G.R. No.

81563 December 19, 1989

AMADO C. ARIAS, petitioner,
vs.
THE SANDIGANBAYAN, respondent.
G.R. No. 82512 December 19, 1989
CRESENCIO D. DATA, petitioner,
vs.
THE SANDIGANBAYAN, respondent.
Paredes Law Office for petitioner.

GUTIERREZ, JR., J.:

The facts of this case are stated in the dissenting opinion of Justice Carolina C.
Grio-Aquino which follows this majority opinion. The dissent substantially reiterates
the draft report prepared by Justice Grio-Aquino as a working basis for the Court's
deliberations when the case was being discussed and for the subsequent votes of
concurrence or dissent on the action proposed by the report.
There is no dispute over the events which transpired. The division of the Court is on
the conclusions to be drawn from those events and the facts insofar as the two
petitioners are concerned. The majority is of the view that Messrs. Arias and Data
should be acquitted on grounds of reasonable doubt. The Court feels that the
quantum of evidence needed to convict petitioners Arias and Data beyond
reasonable doubt, as co-conspirators in the conspiracy to cause undue injury to the
Government through the irregular disbursement and expenditure of public funds,
has not been satisfied.
In acquitting the petitioners, the Court agrees with the Solicitor-General 1 who, in 80
pages of his consolidated manifestation and motion, recommended that Messrs.
Arias and Data be acquitted of the crime charged, with costs de oficio. Earlier,
Tanodbayan Special Prosecutor Eleuterio F. Guerrero had also recommended the
dropping of Arias from the information before it was filed.
There is no question about the need to ferret out and convict public officers whose
acts have made the bidding out and construction of public works and highways
synonymous with graft or criminal inefficiency in the public eye. However, the
remedy is not to indict and jail every person who may have ordered the project, who
signed a document incident to its construction, or who had a hand somewhere in its
implementation. The careless use of the conspiracy theory may sweep into jail even
innocent persons who may have been made unwitting tools by the criminal minds
who engineered the defraudation.

Under the Sandiganbayan's decision in this case, a department secretary, bureau

chief, commission chairman, agency head, and all chief auditors would be equally
culpable for every crime arising from disbursements which they have approved. The
department head or chief auditor would be guilty of conspiracy simply because he
was the last of a long line of officials and employees who acted upon or affixed their
signatures to a transaction. Guilt must be premised on a more knowing, personal,
and deliberate participation of each individual who is charged with others as part of
a conspiracy.
The records show that the six accused persons were convicted in connection with
the overpricing of land purchased by the Bureau of Public Works for the Mangahan
Floodway Project. The project was intended to ease the perennial floods in Marikina
and Pasig, Metro Manila.
The accused were prosecuted because 19,004 square meters of "riceland" in
Rosario, Pasig which had been assessed at P5.00 a square meter in 1973 were sold
as residential land" in 1978 for P80.00 a square meter. The land for the floodway
was acquired through negotiated purchase,
We agree with the Solicitor-General that the assessor's tax valuation of P5.00 per
square meter of land in Rosario, Pasig, Metro Manila is completely unrealistic and
arbitrary as the basis for conviction.
Herein lies the first error of the trial court.
It must be stressed that the petitioners are not charged with conspiracy in the
falsification of public documents or preparation of spurious supporting papers. The
charge is causing undue injury to the Government and giving a private party
unwarranted benefits through manifest partiality, evident bad faith, or inexcusable
negligence.
The alleged undue injury in a nutshell is the Government purchase of land in Pasig,
Rizal for P80.00 a square meter instead of the P5.00 value per square meter
appearing in the tax declarations and fixed by the municipal assessor, not by the
landowner.
The Sandiganbayan, without any clear factual basis for doing so has assumed that
the P5.00 per square meter value fixed by the assessor in the tax declarations was
the correct market value of the Mangahan property and if the Government
purchased the land for P80.00 a square meter, it follows that it must have suffered
undue injury.
The Solicitor General explains why this conclusion is erroneous:
1. No undue injury was caused to the Government

a. The P80.00 per square rneter acquisition cost is just

fair and reasonable.
It bears stress that the Agleham property was acquired through
negotiated purchase. It was, therefor, nothing more than an ordinary
contract of sale where the purchase price had to be arrived at by
agreement between the parties and could never be left to the
discretion of one of the contracting parties (Article 1473, New Civil
Code). For it is the essence of a contract of sale that there must be a
meeting of the minds between the seller and the buyer upon the thing
which is the object of the contract and upon the price (Article 1475,
New Civil Code). Necessarily, the parties have to negotiate the
reasonableness of the price, taking into consideration such other
factors as location, potentials, surroundings and capabilities. After
taking the foregoing premises into consideration, the parties have,
thus, arrived at the amount of P80.00 per square meter as the fair and
reasonable price for the Agleham property.
It bears stress that the prosecution failed to adduce evidence to prove
that the true and fair market value in 1978 of the Agleham property
was indeed P5.00 per square meter only as stated by the assessor in
the tax declaration (Exhibit W). On the contrary, the prosecution's
principal witness Pedro Ocol, the Assistant Municipal Assessor of Pasig,
admitted that the purchase price of P80.00 per square meter paid for
the Agleham property as stated in the Deed of Sale (Exhibit G) is
reasonable (tsn, August 19,1983, p. 20) and fair (Ibid, p. 76); that 'the
value of lands within the town of Pasig ranges from P80.00 to P500.00'
(Ibid, p. 21); that the Agleham property is "around 300 meters" from
Ortigas Avenue, "adjacent to the existing Leongson [Liamson]
Subdivision ... and near Eastland Garment Building" (Ibid, pp. 12-13);
that said property is surrounded by factories, commercial
establishments and residential subdivisions (Ibid, pp. 73-74); that the
P5.00 per square meter assessed valuation of the Agleham property
appearing on the tax declaration (Exhibit W) was based on actual use
only (lbid, pp. 26-27), it being the uniform rate for all ricefields in Pasig
irrespective of their locations (Ibid, pp. 72-74) and did not take into
account the existence of many factories and subdivisions in the area
(Ibid., pp. 25-27, 72-74), and that the assessed value is different from
and always lower than the actual market value (Ibid, pp. 22-23). (At pp.
256-259, Rollo)
A negotiated purchase may usually entail a higher buying price than one arrived at
in the course of expropriation proceedings.
In Export Processing Zone Authority v. Dulay (149 SCRA 305, 310 [1987]) we struck
down the martial law decree that pegged just compensation in eminent domain
cases to the assessed value stated by a landowner in his tax declaration or fixed by

the municipal assessor, whichever is lower. Other factors must be considered. These
factors must be determined by a court of justice and not by municipal employees.
In the instant case, the assessor's low evaluation, in the fixing of which the
landowner had no participation, was used for a purpose infinitely more weighty than
mere expropriation of land. It forms the basis for a criminal conviction.
The Court is not prepared to say that P80.00 to P500.00 a square meter for land in
Pasig in 1978 would be a fair evaluation. The value must be determined in eminent
domain proceedings by a competent court. We are certain, however, that it cannot
be P5.00 a square meter. Hence, the decision, insofar as it says that the "correct"
valuation is P5.00 per square meter and on that basis convicted that petitioners of
causing undue injury, damage, and prejudice to the Government because of gross
overpricing, is grounded on shaky foundations.
There can be no overpricing for purposes of a criminal conviction where no proof
adduced during orderly proceedings has been presented and accepted.
The Court's decision, however, is based on a more basic reason. Herein lies the
principal error of the respondent court.
We would be setting a bad precedent if a head of office plagued by all too common
problems-dishonest or negligent subordinates, overwork, multiple assignments or
positions, or plain incompetence is suddenly swept into a conspiracy conviction
simply because he did not personally examine every single detail, painstakingly
trace every step from inception, and investigate the motives of every person
involved in a transaction before affixing, his signature as the final approving
authority.
There appears to be no question from the records that documents used in the
negotiated sale were falsified. A key tax declaration had a typewritten number
instead of being machine-numbered. The registration stampmark was antedated
and the land reclassified as residential instead of ricefield. But were the petitioners
guilty of conspiracy in the falsification and the subsequent charge of causing undue
in injury and damage to the Government?
We can, in retrospect, argue that Arias should have probed records, inspected
documents, received procedures, and questioned persons. It is doubtful if any
auditor for a fairly sized office could personally do all these things in all vouchers
presented for his signature. The Court would be asking for the impossible. All heads
of offices have to rely to a reasonable extent 'on their subordinates and on the good
faith of those prepare bids, purchase supplies, or enter into negotiations. If a
department secretary entertains important visitors, the auditor is not ordinarily
expected to call the restaurant about the amount of the bill, question each guest
whether he was present at the luncheon, inquire whether the correct amount of
food was served and otherwise personally look into the reimbursement voucher's
accuracy, propriety, and sufficiency. There has to be some added reason why he

should examine each voucher in such detail. Any executive head of

even small government agencies or commissions can attest to the volume of papers
that must be signed. There are hundreds of document , letters and supporting paper
that routinely pass through his hands. The number in bigger offices or departments
is even more appalling.
There should be other grounds than the mere signature or approval appearing on a
voucher to sustain a conspiracy charge and conviction.
Was petitioner Arias part of the planning, preparation, and perpetration of the
alleged conspiracy to defraud the government?
Arias joined the Pasig office on July 19, 1978. The negotiations for the purchase of
the property started in 1977. The deed of sale was executed on April 20, 1978. Title
was transferred to the Republic on June 8, 1978. In other words, the transaction had
already been consummated before his arrival. The pre-audit, incident to payment of
the purchase, was conducted in the first week of October, 1978. Arias points out
that apart from his signature linking him to the signature on the voucher, there is no
evidence transaction. On the contrary, the other co-accused testified they did not
know him personally and none approached him to follow up the payment.
Should the big amount of P1,520,320.00 have caused him to investigate . gate the
smallest detains of the transaction?
Yes, if the land was really worth only P5.00 a square meter. However, if land in Pasig
was already worth P80.00 a square meter at the time, no warning bell of intuition
would have sounded an inner alarm. Land along Ortigas Avenue on the way to Pasig
is now worth P20,000.00 to P30,000.00 a square meter. The falsification of the tax
declaration by changing "riceland" to "residential' was done before Arias was
assigned to Pasig besides, there is no such thing as "riceland" in inner Metro Manila.
Some lots in outlying or easily flooded areas may still be planted to rice or kangkong
but this is only until the place is dedicated to its real purpose which is commercial,
industrial, or residential. If the Sandiganbayan is going to send somebody to jail for
six years, the decision should be based on firmer foundation.
The Sandiganbayan asked why Arias kept the documents from October, 1978 to
June 23, 1982. Arias explained that the rules of the Commission on Audit require
auditors to keep these d documents and under no circumstanceto relinquish
custody to other persons. Arias was auditor of the Bureau of Public Works in Pasig
up to September 1, 1981. The seven months delay in the formal turnover of custody
to the new auditor was explained by prosecution witness Julito Pesayco, who
succeeded him as auditor and who took over the custody of records in that office.
The main reason for the judgment of conviction, for the finding of undue injury and
damage to the Government is the alleged gross overprice for the land purchased for
the floodway project. Assuming that P80.00 is indeed exorbitant, petitioner Arias
cites his testimony as follows:

Q In conducting the pre-audit, did you determine the

reasonableness of the price of the property?
A In this case, the price has been stated, the transaction
had been consummated and the corresponding Transfer
Certificate of little had been issued and transferred to the
government of the Philippines. The auditors have no more
leeway to return the papers and then question the
purchase price.
Q Is it not a procedure in your office that before payment
is given by the government to private individuals there
should be a pre-audit of the papers and the corresponding
checks issued to the vendor?
A Correct, Your Honor, but it depends on the kind of
transaction there is.
Q Yes, but in this particular case, the papers were
transferred to the government without paying the price
Did you not consider that rather odd or unusual? (TSN,
page 17, April 27,1987).
A No, Your Honor.
Q Why not?
A Because in the Deed of Sale as being noted there, there
is a condition that no payments will be made unless the
corresponding title in the payment of the Republic is
committed is made.
Q In this case you said that the title is already in the
name of the government?
A Yes, Your Honor. The only thing we do is to determine
whether there is an appropriation set aside to cover the
said specification. As of the price it is under the sole
authority of the proper officer making the sale.
Q My point is this. Did you not consider it unusual for a
piece of property to be bought by the government; the
sale was consummated; the title was issued in favor of
the government without the price being paid first to the
seller?

A No, Your Honor. In all cases usually, payments made by

the government comes later than the transfer.
Q That is usual procedure utilized in road right of way
transaction?
A Yes, Your Honor. (TSN, p. 18, April 27,1987).
Q And of course as auditor, 'watch-dog' of the government
there is also that function you are also called upon by
going over the papers . . . (TSN, page 22, April 27,1987).
I ... vouchers called upon to determine whether there is
any irregularity as at all in this particular transaction, is it
not?
A Yes, Ma'am.
Q And that was in fact the reason why you scrutinized
also, not only the tax declaration but also the certification
by Mr. Jose and Mr. Cruz?
A As what do you mean of the certification, ma'am?
Q Certification of Mr. Jose and Mr. Cruz in relation to PD
No. 296, A They are not required documents that an
auditor must see. (TSN, page 23, April 27,1987).
and continuing:
A ... The questioning of the purchase price is now beyond
the authority of the auditor because it is inasmuch as the
amount involved is beyond his counter-signing authority.
(TSN, page 35, April 27, 1987). (At pp. 15-16, Petition.
Underlinings supplied by petitioner)
The Solicitor General summarizes the participation of petitioner Data as follows:
As regards petitioner Data's alleged participation, the evidence on
record shows that as the then District Engineer of the Pasig
Engineering District he created a committee, headed by Engr. Priscillo
Fernando with Ricardo Asuncion, Alfonso Mendoza, Ladislao Cruz, Pedro
Hucom and Carlos Jose, all employees of the district office, as
members, specifically to handle the Mangahan Floodway Project,
gather and verify documents, conduct surveys, negotiate with the
owners for the sale of their lots, process claims and prepare the
necessary documents; he did not take any direct and active part in the
acquisition of land for the Mangahan floodway; it was the committee

which determined the authenticity of the documents presented to

them for processing and on the basis thereof prepared the
corresponding deed of sale; thereafter, the committee submitted the
deed of sale together with the supporting documents to petitioner Data
for signing; on the basis of the supporting certified documents which
appeared regular and complete on their face, petitioner Data, as head
of the office and the signing authority at that level, merely signed but
did not approve the deed of sale (Exhibit G) as the approval thereof
was the prerogative of the Secretary of Public Works; he thereafter
transmitted the signed deed of sale with its supporting documents to
Director Anolin of the Bureau of Public Works who in turn
recommended approval thereof by the Secretary of Public Works; the
deed of sale was approved by the Asst. Secretary of Public Works after
a review and re-examination thereof at that level; after the approval of
the deed of sale by the higher authorities the covering voucher for
payment thereof was prepared which petitioner Data signed; petitioner
Data did not know Gutierrez and had never met her during the
processing and payment of her claims (tsn, February 26, 1987, pp. 1014, 16-24, 31-32). (At pp. 267-268, Rollo.)
On the alleged conspiracy, the Solicitor General argues:
It is respectfully submitted that the prosecution likewise has not shown
any positive and convincing evidence of conspiracy between the
petitioners and their co-accused. There was no direct finding of
conspiracy. Respondent Court's inference on the alleged existence of
conspiracy merely upon the purported 'pre-assigned roles (of the
accused) in the commission of the (alleged) illegal acts in question is
not supported by any evidence on record. Nowhere in the seventyeight (78) page Decision was there any specific allusion to some or
even one instance which would link either petitioner Arias or Data to
their co-accused in the planning, preparation and/or perpetration, if
any, of the purported fraud and falsifications alleged in the information
That petitioners Data and Arias happened to be officials of the Pasig
District Engineering Office who signed the deed of sale and passed on
pre-audit the general voucher covering the subject sale, respectively,
does hot raise any presumption or inference, that they were part of the
alleged plan to defraud the Government, as indeed there was none. It
should be remembered that, as aboveshown, there was no undue
injury caused to the Government as the negotiated purchase of the
Agleham property was made at the fair and reasonable price of P80.00
per square meter.
That there were erasures and superimpositions of the words and
figures of the purchase price in the deed of sale from P1,546,240.00 to
P1,520,320.00 does not prove conspiracy. It may be noted that there
was a reduction in the affected area from the estimated 19,328 square

meters to 19,004 square meters as approved by the Land Registration

Commission, which resulted in the corresponding reduction in the
purchase price from P1,546,240.00 to Pl,520,320.00. The erasures in
the deed of sale were simple corrections that even benefited the
Government.
Moreover, contrary to the respondent Court's suspicion, there was
nothing irregular in the use of the unapproved survey plan/technical
description in the deed of sale because the approval of the survey
plan/ technical description was not a prerequisite to the approval of the
deed of sale. What is important is that before any payment is made by
the Government under the deed of sale the title of the seller must have
already been cancelled and another one issued to the Government
incorporating therein the technical description as approved by the
Land Registration Commission, as what obtained in the instant case.
(At pp. 273-275, Rollo)
We agree with the counsel for the People. There is no adequate evidence to
establish the guilt of the petitioners, Amado C. Arias and Cresencio D. Data, beyond
reasonable doubt. The inadequate evidence on record is not sufficient to sustain a
conviction.
WHEREFORE, the questioned decision of the Sandiganbayan insofar as it convicts
and sentences petitioners Amado C. Arias and Cresencio D. Data is hereby SET
ASIDE. Petitioners Arias and Data are acquitted on grounds of reasonable doubt. No
costs.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Gancayco, Bidin, Cortes and
Medialdea, JJ., concur.

G.R. No. L-101545 January 3, 1995

HERMENEGILDO M. MAGSUCI, petitioner,
vs.
THE HON. SANDIGANBAYAN (Second Division) and THE PEOPLE OF THE
PHILIPPINES, respondents.

VITUG, J.:

The Court is here confronted with the question of whether or not criminal
responsibility may be incurred by a head of office who, in the discharge of his official
duties, has relied on an act of his subordinate. There is no inflexible rule.
This petition for review on certiorari assails the 05th September 1991 decision of
respondent Sandiganbayan convicting petitioner, Hermenegildo M. Magsuci, of
estafa through falsification of public documents.
On 06 June 1988, an information was filed charging petitioner Magsuci, a public
officer, and one Jaime B. Ancla, a private person, with the complex crime of estafa
through falsification of public documents. The information read:
That on or about March 11, 1983 and prior sometime thereto, in
Cagayan de Oro City and within the jurisdiction of this Honorable Court,
the abovenamed accused Hermenegildo M. Magsuci, a public officer,
being the Regional Director of the Bureau of Fisheries and Aquatic
Resources (BFAR), Department of Natural Resources), (formerly
Ministry of Natural Resources), Region X, Cagayan de Oro City, and
accused Jaime B. Ancla, a private person, and Engineer and General
Manager of Dexter Construction, Cagayan de Oro City, conspiring,
confederating, and helping one another while the former in the
discharge of his public position and committing the offense in relation
thereto, taking advantage of his public functions, with grave abuse of
confidence, did, then and there, wilfully, unlawfully, and feloniously
issue and make it appear in the Certificate of Completion, dated March
10, 1983 and the undated Accomplishment Report, that the latter had
satisfactorily completed the Work Order on the forty (40) ton ice plant
and cold storage located at Magallanes Street, Surigao City, when in
truth and in fact, there were no such installation and construction
made thereon, thus, from the aforesaid falsities thereof, enabled the
accused to obtain and receive the sum of P412,729.24 through a
Disbursement Voucher and various Treasury Checks and once they are
in possession of said sum, with intent to defraud, misappropriate,
misapply and convert to their own personal use and benefit, to the
damage and prejudice of the government in the aforesaid amount.
Contrary to law.

On 10 August 1988, both accused were ordered arrested. Magsuci voluntarily

surrendered and posted a surety bond for his provisional liberty. Ancla appeared to
have absconded. On 12 September 1988, Magsuci pleaded "not guilty" to the
accusation.
The factual findings of the Sandiganbayan may be narrated thusly:
Some time in January 1980, the Bureau of Fisheries and Aquatic Resources ("BFAR")
and Dexter Construction ("DEXTER"), represented by its Manager Jaime B. Ancla,

entered into a "Contract of Service" for the construction by the latter of a 40-ton ice
making plant, including a 150-ton ice storage and 350-ton cold storage facility, in
Surigao City. In October 1982, while the construction was still on-going, BFAR and
Ancla executed a supplemental "Memorandum of Agreement," under which Ancla
additionally undertook "the purchase and installation of three distribution
transformers and construction of circular steel elevated tank" for P910,500.00. On
10 March 1983, BFAR Central Office Engineer David T. Enriquez, 2 charged with the
duty to render accomplishment reports on the progress of the construction and to
certify on the work accomplishments of DEXTER, prepared and signed an
"Accomplishment Report," as well as a "Certification," attesting to the progress and
extent of completion of the additional work. The report also bore the signature of
Ancla. On the following day, or on 11 March 1983, Hermenegildo M. Magsuci, the
newly designated 3 BFAR Regional Director for Region X, Cagayan de Oro City, read
the Accomplishment Report and Certification, affixed his signature thereon, and
directed the Chief of the Fisheries Extension Division in Cagayan de Oro City, David
F. Ernacio, to cause the issuance of the corresponding voucher. Disbursement
Voucher No. 3-0061, to which the Accomplishment Report and Certification were
attached, was thereupon prepared for the payment of 45.32% (P412,729.24) of the
contract price of P910,700.00, or P357,217.16 after deducting the contractor's tax,
withholding tax, and the required retention. Magcusi signed the disbursement
voucher, carrying the standard printed certification that the expenses were
necessary, lawful, and incurred under his supervision. Forthwith, Magcusi likewise
signed four checks, payable to the order of DEXTER, in the total amount of
P357,217.16. The disbursement Voucher, along with its attachments, and the
corresponding checks were then transmitted from the regional office to the BFAR
Central Office in Manila. Director Felix R. Gonzales approved the voucher and cosigned the checks. Later, the checks were released to DEXTER.
As it turned out, however, the additional work so represented to have been
accomplished in the field report and certifications had yet to be undertaken.
Although somewhat hazy, it would appear that the work was ultimately completed
in December, 1983.
After trial, the Sandiganbayan rendered judgment, finding Magsuci guilty of the
offense charged, and sentenced him thusly:
WHEREFORE, the Court finds Hermenegildo M. Magsuci guilty beyond a
reasonable doubt as principal of the complex crime of estafa defined in
Article 318 of the Revised Penal Code, through falsification of public
documents penalized under Article 171 of the same Code.
Accordingly, the Court imposes on him the indeterminate sentence of
SIX (6) MONTHS and ONE (1) DAY of prision correccional as minimum
to TEN (10) YEARS and ONE (1) DAY of prision mayor as maximum and
a fine of FIVE THOUSAND PESOS (P5,000.00) Philippine Currency.

