Non-interference

Except for some good and compelling reasons, the Supreme Court (SC) does not intervene with the Ombudsman’s exercise of his investigatory and prosecutorial powers since such exercise is based on a constitutional mandate and also because of practicality. This case of the PNB and Northern Cotabato Sugar Industries Inc. (NOCOSII) directors sets forth the instances when the “SC” will and will not intervene.

The case stemmed from the findings of the Presidential Ad-hoc Committee on Behest Loans created in 1992 that the loan transactions between PNB and NOCOSII were behest loans. After examining and studying all the documents relative to the loan transaction, the Technical Working Group of the Committee classified said loan transactions as “behest” because of NOCOSII’s insufficient capital and inadequate collaterals which were among the earmarks of behest loan set forth in a Memorandum Circular issued by then President Ramos.

Based on the sworn statement of the PCGG consultant, the PCGG filed with the Office of the Ombudsman the complaint against the directors of PNB and NOCOSII for corrupt practices under Sections 3 (e) and (g) of the Anti-Graft Law (R.A. 3019).

The directors charged failed to submit any responsive pleading so the Ombudsman graft investigator resolved the case based on the available evidence. The investigator found that the loans acquired by NOCOSII are actually foreign loans from Midland Bank Ltd. of London. There were no direct loans released by PNB but merely credit accommodations to guaranty the foreign loan. As to the collaterals, the PNB Board imposed as one of the conditions the execution of contract assigning all NOCOSII’s share of sugar and molasses to PNB. The company was also required to increase its paid up capital at P5 million a year starting April 30, 1976 up to 1980 or a total of P25 million. In addition, the stockholders of NOCOSII were required to assign all their present and future shares to PNB while the accommodations remain outstanding that since 1975 PNB acquired majority of the voting rights in the company and was given the power to appoint a comptroller therein. The proposed plant site which was offered as collateral was estimated to cost P307,903,000. These collaterals were more than sufficient to cover the loans of P333,465,260. All required clearances prior to release of the loan were likewise submitted. While the paid up capital was only P50 million, other assets of NOCOSII also formed part of the capital.

Hence based on this evidence, the investigator recommended and the Ombudsman approved the dismissal of the complaint for lack of probable cause. PCGG questioned the dismissal before the Supreme Court. It claimed that the Ombudsman committed grave abuse of discretion in finding that no probable cause exists. Was the PCGG correct?

No. Only in certain instances will the court intervene in the investigation and prosecution function of the Ombudsman. These are: (1) when necessary to afford adequate protection to the constitutional rights of the accused; (2) when necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions; (3) when there is a prejudicial question which is sub judice; (4) when the acts of the officer are without or in excess of authority; (5) where the prosecution is under an invalid law, ordinance or regulation; (6) when double jeopardy is clearly apparent; (7) where it is a case of persecution rather than prosecution; (8) where charges are manifestly false and motivated by lust for vengeance; and (9) when there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied.

None of the above instances apply here. No grave abuse of discretion can be attributed to the Ombudsman. Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction. The exercise of power must have been done in an arbitrary and despotic manner by reason of passion or personal hostility. It must be as patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.

The finding of lack of probable cause by the Ombudsman is borne out by the documents on record and by the evidence presented by PCGG. The order of dismissal of the complaint is supported by substantial evidence. So there is no basis for the court to exercise its supervisory powers over the Ombudsman. As long as substantial evidence supports the Ombudsman ruling that decision will not be overturned (PCGG et. al. vs. Desierto et. al. G.R. 140231, July 9, 2007).

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