Quiogue vs. Estacio, Jr.

A public officer's participation in a board resolution granting separation benefits to all corporate officers does not constitute evident bad faith under Section 3(e) of RA No. 3019 where the benefits are incidental to the position held and there is no showing of corrupt motive or perverse intent.

Independent Realty Corporation (IRC) is among several corporations organized by Jose Y. Campos on behalf of former President Ferdinand Marcos, later surrendered to the government and placed under the fiscal supervision of the Presidential Commission on Good Government (PCGG). The State owns 481,181 of the 481,184 subscribed shares of IRC, making it a government-owned or controlled corporation (GOCC). Presidential Memorandum Circular Nos. 40 and 66, both issued in 1993, prescribe policies on allowances, compensation, and the assumption of line functions by PCGG-nominated directors of sequestered corporations, limiting annual compensation and prohibiting profit-sharing and retirement benefits unless authorized by the Office of the President.

In January 2007, upon the recommendation of then President Gloria Macapagal-Arroyo to the PCGG Chairman, Benito F. Estacio, Jr. was elected as a member of the board of directors of Independent Realty Corporation (IRC), a group of companies surrendered by former Marcos crony Jose Y. Campos to the government and supervised by the PCGG. Estacio's term was set to expire on June 30, 2010, but he continued to sit on the IRC board until December 2010 and served as concurrent Vice-President in mid-2010.

Prior to the expiration of his term, Estacio and the other IRC board of directors passed Resolution No. 2010-05-181 dated May 21, 2010, which granted separation benefits to IRC officers. Under the resolution, separation pay equivalent to three months' salary for every year of service was granted to the IRC President, and two and one-half months' salary for every year of service to other IRC officers. Based on the resolution, Estacio received ₱467,308.20 as separation pay as IRC Vice-President, ₱56,870.00 as 14th month pay, and ₱20,000.00 as extra bonus, for a total of ₱544,178.20.

Petitioner Luis G. Quiogue, IRC's General Manager, filed a complaint-affidavit before the Ombudsman alleging that Estacio's receipt of the emoluments caused undue injury to the government in violation of Section 3(e) of RA No. 3019. Quiogue claimed that under Memorandum Circular Nos. 40 and 66, Series of 1993, PCGG-nominated directors may only receive limited allowances and fees, cannot assume line functions without presidential authorization, and are not entitled to profit-sharing or retirement benefits. For his defense, Estacio countered that he was not a public officer since IRC remains a private corporation, that the circulars did not apply to him, and that the release of benefits was pursuant to a board resolution passed in good faith under the business judgment rule.

The Ombudsman dismissed the complaint for lack of probable cause. It found Estacio to be a public officer since the State owns 481,181 out of 481,184 subscribed shares of IRC, making it a GOCC, but found no violation of Section 3(e) because Estacio's receipt of benefits was not done in the performance of judicial, administrative, or official functions, and his participation in the approval of the resolution was not tainted with manifest partiality, evident bad faith, or gross inexcusable negligence. The Ombudsman noted that the resolution granted separation pay to all corporate officers, not just PCGG-nominated directors, and that there was no showing the grant was contrary to IRC's by-laws or that IRC was saddled by losses.

• Grave Abuse of Discretion: Petitioner imputed grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Ombudsman for its alleged unjust refusal to file the appropriate Information against Estacio for violation of Section 3(e) of RA No. 3019.
• Evident Bad Faith: Petitioner insisted that Estacio's act of participating in the approval of IRC Board Resolution No. 2010-05-181 and his receipt of the ensuing emoluments, despite an obvious conflict of interest, constituted evident bad faith because his motive in voting for and approving the resolution was really to benefit himself.
• Violation of Memorandum Circulars: Petitioner alleged that under MC Nos. 40 and 66, Series of 1993, PCGG-nominated directors may only receive representation and transportation allowances not exceeding ₱3,400.00 per month, in addition to a basic director's fee not exceeding ₱120,000.00 per year, and are not entitled to any form of profit-sharing or retirement benefits.

• Not a Public Officer: Estacio countered that the Ombudsman has no jurisdiction over him as he is not a public officer, explaining that while IRC was sequestered and supervised by the PCGG, it remains a private corporation.
• Inapplicability of Memorandum Circulars: Estacio argued that MC Nos. 40 and 66 do not apply to him, and that his designation as Vice-President of IRC does not require the President's approval since he was not a PCGG-nominated director.
• Business Judgment Rule: Estacio maintained that the release of the separation pay, 14th month pay, and extra bonus was pursuant to a board resolution passed in good faith, hence valid under the principle of the business judgment rule.