He is ordered to pay the government by way of reparation the amount

of THREE HUNDRED FIFTY SEVEN THOUSAND TWO HUNDRED
SEVENTEEN
PESOS
and
SIXTEEN
CENTAVOS
(P357,217.16)
representing the amount misapplied.
SO ORDERED. 4
The Sandiganbayan predicated its conviction of petitioner on its finding of
conspiracy among Magsuci, Ancla and now deceased Enriquez.
There is conspiracy "when two or more persons come to an agreement concerning
the commission of a felony and decide to commit it." 5 Conspiracy is not presumed.
Like the physical acts constituting the crime itself, the elements of conspiracy must
be proven beyond reasonable doubt. While conspiracy need not be established by
direct evidence, for it may be inferred from the conduct of the accused before,
during and after the commission of the crime, all taken together, however, the
evidence therefor must reasonably be strong enough to show a community of
criminal design. 6
In concluding petitioner's involvement in the conspiracy, the Sandiganbayan could
only point to Magsuci's having 91) noted the Accomplishment Report and
Certification submitted by Enriquez, 92) signed the disbursement voucher with the
usual certification on the lawful incurrence of the expenses to be paid, and 93) cosigned four checks for the payment of P352,217.16 to Ancla. the Sandiganbayan
concluded that petitioner would not have thusly acted had he not been a party to
the conspiracy.
Fairly evident, however, is the fact that the actions taken by Magsuci involved the
very functions he had to discharge in the performance of his official duties. There
has been no intimation at all that he had foreknowledge of any irregularity
committed by either or both Engr. Enriquez and Ancla. Petitioner might have indeed
been lax and administratively remiss in placing too much reliance on the official
reports submitted by his subordinate (engineer Enriquez), but for conspiracy to
exist, it is essential that there must be a conscious design to commit an offense.
Conspiracy is not the product of negligence but of intentionally on the part of
cohorts.
In Arias vs. Sandiganbayan, 7 this court, aware of the dire consequences that a
different rule could bring, has aptly concluded:
We would be setting a bad precedent if a head of office plagued by all
too common problems dishonest or negligent subordinates,
overwork, multiple assignments or positions, or plain incompetence
is suddenly swept into a conspiracy conviction simply because he did
not personally examine every single detail, painstakingly trace every
step from inception, and investigate the motives of every person

involved in a transaction before affixing his signature as the final

approving authority.
xxx xxx xxx
. . . . All heads of offices have to rely to a reasonable extent on their
subordinates and on the good faith of those who prepare bids,
purchase supplies, or enter into negotiations. . . . There has to be some
added reason why he should examine each voucher in such detail. Any
executive head of even small government agencies or commissions
can attest to the volume of papers that must be signed. There are
hundreds of documents, letters, memoranda, vouchers, and supporting
papers that routinely pass through his hands. The number in bigger
offices or departments is even more appalling.
We are not unaware of an observation made by this Court in People vs. Rodis 8 to
the effect that a person may be so held liable as a co-principal if he, be an act of
reckless imprudence, has brought about the commission of estafa through
falsification, or malversation through falsification, without which (reckless
negligence) the crime could not have been accomplished. 9 When, however, that
infraction consists in the reliance in good faith, albeit misplaced, by a head of office
on a subordinate upon whom the primary responsibility rests, absent a clear case of
conspiracy, the Arias doctrine must be held to prevail.
WHEREFORE, the decision of the Sandiganbayan is REVERSED and SET ASIDE, and
petitioner Magsuci is ACQUITTED of the charges against him. Costs de oficio.
SO ORDERED.
Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason,
Puno, Vitug, Kapunan and Mendoza, JJ., concur.
Feliciano, J., is on leave.

[G.R. Nos. 107119-20. April 17, 1996]

TEODORO D. PAREO, petitioner, vs. SANDIGANBAYAN and THE PEOPLE OF

THE PHILIPPINES, respondents.

[G.R Nos. 108037-38. April 17 1996]

AQUILINO T. LARIN, petitioner, vs. SANDIGANBAYAN and THE PEOPLE OF

THE PHILIPPINES, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE SANDIGANBAYAN;
RULE; CASE AT BAR AN EXCEPTION. - While it is true that the factual
findings of the Sandiganbayan are conclusive on this Court, this rule is however
subject to established exceptions, among them: 1) the conclusion is a finding
grounded entirely on speculation, surmise and conjectures; 2) the inference
made is manifestly mistaken; 3) there is grave abuse of discretion; 4) the
judgment is based on misapprehension of facts, and the findings of fact of the
Sandiganbayan are premised on the absence of evidence and are contradicted
by evidence on record. In the light of the testimonial and documentary evidence
presented, the instant case undoubtedly falls under these exceptions. We find
that the petitioners guilt have not been proven beyond moral certainty.
2. ID.; ID.; WEIGHT AND SUFFICIENCY; GUILT MUST BE PREMISED ON A
MORE KNOWING PERSONAL AND DELIBERATE PARTICIPATION OF EACH
INDIVIDUAL WHO IS CHARGED WITH OTHERS AS PART OF A
CONSPIRACY. - It is rather apparent that under the Sandiganbayans decision, a
department secretary, bureau chief, commission chairman, agency head,
department head or chief of office would be equally culpable for every crime
arising from any transactions or held guilty of conspiracy simply because he was
the last of a long line of officials or employees who acted upon or affixed his
signature to a transaction. We cannot allow this because guilt must be premised
on a more knowing personal, and deliberate participation of each individual who
is charged with others as part of a conspiracy. There must be more convincing
proof which in this case is wanting. The Sandiganbayans finding of guilt is
merely based on speculations and conjectures which does not pass the test of
moral certainty. We find that the evidence on record is not sufficient to sustain a
conviction.
3. CRIMINAL LAW; CIRCUMSTANCES WHICH AFFECT CRIMINAL LIABILITY;
CONSPIRACY; NOT ESTABLISHED IN CASE AT BAR. - Conspiracy may be
proved by evidence of actual agreement between the parties to commit the
crime, or evidence of concerted acts of the parties indicative of a common
objective to commit the crime. In the instant case, there is no proof of actual
agreement between the petitioners to commit the crimes charged. The acts of
petitioners and that of Evangelista may be considered concerted only because
they performed interrelated functions. Larin from the Excise Tax Office received
the letter of Tanduay and referred the matter to Pareo, as head of the Alcohol
Tax Division considering that the issue was a tax on liquor. A certification from
the RAD was requested and indorsed back to Larin who made a favorable
recommendation to the Deputy Commissioner. There is no showing that
petitioners have acted irregularly, or performed acts outside of their official
functions. The testimony of Jeanet Aurelio that she saw Larins secretary at their
office, following up the memorandum she was typing has no probative value at
all. It must be founded on facts, not on mere inferences, conjectures and
presumptions. There is actually no proof that conspiracy exists between the
parties.

APPEARANCES OF COUNSEL
Agustin O. Benitez and Claro B. Parlade for petitioner in G.R. Nos. 107119-20.
Estelito P. Mendoza and Ermitao Asuncion Manzano & Associates for petitioner in
G.R. No. 108037-38.
Carlos D. Montemayor and Gualberto J. Dela Liana for Office of the Ombudsman.
The Solicitor General for public respondent.
DECISION
KAPUNAN, J.:
These consolidated petitions for review seek a review of the decision of the
Sandiganbayan finding petitioners guilty of violations of the National Internal
Revenue Code (NIRC) and Republic Act No. 3019, or the Anti-Graft and Corrupt
Practices Act.
The facts are as follows:
In a letter dated September 17, 1987 addressed to Commissioner Bienvenido A.
Tan, Jr. of the Bureau of Internal Revenue (BIR), through the Chief of the Specific Tax
Office, Senior Vice-President Fausto Preysler of Tanduay Distillery, Inc. (Tanduay)
requested a reimbursement of ad valorem taxes erroneously paid by Tanduay in the
amount of P180,701,682.00 on the ground that Tanduay, as a rectifier and
compounder of distilled spirits, should no longer be required to pay ad
valorem taxes under Section 122 of the National Internal Revenue Code (NIRC).
Attached to said letter was a schedule of the ad valorem taxes allegedly paid
erroneously and photostatic copies of Confirmation Receipts evidencing payment.
The letter read as follows:
September 17, 1987
Hon. Bienvenido A. Tan, Jr.
Commissioner, Bureau of Internal Revenue
Diliman, Quezon City
Attention: Chief, Specific Tax Office
We would like to request for Tax Credit on our erroneous payment of Ad Valorem tax
on the sale of our product lines since January 1, 1986 up to August 31,
1987 amounting to P180,701,682.00.
Tanduay Distillery, Inc. is engaged in the manufacture and sale of Rum (ESQ), 5
Years Old, Tanduay Dark Vodka (De Luxe Vodka, Cossack Vodka), and other similar
products (Amaretto de Tanduay, Creme de Chocolate, Creme de Menthe, Creme de
Cacao). Our company is a rectifier with Assessment No. A-1-3 and compounder with
Assessment No. A-1-3-A. Compounding is only incidental to rectifying.
We pay specific tax per proof liter on the spirit used in the production of liquor
under Section 121 of the National Internal Revenue Code and also Ad Valorem tax

under Sec. 122 which is erroneous sinceJanuary 1, 1986. Section 121 is hereunder
quoted:
Spirit or distilled spirits is the substance known as Ethyl Alcohol, ethanol or spirits of
wine, including all dilutions, purifications and mixtures thereof, from whatever
source by whatever process produced and shall include whisky, brandy, rum, gin
and Vodka, and other similar products or mixtures, except compounded liquors
taxed under Section 122 of this Code.
We buy alcohol from other distillers for further rectification. The specific tax on such
alcohol is not payable upon removal because it will undergo rectification pursuant to
Sec 117 Under the same Section, the duty of paying specific tax on such alcohol
removed under bond is shifted on the rectifier. From hereon, our process is a
continuous one. We produce gin, rum, vodka and these products that are removed
from our place of production fall squarely under the definition of distilled
spirit. Attached is a detailed schedule of Ad Valorem taxes paid for the said period
with supporting official receipts for your ready reference.
We will appreciate very much your immediate action on the above request.
Thank you.
Very truly yours,
TANDUAY DISTILLERY, INC.
Elizalde & Co., Inc.
Gen. Mgrs.
(SGD.) FAUSTO PREYSLER
SVP-Comptroller1
Acting on said letter, Aquilino. Larin, Assistant Commissioner and Chief of the
then Specific Tax Office, now Excise Tax Service of the BIR, wrote a marginal
note2 on the letter instructing Teodoro Pareo head of the Alcohol Tax Division, to
prepare a request to the Revenue Accounting Division (RAD) for confirmation of
Tanduays payments.
On September 23, 1987, upon receipt of said letter, Teodoro Pareo immediately
referred the same to Justino Galban, Chief of the Compounders, Repackers and
Rectifiers Section, one of the sections under the Alcohol Tax Division, for the
preparation of the request.
Galban then prepared a memorandum to the Financial and Management
Service, Attention: Chief, Revenue Accounting Division, requesting the desired
authentication and verification.The memorandum reads as follows:
September 24, 1987
MEMORANDUM FOR:
The Assistant Commissioner
Financial and Management Service

Attention: Chief, Revenue Accounting Division

Sir:
There is forwarded to you for verification and authentication that the amounts
represented by the Confirmation Receipts mentioned in the attached schedules in
the amount of One Hundred Eighty Million Seven Hundred One Thousand Six
Hundred Eighty Two (P180,701,682.00) Pesos, were actually paid and received by
our Bureau as Ad Valorem Tax Payments of Tanduay Distillery, Inc., No. 348 J.
Nepomuceno St., Quiapo, Manila, during the period beginning January 1, 1986 to
August 31 1987.
The Certification of your Office is requested as a requisite in the processing of the
claim for Tax Credit filed by Tanduay Distillery, Inc. for alleged erroneously paid
Ad Valorem Taxes on its compounded liquors.
Very truly yours,
(Sgd.) AQUILINO T. LARIN
Assistant Commissioner
For Specific Tax3
Immediately thereafter, the aforesaid memorandum signed by Larin was
forwarded to the Financial and Management Service, a co-equal unit of the Excise
Tax Service, on September 24, 1987.
On September 25, 1987, Potenciana M. Evangelista, Chief of the Revenue
Accounting Division (RAD) forwarded to Larin through the Assistant Commissioner
for Financial and Management Service the following First Indorsement, certifying as
requested, the Confirmation Receipts listed therein as verified from their records:
1st Indorsement
September 25, 1987
Respectfully forwarded to the Assistant Commissioner for Specific Tax, THRU: the
Assistant Commissioner, Financial & Management, the memorandum dated
September 24, 1987 relative to the alleged erroneous payment of Ad Valorem taxes
on its compounded liquors paid by TANDUAY DISTILLERY, INC. for the period January
1, 1986 to August 31, 1987 in the amount of P180,701,682.00 with the information
that the confirmation receipts listed hereunder were verified from the records of this
Office, as follows:

Name of Taxpayer:

CR NO.
7448215
7448237
7448265

TANDUAY DISTILLERY, INC

TNC

DATE

BNKC

AMOUNT

3011-0001
-do-do-

1-06-86
1-07-86
1-08-86

02 1-002
-do-do-

P77,840.00
-do-do-

xxx
1039532
8
1039614
2
1039535
9
xxx
1243979
1
1243954
4
1243981
5

0000-0000

xxx
1-02-87

021-002

xxx
1,400,000.00

-do-

1-09-87

-do-

750,000.00

-do-

1-07-87

-do-

1,000,000.00

-do-

xxx
8-24-87

-do-

xxx
509,000.00

-do-

8-31-87

-do-

270,582.00

-do-

8-27-87

-do-

385,000.00

SOURCE: Abstract of Collections thru Bank

BIR Form No. 12.56
a) Phil. Trust Co.

TAN-El 526-E 1 946-A-04

(SGD.) POTENCIANA M. EVANGELISTA

Chief,
Revenue
Accounting
Division

On October 13, 1987, Galban and Pareo prepared their respective memoranda
describing the manufacturing process of Tanduay and stating that Tanduay was both
a rectifier and compounder. The memorandum signed by Galban is quoted as
follows:
October 14, 1987
The Assistant Commissioner for Specific Tax
Sir:
This is with reference to the tax credit claim of Tanduay Distillery Inc., for ad
valorem taxes alleged to have been erroneously paid on its ESQ Rhum, Clubmans
Dry Gin, De Luxe and Cossach Vodka and other similar intoxicating beverages.
Submitted herewith is my report on the manufacturing process of Tanduay Distillery,
Inc. Tanduay Distillery, Inc. is a rectifier and at the same time a compounder bearing
Assessment No. A-1-3 and A-1-3A, respectively, and has been in business
since 1854.
The principal raw materials used in manufacture of these products is alcohol
purchased either underbond or taxpaid from various distillers.
The underbond alcohol purchased and delivered are loaded in tankers from source
covered by Official Tax Receipts (OTR) showing the total volume in gauge liters and
proof liters. Each shipment of underbond alcohol are provided with samples which is

tested and examined by the Quality Control Office of Tanduay Distillery for the
purpose of determining if it meets the quality standard. It is therefore pumped into
the underbond storage tanks of the rectifying plant of Tanduay Distillery, Inc., and
undergoes rectification to remove turbidity, color, odor and other impurities for the
purpose of bringing about improved quality of the alcohol for the specific use in the
manufacture of liquors and wines. After sometime in the rectifying plant at time for
several months of storage said underbond rectified alcohol are ready for
compounding depending on the market demands in which case they are transferred
to the compounding area after the payment of the corresponding specific tax. In the
compounding tanks essences, oils, aromatics, coloring material and other
ingredients are added to attain the desired premium quality brand of compound
liquor to be produced. After all the materials were thoroughly mixed the resulting
products which are ESQ Rhum, Clubmans Dry Gin, De Luxe and Cossach Vodka and
other similar intoxicating beverages are tested and examined again by the Quality
Control Office and if found to possess the standard quality strictly set by the
company they are stored for sometime bottled, packed and affixed with the
requisite auxiliary labels. All of these processes are always under the supervision of
revenue enforcement officers assigned on-premises supervision together with the
quality control personnel of Tanduay Distillery to insure a sanitary output. These
various stages of operations are done in one continuous uninterrupted integrated
process. The bottled liquors are packed into cases which are affixed with BIR regular
labels under the supervision of our revenue enforcement officer assigned
thereat. The corresponding official tax receipts are then accomplished showing the
brands of compound liquors produced, the total volume in gauge liters, grade, proof
liters, serial number of regular and auxiliary labels and the amount of
ad valorem taxes paid thereon which is the subject matter of the tax credit claim of
Tanduay Distillery, Inc. The supervision and control of establishments manufacturing
articles subject to excise taxes are extended for revenue purposes up to the
factorys warehouse for finished products.
Very truly yours,
(SGD.) JUSTINO E. GALBAN, JR.
Chief, Compounders, Repackers
& Rectifiers Section.5
The other memorandum prepared and signed by Pareo was addressed to the
Assistant Commissioner for Specific Tax reiterating essentially the manufacturing
process of Tanduay and its status as a rectifier. Pareo recommended that the claim
of Tanduay for tax credit for alleged erroneous payment of ad valorem tax be given
due course. The memorandum states:
October 13, 1987
MEMORANDUM FOR:
The Assistant Commissioner for Specific Tax
This refers to the tax credit claim of Tanduay Distillery, Inc., in the amount of
P180,701,682.00 representing alleged erroneous payment of ad valorem taxes for

the period January 1, 1986 to August 31, 1987 on its products namely ESQ Tanduay
Rhum, Clubmans Dry Gin, De Luxe and Cossach Vodka and other similar products as
Amaretto de Tanduay, Creme de Chocolate, Creme de Menthol and Creme de Cacao.
Tanduay Distillery, Inc., has been engaged in the business as rectifier and in the
manufacture and production of Rhum, whisky, gin, vodka and other similar alcohol
products since 1854.
Tanduay Distillery, Inc., is a rectifier and the underbond alcohol it purchases from
alcohol plants, undergoes one integrated continuous manufacturing process the end
finished products of which are rhum, whisky, gin, vodka and other similar
intoxicating beverages. The purpose of its being a rectifier is principally to produce
the aforesaid products and the removal of any impurities or turbidity in the process
of rectification is to bring about the desired quality of the alcohol for the specific use
in liquor and wine manufacturing. Compounding is merely an adjunct or additional
operation not a distinct independent process in the production of alcohol beverages.
Tanduay Distillery, Inc., becomes an extension of the distiller from which the alcohol
is purchased and the liability in the payment of specific tax due on the alcohol is
shifted and assumed by it. The finished products contemplated under Section 117 of
the Tax Code on removal of spirits for rectification purposes subject to excise tax to
be paid by the rectifier (Tanduay Distillery) are the very same products being
manufactured by subject-taxpayer.
Section 121 of the Tax Code is hereby reproduced which has bearing in this
particular case.
Section 121, Distilled Spirits.
Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits
of wine, including all dilutions purifications and mixtures thereof, from whatever
source by whatever process produced and shall include whisky, brandy, rum, gin
and vodka, and other similar products or mixtures except compounded liquors taxed
under Section 122 of this Code.
Because the law expressly considers whisky, brandy, rum, gin and vodka as distilled
spirits it follows that the products manufactured by Tanduay Distillery, Inc., fall
squarely within the statutory definition without qualifying or distinguishing from
whatever source by whatever process they are produced.
Relevant to the instant case is Section 157. On words and Phrases Defined. which
defines Compounder as every person who, without rectifying, purifying, or refining
distilled spirits, shall by mixing such spirits, wines or other liquor with any material
except water manufacture any intoxicating beverage whatever.
Herein taxpayer as a rectifier is an extension of the distiller, the finished product of
which is subject to the payment of the specific tax on distilled spirits. Taxpayerclaimant produces by rectifying ethyl alcohol or neutral alcohol and in continuous,
uninterrupted process produces as its products whisky, rum, vodka and the like.

In view of the foregoing, it is respectfully recommended that the request of Tanduay

Distillery, Inc., for tax credit in the amount of P180,701,682.00 for alleged erroneous
payment of ad valorem tax be given due course.
Very truly yours,
(SGD.) TEODORO D. PAREO
Chief, Alcohol Tax Division6
Thus, Larin prepared a memorandum, addressed to Deputy Commissioner
Eufracio D. Santos recommending that the claim of Tanduay for tax credit thereby
be granted. Together with his memorandum, Larin also sent to Santos Tax Credit
Memorandum No. 5177 (TCM) bearing his initial for Santos signature. The
memorandum reads, as follows
October 13, 1987
MEMORANDUM FOR:
The Commissioner of Internal Revenue
This refers to the Tax Credit Claim of Tanduay Distillery, Inc., 243 Nepomuceno
Street, Quiapo, Manila in the amount of P180,701,682.00 for alleged erroneous
payment of ad valorem taxes for the period January 1, 1986 to August 31, 1987 on
its alcoholic products namely ESQ Tanduay Rhum, Clubmans Dry Gin, De Luxe and
Cossach Vodka and other similar intoxicating beverages.
Tanduay Distillery, Inc., is engaged in the business as rectifier and manufacturer of
rhum, gin, vodka and other similar products.
As a rectifier it purchases underbond alcohol from distillers without prepayment of
the specific tax and the same undergoes rectification for the purpose of bringing
about the desired quality of the alcohol for the specific use in liquor and wine
manufacturing of premium brands. This process is in the nature of a single
integrated continuous process the final products of which are rum, gin, vodka and
the like.
As a rectifier, Tanduay Distillery, Inc., under Section 121 of the Tax Code becomes
an extension of the distiller from which the alcohol is purchased and accordingly
since the transfer is without prepayment of the specific tax which should have been
paid by the distiller before removal from the place of production, naturally in the
execution of a joint bond between the distiller and rectifier, the burden of payment
of the specific tax is shifted to and assumed by Tanduay Distillery, Inc. It is under
this concept as provided for in the Tax Code that the rectifier pays the excise tax
due on the finished products namely Tanduay ESQ Rhum, gin, vodka and the like.
The crux of the matter is premised on the definition of what is distilled spirits
which is reproduced herein.
Section 121. Distilled Spirits.

Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits
of wine, including all dilutions, purifications and mixtures thereof from whatever
source by whatever process produced and shall include whisky, brandy, rum, gin
and vodka, and other similar products or mixtures, except compounded liquors
taxed under Section 122 of this Code.
From the foregoing, the law explicitly considers whisky, rum, gin, etc. as distilled
spirits and does not qualify whether by direct distillation or reverse
fabrication. Suffice it to say that same may be produced from whatever source by
whatever process produced. In other words, the business operation of Tanduay
Distillery, Inc., in as far as the production of intoxicating liquors is concerned, is
exactly the same as that of Destileria Limtuaco.
In view of the foregoing and considering that it has already been ruled that
Destileria Limtuaco is entitled to a refund of its erroneously paid ad valorem taxes
on its manufactured alcoholic products (approved memorandum for the
Commissioner of the Chief, Appellate Division and concurred by the Chief, Revenue
Service, Chief, Legal Office, copy attached for ready reference). It is recommended
that the claim for tax credit erroneously paid by Tanduay Distillery, Inc., in the
amount of P180,701,682.00 be also tax credited it appearing that the said
erroneous payments have already been verified to have been remitted to the
Bureau by the Revenue Accounting Division as per its 1st Indorsement dated
September 25, 1987, hereto attached.
Very truly yours,
(SGD.) AQUILINO T. LARIN
Assistant Commissioner
for Specific Tax7
On October 13, 1987, Santos approved the recommendation of Larin and signed
Tax Credit Memo No. 5177.8
Consequently, Tanduay availed of the tax credit to the extent of about P74
million, bearing an unused balance of about P34 million. 9
On June 22, 1988, one Ruperto Lim wrote to Commissioner Bienvenido A. Tan, Jr.
denouncing an alleged big Tax Swindle to the effect that Tanduay got a very big
amount of tax credit through fraud. A series of investigation was then conducted by
the Intelligence and Investigation Office of the BIR with the help of the Department
of Justice (DOJ) and the National Bureau of Investigation (NBI).
As a result of these investigations, two (2) informations were filed with the
Sandiganbayan charging (1) Aquilino T. Larin,
Assistant Commissioner for Excise Taxes, (2) Potenciana Evangelista, Chief of
the Revenue Accounting Division, (3) Teodoro Pareo, Chief of the Alcohol Tax
Division and (4) Justino E. Galban, Section Chief Compounders, Rectifiers and
Repackers Section, Alcohol Tax Division, for violation of the NIRC and R.A. 3019. The
Informations read as follows:
(NIRC)

That during the period covering September 25, 1987 to October 13, 1987 and/or
immediately subsequent thereto, in Quezon City, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused, all public officers
being previously appointed to their above-stated positions at the Bureau of Internal
Revenue (BIR) and having qualified to act as such, and who are all charged with the
enforcement of the law and all rules and regulations pertaining to tax impositions
and collections by the Government of revenues by then and there making and/or
signing or causing the preparation and/or signing of false memoranda and
certification regarding a claim for tax credit of Tanduay Distillery, Inc. previously
filed by the latter with the BIR in the amount of P180,701,682.00 by stating in such
memoranda and certification that Tanduay Distillery, Inc. was legally entitled to
such tax credit in the afore-stated sum for the reason that such claimant-firm was
not liable to pay ad valorem taxes as its products are distilled spirits on which
specific taxes are paid for by it and that the amount of P180,701,682.00 claimed for
tax credit was actually paid by it and received by the BIR, all the accused knowing
fully well that such statements made by them in their memoranda and certification
had no legal and factual basis as they all failed to verify the truth and validity of the
claim of Tanduay Distillery, Inc., which was their official duty to do, and by reason of
such false memoranda and certification, the BIR allowed a tax credit in the amount
claimed by the said firm to be made in its favor which in truth and in fact, the latter
had not actually paid such amount to the Government by way of specific taxes and
only P73,614,287.20 of ad valorem taxes was paid by it, the crime having been
committed by the accused in relation to their office.
Contrary to law.
(R.A. 3019)
That during the period covering September 25, 1987 until October 13, 1987, and/or
immediately subsequent thereto, in Quezon City, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, all public officers,
holding the above-stated positions at the Bureau of Internal Revenue (BIR) and as
such, are charged with the duty of enforcing the law and all rules and regulations
administered by the BIR concerning tax impositions and collections made on the
taxpayers by the Government, taking advantage of their public and official positions
and conniving, conspiring and confederating with each other, and mutually helping
one another, did then and there wilfully and unlawfully cause undue injury to the
Government and give unwarranted benefits to the Tanduay Distillery, Inc., a duly
registered domestic corporation engaged in the manufacture and sale of rum, gin,
vodka and other similar products, in the discharge of their official and/or
administrative functions through manifest partiality, evident bad faith and/or gross
inexcusable negligence in the following manner, to wit: the above-named accused,
who were called upon in their respective official capacities to verify and act on the
validity and/or veracity of a claim for tax credit in the amount of ONE HUNDRED
EIGHTY MILLION SEVEN HUNDRED ONE THOUSAND AND SIX HUNDRED EIGHTY TWO
(P180,701,682.00) PESOS, Philippine Currency, filed with the BIR by the Tanduay
Distillery, Inc. on the pretext that said claimant-firm had made erroneous payments
of ad valorem taxes on the sales of its products since January 2, 1986 up to August
31, 1987, deliberately and without any justifiable reason failed to perform their
assigned tasks of checking the truth and validity of such claim for tax credit and

without sufficient legal and factual bases they all endorsed approval of the same
claim by preparing, signing, and submitting and/or causing the preparation, signing
and submission of memoranda, certification and/or official communications stating
their findings thereon that the Tanduay Distillery, Inc. was not liable to pay
ad valorem taxes because its products are distilled spirits on which specific taxes
are paid and that the amount mentioned by said firm in its claim for tax credit was
actually paid and received by the BIR, said (sic) having been made by the accused
in order to give claimant-firm undue benefits in the form of tax credits approved in
their favor, official record of the BIR, actually paid the amount of ONE HUNDRED
EIGHTY MILLION SEVEN HUNDRED ONE THOUSAND SIX HUNDRED EIGHTY TWO
PESOS, (P180,70 1,682.00), Philippine Currency, for specific taxes, and only P73,6
14,287.20 was paid by it as ad valorem taxes and by reason by (sic) such false
memoranda, certification and/or communications submitted by the accused, BIR
approved the claim for tax credit, thereby defrauding the Government of the sum of
P107,087,394.80 which is the difference between the amount claimed as tax credit
and the amount of ad valorem taxes paid by Tanduay Distillery, Inc., to the damage
and prejudice of the Government in the aforestated sum.
Contrary to law.

10

Larin, Pareo and Galban filed separate motions for reinvestigation on various
dates, all of which were denied by the Sandiganbayan.
On April 26, 1990, all the accused were arraigned where they all pleaded Not
Guilty to the charges filed against them. After a pre-trial was conducted, trial finally
commenced onJanuary 7, 1991.
On September 18, 1992, the Sandiganbayan rendered a decision convicting
Larin, Pareo, and Evangelista and acquitting Galban. The dispositive portion reads
as follows:
WHEREFORE, judgment is now rendered in Criminal Cases No. 14208 & 14209
CONVICTING accused Assistant Commissioner for Specific Tax AQUILINO T. LARIN,
Chief of the Alcohol Tax Division TEODORO D. PAREO, and Chief of Revenue
Accounting Division POTENCIANA M. EVANGELISTA;
1. in Criminal Case No. 14208 for the violation of Section 268(4) of the National
Internal Revenue Code, and imposing upon each of them the penalty of
imprisonment for an indeterminate period of 4 years, 8 months and one (1) day by
way of minimum to 6 years and 8 months by way of maximum, and a fine of Twenty
Thousand (P20,000.00) Pesos to be paid by each of them;
2. in Criminal Case No. 14209 for violation of Sec. 3(e) of R.A. 3019, and hereby
imposing upon each of them the penalty of imprisonment for an indeterminate
period ranging from a minimum of 9 years and one (1) month to a maximum of
twelve (12) years.
Likewise imposed upon each of them is the penalty of perpetual disqualification
from public office.

The allegations of the Information in the above Criminal Cases not having been
proven beyond reasonable doubt as to the other accused, judgment is now rendered
ACQUITTING accused JUSTINO E. GALBAN of the charges under Criminal Cases No.
14208 and No. 14209, since his only function and activity had been the preparation
of the description of the technical aspects of TANDUAYS manufacturing process as a
rectifier and compounder of liquors.
Costs against the accused LARIN, PAREO and EVANGELISTA.
SO ORDERED.11
On October 3, 1992, Lam filed a motion for reconsideration which was denied by
the Sandiganbayan. Pareo opted not to file a motion for reconsideration and
elevated his case directly to the Supreme Court.
Hence, these petitions.
The evidence for the prosecution mainly stems from the testimonies of the
following witnesses: (1) Eufracio Santos, Deputy Commissioner of the BIR; (2)
Brikcio Santos, Supervising Revenue Officer at the Intelligence and Investigation
Office of the BIR; (3) Themistocles Montalban, Head Revenue Executive Assistant;
and (4) Jeanet Segundo Aurelio, formerly the Revenue Clerk assigned at the Alcohol
Tax Division under Teodoro Pareo.
Eufracio Santos testified that he was Deputy Commissioner of the BIR whose
main duty was to assist the Commissioner in the administration of revenue laws and
regulations being enforced by the BIR, its regional offices as well as the revenue
district offices.
He testified that on October 13, 1987, he signed Tax Credit Memo No. 5177
(TCM) in favor of Tanduay Distillery for the amount of P108,701,682.00 on the basis
of the memorandum submitted by Larin, memorandum of Pareo and the First
Indorsement dated September 25, 1987 prepared by Potenciana Evangelista.
Considering the voluminous paperwork attendant to his office, he had to rely
mainly on the certifications, recommendations and memorandum of his
subordinates which in this case were herein petitioners. His precise participation in
this case was only to determine if Tanduays claim had legal and factual basis for the
application of the decision of the Limtuaco case.
The legal basis in the Limtuaco ruling was used for the grant of the tax credit in
favor of Tanduay considering that they are both rectifiers - meaning that they get
untax-paid alcohol underbond and then rectify the alcohol after which they pay the
specific tax, hence, no longer subject to ad valorem tax.12
As to the factual basis, Santos had only to find out if Tanduay had indeed paid
the taxes which can be determined through the endorsement of the Revenue
Accounting Division (RAD) which is charged with the verification of the payments
done. In this case, the fact that the papers passed through the RAD was sufficient
proof that verification was made with regard to the tax payment of Tanduay.
His attention was drawn to this case only when an investigation was requested
about an alleged tax swindle perpetrated on the bureau.

Santos would want to distinguish his position from that of the petitioners
explaining that the Deputy Commissioners and the Commissioner do not perform
investigative functions so they have to rely on their subordinates. The Office of the
Assistant Commissioner, on the other hand, performs line functions and has
investigatory powers. It is more in the position to determine if payments were
indeed made.13 Thus, Santos relied on the topmost document bearing Larins
signature for the approval of the TCM.
In effect, therefore, liability was pinpointed on Larin and Pareo who were more in
the position to make a proper determination if Tanduay was indeed entitled to a tax
credit.
The second witness, Brikcio Santos testified that he was Senior Revenue
Enforcement Officer in 1988, about that time when the case arose. His duty was to
conduct investigation of tax liabilities of taxpayers, prepare necessary reports and
do other jobs assigned to him.
On July 18, 1988, he was assigned to look into the Tanduay case by virtue of a
letter of authority issued by one Benjamin D. Parungo, Assistant Commissioner of
the Special Operations Service, addressed to Tanduay. Together with
this, Santos also received the entire docket of TCM No. 5177.
Santos was commissioned to examine the entire tax position of Tanduay. In the
course of his examination of all the documents presented to him, the financial
statement of the company was the most significant. According to Santos, the
financial statement did not reflect any sales tax payment which formed the basis of
a tax refund or tax credit. His audit report contained the following findings as
observed by the Sandiganbayan:
x x x After making the schedule of the Payment Orders and Confirmation Receipts,
he rendered an Audit Report (Exhibit G) (p. 53, id.). He agreed that in this report, he
found that the total amount of Specific Taxes paid from January 6, 1986 to August
31, 1987 was P180,701,682.00 while the Ad Valorem Taxes paid for the period
January 6 to December 31, 1986 and January 2 to August 31, 1987 came up to the
total amount of P67,632,524.00 (p. 55, id.). Thus, the P180 million claimed by
TANDUAY was not for specific taxes alone but excise taxes in general. Excise taxes
are composed of specific taxes and advalorem taxes. Included in the P180 million
was P1 million for ad valorem taxes (p. 56, id.). His report also stated that he found
out that there were receipts which were labeled Specific Taxes but which were
actually payments for ad valorem taxes (p. 57, id.). He confirmed his conclusion
therein that the tax credit memo of P180,701,682.00 was incorrect. The amount of
the TCM should only be P67,632,524.00. This already took into consideration the P1
million that he found (p. 58, id.).
His report (Exhibit G) also contained the observation, which he confirmed, that as
of June 30, 1988, the total TCM of P180,701,682.00 had been fully applied
(p. 50, id.). The memorandum for the Commissioner dated July 7, 1988 from Eliseo
Pitargue, Chief, Intelligence and Investigation Office (Exhibit X) was the source of
this statement in his report (Exhibit G) (p. 59, id.). He verified the correctness of the
observation made by Mr. Pitargue by resorting to the History Card of TCM No. 5177
(Exhibit X) on file at the Receivables Account Division (p. 60, id).14

The prosecutions third witness, Themistocles Montalban who was the Revenue
Executive Assistant for Collection merely testified that he came across TCM No.
5177 but did not actually sign all debit memos in application of TCM No. 5177. He
stated that the amount of P180,701,682.00 was fully utilized in payment of Internal
Revenue taxes due from Tanduay covering the period 1987 to 1988. This full
availment was borne out by the records that they have compiled in the Accounts
Receivable Billing Division.15
The next witness to testify was Jeanet Segundo Aurelio, who was the Revenue
Clerk-typist of petitioner Teodoro Pareo.
She recalled that on October 13, 1987, she typed a memorandum signed by
Pareo with regard to the Tanduay request and a letter of Justino Galban also with
regard to the request of Tanduay. While typing the memorandum, she noticed the
presence of Juliet Galan, who was the secretary of petitioner Larin in their
office. She found this quite unusual since their offices are on different floors. She
allegedly overheard that Juliet Galan was following up the memoranda she was
typing on that day particularly that of Pareo. Except for that day, she never saw
Galan again.
The defense, on the other hand, did not present testimonial evidence but only
documentary evidence, adopting some of the exhibits of the prosecution.
Petitioners were charged for having violated the two (2) different laws, to wit:
xxx xxx xxx
(1) Section 268(4) of the National Internal Revenue Code in Criminal Case No. 14208
which reads as follows:
Sec. 268. Violations committed by government enforcement officers. -Every official,
agent or employee of the Bureau of Internal Revenue or any other agency of the
government charged with the enforcement of the provisions of this Code, who is
guilty of any of the offenses hereinbelow specified, shall, upon conviction for each
act or omission, be fined in a sum of not less than five thousand pesos but not more
than fifty thousand pesos or imprisoned for a term of not less than one year but not
more than ten years, or both;
xxx xxx xxx
4. Those who conspire or collude with another or others to defraud the revenues or
otherwise violate the provisions of this Code;
xxx xxx xxx
(2) Section 3(e) of R.A. 3019 of the Anti-Graft and Corrupt Practices Act for Criminal
Case No. 14209 which reads as follows:
Sec. 3. Corrupt Practices of Public officers. - In addition to acts or omission of public
officers already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

e. Causing any undue injury to any party, including the Government, or giving any
private party any unwarranted benefit, advantage or preference in the discharge of
his official administrative or judicial functions through manifest partiality, evident
bad faith or gross inexcusable negligence. xxx
Specifically, the petitioners have been accused of the following acts:
For the violation of Sec. 268 of the NIRC (Criminal Case No. 14208):
- by having conspired and colluded with one another.
- in knowingly preparing false memoranda and certification regarding
the claim for Tax Credits made by the taxpayer Tanduay Distillery,
Inc. (TANDUAY)
- to the effect that the taxpayer had paid P 180,701,682.00 in ad
valorem taxes;
- when in fact the accused had failed to verify the truth of the
alleged payment of ad valorem taxes;
- the truth being that the taxpayer TANDUAY had not
paid that amount in ad valorem but in specific taxes, although it had
paid another sum (P72,614,287.20) in ad valorem taxes.
For the violation of the Anti-Graft and Corrupt Practices Act (Sec. 3/e of R.A.
3019) in Criminal Case No. 14209
- causing undue injury to the government and giving unwarranted
benefits to TANDUAY;
- by the deliberate and unjustified failure of the accused to verify the
truth and validity of TANDUAYs claim that it had paid the
ad valorem taxes for which it was claiming a tax credit;
- and, instead, indorsing approval of the claim of taxpayer TANDUAY that
it had allegedly paid erroneously the amount claimed (P180,701,682.00)
in ad valorem taxes and would thus be entitled to a tax credit in that
amount thereby resulting in the approval of a tax credit in the amount
claimed in favor of TANDUAY;
- the truth being that the above amount had not been paid in
ad valorem taxes but in specific taxes, although another amount (P73,6
14,287.20) had been paid in ad valorem taxes;
- resulting in undue prejudice to the Government for the difference of
P107,087,394.80 and an unwarranted benefit to TANDUAY for that same
amount.16
The Sandiganbayan found that the claim of Fausto Preysler was false. Tanduay
had not actually paid the amount of P180,701,682.00 in ad valorem taxes. Out of
the 237 tax receipts paid and presented by Tanduay in support of their claim of

P180,701,682.00, only three (3) representing the amount of P1,109,582.00 turned

out to be payments for ad valorem taxes. By reason of the issuance of TCM No.
5177, Tanduay had thereby availed of a tax credit amounting to about P
107,087,394.80 to the prejudice of and loss to, the government. Responsibility was
pinpointed on petitioners, including Potenciana Evangelista, as the people who
allegedly caused the preparation of TCM No. 5177: Larin, for having received the
letter from Tanduay without any endorsement whatsoever from a higher official, for
instructing Pareo to prepare the request to the RAD for verification and for
recommending the approval of TCM No. 5177; and Pareo, for preparing a referral of
the tax application to Potenciana Evangelista who promptly responded with her first
indorsement.
With the foregoing acts, the petitioners were alleged to have conspired and
colluded with one another in making false certifications, false memoranda and false
recommendations to the detriment of the government. Their actions became
suspect when they allegedly acted with haste on the matter.
While it is true that the factual findings of the Sandiganbayan are conclusive on
this Court, this rule is however subject to established exceptions, among them: 1)
the conclusion is a finding grounded entirely on speculation, surmise and
conjectures; 2) the inference made is manifestly mistaken; 3) there is grave abuse
of discretion; 4) the judgment is based on misapprehension of facts, and the
findings of fact of the Sandiganbayan are premised on the absence of evidence and
are contradicted by evidence on record.17
In the light of the testimonial and documentary evidence presented, the instant
case undoubtedly falls under these exceptions. We find that the petitioners guilt
have not been proven beyond moral certainty.
Let us examine once again the events which transpired:
1) Larin received a letter dated September 17, 1987 from Fausto Preysler claiming a
tax credit for Tanduay for alleged erroneous payment of ad valorem taxes
amounting to P180,701,682.00;
2) Larin wrote a note on the margin of the letter addressed to Pareo to prepare a
request to the RAD;
3) Pareo instructed Galban to prepare the memorandum addressed to the RAD
requesting verification that payments were made;
4) This memorandum was brought back to Larin for his signature;
5) Larin received a First Indorsement from Evangelista with the information that the
confirmation receipts were verified;
6) Larin received a memorandum from Galban and later from Pareo explaining the
manufacturing process of Tanduay;

7) With the verification from the RAD and the memorandum of Pareo explaining the
manufacturing process of Tanduay, Larin prepared a memorandum to the Deputy
Commissioner recommending approval of TCM No. 5177.
The Court does not find anything irregular or illegal with the acts committed by
the petitioners. The fact that the letter of Tanduay was addressed to Larin
specifically does not prove anything at all. Nowhere in the rules of the BIR does it
state that all communications must pass through the hierarchy of officers.
The head of the Excise Tax18 Division was petitioner Larin. Any application for
tax credit was usually referred to Larin and responded by him and his immediate
subordinates.
In the instant case, it was but proper for Tanduays claim for tax credit in ad
valorem taxes to have been referred to his office. Whether or not tax refunds or tax
credits were to be made and how much was to be credited was the responsibility of
Larin and Pareo, too, as the head of the Alcohol Tax Division considering that the
issue referred is taxes on liquor.
To repeat, there is nothing irregular with the fact that Tanduays letter was
directly sent to the Office of the Chief of the Excise Tax Division which would
necessarily look into the validity of Tanduays claim.
Neither do we find anything false or irregular in Larins marginal note or Pareo s
memorandum prepared by Galban to the RAD. They were merely requests for
verification or authentication of the Confirmation Receipts for the purpose of
determining if payments for ad valorem taxes had indeed been made by Tanduay.
Pareo and Galbans memorandum, on the other hand, merely explained the
manufacturing process of Tanduay. Considering that the BIR had already ruled that
ad valorem taxes paid by the distillers were erroneous payments and could,
therefore, be proper subject of claims for tax credit, there was legal basis to
Tanduays claim.19
There were two things to be verified before Tanduay s claim for tax refund could
be granted:
First, if Tanduay is a rectifier and is, thus not entitled to pay ad valorem taxes;
and
Second, if Tanduay has paid the ad valorem taxes to the BIR.
With respect to the first, there is no question that Tanduay is a rectifier. The
memoranda of Pareo and Galban very well explained the manufacturing process of
Tanduay which was similar to that of Limtuaco Distillery. The recommendation made
in each of these documents was based entirely on the technical aspects of Tanduays
claim for tax crediting - namely whether or not its products were distilled spirits and
therefore not subject to ad valorem tax. The memoranda were not questioned or
disputed. As rectifiers, they were indeed entitled to a tax refund for any ad
valorem taxes previously paid. The legal basis for Tanduay was ineluctable. The
memoranda of Galban and Pareo are therefore not enough basis for petitioners
conviction.

