G.R. No.
158253 March 2, 2007 Thereafter, respondent sought to collect payment for the
REPUBLIC OF THE PHILIPPINES, represented by the
DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, COMMISSION ON AUDIT and THE
NATIONAL TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name
and style CARWIN CONSTRUCTION AND
CONSTRUCTION SUPPLY, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari
under Rule 45 of the Revised Rules of Court assailing
the Decision1 dated April 28, 2003 of the Court of
Appeals (CA) in CA-G.R. CV No. 56345 which affirmed
with modification the Decision2 of the Regional Trial
Court, Branch 41, San Fernando, Pampanga (RTC) in
Civil Case No. 10538, granting the complaint for Specific
Performance and Damages filed by Carlito Lacap
(respondent) against the Republic of the Philippines
(petitioner).
The factual background of the case is as follows:
The District Engineer of Pampanga issued and duly
published an "Invitation To Bid" dated January 27, 1992.
Respondent, doing business under the name and style
Carwin Construction and Construction Supply (Carwin
Construction), was pre-qualified together with two other
contractors. Since respondent submitted the lowest bid,
he was awarded the contract for the concreting
of Sitio 5 Bahay Pare.3 On November 4, 1992, a
Contract Agreement was executed by respondent and
petitioner.4 On September 25, 1992, District Engineer
Rafael S. Ponio issued a Notice to Proceed with the
concreting of Sitio 5 Bahay Pare.5 Accordingly,
respondent undertook the works, made advances for the
purchase of the materials and payment for labor costs.6
On October 29, 1992, personnel of the Office of the
District Engineer of San Fernando, Pampanga
conducted a final inspection of the project and found it
100% completed in accordance with the approved plans
and specifications. Accordingly, the Office of the District
Engineer issued Certificates of Final Inspection and
Final Acceptance.7
appeal to the COA the decision of the District Auditor to
completed project.8 The DPWH prepared the
Disbursement Voucher in favor of petitioner.9 However,
the DPWH withheld payment from respondent after the
District Auditor of the Commission on Audit (COA)
disapproved the final release of funds on the ground that
the contractor’s license of respondent had expired at the
time of the execution of the contract. The District
Engineer sought the opinion of the DPWH Legal
Department on whether the contracts of Carwin
Construction for various Mount Pinatubo rehabilitation
projects were valid and effective although its contractor’s
license had already expired when the projects were
contracted.10
In a Letter-Reply dated September 1, 1993, Cesar D.
Mejia, Director III of the DPWH Legal Department opined
that since Republic Act No. 4566 (R.A. No. 4566),
otherwise known as the Contractor’s License Law, does
not provide that a contract entered into after the license
has expired is void and there is no law which expressly
prohibits or declares void such contract, the contract is
enforceable and payment may be paid, without prejudice
to any appropriate administrative liability action that may
be imposed on the contractor and the government
officials or employees concerned.11
In a Letter dated July 4, 1994, the District Engineer
requested clarification from the DPWH Legal
Department on whether Carwin Construction should be
paid for works accomplished despite an expired
contractor’s license at the time the contracts were
executed.12
In a First Indorsement dated July 20, 1994, Cesar D.
Mejia, Director III of the Legal Department,
recommended that payment should be made to Carwin
Construction, reiterating his earlier legal
opinion.13 Despite such recommendation for payment,
no payment was made to respondent.
Thus, on July 3, 1995, respondent filed the complaint for
Specific Performance and Damages against petitioner
before the RTC.14
On September 14, 1995, petitioner, through the Office of
the Solicitor General (OSG), filed a Motion to Dismiss
the complaint on the grounds that the complaint states
no cause of action and that the RTC had no jurisdiction
over the nature of the action since respondent did not
disapprove the claim.15
Following the submission of respondent’s Opposition to
Motion to Dismiss,16 the RTC issued an Order dated
March 11, 1996 denying the Motion to Dismiss.17 The
OSG filed a Motion for Reconsideration18 but it was
likewise denied by the RTC in its Order dated May 23,
1996.19
On August 5, 1996, the OSG filed its Answer invoking
the defenses of non-exhaustion of administrative
remedies and the doctrine of non-suability of the State.20
Following trial, the RTC rendered on February 19, 1997
its Decision, the dispositive portion of which reads as
follows:
WHEREFORE, in view of all the foregoing consideration,
judgment is hereby rendered in favor of the plaintiff and
against the defendant, ordering the latter, thru its District
Engineer at Sindalan, San Fernando, Pampanga, to pay
the following:
a) ₱457,000.00 – representing the contract for the
concreting project of Sitio 5 road, Bahay Pare, Candaba,
Pampanga plus interest at 12% from demand until fully
paid; and
b) The costs of suit.
SO ORDERED.21
The RTC held that petitioner must be required to pay the
contract price since it has accepted the completed
project and enjoyed the benefits thereof; to hold
otherwise would be to overrun the long standing and
consistent pronouncement against enriching oneself at
the expense of another.22
Dissatisfied, petitioner filed an appeal with the CA. 23 On
April 28, 2003, the CA rendered its Decision sustaining
the Decision of the RTC. It held that since the case
involves the application of the principle of estoppel
against the government which is a purely legal question,
then the principle of exhaustion of administrative
remedies does not apply; that by its actions the
government is estopped from questioning the validity
and binding effect of the Contract Agreement with the
respondent; that denial of payment to respondent on
purely technical grounds after successful completion of
the project is not countenanced either by justice or
equity.
The CA rendered herein the assailed Decision dated
April 28, 2003, the dispositive portion of which reads:
WHEREFORE, the decision of the lower court is hereby
AFFIRMED with modification in that the interest shall be
six percent (6%) per annum computed from June 21,
1995.
SO ORDERED.24
Hence, the present petition on the following ground:
THE COURT OF APPEALS ERRED IN NOT FINDING
THAT RESPONDENT HAS NO CAUSE OF ACTION
AGAINST PETITIONER, CONSIDERING THAT:
(a) RESPONDENT FAILED TO EXHAUST
ADMINISTRATIVE REMEDIES; AND
(b) IT IS THE COMMISSION ON AUDIT WHICH HAS
THE PRIMARY JURISDICTION TO RESOLVE
RESPONDENT’S MONEY CLAIM AGAINST THE
GOVERNMENT.25
Petitioner contends that respondent’s recourse to judicial
action was premature since the proper remedy was to
appeal the District Auditor’s disapproval of payment to
the COA, pursuant to Section 48, Presidential Decree
No. 1445 (P.D. No. 1445), otherwise known as the
Government Auditing Code of the Philippines; that the
COA has primary jurisdiction to resolve respondent’s
money claim against the government under Section
2(1),26 Article IX of the 1987 Constitution and Section
2627 of P.D. No. 1445; that non-observance of the
doctrine of exhaustion of administrative remedies and
the principle of primary jurisdiction results in a lack of
cause of action.
Respondent, on the other hand, in his
Memorandum28 limited his discussion to Civil Code
provisions relating to human relations. He submits that
equity demands that he be paid for the work performed;
otherwise, the mandate of the Civil Code provisions
relating to human relations would be rendered nugatory
if the State itself is allowed to ignore and circumvent the
standard of behavior it sets for its inhabitants.
The present petition is bereft of merit.
The general rule is that before a party may seek the
intervention of the court, he should first avail of all the
means afforded him by administrative processes.29 The
issues which administrative agencies are authorized to
decide should not be summarily taken from them and
submitted to a court without first giving such
administrative agency the opportunity to dispose of the
same after due deliberation.30
Corollary to the doctrine of exhaustion of administrative
remedies is the doctrine of primary jurisdiction; that is,
courts cannot or will not determine a controversy
involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that
question by the administrative tribunal, where the
question demands the exercise of sound administrative
discretion requiring the special knowledge, experience
and services of the administrative tribunal to determine
technical and intricate matters of fact.31
Nonetheless, the doctrine of exhaustion of administrative
remedies and the corollary doctrine of primary
jurisdiction, which are based on sound public policy and
practical considerations, are not inflexible rules. There
are many accepted exceptions, such as: (a) where there
is estoppel on the part of the party invoking the doctrine;
(b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where there
is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; (d) where the
amount involved is relatively small so as to make the
rule impractical and oppressive; (e) where the question
involved is purely legal and will ultimately have to be
decided by the courts of justice;32 (f) where judicial
intervention is urgent; (g) when its application may cause
great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the issue
of non-exhaustion of administrative remedies has been
rendered moot;33 (j) when there is no other plain, speedy
and adequate remedy; (k) when strong public interest is
involved; and, (l) in quo warranto
proceedings.34Exceptions (c) and (e) are applicable to
the present case.
Notwithstanding the legal opinions of the DPWH Legal
Department rendered in 1993 and 1994 that payment to
a contractor with an expired contractor’s license is
proper, respondent remained unpaid for the completed
work despite repeated demands. Clearly, there was
unreasonable delay and official inaction to the great
prejudice of respondent.
Furthermore, whether a contractor with an expired
license at the time of the execution of its contract is
entitled to be paid for completed projects, clearly is a
pure question of law. It does not involve an examination
of the probative value of the evidence presented by the
parties. There is a question of law when the doubt or
difference arises as to what the law is on a certain state
of facts, and not as to the truth or the falsehood of
alleged facts.35 Said question at best could be resolved
only tentatively by the administrative authorities. The
final decision on the matter rests not with them but with
the courts of justice. Exhaustion of administrative
remedies does not apply, because nothing of an
administrative nature is to be or can be done.36 The
issue does not require technical knowledge and
experience but one that would involve the interpretation
and application of law.
Thus, while it is undisputed that the District Auditor of the
COA disapproved respondent’s claim against the
Government, and, under Section 4837 of P.D. No. 1445,
the administrative remedy available to respondent is an
appeal of the denial of his claim by the District Auditor to
the COA itself, the Court holds that, in view of
exceptions (c) and (e) narrated above, the complaint for
specific performance and damages was not prematurely
filed and within the jurisdiction of the RTC to resolve,
despite the failure to exhaust administrative remedies.
As the Court aptly stated in Rocamora v. RTC-Cebu
(Branch VIII):38
The plaintiffs were not supposed to hold their breath and
wait until the Commission on Audit and the Ministry of
Public Highways had acted on the claims for
compensation for the lands appropriated by the
government. The road had been completed; the Pope
had come and gone; but the plaintiffs had yet to be paid
for the properties taken from them. Given this official
indifference, which apparently would continue
indefinitely, the private respondents had to act to assert
and protect their interests.39
On the question of whether a contractor with an expired
license is entitled to be paid for completed projects,
Section 35 of R.A. No. 4566 explicitly provides:
SEC. 35. Penalties. Any contractor who, for a price,
commission, fee or wage, submits or attempts to submit
a bid to construct, or contracts to or undertakes to
construct, or assumes charge in a supervisory capacity
of a construction work within the purview of this Act,
without first securing a license to engage in the business
of contracting in this country; or who shall present or file
the license certificate of another, give false evidence of
any kind to the Board, or any member thereof in
obtaining a certificate or license, impersonate another, or
use an expired or revoked certificate or license, shall be
deemed guilty of misdemeanor, and shall, upon
conviction, be sentenced to pay a fine of not less than
five hundred pesos but not more than five thousand
pesos. (Emphasis supplied)
The "plain meaning rule" or verba legis in statutory
construction is that if the statute is clear, plain and free
from ambiguity, it must be given its literal meaning and
applied without interpretation.40 This rule derived from
the maximIndex animi sermo est (speech is the index of
intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express
its intention or will and preclude the court from
construing it differently. The legislature is presumed to
know the meaning of the words, to have used words
advisedly, and to have expressed its intent by use of
such words as are found in the statute.41 Verba legis non
est recedendum, or from the words of a statute there
should be no departure.42
This article is part of the chapter of the Civil Code on
Human Relations, the provisions of which were
formulated as "basic principles to be observed for the
rightful relationship between human beings and for the
stability of the social order, x x x designed to indicate
certain norms that spring from the fountain of good
conscience, x x x guides human conduct [that] should
run as golden threads through society to the end that law
may approach its supreme ideal which is the sway and
dominance of justice."43 The rules thereon apply equally
well to the Government.44 Since respondent had
rendered services to the full satisfaction and acceptance
by petitioner, then the former should be compensated for
them. To allow petitioner to acquire the finished project
at no cost would undoubtedly constitute unjust
enrichment for the petitioner to the prejudice of
respondent. Such unjust enrichment is not allowed by
law.
WHEREFORE, the present petition is DENIED for lack
of merit. The assailed Decision of the Court of Appeals
dated April 28, 2003 in CA-G.R. CV No. 56345
is AFFIRMED. No pronouncement as to costs.
SO ORDERED.

The wordings of R.A. No. 4566 are clear. It does not

declare, expressly or impliedly, as void contracts entered
into by a contractor whose license had already expired.
Nonetheless, such contractor is liable for payment of the
fine prescribed therein. Thus, respondent should be paid
for the projects he completed. Such payment, however,
is without prejudice to the payment of the fine prescribed
under the law.

Besides, Article 22 of the Civil Code which embodies the

maxim Nemo ex alterius incommode debet lecupletari
(no man ought to be made rich out of another’s injury)
states:

Art. 22. Every person who through an act of performance

by another, or any other means, acquires or comes into
possession of something at the expense of the latter
without just or legal ground, shall return the same to him.
G.R. No. 182967 April 6, 2011
PHILIPPINE NATIONAL RAILWAYS, Petitioner,
vs.
KANLAON CONSTRUCTION ENTERPRISES CO.,
INC. Respondent.
DECISION
CARPIO, J.:
The Facts
In July 1990, PNR and Kanlaon entered into contracts
for the repair of three PNR station buildings and
passenger shelters, namely: 1) College Station for
₱2,316,568.41;6 2) Biñan Station for
₱2,547,978.63;7 and 3) Buendia Station for
₱1,820,534.40.8 The total cost of the three projects was
₱6,685,081.44. By November 1990, Kanlaon alleged
that it had already completed the three projects.9
On 30 June 1994, Kanlaon sent a demand letter to PNR
requesting for the release of the retention money in the
amount of ₱333,894.07.10
In a letter dated 12 July 1994,11 PNR denied Kanlaon’s
demand because of the 24 January 1994 Notices of
Suspension12 issued by the Commission on Audit
(COA).
On 8 November 1994, Kanlaon filed a complaint for
collection of sum of money plus damages against
PNR.13Kanlaon sought to recover from PNR a total of
₱865,906.79 consisting of the remaining balance of the
three projects in the amount of ₱531,652.7214 and the
retention money in the amount of ₱334,254.07. In its
amended complaint dated 17 August 1995, Kanlaon
impleaded the COA.15
In its answer, PNR admitted the existence of the three
contracts but alleged that Kanlaon did not comply with
the conditions of the contract. PNR also alleged that
Kanlaon did not complete the projects and that PNR did
not have any unpaid balance. PNR added that it had a
valid ground to refuse the release of the retention money
because of the COA orders suspending the release of
payment to Kanlaon.
In its 12 December 2000 Decision, the trial court ruled in
favor of Kanlaon. The dispositive portion of the 12
December 2000 Decision reads:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff [Kanlaon] and
against the herein defendants [PNR and COA].
Accordingly, defendant PNR is ordered to pay the
plaintiff the following amount[s]:
1. ₱333,894.07 representing the unreleased
retention money plus legal interest at 12% per
annum computed from the date of the first
written demand; [and]
2. ₱531,652.72 representing the unpaid
contract price for the completed projects plus
legal interest of 12% per annum computed
from the date of the first written demand.
Defendant COA is absolved of any liability for actual
damages or moral damages.
However, both defendant PNR and defendant COA are
solidarily liable for reasonable attorney’s fees in the
amount of ₱50,000.00 and cost of suit.
SO ORDERED.16
On 28 December 2000, COA appealed. On 9 January
2001, PNR filed a motion for reconsideration.
In its 22 February 2001 Order, the trial court modified its
12 December 2000 Decision and fixed the interest rate
from twelve percent to six percent per annum from the
date of the first written demand.
PNR and COA appealed to the Court of Appeals.
In its 26 February 2008 Decision, the Court of Appeals
affirmed the trial court’s 12 December 2000 Decision, as
amended by its 22 February 2001 Order.
PNR filed a motion for reconsideration.
In its 26 May 2008 Resolution, the Court of Appeals
denied PNR’s motion.
The Ruling of the Trial Court
The trial court found that Kanlaon completed the projects
and that it was entitled to payment in full of the contract
price, as well as the release of the retention money. The
trial court declared the PNR ledger, which was the only
documentary evidence presented by PNR to show that
the projects were not completed, to be self-serving and
unverified. The trial court declared that PNR failed to
present any credible and substantial evidence that
Kanlaon failed to complete the projects. Moreover, the
trial court stated that COA suspended payment because
PNR failed to comply with certain conditions and not
because Kanlaon did not complete the projects. The trial
court also took judicial notice of the fact that the PNR
stations at College, Biñan and Buendia are fully
operational and have been continuously used by PNR
and the riding public. The trial court absolved COA from
actual and moral damages because there was no
contractual relations between COA and Kanlaon and it
was not shown that COA acted in bad faith or with
malice or gross negligence when it issued the Notices of
Suspension.
The Ruling of the Court of Appeals
The Court of Appeals sustained the trial court’s ruling
that PNR was liable for the remaining balance of the
contract price and the retention money. The Court of
Appeals agreed with the trial court that the
preponderance of evidence leaned in favor of Kanlaon’s
claim against PNR and that there was nothing on record
which supports PNR’s allegation that Kanlaon failed to
complete the project. The Court of Appeals said the only
reason PNR refused to pay Kanlaon was because of
COA’s Notices of Suspension and not Kanlaon’s non-
completion of the projects. However, the Court of
Appeals held that COA is not liable for attorney’s fees
and costs of the suit for lack of factual and legal bases.
The Issues
PNR raises the following issues:
I. The Court of Appeals erred in finding that
the projects were completed.
II. The Court of Appeals erred in affirming the
12 December 2000 Decision of the trial court,
 as modified by the Order dated February 22,
2001.
III. The Court of Appeals erred in ruling that
interest should be reckoned from the date of
respondent’s first written demand.17
The Ruling of the Court
The petition is meritorious.
The Court notes that one of the reasons the COA issued
the Notices of Suspension was because the contracts
did not contain a Certificate of Availability of Funds as
required under Sections 85 and 86 of Presidential
Decree No. 1445.18 Kanlaon does not dispute the
absence of a Certificate of Availability of Funds.
The Administrative Code of 1987, a more recent law,
also contains the same provisions. Sections 46, 47, and
48, Chapter 8, Subtitle B, Title I, Book V of the
Administrative Code of 1987 provide:
SECTION 46. Appropriation Before Entering into
Contract. —
1. No contract involving the expenditure of
public funds shall be entered into unless there
is an appropriation therefor, the unexpended
balance of which, free of other obligations, is
sufficient to cover the proposed expenditure;
and
2. Notwithstanding this provision, contracts for
the procurement of supplies and materials to
be carried in stock may be entered into under
regulations of the Commission provided that
when issued, the supplies and materials shall
be charged to the proper appropriations
account.
SECTION 47. Certificate Showing Appropriation to Meet
Contract. — Except in the case of a contract for personal
service, for supplies for current consumption or to be
carried in stock not exceeding the estimated
consumption for three (3) months, or banking
transactions of government-owned or controlled
banks, no contract involving the expenditure of
public funds by any government agency shall be
entered into or authorized unless the proper contracts. The obvious intent is to impose such
accounting official of the agency concerned shall conditions as a priori requisites to the validity of the
have certified to the officer entering into the proposed contract.21
obligation that funds have been duly appropriated
for the purpose and that the amount necessary to
The law expressly declares void a contract that fails to
cover the proposed contract for the current calendar
comply with the two requirements, namely, an
year is available for expenditure on account thereof,
appropriation law funding the contract and a certification
subject to verification by the auditor concerned. The
of appropriation and fund availability.22 The clear
certificate signed by the proper accounting official and
purpose of these requirements is to insure that
the auditor who verified it, shall be attached to and
government contracts are never signed unless
become an integral part of the proposed contract, and
supported by the corresponding appropriation law and
the sum so certified shall not thereafter be available for
fund availability.23
expenditure for any other purpose until the obligation of
the government agency concerned under the contract is
fully extinguished. The three contracts between PNR and Kanlaon do not
comply with the requirement of a certification of
appropriation and fund availability. Even if a certification
SECTION 48. Void Contract and Liability of Officer. —
Any contract entered into contrary to the
of appropriation is not applicable to PNR if the funds
used are internally generated, still a certificate of fund
requirements of the two (2) immediately preceding
availability is required. Thus, the three contracts
sections shall be void, and the officer or officers
between PNR and Kanlaon are void for violation of
entering into the contract shall be liable to the
Sections 46, 47, and 48, Chapter 8, Subtitle B, Title I,
Government or other contracting party for any
Book V of the Administrative Code of 1987, as well as
consequent damage to the same extent as if the
Sections 85, 86, and 87 of the Government Auditing
transaction had been wholly between private parties.
Code of the Philippines.1avvphi1
(Emphasis supplied)
However, Kanlaon is not left without recourse. The law
Thus, the Administrative Code of 1987 expressly
itself affords it the remedy. Section 48 of the
prohibits the entering into contracts involving the
Administrative Code of 1987 provides that "the officer or
expenditure of public funds unless two prior
officers entering into the contract shall be liable to the
requirements are satisfied. First, there must be an
Government or other contracting party for any
appropriation law authorizing the expenditure required in
consequent damage to the same extent as if the
the contract. Second, there must be attached to the
transaction had been wholly between private
contract a certification by the proper accounting official
parties."24 Kanlaon could go after the officers who signed
and auditor that funds have been appropriated by law
the contract and hold them personally liable.
and such funds are available. Failure to comply with any
of these two requirements renders the contract void.
WHEREFORE, we GRANT the petition.
We REVERSE and SET ASIDE the 26 February 2008
In several cases,19 the Court had the occasion to apply
Decision and 26 May 2008 Resolution of the Court of
these provisions of the Administrative Code of 1987 and
Appeals in CA-G.R. CV No. 70205.
the Government Auditing Code of the Philippines. In
these cases, the Court clearly ruled that the two
requirements – the existence of appropriation and the SO ORDERED.
attachment of the certification – are "conditions sine qua
non for the execution of government contracts."
In COMELEC v. Quijano-Padilla,20 we stated:
It is quite evident from the tenor of the language of the
law that the existence of appropriations and the
availability of funds are indispensable pre-requisites to or
conditions sine qua non for the execution of government
 G.R. No. 158562 April 23, 2010 Mr. Yap appealed the Auditor’s disallowances primarily
ND 99-10(98)MGC 04/12/99 2,848.00 Car maintenance allowance
contending that the questioned benefits were all
approved by the MGC Board of Directors. x x x x.
RAMON R. YAP, Petitioner, 1,500.00 Annual fee of VISA card
vs.
COMMISION ON AUDIT, Respondent.
ND 99-12(98)MGC 04/12/99 789.00 Representation expense on a Sunday Petitioner’s appeal was denied by the CAO II,4 which
affirmed the MGC Corporate Auditor’s findings that the
allowances
Sunday and reimbursements at issue were given in
D E CND
I S99-16(98)MGC
ION 09/09/99 4,180.56 Fellowship with other PCA club Members on
violation of Sections 7(2) and 8, Article IX-b of the 1987
ND 99-07(98)IIGSI 08/28/99 11,500.00 Car maintenance allowance Constitution.
LEONARDO-DE CASTRO, J.:
ND 99-14(98)IIGSI 08/31/99 7,000.00 Executive check-up Unperturbed, petitioner sought a reconsideration of the
This is a Petition for Certiorari and Prohibition, in CAO II ruling from respondent COA via a
accordance with Rule 65 ofND the99-09(99)MGC
Rules of Court, with 05/26/00 119,508.90 Monthly allowance Letter5 addressed to the COA Chairman wherein he
application for temporary restraining order (TRO) and/or argued that his assignment to MGC was required by the
preliminary injunction. TheND said2000-01(99)MGC
Petition seeks to annul 03/31/00 2,304.32 Car maintenance allowance primary functions of his office and was also authorized
and set aside the following decisions of respondent by law, namely Executive Order No. 284 issued on July
Commission on Audit (COA): ND(1) COA Decision No.
2000-08(99)MGC 03/31/00 21,523.00 Monthly allowance 25, 1987, the pertinent provision of which provides:
2002-2131 dated September 24, 2002 on the "Request
of Mr. RAMON YAP for reconsideration of the decision
ND 2000-07(99)MGC 03/31/00 445.00 Car maintenance allowance SECTION 1. Even if allowed by law or by the primary
of the Director, Corporate Audit Office II (CAO II),
functions of his position, a member of the Cabinet,
affirming the disallowance of various allowances and 1,862.00 Car maintenance allowance undersecretary, assistant secretary or other appointive
reimbursements paid to him in his capacity as Vice-
official of the Executive Department may, in addition to
President for Finance and ND Treasurer of the Manila Gas
2000-01(99)MGC 5/11/00 35,433.70 Gasoline allowance and driver’s subsidy his primary position, hold not more than two positions in
Corporation (MGC)"; and (2) COA Decision No. 2003-
the government and government corporations and
0872 dated June 17, 2003, denying petitioner’s motion
receive the corresponding compensation
for reconsideration.
which were predicated on the ground that appellant’s therefore: Provided, That this limitation shall not apply
appointment to MGC in addition to his regular position as to ad hoc bodies or committees, or to boards, councils or
The undisputed facts of this case as gathered from the Department Manager III of NDC and the subsequent bodies of which the President is the Chairman.
assailed COA Decision No. 2002-2133 are as follows: receipt of the questioned allowances and (Emphasis supplied.)
reimbursements from the former directly contravened the
proscription contained in Section 7 (2) and Section 8,
x x x Ramon R. Yap is holder of a regular position of In turn, respondent COA denied petitioner’s appeal in
Article IX-b of the Constitution to wit:
Department Manager of the National Development herein assailed COA Decision No. 2002-213.6 It upheld
Company (NDC), a government-owned and controlled the CAO II’s ruling that characterized the disallowed
corporation with original charter. He was appointed by "Section 7. x x x allowances and reimbursements as prohibited by the
the Board of Directors, Manila Gas Corporation (MGC), Constitution. Furthermore, it also ruled that the said
a subsidiary of NDC as Vice-President for Finance allowances and reimbursements claimed by petitioner
Unless otherwise allowed by law or by the primary
effective June 14, 1991 while remaining as a regular "failed to pass the test of ‘public purpose requirement’ of
functions of his position, no appointive official shall hold
employee of NDC. The additional employment entitled the law" and further emphasized that "it is not enough
any other office or employment in the Government or
him to honoraria equivalent to fifty percent (50%) of his that payments made to [petitioner] be authorized by the
any subdivision, agency or instrumentality thereof,
basic salary at NDC and various allowances attached to Board of Directors of the MGC but it is likewise
including government-owned or controlled corporations
the office. necessary that said payments do not contravene the
or their subsidiaries."
principles provided for under Section 4 of [Presidential
Decree No.] 1445 on the use of government funds,"
In the course of the regular audit, the Corporate Auditor, more specifically on the public purpose requirement that
"Section 8. x x x
MGC issued the following notices of disallowances is provided in Section 4(2) of Presidential Decree No.
against Mr. Ramon R. Yap:
1445, otherwise known as the Government Auditing
No elective or appointive public officer or employee shall Code of the Philippines, to wit:
receive additional, double or indirect compensation,
ce Date Amount Nature unless specifically authorized by law, x x x"
Section 4. Fundamental Principles. – Financial
03/26/99 ₱3,330.00 Subscription to National Geographic and Reader’s Digest transactions and operations of any government agency
shall be governed by the fundamental principles set forth
hereunder, to wit:
xxxx
(2) Government funds or property shall be spent or used
solely for public purposes.
In elaborating this point, respondent COA stated that:
x x x [T]his Commission sees no connection to link
payments for subscription to the National Geographic
and Reader’s Digest, car maintenance allowance,
annual fee of VISA card, representation on a Sunday, a
non-working day, fellowship with PCA club members to
social services, promotion of the general welfare, social
justice as well as human dignity and respect for human
rights, slum clearance, low-cost housing, squatter
resettlement, urban and agrarian reform and the like. For
it is not enough that payments made to him be
authorized by the Board of Directors of the MGC but it is
likewise necessary that said payments do not
contravene the principles provided for under Section 4 of
P.D. 1445 on the use of government funds.
Viewed from all the foregoing premises, it is regretted
that the herein request for reconsideration of Mr. Yap is
DENIED. Accordingly, the audit disallowances as
heretofore mentioned are affirmed in toto.7
A Motion for Reconsideration8 was subsequently filed by
petitioner, but this was likewise denied by respondent
COA in COA Decision No. 2003-087,9 wherein it ruled
that although petitioner was correct in arguing that there
was no legal impediment to the validity of petitioner’s
appointment as Vice-President and Treasurer of MGC
and to his entitlement to compensation for the second
office, "[s]ince the constitutionality of Executive Order
No. 284 has been upheld by the Court insofar as other
appointive officials are concerned x x x[,]" however, "of
more important consideration is the condition sine qua
non, that ‘government funds or property shall be spent or
used solely for public purpose’ (Section 4(2), PD 1445)."
Therefore, respondent COA affirmed its original finding
that the disallowed allowances and reimbursements did
not satisfy the public purpose requirement. The
dispositive portion of the said Decision reads:
WHEREFORE, premises considered, the instant motion
for reconsideration is hereby DENIED and the assailed
COA Decision No. 2002-213 dated September 24, 2002
is hereby AFFIRMED in toto.
Hence, this Petition wherein petitioner puts forth the
following grounds in support:
I
RESPONDENT COMMISSION ON AUDIT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT USED AS A BASIS
THE "PUBLIC PURPOSE" REQUIREMENT IN
AFFIRMING THE QUESTIONED DISALLOWANCES
II
RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT AFFIRMED THE
DISALLOWANCES ON A GROUND [different from the
ground] RELIED UPON BY THE RESIDENT AUDITOR
III
ASSUMING, WITHOUT CONCEDING, THAT THE
PUBLIC PURPOSE REQUIREMENT IS RELEVANT TO
THE PRESENT CASE, RESPONDENT COMMISSION
ON AUDIT STILL COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT DISALLOWED ALL THE
ALLOWANCES RECEIVED BY HEREIN
PETITIONER"10
We rule to deny the instant Petition.
As regards the first ground, petitioner puts forward the
argument that although it cannot be denied that the
MGC, being a government-owned and controlled
corporation, is under the jurisdiction of respondent COA,
the respondent’s act of subjecting the salaries,
allowances and benefits of MGC employees to the
"public purpose test" is not only wrong, but also an act of
grave abuse of discretion since the said salaries,
allowances and benefits are intended to compensate
MGC employees for services performed on behalf of the
corporation. According to petitioner, if the "public
purpose requirement" will be applied in auditing these
salaries, allowances and benefits being given to
government employees, no such compensation could
ever pass audit, as, by their very nature, they are solely
intended to benefit their recipients, who are the
employees of the government department, office,
agency or corporation concerned.11
We cannot countenance petitioner’s misleading
assertion on this point. The mere act of disbursing public
funds to pay the allowances and salaries of government
employees does not by itself constitute release of
government funds for public purpose as petitioner would
want us to believe; otherwise, as petitioner dares to
conclude, no salary, benefit or allowance would ever
pass the requisite government audit. This is a rather
simplistic and narrow view of the nature of government
employee compensation. Not unlike other government
expenditures, it is necessary that the release of public
funds to pay the salaries and allowances of government
employees must not contravene the law on
disbursement of public funds. Section 4 of Presidential
Decree No. 1445 lays out the basic guidelines that
government entities must follow in disbursing public
funds, to wit:
Section 4. Fundamental principles. – Financial
transactions and operations of any government agency
shall be governed by the fundamental principles set forth
hereunder, to wit:
(1) No money shall be paid out of any public
treasury or depository except in pursuance of
an appropriation law or other specific statutory
authority.
(2) Government funds or property shall be
spent or used solely for public purposes.
(3) Trust funds shall be available and may be
spent only for the specific purpose for which
the trust was created or the funds received.
(4) Fiscal responsibility shall, to the greatest
extent, be shared by all those exercising
authority over the financial affairs,
transactions, and operations of the
government agency.
(5) Disbursements or disposition of
government funds or property shall invariably
bear the approval of the proper officials.
 (6) Claims against government funds shall be
supported with complete documentation.
(7) All laws and regulations applicable to
financial transactions shall be faithfully
adhered to.
(8) Generally accepted principles and
practices of accounting as well as of sound
management and fiscal administration shall be
observed, provided that they do not
contravene existing laws and regulations.
(Emphases supplied.)
To summarize, any disbursement of public funds, which
includes payment of salaries and benefits to government
employees and officials, must (a) be authorized by law,
and (b) serve a public purpose.
In this regard, it is necessary for this Court to elaborate
on the nature and meaning of the term "public purpose,"
in relation to disbursement of public funds. As
understood in the traditional sense, public purpose or
public use means any purpose or use directly available
to the general public as a matter of right. Thus, it has
also been defined as "an activity as will serve as benefit
to [the] community as a body and which at the same
time is directly related function of
government."12 However, the concept of public use is not
limited to traditional purposes. Here as elsewhere, the
idea that "public use" is strictly limited to clear cases of
"use by the public" has been discarded.13 In fact, this
Court has already categorically stated that the term
"public purpose" is not defined, since it is an elastic
concept that can be hammered to fit modern standards.
It should be given a broad interpretation; therefore, it
does not only pertain to those purposes that which are
traditionally viewed as essentially government functions,
such as building roads and delivery of basic services,
but also includes those purposes designed to promote
social justice. Thus, public money may now be used for
the relocation of illegal settlers, low-cost housing and
urban or agrarian reform.14 In short, public use is now
equated with public interest,15 and that it is not
unconstitutional merely because it incidentally benefits a
limited number of persons.16
To our mind, in view of the public purpose requirement,
the disbursement of public funds, salaries and benefits
of government officers and employees should be
granted to compensate them for valuable public services
rendered, and the salaries or benefits paid to such regulations.19 Section 11, Chapter 4, Subtitle B, Title I,
officers or employees must be commensurate with Book V of the Administrative Code of 1987 echoes this
services rendered. In the same vein, additional constitutional mandate given to COA, to wit:
allowances and benefits must be shown to be necessary
or relevant to the fulfillment of the official duties and
Section 11. General Jurisdiction. – (1) The Commission
functions of the government officers and employees. We
on Audit shall have the power, authority, and duty to
cannot accept petitioner’s theory that the compensation
examine, audit, and settle all accounts pertaining to the
and benefits of public officers are intended purely for the
revenue and receipts of, and expenditures or uses of
personal benefit of such officers, or that the mere
funds and property, owned or held in trust by, or
payment of salaries and benefits to a public officer
pertaining to, the Government, or any of its subdivisions,
satisfies the public purpose requirement. That theory
agencies, or instrumentalities, including government-
would lead to the anomalous conclusion that
owned or controlled corporations with original charters,
government officers and employees may be paid
and on a post-audit basis: (a) constitutional bodies,
enormous sums without limit or without any justification
commissions and offices that have been granted fiscal
necessary other than that such sums are being paid to
autonomy under this Constitution; (b) autonomous state
someone employed by the government. Public funds are
colleges and universities; (c) other government-owned or
the property of the people and must be used prudently at
controlled corporations and their subsidiaries; and (d)
all times with a view to prevent dissipation and waste.
such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the
With regard to the second ground, petitioner Government, which are required by law or the granting
underscores the fact that respondent COA abandoned institution to submit to such audit as a condition of
the ground of double compensation as a basis for the subsidy or equity. However, where the internal control
questioned disallowances and affirmed the same on the system of the audited agencies is inadequate, the
new ground that the allowances did not meet the test of Commission may adopt such measures, including
"public purpose requirement." Petitioner argues that this temporary or special pre-audit, as are necessary and
was an arbitrary and whimsical action on the part of appropriate to correct the deficiencies. It shall keep the
respondent COA, since petitioner had already legally general accounts of the Government and, for such
justified his opposition to the ground originally cited by period as may be provided by law, preserve the
the MGC Corporate Auditor in support of the questioned vouchers and other supporting papers pertaining thereto.
disallowances, and yet respondent COA affirmed said
disallowances on a new ground – failure to pass the
(2) The Commission shall have exclusive authority,
"public purpose requirement" - that was never mentioned
subject to the limitations in this Article, to define the
in the findings made by the MGC Corporate Auditor and
scope of its audit and examination, establish the
the CAO II ruling that was appealed to respondent COA
techniques and methods required therefor, and
by the petitioner.17 In response, respondent COA
promulgate accounting and auditing rules and
maintains that there is no provision in the Constitution,
regulations, including those for the prevention and
the Government Auditing Code or the Administrative
disallowance of irregular, unnecessary, excessive,
Code that restricts its power and authority to examine
extravagant, or unconscionable expenditures, or uses of
and audit government expenditures to merely reviewing
government funds and properties.
and deciding on the validity of the findings and
conclusions of its auditors.18
In light of these express provisions of law granting
respondent COA its power and authority, we have
In resolving this issue, it is imperative that we examine
previously ruled that its exercise of its general audit
the powers vested in respondent COA by the pertinent
power is among the constitutional mechanisms that give
laws of the land. The 1987 Constitution has made the
life to the check and balance system inherent in our form
COA the guardian of public funds, vesting it with broad
of government.20 Furthermore, we have also declared
powers over all accounts pertaining to government
that COA is endowed with enough latitude to determine,
revenue and expenditures and the uses of public funds
prevent and disallow irregular, unnecessary, excessive,
and property including the exclusive authority to define
extravagant or unconscionable expenditures of
the scope of its audit and examination, establish the
government funds.21
techniques and methods for such review, and
promulgate accounting and auditing rules and
Based on the foregoing discussion and due to the lack or
absence of any law or jurisprudence saying otherwise,
we rule that, in resolving cases brought before it on
appeal, respondent COA is not required to limit its
review only to the grounds relied upon by a government
agency’s auditor with respect to disallowing certain
disbursements of public funds. In consonance with its
general audit power, respondent COA is not merely
legally permitted, but is also duty-bound to make its own
assessment of the merits of the disallowed disbursement
and not simply restrict itself to reviewing the validity of
the ground relied upon by the auditor of the government
agency concerned. To hold otherwise would render
COA’s vital constitutional power unduly limited and
thereby useless and ineffective.
As a third ground for the petition, petitioner also
contends that assuming, without conceding, that the
other allowances and benefits do not pass the "public
purpose" test, the rest of the allowances, such as the
basic monthly allowances, executive check-up and the
gasoline allowances should not be disallowed, as they
are normally given to officers of corporations, whether
private or government-owned and controlled.221avvphi1
We cannot uphold petitioner’s plausible but
unsubstantiated argument on this point since, as
previously discussed, respondent COA is in the best
position to determine which allowances and benefits
may be properly allowed under the circumstances, as it
is the sole constitutional body mandated to examine,
audit and settle all accounts pertaining to the revenue
and receipts of, and expenditures or uses of funds and
property owned or held in trust by, or pertaining to, the
government, including government-owned or controlled
corporations such as the MGC and the NDC in the case
at bar. Even if we assume the truth of petitioner’s
assertion that the said allowances are "normally given,"
this fact alone does not operate to preclude respondent
COA from performing its constitutional
mandate.1avvphi1
That certain allowances are enjoyed by corporate
officers in the private sector does not justify the grant of
the same benefits to similarly designated public officers,
even if they are officers of government-owned and
controlled corporations (GOCCs), which perform purely
proprietary functions. As aptly observed by the Solicitor
General, the funds of GOCCs are still public funds and
that is precisely the reason such funds are subject to
audit by the COA. Thus, there is a valid distinction
between the officers of public corporations and those of
private corporations.
To reiterate, the public purpose requirement for the
disbursement of public funds is a valid limitation on the
types of allowances and benefits that may be granted to
public officers. It was incumbent upon petitioner to show
that his allowances and benefits were authorized by law
and that there was a direct and substantial relationship
between the performance of his public functions and the
grant of the disputed allowances to him.
While subscriptions to newspapers and magazines by
government offices may be justified, petitioner’s personal
subscriptions to magazines and the annual fee of his
credit card cannot ipso facto be considered as part of his
remunerations or benefits as a public official.
There is likewise no evidence that the purported
representation and "fellowship" expenses on weekends
are necessary and related to petitioner’s work as Vice-
President of Finance and Treasurer of the MGC. We find
no reason to believe that as an MGC officer, his duties
include business relations or clientele-building functions,
since a finance officer and treasurer, even in the private
sector, is ordinarily tasked with accounting,
disbursement and custody of corporate funds.
Medical expenses, such as those for an executive
check-up, may be justified if specifically authorized by
the appropriate laws, rules or circulars. However,
petitioner failed to point to the existence of such law or
regulation applicable to his case. It also appears from
the records that petitioner already receives medical
benefits from the NDC,23 and that the ground cited by
the MGC Corporate Auditor for the disallowance of his
expense for executive check-up was his own failure to
submit appropriate supporting documents to claim such
benefit.24
The COA’s disallowance of the car maintenance,
gasoline allowance and driver’s subsidy was likewise in
order since petitioner neither alleged nor proved that
these benefits were also authorized by law or
regulation.25 He did not even allege that the car was an
official company vehicle or that the driver was an
employee of the MGC. On the contrary, the MGC
Corporate Auditor found that the vehicle involved was
the personal vehicle of petitioner, although it was
granted to him under an NDC car plan, and that he was
already receiving gasoline and/or transportation
allowance from the NDC.26 It was also found that
petitioner reported to the MGC office, at most, once a
week to attend meetings; and documents, which
required his signature, were often brought to him at the
NDC.27 Since petitioner did not dispute these findings,
he failed to show that the grant of similar or additional
gasoline and transportation benefits to him by the MGC
was warranted.
In order to demonstrate the legality of the grant of his
benefits, it was insufficient for the petitioner to assert that
the disputed allowances and benefits were approved by
the board of directors of the MGC. Such board action
should in itself be authorized by law or regulation or
have valid legal basis. Otherwise, it becomes an illegal
corporate act that is void and cannot be validated.28 In
this case, the MGC board action that permitted the
disallowed disbursements was not shown to have
complied with Section 15(d) of both Republic Act No.
8522 and Republic Act No. 8745, otherwise known as
the General Appropriations Act of 1998 and the General
Appropriations Act of 1999, respectively, which provide:
Sec. 15. Restrictions on the Use of Government Funds.
– No government funds shall be utilized for the following
purposes:
xxxx
d. To pay honoraria, allowances or other forms of
compensation to any government official or employee,
except those specifically authorized by law;
xxxx
The provisions of this Section shall also apply to
government- owned and/or controlled corporations.
On a final note, petitioner claims that respondent COA
acted with grave abuse of discretion since, as a result of
the disallowances, petitioner in effect rendered his
services to MGC for free. This, petitioner points out,
would constitute unjust enrichment on the part of MGC.29
We have ruled before that there is unjust enrichment
when a person unjustly retains a benefit to the loss of
another, or when a person retains the money or property
of another against the fundamental principles of justice,
equity and good conscience.30 In the case at bar, the
assailed COA Decision No. 2002-213 dated September SO ORDERED.
24, 2002 and the CAO II’s 1st Indorsement dated
December 12, 2000 recognized that petitioner’s
appointment to the Board of Directors of MGC "entitled
him to honoraria equivalent to fifty percent (50%) of his
basic salary at NDC and various allowances attached to
the office."31 Furthermore, petitioner’s own assertion in
his Motion for Reconsideration of COA Decision No.
2002-213 belies his claim of being totally
uncompensated, since petitioner stated therein that "[a]s
the NDC representative in MGC, he was not getting the
entire compensation package for such position."32Thus,
petitioner did not render his services to MGC for free,
because it did not appear that his honoraria were among
the expenditures that were disallowed by respondent
COA.

We have previously declared that it is the general policy

of the Court to sustain the decisions of administrative
authorities, especially one that was constitutionally
created like herein respondent COA, not only on the
basis of the doctrine of separation of powers, but also of
their presumed expertise in the laws they are entrusted
to enforce. It is, in fact, an oft-repeated rule that findings
of administrative agencies are accorded not only respect
but also finality when the decision and order are not
tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion.33 Thus, only when
the COA acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or
excess of jurisdiction, may this Court entertain a petition
for certiorari under Rule 65 of the Rules of Court.34

There is grave abuse of discretion when there is an

evasion of a positive duty or a virtual refusal to perform a
duty enjoined by law or to act in contemplation of law as
when the judgment rendered is not based on law and
evidence but on caprice, whim and despotism.35 In the
case at bar, we find no grave abuse of discretion on the
part of respondent COA in issuing the assailed
Decisions. On the contrary, we hold that respondent
COA’s pronouncements in both assailed rulings were
made in faithful compliance with its mandate and in
judicious exercise of its general audit power as conferred
on it by the Constitution and the pertinent laws.

WHEREFORE, premises considered, the petition is

DISMISSED. The assailed COA Decision No. 2002-213
dated September 24, 2002 and COA Decision No. 2003-
087 dated June 17, 2003 are both AFFIRMED.
 G.R. No. 211553, September 13, 2016
Amo Seedling
Suppo Productio
unt
LEANDRO B. VERCELES, MO sed Funding n of
Date (in
JR., Petitioner, v. COMMISSION ON A Autho Source Environm
AUDIT, Respondent. peso
rity ental
s)
Safeguard
DECISION
SP EDF
Resolu allocation Savings
BRION, J.: tion in the CY from the
No. 2001 EDF (CY
67- Budget 2002)
We resolve the petition for certiorari1 filed by
2001; 26 transferre
Leandro B. Verceles, Jr., to assail the October 28, 1
27 affirme Fifth Septe the d to Trees
2010 decision2 and December 6, 2013 1.5 Millio
First Septe d in SP MOA mber same Seedling
resolution3 of the Commission on Audit (COA) in Millio n
MOA mber Resolu 2002 Productio
Case No. 2008-016. n
2001 tion n of
Nos. Environm
Antecedents ental
68-
2001 Safeguard
The Provincial Government of Catanduanes (the
and
province), represented by then Governor Leandro On October 12, 2001, the SP issued Resolution
69-
B. Verceles, Jr. (Verceles), engaged the Provincial No. 104-A-2001,12 which effectively revoked the
2001.
Environment and Natural Resources Office blanket authority given to the governor to enter
(PENRO) to carry out the province's tree into contracts on behalf of the
seedlings production project (the project).4 The Savings Province.13chanrobleslaw
province and PENRO entered into several from the
Memoranda of Agreement (MOA) to implement EDF (CY On February 4, 2003, the COA Audit Team Leader
the project.5chanrobleslaw 2001) issued an Audit Observation
Sec 30 1.5 transferre Memorandum (AOM), finding that Verceles should
On June 11, 2001, the Sangguniang Panlalawigan the
ond Octobe Millio d to have sought prior authority from the SP pursuant
(SP), through Resolution No. 067-2001, gave same
MOA r 2001 n theEnviro to Sections 22 (c)14 and 465 (b) (1) (vi)15 of
blanket authority to the governor to enter into nment Republic Act No. 7160 or the Local Government
contracts on behalf of the province.6 The SP Managem Code (LGC) before executing any MOA after the
reaffirmed the authority given to the governor ent issuance of Resolution No. 104-A-
through Resolution Nos. 068-2001 and 069- Program 2001.16chanrobleslaw
2001.7 On the same date, the SP also resolved to
give the governor the power to realign, revise, or Verceles filed his comments. The Audit Team
modify items in the provincial EDF
Thir 3 allocation Leader forwarded the AOM to the COA Regional
budget.8chanrobleslaw 6 May the Office.17The Regional Office affirmed the AOM and
d Millio in the CY
2002 same issued Notices of Disallowance in the total
The cost of the project was allegedly paid out of MOA n 2002
Budget amount of P7,528,175.46.18chanrobleslaw
the Economic Development Fund (EDF) allocation
in the provincial budget for calendar years (CY) Verceles moved but failed to obtain
2001 and 2002.9 The EDF is the 20% portion of Savings reconsideration of the Notices of Disallowance.
the province's internal revenue allotment (IRA) from the The Legal and Adjudication Office also denied his
required by law to be spent on development Four 22 3
the EDF (CY appeal and motion for reconsideration. Verceles
projects.10chanrobleslaw th August Millio
same 2002) elevated the case to the COA proper (national
MOA 2002 n
transferre office) to challenge the disallowed
The province and PENRO subsequently executed d to Trees payments.19chanrobleslaw
the following MOA:11

