DECISION NO.

2015-193
April 13, 2015
 

Subject:    Motion  for   Reconsideration  of  Ms. 

Lucena  A.  Buscas,  former  Chief,
Cashiering  Services  of  Zamboanga City 
Water  District,  Zamboanga City, of
Commission on Audit Decision No. 2014-
085 dated June 4, 2014, which affirmed
COA Regional Office No. IX Decision
No. 2011-26 dated November 24, 2011
and Notice of Disallowance Nos. 2008-005
(2007) to 2008-009 (2007), all dated
January 6, 2009, on the payment of excess
per diem to its Board of Directors, in the
total amount of P1,632,800.00; and request
of Ms. Zenaida Sanchez, Officer-in-
Charge, Treasury Section, for exclusion
from liability therefrom
 
 

RESOLUTION
 
 

FACTS OF THE CASE

 

Before this Commission is the motion for reconsideration  (MR) of Ms.

1 

Lucena A. Buscas, former Chief, Cashiering Services, Zamboanga City Water

District (ZCWD), Zamboanga City, of Commission on Audit (COA) Decision No.
2014-085 dated June 4, 2014, which affirmed COA Regional Office (RO) No. IX
Decision No. 2011-26 dated November 24, 2011 and Notice of Disallowance (ND)
Nos. 2008-005 (2007) to 2008-009 (2007), all dated January 6, 2009, on the
payment of excess per diem to its Board of Directors (BOD), in the total amount of
P1,632,800.00; and request of Ms. Zenaida Sanchez,  Officer-in-Charge (OIC),
2 

Treasury Section, for exclusion from liability therefrom.

 

Movant Buscas received a copy of the assailed decision on July 4, 2014 and
filed the instant MR on July 8, 2014. On the other hand, Ms. Sanchez received her
copy of the assailed decision on July 1, 2014 and filed her request for exclusion
from liability on July 10, 2014. Both the MR and the letter were filed on time. 3

In her motion, movant Buscas assailed the decision and prayed to allow and
pass in audit the NDs on the following grounds:
 

1. She never received the subject NDs. Moreover, she explained that her
liability under the subject NDs, as then Cashiering Services Chief,
involved the release of the checks for payment. Citing the Arias
Doctrine,  she averred that she had to rely on her subordinates and was
4 

not required to scrutinize checks and vouchers;

 

2. Presidential Decree (PD) No. 198, as amended, being the source or basis
of the compensation of the members of the Board of Directors, should
prevail over Administrative Order (AO) No. 103. The Board of Trustees
of the Local Water Utilities Administration (LWUA) exercised its
mandate under PD No. 198, as amended, when it issued Memorandum
Circular (MC) No. 004-002 as basis for the payment of per diem; and
 

3. The per diem was received in good faith, hence, not subject to refund.

 

On the other hand, Ms. Sanchez sought exclusion from liability on the
following grounds:
 

1. As OIC of the Treasury Section, she did not exercise any discretion as to
the legal technicalities and/or questions of validity involved in the
disbursement of government funds; and
 

2. It would be the height of injustice to reimburse or settle the amounts

disallowed in the subject NDs which she did not receive, or did not
benefit from or authorize its payment. Her only responsibility was to
process the check vouchers indorsed to her in the ordinary course of
office procedures, and to ensure that all signatures therein have been
affixed by her superior officers. It would have been insubordination to
defy the directives embodied in the Board Resolutions authorizing the
payment of per diem, as the check vouchers and their attached documents
all appear valid on its face. She also claims that she was never officially
furnished a copy of the subject NDs.
 

They both contended that their functions were merely ministerial in nature

and did not involve any discretion to approve or deny payments.
 
 
 

ISSUE
 

The issue to be resolved is whether or not the MR of Ms. Buscas and the
request of Ms. Sanchez for exclusion from liability are meritorious.
 
 
 

DISCUSSION
 

This Commission sustains the disallowance but Ms. Buscas and Ms. Sanchez
are not liable therefor.
 

