1. Does Section 20(5) of R.A. 6770 prohibit the Ombudsman from conducting an administrative investigation a year after the act was committed?
2. Does Andutan's resignation render moot the administrative case filed against him?
1.The issue of whether Section 20(5) of R.A. 6770 is mandatory or discretionary has been settled by jurisprudence.  In Office of the Ombudsman v. De Sahagun,  the Court, speaking through Justice Austria-Martinez, held:
[W]ell-entrenched is the rule that administrative offenses do not prescribe [Concerned Taxpayer v. Doblada, Jr., A.M. No. P-99-1342, September 20, 2005, 470 SCRA 218;Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476;Heck v. Judge Santos, 467 Phil. 798, 824 (2004);Floria v. Sunga,420 Phil. 637, 648-649 (2001)]. Administrative offenses by their very nature pertain to the character of public officers and employees. In disciplining public officers and employees, the object sought is not the punishment of the officer or employee but the improvement of the public service and the preservation of the public's faith and confidence in our government [Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 481;Remolona v. Civil Service Commission,414 Phil. 590, 601 (2001)].
Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
SEC. 20.Exceptions. - The Office of the Ombudsmanmaynot 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 year from the occurrence of the act or omission complained of. (Emphasis supplied)
proscribes the investigation of any administrative act or omission if the complaint was filed after one year from the occurrence of the complained act or omission.
InMelchor v. Gironella [G.R. No. 151138, February 16, 2005, 451 SCRA 476], the Court held that the period stated in Section 20(5) of R.A. No. 6770 does not refer to the prescription of the offense but to the discretion given to theOmbudsmanon whether it would investigate a particular administrative offense. The use of the word "may" in the provision is construed as permissive and operating to confer discretion [Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 481;Jaramilla v. Comelec, 460 Phil. 507, 514 (2003)]. Where the words of a statute are clear, plain and free from ambiguity, they must be given their literal meaning and applied without attempted interpretation [Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 481;National Federation of Labor v. National Labor Relations Commission, 383 Phil. 910, 918 (2000)].
In Filipino v. Macabuhay [G.R. No. 158960, November 24, 2006, 508 SCRA 50],the Court interpreted Section 20 (5) of R.A. No. 6770 in this manner:
Petitioner argues that based on the abovementioned provision [Section 20(5) of RA 6770)], respondent's complaint is barred by prescription considering that it was filed more than one year after the alleged commission of the acts complained of.
Petitioner's argument is without merit.
The use of the word "may" clearly shows that it is directory in nature and not mandatory as petitioner contends. When used in a statute, it is permissive only and operates to confer discretion; while the word "shall" is imperative, operating to impose a duty which may be enforced. Applying Section 20(5), therefore,it is discretionary upon the Ombudsman whether or not to conduct an investigation on a complaint even if it was filed after one year from the occurrence of the act or omission complained of. In fine, the complaint is not barred by prescription. (Emphasis supplied)
2.Although the Ombudsman is not precluded by Section 20(5) of R.A. 6770 from conducting the investigation, the Ombudsman can no longer institute an administrative case against Andutan because the latter was not a public servant at the time the case was filed.
The Ombudsman argued - in both the present petition and in the petition it filed with the CA - that Andutan's retirement from office does not render moot any administrative case, as long as he is charged with an offense he committed while in office. It is irrelevant, according to the Ombudsman, that Andutan had already resigned prior to the filing of the administrative case since the operative fact that determines its jurisdiction is the commission of an offense while in the public service.
The Ombudsman relies on Section VI(1) of Civil Service Commission Memorandum Circular No. 38 for this proposition, viz.:
1. x x x
An officer or employee under administrative investigation may be allowed to resign pending decision of his case but it shall be without prejudice to the continuation of the proceeding against him. It shall also be without prejudice to the filing of any administrative, criminal case against him for any act committed while still in the service. (emphasis and underscoring supplied)
The CA refused to give credence to this argument, holding that the provision "refers to cases where the officers or employees were already charged before they were allowed to resign or were separated from service."  In this case, the CA noted that "the administrative cases were filed only after Andutan was retired, hence the Ombudsman was already divested of jurisdiction and could no longer prosecute the cases." 
Challenging the CA's interpretation, the Ombudsman argues that the CA "limited the scope of the cited Civil Service Memorandum Circular to the first sentence."  Further, according to the Ombudsman, "the court a quo ignored the second statement in the said circular that contemplates a situation where previous to the institution of the administrative investigation or charge, the public official or employee subject of the investigation has resigned." 
