People of the Philippines vs. Francisco C. Reyes, et al.

A conviction under Section 3(e) of Republic Act No. 3019 cannot stand where the Information charges that the subject improvement did not exist but the prosecution’s evidence and theory shift to the improvement having existed but being overvalued or only partially demolished; such variance violates the accused’s right to be informed and leaves the elements of manifest partiality or evident bad faith and undue injury unproven beyond reasonable doubt. The death of an accused pending appeal likewise extinguishes criminal liability and the civil liability based solely on the conviction.

The accused included public officers from the Department of Public Works and Highways, the Quezon City government, and the Metro Manila Development Authority, together with private individuals associated with Servy Realty Corporation. The prosecution was for violation of Section 3(e) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, which penalizes causing undue injury to any party, including the Government, or giving any private party unwarranted benefits through manifest partiality, evident bad faith, or gross inexcusable negligence. The charge arose from the government’s acquisition of a warehouse on Servy Realty’s lot for the Circumferential Road (C-3) Project.

Servy Realty Corporation acquired on April 3, 1989 a parcel of land covered by Transfer Certificate of Title No. 49815 located at the corner of Sto. Domingo and Sgt. Rivera Streets, Quezon City, through a Joint Deed of Assignment from Servillano Lim. The property had an improvement consisting of a warehouse. When the government undertook the Circumferential Road (C-3) Project, the lot covered by TCT No. 49815 was among those affected. In 1990, the Republic filed a complaint for eminent domain. As a consequence, TCT No. 49815 was cancelled and two titles were issued: TCT No. 93235, measuring 501 square meters, in favor of Servy Realty, and TCT No. 93245, measuring 466.80 square meters, in favor of the government. Servy Realty was paid PHP 1,899,876.00 as just compensation for the lot.

According to the Urban Road Projects Office of the DPWH, a warehouse of Servy Realty allegedly stood on the lot originally expropriated and was not included in the expropriation proceedings. The warehouse was covered by Tax Declaration No. 02187. Because it obstructed the proposed construction, the Urban Road Projects Office recommended its removal and requested the Quezon City Appraisal Committee to determine just compensation. The Committee was composed of Nacianceno, Rosas, Macapugay, Mercado, and Garcia. It created a technical working group to conduct an ocular inspection and prepare a preliminary appraisal report. On November 13, 1993, the Committee issued Resolution No. 93-23, recommending the re-appraisal of the subject warehouse, described as located along Sgt. Rivera Street, Lot 5, Block 424, with an area of 457.20 square meters, Type I-A, using the cost approach method. After the technical working group’s ocular inspection, the Committee assessed the warehouse’s value and recommended just compensation of PHP 3,291,840.00. The City Assessor’s Office then issued Tax Declaration No. 02947 covering the warehouse.

On December 27, 1993, Servy Realty, represented by Chan, and the DPWH, represented by Reyes, executed an Agreement to Demolish and Remove Improvements. Tax Declaration No. 02947 and Resolution No. 93-23 were attached to the Agreement. The warehouse was thereafter demolished, and just compensation of PHP 3,291,840.00 was paid. According to the prosecution, however, there was only one improvement on Servy Realty’s lot and it measured only 240 square meters. The Commission on Audit organized a special audit team composed of Santiago, Tenorio, and Adelino to audit the DPWH’s right-of-way acquisition. On June 5, 1995, the team inspected the demolished warehouse, which was approximately 457.2 square meters, but was allegedly denied access. Santiago measured the property using the sketch, TCT, and subdivision plan as guides; she saw remnants of an old building and, from outside the wall, measured two columns with a length of about 240 square meters. The team used that measurement instead of 457.2 square meters in assessing unit cost and, using the Schedule of Unit Values Revision from 1981 to 1982, computed the building’s value at PHP 1,398,000.00.

On July 18, 1995, Tax Declaration No. 02947 was cancelled through Notice of Cancellation No. 95-0416 on the ground that the property was non-existent. In July 1997, the special audit team held an exit conference and re-inspected the property; access was again allegedly denied, and its evaluation yielded the same findings. On August 10, 2005, another ocular inspection was conducted. The team was able to enter the property and measured the remnants of the structure. In its report, it computed the different areas of the subject warehouse, including floor area, and arrived at a measurement of 390 square meters. It also went to the City Assessor’s Office to check the warehouse’s index card but found none; instead, it found the index card and tax declaration for a declared building with an area of 240 square meters. The team recomputed the appraised value using the 390-square-meter measurement taken in 2005 and arrived at PHP 2,476,294.74. Deducting the value of the undemolished portion, which it valued at PHP 1,062,459.09, it concluded that the government should have paid only PHP 1,413,835.65 for the improvement. The undemolished portion was computed based on the value per square meter.

