J.A.B. Bulao & Associates

CASE 2011-0216: MONICO K. IMPERIAL, JR. VS. GOVERNMENT SERVICE INSURANCE SYSTEM (G.R. NO. 191224, 04 OCTOBER 2011, BRION, J.) SUBJECTS: GRAVE MISCONDUCT; SIMPLE MISCONDUCT, PROCEDURAL DUE PROCESS; PENALTIES FOR MISCONDUCT; EXAMPLES OF CLEAR DEFIANCE OF THE LAW AND PROCEDURES (BRIEF TITLE: IMPERIAL VS. GSIS)

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DISPOSITIVE:

WHEREFORE, premises considered, we PARTIALLY GRANT the petition for review on certiorari and MODIFY the assailed decision and resolution of the Court of Appeals. Petitioner Monico K. Imperial, Jr. is found GUILTY of SIMPLE MISCONDUCT and is hereby SUSPENDED from the time the preventive suspension that GSIS imposed lapsed, up to the finality of this Decision. 

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SUBJECTS/DOCTRINES/DIGESTS

PETITIONER GSIS NAGA CITY BRANCH MANAGER IMPERIAL APPROVED GSIS LOANS DESPITE LACK OF REQUIREMENTS. HE AND HIS COUNSEL FAILED TO APPEAR DURING AN ADMINISTRATIVE HEARING, NOTICE OF WHICH WAS ONLY RECEIVED BY COUNSEL THROUGH FAX. ALSO, COUNSEL’S ANSWER WAS NOT VERIFIED. AFTER THE HEARING, PETITIONER WAS DEEMED TO HAVE WAIVED HIS RIGHT TO HEARING. HIS ANSWER WAS ALSO EXPUGNED FROM THE RECORDS FOR BEING UNVERIFIED. GSIS RULED HE COMMITTED GRAVE MISCONDUCT AND IMPOSED THE PENALTY OF DISMISSAL. WAS PETITIONER DEPRIVED OF PROCEDURAL DUE PROCESS?

NO BECAUSE THE GSIS DECISION CONSIDERED THE POINTS HE RAISED IN HIS ANSWER. HE WAS HEARD THROUGH HIS PLEADINGS. ALSO, BY FILING A MOTION FOR RECONSIDERATION HE IS DEEMED TO HAVE WAIVED HIS RIGHT UNDER PROCEDURAL DUE PROCESS.

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PETITIONER WAS ADJUDGED BY GSIS, SSC AND CA AS GUILTY OF GRAVE MISCONDUCT? WAS THIS RULING CORRECT?

NO. NO SUBSTANTIAL EVIDENCE WAS ADDUCED TO SUPPORT THE ELEMENTS OF “CORRUPTION,” “CLEAR INTENT TO VIOLATE THE LAW” OR “FLAGRANT DISREGARD OF ESTABLISHED RULE” THAT MUST BE PRESENT TO CHARACTERIZE THE MISCONDUCT AS GRAVE.

PETITIONER ONLY COMMITTED SERIOUS LAPSE OF JUDGMENT SUFFICIENT TO HOLD HIM LIABLE FOR SIMPLE MISCONDUCT.

Thus, the petitioner’s liability under the given facts only involves simple misconduct. As Branch Manager of the GSIS Naga Field Office, he is presumed to know all existing policies, guidelines and procedures in carrying out the agency’s mandate in the area.  By  approving the loan applications of eight GSIS Naga Field Office employees who did not fully meet the required qualifications, he committed a serious lapse of judgment sufficient to hold him liable for simple misconduct.

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BUT PETITIONER COMMITTED SUCH OFFENSE TWICE ALREADY. CAN HE BE NOT CONSIDERED TO HAVE COMMITTED “FLAGRANT DISREGARD OF ESTABLISHED RULE”?

