G.R. No. 144047 - Morales vs. People

The case involves the petitioners Eulogio Morales, Rosalia Morales, and Wilma Hallare.
They were charged with violating Section 3, paragraph (g) in relation to paragraph (h) of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019, as amended).
The alleged offense took place on or about August 20, 1986 in Olongapo City, where a 1979 Model Gallant car (Sigma) was sold at P4,000.00—well below its assessed/book value of over P16,000.00.
Eulogio Morales, then General Manager of the Olongapo City Water District (OCWD), along with Wilma Hallare, the district’s Finance Officer, is accused of facilitating this transaction in their official capacities.
Petitioner's wife, Rosalia Morales, subsequently became involved when she purchased the car on the same date, which underscored the allegations of direct or indirect pecuniary interest.

Eulogio Morales was the duly appointed General Manager of OCWD at the time of sale.
OCWD was the registered owner of the subject vehicle prior to its sale.
Wilma Hallare held the position of Finance Officer, and Rosalia Morales is identified as the wife of Eulogio Morales.
An issue was raised as to whether the OCWD was a government-owned or controlled corporation.

The trial commenced with petitioners pleading not guilty, supported by counsel de oficio.
Petitioners filed a joint demurrer to evidence on the ground of lack of jurisdiction, arguing that the water district was not subject to the Civil Service Law and that its employees were thus private individuals.

The prosecution presented evidence that included two Deeds of Sale allegedly executed on (or covering) August 20, 1986, October 6, 1986, and additional deeds evidencing the same simulated transaction.
An Operations Audit Report by the Local Utilities Water Administration (LUWA) revealed:

The asset (the car) was sold at a price grossly and manifestly below its net book value.
No attempt was made to get a better price via a proper auction.
Supporting bids—submitted by individuals close to OCWD—were irregular, being dated several months before the sale and lacking sufficient details.
There was no formal board resolution to declare the car unserviceable or to authorize its sale.

Testimonies, including that of an accounting officer, contradicted petitioners’ arguments that the car was already “junk” at the time of sale.

Petitioners argued that the sale was the outcome of a bidding process for what was essentially a junk vehicle, with Hallare winning the bid in a process open since October 1985.
It was contended that a cash receipt evidencing a payment on December 10, 1985 supported the argument that the sale was perfected before the issuance of Resolution No. 03-86, which later prohibited such transactions.
Despite these submissions, discrepancies were noted regarding the execution of multiple deeds of sale, and the evidence pointed to a scheme designed to circumvent the legal restrictions.
The involvement of public officers in both the initial sale and the subsequent transfer to Rosalia Morales underscored the allegation that the petitioners improperly intervened in a transaction involving public funds or property.

A significant issue in the case is whether OCWD, as a water district created pursuant to a special law (Presidential Decree No. 198) and subject to subsequent amendments, qualifies as a government-owned or controlled corporation.
Early jurisprudence (such as Baguio Water District v. Trajano) had classified water district employees under the Civil Service Law, a ruling which was later revisited and reaffirmed in Davao City Water District v. Civil Service Commission despite earlier contradictory decisions (e.g., Metro Iloilo Water District v. NLRC).
The case highlights the manner in which the jurisdiction of the Sandiganbayan to try anti-graft cases is anchored on the classification of the water district and its employees at the time the action was instituted.

Whether the Sandiganbayan had jurisdiction over the petitioners given their positions at OCWD and the classification of the water district as a government-owned or controlled corporation.
The argument raised by petitioners that OCWD was a private corporation, and hence, its employees were not subject to the Civil Service Law and the jurisdiction of the anti-graft court.

Whether the conviction of the petitioners under the Anti-Graft and Corrupt Practices Act violates the constitutional prohibition against ex post facto laws.
Whether the principles of equal protection of the laws have been disregarded, especially in relation to prior similar cases (e.g., People v. Lizaso).

Whether the evidence presented established that the sale of the car was grossly and manifestly disadvantageous to the government.
Whether the existence and execution of multiple deeds of sale and the fact of the financial benefit accruing to the petitioners (through the involvement of Hallare and the subsequent sale to Rosalia Morales) sufficiently constituted a violation of Section 3, paragraphs (g) and (h) of RA 3019.