This is a Petition for Review^[1] under Rule 45 of the Rules of Court, as amended, assailing the Decision^[2] and Resolution^[3] of the Court of Appeals (CA) dated January 20, 2017 and June 20, 2017, respectively, in CA-G.R. SP No. 142285.

The Facts

The facts, as culled from the records, are as follows: On August 2, 1996, Raquel A. De Castro (respondent) worked as a Municipal Accountant for the Municipality of Bongabong, Oriental Mindoro. Her functions were the following:

a)	Installing and maintaining an internal audit system in the Municipality;
b)	Preparing and submitting financial statements to the Mayor and the Sanggunian;
c)	Apprising the Sanggunian and other local government officials on the financial condition and operations of the Municipality;
d)	Certifying the availability of budgetary allotment to which expenditures and obligations may be properly charged;
e)	Reviewing supporting documents before preparation of vouchers to determine completeness of requirements; and
f)	Preparing statements of cash advances, liquidation, salaries, allowances, reimbursements and remittances pertaining to the Municipality.[4]

During the respondent's employment, the Municipality of Bongabong transacted with Pink Plate's General Merchandise, Pink Shop Computer Center and Pink Plate's Bistro-all of which were owned by respondent's husband. Moreover, the Municipality of Bongabong transacted with Pink Splash Resort which is registered in the name of respondent's daughter.^[5]

Based on records,^[6] the following transactions and payments have been made for the years 2006 to 2010:

a) Pink Shop Computer Center

Transaction	Date of Payment	Amount (Php)
Purchase of computer accessories for use in the Office of the Municipal Agriculturist	02/24/06	7,886.10
Repeat order for the refill of HP-Ink for use in tax mapping	03/31/06	8,487.50
Purchase of 1 set computer accessories for use in the Office of the Municipal Assessor	05/02/06	5,335.00
Purchase of ink refill for use in tax mapping	05/12/06	9,166.50
Purchase of 1 unit printer (ML 1610 Series) for use in the Office of the Municipal Engineer	12/18/06	8,730.00
Purchase of computer accessories for use in RHU-North	02/20/07	11,167.85
Purchase of 1 unit Power Supply for use in the Office of the Municipal Mayor	03/26/07	3,395.00

b) Pink Plates General Merchandise

Transaction	Date of Payment	Amount (Php)
Purchase of uniforms for use as uniforms of daycare workers	11/24/08	28,761.60
Purchase of t-shirts with print for use in legislative campaign for good governance	11/05/09	63,590.40
Purchase of medals for distribution to different schools, 2nd level and 1st level (CBPS) at Bongabong	04/07/10	38,112.00

c) Pink Plates Bistro

Transaction	Date of Payment	Amount (Php)
Purchase of meals for use in Senior Citizen Health Seminar	02/23/06	4,074.00
Hiring of chairs and tables used in Sulyog Festival	03/30/06	14,400.00
Purchase of meals and snacks for use in Early Childhood Care and Development Training for Service Providers	05/02/06	13,399.75
Purchase of meals and snacks for use in the Community Empowerment and Development Program	06/06/06	58,521.60
Purchase of meals for use in launching of Fish Sanctuary	07/04/06	9,600.00
Purchase of meals for use in skills training on buko juice and pie making packaging and labelling	07/07/06	1,396.80
Purchase of meals and snacks for use in skills training onbuko juice and pie making packaging and labelling	07/05/06	17,539.20
Purchase of meals and snacks for use in orientation on National Tax Mapping Program	08/01/06	19,824.00
Purchase of meals and snacks for use in Senior Citizen's Federation President's Meeting	08/24/06	3,007.00
Purchase of snacks for use in Senior Citizen's Day Celebration	10/05/06	15,118.08
Purchase of meals and snacks for use in orientation workshop on Responsive and Active Parenting (REAP) and Adolescents Health and Youth Development Program (AHYDP)	10/06/06	14,860.80
Purchase of meals and snacks for use in training workshop on Effective Legislation	10/12/06	33,600.00
Rental of venue for training workshop on Effective Legislation	10/12/06	4,850.00
Purchase of meals and snacks for use in investment forum in coco-based product	12/15/06	12,000.00
Purchase of snacks for use in Senior Citizen's Anniversary	12/15/06	18,004.80
Purchase of meals and snacks for use in rules and regulations about privileges of OSCA members	02/15/07	3,007.00
Purchase of meals and snacks used by E-NGA'S group	05/24/07	21,375.00
Purchase of meals and snacks for use in reconciliation of RPU's in the roll out of E-NGAS by roll-out team	12/27/07	5,092.50

