Field Investigation Unit-Office of the Deputy Ombudsman for Luzon vs. De Castro

Repeated certification and approval of disbursement vouchers for transactions between a local government unit and businesses in which the certifying accountable officer has an indirect pecuniary interest constitutes grave misconduct through flagrant disregard of an express prohibition, notwithstanding disclosure in a SALN and lack of participation in supplier selection, where the certification was legally necessary to disburse local funds and was done on numerous occasions over several years.

Raquel A. De Castro served as Municipal Accountant of the Municipality of Bongabong, Oriental Mindoro, with duties concerning internal audit, financial statements, certification of budgetary allotment, review of supporting documents before voucher preparation, and statements of advances, liquidation, salaries and remittances. During her incumbency, the Municipality transacted with Pink Plate's General Merchandise, Pink Shop Computer Center and Pink Plate's Bistro, all owned by her husband, and with Pink Splash Resort, registered in her daughter's name. Sections 89, 341 and 344 of Republic Act No. 7160, otherwise known as The Local Government Code, prohibit local officials and accountable officers from having direct or indirect pecuniary interest in municipal business and prescribe certification requirements before local funds may be disbursed.

On August 2, 1996, Raquel A. De Castro began work as Municipal Accountant for the Municipality of Bongabong, Oriental Mindoro. Her functions included installing and maintaining an internal audit system, preparing financial statements, apprising the Sanggunian and other officials on financial condition, certifying availability of budgetary allotment, reviewing supporting documents before voucher preparation, and preparing statements of cash advances, liquidation, salaries, allowances, reimbursements and remittances.

Thereafter, from 2006 to 2010, the Municipality made numerous payments to four establishments connected to her family. Pink Shop Computer Center supplied computer accessories, ink refills, a printer and a power supply for various municipal offices in seven payments in 2006 to 2007, including Php7,886.10 on February 24, 2006 and Php11,167.85 on February 20, 2007. Pink Plate's General Merchandise supplied daycare workers' uniforms, printed t-shirts and medals in three payments from 2008 to 2010, including Php63,590.40 on November 5, 2009. Pink Plate's Bistro provided meals, snacks, venue rental and hire of chairs and tables for seminars, trainings, orientations and festivals in eighteen payments in 2006 to 2007, including Php58,521.60 on June 6, 2006. Pink Splash Resort provided meals, hotel accommodation, venue and chairs and tables for missions, meetings, trainings, audits and municipal activities in thirty-four payments in 2008 to 2010, including Php116,160.00 on December 18, 2008 and Php174,720.00 on December 22, 2009.

According to the Field Investigation Unit, De Castro knowingly certified and approved the disbursement vouchers covering those transactions despite her indirect pecuniary interest through her husband's ownership of the Pink enterprises and her daughter's registration as owner of the resort. For her part, De Castro asserted in her Counter-Affidavit that she neither intervened nor participated directly or indirectly in the process and consummation of the transactions, that her signature only certified completeness of supporting documents, and that the initiative came from the Bids and Awards Committee when it requested quotations from Pink Enterprises and other establishments. The Deputy Ombudsman for Luzon credited the documentary showing of repeated certification and found grave misconduct, while the Court of Appeals found only simple misconduct for lack of corruption, clear intent to violate the law, or flagrant disregard of rules.

• Non-participation and limited role of certification: Respondent maintained that she neither intervened nor participated directly or indirectly in the process and consummation of the subject transactions and that her signature on the disbursement vouchers only meant she had certified that the supporting documents were complete.
• Initiative from Bids and Awards Committee: Respondent emphasized that the initiative to enter into the subject transactions did not come from her, but from the Bids and Awards Committee when it requested Pink Enterprises and other establishments to submit quotations for goods and services needed by the Municipality.

• Grave vs. Simple Misconduct: Whether the Court of Appeals erred in downgrading respondent's liability from grave misconduct to simple misconduct for certifying disbursement vouchers covering municipal transactions with businesses owned by her husband and daughter.

• Grave vs. Simple Misconduct: Yes. The downgrade was reversed because repeated certification despite a clear statutory prohibition on indirect pecuniary interest established flagrant disregard of rules, the hallmark of grave rather than simple misconduct.

• Grave vs. Simple Misconduct: Misconduct is intentional wrongdoing or deliberate violation of a rule of law or standard of behavior by a government official, grave where corruption, clear intent to violate the law, or flagrant disregard of established rule is present, and simple otherwise, with guilt in administrative cases proven by substantial evidence. The records showed respondent on more than one occasion knowingly certified and approved disbursement vouchers for Municipality of Bongabong transactions with Pink Enterprises despite a clearly prohibited indirect pecuniary interest under Sections 89 and 341 of Republic Act No. 7160. Her propensity to ignore the rules was manifested by repeated violations over four years from 2006 to 2010, not excused by SALN disclosure or long government service negating ignorance, and her certification was not passive because Section 344 makes obligation by the local accountant a necessary condition before local funds may be disbursed. Mitigation for humanitarian reasons and length of service was rejected as inappropriate where condonation of a serious offense and public perception of corruption and incompetence were at stake, following Imperial, Jr. vs. Government Service Insurance System on flagrant disregard and Japson vs. Civil Service Commission on prejudice to the service.

