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488 Phil. 158


[ G.R. Nos. 154668, December 16, 2004 ]




True, the Supreme Court is not a trier of facts. Equally true, errors of facts are not cognizable in a petition for review under Rule 45. However, when the records clearly show a misapprehension of the facts by the lower court, the Supreme Court -- in the interest of speedy justice -- may resolve the factual issue. In the present case, the Office of the Ombudsman had no basis to hold petitioner administratively liable. As a public official, he cannot be expected to “personally examine every single detail, painstakingly trace every step from inception, and investigate the motive of every person involved in a transaction before affixing his signature as the final approving authority.” Petitioner acted in good faith in relying on the records before him and on the recommendation of his subaltern.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the April 12, 2002 Decision[2] and the July 25, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 64878. The challenged Decision disposed as follows:
WHEREFORE, PREMISES CONSIDERED, the instant petition is hereby DISMISSED. The assailed decision dated July 4, 2000 and the April 3, 2001 Order of the respondent are AFFIRMED IN TOTO. Costs against the petitioner.”[4]
The assailed resolution denied petitioner’s Motion for Reconsideration.

On the other hand, the affirmed Order of the Office of the Ombudsman (OMB) disposed as follows:

“Respondents EDWARD DELA CUESTA and ROGELIO HURTADO are hereby found Guilty of Simple Neglect of Duty, for which the penalty of Suspension for Six (6) Months Without Pay is hereby imposed, pursuant to Section 10, Rule III of Administrative Order No. 7, in relation to Section 25 of Republic Act No. 6770.

“Respondent ALLAN PAGKALINAWAN is hereby ABSOLVED of any administrative liability and the complaint against him is hereby DISMISSED.

“The Honorable x x x Secretary, Department of Finance, Manila and the Commissioner, Bureau of Customs, Manila, are hereby furnished a copy of this Decision, for their implementation, in accordance with law.

The Facts

The facts are narrated by the CA as follows:
“On April 7, 1999, a 40-footer van declared to contain ‘parts for rock crusher’ arrived at the Manila International Container Port (MICP) from Singapore on board vessel APL Lotus 0001. The subject cargo, which was supposed to be transshipped to Cagayan de Oro City was consigned to Macro Equipment Corporation with Catalysts Customs Brokerage as broker. It was issued a Boatnote No. 51723253 directing/authorizing the transfer of the said cargo from Manila International Container Port to north Harbor, Manila.

“Allan Pagkalinawan was assigned ‘to remain on duty until the cargo is received by the Collector of Customs.

“Rogelio Hurtado of the office of the Port Collector, North Harbor, Manila, received the container van at the North Harbor Customs House, which was under the control of Edward dela Cuesta, Collector of Customs subport of North Harbor, Manila. Instead of being transshipped to Cagayan de Oro City, the van and its cargo was allowed to exit North harbor, Manila.

“On April 16, 1999, elements of Economic Intelligence and Investigation Bureau (EIIB) apprehended the shipment – [based on reliable information that duties and taxes of cargo contained therein were not properly paid[6]] along Quirino Avenue, Paranaque City. On April 19, 1999, the [EIIB] turned over the container van and its cargo to the AFP Logistics Command at Camp Aguinaldo, Quezon City for safe keeping, and on the same date, respondent Wilfredo A. Nicolas [the Commissioner of the EIIB[7]] issued Mission Order No. 04-10599 directing the inventory of the container van. It was only then when it was discovered that the cargo consisted of various electronics and communications equipment, appliances, parts, and accessories.

“On May 6, 1999, upon the recommendation of J. Francisco Arriola, then Chief of the EIIB’s Special Operations group, petitioner Nicolas issued a Notice of Withdrawal for the release of the subject shipment in favor of Trinity Brokerage, after payment of the necessary customs duties and other fees. However, it was discovered later that the documents presented in support of the release of the cargo were spurious.

