Vergara vs. The Hon. Ombudsman

The Ombudsman's determination of probable cause—or the lack of it—is entitled to great respect and will not be overturned absent a clear showing of grave abuse of discretion; and under Section 22(c) of RA 7160, a contract entered into by the local chief executive on behalf of the local government unit requires prior authorization by the sanggunian, not subsequent ratification. The lack of ratification alone does not establish evident bad faith or unwarranted benefit under Section 3(e) of RA 3019.

Severino B. Vergara was a member of the Sangguniang Panlungsod of Calamba, Laguna, and Edgardo H. Catindig joined him as complainant before the Office of the Ombudsman. The complaint was lodged against Severino J. Lajara in his capacity as City Mayor, Virginia G. Baroro as City Treasurer, Razul Requesto as President of Pamana, Inc., and Lauro Jocson as Vice President and Trust Officer of Prudential Bank and Trust Company. The controversy concerned the acquisition of a site for a new Calamba City Hall, a transaction governed by the Local Government Code of 1991 (RA 7160), which prescribes the manner by which a local chief executive may enter into contracts on behalf of the local government unit. The case reached the Supreme Court after the Ombudsman declined to indict the respondents for violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act (RA 3019).

On 25 June 2001, the Sangguniang Panlungsod of Calamba, of which petitioner Severino B. Vergara was a member, issued Resolution No. 115, Series of 2001, authorizing Mayor Severino J. Lajara to negotiate with landowners within the vicinity of Barangays Real, Halang, and Uno for a new city hall site. During the public hearing held on 3 October 2001, the choice for the site was narrowed to properties owned by Pamana, Inc. and a lot in Barangay Saimsin, Calamba. On 29 October 2001, the City Council passed Resolution No. 280, Series of 2001, authorizing Mayor Lajara to purchase several lots owned by Pamana with a total area of 55,190 square meters for ₱129,017,600, and further authorizing him to execute, sign, and deliver the required documents. The resolution recited the city's need for a modern city hall and the absence of any available real property of its own, and was enacted on the motion of Kagawad S. Vergara himself, seconded by Kagawad R. Hernandez.

On 13 November 2001, the City Government of Calamba, through Mayor Lajara, entered into four agreements: (a) a Memorandum of Agreement with Pamana and Prudential Bank and Trust Company setting the terms of the sale of 15 lots with a total area of 55,190 square meters, with the ₱129,017,600 purchase price payable in installments of ₱10,000,000 on or before 15 November 2001, ₱19,017,600 on or before 31 January 2002, and the ₱100,000,000 balance in four equal installments due on or before 31 April 2002, 31 July 2002, 31 October 2002, and 31 January 2003; (b) a Deed of Sale covering the 15 lots under TCT Nos. 159893, 159894, 159895, 159896, 159897, 158598, 162412, 162413, 204488, 66140, 61703, 66141, 66142, 66143, and 61705; (c) a Deed of Real Estate Mortgage over the same properties as security for the balance of the purchase price; and (d) a Deed of Assignment of the city's Internal Revenue Allotments from January 2002 to 31 January 2003 in the amount of ₱119,017,600 in favor of Pamana and Prudential Bank. On 19 November 2001, the documents were endorsed to the City Council. Petitioner alleged that none of them was ratified by the City Council, a fact noted in an Audit Observation Memorandum dated 9 August 2002 issued by State Auditor Ruben C. Pagaspas of the Commission on Audit.