Sections 19.1 and 30.1 of the 1993 Revised Manual on Certificate of

Settlement and Balances (CSB) prescribed under COA Circular No. 94-001 dated
January 20, 1994 and reiterated in the 2009 Rules and Regulations on the Settlement
of Accounts, provide:
 

19.1 The liability of public officers and other persons for audit
disallowances shall be determined on the basis of: (a) the
nature of the disallowance; (b) the duties, responsibilities
or obligations of officers/persons concerned; (c) the
extent of their participation or involvement in the
disallowed transaction; and (d) the amount of losses or
damages suffered by the government thereby. The
following are illustrative examples:
 

xxx
 

19.1.2 Public officers who certify to the necessity,

legality and availability of funds/budgetary
allotments, adequacy of documents, etc.
involving the expenditure of funds or uses of
 government property shall be liable according
to their respective certifications.
 

xxx
 

30.1 General Liability for Unlawful Expenditure

 

30.1.1 Expenditures of government funds or uses of government

property in violation of law or regulations shall be a
personal liability of the official or employee found to be
directly responsible therefor .
 

Movants Buscas and Sanchez, who held positions of Chief of Cashiering

Services and OIC of the Treasury Section, respectively, were held liable on the subject
NDs as payees in the withdrawal of deposits for the payment of the per diems to the
BOD members. They did not participate in the approval of the payment and were not
directly responsible for the expenditure. Thus, based on the aforementioned provisions
of the Revised Manual on CSB, they may not be held liable for the disallowance.
 

Anent the disallowance itself, the grounds proffered by appellant Buscas

involving the legality of the issuance of MC No. 004-002 as basis for the payment of
per diem vis-à-vis PD No. 198 and AO No. 103, were already considered and
judiciously passed upon in the assailed Decision. If only to stress, LWUA MC No.
004-002 must yield to AO No. 103 issued by the President of the Philippines, limiting
the grant of per diem of the members of the BOD of water districts to P20,000.00
only. LWUA does not have the absolute and unfettered authority to release issuances
contrary to law and rules, for it must bow down to the power of control wielded by the
President of the Philippines.
 
 

RULING
 
 

WHEREFORE , premises considered, the instant motion for reconsideration

of COA Decision No. 2014-085 dated June 4, 2014 is hereby DENIED for lack of
merit. However, Ms. Lucena Buscas and Ms. Zenaida Sanchez, then Chief of
Cashiering Services and Officer-in-Charge, Treasury Section, respectively, of
Zamboanga City Water District, Zamboanga City, are both excluded from liability for
the disallowances under Notice of Disallowance Nos. 2008-2005 (2007) to 2008-009
(2007), all dated January 6, 2009, on the payment of excess per diem to the Board of
Directors of the ZCWD in the total amount of P1,632,800.00.

DECISION NO. 2014-366

December 17, 2014
 
Subject:   Petition of Director Romeo S. Recide, et al.,
Bureau of Agricultural Statistics, Quezon
Avenue, Quezon City, for review of
Adjudication and Settlement Board Decision
No. 2011-057 dated May 17, 2011, which
affirmed Notices of Disallowance Nos. 08-
001-101-08 dated October 8, 2008 and 09-
001-101-08 dated July 28, 2009, relative to
the payment to Atty. Adonis V. Gabriel for
legal services rendered in the amounts of
P672,000.00 and P30,000.00, respectively, or
an aggregate amount of P702,000.00
 
 
DECISION
 
 
FACTS OF THE CASE
 
Before this Commission is the petition of Director Romeo S. Recide, Maura S.
Lizarondo, Virginia A. Viloria, Elizabeth B. Cabrera, Gloria C. Altez, and Eleanora B.
Nabora, all of the Bureau of Agricultural Statistics (BAS), Quezon Avenue, Quezon
City, for review of Adjudication and Settlement Board (ASB) Decision No. 2011-057
dated May 17, 2011, pursuant to Section 1, Rule VII of the 2009 Revised Rules of
Procedure of the Commission on Audit (RRPC).
 