“As a result thereof Ruben Frogoso filed a complaint against Wilfredo A. Nicolas, J. Francisco Arriola, Edward dela Cuesta, Rogelio Hurtado, and Allan Pagkalinawan before the office of the Ombudsman. Ruben Frogoso contend[ed] that the act[s] of x x x petitioner Nicolas and Arriola in releasing the cargo was irregular in view of the following reasons: (1) they failed to inform the Bureau of Customs of the apprehension of the cargo; (2) they failed to request the pertinent papers and documents relating to the shipment; and (3) they did not verify the authenticity of the documents relating to the payment of the customs duties.

“After finding that petitioner Nicolas Arriola and the other person[s] cited in the complaint appeared to be criminally and administratively liable, the Fact Finding and Intelligence Bureau (FFIB) Investigation Panel of the Office of the Ombudsman directed them to file their respective counter-affidavits to controvert the charge against them.

“Petitioner Nicolas contended in his counter-affidavit that he had no knowledge that the allege documents for the payment of cargo duties were spurious. He claimed good faith in releasing the subject cargo and that the documents did not show that the cargo in the container vans were parts for rock crusher. Petitioner Nicolas further claimed that he cannot be held liable for Gross Neglect of Duty and Dishonesty since the said offenses are incompatible with one another.

“A preliminary conference of the case was held on June 1, 2000 wherein dela Cuesta manifested in open proceedings to submit the case for resolution based on the evidence on record. On the other hand, Arriola, through his counsel, and Pagkalinawan and Hurtado requested for the [resetting] of the preliminary conference to June 16, 2000. However, petitioner Nicolas failed to appear at the preliminary conference.

“[Graft Investigation Officer II Joselito P. Fangon rendered a Decision dated July 4, 2000, which was duly approved by the ombudsman on February 9, 2001,] finding the petitioner guilty of Gross Neglect of duty. The petitioner moved for a reconsideration of the said decision but the same was denied by the respondent in its order dated April 3, 2001.

“Hence, [petitioner filed a Petition for review with the CA] alleging-
  1. that there was no valid notice to the petitioner, hence, he was denied x x x his constitutional right to due process; and

  2. that the continuation of the proceedings despite the abolition of Economic Intelligence and Investigation Bureau (EIIB) before the writing of the July 4, 2000 Decision and the approval thereof by the Ombudsman on February 9, 2001 [was] an aberration, if not a total absurdity.”[8]
Ruling of the Court of Appeals

The CA held that due process merely required an opportunity to be heard. This opportunity was accorded to petitioner upon his filing of his Motion for Reconsideration.[9] Citing Zarate v. Romanillos,[10] the appellate court further held that the jurisdiction of respondent over the person of petitioner was not lost by the mere fact that the latter’s public office had subsequently been abolished.[11]

Hence, this Petition.[12]

The Issues

Petitioner raises the following issues for our consideration:
“I. The court of Appeals erred in affirming respondent Ombudsman’s Decision notwithstanding lack of substantial evidence to support the finding of gross neglect of duty.

“II. The Court of Appeals erred in affirming the Decision of the ombudsman rendered against petitioner without the benefit of a preliminary conference required under the rules of procedure of the Office of the Ombudsman thus constituting a violation of petitioner’s right to due process.

“III. The Court of Appeals erred in affirming the direct imposition of penalties on petitioner despite the ombudsman’s lack of jurisdiction to do so.[13]
For clarity, the second issue will be discussed first.

The Court’s Ruling

The Petition is meritorious.

First Issue:
Notice of Preliminary Conference

The cardinal requirements of due process in administrative proceedings were highlighted in Ang Tibay v. Court of Industrial Relations thus:[14] (1) there must be a right to a hearing, which includes the right to present one’s case and submit evidence in support thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have some basis to support itself; (4) the evidence must be substantial; (5) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or body or any of its judges must act on its own independent consideration of the law and the facts of the controversy, and not simply accept the views of a subordinate; (7) the board or body should, in all controversial questions, render its decision in such a manner as would allow the parties to know the various issues involved and the reason for the decision rendered.

