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Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 186659-710               October 19, 2011

ZACARIA A. CANDAO, ABAS A. CANDAO AND ISRAEL B. HARON, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES AND SANDIGANBAYAN, Respondents.

D E C I S I O N

VILLARAMA, JR., J.:

Assailed in this petition for review on certiorari under Rule 45 is the Decision¹ dated October 29, 2008 and Resolution² dated February 20, 2009 of the Sandiganbayan (First Division) finding the petitioners guilty beyond reasonable doubt of malversation of public funds under Article 217 of the Revised Penal Code, as amended.

The Facts

On August 5, 1993, Chairman Pascasio S. Banaria of the Commission on Audit (COA) constituted a team of auditors from the central office to conduct an Expanded Special Audit of the Office of the Regional Governor, Autonomous Region for Muslim Mindanao (ORG-ARMM). State Auditors Heidi L. Mendoza (Team Leader) and Jaime Roxas (Member) were directed to conduct the said audit under the supervision of Jaime P. Naranjo (State Auditor V). From August 24 to September 1, 1993, the expanded audit was thus conducted on the financial transactions and operations of ORG-ARMM for the period July 1992 to March 1993.

As stated in Special Audit Office (SAO) Report No. 93-25 submitted by the audit team, it was found that illegal withdrawals were made from the depository accounts of the agency through the issuance of checks payable to the order of petitioner Israel B. Haron (Disbursing Officer II) without the required disbursement vouchers. The following are the details of the government accounts and the fifty-two (52) checks³ issued and encashed without proper supporting documents:

PNB Account No. 370-3208

DATE ISSUED	CHECK NO.	SIGNATORIES	AMOUNT
December 29, 1992	414431	Israel Haron & Abas Candao	500,000.00
December 29, 1992	414432	Israel Haron & Abas Candao	439,585.00
December 29, 1992	414433	Israel Haron & Abas Candao	210,000.00
January 26, 1993	414487	Israel Haron & Abas Candao	500,000.00
January 26, 1993	414488	Israel Haron & Abas Candao	500,000.00
January 26, 1993	414489	Israel Haron & Abas Candao	500,000.00
February 2, 1993	414493	Israel Haron & Abas Candao	500,000.00
February 2, 1993	414494	Israel Haron & Abas Candao	500,000.00
February 3, 1993	414499	Israel Haron & Abas Candao	450,000.00
February 5, 1993	414500	Israel Haron & Abas Candao	500,000.00
February 5, 1993	461801	Israel Haron & Abas Candao	500,000.00
February 18, 1993	461803	Israel Haron & Zacaria Candao	500,000.00
February 18, 1993	461804	Israel Haron & Zacaria Candao	104,985.64
February 22, 1993	461876	Israel Haron & Zacaria Candao	500,000.00
February 22, 1993	461877	Israel Haron & Zacaria Candao	500,000.00
February 22, 1993	461878	Israel Haron & Zacaria Candao	500,000.00
February 22, 1993	461879	Israel Haron & Zacaria Candao	500,000.00
February 22, 1993	461880	Israel Haron & Zacaria Candao	500,000.00
February 22, 1993	461881	Israel Haron & Zacaria Candao	500,000.00
February 24, 1993	461888	Israel Haron & Abas Candao	64,000.00
March 18, 1993	461932	Israel Haron & Abas Candao	500,000.00
March 18, 1993	461933	Israel Haron & Abas Candao	500,000.00
March 19, 1993	461934	Israel Haron & Abas Candao	350,000.00
March 22, 1993	461935	Israel Haron & Abas Candao	500,000.00
March 22, 1993	461936	Israel Haron & Abas Candao	500,000.00
		TOTAL	₱11,118,570.64

Account No. 844061 (Treasurer of the Philippines)

DATE ISSUED	CHECK NO.	SIGNATORIES	AMOUNT
January 11, 1993 January 11, 1993	968739	Israel Haron & Abas Candao	400,000.00
January 11, 1993	968740	Israel Haron & Abas Candao	400,000.00
January 11, 1993	968741	Israel Haron & Abas Candao	400,000.00
January 13, 1993	968751	Pandical Santiago & Abas Candao	120,000.00
January 18, 1993	968804	Israel Haron & Abas Candao	380,000.00
March 2, 1993	974192	Israel Haron & Zacaria Candao	250,000.00
March 4, 1993	974208	Israel Haron & Abas Candao	500,000.00
March 4, 1993	974209	Israel Haron & Abas Candao	500,000.00
March 4, 1993	974210	Israel Haron & Abas Candao	500,000.00
March 4, 1993	974211	Israel Haron & Abas Candao	500,000.00
March 4, 1993	974212	Israel Haron & Abas Candao	30,000.00
March 5, 1993	974227	Israel Haron & Abas Candao	500,000.00
March 5, 1993	974228	Israel Haron & Abas Candao	500,000.00
March 12, 1993	974244	Israel Haron & Abas Candao	100,000.00
March 18, 1993	974324	Israel Haron & Abas Candao	500,000.00
March 18, 1993	974325	Israel Haron & Abas Candao	500,000.00
March 18, 1993	974326	Israel Haron & Abas Candao	500,000.00
March 18, 1993	974327	Israel Haron & Abas Candao	500,000.00
March 18, 1993	974328	Israel Haron & Abas Candao	500,000.00
March 19, 1993	974339	Israel Haron & Abas Candao	200,000.00
March 19, 1993	974340	Israel Haron & Abas Candao	25,000.00
March 19, 1993	974341	Israel Haron & Abas Candao	172,000.00
March 29, 1993	979533	Israel Haron & Abas Candao	500,000.00
March 29, 1993	979543	Israel Haron & Abas Candao	500,000.00
March 29, 1993	979544	Israel Haron & Abas Candao	500,000.00
March 29, 1993	979545	Israel Haron & Abas Candao	300,000.00
March 30, 1993	979590	Israel Haron & Abas Candao	150,000.00
		TOTAL	₱9,927,000.00
GRAND TOTAL =			₱21,045,570.64

In a letter dated September 10, 1993, Chairman Banaria demanded from petitioner Haron to produce and restitute to the ARMM-Regional Treasurer immediately the full amount of ₱21,045,570.64 and submit his explanation within seventy-two (72) hours together with the official receipt issued by the ARMM Regional Treasurer in acknowledgment of such restitution.