What was crucial was the second prerequisite which the Sandiganbayan
surmised as having been falsely certified by Larin.
The requested verification of the Confirmation Receipts from the RAD was
forwarded to the office of Larin through the First Indorsement of Potenciana
Evangelista. Potenciana Evangelista belonged to the Financial Management Service
which was a co-equal unit of the Excise Tax Service in the BIR. As testified by
Deputy Commissioner Eufracio Santos, verification of the amount of tax payments
was the duty of the Revenue Accounting Division. 20 In such a case, we can not fault
Larin for having relied on the First Indorsement of Potenciana Evangelista which
stated that the confirmation receipts listed hereunder were verified from the records
of this Office. With such a verification, Larin presumed that Tanduay has indeed
paidad valorem taxes.
The Sandiganbayan, however, ruled that Larin should have not accepted the
First Indorsement on its face. It was incumbent upon Larin to have gone beyond the
verification of the RAD, and to personally verify the payments made. Such
contention is absurd, if not outrightly ludicrous. The BIR is a big government office
tasked with the collection of taxes which is considered the lifeblood of the
government. Duties had to be delineated to the different offices for utmost
efficiency in the tax collection system since workload is expectedly heavy. Eufracio
Santos testified that he had to rely on the certifications and recommendations of
the different officials below who are also presumed to rely on their respective
subordinates. In this particular case, he affixed his signature on TCM No. 5177
because he had the trust and confidence not only in Larin but also in the system
itself21 In the same way, Larin also had the trust and confidence in the RAD in
making the requested verification/certification that Tanduay has paid the ad
valorem taxes. Eufracio Santos even admitted that the fact that Tanduays papers
passed through the RAD, bearing the certification and signature of Evangelista was
sufficient for him to consider Tanduays claim favorably.
Moreover, the Sandiganbayan maintains that a perusal of the First Indorsement
reveals that most of the Confirmation Receipts bore TNC numbers referring to
specific taxes. It was also incumbent upon the petitioners to know the meaning of
these TNCs which would readily show that the payments made by Tanduay were for
specific taxes and not ad valorem taxes.
The Tax Numeric Code (TNC) for Specific Taxes is contained in Revenue
Memorandum No. 15-86.22 The TNC system was adopted by the BIR to facilitate the
preparation of statistical and other management reports, the improvement of
revenue accounting and the production of tax data so essential to the management
planning and decision-making. Under this system, a code or number stands for: (a)
kind or class of tax; and (b) the applicable rate. 23 Pertinent to this case are the
following:
TNC No. 3011-0001 stands for specific tax on domestic distilled spirits (RMO
19-83, Exh. 17)
TNC No. 3023-2001 stands for ad valorem tax on compounded liquors (RMO
Circular 15-86, Exh. 3)
TNC No. 0000-0000 for unclassified taxes. (Decision, p.76)

Witness Eufracio Santos explained that the practice of using tax numeric code
was for the purpose of checking remittances of tax payments by the banks. Its
purpose is for the guidance of the banks as well as the guidance of employees of
the BIR, so that he agreed that a technical service like the Alcohol Tax Division has
nothing to do with the verification of tax payments. 24 This was the turf of the RAD.
Santos himself, as Deputy Commissioner of the BIR admitted that he did not know
the meaning of the TNCs.
It must be borne in mind that Larin specifically requested the RAD to verify the
confirmation receipts with respect to the payment of ad valorem taxes. He made
this request in connection with Tanduays claim for tax credit. With the first
indorsement of Evangelista, Larin understood that she verified the confirmation
receipts to cover payments for ad valorem taxes as contained in his query.
Against this backdrop, Larin cannot therefore be held negligent in relying on the
certification of a co-equal unit in the BIR or to look beyond the certifications made
by the RAD.
The alleged haste in acting favorably for Tanduay is nothing but pure
conjecture. The Sandiganbayan considered October 13, 1987 as a very busy day
considering that all these transactions allegedly happened very quickly and in close
succession: 1) preparation of the memorandum of Justino Galban with regard to the
manufacturing process of Tanduay; 2) followed by the memorandum of Pareo
reiterating the same; 3) memorandum of Larin to the Deputy Commissioner
recommending approval of the tax credit; 4) approval of the Deputy Commissioner
of TCM No. 5177.
The alleged haste or the alleged persistent follow-ups of Julieta Galan 25 with
regard to Tanduay s claim was not without basis. As testified by Eufracio Santos,
Tanduay had pending big tax obligations which is why they were hurrying up with
the approval of the tax credit.26 Moreover, there is no reason to delay or prolong
further the study of the instant case since there was a precedent already in the light
of the Limtuaco ruling. It was not difficult for these BIR officials to refer back to
the Limtuaco case. The records reveal that Limtuaco applied for tax credit about
three (3) months before Tanduay filed its application for tax credit. The application
for tax credit went through the usual process of passing thru the offices of Larin,
Pareo and the RAD before it was finally approved by the Commissioner. Both
Tanduay and Limtuaco are similarly situated. We do not see why Tanduay had to be
singled out and the petitioners held liable for acts they were regularly doing.
Finally, petitioners were accused of having conspired or colluded with one
another in granting the tax credit. In Macadangdang v. Hon. Sandiganbayan,27 the
Court stated that:
[C]onspiracy must be established by positive and conclusive evidence. It can not be
based on mere conjectures but must be established as a fact. The same degree of
proof required to establish the crime is necessary to support a finding of the
presence of conspiracy, that is, it must be shown to exist as clearly and convincingly
as the commission of the offense itself.

Conspiracy may be proved by evidence of actual agreement between the

parties to commit the crime, or evidence of concerted acts of the parties indicative
of a common objective to commit the crime.
In the instant case, there is no proof of actual agreement between the
petitioners to commit the crime charged. The acts of petitioners and that of
Evangelista may be considered concerted only because they performed interrelated
functions. Larin from the Excise Tax Office received the letter of Tanduay and
referred the matter to Pareo, as head of the Alcohol Tax Division considering that
the issue was a tax on liquor. A certification from the RAD was requested and
indorsed back to Larin who made a favorable recommendation to the Deputy
Commissioner. There is no showing that petitioners have acted irregularly, or
performed acts outside of their official functions. The testimony of Jeanet Aurelio
that she saw Larins secretary at their office, following up the memorandum she was
typing has no probative value at all. It must be founded on facts, not on mere
inferences, conjectures and presumptions. 28 There is actually no proof that
conspiracy exists between the parties.
It is rather apparent that under the Sandiganbayan s decision, a department
secretary, bureau chief, commission chairman, agency head, department head or
chief of office would be equally culpable for every crime arising from any
transactions or held guilty of conspiracy simply because he was the last of a long
line of officials or employees who acted upon or affixed his signature to a
transaction. We cannot allow this because guilt must be premised on a more
knowing personal, and deliberate participation of each individual who is charged
with others as part of a conspiracy. 29 There must be more convincing proof which in
this case is wanting.
The Sandiganbayans finding of guilt is merely based on speculations and
conjectures which does not pass the test of moral certainty. We find that the
evidence on record is not sufficient to sustain a conviction.
In this connection, the Court observes that there may have been parties
involved in the criminal act but were, however, not included in the information,
which matter may be appropriately acted upon by the authorities concerned, as the
facts may warrant.
WHEREFORE, the questioned decision of the Sandiganbayan insofar as it
convicts and sentences petitioners Teodoro D. Pareo and Aquilino T. Larin is hereby
SET ASIDE. Petitioners Pareo and Larin are ACQUITTED on grounds of reasonable
doubt. No costs.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno,
Vitug, and Mendoza, JJ., concur.
[G.R. No. 133954. August 3, 2000]
VICTORIANO B. TIROL, JR. petitioner, vs. COMMISSION ON AUDIT, Region
VIII, represented by its DIRECTOR, Leyte Government Center, Candahug,
Palo, Leyte, respondent.

DECISION
DAVIDE, JR., C.J.:
In this petition for review on certiorari under Section 27 of R.A. No. 6770, otherwise
known as the Ombudsman Act of 1989, in relation to Rule 45 of the Revised Rules of
Court, petitioner seeks the reversal of the Resolution [1] of 20 March 1997 and the
Order[2] of 5 March 1998 of the Office of the Ombudsman which, respectively, found
petitioner and his co-respondents in OMB-Visayas-Crim-94-0836 criminally culpable
for violation of Section 3(g) of R.A. No. 3019, [3] as amended, and denied petitioners
motion for reconsideration of the said Resolution.
Petitioner is the incumbent Regional Director of the Department of Education,
Culture and Sports (DECS), Region V. Prior to such assignment he was the DECS
Regional Director of Region VIII. In the latter capacity, he and some officials of the
Lalawigan National High School, Lalawigan, Borongan, Eastern Samar, were charged
with the violation of Section 3(g) of Republic Act No. 3019, as amended, for entering
into a contract alleged to be manifestly and grossly disadvantageous to the
government. The charge originated from a complaint filed by the schools Teachers
and Employees Union alleging overpricing of various school equipment for the
Lalawigan National High School. Specifically, petitioners participation consisted in
approving the Requisition and Issue Voucher (RIV) and the check in connection with
the transaction.
On the strength of the complaint, Region VIII of respondent Commission on Audit
(COA) audited the operations and accounts of the Lalawigan National High School.
The audit covered the period from 1 January 1990 to 30 April 1993.
Per the audit report,[4] COA found that there was malversation of public funds. It
cited the purchase of certain supplies and equipment which was done through a
negotiated contract and not through a competitive public bidding, contrary to COA
Circular No. 85-55A. The circular requires public bidding in the purchase of supplies,
materials and equipment in excess of P50,000, unless the law or agency charter
provides otherwise. In the questioned purchase the agency failed to ascertain the
reasonableness of the contract prices, resulting in an overprice ofP35,100 in
comparison with COAs actual canvass of prices, thus:

Per Voucher

Quantit Description
y

Unit Price

Per Canvass

Total
Amount

Unit Price

Total
Amount

Price Variance

Singer Sewing
P7,850
machine

P15,700

P4,450

P8,900

P6,800

16" Hitachi /
Union Coiling 3,800
Fan

15,200

1,200

4,800

10,400

Molodione

3,675

11,025

1,850

5,550

5,475

Xylophone

1,750

3,500

560

1,120

2,380

Makita
Electric Planer
Model
No. 8,837.50
19008 3 in.
82 mm

8,500

17,200

475

7,330

7,330

9,570

P44,900

P35,100

TOTAL

Makita
Electric
Circular Saw
16,900
Model
No.
5601 N 160
mm

P80,000

17,675

16,900

In its letter[5] to the Deputy Ombudsman for the Visayas, the COA recommended the
filing of both criminal and administrative cases against the persons liable therefor,
including petitioner for his approval of the RIV for the assailed purchase and signing
of the check in payment therefor. This complaint was docketed as OMB-VisayasCrim-94-0836.
In his counter-affidavit,[6] petitioner alleged that the aforesaid documents were
previously reviewed by his subordinates. He approved them only upon the
certification and representation of the said subordinates that everything was in
order. Accordingly, his approval was purely a ministerial act.
In her Resolution of 20 March 1997, [7]Virginia Palanca Santiago, Graft Investigation
Officer III of the Office of the Ombudsman-Visayas, rejected petitioners defense
because had he carefully scrutinized the documents he would have discovered that

the purchases were made without competitive public bidding and the magnitude of
the amount involved would prevent a reasonable mind from accepting the claim
that petitioner was merely careless or negligent in the performance of his functions.
Santiago gave credence to COAs detailed report which clearly showed an overpriced
value of the supplies and materials purchased, to the great disadvantage of the
government. Had the proper bidding procedure been observed, no such damage
would have occurred. Moreover, petitioners co-respondents did not dispute the
charge of overpricing. Their main defense was that the purchase was emergency in
nature. The Office of the Ombudsman-Visayas, however, ruled that emergency
purchases could only refer to those which were urgent such that failure to make
them would endanger the lives of the students. It held that the doubtful purchase
did not qualify as an emergency purchase.
Accordingly, Santiago recommended that petitioner and his co-respondents be
indicted for violation of Section 3(g) of R.A. No. 3019, as amended, for entering into
a contract or transaction manifestly and grossly disadvantageous to the
Government.
The Resolution was recommended for approval by Deputy Ombudsman for the
Visayas, Arturo C. Mojica. Ombudsman Aniano A. Desierto approved the Resolution
on 21 June 1997.
In an Information[8] filed with the Sandiganbayan and docketed as SB Criminal Case
No. 23785,[9] petitioner and two other co-respondents were charged with the
aforementioned offense allegedly committed as follows:
That on or about the 21st day of October, 1992, at Tacloban City, Philippines,
and within the jurisdiction of this Honorable Court, above-named accused, all
public officers, having been appointed and qualified as such public positions
above-mentioned, in such capacity and committing the offense in relation to
office, conniving and confederating together and mutually helping with each
other, with deliberate intent, did then and there willfully, unlawfully and
feloniously enter into a transaction or contract for and in behalf of Lalawigan
National High School, Lalawigan, Borongan, Eastern Samar, for the purchase
of the following:

2 pcs.

Singer Sewing Machine

P 15,700.00

4 pcs.

16" Hitachi Union Ceiling Fan

15,200.00

3 pcs.

Meodione

11,025.00

2 pcs.

Xylophone

2 pcs.

Makita Elect. Planor Model No. 17,675.00

19008 3 in. 82 mm

1 pc.

Makita Elect. Circular Saw Model 16,900.00

No. 5601 N 160 mm

TOTAL

3,500.00

P 80,000.00

in the total amount of P80,000.00, Philippine Currency, with Fairchild

Marketing and Construction, based at Tacloban City, without following the
procedures of competitive public bidding as required by law, which
transaction was manifestly and grossly disadvantageous to the government,
particularly the Lalawigan National High School, as the value of abovementioned items were overpriced in the total amount of P35,100.00,
Philippine Currency, to the damage and prejudice of the government. [10]
Petitioner filed a Motion for Reconsideration [11] of the Resolution of the Office of the
Ombudsman-Visayas. He insisted that his act of approving the RIV arose from the
need of the requesting school, and matters pertaining to the price and mode of
purchase were not yet considered at that stage. It was only after the approval of the
RIV that these matters were deliberated upon, not by him, but by the officials of the
requesting school. As to the check, he asserted that the supporting documents had
been acted upon and approved by his subordinates and the concerned school
officials, and since there was no indication of any patent irregularity, he signed the
check. Finally, petitioner assailed the finding of conspiracy since there was no direct
proof therefor other than a mere allegation imputing the same.
In the Order of 5 March 1998, [12] the Office of the Special Prosecutor recommended
that petitioners Motion for Reconsideration be dismissed for lack of merit. The
Ombudsman approved the recommendation on 22 May 1998.
Petitioner then filed the instant petition. In the meantime, the proceeding before the
Sandiganbayan continued. Upon arraignment on 24 August 1998, petitioners coaccused pleaded not guilty to the offense charged. On 2 September 1998, petitioner
filed a motion to reset the scheduled hearing on 17 and 18 September citing the
pendency of the instant petition. The Sandiganbayan denied petitioners motion as
well as his subsequent motion for reconsideration. Consequently, he filed a petition

for certiorari under Rule 65 of the Rules of Court claiming that the Sandiganbayan
gravely abused its discretion in denying his motions. That action, entitled Tirol v.
Sandiganbayan and docketed as G.R. No. 135913, was decided on 4 November
1999 adversely against petitioner.
In the instant petition, petitioner seeks the reversal of the assailed Resolution and
Order of the Office of the Ombudsman, which, according to him, erred in concluding
that he was culpably liable for alleged overpricing of the questioned purchase of
supplies and materials. He argues that the acts directly resulting in the overprice
were committed by the following officials: (1) co-respondent Conchita C. Devora,
Principal 1, who approved the transaction, countersigned the checks and
requisitioned the items; (2) co-respondent Maria A. Alvero, Bookkeeper, who affixed
her signature in the voucher; and (3) Salome G. Germana, Designated Storekeeper,
who signed Box No. 4 of the voucher. His participation was limited to signing the RIV
and the check as a matter of routine. Moreover, the RIV did not involve the
determination of the price of the supplies and materials to be purchased, and his
signing the check was done in compliance with the DECS policy which limited the
signing authority of the principal, Conchita C. Devora, to checks not
exceeding P50,000. In such case the signing authority was vested in him as the
DECS Regional Director.
In maintaining his innocence, petitioner asserts that the presumption of regularity in
the performance of public functions by public officers should apply in his favor. He
had no ground to doubt the preparation, processing and verification of his
subordinates prior to his act of approving the RIV and signing the check. His position
required the signing of voluminous documents and it would be unreasonably
cumbersome if he were to scrutinize every document that required his signature.
In support of his arguments, petitioner cites the cases of Arias v.
Sandiganbayan[13] and Magsuci v. Sandiganbayan,[14] where this Court held that
heads of office may rely to a reasonable extent on their subordinates and on the
good faith of those who prepare bids, purchase supplies or enter into negotiations.
He likewise disputes the allegation of conspiracy for the acts imputed against him
were functions discharged in the performance of his official duty. He did not
overstep or exceed said functions. For conspiracy to exist, it is essential that there
must be a conscious design to commit an offense.
In the Comment for the public respondent, the Office of the Solicitor General
contends that conspiracy need not be proved by direct evidence; it may be
established by circumstantial evidence. It avers that what prevails in the instant
case is a conspiracy of silence and inaction. Petitioner should have been vigilant in
protecting the interest of the government. The magnitude of the amount involved
should have cautioned him to verify the truthfulness of the documents presented for
his signature. Petitioner ignored this telling warning and in so doing he was guilty of
negligence. His reliance on his subordinates is no excuse, otherwise his position
would be a mere rubber stamp for the said subordinates.
As a final argument, the Office of the Solicitor General asseverates that it is beyond
the ambit of this Courts authority to review the power of the Ombudsman in
prosecuting or dismissing a complaint filed before it. The Ombudsman is

constitutionally mandated to investigate and prosecute matters falling within his

jurisdiction.
In his Reply petitioner states that the nature of the petition does not involve a
review of the factual finding of the Office of the Ombudsman but rather its
conclusion based on undisputed facts. The issue is a question of law and may,
therefore, be reviewed by this Court.
A meticulous review and re-evaluation of the pleadings in this case, as well as G.R.
No. 135913 leads this Court to a conclusion unfavorable to petitioner.
Petitioner is indicted for violation of Section 3(g) of R.A. No. 3019, which provides:
Section 3. Corrupt Practices of Public Officers. In addition to acts or omissions
of public officers already penalized by existing law, the following shall
constitute corrupt practices of any public officer and are hereby declared to
be unlawful:
xxx
(g) Entering into a contract or
disadvantageous to the government.

transaction

manifestly

and

grossly

There is no dispute that the Office of the Ombudsman included him as a respondent
because of his participation in signing the RIV and issuing a check pertaining to the
questioned purchase. Whether, on the one hand, the said acts were done in good
faith as to exonerate him from any liability, and on the other, whether there was
conspiracy among petitioner and his co-respondents, involve questions of fact.
These are matters of evidence to be weighed and appreciated by the
Sandiganbayan, which has original exclusive jurisdiction over the case. [15]
Only questions of law may be appealed to us by way of certiorari. This Court is not
ordinarily a trier of facts, its jurisdiction being limited to errors of law. There is a
question of law in any given case when the doubt or difference arises as to what the
law is on a certain state of facts. A question of fact arises when the doubt or
difference arises as to the truth or falsehood of alleged facts. [16]
From the pleadings it is clear to this Court that, contrary to the representations of
petitioner, what he wants us to do is review the evidence and determine whether in
fact he acted in good faith and that no conspiracy existed among the accused.
The rulings in Arias v. Sandiganbayan[17] and Magsuci v. Sandiganbayan[18] are
inapplicable to petitioner. It must be emphasized that the petitioners therein were
indicted and submitted themselves to trial before the Sandiganbayan, which
convicted them of the offenses charged. In short the Sandiganbayan had, in due
course, received the evidence of the parties and weighed its probative value.
Unsatisfied with the findings of fact and conclusion of law of the Sandiganbayan,
petitioners therein appealed to this Court.