Petitioner alleged that he called the City Council's attention to several matters. First, TCT Nos. 66141, 66142, 66143, 61705, and 66140 were registered in the name of Philippine Sugar Estates Development Company (PSEDC), and neither Pamana nor Prudential Bank owned them; although PSEDC had executed a Deed of Assignment in favor of Pamana to maintain the road lots within the PSEDC properties, PSEDC had not conveyed, sold, or transferred the properties to Pamana, and the signature of Fr. Efren O. Rivera in Annex A of the Deed of Assignment appeared to be a forgery, Fr. Rivera having submitted an Affidavit refuting his purported signature. Second, no relocation survey was conducted prior to the execution of the Deed of Sale. Third, as to the two lots covered by TCT No. 61703 with an area of 5,976 square meters and TCT No. 66140 with an area of 3,747 square meters, Fr. Boyd R. Sulpico of the Dominican Province of the Philippines had earlier offered the same for only ₱300 per square meter. Fourth, TCT Nos. 66141, 66142, 66143, and 61705 are road lots, the dorsal sides of the titles bearing the common annotation that the road lots cannot be closed or disposed of without the prior approval of the National Housing Authority and the conformity of the duly organized homeowners' association. Fifth, an existing barangay road and an access road to Bacnotan Steel Corporation and Danlex Corporation were included in the Deed of Sale. Petitioner maintained that since the evidence supporting the complaint was documentary, respondents had impliedly admitted it.

Before the Ombudsman, respondents maintained that the lots covered by TCT Nos. 66141, 66142, and 66143 had already been transferred to Pamana as evidenced by new titles, and that even if TCT Nos. 66140 and 61703 remained in PSEDC's name, ownership had passed to Pamana as confirmed by Fr. Sulpico, the custodian of the Dominican Province's assets. They refuted the overpricing claim, contending that Fr. Sulpico's letter offering the lots at ₱350 per square meter had been superseded by his own denial of the offer during the Sangguniang Panlungsod meeting of 14 November 2002. On the absence of ratification, they explained that Section 22 of RA 7160 speaks of prior authority and not ratification, and that petitioner did not deny that Mayor Lajara had been given prior authority to negotiate and sign the contracts—indeed, it was petitioner who had moved for the enactment of Resolution No. 280. On the relocation survey, they noted that its absence would not affect the validity of the transactions.

The Ombudsman found that the subject properties had been transferred and were registered in the name of Calamba City under new certificates of title; that the purchase price of ₱3,800 per square meter was lower than the zonal valuation of ₱6,000 per square meter; that the terms of payment were neither onerous nor burdensome since the city immediately took possession despite paying less than ten percent of the contract price and was relieved from paying interest; and that there was no compelling evidence of actual injury or damage to the city government. On the alleged overpricing of the lots covered by TCT Nos. 61703 and 66140, the Ombudsman ruled that Fr. Sulpico's affidavit showed the parcels were excluded from the offer as creek easement lots; as to TCT Nos. 66141, 66142, and 66143, new titles had been issued in Pamana's name with PSEDC as former registered owner; and the absence of a relocation survey did not affect the validity of the transactions. The Ombudsman likewise found that the lots covered by the purchase totaled 33,952 square meters, not the 55,000 square meters stated in Resolution No. 280, and that the sketch plan and TCTs submitted by petitioner indicated that the parcels he claimed to be easement, creek, or road lots were in fact parcels of land.

• Failure to Address Road and Creek Lots: Petitioner argued that the assailed Ombudsman's Resolution and Order discussed only the alleged reasonableness of the price of the property and did not pass upon the more serious issue that Calamba City had paid for lots that were either easement/creek lots, road lots, or access roads, which should not have been paid for at the same price per square meter as the other lots.
• Lack of Ratification: Petitioner contended that all the documents pertaining to the purchase—the Memorandum of Agreement, Deed of Sale, Deed of Mortgage, and Deed of Assignment—did not bear the ratification of the City Council, a fact noted in the Commission on Audit's Audit Observation Memorandum.
• Overpricing: Petitioner claimed that the lots covered by TCT Nos. 61703 and 66140 were overpriced by ₱19,812,546, citing a letter from Fr. Sulpico offering the road lots at ₱300 per square meter, and that road lots and creek lots with a total value of ₱35,000,000 had been included in the purchase.
• Absence of Relocation Survey: Petitioner questioned the absence of a relocation survey prior to the execution of the Deed of Sale.
• Implied Admission: Petitioner maintained that since the evidence in support of the complaint was documentary, respondents had admitted it impliedly.

