LORNA FRANCES FILIPINO, PETITIONER, VS. F. WALTER R. MACABUHAY, REPRESENTING DRUGMAKERS’ LABORATORIES, INC., RESPONDENT.

Filipino versus Macabuhay

The Case

This is a petition for review brought by Lorna Frances Filipino, the former Chief of the Legal Information and Compliance Division of the Bureau of Food and Drugs Administration, against F. Walter R. Macabuhay, who sued in representation of Drugmakers' Laboratories, Inc. The company charged her before the Office of the Ombudsman with soliciting a loan of 110,000 pesos from a firm whose business her office regulated, in violation of the Code of Conduct and Ethical Standards for Public Officials and Employees. The case matters because it settles three recurring bar points in one decision: that the one-year period in the Ombudsman Act is directory and not mandatory, that administrative due process requires only a reasonable opportunity to be heard and not a trial-type hearing, and that substantial evidence, once affirmed by the Court of Appeals, binds the Supreme Court.

Procedural History

The complaint was filed before the Office of the Ombudsman. Filipino moved to dismiss on the ground of prescription, and the motion was denied. Hearings were scheduled but did not proceed, and the parties were eventually directed to submit the case for adjudication. The Ombudsman then rendered its decision finding her guilty of contracting a loan from persons with whom her office had business relations and of soliciting a loan, and ordering her dismissed from the service.

Filipino went up to the Court of Appeals on a petition for review, arguing that she was deprived of due process and that the findings were not supported by substantial evidence. The Court of Appeals denied the petition and affirmed the Ombudsman in full. Her motion for reconsideration was likewise denied. She then came to the Supreme Court by petition for review, and the Court resolved the case on the questions of prescription, due process, and the sufficiency of the evidence.

Facts

In January 1993, according to the company, Filipino demanded a loan of 110,000 pesos from Drugmakers' Laboratories. Because of her disciplinary power and supervisory authority over the firm, the company gave in and issued a bank check for that amount, supported by a cash voucher in her name. The check, however, was made payable to a certain Marites Vilchez at Filipino's request.

Filipino denied the charge. She claimed the transaction was purely between the company and Vilchez, that Vilchez had already paid the loan as shown by an acknowledgment receipt, and she submitted an affidavit of Vilchez saying that Vilchez was the true debtor. For its part, the company's principal officer, Evangeline Del Mundo, denied Vilchez's story, denied that the company was in the business of lending, and insisted the amount was loaned to Filipino.

Filipino reserved the right to a formal hearing and to cross-examine the witnesses. Yet when the hearings were set, she instead filed a motion to dismiss on prescription, then a motion for reconsideration, and later a memorandum without reservation. Only after the case had been deemed submitted for resolution did she file an urgent motion to set the case for formal investigation. The Ombudsman held that she had waived the formal hearing, gave credence to the company's evidence, and dismissed her from the service.

Issues

• Whether or not the complaint was barred by prescription under the one-year period in the Ombudsman Act.
• Whether or not Filipino was denied due process when the Ombudsman resolved the case without a formal hearing.
• Whether or not there is substantial evidence showing her participation in the loan transaction.

Applicable Provisions

Section 20 of the Ombudsman Act of 1989 provides:

Section 20. Exceptions. The Office of the Ombudsman may not conduct the necessary investigation of any administrative act or omission complained of if it believes that: x x x x (5) The complaint was filed after one (1) year from the occurrence of the act or omission complained of.

This is the provision Filipino invoked to argue that the complaint, filed more than one year after the alleged act, was barred.

Section 7, paragraph (d) of the Code of Conduct and Ethical Standards for Public Officials and Employees provides:

Section 7. Prohibited Acts and Transactions. In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful: x x x x (d) Solicitation or acceptance of gifts. Public officials and employees shall not solicit or accept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary value from any person in the course of their official duties or in connection with any operation being regulated by, or any transaction which may be affected by the functions of their office.

This is the prohibited act of which she was found guilty, the loan having come from a firm her office regulated.

Section 11, paragraph (b) of the same Code provides:

Section 11. Penalties. (b) Any violation hereof proven in a proper administrative proceeding shall be sufficient cause for removal or dismissal of a public official or employee, even if no criminal prosecution is instituted against him.

This is the provision that authorized her dismissal from the service upon a finding of violation in a proper administrative proceeding.

Ruling

On the first issue, the Court held that the complaint was not barred by prescription. The key is the word "may" in Section 20. The Court explained that when used in a statute, "may" is permissive only and operates to confer discretion, while "shall" is imperative and imposes a duty that may be enforced. Applying Section 20, paragraph 5, it is therefore discretionary upon the Ombudsman whether or not to investigate a complaint filed after one year from the occurrence of the act complained of. The use of "may" clearly shows the provision is directory and not mandatory.

On the second issue, the Court held that Filipino was not denied due process. The essence of due process in administrative proceedings is that a party be afforded a reasonable opportunity to be heard and to submit any evidence in support of his defense. Deprivation cannot be successfully invoked where a party was given the chance to be heard and the opportunity to present his side. Due process in the administrative context does not require trial-type proceedings similar to those in courts of justice; where the opportunity to be heard, whether through oral arguments or through pleadings, is accorded, there is no denial of procedural due process. The Court noted that Filipino participated at every level, filing a counter-affidavit, a motion to dismiss, a motion for reconsideration, a memorandum, an urgent motion, and even a motion for disqualification. Hearings were in fact scheduled, but she chose to file pleadings instead. Having submitted her memorandum without reservation and without moving against the order that deemed the case submitted, she impliedly waived her right to a formal hearing.

On the third issue, the Court held that substantial evidence supported the finding of liability. Substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion, and the requirement is satisfied where there is reasonable ground to believe that the petitioner is guilty of misconduct, even if the evidence might not be overwhelming. The cash voucher showed that the 110,000 pesos was disbursed in favor of Filipino; a signed handwritten note showed her personal details and the terms of payment; and the testimonies of the company's officer and representative were straightforward and consistent. Against this, Filipino offered bare denials, and her account through Vilchez was found incredible and highly suspect. The Court added that findings of fact of the Ombudsman, when supported by substantial evidence and affirmed by the Court of Appeals, are conclusive and binding, and that its task in a petition for review is limited to reviewing errors of law.

Doctrine

First, the one-year period in Section 20 of the Ombudsman Act is directory, not mandatory. The word "may" is permissive and confers discretion, so the Ombudsman may still investigate a complaint filed after one year from the act complained of. A complaint is therefore not barred by prescription on that ground alone.

Second, administrative due process requires only a reasonable opportunity to be heard and to present evidence, whether through oral arguments or pleadings. A trial-type hearing is not essential in all instances, and a party who submits a memorandum without reservation impliedly waives the right to a formal hearing.

Third, substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. Findings of fact of the Ombudsman supported by substantial evidence, and affirmed by the Court of Appeals, are conclusive upon the Supreme Court, whose review is limited to errors of law.

Fourth, under Section 7, paragraph (d) in relation to Section 11, paragraph (b) of the Code of Conduct, soliciting or accepting a loan from a person whose transaction may be affected by the functions of one's office is a prohibited act, and a violation proven in a proper administrative proceeding is sufficient cause for dismissal even without criminal prosecution.

Disposition

The petition was denied, and the Court affirmed the decision of the Court of Appeals sustaining the Ombudsman's dismissal of Filipino from government service.

Remember This

Memorize the line that "may" in Section 20 of the Ombudsman Act is permissive and directory, so the one-year period does not bar investigation. Examiners use this case for administrative due process in the Ombudsman and for the conclusiveness of substantial evidence findings affirmed by the Court of Appeals.