Carlos vs. Department of Finance - RIPS and Office of the Ombudsman

The review and compliance procedure in Section 10 of Republic Act No. 6713 is absolutely mandatory, and absent compliance with it by the government, administrative liability for errors, omissions, or nonsubmission of SALNs will not attach.

Jessie Javier Carlos was a public official employed at the Department of Finance, first as a Tax Specialist II on a contractual basis in 2000 and later receiving a permanent appointment as Tax Specialist I in 2005. The Department of Finance - Revenue Integrity Protection Service (DOF-RIPS) investigates the lifestyle and assets of public officials compared to their SALNs. Republic Act No. 6713, the Code of Conduct and Ethical Standards for Public Officials and Employees, mandates the filing of SALNs and establishes a review and compliance procedure for addressing defects in such statements.

Jessie Javier Carlos was hired as a Tax Specialist II at the Department of Finance - One-Stop Shop Tax Credit and Duty Drawback Center on a contractual basis on September 1, 2000, earning an annual gross salary of P152,004.00. His contract was renewed every six months until he received a permanent appointment as Tax Specialist I on September 27, 2005. On November 25, 2011, his annual gross salary was increased from P126,420.00 to P210,480.00.

Sometime in 2012, the Department of Finance - Revenue Integrity Protection Service (DOF-RIPS) investigated Carlos's lifestyle and assets compared to his SALNs from 2000 to 2010. The DOF-RIPS filed a Complaint against Carlos before the Office of the Ombudsman for his failure to disclose his ownership of a house and lot in Tondo, Manila valued at P1,100,000.00 (not reported from 2003-2008), a Toyota Innova valued at P973,000.00 (not reported from 2007-2008), and his wife's business interest in Armset Trading (not reported in 2010). Carlos was also accused of amassing assets disproportionate to his income and obtaining dubious loans, including a house and lot worth P3,000,000.00, farm lots worth P4,000,000.00, various personal and auto loans, and credit card debts.

In his defense, Carlos alleged that he completed his SALNs in good faith and that he should have been given an opportunity to correct his alleged omissions or mistakes. Regarding the Toyota Innova, he explained that he commenced paying for it in 2003 on an installment basis until full payment in 2007, and removed it from his SALN when he sold the vehicle in 2010. As for his wife's business, he did not disclose it since it was not operating yet. He argued that he complied with the disclosure requirements and that the alleged omissions do not have a direct relation to the performance of his official duties.

The Office of the Ombudsman found Carlos guilty of grave misconduct and gross neglect of duty, imposing the penalty of dismissal. After his motions for reconsideration were denied, Carlos filed a Petition for Review before the Court of Appeals. The Court of Appeals ruled that the review and compliance procedure in Section 10 of Republic Act No. 6713 does not apply where the Ombudsman is reviewing a SALN. While it found that the presumption of unlawful acquisition of properties stood, it held that the failure to file true and detailed SALNs did not amount to grave misconduct or gross neglect of duty, but rather constituted dishonesty, and maintained the penalty of dismissal. The Court of Appeals denied his motion for reconsideration, prompting Carlos to file the present Petition.

• Due Process and Opportunity to Correct: Petitioner maintained that he was deprived of due process and the opportunity to correct his SALNs pursuant to Section 10 of Republic Act No. 6713.
• Insufficiency of Evidence: Petitioner argued that there is no sufficient evidence to support the Court of Appeals' finding him guilty of dishonesty.

• Applicability of Section 10, RA 6713: Whether the Office of the Ombudsman has the power to find petitioner administratively liable for omissions in his SALNs regardless of him availing the remedies in Section 10 of Republic Act No. 6713.
• Liability for Dishonesty: Whether petitioner is guilty of dishonesty.

• Applicability of Section 10, RA 6713: No. The Office of the Ombudsman cannot find a public officer administratively liable for omissions in their SALNs if the review and compliance procedure in Section 10 of Republic Act No. 6713 was not followed.
• Liability for Dishonesty: No. Petitioner cannot be held liable for dishonesty because he was not given the opportunity to correct the mistakes and omissions in his SALNs in accordance with Section 10 of Republic Act No. 6713.

