People v. Hemedes, Jr.

FIRST DIVISION

[G.R. No. 246203. November 23, 2021.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,vs. ISIDRO LEBRILLA HEMEDES, JR., accused-appellant.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated November 23, 2021 which reads as follows:

"G.R. No. 246203 (People of the Philippines v. Isidro Lebrilla Hemedes, Jr.). — This appeal seeks to reverse and set aside the Decision 1 dated February 1, 2019, and the Resolution 2 dated March 22, 2019 of the Sandiganbayan Seventh Division (Sandiganbayan) in Criminal Case No. SB-18-CRM-0152, convicting Isidro Lebrilla Hemedes, Jr. (accused-appellant) of violation of Section 3 (h) of Republic Act (R.A.) No. 3019, in relation to Presidential Decree (P.D.) No. 119.

The facts, as culled from the records, are as follows:

The private complainant Feliciano I. Lavina (Lavina) alleged in her complaint affidavit that accused-appellant is the Mayor of Cabuyao, Laguna, who in one occasion during a public gathering and school graduation celebration, announced that he is a member of the Board of Directors of Luzon Development Bank (LDB). 3 Thus, he cannot be suspected with any graft and corrupt acts, since he is already wealthy long before he became a politician. 4 Lavina likewise averred that the General Information Sheet (GIS) from the Securities and Exchange Commission (SEC) indeed established that Hemedes is a Director of LDB from 2007 until the filing of the complaint, thus making him liable for violation of R.A. No. 3019. 5 According to Lavina, the provision of the General Banking Law of 2000, which reads "except as otherwise provided in the Rural Banks Act, no appointive or elective public official whether full-time or part-time shall at the same time serve as officer of any private bank, save in cases where such service is incident to financial assistance provided by the government or a government owned or controlled corporation to the bank or unless otherwise provided under existing laws," provides that an elective official is not lawfully allowed to serve as private officer, like a member of the Board of Directors, whether such is in a full or part-time capacity. 6

Lavina continued in her complaint that P.D. No. 119, otherwise known as the Private Development Banks Act, echoes the same prohibition for elective officials to be officers of a private development bank, when it ordained that:

x x xAll members of the board of directors of the private development bank shall be citizens of the Philippines: Provided, however, That no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel, or consultant of any private development bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank: Provided, further, That, in case of merger or consolidation of private development banks duly approved by the Monetary Board, the limitation on the maximum number of corporate directors in a corporation, as provided for in section twenty-eight of the Corporation Law (Act No. 1459) shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidation private development banks.7

Lavina then concluded that accused-appellant, by being a Director of LDB, set aside the interest of the public and prioritized his financial interest by serving two masters at the same time without regard to its utter result, the compromise of public service and prejudice to the same. 8 Lastly, Lavina stated that under the provisions of R.A. No. 6713 there is a proscription for public officials against engaging in private practice of their profession unless authorized by law and that such act is branded by R.A. No. 3019 as graft and corrupt practices. 9 CAIHTE

The accused-appellant countered that he neither committed a violation of R.A. No. 3019 nor caused prejudice to public service or the city of Cabuyao by being a member of the Board of Directors of LDB. 10 He then pointed out that the city of Cabuyao did not have direct or indirect transaction with LDB, thus, the claim that he committed a corrupt act is a fallacy. 11 Accused-appellant then argued that he could not be held liable for misconduct, whether grave or simple, for the reason that there was no factual and particular accusation in the complaint that he used, for his own interest, money from the coffers of the city of Cabuyao or the government of the Philippines. 12 He further stated that he worked full time as the Chief Executive of the city of Cabuyao. 13 Accused-appellant also mentioned in his consolidated counter-affidavit that as a result of his hard work and dedication, he received awards and citations from different institutions, which he attached as his annexes. 14

After due proceedings, the Office of the Ombudsman found probable cause to indict the accused-appellant for violation of Section 3 (h) of R.A. No. 3019, in relation to P.D. No. 119, and recommended the filing of the corresponding Information with the Sandiganbayan. The accusatory portion of the Information reads:

That between the period 30 June 2007 and 05 February 2014, or sometime prior or subsequent thereto, in Cabuyao City, Laguna, Philippines and within the jurisdiction of this Honorable Court, the abovenamed accused, a public official, being the City Mayor of Cabuyao, Laguna, committing the crime in relation to office, did then and there willfully, unlawfully and criminally, having direct financial and pecuniary interest in Luzon Development Bank by serving as a member of its Board of Directors, despite being prohibited by law under Section 1 of Presidential Decree No. 119, to the prejudice of public interest.

