q~ j------------- sb decisions... · gener taruc, rolando domingo and nick a yuy ao, accused....

REPUBLIC OF THE PHILIPPINES\

~attbiBattha~attOuezon City

FIRST DIVISION

PEOPLE OF THE PHILIPPINES,Plaintiff,

- versus - CRIM. CASE NOS. S8-08-CRM-0392& S8-08-CRM-0393

For: Violation of Sec. 3(e), RA 3019

DR. HERMES FRIAS,GENER TARUC,ROLANDO DOMINGO andNICK AYUY AO,

Accused.x - - - - - - - - - - - - - - - - - - - - - - - - x

PEOPLE OF THE PHILIPPINES,Plaintiff,

CRIM. CASE NOS. S8-08-CRM-0403For: Violation of Sec. 3(e), RA 3019

- versus - CRIM. CASE NOS. S8-08-CRM-0406For: Falsification of Public Documents

CRIM. CASE NOS. S8-08-CRM-0407For: Malversation of Public Funds

DR. HERMES FRIAS,Accused.

Present:

DE LA CRUZ, J.ECONG, J.CALDONA, J.

Promulgated on:

JAN 1 B Z019 q~x - - - - - - - - - - - - - - - - - - - - ~- - - - - - - - - - - J--------------x

DECISIONpp vs. Dr. Hermes Frias, et al.Crim. Cases Nos. SB-OB-CRM-0392

to SB-OB-CRM-0393; SB-OB-CRM-0403; -0406 & -0407

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DECISION

DE LA CRUZ, J.:

Accused Hermes Frias, Gener Taruc, Rolando Domingo andNick Ayuyao stand charged for violation of Section3(e) of RA 3019,otherwise known as the Anti-Graft and Corrupt Practices Act,Falsification of Public Documents, and Malversation of Public Funds,defined and penalized under Article 171 and Article 217,respectively, in separate .Informations the respective accusatoryportions of which read:

Criminal Case No. S8-08-CRM-0392

That on or about the period between October 1996 to June 1997or sometime prior or subsequent thereto, in the Municipality of Capas,Tarlac, Philippine [sic], and within the jurisdiction of this Honorable Court,the above-named accused, all public officers, DR. HERMES FRIAS,being then the Municipal Mayor, GENER TARUC, being then theMunicipal Administrative Officer, ROLANDO DOMINGO, being then theMunicipal Accountant, and NICK AYUYAO, being then the MunicipalBudget Officer, all of the Municipality of Capas, Tarlac, committing thecrime herein charged in relation to their office and taking advantage oftheir positions, conspiring and confederating with one another thruevident bad faith, manifest partiality or gross inexcusable negligence, didthen and there, willfully, unlawfully and criminally enter into transactionswith supplier S & E Enterprise, involving the purchase of several items inthe total amount of Two Hundred Forty One [sic] One Hundred FortySix Pesos and Five Centavos (Php 241,146.05), knowing fully well thatsaid supplier is not licensed· and authorized to do business by theDepartment of Trade and Industry, thus giving undue preference oradvantage to said supplier.

CONTRARY TO LAW.


That on or about the period between October 1996 to June 1997or sometime prior or subsequent thereto, in the Municipality of Capas,Tarlac, Philippine [sic], and within the jurisdiction of this Honorable Court,the above-named accused, all public officers, OR. HERMES FRIAS,being then the Municipal Mayor, GENER TARUC, being then theMunicipal Administrative Officer, ROLANDO DOMINGO, being then theMunicipal Accountant, and NICK AYUYAO, being then the MunicipalBudget Officer, all of the Municipality of Capas, Tarlac, committing thecrime herein charged in relation to their office and taking advantage oftheir positions, conspiring and confederating with one another thruevident bad faith, manifest partiality or gross inexcusable negligence, didthen and there, willfully, unlawfully and criminally enter into transactions

DECISIONpp vs. Dr. Hermes Fries, et al.Crim. Cases Nos. SB-08-CRM-0392


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with supplier Gem Trading, involving the purchase of several items in thetotal amount of Four Hundred Fifty Six Thousand Six Hundred ThirtyFive Pesos and Forty Three Centavos (Php 456,635.43), knowing fullywell that said supplier is not licensed and authorized to do business bythe Department of Trade and Industry, thus giving undue preference oradvantage to said supplier.

CONTRARY TO LAW.


That on or about March 22, 1997, or sometime prior orsubsequent thereto, in the Municipality of Capas, Tarlac, Philippines, andwithin the jurisdiction of this Honorable Court, the above-named accused,a public officer, OR. HERMES FRIAS, being then the former MunicipalMayor of the Municipality of Capas, Tarlac, committing the crime hereincharged in relation to his office and taking .advantage of his position, thruevident bad faith, manifest partiality or gross inexcusable negligence, didthen and there, willfully, unlawfully and feloniously approve the paymentfor the purchase of electronic calculator in the amount of EighteenThousand Nine Hundred Fifteen Pesos (Php18,915.00) covered by theDisbursement Voucher No. 101-96-227 despite the lack of pertinentdocuments supporting the purchase and delivery of said item, whichresulted in the issuance of Check No. 216410 in the name of SAMIESICAT, thereby causing damage and undue injury to the government insaid amount.

CONTRARY TO LAW.


That on or about the period between 25 April 1997 to June 20,1997, or sometime prior or subsequent thereto, in the Municipality ofCapas, Tarlac, Philippine [sic], and within the jurisdiction Of thisHonorable Court, the above-named accused, OR. HERMES FRIAS, apublic officer, being then the Municipal Mayor of the Municipality ofCapas, Tarlac, commitfing the crime herein charged in relation to hisoffice and taking advantage of his position, did then and there, willfully,unlawfully and criminally falsify the official receipt numbers 0038,0040and 0049 of 716 Enterprise owned by ROBERTO REBOSA by making itappear that 42 pails of chlorbocide were purchased from said supplier,when in fact no such purchases were made, which official receipts wereintended to form part of public records as they were used in support of hisliquidation for cash advances in the total amount of Seven HundredEleven Thousand Three Hundred Twenty Pesos and Forty Centavos(Php711,320.40), to the damage and prejudice of public interest.

CONTRARY TO LAW.