In his petition20 before the COA, Verceles mainly
argued that the payments for the project were
covered by appropriations under the EDF
allocation of the provincial budget for CYs 2001
and 2002.21 Verceles argued that the local chief
executive need not secure express or specific
authorization from the SP as long as a budget for
a contract is already appropriated. He claimed
that the first and third MOAs were funded by the
EDF allocation in the CYs 2001 and 2002
budgets, and that, the second, fourth, and fifth
MOAs were funded by valid augmentations from
other items also under the EDF allocation.
The COA Decision
The COA denied Verceles' petition for lack of
merit.22chanrobleslaw
The COA held that the augmentations or
realignments made by Verceles to fund
the second, fourth, andfifth MOAs23 were contrary
to Section 33624 of the LGC.25cralawred The COA
ruled that the disbursements also violated
Section 85 (1)26, of Presidential Decree (PD) No.
1445 or the Government Auditing Code of the
Philippines and Section 305 (1)27 of the
LGC.28 These provisions underscore the need for
an appropriation before contracts involving the
expenditure of public funds may be entered into.
The COA further ruled that at the time Verceles
made the augmentations to fund
the second, fourth, andfifth MOAs, he was not
authorized by the SP, and that the CY 2003
appropriation ordinance could not ratify the MOAs
entered into in CYs 2001 and
2002.29chanrobleslaw
The COA also explained that Resolution Nos. 067-
2001, 068-2001, and 069-2001 authorized
Verceles' predecessor only (former Governor
Hector Sanchez) and that the grant of authority
did not extend to Verceles.30 The COA reasoned
that a resolution does not have the attribute of
permanence.31Consequently, the public funds
spent to pay for the project had no legal
basis.32 Thus, the first and thirdMOAs were still
unauthorized even assuming they were funded
by the EDF allocation in CYs 2001 and 2002.
The dispositive portion of the COA decision
reads:ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the instant
appeal is hereby DENIED for lack of merit.
Accordingly, LAO-Local Resolution No. 2007-002
dated January 16, 2007 affirming the Notices of
Disallowance in the aggregate amount of
P7,528,175.46 is
herebyAFFIRMED.33chanroblesvirtuallawlibrary
Verceles moved but failed to obtain
reconsideration of the COA decision.34 He came to
this Court for relief through the present petition
for certiorari. On August 12, 2014, the Court
granted Verceles' prayer for the issuance of a
temporary restraining order enjoining the
implementation of the assailed COA
decision.35chanrobleslaw
The Petition
Verceles anchors his petition on the following
grounds:
chanRoblesvirtualLawlibraryFirst, the COA
disregarded Section 465 (b) (1) (vi) of the LGC,
an exception to Section 22 (c) of the same
code.36chanrobleslaw
According to Verceles, while prior authorization to
enter into a contract is the general rule, the LGC
identifies an exception, i.e., when the contract
entered into is pursuant to a law or ordinance. He
points out that the funding for
the first and third MOAs were approved and
included in the budget of the province for CYs
2001 and 2002.37chanrobleslaw
Verceles posits that even granting that Resolution
No. 104-A-2001 had revoked the governor's
blanket authority to enter into contracts on
behalf of the province, the MOAs merely
implemented the items already identified in the
appropriation ordinances for CYs 2001 and 2002.
Thus, he could (as he did) enter into the MOAs to
implement the approved items in the
budget.38chanrobleslaw
Second, he vetoed Resolution No. 104-A-
2001.39chanrobleslaw
Third, Resolution Nos. 67-2001, 68-2001, and
69-2001 had the force and effect of an ordinance
and, thus, were effective during his term.40 He
argues that these resolutions carried the
legislative intent to authorize the provincial
governor to negotiate and contract loans on
behalf of the province.41 These resolutions were
not time-bound.42chanrobleslaw
Fourth, all the MOAs had proper funding
authorizations.
Verceles claims that the first and third MOAs
were covered by appropriations under the EDF of
the Province's CY 2001 and CY 2002
budgets.43chanrobleslaw
The second, fourth and fifth MOAs, on the other
hand, were funded from augmentation of funds
from savings, which augmentations were ratified
in the CY 2003 appropriation ordinance.
Augmentation is allowed under Section 336 of the
LGC and Article 454 (b) of the LGC implementing
rules and regulations.44 Verceles underscores that
the appropriation ordinance for CY 200345 ratified
the second, fourth, and fifth
MOAs.46chanrobleslaw
Finally, Verceles submits that the COA violated
his constitutional right to speedy disposition of
cases when it took it more than ten (10) years to
resolve the case.47chanrobleslaw
The COA's Comment
The COA, through the Office of the Solicitor
General, denies that it gravely abused its
discretion when it affirmed the Notices of
Disallowance.
The COA maintains that it correctly disallowed
the cost of the project based on the grounds
discussed in the assailed decision.48 The COA
emphasizes that when the local chief executive
enters into contracts, the law requires prior
authority from the SP.49 The COA insists that
Verceles executed the MOAs without the prior
authorization from the SP. The appropriation
ordinances for CYs 2001 and 2002 did not
specifically authorize Verceles to enter into MOAs
with the PENRO.50chanrobleslaw
Having affirmed the Notices of Disallowance on
legal grounds, the COA insists that it did not
abuse, much less gravely abuse, its discretion.
The abuse of discretion that warrants the
issuance of the writ ofcertiorari must be grave,
which means that the judicial or quasi-judicial
power was exercised in an arbitrary or despotic
manner, or that the respondent tribunal refused
to perform the duty enjoined or to act in
contemplation of law.51chanrobleslaw
Finally, the COA submits that the right to the
speedy disposition of cases is a flexible concept
such that a mere mathematical counting of the
time involved is not sufficient; the right is
deemed violated only when the proceedings are
attended by vexatious, capricious, and
oppressive delays.52chanrobleslaw
The Issue
The issue is whether the COA gravely abused its
discretion when it disallowed the payments for
the questioned MOAs and held Verceles53 liable
for the amount disallowed.
Our Ruling
We partly grant the petition.
Notwithstanding the number of arguments raised
by the parties, the Court focuses its attention on
two concepts decisive in the resolution of the
present case: (1) the authority of the governor
as the local chief executive to enter into contracts
on behalf of the province; and (2) the power of
the governor to augment items in the provincial
budget.
The authority of the governor to enter into
contracts on behalf of the province
Section 16 of the LGC, also known as the general
welfare clause, empowers the local government
units (LGUs) to act for the benefit of their
constituents. The LGUs exercise powers that are:
(1) expressly granted; (2) necessarily implied
from the power that is expressly granted; (3)
necessary, appropriate, or incidental for its
efficient and effective governance; and (4)
essential to the promotion of the general welfare
of the inhabitants.54chanrobleslaw
As the chief executive of the province, the
governor exercises powers and performs duties
and functions that the LGC and other pertinent
laws provide.55 These include the power to enter
into contracts on behalf of the province.
In support of their competing claims, it is notable
that both Verceles and the COA invoke the same
provisions of the LGC: Section 22 (c) and Section
465 (b) (1) (vi).
Section 22 (c) of the LGC provides that "[u]nless
otherwise provided in this Code, no contract may
be entered into by the local chief executive in
behalf of the local government unit without prior
authorization by the sanggunian concerned."
Section 465 (b) (1) (vi) of the LGC, on the other
hand, states that ". . . the Chief Executive . . .
[shall] [r]epresent the province in all its business
transactions and sign in its behalf all bonds,
contracts, and obligations, and such other
documents upon authority of the sangguniang
panlalawigan or pursuant to law or ordinance."
Verceles insists that the subject MOAs were duly
authorized because they were covered by the
provincial annual budget for CYs 2001 and 2002.
The COA refutes this claim on the grounds that:
(1) the ordinances did not specifically authorize
Verceles to execute the MOAs with the PENRO;
and (2) the CY 2003 appropriation ordinance,
which supposedly ratified the augmentations
made by Verceles in 2001 and 2002, could not
have retroactive application.
We partly agree with Verceles.
The prior authorization for the local chief
executive to enter into contracts on behalf of the
local government unit may be in the form of
an appropriation ordinance passed for the year
which specifically covers the project, cost, or
contract to be entered into by the local
government unit.56chanrobleslaw
The case of Quisumbing v. Garcia57 on this point
is instructive.
In 2004, then Governor Gwendolyn F. Garcia
entered into infrastructure contracts on behalf of
the Province of Cebu. After audit, the COA
reported that Garcia had entered into several
contracts on behalf of the Province of Cebu
without authority from the SP as required under
Section 22 (c) of the LGC.58chanrobleslaw
Garcia, alleging that the infrastructure contracts
were entered into pursuant to the general and
supplemental appropriation ordinances passed by
the SP, argued that a separate authority to enter
into such contracts was no longer
necessary.59 She admitted that the appropriation
ordinances pertained to the CY 2003 budget
which was merely reenacted in CY
2004.60chanrobleslaw
The Court found that Garcia failed to point out
the specific provisions in the general and
supplemental appropriation ordinances in 2003
that supposedly authorized her to enter into the
questioned contracts in 2004.61chanrobleslaw
Highlighting the need to closely examine the
ordinances that supposedly funded the contracts
entered into by Garcia, we explained
in Quisumbing that
[r]esort to the appropriation ordinance is
necessary in order to determine if there is a
provision therein which specifically covers the
expense to be incurred or the contract to be
entered into. Should the appropriation
ordinance, for instance, already contain in
sufficient detail the project and cost of a
capital outlay such that all that the local
chief executive needs to do after undergoing
the requisite public bidding is to execute the
contract, no further authorization is
required, the appropriation ordinance
already being sufficient.
On the other hand, should the appropriation
ordinance describe the projects ingeneric
terms such as "infrastructure projects," "inter-
municipal waterworks, drainage and sewerage,
flood control, and irrigation systems projects,"
"reclamation projects" or "roads and
bridges," there is an obvious need for a
covering contract for every specific
project that in turn requires approval by
the sanggunian. Specificsanggunian approval
may also be required for the purchase of goods
and services which are neither specified in the
appropriation ordinance nor encompassed within
the regular personal services and maintenance
operating expenses.62 [emphasis and
underscoring supplied]
Explained simply, the LGC requires the local chief
executive to secure prior authorization from
thesanggunian before he can enter into contracts
on behalf of the LGU.63 A separate prior
authorization is no longer required if the specific
projects are covered by appropriations64 in the
annual budget65 of the LGU. The appropriation
ordinance passed by the sanggunian is the local
chief executive's authority to enter into a
contract implementing the project.
As required in Quisumbing, the local chief
executive must inquire if the provisions in the
appropriation ordinance specifically cover the
expense to be incurred or the contract to be
entered into.
If the project or program is identified in the
appropriation ordinance in sufficient detail, then
there is no more need to obtain a separate or
additional authority from the sanggunian. In such
case, the project and the cost are already
identified and approved by
the sanggunian through the appropriation
ordinance. To require the local chief executive to
secure another authorization for a project that
has been specifically identified and approved by
the sanggunian is antithetical to a responsive
local government envisioned in the
Constitution66 and in the LGC.67chanrobleslaw
On the other hand, the need for a covering
contract arises when the project is identified
in generic terms. The covering contract must also
be approved by the sanggunian. We will discuss
this requirement below.
In summary and to harmonize the two
provisions: Section 22 (c) of the LGC requires the
local chief executive to obtain prior authorization
from the sanggunian before he can enter into
contracts in behalf of the LGU. Section 465 (b)
(1) (vi), on the other hand, allows the local chief
executive to implement specific or specified
projects with corresponding appropriations
without securing a separate authority from
the sanggunian. In the latter provision, the
appropriation ordinance is the authority from
thesanggunian required in the former provision.
We now apply these parameters to the present
case.
Verceles claims that the first and third MOAs
were funded by the EDF allocation of the province
in CYs 2001 and 2002. We agree but only with
respect to the third MOA.
First MOA (2001 EDF)
The appropriation ordinance of the province for
CY 2001 indeed contained a provision on the
EDF. Section 6 of Appropriations Ordinance No.
1-2001 provides:ChanRoblesVirtualawlibrary
SECTION 6. The Lump-Sum Appropriation for the
20% Economic Development Fund (EDF) is Forty-
Five Million Four Hundred Five Thousand Six
Hundred Thirty-Three and 0.20/100 Pesos
(P45,405,633.20).
Special Provision:
chanRoblesvirtualLawlibrary1. USE AND RELEASE
OF FUNDS - The amount herein appropriated
shall strictly adhere to the policies and guidelines
provided under DILG Memorandum Circular No.
95-216, dated December 14, 1995, in
conjunction with Section 106 of RA 7160 and the
CY 1999 Multi-Sectoral Development Plan of the
Province as may be approved by the
Catanduanes Development Council, PROVIDED,
that appropriations under the 20% EDF
shall be approved by the Sanggunian
Panlalawigan.68 [emphasis and underscoring
ours]
Notably, Section 6 did not list the specific
projects that would be funded by the EDF. In
other words, the SP has not yet determined how
the lump-sum EDF (in the amount of
P45,405,633.20) would be spent at the time it
approved the annual budget. The SP, however,
required that appropriations under the 20% EDF
shall need its approval.
Otherwise stated, while there was an available
fund for the economic development projects of
the province, the specific projects had not yet
been identified. The corresponding costs for the
projects had also not been set aside. Contrary to
Verceles' assertion, the CY 2001 appropriation
ordinance did not specifically authorize him to
enter into the first MOA to implement the tree
seedlings production project.
Thus as held in Quisumbing, we need to
determine whether there was a specific prior
approval from the SP before Verceles could enter
into the first MOA.
There was none.
Verceles claims that SP Resolution No. 67-2001
(affirmed in SP Resolution Nos. 68-2001 and 69-
2001) all dated June 11, 2001 authorized him to
enter into the first MOA dated September 27,
2001. We do not find this position persuasive.
The relevant portions of these resolutions were
similarly worded,
thus:ChanRoblesVirtualawlibrary
BE IT RESOLVED, as it is hereby-resolved, to
authorize, as it is hereby authorized, the
Provincial Governor to enter into, for and in
behalf of Catanduanes, and the Sangguniang
Panlalawigan approving herein, all memoranda of
agreement, contracts or other undertakings with
national government agencies, other local
government units and other public and private
entities, as may be allowable by law, granting
them the authority to undertake for and on
behalf of the provincial government of
Catanduanes activities, such as, but not limited
to, bidding and implementation of projects and
programs, acquisition of supplies and other
undertakings.69chanroblesvirtuallawlibrary
Undeniably, these SP resolutions gave the
provincial governor the blanket authority to enter
into contracts on behalf of the Province. The
question is whether a blanket authority is a
sufficient authority for the governor to implement
projects that have no definite appropriations.

