REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. INTERMEDIATE APPELLATE COURT, SIMPLICIO BERDON, GAUDIOSA BERDON AND LUIS BERDON, RESPONDENTS.

The Republic assails as erroneous
the decision of the Intermediate Appellate Court affirming that of the Court of
First Instance which dismissed the petition for forfeiture of unexplained
wealth under Republic Act No. 1379 filed against private respondents herein.

The dismissed petition
charged Simplicio Berdon,
an Assistant Staff Civil Engineer assigned to Regional Office No. VII of the Bureau of Public Highways in Cebu City, with having acquired unexplained wealth in
violation of Republic Act No. 1379. 
It alleged that during the period
from 1963 to 1969 he and his wife Gaudiosa Mangubat Berdon purchased parcels of land and constructed a house,
the purchase prices and costs of which were not commensurate to their incomes,
savings or declared assets.  Pleaded as
defendants in the petition were Berdon, his wife, and
Luis Berdon, his father.  Petitioner Republic of the Philippines, which valued the unexplained wealth at
P124,495.82, thus sought the forfeiture of the properties and the issuance of a
writ of attachment.  Upon orders of the
trial court, the properties enumerated in the petition were attached.

During the course of the
trial, the following evidence was adduced by the parties:

*        *           *

The evidence for the petitioner as testified to by Joselito Magno and Atty. David Macayayong may be summarized as follows:

That on the basis of a letter complaint sent to the Office of the
President by a certain George Valde against Simplicio Berdon, the Complaint
and Investigation Office, Malacanang, Manila,
sent Joselito Magno and
Atty. David Macayayong to conduct an actual field
investigation on Mr. Simplicio Berdon.  Both investigators went to Cebu City,
Danao City
and the Northern Towns
of Bogo and Borbon, Cebu and secured pertinent documents relative to
the case such as the service record of the respondent Simplicio
Berdon (Exh. ‘B’), copies
of sworn statement of financial condition, assets, income and liabilities of
respondent-spouses Berdon, Exhibit ‘C’ for the year
1962; Exhibit ‘D’ for 1963; Exhibit ‘E’ for 1965; Exhibit ‘F’ for 1967 and Exhibit
‘G’ for 1969.  Copies of documents
regarding the acquisition of respondent Simplicio Berdon were also obtained, to wit: Exhibit ‘H’ which is a
Deed of Absolute Sale of a parcel of land in favor of
respondents-spouses Berdon for a consideration of P3,700.00
executed on July 19, 1967; Exh. ‘I’ is a
contract to sell by installments of a parcel of land of the Singson
Village Subdivision, Cebu City, in favor of
respondent Simplicio Berdon
for a monthly installment of P107.00, more or less, and with a total
consideration of P9,000.00; Exh. ‘J’ is a Deed of
Absolute Sale of a parcel of agricultural land dated September 6, 1967
also in favor of respondent Simplicio Berdon for a consideration of P3,000.00;
Exh. ‘K’ is another Deed of Absolute Sale of a parcel
of land situated in Cebu City, containing an area of 623 square meters in favor of
respondent Simplicio Berdon
for the sum of P15,825.00 executed on 
November 9, 1967; Exh. ‘L’ is a Deed of Sale
With Right to Repurchase within a period of 5 years of a parcel of agricultural
land situated at Managasa, Borbon,
Cebu executed by Fidel Sepulveda in favor of
respondent Simplicio Berdon
on November 27, 1967 for a consideration of P5,000.00; Exh.
‘M’ is another Deed of Sale with Right to Repurchase within the period of three
(3) years of a parcel of agricultural land also situated at Managasa, Borbon, Cebu, executed by Felicidad S. Quiachon on December 7, 1967 in favor of respondent Simplicio Berdon for
a consideration of P3,000.00; Exh. ‘N-1’ is a Deed of
Absolute Sale of a parcel of agricultural
land situated in Managasa, Borbon,
Cebu, executed by Elias M. Dosdos
on December 17, 1967 in favor of respondent  Simplicio Berdon for the sum of P25,000.00; Exh. ‘Y’ is a Deed of Sale with Right to Repurchase executed by Felicidad S. Guiachon on July 4,
1968 in favor of respondent Simplicio Berdon for a sum of P5,000.00; Exh.
‘P’ in another Deed of Sale with Right to Repurchase executed by Fidel
Sepulveda on November 8, 1968 in
favor of Simplicio Berdon
for the sum of P10,000.00 and Exh. ‘0’ refer to a Deed of Absolute Sale dated November 18, 1969 of a parcel of land situated at Bogo, Cebu in favor of respondent Simplicio
Berdon; Exh. ‘S’ refer to a
Deed of Extrajudicial partition of a parcel of land acquired by respondent Luis
Berdon for a consideration of P1,000.00.  This parcel of land is included since the
respondent Luis Berdon had no known source of income
and this land must have been purchased by the respondent Simplicio
Berdon but under the name of respondent Berdon; and Exh. ‘R’ is a
Declaration of Real Property, a residential house of strong materials owned by
respondent Simplicio Berdon
with an assessed value of P34,480.00. 
An analysis and evaluation of respondent Simplicio
Berdon’s financial condition, income, assets and
liabilities reflectd in Exhs.
‘C’, ‘D’, ‘E’, ‘F’, and ‘G’ from 1962 to 1969 show an unexplained total income
of P105,495.92.  Not included in the
computation is the sum of P1,000.00 which was the consideration of the parcel
of land purchased in the name of respondent Luis Berdon,
so that the total unexplained
income of respondent Simplicio Berdon
for the years 1962 to 1969 it P109,495.92. 
The total amounts paid by respondents spouses in the several real
properties purchased and/or constructed by them amounts to P101,305.00 as shown
in Exhs. ‘H’, ‘I’, ‘J’, ‘K’, ‘L’, ‘M’, ‘N-1’, ‘O’,
and ‘P’, ‘Q’, and ‘R’ plus the aforementioned sum of P1,000.00 purchased for a parcel of land in the name of
Luis Berdon (Exhs.
‘S’).  Since the money used to purchase
those real properties came from an unexplained income these properties should
be forfeited in favor of the state.

