Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 122166 March 11, 1998

CRESENTE Y. LLORENTE, JR., petitioner,

PANGANIBAN, J.:

In a prosecution for violation of Section 3[e] of the Anti-Graft Law, that is, "causing undue injury to
any party," the government prosecutors must prove "actual" injury to the offended party;
speculative or incidental injury is not sufficient.

The Case

Before us is a petition for review of the Decision promulgated on June 23, 1995 and the Resolution
promulgated on October 12, 1995 of the Sandiganbayan in Criminal Case No. 18343, finding
Cresente Y. Llorente, Jr. guilty as charged.

Llorente, then municipal mayor of Sindangan, Zamboanga del Norte, was charged with violation of
Sec. 3[e] of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act,
under an Information dated October 22, 1992, textually reproduced as follows:1

That in or about and during the period of July, 1990 to October, 1991, or for sometime subsequent
thereto, in the Municipality of Sindangan, Province of Zamboanga del Norte, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused Cresente Y. Llorente, Jr., a
public officer, being then the Mayor of Sindangan, Zamboanga del Norte, in the exercise of his
official and administrative functions, did then and there, willfully, unlawfully and criminally with
evident bad faith refuse to sign and approve the payrolls and vouchers representing the payments
of the salaries and other emoluments of Leticia G. Fuertes, without just valid cause and without due
process of law, thereby causing undue injury to the said Leticia G. Fuertes.

CONTRARY TO LAW.

Duly arraigned on March 29, 1993, petitioner, with the assistance of counsel, entered a plea of
"NOT GUILTY."2 After trial in due course, the Sandiganbayan3 rendered the assailed
Decision, disposing as follows:4

WHEREFORE, judgment is hereby rendered finding accused Mayor Cresente Y. Llorente, Jr.
GUILTY beyond reasonable doubt as principal of the crime of Violation of Section 3(e) of
Republic Act 3019, as amended, and he is hereby sentenced to suffer imprisonment of SIX
(6) YEARS and ONE (1) MONTH, as minimum to SEVEN (7) YEARS, as maximum; to further
suffer perpetual disqualification from public office; and to pay the costs.
Respondent Court denied the subsequent motion for reconsideration in the assailed
Resolution thus:5

WHEREFORE, accused's "Motion for Reconsideration and/or New Trial" is hereby DENIED
for lack of merit. His "Motion for Marking of Additional Exhibits Cum Offer of Documentary
Exhibits in Support of Motion for Reconsideration and/or New Trials' is now rendered moot
and academic.

Hence, this petition.6

The Facts

Version of the Prosecution

As found by Respondent Court, the prosecution's version of the facts of this case is as
follows:7

After appreciating all the evidence on both sides, the following uncontroverted facts may be
gleaned:

1. Accused Mayor Cresente Y. Llorente, Jr., at the time the alleged act was committed, was
the Municipal Mayor of Sindangan, Zamboanga del Norte.

2. Private [C]omplainant, Leticia C. Fuertes, is the duly appointed Assistant Municipal

3. Starting 1986, private complainant was detailed to different offices, as follows:

(a) Municipality of Katipunan, Zamboanga del Norte — from April, 1986 to August, 1987 as
OIC Municipal Treasurer.

(b) Municipality of Roxas, Zamboanga del Norte — from September, 1987 to March, 1988 as
OIC Municipal Treasurer.

(c) Office of the Provincial Treasurer of Zamboanga del Norte — from April, 1988 to May,
1988.

(d) Municipality of Piñan, Zamboanga del Norte — from June, 1988 to June, 1990 as OIC
Municipal Treasurer.

4. In July, 1990, she was returned to her post as Assistant Municipal Treasurer in the town of
Sindangan.

She was not provided with office table and chair nor given any assignment; neither her daily
time record and application for leave acted upon by the municipal treasure per instruction of
accused Mayor (Exh. "G-2"; "G-3").

5. On July 23, 1990, the Sangguniang Bayan of Sindangan, Zamboanga del Norte, presided
by accused Mayor, passed Resolution No. SB-214 (Exh. "3"), vehemently objecting to the
assignment of complainant as Assistant Municipal Treasurer of Sindangan.
6. On March 12, 1991, accused Municipal Mayor received a letter (SB Resolution No. 36)
from the Sangguniang Bayan of the Municipality of Piñan, demanding from the private
complainant return of the amount overpaid to her as salaries (par. 9, p. 2 of Exh. "4" —
counter-affidavit of accused Mayor).

