republic of the philippines sandiganbayan quezon...

REPUBLIC OF THE PHILIPPINESSANDIGANBAYAN

QUEZON CITY

PEOPLE OFPHILIPPINES,

Criminal Cases Nos. SB-16-CRM-0183 to 0184For: Violation of Section 3(e) ofRepublic Act (R. A.) No. 3019

Criminal Cases Nos. SB-16-CRM-0185 to 0186For: Malversation of PublicFunds

MARC DOUGLASCAGAS IV, et at,

CABOTAJE-TANG, PJFERNANDEZ, SJ., J. andFERNANDEZ,B.J.

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For resolution is accused Marc Douglas Chan Cagas IV'sMotion for Partial Reconsideration ([Of] the Resolution dated May24, 2017) dated June 20, 2017 which denied his motion toquash.l

In his subject motion, accused Cagas IV maintains thatthe allegations in the Informations for malversation, dOCk~

1pp. 275-290, Record, Vol. III

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as SB-16-CRM-0185-0186, are insufficient to su'pport a validindictment for malversation because they allegedly lack theessential elements of control or custody of public funds andaccountability to such funds. In support of his argument, heinsists that the consolidated case of Belgica vs. HonorableExecutive Secretary2 should not be applied to him for thefollowing reasons: (1) the said decision refers to the 2013Priority Development Assistance Fund (PDAF)Article, whichcontained provisions on post enactment authority to identifyPDAFprojects and post enactment authority in the areas offund release and realignment; according to accused Cagas IV,his cases involve 2008 PDAF which does not contain theaforesaid provisions; the Special Provision of the 2008 PDAFArticle shows that the funds shall be directly released to theimplementing agency and not to the legislator; accordingly, hecannot be considered an accountable officer; (2) Belgica wasdecided in 2013; hence, it would be unfair and violative of hisconstitutional rights if he were made liable for an act done in2008 on the basis ofa 2013 decision; and (3)the Supreme Courtexpressly stated that the decision in Belgica should be appliedprospectively; and assuming arguendo that he is being chargedunder the theory of conspiracy, still the Informations do notallege that his co-accused are accountable officers.

The prosecution interposes its objection to the subjectmotion. It claims that the arguments raised by accused CagasIV were squarely addressed by the Court in its assailedResolution. It argues that the "entire pork barrel system andnot just the 2013 PDAFArticle was put in issue in Belgica.According to the prosecution, the Supreme Court narrated thechronology of congressional pork barrel in the Philippines andshowed that in the long history of the said lump-sumdiscretionary funds, the approval and/or consent of thelegislator is needed before the said fund is released. Finally, theprosecution argues that while it may be true that the funds weredirectly released to the implementing agency, it is evident fromthe records that accused Cagas IVchose and actually endorsedthe non-governmental organizations (NGOs) controlled byaccused Napoles to implement the projects funded by hisPDAF"(72701 seRA 1 (2013) ~3 Pp. 354-357, Record, Vol. III r \)


The Court finds the motion bereft of merit.

Belgica assailed the constitutionality of the pork barrelsystem which included the congressional and presidential porkbarrel. Contrary to accused Cagas IV's argument, Belgicaincluded the 2008 PDAFArticle.

One (1) of the substantive issues raised in Belgica was"Whether or not the 2013 PDAF Article and all otherCongressional Pork Barrel Laws similar thereto areunconstitutional considering that they violate the principles offconstitutional provisions on (a) separation of powers; (b) non-delegability of legislative power; (c) checks and balances; (d)accountability; (e)political dynasties; and (f)local autonomy."4

In resolving the aforesaid issue, the Supreme Court tracedthe history of the pork barrel system in the Philippines from1922 until 2013. The HighCourt defined the term congressionalpork barrel, which is now known as PDAF,as "a kind of lump-sum, discretionary fund wherein legislators, either individuallyor collectively organized into committees, are able to effectivelycontrol certain aspects of the fund's utilization."

The High Court held that, "as may be observed from itslegal history, the defining feature of all forms ofCongressional Pork Barrel would be the authority oflegislators to participate in the post-enactment phases ofproject implementation." It also pointed out that the 2005PDAFArticle provided that the PDAF shall be used "to fundpriority programs and projects under the ten point agenda ofthe national government and shall be released directly to theimplementing agencies. It also introduced the program menuconcept, which is essentially a list of general programs andimplementing agencies from which a particular PDAFprojectmay be subsequently chosen by the identifying authority.The 2005 GAAswas re-enacted in 2006 and, hence, operated onthe same bases. In similar regard, the program menu con~

4 emphasis supplied5 General Appropriations Act

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X ------------------------------------------------------------------ x

was consistently integrated into the 2007, 2008, 2009, and2010 GAAS.6 Thus, the High Court declared unconstitutionalthe entire 2013 PDAFArticle and all provisions of past andpresent Congressional Pork Barrel laws which similarly allowlegislators to assume or participate in areas of projectidentification, modification and revision ofproject identification,fund release and/ or fund realignment, for being violative of theseparation of powers principle, among other reasons:

As may be ·observed from its legal history, thedefining feature of all forms of Congressional Pork Barrelwould be the authority of legislators to participate in thepost-enactment phases of project implementation.

