EN BANC

[G.R. No. 129064. November 29, 2000.]

JUAN A. RUEDA, JR., petitioner, vs. HONORABLE

SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES ,
respondents.

Benito P. Fabie for petitioner.

The Solicitor General for respondents.

SYNOPSIS

Petitioner Rueda, the Municipal Treasurer of Tigaon, Camarines Sur, was found
guilty of malversation of public funds after auditors found a "cash shortage" of
P107,229.02.

The Supreme Court acquitted the petitioner on appeal after nding that there was
no shortage on petitioner's cash accountability. Evidence of shortage is necessary
before there could be any taking, appropriation conversion, or loss of public funds
that would amount to malversation. Petitioner satisfactorily explained that the
assumed shortage consisted of "vales" or "chits" which municipal employees took
from the municipal collectors even before the collections were turned over to him.
These are not part of his cash accountability. Disbursement vouchers which lacked
supporting papers at the time of the cash audit were also found to be for legitimate
municipal expenses.

SYLLABUS

1. REMEDIAL LAW; APPEAL FROM THE SANDIGANBAYAN TO THE SUPREME

COURT; FACTUAL FINDINGS OF THE SANDIGANBAYAN ARE GENERALLY
CONCLUSIVE ON THE SUPREME COURT; EXCEPTIONS; CASE AT BAR AN
EXCEPTION. Generally, the factual ndings of the Sandiganbayan are conclusive
on the Court. However, there are established exceptions to that rule, such as, sans
preclusion, when (1) the conclusion is a nding grounded entirely on speculation,
surmise and conjecture; (2) the inference made is manifestly an error or founded on
a mistake; (3) there is grave abuse of discretion; (4) the judgment is based on
misapprehension of facts; and (5) the ndings of fact are premised on the absence
of evidence and are contradicted by evidence on record. In these instances, this
Court is bound to review the facts in order to avoid a miscarriage of justice. The
instant case falls within such exceptions. Considering the evidence on record, we
nd that the Sandiganbayan convicted petitioner on probabilities and conjecture,
not on hard facts duly established. We are thus justied to re-examine, as we do,
the evidence.

2. CRIMINAL LAW; REVISED PENAL CODE; ARTICLE 217 THEREOF;

MALVERSATION OF PUBLIC FUNDS OR PROPERTY; ELEMENTS THEREOF. The
elements of malversation, essential for the conviction of an accused, under the
above penal provision are that: (a) the oender is a public ocer; (b) he has the
custody or control of funds or property by reason of the duties of his oce; (c) the
funds or property involved are public funds or property for which he is accountable;
and (d) he has appropriated, taken or misappropriated, or has consented to, or
through abandonment or negligence permitted, the taking by another person of,
such funds or property.

3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. "Concededly, the rst three elements
are present in this case. It is the last element, i.e., whether or not petitioner really
has misappropriated public funds, where the instant petition focuses itself. In
convicting petitioner, the Sandiganbayan cites the presumption in Article 217 of the
Revised Penal Code that the "failure of a public ocer to have duly forthcoming any
public funds with which he is chargeable, upon demand by any duly authorized
ocer, shall be prima facie evidence that he has put such missing funds or property
to personal uses." The presumption is, of course, rebuttable. Accordingly, if the
accused is able to present adequate evidence that can nullify any likelihood that he
had put the funds or property to personal use, then that presumption would be at
an end and the prima facie case is eectively negated. . . . We sustain petitioner's
submissions primarily because he did not take or misappropriate or through
abandonment or negligence, permit any other person to take or malverse public
funds or property in his custody for which he is accountable. He did not put public
funds to his "personal use." He was able to properly explain and account fully for his
cash accountability of public funds upon demand by the auditors. The assumed
"shortage" does not exist and in any event has been restituted in full. CaHAcT

4. EVIDENCE; PROOF BEYOND REASONABLE DOUBT; PROSECUTION MUST RELY

ON THE STRENGTH OF ITS OWN EVIDENCE; CASE AT BAR. In our criminal justice
system, the overriding consideration is not whether the court doubts the innocence
of the accused but whether it entertains a reasonable doubt as to his guilt. This
determinant, with the constitutional presumption of innocence which can be
overthrown only by the strength of the prosecution's own evidence proving guilt
beyond reasonable doubt, irresistibly dictate an exoneration in this case. The
evidence against petitioner is not enough to engender moral certainty of his guilt.
This moral certainty is that which convinces and satises the conscience of those
who are to act upon it.

DECISION

PARDO, J :p
 The Case

The case is an appeal via certiorari from the decision of the Sandiganbayan 1 nding
petitioner Juan A. Rueda, Jr. guilty of malversation of public funds, and sentencing
him to an indeterminate penalty of ten (10) years and one (1) day of prision mayor,
as minimum, to seventeen (17) years, four (4) months and one (1) day of reclusion
temporal, as maximum, to pay a ne of P107,299.02 with subsidiary imprisonment
in case of insolvency, 2 and to suer perpetual disqualication from holding any
public office, and to pay the costs, and resolution 3 denying reconsideration.

