Title
Presidential Commission on Good Government vs. Navarro-Gutierrez
Case
G.R. No. 194159
Decision Date
Oct 21, 2015
PCGG accused ex-DBP officers of granting behest loans to Galleon under Marcos. SC ruled Ombudsman abused discretion, found probable cause for RA 3019 violations, ordered indictment.

Case Summary (G.R. No. 194159)

Relevant Dates and Applicable Law

  • The complaint was filed on July 15, 2003.
  • The contested resolutions by the Office of the Ombudsman (Ombudsman) were issued on May 30, 2007, and April 13, 2009.
  • The applicable law is the 1987 Philippine Constitution and Republic Act No. 3019.

Factual Background

The issue originated from behest loans extended by DBP to Galleon during the Marcos regime. In 1992, President Fidel V. Ramos issued Administrative Order No. 13, creating an Ad Hoc Fact-Finding Committee on Behest Loans to identify anomalous government loans. Subsequently, Memorandum Order No. 61 established criteria to determine whether a loan is a behest loan, considering factors such as undercollateralization, undercapitalization, cronyism, and marginal notes by President Marcos.

The Technical Working Group (TWG), supporting the Ad Hoc Committee, found that DBP approved guarantees for Galleon amounting to US$90,280,000, even though Galleon failed to meet capital requirements and had significant arrearages. Additional loans and release of collateral were granted despite the corporation’s poor financial standing, resulting in total obligations much higher than the value of the collaterals.

Charges and Defenses

The PCGG charged respondents with violations of Sections 3 (e) and (g) of RA 3019, which involve manifest partiality or evident bad faith by public officers causing undue injury to the government or giving unwarranted benefits, and entering into transactions grossly disadvantageous to the government, respectively.

Respondents offered defenses:

  • Roque denied being a crony and claimed limited influence.
  • Zalamea asserted no involvement in transactions before his tenure.
  • Tengco maintained his participation was limited to board decisions within sound business judgment and argued the charges were time-barred.
  • Castell claimed supervisory roles without approval authority. Others failed to file counter-affidavits despite due notice.

Ombudsman’s Ruling

The Ombudsman dismissed the complaint for lack of probable cause, emphasizing that the PCGG’s evidence mainly consisted of executive summaries and technical reports considered hearsay and of low probative value. The Ombudsman noted the absence of direct evidence such as loan agreements, approved board resolutions, or detailed participation records. A motion for reconsideration was also denied.

Issue for the Court

The central issue was whether the Ombudsman gravely abused its discretion in dismissing the complaint for lack of probable cause under RA 3019.

Legal Standards on Probable Cause

The Court acknowledged its general policy of non-interference with the Ombudsman’s discretion in determining probable cause but emphasized that it could review when grave abuse of discretion is apparent. Grave abuse means a capricious, whimsical, or patent disregard of law or duty.

Probable cause requires facts sufficient to engender a well-founded belief that a crime has been committed and that the accused is probably guilty. It does not require evidence beyond reasonable doubt or sufficient for conviction, only a rational basis for belief in guilt using common sense rather than strict rules of evidence.

Preliminary investigations are inquisitorial in nature, aimed at determining whether reasonable grounds exist to proceed to trial, not to resolve the merits of the case.

Analysis of Evidence and Findings

  • The Court highlighted the suspicious nature of the loans: undercapitalized borrower, undercollateralization, large obligations relative to collateral value, and indications of cronyism, including marginal notes by President Marcos.
  • High-ranking officers of DBP who participated in or approved these loans were public officers under RA 3019.
  • Galleon officers and stockholders implicated held positions of influence in the company at the relevant times.
  • Defenses raised involve factual issues better addressed at trial, particularly since several respondents did not file counter-affidavits.
  • The claim of hearsay and self-serving evidence was rejected because under the jurisprudence, hearsay evidence is admissible during preliminary investigations provided there is a substantial basis for crediting it. It was noted that the TWG’s findings were based on official DBP documents.
  • The Court reiterated that the preliminary investig

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