Racho vs. Miro

The Ombudsman's finding of probable cause is a finding of fact generally not reviewable by the Court, absent grave abuse of discretion. A clarificatory hearing is optional, not mandatory, during preliminary investigation and reinvestigation, and one adverse ruling does not prove bias sufficient to disqualify a prosecutor.

Racho was the Chief of the Special Investigation Division of the Bureau of Internal Revenue (BIR), Regional Office No. 13, Cebu City. The Office of the Ombudsman (OMB) has been given a wide latitude of investigatory and prosecutory powers under the Constitution and Republic Act No. 6770 (The Ombudsman Act of 1989), freed from legislative, executive, or judicial intervention. Public officials are required to disclose their assets, liabilities, and net worth in their SALN under Section 8 of Republic Act No. 6713 and Section 7 of Republic Act No. 3019, as amended.

On November 9, 2001, DYHP Balita Action Team of the Radio Mindanao Network, Inc. addressed a letter on behalf of an anonymous complainant to Deputy Ombudsman for the Visayas Primo C. Miro, accusing Nieto A. Racho, an employee of the Bureau of Internal Revenue (BIR)-Cebu, of having accumulated wealth disproportionate to his income. Photocopied bank certifications disclosed that Racho had a total deposit of P5,793,881.39 with three banks.

Pio R. Dargantes, the Graft Investigation Officer I assigned to investigate the complaint, directed DYHP to submit a sworn statement of its witnesses. Instead, DYHP filed a Manifestation dated October 16, 2002 withdrawing its complaint for lack of witnesses. Consequently, GIO Dargantes dismissed the case, ruling that the photocopied bank certifications did not constitute substantial evidence required in administrative proceedings.

Then, in two separate Memoranda dated May 30, 2003, Ombudsman Director Virginia Palanca-Santiago disapproved GIO Dargantes's Resolution. In OMB-V-A-02-0214-E, Director Palanca-Santiago held Racho administratively liable for falsification and dishonesty, meting the penalty of dismissal from service with forfeiture of all benefits and perpetual disqualification to hold office. In OMB-V-C-02-0240-E, she found probable cause to charge Racho with falsification of public document under Article 171(4) of the Revised Penal Code. Racho moved for reconsideration but it was denied by the Deputy Ombudsman.

On May 30, 2003, Racho was charged with falsification of public document, docketed as Criminal Case No. CBU-66458 before the Regional Trial Court of Cebu City, Branch 8. The Information alleged that Racho, as Chief of the Special Investigation Division of the BIR, Regional Office No. 13, Cebu City, falsified his Statement of Assets, Liabilities and Networth (SALN) as of December 31, 1999 by stating that his cash in bank was only P15,000 and that his assets minus liabilities amounted only to P203,758.00, when in truth he had bank deposits amounting to P5,793,801.39, as shown by accounts with Metropolitan Bank and Trust Company (P2,932,896.27), Philippine Commercial International Bank (P1,228,702.53), and Bank of the Philippine Islands (P1,632,282.59).

Racho appealed the administrative case and filed a petition for certiorari under Rule 65 with the Court of Appeals to question the ruling in OMB-V-C-02-0240-E. In a Decision dated January 26, 2004, the appellate court annulled both Memoranda and ordered a reinvestigation of the cases against petitioner. Thereafter, petitioner filed a Motion to Dismiss dated July 21, 2004, which was denied for lack of merit in an Order dated August 24, 2004. On reinvestigation, petitioner submitted a Comment dated January 4, 2005 along with supporting documents. On January 10, 2005, the OMB issued the assailed Reinvestigation Report, finding no basis to change, modify, nor reverse its previous findings that there was probable cause for falsification of public document, and ordering that the Information be amended to include Racho's failure to reflect his business connections. Petitioner sought reconsideration but was denied in the Joint Order dated April 1, 2005.