DECISIONpp vs. Dr. Hermes Frias, et al.Crim. Cases Nos. SB-08-CRM-0392

to SB-08-CRM-0393; SB-08-CRM-0403; -0406 & -0407

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Criminal Case No. SB-OB-CRM-0407

That on or about the period between 25 April 1997 to June 20,1997, or sometime prior or subsequent thereto, in the Municipality ofCapas, Tarlac, Philippine [sic], and within the jurisdiction of thisHonorable Court, the above-named accused, DR. HERMES FRIAS, apublic officer, being then the. Municipal Mayor of the Municipality ofCapas, Tarlac, committing the crime herein charged in relation to hisoffice and taking advantage of his position, did then and there, willfully,unlawfully and criminally misappropriate, embezzle and convert to hispersonal use and benefit the total amount of Seven Hundred ElevenThousand Three Hundred Twenty Pesos and Forty Centavos (Php711,320.40), representing his cash advances supposedly to finance thepurchase of 42 pails of chlorbocide for which he is accountable toliquidate, when in truth and in fact no such purchases were made, to thedamage and prejudice of the government.

CONTRARY TO LAW

Upon arraiqnrnent.' the accused, assisted by their counsels depette, separately pleaded "Not Guilty" to all the charges againstthem.

At the ore-trial, the parties stipulated on the following facts:"

1. Accused Frias is the same person charged in theInformation; and

2. At all times material to this case, accused Frias was ahigh ranking public officer, being then the Municipal Mayor of theMunicipality of Capas, Tarlac. However, at the time of the filing ofthe Information, the accused was under detention-first at the CampCrame Detention Center and, subsequently, at the Provincial Jail ofTarlac, in connection with the case of murder then pending beforethe Regional Trial Court (RTC) of Quezon City.

The prosecution proposed the following issues:

1 .2 Records, VoL I, pp. 340, 365-367 & 516; Records, S8-08-CRM-0406 & 0407, p. 249

Pre-TnaIOrder, Records, VoL I, pp. 487-492;Pre-Trial Order, Records, S8-08-CRM-0406 & 0407, pp.334-339


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Criminal Case No. S8-08-CRM-0392 to -0393

Whether or not the accusedare liable for violation of Section 3(e) of RA 3019.


Whether or not the accused committed acts which constitute aviolation of Section 3 (e) of RA 3019.


1. Whether or not the accused falsified Official Receipts No.0038, No. 0040 and No. 0049 issued by 716 Enterprises, by makingit appear that forty-two (42) pails of chlorbocide were purchased fromsaid supplier when no such purchases were actually made; and

2. Whether or not these official receipts were submitted bythe accused to support his liquidation for his cash advances in theamount of Seven Hundred Eleven Thousand Three Hundred TwentyPesos and Forty Centavos (~711,320.40).


1. Whether or not the accused misappropriated andconverted to his personal use his cash advances from theMunicipality of Capas, Tarlac, in the amount of Seven HundredEleven Thousand Three Hundred Twenty Pesos and Forty Centavos(~711,320.40).

2. Whether or not the accused actually purchased forty-two(42) chlorbocide from 716 Enterprises out of the said cash advances;and

3. Whether or not the accused lawfully and properlyliquidated said cash advances.

The accused proposed the following issues:



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Criminal Case No. SB-08-CRM-0403

1. Whether or not the signatures of the accused In thedocuments presented by the prosecution were forgeries;

2. Whether or not the accused is liable for the crimecharged; and

3. Whether or not the accused was afforded the right to apreliminary investigation in this case.


Whether or not the accused is guilty beyond reasonable doubtof the crime of falsification of the official receipts mentioned in thecriminal Information.


Whether or not the accused is guilty beyond reasonable doubtof the offense charged in the Information.

The counsel for accused Ayuyao manifested about Ayuyao'sdeath on August 22, 2011, as shown by a Certificate of Death" fromthe Office of the Civil Registrar General. Pending verification by theprosecution of the alleged death, the Court held in abeyance thedismissal of the cases as against the said accused.

EVIDENCE FOR THE PROSECUTION

The prosecution presented two (2) witnesses, namely,Felicidad S. Medrano and Lourdes D. Moran, whose testimonies areset forth below.

Felicidad S. Medrano,4 the Team Leader of the Special AuditOffice of the Commission on Audit (COA) at the time material to thecases.

3 Records, Vol. I, p. 379

4 TSNs,dated March 11 & 12, 2013; and April 30, 2013



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Medrano testified that she conducted a special audit of theMunicipality of Capas, Tarlac, specifically, selected transactions fromJanuary 1996 to June 1997 pertaining to the utilization of the 20%Development Fund and the Countrywide Development Fund (CDF)of Congressman Herminio Aquino, and the grant and utilization ofcash advances. The audit was in response to a letter-complaint filedby then Vice Mayor Fernando Miranda. Their audit findings andrecommendations are incorporated in SAO Report No. 97-40.5

For the purchases amounting to ~1,072,554.71, the teamfound that the official receipts and other documents in connectiontherewith were falsified as the deliveries of the goods and receiptsfor such transactions were denied by the suppliers. One of thesesuppliers, 716 Enterprises, which was owned by Roberto Rebosa,supposedly issued Official Receipts Nos. 0038,6 00407 and 0049,8

corresponding to three (3) purchases amounting to ~720,OOO.00 in

total (~711,320.00 net of tax). According to Medrano, the source ofthe fund was the cash advance of accused Frias as seen in the

check he received amounting to ~720,OOO.00.

Medrano and her team likewise doubted the validity of variouspayments made to a certain Samie Sicat, such as the amount of

~19,500.00 (~18,915.00 net of tax) used to purchase threeelectronic calculators, as shown by the disbursement voucher,invoices, delivery receipt and acceptance report."

In the report, Medrano and her team also noted of purchases

amounting to ~679,781.48, which were made from various suppliers

without permits to do business. The team sent separate confirmationletters 10 to the Department of Trade and Industry (DTI), and to theLicensing and Permit Division, Municipality of Capas, to determinewhether the businesses were illegitimate or registered suppliers. TheDTI confirmed that several suppliers, including Sadie's Trading, GemTrading, and S&E Enterprises, were not registered in the said

5 Exhibit D

6 Exhibit D-4

7 Exhibit D-5

8 Exhibit 0-69 Exhibit D, pp. 134-141

10 Exhibits D-? & D-8



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government office; while the Municipality of Capas stated that thereare no existing records of said suppliers in their office.