The Charge

On April 19, 1991, Special Prosecution Ocer I Gregorio G. Pimentel, Jr., Oce of
the Ombudsman led with the Sandiganbayan an information charging petitioner
Juan A. Rueda, Jr., with malversation of public funds, dened and penalized under
Article 217 of the Revised Penal Code, to wit:

"That on or about the period of February 8, 1989 to September 20, 1989, in

Tigaon, Camarines Sur, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, a public ocer, being then the
Municipal Treasurer of Tigaon, Camarines Sur, and as such was accountable
for all public funds collected and received by him by reason of the duties of
his oce, taking advantage of his ocial position and with grave abuse of
condence, did then and there, willfully, unlawfully and feloniously
misappropriate, embezzle and convert to his own personal use and benet
the total sum of P107,299.02, Philippine Currency, to the damage and
prejudice of the Philippine government in the amount aforesaid." 4

Upon arraignment on November 29, 1991, petitioner entered a plea of not guilty. 5
Trial ensued.

The facts, as found by the Sandiganbayan, 6 are as follows:

At times material hereto, petitioner Rueda was the municipal treasurer of Tigaon,
Camarines Sur. On September 20, 1989, a team of state auditors, headed by
Amparo O. Albeus, conducted an audit examination of the accountabilities of
petitioner Rueda as municipal treasurer of Tigaon, Camarines Sur, covering the
period February 8, 1989 to September 20, 1989. As a result of the audit, it was
assumed that petitioner had a "cash shortage" of P107,299.02 (Exh. "A-2"). The
corresponding report of cash examination was thereafter accomplished. When
confronted therewith, petitioner axed his signature (Exh. "A-1") on the
certication on the dorsal portion of the report to the eect that his accountability
for the funds of the municipal government of Tigaon, Camarines Sur was correctly
stated.

On October 3, 1989, the auditors sent a formal written demand to petitioner Rueda,
requiring him to immediately produce the sum of P107,299.02, representing the
"shortage" on his accountabilities as municipal treasurer of Tigaon, Camarines, Sur,
and to explain in writing within seventy-two (72) hours why the shortage occurred
(Exh. "B"). Notwithstanding receipt of the letter (Exh. "B-1"), petitioner failed to
have the said amount forthcoming or to tender his written explanation why the
shortage occurred.

In his defense, petitioner Rueda disclaimed any criminal liability on the ground that
the assumed "shortage" was the result of unliquidated cash advances made by
several municipal ocials and employees of Tigaon, Camarines Sur, spanning the
period covered by the audit as evidenced by various "chits" or "vales" (Exhs. 11-15),
and expenses of the municipal government of Tigaon as evidenced by several
disbursement vouchers (Exhs. 16, 17, 18, 20, 21, 25, 26, 27, 28, 29 and 30).

Petitioner Rueda declared that the municipal ocials and employees took the cash
advances from the cash collections of the municipal collectors before the cash
collections, in the total amount of P41,234.71, were turned over to him as
municipal treasurer. What they turned over to him were the "chits" and " vales"
evidencing such cash advances. Although he never tolerated the practice and had
verbally warned the municipal ocials and employees from making those cash
advances, they continued to do so. 7

Petitioner Rueda stressed that the cash advances were made with the consent of
the municipal mayor, and had been the practice in the municipality of Tigaon long
before he assumed oce as municipal treasurer. He would later on deduct the cash
advances made from their respective salaries in installment, and after they were
paid, he would turn over the amount to the oce of the municipal treasurer. With
respect to the subject "chits" and "vales," petitioner Rueda declared that after the
same were paid, he turned over the amount to the oce of the municipal treasurer
who then credited those payments as "restitution" of the shortage on his total cash
accountability. 8 Thus, the "debtors" themselves liquidated the cash advances and
petitioner's accountabilities had been fully restituted before the start of the
preliminary investigation in the office of the Ombudsman.

A day before the state auditors from the Commission on Audit conducted an audit
examination of his cash accountabilities, the internal auditors from the provincial
treasurer's oce conducted a similar examination. This group of internal auditors
advised him not to bring the matter about "vales" or cash advances to the COA
audit team because they would only disallow them for lack of supporting
documents. This is the reason why he did not present the disbursement vouchers in
the course of the audit conducted by the State Auditors on September 20, 1989.

After the audit of September 20, 1989, petitioner Rueda began completing the
supporting documents of those disbursement vouchers. Upon completion of those
"vales" and "chits" as supporting documents, he submitted the same together with
the disbursement vouchers to the in-charge-of office of the municipal treasurer, who
credited the amounts reected on those disbursement vouchers as "restitution" of
the shortage on his total accountability.
EDSAac

Consequently, petitioner Rueda stated that as of July 11, 1990, before the start of
the preliminary investigation in the Oce of the Ombudsman, all his nancial
accountabilities had been fully restituted. The cash advances, in the form of "chits"
and "vales" amounting to P41,234.71, had been wholly paid or redeemed by their
respective debtors. The disbursement vouchers of P53,700.00 representing various
legitimate expenses of the municipality of Tigaon, Camarines Sur and the collection
deposits in the amount of P12,384.06 were all liquidated. The in-charge-of oce of
the municipal treasurer of Tigaon, Camarines Sur issued eight ocial receipts, for
various amounts received from petitioner Rueda, to wit:
1. Official Receipt No. 0382089 dated 12/14/89 for P65,000.00

