G.R. No.

115103      April 11, 2002

Graft Investigation Officer II Soquilon of the OMB received information from "informer-for-reward" on anomalous
grant of tax refunds to Distillera Limtuaco and La Tondeña Distilleries, Inc. Upon receipt, Soquilon recommended   to
then Ombudsman Vasquez that the "case" be docketed and subsequently assigned to him for investigation. The
Ombudsman issued a subpoena duces tecum addressed to Atty. Mansequiao of the BIR ordering him to
appear before the OMB and to bring the complete original case dockets of the refunds granted to Limtuaco and La
Tondeña.

The BIR, through AssCom Jaime M. Maza, asked that it be excused from complying with the
subpoena duces tecum because (a) the Limtuaco case was pending investigation by Graft Investigation Officer II
Baldrias; and (b) the investigation thereof and that of La Tondeña was mooted when the Sandiganbayan ruled
in People v. Larin4 that "the legal issue was no longer in question since the BIR had ruled that the ad valorem taxes
were erroneously paid and could therefore be the proper subject of a claim for tax credit." 5

Without resolving the issues raised by the BIR, the Ombudsman issued another subpoena duces
tecum,  addressed to BIR Commissioner Vinzons-Chato ordering her to appear before the Ombudsman and to bring
the complete original case dockets of the refunds granted to Limtuaco and La Tondeña.

The BIR moved to vacate the subpoena duces tecum. The Ombudsman denied the Motion to Vacate the
Subpoena Duces Tecum, pointing out that the Limtuaco tax refund case then assigned to Baldrias was already
referred to the FFIB of the OMB for consolidation. The Ombudsman insisted that the issuance of the subpoena  duces
tecum was not a "fishing expedition" considering that the documents required for production were clearly and
particularly specified. The BIR moved to reconsider alleging that:

(a) the matter subject of the investigation was beyond the scope of the jurisdiction of the Ombudsman;
(b) the subpoena duces tecum was not properly issued in accordance with law; and
(c) non-compliance thereto was justifiable.

The BIR averred it had the exclusive authority whether to grant a tax credit and that the jurisdiction to
review the same was lodged with the CTA and not with the Ombudsman.
The Ombudsman denied the motion for reconsideration and reiterated its directive to the BIR to produce the
documents which prompted the BIR to file before this Court the instant Petition for Certiorari, Prohibition and
Preliminary Injunction and Temporary Restraining Order.

ISSUE:
Whether or not the Office of the Ombudsman can investigate over the tax refund case of BIR.

RULING:
On tax refunds, BIR maintains that the OMB could validly exercise its power to investigate only when there exists an
appropriate case and subject to the limitations provided by law. BIR opines that the fact-finding investigation by the
Ombudsman is not the proper case as it is only a step preliminary to the filing of recovery actions on the tax refunds
granted.

This Court disagrees. No less than the Constitution enjoins that the "OMB and his Deputies, as protectors of the
people, shall act promptly on complaints filed in any form or manner  against public officials or
employees of the government, or any subdivision, agency or instrumentality thereof, including GOCCs,
and shall, in appropriate case, notify the complainants of the action taken and the result thereof .

There is no requirement of pending action before the OMB could wield its investigative power. The OMB could
investigate on its own or upon a complaint filed in any form or manner. Even when the complaint is verbal or written,
unsigned or unverified, the OMB could, on its own, initiate the investigation.

The term "in an appropriate case" has been clarified by in Almonte v. Vasquez, "in an appropriate case" in Art. XI,
§12 means any case concerning official act or omission which is alleged to be "illegal, unjust, improper, or
inefficient," The phrase "subject to such limitations as may be provided by law" refers to such limitations as may be
provided by Congress or, in the absence, to such limitations as may be imposed by courts.

The pendency of an action is not a prerequisite before the Ombudsman can start its own investigation.

Petitioner next avers that the determination of granting tax refunds falls within its exclusive expertise and jurisdiction
and that its findings could no longer be disturbed by the OMB and that the CTA is the proper forum to review the
decisions of the CIR.

This contention is baseless . The power to investigate and to prosecute which was granted by law to the
Ombudsman is plenary and unqualified. The OMB Act makes it perfectly clear that the jurisdiction of the OMB
encompasses "all kinds of malfeasance, misfeasance and nonfeasance that have been committed by
any officer or employee xxx during his tenure of office

Concededly, the determination of whether to grant a tax refund falls within the exclusive expertise of the BIR.
However, when there is a suspicion of even just a tinge of impropriety in the grant of the same, the Ombudsman
could rightfully ascertain whether the determination was done in accordance with law and identify the persons who
may be held responsible thereto. In that sense, the Ombudsman could not be accused of unlawfully intruding into
and intervening with the BIR's exercise of discretion.
As correctly posited by the Office of the Solicitor General –

xxx (T)he OMB undertook the investigation "not as an appellate body exercising the power to review decisions or
rulings rendered by a subordinate body, with the end view of affirming or reversing the same, but as an
investigative agency tasked to discharge the role as 'protector of the people’pursuant to his authority 'to
investigate xxx any act or omission of any public official, employee, office or agency..

