Constantino vs. Ombudsman Desierto

Where a municipal mayor executes a negotiated lease/purchase contract pursuant to an express resolution of the Sangguniang Bayan that fixes no parameters as to rental rate, period of lease, or purchase price, and the Sangguniang Bayan thereafter acknowledges the transaction and directs the operation of the equipment acquired, the evidence is inadequate to sustain his dismissal from the service for grave misconduct, conduct prejudicial to the best interest of the service, or gross neglect of duty. A bilateral contract may validly be embodied in two or more separate writings, which must be read and interpreted together so as to eliminate seeming inconsistencies and render the parties' intention effectual.

Petitioner Felipe K. Constantino was the Municipal Mayor of Malungon, Sarangani Province; the Sangguniang Bayan of the same municipality was the local legislative body whose resolutions governed the acquisition of heavy equipment for municipal projects, and Norlovanian Corporation, represented by its president and chairman Norberto N. Lindong, was the private firm that supplied the equipment. Disciplinary authority over petitioner was exercised by the Office of the Ombudsman under Republic Act No. 6770, the Ombudsman Act of 1989, Section 27 of which allows its orders, directives, or decisions in administrative disciplinary cases to be appealed to the Supreme Court by petition for certiorari. Related criminal proceedings for violation of Section 3(e) and (g) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, were separately instituted against petitioner and Lindong before the Sandiganbayan.

On February 22, 1996, the Sangguniang Bayan of Malungon, Sarangani Province, adopted Resolution No. 21, declaring the municipal government's intention to "lease/purchase one (1) fleet of heavy equipment" composed of seven specifically described units and, because two public biddings had failed, authorizing Mayor Constantino "to enter into a negotiated contract representing the Municipality . . . (with) any company dealing with heavy equipment," the contract to be signed by PBAC members and to be concurred in by the Sangguniang Bayan before implementation. The resolution fixed no parameters as to rate of rental, period of lease, or purchase price. Among those who voted for it were Vice-Mayor Primitiva L. Espinosa and Councilors Rafael J. Suson, Sr., Benjamin M. Guilley, Nemesio P. Liray, Nonito V. Nuñez, Leo G. Ingay, Cesar B. Nallus, Jr., Benjamin C. Asgapo, and Jannette S. Constantino.

On February 28, 1996, in Davao City, Mayor Constantino entered into an agreement with Norlovanian Corporation for the lease by the municipality of seven units of heavy equipment of the types specified in the resolution: one payloader, one grader, one road roller, two six-wheeler dump trucks, and two ten-wheeler dump trucks. At the same time, and with the Mayor's "conforme," the corporation executed a deed of "Undertaking" binding itself to convey ownership of the heavy equipment under lease unto the lessee at the end of the term of the agreement upon faithful compliance with its terms and conditions, and to execute the necessary documents of transfer. The Lease Agreement was a printed pre-prepared form in which only the names of the parties and the notarial acknowledgment had been typed; nothing was stated in the signed contract about the term of the lease or the amount of the rental, and the Undertaking likewise set forth neither the term of the lease, the rental rate, nor the value of the equipment.

Delivery of all seven units was made to the municipality on March 4, 1996, at which time a document of "Delivery and Acceptance" was executed over the signatures of Mayor Constantino and the President of the lessor company. The instrument contained a list of the equipment, an averment that the lessee had inspected and accepted the same as having been found in good condition in accordance with the terms and conditions of the Lease Agreement, and an attestation reading "EQUIPMENT INSPECTED BY" signed by four Municipal Kagawads — Benjamin M. Guilley, Nonito V. Nuñez, Ceasar B. Nallos, and Nemesio P. Liray — as well as by the Municipal Engineer and the Municipal Treasurer. On April 18, 1996, the Sangguniang Bayan unanimously approved Resolution No. 38, requesting the Mayor to operate the newly acquired heavy equipment of the Municipality "leased/purchased" from the Norlovanian Corporation, and the Mayor thereupon directed that the equipment be operated and used in various projects.