CONTRARY TO LAW. 15

On March 16, 2018, accused-appellant personally appeared and posted a cash bond for his provisional liberty. 16 On the same day, he received a notice that the arraignment and pre-trial for his case was set on April 13, 2018. 17

On his arraignment, accused-appellant entered a plea of not guilty. On the same day, the pre-trial proceeded. 18

On August 28, 2018, the Sandiganbayan issued a Pre-Trial Order 19 that included the stipulated facts of the parties as follows:

1. Accused Isidero Lebrilla Hemedes, Jr. (Hemedes, Jr.) is the same person charged in and arraigned under the Information.

2. During the time material to this case, the accused was a public officer, being the municipal/city mayor of Cabuyao, Laguna from 2007 to 2016.

3. Accused Hemedes, Jr. was a member of the Board of Directors of Luzon Development Bank, a private bank from 2007 to February 6, 2014.

4. From 2007 up to February 2014, accused Hemedes, Jr. served both as member of the Board of Directors of Luzon Development Bank, a private development bank and as Municipal/City Mayor of Cabuyao, Laguna.

5. Accused Hemedes, Jr. tendered his resignation from the Board of Directors of Luzon Development Bank on February 6, 2014.

6. The complaint was filed before the Office of the Ombudsman on February 18, 2015, or one (1) year after accused Hemedes, Jr. resigned as member of the Board of Directors of Luzon Development Bank.

7. During the stint as City Mayor of accused Hemedes, Jr. (2007-2016), the City of Cabuyao received several awards in public service.

8. That accused only had seven (7) common shares with a total par value of P700.00 with the Luzon Development Bank.

9. That the said shares were only given to the accused by his father and not through any transaction by the accused with the bank in securing the said shares of stock to hold a seat as Independent Director. 20

In the same Pre-Trial Order, the Sandiganbayan noted that the defense and the prosecution admitted each other's factual allegations and documentary exhibits. Hence, there was no need for a trial, and the remaining issues to be resolved were purely legal. 21

In its Memorandum 22 submitted before the Sandiganbayan, the Office of the Special Prosecutor alleged that the first element is indisputably present, considering that at the time he committed the act complained of, accused-appellant was the municipal/city Mayor of Cabuyao, Laguna from 2007 to 2016. 23

The prosecution then proceeded to discuss the presence of the second element. Accused-appellant admitted that, while he was Mayor of Cabuyao, he had a direct or indirect financial or pecuniary interest in LDB, a private development bank. More particularly, he was a member of LDB's audit committee in 2006, 2008, and 2009. In addition, he served as chairman of LDB's audit committee in 2013. 24 The prosecution pointed out that he necessarily received and enjoyed material benefits, privileges and remuneration from LDB in the form of per diems for serving as a member of the Board of Directors and of the Executive Committee of LDB. 25

The prosecution expressed that as far as the third element is concerned, there are two modes of violating Section 3 (h) of R.A. No. 3019. The first mode is when the accused intervenes or takes part in his official capacity in connection with his financial or pecuniary interest in any business, contract or transaction, and the second mode is when the accused is prohibited from having such an interest by the Constitution or by law. 26 According to the Office of the Ombudsman, accused-appellant served as a director of LDB in his private capacity, and not as an incident to a financial assistance provided by the government or government-owned or controlled corporation to the bank, and thus, his stint as LDB director is tantamount to engagement in an occupation other than the exercise of his function as municipal/city mayor, which is prohibited under Section 20 of the Local Government Code. 27

The accused-appellant asserted in his Memorandum that the only issue is whether P.D. No. 119 qualifies as a law that prohibits a public official like him from having an intertest in a private business as to make him liable under Section 3 (h) of R.A. No. 3019. 28 He stated that he acquired on December 28, 2004, seven (7) LDB common shares, with a total par value of P700.00, that paved the way for him to be elected as an independent director. 29 Thereafter, he was elected as municipal mayor, then later, city mayor for three terms from 2007 to 2016.

Accused-appellant argued that Section 8 of R.A. No. 6713, which requires public officers to include in their Statement of Assets, Liabilities and Net Worth (SALN) their "financial and business interests," is proof that public officers are not, per se, prohibited from having pecuniary interest in any business. He further alleged that the only time public officers are prohibited from having such business interest is in Section 3 (h) of R.A. No. 3019 and Section 7 (a) and (b) of R.A. No. 6713. Further, the first mode of committing Section 3 (h) does not apply to him since he did not become a member of the Board of Directors by reason of his office. 30 Accused-appellant additionally contended that the second mode does not attach to him, since Section 1 of P.D. No. 119 is not a law or a provision of the Constitution that prohibits him as a city mayor, from having interest in LDB. 31

On February 1, 2019, the Sandiganbayan rendered the assailed Decision 32 pronouncing accused-appellant guilty of violating Section 3 (h) of R.A. No. 3019, disposing thusly:

WHEREFORE, in view of the foregoing, accused ISIDRO LEBRILLA HEMEDES, JR. is found GUILTY beyond reasonable doubt of violating Section 3(h) of Republic Act No. 3019, and is sentenced to imprisonment for a minimum of six (6) years and one (1) month to a maximum of eight (8) years, with perpetual disqualification from public office.