On April 17, 1998, the Office of the Special Prosecutor, Office of the Ombudsman-Mindanao, filed in the Sandiganbayan criminal cases for malversation of public funds against the following ORG-ARMM officials/employees: Zacaria A. Candao (Regional Governor), Israel B. Haron (Disbursing Officer II), Abas A. Candao (Executive Secretary) and Pandical M. Santiago (Cashier). They were charged with violation of Article 217 of the Revised Penal Code, as amended, under the following informations with identical allegations except for the varying date, number and amount of the check involved in each case:

Criminal Case Nos. 24569-24574, 24576-24584, 24593, 24595-24620⁴

(42 counts involving checks in the total amount of ₱17,190,585.00)

That on or about 29 December 1992, in Cotabato City, Philippines, and within the jurisdiction of this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the Disbursing Officer of the Office of the Regional Governor, and as such is responsible and accountable for the funds of the said office in the Autonomous Region in Muslim Mindanao, in connivance and in conspiracy with [Abas] Candao, Executive Secretary of the same office, who is a high ranking officer, while in the performance of their respective official functions, taking advantage of their official positions, and committing the offense in relation to their respective functions, with gross abuse of confidence, did then and there wilfully, unlawfully and feloniously withdraw the amount of P500,000.00 from the depository account of the Office of the Regional Governor thru the issuance of Check No. 414431 dated 29 December 1992, payable to the order of accused Israel B. Haron, without the required disbursement voucher and once in possession of the said amount withdrawn, wilfully, unlawfully and feloniously take, misappropriate, embezzle and convert to their own personal use and benefit the amount of P500,000.00, to the damage and prejudice of the government in the aforesaid sum as abovestated.

CONTRARY TO LAW.

Criminal Case Nos. 24585- 24592 and 24594⁵

(9 counts involving checks in the total amount of ₱3,854,985.64)

That on or about 18 February 1993, in Cotabato City, Philippines, and within the jurisdiction of this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the Disbursing Officer of the Office of the Regional Governor, and as such is responsible and accountable for the funds of the said office in the Autonomous Region in Muslim Mindanao, in connivance and in conspiracy with Zacaria Candao, Regional Governor of the same office, who is a high ranking officer, while in the performance of their respective official functions, taking advantage of their official positions, and committing the offense in relation to their respective functions, with gross abuse of confidence, did then and there wilfully, unlawfully and feloniously withdraw the amount of P500,000.00 from the depository account of the Office of the Regional Governor thru the issuance of Check No. 461803 dated 18 February 1993, payable to the order of accused Israel B. Haron, without the required disbursement voucher and once in possession of the said amount withdrawn, wilfully, unlawfully and feloniously take, misappropriate, embezzle and convert to their own personal use and benefit the amount of P500,000.00, to the damage and prejudice of the government in the aforesaid sum as abovestated.

CONTRARY TO LAW.

Criminal Case No. 24575⁶

That on or about 13 January 1993, in Cotabato City, Philippines, and within the jurisdiction of this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the Disbursing Officer of the Office of the Regional Governor, and as such is responsible and accountable for the funds of the said office in the Autonomous Region in Muslim Mindanao, in connivance and in conspiracy with Pandical Santiago and [Abas] Candao, Cashier and Executive Secretary, respectively, of the same office, while in the performance of their respective official functions, taking advantage of their official positions, and committing the offense in relation to their respective functions, with gross abuse of confidence, did then and there wilfully, unlawfully and feloniously withdraw the amount of P120,000.00 from the depository account of the Office of the Regional Governor thru the issuance of Check No. 968751 dated 13 January 1993, payable to the order of accused Israel B. Haron, without the required disbursement voucher and once in possession of the said amount withdrawn, wilfully, unlawfully and feloniously take, misappropriate, embezzle and convert to their own personal use and benefit the amount of P120,000.00, to the damage and prejudice of the government in the aforesaid sum as abovestated.

CONTRARY TO LAW.

At their arraignment, all accused pleaded not guilty to the charge of malversation. In the meantime, accused Santiago died and consequently the case against him in Criminal Case No. 24575 was dismissed.

The prosecution’s lone witness was Heidi L. Mendoza,⁷ COA State Auditor IV. She testified that their expanded audit, conducted from August 24 to September 1, 1993, disclosed the illegal withdrawals of funds from the PNB and Treasury accounts of ORG-ARMM involving 52 checks issued without the required disbursement vouchers. Specifically, their attention was caught by the fact that the Report of Checks Issued by the Deputized Disbursing Officer (RCIDDO) showed that the subject 52 checks have no assigned voucher numbers. The audit team demanded for the original of said RCIDDO for the months of December 1992, February and March 1993, which were supposed to be prepared and submitted by the disbursing officer, but the ORG-ARMM did not submit the same. In a letter dated August 24, 1993, the COA likewise made a demand from the Regional Governor through the resident auditor for the production of the original disbursement vouchers and complete supporting documents of the subject checks.⁸

In response, the Finance and Budget Management Services of ORG-ARMM informed the audit team that the vouchers were already submitted to COA Resident Auditor, Supervising State Auditor IV Rosalinda Gagwis, purportedly under transmittal letters dated March 4 and March 30, 1993. Mendoza then personally verified from Gagwis who denied having received the subject vouchers and issued a certification to that effect. In a letter dated September 10, 1993, Chairman Banaria finally demanded for the restitution of the funds illegally withdrawn through the issued 52 checks and to comply with such demand within 72 hours from receipt of said letter. As to the absence of her signature in the audit report, she explained that she was already on maternity leave when the interim report (SAO Report No. 93-25) was submitted. However, she, together with audit team member Jaime B. Roxas executed a Joint Affidavit dated May 17, 1996 regarding their conduct of the expanded audit and their findings and recommendation. Although Haron submitted copies of disbursement vouchers to the COA receiving clerk, this was made beyond the 72-hour deadline given to them.⁹