BAS received ND No. 08-01-101-08 on October 16, 2008. On the same date,
BAS filed its motion for reconsideration which was treated as an appeal and denied in
 National Government Sector (NGS)-Cluster D Decision No. 2009-001 dated February
20, 2009. The said decision was received by BAS on March 5, 2009. On September 2,
2009, BAS filed a motion for reconsideration of the said decision, but the same was
denied under NGS Cluster D Resolution No. 2009-002 dated October 30, 2009. The
saidresolution was received by BAS on November 6, 2009. On November 9,
2009,  BAS filed a motion for additional time asking for an additional thirty (30) days
1 

within which to file its appeal. On the same date, BAS filed a motion to consolidate
ND No. 09-001-101-(08)  with NGS Cluster D Resolution No. 2009-02. On December
2 

7, 2009, BAS filed its appeal with the then Adjudication and Settlement Board (ASB),
this Commission. On May 17, 2011, the ASB rendered the assailed decision which
was received by BAS on May 27, 2011. Considering that ND No. 09-001-101-(08)
was consolidated with NGS-Cluster D Resolution No. 2009-02, BAS has 57 days left
or until July 23, 2011 to file its petition for review. On June 3, 2011, BAS filed the
instant petition within the reglementary period.
 
Records show that on July 7, 2004, a consultancy agreement was entered into
by and between BAS and Atty. Adonis V. Gabriel for the latter to act as the agency
Legal Consultant from July 1, 2004 to June 30, 2005. Upon the contract’s expiration
on June 30, 2005, BAS and Atty. Gabriel entered into six (6) more consultancy
agreements for the subsequent periods, viz:
 
 
Date of Agreement Period Covered Monthly Fee

June 15, 2005 July 1, 2005 – June 30, 2006 P 14,000.00

June 15, 2006 July 1, 2006 – December 31, 2006 15,000.00

December 15, 2006 January 1, 2007 – June 30, 2007 15,000.00

June 15, 2007 July 1, 2007 – December 31, 2007 15,000.00

December 28, 2007 January 1, 2008 – June 30, 2008 15,000.00

June 2008 July 31, 2008 – December 31, 2008 15,000.00

 
In Audit Observation Memorandum (AOM) No. 07-014 dated December 10,
2007, the Audit Team Leader (ATL), BAS, raised the issue on the payments of
consultancy fees to Atty. Gabriel, citing COA Circular No. 95-11 dated December 4,
1995, which states that:
 
[P]ublic funds shall not be utilized for payment of the services of a
private legal counsel or law firm to represent government agencies in
court or to render legal services for them. In the event that such legal
representation cannot be avoided in exceptional circumstances, the
written conformity and acquiescence of the Solicitor General or the
Government Corporate Counsel, as the case maybe, and the written
concurrence of the Commission on Audit shall first be secured before
the hiring or employment of a private lawyer or law firm.
 
The Director, BAS, subsequently requested authority from the Office of the
Solicitor General (OSG) to hire a legal consultant. In a letter dated March 11, 2008,
the OSG granted the request with the validity thereof retroactive to the period July 1,
2004 and until June 30, 2008.
 
On April 17, 2008, the Director, BAS, requested this Commission for
concurrence in the hiring of Atty. Gabriel under the first five consultancy contracts in
the table above. However, in a 6 th Indorsement dated August 22, 2008, the COA
General Counsel denied the request on the ground that the provision of COA Circular
No. 86-255 dated April 2, 1986, particularly on the requirement of prior written
conformity and acquiescence of the OSG and the prior written concurrence of COA,
was not complied with.
 
On October 7, 2008, the Director, BAS, likewise requested for the written
concurrence of this Commission for the last consultancy contract in the table above.
In a 4 thIndorsement dated June 8, 2009, the COA General Counsel concurred in the
said consultancy contract but the said concurrence was made effective only from the
date the request was made.
 
