Flores vs. Office of the Ombudsman

A hearing officer of the Securities and Exchange Commission cannot be held liable for rendering an unjust judgment under Article 204 of the Revised Penal Code, which applies exclusively to judges, and liability under Section 3(e) of R.A. 3019 requires proof of evident bad faith, manifest partiality, or gross inexcusable negligence — the absence of which the Ombudsman may properly find and uphold.

Petitioner Ban Hua U. Flores was a respondent in SEC Case No. 03328, an action for accounting and turnover of corporate funds of UBS Marketing filed by Johnny K.H. Uy before the Securities and Exchange Commission. Private respondent Atty. Enrique L. Flores, Jr. was the SEC Hearing Officer who rendered the default decision in that case. After the SEC en banc reversed the Hearing Officer's decision except for the order of accounting, petitioner sought criminal prosecution of the Hearing Officer before the Office of the Ombudsman for allegedly rendering an unjust judgment and violating the Anti-Graft and Corrupt Practices Act. The dispute centers on whether the Ombudsman gravely abused its discretion in dismissing that criminal complaint for insufficiency of evidence.

Johnny K.H. Uy instituted SEC Case No. 03328 before the Securities and Exchange Commission against petitioner Ban Hua U. Flores, among others, seeking an accounting and turnover of corporate funds of UBS Marketing. Petitioner, instead of filing an answer, moved to dismiss on the ground of lack of jurisdiction. The motion was denied, as was the appeal filed with the SEC en banc. Petitioner was thereafter declared in default upon motion by complainant Uy, who then presented evidence ex parte.

On May 3, 1995, SEC Hearing Officer Enrique L. Flores, Jr. rendered a decision commanding the respondents to produce and turn over the books of account of Soon Kee Commercial, Inc. and UBS Marketing Corporation, render a full accounting of assets and properties, pay damages amounting to ₱13 Million and ₱48 Million, cancel and annul several transfer certificates of title, execute deeds of conveyance transferring properties back to UBS Marketing Corporation, pay separation pay and contingency fund amounts, turn over a vehicle, return a Hong Kong property, pay ₱600,000 in attorney's fees, and make the writ of preliminary mandatory injunction permanent.

Petitioner and her co-respondents appealed to the SEC en banc, which reversed the decision except the order of accounting. Dissatisfied with the outcome, petitioner filed a criminal complaint docketed as OMB-0-96-1175 with the Office of the Ombudsman, accusing Hearing Officer Flores, Jr. of rendering an unjust judgment under Article 204 of the Revised Penal Code and violating Section 3(e) of R.A. 3019. The Ombudsman dismissed the complaint for insufficiency of evidence, finding no showing that the respondent rendered the decision maliciously or with bad faith, and noting that the SEC en banc had promptly corrected the errors so that the decision never became final and executory. Petitioner's motion for reconsideration was likewise denied, prompting the instant petition.

• Grave Abuse of Discretion: Petitioner contended that the Office of the Ombudsman committed grave abuse of discretion in dismissing the complaint against private respondent.
• Absence of Good Faith: Petitioner maintained that private respondent's decision could not be considered made in good faith because the case did not involve a complex question of law but was a plain violation of simple rules of procedure.
• Undue Injury: Petitioner argued that, contrary to the Ombudsman's findings, she and her family suffered undue injury as a result of the decision in SEC Case No. 03328, making respondent liable under Section 3(e) of R.A. 3019.

