The Supreme Court held that Mehol K. Sadain, former Secretary of the National Commission on Muslim Filipinos (NCMF), was guilty of Simple Misconduct instead of Grave Misconduct. This decision emphasizes that actions taken in good faith and with the intent to serve the government’s best interests cannot be easily equated with grave offenses. The ruling highlights the importance of evaluating the totality of circumstances to discern whether there was corruption, clear intent to violate the law, or flagrant disregard of established rules.

PDAF Projects: When Endorsements and Accreditations Collide

This case originates from the utilization of Priority Development Assistance Funds (PDAF) allocated to Senator Gregorio B. Honasan II, channeled through the NCMF for livelihood projects benefiting Muslim Filipinos. The central question arose when the Commission on Audit (COA) flagged irregularities in the selection of Focus on Development Goals Foundation, Inc. (Focus) as the implementing non-governmental organization (NGO), primarily due to the lack of public bidding. At the heart of the matter is determining whether NCMF Secretary Mehol K. Sadain acted with grave misconduct or simple misconduct in awarding the contract to Focus and releasing funds.

The initial investigation by the Field Investigation Office of the Office of the Ombudsman (FIO) led to charges of Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service against Sadain and other NCMF officials. The FIO alleged violations of COA Circular No. 2007-001 and Government Procurement Policy Board (GPPB) Resolution No. 12-2007, asserting that unwarranted benefits were given to Focus by awarding the contract without a public bidding. In response, Sadain argued that the NCMF conducted its own evaluation and accreditation of NGOs, assuming there was no need for a bidding process.

The Ombudsman found Sadain guilty, citing the NCMF’s acceptance of Senator Honasan’s endorsement of Focus with unusual accommodation. The Ombudsman also noted that the Disbursement Voucher (DV) and check were prepared before Focus was officially informed of its qualification. This led to the initial penalty of dismissal from service. However, the Court of Appeals (CA) affirmed the Ombudsman’s Decision, stating that Sadain disregarded GPPB Resolution No. 12-2007 and Section 53(j) of the 2009 Implementing Rules and Regulations (IRR) of Republic Act No. 9184 (2009 IRR), also known as the Government Procurement Reform Act. The CA emphasized that the lack of open competition gave Focus unwarranted benefits and that Sadain’s actions tarnished the image of his public office.

The Supreme Court, however, partly reversed the CA’s decision, highlighting that the Ombudsman’s determination of Sadain’s reliance solely on Senator Honasan’s endorsement was not supported by evidence. It pointed out that NCMF Commission En Banc Resolution No. 18, Series of 2012, authorizing Sadain to sign the MOA with Focus, predated Senator Honasan’s endorsement letter. Moreover, the Court clarified the inapplicability of GPPB Resolution No. 12-2007, as it applies only when an appropriation law specifically earmarks funds for projects to be contracted out to NGOs.

Building on this principle, the Court emphasized that COA Circular No. 2007-001 was the applicable rule. It allows government funds to be granted to NGOs for projects beyond the government agency’s capability, such as livelihood projects, provided the requirements of the circular are met. Importantly, the Ombudsman failed to demonstrate that the NCMF did not comply with the requirements enumerated in COA Circular No. 2007-001, making the mere absence of public bidding insufficient to prove Grave Misconduct.

The relevant provisions of COA Circular No. 2007-001 include:

3.0 SCOPE
These guidelines shall apply to all funds granted to NGOs/POs for the implementation of projects as enumerated in paragraph 4.1 hereof.

4.0 GUIDELINES
4.1 GO funds granted the NGOs/POs shall retain their character as public funds.

4.2 The flow of the funds shall follow the normal procedures of allotment release by the Department of Budget and Management, and the fund allocation/transfer and disbursement by the GOs. The guidelines that follow shall be strictly observed.

Additionally, the Court noted that at the time the PDAF project was implemented, the prevailing jurisprudence, as per Philippine Constitution Association v. Enriquez (Philconsa), sanctioned the intervention of lawmakers in the enforcement of the General Appropriations Act (GAA). It was only later, in Belgica v. Hon. Exec. Sec. Ochoa, Jr. (Belgica), that such post-enactment authority was deemed unconstitutional. Thus, Sadain could not be faulted for considering Senator Honasan’s endorsement, given the legal landscape at the time.