On October 10, 2008, the ATL, BAS and the Supervising Auditor (SA),
Department of Agriculture (DA), issued ND No. 8-001-101-08 disallowing the
payments made to Atty. Gabriel for the legal services he rendered under the first five
consultancy contracts totaling P672,000.00. Named liable were the following:
 
 
 Name Position Reason

Romeo S. Recide Director For approving the contracts and Disbursement

Vouchers (DVs)

Maura S. Lizarondo Assistant Director For approving the DVs, signing Certificates of
Services and certifying expenses as necessary, lawfu
and incurred under her supervision

Virginia A. Viloria Chief, Administrative and For certifying that the expenses were necessary,
Finance Division lawful and incurred under her supervision

lizabeth B. Cabrera Officer-in-Charge, Project For certifying that the expenses were necessary,
Management Unit lawful and incurred under her supervision

Gloria C. Altez Accountant III For certifying cash availability and completeness of
supporting documents

leanora B. Nabora Assistant, Accounting For certifying cash availability and completeness of
Unit supporting documents

Atty. Adonis V. Gabriel Legal Counsel For being the payee

 
On October 16, 2008, the Director, BAS, in a letter of even date, requested
reconsideration of ND No. 08-001-101-08 averring, among others, that the BAS was
not able to fill up its vacant Legal Officer III position due to lack of applicants and
that the failure to secure the written conformity and acquiescence of the OSG and the
written concurrence of COA was an oversight. The said request was favorably
endorsed by the ATL, BAS, in a 1 st Indorsement dated October 22, 2008, stating that
the BAS management acted in good faith and the consultancy fee was relatively low
and reasonable.
 
BAS management followed this up in a letter dated January 27, 2009,
explaining that (AOM) No. 07-014 was the first notice they had pertaining to the
hiring of a legal consultant considering that the agency Annual Audit Reports from
2004 to 2006 were silent on any violations committed by the BAS in the hiring of a
legal consultant Thus, they assumed that payment pertaining thereto has no legal
impediment.
  
On February 20, 2009, the Cluster Director, Cluster D-Economic Services,
National Government Sector, this Commission, rendered NGS-Cluster D Decision
No. 2009-001 denying the motion for reconsideration and affirming ND No. 08-001-
101-08. BAS filed a motion for reconsideration of the decision but the same was
denied for lack of merit under NGS-Cluster D Resolution No. 2009-002 dated
October 30, 2009.
 
Meanwhile, on July 28, 2009, the ATL, BAS and SA, DA issued ND No. 09-
001-101-08 disallowing the portion of the last consultancy contract pertaining to the
periods July to August, 2008 amounting to P30,000.00, the concurrence being
effective only from the time the same was requested.
 
On December 7, 2009, BAS filed an appeal before the ASB based on the same
grounds. A motion for consolidation was likewise filed to consolidate their appeal
from ND No. 09-001-101-08 with their appeal from the NGS decision considering
that the same proceeded from the same issues and factual circumstances.
 
On May 17, 2011, the ASB rendered the assailed decision denying the appeal
and affirming both NDs in the total amount of P702,000.00.
 
Hence, this petition for review.
 
Petitioners advanced the following arguments:
 
1. They cannot be held civilly liable because the consultancy agreements
between BAS and Atty. Gabriel, and the consequent legal services rendered
therefor are necessary, reasonable, fair, legal and for the best interest of the
public service;
 
2. Neither the national government nor the BAS suffered any loss or damage
by entering into the questioned consultancy agreements. On the other hand,
the BAS and the national government immensely benefited from the legal
services rendered by the legal consultant; and
 
3. The petitioners acted in good faith in entering into the questioned
agreements, and as such, they cannot be held personally liable therefor.
 
 
ISSUE
 
The issue to be resolved is whether or not the instant petition may be granted.
 
 
DISCUSSION
 
This Commission finds the instant petition devoid of merit.
 
The arguments presented before this Commission are mere rehash of the
arguments presented before the CD, NGS-Cluster D and the ASB. The same were
already passed upon and ruled against by NGS-Cluster D Decision No. 2009-001 and
ASB Decision No. 2011-057.
 
The hiring of Atty. Gabriel without the prior written conformity and
acquiescence of the Solicitor General and the prior written concurrence of the
Commission on Audit is irregular and therefore payments for his fees under the said
contracts were correctly disallowed in audit. In a long line of cases, the Supreme
Court (SC) has ruled that this requirement is indispensable and is intended to curtail
the unauthorized and unnecessary disbursement of public funds to private lawyers for
services rendered to the government. 3

 
As to the issue of good faith, the same is unavailing. The lack of knowledge
regarding existing laws, rules and regulations cannot be a valid defense. Petitioners
are presumed to know these existing laws and regulations.
 
