Title
Constantino vs. Sandiganbayan
Case
G.R. No. 140656
Decision Date
Sep 13, 2007
Mayor and private contractor charged under Anti-Graft Act for a lease agreement causing undue injury to the government; contractor acquitted after mayor's death nullified conspiracy claim.
conviction
nullifies orders
private individual

Case Summary (G.R. No. 140656)

Factual Background: The Malungon Heavy Equipment Lease/Purchase Transaction

An Information dated 31 July 1996 charged Constantino, in his capacity as mayor and together with Lindong, with violating Section 3(e) of R.A. No. 3019. The Information alleged that on or about 28 February 1996, in Davao City, Philippines, and within the Sandiganbayan’s jurisdiction, Constantino, a public officer acting in relation to his official functions, entered into a Lease Agreement for the rental of various heavy equipment with Norlovanian Corporation, represented by Lindong, for a six-year period and consideration allegedly contrary to municipal issuances. The Information further alleged that the agreement caused unwarranted benefits to the corporation and undue injury to the government because it allegedly violated the expressed mandates of municipal resolutions, particularly Resolution No. 2, Series of 1995, which implemented Sangguniang Bayan Resolution No. 198, Series of 1995, and Sangguniang Bayan Resolution No. 21 dated 22 February 1996.

The prosecution’s theory was rooted on the municipality’s priority program to acquire a fleet of heavy equipment for development projects, with appropriations intended to amortize a five-year purchase. When two public biddings failed, the Sangguniang Bayan passed Resolution No. 21 on 22 February 1996, authorizing the mayor to enter into a negotiated contract for lease/purchase of the fleet. On 28 February 1996, Constantino executed a lease agreement with Norlovanian Corporation, represented by Lindong, and required the municipality to provide a guaranty deposit. Lindong then appeared before the Sanggunian on the next day. The prosecution asserted that no council member questioned the legality at that time, and that the heavy equipment units were delivered to the municipality on 4 March 1996 and initial payments were made, including the guaranty deposit and rental for periods within March and April 1996.

The prosecution also recounted that on 18 April 1996, the Sanggunian passed Resolution No. 38 requesting the mayor to operate the newly acquired fleet, and the municipality subsequently utilized the equipment. Yet on 23 April 1996, several Sanggunian members and the vice mayor filed a formal complaint against Constantino and Lindong for violation of R.A. No. 3019. On 6 June 1996, the Sanggunian passed Resolution No. 47 urging the municipality to stop unauthorized payments/expenditures relative to the allegedly illegally acquired equipment pool.

Audit Findings and Competing Narratives at Trial

A COA auditor, Nazario B. Tomanan, testified that he was directed by COA Regional Office XI to conduct a special and comprehensive audit. In January 1997, Tomanan submitted an audit report with adverse findings relating to the equipment acquisition. The audit results described the lease/purchase arrangement as disadvantageous to the municipality due to rigid contractual terms required before ownership could be acquired. It also found that Norlovanian Corporation had no proof of ownership because title to the equipment was allegedly in Lindong’s name. It further concluded that the lease/purchase procedure violated Sections 27 and 28 of the Rules and Regulations on Supply and Property Management in Local Governments, and that the procedure was uneconomical, resulting in wastage of P9,658,000.00 of government funds.

Another prosecution witness, Benjamin C. Asgapo, testified that he was present during the 29 February 1996 meeting where Lindong appeared before the Sanggunian. He claimed that the lease contract was never concurred in by the municipal council as required by Resolution No. 21, though he also admitted that no resolution was passed explicitly opposing, objecting to, or rejecting the lease contract. He further testified that when he obtained a copy of the lease contract on 6 March 1996, he did not see an Undertaking executed on 28 February 1996; he obtained it several days later after inquiry with the provincial auditor.

For the defense, Lindong testified as the sole witness. He stated that after negotiations with Constantino and some Sanggunian members, the parties agreed to a lease/purchase scheme consistent with Resolution No. 21. He asserted that the municipality did not have sufficient funds to buy the fleet outright at the alleged total price, so the equipment would be acquired on installment basis with allowance for the corporation to recover incremental cost. Lindong testified that on the same day, 28 February 1996, he and Constantino contemporaneously executed two written instruments: a lease agreement and an undertaking regarding the conveyance of ownership upon full payment. He claimed that these were executed in the presence of Sanggunian members who accompanied the mayor. He also testified that he attended the municipal council meeting on 29 February 1996 to provide a copy and explain the transaction. He argued that while the main agreement was captioned as a “Lease Agreement,” the parties intended it to function as a lease/purchase arrangement through the undertaking’s terms. He further testified that more than two months after delivery, he received certifications: a Certificate of Concurrence dated 9 May 1996 from the committee chair, and a Certification dated 17 May 1996 from the municipal pre-qualification, bids and awards committee.