7. On May 22, 1991, private complainant filed a Petition for Mandamus with Damages (Exh.
"E") against the accused Mayor and the Municipality of Sindangan before Branch II,
Regional Trial Court of Sindangan, Zamboanga del Norte docketed as Special Proceedings
No. 45, for the alleged unjustified refusal of Mayor Llorente to sign and/or approve her
payrolls and/or vouchers representing her salaries and other emoluments as follows: (a)
salary for the month of June, 1990 in the amount of P5,452.00 under disbursement voucher
dated September 5, 1990 (Exh. "H"). Although complainant rendered services at the
municipality of Piñan during this period, she could not collect her salary there considering
that as of that month, Piñan had already appointed an Assistant Municipal Treasurer. When
she referred the matter to the Provincial Auditor, she was advised to claim her salary for that
month with her mother agency, the Municipality of Sindangan, [(]p. 12, TSN of August 9,
1994; 10th paragraph of complainant's Supplemental Affidavit marked Exh. "G"); (b) salary
differential for the period from July 1, 1989 to April 30, 1990 in the total amount of P19,480.00
under disbursement voucher dated August, 1990 (Exh. "I"); (c) 13th month pay, cash gift
and clothing allowance under Supplemental Budget No. 5, CY 1990 in the total amount of
P7,275 per disbursement voucher dated December 4, 1990 (Exh. "J"); (d) vacation leave
commutation for the period from October to December 31, 1990 in the total amount of
P16,356.00 per disbursement voucher dated December 3, 1990 (Exh. "K"); (e) RATA for the
months of July, August and September, 1990, January and February, 1991 in the total
amount of P5,900.00 (par. 12 & 16 of Exh. "E"); and (f) salaries for January and February,
1991 in the total amount of P10,904.00 (par. 17 of Exh. "E").

8. Accused Mayor did not file an answer; instead, he negotiated for an amicable settlement
of the case (p. 24, TSN of August 10, 1994). Indeed, a Compromise Agreement (Exh. "A")
dated August 27, 1991, between the accused and private complainant was submitted to and
approved by the court, hereto quoted as follows:

COMPROMISE AGREEMENT

That the parties have agreed, as they hereby agree, to settle this case amicably on the basis
of the following terms and conditions, to wit:

(a) That the respondent Mayor Cresente Y. Llorente, Jr. binds himself to sign and/or approve
all vouchers and/or payrolls for unpaid salaries, RATA, Cash-gifts, 13th month pay, clothing
allowance, salary differentials and other emoluments which the petitioner is entitled as
Assistant Municipal Treasurer of Sindangan, Zamboanga del Norte;

(b) That the parties herein hereby waive, renounce and relinquish their other claims and
counter-claims against each other;

(c) That the respondent Mayor Cresente Y. Llorente Jr. binds himself to sign and/or approve
all subsequent vouchers and payrolls of the herein petitioner.

9. On August 27, 1991, a Decision (Exh. "B") was rendered by Judge Wilfredo Ochotorena
on the basis of the aforesaid compromise agreement.
10. For his failure to comply with the terms of the compromise agreement, private
complainant, thru counsel, filed a Motion for Execution on September 12, 1991. A Writ of
Execution (Exh. "C") was issued by the Court on September 17, 1991, and served [on] the
accused on September 23,1991.

11. As shown in the Sheriff's Return dated November 19, 1991 (Exh. "D"), private
complainant was paid her salaries for the period from January, 1991 to August, 1991, while
the rest of her salaries including the RATA and other emoluments were not paid considering
the alleged need of a supplemental budget to be enacted by the Sangguniang Bayan of
Sindangan per verbal allegation of the municipal treasurer.

12. Complainant was not also paid her salaries from July to December 1990; September and
October, 1991; RATA for the period from July 1990 to June 1994 (admission of accused, pp.
8-9, TSN of June 27, 1994, a.m.; Exh. "E"; p. 17, TSN of June 27, 1994).

13. Sometime in 1993, accused municipal mayor received from the Municipality of Piñan, Bill
No. 93-08 (Exh. "1"), demanding from the Municipality of Sindangan settlement of
overpayment to complainant Fuertes in the amount of P50,643.93 per SE Resolution No. 6
sent on July 23, 1990. The bill was settled by the Municipality of Sindangan in December,
1993 per Disbursement Voucher No. 101-9312487 dated December 2, 1993 (Exh. "2").