2. Official Receipt No. 0129158 (O) dated 12/29/89 for P618.56

3. Official Receipt No. 0382090 (N) dated 1/08/90 for P6,000.00

4. Official Receipt No. 0382091 (N) dated 1/08/90 for P12,000.00

5. Official Receipt No. 0382095 (N) dated 4/02/90 for P15,000.00

6. Official Receipt No. 0382100 (N) dated 5/31/90 for P3,000.00

7. Official Receipt No. 4846890 (P) dated 7/09/90 for P666.40

8. Official Receipt No. 4833595 (P) dated 7/11/90 for P5,014.06

Total P107,229.02

=========

A certication dated July 11, 1990, signed by Mr. Francisco N. Briguera, in-charge-of
oce of the municipal treasurer of Tigaon, Camarines Sur, and veried and found
correct by Melanio C. Alarcon, state auditing examiner (Exh. "9"), showed that
petitioner Rueda had fully restituted the cash shortage discovered during the cash
examination. As such, petitioner claimed innocence and therefore must be
acquitted. 9

On March 19, 1996, the Sandiganbayan (Third Division) promulgated its decision
nding petitioner Rueda guilty beyond reasonable doubt of malversation of public
funds, dened and penalized under Article 217 (4) of the Revised Penal Code, the
dispositive portion of which reads as follows:

"WHEREFORE, judgment is hereby rendered, nding the accused GUILTY

beyond reasonable doubt, of the crime of Malversation of Public Funds,
under paragraph 4 of Article 217 of the Revised Penal Code and considering
the mitigating circumstance of full restitution of the amount malversed, and
applying the Indeterminate Sentence Law, this Court hereby sentences the
accused to suer an indeterminate penalty of imprisonment for a period of
TEN (10) YEARS and ONE (1) DAY of prision mayor, as minimum, to
SEVENTEEN (17) YEARS, FOUR (4) MONTHS and ONE (1) DAY reclusion
temporal, as maximum; to pay a ne of P107,299.02 with subsidiary
 imprisonment in case of insolvency, and to suer perpetual special
disqualification from holding any public office; and to pay the costs.

"SO ORDERED.

"Manila, Philippines, January 25, 1996." 10

On March 29, 1996, petitioner led with the Sandiganbayan a motion for
reconsideration of the decision. 11

However, on May 07, 1997, the Sandiganbayan found the motion not meritorious
and denied the same. 12

The Appeal

Hence, this appeal. 13

Issues

(1) Is petitioner liable for malversation of public funds due to a "shortage" of

P107,299.02 which consisted of "chits" and "vales" evidencing cash advances from
cash collections of the municipal collectors before these were turned over to
petitioner municipal treasurer as part of his accountability?

(2) Is he presumed to have put the "missing" public funds to his personal use or
allowed others to take such funds when it is an admitted fact that the cash
advances were given by the municipal collectors from their cash collections, not
from funds in the custody of petitioner?

Petitioner submits that the Sandiganbayan erred:

(1) In nding that the rulings in Villacorta v. People , 145 SCRA 425 [1986] and
Quizo v. Sandiganbayan , 149 SCRA 108 [1987] do no apply to the case at bar as
they have been reversed by the pronouncement in Meneses v. Sandiganbayan , 232
SCRA 441 [1994] which relied on the ruling in Cabello v. Sandiganbayan, 197 SCRA
94 [1991];

(2) In rejecting petitioner's submission that the evidence must be appreciated

under the rulings in Villacorta and Quizo, as the events occurred when the
prevailing doctrines were the rulings in Villacorta and Quizo;

(3) In not nding that he succeeded to overthrow the prima facie evidence of
conversion/misappropriation under Article 217 of the Revised Penal Code;

(4) In rejecting petitioner's explanation as regards the disbursement vouchers

and collection deposits such that they do not make out a criminal offense. 14

Actually, the issues really boil down to whether or not petitioner has incurred a
"shortage" in his cash accountability as municipal treasurer of the municipality of
Tigaon, Camarines Sur.
 The Court's Ruling

We sustain petitioner's submissions primarily because he did not take or

misappropriate or through abandonment or negligence, permit any other person to
take or malverse public funds or property in his custody for which he is accountable.
He did not put public funds to his "personal use." He was able to properly explain
and account fully for his cash accountability of public funds upon demand by the
auditors. The assumed "shortage" does not exist and in any event has been
restituted in full.

Generally, the factual ndings of the Sandiganbayan are conclusive on the Court.
However, there are established exceptions to that rule, such as, sans preclusion,
when (1) the conclusion is a nding grounded entirely on speculation, surmise and
conjecture; (2) the inference made is manifestly an error or founded on a mistake;
(3) there is grave abuse of discretion; (4) the judgment is based on misapprehension
of facts: and (5) the findings of fact are premised on the absence of evidence and are
contradicted by evidence on record. 15 In these instances, this Court is bound to
review the facts in order to avoid a miscarriage of justice. 16 The instant case falls
within such exceptions.