Operation of the equipment came to a halt barely two months later, when the Sangguniang Bayan adopted Resolution No. 47 on June 6, 1996, "stopping all forms of unauthorized payment/expenditures relative to the illegally acquired pool of heavy equipment by the Municipality of Malungon, Sarangani Province." The resolution rested on the premises that a 1995 resolution adopting Appropriation Ordinance No. 11 and MPC Resolution No. 2, series of 1995, in relation to SB Resolution No. 198, series of 1995, had provided P2,200,000.00 for the loan amortization of the purchase of heavy equipment for five years but had not been realigned, reprogrammed, and appropriated for lease, and that the pool of heavy equipment acquired was inefficient, ineffective, and inoperative per ocular inspection, investigation, and survey conducted by the Committee on Infrastructure, with no authorized rental payment or expenditure and no approved budget intended for the lease. Of the nine Sangguniang members present, only four — Councilors Octavio, Espinosa, Asgapo, and Ingay — voted for its passage; Councilors Guilley, Nollon, and Nuñez abstained, Councilor Liray was not around during the voting, and Vice-Mayor Primitiva L. Espinosa, identified as Acting Mayor, was recorded as absent.

Earlier, on April 23, 1996 — five days after the Sangguniang Bayan requested the Mayor to start using the heavy equipment — a Letter-Complaint and a Joint Affidavit were filed with the Deputy Ombudsman for Mindanao in Davao City, accusing the Mayor and the president of the lessor company, Norberto Lindong, of violation of Section 3(e) and (g) of Republic Act No. 3019, docketed as Case No. OMB-MIN-ADM-96-0179, and of grave misconduct, conduct prejudicial to the interest of the service, and gross neglect of duty, docketed as Case No. OMB-MIN-ADM-96-060. The letter-complaint was signed by Vice-Mayor Primitiva L. Espinosa, and appended to it was a certification signed by her and by Councilors Rafael J. Suson, Sr., Leo G. Ingay, and Benjamin C. Asgapo, who had approved the first two resolutions, as well as by Councilors Wilfredo P. Espinosa and Pablo V. Octavio, who had approved Resolution No. 38. The Joint Affidavit alleged that Resolution No. 21 authorized the Mayor "to purchase and acquire" heavy equipment to be paid within five years at a yearly amortization of P2.2 million with ownership to be consolidated and vested upon the municipality at the end of the fifth year, and that the Sangguniang Bayan was to concur in the contract of purchase; that contrary to the resolution the Mayor entered into a lease agreement with Norlovanian Corporation with a term of six years, a rental rate of P257,111.11 per month, and a 20% guaranty deposit of P1,780,000.00; that the lease agreement contained no purchase option in favor of the municipality and required the property to be returned to the lessor at the end of the lease; and that the municipality had already paid the total sum of P2,177,070.91, thereby causing and inflicting undue injury to the municipality.

In his Counter-Affidavit, Mayor Constantino asserted that under the authority of Resolution No. 21 he had negotiated with Norberto Lindong for the lease and ultimate purchase of the heavy equipment; that the agreement finally reached fixed the total cost of the equipment at P8,900,000.00, with Norlovanian charging interest at 18% per annum on a diminishing balance over a six-year pay period, the monthly amortization being P257,111.11 for the first year and progressively decreasing every year thereafter; that a committee he created inspected and accepted the units and issued a certification attesting to their worthiness; that Lindong drew up the Lease Agreement on his company's standard printed form and an Undertaking to eventually transfer ownership; that both instruments were signed not only by the Mayor and Lindong but also by the members of the PBAC; that on February 29, 1996 he and Lindong appeared before the Sangguniang Bayan and explained the terms of the agreements, with all members present except Vice-Mayor Primitiva Espinosa and her spouse Councilor Wilfredo Espinosa; that the equipment was delivered four days afterwards and inspected by a representative of the Commission on Audit who found it in good order; and that he subsequently ordered the equipment put into operation in compliance with Resolution No. 38.

The Graft Investigation Officer's Resolution of October 22, 1996 rested on the Mayor's alleged "various dubious legal maneuvers" to stay the implementation of the preventive suspension order, on the supposed strangeness of the Mayor and Lindong having prepared and executed two separate agreements when they could have executed the lease-purchase agreement itself, on a doubt as to the validity of the Undertaking as a unilateral and ancillary contract unsupported by consideration, and on the omission of the assent of the Sangguniang Bayan to the contract before its implementation. The Supreme Court found the evidence against the Mayor inadequate to warrant his dismissal on the specified grounds.

• Due Process: Petitioner argued that he was denied his constitutional right to due process of law when his Motion for Inhibition, his Notice of Appeal, and his Motion to Reset Hearing were denied outright by respondent Gervacio (or by Graft Investigation Officer Buena) and were not reviewed by respondent Ombudsman Desierto.
• Grave Abuse of Discretion: Petitioner maintained that respondents Desierto and Gervacio gravely abused their discretion when they pointedly ignored or disregarded the fact that he merely acted in accordance with Resolution No. 21, Series of 1996 and Resolution No. 38, Series of 1996 of the Municipal Council of Malungon, Sarangani, and that he did not exceed his authority with respect to the transaction and the use of the seven units of heavy equipment acquired by the town.
• Political Motivation: Petitioner contended that no liability, whether criminal or administrative, could be imputed to him and that the charges leveled against him were politically motivated, characterizing private respondents' turn-about as a cunning and treacherous political maneuver amounting to an attempted coup to oust him from his position as Mayor otherwise than through the normal process of election.

