People vs. Asuncion

A public officer who approves the disbursement of public funds based on a good-faith, albeit mistaken, interpretation of the governing statute, and who relies on existing accreditation resolutions and appropriation ordinances, cannot be convicted under Sections 3(e) and 3(j) of RA 3019 or for malversation under Article 217 of the Revised Penal Code absent proof of evident bad faith, manifest partiality, gross inexcusable negligence, knowledge of the grantee's disqualification, or corrupt intent.

Carlos Racadio Asuncion served as Municipal Mayor of Sta. Catalina, Ilocos Sur for three consecutive terms from 2007 to 2016. He is married to Flora R. Asuncion, the Federated President of the Bayanihan ng Kababaihan, an organization of women rural workers. Co-accused Mamelfa Amongol, Rosita Ragunjan, Virginia Rafanan, and Genoveva Ragasa served as presidents of the Cabittaogan, Subec, Paratong, and Sinabaan chapters of the same organization, respectively, from 2007 to 2016. The Bayanihan ng Kababaihan was accredited by the Sangguniang Bayan of Sta. Catalina on September 20, 2010 as a community-based non-governmental organization and civil society organization. The municipality's share of Tobacco Excise Tax under RA 7171 (An Act to Promote the Development of the Farmer in the Virginia Tobacco Producing Provinces) served as the source of the disputed disbursements. Private complainant Jonathan Amando R. Redoble, a member of the local political opposition and son of a three-time mayoralty candidate who lost to Asuncion, filed both administrative and criminal complaints against the accused.

On September 20, 2010, the Bayanihan ng Kababaihan was accredited by the Sangguniang Bayan of Sta. Catalina, Ilocos Sur as a community-based non-governmental organization and civil society organization. The organization was managed by officers elected by its members. On June 4, 2012, Mayor Asuncion approved four undated project proposals and entered into four Memoranda of Agreement (MOA) with each of the four accused chapter presidents — Amongol (Cabittaogan Chapter), Ragunjan (Subec Chapter), Rafanan (Paratong Chapter), and Ragasa (Sinabaan Chapter). Under the project proposals and MOA, each chapter received ₱100,000.00 as financial assistance for livelihood projects, with the recipient members required to repay the loaned amount within six months plus interest.

Asuncion, as the approving authority with control over municipal fund disbursements, approved the release of the funds. On June 15, 2012, each chapter president received and negotiated a check for ₱100,000.00 (Check Nos. 636184, 636186, 636187, and 636185 for Amongol, Ragunjan, Ragasa, and Rafanan, respectively). The funds were sourced from the municipality's 2010 share of Tobacco Excise Tax under RA 7171. The beneficiaries were the individual chapters of the federation, not the federation itself.

The prosecution presented certifications from the Securities and Exchange Commission (dated November 26, 2012), the Cooperative Development Authority (dated January 2, 2013), and the Department of Labor and Employment Region I (dated January 15, 2013) to show that the Bayanihan ng Kababaihan was not registered as a juridical person, cooperative, or labor organization. The prosecution also submitted the marriage contract of the Asuncions and a certification from Flora Asuncion attesting that she was the Federated President of the Bayanihan ng Kababaihan, to demonstrate the mayor's alleged partiality. Disbursement documents — project proposals, MOA, obligation request forms, disbursement vouchers, checks, and journal entry vouchers — were submitted to prove the loans.

For the defense, Asuncion countered that the Bayanihan ng Kababaihan and its chapters possessed juridical personality through Sangguniang Bayan resolutions accrediting the organization since 2007 (Resolution No. 57, s. 2007; Resolution No. 50, s. 2010; Resolution No. 36, s. 2013). He relied on Resolution No. 39, s. 2010, dated July 5, 2010, authorizing him to represent the municipality in all official transactions and sign all bonds, contracts, and obligations. He maintained that he acted in good faith believing the chapters — whose members included rural workers or farmers, belatedly certified by DOLE in September 2013 — were qualified under RA 7171, which does not expressly exclude non-tobacco farmers from benefiting. He also relied on Appropriation Ordinance No. 01, series of 2010, re-enacted in 2011 and 2012 pursuant to Section 323 of the Local Government Code, as authority for the disbursements. The four chapter presidents similarly argued that they had been accredited as NGO and CSO by the municipality since 2007 and could be considered associations of tobacco farmers because tobacco farmers resided within their barangays.