• Non-Interference with Ombudsman's Discretion: Respondents argued that it is not sound practice to depart from the policy of non-interference in the Ombudsman's exercise of judgment in determining whether to file an information, and that petitioner bore the burden of proving grave abuse of discretion, which he failed to discharge in a meager three pages of argumentation.
• Ownership of the PSEDC-Registered Lots: Respondents claimed that of the six PSEDC-owned lots sold to Calamba City, ownership of four had already been transferred to Pamana as evidenced by new TCTs, and that even if TCT Nos. 66140 and 61703 remained in PSEDC's name, ownership had passed to Pamana as confirmed by Fr. Sulpico, custodian of the Dominican Province's assets.
• No Overpricing: Respondents refuted the overpricing claim, contending that Fr. Sulpico's letter offering the lots at ₱350 per square meter had been superseded by his own denial of the offer during the Sangguniang Panlungsod meeting of 14 November 2002.
• Prior Authority, Not Ratification: Respondents explained that Section 22 of RA 7160 speaks of prior authority and not ratification, and that petitioner did not deny that Mayor Lajara had been given prior authority to negotiate and sign the contracts; it was in fact petitioner who moved to enact Resolution No. 280.
• Relocation Survey Not Indispensable: Respondents noted that while a relocation survey may be useful in determining which lands should be purchased, its absence would not affect the validity of the transactions.

• Grave Abuse of Discretion in the Finding of No Probable Cause: Whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed for lack of probable cause the case against respondents for violation of Section 3(e) of RA 3019.
• Grave Abuse of Discretion in the Acquisition of Road Lots: Whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction when it failed to consider the issue that Calamba City had acquired road lots which should not have been paid for at the same price as the other lots.
• Necessity of Ratification by the City Council: Whether all the documents pertaining to the purchase of the lots should bear the ratification of the City Council of Calamba.

• Grave Abuse of Discretion in the Finding of No Probable Cause: No. The Ombudsman's finding of no probable cause was supported by substantial evidence, and the Court will not interfere with the Ombudsman's exercise of discretion absent grave abuse, which was not shown.
• Grave Abuse of Discretion in the Acquisition of Road Lots: No. The Ombudsman's factual findings that the parcels were not road or creek lots, and that the purchase price was reasonable, were supported by substantial evidence, and petitioner's contentions raised questions of fact not cognizable in a petition for certiorari.
• Necessity of Ratification by the City Council: No. Section 22(c) of RA 7160 requires prior authorization by the sanggunian, not ratification, and Resolution No. 280 supplied that authority.

• Grave Abuse of Discretion in the Finding of No Probable Cause: The Ombudsman is vested by Section 12 and Section 13, Article XI of the 1987 Constitution, and by Sections 13 and 15(1) of RA 6770, with the sole power to investigate and prosecute, motu proprio or on complaint, any act or omission of a public officer appearing illegal, unjust, improper, or inefficient. That power is plenary and unqualified, and the filing or non-filing of an information is lodged within the Ombudsman's full discretion. The Court consistently adopts a policy of non-interference in the exercise of these constitutionally mandated powers, and may review the Ombudsman's action only upon a showing of grave abuse of discretion under Section 1, Article VIII of the Constitution. The recognized exceptions—protection of the accused's constitutional rights, orderly administration of justice, prejudicial question, acts without or in excess of authority, prosecution under an invalid law, double jeopardy, lack of jurisdiction, persecution rather than prosecution, and charges manifestly false and motivated by vengeance—were not present. Petitioner's arguments raised questions of fact, which are not entertained in a petition for certiorari. The Ombudsman's findings were supported by substantial evidence: the lots were bought at ₱3,800 per square meter, lower than the ₱6,000 per square meter zonal valuation; the total area actually purchased was 33,952 square meters, not 55,000; and the sketch plan and TCTs showed the parcels claimed to be easement, creek, or road lots were parcels of land. Probable cause, defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged was guilty of the crime, was absent. Under Rubio vs. Ombudsman and Pecho vs. Sandiganbayan, what is punishable under Section 3(e) of RA 3019 is the act of causing undue injury or giving unwarranted benefits, and undue injury means actual injury or damage established by evidence—which the Ombudsman found wanting. To justify certiorari, the abuse must be grave, as when power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, so patent as to amount to evasion of a positive duty or virtual refusal to perform the duty enjoined.