At its core, legislators - may it be through projectlists, prior consultations or program menus - have beenconsistently accorded post-enactment authority toidentify the projects they desire to be funded throughvarious Congressional Pork Barrel allocations. Under the2013 PDAFArticle, the statutory authority of legislatorsto identify projects post-GAAmay be construed from theimport of Special Provisions 1 to 3 as well as the secondparagraph of Special Provision 4. To elucidate, SpecialProvision 1 embodies the program menu feature which,as evinced from past PDAFArticles, allows individuallegislators to identify PDAFprojects for as long as theidentified project falls under a general program listed inthe said menu. Relatedly, Special Provision 2 providesthat the implementing agencies shall, within 90 daysfrom the GAAis passed, submit to Congress a moredetailed priority list, standard or design prepared andsubmitted by implementing agencies from which thelegislator may make his choice. The same provisionfurther authorizes legislators to identify PDAFprojectsoutside his district for as long as the representative of thedistrict concerned concurs in writing. Meanwhile, SpecialProvision 3 clarifies that PDAFprojects refer to "projectsto be identified by legislators" and thereunder providesthe allocation limit for the total amount of projectsidentified by each legislator. Finally, paragraph 2 ofSpecial Provision 4 requires that any modification andrevision of the project identification "shall be submittedto the House Committee on Appropriations and/7

'emph";,'he;,, 4 ~

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X---------------------------- ------ -------------------------------- x

Senate Committee on Finance for favorable endorsementto the DBMor the implementing agency, as the case maybe." From the foregoing special provisions, it cannot beseriously doubted that legislators have been accordedpost-enactment authority to identify PDAFprojects.

Aside from the area of project identification,legislators have also been accorded post-enactmentauthority in the areas of fund release and realignment.Under the 2013 PDAFArticle, the statutory authority oflegislators to participate in the area of fund releasethrough congressional committees is contained inSpecial Provision 5 which explicitly states that "[a]llrequest for release of funds shall be supported by thedocuments prescribed under Special Provision No.1 andfavorably endorsed by House Committee onAppropriations and the Senate Committee on Finance, asthe case may be"; while their statutory authority toparticipate in the area of fund realignment is containedin: first, paragraph 2, Special Provision 4 which explicitlystates, among others, that "[a]nyrealignment [offunds]shall be submitted to the House Committee onAppropriations and the Senate Committee on Finance forfavorable endorsement to the DBMor the implementingagency, as the case may be"; and, second, paragraph 1,also of Special Provision 4 which authorizes the"Secretaries of Agriculture, Education, Energy, Interiorand Local Government, Labor and Employment, PublicWorks and Highways, Social Welfare and Developmentand Trade and Industry ... to approve realignment fromone project/ scope to another within the allotmentreceived from this Fund, subject to [among others] (iii)the request is with the concurrence of the legislatorconcerned. "

Clearly, these post-enactment measures whichgovern the areas of project identification, fund releaseand fund realignment are not related to functions ofcongressional oversight and, hence, allow legislators tointervene and/ or assume duties that properly belong tothe sphere of budget execution. Indeed, by virtue of theforegoing, legislators have been, in one form or another,authorized to participate in - as Guingona, Jr. puts it-"the various operational aspects of budgeting," including"the evaluation ofwork and financial plans for individualactivities" and the "regulation and release of funds" inviolation of the separation of powers principle. '7

II kt

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X -------------------------------------------------------- ---------- x

fundamental rule, as categorically articulated inAbakada, cannot be overstated - from the moment thelaw becomes effective, any provision of law thatempowers Congress or any of its members to play anyrole in the implementation or enforcement of the lawviolates the principle of separation of powers and is thusunconstitutional. That the said authority is treated asmerely recommendatory in nature does not alter itsunconstitutional tenor since the prohibition, to repeat,covers any role in the implementation or enforcement ofthe law. Towards this end, the Court must thereforeabandon its ruling in Philconsa which sanctioned theconduct of legislator identification on the guise that thesame is merely recommendatory and, as such,respondents' reliance on the same falters altogether.

