Aguinaldo vs. Sandiganbayan

A COA post-audit clearance or approval of disbursements does not bar the Ombudsman from prosecuting malversation or the Sandiganbayan from denying a motion to quash and ordering preventive suspension; audit findings settle only administrative accountability and are not conclusive on probable cause or criminal liability.

Petitioner Rodolfo E. Aguinaldo was the Provincial Governor of Cagayan, serving his first term at the time material to the case. The controversy concerned intelligence and counter-insurgency disbursements charged to the province's 20% Development Fund, a fund governed by MLG Circular No. 83-4 and by COA circulars on the liquidation of confidential and intelligence expenses. The Commission on Audit exercised administrative audit authority over the disbursements, while the Office of the Ombudsman and the Sandiganbayan exercised criminal investigation and prosecution authority over public officers accused of malversation.

Petitioner Rodolfo E. Aguinaldo was the Provincial Governor of Cagayan and was serving his first term at the time material to the case. In 1990, the Commission on Audit found that his claims for intelligence operations in 1988 and 1989, amounting to P400,000 and P350,000, respectively, had been charged to the 20% Development Fund. Some claims were covered by disbursement vouchers supported only by reimbursement receipts, most of which were signed by only one person, while other claims had no supporting papers at all. The audit team submitted SAO Report No. 90-25, recommending that the required documents be submitted before payment, that the claimant complete documentation or refund the amounts, and that provincial officials stop using the 20% Development Fund for purposes other than development projects under MLG Circular No. 83-4.

On February 3, 1992, COA Director Feliciano B. Clemencio filed a complaint with the Office of the Ombudsman alleging anomalies consisting of irregular or illegal disbursements of government funds. The complaint named petitioner and the members of the Provincial Board of Cagayan, the Assistant Provincial Treasurer, and the Accountant as respondents. In a resolution dated May 31, 1994, the Ombudsman found that petitioner had distributed P750,000 to military, police, and civilian informers to fight insurgency, but that he could not submit receipts or documents required under COA Circular No. 77-17D dated April 15, 1977. The Ombudsman concluded that there was prima facie evidence that petitioner had put the missing funds to personal use, making him liable for malversation under Article 217 of the Revised Penal Code, and prima facie evidence of violation of Section 3, paragraph (3) of R.A. No. 3019. Two malversation informations were filed against petitioner on August 16, 1994: Criminal Case No. 20948 charged the misappropriation of P400,000 in 1988, and Criminal Case No. 20949 charged the misappropriation of P350,000 in 1989, both allegedly withdrawn from the provincial treasury for intelligence activities.

Upon petitioner's motion, the Sandiganbayan ordered the Office of the Ombudsman to reinvestigate the cases. Petitioner submitted the affidavits of twelve military officers who acknowledged receipt from him of unspecified amounts which they claimed had been used for counter-insurgency operations, as well as his counter-affidavit. In a letter dated January 19, 1995, Prosecutor Espinosa asked the COA Special and Technical Audit Division whether there had been compliance with the recommendations in SAO Report No. 90-25 and whether, based on the military officers' affidavits, the disbursements could be considered fully liquidated. In reply, the COA Special and Technical Audit Division, through Provincial Auditor Teresita Rios, stated that except for the list of recipients and machine copies of some subscribed affidavits, records did not show that the required documents had been received from the Governor; however, the list and affidavits, including the representations of the Provincial Treasurer and Provincial Auditor, "may be a convincing proof" that the disbursements were made for the intended purpose and not for private consumption, and it could be surmised that even the former Provincial Auditor might be convinced as no notice of disallowance or suspension had been issued.