• Misconduct; grave vs. simple — Misconduct is intentional wrongdoing or deliberate violation of a rule of law or standard of behavior, especially by a government official. It is grave where the elements of corruption, clear intent to violate the law, or flagrant disregard of established rule are present; otherwise it is only simple. Applied here, repeated knowing certification despite prohibited indirect pecuniary interest supplied flagrant disregard, elevating the offense to grave misconduct.
• Substantial evidence in administrative proceedings — The quantum of proof necessary for a finding of guilt is substantial evidence, or such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. Applied here, disbursement vouchers, payment records for 2006 to 2010, and respondent's admissions of certification and family connection sufficed to establish culpability.
• Flagrant disregard of rules by repeated violation — Flagrant disregard is shown by a propensity to ignore rules as manifested by actions, including repeated voluntary disregard of established rules in procurement and arrogation of prohibited acts, as illustrated in Imperial, Jr. vs. Government Service Insurance System. Applied here, certification on numerous occasions over four years despite Sections 89, 341 and 344 of Republic Act No. 7160 demonstrated such disregard.
• Public accountability and prejudice to the service — A public servant must exhibit at all times the highest sense of honesty and integrity, and prejudice to the service includes not only wrongful disbursement or loss but the public's perception of corruption and incompetence. Applied here, mitigation was withheld to avoid signaling condonation of a serious breach involving municipal funds and family businesses.

• "Misconduct has been defined as an intentional wrongdoing or a deliberate violation of a rule of law or standard of behavior, especially by a government official. A misconduct is grave where the elements of corruption, clear intent to violate the law or flagrant disregard of established rule are present. Otherwise, a misconduct is only simple." — States the controlling definitional test used to distinguish grave from simple misconduct and to frame the sole issue on appeal.
• "The common denominator in these cases was the employees propensity to ignore the rules as clearly manifested by his or her actions." — Provides the canonical formulation of flagrant disregard drawn from Imperial, Jr. vs. Government Service Insurance System and applied to respondent's repeated certifications.
• "Prejudice to the service is not only through wrongful disbursement of public funds or loss of public property. Greater damage comes with the public's perception of corruption and incompetence in the government." — Articulates the policy basis from Japson vs. Civil Service Commission for refusing to mitigate the dismissal penalty.

• Imperial, Jr. vs. Government Service Insurance System, 674 Phil. 286 (2011) — Followed as controlling on the meaning of flagrant disregard of rules and on the grave vs. simple misconduct distinction, including quotation of its enumeration of prior instances of disregard.
• Vertudes vs. Buenaflor, 514 Phil. 399 (2005) — Cited through Imperial, Jr. vs. Government Service Insurance System as source authority for the definition of misconduct and its grave and simple classifications.
• Government Service Insurance System (GSIS), et al. vs. Mayordomo, 665 Phil. 131 (2011) — Cited for the rule that substantial evidence is the quantum of proof necessary in administrative proceedings.
• Japson vs. Civil Service Commission, 663 Phil. 665 (2011) — Followed on the nature of prejudice to the service and the need for the highest honesty and integrity, supporting refusal to mitigate dismissal.

• Section 89(a), Republic Act No. 7160 — Makes it unlawful for any local government official or employee, directly or indirectly, to engage in any business transaction with the local government unit where money is to be paid out of its resources to such person or firm; applied as the express prohibition respondent violated by certifying vouchers for family-owned suppliers.
• Section 341, Republic Act No. 7160 — Provides that any local treasurer, accountant, budget officer or other accountable officer having any pecuniary interest, direct or indirect, in any contract, work or other business of the local government unit shall be administratively liable; applied to hold respondent as municipal accountant liable for indirect interest through her husband and daughter.
• Section 344, Republic Act No. 7160 — Requires before disbursement that the budget officer certify appropriation, the accountant obligate the appropriation, and the treasurer certify fund availability, with vouchers certified as to validity, propriety and legality; applied to reject the claim of non-participation because respondent's certification was necessary to consummate the transactions.
• Section 10, Rule III, Administrative Order No. 07, as amended by Administrative Order No. 17, in relation to Section 25 of Republic Act No. 6770 — Cited as basis for the penalty of dismissal with forfeiture of retirement benefits, perpetual disqualification, cancellation of eligibility and bar from examinations, convertible to a fine equivalent to one year's salary if dismissal can no longer be enforced.

Senior Associate Justice Carpio, Associate Justice Peralta, Associate Justice Perlas-Bernabe, and Associate Justice Caguioa concurred.