In the present case, Nicolas was not accorded the first requirement -- the right to present his case and submit evidence in support thereof. Petitioner was not notified of the preliminary conference, which would have afforded him the opportunity to appear and defend his rights, including the right to request a formal investigation. Pertinently, the Rules of Procedure of the Office of the Ombudsman[15] provides:
“Section 5. Administrative adjudication; how conducted. –

“a) If the complaint is not dismissed for any of the causes enumerated in Section 20 of Republic Act No. 6770, the respondent shall be furnished with a copy of the affidavits and other evidences submitted by the complainant, and shall be ordered to file his counter-affidavits and other evidences in support of his defense, within ten (10) days from receipt thereof together with proof of service of the same on the complainant who may file reply affidavits within ten (10) days from receipt of the counter-affidavits of the respondent.

“b) If, on the basis of the affidavits and other evidences submitted by the parties, the investigating officer finds no sufficient cause to warrant further proceedings, the complaint may be dismissed. Otherwise, he shall summon the parties to preliminary conference to consider the following matters:
“1) Whether the parties desire a formal investigation or are willing to submit the case for resolution on the basis of the evidence on record and such other evidences they will present at such conference;

“2) Should the parties desire a formal investigation to determine the nature of the charge, stipulation of facts, a definition of the issues, identification and marking of exhibits, limitation of witnesses, and such other matters as would expedite the proceedings.
“c) After the preliminary conference, the investigating officer shall issue an order reciting the matters taken up during the conference, including the facts stipulated, the evidences marked and the issues involved. The contents of this order may not be deviated from unless amended to prevent manifest injustice.

“d) Should a hearing be conducted, the parties shall be notified at least five (5) days before the date thereof. Failure of any or both of the parties to appear at the hearing is not necessarily a cause for the dismissal of the complaint. A party who appears may be allowed to present his evidence in the absence of the adverse party who was duly notified of the hearing.

“e) Only witnesses who have submitted affidavits served on the adverse party at least five (5) days before the date of his being presented as a witness may be allowed to testify at the hearing. The affidavit of any witness shall constitute his direct testimony; subject to cross-examination, re-direct examination and re-cross-examination.

“f) The parties shall be allowed the assistance of counsel and the right to the production of evidence thru the compulsory process of subpoena and subpoena duces tecum.”[16]
The order requiring Nicolas to attend the preliminary conference was sent to the EIIB office at EIIB-DOF, National Government Center, East Triangle, Quezon City. A certain Baby Averion received the order, allegedly on behalf of petitioner on May 19, 2000.[17]

At the time the Notice was sent, however, Nicolas was no longer holding office at the said address, because the EIIB had already been deactivated.[18] The ombudsman should have sent the notice to the home address of petitioner, who had indicated it in his Counter-Affidavit[19] that was submitted to the ombudsman during the fact-finding investigation.

The absence of petitioner at the scheduled preliminary conference was therefore justified. The ombudsman erred in declaring that the former’s case had been submitted for decision and in subsequently rendering the assailed Decision.

Second Issue:
Finding of Gross Neglect

In view of this Court’s finding that the right to due process of petitioner was violated, the logical step would be to allow him to present his evidence. That step, however, is no longer necessary, considering that the evidence on record is more than sufficient to decide the case. It is the policy of the Court to strive to settle an entire controversy in a single proceeding, and to leave no root or branch to bear the seeds of future litigation.[20] The remand of the case for further reception of evidence is not necessary, because the Court is in a position to resolve the issue based on the pleadings, records and evidence before it. The ends of speedy justice would not be served by such remand.

Substantial Evidence Required
In Administrative Proceedings

The present case is an exception to the rule that questions of fact are not cognizable by this Court. The ombudsman’s finding of gross neglect, upheld by the CA, was based on an obvious misapprehension of facts[21] and was clearly not supported by extant evidence.