The OMB evaluated Racho's SALN for 1999 against certified true copies of his bank deposits during the same year. In his SALN, Racho declared P15,000 cash in bank as of December 31, 1999. The bank certifications confirmed an aggregate balance of P5,793,881.39 in his accounts with three banks. Original certifications dated June 17, 1999 from BPI and Equitable PCI Bank revealed accounts for P1,632,282.59 and P1,228,702.53, respectively; a photocopied certification dated June 16, 1999 from Metrobank indicated a deposit of P2,932,896.27. The OMB did not accord weight to the Joint Affidavit submitted by petitioner, in which his brothers Vieto and Dean Racho stated that they entrusted P1,390,000 and P1,950,000 respectively, and his nephew Henry Racho claimed delivery of P1,400,000, purportedly as contributions as stockholders of Angelsons Lending and Investors, Inc. and Nal Pay Phone Services. Dean Racho was not listed as a stockholder of the lending company, and the Articles of Incorporation reflected that Vieto, Henry, and the spouses Racho individually paid only P12,500 of the subscribed shares of P50,000 each, with no proofs of succeeding contributions. The OMB also noted that petitioner failed to report his interests in said businesses in his SALN.

• Failure to Inhibit: Petitioner argued that Director Palanca-Santiago gravely abused her discretion when she did not inhibit herself in the reinvestigation, having handled both the preliminary investigation and the reinvestigation and found probable cause in both instances, thereby losing the cold neutrality of an impartial judge.
• Denial of Due Process: Petitioner claimed denial of due process because Director Palanca-Santiago handled both the preliminary investigation and reinvestigation, and because the reinvestigation was concluded hastily without a hearing.
• Grave Abuse in Denying Reconsideration: Petitioner argued that the OMB committed grave abuse of discretion when it denied his motion for reconsideration without proof of any irregularity in the reinvestigation.
• Dismissal of Cases: Petitioner insisted on the dismissal of the OMB cases by reason of the Court's inherent power to do all things reasonably necessary for the administration of justice.

• No Cause of Action: The Office of the Special Prosecutor (OSP) averred that the petition stated no cause of action since it did not implead the Hon. Ombudsman Simeon Marcelo as a respondent.
• No Partiality: The OSP contended that Director Palanca-Santiago's adverse resolution did not necessarily indicate partiality, and that the Reinvestigation Report was merely recommendatory, made in line with official duty.
• Lack of Specific Allegations: The OSP pointed out that petitioner failed to cite specific acts by which Director Palanca-Santiago showed hostility towards him.
• Forum Shopping: The OSP charged petitioner with forum shopping since he had already raised the issue of the director's impartiality in his petition before the Court of Appeals.

• Failure to Inhibit: Whether Ombudsman Director Palanca-Santiago gravely abused her discretion when she did not inhibit herself in the reinvestigation.
• Due Process: Whether petitioner was denied due process of law on reinvestigation.
• Probable Cause: Whether there was probable cause to hold petitioner liable for falsification under Article 171(4) of the Revised Penal Code.

• Failure to Inhibit: No. One adverse ruling by itself does not prove bias and prejudice; prosecutors are quasi-judicial officers, not judges, and absent proven allegations of specific conduct showing prejudice and hostility, no grave abuse of discretion can be imputed.
• Due Process: No. A clarificatory hearing is optional, not mandatory, during preliminary investigation and reinvestigation; petitioner was given ample opportunity to be heard.
• Probable Cause: Yes. The OMB's finding of probable cause rests on substantial evidence — the SALN declared P15,000 cash in bank while certified bank certifications showed aggregate deposits of P5,793,881.39.