In Arias this Court set aside the judgment against the petitioner because there was
no evidence that the Government suffered undue injury. As stated by the Solicitor
General which recommended Arias acquittal, (a) the "P80.00 per square meter
acquisition cost is just, fair and reasonable," and (b) "the prosecution likewise has
not shown any positive and convincing evidence of conspiracy between the
petitioners and their co-accused."
In Magsuci, the reversal by this Court of the judgment of conviction was based on a
finding that Magsuci acted in good faith and that "there has been no intimation at
all that he had foreknowledge of any irregularity committed by either or both Engr.
Enriquez and Acla."
In both Arias and Magsuci, there was paucity of evidence on conspiracy.
In this case, there is only the claim of petitioner that he had acted in good faith and
that there was no conspiracy. The Ombudsman believes otherwise. It is settled that
this Court ordinarily does not interfere with the discretion of the Ombudsman to
determine whether there exists reasonable ground to believe that a crime has been
committed and that the accused is probably guilty thereof and, thereafter, to file the
corresponding information with the appropriate courts. [19] This rule is based not only
upon respect for the investigatory and prosecutory powers granted by the
Constitution to the Office of the Ombudsman but upon practicality as well.
Otherwise the functions of the courts will be grievously hampered by immeasurable
petitions assailing the dismissal of investigatory proceedings conducted by the
Office of the of the Ombudsman with regard to complaints filed before it, in as much
the same way that the courts would be extremely swamped if they would be
compelled to review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court or
dismiss a complaint by a private complainant.[20]
Petitioner has not convinced this Court that his case falls within any of the
exemptions, enumerated in Brocka v. Enrile,[21] to the rule that criminal prosecution
may not be restrained either through a preliminary or final injunction or a writ of
prohibition.
There is yet another basic reason for dismissing the instant petition. This is an
appeal under Section 27 of the Ombudsman Act of 1989 in relation to Rule 45 of the
1997 Rules of Civil Procedure. We have declared Section 27 to be unconstitutional in
Fabian v. Desierto[22] for increasing the appellate jurisdiction of the Supreme Court
as provided in the Constitution without its advice and consent. Moreover, even if
said provision had not been declared unconstitutional, it still does not grant a right
of appeal to parties aggrieved by orders and decisions of the Ombudsman in
criminal cases[23] as in fact said Section mentions only appeals from "all
administrative disciplinary cases, orders, directives or decisions of the Office of the
Ombudsman."
Even if we were to brush aside technicality which action we would ordinarily reserve
for cases having transcendental importance to the public [24] and considered the
instant petition one forcertiorari under Rule 65 of the Rules of Court, it would still
suffer from a failure to denominate the proper party. A petition for certiorari under

Rule 65 has for its object the review of an action of a tribunal, board or officer
exercising quasi-judicial functions made without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction. In the
instant petition, the tribunal whose action is sought to be reviewed is the Office of
the Ombudsman yet, petitioner impleaded the Commission on Audit as respondent,
and not the Office of the Ombudsman.
Additionally, the totality of petitioners and his counsels acts, including that in the
other case he filed with us in G.R. No. 135913, [25] manifests a scheme to frustrate
the ends of justice by using court procedures to delay the resolution of a pending
case. It is with much regret that we must reiterate to petitioners counsel our
command laid down some thirty years ago that a lawyer, as an officer of the court,
should never induce a court to act contrary to the dictates of justice and equity nor
should he befuddle the issues. These and similar maneuvers are not only unethical,
they also almost always betray the weakness of the clients cause. [26]
The actions filed by petitioner before this Court, specifically G.R. No. 135913 and
the instant petition, were in fact a modified form of forum shopping. Perhaps
realizing that this instant petition could be dismissed in light of Fabian, which was
promulgated on 16 September 1998, petitioner instituted GR. No. 135913 on 3
November 1998. The two petitions could have created havoc to the judicial system
had petitioner succeeded with his ploy. Petitioners counsel is hereby warned that a
repetition of his dilatory tactics or some other similar scheme to thwart justice will
be dealt with more severely.
WHEREFORE, the petition for certiorari in this case is hereby DENIED and the
Resolution of 20 March 1997 and Order of 5 March 1998 of the Office of the
Ombudsman in OMB-Visayas-Crim-94-0836 are AFFIRMED.
Double costs against petitioner.
SO ORDERED.
Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Purisima, Pardo,
Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.
OFELIA C. CAUNAN,
Petitioner,

G.R. Nos. 181999 & 182001-04

- versus PEOPLE OF THE PHILIPPINES and

SANDIGANBAYAN,
Respondents.
X----------------------------X
JOEY P. MARQUEZ,
Petitioner,

G.R. Nos. 182020-24

Present:

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

- versus -

THE SANDIGANBAYAN-FOURTH DIVISION

and PEOPLE OF THEPHILIPPINES,
Respondents.

Promulgated:
September 2, 2009

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

At bar are consolidated petitions for review on certiorari under Rule 45 of the Rules
of Court which assail the Decision [1] dated August 30, 2007 and Resolution [2] dated
March 10, 2008 of the Sandiganbayan in Criminal Case Nos. 27944, 27946, 27952,
27953, & 27954, finding petitioners Joey P. Marquez (Marquez) and Ofelia C. Caunan
(Caunan) guilty of violation of Section 3(g) of Republic Act (R.A.) No. 3019,
otherwise known as the Anti-Graft and Corrupt Practices Act.
Marquez and Caunan, along with four (4) other local government officials
of Paraaque City[3] and private individual Antonio Razo (Razo), were charged under
five (5) Informations, to wit:
The Information in Criminal Case No. 27944 states:
That on January 11, 1996 or thereabout, in Paraaque City,
Philippines, and within the jurisdiction of this Honorable Court, accused
Public Officers JOEY P. MARQUEZ, a high ranking public official, being
the City Mayor of Paraaque City and Chairman, Committee on Awards,
together with the members of the aforesaid Committee,
namely: SILVESTRE
DE
LEON,
being
then
the
City
Treasurer, MARILOU
TANAEL,
the
City
Accountant
(SG
26), FLOCERFIDA M. BABIDA, the City Budget Officer (SG
26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26)
and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting

as such and committing the offense in relation to their official duties

and taking advantage of their official positions, conspiring,
confederating and mutually helping one another and with the accused
private individual ANTONIO RAZO, the owner and proprietor of ZARO
Trading, a business entity registered with the Bureau of Domestic Trade
and Industry, with evident bad faith and manifest partiality (or at the
very least, with gross inexcusable negligence), did then and there
willfully, unlawfully and criminally enter into manifestly and grossly
disadvantageous transactions, through personal canvass, with said
ZARO Trading, for the purchase of 5,998 pieces of walis ting-ting at P25
per piece as per Disbursement Voucher No. 101-96-12-8629 in the total
amount of ONE HUNDRED FORTY-NINE THOUSAND NINE HUNDRED
FIFTY PESOS (P149,950.00), without complying with the Commission on
Audit (COA) Rules and Regulations and other requirements on
Procurement and Public Bidding, and which transactions were clearly
grossly overpriced as the actual cost per piece of the walis ting-ting
was only P11.00 as found by the Commission on Audit (COA) in its
Decision No. 2003-079 dated May 13, 2003 with a difference,
therefore, of P14.00 per piece or a total overpriced amount of EIGHTY
THREE THOUSAND NINE HUNDRED SEVENTY TWO PESOS (P83,972.00),
thus, causing damage and prejudice to the government in the
aforesaid sum.
The Information in Criminal Case No. 27946 states:
That on June 30, 1997 or thereabout, in Paraaque City, Philippines and
within the jurisdiction of this Honorable Court, accused Public
Officers JOEY P. MARQUEZ, a high ranking public official, being the
City Mayor of Paraaque City and Chairman, Committee on Awards,
together
with
members
of
the
aforesaid
committee,
namely: SILVESTRE
DE
LEON,
being
then
the
City
Treasurer, MARILOU
TANAEL,
the
City
Accountant
(SG
26), FLOCERFIDA M. BABIDA, the City Budget officer (SG
26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26)
and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting
as such and committing the offense in relation to their official duties
and taking advantage of their official positions, conspiring,
confederating and mutually helping one another and with accused
private individual ANTONIO RAZO, the owner and proprietor of
ZAR[O] Trading, a business entity registered with the Bureau of
Domestic Trade and Industry, with evident bad faith and manifest
partiality (or at the very least, with gross inexcusable negligence), did
then and there willfully, unlawfully and criminally enter into manifestly
and grossly disadvantageous transactions, through personal canvass,
with ZAR[O] Trading for the purchase of 23,334 pieces of walis ting-ting
atP15.00 per piece as per Disbursement Voucher No. 101-98-02-447 in
the total amount of THREE HUNDRED FIFTY THOUSAND TEN PESOS
(P350,010.00), without complying with the Commission on Audit (COA)
Rules and Regulations and other requirements on Procurement and
Public Bidding, and which transactions were clearly grossly overpriced

as the actual cost per piece of the walis ting-ting was only P11.00 as
found by the Commission on Audit (COA) in its Decision No. 2003-079
dated May 13, 2003 with a difference, therefore, of P4.00 per piece or
a total overpriced amount of NINETY THREE THOUSAND THREE
HUNDRED THIRTY SIX PESOS (P93,336.00), thus causing damage and
prejudice to the government in the aforesaid sum.
The Information in Criminal Case No. 27952 states:
That [in] September 1997, or thereabout, in Paraaque City, Philippines
and within the jurisdiction of this Honorable Court, accused Public
Officers JOEY P. MARQUEZ, a high ranking public official, being the
City Mayor of Paraaque City and Chairman, Committee on Awards,
together
with
members
of
the
aforesaid
committee,
namely: SILVESTRE
DE
LEON,
being
then
the
City
Treasurer, MARILOU
TANAEL,
the
City
Accountant
(SG
26), FLOCERFIDA M. BABIDA, the City Budget officer (SG
26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26)
and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting
as such and committing the offense in relation to their official duties
and taking advantage of their official positions, conspiring,
confederating and mutually helping one another and with accused
private individual ANTONIO RAZO, the owner and proprietor of
ZAR[O] Trading, a business entity registered with the Bureau of
Domestic Trade and Industry, with evident bad faith and manifest
partiality (or at the very least, with gross inexcusable negligence), did
then and there willfully, unlawfully and criminally enter into manifestly
and grossly disadvantageous transactions, through personal canvass,
with ZAR[O] Trading for the purchase of 8,000 pieces of walis ting-ting
at P15.00 per piece as per Disbursement Voucher No. 101-98-02-561 in
the total amount of ONE HUNDRED TWENTY THOUSAND PESOS
(P120,000.00), without complying with the Commission on Audit (COA)
Rules and Regulations and other requirements on Procurement and
Public Bidding, and which transactions were clearly grossly overpriced
as the actual cost per piece of the walis ting-ting was only P11.00 as
found by the Commission on Audit (COA) in its Decision No. 2003-079
dated May 13, 2003 with a difference, therefore, of P4.00 per piece or
a total overpriced amount of THIRTY TWO THOUSAND PESOS
(P32,000.00), thus causing damage and prejudice to the government in
the aforesaid sum.
The Information in Criminal Case No. 27953 states:
That during the period from February 11, 1997 to February 20, 1997, or
thereabout, in Paraaque City, Philippines and within the jurisdiction of
this Honorable Court, accused Public OfficersJOEY P. MARQUEZ, a
high ranking public official, being the City Mayor of Paraaque City and
Chairman, Committee on Awards, together with members of the
aforesaid committee, namely:SILVESTRE DE LEON, being then the
City Treasurer, MARILOU TANAEL, the City Accountant (SG

26), FLOCERFIDA M. BABIDA, the City Budget officer (SG

26), OFELIA C. CAUNAN, the OIC General Services office (SG 26)
and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting
as such and committing the offense in relation to their official duties
and taking advance of their official positions, conspiring, confederating
and mutually helping one another and with accused private
individual ANTONIO RAZO, the owner and proprietor of ZAR[O]
Trading, a business entity registered with the Bureau of Domestic Trade
and Industry, with evident bad faith and manifest partiality (or at the
very least, with gross inexcusable negligence), did then and there
willfully, unlawfully and criminally enter into manifestly and grossly
disadvantageous transactions, through personal canvass, with ZAR[O]
Trading for the purchase of 10,100 pieces of walis ting-ting on several
occasions at P25.00 per piece without complying with the Commission
on Audit (COA) Rules and Regulations and other requirements on
procurement and Public Bidding and which purchases are hereunder
enumerated as follows:
Date
Transaction
February
1997
February
1997
February
1997

of Voucher No.
20, 101-97-041755
12, 101-97-041756
11, 101-97-041759

Amount

Quantity

P 3,000.00

120 pcs.

P100,000.
00
P149,500.
00

4,000
pcs.
5,980
pcs.

in the total amount of TWO HUNDRED FIFTY TWO THOUSAND PESOS

(P252,000.00), and which transactions were clearly overpriced as the
actual cost per piece of the walis ting-ting was only P11.00 as found by
the Commission on Audit (COA) in its Decision No. 2003-079 dated May
13, 2003 with a difference, therefore, of P14.00 per piece or a total
overpriced amount of ONE HUNDRED FORTY ONE THOUSAND FOUR
HUNDRED PESOS (P141,400.00), thus, causing damage and prejudice
to the government in the aforesaid sum.
The Information in Criminal Case No. 27954 states:
That during the period from October 15, 1996 to October 18, 1996 or
thereabout, in Paraaque City, Philippines and within the jurisdiction of
this Honorable Court, accused Public OfficersJOEY P. MARQUEZ, a
high ranking public official, being the City Mayor of Paraaque City and
Chairman, Committee on Awards, together with members of the
aforesaid committee, namely:SILVESTRE DE LEON, being then the
City Treasurer, MARILOU TANAEL, the City Accountant (SG
26), FLOCERFIDA M. BABIDA, the City Budget officer (SG
26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26)
and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting
as such and committing the offense in relation to their official duties

and taking advantage of their official positions, conspiring,

confederating and mutually helping one another and with accused
private individual ANTONIO RAZO, the owner and proprietor of
ZAR[O] Trading, a business entity registered with the Bureau of
Domestic Trade and Industry, with evident bad faith and manifest
partiality (or at the very least, with gross inexcusable negligence), did
then and there willfully, unlawfully and criminally enter into manifestly
and grossly disadvantageous transactions, through personal canvass,
with ZAR[O] Trading for the purchase of 8,000 pieces of walis ting-ting
on several occasions at P25.00 per piece without complying with the
Commission on Audit (COA) Rules and Regulations and other
requirements on procurement and Public Bidding and which purchases
are hereunder enumerated as follows:
Date
Transaction

of Voucher
Number

October 15, 1996

October 18, 1996

101-96-117604
101-96-117605

Amount

Quantity

P 100,000.
00
P 100,000.
00

4,000
pcs.
4,000
pcs.

in the total amount of TWO HUNDRED THOUSAND PESOS

(P200,000.00), and which transactions were clearly grossly overpriced
as the actual cost per piece of the walis ting-ting was onlyP11.00 as
found by the Commission on Audit (COA) in its Decision No. 2003-079
dated May 13, 2003 with a difference, therefore, of P14.00 per piece or
a total overpriced amount of ONE HUNDRED TWELVE THOUSAND
PESOS (P112,000.00), thus, causing damage and prejudice to the
government in the aforesaid sum.[4]

The five (5) Informations were filed based on the findings of the Commission on
Audit (COA) Special Audit Team that there was overpricing in certain purchase
transactions ofParaaque City. In March 1999, a Special Audit Team composed of
Fatima Bermudez (Bermudez), Carolina Supsup, Gerry Estrada, and Yolando Atienza,
by virtue of Local Government Audit Office Assignment Order No. 99-002, audited
selected transactions of Paraaque City for the calendar years 1996 to 1998,
including the walis tingtingpurchases.
In connection with the walis tingting purchases audit, the audit team gathered the
following evidence:
1. Documents furnished by the Office of the City Mayor of Paraaque City upon
request of the audit team;

2. Sample walis tingting with handle likewise submitted by the Office of the City
Mayor of Paraaque City;
3. Samples of walis tingting without handle actually utilized by the street sweepers
upon ocular inspection of the audit team;
4. Survey forms accomplished by the street sweepers containing questions on
the walis tingting;
5. Evaluation by the Technical Services Department [5] of the reasonableness of
the walis tingting procurement compared to current prices thereof;

6. A separate canvass by the audit team on the prices of the walis tingting,
including purchases thereof at various merchandising stores; [6] and
7. Documents on the conduct and process of procurement of walis tingting by the
neighboring city of Las Pias.
Parenthetically, to ascertain the prevailing price of walis tingting for the years 1996
to 1998, the audit team made a canvass of the purchase prices of the different
merchandise dealers of Paraaque City. All, however, were reluctant to provide the
team with signed quotations of purchase prices for walis tingting. In addition, the
audit team attempted to purchase walis tingting from the named suppliers
of Paraaque City. Curiously, when the audit team went to the listed addresses of the
suppliers, these were occupied by other business establishments. Thereafter, the
audit team located, and purchased from, a lone supplier that sold walis tingting.
As previously adverted to, the audit team made a report which contained the
following findings:
1. The purchase of walis tingting was undertaken without public bidding;
2. The purchase of walis tingting was divided into several purchase orders
and requests to evade the requirement of public bidding and instead avail of
personal canvass as a mode of procurement;
3. The purchase of walis tingting through personal canvass was attended with
irregularities; and
4. There was glaring overpricing in the purchase transactions.
Consequently, the COA issued Notices of Disallowance Nos. 01-001-101 (96) to 01006-101 (96), 01-001-101 (97) to 01-011-101 (97), and 01-001-101 (98) to 01-004101 (98) covering the overpriced amount of P1,302,878.00 for the purchases of
142,612 walis tingting, with or without handle, by Paraaque City in the years 19961998.[7]
Objecting to the disallowances, petitioners Marquez and Caunan, along with the
other concerned local government officials of Paraaque City, filed a request for
reconsideration with the audit team which the latter subsequently denied in a letter
to petitioner Marquez.

Aggrieved, petitioners and the other accused appealed to the COA which eventually
denied the appeal. Surprisingly, on motion for reconsideration, the COA excluded
petitioner Marquez from liability for the disallowances based on our rulings in Arias
v. Sandiganbayan[8] and Magsuci v. Sandiganbayan.[9]
On the other litigation front, the criminal aspect subject of this appeal, the
Ombudsman found probable cause to indict petitioners and the other local
government officials ofParaaque City for violation of Section 3(g) of R.A. No. 3019.
Consequently, the five (5) Informations against petitioners, et al. were filed before
the Sandiganbayan.
After trial and a flurry of pleadings, the Sandiganbayan rendered judgment finding
petitioners Caunan and Marquez, along with Silvestre de Leon and Marilou Tanael,
guilty of violating Section 3(g) of R.A. No. 3019. As for accused Flocerfida Babida,
Ailyn Romea and private individual Razo, the Sandiganbayan acquitted them for
lack of sufficient evidence to hold them guilty beyond reasonable doubt of the
offenses charged. The Sandiganbayan ruled as follows:
1. The prosecution evidence, specifically the testimony of Bermudez and the Special
Audit Teams report, did not constitute hearsay evidence, considering that all the
prosecution witnesses testified on matters within their personal knowledge;
2. The defense failed to question, and timely object to, the admissibility of
documentary evidence, such as the Las Pias City documents and the Department of
Budget and Management (DBM) price listing downloaded from the Internet, which
were certified true copies and not the originals of the respective documents;
3. The Bids and Awards Committee was not properly constituted; the accused did
not abide by the prohibition against splitting of orders; and Paraaque City had not
been afforded the best possible advantage for the most objective price in the
purchase of walis tingting for failure to observe the required public bidding;
4. The contracts for procurement of walis tingting in Paraaque City for the years
1996-1998 were awarded to pre-selected suppliers; and
5. On the whole, the transactions undertaken were manifestly and grossly
disadvantageous to the government.
Expectedly, the remaining accused, Caunan, Marquez and Tanael, moved for
reconsideration of the Sandiganbayan decision. Caunan and Tanael, represented by
the same counsel, collectively filed a Motion for Reconsideration (with Written

Notice of Death of Accused Silvestre S. de Leon). Marquez filed several motions,

[10]

including a separate Motion for Reconsideration.

All the motions filed by Marquez, as well as Caunans motion, were denied by the
Sandiganbayan. However, with respect to Tanael, the Sandiganbayan found reason
to reconsider her conviction.
Hence, these separate appeals by petitioners Marquez and Caunan.
Petitioner Caunan posits the following issues:
1. [WHETHER] THE PROSECUTIONS PROOF OF OVERPRICING [IS]
HEARSAY.
2. [WHETHER THE] RESPONDENT SANDIGANBAYAN [ERRED] IN
ADMITTING WITNESS FATIMA V. BERMUDEZ TESTIMONY DESPITE THE
FACT THAT ITS SOURCES ARE THEMSELVES ADMITTEDLY AND PATENTLY
HEARSAY.
3. [WHETHER THE] RESPONDENT SANDIGANBAYAN GRAVELY [ERRED]
IN APPLYING AN EXCEPTION TO THE HEARSAY RULE[.] UNDER THIS
EXCEPTION, PUBLIC DOCUMENTS CONSISTING OF ENTRIES IN PUBLIC
RECORDS, ETC., x x x ARE PRIMA FACIE EVIDENCE OF THE FACTS
STATED THEREIN.
4. CONSEQUENTLY,
[WHETHER]
RESPONDENT
GRAVELY ERRED IN NOT ACQUITTING [CAUNAN].[11]

SANDIGANBAYAN

For his part, petitioner Marquez raises the following:

1. WHETHER [MARQUEZ] MUST BE ACQUITTED FROM THE SUBJECT
CRIMINAL CASES BASED ON THE DOCTRINES LAID DOWN IN THE ARIAS
AND MAGSUCI CASES EARLIER DECIDED BY THIS HONORABLE COURT
AND THE PERTINENT PROVISIONS OF THE LOCAL GOVERNMENT CODE
AND OTHER EXISTING REGULATIONS[;]
2. WHETHER [MARQUEZ] MUST BE ACQUITTED FROM THE SUBJECT
CRIMINAL CASES SINCE HE WAS ALREADY EXCLUDED FROM LIABILITY
BY THE COMMISSION ON AUDIT[;]
3. WHETHER THE ACQUITTAL OF CO-ACCUSED 1) SUPPLIER ANTONIO
RAZO WHO WAS THE OTHER PARTY TO, AND RECEIVED THE TOTAL
AMOUNT OF, THE QUESTIONED CONTRACTS OR TRANSACTIONS, 2)
CITY ACCOUNTANT MARILOU TANAEL WHO PRE-AUDITED THE CLAIMS

AND SIGNED THE VOUCHERS, 3) CITY BUDGET OFFICER FLOCERFIDA M.