14. Private complainant was able to receive complete payment of her claims only on
January 4, 1993 in the form of checks all dated December 29, 1992 (as appearing on Exhs.
"H", "I", "J", "K" of the prosecution, Exhs. "6", "7", "8", of the defense) except her RATA
which was given to her only on July 25, 1994, covering the period from July 1990 to
December, 1993 amounting to P55,104.00, as evidenced by Disbursement Voucher dated
July 25, 1994 (Exh. "5").

Version of the Defense

While admitting some delays in the payment of the complainant's claims, petitioner sought
to prove the defense of good faith — that the withholding of payment was due to her failure
to submit the required money and property clearance and to the Sangguniang Bayan's
delayed enactment of a supplemental budget to cover the claims. He adds that such delays
did not result in "undue injury" to complainant. In his memorandum, petitioner restates the
facts as follows:8

1. Complainant . . . was appointed assistant municipal treasurer of Sindangan, Zamboanga

2. As complainant had been working in municipalities and offices other than in Sindangan
for more than four (4) years, her name was removed from the regular payroll of Sindangan,
and payment of past salaries and other emoluments had to be done by vouchers. When
complainant . . . presented her vouchers to petitioner, the latter required her to submit
clearances from the different offices to which she was detailed, as well as a certificate of
last payment as required by COA regulations (Tsn, p. 11, Aug. 10, 1994). Instead of
submitting the required documents, Mrs. Fuertes said that "what I did, endorsed my
voucher to the mayor through the municipal treasurer" (Tsn, p. 13, June 27, 1994). The
municipal treasurer could not, however, process the vouchers and certify as to the
availability of funds until after the Sangguniang Bayan had passed a supplemental budget
for the purpose (Exhs. D and 6-c Motion), which came only in December 1992.

3. Petitioner, in the meanwhile, received on March 12, 1991 SB Resolution No. 36 from the
Municipality of Piñan, demanding from Mrs. . . . Fuertes the reimbursement of P105,915.00,
and because of this demand, he needed time to verify the matter before acting on Mrs.
Fuertes' claims (Exh. 4). Mrs. Fuertes admitted that she had at the time problems of
accountability with the Municipality of Pinan. She testified.

Q. Counsel now is asking you, when you went back to Sindangan there was [sic] still
problems of the claims either against you or against the Municipality of Sindangan by the
municipalities had, [sic] in their minds, overpaid you?

A. Yes, your Honor, that was evidence[d] by the bill of the Municipality of Pinan to the
Municipality of Sindangan. (Tsn, p. 18, Aug. 3, 1994).

4. Petitioner also stated that he could not act on complainant's claims because she had not
submitted the required money and property accountability clearance from Pinan (Tsn, 11,
Aug. 10, 1994) and that at the time the Sangguniang Bayan had not appropriated funds for
the purpose. (Tsn, pp. 18, 30, 42-43, Aug. 10, 1994). Nonetheless, petitioner included Mrs.
Fuertes' name in the regular annual budget beginning 1991 (Exhs. 4-b, 4-d, 4-f), as a result of
which she had been since then receiving her regular monthly salary.

5. On May 21, 1991, Mrs. Fuertes filed a complaint . . . Petitioner filed his answer to the
complaint, alleging as a defense, that plaintiff did not exhaust administrative remedies.
(Annex B, p. 3, Petition; Exh. 1-Motion). On August 27, 1991, the parties entered into a
compromise agreement, which the trial court approved (Exh. B). . . .

6. Upon motion of counsel for Mrs. Fuertes, the trial court issued a writ of execution of the
compromise judgment. However, the writ of execution was addressed only to petitioner; it
was not served on the municipal Sangguniang Bayan. . . .

Thus, Mrs. Fuertes had been receiving her regular salary from January, 1991 because
petitioner had included her name in the regular budget beginning 1991, which fact
complainant did not dispute. With respect to her other claims for past services in other
offices, Municipal Treasurer; Mrs. Narcisa Caber, informed that a supplemental budget for
such purpose to be passed by the Sangguniang Bayan was necessary before she could be
paid thereof. Being the municipal treasurer, Mrs. Caber knew that without such
supplemental budget, payment of Mrs. Fuertes' other claims could not be made because the
law requires that "disbursements shall be made in accordance with the ordinance
authorizing the annual or supplemental appropriations" (Sec. 346, RA 7160) and that "no
money shall be disbursed unless . . . the local treasurer certifies to the availability of funds
for the purpose." (Sec. 344, RA 7160).