Besides, it must be pointed out that respondentshave nonetheless failed to substantiate their position thatthe identification authority of legislators is only ofrecommendatory import. Quite the contrary, respondents- through the statements of the Solicitor General duringthe Oral Arguments have admitted that theidentification of the legislator constitutes a mandatoryrequirement before his PDAFcan be tapped as a fundingsource, thereby highlighting the indispensability of thesaid act to the entire budget execution process:

Thus, for all the foregoing reasons, the Courthereby declares the 2013 PDAFArticle as well as all otherprovisions of law which similarly allowlegislators to wieldany form of post-enactment authority in theimplementation or enforcement of the budget, unrelatedto congressional oversight, as violative of the separationof powers principle and thus unconstitutional. Corollarythereto, informal practices, through which legislatorshave effectivelyintruded into the proper phases of budgetexecution, must be deemed as acts of grave abuse ofdiscretion amounting to lack or excess of jurisdictionand, hence, accorded the same unconstitutionaltreatment. That such informal practices do exist andhave, in fact, been constantly observed throughout theyears has not been substantially disputed here. Aspointed out by Chief Justice Maria Lourdes P.A. Sereno(Chief Justice Sereno) during the Oral Arguments ofthesecases,/?

4~

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X------------------------------------------------------------------ x

Clearly, the Supreme Court found that the legislators hadcontrol of their PDAF, including the 2008 PDAF, whichintegrated the program menu concept. This concept isessentially a list of general programs and implementingagencies from which a particular PDAF project may besubsequently chosen by the identifYingauthority. The controlof the legislators is shown by the provision according themauthority to participate in the post-enactment phases of theproject implementation through project lists, or priorconsultations which, according to the Supreme Court, is inviolation of the principle of separation of powers.

Accused Cagas IV, however, claims that although theSupreme Court held that the PDAFfunds are personal funds ofthe legislators, the said pronouncement does not apply to himbecause the Supreme Court itself declared that Belgica shouldbe applied prospectively:

17. Consequently, considering the prospectiveapplication of the doctrine laid down in the Belgica cases,the pronouncements made therein making PDAF fundsas personal funds of legislators there by making themaccountable officers for purposes of malversation maynot therefore be validly applied to accused Cagas asregards the questioned 2008 PDAFallocation for the FirstDistrict of Davao del Sur which were the subject matterof SB-CRM-16-0185 and SB-CRM-16-0186, both foralleged malversation of public funds:

The Court finds the argument bereft ofmerit.

Indeed, the Supreme Court stressed in Belgica that itspronouncement on the unconstitutionality of the 2013 PDAFArticles and other pork barrel provisions similar thereto mustonly be treated as prospective in effect in view of the operativefact doctrin~

dJt10

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. ai.X-------------------------------------------------------- ---------- x

As a final point, it must be stressed that the Court'spronouncement anent the unconstitutionality of (a)the 2013 PDAFArticle and its Special Provisions, (b) allother Congressional Pork Barrel provisions similarthereto, and (c) the phrases (1) "and for such otherpurposes as may be hereafter directed by the President"under Section 8 of PD 910, and (2)"to finance the priorityinfrastructure development projects" under Section 12 ofPD 1869, as amended by PD 1993, must only be treatedas prospective in effect in view of the operative factdoctrine.

To explain, the operative fact doctrine exhorts therecognition that until the judiciary, in an appropriatecase, declares the invalidity of a certain legislative orexecutive act, such act is presumed constitutional andthus, entitled to obedience and respect and should beproperly enforced and complied with. As explained in therecent case of Commissioner of Internal Revenue v. SanRoque Power Corporation, the doctrine merely "reflect[s]awareness that precisely because the judiciary is thegovernmental organ which has the final say on whetheror not a legislative or executive measure is valid, a periodof time may have elapsed before it can exercise the powerofjudicial review that may lead to a declaration of nullity.It would be to deprive the law of its quality of fairness andjustice then, if there be no recognition of what hadtranspired prior to such adjudication." "In the languageof an American Supreme Court decision: 'The actualexistence of a statute, prior to such a determination [ofunconstitutionality], is an operative fact and may haveconsequences which cannot justly be ignored. "'

For these reasons, this Decision should beheretofore applied prospectively.

However, in addition to its declaration that the Belgicashould be applied prospectively, the Supreme Court made thefollowing express directive in the dispositive portion of itsdecision:

Finally, the Court hereby DIRECTS allprosecutorial organs of the government to, within thebounds of reasonable dispatch, investigate andaccordingly prosecute all government officials an~

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private individuals for possible criminal offenses relatedto the irregular, improper and/or unlawfuldisbursement/utilization of all funds under the PorkBarrel System.

