G.R. No. 221253-54 - Guialani vs. Court of Appeals, 22nd Division

Oscar S. Moreno was elected as Mayor of Cagayan de Oro City in 2013.
Upon assuming office, Mayor Moreno designated Dr. Glenn C. BaAez as Officer-in-Charge (OIC) of the City Treasurer’s Office.
As part of his functions, OIC BaAez reviewed the records of tax payments of all business establishments in the city.

On November 27, 2013, the City Treasurer’s Office, through OIC BaAez, issued a Notice of Assessment to Ajinomoto Philippines Corporation demanding a deficiency tax of ₱2,924,428.34 for the calendar years 2006–2012.
The deficiency arose from the reclassification of monosodium glutamate (MSG) from an essential to a non-essential commodity.
Ajinomoto protested the retroactive application of the reclassification, arguing that it should not be penalized for an erroneous classification by the previous administration.
Ajinomoto then filed a Petition for Review against the City Government (represented by Mayor Moreno and the City Treasurer’s Office) under Civil Case No. 2014-093.

During pre-trial, the Regional Trial Court (RTC) referred the case to the Philippine Mediation Center.
In the course of court-assisted mediation, Ajinomoto and the City Government (represented by BaAez) entered into a Settlement Agreement.
Under the Settlement Agreement, Ajinomoto agreed to dismiss its suit in exchange for a compromised tax assessment amount of ₱300,000.00 inclusive of all increments (interest, surcharges, among others).
A Joint Motion to Dismiss was subsequently filed by both parties and approved by the RTC on August 22, 2014.

On March 13, 2015, William G. Guialani, a former Punong Barangay, filed a Verified Complaint before the Office of the Ombudsman.
He charged respondents Moreno and BaAez with Grave Abuse of Authority, Grave Misconduct, and violation of R.A. 6713 (the Code of Conduct for Public Officials and Employees).
Guialani contended that BaAez lacked authority to enter into a tax compromise without the prior consent of the Sangguniang Panlungsod (as mandated by R.A. 7160) and that Moreno, by supervising BaAez, implicitly authorized the transaction.

OIC BaAez executed the settlement agreement by accepting a check from Ajinomoto.
BaAez claimed that his decision resulted from favorable legal consultation and that the settlement was part of his administrative duties.
Mayor Moreno later stated that he was not aware of the settlement until after it was effected, and he noted that the city benefited from additional revenue and saved litigation costs.
On August 14, 2015, the Office of the Ombudsman issued a Decision finding Moreno and BaAez guilty of Grave Misconduct and imposing dismissal from service (with accessory penalties) against them.

While awaiting the resolution of their respective Motions for Reconsideration with the Ombudsman, Moreno and BaAez filed Petitions for Certiorari under Rule 65 for issuance of a temporary restraining order (TRO) and writ of preliminary injunction.
Their petitions were docketed under CA-G.R. SP Nos. 07072-MIN (Moreno) and 07073-MIN (BaAez) and later consolidated.
On November 13, 2015, the Court of Appeals (CA) issued a Resolution granting the TRO, enjoining the DILG from enforcing the Ombudsman's dismissal order.
On November 18, 2015, the CA clarified that the TRO was based on respondents’ recognized powers.
Later, while the administrative case was still ongoing, Moreno and BaAez filed Rule 43 Petitions for Review challenging the Ombudsman's rulings.
The CA eventually rendered a Decision on October 13, 2016, reversing the Ombudsman's finding regarding grave misconduct but on a modified basis:

Subsequent petitions for reconsideration by Guialani and the Office of the Ombudsman were denied on February 9, 2017.

Petitioners (Guialani and the Ombudsman) challenged the CA’s ruling, arguing that the settlement agreement constituted a contract that entailed new fiscal obligations for the City Government.
They contended that, as a contract affecting public funds, it required prior authorization from the Sangguniang Panlungsod under Section 22(c) of the Local Government Code.
Conversely, respondents argued that the settlement was an ordinary exercise of the treasurer’s duty in tax assessment and collection, within his executive functions.

Whether respondents Moreno and BaAez are guilty of grave misconduct, grave abuse of authority, and violation of R.A. 6713 for entering into a settlement agreement with Ajinomoto without prior Sangguniang approval.
Whether the settlement agreement is essentially a contract that creates new obligations for the City Government, thereby requiring the prior authorization of the Sangguniang under Section 22(c) of the Local Government Code.

Whether the power to settle a tax deficiency – reducing the amount from ₱2,924,428.34 to ₱300,000.00 – falls within the local treasurer’s executive function, or if it in fact imposes a new fiscal obligation requiring legislative (Sangguniang) approval.
Whether the contractual nature of the settlement renders it a legislative act that must be authorized by the Sangguniang.

Whether the issuance of the temporary restraining order (TRO) and writ of preliminary injunction by the CA was within its inherent powers to protect its jurisdiction and enforce its rulings.
Whether the TRO and subsequent injunctive relief measures remain proper given the evolving status of the case and pending appeals.

Whether the failure of OIC BaAez to secure prior Sangguniang approval constitutes simple misconduct or rises to the level of grave misconduct.
Whether the evidence linking Mayor Moreno to the unauthorized settlement is sufficient to establish his administrative liability or if his supervisory role does not equate to active participation in the transaction.