d. Pink Splash Resort

Transaction	Date of Payment	Amount (Php)
Purchase of meals and hotel accommodation for use in the board and lodging of dignitaries and visitors	05/30/08	10,464.00
Purchase of meals and snacks and hotel accommodation for the Doctors Medical Mission	05/30/08	23,616.00
Board and lodging of COA Regional Officers and Staff and the Provincial Auditor Staff dated 3-4 April 2008	06/24/08	12,672.00
Hire of chairs for use in Career Information and Guidance (PESO)	07/18/08	2,910.00
Purchase of meals and snacks and venue for use in ORMILLBO and PHILLBO meeting	08/01/08	14,016.00
Purchase of meals and snacks for DILG, PNP and AFP Regionals Directors Training, re-Brgy. Pulisya Tungo sa Kapayapaan	08/07/08	4,947.00
Hotel accommodation and meals for Regional Cluster Director (COA and Staff) during Brgy. Signing of AAR	08/19/08	8,759.10
Purchase of meals and snacks for use m Oriental Mindoro Accountant's Quarterly Meeting and Annual Awarding of 2007	09/02/08	14,016.00
Hotel accommodation and meals/snacks for use of COA Auditor's Team IIII during the Semi-Annual Audit of the LGU's transactions	09/08/08	9,544.80
Hotel accommodation (2 persons) used by Napolcom Officers during Annual Inspection of Municipal Police Station	09/08/08	1,164.00
Purchase of meals/snacks and venue for use in monthly meeting of Municipal Vice Mayor's League of Or. Mdo., SB Secretaries, SB Members of Bongabong and all Department Heads and Company on 01 September 2008	09/15/08	21,120.00
Purchase of snacks and meals for use in Career Information and Guidance (PESO)	09/16/08	17,280.00
Purchase of meals and snacks for use in monthly meeting of Provincial Planning and Development Officers (PPDO)	10/22/08	14,016.00
Purchase of meals and snacks for use in the Sanggunian Kabataan Meeting	11/24/08	12,787.20
Air-conditioned room for 6 parts in Physical fitness test conducted by Police Provincial Office on 11 October 2008	12/05/08	1,746.00
Purchase of meals and snacks for use in 3 days Barangay Special Audit on 8-11 October 2008	12/05/08	7,711.50
Purchase of meals and snacks for use in amendment of senior citizens constitution and by-law and updating SC Treasurer's record	12/05/08	21,052.80
Purchase of meals and snacks for use in enhancement of E-NGAS on 30 October to 08 November 2008	12/05/08	15,696.00
Purchase of meals and snacks for use in year-end assessment	12/18/08	116,160.00
Venue in basic training and orientation for the Municipal Coordinating Team (MCT)	12/22/08	6,790.00
Purchase of meals and snacks for use in Medical-Dental Mission (with Makati City Health Officer and Team)	12/22/08	41,040.00
Purchase of meals for use in KALAHI orientation Barangay Captains of different barangays	04/01/09	6,984.00
Accommodation and meals used by COA Regional Director, COA Auditors and staff for the Annual Inspection and Preparation of AAR	04/01/09	6,208.00
Accommodation and meals used by Makati Band and Makati Councilors for the Sulyog Festival 2009	04/01/09	39,360.00
Meals and accommodations for use of INFRES and DA office during the Inspection of INFRES projects	06/10/09	9,021.00
Purchase of snacks and meals and hotel accommodation for use in training on Performance Management System and Office Performance Evaluation System (PMS-OPES)	07/01/09	38,140.80
Hotel accommodation (air-conditioned) for use in training/workshop on Government Procurement Reform Act (RA 9184) and its Implementing Rules and Regulations	07/06/09	3,492.00
Meals, snacks and room accommodation for trainer's training on Natural Farming Technology	10/05/09	97,344.00
Meals and snacks for use in Nakatatanda: Dangal at Yaman ng Bansa seminar	10/23/09	35,712.00
Rental of monoblock chairs and tables for use in the 82nd Founding Anniversary of Bongabong (1-7 Dec)	12/14/09	7,372.00
Purchase of meals and snacks for use in Brgy. Empowerment Seminar and Training	12/22/09	174,720.00
Snacks and meals/ hotel accommodation for use by the Audit Team and Engas Programmer re: Post Audit of 3rd Quarter Transactions and updating of E-NGAS data base	12/22/09	17,424.00
Hotel accommodations and meals for use by Municipal Council for the Protection of Children Team Building	12/29/09	41,772.00
Purchase of meals for use in Family Juvenile Gender Sensitivity Development Desk (FJGSD) Outreach Program Activities	01/19/10	15,600.00
Meals and snacks for the Rights and Violence Against Women Seminar	04/07/10	21,590.00

