Candao Vs People

G.R. Nos.
186659-710 October 19, 2011
ZACARIA A. CANDAO, ABAS A. CANDAO AND ISRAEL B. HARON, Petitioners,

vs.
PEOPLE OF THE PHILIPPINES AND SANDIGANBAYAN, Respondents.
DECISION
VILLARAMA, JR., J.:
Assailed in this petition for review on certiorari under Rule 45 is the Decision1 dated October
29, 2008 and Resolution2 dated February 20, 2009 of the Sandiganbayan (First Division)
finding the petitioners guilty beyond reasonable doubt of malversation of public funds under
Article 217 of the Revised Penal Code, as amended.
The Facts
On August 5, 1993, Chairman Pascasio S. Banaria of the Commission on Audit (COA)

constituted a team of auditors from the central office to conduct an Expanded Special Audit
of the Office of the Regional Governor, Autonomous Region for Muslim Mindanao (ORG-
ARMM). State Auditors Heidi L. Mendoza (Team Leader) and Jaime Roxas (Member) were
directed to conduct the said audit under the supervision of Jaime P. Naranjo (State Auditor
V). From August 24 to September 1, 1993, the expanded audit was thus conducted on the
financial transactions and operations of ORG-ARMM for the period July 1992 to March 1993.
As stated in Special Audit Office (SAO) Report No. 93-25 submitted by the audit team, it was
found that illegal withdrawals were made from the depository accounts of the agency through
the issuance of checks payable to the order of petitioner Israel B. Haron (Disbursing Officer
II) without the required disbursement vouchers. The following are the details of the
government accounts and the fifty-two (52) checks3 issued and encashed without proper
supporting documents:
PNB Account No. 370-3208
DATE CHECK NO. SIGNATORIES AMOUNT
ISSUED
December 29, 1992 414431 Israel Haron & Abas Candao 500,000.00
January 26, 1993 414487 Israel Haron & Abas Candao 500,000.00
February 2, 1993 414493 Israel Haron & Abas Candao 500,000.00
February 18, 1993 461803 Israel Haron & Zacaria Candao 500,000.00
March 18, 1993 461932 Israel Haron & Abas Candao 500,000.00
TOTAL ₱11,118,570.64
Account No. 844061 (Treasurer of the Philippines)
DATE CHECK NO. SIGNATORIES AMOUNT

ISSUED
January 11, 1993
January 13, 1993 968751 Pandical Santiago & Abas Candao 120,000.00
March 2, 1993 974192 Israel Haron & Zacaria Candao 250,000.00