Considering the evidence on record, we nd that the Sandiganbayan convicted

petitioner on probabilities and conjecture, not on hard facts duly established. 17 We
are thus justified to re-examine, as we do, the evidence.

After an assiduous scrutiny, we nd petitioner not guilty of malversation of public

funds. The Sandiganbayan found that petitioner admitted his accountability and
failed to have duly forthcoming his cash shortage in the amount of P107,299.02
with which he is chargeable, and that he did not tender the required written
explanation as to why the shortage was incurred. His failure to do so instantly
created a prima facie evidence pursuant to the last paragraph of Article 217 of the
Revised Penal Code that he had put such missing funds to personal use.

We disagree. Petitioner did not admit any shortage. The mere fact that he signed
the dorsal side of the report of cash examination is not an admission of "shortage."
His signature was only evidence that he received a copy of the report. Thus, it is
incorrect to say that petitioner admitted his shortage when he signed the audit
report prepared by the audit team. 18 For one thing, he was made to sign it right
away; for another, his signature only meant an acknowledgment that a demand
from him to produce all his cash, money and paid vouchers had been made. It did
not mean that he admitted any shortage. In fact, subsequent events showed that
he had fully explained his accountability. Thus, he satisfactorily explained the
shortage. 19 In other words, there was no direct evidence or proof that he put public
funds to personal use. 20 When absence of funds was not due to personal use, the
presumption is completely destroyed. 21 The taking or conversion of public funds for
personal use must be armatively proved. 22 When there is no shortage, taking,
appropriation, conversion or loss, there is no malversation. 23

The crime of malversation of public funds is defined and penalized as follows:

 ART. 217. Malversation of public funds or property Presumption of
malversation. Any public ocer who, by reason of the duties of his oce,
is accountable for public funds or property, shall appropriate the same, or
shall take or misappropriate or shall consent, or through abandonment or
negligence, shall permit any other person to take such public funds or
property, wholly or partially, or shall otherwise be guilty of the
misappropriation or malversation of such funds or property, . . . ."

xxx xxx xxx

"The failure of the public ocer to have duly forthcoming such public funds
or property, upon demand by a duly authorized ocer, "shall be prima facie
evidence that he has put such missing funds or property to personal use."
24

The elements of malversation, essential for the conviction of an accused, under the
above penal provision are that:

(a) the offender is a public officer;

(b) he has the custody or control of funds or property by reason of

the duties of his office;

(c) the funds or property involved are public funds or property for
which he is accountable; and

(d) he has appropriated, taken or misappropriated, or has consented

to, or through abandonment or negligence permitted, the taking
by another person of, such funds or property. 25

"The felony involves breach of public trust, and whether it is committed

through dolo or culpa the law makes it punishable and prescribes a uniform
penalty therefor. Even when the information charges willful malversation,
conviction for malversation through negligence may still be adjudged if the
evidence ultimately proves that mode of commission of the offense." 26

"Concededly, the rst three elements are present in this case. It is the last
element, i.e., whether or not petitioner really has misappropriated public
funds, where the instant petition focuses itself. In convicting petitioner, the
Sandiganbayan cites the presumption in Article 217 of the Revised Penal
Code that the "failure of a public ocer to have duly forthcoming any public
funds with which he is chargeable, upon demand by any duly authorized
ocer, shall be prima facie evidence that he has put such missing funds or
property to personal uses." The presumption is, of course, rebuttable.
Accordingly, if the accused is able to present adequate evidence that can
nullify any likelihood that he had put the funds or property to personal use,
then that presumption would be at an end and the prima facie case is
eectively negated. This Court has repeatedly said that when the absence of
funds is not due to the personal use thereof by the accused, the
 presumption is completely destroyed; in fact, the presumption is deemed
never to have existed at all." 27

"The prosecution, upon whose burden was laden the task of establishing by
proof beyond reasonable doubt that petitioner had committed the oense
charged, mainly relied on the statutory presumption aforesaid and failed to
present any substantial piece of evidence to indicate that petitioner had used
the funds for personal gain. The evidence submitted, just to the contrary,
would point out that not a centavo of the so-called "missing funds" was
spent for personal use . . . ." 28

I n Salamera v. Sandiganbayan , 29 we emphatically declared that the 4th element

requires "that a public ocer must take public funds, money or property, and
misappropriate it to his own private use or benet. There must be asportation of
public funds or property, akin to the taking of another's property in theft. The funds,
money or property taken must be public funds or private funds impressed with
public attributes or character for which the public officer is accountable." HTCDcS

We are convinced that the evidence in this case has not proved beyond reasonable
doubt that petitioner is guilty of malversation of public funds.

We explain why. To begin with, there was no evidence of cash "shortage." The letter
of demand dated October 3, 1989 (Exh. "B-1") to petitioner for him to produce
immediately the "missing" funds in the total amount of P107,299.02 and to submit
within seventy-two hours why the shortage occurred, states:

". . . It was found that your cash was short of P107,229.02.