Thus, granting that the operative fact doctrine may beextended to the acts done by accused Cagas IV,pursuant to the2008 PDAFArticleprior to its declaration ofunconstitutionality,these acts include only those regularly, properly and lawfullyperformed by him. The "mantle of protection" provided by theoperative fact doctrine does not grant accused Cagas IVimmunity from any criminal prosecution related to theirregular, improper and/or unlawful disbursement/utilizationof the funds under the 2008 PDAFArticle.

In these cases, it is alleged that accused Cagas, inconspiracy with the other accused, misappropriated the 2008PDAFallocated to him by the general appropriation law becausehis PDAF-fundedproject turned out to be non-existent.

Moreover, this involves a motion to quash. Thus, accusedCagas IV'sclaim that he is not an accountable officeris a matterof defense. It is settled that in considering a motion to quashon the ground that the facts charged do not constitute anoffense, the test is whether the facts alleged, if hypotheticallyadmitted, would establish the essential elements of the offensecharged as defined by law. The trial court may not consider asituation contrary to that set forth in the criminal complaint orinformation. Facts that constitute the defense of the accusedagainst the charge under the information must be proved by[him]during trial. Such facts or circumstances do not constituteproper grounds for a motion to quash the information on theground that the material averments do not constitute theoffense.7

Thus, the Court maintains its ruling that the allegationsin the Informations in Criminal Cases Nos. SB-16-CRM-0185 to0186 sufficiently charge accused Cagas IV and his co-accusedwith malversation. The allegations therein, if hypotheticallyadmitted, clearlyconstitute the elementsof malversati0/7

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ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X-----------~----------------------------------------------------- X

held by the Court In its Resolution sought to be partiallyreconsidered:8

A motion to quash information is the mode bywhich an accused assails the validity of a criminalcomplaint or information filed against him forinsufficiency on its face in point of law, or for defectswhich are apparent in the face of the information. Infiling a motion to quash, the accused assails the validityof a criminal complaint or information filed against him[or her] for insufficiency on its face in point of law, or fordefects which are apparent in the face of the information.

Here, accused Cagas IV's motion to quash isanchored on the ground that the facts charged in theInformations do not constitute the offenses ofmalversation and violation of Section 3(e) of R. A. No.3019.

The fundamental test in determining whether amotion to quash may be sustained based on this groundis whether the facts alleged, if hypothetically admitted,will establish the essential elements of the offense asdefined in the law. Extrinsic matters or evidence aliundeare not considered. The test does not require absolutecertainty as to the presence of the elements of the offense;otherwise, there would no longer be any need for theprosecution to proceed to trial.

On the other hand, malversation is penalized underArticle 217 of the RPC. It has the following elements:

(1) the offender is a public officer;(2) he has custody or control of the funds orproperty by reason of the duties of his office;(3) the funds or property are public funds orproperty for which he is accountable; and, mostimportantly,(4) he has appropriated, taken, misappropriatedor consented, or, through abandonmen~

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X ---------------------------- ------ ---------------------- ---------- x

negligence, permitted another person to takethem.

Again, except for the date, the amount and theparties involved, the Informations for malversation,similarly read:

Criminal Case No. 16-CRM-0185[For:Malversation]

In January 2008, or sometime or prior orsubsequent thereto, in Quezon City, Philippines,and within this Honorable Court's jurisdiction;accused MARC DOUGLAS C. CAGAS IV (CagasIV), Representative of the First District of Davaodel Sur, accountable for and exercising controlover the Priority Development Assistance Fund(PDAF) allocated to him by the generalappropriation law ... , all publicofficers and while in the performance of theiradministrative and/ or official functions,committing the offense in relation to office,conspiring with one another and with privateindividuals JANET LIM NAPOLES (Napoles),JESUS CASTILLO (Castillo), MARGARITA A.GUADINEZ (Guadinez), IRENEO PIRATER(Pirater) and JOCELYN DEIPARINE (Deiparine);did then and there willfully, unlawfully andfeloniously appropriate, take, misappropriate orconsent or, through abandonment or negligence,permit private individuals to take public fundsamounting to at least TWO MILLION SEVENHUNDRED THOUSAND PESOS (P2,700,000.00)more or less, through the followingacts:

(a) Cagas IV unilaterally chose and indorsedPeoples Organization for Progress andDevelopment Foundation, Inc. (POPDFI),a non-government organization operated and/ orcontrolled by Napoles as "project partner" inproviding agricultural production packages in theFirst District of Davao del Sur which were fundedby Cagas IV's PDAFallocation covered by SpecialAllotment Release Order (SARO)No. 08-00638 indisregard of the appropriation law and itsimplementing rules, and/ or without the benefit ofpublic bidding, as required under Republic Act