On cross-examination, witness Mendoza was asked if the audit team had informed the office or parties concerned that they are going to be audited (entry conference). She replied that this was a sensitive assignment, recalling that they were threatened after their identities were established during the earlier audit of the same office such that she had to be brought back to Manila. At that time, the Regional Governor was accused Candao. Hence, during the expanded audit, the team was unable to proceed as in ordinary situations. While they did an entry conference during the previous main audit, they were unable to do so at the time of the expanded audit. Again for security reasons, the team also did not conduct an exit conference after field work; they would be risking their lives if they discuss there and then their findings. Due to threat to her life, it was her team supervisor (Naranjo) and member (Roxas) who personally retrieved the documents in Cotabato City. She admitted the belated submission of original vouchers (October 29, 1993) to the COA central office but these are without supporting documents.¹⁰

For the accused, the first witness was Nick Luz Aduana who was the Director of Finance of ORG-ARMM from July 1991 until his resignation in March 1993. He testified that his functions then include the supervision and overseeing of the three divisions: Budget, Accounting and Management. When report of the audit team came out, he was surprised because they were not informed of the audit. He was familiar with the 52 checks because the disbursement vouchers passed through his office. He explained the procedure with respect to the processing of cash advances as follows: generally, there were cash advances made in ARMM which cover travels, salaries, etc. but particularly for "peace and order campaign," it emanates from the ORG when the Regional Governor issues an authority for cash advance, and then they process the voucher (Finance and Budget Management Services); once their division have performed their accounting functions relative to the vouchers, the same are forwarded to the Regional Governor for approval or in his absence to his Executive Secretary; after the approval of the voucher, it will be forwarded to the Cash Division for the issuance of check; the person who will liquidate the cash advance is usually the employee mentioned in the voucher; and after they have prepared all the liquidation papers, these are submitted to the Budget and Management Division before forwarding them to the COA Auditor. He maintained that the original disbursement vouchers have already been submitted to the COA Special Audit Office. Since 1991, they have never received any notice of disallowance of their disbursements, including those intended for "peace and order campaign." Being the first ARMM set of officials, they had sought the advice of their Auditor as to proper accounting procedures; they followed the advice of Auditor Gagwis who said that there should be authority to cash advance coming from the Regional Governor which should be given to the Disbursing Officer. He identified the vouchers presented by the defense as the ones processed by their division with the corresponding amounts reflected therein. Insofar as the expanded audit is concerned, they were not given the opportunity to defend the case as they were not given the so-called exit conference.¹¹

On cross-examination, witness Aduana hinted on political reasons why an expanded audit was conducted when Regional Governor Pagdanganan assumed office despite the fact that an earlier audit was already made during the administration of Governor Candao. He claimed that he did not receive any copy of the demand letter dated August 24, 1993; he was no longer connected with ARMM at the time. He also maintained that the disbursement vouchers were processed by their office and entered into their books of account. However, when asked what happened to these books of account, Aduana said these are with the Office of the Regional Governor. He admitted that the only supporting document for the checks and vouchers were the authority to cash advance; the "peace and order campaign" disbursement is peculiar to ARMM and hence they did not know what supporting documents to attach. When queried about the particular activities covered by this "peace and order campaign" disbursement, Aduana admitted that he really does not know the breakdown of expenses or for what items in particular were the disbursed amounts spent. Their division merely processed the disbursement vouchers that were prepared by the ORG, and while his signature appears in said vouchers his role was limited to certifying the availability of funds.¹²

The next witness, Rosalinda G. Gagwis, former COA Resident Auditor of ORG-ARMM, testified that in 1991 she was the Chief of the Operation and Review Division (ORD), COA Region XII which at the time has jurisdiction over ORG-ARMM; she was Auditor-in-Charge of ORG-ARMM only up to March 8, 1993 when the separation of COA Region XII personnel and COA-ARMM was implemented. Among her duties as such Auditor-in-Charge was to conduct a post-audit of the financial transactions of ORG-ARMM. In the course of the expanded audit of ORG-ARMM, she was requested to issue the Certification dated August 27, 1993 stating that she has not received the January to March 1993 vouchers as stated in the letter of Haron. Subsequently, on July 22, 1998 she executed a two-page Affidavit because she has been hearing that her previous Certification was misinterpreted to mean that the subject vouchers were "not existing." She then clarified that actually, ORG-ARMM tried to submit bundles of vouchers to her office but she refused to accept them because she was no longer Auditor-in-Charge of that office as there was already an order separating COA-Regional Office XII from the COA-ARMM. She confirmed that when ARMM was a newly created agency, its officers (Aduana, Brigida Fontanilla and Bartolome Corpus) sought her advice regarding accounting procedures. Prior to submission to her office for post-audit, the accountable officers like the Cashier and Disbursement Officer prepares and submits a Monthly Report of Disbursements to the Accounting Division which, within ten days from receipt and recording in the Books of Accounts, shall submit the same to the auditor for post-audit custody. Based on her experience, however, this deadline was not strictly observed as 25% to 50% of the national agencies are delayed in the submission of such reports. The usual reasons given were the geographical locations of the offices in Region XII and ARMM, lack of manpower due to budgetary constraints and lack of know-how of personnel regarding accounting and auditing procedures, especially if there is a change in administration. As far as she can recall, their office had not issued a notice of disallowance to ORG-ARMM although notices of suspension have been issued for minor deficiencies noted during post-audit; these notices of suspension were usually complied with by the agency.¹³

