Jaca V. People 4m2p1c

Jaca vs People G.R. No. 166967 / January 28, 2013 / Brion, J./ Locgov – Common appointive local officials /JMB

NATURE Petition for review on certiorari PETITIONERS Edna J. Jaca, Alan C. Gaviola, Eustaquio B. Cesa RESPONDENTS People of the Philippines and Sandiganbayan, SUMMARY. A surprise audit revealed that there were cash shortages in the Cebu City Government brought about by Badana’s scheme of double-recording vouchers and payrolls to cover up the money she takes from the government. The petitioners are implicated in the criminal and istrative investigations based on their duties attached to their designations. They raise the defense of the limitations of their duties, as well as reliance on others that the others have faithfully complied with their jobs. OMB and SB found them guilty of the acts alleged in the COA report. The issue that the SC has to settle is WON the petitioners should be held liable for Sec. 3(e) of RA3019, taking into the duties imposed upon them by virtue of their designation. The SC answered this in the affirmative. The finding of gross inexcusable negligence was evident: For the Treasurer – for abiding to that long-standing practice of simply requiring a written request without being accompanied by proper ing documents and his vital role in the release of the funds. For the ant – for itting that she was just g the vouchers in order to avoid delay EVEN when she knew that the previous cash advances were not yet properly settled and ed for. For the City – for ignoring the obvious. When ing documents are absent, he could have at least required its presentation. If there is a practice of some employees being paid weekly, it should have alerted him that there should be four payrolls prepared, instead of only two (which represent the twice a month payroll). DOCTRINE. The City Treasurer is tasked with, inter alia, the following duties: (1) to take custody of and exercise proper management of the funds of the local government unit concerned; and (2) to take charge of the disbursement of all local government funds and such other funds the custody of which may be entrusted to him by law or other competent authority. It is from the viewpoint of Cesa’s duties as a City Treasurer that Cesa’s good faith should be measured, not simply from the fact that he acted because a subordinate from his office is the one asking for a cash advance. By certifying that the cash advances were “necessary and lawful and incurred under his direct supervision,” Cesa cannot escape the obligation to determine whether Badana complied with Section 89 of PD No. 1445, although the same requirement would have to be ultimately determined by the City ant. RA No. 7160 charges the city ant with both the ing and internal audit services of the local government unit and, among others, to (1) install and maintain an internal audit system in the local government unit; (2) review ing documents before the preparation of vouchers to determine the completeness of the requirements; (3) prepare statements of cash advances, liquidation, salaries, allowances, reimbursements and remittances pertaining to the local government unit; (4) prepare statements of journal vouchers and liquidation of the same and other adjustments related thereto; (5) post individual disbursements to the subsidiary ledger and index cards; and (6) maintain individual ledgers for officials and employees of the local government unit pertaining to payrolls and deductions.

FACTS.  Petitioners The following Cebu City appointive officials are charged with violations of 3(e) of RA 3019 and are the petitioners of the case, except Bacasmas:  Gaviola as City  Cesa as City Treasurer  Bacasmas as Chief Cashier under the Office of the City Treasurer  Jaca as City ant   

The proper process of granting cash advances to a paymaster: The voucher: First, paymasters request for a cash advance by preparing vouchers to be submitted to the Chief Cashier. Second, the Chief Cashier affixes his initials to the voucher and forwards the same to the City Treasurer if the accompanying documents are in order. Third, the City Treasurer affixes his signature certifying that the expenses are lawful and incurred under his direct supervision and is forwarded to the City ant. Fourth, the City ant then affixes his signature after recording and conducting a pre-audit. Fifth, the City ant then forwards the voucher, together with an ant’s advice, back to the Chief Cashier for the preparation of the check.

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The check: First, Chief Cashier signs the check and forwards it to the City Treasurer to sign the check and the voucher. Second, the voucher then is sent to the City for approval and also countersigns the check. Third, The City then returns everything to the cash division. Finally, the paymaster receives the check for later encashment and signs the “RECEIPT PORTION” (signifying that he received it.) of the voucher.

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The audit: First, the paymaster and the cash division prepare the report of the disbursement and record it to the cashbook. Second, COA examines the books. Finally, the cashier forwards the report to the City ant for recording and posting.