NO. THERE MUST BE DELIBERATE DEFIANCE OF THE RULES. THE CSC’S FINDINGS ON THE PETITIONER’S ACTIONS PRIOR TO THE APPROVAL OF THE LOANS NEGATE THE PRESENCE OF ANY INTENT ON THE PETITIONER’S PART TO DELIBERATELY DEFY THE POLICY OF THE GSIS. FIRST, GSIS BRANCH MANAGERS HAVE BEEN GRANTED IN THE PAST THE AUTHORITY TO APPROVE LOAN APPLICATIONS BEYOND THE PRESCRIBED REQUIREMENTS OF GSIS; SECOND, THERE WAS A CUSTOMARY LENIENT PRACTICE IN THE APPROVAL OF LOANS EXERCISED BY SOME BRANCH MANAGERS NOTWITHSTANDING THE EXISTING GSIS POLICY; AND THIRD, THE PETITIONER FIRST SOUGHT THE APPROVAL OF HIS IMMEDIATE SUPERVISOR BEFORE ACTING ON THE LOAN APPLICATIONS. THESE CIRCUMSTANCES RUN COUNTER TO THE CHARACTERISTIC FLAGRANT DISREGARD OF THE RULES THAT GRAVE MISCONDUCT REQUIRES. 

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WHAT IS PROCEDURAL DUE PROCESS?

IT IS THE CONSTITUTIONAL STANDARD DEMANDING THAT NOTICE AND AN OPPORTUNITY TO BE HEARD BE GIVEN BEFORE JUDGMENT IS RENDERED.

Procedural due process is the constitutional standard demanding that notice and an opportunity to be heard be given before judgment is rendered. As long as a party is given the opportunity to defend his interests in due course, he would have no reason to complain; the essence of due process is in the opportunity to be heard.^[1][17] A formal or trial-type hearing is not always necessary.

        In this case, while the petitioner did not participate in the August 17, 2006 pre-hearing conference (despite receipt on August 14, 2006 of a fax copy of the August 11, 2006 order), Garcia’s decision of February 21, 2007 duly considered and discussed the defenses raised in Atty. Molina’s pleadings, although the answer was ordered expunged from the records because it was unverified and because Atty. Molina failed to submit a letter of authority to represent the petitioner.

What negates any due process infirmity is the petitioner’s subsequent motion for reconsideration which cured whatever defect the Hearing Officer might have committed in the course of hearing the petitioner’s case.^[2][18] Again, Garcia duly considered the arguments presented in the petitioner’s motion for reconsideration when he rendered the June 6, 2007 resolution.^[3][19]  Thus, the petitioner was actually heard through his pleadings.

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WHAT IS MISCONDUCT?

AN INTENTIONAL WRONGDOING OR A DELIBERATE VIOLATION OF A RULE OF LAW OR STANDARD OF BEHAVIOR.

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WHEN IS MISCONDUCT GRAVE?

A MISCONDUCT IS GRAVE WHERE THE ELEMENTS OF CORRUPTION, CLEAR INTENT TO VIOLATE THE LAW OR FLAGRANT DISREGARD OF ESTABLISHED RULE ARE PRESENT.^[4][21] OTHERWISE, A MISCONDUCT IS ONLY SIMPLE.

Misconduct has a legal and uniform definition. 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.^[5][20] A misconduct is grave where the elements of corruption, clear intent to violate the law or flagrant disregard of established rule are present.^[6][21] Otherwise, a misconduct is only simple.

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GIVE EXAMPLES OF JURISPRUDENCE WHEN THERE HAS BEEN OPEN DEFIANCE OF A CUSTOMARY RULE.

AS FOLLOWS:

Flagrant disregard of rules is a ground that jurisprudence has already touched upon. It has been demonstrated, among others, in the instances when there had been open defiance of a customary rule;^[7][23] in the repeated voluntary disregard of established rules in the procurement of supplies;^[8][24] in the practice of illegally collecting fees more than what is prescribed for delayed registration of marriages;^[9][25] when several violations or disregard of regulations governing the collection of government funds were committed;^[10][26] and when the employee arrogated unto herself responsibilities that were clearly beyond her given duties.^[11][27] The common denominator in these cases was the employee’s propensity to ignore the rules as clearly manifested by his or her actions.

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WHAT IS THE PENALTY FOR SIMPLE MISCONDUCT?

SUSPENSION FOR ONE MONTH AND ONE DAY TO SIX MONTHS FOR THE FIRST OFFENSE AND DISMISSAL FOR THE SECOND OFFENSE.

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BUT PETITIONER HAS COMMITTED THE OFFENSE TWICE. WHY SHOULD HIS PENALTY BE NOT DISMISSAL?

