Case Summary (G.R. No. 237558)
Background Information
The case revolves around the proposed sale of Land Bank's shares in Meralco, initially offered for block sale by the Privatization Management Office of the Department of Finance in March 2007. Following deliberations, the Land Bank board approved the proposal on March 16, 2007, although the sale did not materialize due to prior actions taken by the Government Service Insurance System. In November 2008, Land Bank officers, including Pico and Vergara, proposed to sell their shares at PHP 90.00 per share, which led to the execution of a Share Purchase Agreement with Global 5000 Investment, Inc. on December 2, 2008. However, the transfer of shares was hindered by a prior levy associated with a separate court case.
Ombudsman’s Findings
The Office of the Ombudsman found probable cause for violation of Section 3(g), alleging that the Land Bank officers had given unwarranted benefits to Global 5000 without proper public bidding and had entered into a transaction that was grossly and manifestly disadvantageous to the government. The Ombudsman noted that the failure to engage in thorough due diligence and the granting of extended payment terms were signs of negligence and manifested conspiracy among the Land Bank officials.
Legal Framework
The applicable law concerning the case is Section 3(g) of Republic Act No. 3019, which prohibits public officers from entering into contracts on behalf of the government that are manifestly and grossly disadvantageous, regardless of personal gain. A determination of probable cause requires establishing that the accused is a public officer, that they entered into a contract on behalf of the government, and that the contract was grossly and manifestly disadvantageous.
Arguments from the Petitioners
Petitioners assert that they exercised sound business judgment in negotiating the sale and that the terms were not grossly disadvantageous. Teves claims he relied on the expertise of Land Bank management, while Pico and Halog argue that standard practices were followed and the contract included provisions to protect Land Bank's interests. They contend that the purported disadvantages cited by the Ombudsman were speculative and also highlight that the sale was not consummated, relieving them of potential liability.
Court's Analysis and Decision
The Court found that the Ombudsman erred in its determination of probable cause, emphasizing that the mere existence of disadvantage to the government does not establish a violation of Section 3(g). The Court noted that evidence presented showed petitioners had engaged in
...continue readingCase Syllabus (G.R. No. 237558)
Background and Factual Context
- The case involves consolidated petitions for certiorari filed by Margarito B. Teves (former Secretary of Finance and ex-officio chairperson of Land Bank of the Philippines) and several Land Bank officers, challenging the Office of the Ombudsman's Resolution and Omnibus Order finding probable cause for violation of Section 3(g) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) involving sale of Meralco shares.
- In 2007, the Department of Finance's Privatization Management Office offered Land Bank participation in a block sale of Meralco shares owned by government entities.
- Land Bank's Board approved participation but sale did not proceed due to another government entity's prior sale to San Miguel Corporation.
- In 2008, Land Bank board approved the sale of its 4% Meralco shares to Global 5000 Investment, Inc. via a Share Purchase Agreement (SPA) at PHP 90.00 per share,
- The transaction nominally amounted to PHP 4.193 billion subject to installment payments with interest but execution was thwarted due to levy and transfer of shares to an assignee of Federido Suntay by Meralco; shares were restored to Land Bank by the Supreme Court in 2011.
- Global 5000 later filed a complaint for specific performance to compel Land Bank compliance with the SPA.
- The Ombudsman's Field Investigation Office filed charges against Land Bank officers alleging unwarranted benefits given to Global 5000 and grossly disadvantageous transaction without due diligence.
Allegations and Charges
- Alleged violation of Section 3(e) and 3(g) of RA No. 3019: specifically, public officers purportedly entered into a contract manifestly and grossly disadvantageous to the government.
- Allegation that Global 5000 had insufficient capitalization, only 17.67% of total obligation, lacked track record, and that Land Bank extended undue benefits such as extended payment period and voting and dividend rights upon down payment.
- Ombudsman dismissed charge under Section 3(e) citing absence of undue injury or unwarranted benefits and that the SPA was not consummated.
Ombudsman Findings and Ruling
- Found probable cause for violation of Section 3(g) stating that entering into a manifestly and grossly disadvantageous contract is punishable irrespective of consummation.
- Noted Land Bank officials failed due diligence engaging in a PHP 4.193 billion transaction with a 10-month-old company with low capitalization.
- Highlighted contract provisions giving early beneficial ownership, dividends, and voting rights to Global 5000 with a grace period on payments considered disadvantageous.
- Seen failure of Land Bank officials to object to anomalous SPA provisions as indicative of conspiracy and bad faith.
- Rejected applicability of Arias doctrine (good faith reliance on subordinates) given foreknowledge of anomalies.
Petitioners’ Defenses and Arguments
- Teves and other officers relied in good