BABIDA, AND 4) HEAD OF STAFF AILYN ROMEA CASTS A BIG CLOUD OF
DOUBT ON THE FINDING OF [MARQUEZS] GUILT BY THE
SANDIGANBAYAN FOURTH DIVISION[;]
4. WHETHER [MARQUEZ] CAN BE CONVICTED ON PLAIN HEARSAY, IF
NOT DUBIOUS EVIDENCE OF OVERPRICING OR ON MERE
CIRCUMSTANTIAL EVIDENCE THAT DO NOT AMOUNT TO PROOF OF
GUILT BEYOND REASONABLE DOUBT IN THE SUBJECT CRIMINAL
CASES[;]
5. WHETHER THE ALLEGED OVERPRICING WHICH WAS THE BASIS FOR
CLAIMING THAT THE CONTRACTS OR TRANSACTIONS ENTERED INTO BY
[MARQUEZ] IN BEHALF OF PARAAQUE CITY WERE MANIFESTLY AND
GROSSLY
DISADVANTAGEOUS
TO
THE
GOVERNMENT
WAS
ASCERTAINED OR DETERMINED WITH REASONABLE CERTAINTY IN
ACCORDANCE
WITH
THE
REQUIREMENTS
OR
PROCEDURES
PRESCRIBED UNDER COA MEMORANDUM NO. 97-012 DATED MARCH
31, 1997[;]
6. WHETHER THE QUANTUM OF PROSECUTION EVIDENCE HAS
OVERCOME THE CONSTITUTIONAL PRESUMPTION OF INNOCENCE
WHICH [MARQUEZ] ENJOYS IN THE SUBJECT CRIMINAL CASES[;]
7. WHETHER THE RIGHT OF [MARQUEZ] TO DUE PROCESS WAS
VIOLATED WHEN THE CHAIRMAN (JUSTICE GREGORY ONG) OF THE
SANDIGANBAYAN FOURTH DIVISION REFUSED TO INHIBIT DESPITE
SERIOUS CONFLICT OF INTEREST[;]
8. WHETHER [MARQUEZ] IS ENTITLED TO THE REOPENING OF THE
SUBJECT CRIMINAL CASES[;]
9. WHETHER THE RIGHT OF [MARQUEZ] TO BE INFORMED OF THE
NATURE OF THE ACCUSATION AGAINST HIM WAS VIOLATED WHEN
INSTEAD OF ONLY ONE OFFENSE, SEVERAL INFORMATION HAD BEEN
FILED IN THE TRIAL COURT ON THE THEORY OF OVERPRICING IN THE
PROCUREMENT OF BROOMSTICKS (WALIS TINGTING) BY WAY OF
SPLITTING CONTRACTS OR PURCHASE ORDERS[; and]
10. WHETHER [MARQUEZ] IS ENTITLED TO NEW TRIAL SINCE HIS RIGHT
TO AN IMPARTIAL TRIAL WAS VIOLATED IN THE SUBJECT CRIMINAL
CASES WHEN THE CHAIRMAN (JUSTICE GREGORY ONG) REFUSED TO
INHIBIT DESPITE THE EXISTENCE OF SERIOUS CONFLICT OF INTEREST
RAISED BY THE FORMER BEFORE THE JUDGMENT BECAME FINAL. [12]

In a Resolution dated February 23, 2009, we directed the consolidation of these

cases. Thus, we impale petitioners issues for our resolution:

1. First and foremost, whether the Sandiganbayan erred in finding petitioners

guilty of violation of Section 3(g) of R.A. No. 3019.
2. Whether the testimony of Bermudez and the report of the Special Audit
Team constitute hearsay and are, therefore, inadmissible in evidence against
petitioners.
3. Whether petitioner Marquez should be excluded from liability based on our
rulings in Arias v. Sandiganbayan[13] and Magsuci v. Sandiganbayan.[14]
Both petitioners insist that the fact of overpricing, upon which the charge
against them of graft and corruption is based, had not been established by the
quantum of evidence required in criminal cases, i.e., proof beyond reasonable
doubt.[15] Petitioners maintain that the evidence of overpricing, consisting of the
report of the Special Audit Team and the testimony thereon of Bermudez,
constitutes hearsay and, as such, is inadmissible against them. In addition,
petitioner Marquez points out that the finding of overpricing was not shown to a
reliable degree of certainty as required by COA Memorandum No. 97-012 dated
March 31, 1997.[16] In all, petitioners asseverate that, as the overpricing was not
sufficiently established, necessarily, the last criminal element of Section 3(g) of R.A.
No. 3019 a contract or transaction grossly and manifestly disadvantageous to the
government was not proven.
Section 3(g) of R.A. No. 3019 provides:
Section 3. Corrupt practices of public officersIn addition to acts or
omissions of public officers already penalized by existing law, the
following shall constitute corrupt practices of any public officer and are
hereby declared to be unlawful:
xxxx
(g) Entering on behalf of the Government, into any contract or
transaction, manifestly and grossly disadvantageous to the same,
whether or not the public officer profited or will profit thereby.

For a charge under Section 3(g) to prosper, the following elements must be present:
(1) that the accused is a public officer; (2) that he entered into a contract or
transaction on behalf of the government; and (3) that such contract or transaction is
grossly and manifestly disadvantageous to the government. [17]

The presence of the first two elements of the crime is not disputed. Hence, the
threshold question we should resolve is whether the walis tingting purchase
contracts were grossly and manifestly injurious or disadvantageous to the
government.
We agree with petitioners that the fact of overpricing is embedded in the third
criminal element of Section 3 (g) of R.A. No. 3019. Given the factual milieu of this
case, the subject contracts would be grossly and manifestly disadvantageous to the
government if characterized by an overpriced procurement. However, the gross and
manifest disadvantage to the government was not sufficiently shown because the
conclusion of overpricing was erroneous since it was not also adequately proven.
Thus, we grant the petitions.
In criminal cases, to justify a conviction, the culpability of an accused must be
established by proof beyond a reasonable doubt. [18] The burden of proof is on the
prosecution, as the accused enjoys a constitutionally enshrined disputable
presumption of innocence.[19] The court, in ascertaining the guilt of an accused,
must, after having marshaled the facts and circumstances, reach a moral certainty
as to the accuseds guilt. Moral certainty is that degree of proof which produces
conviction in an unprejudiced mind.[20] Otherwise, where there is reasonable doubt,
the accused must be acquitted.
In finding that the walis tingting purchase contracts were grossly and manifestly
disadvantageous to the government, the Sandiganbayan relied on the COAs finding
of overpricing which was, in turn, based on the special audit teams report. The audit
teams conclusion on the standard price of a walis tingting was pegged on the basis
of

the

following

documentary

and

object

evidence:

(1)

samples

of walis

tingting without handle actually used by the street sweepers; (2) survey forms on
the walis tingtingaccomplished by the street sweepers; (3) invoices from six
merchandising stores where the audit team purchased walis tingting; (4) price
listing of the DBM Procurement Service; and (5) documents relative to the walis
tingting purchases of Las Pias City. These documents were then compared with the
documents

furnished

by

petitioners

to Paraaque Citys walis tingting transactions.

and

the

other

accused

relative

Notably, however, and this the petitioners have consistently pointed out, the
evidence of the prosecution did not include a signed price quotation from the walis
tingting suppliers of Paraaque City. In fact, even the walis tingting furnished the
audit team by petitioners and the other accused was different from the walis
tingting actually utilized by theParaaque City street sweepers at the time of ocular
inspection by the audit team. At the barest minimum, the evidence presented by
the prosecution, in order to substantiate the allegation of overpricing, should have
been identical to the walis tingting purchased in 1996-1998. Only then could it be
concluded

that

the walis

tingting purchases

were

disadvantageous

to

the

government because only then could a determination have been made to show that
the disadvantage was so manifest and gross as to make a public official liable under
Section 3(g) of R.A. No. 3019.
On the issue of hearsay, the Sandiganbayan hastily shot down petitioners
arguments thereon, in this wise:
We find no application of the hearsay rule here. In fact, all the
witnesses in this case testified on matters within their personal
knowledge. The prosecutions principal witness, Ms. Bermudez, was a
State Auditor and the Assistant Division Chief of the Local Government
Audit Office who was tasked to head a special audit team to audit
selected transactions of Paraaque City. The report which she identified
and testified on [was] made by [the] Special Audit Team she herself
headed. The disbursement vouchers, purchase orders, purchase
requests and other documents constituting the supporting papers of
the teams report were public documents requested from the City
Auditor of Paraaque and from the accused Mayor Marquez. Such
documents were submitted to the Special Audit Team for the specific
purpose of reviewing them. The documents were not executed by Ms.
Bermudez or by any member of the Special Audit Team for the obvious
reason that, as auditors, they are only reviewing acts of others. The
Special Audit Teams official task was to review the documents of
the walis tingting transactions. In the process of [the] review, they
found many irregularities in the documentations violations of the Local
Government Code and pertinent COA rules and regulations. They found
that the transactions were grossly overpriced. The findings of the team
were consolidated in a report. The same report was the basis of Ms.
Bermudezs testimony. x x x.[21]

The reasoning of the Sandiganbayan is specious and off tangent. The audit team
reached a conclusion of gross overpricing based on documents which, at best,

would merely indicate the present market price of walis tingting of a different
specification, purchased from a non-supplier of Paraaque City, and the price
of walis tingting purchases in LasPias City. Effectively, the prosecution was unable
to demonstrate the requisite burden of proof, i.e., proof beyond reasonable doubt, in
order to overcome the presumption of innocence in favor of petitioners.
As pointed out by petitioner Caunan, not all of the contents of the audit teams
report constituted hearsay. Indeed, as declared by the Sandiganbayan, Bermudez
could very well testify thereon since the conclusions reached therein were made by
her and her team. However, these conclusions were based on incompetent
evidence. Most obvious would be the market price of walis tingting in Las Pias City
which was used as proof of overpricing in Paraaque City. The prosecution should
have

presented

evidence

of

the

actual

price

of

the

particular walis

tingting purchased by petitioners and the other accused at the time of the audited
transaction or, at the least, an approximation thereof. Failing in these, there is no
basis to declare that there was a glaring overprice resulting in gross and manifest
disadvantage to the government.
We are not unmindful of the fact that petitioners failed to conduct the requisite
public bidding for the questioned procurements. However, the lack of public bidding
alone does not automatically equate to a manifest and gross disadvantage to the
government. As we had occasion to declare in Nava v. Sandiganbayan,[22] the
absence of a public bidding may mean that the government was not able to secure
the lowest bargain in its favor and may open the door to graft and corruption.
However, this does not satisfy the third element of the offense charged, because
the law requires that the disadvantage must be manifest and gross. After all, penal
laws are strictly construed against the government.
With the foregoing disquisition, we find no necessity to rule on the applicability of
our rulings in Arias and Magsuci to petitioner Marquez. Nonetheless, we wish to
reiterate herein the doctrines laid down in those cases. We call specific attention to
the sweeping conclusion made by the Sandiganbayan that a conspiracy existed
among petitioners and the other accused, most of whom were acquitted,
particularly private individual Razo, the proprietor of Zaro Trading.
Our ruling in Magsuci, citing our holding in Arias, should be instructive, viz.:

The Sandiganbayan predicated its conviction of [Magsuci] on its finding

of conspiracy among Magsuci, Ancla and now deceased Enriquez.
There is conspiracy when two or more persons come to an agreement
concerning the commission of a felony and decide to commit it.
Conspiracy is not presumed. Like the physical acts constituting the
crime itself, the elements of conspiracy must be proven beyond
reasonable doubt. While conspiracy need not be established by direct
evidence, for it may be inferred from the conduct of the accused
before, during and after the commission of the crime, all taken
together, however, the evidence therefore must reasonably be strong
enough to show a community of criminal design.
xxxx
Fairly evident, however, is the fact that the actions taken by Magsuci
involved the very functions he had to discharge in the performance of
his official duties. There has been no intimation at all that he had
foreknowledge of any irregularity committed by either or both Engr.
Enriquez and Ancla. Petitioner might have indeed been lax and
administratively remiss in placing too much reliance on the official
reports submitted by his subordinate (Engineer Enriquez), but for
conspiracy to exist, it is essential that there must be a conscious
design to commit an offense. Conspiracy is not the product of
negligence but of intentionality on the part of cohorts.
In Arias v. Sandiganbayan, this Court, aware of the dire consequences
that a different rule could bring, has aptly concluded:
We would be setting a bad precedent if a head of office
plagued by all too common problemsdishonest or
negligent subordinates, overwork, multiple assignments
or positions, or plain incompetenceis suddenly swept into
a conspiracy conviction simply because he did not
personally examine every single detail, painstakingly
trace every step from inception, and investigate the
motives of every person involved in a transaction before
affixing his signature as the final approving authority.
xxxx
x x x. All heads of offices have to rely to a reasonable
extent on their subordinates and on the good faith of
those who prepare bids, purchase supplies, or enter into
negotiations. x x x. There has to be some added reason
why he should examine each voucher in such detail. Any
executive head of even small government agencies or
commissions can attest to the volume of papers that must
be signed. There are hundreds of documents, letters,

memoranda, vouchers, and supporting papers that

routinely pass through his hands. The number in bigger
offices or department is even more appalling. [23]

WHEREFORE, premises considered, the Decision dated August 30, 2007 and
Resolution dated March 10, 2008 of the Sandiganbayan in Criminal Case Nos.
27944, 27946, 27952, 27953, & 27954 are REVERSED and SET ASIDE. Petitioners
Joey P. Marquez in G.R. Nos. 182020-24 and Ofelia C. Caunan in G.R. Nos. 181999
and 182001-04 areACQUITTED of the charges against them. Costs de oficio.
SO ORDERED.

JOSE T. TUBOLA, JR.,

Petitioner,

G.R. No. 154042

Present:

- versus -

SANDIGANBAYAN AND
PEOPLE OF THE
PHILIPPINES,
Respondents.

CARPIO MORALES, J.,

Chairperson,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
Promulgated:
April 11, 2011

x - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CARPIO MORALES, J.:

Jose Tubola, Jr. (petitioner) appeals the December 7, 2000 Decision [1] and June
10, 2002 Resolution of the Sandiganbayan in Criminal Case No. 12015 which found
him guilty of Malversation of Public Funds penalized under Article 217 of the Revised
Penal Code, committed as follows:
That within the period from June 25, 1982 up to November 8,
1982, and for sometime prior thereto, in Iloilo City, Philippines and

within the jurisdiction of this Honorable Court, the said accused who
was a duly appointed cashier/collecting officer of the National
Irrigation System, Iloilo City and as such was an accountable public
officer for public funds that were in his official custody by reason of
his official position, did then and there, wilfully, unlawfully and
feloniously, with grave abuse of confidence misappropriate and
convert to his own personal use and benefit the amount of
NINE THREE THOUSAND FIFTY ONE PESOS AND EIGHTY- EIGHT
CENTAVOS P93,051.88 to the damage and prejudice of the
government.
CONTRARY TO LAW.[2] (emphasis and underscoring supplied)

Petitioner was the cashier of the National Irrigation Administration (NIA)Aganan, Sta. Barbara River Irrigation System in Iloilo City. On November 8, 1982,
Commission on Audit (COA) State Auditing Examiners Yvonne Gotera (Gotera) and
Theresita

Cajita

(Cajita)

conducted

an

audit

examination

of

petitioners

account which indicated a shortage of P93,051.88.[3]

Gotera and Cajita thus sent a letter of demand dated November 23, 1982 to
petitioner directing him to account for the shortage. [4] Petitioner refused to receive
the letter, however, hence, Gotera and Cajita sent it by registered mail. [5]
Petitioner was thereupon charged of committing malversation of public funds
before the Sandiganbayan to which he pleaded not guilty. [6]
By the account of Gotera, the lone witness for the prosecution, petitioner had an
account balance of P30,162.46 prior to June 25, 1982; that from June 25 to
November 8, 1982, the date petitioners account was audited, his cash collections
totaled P347,995.64; that his remittances from June 25 to November 8, 1982
totaled P285,105.41; and that the total collections less total remittances amounted
to P93,051.88 as of November 8, 1982.[7]
Still by Goteras account, the audit team found in petitioners drawer vales/chits or
promissory notes or receivables signed by NIA employees involving the total amount
ofP79,044.51.[8]
Petitioner, who claimed that he was assigned as cashier since 1978 and was also in
charge of payment of salaries of more than 2,000 field employees in the NIA Jalaur

Project, declared that his task of keeping the collected irrigation fees was
temporarily assigned to Editha Valeria (Valeria) upon instruction of his superior,
Regional Director Manuel Hicao,[9] for he (petitioner) was also handling the payroll of
around 2,000 employees.
Petitioner further declared that no accounting of the collected fees was
undertaken since he trusted Valeria, who directly remitted them to the bank, after he
signed the statement of collection without reading the contents thereof. [10]
Petitioner presented vales and chits involving the total amount of P115,661.66
representing loans extended by Valeria to certain NIA employees and even COA
auditors.[11] And he identified chits and vales dated 1975 to 1981 inclusive
representing loans extended prior to the audit period.[12]
By Decision of December 7, 2000,[13] the Sandiganbayan convicted petitioner
as charged, disposing as follows:
WHEREFORE, the guilt of the accused, JOSE TUBOLA, JR.,
having been proven beyond reasonable doubt, the Court
hereby CONVICTS him of the crime of Malversation of Public Funds
penalized under Article 217 of the Revised Penal Code. Appreciating
in his favor the mitigating circumstance of voluntary surrender,
without any aggravating circumstance to offset the same, and
applying the Indeterminate Sentence Law, the accused is hereby
sentenced to suffer the indeterminate penalty of TEN (10) years and
ONE (1) day of Prision Mayor as Minimum, to SEVENTEEN (17) years,
FOUR (4) months of Reclusion Temporal as Maximum, and the
accessory penalties provided for by law.
He is likewise ordered to indemnify the Republic of
the Philippines the amount of Ninety Three Thousand Fifty One Pesos
and Eighty Eight Centavos (P93,051.88); to pay a fine in the same
amount, which is the amount of money malversed and the costs of
suit, and finally to suffer perpetual disqualification to hold public
office.
SO ORDERED.[14] (Capitalization, italics and emphasis in the
original)

His motion for reconsideration having been denied, [15] petitioner lodged the
present appeal, imputing error on the Sandiganbayan for

I
. . . CONCLUD[ING] THAT [HE] FAILED TO REBUT THE
PRESUMPTION UNDER ARTICLE 217 OF THE REVISED PENAL CODE . .
.
II
. . . CONCLUDING THAT [HE] HAS COMMITTED INEXCUSABLE
NEGLIGENCE IN DELEGATING THE CUSTODY OF THE ACCOUNT TO
[AN]OTHER PERSON.
III
.
.
.
RENDERING
JUDGMENT
OF
CONVICTION
NOTWITHSTANDING THE FACT THAT IT HAS BEEN CLEARLY
ESTABLISHED THAT [HE] IS NOT AN ACTUAL AND POTENTIAL
WRONGDOER.
IV
. . . VIOLAT[ING] [HIS] BASIC CONSTITUTIONAL RIGHT TO DUE
PROCESS WHEN IT ACTIVELY TOOK PART IN THE QUESTIONING OF
THE ACCUSED WHEN HE WAS PRESENTED AS A WITNESS. [16]

To petitioner, the evidence adduced at the trial had overcome the legal
presumption that he put the missing funds to his personal use. There is, he argues,
incontrovertible fact that [he] ha[d] not received any single centavo in the form of
irrigation fees since the collections were actually received by Valeria. [17]
According to petitioner, he being the superior of Valeria, he had to rely on her
honesty and competence in the performance of her duties. He cites Arias v.
Sandiganbayan,[18] which ruled that a head of office is not required to examine every
single detail of any transaction from its inception until it is finally approved, to deem
it no longer necessary for him to examine all the details each time a remittance of
the fees was made.
Petitioner even posits that the Sandiganbayan was unsure whether he was
guilty of malversation intentionally or through negligence.

In fine, petitioner insists that as the primary task of collecting the irrigation
fees was the responsibility of Valeria, he cannot be faulted for negligence. [19]
Further, petitioner posits that he was neither an actual or potential wrongdoer
and, absent criminal intent, he should not be convicted with the full harshness of the
law.[20]
Finally, petitioner points out that his right to due process was violated, the
Justices of the Sandiganbayan having actively participated in the criminal
proceedings by tak[ing] into their own hands in proving the case against [him]. [21]
The People, through the Special Prosecutor, draws attention to the failure of
petitioner to present Valeria to shed light on her actual duties, or to at least present
a certification from then Regional Director Manuel Hicao, who allegedly ordered
Valeria to take over from petitioner the duty of collecting irrigation fees. To the
People, petitioners self-serving testimony failed to controvert the legal presumption
of misappropriation.[22]
The People goes on to contend that petitioner may still be convicted of
malversation by negligence even if the Information alleged the commission of
intentional malversation since the dolo or culpa present in the offense is only a
modality in the perpetration of the felony.[23]
Respecting the supposed violation of petitioners right to due process in light
of the alleged active participation of the Sandiganbayan Justices in questioning him
during the hearing of the case, the People underscores that it is the duty of a trial
judge to examine a witness to secure a full and clear understanding of the facts or to
test to his satisfaction the credibility of the witness [24]
Article 217 of the Revised Penal Code provides:
Art.
217. Malversation
of
public
funds
or
property. Presumption of malversation. - Any public officer who, by
reason of the duties of his office, is accountable for public funds or
property, shall appropriate the same, or shall take or misappropriate
or shall consent, or through abandonment or negligence, shall
permit any other person to take such public funds or property,

wholly or partially, or shall otherwise be guilty of the

misappropriation or malversation of such funds or property, shall
suffer:
1.
The penalty of prision correccional in its
medium and maximum periods, if the amount involved in the
misappropriation or malversation does not exceed two hundred
pesos.
2.
The penalty of prision mayor in its minimum
and medium periods, if the amount involved is more than two
hundred pesos but does not exceed six thousand pesos.
3.
The penalty of prision mayor in its maximum
period to reclusion temporal in its minimum period, if the amount
involved is more than six thousand pesos but is less than twelve
thousand pesos.
4.
The penalty of reclusion temporal in its
medium and maximum periods, if the amount involved is more than
twelve thousand pesos but is less than twenty-two thousand
pesos. If the amount exceeds the latter, the penalty shall
be reclusion temporal in its maximum period to reclusion perpetua.
In all cases, persons guilty of malversation shall also suffer
the penalty of perpetual special disqualification and a fine equal to
the amount of the funds malversed or equal to the total value of the
property embezzled.
The failure of a public officer to have duly forthcoming
any
public
fund
or
property
with
which
he
is
chargeable, upon demand by any duly authorized officer,
shall beprima facie evidence that he has put such missing
funds or property to personal uses. (italics in the original,
emphasis and underscoring supplied)

The elements of malversation of public funds are thus:

1.
that the offender is a public officer;
2.
that he had the custody or control of funds or
property by reason of the duties of his office;
3.
that those funds or property were public funds or
property for which he was accountable; and

4.
that he appropriated, took, misappropriated or
consented or, through abandonment or negligence, permitted
another person to take them.[25]

All the above-mentioned elements are here present. Petitioner was a public
officer[26] he occupied the position of cashier at the NIA. By reason of his position,
he was tasked to regularly handle irrigation fees, which are indubitably public funds
pertaining to the NIA, and to remit them to the depositary bank.
As

established

who remitted irrigation

by
fees

the

prosecution,

collected

from June

petitioner
25,

was

the

1982 to October

one
31,

1983[27] inclusive, so that even if the Court were to credit petitioners allegation that
Valeria had actually taken over his function of collecting the irrigation fees, the
collections were still, in fact by his admission, turned over to him.
Q: How about the money after this payment for irrigation fees
are entered in the Collection Book for which Ms. Edita
Valeria is the one in charge, who keeps the money
being paid for irrigation fees?
A: She is the one holding the money turned over to her by the
farmers who paid their irrigation fees, sir. I am just
reporting in my office every 7th, 15th.
PJ GARCHITORENA
Confine your answer to the question. Who keeps the
irrigation fees being collected?
A: Edita Valeria, your Honor.
PJ GARCHITORENA
Q: Is that part of her functions?
WITNESS
A: No, your Honor.
Q: Whose function is it to keep the irrigation fees?
A: My function, your Honor.
x x x x.