On February 22, 2016, upon being informed of the Commission on Audit's disallowance of the financial assistance, the four chapter presidents settled or returned the amounts received, as evidenced by a certification dated April 14, 2016 — prior to the filing of the criminal cases. The Sandiganbayan, after pre-trial and submission of formal offers of evidence and memoranda (without witness testimony), found all five accused-appellants guilty beyond reasonable doubt of all three offenses, finding conspiracy among them.

• Misappreciation of Facts and Erroneous Legal Conclusions: Asuncion argued that the Sandiganbayan made findings of fact not supported by evidence and drew adverse conclusions — including that he acted in evident bad faith, had "guilty knowledge" that his co-accused were not entitled to financial assistance under RA 7171, and that the accused acted in conspiracy — from mere presumptions or from facts and circumstances that could be interpreted in favor of innocence.
• Erroneous Restriction of RA 7171 Beneficiaries: Asuncion maintained that the Sandiganbayan very restrictively limited qualification as beneficiaries of RA 7171 funds to organizations of tobacco-producing farmers, when the law itself makes no such restriction, thereby unjustly excluding barangay-based organizations of women rural workers.
• Good Faith and Absence of Conspiracy: Asuncion argued that it was not proven that the accused conspired, that no actual damage was caused the government, that the accused acted in good faith, and that the loaned amounts were returned to the LGU after COA issued notices of disallowance but before prosecution ensued.
• Lack of Conspiracy (Amongol, Ragasa, Ragunjan): Amongol, Ragasa, and Ragunjan argued that the prosecution failed to prove beyond reasonable doubt that they acted in conspiracy with Asuncion.
• Absence of Bad Faith (Amongol, Ragasa, Ragunjan): They contended that Asuncion never acted with evident bad faith in approving the financial assistance and releasing public funds.
• Presumption of Good Faith (Amongol, Ragasa, Ragunjan): They maintained that the prosecution failed to overcome the presumption of good faith to which every public official acting in discharge of official duties is entitled, and that good faith in the payment of public funds relieves a public officer from the crime of malversation.
• Erroneous Conviction and Appreciation of Restitution (Rafanan): Rafanan argued that the Sandiganbayan erred in convicting her on all charges, in appreciating restitution only as a mitigating circumstance, in concluding that conspiracy exists, in not considering her good faith, and in considering exhibits without them being verified by witnesses.

• Validity of Sandiganbayan Decision: The People, through the Office of the Special Prosecutor, asserted that the Sandiganbayan did not commit reversible error in finding accused-appellants guilty beyond reasonable doubt of violations of Sections 3(e) and (j) of RA 3019 and malversation of public funds, and that the assailed decision was valid and supported by facts and evidence on record.
• Existence of Conspiracy: The Special Prosecutor argued that accused-appellants acted in conspiracy with one another.
• Inapplicability of the Arias Doctrine: The Special Prosecutor contended that the Arias doctrine is not applicable in the present case.
• Restitution Does Not Exonerate: The Special Prosecutor argued that restitution of the amount malversed would not exonerate an accused, as payment is not one of the elements of extinction of criminal liability.