"This shortage was arrived at as follows:

"Accountability:

Balance per audit as of Sept. 20,1989

Certified correct by you.

General Fund P165,078.78

Infrastructure Fund 39,904.77.

Special Education

Fund 28,398.29

Trust Fund 10,983.84

Balgu Fund 33,128.60 P277,494.28

Credit to accountability:

Cash and valid cash items produced

 by you and counted by us P170,195.26

Shortage P107,229.02 " 30

The auditor's nding of a "cash shortage" is denitely wrong. In fact and under
accounting principles, there is no cash shortage. The cash and other valid cash items
were produced by petitioner and counted by the auditors in the total amount of
P170,195.26. The amount is intact in cash. The assumed shortage of P107,229.02
represented "vales," "chits" and "disbursement vouchers" considered as part of the
general fund. This is an auditing error. It is a generally accepted auditing principle
that cash means "cash on hand or in bank." Standard text in accounting denes
"Cash" as consisting of those items that serve as a medium of exchange and provide
a basis for accounting measurement. To be reported as "cash," an item must be
readily available and not restricted for use in the payment of current obligations. A
general guideline is whether an item is acceptable for deposit at face value by a
bank or other financial institution.

"Items that are classied as cash include coin and currency on hand, and
unrestricted funds available on deposit in a bank, which are often called demand
deposits since they can be withdrawn upon demand. Petty cash funds or change
funds and negotiable instruments, such as personal checks, travelers' checks,
cashiers' checks, bank drafts, and money orders are also items commonly reported
as cash. The total of these items plus undeposited coin and currency is sometimes
called cash on hand. Interest-bearing accounts, or time deposits, also are usually
classied as cash, even though a bank legally can demand prior notication before a
withdrawal can be made. In practice, banks generally do not exercise this legal
right.

"Deposits that are not immediately available due to withdrawal or other restrictions
require separate classication as 'restricted cash' or 'temporary investments.' They
are not 'cash.'" 31

In short, there was no shortage on petitioner's cash accountability. " Evidence of

shortage is necessary before there could be any taking, appropriation, conversion, or
loss of public funds that would amount to malversation." 32 The law requires that
the shortage must be clearly established as a fact that over and above the funds
found by the auditors in the actual possession of the accountable ocers, there is an
additional amount which could not be produced or accounted for at the time of
audit.

In this case, there was absolutely no shortage as to petitioner's cash accountability.

The auditors mistakenly included as cash items collectibles in the form of " vales"
and "chits" and "disbursement vouchers" for legitimate expenses of the
municipality.

A n accountable ocer under Article 217 of the Revised Penal Code must receive
money or property of the government which he is bound to account for. It is the
nature of the duties of, not the nomenclature used for, or the relative signicance of
the title to, the position, which controls in that determination. 33
Based on this denition, to be held accountable the public ocer must receive the
money or property, and later fails to account for it. When a public ocer is asked to
account for the cash in his accountability, this necessarily means that he has to
produce the cash in bills and coins and other cash items that he received. It does not
include collectibles and receivables or even promissory notes.

Petitioner Rueda did not receive the money (cash), which he was supposed to
produce or account for at the time of the audit. 34 In fact, the audit team found that
sum of P170,195.26 intact in bills and notes. Nonetheless, the auditors declared a
"shortage" because petitioner Rueda could not produce as cash items the collectibles
and receivables in the form of "chits and vales" and disbursement vouchers for
legitimate expenses of the municipality. This is an auditing error because the
collectibles and receivables are not cash items. The money did not reach the hands
of petitioner. Therefore, it is not part of his cash accountability.

The amount of P107,299.02, was divided as follows: (1) P41,234.71 representing

the "chits and vales" taken by the municipal ocials and employees from the
municipal collections prior to the remittance of these cash collections to petitioner;
(2) P53,700.00 representing the legitimate expenses of the municipality subject to
liquidation; and (3) P12,384.06 unsettled cash collections.

With regard to the P41,234.71 cash advances, petitioner did not receive the cash
nor gave the cash advances for they were taken from the cash collections of the
municipal collectors before the cash collections were turned over to him.

"Q: The cash collections of the municipal collectors from which the chits
and vales , from which the amount represented by the chits and vales
are made by the municipal employees and ocials, from the amount
covered by those chits and vales were already turned over to you or
not yet, when the chits and vales were made?

"A: They were not yet turned over to me, sir. The employees have their
cash advances from the municipal collectors before their cash
collections were turned over to me. So, I got only the chits or vales ;
the cash was not yet turned over to me." 35

Clearly, petitioner Rueda did not receive the above-mentioned amount at the time
of the audit. 36 In fact, no cash was ever given or turned over to petitioner. At any
rate, the respective debtors, not the petitioner, wholly redeemed the cash advances
and "vales" amounting to P41,234.71, to wit: 37

"Q: Where are now those chits and/or vales covering those cash
advances?