• Public Officer Status: Whether Estacio, as a director of the sequestered IRC, is a public officer subject to the Ombudsman's jurisdiction.
• Grave Abuse of Discretion: Whether the Ombudsman committed grave abuse of discretion in dismissing the complaint for lack of probable cause.
• Evident Bad Faith: Whether Estacio's participation in the approval of the board resolution granting separation benefits and his receipt of the emoluments constituted evident bad faith under Section 3(e) of RA No. 3019.

• Public Officer Status: Yes. Estacio is a public officer, having been appointed by the President of the Philippines to sit on the IRC board, a GOCC in which the State owns 481,181 of 481,184 subscribed shares.
• Grave Abuse of Discretion: No. The Ombudsman did not commit grave abuse of discretion in dismissing the complaint, its findings being supported by the attendant facts and circumstances.
• Evident Bad Faith: No. Estacio's participation in the approval of the board resolution and receipt of benefits did not constitute evident bad faith, as the benefits were incidental to his position and there was no showing of corrupt motive or perverse intent.

• Public Officer Status: The Court applied the two-element test for public officer status under Article 203 of the Revised Penal Code and Section 2(b) of RA No. 3019: (1) taking part in the performance of public functions or performing public duties, and (2) authority to do so by direct provision of law, popular election, or appointment by competent authority. Estacio was appointed by then President Macapagal-Arroyo through a "Desire Letter" to the PCGG Chairman, which the Court in Maligalig vs. Sandiganbayan recognized as an exercise of the President's appointing power. IRC qualified as a GOCC under the three-requisite test from Leyson, Jr. vs. Office of the Ombudsman: (1) organized as a stock corporation, (2) vested with functions relating to public needs, and (3) government-owned to the extent of at least 51% of its capital stock. All three were satisfied — IRC is a stock corporation, its income and assets are remitted to the PCGG and then to the Bureau of Treasury, and the government owns 481,181 of 481,184 subscribed shares. Following Javier vs. Sandiganbayan, persons from the private sector invested with sovereign functions for public benefit are public officers.

• Grave Abuse of Discretion: The Court reaffirmed the principle of non-interference with the Ombudsman's exercise of its constitutionally mandated powers, noting that the Ombudsman's power to investigate is plenary and unqualified. Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction, exercised in an arbitrary or despotic manner so patent and gross as to amount to an evasion of positive duty. A mere disagreement with the Ombudsman's findings does not constitute grave abuse of discretion. Petitioner failed to demonstrate that the Ombudsman's Resolution and Order were tainted with such abuse.

• Evident Bad Faith: The Court explained that Section 3(e) of RA No. 3019 may be committed by dolo (evident bad faith or manifest partiality) or culpa (gross inexcusable negligence). Evident bad faith entails not only bad judgment but a palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. Good faith on the part of a public officer is presumed, and allegation does not amount to proof. The board resolution granting separation benefits was a corporate act in which Estacio was only one among several directors. The resolution recognized that it was equitable to grant to officers the same separation benefits already enjoyed by all IRC employees. There was no showing that Estacio was unduly favored, and any benefit he derived was purely incidental to the position he occupied. Absent proof of corrupt intent, the Ombudsman's dismissal of the complaint was upheld.

• Non-interference with the Ombudsman — The Court generally does not review the Ombudsman's finding as to the existence or absence of probable cause, consistent with the policy of non-interference with the exercise of its constitutionally mandated powers. The only exception is when there is grave abuse of discretion amounting to lack or excess of jurisdiction, which implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction, exercised in an arbitrary or despotic manner as patent and gross as to amount to an evasion of a positive duty. A mere disagreement with the Ombudsman's findings is insufficient.

• Public Officer Status — Two Requisites — To be a public officer under Article 203 of the Revised Penal Code and Section 2(b) of RA No. 3019, one must: (1) take part in the performance of public functions in the government, or perform public duties as an employee, agent, or subordinate official of any rank or class; and (2) have authority to do so by direct provision of law, by popular election, or by appointment by competent authority. Persons from the private sector invested with sovereign functions of government for public benefit are public officers.

• GOCC — Three Requisites — A government-owned or controlled corporation must possess all three attributes: (1) any agency organized as a stock or non-stock corporation; (2) vested with functions relating to public needs whether governmental or proprietary in nature; and (3) owned by the government directly or through its instrumentalities either wholly, or in the case of stock corporations, to the extent of at least 51% of its capital stock.

• Evident Bad Faith under Section 3(e), RA No. 3019 — Evident bad faith entails not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will, requiring a state of mind affirmatively operating with furtive design or with some motive or self-interest or ill will or for ulterior purposes. Good faith is presumed; mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. There is no presumption of bad faith in cases involving violations of the Anti-Graft and Corrupt Practices Act.