• Section 3(e) of RA 3019: Whether the Sandiganbayan erred in convicting accused-appellant Asuncion for violation of Section 3(e) of RA 3019, given the absence of manifest partiality, evident bad faith, or gross inexcusable negligence.
• Section 3(j) of RA 3019: Whether the Sandiganbayan erred in convicting accused-appellant Asuncion for violation of Section 3(j) of RA 3019, given the absence of proof that he knowingly approved or granted a benefit to persons not qualified or legally entitled thereto.
• Malversation of Public Funds: Whether the Sandiganbayan erred in convicting accused-appellants for malversation of public funds under Article 217 of the Revised Penal Code, given the absence of proof that public funds were appropriated, taken, or misappropriated.
• Conspiracy: Whether the Sandiganbayan erred in finding the existence of conspiracy between and among accused-appellant Mayor Asuncion and the accused-appellant chapter presidents of the Bayanihan ng Kababaihan.
• Good Faith and Restitution: Whether the good faith of the accused-appellants and their restitution of the loaned amounts upon COA disallowance constitute exculpatory circumstances warranting acquittal.

• Section 3(e) of RA 3019: No. The third element — manifest partiality, evident bad faith, or gross inexcusable negligence — was absent; Asuncion acted on a good-faith interpretation of RA 7171 and relied on existing Sangguniang Bayan resolutions and appropriation ordinances.
• Section 3(j) of RA 3019: No. The element of knowledge that the grantees were not qualified to obtain a loan was not proved; the accreditation conferred by the Sangguniang Bayan and later by DOLE made any lack of qualification not apparent.
• Malversation of Public Funds: No. The most important element — that the offender appropriated, took, misappropriated, or consented or permitted public funds to be taken — was not proved; the disbursements were supported by proper appropriation ordinances.
• Conspiracy: No. The prosecution's evidence of conspiracy consisted solely of the marriage certificate and Mrs. Asuncion's certification as Federated President; no evidence of a common design or purpose to commit a wrongful act was presented.
• Good Faith and Restitution: Yes. Good faith was established through Asuncion's reliance on accreditation resolutions, authorization from the Sangguniang Bayan, and appropriation ordinances; restitution upon COA disallowance, prior to the filing of criminal cases, served as a badge of good faith negating any allegation of bad faith.

• Section 3(e) of RA 3019: The elements of violation of Section 3(e) 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 officer caused undue injury or gave unwarranted benefits. The first two elements were undisputed. However, the third element was absent. RA 7171 does not specifically exclude non-tobacco farmers from benefitting from the fund; its Section 2 lists projects advancing self-reliance of tobacco farmers but does not restrict beneficiaries exclusively to tobacco farmers. Section 14 of RA 11346 later enlarged the purpose to include livelihood programs for farmers shifting from tobacco to other agricultural products. Given the absence of an express provision excluding women rural workers whose barangays include tobacco farmers, Asuncion's mistaken belief that the Bayanihan chapters were entitled to borrow from the fund was made in good faith. An erroneous interpretation of law, absent any dishonest or wrongful purpose, does not constitute bad faith. Manifest partiality was likewise absent because the prosecution made no pretense that other borrowers were unjustly set aside. Gross inexcusable negligence could not be imputed because Asuncion relied on Sangguniang Bayan resolutions accrediting the organization since 2007, Resolution No. 39, s. 2010 authorizing him to enter into contracts, and Appropriation Ordinance No. 01, series of 2010 (re-enacted in 2011 and 2012) as authority for disbursements. The restitution of the loaned amounts upon COA disallowance, before the filing of criminal cases, further served as a badge of good faith.

• Section 3(j) of RA 3019: The elements are: (1) knowingly approving or granting any license, permit, privilege, or benefit; and (2) in favor of any person not qualified for or not legally entitled to such benefit. The first element — knowledge — was not proved. Asuncion relied on the accreditation of the Bayanihan chapters as NGO and CSO by the Sangguniang Bayan since 2007 and later by DOLE. With such accreditation, the grantees' supposed lack of qualification would not have been apparent to anyone, including Asuncion. Knowledge of the grantee's lack of qualification is essential because it is the basis for concluding that the accused acted with bias or partiality and possibly corruption. The Court further emphasized, citing Martel vs. People, that a charge under RA 3019 must be grounded on graft and corruption — the acquisition of gain in dishonest ways. The record was bereft of any evidence showing how any accused personally gained from the transaction, and the immediate repayment upon COA disallowance strengthened the conclusion that no corrupt intent animated the parties.