SO ORDERED. 33

In convicting accused-appellant, the Sandiganbayan opined that the presence of the first element of the offense is undisputed, as the parties earlier stipulated that he was the municipal/city Mayor of Cabuyao, Laguna from 2007 to 2016. 34 The Sandiganbayan further noted that as a member of the Board of Directors of LDB, it begs credulity to assume that he did not take an active part in the management of LDB affairs as a corporate entity, since he was a member of said board from 2006 to 2014, or a total of eight years, hence, he has direct or indirect financial or pecuniary interest in LDB. 35 Lastly, the Sandiganbayan pronounced that as accused-appellant is charged under the second mode, it is not necessary to show that he intervened in his official capacity in connection with the business, contract or transaction. Accordingly, the Sandiganbayan found little value in his assertion that there was never a transaction between the LDB and the City of Cabuyao throughout the years when he was a director. 36

The Sandiganbayan denied the motion for reconsideration filed by Hemedes via a Resolution 37 dated March 22, 2019. Accused-appellant, thereafter timely filed a Notice of Appeal. 38

Accused-appellant asserts in his Brief that he did not violate Section 3 (h) of R.A. No. 3019, as public officers are not prohibited from having pecuniary interest in any business. 39 He states that the second mode under Section 3 (h) of R.A. No. 3019, particularly the concept of "prohibited from having interest" is different from "prohibited from becoming an officer or director." 40 He posits the view that the Sandiganbayan stretched the intent, meaning and import of the provisions of P.D. No. 119 when the Court convicted him. 41 To his mind, the Sandiganbayan ought to exercise lenity in interpreting P.D. No. 119 in relation to Section 3 (h) of R.A. No. 3019, since the subject law is ambiguous. 42 Accused-appellant concedes for the sake of argument that even assuming he committed an infraction, he should only be made administratively liable. 43 DETACa

The prosecution contradicts the arguments of accused-appellant as it maintains that the Sandiganbayan correctly found him guilty beyond reasonable doubt of violating Section 3 (h) of R.A. No. 3019; 44 and that he availed of the wrong mode of appeal. 45

The appeal is impressed with merit.

Section 3 (h) of R.A. No. 3019 states:

Section 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

Thus, to successfully prosecute a case for violation of Section 3 (h) of R.A. No. 3019, the following elements must concur:

1. The accused is a public officer;

2. He has a direct or indirect financial or pecuniary interest in any business, contract, or transaction; and

3. The accused either: (a) intervenes or takes part in his official capacity in connection with such interest, or (b) is prohibited from having such interest by the Constitution or by any law. 46

From the foregoing, it is clear that there are two modes by which a public officer who has a direct or indirect financial or pecuniary interest in any business, contract or transaction may violate Section 3 (h). The first mode is when the public officer intervenes or takes part in his official capacity in connection with his financial or pecuniary interest in any business, contract or transaction. The second mode is when he is prohibited from having such an interest by the Constitution or by law. 47

As regards the first mode, what is contemplated is the actual intervention in the transaction in which one has financial or pecuniary interest in order that liability may attach. For the law aims to prevent the dominant use of influence, authority and power. 48 The law seeks to avoid the situation wherein the public official would use his influence and power to have mercantile gain, either directly or indirectly.

With respect to the second mode, there is a requirement that the public officer possesses such financial or pecuniary interest and said possession is prohibited by the Constitution or by a provision of any statute. Thus, the mere holding of a pecuniary or financial interest would not make the public officer liable under the second mode unless the same is specifically proscribed by the Constitution or by any other law. This is in contrast under the first mode where the public officer simply holds a pecuniary or financial interest in a business, contract, or transaction, regardless of whether the same is proscribed by the Constitution or by a law. Accordingly, while the pecuniary or financial interest of a public officer who owns shares of stock in a corporation would make him liable under the first mode if all the other elements are present, the same would not necessarily make him liable under the second mode if neither the Constitution or a law prohibits such holding of interest.