Sandiganbayan Conviction and the Grounds for Criminal Liability

The Sandiganbayan found both accused guilty beyond reasonable doubt under Section 3(e) of R.A. No. 3019. It imposed: an indeterminate prison sentence of six (6) years and one (1) month as minimum to twelve (12) years and one (1) month as maximum, perpetual disqualification, and joint and several indemnification of the Municipality of Malungon in the amount of P2,177,090.91, representing the amount actually paid to Norlovanian Corporation, with interest at the legal rate from March 6, 1996 until fully paid, plus costs of suit.

The Sandiganbayan’s reasoning distinguished between the accused. It concluded that manifest partiality and evident bad faith were not established as to Constantino. It nevertheless found that Constantino caused undue injury through gross inexcusable negligence. As to Lindong, the Sandiganbayan held him liable as a co-conspirator despite its finding that Constantino’s culpability was negligence only. The Sandiganbayan reasoned that because Section 3(e) is a special law, proof of intent to commit the particular offense was not essential in the same way it would be for crimes under the Revised Penal Code. It concluded that sufficient proof existed that Lindong either allowed or failed to prevent the agreement, which the graft court viewed as contrary to law, thereby making him liable as well.

Procedural History: Appeals, Death of Constantino, and Execution Orders

After the conviction, Constantino and Lindong filed separate appeals. During the pendency of Constantino’s appeal, he died on 25 April 2006. The record described his death as normally rendering his criminal liability extinct under the Revised Penal Code, Article 89 (1), and thus would ordinarily render his petition moot. However, the Supreme Court treated the two petitions as intertwined because Lindong’s conviction depended on Constantino’s criminal liability.

Lindong’s earlier petition for review seeking reversal of the conviction in his own appeal route (G.R. No. 142379) had been dismissed by the Supreme Court on 10 July 2000 for failure to state the material date of receipt of the Sandiganbayan decision, and subsequent motions for reconsideration had failed. The Court issued an Entry of Judgment on 25 July 2001.

After Constantino’s death, Lindong filed G.R. No. 154482, contesting execution. The Sandiganbayan issued orders directing Lindong to appear in person for execution (16 May 2002), denying a motion to defer execution (6 June 2002), and issuing a bench warrant with related directives involving his cash bond (3 July 2002). Lindong alleged these orders were issued with grave abuse of discretion.

The Issues Considered by the Supreme Court

The Supreme Court framed the determinative question as whether Constantino was guilty beyond reasonable doubt of violating Section 3(e) of R.A. No. 3019. It also addressed whether, in light of Constantino’s presumed acquittal or exoneration on the merits, execution of judgment against Lindong should stand notwithstanding Lindong’s earlier technical procedural setbacks.

Ruling in G.R. No. 140656: Denial on the Ground of Mootness and the Effect of Constantino’s Exoneration

In G.R. No. 140656, Constantino assailed his conviction, arguing that the Sandiganbayan erred in holding him liable for entering into a lease agreement rather than a lease/purchase agreement and for allegedly failing to sign an accompanying undertaking. He also asserted that the prosecution evidence was insufficient to overcome the constitutional presumption of innocence. He further contended that the Sandiganbayan disregarded the Supreme Court’s findings in Constantino v. Hon. Ombudsman Desierto.

The Supreme Court reiterated the elements of Section 3(e) of R.A. No. 3019 and the dual modes of commission: (a) causing undue injury, or (b) giving unwarranted benefits, advantage, or preference. It stressed that liability required the presence of manifest partiality, evident bad faith, or gross inexcusable negligence. It treated gross inexcusable negligence as requiring negligence characterized by the want of even slight care, in a duty-bound situation, done willfully and intentionally with conscious indifference to consequences.

While the Sandiganbayan had found no manifest partiality or evident bad faith, it held that Constantino’s conduct amounted to gross inexcusable negligence because he entered into a lease agreement instead of a lease/purchase agreement and allegedly failed to obtain the Sanggunian’s concurrence before executing the agreement. The Supreme Court, however, focused on the prosecution’s

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