• Malversation of Public Funds: The elements of Article 217 are: (1) the offender is a public officer; (2) he or she has custody or control of funds or property by reason of office; (3) the funds or property are public funds or property for which the offender is accountable; and (4) the offender has appropriated, taken, misappropriated, or consented or permitted another to take them. The last and most important element was not proved. There was no proof that Asuncion consented or permitted public funds to be taken either intentionally or through abandonment or negligence. The disbursements were supported by Appropriation Ordinance No. 01, series of 2010, re-enacted in 2011 and 2012 pursuant to Section 323 of the Local Government Code. Since the disbursements were supported by proper appropriation ordinances, there was no reason for Asuncion not to enter into the loan agreements, and the charge of malversation failed.

• Conspiracy: The prosecution's evidence of conspiracy consisted solely of the marriage certificate of the Asuncions and Mrs. Asuncion's certification as Federated President of the Bayanihan. No other evidence of a common design or purpose to commit a wrongful act was presented. The theory that because Asuncion is married to the Federated President, he and the chapter presidents must have conspired in bad faith to obtain the loans required a leap of imagination the Court was not prepared to make. There is no presumption of bad faith in cases involving violations of RA 3019; the law presumes the accused innocent until proven guilty. Citing Macairan vs. People, conspiracy requires proof beyond reasonable doubt that all participants performed overt acts with such closeness and coordination as to indicate a common purpose or design. Mere knowledge, acquiescence, or agreement to cooperate is insufficient. No clear nexus existed to prove unity of action and purpose among the accused-appellants. The acquittal of Asuncion carried with it the acquittal of his co-accused in the absence of any other evidence proving their guilt.

• Good Faith and Restitution: Asuncion's good faith was established through his reliance on multiple legal instruments: Sangguniang Bayan resolutions accrediting the Bayanihan ng Kababaihan as NGO and CSO since 2007 (Resolution No. 57, s. 2007; Resolution No. 50, s. 2010; Resolution No. 36, s. 2013); Resolution No. 39, s. 2010 authorizing him to represent the municipality in official transactions; Appropriation Ordinance No. 01, series of 2010, re-enacted in 2011 and 2012; and the belated DOLE certification of the chapters as associations of rural workers in September 2013. The restitution of the loaned amounts on February 22, 2016, upon COA disallowance and prior to the filing of criminal cases, was a badge of good faith negating any allegation of bad faith. The Court emphasized that while public office is a public trust, it would not interpret laws to be a disincentive to joining public service, and it is absurd to criminally punish every minute mistake that incidentally caused a benefit to private parties when these acts were not done with corrupt intent.

• Elements of Section 3(e) of RA 3019 — The prosecution must establish: (1) the offender is a public officer; (2) the act was done in the discharge of official, administrative, or judicial functions; (3) the act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and (4) the officer caused undue injury to any party, including the government, or gave unwarranted benefits, advantage, or preference. In this case, the third element was absent because Asuncion acted on a good-faith interpretation of RA 7171 and relied on existing municipal resolutions and appropriation ordinances.

• Modes of Committing Section 3(e) Offense — Partiality is synonymous with bias, exciting a disposition to see and report matters as wished rather than as they are. Bad faith imputes a dishonest purpose or moral obliquity and conscious doing of wrong; it partakes of the nature of fraud. Gross negligence is characterized by the want of even slight care, acting or omitting to act willfully and intentionally with conscious indifference to consequences. None of these modes was established against Asuncion.

• Elements of Section 3(j) of RA 3019 — The elements are: (1) knowingly approving or granting any license, permit, privilege, or benefit; and (2) in favor of any person not qualified for or not legally entitled to such benefit, or a mere representative or dummy. Knowledge of the grantee's lack of qualification is an essential element because it is the basis for concluding that the accused acted with bias or partiality and possibly corruption.