BECAUSE IT IS NOT PROPORTIONATE TO THE NATURE AND EFFECT OF HIS TRANSGRESSION.

The Revised Uniform Rules of the Civil Service (Civil Service Rules) classifies simple misconduct as a less grave offense.  Under Section 52(B) (2), Rule IV of the Civil Service Rules, the commission of simple misconduct is penalized by suspension for one (1) month and one (1) day to six (6) months for the first offense, and dismissal from the service for the second offense. While records show that this is not the petitioner’s first offense as he was previously suspended for one (1) year for neglect of duty, we believe that his dismissal would be disproportionate to the nature and effect of the transgression he committed as the GSIS did not suffer any prejudice through the loans he extended; these loans were for GSIS employees and were duly paid for. Thus, for his second simple misconduct, we impose on the petitioner the penalty of suspension from the lapse of his preventive suspension by GSIS up to the finality of this Decision.^[12][28]

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Republic of thePhilippines

Supreme Court

Manila

EN BANC

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D E C I S I O N

BRION, J.:

We resolve the petition for review on certiorari,^[13][1] filed by petitioner Monico K. Imperial, Jr., from the December 10, 2009 decision^[14][2] and the February 5, 2010 resolution^[15][3] of the Court of Appeals (CA) in CA-G.R. SP No. 101297.

The Factual Antecedents

          On October 19, 2005, the Government Service Insurance System (GSIS) administratively charged the petitioner, then Branch Manager of the GSIS Naga Field Office, with Dishonesty, Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service^[16][4] for approving the requests for salary loans of eight GSIS Naga Field Office employees who lacked the contribution requirements under GSIS Policy and Procedural Guidelines (PPG) No. 153-99,^[17][5] giving them unwarranted benefits through his evident bad faith, manifest partiality or gross negligence, and causing injury to the pension fund.^[18][6] He was required to answer and was preventively suspended for ninety (90) days.

On July 21, 2006, Atty. Manuel T. Molina, the petitioner’s purported counsel, filed an unverified answer in behalf of the petitioner, who was then in theUnited States of America.  Atty. Molina explained that the petitioner granted the loan applications under an existing board resolution, with the approval of then GSIS Vice President Romeo Quilatan; the loans were fully paid, without causing any prejudice to the service.

          In a July 26, 2006order,^[19][7]  Hearing Officer Violeta C.F. Quintos set the pre-hearing conference on August 17, 2006 at the GSIS Legazpi Field Office. A week later, in an August 2, 2006 order,^[20][8] the Hearing Officer modified her previous order and set the venue at the GSIS Naga Field Office.

Atty. Molina filed a motion for reconsideration, pointing out that the GSIS Rules of Procedure set the venue of pre-hearing conferences at the GSIS Main Office in PasayCity. The Hearing Officer denied the motion for reconsideration in her August 11, 2006order,^[21][9] stating that the prosecution requested the change of venue. Copies of the order were duly sent via fax and regular mail. Atty. Molina received the faxed copy on August 14, 2006, while he received the registered mail on August 18, 2006.

          At the scheduled August 17, 2006pre-hearing conference, the petitioner and Atty. Molina failed to appear. Atty. Molina likewise failed to submit the petitioner’s verification of the answer and to submit a letter of authority to represent the petitioner in the case. On the prosecution’s motion, the Hearing Officer declared the petitioner to have waived his right to file his answer and to have a formal investigation of his case, and expunged the unverified answer and other pleadings filed by Atty. Molina from the records. The case was then submitted for resolution based on the prosecution’s submitted documents.^[22][10]

          GSIS President and General Manager Winston F. Garcia found the petitioner guilty of grave misconduct and conduct prejudicial to the best interest of the service.^[23][11] He noted that the evidence presented by the prosecution clearly showed that the petitioner’s approval of the requests for salary loans of eight GSIS Naga Field Office employees was improper because they lacked the contribution requirements under PPG No. 153-99. He also noted that the pleadings filed by Atty. Molina, as the petitioner’s purported counsel, were expunged from the records, but he, nonetheless, discussed the defenses raised in these pleadings and found them unmeritorious.