Subsequently, the Field Investigation Unit (FIU)-Office of the Deputy Ombudsman for Luzon charged respondent for Conduct Prejudicial to the Best Interest of the Service and Grave Misconduct on October 1, 2013.^[7]

FIU stated that Section 89 of Republic Act (R.A.) No. 7160, otherwise known as The Local Government Code, prohibits local government officials from engaging, directly or indirectly, in any business transaction with the local government unit in which he is an official whereby money is to be paid, directly or indirectly, out of the resources of the local government unit to such person or firm.^[8]

In her Counter-Affidavit, the respondent asserted that she neither intervened nor participated directly or indirectly in the process and consummation of the subject transactions. She maintained that her signature appearing on the disbursement vouchers only meant that she had certified that the documents supporting the subject transactions were complete. The respondent also emphasized that the initiative to enter into the subject transactions did not come from her, but from the Bids and Awards Committee (BAC), when it requested the Pink Enterprises and other establishments to submit quotations for the goods and services needed by the Municipality of Bongabong.^[9]

In a Decision^[10] dated August 11, 2015, the Office of the Deputy Ombudsman for Luzon exonerated the respondent from the charge of Conduct Prejudicial to the Best Interest of the Service but found her guilty of Grave Misconduct, the dispositive portion of which reads as follows:

WHEREFORE, judgment is rendered finding respondent Raquel A. de Castro guilty of Grave Misconduct and is meted the penalty of dismissal from the service, with the accessory penalties of forfeiture of retirement benefits, perpetual disqualification from holding public office, cancellation of civil service eligibility, and bar from taking civil service examinations, pursuant to Section 10, Rule III, Administrative Order No. 07, as amended by Administrative Order No. 17 in relation to Section 25 of Republic Act No. 6770.

In the event that the penalty of dismissal can no longer be enforced due to respondent's separation from the service, the penalty shall be converted into a Fine in an amount equivalent to respondent's salary for one (1) year, payable to the Office of the Ombudsman, and may be deductible from respondent's retirement benefits, accrued leave credits or any receivable from her office.

The Honorable Secretary of the Department of the Interior and Local Government is hereby directed to implement this DECISION immediately upon receipt thereof pursuant to Section 7, Rule III of Administrative Order No. 17 (Ombudsman Rules of Procedure) in relation to Memorandum Circular No. 1, series of 2006, dated 11 April 2006 and to promptly inform his Office of the action taken hereon.

SO RESOLVED.^[11]

Undeterred, the respondent filed a Petition for Review with the CA anchored on her claim that she is not guilty of Grave Misconduct.

In a Decision[^[12] dated January 20, 2017, the CA partially granted the petition and held that the respondent is guilty of Simple Misconduct only there being no substantial evidence to show that any of the elements of corruption, clear intent to violate the law or flagrant disregard of rules is present, viz.:

WHEREFORE, premises considered, the instant Petition for Review is PARTIALLY GRANTED such that [the respondent] is found guilty of SIMPLE MISCONDUCT with the penalty of suspension of one (1) month and one (1) day. Considering that [the respondent] has been out of the service for more than the imposed suspension, she should now be REINSTATED to her former position.