TOTAL ₱9,927,000.00
GRAND TOTAL = ₱21,045,570.64
In a letter dated September 10, 1993, Chairman Banaria demanded from petitioner Haron to
produce and restitute to the ARMM-Regional Treasurer immediately the full amount of
₱21,045,570.64 and submit his explanation within seventy-two (72) hours together with the
official receipt issued by the ARMM Regional Treasurer in acknowledgment of such
restitution.
On April 17, 1998, the Office of the Special Prosecutor, Office of the Ombudsman-Mindanao,
filed in the Sandiganbayan criminal cases for malversation of public funds against the
following ORG-ARMM officials/employees: Zacaria A. Candao (Regional Governor), Israel B.
Haron (Disbursing Officer II), Abas A. Candao (Executive Secretary) and Pandical M.
Santiago (Cashier). They were charged with violation of Article 217 of the Revised Penal
Code, as amended, under the following informations with identical allegations except for the
varying date, number and amount of the check involved in each case:
Criminal Case Nos. 24569-24574, 24576-24584, 24593, 24595-246204
(42 counts involving checks in the total amount of ₱17,190,585.00)
That on or about 29 December 1992, in Cotabato City, Philippines, and within the jurisdiction
of this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the
Disbursing Officer of the Office of the Regional Governor, and as such is responsible and
accountable for the funds of the said office in the Autonomous Region in Muslim Mindanao,
in connivance and in conspiracy with [Abas] Candao, Executive Secretary of the same office,
who is a high ranking officer, while in the performance of their respective official functions,
taking advantage of their official positions, and committing the offense in relation to their
respective functions, with gross abuse of confidence, did then and there wilfully, unlawfully
and feloniously withdraw the amount of P500,000.00 from the depository account of the
Office of the Regional Governor thru the issuance of Check No. 414431 dated 29 December
1992, payable to the order of accused Israel B. Haron, without the required disbursement
voucher and once in possession of the said amount withdrawn, wilfully, unlawfully and
feloniously take, misappropriate, embezzle and convert to their own personal use and benefit
the amount of P500,000.00, to the damage and prejudice of the government in the aforesaid
sum as abovestated.
CONTRARY TO LAW.
Criminal Case Nos. 24585- 24592 and 245945
(9 counts involving checks in the total amount of ₱3,854,985.64)
That on or about 18 February 1993, in Cotabato City, Philippines, and within the jurisdiction
of this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the
in connivance and in conspiracy with Zacaria Candao, Regional Governor of the same office,
who is a high ranking officer, while in the performance of their respective official functions,
taking advantage of their official positions, and committing the offense in relation to their
respective functions, with gross abuse of confidence, did then and there wilfully, unlawfully
and feloniously withdraw the amount of P500,000.00 from the depository account of the
Office of the Regional Governor thru the issuance of Check No. 461803 dated 18 February
1993, payable to the order of accused Israel B. Haron, without the required disbursement
voucher and once in possession of the said amount withdrawn, wilfully, unlawfully and
feloniously take, misappropriate, embezzle and convert to their own personal use and benefit
the amount of P500,000.00, to the damage and prejudice of the government in the aforesaid
sum as abovestated.
CONTRARY TO LAW.
Criminal Case No. 245756
That on or about 13 January 1993, in Cotabato City, Philippines, and within the jurisdiction of
this Honorable Court, accused Israel B. Haron, a low-ranking public officer being the
in connivance and in conspiracy with Pandical Santiago and [Abas] Candao, Cashier and
Executive Secretary, respectively, of the same office, while in the performance of their
respective official functions, taking advantage of their official positions, and committing the
offense in relation to their respective functions, with gross abuse of confidence, did then and
there wilfully, unlawfully and feloniously withdraw the amount of P120,000.00 from the
depository account of the Office of the Regional Governor thru the issuance of Check No.
968751 dated 13 January 1993, payable to the order of accused Israel B. Haron, without the
required disbursement voucher and once in possession of the said amount withdrawn,
wilfully, unlawfully and feloniously take, misappropriate, embezzle and convert to their own
personal use and benefit the amount of P120,000.00, to the damage and prejudice of the
government in the aforesaid sum as abovestated.
CONTRARY TO LAW.
At their arraignment, all accused pleaded not guilty to the charge of malversation. In the
meantime, accused Santiago died and consequently the case against him in Criminal Case
No. 24575 was dismissed.
The prosecution’s lone witness was Heidi L. Mendoza,7 COA State Auditor IV. She testified
that their expanded audit, conducted from August 24 to September 1, 1993, disclosed the
illegal withdrawals of funds from the PNB and Treasury accounts of ORG-ARMM involving
52 checks issued without the required disbursement vouchers. Specifically, their attention
was caught by the fact that the Report of Checks Issued by the Deputized Disbursing Officer
(RCIDDO) showed that the subject 52 checks have no assigned voucher numbers. The audit
team demanded for the original of said RCIDDO for the months of December 1992, February
and March 1993, which were supposed to be prepared and submitted by the disbursing
officer, but the ORG-ARMM did not submit the same. In a letter dated August 24, 1993, the
COA likewise made a demand from the Regional Governor through the resident auditor for
the production of the original disbursement vouchers and complete supporting documents of
the subject checks.8
In response, the Finance and Budget Management Services of ORG-ARMM informed the
audit team that the vouchers were already submitted to COA Resident Auditor, Supervising
State Auditor IV Rosalinda Gagwis, purportedly under transmittal letters dated March 4 and
March 30, 1993. Mendoza then personally verified from Gagwis who denied having received
the subject vouchers and issued a certification to that effect. In a letter dated September 10,
1993, Chairman Banaria finally demanded for the restitution of the funds illegally withdrawn
through the issued 52 checks and to comply with such demand within 72 hours from receipt
of said letter. As to the absence of her signature in the audit report, she explained that she
was already on maternity leave when the interim report (SAO Report No. 93-25) was
submitted. However, she, together with audit team member Jaime B. Roxas executed a Joint
Affidavit dated May 17, 1996 regarding their conduct of the expanded audit and their findings
and recommendation. Although Haron submitted copies of disbursement vouchers to the
COA receiving clerk, this was made beyond the 72-hour deadline given to them.9
On cross-examination, witness Mendoza was asked if the audit team had informed the office
or parties concerned that they are going to be audited (entry conference). She replied that
this was a sensitive assignment, recalling that they were threatened after their identities were
established during the earlier audit of the same office such that she had to be brought back
to Manila. At that time, the Regional Governor was accused Candao. Hence, during the
expanded audit, the team was unable to proceed as in ordinary situations. While they did an
entry conference during the previous main audit, they were unable to do so at the time of the
expanded audit. Again for security reasons, the team also did not conduct an exit conference
after field work; they would be risking their lives if they discuss there and then their findings.
Due to threat to her life, it was her team supervisor (Naranjo) and member (Roxas) who
personally retrieved the documents in Cotabato City. She admitted the belated submission of
original vouchers (October 29, 1993) to the COA central office but these are without
supporting documents.10
For the accused, the first witness was Nick Luz Aduana who was the Director of Finance of
ORG-ARMM from July 1991 until his resignation in March 1993. He testified that his
functions then include the supervision and overseeing of the three divisions: Budget,
Accounting and Management. When report of the audit team came out, he was surprised
because they were not informed of the audit. He was familiar with the 52 checks because the
disbursement vouchers passed through his office. He explained the procedure with respect
to the processing of cash advances as follows: generally, there were cash advances made in
ARMM which cover travels, salaries, etc. but particularly for "peace and order campaign," it
emanates from the ORG when the Regional Governor issues an authority for cash advance,
and then they process the voucher (Finance and Budget Management Services); once their
division have performed their accounting functions relative to the vouchers, the same are
forwarded to the Regional Governor for approval or in his absence to his Executive
Secretary; after the approval of the voucher, it will be forwarded to the Cash Division for the
issuance of check; the person who will liquidate the cash advance is usually the employee
mentioned in the voucher; and after they have prepared all the liquidation papers, these are
submitted to the Budget and Management Division before forwarding them to the COA
Auditor. He maintained that the original disbursement vouchers have already been submitted
to the COA Special Audit Office. Since 1991, they have never received any notice of
disallowance of their disbursements, including those intended for "peace and order
campaign." Being the first ARMM set of officials, they had sought the advice of their Auditor
as to proper accounting procedures; they followed the advice of Auditor Gagwis who said
that there should be authority to cash advance coming from the Regional Governor which
should be given to the Disbursing Officer. He identified the vouchers presented by the
defense as the ones processed by their division with the corresponding amounts reflected
therein. Insofar as the expanded audit is concerned, they were not given the opportunity to
defend the case as they were not given the so-called exit conference.11
On cross-examination, witness Aduana hinted on political reasons why an expanded audit

