The Supreme Court acquitted Editha Saguin and Lani Grado, employees of Rizal Memorial District Hospital, of violating Presidential Decree No. 1752 for failing to remit Home Development Mutual Fund (HDMF) contributions. The Court found their failure was due to the devolution of the hospital to the Provincial Government of Zamboanga del Norte, which transferred financial control. This decision underscores that individuals cannot be held criminally liable for failing to perform duties that were no longer theirs due to legitimate government restructuring, provided there is no fraudulent intent.

Shifting Responsibilities: Can Devolution Excuse Non-Remittance of HDMF Contributions?

Editha Saguin and Lani Grado, along with Ruby Dalman, were charged with violating P.D. No. 1752, as amended by R.A. No. 7742, for failing to remit HDMF contributions and loan payments deducted from hospital employees’ salaries in March 1993. The core legal question revolved around whether the devolution of Rizal Memorial District Hospital (RMDH) to the Provincial Government of Zamboanga del Norte constituted a valid excuse for their failure to remit these funds. This case highlights the complexities of accountability when government functions and responsibilities shift due to restructuring.

The prosecution argued that Saguin, Grado, and Dalman, as Accountant II, Cashier, and Administrative Officer II respectively, were responsible for ensuring the remittances were made. Evidence was presented showing payroll deductions for Pag-IBIG loan repayments and contributions, which were allegedly not remitted, leading to penalties for the employees. The defense countered that the devolution, effective April 1993, transferred financial control to the provincial government, making them no longer responsible for the remittances.

The Municipal Trial Courts in Cities (MTCC) found all three accused guilty, a decision affirmed by the Regional Trial Court (RTC). Both courts reasoned that the devolution did not prevent the hospital from functioning normally and that failure to remit, regardless of motive, constituted a violation of the special law. The Sandiganbayan upheld the conviction but canceled the award of civil indemnity due to the institution of a separate civil action.

The Supreme Court, however, disagreed with the lower courts. The Court emphasized that Section 23 of P.D. No. 1752, as amended, punishes failure to remit only when it is “without lawful cause or with fraudulent intent.” Here, the petitioners argued that the devolution served as a lawful cause, as the responsibility for HDMF remittances had shifted to the provincial government.

The Sandiganbayan had overlooked crucial evidence: the remittances were typically made in the month following the deductions. The March 1993 deductions were therefore due for remittance in April 1993, by which time the devolution was already in effect. This meant the petitioners had a valid reason to believe the responsibility had been transferred. As the Court stated, the petitioners should not be penalized for failing to perform a duty over which they no longer had control.

The Court also noted Grado’s testimony that she could no longer issue checks for remittances due to the devolution and her reassignment to the Provincial Treasurer’s Office. Similarly, Saguin explained that the Provincial Accountant’s Office assumed the function of certifying fund availability. Dalman had even informed the Hospital Chief about the situation, but the Chief failed to request payment from the provincial government. Thus, the Supreme Court stated:

The records are bereft of any showing that the petitioners retained the same powers and duties and failed without justification. Surmises and conjectures have no place in a judicial inquiry and are especially anathema in a criminal prosecution.

Furthermore, the Supreme Court found no evidence of fraudulent intent. The deducted amounts were commingled with hospital funds, and the prosecution failed to prove the petitioners misappropriated the funds. The Court also highlighted the fact that the penal clause of Section 23 of P.D. No. 1752, as amended, punishes the failure to make remittance only when such failure is without lawful cause or with fraudulent intent.

The Court ultimately concluded that the petitioners’ guilt had not been proven beyond reasonable doubt. Despite the reenactment of the penal provisions in R.A. No. 9679, the devolution justified their non-remittance. This case serves as a reminder of the high standard of proof required in criminal cases, as the Court noted, quoting Ruzol v. Sandiganbayan:

Law and jurisprudence demand proof beyond reasonable doubt before any person may be deprived of his life, liberty, or even property. Enshrined in the Bill of Rights is the right of the petitioner to be presumed innocent until the contrary is proved, and to overcome the presumption, nothing but proof beyond reasonable doubt must be established by the prosecution.

In conclusion, the Supreme Court emphasized that when guilt is not proven with moral certainty, the presumption of innocence must prevail.

FAQs

What was the key issue in this case?	The key issue was whether the devolution of the hospital to the provincial government constituted a valid excuse for the petitioners’ failure to remit HDMF contributions. The Court examined whether this failure was “without lawful cause or with fraudulent intent,” as required by law for a conviction.
What is P.D. No. 1752?	P.D. No. 1752 is the Presidential Decree that created the Home Development Mutual Fund (HDMF), also known as Pag-IBIG Fund. It outlines the rules and regulations for contributions and remittances to the fund.
What does ‘devolution’ mean in this context?	In this context, devolution refers to the transfer of control and functions over the Rizal Memorial District Hospital’s financial operations from the hospital administration to the Provincial Government of Zamboanga del Norte. This transfer occurred due to the implementation of the Local Government Code.
Why were the petitioners initially found guilty?	The lower courts found the petitioners guilty because they believed that the devolution did not prevent the hospital from functioning normally. They also reasoned that the mere failure to remit the HDMF contributions, regardless of motive, was a violation of the law.
On what basis did the Supreme Court acquit the petitioners?	The Supreme Court acquitted the petitioners because it found that the devolution constituted a “lawful cause” for their failure to remit the HDMF contributions. The Court also found no evidence of fraudulent intent.
What is the significance of ‘lawful cause’ in this case?	The presence of a “lawful cause,” such as the devolution, negates the criminal liability for failing to remit HDMF contributions under P.D. No. 1752. The law only punishes failure to remit when it is without lawful cause or with fraudulent intent.
Did R.A. No. 9679 affect the Supreme Court’s decision?	No, R.A. No. 9679, which reenacted the penal provisions of P.D. No. 1752, did not affect the Supreme Court’s decision. The Court found that the devolution justified the petitioners’ non-remittance, regardless of which law was applied.
What does this case teach about responsibility during government restructuring?	This case clarifies that individuals should not be held criminally liable for failing to perform duties that were no longer theirs due to legitimate government restructuring. It underscores the importance of establishing both a lack of lawful cause and fraudulent intent for a conviction under P.D. No. 1752.

This case provides a crucial clarification on the responsibilities of government employees during periods of institutional change. It affirms that individuals should not be penalized for non-performance when their duties have been legitimately transferred to another entity due to restructuring or devolution, absent any fraudulent intent.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

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 v. PEOPLE, G.R. No. 210603, November 25, 2015