In this case, since accused-appellant was charged under the second mode, the prosecution must establish that either the Constitution or any provision of a statute prohibits him, as city mayor, from possessing any interest in a private development bank. The pertinent law cited by the prosecution is Section 1 of P.D. No. 119, which reads:

SECTION 1. Section four of Republic Act Numbered Four thousand ninety-three, as amended, is hereby amended to read as follows:

"Sec. 4. A private development bank shall be organized in the form of a stock corporation and its paid-up capital shall not be less than four million pesos for Class A, two million pesos for Class B, and one million pesos for Class C: Provided, That at least seventy per cent of the voting stock subscribed by the private sector shall be owned and held by citizens of the Philippines, except where a new bank is established as a result of the consolidation of existing private development banks in any of which there are foreign-owned voting stocks at the time of consolidation: Provided, however, That the Monetary Board may, with the approval of the President of the Philippines, reduce the required minimum percentage of Philippine ownership prescribed herein from seventy per cent (70%) to sixty per cent (60%): Provided, further, That if said subscription of private shareholders to the initial capitalization of a private development bank cannot be secured or is not available, the Development Bank of the Philippines on representation of the said private shareholders and with the approval of its Board of Governors shall, within thirty days from date of approval by the Board of Governors, and after compliance by the private stockholders with the conditions of said approval, subscribe to the capital stock of such development banks, which shall be paid in full at the time of subscription out of the trust fund provided in section three, paragraph three, of Republic Act Numbered Two thousand eighty-one, in an amount equal to the difference between the required paid-up capital and to the fully-paid subscribed capital of the private stockholders but not exceeding the latter: Provided, furthermore, That the Board of Governors shall act, on the representation made by the private shareholders within thirty days from the date it is filed: Provided, still further, That such shares of stock subscribed by the bank shall be preferred shares entitled to cumulative dividends at the yearly rate of one per cent during the first five years, two per cent during the following five years, and three per cent thereafter, shall be preferred as against common and other preferred stockholders in the distribution of assets in the event of liquidation, and shall be entitled to voting privileges: Provided, finally, That such preferred shares of the bank may be sold at any time at par to private individuals who are citizens of the Philippines, and in the sale thereof, the qualified registered stockholders shall have the right of pre-emption within one year from the date of offer in proportion to their respective holdings, but in the absence of such buyers, preference shall be given to residents of the province or city where the development bank is located. All members of the board of directors of the private development bank shall be citizens of the Philippines: Provided, however, That no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel, or consultant of any private development bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank: Provided, further, That, in case of merger or consolidation of private development banks duly approved by the Monetary Board, the limitation on the maximum number of corporate directors in a corporation, as provided for in section twenty-eight of the Corporation Law (Act No. 1459) shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidation private development banks." (Emphasis supplied).

A cursory reading of the foregoing unmistakably shows that P.D. No. 119 only prohibits full-time appointive or public elective official from serving as a director, legal counsel, or consultant, and not an absolute prohibition from holding a pecuniary or financial interest in a private development bank. This can easily be gleaned if the subject provision is to be construed in relation to the other parts of the statute.

It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment. 49 The law must not be read in truncated parts; its provisions must be read in relation to the whole law. 50 The statute's clauses and phrases must not be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing the meaning of any of its parts in order to produce a harmonious whole. 51 Consistent with the fundamentals of statutory construction, all the words in the statute must be taken into consideration in order to ascertain its meaning. 52

In this case, the immediately preceding sentence of the subject provision shows that it provides for the citizenship requirement of the board of directors in a private development bank. It states "All members of the board of directors of the private development bank shall be citizens of the Philippines." This citizenship requirement is followed by the subject provision stating that "Provided, however, that no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel, or consultant of any private development bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank." If We are to construe these sentences, it can be reasonably inferred that P.D. No. 119 only articulates the qualifications and disqualifications of an individual to serve as member of the Board of Directors. To be a director, P.D. No. 119 requires that the individual be a Filipino citizen. If he is to serve as an officer, director, legal counsel, or consultant, he must not be at the same time, a full-time appointive or elective public official. The exception provided is when such service is incident to financial assistance provided by the government or government-owned corporation. Taken as a whole, this means that P.D. No. 119 does not pertain to who can or cannot hold pecuniary interest in a private development bank within the context of committing the second mode of violating Section 3 (h) of R.A. No. 3019. Rather, it merely delineates who is qualified or disqualified to hold particular positions. In fact, the law uses the word "serve," which highlights that the prohibition only pertains to "service" or the holding of position and not the absolute prohibition of public officials from holding pecuniary or financial interest in a private development bank. Thus, if a public officer is barred from becoming a director, he can still be a stockholder thereof, who incidentally also holds financial or pecuniary interest because the same is not proscribed by P.D. No. 119.

