SC Decision Malversation

FIRST DIVISION
ZACARIA A. CANDAO, G.R. Nos. 186659-710

ABAS A. CANDAO AND
ISRAEL B. HARON, Present:
Petitioners,
CORONA, C.J.,
Chairperson,
- versus - BERSAMIN,
DEL CASTILLO,
VILLARAMA, JR., and
SERENO,* JJ.
PEOPLE OF THE PHILIPPINES Promulgated:

AND SANDIGANBAYAN,
Respondents. October 19, 2011
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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 CHECKNO. SIGNATORIES AMOUNT
ISSUED
December 29, 1992 414431 Israel Haron & Abas Candao 500,000.00
January 26, 1993 414487 Israel Haron & Abas Candao 500,000.00
February 2, 1993 414493 Israel Haron & Abas Candao 500,000.00
February 18, 1993 461803 Israel Haron & Zacaria Candao 500,000.00
March 18, 1993 461932 Israel Haron & Abas Candao 500,000.00
TOTAL P11,118,570.64
Account No. 844061 (Treasurer of the Philippines)

DATE CHECK SIGNATORIES AMOUNT
ISSUED NO.
January 11, 1993

January 13, 1993 968751 Pandical Santiago & Abas Candao 120,000.00
March 2, 1993 974192 Israel Haron & Zacaria Candao 250,000.00
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 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-

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
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
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 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 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 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 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 the prima 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 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 P21,045,570.64.
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 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
xxx
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.
MARTIN S. VILLARAMA, JR.

Associate Justice
WE CONCUR:RENATO C. CORONA
Chief Justice
Chairperson
LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice
MARIA LOURDES P. A. SERENO

Associate Justice
CERTIFICATION
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 Courts Division.
RENATO C. CORONA
Chief Justice

SC Decision Malversation

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SC Decision Malversation

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FIRST DIVISION

ZACARIA A. CANDAO, G.R. Nos. 186659-710

PEOPLE OF THE PHILIPPINES Promulgated:

VILLARAMA, JR., J.:

PNB Account No. 370-3208

Account No. 844061 (Treasurer of the Philippines)

January 11, 1993

GRAND TOTAL = P21,045,570.64

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

Criminal Case Nos. 24585- 24592 and 24594[5]

Criminal Case No. 24575[6]

Criminal Case Nos. 24569-24584,

Petitioners raised the following grounds for their acquittal:

1. THE SANDIGANBAYAN...COMMITTED A REVERSIBLE ERROR IN CONVICTING THE ACCUSED PETITIONERS

3. THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN CONVICTING ACCUSED PETITIONERS

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

The following elements are essential for conviction in malversation cases:

1. That the offender is a public officer;

4. That he appropriated, took, misappropriated or consented or, through abandonment or negligence,

We are not persuaded by petitioners asseveration.

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

With costs against the petitioners.

MARTIN S. VILLARAMA, JR.

LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

MARIA LOURDES P. A. SERENO

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