• Inapplicability of Article 204: Private respondent argued that he could not be held guilty under Article 204 of the Revised Penal Code because that provision could only be committed by a judge, and he was a hearing officer of the SEC.
• Good Faith Despite Procedural Lapses: Private respondent contended that petitioner erred in assuming an error in judgment could only be considered made in good faith if it involved complex questions of law. He acknowledged possible procedural lapses but maintained these were not tantamount to malice or bad faith, as he based his decision on the overwhelming evidence presented by the complainant in the ex parte proceedings.
• No Undue Injury: Private respondent asserted that no undue injury was inflicted upon petitioner because the SEC en banc timely reversed his decision except for the order of accounting.
• Ombudsman's Discretion (Office of the Ombudsman): The Office of the Ombudsman argued that petitioner failed to cite any new fact warranting a conclusion that private respondent acted with malice and bad faith, and that the Ombudsman has the discretion and competence to determine the sufficiency of a complaint in form and substance.
• Indispensable Requisite (Office of the Ombudsman): The Office of the Ombudsman further submitted that, absent a final, authoritative judicial declaration that the decision was manifestly unjust, no civil or criminal action against the judge should be entertained for want of an indispensable requisite, citing In Re Joaquin T. Borromeo.

• Nature of the Petition: Whether the petition, though captioned as a petition for review under Rule 45, should be treated as a petition for certiorari under Rule 65.
• Grave Abuse of Discretion: Whether the Office of the Ombudsman committed grave abuse of discretion in dismissing the criminal complaint against private respondent for violation of Article 204 of the Revised Penal Code and Section 3(e) of R.A. 3019.

• Nature of the Petition: Treated as a petition for certiorari under Rule 65. The averments in the petition and the character of the relief sought — not the caption — control the nature of the action.
• Grave Abuse of Discretion: No. The Ombudsman's dismissal was legally justified, bad faith being an indispensable element of both Article 204 and Section 3(e) of R.A. 3019, and the Ombudsman having found no bad faith. Article 204, moreover, applies only to judges, not to SEC hearing officers.

• Nature of the Petition: The petition was captioned as a petition for review by certiorari under Rule 45, but the arguments raised referred to alleged grave abuse of discretion committed by the Office of the Ombudsman. In determining the nature of an action, it is not the caption but the averments in the petition and the character of the relief sought that are controlling. Because the allegations pertained to grave abuse of discretion, the petition was treated as one under Rule 65 of the Rules of Court.

• Grave Abuse of Discretion: Grave abuse of discretion exists where the respondent acts in a capricious, whimsical, arbitrary, or despotic manner, as when the assailed order is bereft of any factual and legal justifications. The Ombudsman's dismissal was found legally justified on multiple grounds. First, liability under Article 204 of the Revised Penal Code requires that the offender be a judge; the alleged offender here was a hearing officer of the SEC, not a judge. Second, both Article 204 and Section 3(e) of R.A. 3019 require bad faith as an essential element — a judge is liable for unjust judgment only where he acts in bad faith, malice, revenge, or some similar motive, and Section 3(e) requires manifest partiality, evident bad faith, or gross inexcusable negligence. The Ombudsman found no bad faith, and petitioner failed to overcome the burden of proving it. Petitioner's sole argument — that the decision could not have been made in good faith because the case involved only simple rules of procedure — was insufficient to establish malice. Third, the Court declined to disturb the Ombudsman's finding of absence of bad faith, invoking the policy of non-interference with the Ombudsman's exercise of its investigatory and prosecutory powers, grounded in constitutional recognition of the Ombudsman's authority and in practical necessity to prevent the courts from being overwhelmed by petitions assailing the dismissal of investigatory proceedings.

• Nature of Actions Determined by Averments, Not Caption — In determining the nature of an action, it is not the caption but the averments in the petition and the character of the relief sought that are controlling. Applied here to reclassify a petition captioned under Rule 45 as one properly falling under Rule 65, because the allegations pertained to grave abuse of discretion.

• Grave Abuse of Discretion — Grave abuse of discretion exists where the respondent acts in a capricious, whimsical, arbitrary, or despotic manner in the exercise of judgment, as when the assailed order is bereft of any factual and legal justifications. The Court found the Ombudsman's resolution supported by both factual and legal justification, hence not constituting grave abuse.