• Graft and Corruption as Essential to RA 3019 Violations — A charge of violation of RA 3019 must be grounded on graft and corruption. There must be evidence of corruption and personal gain obtained through wrongful means. It is not enough that a government official violated some law, rule, or regulation resulting in gain to a person and damage to the government, if the root of such gain and damage is mere mistake. As articulated by Senator Tolentino, the main idea of the law is graft and corrupt practices.

• Elements of Malversation under Article 217, RPC — The elements are: (1) the offender is a public officer; (2) he or she has custody or control of funds or property by reason of office; (3) the funds or property are public funds or property for which the offender is accountable; and (4) the offender has appropriated, taken, misappropriated, or consented, or through abandonment or negligence, permitted another person to take them. The fourth element is the most important and was not proved here because the disbursements were supported by proper appropriation ordinances.

• Conspiracy Requires Proof Beyond Reasonable Doubt — Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. While direct proof is not necessary, the prosecution must show, beyond reasonable doubt, that all participants performed overt acts with such closeness and coordination as to indicate a common purpose or design. Mere knowledge, acquiescence, agreement to cooperate, presence at the scene, or companionship is insufficient. The community of design must be conscious.

• Good Faith as Defense to RA 3019 and Malversation Charges — An erroneous interpretation of a provision of law, absent any showing of dishonest or wrongful purpose, does not constitute bad faith. Good faith in the payment of public funds relieves a public officer from the crime of malversation. Restitution of amounts upon COA disallowance, prior to the filing of criminal cases, serves as a badge of good faith negating any allegation of bad faith.

• No Presumption of Bad Faith in RA 3019 Cases — There is no presumption of bad faith in cases involving violations of RA 3019. The law presumes the accused innocent until proven guilty. Conviction must rest on the strength of the prosecution's evidence, not on the weakness of the defense. The constitutional right of presumption of innocence is enjoyed by public officers who stand accused.

• "In the case of Martel vs. People, the Court emphasized that a charge of violation of RA 3019 must be grounded on graft and corruption. There must be evidence of corruption and personal gain obtained through wrongful means order for a charge of the violation to prosper. It is not enough that a government official violated some law, rule or regulation resulting in gain to a person and damage to the government, if the root of such gain and damage is mere mistake." — This passage articulates the controlling rationale for acquittal under RA 3019: that the anti-graft law targets corruption, not mere error, and is frequently cited to distinguish good-faith mistakes from criminal graft.

• "Without an express provision in the laws indicating whether the fund must be used exclusively by current tobacco farmers, or also by former tobacco farmers, or by women farmers who are related to tobacco farmers, or by any other kind of farmer, accused-appellant Mayor Asuncion may be excused when he believed, albeit mistakenly, that the Cabittaogan, Subec, Paratong and Sinabaan chapters of the Bayanihan ng Kababaihan, headed by accused-appellants Amongol, Ragunjan, Rafanan and Ragasa, were entitled to borrow from the fund for their respective barangays' livelihood programs." — This passage establishes the good-faith basis for acquittal: the ambiguity of RA 7171's beneficiary qualifications, absent an express exclusion, justified Asuncion's mistaken interpretation.

• "We are not persuaded by the theory of the prosecution that because accused-appellant Mayor Asuncion is married to the Federated President of the Bayanihan ng Kababaihan, he and the other accused-appellants, who are the presidents of their respective chapters, must have conspired in bad faith to obtain the loans. Without more evidence showing how the accused acted in synchronicity to achieve a common malicious purpose, the presumption of bad faith and conspiracy put forward by the prosecution requires a big leap of the imagination, which the Court is not prepared to do." — This passage defines the insufficiency of marital relationship alone to establish conspiracy and rejects the prosecution's reliance on a presumption of bad faith.

• "Indeed, while public office is a public trust, the Court is called upon to refrain from interpreting the laws to effectively be a disincentive to individuals in joining the public service. It is simply absurd to criminally punish every minute mistake that incidentally caused a benefit to private parties even when these acts were not done with corrupt intent." — This passage, quoted from Martel vs. People, articulates the policy rationale limiting criminal liability under RA 3019 to acts animated by corrupt intent, not honest mistakes.

