In a significant ruling, the Supreme Court affirmed that public officials can be held civilly liable for negligence in handling public funds, even if acquitted of criminal charges. This decision reinforces the principle that public office is a public trust, and officials must exercise due diligence in managing government resources. The Court emphasized that acquittal based on reasonable doubt does not extinguish civil liability, which requires only preponderance of evidence. This case underscores the importance of accountability and responsible stewardship of public funds by those entrusted with their care, ensuring that negligence does not go unaddressed.

Negligence Exposed: Can Public Officials Be Liable Even After Criminal Acquittal?

This case revolves around the controversial transfer of municipal funds from the Land Bank of the Philippines (LBP) to Davao Cooperative Bank (DCB) by officials of Pantukan, Compostela Valley. Silvino B. Matobato, Sr., the Municipal Treasurer, along with Sangguniang Bayan members Walter B. Bucao and Cirila A. Engbino, were charged with violating Section 3(e) of Republic Act (RA) No. 3019, the Anti-Graft and Corrupt Practices Act. The core issue was whether they acted with gross negligence in authorizing the transfer, which resulted in the loss of funds when DCB became insolvent.

The Sandiganbayan acquitted the accused based on reasonable doubt, finding that the prosecution failed to prove gross and inexcusable negligence beyond a reasonable doubt. However, the anti-graft court held them civilly liable for the unrecovered funds, amounting to P9.25 million. It reasoned that even without proving gross negligence for criminal liability, their actions demonstrated sufficient negligence to warrant civil responsibility. This decision hinged on the principle that the standard of proof for civil liability—preponderance of evidence—is lower than that for criminal liability—proof beyond reasonable doubt.

The Supreme Court upheld the Sandiganbayan’s decision, emphasizing the **threefold liability rule**, where wrongful acts of public officers may lead to civil, criminal, and administrative liabilities. The Court cited the case of Office of the Ombudsman v. Andutan, Jr., 670 Phil. 169, 188-189 (2011), underscoring this principle.

The court emphasized that acquittal in a criminal case does not automatically extinguish civil liability, especially when the acquittal is based on reasonable doubt, as was the case here. The Court referred to the case of Dayap v. Sendiong, 597 Phil. 127, 141 (2009), reiterating the exceptions:

(a) the acquittal is based on reasonable doubt as only preponderance of evidence is required; (b) the court declares that the liability of the accused is only civil; and (c) the civil liability of the accused does not arise from or is not based upon the crime of which the accused is acquitted.

The Court found that the actions of Silvino, Walter, and Cirila demonstrated a lack of reasonable care and caution expected of public officials. Silvino, as Municipal Treasurer, failed to flag potential risks associated with the transaction, vouched for DCB’s financial stability despite the Asian Financial Crisis, and continued depositing funds even after DCB’s authority to accept government deposits expired. The Court cited Section 101(1) of Presidential Decree (PD) No. 1445, highlighting Silvino’s duty as Municipal Treasurer:

SEC. 101. Accountable officers; bond requirement.
1. Every officer of any government agency whose duties permit or require the possession or custody of government funds or property shall be accountable therefor and for the safekeeping thereof in conformity with law.

As for Walter and Cirila, the Sangguniang Bayan members, the Court noted their reliance on the bank manager’s verbal assurances without conducting due diligence on DCB’s financial status. The Court cited Section 340 of RA No. 7160, known as the “Local Government Code of 1991,” emphasizing the accountability of local officers:

SEC. 340. Persons Accountable for Local Government Funds. – Any officer of the local government unit whose duty permits or requires the possession or custody of local government funds shall be accountable and responsible for the safekeeping thereof in conformity with the provisions of this Title. Other local officers who, though not accountable by the nature of their duties, may likewise be similarly held accountable and responsible for local government funds through their participation in the use or application thereof. (Emphasis supplied.)

The Supreme Court emphasized that the presumption of regularity in the performance of official functions was overcome by evidence of negligence. The Court also cited Section 21 of COA Circular No. 92-382, underscoring the need for prior authority from the Sangguniang Bayan and approval of the local chief executive before depositing idle funds in time deposit accounts.

The Court reasoned that the Municipality of Pantukan suffered actual damage because the funds were inaccessible for government purposes due to the negligence of the officials. The Court used the case of Llorente, Jr. v. Sandiganbayan, 350 Phil. 820, 838 (1998) to illustrate that compensation must be commensurate to the loss.

The Court did not accept Silvino’s contention that pending DCB’s liquidation, there were no actual damages suffered by the Municipality of Pantukan.

FAQs

What was the key issue in this case?	The key issue was whether public officials could be held civilly liable for negligence in handling public funds, even after being acquitted of criminal charges related to the same acts.
Why were the officials acquitted in the criminal case?	The Sandiganbayan acquitted the officials based on reasonable doubt, finding that the prosecution did not prove gross and inexcusable negligence beyond a reasonable doubt.
What standard of proof is required for civil liability?	Civil liability requires a lower standard of proof than criminal liability. It only requires a preponderance of evidence, meaning the evidence must be more convincing than the opposing evidence.
What is the significance of the “threefold liability rule”?	The “threefold liability rule” states that wrongful acts or omissions of public officers may give rise to civil, criminal, and administrative liabilities, highlighting multiple avenues for accountability.
What was the basis for holding the officials civilly liable?	The officials were held civilly liable because they failed to exercise reasonable care and caution in managing public funds, specifically in transferring funds to a bank that later became insolvent.
What duties did the Municipal Treasurer fail to fulfill?	The Municipal Treasurer failed to flag potential risks, vouched for the bank’s stability without due diligence, and continued depositing funds even after the bank’s authorization expired.
Why couldn’t the Sangguniang Bayan members rely on the presumption of regularity?	The Sangguniang Bayan members could not rely on the presumption of regularity because their negligence in approving the fund transfer without proper investigation was proven.
What was the impact on the Municipality of Pantukan?	The Municipality of Pantukan suffered actual damage because the transferred funds became inaccessible, hindering the implementation of municipal projects and services.
Is pending liquidation a valid reason to dismiss civil liability?	No, the court reasoned that the municipality had already suffered damage and its financial loss could not be disregarded pending liquidation of the bank.

This case serves as a crucial reminder to public officials regarding their responsibilities in managing public funds. The Supreme Court’s decision underscores that even if criminal charges are not proven beyond reasonable doubt, civil liability can still arise from negligent acts that cause financial loss to the government and its constituents.

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: SILVINO B. MATOBATO, SR. VS. PEOPLE, G.R. No. 229265 & WALTER B. BUCAO AND CIRILA A. ENGBINO VS. SANDIGANBAYAN, G.R. No. 229624, February 15, 2022