SO ORDERED.^[13]

FIU filed a Motion for Reconsideration but the same was denied by the CA in a Resolution^[14] dated June 20, 2017. Hence, this petition.

The Issues

WHETHER THE CA ERRED IN DOWNGRADING THE LIABILITY OF THE RESPONDENT FROM GRAVE MISCONDUCT TO SIMPLE MISCONDUCT^[15]

Ruling of the Court

The appellate court ruled that there being no substantial evidence proving any of the elements of Grave Misconduct, the respondent should only be held liable for Simple Misconduct.

The Court disagrees.

"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. A misconduct is grave where the elements of corruption, clear intent to violate the law or flagrant disregard of established rule are present. Otherwise, a misconduct is only simple."^[16]

In administrative proceedings, the quantum of proof necessary for a finding of guilt is substantial evidence or such relevant evidence as a reasonable mind may accept as adequate to support a conclusion.^[17]

A careful perusal of the records shows that the respondent, on more than one occasion, knowingly certified and approved disbursement vouchers covering transactions between the Municipality of Bongabong and Pink Enterprises. She certified the same notwithstanding the fact that she clearly had pecuniary interests, albeit indirect, therein. The prohibition laid down in Sections 89 and 341 of R.A. No. 7160 are clear in this regard, to wit:

Section 89. Prohibited Business and Pecuniary Interest. –

(a) It shall be unlawful for any local government official or employee, directly or indirectly, to:

1. Engage in any business transaction with the local government unit in which he is an official or employee or over which he has the power of supervision, or with any of its authorized boards, officials, agents, or attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred, directly or indirectly, out of the resources of the local government unit to such person or firm;

x x x x

Section 341. Prohibitions Against Pecuniary Interest. -Without prejudice to criminal prosecution under applicable laws, any local treasurer, accountant, budget officer, or other accountable local officer having any pecuniary interest, direct or indirect, in any contract, work or other business of the local government unit of which he is an accountable officer shall be administratively liable therefor.

Notably, the appellate court maintained that the mere fact of having pecuniary interest in the subject transactions is already sufficient to make respondent administratively liable for misconduct. The sole issue then that must be resolved is whether or not the respondent's acts constitute simple or grave misconduct.

As held in the case of Imperial, Jr. v. Government Service Insurance System,^[18] an employee's propensity to ignore the rules as clearly manifested by his or her actions constitutes flagrant disregard of rules, to wit:

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; 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 herself responsibilities that were clearly beyond her given duties. The common denominator in these cases was the employees propensity to ignore the rules as clearly manifested by his or her actions.^[19] (Citations omitted and emphasis Ours)

In downgrading the respondent's liability from Grave to Simple Misconduct, the CA clearly failed to consider the respondent's repeated violation of the law which transpired for four years from 2006 to 2010. That the respondent divulged in her Statement of Assets, Liabilities and Net Worth (SALN) her connection with Pink Enterprises does not absolve her from liability. She violated an express prohibition by law when she certified the disbursement vouchers knowing fully well that her connection with Pink Enterprises prohibited her from doing so. Given the length of time she has been in government service, she cannot feign ignorance as to the prohibitions imposed by law on government employees. That she stood idly by whilst transactions between Pink Enterprises and the Municipality of Bongabong were consummated on numerous occasions point to no other conclusion but that she had wilfully and knowingly violated the law.

In her Counter-Affidavit, the respondent asserted that she neither intervened nor participated directly or indirectly in the process and consummation of the subject transactions. She maintained that her signature appearing on the disbursement vouchers only meant that she had certified that the documents supporting the subject transactions were complete. The respondent also emphasized that the initiative to enter into the subject transactions did not come from her, but from the BAC, when it requested the Pink Enterprises and other establishments to submit quotations for the goods and services needed by the Municipality of Bongabong.^[20]

While the respondent is correct in her claim that the initiative to enter into the subject transactions did not come from her, she is wrong in asserting that she neither intervened nor participated in the consummation of the subject transactions. Chapter IV of R.A. No. 7160, specifically Section 344 thereof, states the basic requirements for disbursement of local funds, to wit:

