Title
Ocampo III vs. People
Case
G.R. No. 156547-51
Decision Date
Feb 4, 2008
Tarlac governor Ocampo and LTFI director Flores were acquitted of malversation as NALGU funds, loaned to LTFI, became private; MOA was ratified by Sangguniang Panlalawigan.

Case Digest (G.R. No. 156547-51)
Expanded Legal Reasoning Model

Facts:

  • Background and Context
    • During President Corazon C. Aquino’s incumbency, Tarlac was selected as one of four test provinces for the decentralization of local government administration.
    • The Department of Budget and Management (DBM) released National Aid for Local Government Units (NALGU) funds totaling P100 million to the Province of Tarlac.
    • The NALGU funds, earmarked in the General Appropriations Act, were intended to assist local government projects and services, and the distribution of the funds was entirely vested in the DBM Secretary.
  • The Transaction and the Memorandum of Agreement (MOA)
    • Petitioner Mariano Un Ocampo III, who served as Governor of Tarlac (February 22, 1988 – June 30, 1992), facilitated the loan of P56.6 million out of the P100 million NALGU funds to the Lingkod Tarlac Foundation, Inc. (LTFI).
    • The MOA, dated August 8, 1988, was entered into between:
      • The Province of Tarlac, represented by petitioner Ocampo.
      • LTFI, represented by petitioner Andres S. Flores, who acted as its executive director.
    • Notably, petitioner Ocampo had resigned as chairperson and trustee of LTFI before the MOA was executed, raising concerns regarding his authority to act on behalf of the Foundation.
  • Series of Criminal Cases and Proceedings
    • The misuse of funds became the subject of 25 separate criminal cases concerning the disbursement, track, and utilization of the funds.
    • Key developments in the litigation included:
      • Quashing of 19 of the 25 Informations by the Supreme Court in an earlier resolution (G.R. Nos. 103754-78, October 22, 1992).
      • Dismissals on demurrer to evidence and other grounds by various divisions of the Sandiganbayan.
      • Two remaining cases, Crim. Case Nos. 16794 and 16795, were consolidated and became the subject matter of these petitions.
  • Allegations of Malversation of Public Funds
    • In Crim. Case No. 16794:
      • It was alleged that, between November 2, 1988, and February 27, 1989, petitioner Ocampo (then Governor and President-Chairman of the LTFI Board of Trustees) received over P52 million from NALGU funds.
      • Out of this amount, P8,860,000 was utilized for the payment related to the importation of Juki embroidery machines. A discrepancy arose when a balance of P1,180,463.48—which should have been returned—was instead misapplied, allegedly in connivance with petitioner Flores and another co-accused.
    • In Crim. Case No. 16795:
      • Petitioner Flores, on April 28, 1989, as LTFI’s executive officer, authorized the withdrawal of P58,000 from a designated LTFI bank account.
      • This withdrawal, part of the total released funds, was allegedly misappropriated, leading to charges of malversation.
  • Evidentiary Trail and Audit Findings
    • The prosecution’s evidence largely depended on a detailed audit conducted by the Commission on Audit covering the period from July 1, 1988, to December 31, 1989.
    • The audit and accompanying documentary evidence established a comprehensive money trail:
      • The initial release of funds (P11.5 million) to LTFI and subsequent deposit in a Rural Bank account.
      • Successive withdrawals traced to the payment for the embroidery machines, including deposits, transfers to personal accounts, and the final withdrawal of P58,000.
    • The discrepancies between the amount shown in LTFI’s books and the funds used for the letter of credit (LC) for payment formed the basis of the alleged malversation.
  • Defense and Additional Documentary Evidence
    • Petitioner Ocampo contended that, as Governor, he ensured that proper safeguards were in place for the handling of NALGU funds and that his resignation from LTFI relieved him of operational accountability thereafter.
    • Petitioner Flores asserted that the funds were released as part of a loan transaction pursuant to the MOA, thereby transferring their ownership from the Province to LTFI.
    • Several documents were submitted to evidence that LTFI’s obligations were effectively extinguished:
      • The Tripartite Memorandum of Agreement (TMOA) with BUILD Foundation transferring a P40 million liability.
      • Sangguniang Panlalawigan Resolutions (Nos. 76 and 199) ratifying transactions and authorizing subsequent agreements, including a Deed of Assignment which transferred additional obligations.
  • Administrative and Legal Issues Concerning the MOA
    • A central issue was whether the MOA binding the Province of Tarlac was valid given that petitioner Ocampo did not secure prior approval from the Sangguniang Panlalawigan as mandated by the Local Government Code of 1983.
    • The question of whether the MOA was void or merely unenforceable (and later ratifiable) arose, implicating principles of agency, contract law, and the transfer of ownership in loans.

Issues:

  • Guilt for Malversation of Public Funds
    • Whether petitioners Ocampo and Flores are guilty of malversation of public funds under Articles 217 and 220, respectively, of the Revised Penal Code.
    • Whether the elements of malversation—including custody/control of public funds and accountability—were satisfied given that the funds were allegedly loaned to LTFI, thereby transferring their character from public to private.
  • Validity and Binding Effect of the MOA
    • Whether the MOA is void or unenforceable because petitioner Ocampo entered into the agreement without securing the requisite authority from the Sangguniang Panlalawigan under the Local Government Code of 1983.
    • Whether subsequent acts and resolutions (such as the TMOA and Sangguniang Panlalawigan Resolutions Nos. 76 and 199) amounted to an implied ratification of the MOA, thereby sensitizing its contractual effect on the Province of Tarlac.
  • Interpretation of the Loan Transaction
    • Whether, by virtue of the loan transaction contained in the MOA, the public funds lost their inherent public nature and became private funds owned by LTFI.
    • Whether the transfer of ownership under the contract of loan absolves petitioner Ocampo from the duty to safeguard the funds, hence negating his criminal liability for malversation.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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