We answer in the negative.
While a blanket authority is not per se ineffective,
it does not suffice for purposes of implementing
projects funded by lump-sum appropriations. The
nature of lump-sum appropriations vis-a-
vis the power of the purse of the SP (as the
legislative organ of the LGU) requires the local
chief executive to obtain definite and specific
authorizations before he can enter into contracts
funded by lump-sum appropriations. The
exception is when the appropriation ordinance
already identifies the specific projects and the
costs of the projects to be funded by lump-sum
appropriations.
We elaborate on these points below.
First, the nature of a lump-sum appropriation
requires specific authorization from the SP before
projects funded by it can be implemented.
The LGC defines appropriation as the
authorization made by ordinance, directing the
payment of goods and services from local
government funds under specified conditions or
for specific purposes.70 The power of
appropriation involves (a) the setting apart by
law (in the case of LGUs, by ordinance) of a
certain sum from the public revenue for (b)
a specified purpose.71 Lump-sum, on the other
hand, means 'consisting of a single sum of
money.'72 Lump-sum appropriation is thus a
single sum of money set aside by the legislature
for a specified purpose.
Relevant in the present case is the EDF, a lump-
sum fund intended for the economic
developmentprojects of the Province. The
description 'economic development,' by itself, is a
generic term as it does not readily specify the
projects that may be covered by the lump-sum
appropriation. To stress, the CY 2001
appropriation ordinance did not at all identify the
projects to be funded by the EDF. On this basis,
Verceles should have clearly obtained prior
approval from the SP before he entered into
the first MOA.
Quisumbing instructs us that should the
appropriation ordinance describe the projects in
generic terms, there is a need for a covering
contract for every specific project that in
turn requires approval by the sanggunian. Thus,
the blanket authority, even granting that
Verceles vetoed its revocation, was not a
sufficient authority for him to enter into
the first MOA as he was not specifically
authorized to do so.
Second, the power of the purse of the SP
requires the governor to obtain prior authority
before he can implement projects funded by
lump-sum appropriations.
The SP, as the legislative organ of the province,
exercises the power of the purse in much the
same way as the Congress does at the national
level.
The SP decides how the provincial budget will be
spent; what projects, activities and programs to
fund; and the amounts of money to be spent for
each project, activity or program. On the other
hand, the governor, as the local chief executive
tasked to enforce ordinances, is expected to
faithfully execute the appropriation ordinance and
to spend the budget in accordance with its
provisions.73chanrobleslaw
In the landmark case of Belgica v. Secretary
Ochoa,74 the Court had the opportunity to discuss
the characteristics of the Priority Development
Assistance Fund (PDAF) as a lump-sum amount
of money given to individual legislators. We held
that -
[w]hat beckons constitutional infirmity are
appropriations which merely provide for
asingular lump-sum amount to be tapped as a
source of funding for multiple purposes. Since
such appropriation type necessitates the further
determination of both the actual amount to be
expended and the actual purpose of the
appropriation which must still be chosen from
the multiple purposes stated in the
law, it cannot be said that the appropriation
law already indicates a "specific
appropriation of money" and hence, without a
proper line-item which the President may
veto.75 [emphasis and underscoring supplied]
Using this as parameter, we note that the CY
2001 EDF is akin to the PDAF as they are both
singular lump-sum amounts to be tapped as a
funding source for multiple purposes. They are
both described in generic terms ("economic
development fund" and "priority development
assistance fund"), which requires the further
determination of the actual amount to be spent
and the actual purpose of the appropriation.
We employ the above analogy to emphasize that
the 2001 EDF was not a specific appropriation of
money as Verceles would want the Court to
believe in his attempt to justify the first MOA. At
the time the SP enacted the 2001 appropriation
ordinance, it had not yet set apart certain sums
of money from the EDF for specified purposes. In
other words, the SP had not yet completely
exercised its power of the pursesuch that all the
governor had to do was to implement the
projects identified in the appropriation ordinance.
On the contrary, the 2001 EDF did not specify the
projects to be funded.
Further, Section 6 of the 2001 appropriation
ordinance stated that "appropriations under the
20% EDF shall be approved by the Sanggunian
Panlalawigan." Obviously, the SP wanted to
ensure that the projects to be funded by the EDF
still go through the deliberations of the SP
members precisely because these projects had
not been previously identified and approved by
the SP.
Since the 2001 EDF was a lump-sum amount not
yet apportioned to specified development
projects, Verceles needed to secure prior
authority from the SP. Having failed to secure
prior authority, the firstMOA was unauthorized
and properly disallowed.
Third MOA (2002 EDF)
Applying the standards discussed above, we find
that the third MOA was duly funded and
authorized by the CY 2002 appropriation
ordinance of the province.
Section 3 of Appropriation Ordinance No. 2002-
00176 provides
Section 3. The Lump-Sum Appropriation for the
20% Economic Development Fund (EDF) is Forty
Five Million One Hundred Twelve Thousand One
Hundred Eighty Six Pesos & 80/100
(P45,112,186.80)
Special Provision:
chanRoblesvirtualLawlibrary1. Use and release of
fund - The amount herein appropriated shall
strictly adhere to the policies and guidelines
provided under DILG Memo Circular No. 95-216
dated December 14, 1995 in conjunction with
Section 106 of RA 7160 and the CY 2002 Multi-
Sectoral Development Plan of the Province as
initiated by the Catanduanes Development
Council (CDC) and approved by the Sanggunian
Panlalawigan and hereto incorporated in this
Ordinance, to wit:ChanRoblesVirtualawlibrary
xxxx
ENVIRONMENTAL SECTOR
1. Tree Seedlings Production for
Environmental Safeguard - Amount:
P3,000,000.00
xxxx [emphasis ours]
In stark contrast to the previous year's EDF, the
CY 2002 appropriation ordinance clearly,
specifically and expressly set aside
P3,000,000.00 to fund the tree seedlings
production project of the Province. This served as
sufficient authority for Verceles to execute
the third MOA.
Thus, the COA gravely abused its discretion when
it disallowed the third MOA and insisted that
Verceles should have secured a separate and
additional authority from the SP. The COA
ignored Section 3 of the CY 2002 appropriation
ordinance, which specifically identified the tree
seedlings production project with a
P3,000,000.00 allocation.
The power of the governor to augment
items or realign funds in the approved
annual budget of the province
Verceles maintains that the second, fourth, and
fifth MOAs were funded by augmentations from
the other items under the EDF for CY 2001 and
2002. He points to Section 8 of the appropriation
ordinance for CY 2003, which ratified all
augmentations made in the previous budgets.
The COA rejects Verceles' claim on the ground
that an appropriation ordinance for a given year
cannot retroactively approve realignments made
in previous years.
We sustain, with qualifications, the argument of
the COA.
The relevant provision is Section 336 of the
LGC:ChanRoblesVirtualawlibrary
Section 336. Use of Appropriated Funds and
Savings. - Funds shall be
availableexclusively for the specific purpose
for which they have been appropriated. No
ordinance shall be passed authorizing any
transfer of appropriations from one item to
another. However, the local chief executive
or the presiding officer of
thesanggunian concerned may, by
ordinance, be authorized to augment any
item in the approved annual budget for their
respective offices from savings in other
items within the same expense class of their
respective appropriations. [emphasis and
underscoring ours]
Under Section 336, the general rule is that funds
shall be available exclusively for the specific
purpose for which they have been appropriated.
The exception is when the local chief executive
is authorized by ordinance to augment any item
in the approved annual budget from savings in
other items within the same expense class.
Article 45477 of the Rules and Regulations
Implementing the LGC78 states that
augmentation implies the existence in the budget
of an item, project, activity, or purpose with an
appropriation which upon implementation or
subsequent evaluation of needed resources is
determined to be deficient.
The question is whether the grant of authority to
the local chief executive to augment items in the
annual budget can be belatedly granted. To
answer this, we review the case of Araullo v. Sec.
Aquino III.79chanrobleslaw
Construing Section 25(5),80 Article VI of the 1987
Constitution, the Court laid down the requisites
for a valid transfer of appropriated funds at the
national level, namely:
chanRoblesvirtualLawlibrary(1) There is a law
authorizing the President, the President of the
Senate, the Speaker of the House of
Representatives, the Chief Justice of the
Supreme Court, and the heads of the
Constitutional Commissions to transfer funds
within their respective offices;
(2) The funds to be transferred are savings
generated from the appropriations for their
respective offices; and cralawlawlibrary
(3) The purpose of the transfer is to augment an
item in the general appropriations law for their
respective offices.81chanrobleslaw
The crucial requisite as far as the fourth and fifth
MOAs are concerned is the first requisite, i.e., the
existence of a law (in this case, ordinance)
authorizing the governor to augment items in
approved budget. As to the second MOA, the
crucial requisite is the third requisite, i.e., the
existence of an actual item to be augmented.
Second MOA (2001 EDF)
There was no valid augmentation made in CY
2001 that could have covered the cost of
the second MOA.
As discussed above, the CY 2001 appropriation
ordinance did not identify the specific projects
or items82to be funded by the EDF. How could
Verceles transfer savings from nonexistent items
(in the EDF) to augment the tree seedlings
propagation project? The project that was
supposed to be augmented was also not
identified in the CY 2001 appropriation ordinance.
The augmentation was legally impossible as there
were no items from which savings could have
been generated from and there was no item to
which such savings could have been
transferred.83 The secondMOA was thus correctly
disallowed.
Fourth and Fifth MOAs (2002 EDF)
Still in Araullo, we ruled that Section 25(5) Article
VI of the 1987 Constitution, not being a self-
executing provision of the Constitution, must
have an implementing law for it to be operative.
That law, generally, is the general appropriation
act (GAA) of a given fiscal year. To comply with
the first requisite, the GAA should expressly
authorize the transfer of funds.84chanrobleslaw
Araullo suggests that for augmentations to be
valid, the GAA of a given fiscal year must
expressly authorize the transfer of funds in the
same year. At the very least, a law must first be
passed authorizing the transfer of savings in the
year that realignments are to be made.
On the local level, Section 336 of the LGC
requires an implementing ordinance so that the
local chief executive can augment items in the
annual budget of the LGU. Applying Araullo, the
appropriation ordinance of a given fiscal year
must expressly authorize the local chief executive
before he can make augmentations in that
particular year, or at the very least, he must be
authorized by ordinance before he can make
augmentations.
Verceles posits that the authority to augment
items in the approved annual budget may be
given retroactively, that is, after the
augmentations have been made. He cites Section
8 of the CY 2003 appropriation ordinance of the
province, which states,
Section 8. Authority to Augment Items and
Figures in the Budget and Ratification of Previous
Acts of the Provincial Governor. — The
Provincial Governor is hereby authorized to
effect and is hereby considered to have been
authorized, and the Sangguniang
Panlalawigan hereby approves and ratifies
all augmentations of items and figures in
the CY 2003 Budget that includes the 20%
Economic Development Fund (EDF) for CY
2003, and previous budgets and 20%
[EDFs], and all modifications, revisions, thereof
that may be considered as augmentations, all
which may be or have been warranted due to,
but not limited to, actual or possible shortfall in
the revenue collections of the province and the
IRA due it xxx.85 [emphasis and underscoring
supplied]
Verceles also cites Ocampo v. People,86 where the
Court held that a loan agreement entered into by
the provincial governor without prior
authorization from the SP is unenforceable. The
Court ruled in that case that the SP's failure to
impugn the contract's validity despite knowledge
of its infirmity is an implied ratification that
validates the contract.
In essence, Verceles argues that if jurisprudence
has allowed the implied ratification of a contract
entered into without prior authority, then there is
no reason why express ratification through & post
factoauthorization would not be valid.
Before we rule on this issue, we note that the
COA disallowed the fourth and fifth MOAs on the
sole ground that the CY 2003 appropriation
ordinance could not ratify the augmentations
made in CY 2002. The COA did not comment on
whether there were actual savings generated
from the other items under the 2002 EDF that
could be realigned to the tree seedlings
production project. We thus limit our discussion
on whether the ratification by the SP of the
augmentations made by Verceles was effective.
We affirm the COA's disallowance of
the fourth and fifth MOAs on the following
grounds:
chanRoblesvirtualLawlibraryFirst, the power of
the local chief executive to augment items under
Section 336 of the LGC is a mere exception to the
general rale that funds shall be available
exclusively for the specific purpose for which they
have been appropriated.
Exceptions are strictly construed and apply only
so far as their language fairly warrants, with all
doubts being resolved in favor of the
general proviso rather than the exception.87 As
an exception to the general rule, all the
requirements for a valid augmentation must be
strictly complied with. One such requirement is
that the local chief executive must be authorized
by an ordinance.
Consistent with the strict construction approach,
we rale that the requisite "authorized by
ordinance" does not necessarily and
automatically include "ratified by ordinance."
The exception clause of Section 336 states: "the
local chief executive . . . may, by ordinance, be
authorized to augment any item in the approved
annual budget . . . ."88 The key phrase is "by
ordinance, be authorized to augment." We must
therefore interpret this phrase in a manner that
does not easily erode the basic principle that
funds shall be available exclusively for the
specific purpose for which they have been
appropriated.
To "authorize" means "to empower; to give a
right or authority to act." It means "to endow
with authority or effective legal power, warrant or
right; to permit a thing to be done in the
future."89chanrobleslaw
Thus, strictly speaking, the governor must be
duly authorized before he can make
augmentations. We highlight the words "to
augment" suggesting that what is being
authorized is an act that has yet to happen.
Nevertheless, our ruling in the present case
should not be taken to mean that the LGC
prohibits the ratification of previously
unauthorized augmentations. We only want to
underscore the necessity of anexisting authority
before the local chief executive can make
augmentations. The Court recognizes that there
may be narrow instances where past
augmentations can be shown to have fully
complied with all the requisites (except for
the authority by ordinance requisite) for a valid
augmentation, in which cases, ratification is
allowed. Such is not the case here as will be
explained next.
Second, the all-encompassing nature of the
blanket ratification by the SP of all the
augmentations made in the past budgets
rendered such ratification ineffective.
We note the very broad wording of Section 8 of
CY 2003 appropriation ordinance. Without
qualification, it approved all past augmentations
regardless of whether such augmentations could
have been legally permissible. By the expedient
passing of the CY 2003 appropriation ordinance,
the SP presumed that all requisites for
augmentation were complied with, effectively
bypassing the said requisites. This cannot be
allowed as there are strict requirements before
augmentations can be made; the existence
of actualsavings90 is just one example.
To cite a case in point, the 2001 augmentation of
the EDF that purportedly funded the second MOA
could not have been validly ratified by the SP
because there were no identified items under the
2001 EDF from which savings could have been
generated; there were also no items to which
such savings could have been realigned.
Third, Section 26 of the CY 2002 appropriation
ordinance of the province provides that "[a]ll
realignments of fund shall be approved by
the Sangguniang Panlalawigan."91chanrobleslaw
In contrast to the CYs 200192 and
200393 appropriation ordinances, which expressly
authorized the governor to realign, revise,
modify, or change items in the annual budget,
Section 26 of the CY 2002 appropriation
ordinance is couched in a markedly different
language. The SP effectively withheld from
Verceles the authority to make augmentations by
requiring its approval for all realignments of
funds.
Finally, the Ocampo case does not squarely apply
here.
What was impliedly ratified in Ocampo was the
MOA entered into by the governor without prior
authority. The issue here is more nuanced. The
present case involves unauthorized
augmentations, which became the bases for
unauthorized MOAs. Verceles not only entered
into unauthorized MOAs, he was able to enter
into these MOAs because he made augmentations
that had no prior authorizations.
Further, Ocampo was decided under the old LGC
where the counterpart provision on appropriation
of funds did not contain the authority of the local
chief executive to make
augmentations.94chanrobleslaw
imputed to the COA.98chanrobleslaw
The personal liability of Verceles, et al., for
the disallowed amount WHEREFORE, in view of the foregoing,
we PARTLY GRANT the petition and
Section 103 of the Government Auditing Code accordingly MODIFY the October 28, 2010
declares that expenditures of government funds decision and December 6, 2013 resolution of the
or uses of government property in violation of Commission on Audit (COA) in Case No. 2008-
law or regulations shall be a personal liability of 016, such that the Notices of Disallowance which
the official or employee found to be directly covered the third Memorandum of Agreement,
responsible therefor. dated May 6, 2002, between the Province of
Catanduanes and the Provincial Environment and
The public official's personal liability arises only if Natural Resources Office, are ANNULLED.
the expenditure of government funds was made
in violation of law. In this case, Verceles' acts of: The temporary restraining order issued is hereby
(1) making augmentations without prior authority lifted.
and (2) entering into a contract on behalf of the
province without requisite authority were in SO ORDERED.chanroblesvirtuallawlibrary
violation of the LGC.95chanrobleslaw
In one case, we held that while the public official
may have relied on the opinion of the City Legal
Officer, such reliance only serves to buttress his
good faith. It does not, however, exculpate him
from his personal liability under the Government
Auditing Code, as the ordinance in question was
clear and precise and left no room for
interpretation.96chanrobleslaw
The same is true in the present case where
Verceles' reliance on, among others, the opinion
of the Department of Interior and Local
Government, does not exculpate him from his
personal liability. Section 336 of the LGC and
Section 26 of the Province's appropriation
ordinance in CY 2002, in clear and precise
language, required the authority from the SP
before the governor can make augmentations or
realignments of funds.
In summary, and except for the incorrectly
disallowed third MOA, we find that the COA's
assailed decision was made in faithful compliance
with its mandate and in judicious exercise of its
general audit power as conferred on it by the
Constitution.97 The COA was merely fulfilling its
mandate in observing the policy that government
funds and property should be fully protected and
conserved; and that irregular, unnecessary,
excessive or extravagant expenditures or uses of
such funds and property should be prevented.
Thus, no grave abuse of discretion may be
G.R. No. 154200 July 24, 2007
NATIONAL ELECTRIFICATION ADMINISTRATION
and its BOARD OF ADMINISTRATORS, Petitioners,
vs.
DANILO MORALES, Respondent.
DECISION
AUSTRIA-MARTINEZ, J>:
The sole issue for resolution in the Petition for Review
on Certiorari1 before us is whether the Court of Appeals
(CA) committed an error of law in its July 4, 2002
Decision2 in CA-G.R. SP No. 62919 in ordering the
implementation of a writ of execution against the funds
of the National Electrification Administration (NEA).
There being no dispute as to the facts,3 the following
findings of the CA are adopted:4
Danilo Morales and 105 other employees5 (Morales, et
al.) of the NEA filed with the Regional Trial Court (RTC),
Branch 88, Quezon City, a class suit6 against their
employer for payment of rice allowance, meal allowance,
medical/dental/optical allowance, children’s allowance
and longevity pay purportedly authorized under Republic
Act (R.A.) No. 6758.7 In its December 16, 1999
Decision,8 the RTC ordered NEA, thus:
WHEREFORE, foregoing considered, the petition is
hereby GRANTED directing the respondent NEA, its
Board of Administrators to forthwith settle the claims of
the petitioners and other employees similarly situated
and extend to them the benefits and allowances to which
they are entitled but which until now they have been
deprived of as enumerated under Section 5 of DBM
CCC No. 10 and their inclusion in the Provident Funds
Membership, retroactive from the date of their
appointments up to the present or until their separation
from the service.
No costs.
SO ORDERED.9
Upon motion of Morales, et al., the RTC issued a Writ of
Execution dated February 22, 2000,10 which reads:
NOW, THEREFORE, you are hereby directed to cause
respondents National Electrification Administration
(NEA) and its Board of Administrators with principal
office address at 1050 CDC Bldg., Quezon Avenue,
Quezon City to forthwith settle the claims of the
petitioners and other employees similarly situated and
extend to them the benefits and allowances to which
they are entitled but which until now they have been
deprived of as enumerated under Sec. 5 of DBM CCC
No. 10 and you are further directed to cause their
inclusion in the Provident Fund Membership, retroactive
from the date of their appointments up to the present or
until their separation from the service.11
Thereafter, a Notice of Garnishment12 was issued
against the funds of NEA with Development Bank of the
Philippines (DBP) to the extent of ₱16,581,429.00.
NEA filed a Motion to Quash Writs of
Execution/Garnishment,13 claiming that the garnished
public funds are exempt from execution under Section
414 of Presidential Decree (P.D.) No. 1445,15 but
manifesting that it is willing to pay the claims of
Morales, et al.,16 only that it has no funds to cover the
same, although it already requested the Department of
Budget and Management (DBM) for a supplemental
budget.17
In its Order of May 17, 2000, the RTC denied the Motion
to Quash but, at the same time, held in abeyance the
implementation of the Writ of Execution, thus:
WHEREFORE, the motion to quash writs of execution/
garnishment is DENIED but the implementation of the
judgment is placed on hold for ninety (90) days reckoned
from this day. The respondents are directed to
formally inform this Court and the petitioners of the
prospect of obtaining funds from Department of
Budget and Management within 30 days from receipt
and every 30 days thereafter, until the 90 day period
has lapsed.
The motion to direct DBP to release to the petitioners the
NEA funds garnished earlier amounting to ₱16,591.429
is also DENIED.
SO ORDERED.18 (Emphasis ours)
Morales, et al. filed a Partial Motion for
Reconsideration19 but the RTC denied it.20
Meanwhile, in a letter dated June 28, 2000, former DBM
Secretary Benjamin E. Diokno informed NEA
Administrator Conrado M. Estrella III of the denial of the
NEA request for a supplemental budget on the ground
that the claims under R.A. No. 6758 which the RTC had
ordered to be settled cannot be paid because
Morales, et al. are not "incumbents of positions as of
July 1, 1989 who are actually receiving and enjoying
such benefits."21
Moreover, in an Indorsement dated March 23, 2000, the
Commission on Audit (COA) advised NEA against
making further payments in settlement of the claims of
Morales, et al.. Apparently, COA had already passed
upon claims similar to those of Morales, et al. in its
earlier "Decision No. 95-074" dated January 25, 1995.
Portions of the Indorsement read as follows:
This Office concurs with the above view. The court may
have exceeded its jurisdiction when it entertained
the petition for the entitlement of the after-hired
employees which had already been passed upon by
this Commission in COA Decision No. 95-074 dated
January 25, 1995. There, it was held that: "the adverse
action of this Commission sustaining the disallowance
made by the Auditor, NEA, on the payment of fringe
benefits granted to NEA employees hired from July 1,
1989 to October 31, 1989 is hereby reconsidered.
Accordingly, subject disallowance is lifted."
Thus, employees hired after the extended date of
October 31, 1989, pursuant to the above COA
decision cannot defy that decision by filing a
petition for mandamus in the lower court.
Presidential Decree No. 1445 and the 1987
Constitution prescribe that the only mode for appeal
from decisions of this Commission is on certiorari to
the Supreme Court in the manner provided by law
and the Rules of Court. Clearly, the lower court had
no jurisdiction when it entertained the subject case
of mandamus. And void decisions of the lower court
can never attain finality, much less be executed.
Moreover, COA was not made a party thereto, hence,
it cannot be compelled to allow the payment of
claims on the basis of the questioned decision.
PREMISES CONSIDERED, the auditor of NEA should
post-audit the disbursement vouchers on the bases of
this Commission's decision particularly the above-cited
COA Decision No. 94-074 [sic] and existing rules and
regulations, as if there is no decision of the court in the
subject special civil action for mandamus. At the same
time, management should be informed of the intention of
this Office to question the validity of the court decision
before the Supreme Court through the Office of the
Solicitor General.22 (Emphasis ours)
Parenthetically, the records at hand do not indicate when
Morales, et al. were appointed. Even the December 16,
1999 RTC Decision is vague for it merely states that
they were appointed after June 30, 1989, which could
mean that they were appointed either before the cut-off
date of October 31, 1989 or after.23 Thus, there is not
enough basis for this Court to determine that the
foregoing COA Decision No. 95-074 adversely affects
Morales, et al..Moreover, the records do not show
whether COA actually questioned the December 16,
1999 RTC Decision before this Court.
On July 18, 2000, Morales, et al. filed a Motion for an
Order to Implement Writ of Execution, pointing out that
the reason cited in the May 17, 2000 RTC Order for
suspension of the implementation of the writ of execution
no longer exists given that DBM already denied NEA’s
request for funding.24 They also filed a Petition to Cite
NEA Board of Administrators Mario Tiaoqui, Victoria
Batungbacal, Federico Puno and Remedios
Macalingcag in Contempt of Court25 for allegedly
withholding appropriations to cover their claims.
Acting first on the petition for contempt, the RTC issued
a Resolution dated December 11, 2000, to wit:
The court is aware of its order dated May 17, 2000,
particularly the directive upon respondents to inform this
court and the petitioners of the prospect of obtaining
funds from the Department of Budget and Management
within the period specified. From the comments of the
respondents, it appears they did or are doing their
best to secure the needed funds to satisfy the
judgment sought to be enforced. In this
regard, Administrative Circular No. 10-2000 of the
Supreme Court provides:
"In order to prevent possible circumvention of the rules
and procedures of the Commission on Audit, judges are
hereby enjoined to observe utmost caution, prudence
and judiciousness in the issuance of writs of execution to
satisfy money judgments against government agencies
and local government units.
Judges should bear in mind that in Commissioner of
Public Highways v. San Diego (31 SCRA 617, 625
[1970], this Court explicitly stated:
"The universal rule that where the State gives its
consent to be sued by private parties either by general
or special law, it may limit claimant's action only up to
the completion of proceedings anterior to the stage of
execution and the power of the court ends when the
judgment is rendered, since government funds and
properties may not be seized under writs of execution or
garnishment to satisfy such judgment, is based on
obvious considerations of public policy. Disbursements
of public funds must be covered by the corresponding
appropriation as required by law. The functions and
public services rendered by the State cannot be allowed
to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects as
appropriated by law."
Moreover, it is settled jurisprudence that upon
determination of State liability, the prosecution,
enforcement or satisfaction thereof must still be pursued
in accordance with the rules and procedures laid down in
P.D. No. 1445, otherwise known as the Government
Auditing Code of the Philippines (Department of
Agriculture v. NLRC, 227 SCRA 693, 701-02 [1993]
citing Republic v. Villasor, 54 SCRA 84 [1973]). All
money claims against the Government must "first be
filed with the Commission on Audit which must act upon
it within sixty days. Rejection of the claim will authorize
the claimant to elevate the matter to the Supreme Court
on certiorari and in effect sue the State thereby (P.D.
1445, Sections 49-50)."
WHEREFORE, foregoing considered, petition to cite
respondents in contempt of court is premature, hence
the same is hereby DENIED.
SO ORDERED.26 (Emphasis ours)
Subsequently, the RTC issued an Order dated January
8, 2001, denying the Motion for an Order to Implement
Writ of Execution, citing the same SC Administrative
Circular No. 10-2000.
Upon a Petition for Certiorari27 filed by Morales, et al.,
the CA rendered the July 4, 2002 Decision assailed
herein, the decretal portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The
Order dated January 8, 2001 and the Resolution of
December 11, 2000 of the public respondent Judge are
declared NULL and VOID.
Accordingly, the respondent judge is directed to
implement the Writ of Execution relative thereto.
SO ORDERED..28
The CA held that NEA can no longer take shelter under
the provisions of P.D. No. 1445 and SC Administrative
Circular No. 10-2000 because it is a government-owned
or controlled corporation (GOCC) created under P.D.
No. 269, effective August 6, 1973.29 Citing Philippine
National Bank v. Court of Industrial Relations,30 the CA
held that, as such GOCC, petitioner NEA may be
subjected to court processes just like any other
corporation; specifically, its properties may be
proceeded against by way of garnishment or levy.31
NEA and its Board of Directors (petitioners) immediately
filed herein petition for review. It is their contention that
the CA erred in directing implementation of the writ of
execution on two grounds: first, execution is premature
as Morales, et al. (respondents) have yet to file their
judgment claim with the COA in accordance with P.D.
No. 1445 and SC Administrative Circular No. 10-
2000;32 and second, execution is not feasible without
DBM as an indispensable party to the petition
for certiorari for it is said department which can certify
that funds are available to cover the judgment claim.33
The petition is meritorious.
Indeed, respondents cannot proceed against the funds
of petitioners because the December 16, 1999 RTC
Decision sought to be satisfied is not a judgment for a
specific sum of money susceptible of execution by