A: Those chits and vales were redeemed by the employees and then,
some of them were redeemed by the employees and then, as I
accumulated the amount, I turned it over, the cash, I turned it over to
the In-Charge of Oce and then, issued an ocial receipt for the
amount and credited against my shortage as restitution. 38
As heretofore stated, in Salamera vs. Sandiganbayan, 39 we ruled that one essential
element of malversation is that a public ocer must take public funds, money or
property, and misappropriate it to his own private use or benet. There must be
asportation of public funds or property, akin to the taking of another's property in
theft. Hence, how can there be taking or misappropriation when the funds did not
even reach the hands or custody of petitioner Rueda?

As regards the amount of P53,700.00, these referred to legitimate expenses of the

municipality. At the time of the audit, petitioner failed to present the vouchers for
these legitimate expenses because they lacked documents in support of the
vouchers, to wit:

"Q: You mentioned about these vouchers. What are these vouchers that
you mentioned?

A: May I refer to my list, Your Honor.

AJ DEL ROSARIO:

The witness may refresh his memory.

"WITNESS: These vouchers, there are 11 of them, from the Will Print,
one voucher from the printing realty taxes, tax declaration, I mean;
and, another two vouchers from the same Will Print, for printing also
the Real Tax Declaration; third voucher is from Angel Bongulto, cash
advance for Manila to get the law books and references from the
Supreme Court for the RTC, Branch 30, at Tigaon, Cam. Sur; one
voucher is for Kagawad Redito Clario, cash advance for seminar
workshop for the municipal kagawad at Los Baos, Laguna; another
voucher is for Orlando Asiado, cash advance for supporting the
athletic uniform of the municipal team for the Summer Basketball
Tournament; next voucher is for Hector Bongat, cash advance for
constructing 50 pieces market stalls, and, next is Leo Cea, a cash
advance for the summer basketball tournament referees; next
voucher is for Mayor Eleonor Lelis, cash advance in going to Manila,
with the INP Station Commander and 3 Patrolmen to get our Fire truck
for the municipality; next voucher is for Leonida Peaor, a cash
advance for the terminal leave of her deceased husband, my assistant
municipal treasurer, Domingo Peaor; next voucher is for Arturo
Pascua, cash advance for delivering sand and gravel for the
cementing of a municipal street and the last is for Iigo Zape, cash
advance for COLA. These were the unsubmitted vouchers, sir.

Q: You said, you did not present these vouchers during the audit by the
COA team because these lack supporting documents and you were
advised by the internal audit team not to present them anymore
because there will be, for sure, is lacking. [sic] Can you still recall what
supporting documents were lacking to these vouchers, for which
reason you did not present them, if you can still recall the supporting
 documents lacking?

A: Some of them lacks the canvass paper; some of them were partially
paid but also lacking supporting papers, sir." 40

After the audit, petitioner prepared the supporting documents that these vouchers
lacked and turned them over to the in-charge-of oce who replaced him, Mr.
Francisco Briguera. 41

Petitioner satisfactorily explained the unsettled cash collection deposits in the

amount of P12,384.06. This amount represented the cash collections of the market
collectors, which had been turned over to the invoicing ocer of the treasury, Mrs.
Delicias Galvante. During the audit examination, this amount had been reected as
unaccounted because it lacked some requirements, such as the labor payroll. It was
only after the audit examination that the invoicing ocer turned over the labor
payroll corresponding to the amount of P6,000.00. The remainder of the P12,384.06
was given as cash advances in the form of "chits and vales," which had been taken
from the collections, again, prior to its remittance to petitioner.

Hence, petitioner satisfactorily explained the cash "shortages" found in his

accountability at the time of the audit examination. No portion of his cash
accountability has been malversed by him or put to his personal use. 42

In Meneses vs. Sandiganbayan, 43 the Court reiterated an earlier ruling in Cabello v.

Sandiganbayan, 44 that the practice of disbursing public funds under the "vale"
system is not a meritorious defense in malversation cases. The grant of loans
through the "vale" system is a clear case of an accountable ocer consenting to the
improper or unauthorized use of public funds by other persons, which is punishable
by law. To tolerate such a practice is to give a license to every disbursing ocer to
conduct a lending operation with the use of public funds.

However, the ruling in Cabello and Meneses cannot be applied to the case at bar.
The circumstances obtaining in those cases are not present in the case at bar. An
important moiety in the instant case is that petitioner did not grant the cash
advances or "vales" to the municipal ocials. They took the cash advances from the
collections of the municipal collectors. However, they restored or "liquidated" the
amounts prior to the conduct of preliminary investigation before the oce of the
Ombudsman. The liquidation was done, not by petitioner, but by the respective
debtors. "Liquidation simply means the settling of indebtedness." 45

"Liquidation does not necessarily signify payment, and to liquidate an account, can
mean to ascertain the balance due, to whom it is due, and to whom it is payable;
hence, an account that has been liquidated can also mean that the item has been
made certain as to what, and how much, is deemed to be owing." 46

Neither can petitioner Rueda be considered guilty of passive malversation. He did

not tolerate the practice of making cash advances by the municipal ocials and
employees. He warned them about the illegality of such practice. However, he was
helpless about the situation because it was done with the consent of the municipal
mayor. They were not indicted for malversation. Why? The prosecution did not
explain. The Sandiganbayan did not even inquire. Instead of the cash collections
being remitted to petitioner, pieces of paper called "chits or vales" were given as
evidence of the cash advances. He never had the opportunity to disburse public
funds under the "vale" system, for in the rst place, the public funds were not
turned over to him.