was conducted when Regional Governor Pagdanganan assumed office despite the fact that
an earlier audit was already made during the administration of Governor Candao. He claimed
that he did not receive any copy of the demand letter dated August 24, 1993; he was no
longer connected with ARMM at the time. He also maintained that the disbursement
vouchers were processed by their office and entered into their books of account. However,
when asked what happened to these books of account, Aduana said these are with the
Office of the Regional Governor. He admitted that the only supporting document for the
checks and vouchers were the authority to cash advance; the "peace and order campaign"
disbursement is peculiar to ARMM and hence they did not know what supporting documents
to attach. When queried about the particular activities covered by this "peace and order
campaign" disbursement, Aduana admitted that he really does not know the breakdown of
expenses or for what items in particular were the disbursed amounts spent. Their division
merely processed the disbursement vouchers that were prepared by the ORG, and while his
signature appears in said vouchers his role was limited to certifying the availability of funds.12
The next witness, Rosalinda G. Gagwis, former COA Resident Auditor of ORG-ARMM,
testified that in 1991 she was the Chief of the Operation and Review Division (ORD), COA
Region XII which at the time has jurisdiction over ORG-ARMM; she was Auditor-in-Charge of
ORG-ARMM only up to March 8, 1993 when the separation of COA Region XII personnel
and COA-ARMM was implemented. Among her duties as such Auditor-in-Charge was to
conduct a post-audit of the financial transactions of ORG-ARMM. In the course of the
expanded audit of ORG-ARMM, she was requested to issue the Certification dated August
27, 1993 stating that she has not received the January to March 1993 vouchers as stated in
the letter of Haron. Subsequently, on July 22, 1998 she executed a two-page Affidavit
because she has been hearing that her previous Certification was misinterpreted to mean
that the subject vouchers were "not existing." She then clarified that actually, ORG-ARMM
tried to submit bundles of vouchers to her office but she refused to accept them because she
was no longer Auditor-in-Charge of that office as there was already an order separating
COA-Regional Office XII from the COA-ARMM. She confirmed that when ARMM was a
newly created agency, its officers (Aduana, Brigida Fontanilla and Bartolome Corpus) sought
her advice regarding accounting procedures. Prior to submission to her office for post-audit,
the accountable officers like the Cashier and Disbursement Officer prepares and submits a
Monthly Report of Disbursements to the Accounting Division which, within ten days from
receipt and recording in the Books of Accounts, shall submit the same to the auditor for post-
audit custody. Based on her experience, however, this deadline was not strictly observed as
25% to 50% of the national agencies are delayed in the submission of such reports. The
usual reasons given were the geographical locations of the offices in Region XII and ARMM,
lack of manpower due to budgetary constraints and lack of know-how of personnel regarding
accounting and auditing procedures, especially if there is a change in administration. As far
as she can recall, their office had not issued a notice of disallowance to ORG-ARMM
although notices of suspension have been issued for minor deficiencies noted during post-
audit; these notices of suspension were usually complied with by the agency.13
On cross-examination, witness Gagwis said that upon seeing the bundles of vouchers being
submitted to her office, she immediately refused to accept, and sort of "washed her hands"
by telling her staff that they were no longer incharge of ORG-ARMM. She did not actually
scan those documents and examine their contents. She also did not receive the Monthly
Report of Disbursements from said office. As to the execution of the July 22, 1998 Affidavit,
she insisted that she did it voluntarily five years later in order to clarify herself after hearing
about the case filed in the Sandiganbayan and her name was being dragged because of the
Certification she made in August 1993. As to the earlier Certification, she maintained that
she did not receive the subject vouchers and she does not know where these documents are
at present.14
Another witness, Brigida C. Fontanilla, Chief Accountant, ORG-ARMM, testified that her
duties and responsibilities include the processing, updating and recording of transactions of
ORG-ARMM in the books of accounts while vouchers are recorded in the Journal of Analysis
and Obligations (JAO). They also prepared financial reports. As to cash advances, she
explained that the procedure starts with the preparation of the voucher at ORG which also
issues the authority to withdraw cash advance which is attached to the disbursement
voucher and supporting documents, afterwhich it is forwarded to the Finance and Budget
Management Services for processing: there, it is first submitted to the Budget Division for the
request for allotment of obligation, and next forwarded to the Accounting Division for the
journal entry of obligation and recording in the books of account, and then the documents are
forwarded to the Office of the Finance Director for his approval, and thereafter returned back
to the ORG for final approval for the issuance of the check. Presently, their office is more
systematic and organized than it was during the administration of Governor Candao.
Sometime in 1994 during the investigation by the Office of the Ombudsman relative to the
subject illegal withdrawals, she was summoned to produce the Cash Receipts Book and
Cash Disbursement Book of the 1991 ARMM seed money for regional, provincial and district
Impact Infrastructure Projects. However, she was not able to comply with the said directive
because such books are not among those required by the COA for their office; what the COA
directed them to maintain was the JAO, a book of original entry for allotments received and
disbursements for the transactions of ORG-ARMM. She wrote a letter-reply to the
Ombudsman Investigator and transmitted the original 1992 JAO which was never returned to
their office.15
Explaining the contents of the JAO, witness Fontanilla said that the entries in the voucher are
recorded therein: an obligation number is placed in the request of allotment (ROA) which
also appears in the voucher. Before such recording in the JAO, the disbursement vouchers
are presented to their office. Actually, she does not know whether the 1992 JAO still exists or
with the Ombudsman Investigator because at the time, they were holding office temporarily
at the office of ORG Auditor which unfortunately got burned sometime in 1996.16
As for witness Bartolome M. Corpus, his deposition upon oral examination was taken on
August 27, 2004 before Atty. Edipolo Sarabia, Clerk of Court, Regional Trial Court of Davao
City. He testified that in 1991 he was appointed Chief of the Management Division of the
Finance and Budget Management Services (FBMS), ORG-ARMM. He was placed on floating
status for three years by the new Chief of Staff of ORG-ARMM (Nasser Pangandaman) upon
the election of a new Regional Governor, Lininding Pangandaman who defeated Governor
Candao. As Finance Director, it was his responsibility to review all transactions of the ORG-
ARMM and see to it that COA regulations are in place and supporting documents are
complete. After reviewing documents, which include disbursement vouchers, his office
submits the same to the COA Regional Officer or to the COA Resident Auditor. Being the
internal control unit of ORG-ARMM, all transactions and supporting documents must pass
through his office. As to the transactions covered by the subject 52 checks, he confirmed that
these passed through his office, including the disbursement vouchers, afterwhich these were
forwarded to the Accounting Office and then to the Cash Division for issuance of checks. He
claimed that his subordinates tried to submit the disbursement vouchers to the Resident
Auditor, as shown by the transmittal letters dated March 4 and March 30, 1993. However,
Ms. Gagwis refused to accept the vouchers because she was no longer the Resident Auditor
at the time. During the time of Governor Candao, he does not recall having received any
notice of disallowance from the COA although there were times they received a notice of
suspension which had been settled. During the time he was on floating status, he discovered
that some vouchers including those original vouchers covered by the subject 52 checks were
still in his filing cabinet. He then handed them over to Haron. In 1996, he was reinstated by
Governor Nur Misuari.17
On cross-examination, witness Corpus said that they tried to submit the vouchers to Gagwis
sometime in late March or early April 1993. He was not aware of the August 27, 1993
Certification issued by Gagwis. When asked about the stated purpose "peace and order
campaign" in the cash advance vouchers, he confirmed that this was the practice at that time
and it was only during liquidation that ORG will have the list of expenses; the supporting
documents will come only after the issuance of the check.18 On re-direct examination, he
maintained that there were previous similar vouchers for "peace and order campaign" which
have not been disallowed but only suspended by the COA.19
Sandiganbayan Ruling
By Decision dated October 29, 2008, the Sandiganbayan found petitioner Haron guilty
beyond reasonable doubt of malversation of public funds under Article 217 of the Revised
Penal Code, as amended, committed in conspiracy with petitioners Zacaria A. Candao and
Abas A. Candao who were likewise sentenced to imprisonment and ordered to pay a fine
equivalent to the amount of the check in each case, as follows:
Criminal Case Nos. 24569-24584,