On cross-examination, witness Gagwis said that upon seeing the bundles of vouchers being submitted to her office, she immediately refused to accept, and sort of "washed her hands" by telling her staff that they were no longer incharge of ORG-ARMM. She did not actually scan those documents and examine their contents. She also did not receive the Monthly Report of Disbursements from said office. As to the execution of the July 22, 1998 Affidavit, she insisted that she did it voluntarily five years later in order to clarify herself after hearing about the case filed in the Sandiganbayan and her name was being dragged because of the Certification she made in August 1993. As to the earlier Certification, she maintained that she did not receive the subject vouchers and she does not know where these documents are at present.¹⁴

Another witness, Brigida C. Fontanilla, Chief Accountant, ORG-ARMM, testified that her duties and responsibilities include the processing, updating and recording of transactions of ORG-ARMM in the books of accounts while vouchers are recorded in the Journal of Analysis and Obligations (JAO). They also prepared financial reports. As to cash advances, she explained that the procedure starts with the preparation of the voucher at ORG which also issues the authority to withdraw cash advance which is attached to the disbursement voucher and supporting documents, afterwhich it is forwarded to the Finance and Budget Management Services for processing: there, it is first submitted to the Budget Division for the request for allotment of obligation, and next forwarded to the Accounting Division for the journal entry of obligation and recording in the books of account, and then the documents are forwarded to the Office of the Finance Director for his approval, and thereafter returned back to the ORG for final approval for the issuance of the check. Presently, their office is more systematic and organized than it was during the administration of Governor Candao. Sometime in 1994 during the investigation by the Office of the Ombudsman relative to the subject illegal withdrawals, she was summoned to produce the Cash Receipts Book and Cash Disbursement Book of the 1991 ARMM seed money for regional, provincial and district Impact Infrastructure Projects. However, she was not able to comply with the said directive because such books are not among those required by the COA for their office; what the COA directed them to maintain was the JAO, a book of original entry for allotments received and disbursements for the transactions of ORG-ARMM. She wrote a letter-reply to the Ombudsman Investigator and transmitted the original 1992 JAO which was never returned to their office.¹⁵

Explaining the contents of the JAO, witness Fontanilla said that the entries in the voucher are recorded therein: an obligation number is placed in the request of allotment (ROA) which also appears in the voucher. Before such recording in the JAO, the disbursement vouchers are presented to their office. Actually, she does not know whether the 1992 JAO still exists or with the Ombudsman Investigator because at the time, they were holding office temporarily at the office of ORG Auditor which unfortunately got burned sometime in 1996.¹⁶

As for witness Bartolome M. Corpus, his deposition upon oral examination was taken on August 27, 2004 before Atty. Edipolo Sarabia, Clerk of Court, Regional Trial Court of Davao City. He testified that in 1991 he was appointed Chief of the Management Division of the Finance and Budget Management Services (FBMS), ORG-ARMM. He was placed on floating status for three years by the new Chief of Staff of ORG-ARMM (Nasser Pangandaman) upon the election of a new Regional Governor, Lininding Pangandaman who defeated Governor Candao. As Finance Director, it was his responsibility to review all transactions of the ORG-ARMM and see to it that COA regulations are in place and supporting documents are complete. After reviewing documents, which include disbursement vouchers, his office submits the same to the COA Regional Officer or to the COA Resident Auditor. Being the internal control unit of ORG-ARMM, all transactions and supporting documents must pass through his office. As to the transactions covered by the subject 52 checks, he confirmed that these passed through his office, including the disbursement vouchers, afterwhich these were forwarded to the Accounting Office and then to the Cash Division for issuance of checks. He claimed that his subordinates tried to submit the disbursement vouchers to the Resident Auditor, as shown by the transmittal letters dated March 4 and March 30, 1993. However, Ms. Gagwis refused to accept the vouchers because she was no longer the Resident Auditor at the time. During the time of Governor Candao, he does not recall having received any notice of disallowance from the COA although there were times they received a notice of suspension which had been settled. During the time he was on floating status, he discovered that some vouchers including those original vouchers covered by the subject 52 checks were still in his filing cabinet. He then handed them over to Haron. In 1996, he was reinstated by Governor Nur Misuari.¹⁷

On cross-examination, witness Corpus said that they tried to submit the vouchers to Gagwis sometime in late March or early April 1993. He was not aware of the August 27, 1993 Certification issued by Gagwis. When asked about the stated purpose "peace and order campaign" in the cash advance vouchers, he confirmed that this was the practice at that time and it was only during liquidation that ORG will have the list of expenses; the supporting documents will come only after the issuance of the check.¹⁸ On re-direct examination, he maintained that there were previous similar vouchers for "peace and order campaign" which have not been disallowed but only suspended by the COA.¹⁹

Sandiganbayan Ruling

By Decision dated October 29, 2008, the Sandiganbayan found petitioner Haron guilty beyond reasonable doubt of malversation of public funds under Article 217 of the Revised Penal Code, as amended, committed in conspiracy with petitioners Zacaria A. Candao and Abas A. Candao who were likewise sentenced to imprisonment and ordered to pay a fine equivalent to the amount of the check in each case, as follows:

Criminal Case Nos. 24569-24584,
24593, 24595-24620

Israel B. Haron and Abas A. Candao - convicted of 43 counts of Malversation of Public Funds and each was sentenced to indeterminate prison term in each case of ten (10) years and one (1) day of prision mayor, as minimum, to eighteen (18) years, eight (8) months and one (1) day of reclusion temporal, as maximum, and ordered to pay a fine in each case equivalent to the particular check involved, without subsidiary imprisonment in case of insolvency and the penalty of perpetual special disqualification to hold public office and other accessory penalties provided by law. In the service of their respective sentences, they shall be entitled to the benefit of the three-fold rule as provided in Art. 70 of the Revised Penal Code, as amended.