Prosecutor Espinosa, apparently not satisfied, recommended that the malversation cases be pressed. His recommendation was approved, and on April 26, 1995 he asked the Sandiganbayan for petitioner's suspension pendente lite. Petitioner opposed the motion and moved to quash the informations, contending that the preliminary investigation was tainted by serious irregularities that denied him due process and that the evidence did not make out probable cause for malversation. In a supplemental motion to quash filed on May 29, 1995, petitioner submitted indorsements from COA officials. Regional Director Rafael Marquez stated that he agreed with Provincial Auditor Rios that the documents submitted by petitioner "may be a convincing proof" that the questioned disbursements were made for the intended purpose and not for private consumption. COA Chairman Celso D. Gangan then stated that the documents submitted by petitioner "are substantial evidence to support disbursements of the intelligence and confidential funds in question" as required by COA Circular No. 92-385 dated October 1, 1992. The Sandiganbayan gave the prosecution fifteen days to firm up its position, noting that the COA's position seemed tentative because there was no categorical claim that the sworn statements confirmed the disbursement of the aggregate P750,000. On July 5, 1995, the prosecution reported that it had inquired from the COA legal office but the COA did not reply. Petitioner asked the COA Chairman for a definitive statement of his liability, but his request was referred to Regional Director Marquez, who merely reiterated that the affidavits submitted by petitioner "could be considered" as sufficient or adequate documents to liquidate petitioner's accountability.

Deeming the COA statements lacking in definiteness, the Sandiganbayan found that the COA's position remained tentative and that no categorical claim confirmed the disbursement of the aggregate P750,000. It also noted that the prosecution maintained that adequate cause existed to proceed against petitioner. On January 29, 1996, petitioner submitted a Certificate of Settlement and Balances dated January 24, 1996, issued by Provincial Auditor Rios, allowing petitioner's claim in audit and relying on the credit advice of Regional Director Marquez that the documents submitted by petitioner were sufficient to liquidate the expenses. When asked whether Marquez's credit advice was final, COA Chairman Gangan stated that it was normally not subject to review by the COA, the matter being within Director Marquez's audit competence. The Sandiganbayan remained unconvinced, and these events led petitioner to file the present petition for certiorari.

• Due Process in Preliminary Investigation: Petitioner argued that the preliminary investigation was tainted by serious irregularities that effectively denied him his right to due process and rendered the proceedings null and void.
• Lack of Probable Cause: Petitioner maintained that even if the irregularities were overlooked, the evidence on record did not make out probable cause for malversation, and the informations were therefore invalid.
• Disregard of COA Clearances: Petitioner alleged that the Sandiganbayan gravely abused its discretion by completely disregarding the COA findings and post-audit clearances, including the COA Chairman's confirmation, which the court and the prosecution had sought and solicited during the proceedings.
• Post-Audit Findings After Arraignment: Petitioner argued that in the higher interest of justice, the COA post-audit findings could still be the subject of a motion to dismiss even after arraignment.
• Presumptive Validity of Informations Overcome: Petitioner contended that the presumptive validity of the informations had been conclusively overcome by the subsequent COA post-audit, the Certificate of Settlement and Balances allowing his claims in audit, and the COA Chairman's confirmation.
• Conclusiveness of COA Audit and P.D. No. 1445: Petitioner asserted that because the COA has constitutional authority to examine, audit, and settle accounts, its finding is conclusive and mandatory and not reviewable except by certiorari and only by the Supreme Court; under P.D. No. 1445, Section 52, settled accounts may be reopened only by the COA within three years, not by the Sandiganbayan.
• Preventive Suspension Not Automatic: Petitioner argued that while preventive suspension is mandatory in cases involving fraud upon government or public funds, it is not automatic because a pre-suspension hearing on the validity of the information must first be conducted.

• Inadequacy of Affidavits: The prosecution argued that the affidavits of military officers were inadequate to liquidate the disbursements under COA Circular No. 92-385, which requires confidential or intelligence disbursements to be accounted for solely on the certification of the head of agency or the officer-in-charge of the intelligence, confidential, or national security mission.
• Improper Use of 20% Development Fund: The prosecution argued that MLG Circular No. 83-4, dated February 7, 1983, requires the 20% Development Fund to be used exclusively for development projects and excludes expenditures for counter-insurgency operations.
• COA Not Conclusive; Ombudsman May Prosecute: The Sandiganbayan maintained that prosecution is left to the prosecutor; the COA may assist in collating evidence but does not preclude the Ombudsman from conducting its own investigation and filing charges if the evidence warrants; the COA is merely a source of facts, and its determination outside the narration of facts does not by itself determine adequate cause.
• No Final COA Determination Required: The Sandiganbayan held that no final COA determination is required for a malversation case to prosper or to decide the propriety of suspending an accused, citing De Guzman vs. People and Corpuz vs. People.

