Zacaria Candao vs.

People of the Philippines and Sandiganbayan

G.R. Nos. 186659-710, October 19, 2011

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.

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
P21,045,570.64 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.

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.

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 P21M, a semblance of
regularity."21 As to the Journal of Analysis and Obligation (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.

Issue: Whether 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?

Held: No.

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. 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
P21,045,570.64 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.
Note:
(1) This was a ready case digest and it was complete as far as I read the full text.
(2) There were 3 issues raised in the Supreme Court and was included on the facts:
(3) First issue was:
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.

Argument of the Court:

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.

(4) Second Issue: as stated above with regards to equipoise rule

(5) Last Issue:
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.

Argument of the Court:

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. Thus, there is conspiracy on their
actions.