• Failure to Inhibit: The OMB has wide latitude of investigatory and prosecutory powers under the Constitution and RA 6770, freed from legislative, executive, or judicial intervention. The Court will refrain from interfering with the OMB's exercise of powers absent grave abuse of discretion, which means capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction, so patent and gross as to amount to an evasion of a positive duty or virtual refusal to perform a duty enjoined by law. One adverse ruling by itself would not prove bias and prejudice against a party sufficient to disqualify even a judge. To ask prosecutors to recuse themselves on reinvestigation upon every unfavorable ruling would cause unwarranted delays in the prosecution of actions.
• Due Process: Under Section 3(e) of Rule 112, a clarificatory hearing is optional on the part of the investigating officer, as evidenced by the use of "may." This rule applies equally to a motion for reinvestigation. Under the Rules of Procedure of the OMB (Administrative Order No. 07), Rule II, Section 7(a) in relation to Section 4(f), a complainant's active participation is no longer a matter of right during reinvestigation. Administrative due process cannot be fully equated with due process in its strict judicial sense. Petitioner was given multiple extensions to file his comment, and the OMB considered his belatedly-filed Comment in its Reinvestigation Report, thus substantially satisfying the requirements of due process.
• Probable Cause: The OMB evaluated the SALN against certified true copies of bank deposits. The SALN declared P15,000 cash in bank; bank certifications confirmed an aggregate balance of P5,793,881.39. Even excluding the Metrobank deposit (photocopied certification), a significant disparity subsists between declared P15,000 and certified P2,860,985.12. The Joint Affidavit of petitioner's brothers and nephew was not given weight because Dean Racho was not listed as a stockholder of Angelsons, the Articles of Incorporation reflected only P12,500 paid of P50,000 subscribed shares, and no proofs of succeeding contributions were presented. Probable cause need not be based on clear and convincing evidence of guilt; it merely binds the suspect to stand trial, not a pronouncement of guilt.

• Grave Abuse of Discretion — The capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction; the abuse must be so patent and gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as when the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. The Court applied this standard in declining to interfere with the OMB's finding of probable cause, there being substantial evidence supporting the ruling.
• Probable Cause Standard — A finding of probable cause need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt; it is enough that it is believed that the act or omission complained of constitutes the offense charged. A finding of probable cause merely binds the suspect to stand trial; it is not a pronouncement of guilt.
• Clarificatory Hearing is Optional — Under Section 3(e) of Rule 112, a clarificatory hearing is optional on the part of the investigating officer, as evidenced by the use of "may." This rule applies equally to a motion for reinvestigation, and the OMB may decide how best to pursue each particular investigation.
• Administrative Due Process — Administrative due process cannot be fully equated with due process in its strict judicial sense; technical rules of procedure and evidence are not strictly applied in administrative proceedings. Due process is substantially satisfied when a party is given the chance to be heard with ample opportunity to present his side.

• "The Ombudsman is empowered to determine whether there exists reasonable grounds to believe that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file the corresponding information with the appropriate courts. Such finding of probable cause is a finding of fact which is generally not reviewable by this Court." — States the general rule on the non-reviewability of the OMB's probable cause findings, the central principle of the decision.
• "By that phrase is meant the capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction. The abuse of discretion must be so patent and so gross as to amount to an evasion of a positive duty; or to a virtual refusal to perform a duty enjoined by law; or to act at all in contemplation of law, as when the power is exercised in an arbitrary and despotic manner by reason of passion or hostility." — Defines the standard of grave abuse of discretion, the sole ground for reviewing OMB resolutions.
• "Indeed, the determination of probable cause need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt. It is enough that it is believed that the act or omission complained of constitutes the offense charged." — States the probable cause standard applied in upholding the OMB's finding.
• "Worth-stressing, one adverse ruling by itself would not prove bias and prejudice against a party sufficient to disqualify even a judge." — States the rule on bias and prejudice, applied to reject petitioner's claim of partiality against the investigating director.