The quantum of proof necessary to prove a charge in an administrative case is substantial evidence, which is defined as relevant evidence that a reasonable mind might accept as adequate to support a conclusion.[22] Such quantum was not met here. Even though petitioner had not adduced evidence on his behalf, the facts on record show that his act or omission does not constitute gross neglect of duty.[23]

Petitioner’s Good Faith

The facts reveal that the charge of gross neglect of duty against petitioner originated from the release of the cargo apprehended by the EIIB. He had ordered the release upon the recommendation of Deputy Commissioner J. Francisco Arriola, then Chief of the Special Operations Group. It was Arriola who informed him that the duties and taxes on the shipment had already been paid, and who submitted to him copies of the Bureau of Customs payment receipts.[24] It was also Arriola who had prepared the Notice of Withdrawal for petitioner’s signature, which gave way to the release of the cargo to the consignee.[25]

There was no other evidence against petitioner. The preliminary investigation was terminated without his appearance or that of complainant.[26] When submitted for decision, the case was decided only upon the basis of the Complaint-Affidavit alleging that petitioner had unlawfully approved the release of the cargo despite the spuriousness of the payment receipts and misdeclaration of the cargo.

While petitioner did order the release of the cargo, he did so in good faith. It was only after carefully studying the documents furnished him that he relied on the recommendation of Arriola. The documents presented consistently pertained to the goods as inventoried (electronic communication equipment). There was no indication therein that the subject 40-foot van had officially been declared to contain “parts for rock crusher.” Further, the payment receipts did not appear spurious at face value. There was thus no intimation that petitioner had foreknowledge of any irregularity about the cargo.

No Showing
Of Gross Neglect

Arias v. Sandiganbayan[27] ruled that heads of office could rely to a reasonable extent on their subordinates. The ratio, which is applicable here, was explained as follows:
“We would be setting a bad precedent if a head of office plagued by all too common problems -- dishonest or negligent subordinates, overwork, multiple assignments or positions, or plain incompetence -- is suddenly swept into a conspiracy conviction simply because he did not personally examine every single detail, painstakingly trace every step from inception, and investigate the motives of every person involved in a transaction before affixing his signature as the final approving authority.”[28]
Without proof that the head of office was negligent, no administrative liability may attach. Indeed, the negligence of subordinates cannot always be ascribed to their superior in the absence of evidence of the latter’s own negligence.[29] While Arriola might have been negligent in accepting the spurious documents, such fact does not automatically imply that Nicolas was also. As a matter of course, the latter relied on the former’s recommendation. Petitioner is not mandated or even expected to verify personally from the Bureau of Customs – or from wherever else it originated – each receipt or document that appears on its face to have been regularly issued or executed.

As regards the ombudsman’s finding that petitioner should have turned over the cargo to the Bureau of Customs in conformity with Memorandum Order No. 225,[30] we find the latter’s explanation well taken.[31]

Prior to its deactivation, the EIIB was tasked to supervise, monitor, and coordinate all intelligence and investigation operations of the bureaus and offices in the Department of Finance (DOF).[32] It had primary responsibility for anti-smuggling operations in all land areas and inland waters and waterways outside the areas constituting the sole jurisdiction of the Bureau of Customs.[33]

Naturally, the EIIB would conduct an inventory and evaluation of articles it apprehended to determine whether there was indeed irregularity it their importation. Under its standard operating procedure, it normally did the inventory in the presence of representatives of the AFP Logistics Command (which was the depository of apprehended container vans), the Bureau of Customs, the broker or importer, and the Commission on Audit.[34] If there was any irregularity, only then would the EIIB turn over the cargo to the Bureau of Customs.[35]

The aforementioned procedure was consistent with Memorandum order No. 225, which required the turnover of seized articles to the Bureau of Customs. For practical considerations, the EIIB could not be expected to forward to the Bureau of Customs all cargoes immediately upon apprehension. The EIIB still needed to determine whether there was any irregularity in the importation. Memorandum Order No. 225 itself did not require the immediate forwarding of apprehended cargoes to the Bureau of Customs. Believing in good faith that the taxes and duties had already been paid, petitioner cannot be faulted for not sending the cargo to the bureau.