The prosecution then filed an Information for violation of Section 3(e) of Republic Act No. 3019 against Reyes, Garcia, Nacianceno, Macapugay, Mateo, Villoria, Malinao, Rosas, Cababa, Dickson, Teodoro, Florence, and Chan, docketed as Criminal Case No. 26352. Rosas was separately charged with falsification of public documents in Criminal Case No. 26353. The Information alleged that on or about November 10, 1993, or sometime prior or subsequent thereto, the accused public officers, in conspiracy with one another and with private persons Dickson, Teodoro, Florence, and Chan, willfully, unlawfully, and criminally, acting with evident bad faith and manifest partiality, caused damage to the Government by making it appear that a warehouse owned by Servy Realty existed and would be affected by the C-3 Road Project, recommending its expropriation and resulting in payment of PHP 3,291,840.00 to Servy Realty, despite full knowledge that the warehouse did not exist, thereby causing undue injury to the Government in that amount. The Sandiganbayan found that the warehouse acquired for PHP 3,291,840.00 did not exist; that the accused public officers acted in bad faith in appraising a non-existent structure and paying just compensation based on unsupported recommendations; and that they acted with manifest partiality in favor of Servy Realty by making it appear that the warehouse existed. It also found Chan and Dickson criminally liable because Servy Realty paid real property tax for a non-existing improvement that was hugely disproportionate from its previous payments, without protest, to justify the claim for compensation.

• Misappreciation of Facts: Macapugay asserted that the Sandiganbayan misappreciated and/or overlooked exculpatory facts and failed to apply relevant laws and jurisprudence.
• Identity of Warehouse: Chan argued that the warehouse described in Tax Declaration No. 02947 refers to the same old warehouse described in Tax Declaration No. 02187.
• Assessor’s Confusion: Chan maintained that the City Assessor’s Office created confusion by issuing Tax Declaration No. 02947 without cancelling Tax Declaration No. 02187 and by declaring the warehouse as “new.”
• Varying Measurements: Chan argued that the area stated in the different tax declarations was arrived at after ocular inspections and varied because of those inspections, and that there is evidence of a warehouse measuring 457 square meters on Servy Realty’s lot.
• No Conspiracy / No Participation: Chan denied conspiring with the Quezon City Appraisal Committee, technical working group, City Assessor’s Office, DPWH, or any other government official to defraud the government; Dickson maintained he had no participation in the deliberations for expropriation and payment, issuance of Tax Declaration No. 02947, or the tax payment on December 17, 1993; Mateo insisted his function was ministerial and limited to taking notes, that he acted as secretariat with no power to review, approve, or recommend, and that he was not a co-conspirator.
• Corporate Role: Dickson maintained he took over management of Servy Realty after his father’s death, that paying taxes for Servy Realty’s other properties beginning 1997 did not mean he paid taxes for the allegedly non-existent warehouse, that he was merely a director and not the owner, and that there was no evidence he was personally involved in the negotiation for the expropriation.
• Just Compensation / Taking: Chan argued that the Sandiganbayan’s order to return the just compensation received would constitute the taking of property without just compensation.

• Disregarding Corporate Personality: The Office of the Special Prosecutor averred that a corporation’s separate personality may be disregarded when it is used to conceal a dishonest or fraudulent act, justify a wrong, or defend a crime.
• Conspiracy: The Office of the Special Prosecutor averred that the public officers and private individuals conspired with each other in making it appear that Servy Realty was entitled to compensation for the 457.2-square-meter warehouse it allegedly owned.

• Death of Accused Pending Appeal: Whether the death of accused-appellant Dante Villoria, while his appeal was pending before the Supreme Court, warrants the dismissal of the criminal action against him.
• Elements of Section 3(e), Republic Act No. 3019: Whether the prosecution was able to prove beyond reasonable doubt all the elements of Section 3(e) of Republic Act No. 3019 to justify the conviction of accused-appellants Alfredo N. Macapugay, Margarito Chan, Dickson Lim, and Ramon Mateo.