During cross-examination." Medrano admitted that for thetransactions involved in Criminal Cases Nos. SB-08-CRM-0392 and-0393, no public bidding was conducted as the mode of procurementused was personal canvass of at least three suppliers. As to thetransactions covered in all the cases, Medrano confirmed that theywere all covered by a Notice of Disallowance.

Lourdes D. Moran,12 a member of the team which conductedthe special audit on the Municipality of Capas.

Moran corroborated the testimony of Medrano that the DTI andthe Local Licensing Bureau of the municipality found no records onS&E Enterprises and Gem Trading. Moran explained that theMunicipality of Capas had 15 transactions each with Gem Trading

and S&E Enterprises, paying them the amounts of ~456,635.43 and

~241, 146.05, respectively, through various checks. Moran alsoclaimed that in the Disbursement Vouchers, the payee was GemTrading but in the checks,' there is an insertion of "and/or" after thesupplier's name. Also, upon conducting an ocular investigation, theteam cannot locate the office of Gem Trading at the given address,and no one in the vicinity knew of the existence of the said supplier.

On September 5, 2013, the prosecution filed its Formal Offer ofExhibits.l" out of which the Court admitted Exhibit 0 and its annexesin the tenor that they were testified on.

Accused Frias and Domingo filed separate Motions for Leaveof Court to File Demurrer to Evidence, both of which the Courtdenied.

EVIDENCE FOR THE DEFENSE

The testimonies of the witnesses for the defense are set forthbelow.

11TSN, dated March 12, 2013

12 TSNs, dated June 3, 201313

Records, Vol. ll, pp. 86-232



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For Accused Frias

Hermes Frias, one of the accused and Municipal Mayor ofCapas, Tarlac at the time material to the present cases.

In his Judicial .Affidavit, 14 accused Frias claimed that hisparticipation in the purchases subject of Criminal Cases Nos. SB-08-CRM-0392 and -0393 was merely to sign the pertinent documentsafter the proper mode of acquisition was conducted. He also deniedknowing personally the owners of Gem Trading and S&EEnterprises. What he knew was that the two suppliers were dulylicensed to conduct business in Capas, and have been issuedbusiness permits which were renewed annually.

In Criminal Case No. SB-08-CRM-0403, with respect to thecharge that he approved the payment for the calculators without thepertinent documents, accused Frias maintained that all documentsfor liquidation and disbursement passed through the properaccounting method and were reviewed by the municipal officersconcerned. As said documents were submitted to LualhatiAbesamis, the resident COA Auditor for Region Ill, she should be theone to explain why the documentsare missing.

As to the purchase made from 716 Enterprises in CriminalCases Nos. SB-08-CRM-0406 and -0407, accused Frias testifiedthat he cannot remember if the municipality transacted with saidsupplier because personal canvassing was done by the Bids andAwards Committee (BAC). He likewise contended that it was not partof his duty as Municipal Mayor to determine the falsity of each andevery document presented to him for signing. Thus, it was only afterthe documents were scrutinized by the municipal accountant, thebudget officer, and the BAC, that they were referred to him forapproval.

Gener Taruc, one of the accused, and the AdministrativeOfficer and Acting General Services Officer of the Municipality ofCapas at the time material to the cases.

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In his Judicial Affidavit.l'' accused Taruc testified that thepurchase of 42 pails of chlorbocide was requested by the RuralHealth Unit of the municipality. He confirmed that he personallychecked the deliveries and made sure that the correct quantity andquality were delivered. As to the purchase of electronic calculatorsfrom Samie Sicat, Taruc testified that the same were delivered andpersonally received by the Municipal Treasurer, Norma Panganiban.Taruc also asserted that there were documents supporting therequest for purchase, which were submitted to the ProvincialAuditor's Office.

Dr. Carlos G. Balmores, the Rural Health Physician at theMunicipality of Capas at the time material to the cases.

In his Judicial Affidavit." Dr. Balmores corroborated thetestimony of accused Taruc that it was Balmores' office whichrequisitioned 42 pails of chlorbocide in connection with its anti-dengue program. Or. Balmores confirmed that his office formallyreceived the chlorbocide which was used in fogging activities invarious barangays of the municipality. He also explained that therewere documents supporting the request for purchase, as he himselffilled out the Purchase Request Form, and signed the first page ofthe voucher acknowledging receipt of the items. He is not aware ofany claim or demand for payment from the supplier.

For Accused Domingo

Rolando Domingo, one of the accused in these cases.

In his Judicial Affidavit." Domingo testified that he was theMunicipal Accountant in Capas at the time material to the cases. Hedenied participation in the subject transactions, arguing that the BACof which he is a member, was not involved as there was no publicbidding. All the items were acquired through personal canvassesconducted by the Mayor's Office or the Office of the GeneralServices, and were paid through purchase orders approved:' and/orsigned by the mayor. During cross-examination." Domingo clarifiedthat as the Municipal Accountant, he signed the Disbursement

15 Records, Vol. Ill, pp. 206-21316 Records, Vo!. Ill. pp. 315-321

17 Exhibit 1- Domingo; Records, Vol. 11, pp, 314-318

18 TSN,dated January 11, 2016

DECISIONpp vs. Dr. Hermes Frias, et al.Grim. Gases Nos. SB-OB-GRM-0392

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Vouchers (DVs) of the subject transactions after reviewing thesupporting documents attached thereto and finding them satisfactoryand complete. When confronted with the DVs,19 Domingo answeredthat he does not know if they are the same documents which hesigned. As to the signatures above his name, he testified that theyappear to be his.

On June 28, 2017, accused Domingo filed his Formal Offer ofEvidence. Considering that the offered documents were JudicialAffidavits, the Court saw no need to admit the same as they alreadyform part of the records of the case."

For Accused Taruc

Gener Taruc" the Administrative Officer and Acting GeneralServices Officer of the Municipality of Capas at the time material tothe cases.