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The city conducted a surprise audit concerning the disbursement of public funds WRT salaries of Cebu City government employees. Of immediate concern is Rosalina Badana, who immediately absconded upon learning of the surprise audit. The audit team learned that there was a cash shortage of P18M and this was because of an allegation that the petitioners violated PD 1145, LGC and some COA regulations. This moved Mayor Garcia to file with the Ombudsman a complaint against Badana for malversation of public funds. Because of this case, criminal and istrative investigations led to the implication of the petitioners for violation of Sec. 3(e) of RA 3019.

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The COA report (what did the petitioners do?): The key allegation is that the records show that cash advances were granted even if the previous cash advances were not yet liquidated, in violation of the above mentioned laws against the accumulation of excess cash in the custody of an able officer (A/N: the point - humihingi ka pa pero sobra sobra na hawak mo.)

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The disbursement vouchers covering the cash advances were not ed by payrolls to determine the cash advance to be granted in violation of a COA regulation requiring proper documentation. ing records show that these cash advances were granted and taken up in January, 1998 while the cash returns made after granting these cash advances were taken up in December, 1997. This is contrary to the generally accepted principles of time period which requires that ing should be time bounded; meaning cutoff date should be properly and strictly observed. Presentation of vouchers already recorded are regarded as cash items even though they have already been used. (A/N: the way I understood it is that this refers into double recording of vouchers to cover up / minimize the deficiency)

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The scheme: Paid payrolls and vouchers already recorded in the cashbook are presented as cash items. This is done to reduce Badana’s ability as paymaster. This is possible because Badana has access to paid payrolls and vouchers and the disbursing officer not stamping “PAID” to all payrolls and vouchers (to prevent double usage and double recording). Anyway, the reason why the petitioners are being tried for this crime is because it was alleged that it was their duty to prevent this from happening.

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The decisions: The Ombudsman found Jaca and Cesa guilty of simple neglect of duty in the case. As to Gaviola, his case was dismissed for being moot. The Sandiganbayan held all four guilty of violation of Sec 3(e) of RA 3019.

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Defenses raised: (most impt. part of the facts) Individually: Cesa, the City Treasurer He was simply following the long-standing practice that the Chief of the Cash Division (Bacasmas) already examined the voucher and ing documents before he affixes his own signature there. Under the LGC, City Treasurers cease to be an approving authority in the cash advances. It is the City ant who can approve or disapprove cash advances or disbursements. He signs the voucher as a requesting party and not as an approving authority. (A/N: in short, laglagan.) Jaca, the City ant Strict compliance with the regulations is unrealistic because of the long-standing practice of some employees being paid weekly while others are paid in 15-day intervals. Before she can process the liquidation of a cash advance, another application comes in. (A/N: natabunan ng trabaho) That she has informed Cesa and the City auditor (at that time) of the unliquidated cash advances. Gaviola, the City He relied on the City ant that Badana’s previous cash advances were properly ed for. His approval is a ministerial act done after a pre-audit and determination of the regularity of the vouchers and documents (which is not his job). Collectively:

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Good faith – they didn’t know that Badana was conducting this scheme. The information is defective because “with deliberate intent, with manifest partiality and evident bad faith” is inconsistent with “gross negligence.” Witnesses are incompetent to testify as they did not take part in the preparation of the report. By extension this makes the COA report as hearsay. Culpability not properly established – they didn’t receive a prior notice of disallowance to warrant them of the knowledge of the unliquidated cash advances. No injury is committed since no one complained that they did not receive their salaries.

ISSUES & RATIO. 1. WON petitioners are liable for violation of Sec. 3(e) RA 3019. YES (as to the specific issue, the SC had to settle WON the scope of their duties included the power to prevent the whole scheme from happening and if so; what should they have done about it.) Procedural (just to get it out of the way)  Rule 45 not proper since that only deals with questions of law. The review of the defense of good faith requires a reevaluation of a question of fact.  The information is valid. Sure, the information could have used “or” in between “…evident bad faith” and “negligence” just so the issue isn’t raised. However, Gallego v. SB already dealt with this issue that the way the information is phrased does not indict the accused of three separate crimes but rather refers to the modes on how committed.  The COA report is not hearsay. In examining the testimony of Chan, it was found out that he was specifically assigned to the audit of the cash and s of Badana. Substantive: Existence of undue injury or giving of unwarranted benefit:  Petitioners: Prosecution has not established the fact of Badana’s unliquidated cash advances because a witness testified that the audit has not yet been completed at the time of the prosecution in the SB, relying on the case of Madarang v. SB.  SC: That case is different: the accused in that case was acquitted because the audit was not yet completed and there were s yet to be considered; the examination was not even done in the official station of the accused and that those located in different areas were not included in the report. The present case is different because the reason why the audit was so hard to complete is precisely because of the irregularities found by the COA in the city’s books. Nowhere does it appear that the incompleteness pertains to the scope of the audit or that the audit was done in a haphazard manner. After all, to explain the irregularities, Badana could have been in the best position to explain but she is still at large so the COA had to make do with what is has. Undue injury to the government has been established because of the shortages. Gross inexcusable negligence and the defense of good faith:

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As to Cesa, the City Treasurer, the SC first states that under the LGC the City Treasurer is tasked with the following duties: o Take custody of and exercise proper management of the funds of the LGU concerned o Take charge of the disbursement of all funds under his custody. When Cesa certified that the cash advances were lawful and incurred under his direct supervision, he cannot escape the obligation to determine WON Badana complied with PD 1445, even though the same would have been determined by the city ant. Both PD 1445 and the LGC provide that the cash advance could only be granted if it is for an authorized purpose; that there is proper documentation on where it is to be applied; and that no cash advance may be allowed unless the previous cash advance has been settled and ed for. Cesa also cannot rely on the defense that it was a long-standing practice that he simply complied with. According to Bacasmas’ testimony, the Office of the Cash Division under the Office of the City Treasurer simply required a written request for the release of the cash advance and nothing more. By g the voucher and representing that he had direct supervision and knowledge of the transaction, Cesa had a vital role in the processing and the subsequent disbursement of funds. The finding that he was only istratively held liable of simple neglect does not operate that he be criminally liable for gross negligence under Sec. 3(e) of RA 3019 as istrative and criminal proceedings operate independently. As to Jaca, the City ant, it was a red flag when she itted that she signed the vouchers in order to avoid delay in the disbursement of the salaries of government employees. She itted that she did so even if she knew that Badana’s previous cash advances had not yet been liquidated and did not even inform the COA that the ing tools did not accurately monitor the cash advances. The LGC imposes the following duties on the City ant: o ing and internal audit of the LGU o Install and maintain an internal audit system o Review ing documents before preparation of vouchers to determine the completeness of the requirements o Prepare statements of cash advances o Prepare statements of journal vouchers and liquidation of the same o Post individual disbursements to the ledger and index cards

As City ant, she should have also been aware that of the COA regulations which require that no additional cash advance shall be allowed to any official or employee unless the previous cash advance given him is first settled or a proper ing thereof is made. Avoiding delay is not an excuse if her duties require that the money is properly ed for. Since it was her job to conduct a pre-audit, what she should have done to inform the Mayor of the attendant risks in the disbursement of funds or set up an internal audit system. 

As to Gaviola, the City , he relies on the ruling in Arias v. SB which exonerated the accused based on the doctrine that All heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies, or enter into negotiations.

SC: The Arias ruling squarely applies where the head of an office is made to answer for his act on relying on the acts of his subordinate. ittedly, the functions of the City do not relate to the functions of management and ing of funds or to internal audit. The concern of the City is the overall istration and management of the affairs of the LGU concerned. As such, the SC cannot consider the deficiency in the particulars of the payment alone to charge Gaviola with knowledge of the scheme going on. He is not directly involved in the management of local government funds. So his reliance that others did their job before g isn’t entirely misplaced. BUT HE IS STILL LIABLE. When the vouchers have been presented to him, there were no ing documents that accompanied them. Yet, Gaviola signed the voucher anyway. No evidence was ever presented that Gaviola requested for the ing documents before he signed the voucher. It should be pointed out that only the payrolls that are prepared are those for the first and second halves of the month. This means that there really won’t be any ing documents for those paid on a weekly basis, which Gaviola should have required before g the voucher. This just shows a gross and inexcusable negligence on his part. There was conspiracy. The petitioners are all heads of their respective offices that perform interdependent functions in the processing of cash advances. The petitioners’ attitude of buck-ing in the face of the irregularities in the voucher (and the absence of ing documents), as established by the prosecution, and their indifference to their individual and collective duties to ensure that laws and regulations are observed in the disbursement of the funds of the local government of Cebu can only lead to a finding of conspiracy of silence and inaction. The separate acts or omissions of all the accused in the present case contributed in the end result of defrauding the government. Without anyone of these acts or omissions, the end result would not have been achieved. Suffice it to say that since each of the accused contributed to attain the end goal, it can be concluded that their acts, taken collectively, satisfactorily prove the existence of conspiracy among them. DECISION. Petition denied.