IMELDA T. DARAUG, PETITIONER, VS. ROGER P. PEREZ (IN HIS CAPACITY AS FORMER EXECUTIVE DIRECTOR OF THE COMMISSION ON HIGHER EDUCATION (CHED), RESPONDENT.

Daraug versus Perez

The Case

This is an administrative case that reached the Supreme Court by petition for review. Imelda T. Daraug, then the Regional Director of the Commission on Higher Education Regional Office No. III, was charged by Roger P. Perez, in his capacity as former Executive Director of the Commission on Higher Education, with violation of Section 3 (e) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, in connection with cash advances for seminars that the Commission on Audit reported never actually took place. The case matters because it is the Court's clearest recent statement that evident bad faith and undue injury are strict elements that must be proven, not presumed, and that a public officer's signature on a liquidation report prepared by subordinates does not by itself make her a conspirator or render her administratively liable.

Procedural History

The Commission on Audit released a report in September 2003 stating that the seminars did not actually take place and that the petitioner had approved allowances without proper authority. The Commission on Higher Education referred the report to the Presidential Anti-Graft Commission, which docketed the case as an administrative matter. After fact-finding and a preliminary conference, the Presidential Anti-Graft Commission, on June 8, 2004, found the petitioner liable under Section 3 (e) of Republic Act No. 3019 and recommended her dismissal, together with the accessory penalties, to the Office of the President. On July 27, 2004, the Office of the President approved the recommendation and dismissed the petitioner from the service, with cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification from re-employment in the government service. The petitioner sought reconsideration, which the Office of the President denied on September 30, 2004. The petitioner then elevated the matter to the Supreme Court by petition for review, and the Court gave due course to the petition.

Facts

In June and July 2003, the Commission on Higher Education Regional Office No. III conducted several seminars, including a Mid-Year Assessment and Strategic Planning Workshop. On September 19, 2003, the Commission on Audit released a report stating that the seminars did not actually take place and that the petitioner had approved, without proper authority, the allowances given to staff from the budget allocated for the seminars. The Commission on Higher Education referred the report to the Presidential Anti-Graft Commission on November 12, 2003.

On February 16, 2004, the respondent, as Executive Director of the Commission on Higher Education, submitted an affidavit-complaint alleging that scholarship funds under the Higher Education Fund were disbursed for other purposes without proper authority. At the fact-finding hearing, the State Auditor testified and presented her Audit Observation Memorandum, which noted that the Daily Time Records of the alleged participants showed they had reported for work on the seminar dates; that the venue had issued no official receipts for room and food accommodations; that the named resource speakers were never invited; and that the disbursements were charged to the Scholarship Fund, which was unauthorized. Two professors from the University of the Philippines testified that they were never invited and never participated, and denied that the signatures on the reimbursement receipts were theirs. Two employees of the regional office testified that their signatures on the attendance sheet were intended for a Civil Service Seminar, and that the workshop was fictitious.

The petitioner denied liability, claiming she relied on the assurances of two subordinates who prepared the liquidation reports, and presenting photographs to show the seminars took place. The Presidential Anti-Graft Commission found her liable and recommended dismissal, which the Office of the President approved. Meanwhile, the Commission on Audit, in a decision dated September 22, 2004, ruled on several notices of disallowance, finding that the amount for the seminars was not misappropriated by the petitioner but distributed to officials and employees as financial assistance, and that refunds were being made.

Issues

• Whether or not the essential elements of the offense under Section 3 (e) of Republic Act No. 3019 are present to justify the penalty of dismissal.
• Whether or not the petitioner acted with evident bad faith in approving the liquidation reports prepared by her subordinates.
• Whether or not the petitioner's acts caused undue injury to the Government or gave any private party unwarranted benefits.
• Whether or not the mere affixing of her signature on the liquidation report makes the petitioner liable for the acts of her subordinates.

Applicable Provisions

Section 3 (e) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, provides:

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial function through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

This is the very provision under which the petitioner was charged and dismissed, and its elements define the whole controversy.

Article 2199 of the Civil Code, which the Court uses to interpret undue injury, provides:

Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.

The Court treats undue injury as actual damage in the civil law sense, which must be proven with a reasonable degree of certainty.

Ruling

On the first issue, the Court held that the elements of Section 3 (e) of Republic Act No. 3019 were not all present. The offense requires that the offender be a public officer discharging administrative or judicial functions; that she commit the prohibited acts during the performance of her official duties or in relation to her public position; that she acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and that her action caused undue injury or any unwarranted benefit to any party. The Court stressed that bad faith must be evident, and quoted its earlier ruling:

Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud. It contemplates a state of mind affirmatively operating with furtive design or some motive of self interest or ill will for ulterior purposes. Evident bad faith connotes a manifest deliberate intent on the part of the accused to do wrong or cause damage.

On the second issue, the Court found no evident bad faith. The petitioner's reliance on her subordinates concerning the correctness of the reports, and her honest belief that distributing the balance of the seminar budget was not prohibited, negated bad faith. The Court noted that acts done in the performance of official duty are protected by the presumption of good faith, and that a mistake on a doubtful or difficult question of law may be the basis of good faith.

On the third issue, the Court found no undue injury and no unwarranted benefit. Undue injury is actual damage, which must be proven with a reasonable degree of certainty and cannot rest on speculation. The employees who received the financial assistance returned the funds upon learning of the disallowance, and the Commission on Audit itself found that no misappropriation occurred.

On the fourth issue, the Court held that the mere signature of a person on a document prepared by another does not automatically make her a participant or conspirator in the wrongful act. The petitioner did not prepare the liquidation report, did not misappropriate the funds, and affixed her signature in good faith.

Doctrine

To sustain a charge under Section 3 (e) of Republic Act No. 3019, all four elements must be proven: the offender is a public officer; the act is done in the performance of official duties; it is attended by manifest partiality, evident bad faith, or gross inexcusable negligence; and it causes undue injury or gives unwarranted benefit. Evident bad faith requires a manifest deliberate intent to do wrong or cause damage; mere bad faith or negligence is not enough. Undue injury means actual damage proven with a reasonable degree of certainty, not speculation. Public officers enjoy the presumption of good faith in the performance of official duties, and a mistake on a doubtful or difficult question of law may be the basis of good faith. Finally, the mere affixing of a signature on a report prepared by subordinates does not by itself establish liability or conspiracy.

Disposition

The Supreme Court reversed and set aside the decision of the Office of the President dismissing the petitioner, and dismissed the charge of violation of Section 3 (e) of Republic Act No. 3019 against her.

Remember This

Memorize this line: evident bad faith must be proven, not presumed, and a signature on a report prepared by others does not make one a conspirator. Examiners use this case to test the elements of Section 3 (e) of the Anti-Graft Law and the presumption of good faith in favor of public officers.