The act or omission allegedly committed by the petitioner does not constitute gross neglect of duty. Having ruled against the finding of the ombudsman, it is no longer necessary to address the third issue he raised.

WHEREFORE, the Petition is GRANTED. The assailed decision and Resolution of the Court of Appeals are REVERSED. The questioned Decision and Order issued by the ombudsman in OMB-ADM-0-00-0001, insofar as it pertains to Petitioner Wilfred A. Nicolas, is likewise ANNULLED and SET ASIDE. No pronouncement as to costs.


Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.
Corona, J., on leave.

[1] Rollo, pp. 24-52.

[2] Id., pp. 59-67. Tenth Division. Penned by Justice Amelita G. Tolentino, with the concurrence of Justices Conrado M. Vasquez Jr. (Division chairman) and Andres B. Reyes Jr. (member).

[3] Id., p. 57.

[4] Assailed decision, p. 8; rollo, p. 66.

[5] Ombudsman’s Decision, pp. 11-12; rollo, pp. 98-99.

[6] Investigation report of J. Francisco Arriola dated May 4, 1999; rollo, p. 68.

[7] Petitioner’s Memorandum, p. 3; rollo p. 247.

[8] Assailed Decision, pp. 2-4; rollo, pp. 60-62.

[9] Assailed Decision, p. 5; rollo, p. 63.

[10] 312 Phil. 679, March 23, 1995.

[11] Assailed Decision, p. 7; rollo, p. 65.

[12] This case was deemed submitted for decision on June 30, 2003, upon this Court’s receipt of petitioner’s Memorandum, signed by Attys. Bernard B. Lopez and Paul Mar C. Avias. This Court received respondent’s Memorandum, signed by Assistant Solicitor General Amy C. Lazaro-Javier and Associate Solicitor Mildred J. Marquez, on June 4, 2003.

[13] Petition, p. 12; rollo, p. 12. Original in upper case.

[14] 69 Phil. 635, 642-644, February 27, 1940.

[15] Ombudsman Administrative Order No. 7 dated April 10, 1990.

[16] Id., Rule III.

[17] Ombudsman’s Order dated May 16, 2000, p. 2; rollo p. 87. The copy of the Order received was attached to the Petition.

[18] Executive Order No. 191 dated January 7, 2000, deactivated the Economic Intelligence and Investigation Bureau. Under Executive Order Nos. 191, 223 and 247, the law enforcement and intelligence functions previously performed by the EIIB were transferred to appropriate agencies, such as the Bureau of Customs, the National Bureau of Investigation (NBI), Bangko Sentral ng Pilipinas (BSP), and the Department of Environment and Natural Resources (DENR).

[19] Rollo, pp. 81-85.

[20] Ching v. Court of Appeals, 387 Phil. 28, 42, April 27, 2000; Golongco v. Court of Appeals, 347 Phil. 771, 778, December 22, 1997.

[21] Misapprehension of facts is one of the exceptions to the general rule that the jurisdiction of this Court in a petition for review under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not of fact. Magellan Capital Management Corporation v. Zosa at supra, p. 168; De la Cruz v. Sosing, 94 Phil. 26, 28, November 27, 1953.

[22] Section 5, Rule 133, Rules of Court. See also Ocampo v. Ombudsman, 379 Phil. 21, 27, January 18, 2000.

[23] Gross neglect of duty denotes a flagrant and culpable refusal or willingness of a person to perform a duty. Philippine Retirement Authority v. Rupa, 415 Phil. 713, 721, August 21, 2001.