Consequently, the prima facie evidence that public funds have been put to the
personal use of petitioner has been obliterated by the fact that he did not receive
the money as municipal treasurer. In Zambrano v. Sandiganbayan, 47 we said that if
the accused did not receive the public funds, there was no malversation. In Diaz vs.
Sandiganbayan, 48 we held that when the absence of funds is not due to the
personal use thereof by the accused, the presumption is completely destroyed; in
fact, the presumption is deemed never to have existed at all.

In malversation, it is necessary to prove that the accused received public funds, and
that he could not account for them and did not have them in his possession and that
he could not give a reasonable excuse for the disappearance of the same. 49 In this
case, the prosecution failed to establish this important element of malversation. In
fact, it did not really exist. Petitioner gave a reasonable and satisfactory explanation
of his cash accountability of public funds that were duly liquidated. The Court must
not reject arbitrarily an explanation consistent with the presumption of innocence.
50

In Narciso v. Sandiganbayan, 51 we said that where "there is no evidence whatever

that over and above the funds found by the auditors in his actual possession, Narciso
had received the additional amount of P14,500.00, which he could no longer
produce or account for at the time of the audit, there being no shortage, there has
been no taking, appropriation, conversion, or loss of public funds; there is no
malversation." We could very well be speaking of the case of petitioner Rueda. DEHcTI

In our criminal justice system, the overriding consideration is not whether the court
doubts the innocence of the accused but whether it entertains a reasonable doubt as
to his guilt. This determinant, with the constitutional presumption of innocence
which can be overthrown only by the strength of the prosecution's own evidence
proving guilt beyond reasonable doubt, irresistibly dictate an exoneration in this
case. 52

The evidence against petitioner is not enough to engender moral certainty of his
guilt. This moral certainty is that which convinces and satises the conscience of
those who are to act upon it. 53

Accordingly, the presumption of innocence which the Constitution guarantees the

petitioner has remained untarnished in this case for want of proof to the contrary. It
is safely entrenched in our jurisprudence that unless the prosecution discharges its
burden to prove the guilt of an accused beyond reasonable doubt, the latter need
not even offer evidence in his behalf. 54

The prosecution must overthrow the presumption of innocence with proof of guilt of
the accused beyond reasonable doubt. The proof against him must survive the test
of reason; the strongest suspicion must not be permitted to sway judgment. 55 Even
if the defense is weak, the case against the accused must fail if the prosecution is
even weaker, for the conviction of the accused must rest not on the weakness of the
defense but on the strength of the prosecution. 56

In order to convict an accused, the circumstances of the case must exclude all and
each and every hypothesis consistent with his innocence. 57

In conclusion, we nd that the guilt of the petitioner has not been proved beyond
reasonable doubt. The petitioner must be acquitted. "Every accused is presumed
innocent until the contrary is proved; that presumption is solemnly guaranteed by
the Bill of Rights. The contrary requires proof beyond reasonable doubt, or that
degree of proof, which produces conviction in an unprejudiced mind. Short of this, it
is not only the right of the accused to be freed; it is even the constitutional duty of
the court to acquit him. 58

The Fallo

WHEREFORE, the petition is GRANTED and the decision of respondent

SANDIGANBAYAN promulgated on March 19, 1996 and the resolution adopted on
May 7, 1997 are REVERSED and SET ASIDE. Petitioner JUAN A. RUEDA, JR. is hereby
ACQUITTED on reasonable doubt of the charge of malversation of public funds,
dened and penalized under Article 217 (4) of the Revised Penal Code. His bail bond
is ordered cancelled.

Costs de oficio. DCHIAS

SO ORDERED.

Davide, Jr., C.J ., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Buena, Gonzaga-Reyes, and Ynares-Santiago, JJ ., concur.

De Leon, Jr., J ., took no part; ponente of SB decision.

Footnotes

1. In Criminal Case No. 16680, promulgated on March 19, 1996, Justice Sabino R de
Leon, Jr., ponente (now Associate Justice, Supreme Court), Justices Cipriano A. del
Rosario and Roberto M. Lagman, concurring. Petition, Annex "A" Rollo, pp. 31-53.

2. This is a palpable and patent error (See Article 39, Revised Penal Code). However,
in view of the resulting acquittal of petitioner, it has become functus officio.

3. Adopted on May 07, 1997, Petition, Annex "B", Rollo, pp. 54-62.
4. SB Rollo, pp. 1-2.

5. Certicate of Arraignment, SB Rollo, p. 61; Order, dated November 29, 1991, SB

Rollo, p. 64.

6. Not quoted verbatim but with editorial changes.

7. For unexplained reasons, neither the mayor nor the municipal ocials and
employees who made the cash advances were prosecuted for malversation of
public funds or otherwise administratively charged.