24593, 24595-24620
Israel B. Haron and Abas A. Candao - convicted of 43 counts of Malversation of Public

Funds and each was sentenced to indeterminate prison term in each case of ten (10) years
and one (1) day of prision mayor, as minimum, to eighteen (18) years, eight (8) months and
one (1) day of reclusion temporal, as maximum, and ordered to pay a fine in each case
equivalent to the particular check involved, without subsidiary imprisonment in case of
insolvency and the penalty of perpetual special disqualification to hold public office and other
accessory penalties provided by law. In the service of their respective sentences, they shall
be entitled to the benefit of the three-fold rule as provided in Art. 70 of the Revised Penal
Code, as amended.
Criminal Case Nos. 24585-24592 & 24594
Israel B. Haron and Zacaria A. Candao – convicted of 9 counts of Malversation of Public

Funds and each was sentenced to indeterminate prison term in each case of ten (10) years
and one (1) day of prision mayor as minimum, to eighteen (18) years, eight (8) months and
one (1) day of reclusion temporal, as maximum, and ordered to pay a fine in each case
equivalent to the particular check involved, without subsidiary imprisonment in case of
insolvency and the penalty of perpetual special disqualification to hold public office and other
accessory penalties provided by law. In the service of their respective sentences, they shall
be entitled to the benefit of the three-fold rule as provided in Art. 70 of the Revised Penal
Code, as amended.20
The Sandiganbayan found no merit in petitioners’ claim that the subject checks were covered
by existing disbursement vouchers which were belatedly submitted and received by the COA
Central Office on October 29, 1993. It said that had those vouchers really existed at the time
of the 52 withdrawals petitioners made from December 29, 1992 to March 30, 1993,
petitioner Haron could have readily produced them when required to do so by the special
audit team on August 24, 1993. Said court likewise did not give credence to the testimony of
Corpus in view of the August 27, 1993 Certification issued by then COA Auditor Gagwis that
she has not received the vouchers mentioned in the transmittal letters. Gagwis’ explanation,
on the other hand, contradicted the testimony of Corpus that when he returned to his office
sometime in May 1993, he found the original vouchers together with the transmittal letters
still there in his filing cabinet and have not been submitted to the COA Resident Auditor.
The Sandiganbayan noted that petitioners presented no proof that the cash advances
intended for "peace and order campaign" were spent for public purposes, as in fact the
alleged disbursement vouchers did not indicate any detail as to the nature of the expense/s
such as purchase of equipment, services, meals, travel, etc. and there were no supporting
documents such as the Request for Issuance of Voucher, Purchase Request and Inspection
Report of the items supposedly purchased. More importantly, the vouchers were not
accomplished in accordance with existing COA circulars because they are unnumbered and
undated. Hence, the belatedly submitted vouchers are of doubtful veracity or origin, nay, a
fabricated evidence or, as pointed out by the prosecution, "self-serving or an afterthought,
belatedly prepared to give the illegal disbursements amounting to the aggregate amount of
more than ₱21M, a semblance of regularity."21 As to the JAO and Certification dated August
18, 1998 issued by Chief Accountant Fontanilla, the Sandiganbayan found there is nothing
therein to indicate the particular disbursement voucher that corresponds to each of the
subject 52 checks which were neither reflected in the JAO.
With respect to petitioners’ assertion that the audit conducted by the COA special audit team
was incomplete and tainted as it did not follow procedures because the person audited were
not notified thereof, the Sandiganbayan found these allegations unsubstantiated as in fact at
the start of the audit on August 24, 1993, the audit team thru their team leader State Auditor
Naranjo, informed the management of ORG-ARMM thru the COA Resident Auditor of the
expanded special audit to be conducted as they even requested for the original copies of the
disbursement vouchers together with their complete supporting documents covering the 52
checks. But despite said letter, the ORG-ARMM failed to heed the audit team’s request. For
the failure of petitioner Haron to account for the funds involved in the illegal withdrawals
when asked to do so, the presumption arose that he misappropriated the same, which
presumption was not overcome by defense evidence.
On the respective liabilities of petitioners Zacaria A. Candao and Abas A. Candao, the
Sandiganbayan held that by their act of co-signing the subject checks, petitioner Haron was
able to consummate the illegal withdrawals without the required disbursement vouchers of
the amounts covered by the 43 checks (for Abas) and 9 checks (for Zacaria). Thus, by their
collective acts, said court concluded that petitioners conspired to effect the illegal
withdrawals of public funds which, when required by the COA to be properly accounted for,
petitioners failed to do so.
In its Resolution dated February 20, 2009, the Sandiganbayan denied the prosecution’s
motion to cancel bail bonds and petitioners’ motion for reconsideration.
The Petition
Petitioners raised the following grounds for their acquittal:
1. …THE SANDIGANBAYAN...COMMITTED A REVERSIBLE ERROR IN

CONVICTING THE ACCUSED PETITIONERS FOR THE CRIME OF
MALVERSATION OF PUBLIC FUNDS DESPITE PROOF POSITIVE THAT,
CONTRARY TO WHAT THE INFORMATIONS CHARGED, THERE WERE
DISBURSEMENT VOUCHERS EXCEPT THAT THE COA REFUSED TO ACCEPT
MUCH LESS EXAMINE THE SAME. PETITIONERS WERE THUS DENIED DUE
PROCESS OF LAW WHEN THEY WERE CONVICTED FOR OFFENSES NOT
COVERED BY THE INFORMATIONS AGAINST THEM.
2. ….THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN NOT
APPLYING THE "EQUIPOISE RULE" WHICH IF APPLIED WOULD HAVE
RESULTED IN THE ACQUITTAL OF THE ACCUSED-PETITIONERS.
3. … THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN

CONVICTING ACCUSED PETITIONERS ZACARIA A. CANDAO AND ABAS A.
CANDAO DESPITE THE FACT THAT THE CHARGE OF CONSPIRACY WHICH IS
THEIR ONLY LINK TO THE OFFENSES HEREIN HAS NOT BEEN PROVEN
BEYOND REASONABLE DOUBT.22
Our Ruling
The petition has no merit.
Article 217 of the Revised Penal Code, as amended, provides:
Art. 217. Malversation of public funds or property –Presumption of malversation. - Any public
officer who, by reason of the duties of his office, is accountable for public funds or property,
shall appropriate the same, or shall take or misappropriate or shall consent, or through
abandonment or negligence, shall permit any other person to take such public funds or
property, wholly or partially, or shall otherwise be guilty of the misappropriation or
malversation of such funds or property, shall suffer:
1. The penalty of prision correccional in its medium and maximum periods, if the
amount involved in the misappropriation or malversation does not exceed two
hundred pesos.
2. The penalty of prision mayor in its minimum and medium periods, if the amount
involved is more than two hundred pesos but does not exceed six thousand pesos.
3. The penalty of prision mayor in its maximum period to reclusion temporal in its
minimum period, if the amount involved is more than six thousand pesos but is less
than twelve thousand pesos.
4. The penalty of reclusion temporal in its medium and maximum periods, if the
amount involved is more than twelve thousand pesos but is less than twenty-two
thousand pesos. If the amount exceeds the latter, the penalty shall be reclusion
temporal in its maximum period to reclusion perpetua.
In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special
disqualification and a fine equal to the amount of the funds malversed or equal to the total
value of the property embezzled.
The failure of a public officer to have duly forthcoming any public fund or property with which
he is chargeable, upon demand by any duly authorized officer, shall be prima
facie evidence that he has put such missing funds or property to personal uses. (Emphasis
supplied.)
The following elements are essential for conviction in malversation cases:
1. That the offender is a public officer;
2. That he had custody or control of funds or property by reason of the duties of his
office;
3. That those funds or property were public funds or property for which he was
accountable; and
4. That he appropriated, took, misappropriated or consented or, through