[24] The Memorandum of Arriola to Nicolas reads:
“xxx [P]lease be informed that the claimant has already paid additional duties and taxes on their shipment in the amount of P646,950.00 as evidence by the attached BOC Receipts of Payment Nos. 75071606, 75071609 & 75071603.

“In view hereof, it is most respectfully recommended that the shipment be released to the consignee or its duly authorized representative.

“Attached is the Notice of Withdrawal for your signature.” (rollo, p. 74).
[25] Rollo, p. 75.

[26] Petitioner’s memorandum, pp. 14-15; rollo, pp. 258-259. The record is silent on whether Complainant Ruben Frogoso appeared during the Ombudsman’s fact-finding investigation or the preliminary conference. It can be presumed that Frogoso did not appear during the preliminary conference, since the other respondents (aside from Nicolas and Arriola) had submitted Affidavits of Desistance (purportedly issued by Frogoso), which would not have been necessary if the complainant were present.

[27] 180 SCRA 309, December 19, 1989. Also cited in Reyes v. Rural Bank of San Miguel (Bulacan), Inc., GR No. 154499, February 27, 2004; Albert v. Gangan, 353 SCRA 673, 682, March 6, 2001; Magsuci v. Sandiganbayan, 240 SCRA 13, 18, January 3, 1995.

[28] Id., pp. 315-316, per Gutierrez Jr., J.

[29] Reyes v. Rural Bank of San Miguel (Bulacan), Inc., supra.

[30] Ombudsman’s Decision dated July 4, 2000, p. 7; rollo, p. 94. Under paragraph 4 of Memorandum Order No. 225 (Intensification of Anti-Smuggling Operations and Delineating Responsibilities Therefor) dated March 17, 1989, “[a]ll government agencies and functionaries authorized by law to engage in anti-smuggling activities shall turn over to the Bureau of Customs all confiscated or seized articles, for the appropriate seizure and forfeiture proceedings as authorized under the Tariff and Customs Code.”

[31] Petitioner’s Memorandum, p. 32; rollo, p. 276.

[32] The pertinent provision of Executive Order No. 292 (The administrative Code of 1987) dated July 25, 1987, which enumerates the functions of the EIIB, reads:
“SECTION 17. Economic Intelligence and Investigation Bureau. – The Economic Intelligence and Investigation Bureau, which shall be headed by and subject to the supervision and control of the Commissioner, who shall in turn be appointed by the President upon the recommendation of the Secretary, shall have the following functions:

“(1) Receive, gather and evaluate intelligence reports and information and evidence on the nature, modes and extent of illegal activities affecting the national economy, such as, but not limited to, economic sabotage, smuggling, tax evasion, and dollar-salting, to investigate the same and aid in the prosecution of cases;

“(2) Coordinate with external domestic or foreign agencies in monitoring the financial and economic activities of persons or entities, which may adversely affect national financial interest with the goal of regulating, controlling or preventing said activities;

“(3) Provide all intelligence units of operating Bureaus or Offices under the department with the general framework and guidelines for the proper conduct of intelligence and investigation work;

“(4) Supervise, monitor and coordinate all the intelligence and investigation operations of the operating Bureaus and Offices under the Department;

“(5) Investigate, hear and file, upon clearance by the Secretary, anti-graft and corruption cases against personnel of the Department and its constituent units; and

“(6) Perform such other appropriate functions as may be assigned by the Secretary or his Undersecretaries.”
[33] Memorandum Order No. 225, par. 2: “Whereas, the Bureau of Customs was given exclusive jurisdiction over all anti-smuggling operations within the ports in all principal ports and subports of entry as well as all areas considered as customs zones, such as Customs Bonded Warehouse.” (Id., paragraph 1).

[34] Petitioner’s Memorandum, pp. 31-33; rollo, pp. 275-277.

[35] Ibid.

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