Had the Legislature intended to totally prohibit public officers from holding any interest in a private development bank, it could have simply said so. The law could have expressly prohibited any and all forms of interest holding by public officers in a private development bank including being a stockholder. However, the law is silent on this matter. It only precludes public officials from concurrently holding certain positions such as being an officer, director, legal counsel or consultant. The limitation provided by the Legislature strongly proves that it is only the holding of particular positions that may affect the bank's decision-making and not the holding of financial or pecuniary interest by public officials that is prohibited in P.D. No. 119.

Relatedly, in Teves v. Sandiganbayan (Teves), 53 the petitioner therein was convicted for Section 3 (h) of R.A. No. 3019 under the second mode. In the said case, the petitioner who was a city mayor was found be an owner of a cockpit, which is a prohibited interest under Section 89 (2) of the Local Government Code (LGC) of 1991, which reads:

Section 89. Prohibited Business and Pecuniary Interest. — (a) It shall be unlawful for any local government official or employee, directly or indirectly, to:

xxx xxx xxx.

(2) Hold such interests in any cockpit or other games licensed by a local government unit x x x.

(Emphasis supplied)

Clearly, in Teves there was an express and unequivocal provision in the LGC that prohibits public local government officials or employees from holding interest in a cockpit. This is in stark contrast to the present case because there is no such express prohibition to hold pecuniary interest in a private development bank in P.D. No. 119. To reiterate, the prohibition in P.D. No. 119 only refers to the qualifications of those who can serve as members of the board and not a prohibition on who can or cannot hold a pecuniary interest in a private development bank. aDSIHc

On this score, the Sandiganbayan seriously erred when it held accused-appellant liable for the crime charged even when the clear and simple import of P.D. No. 119 merely specifies those who are qualified or disqualified to hold particular positions in a private development bank. Even if accused-appellant is disqualified from becoming a director in LDB, he remains a stockholder thereof, which is not prohibited in P.D. No. 119. This reinforces the conclusion that P.D. No. 119 is not the law that prohibits the holding of interest of public officials in a business, contract or transaction within the ambit of Section 3 (h) of R.A. No. 3019.

If at all, the liability of accused-appellant is only administrative in nature for having transgressed an established and definite rule of action, when he concurrently held the position of city mayor and director of LDB in violation of Section 1, P.D. No. 119. In fact, he was already held liable for the said infraction when he was adjudged guilty for Simple Misconduct in OMB-L-A-15-0271. 54

Insofar as his criminal liability is concerned, the prosecution has failed to establish with moral certainty all the elements of the crime charged. More specifically, it was not established beyond reasonable doubt that the third element exists — that accused-appellant is prohibited by a law from having an interest in LDB. To stress anew, P.D. No. 119 does not prohibit him from having an interest in LDB. He can have such interest, only that he is prohibited from holding certain positions.

In all criminal prosecutions, the prosecution bears the burden to establish the guilt of the accused beyond reasonable doubt. In discharging this burden, the prosecution's duty is to prove each and every element of the crime charged. 55 Having failed in this respect, the constitutional presumption of innocence must be upheld. Hence, the acquittal of accused-appellant for violation of Section 3 (h) of R.A. No. 3019 must follow as a matter course.

WHEREFORE, premises considered, the Decision dated February 1, 2019 and the Resolution dated March 22, 2019 of the Sandiganbayan in SB-18-CRM-0152 are hereby REVERSED and SET ASIDE. Accused-appellant Isidro Lebrilla Hemedes, Jr. is ACQUITTED of the charge of violation of Section 3 (h) of Republic Act No. 3019 for failure of the prosecution to prove his guilt beyond reasonable doubt.

SO ORDERED."Lopez, M., J., on official leave.

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

Separate Opinions

CAGUIOA, J., concurring:

I concur with the acquittal of accused-appellant Isidro Lebrilla Hemedes, Jr. (Hemedes). The prosecution in this case failed to prove, beyond reasonable doubt, that Hemedes violated Section 3 (h) of Republic Act No. (RA) 3019. ETHIDa

In the assailed Decision and Resolution, the Sandiganbayan found Hemedes guilty of violating Section 3 (h) of RA 3019, in relation to Presidential Decree No. (PD) 119. In ruling so, the Sandiganbayan relied heavily on the case of Teves v. Sandiganbayan 1 (Teves). In that case, the Court held that there are two modes of committing the crime: (1) when the public officer intervenes in a business or transaction; and (2) when the public officer holds an interest when the Constitution or law prohibits the same. In Teves, petitioner was convicted for violation of Section 3 (h) for having a pecuniary interest in a cockpit, which is prohibited under the Local Government Code. Thus, according to the Sandiganbayan, since Hemedes is also charged under the second mode, it is not necessary to show that he intervened in connection with a business or transaction. Since PD 119 prohibits elective officials from serving as members of the board of trustees in a private development bank, and Hemedes, while serving as Mayor of Cabuyao, Laguna was also a member of the Board of Trustees (BOT) of Luzon Development Bank (LDB), his liability for Section 3 (h) is unquestionable.