In Casal vs. Commission on Audit , the SC ruled that:
 
The failure of petitioners-approving officers to observe all these
issuances cannot be deemed a mere lapse consistent with the
presumption of good faith. Rather, even if the grant of the incentive
award were not for a dishonest purpose as they claimed, the patent
disregard of the issuances of the President and the directives of the
COA amounts to gross negligence , making them liable for the
refund thereof. 
4

 
 In this case, this Commission had already issued three (3) circulars pertaining
to the rules and regulations in the hiring of private lawyers by government agencies
and instrumentalities, namely: COA Circular No. 86-255 dated April 2, 1986; COA
Circular No. 95-011 dated December 4, 1995; and COA Circular No. 98-002 dated
June 9, 1998. Allowing the disbursement of public funds to pay for Atty. Gabriel’s
fees, despite the absence of the requisite prior written conformity and acquiescence of
the OSG and prior written concurrence of this Commission, will be tantamount to
condoning a circumvention of these rules.
 
This Commission agrees with the ASB Decision that Atty. Gabriel is entitled
to compensation for the services he rendered. However, following the ruling in
the Pollosocase, it is not Atty. Gabriel who is liable to return the money already paid
to him; rather, the same shall be the responsibility of the herein petitioners. The SC in
the Polloso case ruled that:
 
We cannot grant the prayer of the petitioner that Atty. Satorre should
be compensated based on the principle of quantum meruit , on the
ground that the government will be unjustly enriched at the expense
of another. We do not deny that Atty. Satorre has indeed rendered
legal services to the government. However, to allow the
disbursement of public funds to pay for his services, despite the
absence of requisite consent to his hiring from the OSG or OGCC
would precisely allow circumvention of COA Circular No. 86-255.
In any event, it is not Atty. Satorre who is liable to return the money
already paid him, rather the same shall be the responsibility of the
officials concerned, among whom include herein petitioner.
 
 
RULING
 
WHEREFORE , premises considered, the instant appeal is DENIED for lack
of merit. Accordingly, Notices of Disallowance Nos. 08-001-101-08 dated October 8,
2008 and 09-001-101-08 dated July 28, 2009, in the amounts of P672,000.00 and
P30,000.00, respectively, are hereby AFFIRMED . Atty. Adonis V. Gabriel,
however, need not refund the amount he received in accordance with the ruling of the
Supreme Court in Polloso vs. Gangan , G.R. No. 140563, July 14, 2000.
Nevertheless, our pronouncement in Blaquera v. Alcala20 supports petitioners’ position on the refund of
the benefits they received. In Blaquera, the officials and employees of several government departments
and agencies were paid incentive benefits which the COA disallowed on the ground that Administrative
Order No. 29 dated 19 January 1993 prohibited payment of these benefits. While the Court sustained the
COA on the disallowance, it nevertheless declared that:
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of
subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed,
no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and
chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given
were due to the recipients and the latter accepted the same with gratitude, confident that they richly
deserve such benefits.

In support thereof, petitioner cited a string of cases  wherein we held that disallowed benefits need not be
21

refunded to the government for having been received in good faith. In saidcases, petitioners therein
received benefits aside from their per diemcompensation at a time when the validity of the payment thereof
was still questionable. Because of their honest belief that they were entitled to the same, We ruled against
the refund of the benefits received. 22

21 Petition, id. at 22-23, citing Singson v. Commission on Audit, G.R. No. 159355, August 9, 2010, 627
SCRA 36; Molen, Jr. v. Commission on Audit, 493 Phil. 874 (2005); Querubin v. Regional Cluster Director,
Legal and Adjudication Office, COA Regional Office VI, Pavia, Iloilo City, G.R. No. 159299, July 7, 2004,
433 SCRA 769; De Jesus v. Commission on Audit, 466 Phil. 912 (2004); Philippine International Trading
Corporation v. Commission on Audit, 461 Phil. 737 (2003).