• Due Process in Preliminary Investigation: Whether the preliminary investigation was tainted by serious irregularities that denied petitioner due process and rendered the proceedings null and void.
• Probable Cause for Malversation: Whether the evidence on record made out probable cause for malversation and validated the informations.
• Disregard of COA Findings: Whether the Sandiganbayan gravely abused its discretion in disregarding COA findings and post-audit clearances, including the COA Chairman's confirmation.
• Post-Audit Findings After Arraignment: Whether COA post-audit findings may still be considered as a ground for dismissal even after arraignment.
• Effect of Certificate of Settlement and Balances: Whether the Certificate of Settlement and Balances and the COA Chairman's confirmation overcame the presumptive validity of the informations and negated probable cause.
• Conclusiveness of COA Audit: Whether COA's audit findings are conclusive on criminal liability and preclude the Ombudsman and Sandiganbayan from proceeding, and whether P.D. No. 1445, Section 52 limits reopening of settled accounts to the COA.
• Preventive Suspension: Whether the Sandiganbayan properly ordered petitioner's 90-day preventive suspension, and whether a pre-suspension hearing on the validity of the information was required and conducted.

• Due Process in Preliminary Investigation: No. The Sandiganbayan ordered a reinvestigation, and petitioner was allowed to submit affidavits and documents and to argue his defense; the alleged irregularities were properly rejected.
• Probable Cause for Malversation: Yes. The Ombudsman found prima facie evidence, and petitioner's failure to submit required COA documents gave rise to the Article 217 presumption sufficient to justify filing.
• Disregard of COA Findings: No. The COA clearances were tentative and equivocal, and the Sandiganbayan did not gravely abuse its discretion in proceeding to trial.
• Post-Audit Findings After Arraignment: No. Such post-audit findings do not require dismissal or deferral; the ultimate questions may be resolved after trial.
• Effect of Certificate of Settlement and Balances: No. The certificate related to administrative accountability and did not foreclose the Ombudsman's authority or conclusively negate probable cause.
• Conclusiveness of COA Audit: No. COA approval is administrative and not conclusive on criminal liability; P.D. No. 1445, Section 52 does not bar prosecution.
• Preventive Suspension: Yes. A pre-suspension hearing was conducted, and once the information's validity was determined, suspension became mandatory under R.A. No. 3019, Section 13.

• Due Process in Preliminary Investigation: The Sandiganbayan, upon petitioner's request, ordered the Ombudsman to conduct a reinvestigation. Petitioner was allowed to submit affidavits and other documents in support of his defense and was given an opportunity to argue his case. The prosecutor remained fundamentally unconvinced by the additional evidence. On these facts, the allegation of irregularity in the preliminary investigation was properly rejected; no denial of due process appears.

• Probable Cause for Malversation: The Ombudsman found that petitioner had distributed P750,000 to military, police, and civilian informers but could not submit receipts or documents required under COA Circular No. 77-17D. Under COA Circular No. 92-385, any disbursement from the confidential or intelligence fund shall be accounted for solely on the certification of the head of the agency or the officer-in-charge of the intelligence, confidential, or national security mission. Under COA Circular No. 88-293, a certification may be used, but it must comply with the prescribed form and state that the details and supporting documents are in the agency's custody and kept in its confidential file and may be audited. Petitioner's counter-affidavit fell short of these requirements. The military officers' affidavits were uniformly worded, did not disclose the name of the informer, the nature and purpose of the information, the date and amount given, the signature of the payee, and other relevant information; the amounts and dates were unspecified; and no receipts were presented. Thus, petitioner's failure to submit the required documents meant that there was a presumption of malversation sufficient to justify the filing of a case in court. Article 217 of the Revised Penal Code provides that the failure of a public officer to have duly forthcoming any public funds 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 use. Petitioner may still prove his innocence, but until he does so, the presumption stands.