garnishment; it is a special judgment requiring
petitioners to settle the claims of respondents in
accordance with existing regulations of the COA.
In its plain text, the December 16, 1999 RTC Decision
merely directs petitioners to "settle the claims of
[respondents] and other employees similarly
situated."34 It does not require petitioners to pay a certain
sum of money to respondents. The judgment is only for
the performance of an act other than the payment of
money, implementation of which is governed by Section
11, Rule 39 of the Rules of Court, which provides:
Section 11. Execution of special judgments. - When a
judgment requires the performance of any act other than
those mentioned in the two preceding sections, a
certified copy of the judgment shall be attached to the
writ of execution and shall be served by the officer upon
the party against whom the same is rendered, or upon
any other person required thereby, or by law, to obey the
same, and such party or person may be punished for
contempt if he disobeys such judgment.
Garnishment cannot be employed to implement such
form of judgment. Under Section 9 of Rule 39, to wit:
Section 9. Execution of judgments for money, how
enforced. -
xxxx
(c) Garnishment of debts and credits. - The officer may
levy on debts due the judgment obligor and other credits,
including bank deposits, financial interests, royalties,
commissions and other personal property not capable of
manual delivery in the possession or control of third
parties. Levy shall be made by serving notice upon the
person owing such debts or having in his possession or
control such credits to which the judgment obligor is
entitled. The garnishment shall cover only such amount
as will satisfy the judgment and all lawful fees.
Garnishment is proper only when the judgment to be
enforced is one for payment of a sum of money.
The RTC exceeded the scope of its judgment when, in
its February 22, 2000 Writ of Execution, it directed
petitioners to "extend to [respondents] the benefits and
allowances to which they are entitled but which until now
they have been deprived of as enumerated under Sec. 5
of DBM CCC No. 10 and x x x to cause their inclusion in
the Provident Fund Membership."35 Worse, it
countenanced the issuance of a notice of garnishment
against the funds of petitioners with DBP to the extent of
₱16,581,429.00 even when no such amount was
awarded in its December 16, 1999 Decision.
However, in its subsequent Orders dated May 17, 2000
and January 8, 2001, the RTC attempted to set matters
right by directing the parties to now await the outcome of
the legal processes for the settlement of respondents’
claims.
That is only right.
Without question, petitioner NEA is a GOCC36 -- a
juridical personality separate and distinct from the
government, with capacity to sue and be sued.37 As such
GOCC, petitioner NEA cannot evade execution; its funds
may be garnished or levied upon in satisfaction of a
judgment rendered against it.38 However, before
execution may proceed against it, a claim for payment of
the judgment award must first be filed with the COA.39
Under Commonwealth Act No. 327,40 as amended by
Section 26 of P.D. No. 1445, it is the COA which has
primary jurisdiction to examine, audit and settle "all
debts and claims of any sort" due from or owing the
Government or any of its subdivisions, agencies and
instrumentalities, including government-owned or
controlled corporations and their subsidiaries.41 With
respect to money claims arising from the implementation
of R.A. No. 6758, their allowance or disallowance is for
COA to decide, subject only to the remedy of appeal by
petition for certiorari to this Court.42
All told, the RTC acted prudently in halting
implementation of the writ of execution to allow the
parties recourse to the processes of the COA. It may be
that the tenor of the March 23, 2000 Indorsement issued
by COA already spells doom for respondents’ claims; but
it is not for this Court to preempt the action of the COA
on the post-audit to be conducted by it per its
Indorsement dated March 23, 2000.1avvphi1
In fine, it was grave error for the CA to reverse the RTC
and direct immediate implementation of the writ of
execution through garnishment of the funds of
petitioners,
WHEREFORE, the petition is GRANTED. The July 4,
2002 Decision of the Court of Appeals is REVERSED
andSET ASIDE. The Resolution dated December 11,
2000 and Order dated January 8, 2001 of the Regional
Trial Court, Branch 88, Quezon City in Special Civil
Action No. Q-99-38275 are REINSTATED.
SO ORDERED.
G.R. No. 98355 March 2, 1994
HON. TOMAS R, OSMEÑA, petitioner,
vs.
COMMISSION ON AUDIT AND HONORABLE
EUFEMIO C. DOMINGO, respondents.
Sometime in 1985 the City of Cebu decided to construct
a modern abattoir. For this project, the City Treasurer,
Ricardo Pestano, issued a certificate of availability of
funds dated April 30, 1985, in the amount of FIVE
MILLION FOUR HUNDRED NINETEEN THOUSAND
AND ONE HUNDRED EIGHTY (P5,419,180.00)
PESOS, specifically "for the construction of Cebu City
Abbatoir (sic)." 1 After a public bidding, H. Franco
Construction Company, Inc. (HFCCI) was awarded to do
the construction of the abattoir. Thus, the City of Cebu,
through its Mayor, Ronald R. Duterte, entered into a
contract with HFCCI, the terms of which are as follows:
WHEREAS, the contract cost for
this project is EIGHT MILLION
THREE HUNDRED SIXTY-EIGHT
THOUSAND NINE HUNDRED
TWENTY(P8,368,920.00) PESOS;
xxx xxx xxx
WHEREAS, the City treasurer of
Cebu City certified the availability of
funds for the first installment due to
the CONTRACTOR in the amount of
TWO MILLION NINETY TWO
THOUSAND TWO HUNDRED
THIRTY (P2,092,230.00) PESOS,
which is to be due and payable
upon certification of the City
Engineer, concurred in by the
Project Management Staff that the
project substantially completed;
WHEREAS, the CITY OF CEBU
shall include the Budget for calendar
year 1986, the amount of SIX
MILLION TWO HUNDRED
SEVENTY SIX THOUSAND SIX
HUNDRED NINETY
(P6,276,690.00) PESOS which
represents the second, third and
final installment payments due to
the CONTRACTOR. 2
On March 13, 1986, Sen. John H. Osmeña, then Officer-
In-Charge of the City of Cebu, ordered the suspension of
the project and review of the contract by the COA. He
also wrote HFCCI asking them to account for the value
of their progress. On April 24, 1986, HFCCI claimed the
amount of TWO MILLION ONE HUNDRED FORTY
TWO THOUSAND NINE HUNDRED SIXTY FOUR AND
29/100 (P2,142,964.29) PESOS as the value of the work
accomplished.
Unable to collect the said amount after so many
demands, HFCCI instituted a civil action, 3 dated May
21, 1987 against the City of Cebu, for recovery of
investment and damages.
In its answer dated June 5, 1987, the City of Cebu, while
admitting having entered into a contract with HFCCI,
alleged that the contract it entered into was null and void
as declared by the Commission on Audit in its 2nd
Indorsement dated September 4, 1986. Therefore
whatever amount is due to HFCCI is to the sole liability
of the officer or officers who entered into the said
contract.4
Nevertheless, on December 15, 1988, the City of Cebu,
through its Mayor, Tomas R. Osmeña, entered into a
compromise agreement, approved by the court, to the
effect that as a full and final settlement to the claim of
HFCCI, the City of Cebu shall pay the amount of ONE
MILLION FIVE HUNDRED THOUSAND (P1,500,000.00)
PESOS.
On the strength of the Court's Order dated March 3,
1989 the Provincial Deputy Sheriff, RTC, Branch 5,
Cebu City was ordered on March 8, 1989, to serve a writ
of execution against the City of Cebu through its Mayor,
Tomas R. Osmeña. Thus, the amount of P1,500,000.00
and P15,052.00, as lawful fees, were garnished from the
City's funds deposited in the Philippine National
Bank. 5
The trial court's judgment based on the compromise
agreement was referred to the COA's Regional Director,
who in turn indorsed the same to the Chairman of the
COA. In its 3rd Indorsement dated May 2, 1989, the
COA ruled that:
It may not be disputed that the
contract for the construction of the
Cebu City Abattoir was declared
void in a 2nd Indorsement dated
September 4, 1986, of this
Commission. And since no appeal
appears to have been taken
thereon, said decision became final.
Consequently, "if a compromise is
based upon an antecedent claim
which is undisputedly and
undoubtedly illegal, the compromise
may be considered invalid on the
ground of illegality as well as lack of
consideration." (Sec. 29, 15 Am. Jur
2d) Besides the compromise
agreement entered into by the City
of Cebu with H. Franco Construction
Co., Inc., after the contract by and
between them had been declared
void by this Commission, is a
circumvention of the constitutional
provision that the party aggrieved by
any decision, order or ruling of the
Commission may within thirty (30)
days from receipt of a copy thereof
appeal on certiorari to the Supreme
Court (Sec. 2-2, Art. XII-D,1973
Constitution; Sec. 7, Art, IX-A, 1987
Constitution).
Under the circumstances, this
Commission concurs in the view
expressed by that Office that the
expenditure involved would be the
personal liability of the officer
directly responsible for its
incurrence (Sec. 103, P.D. No.
1445).6
Petitioner's request for reconsideration of the above
ruling was denied in COA's 5th Indorsement dated
January 23, 1991,7 hence this petition, with the following
arguments:
1) the decision of the Public
Respondent as contained in the 2nd
Indorsement dated September 4,
1986 is null and void for having
been made without, in excess of
 jurisdiction or with grave abuse of
discretion;
2) that Public Respondent's decision
has never become final because it
was made without, in excess of
jurisdiction, or with grave abuse of
discretion.8
Petitioner argues that the decision of COA invalidating
the contract between the City of Cebu and HFCCI was
void since it was already executed and fulfilled.
Petitioner further stresses that COA has no authority to
declare a contract already executed void. And since the
2nd Indorsement is a nullity, it never attained finality.
The petition is devoid of merit.
The Commission on Audit has the power, authority and
duty to examine, audit and settle all accounts pertaining
to revenue and receipts of and expenditures or uses of
funds and property, owned of held in trust by, or
pertaining to, the government, or any of its subdivisions,
agencies or instrumentalities.9
The Auditing Code of the Philippines (P.D. 1445) further
provides that no contract involving the expenditure of
public funds shall be entered into unless there is an
appropriation therefor 10 and the proper accounting
official of the agency concerned shall have certified to
the officer entering into the obligation that funds have
been duly appropriated for the purpose and the amount
necessary to cover the proposed contract for the current
year is available for expenditure on account
thereof. 11 (Emphasis supplied) Any contract entered into
contrary to the foregoing requirements shall be VOID. 12
Clearly then, the contract entered into by the former
Mayor Duterte was void from the very beginning since
the agreed cost for the project (P8,368,920.00) was way
beyond the appropriated amount (P5,419,180.00) as
certified by the City Treasurer. Hence, the contract was
properly declared void and unenforceable in COA's 2nd
Indorsement, dated September 4, 1986. The COA
declared and we agree, that:
The prohibition contained in Sec. 85
of PD 1445 (Government Auditing
Code) is explicit and mandatory.
Fund availability is, as it has always
been, an indispensable prerequisite Agreement relative to the
to the execution of any government petitioner's obligation resulting from
contract involving the expenditure of said Abattoir contract is also void
public funds by all government and in existent and the decision
agencies at all levels. Such based on said Compromise
contracts are not to be considered Agreement is unenforceable against
as final or binding unless such the City of Cebu. (Art. 1422, Civil
certification as to funds availability is Code of the Philippines). 18
issued (Letter of Instruction No. 767,
s. 1978). Antecedent of advance
The trial court's decision based on the compromise
appropriation is thus essential to
agreement could not have ratified a contract which is
government liability on contracts
void ab initio. Consequently the settlement of the
(Zobel v. City of Manila, 47 Phil.
supposed obligation of the City of Cebu arising out of a
169). This contract being violative of
void contract becomes a personal liability of petitioner
the legal requirements aforequoted,
who is directly responsible therefor.19
the same contravenes Sec. 85 of
PD 1445 and is null and void by
virtue of Sec. 87. 13 Neither can petitioner rely on the principle of Quantum
Meruit. Quantum Meruit is based on justice and equity,
to compensate a property or benefit received if
As a matter of fact, the City of Cebu relied on the above
restitution is equitable and if such action involves no
pronouncement and interposed the same as its
violation, frustration or opposition to public policy. In the
affirmative defense, 14 so much so that petitioner cannot
present case, however, the payment due to HFCCI was
now assert that it was void having been issued in excess
due to the compromise agreement which in turn was
of COA's jurisdiction. A party cannot invoke the
made in pursuance to a supposed abattoir contract,
jurisdiction of a court or an administrative body to secure
which is a void contract. Furthermore, there was no
affirmative relief against his opponent and after obtaining
evidence presented as to the extent of work
or failing to obtain such relief, repudiate or question that
accomplished by HFCCI as to substantiate the amount
same jurisdiction. It is not right for a party who has
stipulated in the compromise agreement. Finally, as
affirmed and invoked the jurisdiction of a court in a
observed by the Solicitor General:
particular matter to secure an affirmative relief, to
afterwards deny the same jurisdiction to escape a
penalty.15 In any event, it is respectfully
submitted that since petitioner's act
in entering into said Compromise
Besides, neither the petitioner nor HFCCI questioned the
Agreement . . . came after public
ruling of COA declaring the invalidity of the abattoir
respondent had voided petitioner's
contract, thereby resulting in its finality even before the
abattoir contract (he) may not be
civil case was instituted. Petitioner could have brought
the case to the Supreme Court on a petition
allowed to evade the legal sanctions
resulting from his failure to comply
for certiorari within thirty days from receipt of a copy of
with the law's safeguards against
the COA decision in the manner provided by law and the
undue expenditures of public
Rules of Court. 16 A decision of the Commission or of
funds.20
any of its Auditor not appealed within the period provided
by law, shall be final and executory.17
Premises considered, the Compromise Agreement
entered into between the City of Cebu, through its
Petitioner cannot hide behind the argument that the
Mayor, Tomas Osmeña is void being merely a derivative
payment was made in compliance with the trial court's
of a previously void Abattoir Contract, and thus becomes
judgment. As correctly stated by the Solicitor General:
a personal liability of the officer who entered into it
pursuant to Sec. 87 & 103 of P.D. 1445.
Since petitioner and HFCCI knew of
the absolute invalidity of said
WHEREFORE, petition is hereby DISMISSED for lack of
Abattoir Contract, the Compromise
merit.
G.R. No. 175457 July 6, 2011
RUPERTO A. AMBIL, JR., Petitioner,
vs.
SANDIGANBAYAN and PEOPLE OF THE
PHILIPPINES, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 175482
ALEXANDRINO R. APELADO, SR., Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
VILLARAMA, JR., J.:
Before us are two consolidated petitions for review on
certiorari filed by petitioner Ruperto A. Ambil, Jr.1 and
petitioner Alexandrino R. Apelado Sr.2 assailing the
Decision3 promulgated on September 16, 2005 and
Resolution4dated November 8, 2006 of the
Sandiganbayan in Criminal Case No. 25892.
The present controversy arose from a letter5 of Atty.
David B. Loste, President of the Eastern Samar Chapter
of the Integrated Bar of the Philippines (IBP), to the
Office of the Ombudsman, praying for an investigation
into the alleged transfer of then Mayor Francisco Adalim,
an accused in Criminal Case No. 10963 for murder, from
the provincial jail of Eastern Samar to the residence of
petitioner, then Governor Ruperto A. Ambil, Jr. In a
Report6 dated January 4, 1999, the National Bureau of
Investigation (NBI) recommended the filing of criminal
charges against petitioner Ambil, Jr. for violation of
Section 3(e)7 of Republic Act (R.A.) No. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act, as
amended. On September 22, 1999, the new President of
the IBP, Eastern Samar Chapter, informed the
Ombudsman that the IBP is no longer interested in
pursuing the case against petitioners. Thus, he
recommended the dismissal of the complaint against
petitioners.8
Nonetheless, in an Information9 dated January 31, 2000,
petitioners Ambil, Jr. and Alexandrino R. Apelado, Sr.
were charged with violation of Section 3(e) of R.A. No.
3019, together with SPO3 Felipe A. Balano. Upon
reinvestigation, the Office of the Ombudsman issued a
Memorandum10 dated August 4, 2000, recommending
the dismissal of the complaint as regards Balano and the
amendment of the Information to include the charge of
Delivering Prisoners from Jail under Article 15611 of
the Revised Penal Code, as amended, (RPC) against
the remaining accused. The Amended
Information12 reads:
That on or about the 6th day of September 1998, and for
sometime prior [or] subsequent thereto, [in] the
Municipality of Borongan, Province of Eastern Samar,
Philippines, and within the jurisdiction of this Honorable
Court, [the] above-named accused, Ruperto A. Ambil,
Jr.[,] being then the Provincial Governor of Eastern
Samar, and Alexandrino R. Apelado, being then the
Provincial Warden of Eastern Samar, both having been
public officers, duly elected, appointed and qualified as
such, committing the offense in relation to office,
conniving and confederating together and mutually
helping x x x each other, with deliberate intent, manifest
partiality and evident bad faith, did then and there
wilfully, unlawfully and criminally order and cause the
release from the Provincial Jail of detention prisoner
Mayor Francisco Adalim, accused in Criminal Case No.
10963, for Murder, by virtue of a warrant of Arrest issued
by Honorable Arnulfo P. Bugtas, Presiding Judge, RTC-
Branch 2, Borongan, Eastern Samar, and thereafter
placed said detention prisoner (Mayor Francisco Adalim)
under accused RUPERTO A. AMBIL, JR.’s custody, by
allowing said Mayor Adalim to stay at accused Ambil’s
residence for a period of Eighty-Five (85) days, more or
less which act was done without any court order, thus
accused in the performance of official functions had
given unwarranted benefits and advantage to detainee
Mayor Francisco Adalim to the prejudice of the
government.
CONTRARY TO LAW.
BAIL BOND RECOMMENDED: P30,000.00 each.13
On arraignment, petitioners pleaded not guilty and
posted bail.
At the pre-trial, petitioners admitted the allegations in the
Information. They reason, however, that Adalim’s
transfer was justified considering the imminent threats
upon his person and the dangers posed by his detention
at the provincial jail. According to petitioners, Adalim’s
sister, Atty. Juliana A. Adalim-White, had sent numerous
prisoners to the same jail where Mayor Adalim was to be
held.
Consequently, the prosecution no longer offered
testimonial evidence and rested its case after the
admission of its documentary exhibits. Petitioners filed a
Motion for Leave to File Demurrer to Evidence with
Reservation to Present Evidence in Case of Denial14 but
the same was denied.
At the trial, petitioners presented three witnesses:
petitioner Ambil, Jr., Atty. Juliana A. Adalim-White and
Mayor Francisco C. Adalim.
Petitioner Ambil, Jr. testified that he was the Governor of
Eastern Samar from 1998 to 2001. According to him, it
was upon the advice of Adalim’s lawyers that he directed
the transfer of Adalim’s detention to his home. He cites
poor security in the provincial jail as the primary reason
for taking personal custody of Adalim considering that
the latter would be in the company of inmates who were
put away by his sister and guards identified with his
political opponents.15
For her part, Atty. White stated that she is the District
Public Attorney of Eastern Samar and the sister of
Mayor Adalim. She recounted how Mayor Adalim was
arrested while they were attending a wedding in Sulat,
Eastern Samar, on September 6, 1998. According to
Atty. White, she sought the alternative custody of Gov.
Ambil, Jr. after Provincial Warden and herein petitioner
Apelado, Sr. failed to guarantee the mayor’s safety.16
Meanwhile, Francisco Adalim introduced himself as the
Mayor of Taft, Eastern Samar. He confirmed his arrest
on September 6, 1998 in connection with a murder case
filed against him in the Regional Trial Court (RTC) of
Borongan, Eastern Samar. Adalim confirmed Atty.
White’s account that he spotted inmates who served as
bodyguards for, or who are associated with, his political
rivals at the provincial jail. He also noticed a prisoner,
Roman Akyatan, gesture to him with a raised clenched
fist. Sensing danger, he called on his sister for help.
Adalim admitted staying at Ambil, Jr.’s residence for
almost three months before he posted bail after the
charge against him was downgraded to homicide.17
Petitioner Apelado, Sr. testified that he was the
Provincial Jail Warden of Eastern Samar. He recalls that
on September 6, 1998, SPO3 Felipe Balano fetched him superior order and sentenced him to imprisonment for DUTY OR THE LAWFUL EXERCISE OF A
at home to assist in the arrest of Mayor Adalim. six (6) years and one (1) month to nine (9) years and RIGHT OR OFFICE.
Allegedly, Atty. White was contesting the legality of eight (8) months.
Mayor Adalim’s arrest and arguing with the jail guards
VI
against booking him for detention. At the provincial jail,
Hence, the present petitions.
petitioner was confronted by Atty. White who informed
him that he was under the governor, in the latter’s WHETHER OR NOT PETITIONER SHOULD
capacity as a provincial jailer. Petitioner claims that it is Petitioner Ambil, Jr. advances the following issues for HAVE BEEN ACQUITTED BECAUSE THE
for this reason that he submitted to the governor’s order our consideration: PROSECUTION EVIDENCE DID NOT
to relinquish custody of Adalim.18 ESTABLISH HIS GUILT BEYOND
REASONABLE DOUBT.22
I
Further, petitioner Apelado, Sr. described the physical
condition of the jail to be dilapidated and undermanned. For his part, petitioner Apelado, Sr. imputes the following
WHETHER OR NOT SECTION 3(e)
According to him, only two guards were incharge of errors on the Sandiganbayan:
looking after 50 inmates. There were two cells in the jail, REPUBLIC ACT NO. 3019, AS AMENDED,
each housing 25 inmates, while an isolation cell of 10 APPLIES TO PETITIONER’S CASE BEFORE
THE SANDIGANBAYAN. I
square meters was unserviceable at the time. Also, there
were several nipa huts within the perimeter for use
during conjugal visits.19 II THERE WAS MISAPPREHENSION OF
FACTS AND/OR MISAPPLICATION OF THE
On September 16, 2005, the Sandiganbayan, First LAW AND JURISPRUDENCE IN
WHETHER OR NOT A PUBLIC OFFICER
Division, promulgated the assailed Decision20 finding CONVICTING ACCUSED APELADO, EITHER
SUCH AS PETITIONER IS A PRIVATE
AS PRINCIPAL OR IN CONSPIRACY WITH
petitioners guilty of violating Section 3(e) of R.A. No. PARTY FOR PURPOSES OF SECTION 3(e),
3019. The court ruled that in moving Adalim to a private HIS CO-ACCUSED AMBIL.
REPUBLIC ACT NO. 3019, AS AMENDED.
residence, petitioners have conspired to accord him
unwarranted benefits in the form of more comfortable II
quarters with access to television and other privileges III
that other detainees do not enjoy. It stressed that under
the Rules, no person under detention by legal process IN THE ABSENCE OF COMPETENT PROOF
WHETHER OR NOT PETITIONER ACTED
shall be released or transferred except upon order of the BEYOND REASONABLE DOUBT OF
WITH DELIBERATE INTENT, MANIFEST
court or when he is admitted to bail.21 CONSPIRACY BETWEEN ACCUSED AMBIL
PARTIALITY, EVIDENT BAD FAITH OR
AND HEREIN PETITIONER, THE LATTER
GROSS INEXCUSABLE NEGLIGENCE IN
SHOULD BE ACCORDED FULL CREDIT
The Sandiganbayan brushed aside petitioners’ defense THE CONTEXT OF SAID SECTION 3(e).
FOR THE JUSTIFYING CIRCUMSTANCE
that Adalim’s transfer was made to ensure his safety. It UNDER PARAGRAPH 6, ARTICLE 11 OF
observed that petitioner Ambil, Jr. did not personally IV THE REVISED PENAL CODE.
verify any actual threat on Adalim’s life but relied simply
on the advice of Adalim’s lawyers. The Sandiganbayan
also pointed out the availability of an isolation cell and WHETHER OR NOT PETITIONER AS III
nipa huts within the 10-meter-high perimeter fence of the PROVINCIAL GOVERNOR AND JAILER
UNDER SECTIONS 1730 AND 1733,
jail which could have been used to separate Adalim from THE COURT A QUO’S BASIS IN
other prisoners. Finally, it cited petitioner Ambil, Jr.’s ARTICLE III, CHAPTER 45 OF THE
CONVICTING BOTH ACCUSED AMBIL AND
failure to turn over Adalim despite advice from Assistant ADMINISTRATIVE CODE OF 1917 AND
HEREIN PETITIONER OF HAVING GIVEN
Secretary Jesus Ingeniero of the Department of Interior SECTION 61, CHAPTER V, REPUBLIC ACT
MAYOR ADALIM "UNWARRANTED
and Local Government. 6975 HAS THE AUTHORITY TO TAKE
BENEFITS AND ADVANTAGE TO THE
CUSTODY OF A DETENTION PRISONER.
PREJUDICE x x x OF THE GOVERNMENT
Consequently, the Sandiganbayan sentenced petitioner IS, AT THE MOST, SPECULATIVE.23
Ambil, Jr. to an indeterminate penalty of imprisonment V
for nine (9) years, eight (8) months and one (1) day to The issues raised by petitioner Ambil, Jr. can be
twelve (12) years and four (4) months. In favor of WHETHER OR NOT PETITIONER IS summed up into three: (1) Whether he is guilty beyond
petitioner Apelado, Sr., the court appreciated the ENTITLED TO THE JUSTIFYING reasonable doubt of violating Section 3(e), R.A. No.
incomplete justifying circumstance of obedience to a CIRCUMSTANCE OF FULFILLMENT OF A 3019; (2) Whether a provincial governor has authority to
take personal custody of a detention prisoner; and (3)
Whether he is entitled to the justifying circumstance of
fulfillment of duty under Article 11(5)24 of the RPC.
Meanwhile, petitioner Apelado, Sr.’s assignment of
errors can be condensed into two: (1) Whether he is
guilty beyond reasonable doubt of violating Section 3(e),
R.A. No. 3019; and (2) Whether he is entitled to the
justifying circumstance of obedience to an order issued
by a superior for some lawful purpose under Article
11(6)25 of the RPC.
Fundamentally, petitioner Ambil, Jr. argues that Section
3(e), R.A. No. 3019 does not apply to his case because
the provision contemplates only transactions of a
pecuniary nature. Since the law punishes a public officer
who extends unwarranted benefits to a private person,
petitioner avers that he cannot be held liable for
extending a favor to Mayor Adalim, a public officer.
Further, he claims good faith in taking custody of the
mayor pursuant to his duty as a "Provincial Jailer" under
the Administrative Code of 1917. Considering this,
petitioner believes himself entitled to the justifying
circumstance of fulfillment of duty or lawful exercise of
duty.
Petitioner Apelado, Sr., on the other hand, denies
allegations of conspiracy between him and petitioner
Ambil, Jr. Petitioner Apelado, Sr. defends that he was
merely following the orders of a superior when he
transferred the detention of Adalim. As well, he invokes
immunity from criminal liability.
For the State, the Office of the Special Prosecutor (OSP)
points out the absence of jurisprudence that restricts the
application of Section 3(e), R.A. No. 3019 to transactions
of a pecuniary nature. The OSP explains that it is
enough to show that in performing their functions,
petitioners have accorded undue preference to Adalim
for liability to attach under the provision. Further, the
OSP maintains that Adalim is deemed a private party for
purposes of applying Section 3(e), R.A. No. 3019
because the unwarranted benefit redounded, not to his
person as a mayor, but to his person as a detention
prisoner accused of murder. It suggests further that
petitioners were motivated by bad faith as evidenced by
their refusal to turn over Adalim despite instruction from
Asst. Sec. Ingeniero. The OSP also reiterates
petitioners’ lack of authority to take custody of a
detention prisoner without a court order. Hence, it
concludes that petitioners are not entitled to the benefit
of any justifying circumstance.
After a careful review of this case, the Court finds the
present petitions bereft of merit.
Petitioners were charged with violation of Section 3(e) of
R.A. No. 3019 or the Anti-Graft and Corrupt Practices
Actwhich 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:
xxxx
(e) Causing any undue injury to any party, including the
Government, or giving any private party any
unwarranted benefits, advantage or preference in the
discharge of his official, administrative or judicial
functions through manifest partiality, evident bad faith or
gross inexcusable negligence. This provision shall apply
to officers and employees of offices or government
corporations charged with the grant of licenses or
permits or other concessions.
In order to hold a person liable under this provision, the
following elements must concur: (1) the accused must
be a public officer discharging administrative, judicial or
official functions; (2) he must have acted with manifest
partiality, evident bad faith or gross inexcusable
negligence; and (3) his action caused any undue injury
to any party, including the government, or gave any
private party unwarranted benefits, advantage or
preference in the discharge of his functions.26
As to the first element, there is no question that
petitioners are public officers discharging official
functions and that jurisdiction over them lay with the
Sandiganbayan. Jurisdiction of the Sandiganbayan over
public officers charged with violation of the Anti-Graft
Law is provided under Section 4 of Presidential Decree
No. 1606,27 as amended by R.A. No. 8249.28 The
pertinent portions of Section 4, P.D. No. 1606, as
amended, read as follows:
SEC. 4. Jurisdiction.—The Sandiganbayan shall
exercise exclusive original jurisdiction in all cases
involving:
a. Violations of Republic Act No. 3019, as amended,
otherwise known as the Anti-Graft and Corrupt Practices
Act, Republic Act No. 1379, and Chapter II, Section 2,
Title VII, Book II of the Revised Penal Code, where one
or more of the accused are officials occupying the
following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the
commission of the offense:
(1) Officials of the executive branch occupying the
positions of regional director and higher, otherwise
classified as Grade ‘27’ and higher, of the Compensation
and Position Classification Act of 1989 (Republic Act No.
6758),specifically including:
(a) Provincial governors, vice-governors, members of
the sangguniang panlalawigan and provincial treasurers,
assessors, engineers and other provincial department
heads[;]
xxxx
In cases where none of the accused are occupying
positions corresponding to Salary Grade ‘27’ or higher,
as prescribed in the said Republic Act No. 6758, or
military and PNP officers mentioned above, exclusive
original jurisdiction thereof shall be vested in the proper
regional trial court, metropolitan trial court, municipal trial
court, and municipal circuit trial court, as the case may
be, pursuant to their respective jurisdiction as provided
in Batas Pambansa Blg. 129, as amended.
xxxx
Thus, the jurisdiction of the Sandiganbayan over
petitioner Ambil, Jr. is beyond question. The same is true
as regards petitioner Apelado, Sr. As to him, a
Certification29 from the Provincial Government
Department Head of the HRMO shows that his position
as Provincial Warden is classified as Salary Grade 22.
Nonetheless, it is only when none of the accused are
occupying positions corresponding to salary grade ‘27’
or higher shall exclusive jurisdiction be vested in the
lower courts. Here, petitioner Apelado, Sr. was charged
as a co-principal with Governor Ambil, Jr., over whose
position the Sandiganbayan has jurisdiction.
Accordingly, he was correctly tried jointly with said public
officer in the proper court which had exclusive original
jurisdiction over them – the Sandiganbayan.
The second element, for its part, describes the three
ways by which a violation of Section 3(e) of R.A. No.
3019 may be committed, that is, through manifest
partiality, evident bad faith or gross inexcusable
negligence.
30
In Sison v. People, we defined "partiality," "bad faith"
and "gross negligence" as follows:
"Partiality" is synonymous with "bias" which "excites a
disposition to see and report matters as they are wished
for rather than as they are." "Bad faith does not simply
connote bad judgment or negligence; it imputes a
dishonest purpose or some moral obliquity and