Under prevailing jurisprudence, mistakes committed by a public officer are not actionable, absent a clear
showing that he was motivated by malice or gross negligence amounting to bad faith. It does not simply
connote bad moral judgment or negligence. Rather, there must be some dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of a sworn duty through some motive or intent, or ill will.
It partakes of the nature of fraud and contemplates a state of mind affirmatively operating with furtive
design or some motive of self-interest or ill will for ulterior purposes. 40
Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto, G.R. No. 145184,
March 14, 2008, 548 SCRA 295.

In regard to the refund of the disallowed benefits, this Court holds that petitioners need not refund the
benefits received by them based on our rulings in Blaquera v. Alcala,7 De Jesus v. Commission on
Audit8 and Kapisanan ng mga Manggagawa sa Government Service Insurance System (KMG) v.
Commission on Audit.9
In Blaquera, the petitioners, who were officials and employees of several government departments and
agencies, were paid incentive benefits pursuant to EO No. 292 and the Omnibus Rules Implementing Book
V of EO No. 292. On January 3, 1993, then President Fidel V. Ramos issued Administrative Order (AO)
No. 29 authorizing the grant of productivity incentive benefits for the year 1992 in the maximum amount
of P1,000. Section 4 of AO No. 29 directed all departments, offices and agencies which authorized
payment of CY 1992 Productivity Incentive Bonus in excess of P1,000 to immediately cause the refund of
the excess. Respondent heads of the departments or agencies of the government concerned caused the
deduction from petitioners’ salaries or allowances of the amounts needed to cover the overpayments.
Petitioners therein filed a petition for certiorari and prohibition before this Court to prevent respondents
therein from making further deductions from their salaries or allowances. The Court ruled against the
refund, thus:
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of
subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed,
no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and
chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given
were due to the recipients and the latter accepted the same with gratitude, confident that they richly
deserve such benefits.10
The said ruling in Blaquera was applied in De Jesus.
In De Jesus, COA disallowed the payment of allowances and bonuses consisting of representation and
transportation allowance, rice allowance, productivity incentive bonus, anniversary bonus, year-end bonus
and cash gifts to members of the interim Board of Directors of the Catbalogan Water District. This Court
affirmed the disallowance because petitioners therein were not entitled to other compensation except for
payment of per diemunder PD No. 198. However, the Court ruled against the refund of the allowances and
bonuses received by petitioners, thus:
This ruling in Blaquera applies to the instant case. Petitioners here received the additional allowances and
bonuses in good faith under the honest belief that LWUA Board Resolution No. 313 authorized such
payment. At the time petitioners received the additional allowances and bonuses, the Court had not yet
decided Baybay Water District. Petitioners had no knowledge that such payment was without legal basis.
Thus, being in good faith, petitioners need not refund the allowances and bonuses they received but
disallowed by the COA.11
Further, in KMG, this Court applied the ruling in Blaquera and De Jesus in holding that the Social
Insurance Group (SIG) personnel of the Government Service Insurance System need not refund the
hazard pay received by them although said benefit was correctly disallowed by COA. The Court ruled:
The Court however finds that the DOH and GSIS officials concerned who granted hazard pay under R.A.
No. 7305 to the SIG personnel acted in good faith, in the honest belief that there was legal basis for such
grant. The SIG personnel in turn accepted the hazard pay benefits likewise believing that they were entitled
to such benefit. At that time, neither the concerned DOH and GSIS officials nor the SIG personnel knew
that the grant of hazard pay to the latter is not sanctioned by law. Thus, following the rulings of the Court
in De Jesus v. Commission on Audit, andBlaquera v. Alcala, the SIG personnel who previously received
hazard pay under R.A. No. 7305 need not refund such benefits. 12
In the same vein, the rulings in Blaquera, De Jesus and KMG apply to this case. Petitioners received the
hazard duty pay and birthday cash gift in good faith since the benefits were authorized by PPA Special
Order No. 407-97 issued pursuant to PPA Memorandum Circular No. 34-95 implementing DBM National
Compensation Circular No. 76, series of 1995, and PPA Memorandum Circular No. 22-97, respectively.
Petitioners at that time had no knowledge that the payment of said benefits lacked legal basis. Being in
good faith, petitioners need not refund the benefits they received.