Criminal Case Nos. 24585-24592 & 24594

Israel B. Haron and Zacaria A. Candao – convicted of 9 counts of Malversation of Public Funds and each was sentenced to indeterminate prison term in each case of ten (10) years and one (1) day of prision mayor as minimum, to eighteen (18) years, eight (8) months and one (1) day of reclusion temporal, as maximum, and ordered to pay a fine in each case equivalent to the particular check involved, without subsidiary imprisonment in case of insolvency and the penalty of perpetual special disqualification to hold public office and other accessory penalties provided by law. In the service of their respective sentences, they shall be entitled to the benefit of the three-fold rule as provided in Art. 70 of the Revised Penal Code, as amended.²⁰

The Sandiganbayan found no merit in petitioners’ claim that the subject checks were covered by existing disbursement vouchers which were belatedly submitted and received by the COA Central Office on October 29, 1993. It said that had those vouchers really existed at the time of the 52 withdrawals petitioners made from December 29, 1992 to March 30, 1993, petitioner Haron could have readily produced them when required to do so by the special audit team on August 24, 1993. Said court likewise did not give credence to the testimony of Corpus in view of the August 27, 1993 Certification issued by then COA Auditor Gagwis that she has not received the vouchers mentioned in the transmittal letters. Gagwis’ explanation, on the other hand, contradicted the testimony of Corpus that when he returned to his office sometime in May 1993, he found the original vouchers together with the transmittal letters still there in his filing cabinet and have not been submitted to the COA Resident Auditor.

The Sandiganbayan noted that petitioners presented no proof that the cash advances intended for "peace and order campaign" were spent for public purposes, as in fact the alleged disbursement vouchers did not indicate any detail as to the nature of the expense/s such as purchase of equipment, services, meals, travel, etc. and there were no supporting documents such as the Request for Issuance of Voucher, Purchase Request and Inspection Report of the items supposedly purchased. More importantly, the vouchers were not accomplished in accordance with existing COA circulars because they are unnumbered and undated. Hence, the belatedly submitted vouchers are of doubtful veracity or origin, nay, a fabricated evidence or, as pointed out by the prosecution, "self-serving or an afterthought, belatedly prepared to give the illegal disbursements amounting to the aggregate amount of more than ₱21M, a semblance of regularity."²¹ As to the JAO and Certification dated August 18, 1998 issued by Chief Accountant Fontanilla, the Sandiganbayan found there is nothing therein to indicate the particular disbursement voucher that corresponds to each of the subject 52 checks which were neither reflected in the JAO.

With respect to petitioners’ assertion that the audit conducted by the COA special audit team was incomplete and tainted as it did not follow procedures because the person audited were not notified thereof, the Sandiganbayan found these allegations unsubstantiated as in fact at the start of the audit on August 24, 1993, the audit team thru their team leader State Auditor Naranjo, informed the management of ORG-ARMM thru the COA Resident Auditor of the expanded special audit to be conducted as they even requested for the original copies of the disbursement vouchers together with their complete supporting documents covering the 52 checks. But despite said letter, the ORG-ARMM failed to heed the audit team’s request. For the failure of petitioner Haron to account for the funds involved in the illegal withdrawals when asked to do so, the presumption arose that he misappropriated the same, which presumption was not overcome by defense evidence.

On the respective liabilities of petitioners Zacaria A. Candao and Abas A. Candao, the Sandiganbayan held that by their act of co-signing the subject checks, petitioner Haron was able to consummate the illegal withdrawals without the required disbursement vouchers of the amounts covered by the 43 checks (for Abas) and 9 checks (for Zacaria). Thus, by their collective acts, said court concluded that petitioners conspired to effect the illegal withdrawals of public funds which, when required by the COA to be properly accounted for, petitioners failed to do so.

In its Resolution dated February 20, 2009, the Sandiganbayan denied the prosecution’s motion to cancel bail bonds and petitioners’ motion for reconsideration.

The Petition

Petitioners raised the following grounds for their acquittal:

1. …THE SANDIGANBAYAN...COMMITTED A REVERSIBLE ERROR IN CONVICTING THE ACCUSED PETITIONERS FOR THE CRIME OF MALVERSATION OF PUBLIC FUNDS DESPITE PROOF POSITIVE THAT, CONTRARY TO WHAT THE INFORMATIONS CHARGED, THERE WERE DISBURSEMENT VOUCHERS EXCEPT THAT THE COA REFUSED TO ACCEPT MUCH LESS EXAMINE THE SAME. PETITIONERS WERE THUS DENIED DUE PROCESS OF LAW WHEN THEY WERE CONVICTED FOR OFFENSES NOT COVERED BY THE INFORMATIONS AGAINST THEM.

2. ….THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN NOT APPLYING THE "EQUIPOISE RULE" WHICH IF APPLIED WOULD HAVE RESULTED IN THE ACQUITTAL OF THE ACCUSED-PETITIONERS.

3. … THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN CONVICTING ACCUSED PETITIONERS ZACARIA A. CANDAO AND ABAS A. CANDAO DESPITE THE FACT THAT THE CHARGE OF CONSPIRACY WHICH IS THEIR ONLY LINK TO THE OFFENSES HEREIN HAS NOT BEEN PROVEN BEYOND REASONABLE DOUBT.²²

Our Ruling

The petition has no merit.

Article 217 of the Revised Penal Code, as amended, provides:

Art. 217. Malversation of public funds or property –Presumption of malversation. - Any public officer who, by reason of the duties of his office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or negligence, shall permit any other person to take such public funds or property, wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall suffer:

1. The penalty of prision correccional in its medium and maximum periods, if the amount involved in the misappropriation or malversation does not exceed two hundred pesos.

2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is more than two hundred pesos but does not exceed six thousand pesos.

3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if the amount involved is more than six thousand pesos but is less than twelve thousand pesos.

4. The penalty of reclusion temporal in its medium and maximum periods, if the amount involved is more than twelve thousand pesos but is less than twenty-two thousand pesos. If the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to reclusion perpetua.

In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special disqualification and a fine equal to the amount of the funds malversed or equal to the total value of the property embezzled.