The Court also underscored Sadain’s initiatives, such as forming the PDAF Accreditation Committee and actively seeking COA audits of prior PDAF projects. These actions evidenced his intent to safeguard the interests of the NCMF and the government, rather than engage in corrupt practices. Given that there was no evidence of corruption, willful intent to violate the law, or flagrant disregard of established rules, the Court determined that the elements of Grave Misconduct were lacking. Instead, the Court found Sadain guilty of Simple Misconduct, which is defined as a transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by a public officer.

Simple misconduct, unlike Grave Misconduct, lacks the elements of corruption, clear intent to violate the law, or flagrant disregard of established rules. In the case of Sabio v. FIO, Office of the Ombudsman, the Court clarified that flagrant disregard of established rule involves open defiance of customary rules or repeated voluntary disregard of established procedures.

[W]hen there had been open defiance of a customary rule; in the repeated voluntary disregard of established rules in the procurement of supplies; in the practice of illegally collecting fees more than what is prescribed for delayed registration of marriages; when several violations or disregard of regulations governing the collection of government funds were committed; and when the employee arrogated unto [himself or] herself responsibilities that were clearly beyond [his or] her given duties.

Even though Sadain approved the processing of the check before the project was officially awarded to Focus, he explained this action as necessary to obligate the Notice of Cash Allocation (NCA) and prevent its expiration. He further supported this explanation with a written instruction to the NCMF’s Financial and Management Service to hold the check pending compliance with documentary requirements. This demonstrated that Sadain’s actions were not motivated by corrupt intent but by the need to efficiently manage government funds within the constraints of the NCA’s validity period. As highlighted in Office of the Ombudsman v. Apolonio, similar violations may constitute Simple Misconduct rather than Grave Misconduct or Conduct Prejudicial to the Best Interest of the Service.

Therefore, the Supreme Court found Sadain guilty of Simple Misconduct and imposed a penalty of suspension from office for six months without pay. The Court also clarified that Sadain was not entitled to back salaries, as public officers are only entitled to payment for services rendered.

FAQs

What was the key issue in this case?	The key issue was whether Mehol K. Sadain was guilty of Grave Misconduct or Simple Misconduct in awarding a PDAF-funded project to an NGO without public bidding. The Court ultimately found him guilty of Simple Misconduct.
What is the difference between Grave Misconduct and Simple Misconduct?	Grave Misconduct involves corruption, clear intent to violate the law, or flagrant disregard of established rules, while Simple Misconduct is a transgression of established rules without those elements. The presence of corrupt intent or a clear violation is what differentiates grave misconduct from simple misconduct.
Was public bidding required in this case?	No, public bidding was not required because the appropriation law did not specifically earmark funds for projects to be contracted out to NGOs. COA Circular No. 2007-001 was the applicable rule.
What is COA Circular No. 2007-001?	COA Circular No. 2007-001 provides guidelines for granting, utilizing, accounting for, and auditing funds released to NGOs or People’s Organizations. It allows government funds to be granted to NGOs for projects beyond the government agency’s capability.
Why was Senator Honasan’s endorsement considered?	Senator Honasan’s endorsement was considered because, at the time, the prevailing jurisprudence sanctioned lawmakers’ intervention in the enforcement of the GAA. It was only later that such post-enactment authority was deemed unconstitutional.
What actions did Sadain take to safeguard government interests?	Sadain formed the PDAF Accreditation Committee, sought COA audits of prior PDAF projects, and ensured Focus submitted required reports. These actions demonstrated his intent to act in good faith.
What was the Supreme Court’s final ruling?	The Supreme Court found Sadain guilty of Simple Misconduct and imposed a penalty of suspension from office for six months without pay. His rights, emoluments, benefits, and privileges removed by the Ombudsman were restored.
What does the operative fact doctrine mean in this case?	The operative fact doctrine means that acts done before a law or ruling is declared unconstitutional are presumed valid. This protected Sadain from being penalized for actions that were considered acceptable at the time.

This case serves as a reminder that while public officials are expected to adhere to established rules and regulations, their actions must be evaluated within the context of their intent and the prevailing legal landscape. It also shows that the creation of an accreditation committee is permissible under COA rules. Good faith and the desire to serve the government’s best interests can mitigate what might otherwise be considered a grave offense.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Mehol K. Sadain vs. Office of the Ombudsman, G.R. No. 253688, February 08, 2023