"Taruc testified that it was his personnel, Rosie Sibal andRommel Reamico, who conducted the canvass of materials duringthe period of October 1996 to June 1997. In order for anestablishment to be a qualified bidder, it must be legitimate andexisting. It must be a duly registered business entity and shouldhave a business license/permit, DTI registration and BIR registration,among others. After the canvass from three (3) stores, the BAC willevaluate the canvass documents to determine the winning bidder.The purchase order shall be prepared by the Office. of the Mayor,and when approved, the materials will be purchased from thewinning bidder. Taruc admitted that there were times that he himselfwent to the winning establishments to purchase the items. In thecase of Gem Trading and S&E Enterprises, Taruc testified that hewas able to see that the two (2) establishments were qualifiedbidders, as their business license, DTI registration and BIRregistration were all displayed in their respective stores. Taruc alsodenied knowing the owners of the two suppliers.

19 Exhibits V to CC and series, inclusive

20 Records, Vol. IV, p. 353

21 Exhibit I-Taruc; Records, Vol. 11,pp. 468-477

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REBUTTAL EVIDENCE

The prasecutian presented three (3) witnesses to testify anrebuttal.

Ma. Concordia L.Soriano, the Chief, Trade and IndustryDevelapment Specialist of the Department of Trade and Industry(DTI), Tarlac Pravincial Office.

In her Judicial Affidavit,22 Sariana testified that in campliancewith a subpoena issued by the Office of the Ombusdman, theyverified from the Philippine Business Registry System the businessnames "S&E Enterprises" and "Gem Trading" in Capas, Tarlac. Theyfound that the two names are not in their database. Sorianoprepared a letter-response" to the subpoena, stating their findingsand attaching thereto screenshots of the DTI-Business NameRegistration System, and system-generated Certifications regardingGem Trading registered in NCR, Cagayan Valley and Calabarzan.

Rosie Sibal-Manalo, .a Radia Operatar "I detailed at theGeneral Services Office, Mayor's Office, Municipality of Capas at thetime material to the cases.

In her Judicial Affidavit." Sibal-Manalo denied that sheconducted personal canvass. She explained that the only tasks thataccused Taruc, as GSO, would instruct her to do were to carrydocuments to the budget office and accounting office, or buymerienda far the visitors

Rommel Rearnlco, a Clerk I detailed at the General ServicesOffice (GSO), Mayor's Office, at the Municipality of Capas in 1997.

Reamico testified in his Judicial Affidavit25 that when he wasdetailed at the GSO, he ran errands for accused Taruc which includebringing of documents to the budget and accounting office, andbuying of items such as janitorial and office supplies.

22 Records, Vol. Ill, pp. 387-400

23 Exhibit RR and series

24 Records, Vol. IV, pp. 17-21


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The Court admitted'" all the exhibits formally offered by theprosecution" as part of the testimony of the accused on cross-examination.

On October 29 and November 5, 2018, the prosecution,accused Domingo and Taruc,. and accused Frias, filed theirrespective memoranda."

THE FACTS

Based on the evidence adopted and presented, and thestipulations between the prosecution and the accused, the Courtfinds the facts below:

At the time material to the cases, or between the periodOctober 1996 to June 1997, accused Dr. Hermes Frias, GenerTaruc, Rolando Domingo and Nick Ayuyao were officials of theMmunicipality of Capas, Tarlac, serving as Municipal Mayor,Municipal Administrative Officer, Municipal Accountant and MunicipalBudget Officer, respectively.

On August 12, 1997, the Sangguniang Bayan of Capas,Tarlac, through Vice-Mayor Fernando Miranda, requested for aninvestigation on alleged anomalies in the said municipality. Pursuantto COA Assignment Orders Nos. 97-117, 97-117 -A and 97-117-8, anaudit team conducted a special audit on selected transactions of themunicipality, covering the period January 1996 to June 1997, withfocus on the utilization of the 20% Municipal Development Fund andthe Countrywide Development Fund allocated to CongressmanHerminio Aquino, and the grant and utilization of cash advances.

The audit team submitted its findings in SAO Report No. 97-40,dated December 28, 2000. Among the findings are: (1) falsificationof officia! receipts and other documents, committed by issuingreceipts for fictitious transactions, fabricating fake official receiptsand invoices, and padding the amounts payable indicated in theprovisional receipts; (2) the deliveries of goods and receipt ofpayments for such transactions were denied by the suppliers; and

26 Records, Vol. V, p. 30


28 Records, VO!.V, pp. 96-121; 122-131; & 132-159

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(3) the checks issued were encashed by unauthorized employees ofthe municipality and other persons.

Finding probable cause to indict Dr. Frias, Taruc, Domingo andAyuyao for two counts of violation of Section 3(e) of RA 3Q19, andDr. Frias for violation of Section 3(e) of RA 3019,Malversation, andFalsification of Public Documents, on October 15, 2008, the .Office ofthe Ombudsman filed five (5) separate Informations against them.

Hence, this Decision ..

DISCUSSION

The following discussion will be limited to the participation ofaccused Frias, Domingo and Taruc only. Should the name ofaccused Ayuyao, whose death is still pending verification, may beinevitably mentioned, it is only to lend completeness to the narrationof events, and will not ascertain his culpability, if any.

Criminal Cases Nos. S8-08-CRM-0392 and -0393

The prosecution alleges that accused Frias, Taruc andDomingo, conspiring with one another, and thru evident bad faith,manifest partiality or gross inexcusable negligence, entered intoseparate transactions with S&E Enterprise and Gem Trading,despite knowing that these suppliers are not licensed, thereby givingundue preference or advantage to them.

Section 3(e) of RA 3019, as amended, provides:

Section 3. Corrupt practices of public officers. In addition toads or omissions of public officers already penalized by existinglaw, the following shall constitute corrupt practices of any publicofficer and are hereby declared to be unlawful:

xxx

(e) Causing any undue injury to any party, including theGovernment, or giving any private party any unwarranted benefits,advantage or preference in the discharge of his officialadministrative or judicial functions through manifest partiality,evident bad faith or gross inexcusable negligence. This provision



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shall apply to officers and employees of offices or governmentcorporations charged with the grant of licenses or permits or otherconcessions.

xxx

In Fuentes v. People of the Philippines,29 the Supreme Courtenumerated the essential elements of violation of Sec. 3 (e) of RA3019, thus:

1. That the accused must be a public officer dischargingadministrative, judicial or official functions (or a private individualacting in conspiracy with such public officers);

2. That he acted with manifest partiality, evident bad faith or .inexcusable negligence; and

3. That his action caused any undue injury to any party,including the government, or giving any private party unwarrantedbenefits, advantage or preference in the discharge of his functions.