• Due Process: Whether petitioner was denied his constitutional right to due process of law when his Motion for Inhibition, Notice of Appeal, and Motion to Reset Hearing were denied outright by the investigating officer and were not reviewed by the Ombudsman.
• Grave Abuse of Discretion: Whether respondents Desierto and Gervacio gravely abused their discretion in finding petitioner guilty of grave misconduct, conduct prejudicial to the best interest of the service, and gross neglect of duty, and in dismissing him from the service, notwithstanding that he merely acted in accordance with Resolution No. 21 and Resolution No. 38 of the Sangguniang Bayan of Malungon, Sarangani.

• Due Process: No. Under Section 28 of Republic Act No. 6770, the deputy or investigator may issue orders and provisional remedies pending investigation which are immediately executory subject to review by the Ombudsman, and the challenged order was in fact reviewed by Director Antonio E. Valenzuela, recommended for approval by Deputy Ombudsman Gervacio, and approved by Ombudsman Desierto on October 4, 1996.
• Grave Abuse of Discretion: Yes. The evidence against petitioner was inadequate to warrant his dismissal for grave misconduct, conduct prejudicial to the best interest of the service, and gross neglect of duty, the pertinent written instruments confirming that he had done nothing but carry out the expressed wishes of the Sangguniang Bayan.

• Due Process: Section 28 of Republic Act No. 6770 provides that the investigation of complaints may be assigned to the regional or sectoral deputy concerned or to a special investigator who shall proceed in accordance with the rules or special instructions or directives of the Office of the Ombudsman, and that pending investigation the deputy or investigator may issue orders and provisional remedies which are immediately executory subject to review by the Ombudsman. The authority of Investigator Buena to issue the challenged order pending investigation of the administrative case against the Mayor therefore cannot be gainsaid, being specifically conferred by that provision. In any event, the impugned order was actually reviewed by a superior officer, Director Antonio E. Valenzuela, on September 13, 1996, then recommended for approval by Deputy Ombudsman Gervacio, and ultimately approved by Ombudsman Desierto on October 4, 1996. The Mayor's motions thus received due attention and consideration although resolved adversely to him, and there was no occasion to speak of a denial of due process.

• Grave Abuse of Discretion: The explicit terms of Resolution No. 21 clearly authorized Mayor Constantino to "lease/purchase one (1) fleet of heavy equipment" composed of seven generally described units through a "negotiated contract," and the resolution contained no parameters as to rate of rental, period of lease, or purchase price. Pursuant thereto, the Mayor, representing the Municipality of Malungon, and Norberto Lindong, representing Norlovanian Corporation, executed two written instruments on the same date and occasion: an agreement on a standard printed form dated February 28, 1996 for the lease by the corporation to the municipality of heavy equipment of the number and description required by Resolution No. 21, and an undertaking for the subsequent conveyance and transfer of ownership of the equipment to the municipality at the end of the term of the lease. That the members of the Sangguniang Bayan knew of this "lease/purchase" was evident from Resolution No. 38, unanimously enacted shortly after delivery of the equipment, in which they declared that the municipal government "has just acquired its fleet of heavy equipment leased/purchased from the Norlovanian Corporation" and requested Mayor Constantino "to operate the newly acquired heavy equipment . . . leased/purchased from the Norlovanian Corporation." The resolution was consistent with the Mayor's allegations, which were not denied by the councilors or the Vice-Mayor, that the equipment was delivered and duly inspected by Councilors Guilley, Nuñez, Nallos, and Liray together with the Municipal Engineer and the Municipal Treasurer; that prior to delivery the Vice-Mayor and other members of the Sangguniang Bayan had the opportunity to read the Lease Agreement and the Undertaking but raised no objections thereto; and that no objections were raised either at the session of the Municipal Council on February 29, 1996, when Norberto Lindong explained the terms of the negotiated contract of lease/purchase, or at the time the units were delivered and inspected by designated municipal officials.