The failure of a public officer to have duly forthcoming any public fund or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal uses. (Emphasis supplied.)

The following elements are essential for conviction in malversation cases:

1. That the offender is a public officer;

2. That he had custody or control of funds or property by reason of the duties of his office;

3. That those funds or property were public funds or property for which he was accountable; and

4. That he appropriated, took, misappropriated or consented or, through abandonment or negligence, permitted another person to take them.²³

All the foregoing elements were satisfactorily established by the prosecution in this case. Petitioners have not rebutted the legal presumption that with the Disbursing Officer’s (Haron) failure to account for the illegally withdrawn amounts covered by the subject checks when demanded by the COA, they misappropriated and used the said funds for their personal benefit.

Petitioners however assert that their convictions were based solely on the Sandiganbayan’s conclusion that the vouchers submitted by the defense were illegal or irregular, whereas the informations simply alleged their absence or non-existence. They contend that said court could not have validly assessed the disbursement vouchers as to their legality because that duty pertains to the COA which refused and failed to examine the same. Had the court allowed the COA to evaluate and make a ruling on the validity of the vouchers, the result would have been different and most probably they would have been acquitted of the crime charged.

We are not persuaded by petitioners’ asseveration.

The Sandiganbayan categorically ruled that the disbursement vouchers were inexistent at the time of the issuance of the subject checks and expanded special audit based on its findings that: (1) petitioner Haron could not produce the vouchers upon demand by the COA in August 1993; (2) Resident Auditor Gagwis certified at about the same time that to date she has not received the vouchers mentioned in the supposed transmittal letters of March 4 and March 30, 1993; (3) the entries in the duly certified Report of Checks Issued by Deputized Disbursing Officer (RCIDDO) of the late Pandical M. Santiago, Cashier of ORG-ARMM, showed that for the months of January, February and March 1993, there were indeed entries of checks issued with Haron as payee but no disbursement voucher numbers as these were either lacking, detached or missing, and which were verified by the audit team as corresponding to the subject 52 checks issued and signed by petitioners and encashed by petitioner Haron who received the money withdrawn from the government depositary accounts; (4) FBMS Chief Corpus testified that he discovered the supposed vouchers still there at his office filing cabinet in May 1993 when these supposedly have already been submitted to the COA Resident Auditor as reflected in the March 4 and March 30, 1993 transmittal letters; and (5) the supposed original disbursement vouchers belatedly submitted to the COA central office last week of October 1993, were undated and unnumbered with no supporting documents as required by COA Circular No. 78-79 (April 5, 1978).

Contrary to petitioners’ claim, the special audit team could not have examined the vouchers presented by the defense (Exhibits "1" to "1-A-43") because the only indication of its actual receipt by the COA as admitted by the prosecution, was on October 23, 1993 long after the expanded audit was completed and beyond the 72-hour deadline specified in the September 10, 1993 demand letter addressed to Haron for the restitution of the total amount of illegal withdrawals. In addition, such disbursement vouchers have no supporting documents as required by COA Circular No. 92-389 dated November 3, 1992. On the other hand, the Certification dated August 18, 1998 issued by ARMM Chief Accountant Fontanilla stating that the vouchers were regular because these were properly recorded in the JAO, was not given credence by the Sandiganbayan. Upon scrutiny of the JAO covering the period January to March 1993, said court found that it failed to indicate the particular disbursement voucher that corresponds to each of the 52 checks, aside from the fact that it was prepared by the ARMM Chief Accountant who is under the control and supervision of the ORG. Notably, the JAO is used to summarize obligations incurred and to monitor the balance of unobligated allotments, which is prepared by function, and project for each fund and allotment class.²⁴ The JAO is thus separate and distinct from the Report of Checks Issued (RCI) which is prepared by the Disbursing Officer to report checks issued for payment of expenditures and/or prior accounts payable. What is clear is that the disbursement of funds covered by the 52 checks issued by the petitioners are subject to the rule that disbursement voucher "shall be used by all government entities for all money claims" and that the "voucher number shall be indicated on the voucher and on every supporting document."²⁵ Inasmuch as the JAO for the months of January, February and March 1993 do not at all reflect or indicate the number of each of the disbursement vouchers supposedly attached to the 52 checks, it cannot serve as evidence of the recording of the original vouchers, much less the existence of those disbursement vouchers at the time of the issuance of the 52 checks and the conduct of the expanded audit.

Petitioners further raise issue on the regularity, completeness and objectivity of the expanded audit conducted by the COA. However, records showed that the ORG-ARMM were duly notified of the expanded audit at its commencement and was even requested thru the COA Resident Auditor to submit the needed disbursement vouchers. It must be noted that at an earlier date, a main audit had already been conducted for the financial transactions of ORG-ARMM during which State Auditor Mendoza experienced threats against her own security that she had to be immediately recalled from her assignment. Thus, by the time the expanded audit was conducted in August 1993 upon the directive of the COA Chairman, petitioners, especially Haron, should have seen to it that the records of disbursements and financial transactions including the period January to March 1993, were in order and available for further audit examination. In any case, even if there was no so-called entry conference held, there is absolutely no showing that petitioners were denied due process in the conduct of the expanded audit as they simply refused or failed to heed COA’s request for the production of disbursement vouchers and likewise ignored the formal demand made by COA Chairman Banaria for the restitution of the illegally withdrawn public funds, submitting their compliance only after the special audit team had submitted their report.

In fine, the Sandiganbayan committed no reversible error in holding that the testimonial and documentary evidence presented by the petitioners failed to overcome the prima facie evidence of misappropriation arising from Haron’s failure to give a satisfactory explanation for the illegal withdrawals from the ARMM funds under his custody and control. Petitioners likewise did not accomplish the proper liquidation of the entire amount withdrawn, during the expanded audit or any time thereafter. There is therefore no merit in petitioners’ argument that the Sandiganbayan erred in not applying the equipoise rule.

