The Supreme Court held that public officials can be held liable for violating Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) if they exhibit gross inexcusable negligence in handling cash advances. This negligence must cause undue injury to the government or give unwarranted benefits to a private party. The Court emphasized that public office is a public trust, requiring officials to act with utmost responsibility and integrity.

When Oversight Fails: Examining Official Negligence in Cebu City’s Lost Millions

This case revolves around the accumulated shortage of P9,810,752.60 in the cash and accounts of Luz Gonzales, a paymaster for the City Government of Cebu, between 1995 and 1998. Benilda N. Bacasmas, Alan C. Gaviola, and Eustaquio B. Cesa, along with Edna J. Jaca (deceased during the proceedings), were found guilty by the Sandiganbayan for violating Section 3(e) of R.A. 3019. The central issue was whether these officials acted with gross inexcusable negligence, causing undue injury to the government and unwarranted benefit to Gonzales, and whether the Information filed against them was sufficient.

The Supreme Court affirmed the Sandiganbayan’s decision, emphasizing the duty of public officials to adhere strictly to laws, rules, and regulations governing cash advances. The procedure for cash advances in the City Government of Cebu involved several steps. A written request would be made by the paymaster, Luz Gonzales, and submitted to Cash Division Chief Bacasmas for approval. After approval, it would be forwarded to City Treasurer Cesa for signature, and then to City Accountant Jaca for processing and pre-audit. Finally, it would go to City Administrator Gaviola for final approval and countersigning of the check.

The COA’s investigation revealed that Bacasmas, Gaviola, Cesa, and Jaca failed to follow this procedure, which led to the significant shortage. The irregularities included granting additional cash advances even if previous ones had not been liquidated, and the absence of supporting documents such as payrolls or lists of payees. These actions violated R.A. 7160, P.D. 1445, and various COA circulars, specifically COA Circular Nos. 90-331, 92-382, and 97-002.

The petitioners argued that the Information was insufficient, contending that it did not specify a reasonable time frame, failed to include Gonzales as an accused, and alleged inconsistent charges of negligence and conspiracy. However, the Supreme Court held that the Information was indeed sufficient. The Court explained that it is not necessary to state the precise date of the offense, especially when it occurred over a period of time. Including Gonzales in the Information was deemed unnecessary, as the focus was on the officials’ actions that enabled Gonzales to obtain the cash advances.

The Court found that the Information adequately described the nature of the accusation against the petitioners for violating Section 3(e) of R.A. 3019. The essential elements of this violation, as stated by the Court, are: first, the accused must be a public officer performing administrative, judicial, or official functions; second, the accused must have acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and third, the action of the accused caused undue injury to any party, including the government, or gave any private party unwarranted benefits. The Information sufficiently specified the offense by using the phrases “manifest partiality,” “evident bad faith,” and “inexcusable negligence”, indicating that the offense may have been committed through any of the modes provided by the law. Further, the court stated that there was no inconsistency in alleging both conspiracy and gross inexcusable negligence, as the latter involves a willful, intentional, and conscious indifference to the consequences of one’s actions.

Crucially, the Supreme Court emphasized that the petitioners committed gross negligence amounting to bad faith. They approved and disbursed cash advances in violation of law and established rules and regulations. It was established that cash advances can only be disbursed for a legally authorized specific purpose and cannot be given to officials with unsettled previous cash advances. Also, cash advances should be equal to the net amount of the payroll for a certain pay period, supported by the payroll or list of payees and their net payments.

