In a 23-page resolution, the DOJ said there was insufficient evidence against the 290 servicemen to warrant the filing of the charges against them.
The DOJ investigating panel considered the claims made by the accused servicemen that they were misled by their officers into joining the mutiny.
In the same order, the DOJ said there is enough evidence to indict the remaining 31 military and police officers.
The accused servicemen denied being members of the Magdalo group and said they were ordered by the officers to deploy at the Oakwood Premier Ayala Center on that day for a supposed "strike operation" against suspected communist New Peoples Army (NPA) guerrillas in the area.
Chief State Prosecutor Jovencito Zuño, however, clarified the 290 servicemen will still face court martial under the Articles of War for administrative charges.
Zuño said this was contained in the order issued by the Armed Forces of the Philippines-Judge Advocate Generals Office.
He said the identities of the 290 servicemen had not been clear from the beginning unlike the 31 who were considered the core group among the mutineers.
Earlier this month, President Arroyo ordered 133 soldiers freed, saying they had been deceived by their officers into joining the mutiny.
Zuño said he believed the 133 solders who were ordered freed by Mrs. Arroyo were among the 290 who had the charges against them dropped.
Zuño also brushed aside speculations that the charges were being dropped to mollify the military.
"As far as the DOJ is concerned, they only decided on the basis of evidence," he said.
The resolution absolving the servicemen came even despite the opposition of the 31 officers who questioned the DOJs jurisdiction over them as public officials.
The 31 officers said the Office of the Ombudsman should have conducted the preliminary investigation on them since they are public officials. But the DOJ assumed jurisdiction over the case saying the acts committed were not in relation to their office or their duties.
The 31 alleged mutineers to be indicted before the Makati City Regional Trial Court Branch 61 are Navy Lieutenants Senior Grade Antonio Trillanes IV, James Layug, Manuel Cabochan, Eugene Louie Gonzales, Andy Torrato; Navy Lt. Junior Grade Arturo Pascua Jr.; Army Captains Milo Maestrecampo, Gary Alejano, Laurence Luis Somera, Gerardo Gambala, Nicanor Faeldon, Albert Baloloy, Segundino Orfiano Jr., John Andres, and Alvin Ebreo.
Also included were Army 1Lts. Florentino Somera, Cleo Dungga-as, Sonny Sarmiento, Audie Tocloy, Von Rio Tayab, Rex Bolo, Laurence San Juan, Warren Lee Dagupon, Nathaniel Rabonza, Francisco Acedillo, Jonnel Sanggalang and Billy Pascua; Army 2Lt. Kristoffer Bryan Yasay; Navy Ensign Armand Pontejos; Police Officers 3 (PO3) Julius Mesa and Cesar Gonzales.
The charges stemmed from the complaint filed by the National Bureau of Investigation (NBI) before the DOJ, submitting, among others, the sworn statement of Army Col. Enrique Cabos to support the charges of coup detat.
Cabos detailed the alleged preparation and proposed plan to topple Mrs. Arroyos government and install a junta to be led allegedly by Sen. Gregorio Honasan under "Oplan Andres."
Honasan, who was separately charged by the government for the crime of rebellion, denied the accusations.
Cabos, chief of the AFP Office of the Inspector General investigation division, said Honasan and the core group leaders of Magdalo had recruited junior officers to join their cause in presenting the opposition senators National Recovery Program (NRP) as answer to the countrys political problems, mainly to prevent graft and corruption in the government.
"Evidently, above-named respondents launched a swift attack against the government by taking control of the Ayala Center, Makati City, specifically its Oakwood Premier Hotel and the vicinity thereof, by any means of stealth, strategy, force, intimidation and threat,"the DOJ said in its resolution.
"The intimidation and threat to the public, in particular, and the State, in general, was made manifest by respondents in planting explosives in the surrounding area of the hotel. Once in control thereof, respondents publicly withdrew their allegiance to the duly constituted authorities, the President, as their commander-in-chief, members of the Cabinet and top officials of the military and the police forces of the country," it added.
DOJ prosecutors said the rebel soldiers showed open hostility to the government with the aim of toppling it by withdrawing allegiance of the police and military.
"Respondents deprived President Gloria Macapagal-Arroyo, wholly or partially of her powers and prerogatives, thus, diminishing the general power of the State," the DOJ said.
In the same resolution, DOJ prosecutors noted the evidence against the 31 officers were "overwhelming" considering their actions on July 27.
The DOJ said the accused soldiers abandoned their posts on the eve of the mutiny and illegally brought with them firearms and ammunition and other military equipment which belong to the government.
The mutineers proceeded in laying siege to Oakwood by disarming the security officers in the establishment and rigged the building and the area with explosives.
The DOJ said the rebel soldiers, using the media, conveyed their intention by demanding the resignation of President Arroyo and officials of the government and the AFP which they branded as corrupt.
The rebels also sought the implementation of the NRP being espoused by Honasan.
After a 22-hour standoff, the rebels surrendered after a series of negotiations and were subsequently arrested.
"After careful evaluation of the uncontroverted evidence on record, we find and so hold that probable cause exists to warrant the indictment of respondents of the crime of coup detat," the DOJ said.
Armed Forces chief Gen. Narciso Abaya said the July 27 failed mutiny brought positive and speedy results in reforming the military.
"It didnt have to take Oakwood for us to jumpstart the reforms that I wanted to do at the GHQ (AFP General Headquarters), maybe (it was a) blessing in disguise when this (failed mutiny) happened. At least the reforms we wanted were given the much needed boost," Abaya said in the vernacular before the troops at the Western Command in Puerto Princesa, Palawan.
Abaya, however, warned that the AFP leadership must make good its reform agenda or face a reprise of the Oakwood incident. Aurea Calica, Jaime Laude