Indeed, the clause "any [illegal] act or omission of any public official" is broad enough to embrace any crime
committed by a public official. The law does not qualify the nature of the illegal act or omission of the public official
or employee that the OMB may investigate nor require that the act or omission be related to or be connected with or
arise from the performance of official duty.

The records do not show how the production of the subpoenaed documents would necessarily contravene Sec.
26929 of the National Internal Revenue Code (NIRC) on unlawful divulgence of trade secrets and Sec. 277 30 of the
same Code on procuring unlawful divulgence of trade secrets. The documents sought to be produced were only the
case dockets of the tax refunds granted to Limtuaco and La Tondeña which are public records, and the
subpoena duces tecum were directed to the public officials who have the official custody of the said records. We find
no valid reason why the trade secrets of Limtuaco and La Tondeña would be unnecessarily disclosed if such official
records, subject of the subpoena duces tecum, were to be produced by the petitioner BIR to respondent Office of the
Ombudsman.

With regard to the manner in which the investigation was conducted, petitioner asserts that the
investigation conducted by the OMB violated due process, inasmuch as it commenced its investigation by
issuing the subpoena duces tecum without first furnishing petitioner with a summary of the complaint and requiring it
to submit a written answer.

On this score, The Court rule in favor of petitioner BIR. Records show that immediately upon receipt of the
information from an "informer-for-reward", Soquilon, addressed to then Ombudsman Vasquez, requested that the
"case" be docketed and assigned to him for a "full-blown fact-finding investigation."

In his Memorandum, Soquilon averred that he is "certain that these refunds can be recovered by reason of the
Tanduay precedent xxx and using the power of this Office, we will not only bring back to the government multi-
million illegal refunds but, like the Tanduay case, we will be establishing graft and corruption against key BIR
officials."  Ombudsman Vasquez approved the docketing of the case and its assignment to Soquilon.

Likewise, the FFIB of the Ombudsman was named as complainant against Concerned High Ranking and Key Officials
of the BIR who granted multi-million tax refunds to Limtuaco and La Tondeña Distilleries for alleged violation of RA
3019. On November 29, 1993 and December 9, 1993 Soquilon issued the assailed subpoena  duces tecum requiring
the concerned BIR officials to appear before the Ombudsman and to bring with them the complete case dockets of
the tax refunds granted to Limtuaco and La Tondeña.

It is our view and we hold that the procedure taken by the respondent did not comply with the safeguards
enumerated in Sec. 26, §(2) of RA 6770 or the Ombudsman Act of 1989, which clearly provides that –

(2) The Office of the Ombudsman shall receive complaints from any source in whatever form
concerning an official act or omission. It shall act on the complaint immediately and if it finds the same
entirely baseless, it shall dismiss the same and inform the complainant of such dismissal citing the reasons
therefore. If it finds a reasonable, ground to investigate further, it shall first furnish the respondent public
officer or employee with a summary of the complaint and require him to submit a written answer
within 72 hours from receipt hereof. If the answer is found satisfactory, it shall dismiss the case.

The procedure likewise contravened the Rules of Procedure of the Office of the Ombudsman , Sec. 4, Rule 11 of
which provides that –

(a) If the complaint is not under oath or is based only on official reports, the investigating officer shall require
the complaint or supporting witnesses to execute affidavits to substantiate the complaints.
(b) After such affidavits have been secured, the investigating officer shall issue an order, attaching thereto a
copy of the affidavits and other supporting documents, directing the respondent to submit, within ten days from
receipt thereof, his counter-affidavits and controverting evidence with proof of service thereof on the
complainant. The complainant may file reply affidavits within ten days after service of the counter-affidavits xxx

It is clear from the initial comments of Soquilon in his Memorandum that he undoubtedly found reasonable grounds
to investigate further. In fact, he recommended that the "case" be docketed immediately and assigned to him for a
"full-blown fact-finding investigation." Even during that initial stage, Soquilon was convinced that the granting of the
tax refunds was so anomalous that he assured Ombudsman Vasquez of the eventual recovery of the tax refunds and
the prosecution and conviction of key BIR officials for graft and corruption.

We commend the graft investigators of the OMB in their efforts to cleanse our bureaucracy of scalawags. Sometimes,
however, in their zeal and haste to pin down the culprits they tend to circumvent some procedures. In this case,
Graft Investigation Officer Soquilon forgot that there are always two (2) sides to an issue and that each party must
be given every opportunity to air his grievance or explain his side as the case may be. This is the essence of due
process.

The law clearly provides that if there is a reasonable ground to investigate further, the investigator of the Office of
the OMB shall first furnish the respondent public officer or employee with a summary of the complaint and
require him to submit a written answer within 72 hours from receipt thereof. In the instant case, the BIR
officials concerned were never furnished by the respondent with a summary of the complaint and were
not given the opportunity to submit their counter-affidavits and controverting evidence. Instead, they
were summarily ordered to appear before the OMB and to produce the case dockets of the tax refunds granted to
Limtuaco and La Tondeña. They are aggrieved in that, from the point of view of the respondent, they were already
deemed probably guilty of granting anomalous tax refunds. Plainly, respondent Office of the OMB failed to afford
petitioner with the basics of due process in conducting its investigation.

Petition is GRANTED. The respondent Office of the Ombudsman is prohibited and ordered to desist from proceeding
with Case; and its Orders are hereby ANNULLED and SET ASIDE.