G.R. No. 232844 - Heirs of Buenaflor vs. Field Investigation Office

Case Summary (G.R. No. 232844)

Factual Background

On March 18, 2004, the late Nelson Cabrera Buenaflor, then President and Chief Executive Officer of Quedan and Rural Credit Guarantee Corporation (QUEDANCOR), issued Memorandum Circular No. 270, the Consolidated Guidelines on QUEDANCOR Swine Program (CG-QSP), which established a credit program to provide affordable credit to swine raisers. Under the CG-QSP, QUEDANCOR approved loan applications, issued Purchase Orders to borrowers, and borrowers presented those POs to accredited Input Suppliers for delivery of swine inputs; upon delivery borrowers signed a Joint Acceptance and Delivery Receipt and the accredited Input Supplier collected payment from QUEDANCOR, the amount of which constituted the borrowers’ loan.

Administrative Complaint and Defense

The Field Investigation Office (FIO) filed Complaint OMB-C-A-09-0690-K on June 23, 2009 charging Buenaflor and others with Serious Dishonesty and Conduct Prejudicial to the Best Interest of the Service under Rule IV, Section 52A(1) and (20) of Civil Service Commission Resolution No. 99-1936, alleging irregular implementation of the QSP in Oriental Mindoro, including alleged circumvention of competitive bidding under R.A. No. 9184 in awarding contracts totaling P48,606,750.00 to Metro Livestock Incorporated (MLI), accreditation and eligibility deficiencies of MLI, and borrower complaints of late or non-delivery and poor quality of inputs; the FIO relied in part on a Commission on Audit Audit Observation Memorandum dated February 29, 2008. In his Counter-Affidavit, Buenaflor contended that R.A. No. 9184 did not apply because QUEDANCOR did not engage in procurement and the CG-QSP did not contemplate procurement of goods.

Ombudsman Decision

In its Decision dated January 27, 2014, the Ombudsman found Buenaflor and five others administratively liable for Grave Misconduct for signing, approving, and issuing the CG-QSP, and ordered their dismissal from office with forfeiture of retirement benefits and perpetual disqualification from reemployment in government service; the Ombudsman denied Buenaflor’s Motion for Reconsideration in an Order dated November 4, 2014.

Court of Appeals Ruling

The Court of Appeals, in the assailed Decision dated January 18, 2017, sustained the Ombudsman’s finding and held that the QSP was in reality a loan in kind rather than a loan in money, with the consequence that QUEDANCOR should have complied with public bidding requirements under R.A. No. 9184; the CA also agreed with the Ombudsman that the denomination of the offense in the administrative charge was not dispositive and that one may be found guilty of a different offense when the allegations and evidence proved such guilt.

Subsequent Events and the Heirs’ Petition

Buenaflor died on June 11, 2016, a fact communicated to the CA in a Manifestation dated March 17, 2017; the CA denied the petition for reconsideration in a Resolution dated July 13, 2017. Thereafter, the heirs of the late Buenaflor filed the present Petition for Review on Certiorari under Rule 45, Rules of Court, asserting their interest in the retirement benefits that the Ombudsman had ordered forfeited.

Issue Presented

The central issue was whether the late Buenaflor could be held administratively liable for issuing the CG-QSP, and whether the CG-QSP fell within the procurement regime of R.A. No. 9184 such that noncompliance with public bidding constituted an unlawful act supporting administrative sanction.

Supreme Court Ruling

The Supreme Court granted the Petition. The Court reversed and set aside the Decision dated January 18, 2017 and the Resolution dated July 13, 2017 of the Court of Appeals in CA-G.R. SP No. 138415, and dismissed the administrative case against the late Nelson Cabrera Buenaflor.

Legal Reasoning

The Court first observed that the death of a respondent in an administrative case does not ordinarily preclude final disposition and that exceptions to that principle were not present in the case, so that resolution inured to the benefit of the heirs and prevented unjust deprivation of accrued benefits. On the merits, the Court relied on its earlier disposition in People v. Sandiganbayan, First Division, which involved substantially the same facts, and concluded that the CG-QSP did not involve procurement as defined in Section 5(n) of R.A. No. 9184, because QUEDANCOR provided credit facilities and the borrowers, not QUEDANCOR, procured inputs from accredited suppliers; the CG-QSP laid down lending procedures rather than procedures for purchasing or maintaining inventories. The Court noted that QUEDANCOR sought and obtained the view of the Office of the Government Corporate Counsel (OGCC) in Opinion No. 21, Series of 2006, which opined that QUEDANCOR was not engaged in procurement under R

Case Syllabus (G.R. No. 232844)

Parties and Procedural Posture

Heirs of Nelson Cabrera Buenaflor, namely, Pura R. Buenaflor, Kareva R. Buenaflor, Kenneth R. Buenaflor, Paul R. Buenaflor and Mark R. Buenaflor, Petitioners appealed to the Supreme Court under Rule 45 of the Rules of Court.
Field Investigation Office, Office of the Ombudsman, Respondent filed the administrative complaint and prosecuted the case before the Ombudsman.
The administrative complaint was docketed as OMB-C-A-09-0690-K and was filed on June 23, 2009 by the Field Investigation Office.
The Ombudsman rendered a Decision dated January 27, 2014 finding Nelson Cabrera Buenaflor guilty of Grave Misconduct and ordered dismissal with forfeiture of retirement benefits.
The Court of Appeals affirmed the Ombudsman in a Decision dated January 18, 2017 and denied a motion for reconsideration in a Resolution dated July 13, 2017.
The present Petition for Review on Certiorari challenged the CA Decision and sought to protect the petitioners' interest in the forfeited retirement benefits.

Key Factual Allegations

Quedan and Rural Credit Guarantee Corporation (QUEDANCOR) issued Memorandum Circular No. 270 known as the Consolidated Guidelines on QUEDANCOR Swine Program (CG-QSP) on March 18, 2004.
The CG-QSP prescribed that QUEDANCOR would issue Purchase Orders to approved borrowers who would present them to accredited Input Suppliers for delivery of swine inputs.
Borrowers were required to sign Joint Acceptance and Delivery Receipts upon receiving inputs, and QUEDANCOR would pay Input Suppliers based on those receipts, which payment constituted the borrowers' loan amount.
Metro Livestock Incorporated (MLI) was accredited as an Input Supplier by QUEDANCOR Regional Office No. 4 and Calapan District Office by Certificate of Accreditation No. R-IV-IS-009 dated August 25, 2003.
The Field Investigation Office alleged that QUEDANCOR failed to comply with competitive bidding under R.A. No. 9184 when contracts totaling P48,606,750.00 were awarded to MLI.
The FIO further alleged that MLI did not comply with accreditation and eligibility requirements and that borrowers reported late or non-delivery, poor quality inputs, insufficient technical assistance, and reimbursement difficulties.
The FIO cited an Audit Observation Memorandum by the Commission on Audit dated February 29, 2008 as corroborative of its findings.

Administrative Proceedings

The complaint charged various QUEDANCOR officials with Serious Dishonesty and Conduct Prejudicial to the Best Interest of the Service under Rule IV, Section 52A(1) and (20) of Civil Service Commission Resolution No. 99-1936.
Nelson Cabrera Buenaflor filed a counter-affidavit denying violation of law and contending that R.A. No. 9184 applied only to procurement and that the CG-QSP did not contemplate procurement of goods by QUEDANCOR.
The Ombudsman found Buenaflor and five other officials administratively liable for Grave Misconduct for signing, approving, and issuing the CG-QSP and ordere