Section 344. Certification, and Approval of, Vouchers. - No money shall be disbursed unless the local budget officer certifies to the existence of appropriation that has been legally made for the purpose, the local accountant has obligated said appropriation, and the local treasurer certifies to the availability of funds for the purpose. Vouchers and payrolls shall be certified to and approved by the head of the department or office who has administrative control of the fund concerned, as to validity, propriety, and legality of the claim involved. Except in cases of disbursements involving regularly recurring administrative expenses such as payrolls for regular or permanent employees, expenses for light, water, telephone and telegraph services, remittances to government creditor agencies such as GSIS, SSS, LDP, DBP, National Printing Office, Procurement Service of the DBM and others, approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed.

In cases of special or trust funds, disbursements shall be approved by the administrator of the fund.

In case of temporary absence or incapacity of the department head or chief of office, the officer next-in-rank shall automatically perform his function and he shall be fully responsible therefor. (Underlining and emphasis ours)

To recapitulate, there are at least three primary conditions or requirements that must be met before local funds can be disbursed. First, the local budget officer must certify to the existence of appropriation that has been legally made for the purpose. Second, the local accountant must have obligated said appropriation. Third, the local treasurer certifies to the availability of funds for the purpose. From the foregoing it is clear that the respondent's certification on the disbursement vouchers is necessary to consummate the subject transaction with the Municipality. Her repeated certification on the disbursement vouchers covering numerous transactions clearly shows flagrant disregard of the law or rules. Simply put, the culpability of the respondent has been clearly established. Her acts coupled with the surrounding circumstances constitute Grave Misconduct.

Although this Court, in a catena of cases, has mitigated the imposable penalty for humanitarian reasons and have taken into consideration factors such as length of service in the government and good faith, the Court should be cautious in appreciating the same so as not to send the message that the Court is condoning the offense or that it is not serious enough to warrant the penalty of dismissal.

A public servant must exhibit at all times the highest sense of honesty and integrity. The Court, in the case of Japson v. Civil Service Commission,^[21] ruled in this wise:

Prejudice to the service is not only through wrongful disbursement of public funds or loss of public property. Greater damage comes with the public's perception of corruption and incompetence in the government.^[22]

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated January 20, 2017 and Resolution dated June 20, 2017 of the Court of Appeals in CA-G.R. SP No. 142285, are hereby REVERSED and SET ASIDE. The Decision dated August 11, 2015 of the Office of the Deputy Ombudsman for Luzon finding respondent Raquel A. De Castro liable for Grave Misconduct is hereby REINSTATED.

SO ORDERED.

Carpio^[*], Peralta, Perlas-Bernabe, and Caguioa, JJ., concur.

---

^[*] Senior Associate Justice (Per Section 12, R.A. No. 296 The Judiciary Act of 1948, as amended)

^[1] Rollo, pp. 35-52.

^[2] Penned by Associate Justice Marlene Gonzales-Sison, with Associate Justices Ramon A. Cruz and Henri Jean Paul B. Inting concurring; id. at 14-21.

^[3] Id. at 23-24.

^[4] Id. at 14-15.

^[5] Id. at 15.

^[6] Id. at 71-77.

^[7] Id. at 68.

^[8] Id.

^[9] Id. at 15-16.

^[10] Id. at 68-79.

^[11] Id. at 77-78.

^[12] Id. at 14-21.

^[13] Id. at 20.

^[14] Id. at 23-24.

^[15] Id. at 40.

^[16] Imperial, Jr. v. Government Service Insurance System, 674 Phil. 286, 296 (2011), citing Vertudes v. Buenaflor, 514 Phil. Phil. 399, 423-424 (2005).

^[17] Government Service Insurance System (GSIS), et al. v. Mayordomo, 665 Phil. 131, 144-145 (2011).

^[18] 674 Phil. 286 (2011).

^[19] Id. at 297.

^[20] Rollo, pp. 15-16.

^[21] 663 Phil. 665 (2011).

^[22] Id. at 677.