The evidence for the respondents as testified to by respondents
spouses Simplicio Berdon
and Gaudiosa Mangubat Berdon is as follows:

Respondent Mrs. Berdon is employed as a pharmacist at the Danao General Hospital
(Exh. ‘4’). 
Her parents who have
several landholdings in the municipality
of Borbon,
Cebu (Exh.
‘9’) extended to respondents spouses a loan in the sum of P5,000.00 (Exh. ’10-A’) to buy the house and lot in Danao City.  Aside from this amount respondents spouses
were given by Mrs. Berdon’s mother the sum of P3,000.00 to repair said house
which was already very dilapidated. 
Respondents deny having owned a moviehouse in Bago, Cebu.  Moreover, Mrs. Romualda
Mangubat, respondent Mrs. Berdon’
mother, owns the moviehouse.

Respondent Simplicio Berdon
testified that he started in the government service as construction foreman in
the year 1955.  Since then he has been in the government
service and rose from the ranks when he was
promoted to the position of Assistant Staff Civil Engineer in the
Ministry of Public Highways, Region 7. 
Aside from respondents spouses’ income as government employees they have
also other income, and for which they have paid taxes thereon under
Presidential Decree 370 (Exhs. ’12’ and ’12-A’) and
Presidential Decree 631 (Exhs. ‘13′ &
’13-A’).  In respondents-spouses’
statement of assets and liabilities as of December 31, 1967, the P20,000.00 disbursed as insurance
premiums was erroneous.  This amount
represents the face value of the insurance policy of respondent Simplicio Berdon (Exh. ’15’). 
Insurance premiums should have been only P427.66 semi-annually (Exh. ’15-A’).  The
respondent Simplicio Berdon
also denied petitioner’s allegation that the purchase price of the parcel of
land he bought from a certain Elias Dosdos was
P45,000.00.  The truth is that he paid
only P25,000.00 as shown in Exhs. ’16’ &
’16-A’.  The residential house of
respondents spouses situated in Lahug, Cebu City,
actually costs about P25,000.00 as shown in the building permit of said house (Exhs. ’17’ and ’17-A’) and respondents spouses were able to
obtain a real estate loan of P14,000.00 from the GSIS to finance the
construction of said building (Exhs. ’18’ &
’19’).  Sometime on November 7, 1967, the respondent Simplicio Berdon obtained a
personal loan from former Congressman Ramon Durano in
the sum of P100,000.00 under a Memorandum of Agreement (Exhs.
‘20′) which amount he used to purchase the several parcels of agricultural
lands in 1967 and 1968.  The marriage
contract of the respondents spouses marked Exh. ‘21′
showed that Congressman and Mrs. Durano stood as
sponsors of the wedding of respondents spouses. 
Defendants spouses had also obtained a loan from the Development Bank of
the Philippines
(Exh. ’22’) which they used to purchase the lot in Bogo, Cebu
containing an area of 359 sq. m. (Exh. ‘23′)
mentioned in petitioner’s Exh. ‘O’.

Respondent Luis Berdon was not
presented.  However, Exhibit ‘11′ which is
a medical certificate issued by the municipal health officer of Borbon, Cebu was presented to
show that the general physical condition of the respondent Luis Berdon cannot sustain long distance land travel.  Exhs. ‘5′ and ‘9’
were also presented showing that the respondent Luis Berdon
is a retired school teacher and a declared owner of several parcels of land
situated in Borbon, Cebu,
respectively.  (pp. 67-76, Record on
Appeal).

[IAC Decision, pp. 3-7; Rollo, pp. 34-38.]

On the basis of the aforesaid evidence, the trial court dismissed
the petition, holding that respondents have no unexplained wealth.