• Grave Abuse of Discretion in the Acquisition of Road Lots: The Ombudsman's findings of fact were supported by substantial evidence, and as long as substantial evidence supports the ruling, it will not be overturned. Petitioner's contention that the Ombudsman ignored the road-lot issue was belied by the record: the Ombudsman examined the sketch plan submitted as Annex L to petitioner's Affidavit-Complaint and the TCTs of the properties, and concluded that the parcels were parcels of land rather than easement, creek, or road lots. Petitioner's arguments invited a re-evaluation of the evidence, which the Court, not being a trier of facts, declines to undertake in an extraordinary writ of certiorari where only questions of lack of jurisdiction or grave abuse of discretion may be raised. The rationale rests on respect for the Ombudsman's investigatory and prosecutory powers and on practicality, lest the courts be swamped by innumerable petitions assailing the dismissal of investigatory proceedings.

• Necessity of Ratification by the City Council: Section 22(c), Title I of RA 7160 provides that no contract may be entered into by the local chief executive on behalf of the local government unit without prior authorization by the sanggunian concerned. Section 455(b)(vi), Title III of RA 7160 likewise empowers the city mayor to represent the city in all business transactions and to sign in its behalf all bonds, contracts, and obligations upon authority of the sangguniang panlungsod or pursuant to law or ordinance. The law thus speaks of prior authorization or authority, not ratification. Resolution No. 280, Series of 2001, expressly authorized Mayor Lajara to purchase the Pamana lots for ₱129,017,600 and to represent the city government and to execute, sign, and deliver such documents as might be required. With that resolution, it could not be said that there was evident bad faith in purchasing the lots, and the lack of ratification alone did not characterize the purchase as one giving unwarranted benefits to Pamana or Prudential Bank or causing undue injury to Calamba City. Ratification by the City Council was not a condition sine qua non for the local chief executive to enter into the contracts.

• Ombudsman's Plenary Investigatory and Prosecutory Power — The Office of the Ombudsman is vested with the sole power to investigate and prosecute, motu proprio or on complaint of any person, any act or omission of any public officer or employee, office, or agency appearing illegal, unjust, improper, or inefficient. This power is plenary and unqualified, and the filing or non-filing of an information is lodged within the Ombudsman's full discretion. In this case, the Court declined to disturb the Ombudsman's dismissal of the complaint for lack of probable cause.
• Policy of Non-Interference and the Grave Abuse of Discretion Exception — Courts consistently adopt a policy of non-interference in the exercise of the Ombudsman's constitutionally mandated powers, and may review the Ombudsman's action only when grave abuse of discretion is shown, pursuant to Section 1, Article VIII of the Constitution. The recognized exceptions are: (a) protection of the constitutional rights of the accused; (b) necessity for the orderly administration of justice or to avoid oppression or multiplicity of actions; (c) existence of a prejudicial question sub judice; (d) acts of the officer without or in excess of authority; (e) prosecution under an invalid law, ordinance, or regulation; (f) clearly apparent double jeopardy; (g) lack of jurisdiction over the offense; (h) persecution rather than prosecution; and (i) charges manifestly false and motivated by the lust for vengeance. None of these exceptions was present.
• Grave Abuse of Discretion — To justify the issuance of the writ of certiorari on the ground of abuse of discretion, the abuse must be grave, as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent 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, as to be equivalent to having acted without jurisdiction. The Court found no such abuse in the Ombudsman's dismissal of the complaint.
• Probable Cause — Probable cause is the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. It need not be based on clear and convincing evidence of guilt, or on evidence establishing guilt beyond reasonable doubt, or on evidence establishing absolute certainty of guilt, but it demands more than bare suspicion and can never be left to presupposition, conjecture, or even convincing logic.
• Elements of Section 3(e), RA 3019 — To warrant conviction under Section 3(e) of RA 3019, the following essential elements must concur: (a) the accused is a public officer discharging administrative, judicial, or official functions; (b) he must have acted with manifest partiality, evident bad faith, or inexcusable negligence; and (c) his action caused undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage, or preference in the discharge of his functions. What is contextually punishable is the act of causing undue injury or giving unwarranted benefits, and undue injury means actual injury or damage established by evidence.
• Prior Authorization under RA 7160, Not Ratification — Under Section 22(c) of RA 7160, no contract may be entered into by the local chief executive on behalf of the local government unit without prior authorization by the sanggunian concerned; and under Section 455(b)(vi), the city mayor may represent the city in business transactions and sign contracts upon authority of the sangguniang panlungsod. Ratification by the sanggunian is not a condition sine qua non for the local chief executive to enter into contracts, and the lack of ratification alone does not characterize a purchase as one giving unwarranted benefits or causing undue injury.
• Courts Are Not Triers of Facts in Certiorari — In an extraordinary writ of certiorari, neither questions of fact nor even of law are entertained; only questions of lack of jurisdiction or grave abuse of discretion may be raised. The rationale rests on respect for the Ombudsman's investigatory and prosecutory powers and on practicality, lest the courts be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings.

