o There was no clear showing that the documents contained evidence
[14] BIR v. OFFICE OF THE OMBUDSMAN
G.R No. 115103 | April 11, 2002 | De Leon Jr, J.
SUMMARY
Ombudsman issued a subpoena to BIR, ordering them to produce the case dockets
of the tax refunds granted to 2 companies. BIR raised issues opposing this, but
without resolving these issues, Ombudsman issued another subpoena ordering the
same thing. The Court held that the Ombudsman had plenary power to investigate
BIR findings, but BIR’s right to due process was violated because BIR officials were
never furnished with a summary of the complaint and were not given opportunity to
submit counter-affidavits and controverting evidence.
DOCTRINE:
FACTS:
 Graft Investigation Officer II Soquilon of the Office of the Ombudsman received
information from an “informer-for-reward” regarding allegedly anomalous grant
of tax refunds to Distillera Limtuaco & Co., Inc. and La Tondeña Distilleries, Inc.
o He recommended to Ombusdman Vasquez that the “case” be
docketed and subsequently assigned to him for investigation.
 Ombudsman issued a subpoena duces tecum to Atty. Mansequiao of the BIR,
ordering him to bring the complete original case dockets of the refunds granted
to Limtuaco and La Tondeña.
 BIR asked to be excused from complying with this because:
o The Limtuaco case was pending investigation by Graft Investigation
Officer II Baldrias
o The investigation thereof and that of La Tondeña was mooted1
 Without resolving the issued raised by BIR, Ombudsman issued another
subpoena ordering the BIR Commissioner to bring the case dockets.
 BIR moved to vacate the subpoena, arguing that:
o The second subpoena was issued without first resolving the issues
raised in its Manifestation and Motion
o The documents being required to be produced were already submitted
to Graft Investigation Officer II Baldrias
o The issue of the tax credit of ad valorem taxes has already been
resolved as proper by the Sandiganbayan
o The subpoena was in the nature of an omnibus subpoena because it
did not specifically described the particular documents to be produced
1 In People v. Larin: the legal issue was no longer in question since BIR had ruled that
the ad valorem taxes were erroneously paid and could therefore be the proper subject
of a claim for tax credit.”
material to the inquiry
o It would violate Sec. 269, NIRC on unlawful divulgence of trade secrets
and Sec. 277, NIRC on procuring unlawful divulgence of trade secrets
o Limtuaco and La Tondeña had the right to rely on the correctness and
conclusiveness of the decisions of the Commissioner of Internal
Revenue (CIR)
 Ombudsman denied the motion because:
o The Limtuaco case was already referred to the Fact-Finding and
Investigation Bureau of the Ombudsman
o the documents submitted by the BIR to Baldrias were incomplete and
not certified
o the documents required were clearly and particularly specified
 BIR filed a MR, alleging that:
o The subject matter was beyond the scope of the jurisdiction of the
Ombudsman
o The subpoena was not properly issued in accordance with law. There
must first be a pending action, but the Ombudsman issued the
subpoena based only on the information from an informer-for-reward
and the report of the Asst. Comm. Reyes.
o Non-compliance thereto was justifiable
o It had exclusive authority whether to grant a tax credit and that the
jurisdiction to review this is with the Court of Tax Appeals (CTA)
o The subpoena did not specifically describing the documents sought
 Ombudsman denied the MR and reiterated its directive.
 BIR manifested its intention to elevate the case on certiorari to SC, so
Ombudsman ordered Asst. Comm. Maza to show cause why he should not be
cited for contempt for contumacious refusal to comply with the subpoena.
 BIR filed the instant Petition for Certiorari, Prohibition and Preliminary Injunction
and Temporary Restraining Order.
ISSUES w/ HOLDING & RATIO
1. W/N there must first be a pending action before the Ombudsman can
investigate - NO
BIR:
 Investigative power of Ombudsman is not unbridled. Regarding tax refunds, it
can investigate only when there is an appropriate case and subject to the
limitations provided by law.
 The fact-finding investigation is not the proper case, but only a step preliminary
to the filing of recovery actions on the tax refunds.
SC:
 Art. XI, Sec. 12, 1987 Consti: “Ombudsman 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… and shall, in
 appropriate cases, notify the complainants of the action taken and the result
thereof.”
 There is no requirement of a pending action before the Ombudsman could wield
its investigative power.
 Ombudsman could resort to its investigative prerogative on its own18 or upon a
complaint filed in any form or manner
 “in appropriate cases” means any case concerning official act or omission which
is alleged to be “illegal, unjust, improper, or inefficient,”
2. W/N the BIR findings could be disturbed by the Ombudsman through
investigation - YES
BIR:
 Determination of granting tax refunds falls within its exclusive expertise and
jurisdiction and that its findings could no longer be disturbed by the Ombudsman
as it was a valid exercise of discretion
 Ombudsman should have appealed to CTA
SC:
 Ombudsman’s power to investigate and prosecute is plenary and unqualified.
 The Ombudsman Act: jurisdiction of the Ombudsman encompasses “all kinds of
malfeasance, misfeasance and nonfeasance that have been committed by any
officer or employee x x x during his tenure of office.”
 When there is a suspicion of impropriety in the grant of tax refund, the
Ombudsman could ascertain W/N this was done in accordance with law.
 The investigation was not undertaken by the Ombudsman as an appellate body,
but as an investigative agency in its role as “protector of the people”
3. W/N the documents sought to be produced were particularly described -
YES
BIR:
 The investigation would only amount to a general inquisitorial examination on
the ‘case dockets’ with a view to search through them to gather evidence
considering that the subpoena did not describe the documents with particularity
SC
 The subpoena did particularly and sufficiently describe the records to be
produced.
 BIR even knew precisely what records were being referred to as it even
suggested that the tax dockets sought to be produced may not contain evidence
material to the inquiry and that it has already submitted the same to Baldrias
 No contravention of Sec. 269, NIRC. The documents sought were only the case
dockets of tax refunds, which are public records, and the subpoena were
directed to public officials who have official custody of the records.
 Assuming that the case dockets contain trade secrets, this would not justify their
nonproduction.
o Almonte v. Vasquez: At common law a governmental privilege against
disclosure is recognized with respect to state secrets bearing on
military, diplomatic and similar matters. Even if the subpoenaed
documents are treated as presumptively privileged, it would not justify
their nonproduction.
4. W/N BIR’s right to due process was violated - YES
BIR:
 The investigation violated due process because it was commenced by issuing
the subpoena without first furnishing BIR with a summary of the complaint and
requiring to a written answer
Ombudsman:
 It is required to furnish a summary of the complaint only then the Ombudsman
finds reasonable ground to investigate further. In this case, it has yet to make
that determination.
SC:
 The procedure taken by the Ombudsman did not comply with Sec. 26,
Ombudsman Act of 1989
o “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 seventy-two
hours from receipt hereof….”
 It also contravened Sec. 4, Rule 11, Rules of Procedure of the Office of the
Ombudsman
o (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.
o (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 (10) 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 (10) days after service of the counter-affidavits x x x
 Graft Investigation Officer Soquilon found reasonable grounds to investigate
further and even recommended the case be docked immediately and assigned
to him for investigation. He was convinced that the granting of the tax refunds
was so anomalous that he assured the recovery of the tax refunds and the
prosecution and conviction of BIR officials for graft and corruption.
 The BIR officials concerned were never furnished with a summary of the
complaint and were not given opportunity to submit counter-affidavits and
controverting evidence. Instead, they were summarily ordered to appear before
the Ombudsman and produce the case dockets.
RULING: Petition GRANTED.