Evangelista vs. People

Mere negligence is insufficient for malversation of public funds through negligence; the negligence must be positively and clearly shown to be inexcusable, approximating malice or fraud. Signing checks without supporting documents pursuant to a tolerated office practice, in good-faith reliance on the treasurer and accountant, does not satisfy that standard absent positive proof that the specific negligent act permitted the taking.

Silvino C. Evangelista served as municipal mayor of the Municipality of San Miguel, Bohol, with Trinidad Millare as municipal treasurer and Hedeliza L. Carcueva as municipal accountant. Pursuant to Section 102(1) of Presidential Decree No. 1445 and Section 340 of Republic Act No. 7160, the municipal mayor as head of the municipality is immediately and primarily responsible for safekeeping government funds, with disbursement requiring his approval. Prior to his assumption of office on July 1, 1998, the municipality tolerated the practice of transferring funds between depository banks through treasurer-issued checks supported only by a Form 123, without disbursement vouchers.

During Evangelista's incumbency as municipal mayor of San Miguel, Bohol beginning July 1, 1998, six checks were issued without necessary supporting documents and were not taken up in the municipality's books: FCB-5644 dated September 11, 1998 for PHP 255,148.00, FCB-5655 dated October 26, 1998 for PHP 88,000.00, FCB-81203 dated April 8, 1999 for PHP 50,000.00, FCB-81284 dated November 24, 1999 for PHP 50,000.00, LBP-27405199 dated March 31, 2000 for PHP 60,000.00, and LBP-6593803 dated June 1, 2000 for PHP 50,000.00, totaling PHP 553,148.00. According to Evangelista, the practice of transferring funds from one depository bank to another through checks issued by the municipal treasurer without supporting vouchers predated his term; upon inquiry he was told by the accountant that no disbursement voucher was attached to such transfer checks and by the treasurer that only a Form 123 was needed, leading him to sign checks presented by Millare in the belief that the practice was lawful.

The anomaly was discovered sometime in 2002 when Municipal Accountant Carcueva performed bank reconciliation upon directive of the Commission on Audit. Thereafter COA State Auditor II Lorna Piezas issued Audit Observation Memorandum No. 2002-001 dated September 17, 2002 addressed to Evangelista, Millare, and Carcueva, noting check disbursements not taken up in the books for lack of supporting documents in violation of Section 138 of the Government Accounting Manual Volume I and recommending submission of documents and verification. On February 28, 2006, COA State Auditor III Ernesto Pala submitted the Annual Audit Report for the year ended December 31, 2005 reflecting no action on Millare's cash shortage of PHP 733,148.00 from unrecorded checks from 1998 to 2001, and on May 18, 2006 COA Cluster IV Regional Cluster Director Charlita Leopoldo furnished Evangelista a copy and requested action within one month. When no action was taken, Pala issued a Notice of Disallowance dated February 12, 2007 involving the subject checks, received by Evangelista, Millare, and Carcueva on March 23, 2007.

Meanwhile, on February 21, 2007 the Sangguniang Bayan passed Resolution No. 25, series of 2007, approved by Evangelista, requesting Millare to settle accountabilities long carried in the books, and on April 30, 2007 Evangelista issued Millare a memorandum directing compliance with COA audit memoranda, intact deposits, daily collection reports, settlement of cash advances, and strict monitoring. Before retiring, Evangelista spoke with Millare, who said she would issue a waiver to settle her accountabilities. On March 12, 2009 Millare executed an Affidavit of Undertaking acknowledging a monetary obligation of PHP 1,003,960.19 and offering her vehicle and housing unit as security, and a year later executed an Affidavit of Waiver of her housing unit in favor of the municipality. The prosecution at trial presented bank officers to link Evangelista's signatures to the checks, while the defense maintained good-faith reliance on Millare and the accountant; the Sandiganbayan credited the prosecution and convicted Evangelista, imposing the indeterminate penalty and accessory penalties stated in its disposition.

• Notice: Petitioner argued that he was not duly notified of the unrecorded checks.
• Accountable Officer Status: Petitioner maintained that he is not an accountable officer with regard to the accountabilities pertaining to the municipal treasurer.
• Absence of Negligence or Abandonment: Petitioner argued that there is no evidence to show that he allowed Millare to misappropriate funds through abandonment or negligence.
• Burden of Production: Petitioner maintained that it is erroneous to put the burden on him to produce documents in the custody of the municipal treasurer.
• Effect of Administrative Dismissal: Petitioner argued that the dismissal of the administrative case arising from the same facts bars the criminal case, relying on Constantino vs. Sandiganbayan where dismissal based on the same subject matter and crucial evidence was held to operate as dismissal of the criminal case because of a precise finding that the act anchoring liability does not exist.