To recall, we have held in the past that a public official's resignation does not render moot an administrative case that was filed prior to the official's resignation. In Pagano v. Nazarro, Jr.,  we held that:
InOffice of the Court Administrator v. Juan [A.M. No. P-03-1726,22 July 2004, 434 SCRA 654, 658], this Court categorically ruled that the precipitate resignation of a government employee charged with an offense punishable by dismissal from the servicedoes notrender moot the administrative case against him.Resignation is not a way out to evade administrative liability when facing administrative sanction.The resignation of a public servant does not preclude the finding of any administrative liability to which he or she shall still be answerable [Baquerfo v. Sanchez, A.M. No. P-05-1974,6 April 2005, 455 SCRA 13, 19-20]. [emphasis and underscoring supplied]
Likewise, in Baquerfo v. Sanchez,  we held:
Cessation from office of respondent by resignation [Reyes v. Cristi, A.M. No. P-04-1801, 2 April 2004, 427 SCRA 8] or retirement [Re: Complaint Filed by Atty. Francis Allan A. Rubio on the Alleged Falsification of Public Documents and Malversation of Public Funds, A.M. No. 2004-17-SC, 27 September 2004;Caja v. Nanquil, A.M. No. P-04-1885, 13 September 2004] neither warrants the dismissal of the administrative complaint filed against him while he was still in the service [Tuliao v. Ramos, A.M. No. MTJ-95-1065, 348 Phil. 404, 416 (1998), citing Perez v. Abiera, A.C. No. 223-J, 11 June 1975, 64 SCRA 302; Secretary of Justice v. Marcos, A.C. No. 207-J, 22 April 1977, 76 SCRA 301] nor does it render said administrative case moot and academic [Sy Bang v. Mendez, 350 Phil. 524, 533 (1998)]. The jurisdiction that was this Court's at the time of the filing of the administrative complaint was not lost by the mere fact that the respondent public official had ceased in office during the pendency of his case [Flores v. Sumaljag, 353 Phil. 10, 21 (1998)]. Respondent's resignation does not preclude the finding of any administrative liability to which he shall still be answerable [OCA v. Fernandez, A.M. No. MTJ-03-1511, 20 August 2004]. [emphases and underscoring supplied)
However, the facts of those cases are not entirely applicable to the present case. In the above-cited cases, the Court found that the public officials - subject of the administrative cases - resigned, either to prevent the continuation of a case already filed  or to pre-empt the imminent filing of one.  Here, neither situation obtains.
The Ombudsman's general assertion that Andutan pre-empted the filing of a case against him by resigning, since he "knew for certain that the investigative and disciplinary arms of the State would eventually reach him"  is unfounded. First, Andutan's resignation was neither his choice nor of his own doing; he was forced to resign. Second, Andutan resigned from his DOF post on July 1, 1998, while the administrative case was filed on September 1, 1999, exactly one (1) year and two (2) months after his resignation. The Court struggles to find reason in the Ombudsman's sweeping assertions in light of these facts.
What is clear from the records is that Andutan was forced to resign more than a year before the Ombudsman filed the administrative case against him. Additionally, even if we were to accept the Ombudsman's position that Andutan foresaw the filing of the case against him, his forced resignation negates the claim that he tried to prevent the filing of the administrative case.
Having established the inapplicability of prevailing jurisprudence, we turn our attention to the provisions of Section VI of CSC Memorandum Circular No. 38. We disagree with the Ombudsman's interpretation that "[a]s long as the breach of conduct was committed while the public official or employee was still in the service x x x a public servant's resignation is not a bar to his administrative investigation, prosecution and adjudication."  If we agree with this interpretation, any official - even if he has been separated from the service for a long time - may still be subject to the disciplinary authority of his superiors, ad infinitum. We believe that this interpretation is inconsistent with the principal motivation of the law - which is to improve public service and to preserve the public's faith and confidence in the government, and not the punishment of the public official concerned.  Likewise, if the act committed by the public official is indeed inimical to the interests of the State, other legal mechanisms are available to redress the same.
[ G.R. No. 164679, July 27, 2011 ]
OFFICE OF THE OMBUDSMAN, PETITIONER, VS. ULDARICO P. ANDUTAN, JR., RESPONDENT.