8. Per Official Receipts marked as Exhs. 1-8.

9. Rollo, pp. 32-37.

10. Petition, Rollo, pp. 31-53, at p. 52.

11. SB Rollo, pp. 274-289.

12. Supra, Note 3.

13. Petition led on May 20, 1997, Rollo, pp. 3-30. On September 16, 1998, we gave
due course to the petition, Rollo, pp. 133-134.

14. Petition, Rollo, p. 11.

15. Diaz v. Sandiganbayan , 302 SCRA 118, 137 [1999], citing Macadangdang v.
Sandiganbayan, 170 SCRA 308 [1989].

16. Diaz vs. Sandiganbayan, supra, Note 15, at p. 137.

17. Enriquez v. People , G.R. No. 119239; Espinosa v. Sandiganbayan , G.R. No.
119285, May 9, 2000.

18. Tinga v. People, 160 SCRA 483 [1988].

19. Bugayong v. People, 202 SCRA 762 [1991].

20. Alvarez v. Sandiganbayan, 201 SCRA 557 [1991].

21. Diaz v. Sandiganbayan, supra, Note 15, at p. 131.

22. Bugayong v. People, supra, Note 19.

23. Narciso v. Sandiganbayan, 229 SCRA 229 [1994].

24. Article 217, Revised Penal Code, penalties omitted for brevity.

25. Nizurtado v. Sandiganbayan , 239 SCRA 33, 42 [1994]; People v. Pepito , 335 Phil.
37, 46 [1997]; Diaz v. Sandiganbayan , supra, Note 15, pp. 130-131; Salamera v.
Sandiganbayan, 303 SCRA 217, 227 [1999]; Enriquez v. People ; Espinosa v.
Sandiganbayan, supra, Note 17; Agbanlog v. People , 222 SCRA 530, 536-537
[1993]; Peanueva, Jr. v. Sandiganbayan , 224 SCRA 86, 92 [1993]; Corpuz v.
 People, 194 SCRA 73, 80 [1991].

26. Diaz v. Sandiganbayan , supra, Note 15, p. 130, citing Kimpo v. Sandiganbayan ,
232 SCRA 53, 62 [1994].

27. Diaz v. Sandiganbayan , supra, Note 15, p. 131, citing U.S. v. Catolico , 18 Phil.
504, cited in U.S. v. Elvia, 24 Phil. 230, and Quizo v. Sandiganbayan , 149 SCRA
108; Mahinay v. Sandiganbayan, 173 SCRA 237.

28. Diaz v. Sandiganbayan, supra, Note 15, p. 131.

29. Salamera v. Sandiganbayan, supra, Note 25, at p. 227.

30. SB Decision, Rollo, pp. 39-40.

31. Intermediate Accounting, Comprehensive Volume, Ninth Ed., by Smith, Jr. and
Skousen, Brigham Young University, Copyright 1987, South-Western Publishing
Co., Cincinnati, Ohio, USA, p. 243.

32. Enriquez v. People; Espinosa v. Sandiganbayan, supra, Note 17.

33. Tanggote v. Sandiganbayan, 236 SCRA 273, 279 [1994].

34. Enriquez v. People; Espinosa vs. Sandiganbayan, supra, Note 17.

35. TSN, October 7, 1992, pp. 8-9.

36. Enriquez v. People; Espinosa vs. Sandiganbayan, supra, Note 17.

37. Sandiganbayan Decision, Rollo, p. 36.

38. TSN, October 7, 1992, pp. 9-10.

39. Supra, Note 25.

40. TSN, October 7, 1992, pp. 5-6.

41. Ibid., pp. 6-7.

42. Alvarez v. Sandiganbayan, supra, Note 20.

43. Meneses v. Sandiganbayan, 233 SCRA 441 [1994].

44. Cabello v. Sandiganbayan, 197 SCRA 94 [1991].

45. Yong Chan Kim v. People, 193 SCRA 344, 352 [1991].

46. Diaz v. Sandiganbayan, supra, Note 15, at p. 133.

47. 208 SCRA 44 [1992].

48. Supra, Note 15.

49. Tanggote v. Sandiganbayan, supra, Note 33; Agbanlog v. People, supra, Note 25;
 De Guzman v. People of the Philippines , 119 SCRA 337, 347 [1982].

50. Dizon-Pamintuan v. People , 234 SCRA 63 [1994], citing Diong-an v. Court of

Appeals , 138 SCRA 39 [1985].

51. Supra, Note 23.

52. People v. Salangga, 234 SCRA 407, 423 [1994].

53. People v. Salguero, 198 SCRA 357, 367 [1991]; People v. Aranda, 226 SCRA 562,
572 [1993].

54. People v. Sulit, 233 SCRA 117, 125 [1994].

55. People v. Austria, 195 SCRA 700, 709 [1991].

56. People v. Cruz , 215 SCRA 339, 347 [1992]; People v. Cruz , 231 SCRA 759, 771-
772 [1994]; See also People v. Aniscal, 228 SCRA 101, 113 [1993].

57. People v. del Rosario, 234 SCRA 246, 253 [1994].

58. People v. Valeriano , 226 SCRA 694, 714 [1993], citing People v. Pido , 200 SCRA
45, [1991].