No. 9184 and its implementing rules /7~ fti


regulations, with POPDFIbeing unaccredited andunqualified to undertake the projects;(b) DBM's Relampagos, Nuiiez, Paule andBare unduly accommodating Napoles, facilitatedthe processing of the aforementioned SAROandthe corresponding Notice of Cash Allocationresulting in the release of the subject fundsdrawn from Cagas IV's PDAFto TRC, the agencychosen by Cagas IV through which to course hisPDAFallocations;(c) Cagas IVand TRC'sOrtiz then entered intoa Memorandum ofAgreement with POPDFIon thepurported implementation of Cagas IV's PDAFprojects;(d) Lacsamana recommended to Ortiz therelease of Cagas IV's PDAFto POPDFI;(e) Ortiz also facilitated, processed andapproved the disbursement of the subject PDAFrelease by signing Disbursement Voucher (DV)Nos. 012008041034 and 012009030673 alongwith Cunanan, Espiritu and Jover verifying thatthe supporting documents were attached, as wellas causing the issuance of Land Bank of thePhilippines (LBP)checks with numbers 885788and 890078 covering the total amount ofP2,700,000.00 to POPDFIwhich were signed byOrtiz and Figura, without accused TRC officersand employees having carefully examined andverified the accreditation and qualification ofOPDFI as well as the transaction's supportingdocuments;(f) POPDFI received the above describedchecks from TRC and the proceeds thereof wereremitted to Napoles;(g) By their above acts, Cagas IV and theabove-named public officialsallowed Napoles andher cohorts, through POPDFI, to take possessionand thus misappropriate PDAF-drawn publicfunds, instead of implementing the PDAF-fundedprojects, which turned out to be non-existent;with Ducut receiving kickback or share of thePDAF proceeds for and in behalf of Cagas IV,while Napoles, Castillo, Guadinez, Pirater andDeiparine caused/ participated in thepreparation and signing of the acceptance anddelivery reports, disbursement reports, projectproposals and other liquidation documents toconceal the fictitious nature of the transaction, tothe damage and prejudice of the Republic of thePhiliPPin~

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The Informations for malversation also specificallyallege all the elements of the offense charged, i.e., thataccused accountable public officers, conspiring with oneanother and with accused Napoles and other accusedprivate individuals, appropriated, took, misappropriatedor consented or through abandonment or negligencepermitted private individuals to take public funds byallowing accused Napoles to take possession and thusmisappropriate PDAF-drawn public funds instead ofimplementing the PDAF-funded projects which turned-out to be non-existent.

Accused Cagas IV,however, insists that he cannotbe held liable for malversation because he is not anaccountable officerand he had no control of funds.

An accountable public officer,within the purview ofArticle 217 of the Revised Penal Code, is one who hascustody or control of public funds or property by reasonof the duties of his office. To be liable for malversation,an accountable officerneed not be a bonded official.Thename or relative importance of the officeor employmentis not the controlling factor. What is decisive is the natureof the duties that he performs and that as part of, and byreason of, said duties, he receives public money orproperty, which he is bound to account for.

This issue of accused Cagas IV as an accountableofficerinsofar as his PDAFis concerned had already beenexplained by the Office of the Ombudsman in itsResolution dated June 22, 2015. Citing Belgica, it heldthat "it is the legislator who exercises actual control andcustody of the PDAFshare allocated to him or her by theappropriation statute." The Court agrees .

. Finally, accused Cagas IV's claims that he is not amember of the BAC;that he merely endorsed the NGOs;that his signature is forged; that he never facilitated theprocessing of the SAROsand the NCAs,are facts contraryto the allegations in the Informations. These should notbe considered in determining a motion to quash on theground that the facts charged in the Information do notconstitute an offense because facts contrary to theallegations in the information are matters of defensewhich may be raised only during the presentati0/7

evidence. 41M

ResolutionCriminal Cases No. SB-16-CRM-0183 to 0186People vs. Cagas IV, et. al.X ------------------------------------------------------------------ x

WHEREFORE, the Court DENIES accused Marc DouglasChan Cagas IV's Motion for Partial Reconsideration (fO.n theResolution dated May 24, 201 7)dated June 20, 2017 for lack ofmerit and for being pro forma.

ARO M. CA -TANGPresiding Justice

Chairperson

o R. FERNANDEZdate Justice

<: SARA JANE T. F RNANDEZAssociate Justice

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