Q: After Edita Valeria receives the money representing the

irrigation fees of farmers, does she turn over the
collections to you?
A: Yes, sir.[28] (Emphasis and underscoring supplied)

In fact, petitioners admission that his signature was required before remitting
the irrigation fees to the depositary bank reinforces the fact that he had
complete control andcustody thereof.
WITNESS
A: Everytime she reported to me, she just fold [sic] the page of the
collection book and he [sic] tells [sic] me, this is okay
and you can just sign this statement of collection.
PJ GARCHITORENA
Q: So you
are
being made
to
sign a
statement
of
collection without looking at the supporting documents
to validate the correctness of the figures nor even to
determine whether the figures there and the ones
remitted to the Philippine National Bank?
A: Yes, your Honor. I just asked her, Is this accounting okay? and she
said Yes.[29] (emphasis and underscoring supplied)

As to the element of misappropriation, indeed petitioner failed to rebut

the legal presumption that he had misappropriated the fees to his personal use, his
disclaimer being self-serving.
Why, indeed, Valeria, whom petitioner had pointed to as having full
responsibility for the collections, including their deposit to the bank, covered by the
audit period, was never presented to corroborate his claim dents his defense as does
his failure to present the Regional Director or a certification from him for the same
purpose.
As for petitioners explanation that the unaccounted fees were extended as
loans to employees as evidenced by vales and chits found in his drawer which
involved a total ofP79,044.51, it fails. If this claim were true, petitioner could have at

least promptly collected them, and/or offered the testimonies of the employeesobligors to prove good faith on his part.
As for the vales and chits that he offered in evidence, as the same were
admittedly incurred before the period of audit, they are immaterial, as correctly
observed by the Sandiganbayan:

PROS GALINDEZ
Q: Mr. Witness, since these chits and vales were incurred before the
period [covered by the ] audit, you could not have possibly
used the money collected by you in your capacity as
Cashier for the period from June 25, 1982 to November
8, 1982.
A: Yes, sir. I have told you before that Mrs. Valeria is the
handling my collections. I am just concentrating on
disbursements. I have two disbursement books and
collection book is handled by Mrs. Valeria including
payments and

one
my
my
the

x x x x.
Q: So that these chits and vales which were merely listed by the
Auditing Examiners as they were found inside your safe are
irrelevant to the accusation?
WITNESS
A: Where can Mrs. Valeria get the cash to extend vales, sir? Because
my collection book is balance as found by the examiners. So,
she herself extended vales from her collections.
Q: Mr. Witness, we are speaking about the chits and vales which you
extended.
PJ GARCHITORENA
It is clear that the accused is being charged for shortage
covered by the period June 25, 1982 to November 8, 1982
and that Exhibit 1 series refers to accounts prior to that
period of audit so that you have a point. You have covered
that point already.
PROS GALINDEZ

Q: This inventory of cash and cash items which is from 1975

to 1981, did you attempt to collect this from the
payees?
A: No, sir.[30] (emphasis and underscoring supplied)
Petitioners assertion, vis--vis his citation of the ruling in Arias, that he was the
superior of Valeria was later belied by him:
Q: But she [referring
supervision?

to

Valeria]

is

under

your

direct

A: Under the Chief of Office, the Irrigation Superintendent.[31]

Aside then from the lack of a superior-subordinate relationship with Valeria,

the

circumstances

obtaining

in Arias and

the

present

case

are

entirely

different. Arias involved the culpability of a final approving authority on the basis of
criminal conspiracy, whereas the present case involves petitioners culpability on the
basis of his being the accountablepublic officer.
On petitioners assertion that the Sandiganbayan erred in concluding that he
committed malversation through inexcusable negligence when the Information
alleges intentional malversation, it does not impress.
To

be

sure,

the

Sandiganbayan

convicted

petitioner

for intentional malversation on the basis of his failure to refute the presumption that
he converted the money to his personal use. Petitioner misreads the assailed
Decision since the discussion about his culpability for malversation through
inexcusable negligence was merely academic in light of the postulation that a
subordinate (Valeria) was at fault. [32]
Nonetheless, in Cabello v. Sandiganbayan,[33] the Court ratiocinated that:
On the other hand, petitioner contends that the bulk of said
amount represented "vales" he granted to the postal employees and
the minor portion consisted of unremitted, unreimbursed or
uncollected amounts. His very own explanation, therefore,
shows that the embezzlement, as claimed by the
prosecution, or the expenditures, as posited by him, were
not only unauthorized but intentionally and voluntarily
made. Under no stretch of legal hermeneutics can it be contended

that these funds were lost through abandonment or negligence

without petitioner's knowledge as to put the loss within a merely
culpable category. From the contention of either party, the
misappropriation
was
intentional
and
not
through
negligence.
Besides, even on the putative assumption that the evidence
against petitioner yielded a case of malversation by negligence but
the information was for intentional malversation, under the
circumstances of this case his conviction under the first mode of
misappropriation would still be in order. Malversation is committed
either intentionally or by negligence. The dolo or theculpa present in
the offense is only a modality in the perpetration of the felony. Even
if the mode charged differs from the mode proved, the same
offense of malversation is involved and conviction thereof is
proper. A possible exception would be when the mode of
commission alleged in the particulars of the indictment is so far
removed from the ultimate categorization of the crime that it may
be said due process was denied by deluding the accused into an
erroneous comprehension of the charge against him. That no such
prejudice was occasioned on petitioner nor was he beleaguered in
his defense is apparent from the records of this case. [34] (italics in
the original, emphasis and underscoring supplied)

Finally, petitioners claim of violation of his right to due process vis--vis the
Sandiganbayan Justices active participation during the trial fails too. For he has not
specified any instance of supposed bias of the Justices, or cited what questions
adversely affected him. The record does not reflect any question or objection raised
by petitioners counsel during the trial to the Justices questions or the tenor or
manner they were propounded. Nor does the record reflect any move to inhibit the
Justices if petitioner perceived that they were biased against him.
That a magistrate may propound clarificatory questions to secure a full and
clear understanding of the facts in the case is not proscribed. [35]

WHEREFORE, the petition is DENIED. The December 7, 2000 Decision

and June 10, 2002 Resolution of the Sandiganbayan in Criminal Case No. 12015
areAFFIRMED.

SO ORDERED.

SECOND DIVISION
OFFICE OF THE OMBUDSMAN,
Petitioner,

G.R. No. 164679

Present:

- versus -

CARPIO, J.,
Chairperson,
LEONARDO-DE CASTRO,*
BRION,
PERALTA,** and
PEREZ, JJ.
Promulgated:

ULDARICO P. ANDUTAN, JR.,

Respondent.

July 27, 2011

x------------------------------------------------------------------------------------x
DECISION
BRION, J.:

Through a petition for review on certiorari,[1] the petitioner Office of the

Ombudsman (Ombudsman) seeks the reversal of the decision [2] of the Court of
Appeals (CA), dated July 28, 2004, in Uldarico P. Andutan, Jr. v. Office of the
Ombudsman and Fact Finding and Intelligence Bureau (FFIB), etc., docketed as CAG.R. SP No. 68893. The assailed decision annulled and set aside the decision of the
Ombudsman dated July 30, 2001,[3] finding Uldarico P. Andutan, Jr. guilty of Gross
Neglect of Duty.

THE FACTUAL ANTECEDENTS

Andutan was formerly the Deputy Director of the One-Stop Shop Tax Credit
and Duty Drawback Center of the Department of Finance (DOF). On June 30, 1998,
then Executive Secretary Ronaldo Zamora issued a Memorandum directing all noncareer officials or those occupying political positions to vacate their positions
effective July 1, 1998.[4] On July 1, 1998, pursuant to the Memorandum, Andutan
resigned from the DOF.[5]
On September 1, 1999, Andutan, together with Antonio P. Belicena, former
Undersecretary, DOF; Rowena P. Malonzo, Tax Specialist I, DOF; Benjamin O. Yao,
Chairman and Executive Officer, Steel Asia Manufacturing Corporation (Steel Asia);
Augustus S. Lapid, Vice-President, Steel Asia; Antonio M. Lorenzana, President and
Chief Operating Officer, Steel Asia; and Eulogio L. Reyes, General Manager, Devmark
Textiles Ind. Inc., was criminally charged by the Fact Finding and Intelligence Bureau
(FFIB) of the Ombudsman with Estafa through Falsification of Public Documents, and
violations of Section 3(a), (e) and (j) of Republic Act No. (R.A.) 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act. [6] As government employees,
Andutan, Belicena and Malonzo were likewise administratively charged of Grave
Misconduct, Dishonesty, Falsification of Official Documents and Conduct Prejudicial
to the Best Interest of the Service.[7]
The criminal and administrative charges arose from anomalies in the illegal
transfer of Tax Credit Certificates (TCCs) to Steel Asia, among others.[8]
During the investigation, the FFIB found that Steel Asia fraudulently
obtained TCCs worth Two Hundred Forty-Two Million, Four Hundred Thirty-Three
Thousand, Five Hundred Thirty-Four Pesos (P242,433,534.00).[9] The FFIB concluded
that Belicena, Malonzo and Andutan in their respective capacities irregularly
approved the issuance of the TCCs to several garment/textile companies and
allowing their subsequent illegal transfer to Steel Asia. [10]
On November 11, 1999, the Ombudsman ordered the respondents therein
(respondents) to submit their counter-affidavits. Only Malonzo complied with the
order, prompting the Ombudsman to set a Preliminary Conference on March 13,
2000.

Upon the respondents failure to appear at the March 20, 2000 hearing, the
Ombudsman deemed the case submitted for resolution.
On July 30, 2001, the Ombudsman found the respondents guilty of Gross
Neglect of Duty.[11] Having been separated from the service, Andutan was imposed
the penalty of forfeiture of all leaves, retirement and other benefits and privileges,
and perpetual disqualification from reinstatement and/or reemployment in any
branch or instrumentality of the government, including government owned and
controlled agencies or corporations.[12]
After failing to obtain a reconsideration of the decision, [13] Andutan filed a
petition for review on certiorari before the CA.
On July 28, 2004,[14] the CA annulled and set aside the decision of the
Ombudsman, ruling that the latter should not have considered the administrative
complaints

because: first, Section

20

of

R.A.

6770

provides

that

the

Ombudsman may not conduct the necessary investigation of any administrative act
or omission complained of if it believes that x x x [t]he complaint was filed after one
year from the occurrence of the act or omission complained of; [15] and second, the
administrative case was filed after Andutans forced resignation. [16]
THE PETITIONERS ARGUMENTS
In this petition for review on certiorari, the Ombudsman asks the Court to overturn
the decision of the CA. It submits, first, that contrary to the CAs findings,
administrative offenses do not prescribe after one year from their commission,
[17]

and second, that in cases of capital administrative offenses, resignation or

optional retirement cannot render administrative proceedings moot and academic,

since accessory penalties such as perpetual disqualification and the forfeiture of
retirement benefits may still be imposed.[18]
The Ombudsman argues that Section 20 of R.A. 6770 is not mandatory. Consistent
with existing jurisprudence, the use of the word may indicates that Section 20 is
merely directory or permissive.[19] Thus, it is not ministerial upon it to dismiss the
administrative complaint, as long as any of the circumstances under Section 20 is
present.[20] In any case, the Ombudsman urges the Court to examine its mandate

under Section 13, Article XI of the 1987 Constitution, and hold that an imposition of
a one (1) year prescriptive period on the filing of cases unconstitutionally restricts its
mandate.[21]
Further, the Ombudsman submits that Andutans resignation from office does not
render moot the administrative proceedings lodged against him, even after his
resignation.Relying on Section VI(1) of Civil Service Commission (CSC) Memorandum
Circular No. 38,[22] the Ombudsman argues that [a]s long as the breach of conduct
was committed while the public official or employee was still in the service x x x a
public servants resignation is not a bar to his administrative investigation,
prosecution and adjudication.[23] It is irrelevant that Andutan had already resigned
from office when the administrative case was filed since he was charged for acts
performed in office which are inimical to the service and prejudicial to the interests
of litigants and the general public. [24] Furthermore, even if Andutan had already
resigned, there is a need to determine whether or not there remains penalties
capable of imposition, like bar from reentering the (sic) public service and forfeiture
of benefits.[25] Finally, the Ombudsman reiterates that its findings against Andutan
are supported by substantial evidence.
THE RESPONDENTS ARGUMENTS
Andutan raises three (3) counterarguments to the Ombudsmans petition.
First, Andutan submits that the CA did not consider Section 20(5) of R.A. 6770
as a prescriptive period; rather, the CA merely held that the Ombudsman should not
have considered the administrative complaint. According to Andutan, Section 20(5)
does not purport to impose a prescriptive period x x x but simply prohibits the Office
of the Ombudsman from conducting an investigation where the complaint [was] filed
more than one (1) year from the occurrence of the act or omission complained of.
[26]

Andutan believes that the Ombudsman should have referred the complaint to

another government agency. [27] Further, Andutan disagrees with the Ombudsmans
interpretation of Section 20(5). Andutan suggests that the phrase may not conduct
the necessary investigation means that the Ombudsman is prohibited to act on
cases that fall under those enumerated in Section 20(5). [28]

Second, Andutan reiterates that the administrative case against him was moot
because he was no longer in the public service at the time the case was
commenced.[29] According to Andutan, Atty. Perez v. Judge Abiera[30] and similar
cases cited by the Ombudsman do not apply since the administrative investigations
against

the

respondents

in

those

cases

were

commenced

prior

to

their

resignation. Here, Andutan urges the Court to rule otherwise since unlike the cases
cited, he had already resigned before the administrative case was initiated. He
further notes that his resignation from office cannot be characterized as preemptive,
i.e.

made

under

an

atmosphere

of

fear

for

the

imminence

of

formal

charges[31] because it was done pursuant to the Memorandum issued by then

Executive Secretary Ronaldo Zamora.
Having established the propriety of his resignation, Andutan asks the Court to
uphold the mootness of the administrative case against him since the cardinal issue
in administrative cases is the officers fitness to remain in office, the principal penalty
imposable being either suspension or removal. [32] The Ombudsmans opinion - that
accessory penalties may still be imposed - is untenable since it is a fundamental
legal principle that accessory follows the principal, and the former cannot exist
independently of the latter.[33]
Third,

the

Ombudsmans

findings

were

void

because

procedural

and

substantive due process were not observed. Likewise, Andutan submits that the
Ombudsmans findings lacked legal and factual bases.

ISSUES
Based on the submissions made, we see the following as the issues for our
resolution:
I.

Does Section 20(5) of R.A. 6770 prohibit the Ombudsman from

conducting an administrative investigation a year after the act was
committed?

II.

Does Andutans resignation render moot the administrative case filed

against him?

III.

Assuming that the administrative case is not moot, are the Ombudsmans
findings supported by substantial evidence?

THE COURTS RULING

We rule to deny the petition.
The provisions of Section 20(5) are
merely directory; the Ombudsman is
not prohibited from conducting an
investigation a year after the supposed
act was committed.
The issue of whether Section 20(5) of R.A. 6770 is mandatory or discretionary
has been settled by jurisprudence. [34] In Office of the Ombudsman v. De Sahagun,
[35]

the Court, speaking through Justice Austria-Martinez, held:

[W]ell-entrenched is the rule that administrative offenses do not
prescribe [Concerned Taxpayer v. Doblada, Jr., A.M. No. P-99-1342,
September 20, 2005, 470 SCRA 218; Melchor v. Gironella, G.R. No.
151138, February 16, 2005, 451 SCRA 476; Heck v. Judge Santos, 467
Phil. 798, 824 (2004); Floria v. Sunga, 420 Phil. 637, 648-649
(2001)]. Administrative offenses by their very nature pertain to the
character of public officers and employees. In disciplining public
officers and employees, the object sought is not the punishment of the
officer or employee but the improvement of the public service and the
preservation of the publics faith and confidence in our government
[Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA
476, 481; Remolona v. Civil Service Commission, 414 Phil. 590, 601
(2001)].

Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:

SEC. 20. Exceptions. The Office of the Ombudsman may not
conduct the necessary investigation of any administrative act or
omission complained of if it believes that:
xxxx
(5) The complaint was filed after one year from the occurrence
of the act or omission complained of. (Emphasis supplied)
proscribes the investigation of any administrative act or omission if the
complaint was filed after one year from the occurrence of the
complained act or omission.
In Melchor v. Gironella [G.R. No. 151138, February 16, 2005, 451 SCRA
476], the Court held that the period stated in Section 20(5) of R.A. No.
6770 does not refer to the prescription of the offense but to the
discretion given to the Ombudsman on whether it would investigate a
particular administrative offense. The use of the word "may" in the
provision is construed as permissive and operating to confer discretion
[Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA
476, 481; Jaramilla v. Comelec, 460 Phil. 507, 514 (2003)]. Where the
words of a statute are clear, plain and free from ambiguity, they must
be given their literal meaning and applied without attempted
interpretation [Melchor v. Gironella, G.R. No. 151138, February 16,
2005, 451 SCRA 476, 481; National Federation of Labor v. National
Labor Relations Commission, 383 Phil. 910, 918 (2000)].
In Filipino v. Macabuhay [G.R. No. 158960, November 24, 2006, 508
SCRA 50], the Court interpreted Section 20 (5) of R.A. No. 6770 in this
manner:
Petitioner argues that based on the abovementioned provision
[Section 20(5) of RA 6770)], respondent's complaint is barred by
prescription considering that it was filed more than one year
after the alleged commission of the acts complained of.
Petitioner's argument is without merit.
The use of the word "may" clearly shows that it is directory in
nature and not mandatory as petitioner contends. When used in
a statute, it is permissive only and operates to confer discretion;
while the word "shall" is imperative, operating to impose a duty
which may be enforced. Applying Section 20(5), therefore, it is
discretionary upon the Ombudsman whether or not to
conduct an investigation on a complaint even if it was
filed after one year from the occurrence of the act or
omission complained of. In fine, the complaint is not
barred by prescription. (Emphasis supplied)

The declaration of the CA in its assailed decision that while as a

general rule the word "may" is directory, the negative phrase "may
not" is mandatory in tenor; that a directory word, when qualified
by the word "not," becomes prohibitory and therefore becomes
mandatory in character, is not plausible. It is not supported by
jurisprudence
on
statutory
construction.[emphases
and
underscoring supplied]

Clearly, Section 20 of R.A. 6770 does not prohibit the Ombudsman from
conducting an administrative investigation after the lapse of one year, reckoned
from the time the alleged act was committed. Without doubt, even if the
administrative case was filed beyond the one (1) year period stated in Section 20(5),
the Ombudsman was well within its discretion to conduct the administrative
investigation.
However, the crux of the present controversy is not on the issue of
prescription, but on the issue of the Ombudsmans authority to institute an
administrative complaint against a government employee who had already
resigned. On this issue, we rule in Andutans favor.
Andutans
resignation
divests
the
Ombudsman of its right to institute an
administrative complaint against him.

Although the Ombudsman is not precluded by Section 20(5) of R.A. 6770 from
conducting

the

investigation,

the

Ombudsman

can

no

longer

institute

an

administrative case against Andutan because the latter was not a public servant at
the time the case was filed.
The Ombudsman argued in both the present petition and in the petition it filed with
the CA that Andutans retirement from office does not render moot any
administrative case, as long as he is charged with an offense he committed while in
office. It is irrelevant, according to the Ombudsman, that Andutan had already
resigned prior to the filing of the administrative case since the operative fact that
determines its jurisdiction is the commission of an offense while in the public
service.

The Ombudsman relies on Section VI(1) of Civil Service Commission

Memorandum Circular No. 38 for this proposition, viz.:
Section VI.
1. x x x
An officer or employee under administrative investigation may be
allowed to resign pending decision of his case but it shall be without
prejudice to the continuation of the proceeding against him. It shall
also be without prejudice to the filing of any administrative,
criminal case against him for any act committed while still in
the service. (emphasis and underscoring supplied)

The CA refused to give credence to this argument, holding that the provision refers
to cases where the officers or employees were already charged before they were
allowed to resign or were separated from service. [36] In this case, the CA noted that
the administrative cases were filed only after Andutan was retired, hence the
Ombudsman was already divested of jurisdiction and could no longer prosecute the
cases.[37]
Challenging the CAs interpretation, the Ombudsman argues that the CA limited the
scope of the cited Civil Service Memorandum Circular to the first sentence.
[38]

Further, according to the Ombudsman, the court a quo ignored the second

statement in the said circular that contemplates a situation where previous to the
institution of the administrative investigation or charge, the public official or
employee subject of the investigation has resigned. [39]
To recall, we have held in the past that a public officials resignation does not render
moot

an

administrative

case

resignation. In Pagano v. Nazarro, Jr.,

that
[40]

was

filed

prior

to

the

officials

we held that:

In Office of the Court Administrator v. Juan [A.M. No. P-031726, 22 July 2004, 434 SCRA 654, 658], this Court categorically ruled
that the precipitate resignation of a government employee charged
with an offense punishable by dismissal from the service does
not render moot the administrative case against him. Resignation is
not a way out to evade administrative liability when facing
administrative sanction. The resignation of a public servant
does not preclude the finding of any administrative liability to
which he or she shall still be answerable [Baquerfo v. Sanchez,

A.M. No. P-05-1974, 6 April 2005, 455 SCRA 13, 19-20]. [emphasis and
underscoring supplied]

Likewise, in Baquerfo v. Sanchez,[41] we held:

Cessation from office of respondent by resignation [Reyes v.
Cristi, A.M. No. P-04-1801, 2 April 2004, 427 SCRA 8] or retirement [Re:
Complaint Filed by Atty. Francis Allan A. Rubio on the Alleged
Falsification of Public Documents and Malversation of Public Funds ,
A.M. No. 2004-17-SC, 27 September 2004; Caja v. Nanquil, A.M. No. P04-1885, 13 September 2004]neither warrants the dismissal of
the administrative complaint filed against him while he was
still in the service [Tuliao v. Ramos, A.M. No. MTJ-95-1065, 348 Phil.
404, 416 (1998), citing Perez v. Abiera, A.C. No. 223-J, 11 June 1975,
64 SCRA 302; Secretary of Justice v. Marcos, A.C. No. 207-J, 22 April
1977, 76 SCRA 301] nor does it render said administrative case moot
and academic [Sy Bang v. Mendez, 350 Phil. 524, 533 (1998)]. The
jurisdiction that was this Courts at the time of the filing of the
administrative complaint was not lost by the mere fact that the
respondent public official had ceased in office during the pendency of
his case [Flores v. Sumaljag, 353 Phil. 10, 21 (1998)]. Respondents
resignation does not preclude the finding of any administrative
liability to which he shall still be answerable [OCA v. Fernandez,
A.M. No. MTJ-03-1511, 20 August 2004]. [emphases and underscoring
supplied)

However, the facts of those cases are not entirely applicable to the present case. In
the above-cited cases, the Court found that the public officials subject of the
administrative cases resigned, either to prevent the continuation of a case already
filed[42] or to pre-empt the imminent filing of one.[43] Here, neither situation obtains.
The Ombudsmans general assertion that Andutan pre-empted the filing of a
case against him by resigning, since he knew for certain that the investigative and
disciplinary arms of the State would eventually reach him [44] is unfounded. First,
Andutans resignation was neither his choice nor of his own doing; he was forced to
resign. Second, Andutan resigned from his DOF post on July 1, 1998, while the
administrative case was filed on September 1, 1999, exactly one (1) year and two
(2) months after his resignation. The Court struggles to find reason in the
Ombudsmans sweeping assertions in light of these facts.