conscious doing of a wrong; a breach of sworn duty
through some motive or intent or ill will; it partakes of the
nature of fraud." "Gross negligence has been so defined
as negligence characterized by the want of even slight
care, acting or omitting to act in a situation where there
is a duty to act, not inadvertently but wilfully and
intentionally with a conscious indifference to
consequences in so far as other persons may be
affected. It is the omission of that care which even
inattentive and thoughtless men never fail to take on
their own property." x x x31
In this case, we find that petitioners displayed manifest
partiality and evident bad faith in transferring the
detention of Mayor Adalim to petitioner Ambil, Jr.’s
house. There is no merit to petitioner Ambil, Jr.’s
contention that he is authorized to transfer the detention
of prisoners by virtue of his power as the "Provincial
Jailer" of Eastern Samar.
Section 28 of the Local Government Code draws the
extent of the power of local chief executives over the
units of the Philippine National Police within their
jurisdiction:
SEC. 28. Powers of Local Chief Executives over the
Units of the Philippine National Police.—The extent of
operational supervision and control of local chief
executives over the police force, fire protection unit, and
jail management personnel assigned in their respective
jurisdictions shall be governed by the provisions of
Republic Act Numbered Sixty-nine hundred seventy-five
(R.A. No. 6975), otherwise known as "The Department
of the Interior and Local Government Act of 1990," and
the rules and regulations issued pursuant thereto.
In particular, Section 61, Chapter 5 of R.A. No.
697532 on the Bureau of Jail Management and Penology
provides:
Sec. 61. Powers and Functions. - The Jail Bureau shall
exercise supervision and control over all city and
municipal jails. The provincial jails shall be
supervised and controlled by the provincial
government within its jurisdiction, whose expenses shall
be subsidized by the National Government for not more
than three (3) years after the effectivity of this Act.
The power of control is the power of an officer to alter or
modify or set aside what a subordinate officer had done
in the performance of his duties and to substitute the
judgment of the former for that of the latter.33 An officer
in control lays down the rules in the doing of an act. If
they are not followed, he may, in his discretion, order the
act undone or re-done by his subordinate or he may
even decide to do it himself.34
On the other hand, the power of supervision means
"overseeing or the authority of an officer to see to it that
the subordinate officers perform their duties."35 If the
subordinate officers fail or neglect to fulfill their duties,
the official may take such action or step as prescribed by
law to make them perform their duties. Essentially, the
power of supervision means no more than the power of
ensuring that laws are faithfully executed, or that
subordinate officers act within the law.36 The supervisor
or superintendent merely sees to it that the rules are
followed, but he does not lay down the rules, nor does
he have discretion to modify or replace them.37
Significantly, it is the provincial government and not the
governor alone which has authority to exercise control
and supervision over provincial jails. In any case, neither
of said powers authorizes the doing of acts beyond the
parameters set by law. On the contrary, subordinates
must be enjoined to act within the bounds of law. In the
event that the subordinate performs an act ultra vires,
rules may be laid down on how the act should be done,
but always in conformity with the law.
In a desperate attempt to stretch the scope of his
powers, petitioner Ambil, Jr. cites Section 1731, Article
III of theAdministrative Code of 1917 on Provincial jails
in support. Section 1731 provides:
SEC. 1731. Provincial governor as keeper of jail.—The
governor of the province shall be charged with the
keeping of the provincial jail, and it shall be his duty
to administer the same in accordance with law and
the regulations prescribed for the government of
provincial prisons. The immediate custody and
supervision of the jail may be committed to the care of a
jailer to be appointed by the provincial governor. The
position of jailer shall be regarded as within the
unclassified civil service but may be filled in the manner
in which classified positions are filled, and if so filled, the
appointee shall be entitled to all the benefits and
privileges of classified employees, except that he shall
hold office only during the term of office of the appointing
governor and until a successor in the office of the jailer is
appointed and qualified, unless sooner separated. The
provincial governor shall, under the direction of the
provincial board and at the expense of the province,
supply proper food and clothing for the
prisoners; though the provincial board may, in its
discretion, let the contract for the feeding of the
prisoners to some other person. (Emphasis supplied.)
This provision survived the advent of the Administrative
Code of 1987. But again, nowhere did said provision
designate the provincial governor as the "provincial
jailer," or even slightly suggest that he is empowered to
take personal custody of prisoners. What is clear from
the cited provision is that the provincial governor’s duty
as a jail keeper is confined to the administration of the
jail and the procurement of food and clothing for the
prisoners. After all, administrative acts pertain only to
those acts which are necessary to be done to carry out
legislative policies and purposes already declared by the
legislative body or such as are devolved upon it38 by the
Constitution. Therefore, in the exercise of his
administrative powers, the governor can only enforce the
law but not supplant it.
Besides, the only reference to a transfer of prisoners in
said article is found in Section 173739 under which
prisoners may be turned over to the jail of the
neighboring province in case the provincial jail be
insecure or insufficient to accommodate all provincial
prisoners. However, this provision has been superseded
by Section 3, Rule 114 of theRevised Rules of Criminal
Procedure, as amended. Section 3, Rule 114 provides:
SEC. 3. No release or transfer except on court order or
bail.-No person under detention by legal process shall
be released or transferred except upon order of the court
or when he is admitted to bail.
Indubitably, the power to order the release or transfer of
a person under detention by legal process is vested in
the court, not in the provincial government, much less
the governor. This was amply clarified by Asst. Sec.
Ingeniero in his communication40 dated October 6, 1998
addressed to petitioner Ambil, Jr. Asst. Sec. Ingeniero
wrote:
06 October 1996
GOVERNOR RUPERTO AMBIL
Provincial Capitol
Borongan, Eastern Samar
Dear Sir:
This has reference to the letter of Atty. Edwin B. Docena,
and the reports earlier received by this Department,
relative to your alleged action in taking into custody
Mayor Francisco "Aising" Adalim of Taft, that province,
who has been previously arrested by virtue by a warrant
of arrest issued in Criminal Case No. 10963.
If the report is true, it appears that your actuation is not
in accord with the provision of Section 3, Rule 113 of the
Rules of Court, which mandates that an arrested person
be delivered to the nearest police station or jail.
Moreover, invoking Section 61 of RA 6975 as legal basis
in taking custody of the accused municipal mayor is
misplaced. Said section merely speaks of the power of
supervision vested unto the provincial governor over
provincial jails. It does not, definitely, include the power
to take in custody any person in detention.
In view of the foregoing, you are hereby enjoined to
conduct yourself within the bounds of law and to
immediately deliver Mayor Adalim to the provincial jail in
order to avoid legal complications.
Please be guided accordingly.
Very truly yours,
(SGD.)
JESUS I. INGENIERO
Assistant Secretary
Still, petitioner Ambil, Jr. insisted on his supposed
authority as a "provincial jailer." Said petitioner’s
usurpation of the court's authority, not to mention his
open and willful defiance to official advice in order to
accommodate a former political party mate,41 betray his
unmistakable bias and the evident bad faith that
attended his actions.
Likewise amply established beyond reasonable doubt is
the third element of the crime. As mentioned above, in
order to hold a person liable for violation of Section 3(e),
R.A. No. 3019, it is required that the act constituting the
offense consist of either (1) causing undue injury to any
party, including the government, or (2) giving any private
party any unwarranted benefits, advantage or preference
in the discharge by the accused of his official,
administrative or judicial functions.
In the case at hand, the Information specifically accused
petitioners of giving unwarranted benefits and advantage
to Mayor Adalim, a public officer charged with murder,
by causing his release from prison and detaining him
instead at the house of petitioner Ambil, Jr. Petitioner
Ambil, Jr. negates the applicability of Section 3(e), R.A.
No. 3019 in this case on two points. First, Section 3(e) is
not applicable to him allegedly because the last
sentence thereof provides that the "provision shall apply
to officers and employees of offices or government
corporations charged with the grant of licenses, permits
or other concessions" and he is not such government
officer or employee. Second, the purported unwarranted
benefit was accorded not to a private party but to a
public officer.
However, as regards his first contention, it appears that
petitioner Ambil, Jr. has obviously lost sight, if he is not
altogether unaware, of our ruling in Mejorada v.
Sandiganbayan42 where we held that a prosecution for
violation of Section 3(e) of the Anti-Graft Law will lie
regardless of whether or not the accused public officer is
"charged with the grant of licenses or permits or other
concessions." Following is an excerpt of what we said in
Mejorada,
Section 3 cited above enumerates in eleven subsections
the corrupt practices of any public officers (sic) declared
unlawful. Its reference to "any public officer" is without
distinction or qualification and it specifies the acts
declared unlawful. We agree with the view adopted by
the Solicitor General that the last sentence of paragraph
[Section 3] (e) is intended to make clear the inclusion of
officers and employees of officers (sic) or government
corporations which, under the ordinary concept of "public
officers" may not come within the term. It is a strained
construction of the provision to read it as applying
exclusively to public officers charged with the duty of
granting licenses or permits or other
concessions.43 (Italics supplied.)
In the more recent case of Cruz v. Sandiganbayan,44 we
affirmed that a prosecution for violation of said provision
will lie regardless of whether the accused public officer is
charged with the grant of licenses or permits or other
concessions.45
Meanwhile, regarding petitioner Ambil, Jr.’s second
contention, Section 2(b) of R.A. No. 3019 defines a
"public officer" to include elective and appointive officials
and employees, permanent or temporary, whether in the
classified or unclassified or exemption service receiving
compensation, even nominal from the government.
Evidently, Mayor Adalim is one. But considering that
Section 3(e) of R.A. No. 3019 punishes the giving by a
public officer of unwarranted benefits to a private party,
does the fact that Mayor Adalim was the recipient of
such benefits take petitioners’ case beyond the ambit of
said law?
We believe not.
In drafting the Anti-Graft Law, the lawmakers opted to
use "private party" rather than "private person" to
describe the recipient of the unwarranted benefits,
advantage or preference for a reason. The term "party"
is a technical word having a precise meaning in legal
parlance46 as distinguished from "person" which, in
general usage, refers to a human being.47 Thus, a
private person simply pertains to one who is not a public
officer. While a private party is more comprehensive in
scope to mean either a private person or a public officer
acting in a private capacity to protect his personal
interest.
In the present case, when petitioners transferred Mayor
Adalim from the provincial jail and detained him at
petitioner Ambil, Jr.’s residence, they accorded such
privilege to Adalim, not in his official capacity as a
mayor, but as a detainee charged with murder. Thus, for
purposes of applying the provisions of Section 3(e), R.A.
No. 3019, Adalim was a private party.
Moreover, in order to be found guilty under the second
mode, it suffices that the accused has given unjustified
favor or benefit to another in the exercise of his official,
administrative or judicial functions.48 The word
"unwarranted" means lacking adequate or official
support; unjustified; unauthorized or without justification
or adequate reason. "Advantage" means a more
favorable or improved position or condition; benefit, profit
or gain of any kind; benefit from some course of action.
"Preference" signifies priority or higher evaluation or
desirability; choice or estimation above another.49
Without a court order, petitioners transferred Adalim and
detained him in a place other than the provincial jail. The
latter was housed in much more comfortable quarters,
provided better nourishment, was free to move about the
house and watch television. Petitioners readily extended
these benefits to Adalim on the mere representation of
his lawyers that the mayor’s life would be put in danger
inside the provincial jail.
As the Sandiganbayan ruled, however, petitioners were
unable to establish the existence of any risk on Adalim’s
safety. To be sure, the latter would not be alone in
having unfriendly company in lockup. Yet, even if we
treat Akyatan’s gesture of raising a closed fist at Adalim
as a threat of aggression, the same would still not
constitute a special and compelling reason to warrant
Adalim’s detention outside the provincial jail. For one,
there were nipa huts within the perimeter fence of the jail
which could have been used to separate Adalim from the
rest of the prisoners while the isolation cell was
undergoing repair. Anyhow, such repair could not have
exceeded the 85 days that Adalim stayed in petitioner
Ambil, Jr.’s house. More importantly, even if Adalim
could have proven the presence of an imminent peril on
his person to petitioners, a court order was still
indispensable for his transfer.
The foregoing, indeed, negates the application of the
justifying circumstances claimed by petitioners.
Specifically, petitioner Ambil, Jr. invokes the justifying
circumstance of fulfillment of duty or lawful exercise of
right or office. Under paragraph 5, Article 11 of the RPC,
any person who acts in the fulfillment of a duty or in the
lawful exercise of a right or office does not incur any
criminal liability. In order for this justifying circumstance
to apply, two requisites must be satisfied: (1) the
accused acted in the performance of a duty or in the
lawful exercise of a right or office; and (2) the injury
caused or the offense committed be the necessary
consequence of the due performance of duty or the
lawful exercise of such right or office.50 Both requisites
are lacking in petitioner Ambil, Jr.’s case.
As we have earlier determined, petitioner Ambil, Jr.
exceeded his authority when he ordered the transfer and
detention of Adalim at his house. Needless to state, the
resulting violation of the Anti-Graft Law did not proceed
from the due performance of his duty or lawful exercise
of his office.
In like manner, petitioner Apelado, Sr. invokes the
justifying circumstance of obedience to an order issued
for some lawful purpose. Under paragraph 6, Article 11
of the RPC, any person who acts in obedience to an
order issued by a superior for some lawful purpose does
not incur any criminal liability. For this justifying
circumstance to apply, the following requisites must be
present: (1) an order has been issued by a superior; (2)
such order must be for some lawful purpose; and (3) the
means used by the subordinate to carry out said order is
lawful.51 Only the first requisite is present in this case.
While the order for Adalim’s transfer emanated from
petitioner Ambil, Jr., who was then Governor, neither
said order nor the means employed by petitioner
Apelado, Sr. to carry it out was lawful. In his capacity as
the Provincial Jail Warden of Eastern Samar, petitioner
Apelado, Sr. fetched Mayor Adalim at the provincial jail
and, unarmed with a court order, transported him to the
house of petitioner Ambil, Jr. This makes him liable as a
principal by direct participation under Article 17(1)52 of
the RPC.
An accepted badge of conspiracy is when the accused
by their acts aimed at the same object, one performing
one part of and another performing another so as to
complete it with a view to the attainment of the same
object, and their acts although apparently independent
were in fact concerted and cooperative, indicating
closeness of personal association, concerted action and
concurrence of sentiments.53
Conspiracy was sufficiently demonstrated by petitioner
Apelado, Sr.’s willful cooperation in executing petitioner
Ambil, Jr.’s order to move Adalim from jail, despite the
absence of a court order. Petitioner Apelado, Sr., a law
graduate, cannot hide behind the cloak of ignorance of
the law. The Rule requiring a court order to transfer a
person under detention by legal process is elementary.
Truth be told, even petitioner governor who is
unschooled in the intricacies of the law expressed
reservations on his power to transfer Adalim. All said,
the concerted acts of petitioners Ambil, Jr. and Apelado,
Sr. resulting in the violation charged, makes them
equally responsible as conspirators.
As regards the penalty imposed upon petitioners,
Section 9(a) of R.A. No. 3019 punishes a public officer
or a private person who violates Section 3 of R.A. No.
3019 with imprisonment for not less than six (6) years
and one (1) month to not more than fifteen (15) years
and perpetual disqualification from public office. Under
Section 1 of theIndeterminate Sentence Law or Act No.
4103, as amended by Act No. 4225, if the offense is
punished by a special law, the court shall sentence the
accused to an indeterminate sentence, the maximum
term of which shall not exceed the maximum fixed by
said law and the minimum shall not be less than the
minimum term prescribed by the same.1avvphi1
Thus, the penalty imposed by the Sandiganbayan upon
petitioner Ambil, Jr. of imprisonment for nine (9) years,
eight (8) months and one (1) day to twelve (12) years
and four (4) months is in accord with law. As a co-
principal without the benefit of an incomplete justifying
circumstance to his credit, petitioner Apelado, Sr. shall
suffer the same penalty.
WHEREFORE, the consolidated petitions are DENIED.
The Decision of the Sandiganbayan in Criminal Case
No. 25892 is AFFIRMED WITH MODIFICATION. We
find petitioners Ruperto A. Ambil, Jr. and Alexandrino R.
Apelado, Sr. guilty beyond reasonable doubt of violating
Section 3(e), R.A. No. 3019. Petitioner Alexandrino R.
Apelado, Sr. is, likewise, sentenced to an indeterminate
penalty of imprisonment for nine (9) years, eight (8)
months and one (1) day to twelve (12) years and four (4)
months.
With costs against the petitioners.
SO ORDERED.
G.R. No. 191219 July 31, 2013 and Acceptance Committee, PNP, GSC; SPO1 Ramon
Lihay-Lihay, Inspector, Office of the Directorate for 30365 8080941 500,000.00
Comptrollership, PNP; Chief Supt. Jose M. Aquino,
SPO1 RAMON LIHAYLIHAY1 AND C/INSP. VIRGILIO 30323 880943 500,000.00
Director, Finance Service, PNP; and Sr. Supt. Marcelo
V. VINLUAN, Petitioners,
Castillo III, Chief, Gen. Materials Office/Technical
vs.
Inspector, PNP, while in the performance of their 30358 880942 500,000.00
PEOPLE OF THE PHILIPPINES, Respondent.
respective official and administrative functions as such,
taking advantage of their positions, committing the 30362 880943 500,000.00
RESOLUTION offense in relation to their office and conspiring,
confederating with one another, did then and there
willfully, unlawfully and criminally, through evident bad 30366 880943 500,000.00
PERLAS-BERNABE, J.:
faith, cause undue injury to the government in the
following manner: 30357 880946 500,000.00
Assailed in this petition for review on certiorari2 are the
Decision3 dated August 8, 2008 and Resolution4 dated Accused Gen. Nazareno in his capacity as Chief, PNP 30361 880947 500,000.00
February 12, 2010 of the Sandiganbayan in Criminal and concurrently Board Chairman of the PNP Service
Case No. 22098 which found petitioners Virgilio V. 30363 880948 500,000.00
Store System, surreptitiously channeled PNP funds to
Vinluan (Vii1luan) and Ramon Lihaylihay (Lihaylihay) the PNP SSS through "Funded RIVs" valued at ₱8
guilty beyond reasonable doubt of the crime of violation [M]illion and Director Domondon released ASA No. 000- P 8,000,000.00
of Section 3(e) of Republic Act No. (RA) 3019, otherwise
200-004-92 (SN-1353) without proper authority from the =============
known as the "Anti-Graft and Corrupt Practices Act." National Police Commission (NAPOLCOM) and
Department of Budget and Management (DBM), and
The Facts caused it to appear that there were purchases and thereafter, accused members of the Inspection and
deliveries of combat clothing and individual equipment Acceptance Committee together with respondents
(CCIE) to the General Service Command (GSC), PNP, Marcelo Castillo III and Ramon Lihay-Lihay certified or
Acting on the special audit report5 submitted by the by deliberately and maliciously using funds for personal
Commission on Audit, the Philippine National Police caused to be certified that the CCIE items covered by
services and divided the invoices of not more than the aforementioned invoices were delivered, properly
(PNP) conducted an internal investigation6 on the ₱500,000.00 each, pursuant to which the following
purported "ghost" purchases of combat, clothing, and inspected and accepted, and subsequently distributed to
invoices were made and payments were effected the end-users, when in truth and in fact, as accused well
individual equipment (CCIE) worth ₱133,000,000.00 therefor through the corresponding checks, to wit:
which were allegedly purchased from the PNP Service knew, no such purchases of CCIE items were made and
Store System (SSS) and delivered to the PNP General no items were delivered, inspected, accepted and
Services Command (GSC). As a result of the internal distributed to the respective end-users; that despite the
investigation, an Information7 was filed before the Invoice No. Check No. Amount fact that no deliveries were made, respondent Alejandro
Sandiganbayan, charging 10 PNP officers, including, claimed payment therefor, and respondent Obillos
among others, Vinluan and Lihaylihay, for the crime of 30368 880932 P 500,000.00 approved the disbursement vouchers therefor as well as
violation of Section 3(e) of RA 3019, the accusatory the checks authorizing payment which was
portion of which reads: 30359 880934 500,000.00 countersigned by respondent Aquino; and as a result,
the government, having been caused to pay for the
inexistent purchases and deliveries, suffered undue
That on January 3, 6, 8, 9 and 10, 1992, and for 30324 880935 500,000.00 injury in the amount of EIGHT MILLION PESOS
sometime subsequent thereto, in Quezon City, (₱8,000,000.00), more or less.
Philippines, and within the jurisdiction of this Honorable 30325 8080936 500,000.00
Court, the above-named accused public officers namely:
Gen. Cesar P. Nazareno, being then the Director CONTRARY TO LAW.8
30322 8080937 500,000.00
General of the Philippine National Police (PNP); Gen.
Guillermo T. Domondon, Director for Comptrollership, Four of the above-named accused died during the
PNP; Sr. Supt. Bernardo Alejandro, Administrator, PNP 30356 8080938 500,000.00
pendency of the case, while Chief Supt. Jose M. Aquino
Service Store System; Sr. Supt. Arnulfo Obillos, Director, was dropped from the Information for lack of probable
PNP, General Services Command (GSC); C/Insp. 30364 8080939 500,000.00 cause.9 As such, only Director Guillermo Domondon, Sr.
Virgilio Vinluan, Chairman, Inspection and Acceptance (Domondon), Supt. Arnulfo Obillos (Obillos), C/Inspector
Committee, PNP, GSC; C/Insp. Pablito Magnaye, 30360 8080940 500,000.00 Vinluan, Sr. Inspector Amado Guiriba, Jr. (Guiriba), and
Member, Inspection and Acceptance Committee, PNP, SPO1 Lihaylihay remained as accused in the subject
GSC; Sr. Insp. Amado Guiriba, Jr., Member, Inspection case. During their arraignment, Domondon, Obillos,
Vinluan, and Lihaylihay all pleaded not guilty to the crime
charged,10 while Guiriba remained at large.11
The Sandiganbayan Ruling
On August 8, 2008, the Sandiganbayan rendered the
assailed Decision,12 exonerating Domondon but finding
Obillos, Vinluan, and Lihaylihay guilty beyond
reasonable doubt of the crime charged.13 It found that all
the essential elements of the crime of violation of
Section 3(e) of RA 3019 were present in the case, in
particular that: (a) Obillos, Vinluan, and Lihaylihay are
public officers discharging administrative functions; (b)
they have acted with evident bad faith in the discharge of
their respective functions considering that: (1) seven of
the sixteen Requisition and Invoice Vouchers (RIVs)
bore erasures and/or superimposition to make it appear
that the transactions were entered into in 1992 instead of
1991;14 (2) the details of the supplies purportedly
received and inspected were not reflected in the Reports
of Public Property Purchased, thus, indicating that no
actual inspection of the items were made;15 and (3) there
was a "splitting" of the subject transactions into
₱500,000.00 each to avoid the review of a higher
authority as well as to make it fall within the signing
authority of Obillos; and (c) they failed to refute the
prosecution’s claim that the subject CCIE items were
never received by Supply Accountable Officer of the
GSC (GSC SAO), Dante Mateo (Mateo), nor delivered to
its end-users,17 hence, leading to the conclusion that the
subject transactions were indeed "ghost" purchases
which resulted to an ₱8,000,000.00 loss to the
government. In view of their conviction, Obillos, Vinluan,
and Lihaylihay were sentenced to suffer imprisonment
for a term of six years and one month, as minimum, to
nine years and one day, as maximum, including the
penalty of perpetual disqualification from public office.
They were likewise ordered to jointly and severally
indemnify the government the amount of
₱8,000,000.00.18 Aggrieved, Obillos, Vinluan, and
Lihaylihay filed their separate motions for
reconsideration which were all denied in a
Resolution19 dated February 12, 2010. Hence, the
instant petition.
The Issue Before the Court
The essential issue in this case is whether or not
petitioners’ conviction for the crime of violation of Section
3(e) of RA 3019 was proper.
The Court’s Ruling
The petition lacks merit.
At the outset, it bears pointing out that in appeals from
the Sandiganbayan, as in this case, only questions of
law and not questions of fact may be raised. Issues
brought to the Court on whether the prosecution was
able to prove the guilt of the accused beyond reasonable
doubt, whether the presumption of innocence was
sufficiently debunked, whether or not conspiracy was
satisfactorily established, or whether or not good faith
was properly appreciated, are all, invariably, questions of
fact.20 Hence, absent any of the recognized exceptions
to the above-mentioned rule,21the Sandiganbayan’s
findings on the foregoing matters should be deemed as
conclusive.
Petitioners were charged with the crime of violation of
Section 3(e)22 of RA 3019 which has the following
essential elements: (a) the accused must be a public
officer discharging administrative, judicial or official
functions; (b) he must have acted with manifest partiality,
evident bad faith or gross inexcusable negligence; and
(c) his action caused any undue injury to any party,
including the government, or gave any private party
unwarranted benefits, advantage or preference in the
discharge of his functions.23 As observed by the
Sandiganbayan, all these elements are extant in this
case:
As to the first element, it is undisputed that both
petitioners were public officers discharging
administrative functions at the time material to this case.
As to the second element, records show that Vinluan, in
his capacity as Chairman of the Inspection and
Acceptance Committee, signed the 16 certificates of
acceptance, inventory, and delivery of articles from the
PNP SSS despite its incompleteness or lack of material
dates, while Lihaylihay certified to the correctness of the
Inspection Report Forms even if no such deliveries were
made.24 Petitioners’ claim that the subject CCIE items
were received by GSC SAO Mateo25 is belied by the
absence of any proof as to when the said deliveries were
made. Moreover, the supposed deliveries to the
Narcotics Command26 were properly rejected by the
Sandiganbayan considering that the said transactions
pertained to a different set of end-users other than the
PNP GSC. Hence, having affixed their signatures on the
disputed documents despite the glaring defects found
therein, petitioners were properly found to have acted
with evident bad faith in approving the "ghost" purchases
in the amount of ₱8,000,000.00.27 To note, their
concerted actions, when taken together, demonstrate a
common design28 which altogether justifies the finding of
conspiracy.1âwphi1
Lastly, as to the third element, petitioners’ participation in
facilitating the payment of non-existent CCIE items
resulted to an ₱8,000,000.00 loss on the part of the
government.1âwphi1
Thus, considering the presence of all its elements, the
Court sustains the conviction of petitioners for the crime
of violation of Section 3(e) of RA 3019.
In this relation, it must be clarified that the ruling in Arias
v. Sandiganbayan29 (Arias) cannot be applied to
exculpate petitioners in view of the peculiar
circumstances in this case which should have prompted
them to exercise a higher degree of circumspection, and
consequently, go beyond what their subordinates had
prepared. In particular, the tampered dates on some of
the RIVs, the incomplete certification by GSC SAO
Mateo on the date of receipt of the CCIE items, the
missing details on the Reports of Public Property
Purchased and the fact that sixteen checks all dated
January 15, 1992 were payable to PNP SSS should
have aroused a reasonable sense of suspicion or
curiosity on their part if only to determine that they were
not approving a fraudulent transaction. In a similar case
where the documents in question bore irregularities too
evident to ignore, the Court in Cruz v.
Sandiganbayan30carved out an exception to the Arias
doctrine and as such, held:
Unlike in Arias, however, there exists in the present case
an exceptional circumstance which should have prodded
petitioner, if he were out to protect the interest of the
municipality he swore to serve, to be curious and go
beyond what his subordinates prepared or
recommended. In fine, the added reason contemplated
in Arias which would have put petitioner on his guard
and examine the check/s and vouchers with some
degree of circumspection before signing the same was
obtaining in this case.
We refer to the unusual fact that the checks issued as
payment for construction materials purchased by the
municipality were not made payable to the supplier, Kelly
Lumber, but to petitioner himself even as the
disbursement vouchers attached thereto were in the to be established is the mere general appearance of
name of Kelly Lumber. The discrepancy between the forgery which may be readily observed through the
names indicated in the checks, on one hand, and those marked alterations and superimpositions on the subject
in the disbursement vouchers, on the other, should have documents, even without conducting a comparison with
alerted petitioner - if he were conscientious of his duties any original document as in the case of forged
as he purports to be - that something was definitely signatures where the signature on the document in
amiss. The fact that the checks for the municipality’s question must always be compared to the signature on
purchases were made payable upon his order should, the original document to ascertain if there was indeed a
without more, have prompted petitioner to examine the forgery.
same further together with the supporting documents
attached to them, and not rely heavily on the
WHEREFORE, the petition is OENIED. The Decision
recommendations of his subordinates.31 (Emphasis
dated August 8, 2008 and Resolution dated February 12,
supplied)
2010 of the Sandiganbayan in Criminal Case No. 22098
are hereby AFFIRMED.
Equally compelling is the nature of petitioners’
responsibilities and their role in the purchasing of the
SO ORDERED.
CCIE items in this case which should have led them to
examine with greater detail the documents which they
were made to approve. As held in the recent case of
Bacasmas v.