The Joint Affidavit of private respondents contained a clearly distorted version of Resolution No. 21, describing it as authorizing the Mayor "to purchase and acquire" heavy equipment to be paid within five years at a yearly amortization of P2.2 million, when the most cursory perusal of the resolution disclosed that what the Mayor was empowered to do was "to enter into a negotiated contract" in the municipality's behalf with interested parties in line with the expressed wish to "lease/purchase" one fleet of heavy equipment, and that the resolution was completely silent as regards any terms and conditions of the negotiated contract. Such obvious distortions eroded the complainant councilors' credibility and bona fides. Resolution No. 47, approved by only four members of the Municipal Council, was likewise flagrantly inaccurate and, indicative of bad faith if not malice, made absolutely no reference to the two resolutions that on their face justified the Mayor's contract with Norlovanian Corporation: Resolution No. 21, which having been enacted after the cited resolutions must be deemed to have superseded them, and Resolution No. 38, in which the councilors expressly acknowledged the lease/purchase and requested the Mayor to operate the equipment.

The Graft Investigator appeared to have been carried away by his disapproval of the Mayor's supposed dubious maneuvers to delay the disposition of the case, but such maneuvers, assuming their description as dilatory to be correct, could not affect the intrinsic character of the evidence submitted by the parties. His interpretation of Resolution No. 21 in light of other official documents executed a year earlier disregarded the elementary doctrine that it is within the power and prerogative of the town council to repeal its prior acts, either expressly or by the passage of essentially inconsistent resolutions; when the council passed Resolution No. 21 without any mention of those prior official documents, the evident intention was to supersede them and to have the acquisition governed solely by Resolution No. 21. That conclusion was strongly supported by the Second Whereas Clause of Resolution No. 21, which admitted the failure of bidders to submit bids despite two public biddings, and by the council's subsequent request that the Mayor put the equipment into operation. The council thus intended to confer on the Mayor ample discretion to execute a negotiated contract with any interested party, without regard to any official acts of the council prior to Resolution No. 21.

The execution of two writings to embody one contract of lease/purchase could not be regarded as fatally defective or as indicative of a criminal conspiracy, nor should the writings be interpreted so as to magnify their seeming inconsistencies. The fundamental and familiar legal principle, which the Office of the Ombudsman ignored, is that it is perfectly legitimate for a bilateral contract to be embodied in two or more separate writings, and that in such an event the writings should be read and interpreted together in such a way as to eliminate seeming inconsistencies and render the parties' intention effectual. The statement in the appealed Resolution as to the absence of prior consent of the council to the negotiated contract flew in the teeth of the evidence, there being unrebutted proof that the heavy equipment delivered pursuant to the contract was inspected by designated councilors and municipal officers, that the negotiated contract composed of two documents was explained and discussed at the session of the town council of February 29, 1996, and that afterwards the council requested Mayor Constantino to put the equipment into operation. The ratiocinations and conclusions in the challenged resolution were so gravely and egregiously in error as to make necessary their invalidation by the extraordinary writ of certiorari, and the Court would not allow itself to be made an instrument of politics or be privy to any attempt at the perpetration of injustice.

• Bilateral Contract Embodied in Two or More Writings — It is perfectly legitimate for a bilateral contract to be embodied in two or more separate writings; in such an event, the writings must be read and interpreted together in such a way as to eliminate seeming inconsistencies and render the parties' intention effectual. The Court applied the principle to the lease agreement and the separate deed of Undertaking, which together constituted the single negotiated contract of "lease/purchase" between the Municipality of Malungon and Norlovanian Corporation, and held that the Ombudsman erred in treating the two instruments as fatally defective or as indicative of a criminal conspiracy.
• Repeal of Prior Municipal Resolutions by Inconsistency — It is within the power and prerogative of a town council to repeal its prior acts, either expressly or by the passage of essentially inconsistent resolutions. Because the Sangguniang Bayan passed Resolution No. 21 without any mention of earlier official documents respecting the acquisition of heavy equipment, its evident intention was to supersede them and to have the acquisition governed solely by Resolution No. 21; this construction was supported by the resolution's recital of the failure of two public biddings and by the council's subsequent Resolution No. 38 requesting the operation of the equipment.
• Immediately Executory Orders of the Ombudsman's Investigator — Under Section 28 of Republic Act No. 6770, pending investigation the deputy or investigator may issue orders and provisional remedies which are immediately executory, subject to review by the Ombudsman; within three days after concluding the investigation the deputy or investigator transmits the report and entire records to the Office of the Ombudsman, which renders the appropriate order, directive, or decision within five days after receipt. The Court relied on this provision to reject the claim that the denial of petitioner's motion for inhibition, notice of appeal, and motion to reset hearing, without review by the Ombudsman, amounted to a denial of due process.
• Certiorari as the Mode of Review of Ombudsman Disciplinary Resolutions — Section 27 of Republic Act No. 6770 provides that in all administrative disciplinary cases, orders, directives, or decisions of the Office of the Ombudsman may be appealed to the Supreme Court by filing a petition for certiorari within ten days from receipt of the written notice of the order, directive, or decision or denial of the motion for reconsideration, in accordance with Rule 45 of the Rules of Court. This was the procedural vehicle by which petitioner sought, and obtained, the invalidation of the dismissal resolution and the preventive suspension order.
• Insufficiency of Evidence for Administrative Liability of a Local Official — A municipal mayor may not be dismissed from the service for grave misconduct, conduct prejudicial to the best interest of the service, or gross neglect of duty where the evidence shows that he executed a negotiated contract strictly within the authority and discretion conferred by an express resolution of the Sangguniang Bayan, and where the council thereafter acknowledged the transaction and directed the use of the property acquired. The Court found the evidence against petitioner inadequate, the pertinent written instruments confirming their integrity and congruity and establishing that he had done nothing but carry out the expressed wishes of the Sangguniang Bayan.