The first element is present. As stipulated by the parties,accused Frias was a high ranking public officer, being then theMunicipal Mayor of the Municipality of Capas, Tarlac, at all' timesmaterial to the cases. As to accused Domingo and Taruc, theyadmitted that they were the Municipal Accountant, and MunicipalAdministrative Officer, respectively, of Capas, Tarlac, at the timematerial to the cases. All of them were discharging official oradministrative functions in connection with the subject transactions.

As to the second and third elements, their determination restson whether or not Gem Trading and S&E Enterprises were ind.eednot licensed to do business at the time material to the cases.

Based on the DVs and the supporting documents, thetransactions of the municipality with the two suppliers occurredsometime in May and June of 1997. On December 11, 1997, in thecourse of the COA special audit, the DTI Office of Tarlac wrote a .letter" to prosecution witness Medrano informing her that no recordswere found on certain establishments, which include Gem Trading

29 April 17, 2017, 822 SeRA509, 51730 Exhibit D-7



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and S&E Enterprises. On April 29, 1998, the OIC MunicipalTreasurer of Capas informed the special audit team through a letter31

that the Office of the Municipal Treasurer of Capas does not haveany existing records of the suppliers. Doubtless, both Gem Tradinqand S&E Enterprises were not authorized to do business either bythe DTI and the Municipality of Capas.

The Court finds untenable the argument of the defense thatGem Trading, as certified by the OTI in June 2017, was found to beoperating in other localities such as in Quezon City, Cagayan, andBatangas. The COA findings indicate that the business address ofGem Trading was Sto. Rosario St., Capas, Tarlac. Common sensealso dictates that it is highly incredulous that the municipality wentcanvassing from as far as the said provinces just to procure rice andmango seedlings. Moreover, Section 367 of RA 7160 or the LocalGovernment Code of 1991, expressly provides that procurement ofsupplies through personal canvass may be effected by canvassing ofat least three (3) responsible suppliers in the locality. Similarly, theargument that there was an S&E Enterprises registered in the SECdoes not convince the Court, considering that it appears from theOTI records that it was registered only in 2005.

As to the second element of violation of Section 3(e) of RA3019, the Supreme Court defined partiality, bad faith and grossnegligence in Ampil v. Office of the Cimbuaemen'" as follows:

"Partiality" is synonymous with "bias" which "excites adisposition to see and report matters as they are wished for ratherthan as they are." "Bad faith 'does not simply connote badjudgment or negligence; it imputes a dishonest purpose or somemoral obliquity and conscious doing of a wrong; a breach of swornduty through some motive or intent or ill will; it partakes of thenature of fraud." "Gross negligence has been so defined asnegligence characterized by the want of even slight care, acting oromitting to act in a situation where there is a duty to act, notinadvertently but willfully and intentionally with .a consciousindifference to consequences in so far as other persons may beaffected. It is the omission of that care which even inattentive andthoughtless men never fail to take on their own property."

31 Exhibit D-8

32 July 31, 2013, 703 seRA 1, 27

DECISIONpp vs. Dr. Hermes Frias, et al.Grim. Cases Nos. SB-08-GRM-0392

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Evident bad faith was further described in Consigna v.People33 in this manner:

"Evident bad faith" contemplates a state of mindaffirmatively operating with furtive design or with some motive ofself-interest or ill will or for ulterior purposes, which manifested inpetitioner's actuations and representation.

In both cases, the testimonial and documentary evidencesufficiently proved that the accused acted with evident bad faith,manifest partiality and/or gross inexcusable negligence when theyentered into the transactions with the unlicensed suppliers. Despitethe clear import of the law and COA rules, the accused, whether withdishonest intent or gross negligence, selected both Gem Tradingand S&E Enterprises to be personally ea vassed and even awardedthem the transactions. Accused Frias tried to evade liability byinsisting that he relied on the budget and treasury officers as to thesuppliers being duly licensed. He also maintained that he onlysigned when all the documents forwarded to him were completelyfilled out and signed by the other municipal officers. However, thisclaim was negated by DV No. 101-96-03-15834 with Gem Trading asclaimant, which shows that it was signed by accused Frias despitethe lack of signature of accused Domingo as Municipal Accountant.Also, considering that accused Frias was not just the approvingauthority but also the requisitioning officer of the subjecttransactions, he should have been prompted to exercise a higherdegree of care and circumspection, and consequently, to go beyondwhat his subordinates had prepared. That he allowed theprocurement of the items via personal canvass, despite the fact thatthe total amount grossly exceeded the threshold set by law,35 all the

33 April 2, 2014, 720 SeRA 350, 368

34 Exhibit DD

35 Section 367 of RA 7160 provides:"Procurement through Personal Canvass.-Upon approval by t e Committee on Awards, procurement ofsupplies may be effected after personal canvass of at least three (3) responsible suppliers in the locality bya committee of three (3) composed of the local general services officer or the municipal or barangaytreasurer, as the case may be, the local accountant, and the head of office or department for whose use thesupplies are being procured. xxx

"Purchases under this Section shall not exceed the amounts specified hereunder for all items in anyone (I)month for each local government unit:xxxMunicipalities:First ClassSecond and Third ClassF01ll1h Class and Below

Sixty thousand pesos (P60,OOO.OO)Forty thousand pesos (P40,OOO.OO)

Twenty thousand pesos (P20,OOO.OO).

DECISIONpp vs. Dr. Hermes Frias, et al.Grim. Gases Nos. SB-08-GRM-0392

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more raises the suspicion that he was acting not just grosslynegligent, but with evident bad faith. His lame excuse that he cannotremember whether he was the one who signed the documents inview of the long period which has passed, without offering evidenceto support his claim, deserves scant consideration.