• "There being no proof that the incidental benefits received by Estacio was done with, or rooted in any corrupt intent, the Ombudsman's dismissal of the complaint must be upheld." — This passage states the ratio decidendi: absent proof of corrupt motive, incidental benefits derived from a board resolution do not constitute evident bad faith under Section 3(e) of RA No. 3019.

• "Indeed, there is no such thing as presumption of bad faith in cases involving violations of the 'Anti-Graft and Corrupt Practices Act.'" — This articulates the principle that good faith is presumed in graft cases and that the burden rests on the prosecution to demonstrate corrupt intent, not merely to allege it.

• "How can there be evident bad faith when the perceived benefit has long been enjoyed by all employees of IRC before it was granted to the officers such as Estacio." — This rhetorical question underscores the Court's finding that the board resolution merely extended to officers benefits already enjoyed by employees, negating any inference of undue favor or perverse motive.

• Javier vs. Sandiganbayan, 615 Phil. 393 (2009) — Controlling precedent on public officer status, holding that persons from the private sector invested with sovereign functions for public benefit are public officers. Applied to Estacio's appointment by the President to the IRC board.

• Maligalig vs. Sandiganbayan, G.R. No. 236293, December 10, 2019 — Followed on the nature of the President's "Desire Letter" as an exercise of appointing power, making board members of sequestered corporations public officers.

• Leyson, Jr. vs. Office of the Ombudsman, 387 Phil. 241 (2000) — Followed for the three-requisite test to determine whether an entity is a GOCC.

• Cuenca vs. PCGG, 561 Phil. 235 (2007) — Cited for the historical recognition that IRC was among the corporations organized by Jose Y. Campos on behalf of former President Marcos, with shares later surrendered to the government.

• Uriarte vs. People, 540 Phil. 477 (2006) — Cited for the definitions of manifest partiality, evident bad faith, and gross inexcusable negligence as modes of committing Section 3(e) of RA No. 3019.

• Sistoza vs. Desierto, 437 Phil. 117 (2002) — Followed for the principle that before the modes of manifest partiality, evident bad faith, or gross inexcusable negligence may be considered, the Ombudsman must determine with certainty the facts indicating a transgression of the law.

• Villarosa vs. People, G.R. Nos. 233155-63, June 23, 2020 — Cited for the principle that mistakes by a public officer are not actionable absent a clear showing of malice or gross negligence amounting to bad faith, and that there is no presumption of bad faith in anti-grraft cases.

• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Penalizes a public officer who, in the discharge of official administrative or judicial functions, causes undue injury to any party including the government, or gives any private party unwarranted benefits, advantage, or preference through manifest partiality, evident bad faith, or gross inexcusable negligence. Applied to determine whether Estacio's participation in the board resolution and receipt of benefits constituted a violation.

• Section 2(b), Republic Act No. 3019 — Defines "public officer" to include elective and appointive officials and employees, permanent or temporary, receiving compensation even nominal from the government. Applied to classify Estacio as a public officer.

• Article 203, Revised Penal Code — Defines a public officer as any person who, by direct provision of law, popular election, or appointment by competent authority, takes part in the performance of public functions or performs public duties. Applied through the two-element test for public officer status.

• Section 2(13), Administrative Code of 1987 (Executive Order No. 292) — Defines a government-owned or controlled corporation as any agency organized as a stock or non-stock corporation, vested with functions relating to public needs, and owned by the government directly or through its instrumentalities either wholly or to the extent of at least 51% of its capital stock. Applied to classify IRC as a GOCC.

• Section 3(o), Republic Act No. 10149 (GOCC Governance Act of 2011) — Provides a parallel definition of GOCC, cited to reinforce the Administrative Code definition.

• Section 15(1), Republic Act No. 6770 (Ombudsman Act of 1989) — Empowers the Ombudsman to investigate and prosecute criminal cases against public officers and employees, with primary jurisdiction over cases cognizable by the Sandiganbayan. Applied to establish the Ombudsman's authority and the policy of non-interference.

• Sections 12 and 13, Article XI, 1987 Constitution — Provide the constitutional basis for the Ombudsman's mandate as protector of the people and its powers, functions, and duties.

• Memorandum Circular No. 40, Series of 1993 — Prescribes the policy on allowances to PCGG-nominated directors of sequestered corporations, limiting transportation and representation allowances and capping director's fees at ₱120,000 per annum. Cited by petitioner but found by the Ombudsman to apply only to PCGG-nominated directors.

• Memorandum Circular No. 66, Series of 1993 — Prohibits PCGG-nominated directors from assuming line functions without presidential authorization and bars profit-sharing and retirement benefits. Cited by petitioner but found inapplicable to Estacio's circumstances by the Ombudsman.

Associate Justice Perlas-Bernabe, S.A.J. (Chairperson), Associate Justice Gaerlan, Associate Justice Lazaro-Javier, and Associate Justice Rosario concurred.