• Death of Accused Pending Appeal: Yes. The criminal action against Villoria must be dismissed because his death pending appeal extinguished his criminal liability and the civil liability based solely on the conviction under Article 89(1) of the Revised Penal Code.
• Elements of Section 3(e), Republic Act No. 3019: No. The prosecution failed to prove beyond reasonable doubt that the 457.2-square-meter warehouse did not exist; the Information charged non-existence, but the evidence showed a warehouse existed, and the third and fourth elements—manifest partiality or evident bad faith and undue injury—were not established. Macapugay, Chan, Dickson, and Mateo were acquitted.

• Death of Accused Pending Appeal: Article 89(1) of the Revised Penal Code provides that criminal liability is totally extinguished by the death of the convict as to personal penalties, and as to pecuniary penalties, liability is extinguished only when death occurs before final judgment. In People vs. Monroyo, the Court stressed that the death of the accused pending appeal of the conviction extinguishes criminal liability, as well as civil liability based solely thereon. Because Villoria died on March 21, 2020 while his appeal was pending, the criminal action against him must be dismissed.
• Elements of Section 3(e), Republic Act No. 3019: The elements are: (1) the offender is a public officer; (2) the act was done in the discharge of the public officer’s official, administrative, or judicial functions; (3) the act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and (4) the public officer’s action caused undue injury to any party, including the Government, or gave any unwarranted benefits, advantage, or preference. The first and second elements were undisputed for Macapugay and Mateo. Private individuals Chan and Dickson may be liable under Section 3 when acting in conspiracy with public officers under People vs. Go. The Information charged that the accused conspired to make it appear that a non-existent warehouse existed and was affected by the C-3 Project, causing payment of PHP 3,291,840.00. The prosecution initially relied on Tax Declaration No. 02947, cancelled in 1995, but later shifted to a theory that a warehouse may have existed though less than 457.2 square meters. This shift violated the right to be informed under Article III, Section 14(2) of the Constitution and Rule 115, Section 1(b) of the Rules of Court; an accused cannot be convicted of a crime not alleged or necessarily included in the Information. The charge of making a non-existent warehouse appear to exist is different from making a warehouse appear larger than it was. Even disregarding the variance, the prosecution failed to prove guilt beyond reasonable doubt. The evidence showed the warehouse described in Tax Declaration No. 02947 was the same old warehouse in Tax Declaration No. 02187, re-appraised to reflect current replacement value for just compensation. The Sandiganbayan itself confirmed the Quezon City Appraisal Committee recommended re-appraisal and revision of the tax declaration. Republic vs. Spouses Nocom supports valuing property at the time of taking; the increase from PHP 44,050.00 in 1973 to PHP 3,291,840.00 in 1992 after 19 years was not irregular. The Commission on Audit’s 2005 measurement of 390 square meters was made long after partial demolition, whereas the technical working group measured the warehouse while intact, and its findings were corroborated by prosecution witness Angeles. Angeles’s cancellation of Tax Declaration No. 02947 was because the improvement no longer existed at the time of inspection in 1995, not because it never existed. State Auditor Adelino admitted the amount was already arrived at before Tax Declaration No. 02947 was issued and that Tax Declaration No. 02187 was revised as recommended. Engr. Valdez admitted the improvement existed and was demolished, and his August 1, 1996 letter described the affected warehouse as an old warehouse. Angeles confirmed only one warehouse stood on Lot 3, Block 424. The City Assessor’s Office made two inadvertences—issuing Tax Declaration No. 02947 without cancelling Tax Declaration No. 02187 and marking it “New”—but these did not automatically establish criminal liability. Manifest partiality and evident bad faith, as defined in Uriarte vs. People, are in the nature of dolo and require deliberate dishonest or fraudulent purpose; People vs. Pallasigue requires the irregular act to be connected with official functions, accompanied by benefit, and deliberately committed for a dishonest purpose and disregard of public trust. The purpose of the re-appraisal was to determine replacement cost and just compensation, not to defraud the government. Chan and Dickson had no participation in the Quezon City Appraisal Committee deliberations, and the officer responsible for issuing the tax declaration was Rosas, who died. As to undue injury, Llorente, Jr. vs. Sandiganbayan holds that undue injury means actual damage that must be specified, quantified, and proven to moral certainty, akin to actual or compensatory damages under Article 2199 of the Civil Code. The alleged overstatement was not proven with moral certainty because the Commission on Audit measurement was questionable and made after demolition. Remnants of the demolished warehouse should not be the basis for concluding non-existence or overvaluation, especially since Engr. Valdez testified the remaining portion was useless to Servy Realty. The warehouse was also leased to Sycwin, and the Office of the Solicitor General had to seek a writ of possession before Branch 96, Regional Trial Court, Quezon City, which bolstered its existence. Since the prosecution failed to prove the non-existence of the warehouse beyond reasonable doubt, the third and fourth elements were not established, and Macapugay, Chan, Dickson, and Mateo must be acquitted.