The Court highlighted several violations detailed in the COA Narrative Report. Additional cash advances were granted even when previous ones remained unliquidated, leading to excessive cash advances and opportunities for misappropriation of public funds. The amounts of cash advances for salary payments did not match the net payroll, and vouchers lacked essential supporting documents, violating multiple COA circulars and regulations. Cash advances for salaries were not liquidated within the required five-day period, and the unliquidated balance as of December 31, 1997, was significantly understated due to improper accounting practices. These violations, the Court stated, demonstrated that the petitioners were unified in illegally approving irregular cash advance vouchers to defraud the government. To emphasize this point, the Court quoted the COA Narrative Report:

The concerned City Officials signed, certified and approved the disbursements/cash advance vouchers, and signed and countersigned the corresponding checks despite the deficiencies which are violations of laws, rules and regulations mentioned in the preceding paragraphs. The accountable officer was able to accumulate excess or idle funds within her total control and disposal, resulting in the loss of public funds, due to the flagrant violations by the concerned city officials of the abovementioned laws, rules and regulations.

The Supreme Court also addressed the element of undue injury to the government. Undue injury means actual damage, which was proven in this case by the shortage of P9,810,752.60. This loss was directly caused by the petitioners’ actions in approving cash advance vouchers that lacked the required documentation and violated established procedures. This also resulted in an unwarranted benefit to Gonzales, who received cash advances without proper justification.

The Court rejected the petitioners’ reliance on the Arias v. Sandiganbayan doctrine, which generally absolves heads of offices from liability for actions of subordinates, stating that, unlike in Arias, there were clear reasons for the heads of offices to further examine each voucher in detail.

Moreover, the indeterminate penalty of 12 years and one month as minimum to 15 years as maximum was found to be justified. The Court acknowledged that while Section 9 of R.A. 3019 grants the Sandiganbayan discretion over the penalty, the anti-graft court should justify the imposition of the highest possible penalty. In this case, the Court cited a similar case, Jaca v. People of the Philippines, where the same petitioners were convicted of similar violations. Further, the Court stated that it was taking judicial notice of the need to stop these corrupt practices that drain local government coffers.

FAQs

What was the key issue in this case?	The key issue was whether public officials could be held liable under Section 3(e) of R.A. 3019 for gross inexcusable negligence in approving cash advances that led to a significant loss of public funds.
What is Section 3(e) of R.A. 3019?	Section 3(e) of R.A. 3019 prohibits public officers from causing undue injury to any party, including the government, or giving any private party unwarranted benefits through manifest partiality, evident bad faith, or gross inexcusable negligence.
What constitutes gross inexcusable negligence in this context?	Gross inexcusable negligence involves a want of even the slightest care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but wilfully and intentionally, with conscious indifference to consequences.
What evidence did the Court rely on to find the officials guilty?	The Court heavily relied on the COA Narrative Report, which detailed numerous irregularities in the granting, utilization, and liquidation of cash advances, along with the officials’ admissions of not strictly following established procedures.
What is the significance of the Arias v. Sandiganbayan doctrine?	The Arias doctrine generally provides that heads of offices cannot be held liable for actions of subordinates if there is no evidence of conspiracy. However, the Court found the doctrine inapplicable here because there was evidence of conspiracy among the officials.
What was the penalty imposed on the officials?	The officials were sentenced to imprisonment for 12 years and one month to 15 years, perpetual disqualification from holding any public office, and were ordered to jointly and severally indemnify the City Government of Cebu for the amount of P9,810,752.60.
What is the implication of this ruling for other public officials?	This ruling serves as a strong reminder to public officials about their duty to adhere strictly to laws, rules, and regulations governing cash advances and other financial transactions, emphasizing accountability for negligence that results in loss of public funds.
How does this case define “undue injury” to the government?	In this case, undue injury was defined as the actual damage suffered by the government due to the loss of P9,810,752.60, which resulted from the officials’ negligent approval of cash advances.
What specific COA Circulars were violated in this case?	The violations included COA Circular Nos. 90-331, 92-382, and 97-002, which pertain to the proper procedures for granting, utilizing, and liquidating cash advances.

This case underscores the high standard of care expected from public officials in managing public funds. The Supreme Court’s decision reinforces the principle that even acts of gross negligence, when they result in significant financial loss to the government, can lead to criminal liability under anti-graft laws.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: BENILDA N. BACASMAS, ET AL. VS. SANDIGANBAYAN AND PEOPLE, G.R. NO. 189343, July 10, 2013