Petitioner concludes that he cannot be held liable in view of the doctrine enunciated in Arias v.
Sandiganbayan, to wit:
We can, in retrospect, argue that Arias should have probed records, inspected documents, received
procedures, and questioned persons. It is doubtful if any auditor for a fairly sized office could personally do
all these things in all vouchers presented for his signature. The Court would be asking for the
impossible. All heads of offices have to rely to a reasonable extent on their subordinates and on the
good faith of those who prepare bids, purchase supplies, or enter into negotiations. If a department
secretary entertains important visitors, the auditor is not ordinarily expected to call the restaurant about the
amount of the bill, question each guest whether he was present at the luncheon, inquire whether the
correct amount of food was served, and otherwise personally look into the reimbursement voucher's
accuracy, propriety, and sufficiency. There has to be some added reason why he should examine each
voucher in such detail. Any executive head of even small government agencies or commissions can attest
to the volume of papers that must be signed. There are hundreds of documents, letters, memoranda,
vouchers, and supporting papers that routinely pass through his hands. The number in bigger offices or
departments is even more appalling.8 (Emphasis and underscoring supplied)

Every reasonable intendment will be made in support of the presumption and in case of doubt as to an
officer’s act being lawful or unlawful, construction should be in favor of its lawfulness.

Well entrenched in jurisprudence is the time honored principle that the law bestows upon a public official
the presumption of regularity in the discharge of one’s official duties and functions. In the case of Fernando
v. Sto. Tomas,[22] this Court categorically held that:
…public respondents have in their favor the presumption of regularity in the performance of official duties
which petitioners failed to rebut when they did not present evidence to prove partiality, malice and bad faith.
Bad faith can never be presumed; it must be proved by clear and convincing evidence. No such evidence
exists in the case at bar.23

Moreover, there is a presumption that official duty is regularly performed, 31 i.e., government officials who
perform them are clothed with the presumption of regularity,32 as the courts below pointed out.33 In this
case, the verification survey was conducted by a government functionary.
Even prescinding from the presumption of regularity, what appears on record is that the verification survey
was conducted with the agreement of both parties and in their presence. That was the finding made by the
courts below and affirmed by the appellate court without any wrinkle. 34
 Rules of Court, Rule 131, Sec. 3(m).
31

 Republic v. Nolasco, G.R. No. 155108, 27 April 2005; People v. De La Cruz, G.R. No. 148730, 26 June
32

2003, 405 SCRA 112

More importantly, the Court, the parties, and the public at large are bound to respect the fact that
official acts of the Government, including those performed by governmental agencies such as the
DPWH, are clothed with the presumption of regularity in the performance of official duty. and
cannot be summarily, prematurely and capriciously set aside. [61] Such presumption is operative
not only upon the courts, but on all persons, especially on those who deal with the government
on a frequent basis. There is perhaps a more cynical attitude fostered within the popular culture,
or even through anecdotal traditions. Yet, such default pessimism is not embodied in our system
of laws, which presumes that the State and its elements act correctly unless otherwise proven.
To infuse within our legal philosophy a contrary, gloomy pessimism would assure that the State
would bog down, wither and die.
[G.R. No. 155108. April 27, 2005]

REPUBLIC OF THE PHILIPPINES, Represented by Department of Public Works and Highways (DPWH) under Secretary

Simeon Datumanong and Undersecretary Edmundo V. Mir, then Chairman Of Bid and Awards Committee (BAC),

Assistant Secretary Bashir D. Rasuman, BAC Vice-Chairman, Director Oscar D. Abundo, BAC Member Director OIC-

Director Antonio V. Malano, Jr., BAC Member and Project Director Philip F. Menez,  petitioner, vs. EMILIANO R.