• "The Ombudsman's power to investigate and to prosecute is plenary and unqualified." — This one-sentence formulation states the foundational premise of the Court's non-interference doctrine, grounding the refusal to review the Ombudsman's probable-cause determination absent grave abuse of discretion.
• "Probable cause is defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted." — This is the canonical definition of probable cause applied in the case, and the standard against which the Ombudsman's dismissal was measured.
• "Clearly, when the local chief executive enters into contracts, the law speaks of prior authorization or authority from the Sangguniang Panlungsod and not ratification." — This is the ratio decidendi on the third issue, construing Section 22(c) and Section 455(b)(vi) of RA 7160 and rejecting the argument that the absence of ratification rendered the contracts irregular.
• "causing undue injury to any party, including the government, could only mean actual injury or damage which must be established by evidence." — Quoting Pecho vs. Sandiganbayan, this passage supplies the element of undue injury under Section 3(e) of RA 3019 and explains why the Ombudsman's finding of no actual damage to Calamba City defeated the complaint.

• Rubio vs. Ombudsman, G.R. No. 171609, 17 August 2007, 530 SCRA 649 — Cited as controlling authority that what is contextually punishable under Section 3(e) of RA 3019 is the act of causing undue injury to any party or giving any private party unwarranted benefits, advantage, or preference in the discharge of the public officer's functions.
• Pecho vs. Sandiganbayan, G.R. No. 111399, 14 November 1994, 238 SCRA 116 — Cited for the rule that causing undue injury to any party, including the government, could only mean actual injury or damage which must be established by evidence.
• Trinidad vs. Office of the Ombudsman, G.R. No. 166038, 4 December 2007, 539 SCRA 415 — Cited for the Ombudsman's sole power to investigate and prosecute and for the policy of non-interference with its constitutionally mandated powers.
• Republic vs. Desierto, G.R. No. 135123, 22 January 2007, 512 SCRA 57 — Cited for the rule that the filing or non-filing of an information is primarily lodged within the Ombudsman's full discretion and that its factual findings, if supported by substantial evidence, will not be overturned.
• Redulla vs. Sandiganbayan, G.R. No. 167973, 28 February 2007, 517 SCRA 110 — Cited as the source of the enumeration of instances in which courts may interfere with the Ombudsman's investigatory powers.
• Cruz, Jr. vs. People, G.R. No. 110436, 27 June 1994, 233 SCRA 439 — Cited for the rule that in an extraordinary writ of certiorari, only questions of lack of jurisdiction or grave abuse of discretion may be raised, not questions of fact or of law.
• San Miguel Corporation vs. Sandiganbayan, 394 Phil. 608 (2000) — Cited for the definition of grave abuse of discretion as the exercise of power in an arbitrary or despotic manner by reason of passion or personal hostility, so patent as to amount to evasion of a positive duty or virtual refusal to perform the duty enjoined.
• De Chavez vs. Office of the Ombudsman, G.R. Nos. 168830-31, 6 February 2007, 514 SCRA 638 — Cited for the definition of probable cause.
• R.R. Paredes vs. Calilung, G.R. No. 156055, 5 March 2007, 517 SCRA 369 — Cited for the rule that probable cause demands more than bare suspicion and can never be left to presupposition, conjecture, or even convincing logic.
• Quiambao vs. Hon. Desierto, 481 Phil. 852 (2004) — Cited for the description of the Ombudsman as beholden to no one, acting as champion of the people and preserver of the integrity of the public service.