• Presidential Commission on Good Government (PCGG) vs. Desierto, G.R. No. 139675, July 21, 2006, 496 SCRA 112 — Cited for the OMB's wide latitude of investigatory and prosecutory powers and the rule that as long as substantial evidence supports the OMB's ruling, its decision will not be overturned.
• Galario vs. Office of the Ombudsman (Mindanao), G.R. No. 166797, July 10, 2007, 527 SCRA 190 — Cited for the rule that a finding of probable cause is a finding of fact generally not reviewable by the Court, and for the probable cause standard.
• Peralta vs. Desierto, G.R. No. 153152, October 19, 2005, 473 SCRA 322 — Cited for the definition of grave abuse of discretion.
• De Ocampo vs. Secretary of Justice, G.R. No. 147932, January 25, 2006, 480 SCRA 71 — Cited for the rule that a clarificatory hearing is not required during preliminary investigation, being optional under Section 3(e) of Rule 112.
• Raro vs. Sandiganbayan, G.R. No. 108431, July 14, 2000, 335 SCRA 581 — Cited for the proposition that the trial of a case is conducted precisely for the reception of evidence of the prosecution in support of the charge.
• Dimayuga vs. Office of the Ombudsman, G.R. No. 129099, July 20, 2006, 495 SCRA 461 — Cited for the OMB's plenary investigatory powers to decide how best to pursue each investigation.
• Espinosa vs. Office of the Ombudsman, G.R. No. 135775, October 19, 2000, 343 SCRA 744 — Cited for the rule that administrative due process cannot be fully equated with due process in its strict judicial sense.
• Filipino vs. Macabuhay, G.R. No. 158960, November 24, 2006, 508 SCRA 50 — Cited for the proposition that due process requirements are substantially satisfied when a party is given the chance to be heard with ample opportunity to present his side.
• Sales vs. Sandiganbayan, G.R. No. 143802, November 16, 2001, 369 SCRA 293 — Cited for the proposition that public prosecutors are not considered judges but merely quasi-judicial officers.
• Gallardo vs. People, G.R. No. 142030, April 21, 2005, 456 SCRA 494 — Cited for the proposition that public prosecutors could not decide whether there is evidence beyond reasonable doubt of the guilt of the person charged.
• Republic vs. Gingoyon, G.R. No. 166429, December 19, 2005, 478 SCRA 474 — Cited for the rule that one adverse ruling by itself would not prove bias and prejudice against a party sufficient to disqualify even a judge.
• Go vs. Court of Appeals, G.R. No. 163745, August 24, 2007, 531 SCRA 158 — Cited for the requirement of providing appellate courts with certified true copies of judgments or final orders subject of review.

• Article 171(4), Revised Penal Code — Falsification by public officer, employee, or notary by making untruthful statements in a narration of facts; the provision under which Racho was charged and for which probable cause was found.
• Section 8, Republic Act No. 6713 — The Norms of Conduct and Ethical Standards for Public Officials and Employees; the provision mandating disclosure of assets, liabilities, and net worth in the SALN, which Racho allegedly violated.
• Section 7, Republic Act No. 3019, as amended — The Anti-Graft and Corrupt Practices Act; the provision requiring disclosure of business interests and financial connections, which Racho allegedly failed to reflect.
• Section 3(e), Rule 112, Rules of Court — Provides that a clarificatory hearing is optional on the part of the investigating officer, as evidenced by the use of "may"; applied to reject petitioner's claim of denial of due process for lack of hearing on reinvestigation.
• Rule II, Section 7(a), Administrative Order No. 07 (Rules of Procedure of the Ombudsman) — Only one motion for reconsideration or reinvestigation of an approved order or resolution shall be allowed; cited in relation to the conduct of reinvestigation.
• Section 4(f), Administrative Order No. 07 — A complainant's active participation is no longer a matter of right during reinvestigation; cited to support the OMB's discretion in conducting reinvestigation.
• Section 1, Rule 65, Rules of Court — Requires the petition for certiorari to be accompanied by a certified true copy of the judgment, order, or resolution subject thereof; petitioner failed to attach the certified true copy of the assailed Resolution in OMB-C-C-03-0729-L.

Conchita Carpio Morales, Dante O. Tinga, Presbitero J. Velasco, Jr., and Arturo D. Brion.