Sandiganbayan,32 when there are reasons for the heads

of offices to further examine the documents in question,
they cannot seek refuge by invoking the Arias doctrine:

Petitioners cannot hide behind our declaration in Arias v.

Sandiganbayan charge just because they did not
personally examine every single detail before they, as
the final approving authorities, affixed their signatures to
certain documents. The Court explained in that case that
conspiracy was not adequately proven, contrary to the
case at bar in which petitioners’ unity of purpose and
unity in the execution of an unlawful objective were
sufficiently established. Also, unlike in Arias, where there
were no reasons for the heads of offices to further
examine each voucher in detail, petitioners herein, by
virtue of the duty given to them by law as well as by
rules and regulations, had the responsibility to examine
each voucher to ascertain whether it was proper to sign
it in order to approve and disburse the cash
advance.33 (Emphasis supplied)

Finally, on the matter of the admissibility of the

prosecution’s evidence, suffice it to state that, except as
to the checks,34 the parties had already stipulated on the
subject documents’ existence and authenticity and
accordingly, waived any objections thereon.35 In this
respect, petitioners must bear the consequences of their
admission and cannot now be heard to complain against
the admissibility of the evidence against them by harking
on the best evidence rule. In any event, what is sought
G.R. Nos. 153952-71 August 23, 2010
PEOPLE OF THE PHILIPPINES, Plaintiff,
vs.
THE HON. SANDIGANBAYAN (4th Div.) and HENRY
BARRERA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This Petition for Certiorari under Rule 65 of the Rules of
Court assails the Decision1 dated May 6, 2002 of the
Sandiganbayan granting the Demurrer to Evidence of
Mayor Henry E. Barrera (Mayor Barrera) and dismissing
Criminal Case Nos. 25035-25037, 25039-25041, 25043,
25045-25047, 25049-25050, and 25053-25054, on the
ground that the elements of the offense under Section
3(e) of Republic Act No. 3019, otherwise known as the
Anti-Graft and Corrupt Practices Act, as amended, were
not established beyond reasonable doubt.
Mayor Barrera, together with Rufina Escala (Escala) and
Santos Edquiban (Edquiban), were charged with 14
counts of violation of Sections 3(e) and 9 of Republic Act
No. 3019 in separate Informations, which alleged
essentially similar set of facts, save for the names of the
complainants, to wit:
That on or about 30 June 1998, or sometime prior or
subsequent thereto, in Candelaria, province of
Zambales, Philippines, and within the jurisdiction of this
Honorable Court, accused Henry E. Barrera, Santos
Edquiban and Rufina E. Escala, all public officers, then
being the Municipal Mayor, Market Collector, and District
Supervisor, respectively, all of Candelaria, Province of
Zambales, committing the penal offense herein charged
against them while in the performance of, in relation to,
and taking advantage of their official functions and duties
as such, thru manifest partiality and/or evident bad faith,
did then and there, willfully, unlawfully, and criminally, in
conspiracy with one another, prevent [Ermelinda Abella
(Criminal Case No. 25035), Lourdes Jaquias (C.C. No.
25036), John Espinosa (C.C. No. 25037), Jean Basa
(C.C. No. 25038), Lerma Espinosa (C.C. No. 25039),
Eduardo Sison (C.C No. 25040), Lina Hebron (C. C. No.
25041), Nora Elamparo (C.C. No. 25042), Luz Aspiras
(C.C . No. 25043), Oscar Lopez (C.C. No. 25044),
Corazon Cansas (C.C. No. 25045), Michelle Palma
(C.C. No. 25046), Mila Saberon (C.C. No.25047),
Merlina Miraflor (C.C. No. 25048), Edna Bagasina (C.C.
No. 25049), Jocelyn Educalane (C.C. No. 25050), Alvin
Gatdula (C.C. No. 25051), Helen Egenias (C.C. No.
25052), Luz Eclarino (C.C. No. 25053) and Josephine
Elamparo (C.C. No. 25054)], a legitimate lessee-
stallholder from exercising his/her contractual and/or
proprietary rights to transfer to, occupy and/or operate
his/her assigned stall at the public market of Candelaria,
Province of Zambales, under the subsisting lease
contract dated 25 June 1998, without any valid or
justifiable reason whatsoever, by means of the issuance
and implementation of the patently unlawful
Memorandum No. 1 dated 30 June 1998, thereby
causing undue injury to (private complainants).2
During the Pre-Trial Conference on February 22, 2000,
the People and Mayor Barrera marked their respective
documentary exhibits and entered into the following
stipulation of facts:
1. That at the time material to this case as
alleged in all of the Informations, accused
Henry E. Barrera was a public officer being
then the municipal mayor of Candelaria,
Zambales;
2. That private complainants were awarded
individual contract of lease for a market stall in
the new Candelaria Public Market by the
former Mayor Fidel Elamparo before the oath
taking of the accused on June 30, 1998;
3. That the awardees are the following:
1. Ermelina Abella 11. Corazon
Cansas
2. Lourdes Jaquias 12. Michelle
Palma
3. John Espinosa 13. Mila Saberon
4. Jean Basa 14. Merlinda Miraflor
5. Lerma Espinosa 15. Edna
Bagasina
6. Eduardo Sison 16. Jocelyn
Educalane
7. Lina Hebron 17. Alvin Gatdula
8. Nora Elamparo 18. Helen
Egenias
9. Luz Aspiras 19. Luz Eclarino
10. Oscar Lopez 20. Josephine
Elamparo
4. That on June 30, 1998 accused Henry E.
Barrera after taking his oath as the new Mayor
of Candelaria, Zambales went to the public
market and pleaded with the complainants
herein not to occupy the new market stalls;
5. That there was a public hearing conducted
on the issue of the public market on July 8,
1998 by the Sangguniang Bayan with the new
elected mayor as presiding officer;
6. That accused Henry E. Barrera was the
Vice-Mayor of Candelaria, Zambales from
1986 to 1992;
7. That the accused was a stall holder or
lessee of one of the stalls at the Candelaria
Public Market;
8. That on March 11, 1995 during the time of
Mayor Fidel Elamparo, the public market of
Candelaria, Zambales was razed to the
ground;
9. That the incident displaced about 60 market
vendors;
10. That Ex-Mayor Elamparo assured the
market vendors who were displaced together
with Congressman Antonio Diaz that they will
enjoy priority/preference over the new stalls
once the public market is re-built; and
 11. That the displaced market vendors were
temporarily sheltered along Perla St. and
Ruby St., adjacent to the burned public
market.
The parties agreed, that the only issue to be resolved is:
whether or not accused Henry E. Barrera is liable for
violation of Section 3(e) and 9 of Republic Act No. 3019.3
While the Pre-Trial Order, reflecting the foregoing
stipulation of facts, was not signed by the members of
the Fourth Division of the Sandiganbayan, the issuance,
authenticity, and contents thereof were never disputed
nor put in issue by any of the parties.
When arraigned, accused Mayor Barrera, Escala, and
Edquiban separately pleaded not guilty.
On August 2, 2000, Escala and Edquiban filed an
Omnibus Motion: 1) For the Issuance of an Order
Dropping Dr. Rufina Escala and Mr. Santos Edquiban
from the Information; 2) To Withdraw Bond; and 3) To
Lift Hold Departure Orders on the ground that the
Ombudsman approved the recommendation of the
Special Prosecutor to drop said two accused from the
Informations.
In an Order dated August 8, 2000, the Sandiganbayan
granted the Omnibus Motion and accordingly ordered
Escala and Edquiban dropped from the Informations.
Complainants Abella, Jaquias, John Espinosa, Lerma
Espinosa, Sison, Hebron, Cansas, Palma, Saberon,
Bagasina, Educalane, Eclarino, and Josephine
Elamparo testified for the People. Upon motion of the
People, the Sandiganbayan issued an Order dated
August 14, 2001, dismissing the complaints of Basa,
Norma Elamparo, Lopez, Miraflor, Gatdula, and Egenias,
on the ground that said charges cannot be prosecuted
successfully without the testimony of these six
complainants. The People, however, proceeded with the
prosecution of the complaints of Abella and the 13 other
complainants (Abella, et al.). Subsequently, the People
formally offered its documentary exhibits, which were
admitted in evidence.
Mayor Barrera filed a Motion for Leave to File Demurrer
to Evidence on October 23, 2001, which the
Sandiganbayan granted in an Order dated October 29,
2001.
Mayor Barrera filed his Demurrer to Evidence on
November 8, 2001, avowing that there was no bad faith
in his issuance of Memorandum No. 1, which prevented
Abella, et al., from occupying the new stalls at the
Candelaria Public Market. He explained that he needed
to issue Memorandum No. 1 since the previous
Municipal Mayor, Fidel Elamparo, awarded the Lease
Contracts over the new public market stalls less than a
week before the end of the latter’s term and without
regard to the requirement of pertinent laws. Mayor
Barrera also claimed that he did not act with manifest
partiality in issuing Memorandum No. 1 considering that
said issuance applies not only to Abella, et al., but also
to all awardees of the questionable Lease Contracts.
Mayor Barrera further pointed out that Abella, et al., did
not suffer any undue injury even when they were unable
to occupy the new public market stalls as they were able
to continue working and earning as market vendors at
the temporary public market site. Hence, Mayor Barrera
argued that any purported damage sustained by Abella,
et al., by reason of the issuance and implementation of
Memorandum No. 1 should be solely borne by them,
being damnum absque injuria.
In its Comment/Opposition to Mayor Barrera’s Demurrer
to Evidence, the People asserted that the pieces of
evidence it adduced and presented were more than
sufficient to sustain the accused Mayor’s conviction. The
People maintained that it would be in Mayor Barrera’s
best interest to explain during trial why on June 30,
1998, said Mayor, assisted by the police, forcibly evicted
Abella, et al., from the new public market and padlocked
the market stalls without the benefit of any court order.
According to the People, Mayor Barrera’s actuations
displayed a wanton disregard of the constitutional rights
to life and property, as well as to due process of law,
which resulted to business losses on the part of Abella,
et al., from the time their market stalls were closed.
On May 6, 2002, the Sandiganbayan rendered its
Decision granting Mayor Barrera’s Demurrer to Evidence
and dismissing the criminal cases against said Mayor.
The dispositive portion of the Decision reads:
WHEREFORE, the Demurrer to Evidence filed by
accused HENRY E. BARRERA, through counsel, is
hereby GRANTED and Criminal Cases Nos. 25035-37;
25039-41; 25043; 25045-47; 25049-50 and 25053-54
are hereby DISMISSED on the ground that the elements
of the offense under Sec. 3(e) of R.A. No. 3019, as
amended, were not established beyond reasonable
doubt.4
Without filing a Motion for Reconsideration of the
Sandiganbayan judgment, the People filed the present
Petition, faulting the graft court for the following:
I
THE RESPONDENT COURT ACTED WITH
GRAVE ABUSE OF DISCRETION IN
PROMULGATING THE ASSAILED DECISION
AS IT NEVER EXPRESSED CLEARLY AND
DISTINCTLY THE FACTS AND THE
EVIDENCE ON WHICH IT IS BASED, IN
VIOLATION OF THE PROVISIONS OF SEC.
14, ARTICLE VIII OF THE CONSTITUTION.
II
THE RESPONDENT COURT COMMITTED
GRAVE ABUSE OF DISCRETION IN RULING
THAT THE PROSECUTION FAILED TO
PROVE AND QUANTIFY ACTUAL INJURY
AND DAMAGE SUFFERED BY THE
PRIVATE COMPLAINANTS.
III
THE RESPONDENT COURT COMMITTED
GRAVE ABUSE OF DISCRETION IN RULING
THAT THE PROSECUTION FAILED TO
PROVE EVIDENT BAD FAITH ON THE PART
OF THE PRIVATE RESPONDENT.
The Petition has no merit.
At the outset, we note that this Petition for Certiorari
under Rule 65 of the Rules of Court was filed without a
Motion for Reconsideration of the Decision dated May 6,
2002 having been filed before the Sandiganbayan. This
fact alone would have warranted the dismissal of the
instant Petition given the general rule that a motion for
reconsideration is a condition sine qua non before the
filing of a petition for certiorari. In Republic v.
Sandiganbayan,5 we held:
As a rule, the special civil action of certiorari under Rule
65 of the 1997 Rules of Civil Procedure, as amended,
lies only when the lower court has been given the
opportunity to correct the error imputed to it through a
motion for reconsideration of the assailed order or
resolution. The rationale of the rule rests upon the
presumption that the court or administrative body which
issued the assailed order or resolution may amend the
same, if given the chance to correct its mistake or error.
The motion for reconsideration, therefore, is a condition
sine qua non before filing a petition for certiorari.
Here, petitioners filed the instant petitions for certiorari
without interposing a motion for reconsideration of the
assailed Resolution of the Sandiganbayan. Section 1 of
the same Rule 65 requires that petitioners must not only
show that the trial court, in issuing the questioned
Resolution, "acted without or in excess of its jurisdiction,
or with grave abuse of discretion amounting to lack or
excess of jurisdiction," but that "there is no appeal, nor
any plain, speedy, and adequate remedy in the ordinary
course of law." We have held that the "plain," "speedy,"
and "adequate remedy" referred to in Section 1 of Rule
65 is a motion for reconsideration of the questioned
Order or Resolution. It bears stressing that the strict
application of this rule will also prevent unnecessary and
premature resort to appellate proceedings. We thus
cannot countenance petitioners’ disregard of this
procedural norm and frustrate its purpose of attaining
speedy, inexpensive, and orderly judicial proceedings.
In justifying their failure to file the required motion for
reconsideration, petitioners vehemently assert that they
were "deprived of due process and there is extreme
urgency for relief, and that under the circumstances, a
motion for reconsideration would be useless."
We are not persuaded.
Petitioners may not arrogate to themselves the
determination of whether a motion for reconsideration is
necessary or not. To dispense with the requirement of
filing a motion for reconsideration, petitioners must show
concrete, compelling, and valid reason for doing so.
They must demonstrate that the Sandiganbayan, in
issuing the assailed Resolution, acted capriciously,
whimsically and arbitrarily by reason of passion and
personal hostility. Such capricious, whimsical and
arbitrary acts must be apparent on the face of the
assailed Resolution. These, they failed to do.
The People in the instant case absolutely failed to
provide any explanation as to why it did not first move for
reconsideration of the challenged Sandiganbayan
judgment before seeking a writ of certiorari from this
Court. We therefore cannot find any "concrete,
compelling, and valid reason" to except the People from
the aforementioned general rule of procedure.
The Petition at bar must also be dismissed on
substantive grounds.
Article VIII, Section 14 of the 1987 Constitution
mandates that "[n]o decision shall be rendered by any
court without expressing therein clearly and distinctly the
facts and the law on which it is based." The purpose of
Article VIII, Section 14 of the Constitution is to inform the
person reading the decision, and especially the parties,
of how it was reached by the court after consideration of
the pertinent facts and examination of the applicable
laws. The losing party is entitled to know why he lost, so
he may appeal to a higher court, if permitted, should he
believe that the decision should be reversed. A decision
that does not clearly and distinctly state the facts and the
law on which it is based leaves the parties in the dark as
to how it was reached and is especially prejudicial to the
losing party, who is unable to pinpoint the possible errors
of the court for review by a higher tribunal. Thus, a
decision is adequate if a party desiring to appeal
therefrom can assign errors against it.6
Our review of the Sandiganbayan Decision dated May 6,
2006 reveals that said judgment actually contained a
summary of the antecedent facts and proceedings; as
well as a discussion on the relevant statutory provisions,
the elements of the offense charged, and the testimonial
and documentary evidence presented by the People.
The factual and legal bases of the assailed
Sandiganbayan Decision, granting Mayor Barrera’s
Demurrer to Evidence, are readily evident in the
following excerpts therefrom:
The instant "Demurrer to Evidence" is impressed with
merit.
Section 3, paragraph (e) of R.A. 3019, provides that:
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;
xxxx
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. x x x
To be liable for violation of Section 3(e) of Republic Act
No. 3019, four essential elements (as stated in the
Information filed in the present cases) must be present:
1) That the accused is a public officer or a
private person charged in conspiracy with the
public officers;
2) That said public officer commits the
prohibited acts during the performance of his
official duties or in relation to his public
position;
3) That he causes undue injury to any party,
whether government or private individuals;
and
4) That the public officer has acted with
manifest partiality, evident bad faith or gross
inexcusable negligence.
The first two above-stated elements are clearly present
in the instance cases. However, the third and fourth
elements appear to be absent, or at best remain
doubtful.
The undue injury mentioned as the third essential
element in the commission of the crime requires proof of
actual injury and damage. Clarifying, the Supreme Court,
in Llorente v. Sandiganbayan, stated:
"x x x Unlike in actions for torts, undue injury in Sec. 3(e)
cannot be presumed even after a wrong or a violation of
a right has been established. Its existence must be
proven as one of the elements of a crime. In fact, the
causing of undue injury or the giving of any unwarranted
advantage or preference through manifest partiality,
evident bad faith or gross inexcusable negligence
constitutes the very act punished under this section.
Thus, it is required that the undue injury be specified,
quantified and proven to the point of moral certainty."
In the instant cases, the evidence presented by the
prosecution failed to prove actual injury and damage
suffered by the private complainants, as one of the
elements of the crime herein charged, in that it failed to
specify, quantify and prove to the point of moral certainty
the purported "undue injury". The complainants in their
testimonies, admitted that they have been working and
earning, either as market vendors or in pursuit of their
profession from the time of the closure of their respective
market stalls up to now. Also, their claims of business
losses, at the time material to the cases at bar, leave
much to be desired vis-à-vis the moral certitude exacted
by law to prove the alleged undue injury. Pathetically,
said evidence, are either contradictory or incredible.
Likewise, the prosecution’s evidence failed to prove
manifest partiality and/or evident bad faith on the part of
the accused, as the fourth of the above-stated requisites
for the commission of the crime herein charged.
For an act to be considered as exhibiting "manifest
partiality," there must be a showing of a clear, notorious
or plain inclination or predilection to favor one side rather
than the other. "Partiality" is synonymous with "bias"
which "excites a disposition to see and report matters as
they are wished for rather than as they are." "Evident
bad faith," on the other hand, is something which does
not simply connote bad judgment or negligence; it
imputes a dishonest purpose or some moral obliquity
and conscious doing of a wrong; a breach of sworn duty
through some motive or intent or ill will; It partakes of the
nature of fraud. It contemplates a state of mind
affirmatively operating with furtive design, or some
motive of self-interest or ill will for ulterior purpose.
Evident bad faith connotes a manifest and deliberate
intent on the part of the accused to do wrong or cause
damage.
The evidence presented by the prosecution falls short of
that quantum of proof necessary to establish the fact that
the accused acted with manifest partiality or with evident
bad faith. On the contrary, what is clear from the
evidence adduced, was that herein accused simply
exercised his legitimate powers under the Local
Government Code of 1991 (LGC) which provides that a
municipal mayor has the power to "enforce all laws and
ordinances relative to the governance of the municipality
and the exercise of its corporate powers" and, for this
purpose, he shall have the power to "issue such
executive order as are necessary for the proper
enforcement and execution of the laws and ordinances."
Ex-Mayor Elamparo’s acts of entering into lease
contracts, when his term was about to expire and herein
accused-movant’s term was about to commence, being
the mayor-elect, was not only in violation of the Local
Government Code provision that "no contract may be
entered into by the local chief executive in behalf of the
local government unit without prior authorization by the
sangguniang concerned," but also of the other
requirements of law such as, a verified application from
the complainants, payment of application fees, drawing
of lots and the opening of bids, since not all the
displaced vendors can be accommodated in the thirty-
two stalls in the new public market. The intent of such a
maneuvering was obviously to tie the hands of the
incoming administration.
The undue haste of awarding stalls in the new public
market by Ex-Mayor Elamparo was flagrant, because
from 26 June to 30 June, 1998, former stall holders of
the old market that burned down, held a rally to
denounce the allegedly unfair awarding of contracts of
lease over the new stalls, complaints ranging from
awards to new comers, to instances of two stalls, being
awarded to one lessee.
It was precisely in this state of affair that prompted
herein accused-movant Barrera to cause the issuance of
Memorandum No. 1, Series of 1998, after he had taken
his oath as mayor of Candelaria, Zambales, to wit:
"You are hereby advised that effective 1:00 PM, June
30, 1998, the transferring to and occupancy of stalls
inside the Public Market shall be temporarily suspended.
For your strict implementation and compliance."
Lastly, of significance is the fact that Memorandum No. 1
applied to all stallholders at the new public market, be
they supporters or not of Mayor Barrera during the 1998
mayoralty elections just past. These admissions of the
complaining witnesses in open court, thus, refute their
allegations in their affidavits that the purpose of the
memorandum was to award the new stalls to Mayor
Barrera’s supporters.
In the light of all the foregoing, We find that herein
accused-movant Henry E. Barrera cannot in fairness be
held liable under the indictment. In this connection, it has
been held that the prosecution must rely on the strength
of its own evidence and not on the weakness of the
defense; the burden of proof is never on the accused to
disprove the facts necessary to establish the crime
charged. "It is safely entrenched in our jurisprudence"
says the Supreme Court, "that unless the prosecution
discharges its burden to prove the guilt of an accused
beyond reasonable doubt, the latter need not even offer
evidence in his behalf.7
In fact, based on the foregoing, the People was able to
identify and discuss with particularity in its present
Petition the grave abuse of discretion allegedly
committed by the graft court in granting Mayor Barrera’s
Demurrer to Evidence. Thus, contrary to the People’s
contention, the aforequoted Sandiganbayan judgment
did not violate the mandate of Article VIII, Section 14 of
the 1987 Constitution.
We further disagree with the People’s assertion of grave
abuse of discretion on the part of Sandiganbayan in
ruling that several elements for the violation of Section
3(e) of Republic Act No. 30198 are lacking, or at best,
doubtful, in this case.
In order to be held guilty of violating Section 3(e) of
Republic Act No. 3019, the provision itself explicitly
requires that the accused caused undue injury for having
acted with manifest partiality, evident bad faith, or with
gross inexcusable negligence, in the discharge of his
official administrative or judicial function. The People’s
evidence failed to support the existence of these two
elements.
The issuance by Mayor Barrera of Memorandum No. 1 is
rooted in Section 444, in relation to Section 22, of
Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, which provide:
Section 444. The Chief Executive: Powers, Duties,
Functions and Compensation. – (a) The municipal
mayor, as the chief executive of the municipal
government, shall exercise such powers and perform
such duties and functions as provided by this Code and
other laws.
(b) For efficient, effective and economical governance
the purpose of which is the general welfare of the
municipality and its inhabitants pursuant to Section 16 of
this Code, the municipal mayor shall:
xxxx
(2) Enforce all laws and ordinances relative to the
governance of the municipality and the exercise of its
corporate powers provided for under Section 22 of this
Code, implement all approved policies, programs,
projects, services and activities of the municipality and,
in addition to the foregoing, shall:
xxxx
(iii) Issue such executive orders as are necessary for the
proper enforcement and execution of laws and
ordinances.
Section 22. Corporate Powers. – x x x
xxxx
(c) Unless otherwise provided in this Code, no contract
may be entered into by the local chief executive in behalf
of the local government unit without prior authorization
by the sanggunian concerned. A legible copy of such
contract shall be posted at a conspicuous place in the
provincial capitol or the city, municipality or barangay
hall.
The award of Lease Contracts over the new public
market stalls were marred by several irregularities,
among which, was it being made by the former Mayor
with only one week before the expiration of his term and
the lack of prior authorization by the sanggunian as
required by Section 22(c) of Republic Act No. 7160.
Also, there were 60 market vendors displaced by the fire
at the old public market, but only 32 stalls were available
for occupancy at the new public market. A rally was held
by the stall holders displaced by the fire from the old
public market to denounce the allegedly unfair awarding
of the Lease Contracts over the new public market stalls
to new comers, and even in some instances, the
awarding of two stalls to only one lessee. These
circumstances prompted Mayor Barrera, the newly
elected Municipal Mayor, to issue Memorandum No. 1
pursuant to his duty of enforcing and implementing laws
and ordinances for the general welfare of the
municipality and its inhabitants. It bears to stress that
Memorandum No. 1 applies equitably to all awardees of
the Lease Contracts over the new public market stalls,
not just Abella, et al., and did not give any unwarranted
benefit, advantage, or preference to any particular
private party. Consequently, we find that the
Sandiganbayan did not commit grave abuse of discretion
when it declared that Mayor Barrera did not issue commission of grave abuse of discretion amounting to
Memorandum No. 1 with manifest partiality, evident bad lack or excess of jurisdiction. For as long as the court
faith, or with gross inexcusable negligence.1âwphi1 acted within its jurisdiction, an error of judgment that it
may commit in the exercise thereof is not correctible
through the special civil action of certiorari. To reiterate,
Moreover, in Pecho v. Sandiganbayan,9 we explained
the Sandiganbayan, in rendering the challenged
that the undue injury caused to any party, including the
Decision, acted with jurisdiction and did not gravely
government, under Section 3(e) of Republic Act No.
abuse its discretion.
3019, could only mean actual injury or damage which
must be established by evidence. Abella, et al., alleged
undue damage/injury by reason of Memorandum No. 1 There being no grave abuse of discretion on the part of
because they had been unable to occupy the new public the Sandiganbayan in granting Mayor Barrera’s
market stalls and were thus deprived of their daily Demurrer to Evidence as to deprive the graft court of
income of varying amounts. However, Abella, et al., in jurisdiction, the issuance of a writ of certiorari is not
their own testimonies,10 admitted that that they have warranted in the present case.
continued working and earning – either as market
vendors at the temporary public market site, or in pursuit
WHEREFORE, the Petition is hereby dismissed.
of their profession – from the time their market stalls
were closed until present time. Hence, there was no
sufficient evidence to establish actual injury or damage SO ORDERED.
suffered by Abella, et al., by reason of Memorandum No.
1.
In People v. Sandiganbayan,11 we defined grave abuse
of discretion as follows:
Grave abuse of discretion is the capricious and
whimsical exercise of judgment as equivalent to lack of
jurisdiction or where the power is exercised in an
arbitrary or despotic manner by reason of passion or
personal hostility, and it must be so patent and gross as
to amount to an evasion of positive duty or a virtual
refusal to perform the duty enjoined or to act in
contemplation of law. x x x.
xxxx
The demurrer to evidence in criminal cases, such as the
one at bar, is "filed after the prosecution had rested its
case," and when the same is granted, it calls "for an
appreciation of the evidence adduced by the prosecution
and its sufficiency to warrant conviction beyond
reasonable doubt, resulting in a dismissal of the case on
the merits, tantamount to an acquittal of the accused."
Such dismissal of a criminal case by the grant of
demurrer to evidence may not be appealed, for to do so
would be to place the accused in double jeopardy. The
verdict being one of acquittal, the case ends there.
The sole office of an extraordinary writ of certiorari is the
correction of errors of jurisdiction including the
G.R. No. 197567 November 19, 2014
GOVERNOR ENRIQUE T. GARCIA, JR., Petitioner,
vs.
OFFICE OF THE OMBUDSMAN, LEONARDO B.
ROMAN, ROMEO L. MENDIOLA, PASTOR P.
VICHUACO, AURORA J. TIAMBENG, and
NUMERIANO G. MEDINA, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the
Resolution2 dated May 30, 2006 and the Order3 dated
October 9, 2009 of the Office of the Ombudsman
(Ombudsman) in OMB-L-C-05-0084-A, which dismissed
the criminal complaint against herein respondents for
lack of probable cause.
The Facts
The present case stemmed from a Complaint-
Affidavit4 filed by herein petitioner Enrique T. Garcia, Jr.
(Garcia), incumbent Provincial Governor of the Province
of Bataan (Province), before the Ombudsman, docketed
as OMB-L-C-05-0084-A, against respondents former
Provincial Governor Leonardo B. Roman (Roman),
former Executive Assistant Romeo L. Mendiola
(Mendiola), former Provincial Treasurer Pastor P.
Vichuaco (Vichuaco), former Budget Officer Aurora J.
Tiambeng (Tiambeng), and incumbent5 Provincial
Accountant Numeriano G. Medina (Medina), all of the
Provincial Capitol of Bataan, charging them with
Malversation of Public Funds through Falsification of
Public Documents under Article 217 in relation to Article
171 of the Revised Penal Code (RPC) and violation of
Section 3, paragraphs (a) and (e) of Republic Act No.
(RA) 3019, or the "Anti-Graft and Corrupt Practices Act,"
inter alia.
Also charged were incumbent6 Provincial Engineer
Amelia R. De Pano (De Pano), Assistant Provincial
Engineer Angelito A. Rodriguez (Rodriguez), Engineer
Noel G. Jimenez (Jimenez), and Architect Bernardo T.
Capistrano (Capistrano), as well as Noel
Valdecañas7 (Valdecañas), the owner and manager of
V.F. Construction of Balanga City.
The essential allegations in the Complaint-Affidavit are
as follows:
On November 3, 2003, Roman, being the Provincial
Governor at that time, entered into a contract8 with V.F.
Construction, as represented by Valdecañas, for the
construction of a mini-theater at the Bataan State
College - Abucay Campus, Abucay, Bataan (project) for
the contract price of ₱3,660,000.00.9
Thereafter, or on February 23, 2004, Roman signed and
issued a Certificate of Acceptance,10 stating that the
project was "100% completed in accordance with plans
and specification[s]" per the Accomplishment
Report11 and Certification,12 both dated February 20,
2004, prepared and signed by Capistrano, Jimenez,
Rodriguez, and De Pano. Valdecañas also affixed his
signature on the said Accomplishment Report and later
executed an Affidavit13dated May 26, 2004 stating that
the project was 100% completed.
In view of the project’s purported completion, two (2)
Land Bank of the Philippines checks14 (Land Bank
checks) – each in the amount of ₱1,655,318.18 (or
₱3,310,636.36 in total) – were respectively issued by
Roman and Vichuaco on April 30 and June 2, 2004 in
favor of V.F. Construction. The issuances were made
pursuant to two (2) separate Disbursement
Vouchers15 prepared and issued by De Pano, Medina,
and Vichuaco, and approved for payment by Roman. In
addition, an Allotment and Obligation Slip16 (ALOBS)
was issued, prepared, and signed by De Pano,
Tiambeng, and Medina to reimburse V.F. Construction
for the cost of the labor and materials utilized for the
construction of the project. Tiambeng also certified in the
ALOBS the "existence of [an] appropriation" for the said
project.17 Meanwhile, Mendiola prepared all the
supporting documents for the approval and release of
the funds therefor, and submitted the same to Roman for
his signature.18
The receipts issued by V.F. Construction dated May 5,
200419 and June 3, 200420 show that it received the
payments for the project.
Notwithstanding the various documents attesting to the
project’s supposed completion, as well as the
disbursement of funds in payment therefor, Garcia –
Roman’s successor as Provincial Governor – authorized
the inspection of the project sometimein August 2004
and discovered that while its construction was indeed
commenced, it remained unfinished as reflected in a
Memorandum Report21 dated August 24, 2004.
Hence, Garcia filed the above-mentioned Complaint-
Affidavit against, among others, respondents, who, in
response, proffered their individual defenses.22
For his part, Roman cited political enmity between him
and Garcia as the reason for the filing of the
complaint.23 He defended the genuineness of the
project, averring that it was not a "ghost project" as, in
fact, substantial work had been done thereon.24 He
ascribed the falsehood in this case to the
Accomplishment Report and Certification dated February
20, 2004, as well as Valdecañas’s Affidavit, which all
stated that the project was 100% completed, claiming
that he had no participation in their preparation and
execution25 and that he only signed the Disbursement
Vouchers after finding no irregularities on the said
documents.26
Similarly, Mendiola denied any participation in the
preparation and execution of any of the documents
involved in the project.27
On the other hand, Vichuaco admitted having signed the
Disbursement Vouchers and Land Bank checks, from
which the project was funded, but denied having any
knowledge that the construction thereof was not yet
completed.28 He claimed to have signed the
Disbursement Vouchers only after having ascertained
that De Pano and Medina, in their official capacities, had
already signed the same, and ventured that he would not
have done so had he known that the project was not yet
complete.29
Medina also admitted having signed the Disbursement
Vouchers and ALOBS, but claimed that he did so after a
thorough examination of the supporting documents, i.e.,
the Accomplishment Report and Certification. He stated
that he was not informed that the project was not yet
completed when he signed the Disbursement Vouchers
and the ALOBS, adding that the project was already
substantially completed when Garcia prevented further
work on the same.30 He further insisted that the project
was covered by a corresponding appropriation.31
Meanwhile, Tiambeng claimed that, as the Budget
Officer of Bataan at the time, she verified that there was
a corresponding appropriation for the project. Thus, she
signed the ALOBS, which she claimed was a ministerial
duty on her part.32 In this regard, she posited that she
would not have signed the same had she known that
there was no appropriation for the project.33
As for the other officials charged, namely, De Pano,
Rodriguez, Jimenez, and Capistrano, they collectively
admitted having signed the Accomplishment Report and
Certification, but maintained that they did so only after
the same had been reviewed by the other provincial
engineers.34 Valdecañas, for his part, denied35 the
allegations against him and claimed that Medina
borrowed his contractor’s accreditation in order to
participate in the bidding for the project. He pointed out
that it was Medina who actually participated in the
bidding process and that his signature appearing on the
documents pertaining to the project was falsified.36 He
added that he was out of the country when payments for
the project were made.37
The Ombudsman Ruling
In a Resolution38 dated May 30, 2006, the Ombudsman
found probable cause to indict De Pano, Rodriguez,
Jimenez, and Capistrano for the crime of Falsification of
Public Documents by making it appear through the
aforesaid Certification and Accomplishment Report that
the project had already been completed when the same
was only partially constructed. The Ombudsman held
that their report was necessary for the issuance of a
certification for the disbursement of funds therefor. 39
On the other hand, the Ombudsman cleared
respondents from liability on the ground of insufficiency
of evidence, reasoning that "mere signature on a
voucher or certification is not enough" to establish any
conspiracy among them which would warrant their
conviction.40 Relying on the doctrine enunciated in the
case of Arias v. Sandiganbayan41(Arias) which states
that "[a]ll heads of offices have to rely to a reasonable
extent on their subordinates and on the good faith
ofthose who prepare bids, purchase supplies, or enter
into negotiations,"42 the Ombudsman held that there was
"no direct and strong evidence that [Roman] participated
in the fraudulent act/transaction"43 and that his act,
together with that of the other respondents, was
protected by the "legal presumption of good faith and
regularity,"44 which Garcia failed to overcome.
Oddly, no pronouncement was made with regard to the
criminal charges against Valdecañas.45
Dissatisfied, Garcia moved for reconsideration,46 citing
the Commission on Audit’s (CoA) Audit Observation
Memorandum (AOM) No. 2005-004-100 (2004)47 dated
April 21, 2005 (CoA Memo), which stated that the project
had no source of funds, thus rendering the contract
therefor void and the payments made therefor
illegal.48Moreover, by approving and effecting the
payment of the project despite its non-completion and
the absence of an allotment therefor, Garcia claimed that
respondents, who acted in conspiracy with each other,
should beheld liable this time for the crime of Technical
Malversation under Article 22049 of the RPC.50
In an Order51 dated October 9, 2009, the Ombudsman
denied Garcia’s motion for reconsideration, hence, this
certiorari petition.
The Issue Before the Court
The central issue for the Court’s resolution is whether or
not the Ombudsman gravely abused its discretion in
dismissing all the criminal charges against respondents
for lack of probable cause. In his certiorari petition,
Garcia maintains that the findings in the CoA Memo are
sufficient to establish probable cause and to hold
respondents for trial for the crimes of Technical
Malversation, Malversation of Public Funds through
Falsification of Public Documents, and for Violation of
Section 3 (e) of RA 3019.52 As it appears, the other
criminal and administrative charges contained in his
complaint-affidavit53 were not anymore discussed in the
said petition.Thus, the Court is constrained to confine its
analysis only to what has been alleged therein.
The Court's Ruling
The petition is partly meritorious.
I.
The present Constitution and RA 6770,54 otherwise
known as the "Ombudsman Act of 1989," have endowed
the Office of the Ombudsman with wide latitude, in the
exercise ofits investigatory and prosecutorial powers, to
pass upon criminal complaints involving public officials
and employees.55 Hence, as a general rule, the Court
does not interfere with the Ombudsman’s findings and
respects the initiative and independence inherent in its
office, which "beholden to no one, acts as the champion
of the people and the preserver of the integrity of the
public service."56
The foregoing principle does not, however, apply when
the Ombudsman’s ruling is tainted with grave abuse of
discretion, subjecting the same to certiorari correction.
Among other instances, the Ombudsman may be
deemed to have gravely abused its discretion when it
unjustifiably fails to take essential facts and evidence
into consideration in the determination of probable
cause.57 It may also be committed when the
Ombudsman patently violates the Constitution, the law
or existing jurisprudence. Indeed, any decision, order or
resolution of a tribunal tantamount to overruling a judicial
pronouncement of the highest Court is unmistakably
grave abuse of discretion.58
Legally classified, such misdeeds fall squarely within the
concept of grave abuse of discretion which is defined as
the capricious and whimsical exercise of judgment on
the part of the public officer concerned, which is
equivalent to an excess or lack of jurisdiction. The abuse
of discretion must be so patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to
perform a duty enjoined by law, or to act at all in
contemplation of law as where the poweris exercised in
an arbitrary and despotic manner by reason of passion
or hostility.59
Applying these principles to thiscase, the Court finds that
the Ombudsman gravely abused its discretion when it
disregarded the CoA Memo and patently misapplied
existing jurisprudence – particularly, the Ariascase – in
ruling that there was no probable cause for the crime of
Violation of Section 3 (e),60 RA 3019. Accordingly,
respondents should be indicted for such. However, the
same does not hold true for the other crimes of
Technical Malversation and Malversation of PublicFunds
through Falsification of Public Documents for reasons
that will be hereinafter discussed.
II.
Probable cause, for the purpose of filing a criminal
information, exists when the facts are sufficient to
engender a well-founded belief that a crime has been
committed and that the respondent is probably guilty
thereof. To engender a well-founded belief that a crime
has been committed, and to determine if the suspect is
probably guilty of the same, the elements of the crime
charged should, in all reasonable likelihood, be present.
This is based on the principle that every crime is defined
by its elements, without which there should be, at the
most, no criminal offense.61
The elements of the crime of Violation of Section 3
(e),62 RA 3019 are as follows: (a) the offender must be a
public officer discharging administrative,judicial, or
official functions; (b) he must have acted with manifest
partiality, evident bad faith or gross inexcusable
negligence; and (c) his action caused any undue injury
to any party, including the government, or gave any
private party unwarranted benefits, advantage or
preference in the discharge of his functions.63
Considering the findings contained in the CoA Memo,
which the Ombudsman, however, disregarded, it is quite
clear that all the foregoing elements are, in all
reasonable likelihood, present with respect to
respondents’ participation in this case.
Respondents, who were all public officers at the time of
the alleged commission of the crime – particularly, as
provincial officials of Bataan discharging administrative
functions (first element) – apparently acted with manifest
partiality, evident bad faith – or, at the very least, gross
inexcusable negligence – when they issued the pertinent
documents and certifications that led to the diversion of
public funds to a project that had no proper allotment,
i.e., the mini-theater project (second element). The
absence of such allotment not only renders invalid the
release of funds therefor but also taints the legality of the
project’s appropriation64 as well as the Province’s
contract with V.F. Construction. As the CoA Memo
pertinently explains:
Four contracted infrastructure projects and a financial
assistance extended to [the] barangay by your
administration amounting to ₱5,404,000 and ₱100,000,
respectively, were found devoid of valid appropriations.
Of the amounts, ₱4,992,750 was already paid while the
remaining balance of ₱511,250 was lodged to Accounts
Payable. The non-existence of valid appropriations
rendered the contracts void and the payments illegal.
The said projects were among the 19 provided with
appropriations totalling ₱14,005,000 in the [P]rovince’s
2003 Closing Budgets embodied under Ordinance No.
A-6 and approved by the Sangguniang Panlalawigan in
its Resolution No. 54 on February 23, 2004.
The validity of the appropriations and the subsequent
transactions were not considered in audit due tolack of
legal basis, to wit:
a. No sources of funds for the ₱14.005M appropriation
rendering it invalid
The ₱43,487,527.16 computed source/available balance
for the ₱14,005,000 appropriation was already used as
the beginning available balance in the computation of
the Estimated Revenues and Receipts considered in the
earlier approved CY 2004 Annual General Fund Budget
contained in Appropriation Ordinance No. 2 and passed
under S.P. Resolution No. 6 on January 12, 2004
(Please see Annex A [with the heading "Supplemental
Appropriations of ₱14,005,000. CY 2003 Closing
Budget]). Sec. 321 of RA 7160 provides, among others,
that:
"No ordinance providing for a supplemental budget shall
be enacted, except when supported by funds actually
available as certified by the local treasurer or by new
revenue sources."
b. Non-release of allotments for the ₱14.005 M
appropriation
Allotment is the authorizationissued by the Local Chief
Executive (LCE) to a department/office of the LGU,
which allows it to incur obligations, for specified
amounts, within the appropriation ordinance. (Sec. 08,
Manual on the NGAS for LGUs, Volume I).
As verified from the Accounting and Budget offices, no
allotments were released for the projects, hence the
incurrence of the obligations were not authorized. In
spite of this, the amount of ₱14,005,000 was taken up
among the continuing appropriations/allotments in CY
2004. Also, Allotment and Obligation Slips (ALOBS)
which serve as the LGU commitments to pay were
certified for eight of the projects in the amount of
₱7,816,000.65 (Emphases and underscoring supplied)
To be clear, the nineteen (19) projects mentioned in the
CoA Memo were listed under "Annex B"66 thereof
entitled "Schedule of Contracted Projects and Financial
Assistance Out ofInvalid Appropriations, CY 2004," all of
which had no allotments issued. First and foremost on
the list is the construction of the mini-theater project. A
similar CoA memorandum, AOM No. 2004-2667 dated
September 6, 2004, which was also ignored by the
Ombudsman, contains the same audit results with
regard to the lack of a valid allotment for the project.
Thus, absent compliance with this basic requirement, the
authorizations made by respondents in relation to the
project were therefore prima facie tainted with illegality,
amounting to either manifest partiality, evident bad faith,
or, at the very least, to gross inexcusable negligence.
Indeed, it is reasonable to expect that respondents –
being the Province’s accountable officers at that time –
had knowledge of the procedure on allotments and
appropriations. Knowledge of basic procedure is part
and parcel of respondents’ shared fiscal responsibility
under Section 305 (l) of RA 7160, viz.:
Section 305. Fundamental Principles.- The financial
affairs, transactions, and operations of local government
units shall be governed by the following fundamental
principles:
xxxx
(l) Fiscal responsibility shall beshared by all those
exercising authority over the financial affairs,
transactions, and operations of the local government
units; x x x.
Hence, unless the CoA’s findings are substantially
rebutted, the allotment’s absence should have roused
respondents’ suspicions, as regards the project’s
legality, and, in consequence, prevented them from
approving the disbursements therefor. This is especially
true for Roman, who, as the Local Chief Executive of the
Province at that time, was primarily charged with the
issuance of allotments.68 As such, he was in the position
to know if the allotment requirement had, in the first
place, been complied with, given that it was a pre-
requisite before the project could have been contracted.
In addition, the Court observes the same degree of
negligence on the part of respondents in seemingly
attesting to the project’s 100% completion when such
was not the case. The erroneous certification rendered
the disbursements made by the Province suspect as
V.F. Construction had still to fulfill its contractual
obligations to the Province and yet were able to receive
full payment.
Considering that the illegal diversion of public funds for
the mini theafter project would undermine the execution
of other projects legitimately supported by proper
allotments, it is quite obvious that undue injury on the
part of the Province and its residents would be caused.
Likewise, considering that V.F. Construction had already
received full payment for a project that had yet to be
completed,it also appears that a private party was given
unwarranted benefits by respondents inthe discharge of
their functions (third element).
Thus, with the elements of the crime of Violation of
Section 3 (e), RA 3019 herein ostensibly present, the
Court hereby holds that the Ombudsman committed
grave abuse of discretion whenit dismissed said charge
against respondents.
That the Ombudsman had not, in any manner,
mentioned the two (2) CoA AOMs, i.e., AOM Nos. 2005-
004-100 (2004) (i.e., the CoA Memo) and 2004-26, in its
ruling leads the Court to believe that it deliberately failed
to consider the same. As the Court sees it, these are
significant pieces of evidence which should not have
been casually ignored. This stems from a becoming
respect which all government agencies should accord to
the CoA’s findings. Verily, being the constitutionally-
mandated audit arm of the government, the CoA is
vested with broad powers over all accounts pertaining to
government revenue and expenditures and the uses of
public funds and property.69 As held in the case of
Belgica v. Ochoa, Jr.:70
[I]t is the general policy of the Court to sustain the
decisions of administrative authorities, especially
onewhich is constitutionally-created, such as the CoA,
not only on the basis of the doctrine of separation of
powers but also for their presumed expertise in the laws
they are entrusted to enforce. Findings of administrative
agencies are accorded not only respect but also finality
when the decision and order are not tainted with
unfairness or arbitrariness that would amount to grave
abuse of discretion. It is only when the CoA has acted
without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction,
that this Court entertains a petition questioning its
rulings.71
With the weight accorded to the CoA’s findings, the
Ombudsman should have, at the very least, explained its
reasons as to why the two (2) CoA AOMs had no
bearing in this case. However, no such explanation was
herein made. As such, the Court holds that the
Ombudsman committed grave abuse of discretion in this
respect.
Palpable too is the Ombudsman’s grave abuse of
discretion by its misplaced reliance on the Arias
doctrine.1âwphi1
The factual circumstances which led to the Court’s ruling
in Arias were such that there was nothing else in the
documents presented before the head of office therein
that would haverequired the detailed examination of
each paper or document, viz.:
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 who prepare
bids, purchase supplies, or enter into negotiations. If a
department secretary entertains important visitors, the
auditor isnot ordinarily expected to call the restaurant
aboutthe 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 ofpapers that must be signed. x x x.72 (Emphasis
supplied)
Simply put, when a matter is irregular on the document’s
face, so much so that a detailed examination becomes
warranted, the Arias doctrine is unavailing.
Here, it cannot be denied that the absence of an
allotment for the project already rendered all related
documents/transactions irregular on their face. By this
fact alone, respondents ought to have known that
something was amiss. To echo the CoA Memo, Section
321 of RA 7160 provides, among others, that "[n]o
ordinance providing for a supplemental budget shall be
enacted, except when supported by funds actually
availableas certified by the local treasurer or by new
revenue sources." Section 8, Chapter 3 of the Manual on
the NGAS for LGUs, Volume I further defines an
"[a]llotment [as] the authorizationissued by the Local
Chief Executive (LCE) to a department/office of the LGU,
which allows it to incur obligations, for specified
amounts, within the appropriation ordinance." Since the
mini-theater project was an appropriation made in a
supplemental budget, then there should have been
funds certified to be actually available for such
appropriation to even be made. However, as the CoA
found, no such funds were certified as available.
Likewise, the project had no supporting allotment, which
means thatthere was basically no authority for the
provincial officials, i.e., respondents, to even incur the
obligations under the V.F. Construction contract, much
morefor them to disburse the funds in connection
therewith. Section 344 of RA 7160 provides:
Section 344. Certification on, and Approval of,
Vouchers.- No money shall be disbursed unless the local
budget officer certifies to the existence of appropriation
that has been legally made for the purpose, the local
accountant has obligated said appropriation, and the
local treasurer certifies to the availability of funds for the
purpose. x x x.
xxxx
With these apparent irregularities, it is quite perplexing
how the Ombudsman could have applied the Arias
doctrine in support of its ruling, especially with respect to
the charge of Violation of Section 3 (e), RA 3019. Thus,
by patently misapplying existing jurisprudence, the Court
finds that the Ombudsman also committed a grave
abuse of discretion on this score and its ruling, in these
aspects, must bereversed and set aside. In fine, the
Ombudsman is ordered to file in the proper court the
necessary Information against respondents for violating
Section 3 (e), RA 3019.
That being said, the Court proceeds to discuss the other
charges contained in Garcia’s petition. III.
As earlier stated, Garcia, in his petition, also seeks that
respondents be indicted for the crimes of Technical
Malversation, and Malversation of Public Funds through
Falsification of Public Documents. However, unlike the
charge for the crime of Violation of Section 3 (e), RA
3019, the Court is unable to render the same disposition.
First, while Garcia insists upon the sufficiency of his
evidence to indict respondents for Technical
Malversation, the Court cannot pass upon this issue,
considering that the Complaint-Affidavit filed before the
Ombudsman originally charged respondents not with
Technical Malversation under Article 22073 of the RPC,
but with Malversation of Public Funds through
Falsification of Public Documents, defined and penalized
under Article 217,74 in relation to Article 17175 of the
RPC, a complex crime.76 It bears stressing that the
elements of Malversation of Public Funds are distinctly
different from those of Technical Malversation. In the
crime of Malversation of Public Funds, the offender
misappropriates public funds for his own personal useor
allows any other person to take such public funds for the
latter’s personal use. On the other hand, in Technical
Malversation, the public officer applies public funds
under his administration not for his or another’s personal
use, but to a public use other than that for which the fund
was appropriated by law or ordinance.77 Technical
Malversation does not include, or is not necessarily
included in the crime of Malversation of Public Funds.78
Since the acts supposedly committed by respondents
constituting the crime of Technical Malversation were not
alleged in the Complaint Affidavit and the crime for which
respondents raised their respective defenses was not
Technical Malversation, the petition must perforce be
denied on this score. Otherwise, the Court would be
sanctioning a violation of respondents’ constitutionally-
guaranteed right to be informed of the nature and cause
of the accusation against them, so as to deny them a
reasonable opportunity to suitably prepare their
defense.79
prescription, considering that such dismissal was based
merely on procedural grounds and is not, in any way,
tantamount to an acquittal. WHEREFORE, the petition is
PARTLY GRANTED. The Resolution dated May 30,
2006 and the Order dated October 9, 2009 of the Office
of the Ombudsman in OMB-L-C-05-0084-A, insofar as
they dismissed the criminal charge against respondents
Leonardo B. Roman, Romeo L. Mendiola, Pastor P.
Vichuaco, Aurora J. Tiambeng, and Numeriano G.
Medina (respondents), for Malversation of Public Funds
through Falsification of Public Documents, are
AFFIRMED. However, the said Resolution and Order,
insofar as they dismissed the criminal charge against
respondents for violation of Section 3 (e), Republic Act
No. (RA) 3019 or the "Anti-Graft and Corrupt Practices
Act" are REVERSED and SET ASIDE. The Ombudsman
is ORDERED to file in the proper court the necessary
Information for violation of Section 3 (e), RA 3019
against respondents. Finally, for reasons herein
discussed, the criminal charge against respondents for
Technical Malversation is DISMISSED, without prejudice
to its proper re-filing.
SO ORDERED.

