In Editha B. Saguin and Lani D. Grado v. People of the Philippines, the Supreme Court acquitted petitioners charged with failing to remit Home Development Mutual Fund (HDMF) contributions, emphasizing that the failure was due to the devolution of hospital administration to the provincial government, which constituted a lawful cause. This decision clarifies that individuals cannot be held criminally liable for non-remittance when a valid reason, such as a change in institutional control, prevents them from fulfilling their duties. The ruling underscores the importance of establishing both the absence of lawful cause and fraudulent intent to secure a conviction under Section 23 of P.D. No. 1752, as amended.

From Hospital to Province: Who Pays When Governance Shifts?

This case originated from the Municipal Trial Courts in Cities (MTCC) of Dapitan City, where Editha Saguin, Lani Grado, and Ruby Dalman were convicted for violating Section 23 of Presidential Decree (P.D.) No. 1752, as amended by Republic Act (R.A.) No. 7742, and Executive Order (E.0.) No. 35. The charges stemmed from their failure to remit HDMF contributions and loan repayments deducted from the salaries of Rizal Memorial District Hospital (RMDH) employees for March 1993. Saguin was the Accountant II, Grado the Cashier, and Dalman the Administrative Officer II at RMDH. The central question was whether the devolution of RMDH to the provincial government of Zamboanga del Norte provided a lawful excuse for the non-remittance.

The prosecution argued that Saguin, Grado, and Dalman conspired to deduct HDMF contributions without remitting them to the fund, leading to penalties and surcharges for the employees. In contrast, the defense contended that the devolution transferred the responsibility for remittances to the provincial government, thus absolving them of liability. Grado testified that the hospital could no longer issue checks due to the devolution, believing the provincial government would handle the remittances. Saguin corroborated this, stating her role in preparing vouchers ceased after the devolution, with the provincial government taking over financial transactions.

The MTCC found the accused guilty, a decision affirmed by the Regional Trial Court (RTC), which reasoned that the devolution should not have prevented the hospital from functioning normally or caused prejudice to its employees. The RTC emphasized that the violation of a special law constituted malum prohibitum, meaning the act alone, irrespective of motive, was punishable. The Sandiganbayan upheld these rulings, asserting that the repeal of P.D. No. 1752 by R.A. No. 9679 did not absolve the accused, as the provisions were reenacted. It also dismissed concerns about the private prosecutor’s participation, deeming it under the control of the public prosecutor.

The Supreme Court, however, reversed the Sandiganbayan’s decision, underscoring that the failure to remit was not without lawful cause. Section 23 of P.D. No. 1752 explicitly requires that the refusal or failure to comply must be “without lawful cause or with fraudulent intent” to be punishable. The Court found that the devolution of RMDH to the provincial government constituted such a lawful cause. This transfer meant that the financial operations and transactions of the hospital were carried out through the Office of the Provincial Governor, shifting the responsibility for HDMF remittances.

A critical point highlighted by the Court was the timing of the remittances. RMDH typically made HDMF remittances in the months following the deductions, usually from the second quincena payroll. Since the deductions in question were made in March 1993, the corresponding remittances were due in April 1993. By April 1, 1993, RMDH had already been devolved to the Provincial Government of Zamboanga del Norte. Consequently, the petitioners reasonably believed that the duty to remit the HDMF contributions had transferred to the provincial government, which had taken control of the hospital’s finances.

The Court observed that the Sandiganbayan overlooked evidence indicating that remittances were typically made after deductions and that the devolution had indeed transferred financial responsibilities. Grado’s reassignment to the Provincial Treasurer’s Office and Saguin’s transfer to the Office of the Provincial Accountant further supported their claim that they no longer had the authority or responsibility to make the remittances. The Supreme Court thus concluded that the devolution served as a valid justification for the petitioners’ inability to remit the HDMF contributions for March 1993.

Moreover, the Court emphasized that there was no evidence of fraudulent intent or deliberate refusal on the part of the petitioners. Any lapses in the remittance process were attributed to the confusion and uncertainty surrounding the devolution. Crucially, the petitioners believed that the remittance function had been transferred to the provincial government and had even informed the Hospital Chief of the need to make representations to the Governor for payment. This lack of fraudulent intent further supported the petitioners’ exoneration.

The Supreme Court reiterated the principle that while good faith is not a defense in cases of malum prohibitum, Section 23 of P.D. No. 1752, as amended, specifically requires the absence of lawful cause or fraudulent intent for a failure to remit to be punishable. The Court emphasized that the prosecution had failed to prove beyond a reasonable doubt that the petitioners acted without lawful cause or with fraudulent intent. Therefore, the constitutional presumption of innocence prevailed, leading to the acquittal of Saguin and Grado.

FAQs

What was the key issue in this case?	The key issue was whether the petitioners’ failure to remit HDMF contributions was justified by the devolution of the hospital to the provincial government. This determined if their actions constituted a punishable offense under P.D. No. 1752.
What is ‘devolution’ in the context of this case?	Devolution refers to the transfer of control and responsibility over the financial operations of the Rizal Memorial District Hospital from its original administration to the Provincial Government of Zamboanga del Norte. This transfer of power occurred in April 1993 under the Local Government Code (R.A. No. 7160).
What is the meaning of malum prohibitum?	Malum prohibitum refers to acts that are wrong simply because they are prohibited by law, regardless of whether they are inherently immoral. In such cases, intent is generally not a factor in determining guilt.
What did Section 23 of P.D. No. 1752 penalize?	Section 23 of P.D. No. 1752 penalized the refusal or failure to comply with the decree’s provisions regarding the collection and remittance of employee savings, but only if such failure was without lawful cause or with fraudulent intent. This section was central to the charges against the petitioners.
Why were the petitioners acquitted by the Supreme Court?	The petitioners were acquitted because the Supreme Court found that their failure to remit HDMF contributions was due to the devolution of the hospital, which constituted a lawful cause. The prosecution failed to prove beyond reasonable doubt that the petitioners acted without lawful cause or with fraudulent intent.
Did the repeal of P.D. No. 1752 affect the outcome of the case?	No, the repeal of P.D. No. 1752 by R.A. No. 9679 did not affect the outcome. The Sandiganbayan noted that the provisions of P.D. No. 1752 were reenacted in R.A. No. 9679.
What evidence did the Supreme Court consider in its decision?	The Supreme Court considered the timing of the remittances, the devolution of the hospital, the petitioners’ reassignment to provincial government offices, and the lack of evidence of fraudulent intent. These factors collectively supported the petitioners’ claim of lawful cause.
What is the significance of the timing of the remittances in this case?	The timing was significant because the deductions were made in March 1993, but the remittances were due in April 1993, after the devolution had already occurred. This meant that the responsibility for the remittances had arguably shifted to the provincial government.

In conclusion, the Supreme Court’s decision in Saguin v. People underscores the importance of establishing both the absence of lawful cause and fraudulent intent in cases involving the failure to remit HDMF contributions. The Court recognized that significant changes in institutional control, such as devolution, can provide a valid justification for non-remittance, thereby absolving individuals of criminal liability. This ruling serves as a critical reminder of the need for clear evidence and a thorough understanding of the circumstances surrounding alleged violations of special laws.

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Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Editha B. Saguin and Lani D. Grado, Petitioners, vs. People of the Philippines, G.R. No. 210603, November 25, 2015