Under the equipoise rule, where the evidence on an issue of fact is in equipoise or there is doubt on which side the evidence preponderates, the party having the burden of proof loses. The equipoise rule finds application if the inculpatory facts and circumstances are capable of two or more explanations, one of which is consistent with the innocence of the accused and the other consistent with his guilt, for then the evidence does not fulfill the test of moral certainty, and does not suffice to produce a conviction.²⁶ Such is not the situation in this case because the prosecution was able to prove by adequate evidence that Disbursing Officer Haron failed to account for funds under his custody and control upon demand, specifically for the ₱21,045,570.64 illegally withdrawn from the said funds. In the crime of malversation, all that is necessary for conviction is sufficient proof that the accountable officer had received public funds, that he did not have them in his possession when demand therefor was made, and that he could not satisfactorily explain his failure to do so. Direct evidence of personal misappropriation by the accused is hardly necessary in malversation cases.²⁷

As to the liability of petitioners Zacaria A. Candao and Abas A. Candao, the Sandiganbayan correctly ruled that they acted in conspiracy with petitioner Haron to effect the illegal withdrawals and misappropriation of ORG-ARMM funds.

Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Conspiracy need not be proved by direct evidence and may be inferred from the conduct of the accused before, during and after the commission of the crime, which are indicative of a joint purpose, concerted action and concurrence of sentiments. In conspiracy, the act of one is the act of all. Conspiracy is present when one concurs with the criminal design of another, indicated by the performance of an overt act leading to the crime committed. It may be deduced from the mode and manner in which the offense was perpetrated.²⁸

In this case, petitioners Zacaria A. Candao and Abas A. Candao were co-signatories in the subject checks issued without the required disbursement vouchers. Their signatures in the checks, as authorized officials for the purpose, made possible the illegal withdrawals and embezzlement of public funds in the staggering aggregate amount of ₱21,045,570.64.1avvphil

Petitioners Zacaria A. Candao and Abas A. Candao assail their conviction as co-conspirators in the crime of malversation contending that their only participation was in the ministerial act of signing the checks. The checks having passed through processing by finance and accounting personnel of ORG-ARMM, petitioners said they had to rely on the presumption of regularity in the performance of their subordinates’ acts. Furthermore, they assert that since conspiracy requires knowledge of the purpose for which the crime was committed, they could not have been conspirators in the design to defraud the government.

We disagree with such postulation.

As the Regional Governor of ARMM, petitioner Zacaria A. Candao cannot exonerate himself from liability for the illegally withdrawn funds of ORG-ARMM. Under Section 102 (1) of the Government Auditing Code of the Philippines, he is responsible for all government funds pertaining to the agency he heads:

Section 102. Primary and secondary responsibility. – (1) The head of any agency of the government is immediately and primarily responsible for all government funds and property pertaining to his agency.

x x x x (Emphasis supplied.)

Petitioners Zacaria A. Candao and his Executive Secretary Abas A. Candao are both accountable public officers within the meaning of Article 217 of the Revised Penal Code, as amended. No checks can be prepared and no payment can be effected without their signatures on a disbursement voucher and the corresponding check. In other words, any disbursement and release of public funds require their approval,²⁹ as in fact checks issued and signed by petitioner Haron had to be countersigned by them. Their indispensable participation in the issuance of the subject checks to effect illegal withdrawals of ARMM funds was therefore duly established by the prosecution and the Sandiganbayan did not err in ruling that they acted in conspiracy with petitioner Haron in embezzling and misappropriating such funds.

Moreover, as such accountable officers, petitioners Zacaria A. Candao and Abas A. Candao were charged with the duty of diligently supervising their subordinates to prevent loss of government funds or property, and are thus liable for any unlawful application of government funds resulting from negligence, as provided in Sections 104 and 105 of the Government Auditing Code of the Philippines, which read:

Sec. 104. Records and reports required by primarily responsible officers. – The head of any agency or instrumentality of the national government or any government-owned or controlled corporation and any other self-governing board or commission of the government shall exercise the diligence of a good father of a family in supervising accountable officers under his control to prevent the incurrence of loss of government funds or property, otherwise he shall be jointly and solidarily liable with the person primarily accountable therefor. x x x x

Sec. 105. Measure of liability of accountable officers. x x x

(2) Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds.

The fact that ARMM was still a recently established autonomous government unit at the time does not mitigate or exempt petitioners from criminal liability for any misuse or embezzlement of public funds allocated for their operations and projects. The Organic Act for ARMM (R.A. No. 6734) mandates that the financial accounts of the expenditures and revenues of the ARMM are subject to audit by the COA.³⁰ Presently, under the Amended Organic Act (R.A. No. 9054), the ARMM remained subject to national laws and policies relating to, among others, fiscal matters and general auditing.³¹ Here, the prosecution successfully demonstrated that the illegal withdrawals were deliberately effected through the issuance of checks without the required disbursement vouchers and supporting documents. And even if petitioners Zacaria A. Candao and Abas A. Candao invoke lack of knowledge in the criminal design of their subordinate, Disbursing Officer Haron, they are still liable as co-principals in the crime of malversation assuming such misappropriation of public funds was not intentional, as alleged in the informations, but due to their negligence in the performance of their duties. As this Court ratiocinated in Cabello v. Sandiganbayan³² :

Besides, even on the putative assumption that the evidence against petitioner yielded a case of malversation by negligence but the information was for intentional malversation, under the circumstances of this case his conviction under the first mode of misappropriation would still be in order. Malversation is committed either intentionally or by negligence. The dolo or the culpa present in the offense is only a modality in the perpetration of the felony. Even if the mode charged differs from the mode proved, the same offense of malversation is involved and conviction thereof is proper. A possible exception would be when the mode of commission alleged in the particulars of the indictment is so far removed from the ultimate categorization of the crime that it may be said due process was denied by deluding the accused into an erroneous comprehension of the charge against him. That no such prejudice was occasioned on petitioner nor was he beleaguered in his defense is apparent from the records of this case.³³ (Emphasis supplied.)