Noting that this was the petitioner’s second administrative offense (he had previously been suspended for one [1] year for gross neglect of duty for failing to implement the recommendations of the Internal Audit Services Group pertaining to the handling of returned-to-sender checks, resulting in a GSIS Naga Field Office Cashier defrauding the GSIS of checks), Garcia imposed the penalty of dismissal with the accessory penalties of forfeiture of retirement benefits, cancellation of eligibility and perpetual disqualification from re-employment in the government. On the same date, the GSIS Board of Trustees approved the decision.^[24][12]

In a June 6, 2007 resolution,^[25][13] Garcia denied the petitioner’s motion for reconsideration, noting that Atty. Molina had no authority to appear for and in behalf of the petitioner, having failed to submit any formal written authority; that the petitioner’s answer was unverified; and that, in any event, the petitioner had no evidence sufficient to overturn the evidence presented by the prosecution. 

The petitioner appealed to the Civil Service Commission (CSC), reiterating his arguments of denial of due process and the lack of evidence against him.

          The CSC rejected the petitioner’s claim of due process violation, finding that the petitioner’s filing of a motion for reconsideration cured whatever procedural due process defect there might have been.^[26][14]  It noted that the records of the case showed that the petitioner approved the loan applications despite the patent ineligibility of the loan applicants. The CSC thus affirmed the petitioner’s dismissal for grave misconduct, but added as an accessory penalty the prohibition from taking any civil service examination.

The petitioner elevated his case to the CA through a petition for review under Rule 43 of the Rules of Court.

          In its December 10, 2009decision,^[27][15]  the CA dismissed the petition, and denied the subsequent motion for reconsideration,^[28][16] finding no reversible error in the challenged CSC Resolution.

The Petition

          In the petition before us, the petitioner argues that he was denied due process when the August 17, 2006 pre-hearing conference was conducted in his absence without prior notice of the August 11, 2006 order denying the motion for reconsideration of the order of change of venue, since Atty. Molina received by registered mail a copy of the August 11, 2006 order only on August 18, 2006, or a day after the August 17, 2006 pre-hearing conference. The petitioner pleads good faith in approving the loans based on an existing GSIS Board Resolution which authorizes branch managers to approve loans for meritorious and special reasons; the loans were cleared by the Commission on Audit and settled by the borrowers. He contends that the penalty of dismissal is too severe in the absence of any wrongful intent and given his 40 years of government service.

The Case for Respondent GSIS

          The GSIS submits that the petitioner was not denied due process because Atty. Molina received onAugust 14, 2006a fax copy of theAugust 11, 2006order. On the merits of the case, the GSIS maintains that the evidence on record duly established the petitioner’s administrative culpability for acts inimical to the interest of the public, warranting his dismissal from the service; the penalty of dismissal was warranted since this was the petitioner’s second administrative offense.

The Issues

The issues are: (1) whether the petitioner was denied due process, and (2) whether there was substantial evidence to support petitioner’s dismissal from the service.

The Court’s Ruling

  We PARTIALLY GRANT the petition and modify the findings of the CA pertaining to the petitioner’s administrative liability.

The Procedural Due Process Issue

Procedural due process is the constitutional standard demanding that notice and an opportunity to be heard be given before judgment is rendered. As long as a party is given the opportunity to defend his interests in due course, he would have no reason to complain; the essence of due process is in the opportunity to be heard.^[29][17] A formal or trial-type hearing is not always necessary.

          In this case, while the petitioner did not participate in the August 17, 2006 pre-hearing conference (despite receipt on August 14, 2006 of a fax copy of the August 11, 2006 order), Garcia’s decision of February 21, 2007 duly considered and discussed the defenses raised in Atty. Molina’s pleadings, although the answer was ordered expunged from the records because it was unverified and because Atty. Molina failed to submit a letter of authority to represent the petitioner.

What negates any due process infirmity is the petitioner’s subsequent motion for reconsideration which cured whatever defect the Hearing Officer might have committed in the course of hearing the petitioner’s case.^[30][18] Again, Garcia duly considered the arguments presented in the petitioner’s motion for reconsideration when he rendered the June 6, 2007 resolution.^[31][19]  Thus, the petitioner was actually heard through his pleadings.

Findings of facts of administrative bodies accorded finality when supported by substantial evidence

Misconduct has a legal and uniform definition. 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.^[32][20] A misconduct is grave where the elements of corruption, clear intent to violate the law or flagrant disregard of established rule are present.^[33][21] Otherwise, a misconduct is only simple.

