G.R. No. 116033 - Azarcon vs. Sandiganbayan

Case Summary (G.R. No. 116033)

Facts: distraint, receipt, and subsequent events

The BIR issued a Warrant of Distraint addressed to its Regional Director ordering distraint of goods of delinquent taxpayer Jaime Ancla and a Warrant of Garnishment directed to Alfredo Azarcon to transfer surrendered property. Azarcon received the Warrant and signed a Receipt for Goods Seized (June 17, 1985), which obligated him to preserve and not dispose of the truck without BIR authority. Azarcon later sent a letter (November 21, 1985) attempting to relinquish responsibility after Ancla allegedly removed equipment. The BIR Regional Director replied (May 27, 1986) asserting Azarcon had voluntarily assumed safekeeping obligations and remained responsible. A progress report (June 11, 1986) suggested further action against a third party but instead a letter‑complaint was filed (January 22, 1988), and the Ombudsman authorized preliminary investigation in August 1988.

Procedural history before the Sandiganbayan

An Information was filed on January 12, 1990 charging Azarcon and Ancla with malversation of public funds or property (Art. 217 RPC in relation to Art. 222 RPC), alleging Azarcon had become a depository/administrator of distrained property and thus a responsible public officer who misappropriated the truck or its value (P80,831.59). The Sandiganbayan granted reinvestigation (May 22, 1991); prosecution recommended withdrawal but was overruled by the Ombudsman. Motions to dismiss for lack of jurisdiction were denied; trial proceeded; the Sandiganbayan convicted Azarcon on March 8, 1994, and sentenced him to imprisonment, indemnity, fine, disqualification and costs. Azarcon filed a motion for new trial/reconsideration which was denied; he then elevated the case to the Supreme Court.

Core legal issues presented

Whether the Sandiganbayan had jurisdiction over Azarcon, a private individual, charged with malversation of public funds.
Whether Azarcon, by virtue of signing the BIR receipt and acting as a custodian/depositary of distrained property, became a public officer subject to Sandiganbayan jurisdiction.
Ancillary contentions raised below: lack of proof of Ancla’s ownership of the truck; alleged non‑compliance with NIRC procedures for disposition of distrained property; delay and alleged negligence by the BIR in selling distrained property.

Governing jurisdictional rule and its application date

Jurisdiction is determined by statute as of the time the criminal action commenced (the filing of the Information on January 12, 1990). Under P.D. No. 1606 (as amended by P.D. No. 1861 and prior to R.A. No. 7975), the Sandiganbayan’s exclusive original jurisdiction encompassed, inter alia, certain offenses committed by public officers and cases under the Anti‑Graft law; expressly, when private individuals are charged as co‑principals, accomplices or accessories with public officers, they may be tried jointly by the Sandiganbayan. Thus the Sandiganbayan’s jurisdiction over a private individual depended on either (a) the private person being charged jointly with a public officer, or (b) the private person himself qualifying as a public officer.

Jurisdictional analysis and statutory construction

The Supreme Court reiterated the elementary rule that jurisdiction must appear clearly from statute and is not presumed. Applying the statutory framework in force on January 12, 1990, the Court emphasized that P.D. No. 1606 specified only two situations for the Sandiganbayan to try private individuals: where they are charged as co‑principals/accomplices/accessories with public officers or where the private individuals themselves are public officers. Because the Information did not charge Azarcon as a co‑actor with any public officer, the Court analyzed whether Azarcon could be deemed a public officer for jurisdictional purposes.

Definition of public officer under the RPC and application to Azarcon

Article 203 RPC defines public officers for purposes of relevant criminal provisions: a person who takes part in the performance of public functions or performs public duties must have such authority by (a) direct provision of law, (b) popular election, or (c) appointment by competent authority. The Court held that even if signing the BIR receipt commenced participation in an activity related to public functions (safekeeping of distrained property), Azarcon’s status could not be elevated to public officer absent authorization by one of the three constitutionally or statutorily recognized modes. The Court found no direct statutory provision or appointment by a competent authority that converted Azarcon into a public officer.

