Title
Garcia vs. Miro
Case
G.R. No. 148944
Decision Date
Feb 5, 2003
Mayor Garcia’s void asphalt contract, COA audit findings, and Ombudsman investigation upheld by Supreme Court after reelection condoned prior liability.
criminal investigation
public officials
special civil action

Case Summary (G.R. No. 148944)

Factual Background

Petitioner, while then Mayor of Cebu City, signed a contract with F.E. Zuellig on May 7, 1998. The contract essentially designated F.E. Zuellig as the exclusive supplier of asphalt for the city’s asphalt batching plant, covering the years 1998 to 2001, with initial delivery scheduled for September 1998. Petitioner later assumed a new term after reelection.

Newspaper accounts of alleged irregularities involving the asphalt contract surfaced in the local media in March 1999. In response, respondent Deputy Ombudsman for the Visayas caused an action to be taken for auditing and fact-finding. In a letter dated March 30, 1999, the Deputy Ombudsman required the Commission on Audit (COA), Region VII to conduct a special audit. On the same date, the Ombudsman also requested the city administration to submit documents relating to the city’s asphalt supply and a copy of the contract.

The inquiry was docketed as INQ-VIS-99-0132, with Special Prosecution Officer Jesus Rodrigo T. Tagaan assigned to conduct the inquiry. Tagaan’s initial report recommended filing of both criminal and administrative complaints. On June 21, 1999, Tagaan filed an affidavit with the Graft Investigation Office against petitioner and others for alleged violation of Section 3(g) of Republic Act No. 3019.

COA Special Audit Findings and Supporting Affidavits

On August 16, 1999, the Office of the City Auditor submitted its report to the Deputy Ombudsman. The report, prepared by State Auditors Hilario S. Cabreros and Sulpicio C. Quejada, Jr., was anchored on a COA special audit. The audit concluded that the propriety of the transactions was highly questionable because payments were made even if the items were not yet delivered, which the auditors characterized as advance payment contrary to existing law, rules, and regulations.

Cabreros and Quejada later executed a joint affidavit dated September 29, 1999, which the Court treated as supporting materials for the Ombudsman’s initiation of the preliminary investigation. In that joint affidavit, the auditors stated that by virtue of certain SP and committee resolutions, the city executed a three-year contract. They asserted that the contract was void due to the lack of available appropriation or funds to cover the proposed expenditures at the time of execution, in purported violation of Sections 85 and 86 of PD 1445. They further claimed that officers who entered into the contract became liable under Section 87 of PD 1445.

The auditors also claimed that execution of a three-year contract exceeded the mayor’s authority under SP Resolution No. 3167. They further alleged disadvantages to the city arising from dollar-denominated obligations payable in Philippine pesos and highlighted concerns about the reasonableness and certainty of pricing under COA circular standards, as reflected in their affidavit. They added that the city allegedly had to pay substantial amounts for equipment use (including Bitucontainers) and alleged that the reasonableness of the price was highly doubtful. They also stated that prior asphalt purchases from F.E. Zuellig had allegedly occurred and that full payments were made even if items were not yet delivered, citing alleged violations of Section 338 of RA 7160 and Section 88 of PD 1445. The affidavits described the specific purchase order amounts and alleged non-delivery despite full payment.

The auditors later filed a supplemental joint affidavit dated April 18, 2000, disclosing other details, including ghost deliveries of asphalt.

Ombudsman Process: Orders, Non-Compliance, and Record Treatment

Special Prosecution Officer Tagaan resigned from office in January 2000, and his name was later dropped as complainant. During a joint clarificatory hearing and preliminary conference on September 12, 2000, respondents’ counsel stated that dropping Tagaan’s name deprived them of the right to confront their accusers.

On October 3, 2000, the Deputy Ombudsman issued an order directing petitioner to submit a counter-affidavit pursuant to the preliminary investigation process under the Ombudsman’s rules. The order required petitioner to file his counter-affidavit within ten (10) days from receipt, with proof of service to the complainants, who could file reply affidavits within another ten (10) days. The order warned that petitioner’s failure to file would result in waiver and would cause the case to be resolved based on evidence on record.