In the resolution for the above-captioned case, the ponencia acquits Hemedes. The ponencia finds that the Sandiganbayan seriously erred when it held Hemedes liable for violation of Section 3 (h) of RA 3019 when PD 119 does not explicitly disqualify an elective public official from holding a financial or pecuniary interest in a private development bank. 2 The ponencia explains that PD 119 is not the law referred to under Section 3 (h); thus, a violation of its proscription does not make Hemedes liable for the crime charged. 3

As stated at the outset, I agree with the acquittal of Hemedes.

Section 3 (h) of RA 3019 states:

Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

(h) Directly or indirectly having financial or pecuniary interest in any business, contract, or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

As correctly explained in the ponencia, it is not clear whether PD 119 is the law referred to under Section 3 (h) of RA 3019. Thus, any doubt in the construction and interpretation of a law should always be resolved in favor of the accused. 4

In addition to this, or more importantly, the Sandiganbayan's interpretation and application of Section 3 (h) — that a mere possession of a financial or pecuniary interest can make one liable for RA 3019 — fails again to recognize the spirit that animates RA 3019, which is graft and corruption. Under this prism, mere possession of a financial or pecuniary interest is not enough to make one liable for violation of Section 3 (h). Rather, there must be a concomitant proof of the accused-public officer's actual intervention or participation in a business or transaction, indicative that he or she used his or her power, influence or authority in said transaction.

This interpretation of Section 3 (h) is not without jurisprudential basis.

In the case of Trieste, Sr. v. Sandiganbayan 5 (Trieste), petitioner Generoso Trieste, Sr. (Mayor Trieste) therein, then Municipal Mayor of Numancia, Aklan, was charged for twelve (12) counts of violating Section 3 (h) of RA 3019 in relation to the purchases of construction materials made by the Municipality of Numancia from Trigen Agro-Industrial Development Corporation. The Sandiganbayan found Mayor Trieste guilty of the offense charged. However, when the case was elevated to this Court, the Solicitor General moved for the dismissal of the case and the acquittal of Mayor Trieste on the basis of, among others, lack of evidence showing that Mayor Trieste intervened in the transaction in which he has financial or pecuniary interest.

The Court, adopting the Solicitor General's position, acquitted Mayor Trieste and ruled:

"Inasmuch as Treasurer Vega signed and paid the vouchers after the materials were delivered, petitioner's signature on the vouchers after payment is not, we submit the kind of intervention contemplated under Section 3(h) of the Anti-Graft Law.

xxx xxx xxx

"What is contemplated in Section 3(h) of the anti-graft law is the actual intervention in the transaction in which one has financial or pecuniary interest in order that liability may attach. (Opinion No. 306, Series 1961 and Opinion No. 94, Series 1972 of the Secretary of Justice). The official need not dispose his shares in the corporation as long as he does not do anything for the firm in its contract with the office. For the law aims to prevent the dominant use of influence, authority and power (Deliberation on Senate Bill 293, May 6, 1959, Congressional Record, Vol. II, page 603). TIADCc

"There is absolutely no evidence that petitioner had, in his capacity as Mayor, used his influence, power, and authority in having the transactions given to Trigen. He didn't ask anyone — neither Treasurer Vega nor Secretary Maravilla for that matter, to get the construction materials from Trigen.

xxx xxx xxx

Considering the correct facts now brought to the attention of this Court by the Solicitor General and in view of the re-assessment made by that Office of the issues and the evidence and the law involved, the Court takes a similar view that the affirmance of the decision appealed from cannot be rightfully sustained. The conscientious study and thorough analysis made by the Office of the Solicitor General in this case truly reflects its consciousness of its role as the People's Advocate in the administration of justice to the end that the innocent be equally defended and set free just as it has the task of having the guilty punished. This Court will do no less and, therefore, accepts the submitted recommendation that the decision and resolution in question of the respondent Sandiganbayan be reversed and that as a matter of justice, the herein petitioner be entitled to a judgment of acquittal." 6 (Emphasis, italics and underscoring supplied)

Also, in Palma Gil v. People, 7 the Court acquitted the petitioner-mayor for violation of Section 3 (h) because there was no proof that he actually intervened in the questioned government transaction. The Court, reiterating its pronouncement in Trieste, held:

The mayor was convicted for violating section 3(h) of the Anti-Graft Law, to wit:

"SEC. 3. Corrupt Practices of Public Officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

x x x "(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest."

