Cedeño vs. People; Pundaodaya vs. Sandiganbayan

Public officers who are members of inspectorate teams and who sign inspection reports certifying complete delivery of goods according to contract specifications, when in fact there were short deliveries or no deliveries at all, are guilty of violation of Section 3(e) of R.A. No. 3019 for acting with evident bad faith and causing undue injury to the government; the doctrine in Arias v. Sandiganbayan exempting heads of offices from liability based solely on signature as final approving authority does not apply to inspectors who are required by the nature of their office to personally verify deliveries, and conspiracy may be inferred from the concerted actions of public officers in processing fraudulent transactions.

In 1992-1993, the Department of Education, Culture and Sports (DECS) Regional Office XII procured graders' desks from various suppliers including Business International Wood Products (BIWP), AAA Services Generales (AAA), and Niño Wood Products (NWP). A Commission on Audit (COA) special audit team conducted an investigation covering the period January 1992 to September 1993 and discovered that the government was defrauded of P5,268,610.00 due to short deliveries and non-deliveries of 10,487 pieces of desks to various schools divisions in Region XII, including Sultan Kudarat, Marawi City, and Iligan City. The audit revealed that Disbursement Vouchers were processed and payments were approved by DECS officials despite the fact that thousands of desks were never delivered to the recipient schools, with Inspection Reports falsified to show complete deliveries.

• COA Regional Office No. XII issued Office Order No. 93-58 creating a special audit team to audit the purchase of graders' desks by DECS Region XII covering January 1992 to September 1993.
• The audit covered nine Schools Division Offices in Region XII, including Iligan City, Marawi City, and Sultan Kudarat.
• The audit found that the government was defrauded of P5,268,610.00 due to short delivery of 10,487 pieces of graders' desks: 1,823 pieces in Iligan City (P936,610.00), 2,051 pieces in Marawi City (P1,025,500.00), and 6,613 pieces in Sultan Kudarat (P3,306,500.00).
• In Criminal Case No. 24784, Disbursement Voucher (DV) No. 92031124 for P2,000,000.00 was processed for 4,000 desks allegedly delivered by BIWP to Sultan Kudarat, but the audit revealed no actual delivery was made to recipient schools.
• In Criminal Case No. 24785, DV No. 92041526 for P457,000.00 was processed for 914 desks allegedly delivered by BIWP to Sultan Kudarat, but no delivery was actually made.
• In Criminal Case No. 24786, DV No. 92093173 for P1,025,500.00 was processed for 2,051 desks allegedly delivered by AAA Services Generales to Marawi City, but no delivery was made to recipient schools.
• In Criminal Case No. 24787, DV No. 92124698 for P1,557,000.00 was processed for 3,114 desks allegedly delivered by Niño Wood Products (NWP) to Iligan City, but only 3,066 were actually delivered (shortage of 48 desks).
• In Criminal Case No. 24788, DV No. 92124700 for P1,853,500.00 was processed for 3,707 desks allegedly delivered by NWP to Sultan Kudarat, but only 2,008 were delivered (shortage of 1,699 desks).
• In Criminal Case No. 24789, DV No. 93082954 for P557,175.00 was processed for 969 desks allegedly delivered by AAA to Iligan City, but only 331 were delivered (shortage of 638 desks).
• Cedeño was the Inspector/ICU who signed Inspection Reports (IRs) certifying that items were delivered according to specifications, quality, and quantity.
• Pundaodaya was the Regional Director who approved payments in Criminal Case Nos. 24787, 24788, and 24789.
• Adiong was the Accountant III who certified as to adequacy of funds and completeness of documents.
• Navera was the Financial Management Officer who recommended payment in several transactions.
• Delos Reyes was the Supply Officer who signed the IRs as having received the desks.
• The contract required door-to-door delivery to recipient schools, but deliveries were made in bulk to division offices, and in many cases, no deliveries were made at all.
• The Sandiganbayan found that the accused public officers displayed evident bad faith and extended unwarranted benefits to private suppliers.

• Cedeño argued that the COA audit report and the testimony of State Auditor Nilo Romano were insufficient to convict him absent positive evidence of his active and knowing participation, citing Arias v. Sandiganbayan which held that heads of offices cannot be swept into conspiracy convictions simply for signing as final approving authority.
• Cedeño contended that he did not sign the Inspection Reports attached to the Disbursement Vouchers in Criminal Case Nos. 24784 and 24785, and that Romano did not specifically identify him as a signatory in Criminal Case Nos. 24787 and 24789 during testimony.
• Cedeño claimed he was merely performing his official duties and had no knowledge of the irregularities committed by his co-accused.
• Pundaodaya, Adiong, Navera, and Delos Reyes argued that they should be acquitted together with co-accused Kadon and Dy since the Sandiganbayan found that the facts upon which the resolution was based were the same for all accused.
• They contended that the deliveries were actually made and were not "ghost deliveries" as claimed by the prosecution.
• They asserted that the facts and evidence on record clearly pointed to their innocence and that they acted in good faith in relying on the documents presented to them.

