivalent to lack of jurisdiction.
The Court found no such abuse. The Ombudsman’s resolution was based on its evaluation of the evidence, including its finding that the collateral values were adequate and that the loan approvals underwent DBP’s regular process. The mere existence of a marginal note from a high official, without more, does not automatically establish criminal liability for the bank officers who processed the loans in accordance with their functions. The PCGG’s reliance on the Behest Loans Committee’s findings was insufficient to overturn the Ombudsman’s exercise of discretion, as the Committee’s report was merely preliminary and investigative. The Ombudsman correctly required a higher standard of proof for a criminal indictment. Absent a clear showing that its factual conclusions were arrived at arbitrarily, the Court upheld the Ombudsman’s finding of no probable cause.