Petitioner did not file the counter-affidavit. Instead, on November 22, 2000, he filed a Motion to be Furnished a Copy of the Complaint-Affidavit and a Motion to Suspend Implementation of the October 3, 2000 order. In a second order dated December 26, 2000, the Deputy Ombudsman denied the motion and granted petitioner another period of ten (10) days to file his counter-affidavit. Petitioner again refused. He then filed a Motion for Reconsideration dated January 17, 2001, and a Supplemental Manifestation with a Motion to Dismiss on the Ground of Lack of Jurisdiction dated February 1, 2001.

On June 18, 2001, the Deputy Ombudsman issued a third order stating that, to avoid further delay, petitioner’s motions and manifestations would be considered as his answer under Section 4(c), Rule II of Administrative Order No. 7. It declared the preliminary investigation terminated and indicated it would proceed to resolve the case based on evidence on record.

Petitioner’s Claims in the Present Special Civil Action

Petitioner sought to dismiss the criminal investigation before the Ombudsman, docketed as OMB-VIS-CRIM-99-0546, and sought to restrain respondents from proceeding with the preliminary investigation. He raised two principal questions.

First, he argued that the COA Special Audit Report did not constitute a valid complaint sufficient to support a criminal proceeding, contending that it did not satisfy the affidavit-based complaint requirements under the Ombudsman’s rules.

Second, he contended that respondents committed grave abuse of discretion amounting to lack or excess of jurisdiction by unilaterally converting what he viewed as a mere COA fact-finding report into a complaint and by requiring him to submit a counter-affidavit in response to it.

The Court’s Framework: Ombudsman Rules on Evaluation and Preliminary Investigation

The Court began with the Ombudsman’s procedural rules under Administrative Order No. 7. It cited Rule II, Section 2, which allowed the investigating officer, upon evaluating the complaint, to recommend whether it should be dismissed for want of palpable merit, referred for comment, endorsed for appropriate jurisdiction, forwarded for fact-finding, referred for administrative adjudication, or subjected to preliminary investigation.

It also cited Rule II, Section 4 which governed preliminary investigation. Under that rule, if the complaint was not under oath or was based only on official reports, the investigating officer must require complainants or supporting witnesses to execute affidavits to substantiate the complaints. After affidavits were secured, the investigating officer would issue an order attaching copies of the affidavits and documents, directing the respondent to file counter-affidavits within ten days. The rule permitted consideration of the investigating officer’s comment as the answer if the respondent did not file a counter-affidavit, and it ensured that the respondent would have access to evidence on record. The rule also recognized that no motion to dismiss was allowed except for lack of jurisdiction.

In this setting, the Court noted a key procedural rationale: after the Ombudsman gathers evidence, the investigation ceases to be general and exploratory and takes on adversarial character, which makes the submission of affidavits central to the respondent’s informed participation.

Assessment of Whether a COA Special Audit Report May Serve as a Basis for Requiring a Counter-Affidavit

The Court rejected petitioner’s reliance on Duterte v. Sandiganbayan. It distinguished Duterte on the basis that, there, the respondents were directed to file comment and point-by-point responses under circumstances where they were already being subjected to a preliminary investigation without being properly informed, and they were not furnished any single affidavit from a person charging them with an offense. In contrast, the Deputy Ombudsman’s October 3, 2000 order in the present case was accompanied by the COA Special Audit Report and by the joint affidavit and supplemental joint affidavit of State Auditors Cabreros and Quejada.

The Court emphasized that petitioner did not deny receipt of these documents. It treated the joint affidavits as sufficiently specific under oath to enable petitioner to prepare counter-arguments. It held that the affidavits contained allegations about the alleged voidness of the contract due to lack of funds, violation of Sections 85 and 86 of PD 1445, resulting liability under Section 87 of PD 1445, and alleged excess of authority under SP Resolution No. 3167. It also noted that the affidavits outlined circumstances the auditors considered manifestations of manifest disadvantage and irregularity, connected to the suspected offense under Republic Act No. 3019, and that these were serious and specific enough to warrant requiring petitioner to submit a counter-affidavit.

The Court also addressed petitioner’s invocation of Matilde, Jr. v. Jabson, which concerned the sufficiency and clarity of allegations in court informations and the right to be informed of the accusations. The Court explained that the complaint contemplated by the Ombudsman’s preliminary investigation is not the same as a court information. For purposes of initiating preliminary investigation before the Office of the Ombudsman, it held that a complaint in any form or manner is sufficient.

In this regard, it anchored the analysis on Article XI, Section 12 of the 1987 Constitution, which requires the Ombudsman to act promptly on complaints

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