• Disregard of COA Findings: The COA statements were not categorical. Provincial Auditor Rios said the documents "may be" convincing proof; Regional Director Marquez said "may be" and "could also be surmised" and "maybe convinced"; COA Chairman Gangan initially said the documents "are substantial evidence" but later referred the matter to Marquez and said his decision was normally not subject to review. The Sandiganbayan gave the prosecution time to firm up the COA's position, but no categorical claim emerged. Given the indecisive, uncertain, and at best tentative opinions of COA officials, the Sandiganbayan correctly decided to proceed with trial, leaving the ultimate resolution of the questions to be made after trial. The Ombudsman, having found the COA's original finding of failure to comply with accounting rules unaffected by later equivocal clearances, found no reason to reconsider its decision to prosecute.

• Post-Audit Findings After Arraignment: The Court found no merit in petitioner's contentions. The Sandiganbayan correctly decided to proceed with the trial of petitioner, leaving the ultimate resolution of the questions—whether the affidavits submitted by petitioner constitute sufficient evidence of disbursement of public funds for the purpose claimed, and whether charging certain expenditures to the 20% Development Fund is authorized under the law—to be made after trial. Post-audit findings do not require dismissal or deferral after arraignment.

• Effect of Certificate of Settlement and Balances: The Certificate of Settlement and Balances issued by Provincial Auditor Rios allowed petitioner's claim in audit, relying on the credit advice of Regional Director Marquez. But COA approval of petitioner's disbursements relates only to the administrative aspect of his accountability. It does not foreclose the Ombudsman's authority to investigate and determine whether there is a crime to be prosecuted for which petitioner is answerable. In Ramos vs. Aquino, the fact that accounts and vouchers had been passed in audit is not a ground for enjoining the provincial fiscal from conducting a preliminary investigation for malversation; the ascertainment of whether a crime was committed and by whom is definitely another matter. While the COA may regard petitioner to have substantially complied with its accounting rules, this is not sufficient to dismiss the criminal cases. Beyond compliance with COA rules and regulations, the question is whether there was a misappropriation of public funds, a question of fact to be established by evidence.

• Conclusiveness of COA Audit: Petitioner invoked P.D. No. 1445, Section 52, arguing that settled accounts may only be reopened by the COA within three years and not by the Sandiganbayan. This argument was rejected in Ramos vs. Aquino. The statutory authority of the Auditor General to open or revise settled accounts does not carry with it the power to determine who may be prosecuted in the event that a crime was committed in the preparation of the accounts. The conclusive effect of the finality of the audit decision relates solely to the administrative aspect of the matter. The Ombudsman is given the power under Article XI, Section 13, paragraph (1) of the Constitution to investigate on its own an illegal act or omission of a public official. As explained in Paredes vs. Sandiganbayan, citing Young vs. Office of the Ombudsman, courts are loath to interfere with the discretion of the Ombudsman unless such discretion is clearly shown to have been abused. No grave abuse was shown.

• Preventive Suspension: Petitioner argued that while preventive suspension is mandatory in cases involving fraud upon government or public funds, it is not automatic because a pre-suspension hearing on the validity of the information must first be conducted, citing People vs. Albano. This was done in the present case. Petitioner filed a Consolidated Motion to Quash/Dismiss and Opposition to the Motion to Suspend Accused Pendente Lite and presented several COA certifications purportedly clearing him. On the basis of the pleadings and documents submitted, the Sandiganbayan denied the motion to quash and granted the motion to suspend petitioner pendente lite. As held in Socrates vs. Sandiganbayan, upon a proper determination of the validity of the information, it becomes mandatory for the court to immediately issue the suspension order; the rule is specific and categorical and leaves no room for interpretation, and it is not within the court's discretion to hold in abeyance the suspension of the accused officer on the pretext that the order denying the motion to quash is pending review before the appellate courts. Bolastig vs. Sandiganbayan was also cited. The Sandiganbayan committed no grave abuse of discretion.

