THIRD DIVISION

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

WILFRED
A.
NICOLAS, petitioner, vs.
DESIERTO, respondent.

ANIANO

A.

DECISION
PANGANIBAN, J.:

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 petitioners Motion for Reconsideration.

On the other hand, the affirmed Order of the Office of the Ombudsman
(OMB) disposed as follows:
WHEREFORE, PREMISES CONSIDERED, respondents WILFRED
NICOLAS and J. FRANCISCO ARRIOLA are hereby found Guilty of GROSS
NEGLECT OF DUTY, for which the penalty of DISMISSAL FROM THE
SERVICE, CANCELLATION OF ELIGIBILITY, FORFEITURE OF
RETIREMENT BENEFITS and LEAVE CREDITS and DISQUALIFICATION
FOR RE-INSTATEMENT OR RE-EMPLOYMENT IN THE GOVERNMENT
SERVICE is hereby imposed, pursuant to Section 10, Rule III of Administrative
Order No. 7, in relation to Section 25 of Republic Act No. 6670.
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.
SO RESOLVED.[5]
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
EIIBs 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] allegingI. that there was no valid notice to the petitioner, hence, he was denied x x x
his constitutional right to due process; and
II. 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 latters 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 Ombudsmans 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
petitioners right to due process.
III. The Court of Appeals erred in affirming the direct imposition of penalties on
petitioner despite the ombudsmans lack of jurisdiction to do so. [13]
For clarity, the second issue will be discussed first.
The Courts 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 ones 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 counteraffidavits 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 formers case
had been submitted for decision and in subsequently rendering the assailed
Decision.
Second Issue:
Finding of Gross Neglect

In view of this Courts 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 ombudsmans 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]
Petitioners 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
petitioners 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 latters 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 formers 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 ombudsmans 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 latters 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.
SO ORDERED.