What is clear from the records is that Andutan was forced to resign more than
a

year

before

the

Ombudsman

filed

the

administrative

case

against

him. Additionally, even if we were to accept the Ombudsmans position that Andutan
foresaw the filing of the case against him, his forced resignation negates the claim
that he tried to prevent the filing of the administrative case.
Having established the inapplicability of prevailing jurisprudence, we turn our
attention to the provisions of Section VI of CSC Memorandum Circular No. 38. We
disagree with the Ombudsmans interpretation that [a]s long as the breach of
conduct was committed while the public official or employee was still in the service
x x x a public servants resignation is not a bar to his administrative investigation,
prosecution and adjudication. [45] If we agree with this interpretation, any official even
if he has been separated from the service for a long time may still be subject to the
disciplinary

authority

of

his

superiors, ad

infinitum. We

believe

that

this

interpretation is inconsistent with the principal motivation of the law which is to

improve public service and to preserve the publics faith and confidence in the
government, and not the punishment of the public official concerned. [46] Likewise, if
the act committed by the public official is indeed inimical to the interests of the
State, other legal mechanisms are available to redress the same.
The possibility of imposing
accessory penalties does not
negate the Ombudsmans lack
of jurisdiction.
The Ombudsman suggests that although the issue of Andutans removal from
the service is moot, there is an irresistible justification to determine whether or not
there remains penalties capable of imposition, like bar from re-entering the public
service and forfeiture of benefits. [47] Otherwise stated, since accessory penalties may
still be imposed against Andutan, the administrative case itself is not moot and may
proceed despite the inapplicability of the principal penalty of removal from office.
We find several reasons that militate against this position.
First, although we have held that the resignation of an official does not render
an administrative case moot and academic because accessory penalties may still be

imposed, this holding must be read in its proper context. In Pagano v. Nazarro, Jr.,
[48]

indeed, we held:
A case becomes moot and academic only when there is no more
actual controversy between the parties or no useful purpose can be
served in passing upon the merits of the case [Tantoy, Sr. v. Abrogar,
G.R. No. 156128, 9 May 2005, 458 SCRA 301, 305]. The instant case is
not moot and academic, despite the petitioners separation from
government service. Even if the most severe of administrative
sanctions - that of separation from service - may no longer be imposed
on the petitioner, there are other penalties which may be imposed on
her if she is later found guilty of administrative offenses charged
against her, namely, the disqualification to hold any government office
and the forfeiture of benefits. [emphasis and underscoring supplied]

Reading the quoted passage in a vacuum, one could be led to the conclusion that
the mere availability of accessory penalties justifies the continuation of an
administrative case.This is a misplaced reading of the case and its ruling.
Esther S. Pagano who was serving as Cashier IV at the Office of the Provincial
Treasurer of Benguet filed her certificate of candidacy for councilor four days after
the Provincial Treasurer directed her to explain why no administrative case should be
filed against her. The directive arose from allegations that her accountabilities
included a cash shortage ofP1,424,289.99. She filed her certificate of candidacy
under the pretext that since she was deemed ipso facto resigned from office, she
was no longer under the administrative jurisdiction of her superiors. Thus, according
to Pagano, the administrative complaint had become moot.
We rejected Paganos position on the principal ground that the precipitate
resignation of a government employee charged with an offense punishable by
dismissal from the service does not render moot the administrative case against
him. Resignation is not a way out to evade administrative liability when facing
administrative sanction.[49] Our position that accessory penalties are still imposable
thereby negating the mootness of the administrative complaint merely flows from
the fact that Pagano pre-empted the filing of the administrative case against her. It
was neither intended to be a stand-alone argument nor would it have justified the
continuation

of

the

administrative

complaint

if

Paganos

filing

of

candidacy/resignation

did

not

reek

of

irregularities. Our

factual

findings

in Pagano confirm this, viz.:

At the time petitioner filed her certificate of candidacy, petitioner was
already notified by the Provincial Treasurer that she needed to explain
why no administrative charge should be filed against her, after it
discovered
the
cash
shortage
of P1,424,289.99
in
her
accountabilities. Moreover, she had already filed her answer. To all
intents and purposes, the administrative proceedings had already
been commenced at the time she was considered separated
from service through her precipitate filing of her certificate of
candidacy. Petitioners bad faith was manifest when she filed
it, fully knowing that administrative proceedings were being
instituted against her as part of the procedural due process in
laying the foundation for an administrative case.[50] (emphasis
and underscoring supplied)
Plainly, our justification for the continuation of the administrative case
notwithstanding Paganos resignation was her bad faith in filing the certificate of
candidacy, and not the availability of accessory penalties.
Second, we agree with the Ombudsman that fitness to serve in public office x
x x is a question of transcendental [importance] [51] and that preserving the
inviolability of public office compels the state to prevent the re-entry [to] public
service of persons who have x x x demonstrated their absolute lack of fitness to
hold public office.[52] However, the State must perform this task within the limits set
by law, particularly, the limits of jurisdiction. As earlier stated, under the
Ombudsmans theory, the administrative authorities may exercise administrative
jurisdiction over subordinates ad infinitum; thus, a public official who has validly
severed his ties with the civil service may still be the subject of an administrative
complaint up to his deathbed. This is contrary to the law and the public policy
behind it.
Lastly, the State is not without remedy against Andutan or any public official
who committed violations while in office, but had already resigned or retired
therefrom.Under the threefold liability rule, the wrongful acts or omissions of a
public officer may give rise to civil, criminal and administrative liability. [53] Even if the
Ombudsman may no longer file an administrative case against a public official who
has already resigned or retired, the Ombudsman may still file criminal and civil
cases to vindicate Andutans alleged transgressions. In fact, here, the Ombudsman

through the FFIB filed a criminal case for Estafa and violations of Section 3(a), (e)
and (j) of the Anti-Graft and Corrupt Practices Act against Andutan. If found guilty,
Andutan will not only be meted out the penalty of imprisonment, but also the
penalties of perpetual disqualification from office, and confiscation or forfeiture of
any prohibited interest.[54]
CONCLUSION
Public office is a public trust. No precept of administrative law is more basic
than this statement of what assumption of public office involves. The stability of our
public institutions relies on the ability of our civil servants to serve their
constituencies well.
While we commend the Ombudsmans resolve in pursuing the present case
for violations allegedly committed by Andutan, the Court is compelled to uphold the
law and dismiss the petition. Consistent with our holding that Andutan is no longer
the proper subject of an administrative complaint, we find no reason to delve on the
Ombudsmans factual findings.
WHEREFORE, we DENY the Office of the Ombudsmans petition for review
on certiorari, and AFFIRM the decision of the Court of Appeals in CA-G.R. SP No.
68893, promulgated on July 28, 2004, which annulled and set aside the July 30,
2001 decision of the Office of the Ombudsman, finding Uldarico P. Andutan, Jr. guilty
of Gross Neglect of Duty.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 176702

November 13, 2013

OFFICE OF THE OMBUDSMAN, Petitioner,

vs.
MARCELINO A. DECHAVEZ, Respondent.
DECISION

BRION, J.:
The petitioner, Office of the Ombudsman (Ombudsman), seeks in this Rule 45
petition for review on certiorari 1 the reversal of the Court of Appeals (CA s)
decision2 and resolution3 reversing the Ombudsmans rulings 4 that dismissed
respondent Marcelino A. Dechavez (Dechavez) from the service for dishonesty.
THE FACTS
The attendant facts are not complicated and, in fact, involve the oft-repeated
scenario in the public service workplace -a complaint by subordinate employees
against their superior officer for misconduct in office. In a twist of fortune (or
misfortune), an accident triggered the whole train of events that led to the present
case.
Dechavez was the president of the Negros State College of Agriculture (NSCA) from
2001 until his retirement on April 9, 2006. On May 5, 2002, a Sunday, Dechavez and
his wife, Amelia M. Dechavez (Mrs. Dechavez), used the college service Suzuki
Vitara to go to Pontevedra, Negros Occidental. Dechavez drove the vehicle himself.
On their way back to the NSCA, they figured in a vehicular accident in Himamaylan
City, resulting in minor injuries to the occupants and damage to the vehicle.
To support his claim for insurance, Dechavez executed an affidavit 5 before the
Government Service Insurance System (GSIS). The GSIS subsequently granted
Dechavez's
claims
amounting
to P308,000.00,
while
the
NSCA
shouldered P71,000.00 as its share in the vehicle's depreciation expense. The GSIS
released P6,000.00 for Mrs. Dechavez's third-party liability claim for bodily injuries.
On November 11 2002, twenty (20) faculty and staff members of the NSCA
(complainants) asked the Commission on Audit (COA) to conduct an audit
investigation of NSCAs expenditures in the May 5, 2002 vehicular accident. The
COA dismissed the complaint for lack of merit.
The complainants then sought recourse with the Ombudsman, Visayas, through a
verified complaint7 charging Dechavez with Dishonesty under Section 46(b)(l),
Chapter 6, Tile I of the Administrative Code of 1987. 8
THE OMBUDSMAN S RULING
The Ombudsman dismissed Dechavez from the service with all accessory penalties
after finding him guilty.9 The Ombudsman ruled that the complainants sufficiently
established their allegations, while Dechavez's defenses had been successfully
rebutted. The motion for reconsideration that Dechavez filed was subsequently
denied.10
THE CAS RULING

The CA examined the same pieces of evidence that the Ombudsman considered and
reversed the Ombudsman s findings. 11
In complete contrast with the Ombudsman's rulings, the CA found that the
complainants failed to sufficiently show that Dechavez had deliberately lied in his
May 10, 2002 affidavit. Dechavez sufficiently proved that he went on an official trip,
based on the reasons outlined below and its reading of the evidence:
First, there was nothing wrong if Dechavez worked on a Sunday; he must, in fact, be
commended for his dedication.
Second, the Ombudsman should have accorded greater belief on the NSCA drivers
positive assertion that they were not available to drive for Mr. and Mrs. Dechavez
(as they had serviced other faculty members at that time), as against the NSCA
security guards allegation that these drivers were available then (because they
allegedly saw the drivers within the college premises on that Sunday); speculations
on the nature of the trip should not arise simply because Dechavez personally drove
the vehicle.
Third, the certifications of Mr. Larry Parroco (Pontevedra Sanggunian Bayan
Member) and Mr. Cornelio Geanga (Chair of the Education Committee and Head
Teacher of the M.H. Del Pilar Elementary School) should have persuaded the
Ombudsman that the affiants are public officials who would not lightly issue a
certification or falsely execute affidavits as they know the implications and
consequences of any falsity.
Fourth, and lastly the two lists of teaching instructors had been prepared by the
same person, and if the second list had indeed been questionable, Mr. Pablito
Cuizon (NSCA s Chairman for Instructions) would have not attached the second list
to his affidavit.
On February 7, 2007, the CA denied 12 the motion for reconsideration filed by the
Ombudsman.
THE PARTIES ARGUMENTS
The Ombudsman argues that the guilt of Dechavez has been proven by substantial
evidence -the quantum of evidence required in administrative proceedings. It
likewise invokes its findings and posits that because they are supported by
substantial evidence, they deserve great weight and must be accorded full respect
and credit.
Dechavez counters that the present petition raises factual issues that are improper
for a petition for review on certiorari under Rule 45. He adds that the present case
has been mooted by his retirement from the service on April 9, 2006, and should
properly be dismissed.

THE COURTS RULING

The Court finds the petition meritorious.
The CAs factual findings are conclusive exceptions
The rule that the Court will not disturb the CA' s findings of fact is not an absolute
rule that admits of no exceptions. 13 A notable exception is the presence of conflict
of findings of fact between or among the tribunals' rulings on questions of fact. The
case before us squarely falls under this exception as the tribunals below made two
critical conflicting factual findings. We are thus compelled to undertake our own
factual examination of the evidence presented.
This Court cannot be any clearer in laying down the rule on the quaritum of
evidence to support an administrative ruling: In administrative cases, substantial
evidence is required to support any findings. Substantial evidence is such relevant
evidence as a reasonable mind may accept as adequate to support a conclusion.
The requirement is satisfied where there is reasonable ground to believe that the
petitioner is guilty of the act or omission complained of, even if the evidence might
not be overwhelming."14
Our own examination of the records tells us that the Ombudsman's findings and
appreciation of the presented evidence are more in accord with reason and common
experience so that it successfully proved, by the required quantum of evidence,
Dechavez's dishonesty, at the same time that we find the respondent's reading of
the evidence to be stretched to the point of breaking, as our analysis below shows.
We start with our agreement with the CA's view that the Ombudsman's finding
that Dechavez was not on official business on May 5, 2002 because it was a Sunday
(a non-working day) -by itself, is not sufficient basis for the conclusion that
Dechavez's business on that day was not official. We, nevertheless, examined the
other surrounding facts and are convinced that the spouses Dechavez's trip was a
personal one; thus, Dechavez had been dishonest when he made the claim that he
went on official business. The dishonesty, of course, did not arise simply from the
nature of the trip, but from the claim for insurance that brought the spouses a
substantial sum. First, Dechavez alleged that the trip was urgent, and there were no
drivers available; hence, he drove the vehicle himself. He added that the fact that
the trip ticket was accomplished on May 5, 2002, a Sunday, and that it was
typewritten, are not material as he was not prohibited from driving the car himself.
We do not agree with Dechavez's claim about the immateriality of the trip ticket; it
was presented as evidence and, as such, carries implications far beyond what
Dechavez claims. The fact alone that the ticket, for a trip that was allegedly urgent,
was typewritten already speaks volumes about the integrity of this piece of
evidence. We agree with the Ombudsman, based on common experience and
probability, that had the trip really been urgent and had the trip ticket been
accomplished on the date of the trip, May 5, 2002, it would have been handwritten.

The trip ticket, however, was typewritten, indicating that it had been prepared
ahead of time, or thereafter, not on that Sunday immediately before leaving on an
urgent trip. In fact, if it had been prepared ahead of time, then the trip could not
have been urgent as there was advance planning involved.
In other words, if the trip ticket had been prepared ahead of time, the trip should
have been scheduled ahead of time, and necessary arrangements should have been
made for the availability of a driver. Therefore, it was unlikely that Dechavez would
have known that no driver would be available for him on the date of the trip.
On another note, if the trip ticket had been prepared after the trip, the Ombudsman
was correct in observing that Dechavez had no authority to drive the vehicle in the
absence of the requisite trip ticket. 15 Worse, if it had been prepared after the trip
after an accident had intervened, then there had been a. conscious attempt to
sanitize the incidents of the trip. It is at this point where the claim for insurance
becomes material; the trip ticket removed all questions about the regularity and
official character of the trip.
After examining the testimonies, too, we lean in favor of the view that there were
available drivers on May 5, 2002, contrary to what Dechavez claimed. As between
the assertion of the security guards that they had seen available drivers on the day
of the trip, and the drivers' denial (and assertion that they had serviced other
faculty members at that time), the settled evidentiary rule is that as between a
positive and categorical testimony which has a ring of truth, on one hand, and a
bare denial, on the other, the former is generally held to prevail. 16Furthermore, while
Dechavez insists that the allegations of the drivers were corroborated by the
teachers they had driven for, the attestations of these teachers remained to be
hearsay: Dechavez failed to present their attestations in evidence.
Dechavez additionally argues that the way the trip ticket was accomplished bears
no significance in these circumstances, insisting further that it is of no moment that
he drove the vehicle himself, as he was not prohibited from doing so. Read in
isolation, the Court might just have found these positions convincing. Read with the
other attendant circumstances, however, the argument becomes shaky.
If Dechavez thought that there was nothing wrong in driving the vehicle himself,
why would he indicate that the reason he drove the vehicle himself was that there
were no available drivers, and that it was urgent? Finally, if indeed it was true that
Dechavez used to perform his extension service or confer with the NSCA's linkages
during weekends, how come the trip became urgent and the driver had not been
assigned beforehand?
Second. We cannot give weight to the certification of Mr. Parroco that Dechavez
used to visit the Pontevedra District to coordinate with his office, and that Dechavez
also visited his office on May 5, 2002. We likewise disregard the statement of Mr.
Geanga that Dechavez appeared before his office on May 5, 2002. The certifications
of these two witnesses were submitted only in October 2004 or two (2) years after

the case was filed with the Ombudsman. The time lag alone already renders the
certifications suspect and this inconsistency has not been satisfactorily explained.
The late use of the certifications also deprived the complainants of the opportunity
to refute them and the Ombudsman the chance to examine the affiants. As the
Ombudsman observed, too, it is hard to believe that all four (4) of them -Mr. and
Mrs. Dechavez, Mr. Parroco, and Mr. Geanga -happened to agree to work on a
Sunday, a non-working day; this story simply stretches matters beyond the point of
believability in the absence of supporting proof that this kind of arrangement has
been usual among them.
Finally we find that Mrs. Dechavez was not on official business on May 5, 2002; in
fact, she was not teaching at that time. We note in this regard that the parties
presented two (2) conflicting instructor's summer teaching loads for 2002: the first
one, dated April 1, 2002, which did not include Mrs. Dechavez, while the other, an
undated one, included Mrs. Dechavez's name. Curiously, the same person who
prepared both documents, Mr. Cuizon, failed to explain why there were two (2)
versions of the same document. Considering the highly irregular and undated
nature of the list that contained the name of Mrs. Dechavez, we again concur with
the Ombudsman's reading that while we can presume that the undated list had
been prepared before the start of the summer classes, we can also presume that
the other list had been prepared subsequently to conveniently suit the defense of
the respondent.17
Likewise, Ms. Fe Ulpiana, a teacher at the NSCA, whose name appears in the second
document, attested that she had never been assigned to register and assess the
students' school fees, contrary to what appeared thereon. We find it worth
mentioning that Dechavez's witness, Mr. Cuizon, despite being subpoenaed by the
Ombudsman, failed to furnish the Schedule of Classes for Summer 2002 and the
Actual Teaching Load for Summer 2002. 18 Dechavez also failed to provide the
Ombudsman with the subpoenaed daily time record (DTR) of Mrs. Dechavez for
summer 2002 as the DTR supposedly could not be located.
All told, too many gaps simply existed in Dechavez's tale and supporting evidence
for his case to be convincing.
Retirement
from
during
the
pendency
administrative
case
render the case moot and academic

the
of
does

service
an
not

As early as 1975, we have upheld the rule that the jurisdiction that was Ours at the
time of the filing of the administrative complaint was not lost by the mere fact that
the respondent public official had ceased to be in office during the pendency of his
case. The Court retains its jurisdiction either to pronounce the respondent official
innocent of the charges or declare him guilty thereof. A contrary rule would be
fraught with injustices and pregnant with dreadful and dangerous implications." 19

Arguably, the cited case above is not applicable as it involved a judge who retired
four (4) days after a charge of grave misconduct, gross dishonesty and serious
inefficiency was filed against him.1wphi1 The wisdom of citing this authority in the
present case can be found, however, in its ruling that: "If innocent, respondent
official merits vindication of his name and integrity as he leaves the government
which he served well and faithfully; if guilty, he deserves to receive the
corresponding censure and a penalty proper and imposable under the situation." 20
Recently, we emphasized that in a case that a public official's cessation from service
does not render moot an administrative case that was filed prior to the official's
resignation. In the 2011 case of Office of the Ombudsman v. Andutan Jr. 21 we
reiterated the doctrine and laid down the line of cases supporting this principle
when we ruled:
To recall, we have held in the past that a public official's resignation does not render
moot an administrative case that was filed prior to the official's resignation. In
Pagano v. Nazarro, Jr., we held that:
In Office of the Court Administrator v. Juan [A.M. No. P-03-1726, 22 July 2004, 434
SCRA 654, 658], this Court categorically ruled that the precipitate resignation of a
government employee charged with an offense punishable by dismissal from the
service does not render moot the administrative case against him. Resignation is
not a way out to evade administrative liability when facing administrative sanction.
The resignation of a public servant does not preclude the finding of any
administrative liability to which he or she shall still be answerable-[Baquerfo v.
Sanchez A.M. No. P-05-1974, 6 April 2005, 455 SCRA 13, 19-20]. [Italics supplied,
citation omitted]
Likewise, in Baquerfo v. Sanchez22 we held:
Cessation from office of respondent by resignation or retirement neither warrants
the dismissal of the administrative complaint filed against him while he was still in
the service nor does it render said administrative case moot and academic. The
jurisdiction that was this Court's at the time of the filing of the administrative
complaint was not lost by the mere fact that the respondent public official had
ceased in office during the pendency of his case. Respondent's resignation does not
preclude the finding of any administrative liability to which he shall still be
answerable. [Emphases ours; citations omitted]
Thus, from the strictly legal point of view and as we have held in a long line of
cases, jurisdiction, once it attaches, cannot be defeated by the acts of the
respondent save only where death intervenes and the action does not survive.
WHEREFORE, under these premises we hereby GRANT the petition for review on
certiorari Accordingly we REVERSE AND SET ASIDE the decision dated March 31,
2006 and the resolution dated February 7, 2007 of the Court of Appeals in CA-G.R.

SP. No. 00673 and REINSTATE the decision dated October 29 2004 and the order
dated April 6 2005 of the Office of the Ombudsman.
Costs against respondent Marcelino A. Dechavez.
SO ORDERED.