• The Office of the Solicitor General argued that the petitions raised questions of fact regarding the sufficiency of evidence and credibility of witnesses, which are not proper under Rule 45 as petitions for review on certiorari must raise only questions of law.
• The prosecution maintained that the evidence proved conspiracy among the accused public officers and private suppliers to defraud the government through falsified Inspection Reports and Disbursement Vouchers.
• It was argued that Cedeño, as an inspector, was duty-bound to personally inspect the deliveries, and his signature on the Inspection Reports constituted evident bad faith, distinguishing his case from Arias where the petitioner was merely a final approving authority.
• The respondents contended that Pundaodaya and Adiong were not similarly situated as Kadon (who had just transferred to the region) and Dy (who was merely the owner with no proof of actual participation), and that the evidence proved their active participation in processing payments despite knowledge of irregularities.

• Procedural Issues:
  • Whether the petitions for review on certiorari filed by Navera and Delos Reyes were filed within the reglementary period provided under Section 7 of P.D. No. 1606 and Rule 45 of the Rules of Court.
  • Whether the petitions properly raised questions of law reviewable under Rule 45, or questions of fact which are beyond the scope of review.
• Substantive Issues:
  • Whether the Sandiganbayan erred in finding Cedeño guilty despite the alleged insufficiency of evidence and lack of his signature on some documents.
  • Whether Pundaodaya, Adiong, Navera, and Delos Reyes should be acquitted on the basis of reasonable doubt or parity with acquitted co-accused Kadon and Dy.
  • Whether the prosecution proved beyond reasonable doubt the elements of violation of Section 3(e) of R.A. No. 3019, specifically evident bad faith and conspiracy among the accused.

• Procedural:
  • The Supreme Court held that the petition filed by Navera and Delos Reyes was filed out of time. They failed to file a motion for reconsideration of the Sandiganbayan decision dated November 25, 2009, and their petition filed on August 27, 2010 was beyond the 15-day reglementary period under Section 7 of P.D. No. 1606 and Rule 45 of the Rules of Court; thus, the decision had long become final as to them.
  • The Court ruled that the petitions raised questions of fact (sufficiency of evidence, existence of conspiracy, appreciation of defense of good faith) which are generally not reviewable under Rule 45, as Rule 45 petitions must raise only questions of law and the Court is not a trier of facts.
  • The Court declined to apply the exceptions to the rule that it is not a trier of facts (where conclusion is grounded on speculation, inference is manifestly mistaken, there is grave abuse of discretion, judgment is based on misapprehension of facts, or findings are premised on absence of evidence), as petitioners failed to allege, substantiate, and prove these circumstances.
• Substantive:
  • The Court affirmed the conviction of Cedeño, holding that unlike in Arias v. Sandiganbayan, Cedeño was not merely a final approving authority but was the appointed inspector who was required by the nature of his office to personally inspect the items before signing the Inspection Reports.
  • The Court found that Cedeño's signature on the Inspection Reports certifying complete delivery when there were short deliveries or no deliveries constituted evident bad faith, and his failure to inquire why another inspector (Agustin) signed reports in his place in some transactions demonstrated his knowing participation in the conspiracy.
  • The Court rejected Cedeño's reliance on Magsuci and Albert, distinguishing those cases on the ground that the petitioners therein were heads of offices acting in reliance on subordinates, whereas Cedeño was an inspector with a personal duty to verify deliveries who falsely certified to complete deliveries.
  • The Court held that Pundaodaya and Adiong were not similarly situated as Kadon (who had just transferred and held meetings to verify documents) and Dy (who was merely the owner with no proof of participation in the transactions), and that the evidence showed Pundaodaya and Adiong actively participated in processing payments despite knowledge of irregularities.
  • The Court affirmed that conspiracy existed among the accused, as shown by their concerted actions in preparing false documents and processing payments for undelivered goods, and that the act of one conspirator was deemed the act of all.
  • The Court held that the elements of Section 3(e) of R.A. No. 3019 were satisfied: (1) the accused were public officers; (2) they acted with evident bad faith; and (3) their actions caused undue injury to the government and gave unwarranted benefits to private suppliers.