NIRC constructive distraint provision and its limits

The NIRC provision authorizing constructive distraint (quoted as Section 206 in the decision) permits the BIR to require a taxpayer or any person in possession of property to sign a receipt and obligate preservation of the distrained property. The Court acknowledged the BIR’s authority to require such a receipt but distinguished that administrative authority to secure and preserve distrained goods does not carry with it the power to appoint the private holder as a public officer. The Court stressed that administrative agencies exercise only powers conferred expressly or by necessary implication in their enabling statutes and may not, by administrative act, usurp appointive powers or confer public‑officer status.

Distinguishing authorities relied upon by the prosecution

The Solicitor General invoked U.S. v. Rastrollo (1 Phil. 22, 1901) and analogized the depositary status there to the BIR receipt here. The Court found Rastrollo inapposite: Rastrollo involved a judicial deposit in the context of court jurisdiction and the depositary’s character as an officer flowed from the judicial act; here, the act was administrative (BIR distraint and receipt), and the NIRC did not create public‑officer status by that act. The Court therefore rejected the contention that signing the BIR receipt transformed Azarcon into a public officer.

Interpretation of Article 222 and penal construction

Article 222 RPC makes penal provisions applicable to private individuals who have charge of certain funds or property (including administrators or depositaries of property attached or seized by public authority). The Court highlighted the plain language of Article 222: it subjects such private individuals to the penal provisions of the chapter but does not declare them to

Case Syllabus (G.R. No. 116033)

Case Caption, Decision Authorship and Citation

Reported as 335 Phil. 1202, Third Division, G.R. No. 116033, decided February 26, 1997.
Title of the case as presented in the source: "ALFREDO L. AZARCON, PETITIONER, VS. SANDIGANBAYAN, PEOPLE OF THE PHILIPPINES AND JOSE C. BATAUSA, RESPONDENTS."
Decision authored by Justice Panganiban.
Final disposition by the Supreme Court set aside and declared null and void the Sandiganbayan Decision and Resolution for lack of jurisdiction; concurrence by Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ.

Core Legal Questions Presented

Whether the Sandiganbayan had jurisdiction over a private individual (Alfredo L. Azarcon) charged with malversation of public funds as a principal after being designated by the Bureau of Internal Revenue (BIR) as a custodian (depositary) of distrained property.
Whether the designation by the BIR of a private individual as custodian/depositary of distrained property converts that individual into a public officer, thereby bringing him within the Sandiganbayan’s jurisdiction.

Factual Background — Parties and Business Relations

Petitioner Alfredo Azarcon owned and operated an earth-moving business hauling "dirt and ore."
Azarcon supplied services to Paper Industries Corporation of the Philippines (PICOP) at its Mangagoy, Surigao del Sur concession.
Petitioner occasionally engaged subcontractors, including Jaime Ancla, whose trucks were left on petitioner’s premises.