As to accused Taruc, his· defense was that it was hispersonnel, Sibal-Manalo and Reamico, who conducted the personalcanvass of the items. However, this was belied by the clear andcategorical testimonies of the two employees he mentioned whodenied doing, or being asked. to do, any canvass. Accused Taruc'sattempt to exculpate himself by maliciously passing on the blame tohis subordinates only proves that he acted in evident bad faith,manifest partiality and/or gross inexcusable negligence when heallowed the transactions to be awarded to Gem Trading and S&EEnterprises.

As to accused Domingo, he admitted that the signaturesappearing on the DVs appeared to be his. While he deniedparticipation in the subject transactions as the mode of procurementwas not public bidding, such argument is untenable as he was beingcharged in his capacity as Municipal Accountant, and not as amember of the BAC or Committee of Awards. Indeed, hisparticipation was in siqninq the DVs and the canvass sheets, thus,he cannot feign ignorance of his involvement.

With respect to the third element, the Supreme Courtdiscussed in /smpit" that Section 3(e) of RA 3019 may be violated intwo ways:

xxx [I]t should be noted that there are two ways by whichSection 3(e) of RA 3019 may be violated-the first, by causingundue injury to any party, including the government, or the second,by giving any private party any unwarranted benefit, advantage orpreference. Although neither mode constitutes a distinct offense,an accused may be charged under either mode or both.

As defined by the Court, "unwarranted" means lackingadequate or official support; unjustified; unauthorized or withoutjustification or adequate reason. "Advantage," on the other hand,

36 July 31, 2013, 703 seRA 1



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means a more favorable or improved position or condition; benefit,profit or gain of any kind; benefit from some course of action."Preference" signifies priority or higher evaluation or desirability;choice or estimation above another."

In order to be found guilty under t e second mode, or by givingany private party any unwarranted benefit, advantage or preference,it suffices that the accused has given unjustified favor or benefit toanother, in the exercise of his official, administrative or judicialfunctions."

The present cases fall under the second mode, in that theaccused were alleged to have given unwarranted benefit, advantageor preference to Gem Trading and S&E Enterprises. The Court findsthat the prosecution has sufficiently proved that the accused gaveunwarranted benefits to both suppliers. Despite not being licensed todo business by both the DTI and the municipality, Gem Trading andS&E Enterprises were afforded the opportunity of being included inthe list of suppliers personally canvassed by the accused. The actsof the accused in even considering Gem Trading and S&EEnterprises as potential suppliers, and thereafter awarding them thecontracts, unsettle the fair system of procurement in determining thebest possible price for the government. Such act is akin to rewardingthese unlicensed establishments despite non-compliance with lawsand regulations.

Finally, the Court finds that conspiracy among the accusedwas established by the prosecution. In Jaca v. People,39 the Courtelucidated how there can be conspiracy even if the violation ofSection 3(e) of RA No. 3019 was committed through gross andinexcusable negligence, thus:

In Sistoza, the Court already intimated on the possibility ofcommitting a violation of Section 3(e) of RA No. 3019 throughgross and inexcusable negligence, and of incurring collectivecriminal responsibility through a conspiracy.

x x x As we have consistently held, evidence of guilt mustbe premised upon a more knowing, personal and deliberate

371bid381bid

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participation of each individual who is charged with others as partof a conspiracy.

Furthermore, even if the conspiracy were one of silence andinaction arising from gross inexcusable negligence, it isnonetheless essential to prove that the breach of duty borders onmalice and is characterized by flagrant, palpable and willfulindifference to consequences insofar as other persons may beaffected.

As earlier discussed, considering that the gravity ofnegligence required by law for a violation of Section 3(e) of RA No.3019 to exist falls short of the degree of bad faith or partiality toviolate the same provision, a conspiracy of silence and inactionarising from gross inexcusable neqliqence would almost always beinferred only from the surrounding circumstances and the parties'acts or omissions that, taken together, indicate a commonunderstanding and concurrence of sentiments respecting thecommission of the offense. The duties a d responsibilities that theoccupancy of a public office carry and the degree of relationship ofinterdependence of the different offices involved here determinethe existence of conspiracy where gross inexcusable negligencewas the mode of commission of the offence.

For emphasis, the petitioners are all heads of theirrespective offices that perform interdependent functions in theprocessing of cash advances. The petitioners' attitude of buck-passing in the face of the irregularities in the voucher (and theabsence of supporting documents), as established by theprosecution, and their indifference to their individual and collectiveduties to ensure that laws and regulations are observed in thedisbursement of the funds of the local government of Cebu canonly lead to a finding of conspiracy of silence and inaction,contemplated in Sistoza. The Sandiganbayan correctly observedthat -

Finally, it bears stressing that the separate acts oromissions of all the accused in the present case contributed in theend result of defrauding the government. Without anyone of theseacts or omissions, the end result would not have been achieved.Suffice it to say that since each of the accused contributed to attainthe end goal, it can be concluded that their acts, taken collectively,satisfactorily prove the existence of conspiracy among them.

All told, the Court finds and so rules that the prosecution hassufficiently proved all the essential elements of violation of Section3(e) of RA 3019 in both Criminal Cases Nos. SB-08-CRM-0392 and-0393.

1\\

DECISIONpp vs. Dr. HermesFrias, et al.Crim. Cases Nos. SB-OB-CRM-0392


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Accused Frias is being charged of violation of Section 3(e) of

RA 3019 for approving the payment of f>'18,915.00 to Samie Sicat forthe purchase of electronic calculators. Such act was allegedlycommitted with evident bad faith, manifest partiality, or grossinexcusable negligence as the purchase was approved despite thelack of pertinent supporting documents and the delivery of saiditems, thereby causing undue injury to the government.

As discussed above, the first element is stipulated. AccusedFrias was the Municipal Mayor of Capas, Tarlac, discharging officialor administrative functions when he approved the subject purchase.

As to the second and third elements, the Court finds that theywere not sufficiently proved by the prosecution.

First, the Information alleges that the payment for the purchaseof the electronic calculators was made thru Check No. 216410payable to a certain Samie Sicat. However, the supportingdocuments of the purchase, as contained in the SAO Report No. 97-40, such as the Disbursement Voucher." Purchase Order." andRequest for Obligation of Allotment." all indicate that thepayee/supplier is Sadie's Trading. The Official Receipt'" for the

check in the amount of f)=18,915.00 was also issued by Sadie's

Trading. In the canvass sheets." it was also indicated that Sadie'sTrading was awarded the transaction, being the lowest offer andmost advantageous to the government. Even the check purportedly

issued to Samie Sicat for the amount of f)=18,915.00 was notpresented. Thus, the prosecution' failed to establish that Sadie'sTrading and Samie Sicat are one and the same, or that there was aconnection or relation between the two. Based on the SAO Report,Samie Sicat allegedly disclosed that his name was used by theaccused to facilitate the transaction. However, he did not execute anaffidavit or sworn statement. Neither was he presented as a witness.