abandonment or negligence, permitted another person to take them.23
All the foregoing elements were satisfactorily established by the prosecution in this case.
Petitioners have not rebutted the legal presumption that with the Disbursing Officer’s (Haron)
failure to account for the illegally withdrawn amounts covered by the subject checks when
demanded by the COA, they misappropriated and used the said funds for their personal
benefit.
Petitioners however assert that their convictions were based solely on the Sandiganbayan’s
conclusion that the vouchers submitted by the defense were illegal or irregular, whereas the
informations simply alleged their absence or non-existence. They contend that said court
could not have validly assessed the disbursement vouchers as to their legality because that
duty pertains to the COA which refused and failed to examine the same. Had the court
allowed the COA to evaluate and make a ruling on the validity of the vouchers, the result
would have been different and most probably they would have been acquitted of the crime
charged.
We are not persuaded by petitioners’ asseveration.
The Sandiganbayan categorically ruled that the disbursement vouchers were inexistent at
the time of the issuance of the subject checks and expanded special audit based on its
findings that: (1) petitioner Haron could not produce the vouchers upon demand by the COA
in August 1993; (2) Resident Auditor Gagwis certified at about the same time that to date she
has not received the vouchers mentioned in the supposed transmittal letters of March 4 and
March 30, 1993; (3) the entries in the duly certified Report of Checks Issued by Deputized
Disbursing Officer (RCIDDO) of the late Pandical M. Santiago, Cashier of ORG-ARMM,
showed that for the months of January, February and March 1993, there were indeed entries
of checks issued with Haron as payee but no disbursement voucher numbers as these were
either lacking, detached or missing, and which were verified by the audit team as
corresponding to the subject 52 checks issued and signed by petitioners and encashed by
petitioner Haron who received the money withdrawn from the government depositary
accounts; (4) FBMS Chief Corpus testified that he discovered the supposed vouchers still
there at his office filing cabinet in May 1993 when these supposedly have already been
submitted to the COA Resident Auditor as reflected in the March 4 and March 30, 1993
transmittal letters; and (5) the supposed original disbursement vouchers belatedly submitted
to the COA central office last week of October 1993, were undated and unnumbered with no
supporting documents as required by COA Circular No. 78-79 (April 5, 1978).
Contrary to petitioners’ claim, the special audit team could not have examined the vouchers
presented by the defense (Exhibits "1" to "1-A-43") because the only indication of its actual
receipt by the COA as admitted by the prosecution, was on October 23, 1993 long after the
expanded audit was completed and beyond the 72-hour deadline specified in the September
10, 1993 demand letter addressed to Haron for the restitution of the total amount of illegal
withdrawals. In addition, such disbursement vouchers have no supporting documents as
required by COA Circular No. 92-389 dated November 3, 1992. On the other hand, the
Certification dated August 18, 1998 issued by ARMM Chief Accountant Fontanilla stating that
the vouchers were regular because these were properly recorded in the JAO, was not given
credence by the Sandiganbayan. Upon scrutiny of the JAO covering the period January to
March 1993, said court found that it failed to indicate the particular disbursement voucher
that corresponds to each of the 52 checks, aside from the fact that it was prepared by the
ARMM Chief Accountant who is under the control and supervision of the ORG. Notably, the
JAO is used to summarize obligations incurred and to monitor the balance of unobligated
allotments, which is prepared by function, and project for each fund and allotment
class.24 The JAO is thus separate and distinct from the Report of Checks Issued (RCI) which
is prepared by the Disbursing Officer to report checks issued for payment of expenditures
and/or prior accounts payable. What is clear is that the disbursement of funds covered by the
52 checks issued by the petitioners are subject to the rule that disbursement voucher "shall
be used by all government entities for all money claims" and that the "voucher number shall
be indicated on the voucher and on every supporting document."25 Inasmuch as the JAO for
the months of January, February and March 1993 do not at all reflect or indicate the number
of each of the disbursement vouchers supposedly attached to the 52 checks, it cannot serve
as evidence of the recording of the original vouchers, much less the existence of those
disbursement vouchers at the time of the issuance of the 52 checks and the conduct of the
expanded audit.
Petitioners further raise issue on the regularity, completeness and objectivity of the
expanded audit conducted by the COA. However, records showed that the ORG-ARMM
were duly notified of the expanded audit at its commencement and was even requested thru
the COA Resident Auditor to submit the needed disbursement vouchers. It must be noted
that at an earlier date, a main audit had already been conducted for the financial transactions
of ORG-ARMM during which State Auditor Mendoza experienced threats against her own
security that she had to be immediately recalled from her assignment. Thus, by the time the
expanded audit was conducted in August 1993 upon the directive of the COA Chairman,
petitioners, especially Haron, should have seen to it that the records of disbursements and
financial transactions including the period January to March 1993, were in order and
