In Tito S. Sarion v. People of the Philippines, the Supreme Court reiterated that public officials entrusted with public funds must exercise diligence in handling those funds. The Court affirmed the conviction of a former mayor for malversation and violation of Republic Act No. 3019, emphasizing that reliance on subordinates does not excuse gross negligence when disbursing public money.

When Oversight Fails: Mayor’s Negligence and Public Fund Mismanagement

This case revolves around Tito S. Sarion, the former Mayor of Daet, Camarines Norte, who was found guilty of Malversation of Public Funds and violation of Section 3(e) of Republic Act (R.A.) No. 3019, also known as the Anti-Graft and Corrupt Practices Act. The charges stemmed from the irregular payment of price escalation to Markbilt Construction for the Daet Public Market Phase II project. The central legal question is whether Sarion, as the accountable officer, exercised the necessary diligence in approving the disbursement of public funds, or if his actions constituted gross inexcusable negligence leading to the illegal release of funds.

The Supreme Court’s decision hinged on the principle that public officials, particularly those in positions of authority like mayors, have a responsibility to ensure that public funds are disbursed properly and in accordance with the law. The Court found that Sarion, by virtue of his office, was an accountable officer for the public funds of Daet. This means he was obligated to ensure that these funds were used only for their intended municipal purposes. As the Supreme Court stated, Sarion, as the mayor, had to “ensure that these funds are disbursed only for their ‘intended municipal use.’”

In this case, the Court determined that Sarion committed malversation through gross inexcusable negligence. This negligence occurred when he allowed Markbilt Construction to receive payment for price escalation, despite the fact that Markbilt was not entitled to it. The Court elaborated, explaining that “by approving the disbursement voucher and signing the Landbank check, despite the absence of appropriation and failure to comply with the requirements of Section 61 of Republic Act (R.A.) No. 9184 or the Government Procurement Reform Act, the petitioner facilitated the illegal release of public funds to Markbilt.” This act of approving the payment without ensuring compliance with legal requirements constituted a breach of Sarion’s duty as an accountable officer.

Furthermore, the Court identified two specific acts constitutive of malversation: the failure to comply with the requirements of R.A. 9184 and the payment of price escalation despite the absence of appropriation. Sarion’s defense of good faith was rejected by the Court, citing the presence of circumstances that should have prompted him to inquire further before approving the payment to Markbilt. This ruling reinforces the principle that public officials cannot simply rely on the actions of their subordinates, especially when there are red flags or indications of irregularity.

The Court also addressed the charge of violating Section 3(e) of R.A. No. 3019. This section prohibits public officials from causing undue injury to the government or giving unwarranted benefits to any private party through manifest partiality, evident bad faith, or gross inexcusable negligence. The Court affirmed Sarion’s conviction, finding him guilty of gross inexcusable negligence in violating basic rules in disbursement, thereby causing undue injury to the Municipality of Daet. This underscores the importance of adhering to established procedures and regulations when handling public funds.

Sarion argued that the Information filed against him violated his constitutional right to information, as it alleged the absence of a Certificate of Availability of Funds (CAF), not an irregularity in the CAF. He also contended that there was no irregularity in the CAF because the price escalation claim of Markbilt was approved by Appropriation Ordinance No. 1. Moreover, he argued that non-compliance with Section 61 of R.A. No. 9184 did not pertain to him and that the law does not penalize such irregularity. The Court rejected these arguments, emphasizing that the absence of appropriation pertained specifically to the payment of price escalation, not the entire project. The only appropriation in this case was the original contract price, and no payment could be made beyond that amount without a specific appropriation for the price escalation.

Section 85 in relation to Section 86 of P.D. No. 1445, requires the existence of a prior sufficient appropriation, as certified by he prop r accounting official, before any contract for expenditure of public funds is authorized, viz.:

Section 85. Appropriation before entering into contract.

(1) No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure.

The Court also addressed Sarion’s reliance on the legal opinion of Legal Officer Edmundo R. Deveza II, who stated that the Municipal Engineering Office found no irregularity in the computation of the price escalation. The Court noted that it was not Sarion who sought this opinion, but rather the Accountant acting on the advice of the COA Auditor. Furthermore, the Court found that Sarion immediately ordered the Administrator to look for sources of funds upon receiving Markbilt’s request, without first verifying the propriety of the claim. This demonstrated a lack of diligence on Sarion’s part.

The Supreme Court distinguished this case from the doctrine established in Arias v. Sandiganbayan, which generally holds that heads of offices can rely on the actions of their subordinates. The Court emphasized that the Arias doctrine does not apply when there are circumstances that should have alerted the head of office to exercise a higher degree of circumspection. In this case, the Court found that such circumstances existed, including the fact that the project was completed prior to Sarion’s term, the amount appropriated for the project had already been fully released, and Markbilt’s demand was dependent on material costs from years prior. The Court therefore deemed that Sarion’s failure to observe sufficient diligence, resulting in a violation of laws and rules relating to the disbursement of public funds, amounted to gross inexcusable negligence.

FAQs

What was the key issue in this case?	The key issue was whether the former mayor exercised due diligence in approving the disbursement of public funds for price escalation, or if his actions constituted gross inexcusable negligence.
What is malversation of public funds?	Malversation of public funds is the misappropriation or misuse of public funds by a public official entrusted with their care or custody. It is a crime punishable under Article 217 of the Revised Penal Code.
What is Section 3(e) of R.A. No. 3019?	Section 3(e) of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, prohibits public officials from causing undue injury to the government or giving unwarranted benefits to any private party through manifest partiality, evident bad faith, or gross inexcusable negligence.
What is gross inexcusable negligence?	Gross inexcusable negligence is the failure to exercise even slight care, or the acting in a manner so as to show complete disregard for the rights and safety of others. In the context of public officials, it involves a clear and palpable breach of duty due to manifest inattention or lack of care.
What is the ‘Arias Doctrine’?	The ‘Arias Doctrine’ generally allows heads of offices to rely on the actions of their subordinates, unless there are circumstances that should have alerted them to exercise a higher degree of circumspection.
What is a Certificate of Availability of Funds (CAF)?	A Certificate of Availability of Funds (CAF) is a document certifying that funds have been duly appropriated for a specific purpose and that the amount necessary to cover the proposed expenditure is available for expenditure. It is a requirement under Section 86 of P.D. No. 1445.
What is the Government Procurement Reform Act (R.A. No. 9184)?	The Government Procurement Reform Act (R.A. No. 9184) provides the rules and regulations for the procurement of goods, supplies, and services by government agencies. Section 61 of the act lays down the requirements for price adjustments.
What was the basis for the Supreme Court’s decision in this case?	The Supreme Court based its decision on the finding that the former mayor, as an accountable officer, failed to exercise the necessary diligence in approving the disbursement of public funds, and that his actions constituted gross inexcusable negligence leading to the illegal release of funds.

This case serves as a reminder to all public officials of their responsibility to safeguard public funds and to exercise due diligence in all their official actions. The Supreme Court’s decision reinforces the importance of adhering to established procedures and regulations, and of being vigilant in the performance of one’s duties. A lack of oversight will not be tolerated.

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: TITO S. SARION, PETITIONER, V.S. PEOPLE OF THE PHILIPPINES, RESPONDENT., G.R. Nos. 243029-30, August 22, 2022