• Section 3(e) of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) — Defines the offense of causing undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage or preference in the discharge of official functions through manifest partiality, evident bad faith, or gross inexcusable negligence. Applied to hold petitioners liable for certifying and approving payments for undelivered or short-delivered goods.
• Conspiracy in Criminal Cases — Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. It does not need to be proven by direct evidence and may be inferred from the conduct before, during, and after the commission of the crime indicative of a joint purpose, concerted action, and concurrence of sentiments. The act of one conspirator is the act of all. Applied to hold petitioners liable for the collective acts of the group in processing fraudulent transactions.
• Evident Bad Faith — Defined as a dishonest purpose or moral obliquity, conscious doing of wrong, breach of sworn duty through some motive or intent or ill will, partaking of the nature of fraud. Distinguished from mere bad judgment or negligence. Applied to characterize the petitioners' actions in signing falsified inspection reports certifying complete deliveries when there were shortages.
• Arias Doctrine (Reliance on Subordinates) — Established in Arias v. Sandiganbayan, this doctrine holds that heads of offices cannot be held liable for conspiracy solely because they signed as final approving authority without personal examination of every detail, provided they relied in good faith on subordinates. Distinguished in this case because Cedeño was an inspector with a personal statutory duty to verify deliveries, not merely a final approving authority.
• Rule 45 Limitation (Questions of Law) — A petition for review on certiorari under Rule 45 must raise only questions of law, not questions of fact. Questions of law arise when there is a doubt as to what the law is on a certain state of facts, while questions of fact arise when doubt exists as to the truth or falsity of alleged facts.
• Exceptions to Finality of Factual Findings — The Supreme Court may review factual findings when: (1) the conclusion is grounded entirely on speculation, surmise, and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts; or (5) the findings of fact are premised on the absence of evidence and are contradicted by evidence on record. Petitioners failed to establish these exceptions.

• "We would be setting a bad precedent if a head of office plagued by all too common problems - dishonest or negligent subordinates, overwork, multiple assignments or positions, or plain incompetence - is suddenly swept into a conspiracy conviction simply because he did not personally examine every single detail, painstakingly trace every step from inception, and investigate the motives of every person involved in a transaction before affixing his signature as the final approving authority." (Citing Arias v. Sandiganbayan)
• "There should be other grounds than the mere signature or approval appearing on a voucher to sustain a conspiracy charge and conviction."
• "It is rather apparent that under the Sandiganbayan's decision, a department secretary, bureau chief, commission chairman, agency head, department head or chief of office would be equally culpable for every crime arising from any transactions or held guilty of conspiracy simply because he was the last of a long line of officials or employees who acted upon or affixed his signature to a transaction. We cannot allow this because guilt must be premised on a more knowing personal, and deliberate participation of each individual who is charged with others as part of a conspiracy." (Citing Pareño v. Sandiganbayan)
• "Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud."
• "Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Conspiracy does not need to be proven by direct evidence and may be inferred from the conduct before, during, and after the commission of the crime - indicative of a joint purpose, concerted action, and concurrence of sentiments."

• Arias v. Sandiganbayan — Cited by Cedeño and distinguished by the Court. Established the doctrine that heads of offices cannot be held liable for conspiracy based solely on signature as final approving authority without personal examination of details. Distinguished because Cedeño was an inspector with personal duty to verify deliveries, not merely a final approving authority.
• Magsuci v. Sandiganbayan — Cited by Cedeño. Involved a Regional Director who relied on accomplishment reports. Distinguished because Magsuci had just assumed office and there was no intimation he knew of irregularities, whereas Cedeño personally inspected (or failed to inspect) the goods.
• Albert v. Gangan — Cited by Cedeño. Involved a President of NHMFC held liable by COA as final approving authority. Distinguished because Albert's guilt as conspirator was not established beyond reasonable doubt, and the Court held that signing a voucher does not necessarily mean conspiracy.
• Pareño v. Sandiganbayan — Cited in Albert and referenced here. Emphasized that guilt must be premised on knowing, personal, and deliberate participation, not mere signature as last in line of officials.
• Uyboco v. People — Cited for the proposition that exceptions to the rule that the Court is not a trier of facts must be alleged, substantiated, and proved by the parties.
• Caunan v. People — Cited for the elements of violation of Section 3(e) of R.A. No. 3019.
• Coloma v. Sandiganbayan — Cited for the definition of bad faith as involving dishonest purpose or moral obliquity.
• Zoleta v. Sandiganbayan — Cited for the definition of conspiracy and the principle that the act of one conspirator is the act of all.
• Ampil v. Office of the Ombudsman — Cited for the definition of "unwarranted" as lacking adequate or official support, unjustified, or unauthorized, and "advantage" as a more favorable position or benefit.

• Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — The penal provision violated by the petitioners. Punishes public officers who cause undue injury to any party, including the government, or give any private party unwarranted benefits, advantage or preference in the discharge of official functions through manifest partiality, evident bad faith, or gross inexcusable negligence.
• Presidential Decree No. 1606, as amended by Republic Act No. 8249 (Sandiganbayan Charter) — Section 7 thereof provides for the finality of decisions of the Sandiganbayan and the 15-day period to file motions for reconsideration or appeals to the Supreme Court via Rule 45.
• Rule 45 of the Rules of Court — Governs petitions for review on certiorari to the Supreme Court, limiting review to questions of law and prescribing the 15-day reglementary period from notice of judgment or denial of motion for reconsideration.
• Section 2, Presidential Decree No. 1445 (Government Auditing Code) — Cited in the COA report as the basis for the audit and verification of government transactions.