G.R. No. 194346 . June 18, 2018.
FERNANDO A. MELENDRES, PETITIONER, V. OMBUDSMAN MA. MERCEDITAS N. GUTIERREZ AND JOSE PEPITO M. AMORES, M.D., RESPONDENTS.

FACTS

Petitioner Fernando A. Melendres, then Executive Director of the Lung Center of the Philippines (LCP), was entrusted with funds for the center’s rehabilitation. He transferred P73,258,377.00 from Land Bank to the Philippine Veterans Bank (PVB) on February 13, 2002, instructing its placement under an Investment Management Agreement (IMA) for 30 days. This transfer was executed even though Melendres had requested a contract review from the Office of the Government Corporate Counsel (OGCC) on February 4, and prior to receiving the OGCC’s reply. The OGCC opinion, received on May 3, advised that the LCP Board of Trustees must first authorize such an investment and that PVB’s authority to engage in investment management must be verified.
A complaint for Grave Misconduct was filed against Melendres, alleging he caused undue injury by misappropriating renovation funds for private investment. The Ombudsman found him guilty, a decision affirmed by the Court of Appeals (CA). The CA later dismissed Melendres’s appeal for failure to submit required documents. Melendres elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in dismissing Melendres’s appeal and whether he is administratively liable for his actions concerning the LCP funds.

RULING

The Supreme Court granted the petition but modified the finding of liability. On procedural grounds, the Court found the CA’s dismissal too harsh. Melendres had substantially complied by submitting most required documents; his omission of one was not a deliberate refusal to obey. The interest of justice warranted a review of the case on its merits.
On the merits, the Court held Melendres liable for Simple Misconduct, not Grave Misconduct. Grave Misconduct requires corruption, clear intent to violate the law, or flagrant disregard of established rules. The evidence showed Melendres transferred funds based on a general board resolution authorizing investments in government depository banks. However, he acted with a serious lapse of judgment by placing the enormous sum without a formal, reviewed investment contract and without the specific board authority required by the OGCC. His act of transferring the funds prior to receiving legal advice and his subsequent instructions for rollovers demonstrated negligence and poor judgment in safeguarding public funds. This constituted Simple Misconduct, defined as a transgression of an established rule, but without the corrupt intent or flagrant disregard required for the grave offense. The appropriate penalty was a three-month suspension without pay.