• Audit Approval Does Not Bar Criminal Prosecution — COA approval or settlement of accounts relates only to administrative accountability; it does not foreclose the Ombudsman from investigating and prosecuting a public officer for malversation, nor does it conclusively establish absence of probable cause. Applied: the COA clearances did not require quashing the informations or barring trial.
• Prima Facie Presumption of Malversation — Under Article 217 of the Revised Penal Code, the failure of a public officer to have duly forthcoming public funds upon demand by an authorized officer is prima facie evidence that he put the missing funds to personal use. Applied: petitioner's failure to submit required COA documents justified the filing of the malversation cases; he may rebut the presumption at trial.
• Ombudsman's Investigatory and Prosecutory Discretion — The Ombudsman has constitutional power to investigate on its own an illegal act or omission of a public official; courts will not interfere unless grave abuse of discretion is clearly shown. Applied: the Sandiganbayan properly allowed the Ombudsman to proceed despite COA clearances.
• Preventive Suspension Under R.A. No. 3019 — Once a pre-suspension hearing determines the validity of the information, suspension of the accused public officer is mandatory and not discretionary; the court cannot hold it in abeyance pending review of the denial of a motion to quash. Applied: the 90-day suspension was upheld.
• Due Process in Reinvestigation — Due process in preliminary investigation is satisfied when the accused is given an opportunity to submit evidence and argue his defense; the prosecutor's remaining unconvinced does not amount to denial of due process. Applied: the reinvestigation cured the alleged irregularities.
• COA Circulars on Confidential and Intelligence Funds — Disbursements from confidential or intelligence funds are accounted for solely on the certification of the head of agency or officer-in-charge, but the certification must comply with the prescribed form and include the required details in the confidential file. Applied: petitioner's counter-affidavit and the military affidavits failed compliance.
• Finality of Settled Accounts Is Administrative — Under P.D. No. 1445, Section 52, the COA may reopen settled accounts within three years, but this authority does not determine criminal liability or bar prosecution. Applied: petitioner's reliance on Section 52 was rejected.

• "The Auditor General, as noted, is vested with the power to examine, audit and settle all accounts pertaining to the revenues and receipts from whatever source, and to audit, in accordance with law and administrative regulations, all expenditures of funds or property pertaining to or held in trust by the government as well as the provinces or municipalities thereof. That is one thing: The ascertainment of whether a crime [is] committed and by whom is definitely another." — This passage states the ratio decidendi distinguishing the COA's administrative audit authority from the separate determination of criminal liability, and it is central to the Court's rejection of petitioner's claim that COA findings controlled the prosecution.
• "COA's approval of petitioner's disbursements only relates to the administrative aspect of the matter of his accountability but it does not foreclose the Ombudsman's authority to investigate and determine whether there is a crime to be prosecuted for which petitioner is answerable." — This is the Court's canonical formulation of the rule that audit approval does not bar criminal prosecution, and it directly resolves the effect of the Certificate of Settlement and Balances.
• "The failure of a public officer to have duly forthcoming any public funds 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 use." — This quotation of Article 217 of the Revised Penal Code supplies the statutory presumption that justified the filing of the malversation informations despite petitioner's later COA clearances.
• "[U]pon a proper determination of the validity of the information, it becomes mandatory for the court to immediately issue the suspension order. The rule on the matter is specific and categorical. It leaves no room for interpretation. It is not within the court's discretion to hold in abeyance the suspension of the accused officer on the pretext that the order denying the motion to quash is pending review before the appellate courts." — This passage defines the mandatory nature of preventive suspension under R.A. No. 3019 after a pre-suspension hearing and is the basis for upholding the Sandiganbayan's 90-day suspension order.

• Ramos vs. Aquino, 39 SCRA 641 (1971) — Controlling precedent cited by the Court; held that audit approval does not bar preliminary investigation for malversation and that the finality of an audit settlement relates solely to the administrative aspect of accountability.
• Paredes vs. Sandiganbayan, G.R. No. 108251, January 31, 1996 — Cited to affirm that courts will not interfere with the Ombudsman's discretion unless it is clearly shown to have been abused.
• Young vs. Office of the Ombudsman, 228 SCRA 718 (1993) — Cited in Paredes for the same rule; courts should not be swamped by petitions assailing the Ombudsman's investigatory proceedings.
• People vs. Albano, 163 SCRA 511 (1988) — Cited for the requirement of a pre-suspension hearing to determine the validity of the information before preventive suspension may be ordered.
• Socrates vs. Sandiganbayan, G.R. Nos. 116259-6 and 118896-97, Feb. 20, 1996 — Followed; once the validity of the information is properly determined, suspension is mandatory and cannot be held in abeyance pending review of the denial of the motion to quash.
• Bolastig vs. Sandiganbayan, 235 SCRA 103 (1994) — Cited as further authority on preventive suspension.
• De Guzman vs. People, 119 SCRA 337, 348 (1982) — Cited by the Sandiganbayan; a public officer may be held guilty of malversation based on a preliminary audit report.
• Corpuz vs. People, 194 SCRA 73, 79 (1990) — Cited by the Sandiganbayan; the absence of a post-audit is not a fatal omission nor a preliminary requirement to the filing of an information for malversation as long as prima facie guilt has been established.
• Compania Generalia de Tabacos vs. French and Unson, 39 Phil. 34, 56 (1918) — Cited for the principle that COA approval relates to the administrative aspect of accountability.