40 Exhibit D, p. 134




44 Exhibit D, pp. 138-140

DECISIONpp vs. Dr. Hermes Fries, et al.Crim. Cases Nos. SB-OB-CRM-0392 .


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Second, while prosecution witness Medrano testified that therewas a Notice of Suspension (which automatically became a Notice ofDisallowance after 30 days) for the subject transaction, the reasonthereof was that the required documentation was lacking. In theSAO Report, the documents lacking were identified as the deliveryreceipt, supplier's invoice, and inspection report." However, evenassuming that these documents were indeed not submitted to theCOA, the non-delivery of the items has not been proved. Noevidence, documentary or testimonial, was adduced to establish thisargument. The requisitioning officer of the subject purchase, or anycredible witness, was not presented to testify on the non-delivery ofthe calculators. Hence, there being no evidence to the contrary, thepresumption is that there was regularity in the purchase and deliveryof the items.

Third, the act complained against accused Frias was hisapproval of the purchase of the electronic calculators. However,what the prosecution attempts to establish was that thedocumentation submitted to the COA lacks proof of delivery andreceipt of the items. Clearly, the' act of approving the purchaserequest comes before the delivery. Assuming arguendo that therewas no delivery of the items, the fault cannot be ascribed solely toaccused Frias. More importantly, the mere approval by accusedFrias of the subject purchase, without proof that he knew that theitems will not be delivered, does not amount to manifest partiality,evident bad faith, or gross inexcusable negligence.

Considering the foregoing, the Court finds and so holds thatthe prosecution failed to prove all the elements of violation of Section3 (e) of RA 3019 in this case.


In this case, accused Frias is being charged of falsifyingOfficial Receipt Nos. 0038, 0040 and 0049 issued by 716Enterprises, which is owned by Roberto Rebosa. The prosecutioncontends that accused' Frias made it appear that 42 pails ofchlorbocide were purchased from the said supplier but in fact, nosuch purchases were made. The' alleged falsified official receipts,

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with a total amount of P711,320.40, were supposedly used byaccused Frias to liquidate his cashadvances.

Article 171, paragraph 2, of the RPC,46 provides:

Art. 171. Falsification by public officer, employee or notary orecclesiastic minister.- The penalty of prisi6n mayor and a fine notto exceed One million pesos (131,000,000) shall be imposed uponany public officer, employee, or notary who, taking advantage of hisposition shall falsify a document by committing any of the followingacts:

xxx

(2) Causing it to appear that persons have participated in any act orproceeding when they did not in fact so participate.

xxx

The elements of the Crime, as above defined and penalized,are:

1. That the offender IS a public officer, employee, or notarypublic.

2. That he takes advantage of his official position ..

3. That he falsifies a document by causing it to appear thatpersons have participated in any act or proceeding.

4. That such person or persons did not in fact so participate inthe proceedinq."

A perusal of the evidence, both testimonial and documentary,will show that except for the first element, all the other elementswere not sufficiently proved by the prosecution.

Indeed, when a person whose signature was affixed to adocument denies his/her signature therein, a prima facie case forfalsification is established which the defendant must overcome."

46 As amended by Section 25 of RA 10951

47 Goma v. Court of Appeals, January 8, 2009, 576 SeRA 1

48 Pacosum v. People, April 16, 2009, 585 SeRA 616

DEGISIONpp vs. Dr. Hermes Fries, et al.Grim. Gases Nos. SB-OB-CRM-0392

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However, the same is not availing in the present case. In provingthat there was falsification, the prosecution anchors its argument onthe statement supposedly made by the supplier, Roberto Rebosa,during the audit investigation, that the official receipts of the supplierwere delivered in blank. However, Rebosa was not presented as awitness to testify that the signatures appearing on Official ReceiptsNo. 0038, No. 0040 and No. 0049 were in fact not his. Neither didthe prosecution present any expert witness to compare the signatureof Rebosa to the signatures appearing on the receipts. Hence, thepresumption of validity and regularity prevails over allegations offorgery and fraud.

Failing to prove beyond reasonable doubt all the elements ofviolation of Article 171 (2) of the RPC, the Court is constrained toorder the acquittal of accused Frias.


For this case, accused Frias is being charged of Malversationof public funds in the amount of ~711 ,320.40, representing his cashadvances supposedly used. in the purchase of 42 pails ofchlorbocide, with such purchases alleged to be inexistent.

The crime of Malversation of Public Funds under Article 217 ofthe Revised Penal Code, as amended by RA 10951, is defined as:

Art. 217. Malversation of public funds or property. -Presumption of malversation. - Any public officer who, by reasonof the duties of his office, is accountable for public funds orproperty, shall appropriate the same or shall take or misappropriateor shall consent, through abandonment or negligence, shall permitany other person to take such public funds, or property, wholly orpartially, or shall otherwise be guilty of the misappropriation ormalversation of such funds or property, shall suffer:

xxx

2. The penalty of prision mayor in its minimum and mediumperiods, if the amount involved is more than Forty thousand pesos(P40,000.00) but does not exceed One million two hundredthousand pesos (Pi ,200,000.00).

xxx


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In all cases, persons guilty of malversation shall also sufferthe penalty of perpetual special disqualification and a fine equal tothe amount of the funds malversed or equal to the total value of theproperty embezzled.

The failure of a public officer to have duly forthcoming anypublic funds or property with which he is chargeable, upon demandby any duly authorized officer, shall be prima facie evidence that hehas put such missing funds or property to personal use.

To sustain a criminal conviction, the following elements mustbe proved:

1. That the offender is a public officer;

2. That he had custody or control of funds or property byreason of the duties of his office;

3. That those funds or property were public funds or propertyfor which he was accountable; and

4. That he appropriated, took, misappropriated or consentedor, through abandonment or negligence, permitted another person totake them."

