Title
Valera vs. Office of the Ombudsman
Case
G.R. No. 167278
Decision Date
Feb 27, 2008
Deputy Customs Commissioner Gil Valera found guilty of grave misconduct for unauthorized compromise agreement, nepotism, and improper foreign travel, violating anti-graft laws and customs regulations.
deputy commissioner
bureau of customs
grave misconduct
A

Case Summary (G.R. No. 167278)

Factual Background

Petitioner instituted Civil Case No. 01-102504 on behalf of the Bureau of Customs for recovery of PHP 37,195,859.00 in unpaid duties and taxes from Steel Asia Manufacturing Corporation (SAMC), which the complaint alleged used fraudulent tax credit certificates. A writ of preliminary attachment issued and attachments were effected on SAMC’s raw materials, finished products, and plant equipment. Petitioner and SAMC executed a compromise agreement under which SAMC would pay the principal amount in thirty monthly installments. The compromise purportedly waived legal interest, surcharges, litigation expenses and damages totaling PHP 14,762,467.70.

Administrative Complaint and Allegations

On August 20, 2003, the CIDG through Director General Eduardo Matillano lodged a letter-complaint with the Ombudsman. The complaint alleged that petitioner compromised the SAMC case without proper authority from the Commissioner of Customs, in violation of Section 2316 of the Tariff and Customs Code, and without approval of the President as required by E.O. No. 156 as amended by E.O. No. 38. The complaint further alleged that petitioner directly or indirectly had a pecuniary interest in Cactus Cargoes Systems, Inc. (CCSI) and caused the employment of his brother-in-law, Ariel Manongdo, with that brokerage, in violation of Section 3(d) of R.A. No. 3019, and that petitioner traveled to Hong Kong with his family without proper authority in violation of presidential travel regulations.

Administrative Proceedings and Preventive Suspension

The administrative matter was docketed OMB-C-A-03-0379-J. Then Ombudsman Simeon V. Marcelo inhibited himself by Memorandum dated November 12, 2003 and directed Special Prosecutor Dennis M. Villa-Ignacio to act in his stead. The Special Prosecutor found that the compromise may have been highly prejudicial to the government and issued an Order placing petitioner on preventive suspension for six months without pay pending investigation. Petitioner filed a motion for reconsideration on March 19, 2004. When the motion lapsed without resolution, petitioner filed a petition for certiorari and prohibition before the Court of Appeals, CA-G.R. SP No. 83091, which was raffled to the Special First Division. Special Prosecutor Villa-Ignacio later inhibited himself on June 14, 2004. The Special First Division of the Court of Appeals, on June 25, 2004, set aside the preventive suspension order on the ground that the Special Prosecutor lacked authority to sign such orders.

OMB-MOLEO Decision and Charges Sustained

After reassignment to OMB-MOLEO under Acting Deputy Ombudsman Orlando C. Casimiro, the administrative adjudication proceeded. The OMB-MOLEO rendered a Decision dated August 30, 2004 finding petitioner administratively liable for grave misconduct and ordering dismissal with accessory penalties. The decision rested on three charges: (i) compromising the SAMC case without the Commissioner’s authority and without presidential approval in violation of Section 2316 and E.O. No. 156; (ii) causing the employment of his brother-in-law with CCSI in violation of Section 3(d) of R.A. No. 3019; and (iii) traveling abroad without complying with applicable guidelines on travel for private purposes.

Court of Appeals (Fourth Division) Ruling

Petitioner sought relief in the Court of Appeals, which raffled the petition to the Fourth Division as CA G.R. SP No. 86281. The Fourth Division deferred ruling on the first charge in deference to this Court’s pending resolution in G.R. No. 164250. The appellate court nevertheless found substantial evidence to sustain the second and third charges. It accepted that CCSI had regular transactions with petitioner’s office and that Ariel Manongdo was petitioner’s brother-in-law. Relying on Section 3(d) of R.A. No. 3019, the court concluded that mere acceptance by a family member of employment in a private enterprise with pending official business constituted a corrupt practice. The court also rejected petitioner’s due process and status arguments concerning foreign travel and the effect of a temporary restraining order, holding that petitioner had notice and opportunity to be heard and remained a public officer during the TRO.