• Death of Accused Pending Appeal — Under Article 89(1) of the Revised Penal Code, the death of the convict extinguishes criminal liability as to personal penalties, and as to pecuniary penalties, liability is extinguished only when death occurs before final judgment. The Court applied this rule to dismiss the criminal case against Villoria because he died while his appeal was pending, citing People vs. Monroyo for the principle that death pending appeal extinguishes both criminal liability and civil liability based solely on the conviction.
• Elements of Section 3(e) of Republic Act No. 3019 — The elements are: (1) the offender is a public officer; (2) the act was done in the discharge of official functions; (3) the act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and (4) the act caused undue injury to any party, including the Government, or gave any private party unwarranted benefits, advantage, or preference. The Court found the first and second elements undisputed as to Macapugay and Mateo, but held the third and fourth elements unproven.
• Private Individuals in Conspiracy with Public Officers — Private individuals may be convicted of violations of Section 3 of Republic Act No. 3019 when they act in conspiracy with public officers. The Court recognized this rule from People vs. Go but found no proof that Chan and Dickson conspired with the public officers.
• Right to be Informed of the Nature and Cause of the Accusation — An accused cannot be convicted of a crime, even if duly proven, unless it is alleged or necessarily included in the Information. The Court held that the prosecution’s shift from charging that the warehouse did not exist at all to a theory that it existed but was less than 457.2 square meters violated the accused’s constitutional and procedural right to be informed.
• Manifest Partiality and Evident Bad Faith — Manifest partiality exists when there is a clear, notorious, or plain inclination or predilection to favor one side or person rather than another. Evident bad faith connotes not only bad judgment but also a palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. Both modes are in the nature of dolo and require deliberate commission for a dishonest and fraudulent purpose and in disregard of public trust.
• Undue Injury as Actual Damage — Undue injury under Section 3(e) of Republic Act No. 3019 is consistently interpreted as actual damage. It cannot be presumed even after a wrong or violation of a right has been established; it must be specified, quantified, and proven to the point of moral certainty. It is akin to actual or compensatory damages under Article 2199 of the Civil Code and cannot be based on speculation, conjecture, or guesswork.
• Circumstantial Evidence — Circumstantial evidence is sufficient for conviction if: (1) there is more than one circumstance; (2) the facts from which the inferences are derived are proven; and (3) the combination of all circumstances is such as to produce a conviction beyond reasonable doubt. The Court found these requisites absent.
• Just Compensation in Expropriation — When there is actual taking by the government without expropriation proceedings, the owner is entitled to just compensation pegged at the value of the property at the time of taking. The Court used this doctrine to explain that the re-appraisal of the warehouse to reflect current replacement value was not irregular.

• "In view of the supervening death of accused-appellant Villoria, the criminal case against him must be dismissed." — This states the Court’s ruling on the effect of Villoria’s death pending appeal, applying Article 89(1) of the Revised Penal Code and People vs. Monroyo.
• "The sudden shift from the original accusation in the Information against Macapugay et al. that the warehouse did not exist at all to the theory that the warehouse may have existed, albeit less than 457.2 square meters, violates their constitutional right to be informed of the nature and cause of action against them" — This is the Court’s ratio for finding a fatal variance between the charge and the prosecution’s evidence, leading to the acquittal.
• "It can be gleaned from the quoted exchange that the cancellation of Tax Declaration No. 02947 was not because the property never existed but because the improvement no longer existed at the time Angeles conducted an ocular inspection in 1995." — This clarifies the Court’s factual finding that the warehouse previously existed, which undermined the prosecution’s central allegation of non-existence.
• "Unlike in actions for torts, undue injury in Sec. 3[e] cannot be presumed even after a wrong or a violation of a right has been established. Its existence must be proven as one of the elements of the crime." — This defines the stringent evidentiary requirement for the fourth element of Section 3(e) and explains why the alleged overvaluation did not suffice for conviction.