Factual Background — BIR Distrain, Receipt, Possession and Loss

On May 25, 1983, the Main Office of the Bureau of Internal Revenue issued a Warrant of Distraint of Personal Property addressed to the Regional Director (Jose C. Batausa), Revenue Region 10, Butuan City, commanding distraint of goods belonging to taxpayer and delinquent taxpayer Jaime Ancla.
A Warrant of Garnishment was issued to Alfredo Azarcon directing him to transfer, surrender, transmit and/or remit to BIR the property in his possession owned by taxpayer Ancla; the Warrant of Garnishment was received by Azarcon on June 17, 1985.
Azarcon signed a "Receipt for Goods, Articles, and Things Seized Under Authority of the National Internal Revenue," acknowledging receipt of an Isuzu dump truck (motor and chassis numbers and vehicle details reproduced in the receipt) seized and left in his possession pending investigation by the Commissioner or authorized representative.
The signed receipt contained Azarcon’s undertakings: to faithfully keep and protect the seized goods, not to alter, remove, permit removal or dispose of the goods without express authority of the Commissioner, and to produce and deliver the goods on court order or demand by the Commissioner or authorized BIR officer.
In November 21, 1985, Azarcon wrote to the BIR’s Regional Director (Revenue Region 10 B, Butuan City) stating that Jaime Ancla intended to cease operations and had surreptitiously withdrawn his equipment from Azarcon’s custody (citing that Ancla withdrew equipment in August 1985), and formally informing the BIR of Azarcon’s desire to relinquish responsibilities over the property effective immediately.
Azarcon reported the taking of the truck to PICOP security manager Delfin Panelo and requested prevention of its removal; the truck had already been taken by the time the order to bar its exit was given.
Regional Director Jose C. Batausa responded by letter dated May 27, 1986, concluding Azarcon voluntarily assumed liabilities of safekeeping and preserving the unit on behalf of the BIR per the signed Warrant of Garnishment and receipt, and that Azarcon’s failure to observe those provisions did not relieve him of responsibility.

Investigation and Administrative Correspondence

On June 11, 1986, Marilyn T. Calo, Revenue Document Processor, sent a progress report to the Chief of the Collection Branch reporting the surreptitious taking of the dump truck and that Ancla was renting out the truck to a contractor named Oscar Cueva at PICOP; she suggested reissuing a warrant of garnishment against Cueva for rental proceeds if report true.
Instead of pursuing garnishment against Cueva, Director Batausa filed a letter-complaint against Azarcon and Ancla on January 22, 1988, more than one year after Mrs. Calo’s report.

Commencement of Criminal Proceedings and Preliminary Investigation

Provincial Fiscal Pretextato Montenegro forwarded the records of the complaint to the Office of the Tanodbayan on May 18, 1988.
A Tanodbayan prosecutor was deputized; preliminary investigation authority was granted on August 22, 1988 in a letter by Special Prosecutor Raul Gonzales approved by Ombudsman (Tanodbayan) Conrado Vasquez.

Information, Charges and Pleadings Before the Sandiganbayan

On January 12, 1990, Special Prosecution Officer Victor Pascual filed an Information charging Alfredo Azarcon and co-accused Jaime Ancla with malversation of public funds or property under Article 217 in relation to Article 222 of the Revised Penal Code.
The Information alleged that on or about June 17, 1985, Azarcon, a private individual but designated as depository/administrator of property seized or deposited by the BIR and authorized as such, became a responsible and accountable officer; that the seized Isuzu dump truck represented an unsatisfied tax liability of P80,831.59 of Jaime Ancla; and that Azarcon, with Ancla, wilfully, unlawfully and feloniously misappropriated, misapplied and converted the vehicle or its value to personal use, to the damage and prejudice of the government in the said amount.
The Information characterized Azarcon as having "become a responsible and accountable officer" and alleged malversation with conspiracy and grave abuse of confidence.

Motions, Reinvestigation, and Trial Proceedings

Petitioner moved for reinvestigation on May 14, 1991 asserting non-appearance at preliminary investigation and that he was not a public officer; the Sandiganbayan granted the motion for reinvestigation on May 22, 1991.
After reinvestigation, Special Prosecution Officer Roger Berbano, Sr. recommended withdrawal of the Information, but the Ombudsman overruled that recommendation.
Petitioner filed a motion to dismiss on March 25, 1992, arguing lack of Sandiganbayan jurisdiction because he was not a public officer; the Sandiganbayan denied the motion on May 18, 1992.
The prosecution rested its case; petitioner filed a motion for leave to file demurrer to evidence which was denied on November 16, 1992 as without merit.
Petitioner presented his evidence and finished presenting on February 15, 1993.

Sandiganbayan Decision and Penalties Imposed

On March 8, 1994, the Sandiganbayan (Second Division, composed of J. Narciso