CANDAO

FIRST DIVISION
ZACARIA A. CANDAO,
ABAS A. CANDAO AND
ISRAEL B. HARON,
Petitioners,
- versus -
G.R. Nos. 186659-710

Present:
CORONA, C.J.,
Chairperson,
BERSAMIN,
DEL CASTILLO,
VILLARAMA, JR., and
SERENO, JJ.
PEOPLE OF THE PHILIPPINES Promulgated:

AND SANDIGANBAYAN,
Respondents.
October 19, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Assailed in this petition for review on certiorari under Rule 45 is the
Decision[1] dated October 29, 2008 and Resolution[2] 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) checks[3] issued and encashed without proper supporting
documents:
PNB Account No. 370-3208
DATE
ISSUED
CHECKNO SIGNATORIES
.
AMOUNT
December
29,
1992
December
29,
1992
December
29,
1992
January 26, 1993
414431
Israel Haron & Abas Candao
500,000.00
414432
439,585.00
414433
210,000.00
414487
500,000.00
January 26, 1993
414488
500,000.00
January 26, 1993
414489
500,000.00
February 2, 1993
414493
500,000.00
February 2, 1993
414494
500,000.00
February 3, 1993
414499
450,000.00
February 5, 1993
414500
500,000.00
February 5, 1993
461801
500,000.00
February 18, 1993
461803
Israel Haron & Zacaria Candao
500,000.00
February 18, 1993
461804
104,985.64
February 22, 1993
461876
500,000.00
February 22, 1993
461877
500,000.00
February 22, 1993
461878
500,000.00
February 22, 1993
461879
500,000.00
February 22, 1993
461880
500,000.00
February 22, 1993
461881
500,000.00
February 24, 1993
461888
64,000.00
March 18, 1993
461932
500,000.00
March 18, 1993
461933
500,000.00
March 19, 1993
461934
350,000.00
March 22, 1993
461935
500,000.00
March 22, 1993
461936
500,000.00
TOTAL
P11,118,570.64
Account No. 844061 (Treasurer of the Philippines)

DATE
ISSUED
CHECK
NO.
SIGNATORIES
January 11, 1993
968739
400,000.00
January 11, 1993
968740
400,000.00
January 11, 1993
968741
400,000.00
January 13, 1993
968751
Pandical Santiago & Abas Candao
120,000.00
January 18, 1993
968804
380,000.00
March 2, 1993
974192
250,000.00
March 4, 1993
974208
500,000.00
March 4, 1993
974209
500,000.00
March 4, 1993
974210
500,000.00
March 4, 1993
974211
500,000.00
March 4, 1993
974212
30,000.00
March 5, 1993
974227
500,000.00
March 5, 1993
974228
500,000.00
March 12, 1993
974244
100,000.00
March 18, 1993
974324
500,000.00
March 18, 1993
974325
500,000.00
March 18, 1993
974326
500,000.00
March 18, 1993
974327
500,000.00
March 18, 1993
974328
500,000.00
AMOUNT
January 11, 1993
March 19, 1993
974339
200,000.00
March 19, 1993
974340
25,000.00
March 19, 1993
974341
172,000.00
March 29, 1993
979533
500,000.00
March 29, 1993
979543
500,000.00
March 29, 1993
979544
500,000.00
March 29, 1993
979545
300,000.00
March 30, 1993
979590
150,000.00
TOTAL
P9,927,000.00
GRAND TOTAL = P21,045,570.64
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 P21,045,570.64 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 OmbudsmanMindanao, 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, 24595-24620[4]
(42 counts involving checks in the total
amount of P17,190,585.00)
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
24594[5]
(9 counts involving checks in the total
amount of P3,854,985.64)
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. 24575[6]
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 prosecutions 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 ORGARMM, 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 ORGARMM; 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 postaudit 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 twopage 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 postaudit, 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 ORGARMM. 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 ORGARMM. 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 P21M, 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 teams 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
prosecutions 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 Officers (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
Sandiganbayans conclusion that the vouchers submitted by the defense were illegal
or irregular, whereas the informations simply alleged their absence or nonexistence. 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 COAs 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 theprima facie evidence of misappropriation arising from Harons 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 P21,045,570.64 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 cosignatories 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 ofP21,045,570.64.
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 ORGARMM. 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. Sandiganbayan[32]:
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 culpapresent 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 P22,000.00, 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.

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FIRST DIVISION

G.R. Nos. 186659-710

PEOPLE OF THE PHILIPPINES Promulgated:

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

January 26, 1993

Israel Haron & Abas Candao

January 26, 1993

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

February 18, 1993

Israel Haron & Zacaria Candao

February 18, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 22, 1993

Israel Haron & Zacaria Candao

February 24, 1993

Israel Haron & Abas Candao

March 18, 1993

Israel Haron & Abas Candao

March 18, 1993

Israel Haron & Abas Candao

March 19, 1993

Israel Haron & Abas Candao

March 22, 1993

Israel Haron & Abas Candao

March 22, 1993

Israel Haron & Abas Candao

Account No. 844061 (Treasurer of the Philippines)

January 11, 1993

Israel Haron & Abas Candao

January 11, 1993

Israel Haron & Abas Candao

January 11, 1993

Israel Haron & Abas Candao

January 13, 1993

Pandical Santiago & Abas Candao

January 18, 1993

Israel Haron & Abas Candao

Israel Haron & Zacaria Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

Israel Haron & Abas Candao

March 12, 1993