• Section 12, Article XI, 1987 Constitution — Provides that the Ombudsman and his Deputies, as protectors of the people, shall act promptly on complaints filed in any form or manner against public officials or employees of the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations, and shall notify complainants of the action taken and the result thereof. Cited to establish the constitutional mandate underlying the Ombudsman's investigatory authority.
• Section 13, Article XI, 1987 Constitution — Vests in the Office of the Ombudsman the powers, functions, and duties to investigate on its own or on complaint any act or omission of any public official appearing illegal, unjust, improper, or inefficient; to direct the officer concerned to take appropriate action against a public official at fault; and to promulgate its rules of procedure, among others. Cited as the source of the Ombudsman's plenary investigatory and prosecutory powers.
• Section 13, RA 6770 (Ombudsman Act of 1989) — Restates the Ombudsman's mandate to act promptly on complaints against officers or employees of the government and to enforce their administrative, civil, and criminal liability in every case where the evidence warrants. Cited to reinforce the statutory basis of the Ombudsman's authority.
• Section 15(1), RA 6770 — Grants the Office of the Ombudsman the power to investigate and prosecute on its own or on complaint any act or omission of any public officer or employee appearing illegal, unjust, improper, or inefficient, and confers primary jurisdiction over cases cognizable by the Sandiganbayan. Cited to establish the Ombudsman's primary jurisdiction and discretion.
• Section 3(e), RA 3019 (Anti-Graft and Corrupt Practices Act) — Punishes the act of causing undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage, or preference in the discharge of the public officer's functions. The Court applied its elements and held that no probable cause existed because no actual injury or damage to Calamba City was established.
• Section 22(c), Title I, RA 7160 (Local Government Code of 1991) — Provides that, unless otherwise provided in the Code, no contract may be entered into by the local chief executive on behalf of the local government unit without prior authorization by the sanggunian concerned, and that a legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal, or barangay hall. The Court held that this provision requires prior authorization, not ratification, and that Resolution No. 280 supplied the required authority.
• Section 455(b)(vi), Title III, RA 7160 — Empowers the city mayor, for efficient, effective, and economical governance, to represent the city in all its business transactions and to sign in its behalf all bonds, contracts, and obligations, and such other documents upon authority of the sangguniang panlungsod or pursuant to law or ordinance. Cited to confirm that Mayor Lajara acted within his authority in executing the contracts.
• Section 1, Article VIII, 1987 Constitution — Provides the certiorari jurisdiction of the courts, which may be exceptionally invoked to review the Ombudsman's action when grave abuse of discretion is present. Cited as the jurisdictional basis for the petition.

Concurring: Leonardo A. Quisumbing (Acting Chief Justice), Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Renato C. Corona, Conchita Carpio Morales, Dante O. Tinga, Minita V. Chico-Nazario, Presbitero J. Velasco, Jr., Antonio Eduardo B. Nachura, Teresita J. Leonardo-de Castro, Arturo D. Brion, and Diosdado M. Peralta. Chief Justice Reynato S. Puno was on official leave. No separate concurring opinions were rendered.