7. Petitioner had instructed the municipal budget officer to prepare the supplemental budget
for payment of complainant's unpaid claims for submission to the Sangguniang [Bayan] for
enactment. (Tsn, pp. 32-33, Aug. 10, 1994). The budget officer, Mr. Narciso Siasico stated as
follows:

1. I am the budget officer for the Municipality of Sindangan, Zamboanga del Norte, a position
I have held since 1981.
 xxx xxx xxx

3. Immediately after said mandamus case was settled through a compromise agreement,
Mayor Llorente instructed me to prepare the necessary budget proposals for the
deliberation and approval of the Sangguniang Bayan;

xxx xxx xxx

8. Instead of waiting for the Sangguniang Bayan to enact the budget or of securing an alias
writ of execution to compel the Sangguniang Bayan to pass the same, Mrs. Fuertes filed a
criminal complaint with the Office of the Ombudsman under date of October 28, 1991,
admitting receipt of her salaries from January 1991 and saying she had not been paid her
other claims in violation of the compromise judgment. (Exh. F). She had thus made the
Office of the Ombudsman a collecting agency to compel payment of the judgment
obligation.

9. While the budget proposal had been prepared and submitted to the Sangguniang Bayan
for action, it took time for the Sangguniang Bayan to pass the supplemental budget and for
the Provincial Board to approve the same. It was only on December 27, 1992 that the
municipal treasurer and the municipal accountant issued a certification of availability of
funds for the purpose. Petitioner approved the vouchers immediately, and in a period of one
week, Mrs. Fuertes was paid all claims, as evidenced by the prosecution's Exhs. H, I, J and K,
which were the four vouchers of Mrs. Fuertes, . . . .

xxx xxx xxx

11. Petitioner testified that he could not immediately sign or approve the vouchers of Mrs.
Fuertes for the following reasons:

a) The Sangguniang Bayan had not appropriated the amounts to pay Mrs. Fuertes. (Tsn, pp.
18, 30, 42-43, Aug. 10, 1994).

b) Municipal Treasurer Caber, to whom Mrs. Fuertes endorsed her vouchers for processing,
and the Municipal Accountant issued the certificate of availability of funds only on
December 27, 1992 (Tsn, p. 42, Aug. 10, 1994; Exhs. H, I, J and K); and the delay in the
issuance of the certificate of availability of funds was due to the delay by the Provincial
Board to approve the supplemental budget. (Tsn, p. 43, Aug. 10, 1994).

[c]) He received on March 12, 1991 a demand from the Municipality of Pinan, Zamboanga del
Norte, where Mrs. Fuertes last worked, for the reimbursement of P105,915.00, and the matter
had to be clarified first. (Exh. 4). Mrs. Fuertes admitted that she had some problem of
accountability with the Municipality of Pinan. (Tsn, p. 18, 1994). It took time before this
matter could be clarified by the Municipality of Pinan reducing its claim to P50,647.093 and
the Municipality of Sindangan paying said claim. (Exh. 2; Decision, p. 9).

[d]) Mrs. Fuertes had not submitted the required clearance from the Municipality of Pinan.
(Tsn, p. 11, Aug. 10, 1994). He did not insist on this requirement after the trial court issued
the writ of execution to implement the compromise judgment. (Tsn, p. 23, Aug. 10, 1994).
Nonetheless, in the post audit of Mrs. Fuertes' accountability, the Commission on Audit
issued a notice of suspension of the amount of P5,452.00 from Mrs. Fuertes for her failure to
submit: "1. Clearance for money & property accountability from former office. 2.
Certification as [sic] last day of service in former office. 3. Certification of last salary
received & issued by the disbursing officer in former office, certified by chief accountant
and verified by resident auditor." (Exh. 2-Motion).

12. The Information dated October 12, 1992 filed against petitioner alleged that petitioner as
mayor did not sign and approve the vouchers of Mrs. Fuertes for payment of her salaries
and other emoluments from July 1, 1990 to October 1991, which caused her undue injury.
However, the prosecution's Exh. "D", the sheriff's return dated November 19, 1991, stated
that Mrs. Fuertes had received her salary from January 1, 1991 "up to the present", which
meant that even before the information was filed, she had been paid her regular salaries
from January 1, 1991 to October 1991. The supplemental budget to cover payment of her
other claims for past services was passed only in December 1992 and the municipal
treasurer and accountant issued the certificate of availability of funds only on December 27,
1992, and Mrs. Fuertes got paid of [sic] all her other claims, including those not claimed in
the Information, within one week therefrom. (Exhs. H, I, J, and K).