available for further audit examination. In any case, even if there was no so-called entry
conference held, there is absolutely no showing that petitioners were denied due process in
the conduct of the expanded audit as they simply refused or failed to heed COA’s request for
the production of disbursement vouchers and likewise ignored the formal demand made by
COA Chairman Banaria for the restitution of the illegally withdrawn public funds, submitting
their compliance only after the special audit team had submitted their report.
In fine, the Sandiganbayan committed no reversible error in holding that the testimonial and
documentary evidence presented by the petitioners failed to overcome the prima facie
evidence of misappropriation arising from Haron’s failure to give a satisfactory explanation
for the illegal withdrawals from the ARMM funds under his custody and control. Petitioners
likewise did not accomplish the proper liquidation of the entire amount withdrawn, during the
expanded audit or any time thereafter. There is therefore no merit in petitioners’ argument
that the Sandiganbayan erred in not applying the equipoise rule.
Under the equipoise rule, where the evidence on an issue of fact is in equipoise or there is
doubt on which side the evidence preponderates, the party having the burden of proof loses.
The equipoise rule finds application if the inculpatory facts and circumstances are capable of
two or more explanations, one of which is consistent with the innocence of the accused and
the other consistent with his guilt, for then the evidence does not fulfill the test of moral
certainty, and does not suffice to produce a conviction.26 Such is not the situation in this case
because the prosecution was able to prove by adequate evidence that Disbursing Officer
Haron failed to account for funds under his custody and control upon demand, specifically for
the ₱21,045,570.64 illegally withdrawn from the said funds. In the crime of malversation, all
that is necessary for conviction is sufficient proof that the accountable officer had received
public funds, that he did not have them in his possession when demand therefor was made,
and that he could not satisfactorily explain his failure to do so. Direct evidence of personal
misappropriation by the accused is hardly necessary in malversation cases.27
As to the liability of petitioners Zacaria A. Candao and Abas A. Candao, the Sandiganbayan
correctly ruled that they acted in conspiracy with petitioner Haron to effect the illegal
withdrawals and misappropriation of ORG-ARMM funds.
Conspiracy exists when two or more persons come to an agreement concerning the
commission of a felony and decide to commit it. Conspiracy need not be proved by direct
evidence and may be inferred from the conduct of the accused before, during and after the
commission of the crime, which are indicative of a joint purpose, concerted action and
concurrence of sentiments. In conspiracy, the act of one is the act of all. Conspiracy is
present when one concurs with the criminal design of another, indicated by the performance
of an overt act leading to the crime committed. It may be deduced from the mode and
manner in which the offense was perpetrated.28
In this case, petitioners Zacaria A. Candao and Abas A. Candao were co-signatories in the
subject checks issued without the required disbursement vouchers. Their signatures in the
checks, as authorized officials for the purpose, made possible the illegal withdrawals and
embezzlement of public funds in the staggering aggregate amount of ₱21,045,570.64. 1avvphil
Petitioners Zacaria A. Candao and Abas A. Candao assail their conviction as co-conspirators
in the crime of malversation contending that their only participation was in the ministerial act
of signing the checks. The checks having passed through processing by finance and
accounting personnel of ORG-ARMM, petitioners said they had to rely on the presumption of
regularity in the performance of their subordinates’ acts. Furthermore, they assert that since
conspiracy requires knowledge of the purpose for which the crime was committed, they could
not have been conspirators in the design to defraud the government.
We disagree with such postulation.
As the Regional Governor of ARMM, petitioner Zacaria A. Candao cannot exonerate himself
from liability for the illegally withdrawn funds of ORG-ARMM. Under Section 102 (1) of
the Government Auditing Code of the Philippines, he is responsible for all government funds
pertaining to the agency he heads:
Section 102. Primary and secondary responsibility. – (1) The head of any agency of the
government is immediately and primarily responsible for all government funds and
property pertaining to his agency.
x x x x (Emphasis supplied.)
Petitioners Zacaria A. Candao and his Executive Secretary Abas A. Candao are both
accountable public officers within the meaning of Article 217 of the Revised Penal Code, as
amended. No checks can be prepared and no payment can be effected without their
signatures on a disbursement voucher and the corresponding check. In other words, any
disbursement and release of public funds require their approval,29 as in fact checks issued
and signed by petitioner Haron had to be countersigned by them. Their indispensable
participation in the issuance of the subject checks to effect illegal withdrawals of ARMM
funds was therefore duly established by the prosecution and the Sandiganbayan did not err
in ruling that they acted in conspiracy with petitioner Haron in embezzling and
misappropriating such funds.
Moreover, as such accountable officers, petitioners Zacaria A. Candao and Abas A. Candao
were charged with the duty of diligently supervising their subordinates to prevent loss of
