G.R. No. 167982 - Office of the Ombudsman vs. De Sahagun

On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Publications Division of the Intramuros Administration, submitted a memorandum to then Intramuros Administrator Edda V. Henson recommending Brand Asia, Ltd. for the production of a video documentary, in addition to the implementation of a media plan and marketing support services.
On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros Administration—composed of Merceditas de Sahagun (Chairman), Manuela T. Waquiz, and Dominador C. Ferrer, Jr.—recommended to Henson the awarding of the contract to Brand Asia, Ltd. Subsequently, Henson approved the recommendation and issued a Notice of Award on the same day.

A video documentary contract was executed on November 23, 1992, following the issuance of the Notice of Award.
On December 1, 1992, the Notice to Proceed was issued to Brand Asia, Ltd.
On June 2, 1993, the BAC, now including Augusto P. Rustia as an additional member, recommended to Henson the award of a separate contract for print collaterals to Brand Asia, Ltd. This led to Henson’s approval and subsequent issuance of the Notice of Award/Notice to Proceed on the same day.
A contract of services for producing print collaterals was subsequently executed on June 22, 1993.

On March 7, 1995, an anonymous complaint was filed with the Presidential Commission Against Graft and Corruption (PGAC) against Henson regarding the contracts, resulting in her dismissal from service on November 30, 1995, based on findings of violations of Section 3(a) and (e) of Republic Act No. 3019 (the Anti-Graft and Corrupt Practices Act).
On August 8, 1996, another anonymous complaint was filed with the Ombudsman against the BAC due to its involvement in the said contracts.
On September 5, 2000, the Fact-Finding Intelligence Bureau (FFIB) instituted both criminal and administrative charges (docketed as OMB-0-00-1411 and OMB-ADM-0-00-0721) against the respondents—including former BAC members—and additional officials for alleged violations of Section 3 (a) and (c) of R.A. No. 3019, as well as for grave misconduct.

The case docketed as OMB-0-00-1411 was dismissed on February 27, 2002, for lack of probable cause.
In his proposed Decision dated June 19, 2002, Graft Investigation Officer II Joselito P. Fangon recommended the dismissal of OMB-ADM-0-00-0721; however, Ombudsman Simeon V. Marcelo disapproved this recommendation.
On March 10, 2003, Ombudsman Marcelo issued an Order holding that substantial evidence existed for holding the respondents administratively liable, ruling that the contracts with Brand Asia, Ltd. were entered into without the required public bidding.

Respondents Merceditas de Sahagun and Manuela T. Waquiz, along with Ferrer, were found guilty of grave misconduct and dismissed from service.
Augusto P. Rustia was found guilty of simple misconduct and was suspended for six months without pay.

The penalties for respondents and Ferrer were reduced from dismissal (or grave misconduct) to the lesser offense of simple misconduct with a suspension of six months without pay.
Rustia’s suspension was reduced to three months.

Dissatisfied with the orders issued by the Ombudsman, the respondents filed a Petition for Review with the CA.
On April 28, 2005, the CA rendered a Decision setting aside both the March 10, 2003 and June 24, 2003 Orders of the Ombudsman.

The CA held that the complaint was filed beyond the one-year period provided by Section 20(5) of Republic Act No. 6770, effectively barring further prosecution on the grounds of prescription.
It further asserted that the Ombudsman’s function was merely recommendatory and did not extend to directly penalizing government officials or employees.

The petition was ultimately raised under Rule 45 for Certiorari by the Office of the Ombudsman, challenging the CA’s decision that conflicted with the Ombudsman's powers and procedural discretion as granted by law.

Whether Section 20(5) of Republic Act No. 6770, which states that the complaint may be dismissed if filed after one year from the occurrence of the act or omission, serves as a mandatory bar to the investigation of administrative acts or omissions.
Whether the term “may” in Section 20(5) is directory or prohibitory, thereby affecting the discretion of the Ombudsman in conducting investigations even after the one-year period.

Whether the Ombudsman’s authority is purely recommendatory or if it extends to direct imposition of administrative penalties, including dismissal, suspension, demotion, fines, or censure, against erring government officials and employees.
The proper interpretation of the power of the Ombudsman in light of the constitutional provisions and statutory mandates provided under R.A. No. 6770 and the 1987 Constitution.