G.R. No. 109666 - Olaguer vs. Domingo

The National Home Mortgage Finance Corporation (NHMFC) was established as a government corporation and the implementing arm of the National Shelter Program, catering primarily to lower-income Philippine citizens.
In 1987, the NHMFC, together with the Housing and Urban Development Council (HUDC), the Presidential Commission on Urban Poor (PCUP), and the Home Insurance Guaranty Corporation (HIGC), conceptualized a Community Mortgage Program (CMP) to enable community ownership of land.
In 1988, the CMP was launched as a sub-program of the Unified Home Lending Program, innovatively enabling groups of beneficiaries to acquire undivided tracts of land.

Guidelines were established and later amended, increasing the loan ceiling and modifying the origination fee.
In December 1988, HIGC Vice-President Carlos P. Doble issued an appraisal policy for the CMP, which was concurred in by key officials, thereby setting the stage for subsequent transactions.
In February 1989, following a request from Severino H. Gonzales, Jr. Construction Co., Inc., an appraisal was conducted by HIGC on a parcel of land in Angeles City, Pampanga, estimating its value at P60.00 per square meter (if a right-of-way were provided).

In March 1989, the Sapang Palay Community Development Foundation, Inc. (SPCDFI) filed a Purchase Commitment Line application covering several Community Mortgage projects.
In April 1989, SPCDFI, through its president Nelson Concepcion, applied for accreditation as an originator for land and housing projects, including the AMAKO Project in Angeles City.
On October 1989, the Accreditation and Project Evaluation Department (APED) of the NHMFC evaluated and recommended the approval of SPCDFI’s revised loan application for the AMAKO Project, which thereafter was approved by the NHMFC Board through Resolution No. 662.
The NHMFC created the CMP Task Force, later reorganized as the Community Mortgage Management Office (CMMO) and then upgraded to the Community Mortgage Group (CMG); petitioners Rogerio R. Olaguer (Manager), Ernesto S. Salvador (Executive Assistant), and Irma R. Fuentes (Unit Head) were among the designated officers involved in processing, reviewing, and evaluating CMP loan documents.

On January 4, 1990, pursuant to the APED recommendation, the NHMFC disbursed approximately P36.8 million as a loan to SPCDFI-AMAKO for the purchase of the Angeles property, using the land as collateral.
Soon after the disbursement, an audit conducted by the NHMFC’s resident auditor, Lakambini Razon, identified numerous irregularities and deficiencies, including:

Non-submission or defective documentary requirements such as the lease purchase agreement (LPA) and beneficiaries’ affidavits of income.
Discrepancies in appraisal values, including conflicting findings between the HIGC appraisal and the task force’s investigation regarding key physical attributes (absence of a road right-of-way, presence of creeks and rivers, and the classification/actual use of the land).
Irregular and excessive expenditures detrimental to the NHMFC, particularly with regard to the release of funds covering 90% of the appraised land value.

The audit disallowed the loan and associated origination fee, attributing the irregularities to the actions and omissions of the officers in the CMP Task Force, whose responsibilities included processing, reviewing, and verifying loan documents.

Following the initial audit, the NHMFC President and other implicated officers filed motions for reconsideration.
A memorandum dated April 10, 1991 by the Director, Corporate Audit Office of the Commission on Audit (COA) partially lifted the disallowance against some officers on the basis that their roles were merely ministerial; however, the disallowance was maintained on the NHMFC President due to his material participation.
On February 19, 1993, COA Decision No. 2700, signed by the COA Chairman and Commissioners, affirmed the disallowances imposed on the NHMFC President and the three petitioners, thereby denying their request for reconsideration.
Petitioners argued that no single act or omission could be solely attributed to them and that they had not acted negligently, fraudulently, or in bad faith; nonetheless, they were held accountable as the officers charged with the processing and approval of the CMP loan applications.

Whether the COA gravely abused its discretion in affirming the administrative findings and audit disallowance against the NHMFC President and the petitioners.
Whether the responsibilities of petitioners in processing, reviewing, and evaluating the loan application could exempt them from personal accountability for the alleged irregularities.

Whether the failure to enforce and comply with mandated documentary requirements (e.g., the lease purchase agreements and beneficiary affidavits) warrants personal liability for the petitioners.
Whether the delegation of technical powers in the Community Mortgage Program absolves the petitioners of responsibility for deficiencies that fell within their direct oversight.

Whether the court should intervene in the review of the technical and administrative decisions rendered by the COA given its specialized expertise and discretion in matters of government expenditure auditing.