NOLASCO, respondent.

c1.1 The Arias ruling and subsequent cases

In the seminal case of Arias v. Sandiganbayan89 involving the prosecution and conviction of a public official
for violation of RA No. 3019, the Court ruled:
We would be setting a bad precedent if a head of office plagued by all too common problems - dishonest or
negligent subordinates, overwork, multiple assignments or positions, or plain incompetence - is suddenly
swept into a conspiracy conviction simply because he did not personally examine every single detail,
painstakingly trace every step from inception, and investigate the motives of every person involved in a
transaction before affixing his signature as the final approving authority.
xxxx
We can, in retrospect, argue that Arias should have probed records, inspected documents, received
procedures, and questioned persons. It is doubtful if any auditor for a fairly sized office could personally do
all these things in all vouchers presented for his signature. The Court would be asking for the impossible.
All heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those
who prepare bids, purchase supplies, or enter into negotiations. xxx There has to be some added reason
why he should examine each voucher in such detail. Any executive head of even small government
agencies or commissions can attest to the volume of papers that must be signed. There are hundreds of
documents, letters, memoranda, vouchers, and supporting papers that routinely pass through his hands.
The number in bigger offices or departments is even more appalling.
There should be other grounds than the mere signature or approval appearing on a voucher to sustain a
conspiracy charge and conviction.90 (italics supplied; emphases ours)
The Court has since applied the Arias ruling to determine not only criminal, 91 civil92 and
administrative93 liability, but even the existence of probable cause to file an information 94 in the context of an
allegation of conspiracy.
In Siztoza v. Desierto, involving the Ombudsman’s determination of probable cause for violation of RA No.
3019, the Court expounded on the reach of Arias, thus:
The fact that Sistoza had knowledge of the status of the contractor as being only the second lowest bidder
does not ipso facto characterize his act of reliance as recklessly imprudent xxx. Albeit misplaced, reliance
in good faith by a head of office on a subordinate upon whom the primary responsibility rests negates an
imputation of conspiracy by gross inexcusable negligence to commit graft and corruption. As things stand,
Sistoza is presumed to have acted honestly and sincerely when he depended upon responsible
assurances that everything was aboveboard since it is not always the case that second best bidders in
terms of price are automatically disqualified from the award considering that the PBAC reserves the
authority to select the best bid not only in terms of the price offered but other factors as well. x x x
Verily, even if petitioner erred in his assessment of the extrinsic and intrinsic validity of the documents
presented to him for endorsement, his act is all the same imbued with good faith because the otherwise
faulty reliance upon his subordinates, who were primarily in charge of the task, falls within parameters of
tolerable judgment and permissible margins of error. Stated differently, granting that there were flaws in the
bidding procedures, x x x there was no cause for Sistoza to x x x investigate further since neither the
defects in the process nor the unfairness or injustice in the actions of his subalterns are definite, certain,
patent and palpable from a perusal of the supporting documents. 95(emphases ours)
In Leycano, Jr. v. Commission on Audit,96 the Court clarified that for one to successfully invoke Arias, the
public official must then be acting in his capacity as head of office. 97 In Cruz v. Sandiganbayan,98 where the
Court sustained the petitioner’s conviction for violation of Section 3(e) of RA No. 3019, it observed that the
fact that "the checks issued as payment for construction materials purchased by the municipality were not
made payable to the supplier x x x but to petitioner himself even as the disbursement vouchers attached
thereto were in the name of the supplier" constitute an "added reason" for the petitioner to further examine
the documents.99
G.R. No. 166967               January 28, 2013

EDNA J. JACA, Petitioner, 

vs.

PEOPLE OF THE PHILIPPINES and the SANDIGANBAYAN, Respondents.

It is well to stress that neither will it do justice to hold Dimapilis-Baldoz personally liable simply because she
possessed the final authority for the disbursements and had direct supervision over her subordinates. Case
law exhorts that although a public officer is the final approving authority and the employees who processed
the transaction were directly under his supervision, personal liability does not automatically attach to him
but only upon those directly responsible for the unlawful expenditures. 58

Salva v. Carague, G.R. No. 157875, December 19, 2006, 511 SCRA 258, 264.
G.R. No. 199114               July 16, 2013
ROSALINDA DIMAPILIS-BALDOZ, IN HER CAPACITY AS THEN ADMINISTRATOR OF THE
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), PETITIONER, 
vs.
COMMISSION ON AUDIT, REPRESENTED BY CHAIRMAN REYNALDO A. VILLAR AND
COMMISSIONER JUANITO G. ESPINO, JR., RESPONDENT.