• People vs. Monroyo, G.R. No. 223708, October 9, 2019 — Cited as controlling authority that the death of the accused pending appeal of the conviction extinguishes criminal liability, as well as civil liability based solely thereon.
• People vs. Go, 730 Phil. 362 (2014) — Cited to establish that private individuals, when acting in conspiracy with public officers, may be indicted and held liable for offenses under Section 3 of Republic Act No. 3019.
• Uriarte vs. People, 540 Phil. 477 (2006) — Cited for the definitions of “manifest partiality” and “evident bad faith” under Republic Act No. 3019.
• People vs. Pallasigue, G.R. Nos. 248653, July 14, 2021 — Cited for the rule that the alleged irregular or anomalous act under Republic Act No. 3019 must be intimately connected with the discharge of official functions, accompanied by some benefit, and deliberately committed for a dishonest and fraudulent purpose and in disregard of public trust.
• Llorente, Jr. vs. Sandiganbayan, 350 Phil. 820 (1998) — Cited for the doctrine that undue injury under Section 3(e) means actual damage, which must be specified, quantified, and proven to the point of moral certainty.
• Republic vs. Spouses Nocom, G.R. No. 233988, November 15, 2021 — Cited for the rule that just compensation is pegged at the value of the property at the time of taking, supporting the Court’s finding that the re-appraisal was not irregular.
• People vs. Delector, 819 Phil. 310 (2017) — Cited for the rule that an accused cannot be convicted of a crime, even if duly proven, unless it is alleged or necessarily included in the Information.
• Fuentes vs. People, 808 Phil. 586 (2017) — Cited for the elements of violation of Section 3(e) of Republic Act No. 3019.
• Villarosa vs. People, G.R. No. 233155-63, June 23, 2020 — Cited in relation to the fourth element of Section 3(e), which requires causing undue injury or giving unwarranted benefits, advantage, or preference.
• People vs. Credo, G.R. No. 230778, July 22, 2019 — Cited for the exception to the rule that trial court findings of fact are entitled to great weight, where facts of weight and substance have been overlooked, misapprehended, or misapplied.

• Article 89(1), Revised Penal Code — Provides that criminal liability is totally extinguished by the death of the convict as to personal penalties, and as to pecuniary penalties, liability is extinguished only when death occurs before final judgment. Applied to dismiss the criminal case against Villoria.
• Section 3(e), Republic Act No. 3019 — Defines the corrupt practice of causing undue injury to any party, including the Government, or giving any private party unwarranted benefits, advantage, or preference through manifest partiality, evident bad faith, or gross inexcusable negligence. The Court found the third and fourth elements unproven.
• Article III, Section 14(2), 1987 Constitution — Guarantees the accused the right to be informed of the nature and cause of the accusation. The Court held this right was violated by the prosecution’s shift in theory.
• Rule 115, Section 1(b), Rules of Court — Reinforces the accused’s right to be informed of the nature and cause of the accusation. Cited together with the constitutional provision.
• Rule 110, Sections 8 and 9, Rules of Court — Govern the designation of the offense and the cause of the accusation, requiring the acts or omissions constituting the offense to be stated in ordinary and concise language sufficient to enable a person of common understanding to know the offense charged. Used to emphasize that the crime to be proven is determined by the Information.
• Rule 133, Section 4, Rules of Court — Provides that circumstantial evidence is sufficient for conviction if there is more than one circumstance, the facts from which inferences are derived are proven, and the combination produces conviction beyond reasonable doubt. The Court found these requisites absent.
• Article 2199, Civil Code — Defines actual or compensatory damages as adequate compensation for pecuniary loss duly proved. Cited to explain that undue injury under Section 3(e) is akin to actual damage.
• Rule 67, Rules of Court — Provides that just compensation is to be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. Cited in relation to Republic vs. Spouses Nocom.

Leonen, SAJ. (Chairperson), Lazaro-Javier, M. Lopez, and Kho, Jr., JJ., concur.