• People vs. Bacaltos, G.R. No. 248701, July 28, 2020 — Followed. The Court relied on this case for the definitions of partiality, bad faith, and gross negligence as modes of committing the offense penalized under Section 3(e) of RA 3019.
• Martel vs. People, G.R. No. 224720-23, February 2, 2021 — Followed. The Court extensively cited this case for the doctrine that a charge under RA 3019 must be grounded on graft and corruption, that the law presumes innocence and does not presume bad faith, and that public officers should not be criminally punished for every minute mistake absent corrupt intent.
• Ysidoro vs. Leonardo-De Castro, 681 Phil. 1 (2012) — Followed. Cited for the proposition that an erroneous interpretation of a provision of law, absent any showing of dishonest or wrongful purpose, does not constitute bad faith.
• Macairan vs. People, G.R. No. 215104, March 18, 2021 — Followed. Cited for the hornbook doctrine on conspiracy: that the prosecution must prove beyond reasonable doubt that all participants performed overt acts with closeness and coordination indicating a common purpose or design.
• Suba vs. Sandiganbayan, G.R. No. 235418, March 3, 2021 — Followed. Cited for the principle that the burden is on the prosecution to prove an accused's guilt beyond reasonable doubt, and that in ruling on conspiracy, there must be positive and clear evidence showing each accused's conscious and intentional participation.
• Albert vs. Sandiganbayan, 599 Phil. 439 (2009) — Followed. Cited for the definition of manifest partiality as a clear, notorious, or plain inclination or predilection to favor one side or person rather than another.
• Maamo vs. People, 801 Phil. 627 (2016) — Followed. Cited for the principle that where there is misappreciation of facts, the Court will not hesitate to reverse the trial court's conclusions.
• Arriola vs. Sandiganbayan, 526 Phil. 822 (2006) — Followed. Cited for the proposition that the presumption of innocence must be favored and exoneration granted as a matter of right where the prosecution fails to meet the standard of proof beyond reasonable doubt.

• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Penalizes 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. The Court found the third element absent because Asuncion acted in good faith.
• Section 3(j), Republic Act No. 3019 — Penalizes knowingly approving or granting any license, permit, privilege, or benefit in favor of any person not qualified for or not legally entitled to such benefit. The Court found the element of knowledge not proved because the accreditation by the Sangguniang Bayan and DOLE made the grantees' lack of qualification not apparent.
• Article 217, Revised Penal Code (as amended by RA No. 10951) — Defines and penalizes malversation of public funds or property. The Court found the fourth and most important element — appropriation, taking, misappropriation, or consent to taking — not proved because the disbursements were supported by proper appropriation ordinances.
• Section 2, Republic Act No. 7171 — Lists the projects that advance the law's purpose in granting LGUs a 15% share in tobacco excise taxes: cooperative projects, livelihood projects, agro-industrial projects, and infrastructure projects. The Court held that the law does not specifically exclude non-tobacco farmers from benefitting from the fund.
• Section 14, Republic Act No. 11346 — Enlarged the purpose of the excise tax fund to include livelihood programs allowing farmers to shift from tobacco production to other agricultural products, further supporting the conclusion that the fund's beneficiaries were not limited to current tobacco farmers.
• Section 323, Local Government Code (Republic Act No. 7160) — Provides that if the sanggunian fails to enact the annual appropriations ordinance within ninety days from the beginning of the fiscal year, the preceding year's ordinance shall be deemed re-enacted. Asuncion relied on Appropriation Ordinance No. 01, series of 2010, re-enacted in 2011 and 2012 under this provision, as authority for the disbursements.
• Section 85, Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Provides that no contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor sufficient to cover the proposed expenditure. The Court noted this principle but found that the disbursements were supported by proper appropriation ordinances.

Perlas-Bernabe (Chairperson), Hernando, Zalameda, and Marquez, JJ., concurred.