government funds or property, and are thus liable for any unlawful application of government
funds resulting from negligence, as provided in Sections 104 and 105 of the Government
Auditing Code of the Philippines, which read:
Sec. 104. Records and reports required by primarily responsible officers. – The head of any
agency or instrumentality of the national government or any government-owned or controlled
corporation and any other self-governing board or commission of the government shall
exercise the diligence of a good father of a family in supervising accountable officers under
his control to prevent the incurrence of loss of government funds or property, otherwise he
shall be jointly and solidarily liable with the person primarily accountable therefor. x x x x
Sec. 105. Measure of liability of accountable officers. x x x
(2) Every officer accountable for government funds shall be liable for all losses resulting from
the unlawful deposit, use, or application thereof and for all losses attributable to negligence
in the keeping of the funds.
The fact that ARMM was still a recently established autonomous government unit at the time
does not mitigate or exempt petitioners from criminal liability for any misuse or
embezzlement of public funds allocated for their operations and projects. The Organic Act for
ARMM (R.A. No. 6734) mandates that the financial accounts of the expenditures and
revenues of the ARMM are subject to audit by the COA.30 Presently, under the Amended
Organic Act (R.A. No. 9054), the ARMM remained subject to national laws and policies
relating to, among others, fiscal matters and general auditing.31 Here, the prosecution
successfully demonstrated that the illegal withdrawals were deliberately effected through the
issuance of checks without the required disbursement vouchers and supporting documents.
And even if petitioners Zacaria A. Candao and Abas A. Candao invoke lack of knowledge in
the criminal design of their subordinate, Disbursing Officer Haron, they are still liable as co-
principals in the crime of malversation assuming such misappropriation of public funds was
not intentional, as alleged in the informations, but due to their negligence in the performance
of their duties. As this Court ratiocinated in Cabello v. Sandiganbayan32 :
Besides, even on the putative assumption that the evidence against petitioner yielded a case
of malversation by negligence but the information was for intentional malversation, under the
circumstances of this case his conviction under the first mode of misappropriation would still
be in order. Malversation is committed either intentionally or by negligence. The dolo or
the culpa present in the offense is only a modality in the perpetration of the felony. Even if
the mode charged differs from the mode proved, the same offense of malversation is
involved and conviction thereof is proper. A possible exception would be when the mode of
commission alleged in the particulars of the indictment is so far removed from the ultimate
categorization of the crime that it may be said due process was denied by deluding the
accused into an erroneous comprehension of the charge against him. That no such prejudice
was occasioned on petitioner nor was he beleaguered in his defense is apparent from the
records of this case.33 (Emphasis supplied.)
Under Article 217, paragraph 4 of the Revised Penal Code, as amended, the penalty of
reclusion temporal in its maximum period to reclusion perpetua shall be imposed if the
amount involved exceeds ₱22,000.00, in addition to fine equal to the funds malversed.
Considering that neither aggravating nor mitigating circumstance attended the crime
charged, the maximum imposable penalty shall be within the range of the medium period of
reclusion temporal maximum to reclusion perpetua, or eighteen (18) years, eight (8) months
and one (1) day to twenty (20) years. Applying the Indeterminate Sentence Law, the
minimum penalty, which is one degree lower from the maximum imposable penalty, shall be
within the range of prision mayor maximum to reclusion temporal medium, or ten (10) years
and one (1) day to seventeen (17) years and four (4) months.34 The penalty imposed by the
Sandiganbayan on petitioners needs therefore to be modified insofar as the maximum
penalty is concerned and is hereby reduced to seventeen (17) years and four (4) months
of reclusion temporal medium, for each count.
WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. The Decision
dated October 29, 2008 in Criminal Case Nos. 24569 to 24574, 24575, 24576 to 24584,
24585 to 24592, 24593, 24594, 24595 to 24620 finding petitioners guilty beyond reasonable
doubt of the crime of Malversation of Public Funds under Article 217, paragraph 4 of
the Revised Penal Code, as amended, and the Resolution dated February 20, 2009 of the
Sandiganbayan (First Division), denying petitioners’ motion for reconsideration are
AFFIRMED with MODIFICATIONS in that petitioners are instead accordingly sentenced to
suffer an indeterminate prison term of ten (10) years and one (1) day of prision
mayor maximum, as minimum, to seventeen (17) years and four (4) months of reclusion
temporal medium, as maximum, in each of the above-numbered criminal cases.
In addition to the payment of the fine ordered by the Sandiganbayan, and by way of
restitution, the petitioners are likewise ordered to pay, jointly and severally, the Republic of
the Philippines through the ARMM-Regional Treasurer, the total amount of P21,045,570.64
malversed funds as finally determined by the COA.
In the service of their respective sentences, the petitioners shall be entitled to the benefit of
the three-fold rule as provided in Article 70 of the Revised Penal Code, as amended.
With costs against the petitioners.
SO ORDERED.
MARTIN S. VILLARAMA, JR.

Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice
MARIA LOURDES P. A. SERENO*
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in
the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice

Candao Vs People

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G.R. Nos.

186659-710 October 19, 2011

ZACARIA A. CANDAO, ABAS A. CANDAO AND ISRAEL B. HARON, Petitioners,

VILLARAMA, JR., J.:

On August 5, 1993, Chairman Pascasio S. Banaria of the Commission on Audit (COA)

PNB Account No. 370-3208

DATE CHECK NO. SIGNATORIES AMOUNT

Account No. 844061 (Treasurer of the Philippines)

DATE CHECK NO. SIGNATORIES AMOUNT

March 2, 1993 974192 Israel Haron & Zacaria Candao 250,000.00

March 4, 1993 974208 Israel Haron & Abas Candao 500,000.00

March 4, 1993 974212 Israel Haron & Abas Candao 30,000.00

Criminal Case Nos. 24569-24574, 24576-24584, 24593, 24595-246204

(42 counts involving checks in the total amount of ₱17,190,585.00)

Criminal Case Nos. 24585- 24592 and 245945

(9 counts involving checks in the total amount of ₱3,854,985.64)

Criminal Case No. 245756

On cross-examination, witness Aduana hinted on political reasons why an expanded audit

Criminal Case Nos. 24569-24584,

Israel B. Haron and Abas A. Candao - convicted of 43 counts of Malversation of Public

Criminal Case Nos. 24585-24592 & 24594

Israel B. Haron and Zacaria A. Candao – convicted of 9 counts of Malversation of Public

Petitioners raised the following grounds for their acquittal:

1. …THE SANDIGANBAYAN...COMMITTED A REVERSIBLE ERROR IN

3. … THE SANDIGANBAYAN COMMITTED A REVERSIBLE ERROR IN

The petition has no merit.

Article 217 of the Revised Penal Code, as amended, provides:

The following elements are essential for conviction in malversation cases:

1. That the offender is a public officer;

4. That he appropriated, took, misappropriated or consented or, through

We are not persuaded by petitioners’ asseveration.

We disagree with such postulation.

Sec. 105. Measure of liability of accountable officers. x x x

With costs against the petitioners.

MARTIN S. VILLARAMA, JR.

LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

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