• Due Notice: Respondent countered that petitioner was duly notified of the unrecorded checks from 2002 up to 2007.
• Proof of Guilt: Respondent argued that the prosecution sufficiently established petitioner's guilt beyond reasonable doubt for malversation of public funds through negligence.
• Encashment Uncontradicted: Respondent countered that petitioner failed to present any evidence to contradict the fact that all the checks were encashed.
• Signatures Unquestioned: Respondent argued that petitioner never questioned the authenticity of his signatures despite knowledge of the existence of the unrecorded checks.

• Effect of Administrative Dismissal: Whether dismissal of the administrative case for insufficiency of evidence bars the criminal prosecution for malversation arising from the same facts.
• Malversation Through Negligence: Whether petitioner, as municipal mayor, through abandonment or negligence permitted the municipal treasurer to take public funds as to the six unsupported checks.

• Effect of Administrative Dismissal: No. Dismissal merely for insufficiency of evidence, not a finding that the act anchoring liability does not exist, does not bar an independent criminal prosecution.
• Malversation Through Negligence: No. Guilt was not proved beyond reasonable doubt because inexcusable negligence approximating malice or fraud was not positively shown, particularly for the four FCB checks, and good-faith reliance on a tolerated practice negated criminal negligence.

• Effect of Administrative Dismissal: Administrative cases are independent from criminal actions for the same act or omission, so absolution in one does not bar the other. Only a finding that the act from which liability is anchored does not exist, after examination of the same subject matter and crucial evidence, operates to dismiss the parallel case. Here the March 15, 2012 dismissal as to Evangelista was expressly for insufficiency of evidence, and the statement that there was no legal basis to drag him to the anomaly was not incompatible with that ground. Under Pahkiat vs. Office of the Ombudsman-Mindanao and Paredes, Jr. vs. Sandiganbayan, such a dismissal leaves the prosecution free to adduce additional evidence to meet the criminal burden of proof.
• Malversation Through Negligence: The first three elements of Article 217 were undisputed: petitioner was a public officer with custody or control of municipal funds by reason of his duties, accountable therefor as head of the municipality required to approve disbursements. Malversation through negligence, however, requires reckless negligence positively and clearly shown to be inexcusable, approximating malice or fraud, judged by what the offender did or omitted to do that permitted the taking, not by post-taking remedial acts such as approving the Sanggunian resolution or issuing the compliance memorandum. As to the four FCB checks, the originals, microfilm copies, specimen signature cards, and ledgers were not presented; the bank officer had no personal knowledge of genuineness and relied only on the fact of encashment and clearance, while the lone testimony that petitioner once admitted signing a check without a voucher did not link the admission to the subject checks, amounting only to inference rather than positive proof beyond reasonable doubt. As to the two LBP checks, one microfilm was damaged and unidentifiable while the other was unquestioned, and signing without supporting documents enabled concealment, but good faith under Villacorta vs. People and Quizo vs. Sandiganbayan — reliance on the treasurer's assurance and a practice tolerated since before petitioner's term, without personal use of funds — prevented the negligence from approximating malice or fraud, though civil liability survived acquittal because the fact giving rise thereto was not found nonexistent.

• Malversation of public funds; elements — The elements are (1) the offender is a public officer, (2) he had custody or control of funds or property by reason of the duties of his office, (3) those funds or property were funds or property for which he was accountable, and (4) he appropriated, took, misappropriated, or consented or, through abandonment or negligence, permitted another person to take them. Applied here, the first three elements were found beyond dispute because the mayor, as head of the municipality, is immediately and primarily responsible for municipal funds and must approve disbursements.
• Malversation through negligence; reckless, inexcusable negligence — The same penalty applies whether malversation is committed by dolo or culpa, but negligence must be reckless, positively and clearly shown to be inexcusable, approximating malice or fraud. Citing United States vs. Catolico and Viada's commentary on the Codigo Penal, simple negligence does not suffice; criminal intent or negligence or indifference equivalent thereto is required. Applied here, signing unsupported checks in good-faith reliance on a tolerated fund-transfer procedure was not shown to meet that degree.
• Positive proof requirement — Positive proof is proof beyond reasonable doubt, not an inference drawn more or less logically from a hypothetical fact; mere presumptions and inferences, however logical and probable, are insufficient absent positive proof. Applied here, testimony inferring genuineness of signatures from encashment and ledgers not in evidence failed to positively prove petitioner signed the four FCB checks without supporting documents.
• Independence of administrative and criminal actions — Administrative and criminal cases for the same act are independent; only dismissal grounded on a precise finding that the act from which liability is anchored does not exist bars the parallel case, while dismissal for insufficiency of evidence does not. Applied here, the Ombudsman's dismissal as to Evangelista for insufficiency of evidence did not preclude the six malversation Informations.
• Good faith in tolerated practice — Allowing transactions pursuant to a practice tolerated since a predecessor's time, done in good faith without intent to gain and without personal use of funds, may negate negligence approximating malice or fraud, though each case turns on its facts per Cabello vs. Sandiganbayan. Applied here, reliance on the treasurer and accountant that transfer checks needed only Form 123 warranted acquittal.
• Civil liability despite acquittal — Acquittal does not necessarily extinguish civil liability unless the final judgment declares that the fact from which civil liability might arise did not exist. Applied here, acquittal for failure to prove guilt beyond reasonable doubt did not negate the existence of the shortage, so civil liability for PHP 553,148.00 with legal interest was imposed.