This section contemplates actual intervention in the transaction in which the accused has financial or pecuniary interest in order that liability may attach. (See Trieste, Sr. v. Sandiganbayan, 145 SCRA 508 [1986]). This does not appear clearly in the instant case. The contract to haul cement and other materials was given to Iturralde not by the mayor but by Roger Bacalla. Nowhere in the testimony of Roger Bacalla did he categorically state that the mayor authorized him to award the contract to Iturralde. Iturralde, on the other hand, repeatedly stated that he never had direct contact with the mayor as regards the contract and that it was Bacalla who told him that the mayor awarded the contract to him. Iturralde only assumed the authority of Bacalla on the belief that the mayor entrusted his cargo truck to Bacalla.

xxx xxx xxx

Considering the defense testimony and Iturralde's testimony that he never directly had any transaction with the mayor as regards the hauling contract plus Bacalla's unexplained silence on whether or not he was authorized by the mayor to transact business with Iturralde, there arise reasonable doubts as to the mayor's culpability for violating section 3(h) of the Anti-Graft Law. 8 (Emphasis supplied; italics in the original)

The Court's ruling in the foregoing cases is the correct interpretation and application of Section 3 (h) of RA 3019 because, in these cases, the Court recognized the underlying purpose for such prohibition — the dominant use of influence, power and authority. Thus, inasmuch as Section 3 (h) is recognized by law as a corrupt practice, its elements must necessarily pertain to indicia of graft and corruption. The actual intervention in a government transaction, where the accused-public officer has a financial or pecuniary interest, is that indispensable element that makes a person liable under Section 3 (h). Again, as the Court said in Trieste, what Section 3 (h) aims to prevent is the dominant use of influence, authority and power. Passive possession of a financial or pecuniary interest therefore is not enough; because while this may suggest conflict of interest, it does not amount to dominant use of power, influence and position. It does not amount to graft and corruption. cSEDTC

In Martel v. People, 9 the Court En Banc, echoing the words of Senator Arturo M. Tolentino, one of the sponsors of the law, explained the purpose of the enactment of RA 3019:

At this juncture, the Court emphasizes the spirit that animates R.A. 3019. As its title implies, and as what can be gleaned from the deliberations of Congress, R.A. 3019 was crafted as an anti-graft and corruption measure. At the heart of the acts punishable under R.A. 3019 is corruption. As explained by one of the sponsors of the law, Senator Arturo M. Tolentino, "[w]hile we are trying to penalize, the main idea of the bill is graft and corrupt practices. x x xWell, the idea of graft is the one emphasized." Graft entails the acquisition of gain in dishonest ways. 10 (Emphasis supplied; italics and underscoring in the original)

Clearly, not every act of a public official, improper or erroneous as it may be, falls under the provision of RA 3019. What makes an act punishable under RA 3019 is the public officer's corrupt intent, dishonest design or unethical interest, which are all wanting in the instant case.

While Hemedes admitted that he owns seven (7) shares in LDB and held a position in the BOT, there is no showing that he actually intervened in a government transaction involving LDB. Neither was it shown that Hemedes used his influence, power, and authority in relation to any business or transaction given by the government to LDB. Notably, the Office of the Ombudsman (Ombudsman) in fact found that the City Government of Cabuyao had no contract or transaction with LDB wherein Hemedes intervened or took part in his official capacity. 11 Further, in the parallel administrative case, the Ombudsman also found that, during his term as a member of the BOT of LDB, there was no showing that Hemedes compromised the interest of the City of Cabuyao or that the performance of his functions as a mayor had been negatively affected. 12 In addition, the Ombudsman found that Hemedes' membership in the BOT of LDB cannot be considered as "corrupt, inspired by an intention to violate the law, or that it was such grave or aggravated in character." 13 As such, the Ombudsman, in the said administrative case, found Hemedes liable only for simple misconduct.

Although these findings pertain to the administrative case, they are material proof that Hemedes did not actually violate Section 3 (h) of RA 3019. To emphasize, without any evidence that such public officer, using his influence, power or authority, intervened in a transaction or business, where he holds a financial or pecuniary interest, it cannot be said, beyond reasonable doubt, that the offense penalized under Section 3 (h) of RA 3019 was committed.

Furthermore, I find that Hemedes should be given the benefit of good faith.