The Republic appealed the
trial court’s decision to the Intermediate Appellate Court.  The appellate court, finding no reversible
error in the decision appealed from, affirmed said decision.  Said court found that, on the basis of the
evidence presented, “the assets acquired by the respondent-spouses in excess of their income and receipts from their employment in the Government
were satisfactorily explained, thus justifying the conclusion of the trial
court that respondent-spouses do not have unexplained wealth subject to
forfeiture under Republic Act 1379.” [IAC Decision, p. 7; Rollo, p. 38.]

Hence, the instant
recourse by the Republic to this Court through a petition to review the
appellate court’s decision.

Republic Act No. 1379,
entitled “An Act Declaring Forfeiture in Favor of the State of Any Property Found to Have Been Unlawfully Acquired By Any
Public Officer or Employee and Providing for the Procedure Thereof,”
provides inter alia:

Sec.  2.  Filing of petition.  – Whenever any public officer or employee has
acquired during his incumbency an amount of property which is manifestly out of
proportion to his salary as such public officer or employee and to his other
lawful income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired. . . .

*   *           *

Sec. 6.  Judgment.  – If the respondent is unable to show to the
satisfaction of the court that he has lawfully acquired the property in
question, then the court shall declare such property, forfeited in favor of the
State, and by virtue of such judgment the
property aforesaid shall become property of the State: Provided, That no
judgment shall be released
within six months before any
general election or within three months
before any special election.  The Court
may, in addition, refer this case to the corresponding Executive Department for
administrative or criminal action, or both.

*   *           *

Clear from these provisions is that the law creates presumption against the public
officer or employee who acquires property grossly disproportionate to his
income, i.e. that the property was unlawfully acquired.  However, this presumption is juris tantum.  It may be rebutted by the public officer or employee by showing to the satisfaction of the court that his acquisition of the
property was lawful.

In the instant case, both
the trial and the appellate courts had found satisfactory the
private respondents’ explanation of their acquisition of the properties and
consequently held that they do not have any unexplained wealth as contemplated
by the law.

The Solicitor General
contends that the findings of the appellate court are not supported by the
evidence and, hence, should not bind the Court. 
The Court finds the contention unmeritorious, as the evidence indeed
obviates a finding of unexplained
wealth.

The Court has carefully gone over the evidence presented
by private respondents, and like the trial court and the intermediate Appellate
Court, finds the acquisition of the subject properties satisfactorily
explained.

While respondent spouses had acquired properties and constructed
a house the costs of which were disproportionate to their combined incomes from
their employment in the government, it had been proved that such were financed
through a donation and loans, to wit:

(1)     a P3,000.00 donation
and a P5,000.00 loan from the parents of Mrs. Berdon,
who owned several parcels of land and a moviehouse
[TSN, October 3, 1979, pp.
11-17; Exh. “9”];

(2)     a P14,000.00 loan from
the Government Service Insurance System (Exh.
“18” and “19”];

(3)     a P6,000.00 loan from the Development
Bank of the Philippines
[TSN, November 21, 1979,
pp. 21-22; Exh. “22” and “23”];
and,

(4)     a P1.00,000.00 loan
from Congressman Ramon Durano, a wedding sponsor of
respondent spouses [TSN, November 20,
1979, pp. 18-19; Exh. “21”],
for the purchase of agricultural land to be planted with sugarcane (although
only a total amount of
approximately P60,000.00 was  actually
released).  [TSN, November 21, 1979, pp. 17-19; Exh. “20”].

The Solicitor General also makes much of the fact that the
statements of assets and liabilities filed by private Simplicio
Berdon covering the years material to the case did
not accurately reflect the donation and the loans granted to private respondent spouses and that Simplicio’s
testimony in effect contradicts the entries in said statements.  It must be emphasized, however, that in
determining whether or not there is unexplained wealth within the purview of
R.A. No. 1379 the courts are not bound by the statements of assets and
liabilities filed by the respondent.* On the
contrary, this statute affords the respondent every opportunity to explain, to
the satisfaction of the court, how he had acquired the property in question
[Sec. 5, R.A. No. 1379.]

In sum, the presumption under Sec. 2 of R.A. No.
1379 that the subject properties were unlawfully acquired had been successfully
rebutted by private respondents through competent evidence.  Hence, the Intermediate Appellate Court did
not err in affirming the trial court’s decision dismissing the Republic’s
petition.

WHEREFORE, no reversible error having been committed by the Intermediate Appellate Court,
the instant petition is hereby DENIED and its decision dated March 31, 1986 is AFFIRMED.

SO ORDERED.

Fernan, C.J., and Feliciano, J., concur.

Gutierrez, Jr., no part.

Bidin, JJ., no part, participated in the appealed decision of the Court of Appeals.

* The accuracy of entries in
statements of assets and liabilities becomes material in criminal or
administrative proceedings for violation of Sec. 7 of R.A. No. 3019, as amended (the “Anti-Graft and
Corrupt Practices Act”), which requires every public officer to file a
“true, detailed and” sworn statement of assets and liabilities,
including a statement of the amounts and sources of his income, the amounts of
his personal and family expenses and the amount of, income taxes paid for the
next preceeding calendar . year.” [See Sec. 9(b) of R.A., No. 3019, as
amended.]