• Bad Faith as Element of Unjust Judgment and Section 3(e) R.A. 3019 — A judge is held liable for rendering an unjust judgment under Article 204 of the Revised Penal Code only where he acts in bad faith, malice, revenge, or some similar motive. Under Section 3(e) of R.A. 3019, the public officer complained of must have acted with manifest partiality, evident bad faith, or gross inexcusable negligence. Without proof of bad faith, the essential element of both offenses is wanting.

• Article 204 Applies Only to Judges — Article 204 of the Revised Penal Code, which penalizes knowingly rendering an unjust judgment, applies exclusively to judges. A hearing officer of the SEC is not covered by the provision.

• Non-Interference with Ombudsman's Investigatory and Prosecutory Powers — Courts consistently adopt a policy of non-interference with the Office of the Ombudsman's exercise of its investigatory and prosecutory powers, in recognition of the Ombudsman's constitutional mandate and for practicality, to prevent courts from being overwhelmed by petitions assailing the dismissal of investigatory proceedings.

• "In determining the nature of an action, it is not the caption, but the averments in the petition and the character of the relief sought, that are controlling." — This passage articulates the rule for classifying the nature of petitions, which the Court applied to reclassify the petition from Rule 45 to Rule 65.

• "a judge will be held liable for rendering an unjust judgment where he acts in bad faith, malice, revenge or some other similar motive" — This formulation, drawn from Guerrero vs. Villamor, states the requisite mental element for liability under Article 204 of the Revised Penal Code and underscores why the complaint against the hearing officer was properly dismissed.

• "we are not inclined to disturb the Ombudsman's finding of absence of bad faith because of the policy of non-interference with the Office of the Ombudsman's exercise of its investigatory and prosecutory powers, which we have consistently adopted in our decisions." — This passage states the doctrinal basis for judicial deference to the Ombudsman's discretion in dismissing complaints, a principle frequently invoked in subsequent jurisprudence.

• Guerrero vs. Villamor, 296 SCRA 88 (1998) — Followed for the proposition that a judge is liable for rendering an unjust judgment only where he acts in bad faith, malice, revenge, or some similar motive.

• Ingco vs. Sandiganbayan, 272 SCRA 563 (1997) — Followed for the elements of the offense under Section 3(e) of R.A. 3019, specifically the requirement that the public officer acted with manifest partiality, evident bad faith, or gross inexcusable negligence.

• De La Cruz vs. Concepcion, 235 SCRA 597 (1994) — Followed for the holding that Article 204 of the Revised Penal Code applies only to judges.

• Knecht vs. Desierto, 291 SCRA 292 (1998) — Followed for the policy of non-interference with the Ombudsman's exercise of its investigatory and prosecutory powers.

• In Re Joaquin T. Borromeo, 241 SCRA 405 (1995) — Cited by the Office of the Ombudsman for the proposition that absent a final, authoritative judicial declaration that a decision is manifestly unjust, no civil or criminal action against the judge should be entertained.

• JG Summit Holdings, Inc. vs. Court of Appeals, 345 SCRA 143 (2000) — Cited for the rule that the nature of an action is determined by its averments and the character of relief sought, not by its caption.

• Article 204, Revised Penal Code — Penalizes any judge who knowingly renders an unjust judgment with prision mayor and perpetual absolute disqualification. The Court held this provision inapplicable because the alleged offender was a SEC hearing officer, not a judge, and because bad faith was not established.

• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Penalizes causing undue injury to any party or giving unwarranted benefits through manifest partiality, evident bad faith, or gross inexcusable negligence in the discharge of official functions. The Court found the essential element of bad faith wanting, the Ombudsman having properly determined its absence.

• Section 13(1), Article XI, 1987 Constitution — Recognizes the authority of the Ombudsman, serving as constitutional basis for the policy of non-interference with the Ombudsman's investigatory and prosecutory powers.

• Rule 65, Rules of Court — Governs petitions for certiorari, prohibition, and mandamus. The petition, though captioned under Rule 45, was treated as one under Rule 65 because the allegations pertained to grave abuse of discretion.

Bellosillo, Mendoza, Austria-Martinez, and Callejo, Sr., JJ., concurred.