Title
Panganiban vs. People
Case
G.R. No. 211543
Decision Date
Dec 9, 2015
Mayor Panganiban acquitted of malversation; SC ruled he lacked custody of funds, acted in good faith, and fully liquidated cash advance via COA-sanctioned salary deductions.

Case Summary (G.R. No. 211543)

Key Dates and Procedural History

May 2006: Php500,000 cash advance granted to petitioner for planned official travel to Adelaide, Australia (scheduled 9 June–9 July 2006). 15 August 2006: COA demand letter for liquidation. 19 November 2007: Deputy Ombudsman issued resolution finding probable cause for malversation. 22 November 2007: Php256,318.45 deducted from petitioner’s terminal leave pay (DV No. 100‑2007‑11‑1152). 26 June 2009: Arraignment (not guilty plea). 18 November 2013: Sandiganbayan conviction for malversation (assessed sentence and perpetual special disqualification). 9 December 2015: Supreme Court decision reversing and acquitting petitioner (final disposition set out below). Applicable constitutional baseline: 1987 Constitution.

Factual Background

Petitioner received a Php500,000 cash advance, evidenced by a disbursement voucher, obligation slip, duplicate check, and promissory note, as an alleged travel advance for an official study trip that ultimately did not occur. Petitioner instructed the municipal accountant to withhold his salary to liquidate the advance; salary deductions began in July 2006. COA auditors discovered an unliquidated balance reported as Php463,931.78 as of 31 August 2006, which was subsequently reduced to Php256,318.45 by the end of petitioner’s term in June 2007. That remaining balance was deducted from petitioner’s terminal leave pay and recorded by DV dated 22 November 2007. A warrant of arrest issued in February 2008 and charges for malversation ensued; an amended information alleged conversion/misappropriation of Php463,931.78.

Trial Record and Evidence

Prosecution witnesses included the municipal accountant, COA auditors, the OIC municipal treasurer, and a municipal clerk. Prosecution exhibits included the disbursement voucher, obligation slip, duplicate check, travel documents, COA demand letter, and COA reports on unliquidated advances. Defense witnesses included the municipal accountant and COA State Auditor Tria; defense exhibits included municipal subsidiary ledgers, petitioner’s leave and terminal leave documents, DV evidencing the terminal leave deduction, a 9 November 2007 certification confirming deduction from terminal leave pay, and a 9 July 2009 certification clearing petitioner of money and property accountabilities.

Charge and Legal Issues Presented

Petitioner was charged with malversation under Article 217 of the Revised Penal Code for allegedly taking, misappropriating, and converting public funds (originally Php500,000; amended information specified Php463,931.78). Central legal issues: whether petitioner, as mayor, had custody or control of public funds “by reason of the duties of his office” and therefore whether he committed appropriation/misappropriation under Art. 217; whether documentary and testimonial proof established the requisite criminal element of appropriation; whether the manner and timing of liquidation, restitution and the COA‑approved practice of salary deduction negated criminal liability; and whether, if convicted, the indeterminate sentence was properly imposed.

Governing Law and Administrative Rules

Primary penal provisions quoted and applied were Article 217 (malversation) and Article 218 (failure of accountable officer to render accounts) of the Revised Penal Code. COA Circular No. 96‑004 (April 19, 1996) on liquidation of cash advances—particularly the 60‑day liquidation rule, suspension of salary for non‑compliance and the directives for refund where travel is cancelled—figured in the factual and legal analysis. The Indeterminate Sentence Law was noted in relation to sentencing. The 1987 Constitution served as the constitutional backdrop for adjudication.

Court’s Analysis on the Elements of Malversation

The Court accepted that petitioner was a public officer but held that the Sandiganbayan erred in finding the remaining essential elements of Art. 217. The Court emphasized that custody or control “by reason of the duties of his office” implies a role akin to treasurer, cashier, collector, property officer, or other officer charged with taking public money from the public and temporarily keeping it until proper deposit or endorsement to accountable officers—roles not shown to have been performed by petitioner. The cash advance here was documentary evidence of a properly issued loan/advance to petitioner, not evidence that petitioner held custodial responsibility for public funds in the statutory sense required for malversation.

Liquidation, COA Practice, and Good Faith

The Court gave weight to the consistent documentary trail and the testimony that petitioner had an agreement with the municipal accountant to liquidate the advance by salary deductions, a practice the COA auditors treated as allowable in similar municipal cases. Tria’s testimony confirmed that the COA regional office had been informed that the balance was paid in full by terminal leave deduction and indicated that installment/adjustment arrangements had been encountered and respected in practice. The Court relied on this practice, the actual salary and terminal leave deductions, and the completed liquidation to find that petitioner acted under a lawful mechanism to settle his obligation. That liquidation and the surrounding circumstances were held to support petitioner’s claim of good faith and to negate the criminal intent component required for malversation.

Distinction Between Malversation and Failure to Render Accounts

The Court observed that the Office of the Deputy Ombudsman originally charged petitioner with malversation notwithstanding that the funds in question were advances and that the facts—proper issuance of the advance and subsequent liquidation—made a failure‑to‑render‑accounts charge under Art. 218 more appropriate had there been any irregularity. Even on the theory of

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