• Applicability of Section 10, RA 6713: The review and compliance procedure in Section 10 of Republic Act No. 6713 is absolutely mandatory. It institutes a mechanism for review and an opportunity to rectify errors regarding failure to submit on time, incomplete SALNs, and formally defective SALNs. A review and compliance committee is required to review SALNs and prepare a list detailing who filed complete, incomplete, or no SALNs. Based on this determination, the head of office has five days to inform the official or employee and direct them to take corrective action within a non-extendible period of 30 days. If the official or employee fails to comply after this period, only then can they be subjected to disciplinary action. Without compliance with this procedure, liability for failure to file, or for omissions or errors in SALNs will not attach. While the duty to conduct the review and compliance procedure does not fall on the Ombudsman, the Ombudsman cannot prosecute the official or employee for errors or omissions if the official was not informed of them or afforded the opportunity to comply. Republic Act No. 6713 is more specific and more recently promulgated than Republic Act No. 6770 and Republic Act No. 3019, thus it takes precedence for the prosecution of offenses involving SALNs. Previous cases holding otherwise (Pleyto vs. Philippine National Police Criminal Investigation and Detection Group and its progeny) were abandoned as contrary to the clear mandate of the law.
• Liability for Dishonesty: Because the review and compliance procedure is mandatory, the violation for omissions or errors in SALNs does not arise unless the government complies with Section 10 of RA 6713. Here, Carlos was not given the opportunity to correct the mistakes and omissions in his SALNs. Therefore, liability will not attach, and the Court of Appeals erred in finding him guilty of dishonesty. Strict compliance with Section 10 allows the government to weed out simple, correctible errors from deliberate attempts to conceal ill-gotten wealth, preventing the weaponizing of SALNs where errors were made in good faith.

• Mandatory Review and Compliance Procedure for SALNs — Under Section 10 of Republic Act No. 6713, the government must comply with a review and compliance procedure before holding public officials or employees liable for errors, omissions, or nonsubmission of their SALNs. The head of office or designated committee must review SALNs to determine if they were submitted on time, are complete, and in proper form. If a SALN is deficient, the reporting individual must be informed and directed to take corrective action within 30 days. Only upon failure to comply within this period may disciplinary action be taken. Without adherence to this procedure, administrative liability does not attach. The Court abandoned previous rulings that held this procedure was merely internal or inapplicable when the Ombudsman investigates.

• "The review and compliance procedure in Section 10 of Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees is absolutely mandatory. The government must comply with it for public officials or employees to be held liable for errors or omissions in, or nonsubmission of, their Statements of Assets, Liabilities, and Net Worth (SALNs)." — This passage opens the decision and establishes the core ratio decidendi regarding the mandatory nature of the review and compliance procedure.
• "Without compliance with it, liability for failure to file, or for omissions or errors in SALNs will not attach. The reporting individual cannot be subjected to disciplinary action without being informed of their errors or omissions, and also being afforded an opportunity to comply." — This articulates the consequence of the government's failure to comply with the review and compliance mechanism, serving as a shield for public officials against premature administrative liability.
• "Pleyto v. Philippine National Police Criminal Investigation and Detection Group and subsequent applications of its erroneous ruling as regards the necessity of the review and compliance mechanism must therefore be abandoned." — This explicitly overturns prior jurisprudence that deviated from the mandatory nature of Section 10 of RA 6713, realigning the Court's doctrine with the statutory text.

• Office of the Deputy Ombudsman for Luzon vs. Salig, G.R. No. 215877, June 16, 2021 — Followed. The Court cited this case to support the ruling that public officials are not automatically liable absent adherence to Section 10 of RA 6713 and must be given an opportunity to correct SALN entries.
• Department of Finance-Revenue Integrity Protection Service vs. Office of the Ombudsman and Ramirez, G.R. No. 238510, July 14, 2021 — Followed. The Court relied on this case to discuss the government's duty to issue a compliance order and the consequences of its failure to do so, reinforcing that liability does not automatically arise.
• Atty. Navarro vs. Office of the Ombudsman, 793 Phil. 453 (2016) — Followed. Cited to illustrate that a public officer must be given the opportunity to correct SALN entries before being found liable for untruthful declaration.
• Pleyto vs. Philippine National Police Criminal Investigation and Detection Group, 563 Phil. 842 (2007) — Overruled/Abandoned. The Court explicitly abandoned this case and its progeny for erroneously holding that the review and compliance procedure is merely internal and inapplicable to Ombudsman investigations.

• Section 10, Republic Act No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees) — Establishes the mandatory review and compliance procedure for SALNs, requiring the designated committees or heads of offices to review SALNs, inform the reporting individual of defects, and direct them to take corrective action.
• Section 8, Republic Act No. 6713 — Mandates the keeping of SALNs for a period of 10 years, after which they may be destroyed unless needed in an ongoing investigation.
• Section 19, Republic Act No. 6770 (The Ombudsman Act of 1989) — Enumerates the administrative complaints the Ombudsman shall act on. The Court clarified that while the Ombudsman has broad powers, it cannot prosecute for SALN errors if the review and compliance procedure was not followed.
• Section 7, Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Mandates every public officer to file a SALN. The Court noted that RA 6713, being more specific and recent, takes precedence over RA 3019 for the prosecution of offenses involving SALNs.

Gesmundo, C.J., Caguioa, Hernando, Lazaro-Javier, Inting, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, Kho, Jr., and Singh, JJ., concur.