In the present case, the first element is stipulated. AccusedFrias was the Municipal Mayor of Capas, Tarlac at the time materialto the case. He was discharging official or administrative function inrelation to the subject transaction.

The second and third elements are likewise present. Whilewitness Or. Balmores claimed that he was the requisitioning officerfor the purchase of 42 pails of chlorbocide, the Purchase Requests'"and Requests for Obligation and Allotment" state otherwise, as theywere signed by accused Frias. In addition, accused Frias, as thenmayor of Capas, is considered an accountable public officerpursuant to Section 340 of the Local Government Code, asenunciated in Manuel v. Sandiganbayan. 52 Section 340 states:

49 Manuel, et al. v. Sandiganbayan (Fourth Division), February 8, 2012, 665 SeRA 266, 284soExhibit D, pp. 82, 90 & 9851 Exhibit D, pp. 86, 94 & 100

52 February 8, 2012, 665 SeRA 266, 285

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Section 340. Persons Accountable for Local GovernmentFunds.-Any officer of the . local government unit whose dutypermits or requires the possession or custody of local governmentfunds shall be accountable and responsible for the safekeepingthereof in conformity with the provisions of this title. Other localofficials, though not accountable by the nature of their duties, maylikewise be similarly held accountable and responsible for localgovernment funds through their participation in the use orapplication thereof.

Likewise, in Escoberv. People,53 the Supreme Court held thatofficials whose signatures were necessary for disbursement of fundsare accountable officers. Thus, accused Frias, being therequisitioninq and/or approving officer of the purchases of thechlorbocide, and a signatory to the DVs, had control of the fundsused for the payment of the purchases and was accountabletherefor.

As to the last element, which is the appropriation, taking ormisappropriation of the subject funds by accused Frias, this Courtfinds that the prosecution has not sufficiently established the same.

In Legrama v. Sandiganbayan,54 the Supreme Court explainedthe burden of proof in malversation cases, thus:

In malversation of public funds, the prosecution is burdened toprove beyond reasonable doubt, either by direct or circumstantialevidence, that the public officer appropriated, misappropriated orconsented, or through abandonment or negligence, permitted anotherperson to take public property or public funds under his custody. Absentsuch evidence, the public officer cannot be held criminally liable formalversation. Mere absence of funds is not sufficient proof ofconversion; neither is the mere failure of the public officer to turn overthe funds at any given time sufficient to make even the prima facie case.In fine, conversion must be proved. However, an accountable officer maybe convicted of malversation even in the absence of direct proof ofmisappropriation so long as there is evidence of shortage in his accountwhich he is unable to explain.

To establish its case, the prosecution uses as basis thesupposed denial by the supplier, Roberto Rebosa, of his signaturesappearing in the official receipts for the purchases, which wouldmean that there were no purchases made. However, as earlier

53 G.R No. 205576, November 20,2017'

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discussed, the claim that the signatures of Rebosa were forged wasnot confirmed by either Rebosa himself, or an expert witness.Neither was there a staff from 716 Enterprises, or a municipalemployee, who testified that there was no purchase or deliverymade. On the other hand, the corroborating testimonies of accusedTaruc and Dr. Baldemor that the 42 pails of chlorbocide weredelivered and were used in the fogging activities of variousbarangays in the municipality, were not contradicted. Hence, noprima facie case of malversation was established.

Considering the foregoing, the Court finds and so holds thatthe prosecution failed to prove beyond reasonable doubt all theelements of the crime of Malversation, punishable under Article 217of the Revised Penal Code.

WHEREFORE, in light of all the foregoing, the Court herebyrenders judgment as follows:

1. In Criminal Case Nos. SB-08-CRM-0392, accused DR.HERMES FRIAS, GENER TARUC, and ROLANDO DOMINGO arefound GUILTY beyond reasonable doubt of violation of Section 3(e)of RA 3019, and pursuant to Section 9 thereof, each of them ishereby sentenced to suffer the indeterminate penalty ofimprisonment of six (6) years and one (1) month as minimum up toten (10) years as maximum, with perpetual disqualification fromholding public office.

2. In Criminal Case Nos. SB-08-CRM-0393, accused DR.HERMES FRIAS, GENER TARUC, and ROLANDO DOMINGO arefound GUILTY beyond reasonable doubt of violation of Section 3(e)of RA 3019, and pursuant to Section 9 thereof, each of them ishereby sentenced to suffer the indeterminate penalty ofimprisonment of six (6) years and one (1) month as minimum up toten (10) years as maximum, with perpetual disqualification fromholding public office.

3. In Criminal Cases Nos. SB-08-CRM-0403, -0406 and-0407, accused DR. HERMES FRIAS is hereby ACQUITTED of thecharges against him for failure of the prosecution to prove his guiltbeyond reasonable doubt. Let the hold departure orders against himby reason of these cases be lifted and set aside, and his bondsreleased, subject to the usual accounting and auditing procedure.


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As the act or omission from which the civil liabilty might arisedid not exist, no award of civil liability is hereby made.

Let the hold departure order/s issued against accused Frias inCriminal Cases Nos. SB-OB-CRM-0403, ··0406 and -0407 be LIFTEDand SET ASIDE, and his bond in the said cases RELEASED, subjectto the usual accounting and auditing procedure.

The Office of the Special Prosecutor is hereby ordered toconfirm with the National Statistics Office and to report to the Courtwithin 30 days from the promulgation of this Decision the fact ofdeath of accused Nick Ayuyao. Pending confirmation of the saidfact, let a warrant for the arrest of the said accused be issued.

SO ORDERED.

EFREN ~~ LA CRUZAss;~iar: Justice

We Concur:

GE~E ~IT~. ECONGAssociate Justice

~~ uu -ULtl ~\>---r-T"1I'O.· •• ARDO M. CALDONA

Associate Justice



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ATTESTATION

I attest that the conclusions in the above decision werereached in consultation before the case was assigned to the writer ofthe opinion of the Court's Division.

EFREN ~ LA CRUZChairperson, First Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and theDivision's Chairperson's Attestation, it is hereby certified that theconclusions in the above decision were reached in consultationbefore the case was assigned to the writer of the opinion of theCourt's Division.

MPARO JE-TAPresiding Justice