G.R. No. 182252 - Ang vs. So

On May 25, 2005, the Government Service and Insurance System (GSIS), represented by its President and General Manager, Winston F. Garcia, executed a Memorandum of Agreement (MOA) with the Office of the Government Corporate Counsel (OGCC), headed by then Government Corporate Counsel (GCC) Agnes VST Devanadera.
The MOA enabled the OGCC to handle the extrajudicial foreclosure of delinquent real estate loan accounts of GSIS (the GSIS Foreclosure Project).
In consideration of the services rendered, GSIS agreed to pay special assessment fees, with the total amount collected amounting to P11,845,000.00.

Devanadera issued two separate memoranda authorizing the release of proceeds from the collected special assessment fees.

The January 23, 2007 memorandum requested the release of P500,000.00 to Devanadera and P200,000.00 to her then Chief of Staff and Head Executive Assistant, Rolando B. Faller.
This memorandum was accompanied by disbursement vouchers and subsequent Landbank checks, co-signed by the Assistant GCC for Administration, Jose Capili, and Devanadera herself.

A second memorandum dated February 8, 2007 authorized additional disbursements purportedly for the purchase of reading materials, releasing P100,000.00 to Devanadera and P30,000.00 to Faller.

Just like the prior release, accompanying disbursement vouchers and Landbank checks were issued, again co-signed by Capili and Devanadera.

On January 23, 2008, the Commission on Audit (COA) issued Audit Observation Memorandum No. 2008-002, highlighting irregularities in the alleged purchase of reading materials amounting to P130,000.00.

The COA observed that disbursements for the reading materials were made directly to government officials (Devanadera and Faller) instead of to bona fide suppliers, and lacked proper supporting documents.
These irregularities were in violation of Section 4(6) of Presidential Decree No. 1445, known as the Government Auditing Code of the Philippines.

When the Field Investigation Office (FIO) of the Ombudsman subpoenaed the relevant supporting documents, the Accounting Division certified that no such documentation existed, noting that the proper procurement process was not followed.

The FIO of the Ombudsman filed a complaint against Devanadera, Faller, Cruz (the issuing accountant), and Capili (the co-signatory), charging:

Criminal liability for violations of Article 217 of the Revised Penal Code (Malversation of Public Funds) and Section 3(e) of Republic Act No. 3019.
Administrative liability for grave misconduct, dishonesty, and conduct prejudicial to the best interest of the service with respect to an aggregate disbursement amounting to P830,000.00.

Their receipt of what were termed “attorney’s fees” was in accordance with the Administrative Code of 1987 and OGCC Office Order No. 006, series of 2004.
They had genuinely used the funds to purchase reading materials, which were reportedly kept at the OGCC premises.
The lapse in documentation was attributed to accountability issues with the accountant, Cruz, who was no longer available.

Capili argued that his role was purely ministerial, having merely affixed his signature on the checks without active participation in the disbursement process.

In a Decision dated March 3, 2010, the Ombudsman found Devanadera, Faller, Cruz, and Capili guilty of grave misconduct, dishonesty, and conduct prejudicial to the best interest of the service, thereby ordering their dismissal.

They were further ordered to jointly and solidarity restitute P760,000.00 to the OGCC Trust Liability Account.
The Ombudsman's findings stressed the lack of documentation concerning the purchase of reading materials and the improper use of special assessment fees.
The ruling distinguished between special assessment fees and attorney’s fees, noting that the former were subject to different guidelines.

Subsequent motions for reconsideration and reinvestigation were filed by the offending parties, but these were denied through an Omnibus Order dated October 3, 2011.
Faller, acting on his own behalf, later elevated the matter before the Court of Appeals (CA) by filing a petition for review.

The CA Decision dated May 22, 2014, modified the Ombudsman’s ruling concerning Faller by:

Finding him liable only for simple misconduct and conduct prejudicial to the best interest of the service.
Imposing a suspension of one (1) year and an accessory penalty of disqualification from promotion for the same period.
Ordering him to restitute P760,000.00 to the OGCC Trust Liability Account.

The CA ruled that the necessary elements for grave misconduct—such as clear intent to violate the law or evidence of corruption—were absent in Faller’s actions.
Thereafter, motions for partial reconsideration were filed by both the Ombudsman and Faller, but these were denied in a Resolution dated December 17, 2014, giving rise to the current petition.

Whether the Court of Appeals erred in ruling that Rolando B. Faller is administratively liable only for simple misconduct and conduct prejudicial to the best interest of the service, as opposed to grave misconduct or dishonesty.
Whether Faller’s conduct—specifically his receipt of funds released under unauthorized disbursement memoranda—exhibited a wilful intent to defraud or violate established procedures warranting a harsher penalty.
Whether the application of the guidelines for the disbursement of attorney’s fees (under OGCC Office Order No. 006, series of 2004) was appropriate given that the GSIS Foreclosure Project was extrajudicial in nature, thereby impacting the characterization of the offense.