Issues Presented to the Supreme Court

The Supreme Court treated whether petitioner was guilty of grave misconduct on each charge. The critical legal questions included whether petitioner violated Section 2316 by entering into the compromise without Commissioner and Secretary of Finance approval; whether the approval requirements of E.O. No. 156, as amended, required presidential approval that petitioner lacked; whether a brother-in-law is within the statutory concept of family under R.A. No. 3019 so as to trigger liability under Section 3(d); whether a temporary restraining order suspended petitioner’s public status so that travel rules did not apply; and whether administrative findings were supported by substantial evidence.

Parties’ Contentions

Petitioner argued that Section 2401 of the Tariff and Customs Code controlled once a civil action was filed and thus no Commissioner authority was required to compromise a court case. He further invoked qualified political agency and asserted that approvals and praise by Special Task Force officials constituted effective presidential approval. Petitioner also contended that the definition of family under R.A. No. 6713 excluded a brother-in-law, and that a TRO rendered him a private citizen during the travel in question. Respondents relied upon the statutory text of Section 2316, the express presidential-approval requirement of E.O. No. 156, the family definition in Section 4 of R.A. No. 3019, and documentary affidavits and surveillance reports to show that petitioner’s brother-in-law accepted employment with a firm that had regular business with petitioner’s office and that petitioner failed to secure required travel clearances.

Standard of Review and Evidentiary Assessment

The Court reiterated that administrative findings are reviewed under the substantial evidence test. Substantial evidence is such relevant evidence as a reasonable mind might accept to support a conclusion. When administrative findings are supported by substantial evidence and not shown to be arbitrary, they are binding when affirmed by the Court of Appeals. The Court found that the Matillano letter-complaint and supporting affidavits, together with petitioner’s failure to deny key facts, constituted substantial evidence to sustain the second and third charges.

Analysis of the Second Charge: Family and Employment under R.A. No. 3019

The Court rejected petitioner’s attempt to import the family definition of R.A. No. 6713 into R.A. No. 3019. It observed that the definition in R.A. No. 6713 is limited to that Act and serves different policy ends. The Court relied upon Section 4 of R.A. No. 3019, which includes relatives by affinity within the third civil degree within the term family. A brother-in-law therefore falls squarely within that definition. The Court held that under Section 3(d) of R.A. No. 3019 mere acceptance by a family member of employment in a private enterprise which has pending official business with the public official is a corrupt practice. Petitioner’s failure to deny that CCSI transacted regularly with his office and that Ariel Manongdo was his brother-in-law supported the finding of liability for grave misconduct under this charge.

Analysis of the Third Charge: Travel and Status During TRO

On the travel issue, the Court held that administrative due process was observed when the respondent was given an opportunity to be heard, and that the constitutional guarantee concerning being informed of the nature and cause of accusation is principally applicable to criminal prosecutions. The Court found that the complaint sufficiently notified petitioner that he had failed to secure presidential authority or comply with travel guidelines. It further rejected petitioner’s assertion that a TRO effectively converted him into a private citizen. The Court explained that a TRO is provisional and does not divest a public officer of his public character. Because petitioner continued to assert his right to the office and no evidence showed any dissociation from the office, the travel regulations remained applicable.

Analysis of the First Charge: Authority to Compromise and Presidential Approval

The Court addressed the unresolved first charge concerning the compromise of the SAMC civil case. It construed Section 2316 and Section 2401 of the Tariff and Customs Code together. The Court found no conflict between the provisions. Section 2401 concerns the filing of civil and criminal actions and prescribes Commissioner approval for filing certain actions; it does not obviate the separate statutory scheme for compromise found in Section 2316, which expressly conditions the Commissioner’s power to compromise upon the approval of the Secretary of Finance. The Court held that petitioner’s construction would lead to absurd results that would permit bargains in court to evade the oversight that compromises of government claims require. On E.O. No. 156, as amended by E.O. No. 38, the Court held that the Special Task Force’s recommendation remained subject to presidential approval. The praise or inaction of Tas

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