Hemedes explained that he has no knowledge of the prohibition in PD 119 and has no intention of violating the same. 14 As discussed, Hemedes' lack of intent to violate PD 119 has been categorically affirmed by Ombudsman. Furthermore, this Court, in several cases, has recognized that, absent any showing of some dishonest or wrongful purpose, 15 a simple infraction of a law, especially those not penal in nature, does not automatically amount to bad faith or criminal intent. 16

PD 119 is not penal in nature. Thus, that Hemedes violated the same should not per se result in criminal prosecution; more so, for violation of RA 3019. At this juncture, I reiterate my Concurring Opinion in Villarosa v. People: 17

While I am in full agreement with the call to hammer the point that "public office is a public trust," I cannot, in good conscience, agree to punishing with imprisonment any and all violations of non-penal laws. It is true that public servants have a duty to know the limits of the authority granted to them. Yet, I cannot subscribe to the thinking that to do an act outside of those limits already constitutes "gross inexcusable negligence" that is criminally punishable. If that is the case, then we might as well dispense with administrative proceedings — whether in the Civil Service Commission or in the Ombudsman — against public officials, for what is the sense of having a distinction between administrative and criminal cases when every single misstep merits a criminal sanction.

It is also true that every person is presumed to know the law, and that ignorance of the law excuses no one from compliance therewith. However, it is likewise true that it is unjust to automatically punish someone with a criminal sentence by virtue of his non-compliance with a non-penal rule.18 (Emphasis supplied; underscoring in the original)

In light of the foregoing, I vote to acquit Hemedes because the prosecution failed to prove beyond reasonable doubt the essential elements of the crime charged.

 

Footnotes

1. Penned by Associate Justice Zaldy V. Trespeses, with Associate Justices Ma. Theresa Dolores C. Gomez-Estoesta and Georgina D. Hidalgo, concurring; rollo, pp. 5-23.

2. Records, Vol. I, pp. 41-50.

3.Id. at 21.

4.Id. at 20.

5.Id. at 20-21.

6.Id. at 22.

7.Id. at 23. (Italics supplied).

8.Id.

9.Id. at 23.

10.Id. at 88.

11.Id.

12.Id. at 89.

13.Id.

14.Id. at 90-95.

15.Id. at 1-2.

16.Id. at 160.

17.Id.

18.Rollo, p. 6.

19. Records, Vol. 1, pp. 281-291.

20.Id. at 281-282.

21.Id. at 290.

22.Id. at 356-373.

23.Rollo, p. 8.

24.Id.

25.Id. at 8-9.

26.Id. at 9.

27.Id.

28.Id.

29.Id. at 9-10.

30.Id. at 10.

31.Id.

32.Rollo, pp. 5-24.

33.Id. at 23.

34.Id. at 13.

35.Id. at 14-15.

36.Id. at 19-20.

37. Records, pp. 41-50.

38.Rollo, pp. 26-27.

39.Id. at 52-53.

40.Id. at 55.

41.Id. at 59.

42.Id. at 64-65.

43.Id. at 66-67.

44.Id. at 128.

45.Id. at 136.

46.Caballero v. Sandiganbayan (Third Division), 560 Phil. 302, 317 (2007).

47.Domingo v. Sandiganbayan, 510 Phil. 691, 702-703 (2005).

48.Trieste, Sr. v. Sandiganbayan, 229 Phil. 505, 516 (1986).

49.Enriquez v. Enriquez, 505 Phil. 193, 199 (2005).

50.Mactan-Cebu International Airport Authority v. Urgello, 549 Phil. 302, 322 (2007).

51.Fort Bonifacio Dev't. Corp. v. Commissioner of Internal Revenue, et al., 617 Phil. 358, 367 (2009).

52.Phil. International Trading Corp. v. COA, 635 Phil. 448, 454 (2010).

53.488 Phil. 311 (2004).

54.Rollo, pp. 103-109.

55.Catubao v. Sandiganbayan, G.R. No. 227371, October 2, 2019.

CAGUIOA, J., concurring:

1.G.R. No. 154182, December 17, 2004, 447 SCRA 309.

2.Ponencia, p. 11.

3.Id.

4.See id. at 8-10.

5.G.R. Nos. 70332-43, November 13, 1986, 145 SCRA 508.

6.Id. at 518-519.

7.G.R. Nos. 73642, 73613-16, September 1, 1989, 177 SCRA 229.

8.Id. at 247-249.

9.G.R. Nos. 224720-23 & 224765-68, February 2, 2021, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67194>.

10.Id.

11.See rollo, p. 54.

12.Id. at 106.

13.Id.

14.See id. at 93.

15.See Ysidoro v. Leonardo-de Castro, G.R. Nos. 171513 & 190963, February 6, 2012, 665 SCRA 1, 19.

16.See J. Caguioa, Concurring Opinion in Villarosa v. People, G.R. Nos. 233155-63, June 23, 2020, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66280>; See also Martel v. People, supra note 9; and J. Caguioa, Concurring Opinion in People v. Bacaltos, G.R. No. 248701, July 28, 2020, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66566>.

17.Id.

18.Id.