Under Article 217, paragraph 4 of the Revised Penal Code, as amended, the penalty of reclusion temporal in its maximum period to reclusion perpetua shall be imposed if the amount involved exceeds ₱22,000.00, in addition to fine equal to the funds malversed. Considering that neither aggravating nor mitigating circumstance attended the crime charged, the maximum imposable penalty shall be within the range of the medium period of reclusion temporal maximum to reclusion perpetua, or eighteen (18) years, eight (8) months and one (1) day to twenty (20) years. Applying the Indeterminate Sentence Law, the minimum penalty, which is one degree lower from the maximum imposable penalty, shall be within the range of prision mayor maximum to reclusion temporal medium, or ten (10) years and one (1) day to seventeen (17) years and four (4) months.³⁴ The penalty imposed by the Sandiganbayan on petitioners needs therefore to be modified insofar as the maximum penalty is concerned and is hereby reduced to seventeen (17) years and four (4) months of reclusion temporal medium, for each count.

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. The Decision dated October 29, 2008 in Criminal Case Nos. 24569 to 24574, 24575, 24576 to 24584, 24585 to 24592, 24593, 24594, 24595 to 24620 finding petitioners guilty beyond reasonable doubt of the crime of Malversation of Public Funds under Article 217, paragraph 4 of the Revised Penal Code, as amended, and the Resolution dated February 20, 2009 of the Sandiganbayan (First Division), denying petitioners’ motion for reconsideration are AFFIRMED with MODIFICATIONS in that petitioners are instead accordingly sentenced to suffer an indeterminate prison term of ten (10) years and one (1) day of prision mayor maximum, as minimum, to seventeen (17) years and four (4) months of reclusion temporal medium, as maximum, in each of the above-numbered criminal cases.

In addition to the payment of the fine ordered by the Sandiganbayan, and by way of restitution, the petitioners are likewise ordered to pay, jointly and severally, the Republic of the Philippines through the ARMM-Regional Treasurer, the total amount of P21,045,570.64 malversed funds as finally determined by the COA.

In the service of their respective sentences, the petitioners shall be entitled to the benefit of the three-fold rule as provided in Article 70 of the Revised Penal Code, as amended.

With costs against the petitioners.

SO ORDERED.

MARTIN S. VILLARAMA, JR.
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

LUCAS P. BERSAMIN Associate Justice

MARIANO C. DEL CASTILLO Associate Justice

MARIA LOURDES P. A. SERENO*
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

Footnotes

* Designated additional member per Raffle dated October 17, 2011 vice Associate Justice Teresita J. Leonardo-De Castro who recused herself from the case due to prior action in the Sandiganbayan.

¹ Rollo, pp. 74-124. Penned by Associate Justice Rodolfo A. Ponferrada with Presiding Justice Diosdado M. Peralta (now a Member of this Court) and Associate Justice Alexander G. Gesmundo concurring.

² Id. at 125-131. Penned by Associate Justice Rodolfo A. Ponferrada with Associate Justices Norberto Y. Geraldez and Alexander G. Gesmundo concurring.

³ Exhibits "A" to "ZZ", Sandiganbayan Records.

⁴ SB Records, Vols. 1, 5-10, 12-20, 29, 31-56.

⁵ Id., Vols. 21-28 and 30.

⁶ Id., Vol. 11.

⁷ Recently appointed Commissioner of the Commission on Audit.

⁸ TSN, October 13, 1998, pp. 3, 7-26.

⁹ Id. at 27-34, 40-41.

¹⁰ Id. at 41-52, 73-74.

¹¹ TSN, May 20, 2004, pp. 15-24.

¹² Id. at 25-42.

¹³ TSN, April 26, 2005, pp. 6-22.

¹⁴ Id. at 24-40.

¹⁵ TSN, June 8, 2006, pp. 5-12.

¹⁶ Id. at 13-15.

¹⁷ TSN, August 27, 2004, pp. 3-17; SB Records (Vol. II), pp. 467-481.

¹⁸ Id. at 17-21; id. at 481-485.

¹⁹ Id. at 21-22; id. at 485-486.

²⁰ Rollo, pp. 104-123.

²¹ Id. at 100.

²² Id. at 48.

²³ LUIS B. REYES, The Revised Penal Code, Book Two, 2008 Edition, p. 426.

²⁴ Sec. 405, Government Auditing and Accounting Manual.

²⁵ Sec. 430, Government Auditing and Accounting Manual.

²⁶ Bernardino v. People, G.R. Nos. 170453 and 170518, October 30, 2006, 506 SCRA 237, 252, citing Dado v. People, 440 Phil. 521, 537 (2002).

²⁷ Davalos, Sr. v. People, G.R. No. 145229, April 24, 2006, 488 SCRA 85, 92, citing Sarigumba v. Sandiganbayan, G.R. Nos. 154239-41, February 16, 2005, 451 SCRA 533, 554.

²⁸ People v. Pajaro, G.R. Nos. 167860-65, June 17, 2008, 554 SCRA 572, 586, citing People v. Garcia, Jr., G.R. No. 138470, April 1, 2003, 400 SCRA 229, 238-239.

²⁹ Article VII, Sec. 24 (e) of R.A. No. 6734 entitled "An Act Providing for an Organic Act For the Autonomous Region in Muslim Mindanao", provides that: "No funds or resources shall be disbursed unless duly approved by the Regional Governor or by his duly authorized representative." This provision was retained under R.A. No. 9054 amending the Organic Act, Art. VII, Sec. 24 (e) thereof.

³⁰ Art. IX, Sec. 2.

³¹ Art. IV, Section 3 (d) and (j).

³² G.R. No. 93885, May 14, 1991, 197 SCRA 94.

³³ Id. at 103.

³⁴ Cabarlo v. People, G.R. No. 172274, November 16, 2006, 507 SCRA 236, 246.

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