By Benjamin Cuaresma
MANILA — The Office of the Ombudsman has reprimanded Government Service Insurance System (GSIS) President and General Manager Jose Arnulfo A. Veloso and four senior officials over the state pension fund’s P1.45-billion investment in Alternergy Holdings Corp., ruling that they failed to strictly comply with internal investment procedures but clearing them of allegations of corruption and gross misconduct.
In a decision dated May 29, 2026, the Ombudsman found Veloso, Executive Vice President Jason Teng, Vice President Mary Abigail Cruz-Francisco, Officer III Jaime Leon Warren and Acting Officer IV Alfredo Pablo administratively liable for Violation of Reasonable Office Rules and Regulations, a light administrative offense punishable by reprimand.
The anti-graft office, however, dismissed the more serious charges of Grave Misconduct and Gross Neglect of Duty, ruling that investigators found no evidence showing bad faith, corrupt motive, malicious intent or negligence so severe as to warrant heavier administrative sanctions.
The case stemmed from GSIS’ purchase of 100 million perpetual preferred shares of Alternergy under a subscription agreement signed on Nov. 7, 2023, with the government pension fund paying P1.45 billion for the investment on Dec. 15, 2023.
An anonymous complainant alleged that the transaction violated the GSIS Investment Policy Guidelines because the preferred shares had yet to be listed on the Philippine Stock Exchange when the subscription agreement was executed and because Alternergy allegedly failed to meet the policy’s P15-billion minimum market capitalization requirement.
After reviewing the records, the Ombudsman concluded that while internal procedures were not strictly observed, the evidence failed to prove that the officials deliberately disregarded the rules or acted for personal gain.
The decision stressed that the procedural lapses did not amount to misconduct or gross neglect, saying the records failed to establish bad faith, corruption or willful disregard of official duties.
The Ombudsman likewise cited what it described as substantial compliance with the investment process, noting that the GSIS Board of Trustees acknowledged the transaction during its Dec. 12, 2023 meeting.
It also noted that GSIS had already received nearly P118 million in dividend payments from Alternergy without the Board adopting any resolution rejecting or rescinding the investment.
In his defense, Veloso argued that Alternergy was already a publicly listed company when GSIS subscribed to the preferred shares and maintained that the investment was authorized under Republic Act No. 8291, or the GSIS Act of 1997.
He further asserted that the Investment Policy Guidelines on minimum market capitalization and free-float requirements applied only to common shares and not to the perpetual preferred shares acquired by GSIS.
Veloso also said the transaction underwent extensive due diligence, including evaluations by the GSIS Research Office and consultations with the Assets and Liabilities Committee before it was endorsed for approval.
The four other respondents similarly maintained that they merely discharged their official duties in processing and evaluating the investment proposal and that none of them received any personal benefit from the transaction.
Meanwhile, the Ombudsman dismissed the complaint against former Executive Vice President Michael M. Praxedes and former Vice President Aaron Samuel C. Chan, ruling that it no longer had administrative jurisdiction over them after they had left government service.
The Ombudsman classified the violation committed by the five incumbent officials as a light administrative offense, adding that they had already served the penalty of reprimand.
The ruling also came after the anti-graft office earlier lifted the preventive suspension imposed on the respondents, allowing them to resume their duties while the administrative proceedings were ongoing.
The decision underscores the Ombudsman’s position that while strict compliance with government investment procedures remains essential, administrative liability must be supported by clear evidence of bad faith or corrupt intent. In the absence of such proof, the anti-graft office held that the lapses warranted disciplinary action but not the harsher penalties sought by the complainant.
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