• "For a charge of malversation of public funds through negligence to prosper, mere negligence is not sufficient. The negligence must be positively and clearly shown to be inexcusable, approximating malice or fraud." — States the controlling standard for malversation through negligence that determined acquittal.
• "To constitute a crime, the act must, except in certain crimes made such by statute, be accompanied by a criminal intent, or by such negligence or indifference to duty or to consequences, as, in law, is equivalent to criminal intent." — Recalls the early formulation from United States vs. Catolico equating culpable negligence with criminal intent.
• "Positive proof is not merely an inference drawn more or less logically from a hypothetical fact. It is proof beyond reasonable doubt. Absent positive proof, mere presumptions and inferences, no matter how logical and probable, are insufficient." — Defines why bank-officer inferences from encashment and unseen ledgers failed to prove signing of the FCB checks.
• "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." — Reproduces the Ombudsman's administrative reasoning cited to support good-faith reliance and absence of willful conspiracy.

• United States vs. Catolico, 18 Phil. 504 (1911) — Foundational authority that criminal negligence must be equivalent to criminal intent; followed to require inexcusable negligence for Article 217.
• Villacorta vs. People, 229 Phil. 422 (1986) — Acquitted where irregular payments followed a practice tolerated since predecessor's time and were made in good faith without personal use; applied to support petitioner's good-faith defense.
• Quizo vs. Sandiganbayan, 233 Phil. 103 (1987) — Acquitted where cash advances were granted in good faith without intent to gain pursuant to tolerated office practice; applied similarly to negate malice-like negligence.
• Cabello vs. Sandiganbayan, 274 Phil. 369 (1991) — Cautioned that Villacorta and Quizo turn on their facts in assessing exculpatory good faith; followed to test petitioner's claim on its own record.
• Mayor Constantino vs. Sandiganbayan, 559 Phil. 622 (2007) — Held administrative dismissal operates to dismiss the criminal case only upon a precise finding that the liability-anchoring act does not exist; distinguished because dismissal here was only for insufficiency of evidence.
• Pahkiat vs. Office of the Ombudsman-Mindanao, 888 Phil. 611 (2020) — Distinguished a finding of no incriminating act at all from mere insufficiency of evidence; followed to reject the bar argument.
• Paredes, Jr. vs. Sandiganbayan, 322 Phil. 709 (1996) — Denied dismissal of criminal case despite administrative dismissal for insufficiency of evidence; followed on independence of actions.
• Venezuela vs. People, 826 Phil. 11 (2018) — Stated the four elements of malversation; cited for the elements test.
• People vs. Pantaleon, Jr., 600 Phil. 186 (2009) — Cited for mayor's control and responsibility over municipal funds.
• Hernan vs. Sandiganbayan, 822 Phil. 148 (2017) — Affirmed liability even without personal benefit where officer consented or negligently permitted taking; cited for scope of Article 217.
• Romero vs. People, 610 Phil. 615 (2009) — Held acquittal does not extinguish civil liability absent a finding of nonexistence of the civil-liability source fact; applied to impose civil liability.

• Article 217, Revised Penal Code, as amended by Republic Act No. 10951 — Defines and penalizes malversation, including consent or permission through abandonment or negligence, with prison mayor in its minimum and medium periods when the amount exceeds PHP 40,000.00 but does not exceed PHP 1,200,000.00, plus perpetual special disqualification and fine equal to funds malversed; applied as the basis for the six charges totaling PHP 553,148.00.
• Section 102(1), Presidential Decree No. 1445 (Government Auditing Code) — Makes the head of agency immediately and primarily responsible for government funds pertaining thereto; applied to establish petitioner's accountability and control.
• Section 340, Republic Act No. 7160 (Local Government Code of 1991) — Charges the local chief executive with safekeeping of public funds; applied together with approval authority to satisfy custody and accountability elements.
• Section 138, Government Accounting Manual Volume I — Requires supporting documents for check disbursements to be taken up in the books; violation thereof underlay the audit observation on unrecorded disbursements.

Gesmundo, C.J. (Chairperson) and Hernando, J., concur. Zalameda, J. and Marquez, J., on official business.