• "The fundamental and familiar legal principle — which the Office of the Ombudsman ignored — is that it is perfectly legitimate for a bilateral contract to be embodied in two or more separate writings, and that in such an event the writings should be read and interpreted together in such a way as to eliminate seeming inconsistencies and render the parties' intention effectual." — This is the ratio decidendi on the principal evidentiary error attributed to the Ombudsman: the treatment of the lease agreement and the separate Undertaking as two defective instruments rather than as one integrated lease/purchase contract.
• "it is within the power and prerogative of the town council to repeal its prior acts, either expressly, or by the passage of essentially inconsistent resolutions." — This states the canonical formulation of the doctrine of implied repeal of municipal resolutions, which the Court used to reject the Graft Investigator's construction of Resolution No. 21 in light of earlier official acts of the council.
• "A person with the most elementary grasp of the English language would, from merely scanning those material documents, at once realize that the Mayor had done nothing but carry out the expressed wishes of the Sangguniang Bayan." — This passage encapsulates the Court's conclusion that the Mayor acted within the authority conferred by Resolution No. 21 and acknowledged by Resolution No. 38, and that the documentary evidence negated any prima facie case warranting preventive suspension.
• "The Court thus considers the ratiocinations and conclusions in the challenged resolution to be so gravely and egregiously in error as to make necessary said issuances' invalidation by the extraordinary writ of certiorari." — This is the standard of review the Court applied in granting the extraordinary writ against the Ombudsman's administrative disciplinary resolution.

• Section 28, Republic Act No. 6770 (The Ombudsman Act of 1989) — Governs investigation in municipalities, cities, and provinces. It authorizes the deputy or investigator, pending investigation, to issue orders and provisional remedies which are immediately executory subject to review by the Ombudsman, and requires transmittal of the report and entire records to the Office of the Ombudsman within three days after concluding the investigation, with the Ombudsman rendering the appropriate order, directive, or decision within five days after receipt. The Court invoked this provision to uphold the authority of Graft Investigation Officer Buena to issue the challenged order and to reject the claim of denial of due process.
• Section 27, Republic Act No. 6770 (The Ombudsman Act of 1989) — Provides that in all administrative disciplinary cases, orders, directives, or decisions of the Office of the Ombudsman may be appealed to the Supreme Court by filing a petition for certiorari within ten days from receipt of the written notice of the order, directive, or decision or denial of the motion for reconsideration, in accordance with Rule 45 of the Rules of Court. This was the jurisdictional basis for petitioner's special civil action and for the Court's review and nullification of the dismissal resolution.
• Section 3(e) and (g), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — The provisions under which the Letter-Complaint and Joint Affidavit were filed against Mayor Constantino and Norberto Lindong, docketed as Case No. OMB-MIN-ADM-96-0179, and under which an information was filed before the Sandiganbayan on August 8, 1996. The administrative case at bar, Case No. OMB-MIN-ADM-96-060, proceeded separately on charges of grave misconduct, conduct prejudicial to the interest of the service, and gross neglect of duty.
• Section 44, Republic Act No. 7160 (Local Government Code of 1991) — Cited by DILG Regional Director Jaime L. Madridano in his Memorandum directing Mayor Constantino to turn over the functions of his office to the Vice Mayor pursuant to the dismissal resolution. The directive was not implemented after the Director was advised of the pendency of the action in the Supreme Court.

Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Martinez, Quisumbing, and Purisima, JJ.