Finally, with respect to the chargeof Malversation of

Public Funds through Falsification of Public Documents,
the Court observes that there lies no evidence which
would give a prima facieindication that the funds
disbursed for the project were misappropriated for any
personal use. The CoA Memo shows that the Province’s
funds were used for a public purpose, i.e., the mini-
theater project, albeit without any allotment issued
therefor. Garcia also fails to convince the Court that the
Province’s funds were diverted to some personal
purpose. Failing in which, the Court cannot pronounce
that the Ombudsman committed a grave abuse of
discretion in dismissing such charge.

As it stands, Garcia’s petition is granted only in part as

respondents should be indicted for the lone crime of
Violation of Section 3 (e), RA 3019 for the reasons
above-discussed. It must, however, be clarified that the
dismissal of the charge of Technical Malversation is
without prejudice to its proper re-filing unless barred by
G.R. No. 188066 October 22, 2014
OFFICE OF THE OMBUDSMAN, Petitioner,
vs.
CYNTHIA E. CABEROY, Respondent.
DECISION
REYES, J.:
This is a petition for review1 under Rule 45 of the Rules
of Court of the Decision2 dated November 21, 2008 and
Resolution3 dated May 14, 2009 of the Court of Appeals
(CA) in CA-G.R. SP No. 03498, which reversed and set
aside the Consolidated Decision4 dated June 30, 2005 of
the Office of the Ombudsman-Visayas (Ombudsman)
and absolved respondent Cynthia E. Caberoy (Caberoy)
of any administrative liability.
Caberoy is the principal of Ramon Avanceña National
High School (RANHS) in Arevalo, Iloilo City. She was
charged with Oppression and Violation of Section 3(e)
and (f) ofRepublic Act (R.A.) No. 3019 or the "Anti-Graft
and Corrupt Practices Act"by Angeles O. Tuares
(Tuares) for allegedly withholding her salary for the
month of June 2002. The case was docketed as OMB-V-
A-03-0239-E. Saidcase was consolidated with OMB-V-
A-03-0572-I, which was a complaint filed by Tuares
against Ida B. Endonila, Erlinda G. Gencaya, Clarissa G.
Zamora and Victoria T. Calunsod.
Caberoy denied the charge against her, alleging, among
others, that the payrolls of June 1 to15, 2002 and
June16 to 30, 2002 show that Tuares received her
salary as shown by her signatures on lines no. 11 of the
payrolls.5
In the Consolidated Decision dated June 30, 2005
rendered by the Ombudsman, Caberoy was found guilty
of Oppression and was meted out the penalty of
dismissal from service. The dispositive portion of the
consolidated decision provides:
WHEREFORE, premises considered, respondent
CYNTHIA E. CABEROY, Principal II, Ramon Avanceña
National High School, (RANHS), Arevalo, Iloilo City, is
hereby found GUILTY of OPPRESSION and is hereby
meted the penalty of DISMISSAL FROM THE SERVICE
WITH CANCELLATION OF CIVIL SERVICE
ELIGIBILITY, FORFEITURE OFEARNED
LEAVECREDITS AND RETIREMENT BENEFITS, AND
DISQUALIFICATION FROM REEMPLOYMENT IN THE
GOVERNMENT SERVICE. On the other hand,
respondents IDA B. ENDONILA, Schools Division
Superintendent, ERLINDA G. GENCAYA, Asst. Schools
Division Superintendent, CLARISSA G. ZAMORA,
Administrative Officer III, all three of the Division of Iloilo
City, DepEd Region VI, Iloilo City, and VICTORIA T.
CALUNSOD, Officer-In-Charge/Secondary School Head
Teacher III, Ramon Avanceña National High School,
(RANHS) Arevalo, Iloilo City, are found NOT GUILTYof
the same offense and/or violating Sec. 3 (f) of R.A.
3019and thus these cases are considered DISMISSED
as far as they are concerned. Furthermore, on the
administrative aspect of the counter-allegation of Perjury
against herein complainant ANGELES O. TUARES,
Ramon Avanceña National High School, Arevalo, Iloilo
City, the same is likewise DISMISSED, for lack of merit.
SO DECIDED.6
Caberoy filed a joint motion for reconsideration, which
was denied by the Ombudsman in its Order dated
September 19, 2006.7
The Ombudsman found that Tuares was not paid any
amount in June 2002 because of her failure to submit
her clearance and Performance Appraisal Sheet for
Teachers (PAST), while the other teachers received their
salaries for the same month.8 The Ombudsman
concluded that Tuares was "singled out by respondent
Caberoy as the only one who did not receive any
amount from the school on June 2002 because, as
established earlier, the former failed to submit her
clearance and PAST."9 The Ombudsman also took into
consideration several infractions previously committed
by Caberoy, which allegedly displayed her
"notoriousundesirability as a government officer for
withholding teachers’ salaries without
authority."10 According to the Ombudsman, Caberoy
could not honestly claim that she had not been
forewarned by the Ombudsman of the grave
consequences of her repeated illegal act.11Caberoy filed
a petition for certiorariwith the CA, seeking the reversal
of her dismissal from service, and in the assailed
Decision dated November 21, 2008, the CA granted
Caberoy’s petition. The dispositive portion of the CA
decision states:
WHEREFORE, the petition is GRANTED. The
consolidated decision dated June 30, 2005, of the
respondent Ombudsman is hereby REVERSED and
SET ASIDE and another judgment is hereby rendered
ABSOLVING the petitioner of any liability, with costs de
oficio.
SO ORDERED.12
The Ombudsman filed a motion for reconsideration,
which was denied by the CA in the assailed Resolution
dated May 14, 2009.
In clearing Caberoy from the charge against her, the CA
found that no undue injury was caused to Tuares since
she received her June 2002 salary. According to the CA,
since Caberoy was charged with Violation of Section
3(e) of R.A. No. 3019 and the element of undue injury is
absent in this case, Caberoy cannot be held liable for the
offense.13 The CA also ruled that Caberoy’s "refusal" to
release Tuares’ salary was justified and the element of
"failure to so act x x x for the purpose of obtaining,
directly or indirectly, from any person interested in the
matter some pecuniary or material benefit or advantage
in favor of an interestedparty, or [discrimination] against
another" under Section 3(f) of R.A. No. 3019, is likewise
absent.14 Finally, the CA found that the acts of Caberoy
are not constitutive of oppression.15
Lastly, the CA ruled that the Ombudsman’s findings and
conclusions are not supported by substantial
evidencesince Caberoy’s act of withholding Tuares’
salaries was clearly justified.16 Hence, the present
petition, based on the ground that:
THE HONORABLE COURT OF APPEALS’ REVERSAL
OF THE PETITIONER OFFICE OF THE
OMBUDSMAN’S DECISION FINDING [CABEROY]
ADMINISTRATIVELY LIABLE FOR OPPRESSION IS
AN ERROR OF LAW CONSIDERING THAT ITS
FINDINGS IS SUPPORTED BY SUBSTAN[T]IAL
EVIDENCE.17
The Ombudsman argues that it was error for the CA to
exonerate Caberoy on the reasons that the withholding
of Tuares’ salary was justified and that there was no
undue injury onher part as she later received her salary.
The Ombudsman contends that Caberoy was found
guilty of Oppression, which is an administrative offense
under the Civil Service law, and is distinct from the crime
of Violation of R.A. No. 3019, from which she was
absolved. According to the Ombudsman, the quantum of
proof in these two offenses (Oppression and Violation
ofR.A. No. 3019) is distinct and the records of the case
disclose that there is substantial evidence to support its
decision. The Ombudsman also contests the factual
findings of the CA that Tuares actually received her
salary, stating that in the summary of payrolls and the
checks, Tuares’ name does not appear. Moreover, no
evidence was presented by Caberoy to prove that
Tuares actually received her salary, other than her bare
allegation. Finally, the Ombudsman states that Caberoy
has already been penalized several times for previous
misconduct, which displays her propensity to commit the
misdemeanor.18
Ruling of the Court
Initially, it must be stated thatin a petition for review filed
under Rule 45 of the Rules of Court, the Court is limited
only to a review of errors of law committed by the CA,
and the Court is not required to review all over again the
evidence presented before the Ombudsman.19 The rule,
nevertheless, admits of exceptions, such as when the
findings of the CA and the Ombudsman are
conflicting,20 which is what occurred in the present case.
Hence, the Court must now look into the matter of
whether the CA committed a reversible error when it
reversed the findings and conclusions of the
Ombudsman.
Tuares charged Caberoy in OMB-V-A-03-0239-E with
both Oppression and Violation of Section 3(e)(f) of R.A.
No. 3019. The Ombudsman, however, found Caberoy
guilty only of Oppression.
Oppression is an administrative offense21 penalized
under the Uniform Rules on Administrative Cases in the
Civil Service,22 which provides:
Section 52. Classification of Offenses.—Administrative
offenses with corresponding penalties are classified into
grave, less grave or light, depending on their gravity or
depravity and effects on the government service.
A. The following are grave offenses with their
corresponding penalties:
xxxx
14. Oppression.
1st Offense – Suspension for six (6) months and one (1)
day to one (1) year;
2nd Offense – Dismissal.
xxxx
Oppression is also known as grave abuse of authority,
which is a misdemeanor committed by a public officer,
who under color of his office, wrongfully inflict upon any
person any bodily harm, imprisonment or other injury. It
is an act ofcruelty, severity, or excessive use of
authority.23 To be held administratively liable for
Oppression or Grave Abuse of Authority, there must be
substantial evidence presented proving the
complainant’s allegations.24 Substantial evidence is that
amount of relevant evidence which a reasonable mind
might accept asadequate to support a conclusion.25 In
this case, the CA correctly overturned the Ombudsman’s
findings and conclusions, and explained the reasonsfor
exculpating Caberoy, as follows:
Evidently, from the foregoing disquisitions, respondent
Ombudsman contradicted itself when it found and held
thatpetitioner was guilty of "oppression" for not paying
the private respondent her June 2002 salary, because
as a matter of fact she has been paidalbeit delayed.
Such payment is clearly and indubitably established from
the table where it was shown that private respondent
received on July 17 and 25, 2002, her June 2002 salary
in the amounts of ₱4,613.80 and ₱4,612.00,
respectively.
xxxx
The above narration of facts do not show that petitioner
committed acts constitutive of "oppression." Assuming
petitioner’s action is erroneous or overly zealous, this
certainly does not merit the most severe penalty of
dismissal from government service. Apparently, the
petitioner is only protecting herself from any future,
adverse consequences if she allows the disbursement of
public funds without the appropriate supporting
documents. "It is a well-known fact that in the
government service an employee must submit his daily
time record duly accomplished and approved before one
cancollect his salary."
xxxx
Finally, on the contention that the findings and
conclusions of the respondent Ombudsman is
considered conclusive and deserve respect and finality
is true only when the same is based on substantial
evidence. As discussed above, the action taken by
petitioner in withholding the salaries of private
respondent was clearly justified. It was a measure taken
by a superior against a subordinate who ignored the
basic tenets of law by not submitting the required
documents to support payment of her salary and
proportional vacation pay for the aforesaid period. x x x.
x x x [I]n this case before us, the records is bereft of
substantial evidence to support respondent
Ombudsman’s findings and conclusion that petitioner
committed oppressive acts against private respondent
and violated Sections 3(e) and (f) of RA 3019. On the
contrary and as earlier discussed, respondent
Ombudsman found and concluded that private
respondent was paid her June salaryalbeit late. Hence, it
cannot be gainsaid that the act of respondent
Ombudsman in concluding that petitioner is guilty as
charged despite absence of substantial evidence to
support the same is totally unfounded and is therefore,
tantamount to grave abuse of discretion amounting to a
lack or excess of discretion. x x x.26 (Citations omitted)
The complaint filed by Tuares against Caberoy charged
the latter with "manifest partiality, evident bad faith or
gross inexcusable negligence for having ordered the
payroll clerk of [RANHS] to cause the exclusion of [her]
name in the payroll of June 2002 x x x and [in spite of]
the fact that [she has already] rendered full service
during said days x x x without any justifiable reason and
without due process and without any authority under the
law."27 A perusal of Tuares’ allegations shows that her
claim pertains to the alleged withholding of her salary for
the month of June 2002. Records show, however, that
Tuares was actually paid her salary for the month of
June 2002. Thus, the vouchers for the payroll period of
June 1 to 15, 200228 and June 16 to 30, 200229 showed
Tuares’ name on line 11 and her signature
acknowledging receipt of her salary for such period. This
was, in fact, confirmed in the 2002 salary payrolls
submitted by the RANHS Office of the Auditor and
summarized by the Ombudsman,30 to wit:
1âwphi1
The amounts received and signed for by Tuares
correspond essentially to the other amounts she
received as salaryfor the other periods in 2002. On this
score, entries in the payroll, being entries in the course
of business, enjoy the presumption of regularity under
Section 43, Rule 130 of the Rules of Court,31 and absent
any evidence presented by Tuares showing the contrary,
good faith must be presumed in the preparation and
signing of such payrolls.32
Even assuming, as the Ombudsman asserted, that
Tuares received her June 2002 salary only on July 2002,
the same does not constitute Oppression or Grave
Abuse of Authority. The delay in the release of Tuares’
salary hardly qualifies as an "act of crueltyor severity or
excessive use of authority," especially when she
contributed to the cause of the delay, that is, she
submitted her Form 48 (Daily Time Record) for June
2002 only on July 11, 2002.33
Neither can the Court subscribe to the Ombudsman’s
conclusion that Tuares was singled out by
Caberoy.According to the Ombudsman:
In other words, as far as these fortunate teachers are
concerned, checks dated June 25 and 28, 2002 and July
04 and 19, 2002 actually and in paper covered their
June 2002 salary; checks dated July 17 and 19, 2002
actually and in paper covered their July 2002 salary; x x
x.
Whereas on the part of complainant Tuares, this is what
really happened: The checks dated July 17 and 25, 2002
were technically for services rendered in June 2002
ascorrected by COA but the amounts corresponding to
complainant’s salaryfor the whole month of June 2002
was actually received by her only in July 2002 and that
in effect means that she did not really receive any
amount from the school in June 2002; x x x.
dishonest purpose or some moral obliquity and
conscious doing of a wrong; a breach of sworn duty
through some motive or intent or ill will; it partakes of the
nature of fraud.35 There must be evidence, independent
of the fact of such delay, which will lead to the inevitable
conclusion that it was for the purpose of singling out
Tuares. The Court has consistently upheld the principle
that in administrative cases, to be disciplined for grave
misconduct or any grave offense, the evidence against
the respondent should be competent and must be
derived from direct knowledge.36 "Reliance on mere
allegations, conjectures and suppositions will leave an
administrative complaint with no leg to stand
on."37 Except for the Ombudsman’s deduction based on
the dates of issuance of the vouchers and the checks as
shown in the payroll, the records of thiscase are bereft of
evidence that will support its view that the delay in the
release of Tuares’ salary indicated that she was singled
out. Moreover, as correctly pointed out by the CA, "[t]he
certifications issued by Acting Book keeper Hayde S.
Momblan will show that it was not only [Tuares] who was
not included in the June 2002 payrolls; there were other
teachers who were not included because they failed to
submit the required year-end clearance. x x x Evidently,
[Tuares] was not singled out or discriminated against as
insisted by her and respondent Ombudsman."38
All told, the Court finds that the CA did not commit a
reversible error in exonerating Caberoy from the charge
against her.
WHEREFORE, the petition for review is DENIED for lack
of merit.
SO ORDERED.

Viewed from the discussion above, it is therefore crystal

clear that complainant was singled out by respondent
Caberoy as the only one who did not receive any
amount from the school on June 2002 because, as
established earlier, the former failed to submit her
clearance and PAST.34

It must be stressed that like other grave offenses

classified under the Civil Service laws, bad faith must
attend the act complained of. Bad faith connotes a