• Article 217, Revised Penal Code — Defines malversation and provides that the failure of a public officer to have duly forthcoming any public funds or property upon demand by an authorized officer is prima facie evidence that he has put the missing funds or property to personal use. Applied: petitioner's failure to submit required COA documents created a presumption sufficient to justify the filing of the informations; he may still rebut it at trial.
• Section 3, paragraph (3), R.A. No. 3019 — The Anti-Graft and Corrupt Practices Act provision cited by the Ombudsman in finding prima facie evidence of violation against petitioner. Mentioned as one of the charges arising from the irregular disbursements.
• Section 13, R.A. No. 3019 — Provides for preventive suspension of a public officer charged with fraud upon government or public funds or property. Applied: the Sandiganbayan's 90-day suspension order was upheld after a pre-suspension hearing.
• Article XI, Section 13, paragraph (1), 1987 Constitution — Vests the Ombudsman with the power to investigate on its own an illegal act or omission of a public official. Applied: the Ombudsman's authority to investigate and prosecute was upheld despite the COA clearances.
• Section 52, P.D. No. 1445 (Government Auditing Code) — Governs the opening and revision of settled accounts by the COA within three years. Petitioner invoked it to argue that only the COA could reopen settled accounts; the Court held it relates only to the administrative aspect and does not bar criminal prosecution.
• COA Circular No. 92-385 — Provides that any disbursement from the confidential or intelligence fund shall be accounted for solely on the certification of the head of agency or the officer-in-charge of the intelligence, confidential, or national security mission. Applied: petitioner failed to comply.
• COA Circular No. 88-293 — Allows the use of a certification but requires the prescribed form and that the details and supporting documents be kept in the agency's confidential file and be subject to audit. Applied: petitioner's counter-affidavit and the military affidavits were insufficient.
• COA Circular No. 77-17D — Required receipts or documents for intelligence activities. Cited by the Ombudsman in finding petitioner's failure to account for the funds.
• MLG Circular No. 83-4 — Requires the 20% Development Fund to be utilized exclusively for development projects and excludes expenditures for counter-insurgency operations. Invoked by the prosecution; the Court left the ultimate question of authorization for trial.
• Rule 117, Section 2, Rules of Court — Lists the grounds for a motion to quash an information. Mentioned in the Socrates vs. Sandiganbayan formulation of the matters to be determined during the pre-suspension hearing.

Regalado, Romero, and Torres, Jr., JJ., concurred.

• Puno, J. — Dissented on the ground that the prosecution evidence against petitioner was weak. He noted that the COA Special and Technical Audit Division, through Provincial Auditor Rios, declared that the list of recipients and the duly subscribed affidavits may be convincing proof that the questioned disbursements were made for the intended purpose and not for private consumption; Regional Director Marquez concurred; and COA Chairman Gangan held that the documents submitted by petitioner were substantial evidence to support the disbursements under COA Circular No. 92-385. The records did not show that the prosecution had other evidence aside from the evidence furnished by the COA, which initiated the malversation cases. If the COA itself persisted in its inconsistent position against petitioner, the Ombudsman could not succeed in convicting him. A criminal suit with no hope of succeeding cannot be a basis for suspending a duly elected public official; suspension, even if preventive in nature, stigmatizes a public official before his constituents and should not be imposed where the prosecution witnesses themselves doubt the strength of their evidence.