ROMEO D. CABARLO, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

Cabarlo versus People of the Philippines

The Case

This is the case of Romeo Cabarlo against the People of the Philippines. Cabarlo was the Deputy Provincial and Municipal Treasurer of Isulan, Sultan Kudarat, and he was convicted of malversation of public funds under Article 217 of the Revised Penal Code after a Commission on Audit examination disclosed a shortage of more than four million pesos in the funds under his custody. The case matters to every reviewee because it gathers in one decision the elements of malversation, the prima facie presumption that arises from an unexplained shortage, the primacy of the Commission on Audit over internal audits of the provincial treasurer, and the strict requisites for a new trial based on newly discovered evidence.

Procedural History

The Office of the Ombudsman found prima facie evidence of malversation and the corresponding Information was filed with the Regional Trial Court of Isulan, Sultan Kudarat, Branch 19. After trial, the court rendered judgment on July 26, 2000, finding Cabarlo guilty beyond reasonable doubt and imposing an indeterminate prison term, perpetual special disqualification, a fine, and an indemnity, all in the amount of the shortage. Cabarlo appealed to the Court of Appeals, which affirmed the conviction in its Decision of April 28, 2005, and later denied his motion for reconsideration in its Resolution of March 23, 2006. Cabarlo then came to the Supreme Court by a petition for review under Rule 45 of the Rules of Court, and the Court denied the petition and affirmed both rulings below.

Facts

The Commission on Audit conducted a comprehensive audit of the accounts of Cabarlo as Deputy Provincial and Municipal Treasurer of Isulan, Sultan Kudarat. After reconciling the accounting records with the cash records, the audit team discovered a shortage of 3,201,200 pesos in the General Fund and 1,106,000 pesos in the Cash Fund, for a total of 4,307,200 pesos. The audit also showed that 800,000 pesos of the Special Education Fund had been transferred to the General Fund without the approval of the local school board.

When required to explain the shortages, Cabarlo sought the help of the Provincial Treasurer of Sultan Kudarat, whose examination of Cabarlo's Cash Book supposedly showed no shortage. The Ombudsman nonetheless found prima facie evidence of malversation, and Cabarlo was charged before the trial court. He was also charged before the Sandiganbayan, together with the Municipal Mayor and the Provincial Auditor, for the anomalous transfer of the Special Education Fund.

At trial, Cabarlo failed to produce any document or proof to explain the shortages. He relied only on the internal audit of the Provincial Treasurer's Office. He later moved for a new trial so that he could present vouchers and paid-up cash items supposedly showing that the amount covering the shortage had been spent for public purposes, claiming that these documents had been in the custody of other local government offices for processing. The courts below refused, and the case reached the Supreme Court.

Issues

• Whether or not the Court of Appeals erred in ruling that Cabarlo appropriated, took, or misappropriated the sum of 4,307,200 pesos from the funds collected and received by him in the performance of his official functions.
• Whether or not the Court of Appeals erred in denying his motion for new trial to allow him to submit documents and vouchers proving liquidation of cash advances and reconciliation of the findings of the state auditors.

Applicable Provisions

Article 217 of the Revised Penal Code, as quoted in the decision, provides on the presumption arising from an unexplained shortage:

That the failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal uses.

This presumption is the heart of the case, because it supplies the fourth element of malversation when the accountable officer cannot explain the shortage.

Section 2, paragraph 1, Article Nine(D) of the 1987 Constitution, as quoted in the decision, provides:

The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities.

This provision is why the internal audit of the Provincial Treasurer cannot overcome the findings of the Commission on Audit.

Section 470 of the Local Government Code of 1991, as described in the decision, provides that the treasurer is in 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. This provision is why Cabarlo cannot claim that the vouchers were beyond his knowledge, since his own office prepared them.

Ruling

On the first issue, the Court held that conviction for malversation requires proof that the offender is a public officer, that he has custody or control of the funds by reason of the duties of his office, that the funds are public funds for which he is accountable, and that he appropriated, took, or misappropriated them, or permitted another to do so through abandonment or negligence. Cabarlo was a public officer tasked with the custody of funds, and the General Fund, the Cash Fund, and the Special Education Fund are public funds for which he was accountable. What remained was the fourth element, and the Court resolved it through the presumption in Article 217. Being an accountable officer, Cabarlo could be convicted even without direct proof of misappropriation, so long as there was a shortage in his accounts which he could not explain. The shortage was undisputed, and he failed to produce the amount upon demand or to explain it satisfactorily. He even signed the Report of Cash Examination certifying the shortage. His reliance on the internal audit of the Provincial Treasurer was misplaced, because only the Commission on Audit has the power, authority, and duty to examine, audit, and settle the accounts of the government, and the internal audit was based only on his Cash Book, covered a different period, and was not binding.

On the second issue, the Court held that the requisites for newly discovered evidence are that the evidence was discovered after trial, that it could not have been discovered and produced at trial with reasonable diligence, and that it is material, not merely cumulative, corroborative, or impeaching, and of such weight that, if admitted, it would probably change the judgment. Cabarlo failed to show that the vouchers and paid-up cash items were discovered after trial, since they already existed during the trial, his own office prepared them, and he had more or less four years and seven months to dig up the records. The Court also noted that the total amount of the cash items and paid vouchers was only 872,907.46 pesos, which would not alter the result given the shortage of 4,307,200 pesos. The Court likewise rejected his claim of threats, and it held that the auditors are presumed to have regularly performed their duties. Finally, the Court affirmed the penalty, since the amount involved exceeds 22,000 pesos, and with neither aggravating nor mitigating circumstance, the indeterminate penalty imposed by the trial court was correct.

Doctrine

Malversation of public funds under Article 217 of the Revised Penal Code is committed by a public officer who, having custody or control of public funds by reason of the duties of his office, appropriates, takes, or misappropriates them, or permits another to do so through abandonment or negligence. The failure of the public officer to have the funds duly forthcoming upon demand by a duly authorized officer is prima facie evidence that he has put the missing funds to personal uses. An accountable officer may therefore be convicted even without direct proof of misappropriation, so long as there is a shortage in his accounts which he is unable to explain. Only the Commission on Audit has the power, authority, and duty to examine, audit, and settle government accounts, so an internal audit by the Provincial Treasurer cannot prevail over its findings. And a motion for new trial based on newly discovered evidence must satisfy the three requisites, and evidence already known or which should have been known to the accused during trial, sometimes called forgotten evidence, does not justify a new trial.

Disposition

The Supreme Court denied the petition and affirmed the conviction of Cabarlo for malversation of public funds, including the penalty, the fine, and the indemnity in the amount of 4,307,200 pesos.

Remember This

The single line worth memorizing is that an accountable officer may be convicted of malversation even without direct proof of misappropriation, so long as there is a shortage in his accounts which he cannot explain. Examiners like to use this case on the prima facie presumption in Article 217, on the primacy of the Commission on Audit over internal audits, and on the distinction between newly discovered evidence and forgotten evidence in a motion for new trial.