xxx xxx xxx

Ruling of the Sandiganbayan

Respondent Court held that the delay or withholding of complainant's salaries and
emoluments was unreasonable and caused complainant undue injury. Being then the sole
breadwinner in their family, the withholding of her salaries caused her difficulties in meeting
her family's financial obligations like paying for the tuition fees of her four children.
Petitioner's defense that complainant failed to attach the required money and property
clearance to her vouchers was held to be an afterthought that was brought about, in the first
place, by his own failure to issue any memorandum requiring its submission. That the
voucher form listed the clearance as one of the requirements for its approval had neither
been brought to complainant's attention nor raised by petitioner as defense in his answer. In
any event, the payment of complainant's salary from January to November 1991, confirmed
by the sheriff's return, showed that the clearance was not an indispensable requirement,
because petitioner could have acted upon or approved the disbursement even without it.
The alleged lack of a supplemental budget was also rejected, because it was petitioner's
duty as municipal mayor to prepare and submit the "executive and supplemental budgets"
under Sections 318, 320, and 444 (3)(ii) of the Local Government Code,9 and the
complainant's claims as assistant municipal treasurer, a permanent position included in the
plantilla for calendar year 1990 and 1991, were classified as "current operating
expenditures" for the same calendar years, which were chargeable against the general
funds of the town of Sindangan. Except for the representation and transportation allowance,
Fuertes' claims for thirteenth month pay, cash gift and clothing allowance were already
covered by Supplemental Budget No. 5 for calendar year 1990. Petitioner's contention that
funds covering complainant's claims were made available only in December 1992 was
unbelievable, considering that an ordinance enacting a supplemental budget takes effect
upon its approval or on the date fixed therein under Sec. 320 of the Local Government Code.

The Sandiganbayan also ruled that the petitioner's evident bad faith was the direct and
proximate cause of Fuertes' undue injury. Complainant's salaries and allowances were
withheld for no valid or justifiable reasons. Such delay was intended to harass complainant,
because petitioner wanted to replace her with his political protege whom he eventually
designated as municipal treasurer, bypassing Fuertes who was next in seniority. Bad faith
was further evidenced by petitioner's instructions to the outgoing municipal treasurer not to
give the complaining witness any work assignment, not to provide her with office table and
chair, not to act on her daily time record and application for leave of absence, instructions
which were confirmed in the municipal treasurer's certification. (Exh. G-2).

The Issues

In his memorandum, petitioner submits the following issues:10

1. Could accused be held liable under Sec. 3(e) of R.A. 3019 "in the discharge of his official
administrative duties", a positive act, when what was imputed to him was failing and
refusing to sign and/or approve the vouchers of Mr[s]. Fuertes on time or by "inaction on his
obligation under the compromise agreement" (ibid., p. 19), a passive act? Did not the act
come under Sec. 3(f) of R.A. 3019, of [sic] which accused was not charged with?

2. Assuming, arguendo, that his failure and refusal to immediately sign and approve the
vouchers of Mrs. Fuertes comes [sic] under Sec. 3(e), the questions are:

(a) Did not the duty to sign and approve the same arise only after the Sangguniang Bayan
had passed an appropriations ordinance, and not before? In other words, was the
non-passage of the appropriation ordinance a justifiable reason for not signing the
vouchers?

(b) Did Mrs. Fuertes suffer undue injury, as the term is understood in Sec. 3(e), she having
been paid all her claims?

(c) Did petitioner not act in good faith in refusing to immediately sign the vouchers and
implement the compromise agreement until the Sangguniang Bayan had enacted the
appropriation ordinance and until Mrs. Fuertes submitted the clearance from the
Municipality of Pinan, Zamboanga del Norte?

Restated, petitioner claims that the prosecution failed to establish the elements of undue
injury and bad faith. Additionally, petitioner submits that a violation of Section 3[e] of RA
3019 cannot be committed through nonfeasance.

The Court's Ruling

The petition is meritorious. After careful review of the evidence on record and thorough
deliberation on the applicable provision of the Anti-Graft Law, the Court agrees with the
solicitor general's assessment that the prosecution failed to establish the elements of the
crime charged.

First Issue: Undue Inquiry

Petitioner was charged with violation of Section 3[e] of R.A. 3019, which states:

Sec. 3. Corrupt practices of public officers