No doubt exists in our mind that the petitioner committed misconduct in this case.  The records clearly show that the petitioner committed the acts complained of, i.e., he approved the requests for salary loans of eight GSIS Naga Field Office employees who lacked the necessary contribution requirements under PPG No. 153-99.  After a careful review of the records, however, we disagree with the findings of the GSIS, the CSC and the CA that the petitioner’s acts constituted grave misconduct. While we accord great respect to the factual findings of administrative agencies that misconduct was committed, we cannot characterize the offense committed as grave. No substantial evidence was adduced to support the elements of “corruption,” “clear intent to violate the law” or “flagrant disregard of established rule” that must be present to characterize the misconduct as grave.

 We are aware that to the CSC, the mere act of approving the loan applications on several occasions proves the element of flagrant disregard of established rules to constitute grave misconduct.  Thus, it said:

            The act of the appellant in approving salary loan applications of his subordinates over and above the prescribed rates under the GSIS policy, not only once but several times, indicates his flagrant and wanton transgression of the said policy. He, in fact, abused his authority in doing so.^[34][22]

Flagrant disregard of rules is a ground that jurisprudence has already touched upon. It has been demonstrated, among others, in the instances when there had been open defiance of a customary rule;^[35][23] in the repeated voluntary disregard of established rules in the procurement of supplies;^[36][24] in the practice of illegally collecting fees more than what is prescribed for delayed registration of marriages;^[37][25] when several violations or disregard of regulations governing the collection of government funds were committed;^[38][26] and when the employee arrogated unto herself responsibilities that were clearly beyond her given duties.^[39][27] The common denominator in these cases was the employee’s propensity to ignore the rules as clearly manifested by his or her actions.

Under the circumstances of the present case, we do not see the type of open defiance and disregard of GSIS rules that the CSC observed.  In fact, the CSC’s findings on the petitioner’s actions prior to the approval of the loans negate the presence of any intent on the petitioner’s part to deliberately defy the policy of the GSIS. First, GSIS branch managers have been granted in the past the authority to approve loan applications beyond the prescribed requirements of GSIS; second, there was a customary lenient practice in the approval of loans exercised by some branch managers notwithstanding the existing GSIS policy; and third, the petitioner first sought the approval of his immediate supervisor before acting on the loan applications. These circumstances run counter to the characteristic flagrant disregard of the rules that grave misconduct requires. 

 Thus, the petitioner’s liability under the given facts only involves simple misconduct. As Branch Manager of the GSIS Naga Field Office, he is presumed to know all existing policies, guidelines and procedures in carrying out the agency’s mandate in the area.  By  approving the loan applications of eight GSIS Naga Field Office employees who did not fully meet the required qualifications, he committed a serious lapse of judgment sufficient to hold him liable for simple misconduct.

The Revised Uniform Rules of the Civil Service (Civil Service Rules) classifies simple misconduct as a less grave offense.  Under Section 52(B) (2), Rule IV of the Civil Service Rules, the commission of simple misconduct is penalized by suspension for one (1) month and one (1) day to six (6) months for the first offense, and dismissal from the service for the second offense. While records show that this is not the petitioner’s first offense as he was previously suspended for one (1) year for neglect of duty, we believe that his dismissal would be disproportionate to the nature and effect of the transgression he committed as the GSIS did not suffer any prejudice through the loans he extended; these loans were for GSIS employees and were duly paid for. Thus, for his second simple misconduct, we impose on the petitioner the penalty of suspension from the lapse of his preventive suspension by GSIS up to the finality of this Decision.^[40][28]

WHEREFORE, premises considered, we PARTIALLY GRANT the petition for review on certiorari and MODIFY the assailed decision and resolution of the Court of Appeals. Petitioner Monico K. Imperial, Jr. is found GUILTY of SIMPLE MISCONDUCT and is hereby SUSPENDED from the time the preventive suspension that GSIS imposed lapsed, up to the finality of this Decision. 

          SO ORDERED.

                                                ARTURO D. BRION

                                                Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

                                                  (On Leave)

MARIA LOURDES P. A. SERENO                        BIENVENIDO L. REYES

         Associate Justice                                               Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

                                                RENATO C. CORONA

                                                Chief Justice