In People v. Caballes, the Supreme Court addressed the liability of public officials in government procurement processes. The Court affirmed the conviction of Samson Z. Caballes, a Supply Officer, for violating Section 3(e) of the Anti-Graft and Corrupt Practices Act. The ruling underscores that even seemingly minor roles in procurement carry a significant responsibility to ensure transparency and legality. This decision highlights the importance of due diligence in government transactions and serves as a stern warning against negligence that leads to the misuse of public funds. Public officials cannot hide behind ministerial duties to avoid accountability when irregularities occur.

Unheeded Warnings: Can a Supply Officer Be Held Liable for Overpriced Purchases?

The case revolves around a series of anomalous purchases made by the Department of Health, Region XI (DOH XI) in Davao City during 1990 and 1991. Samson Z. Caballes, as Supply Officer III, was implicated in these transactions. The Commission on Audit (COA) discovered irregularities, including overpriced items, lack of necessary drug registrations, and failure to conduct public biddings as required by law. These findings led to charges against Caballes and other officials for violating Section 3(e) of Republic Act No. 3019, also known as the Anti-Graft and Corrupt Practices Act. The central question before the Supreme Court was whether Caballes’ actions, specifically his role in recommending approval of purchases and signing related documents, constituted a violation of the said Act.

The Sandiganbayan initially convicted Caballes, along with his co-accused, for violating Section 3(e) of RA 3019 in several criminal cases. However, upon appeal, the Supreme Court modified the Sandiganbayan’s decision. The Court acquitted Caballes in Criminal Case Nos. 24481, 24487, and 24489, noting that he was not formally charged in those cases. Yet, his conviction was affirmed in Criminal Case Nos. 24480, 24482, 24484, and 24486. These cases involved irregular purchases of multivitamins and sodium fluoride powder. The Supreme Court anchored its decision on the elements of Section 3(e) of RA 3019. These include: (a) the accused being a public officer performing official functions; (b) acting with manifest partiality, evident bad faith, or gross inexcusable negligence; and (c) causing undue injury to the government or giving unwarranted benefits to a private party.

Section 3(e) of RA 3019 explicitly defines the prohibited acts:

Section 3. Corrupt practices of public officers. – In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

x x x x

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

The Supreme Court found that Caballes, as Supply Officer III, was indeed a public officer performing administrative functions. The Court further determined that Caballes acted with gross inexcusable negligence. This negligence was demonstrated through his recommendation of approval for purchases and his signing of Disbursement Vouchers (DVs), Purchase Orders (POs), and Requisition and Issue Vouchers (RIVs), despite the presence of obvious irregularities. The Court cited several instances where Caballes failed to exercise due diligence. For example, in Criminal Case Nos. 24480 and 24482, DOH XI purchased multivitamins without public bidding and at inflated prices from Ethnol Generics, a non-participating supplier. Despite these anomalies, Caballes signed the DVs and POs, certifying the regularity of the transactions.

Even though Caballes argued that he merely performed ministerial duties, the Court disagreed. It emphasized that his role as a signatory in the “Recommending Approval” portion of the POs carried a duty to verify the regularity and legality of the purchases. The Court highlighted Caballes’ own admission that approved bidding documents and price lists were sent to the Supply Office. This implied that he had access to information that should have raised red flags about the irregularities. Despite the red flags, Caballes failed to present any evidence to the contrary. It was also established that he was part of the process of checking prices and other documents.

Moreover, the Court found that Caballes’ actions caused undue injury to the government and gave unwarranted benefits to Ethnol Generics and J.V. Sorongon Enterprises. The absence of public bidding, the inflated prices, and the purchase of unregistered drugs all contributed to the misuse of public funds. The Court further emphasized the implied conspiracy among Caballes, Legaspi, and Peralta, noting that their collective actions facilitated the illegal disbursements. The Court cited the case of Napoles v. Sandiganbayan, to explain the standard of proving conspiracy:

Seeing as it would be difficult to provide direct evidence establishing the conspiracy among the accused, the Sandiganbayan may infer it “from proof of facts and circumstances which, taken together, apparently indicate that they are merely parts of some complete whole.” It was therefore unnecessary for the Sandiganbayan to find direct proof of any agreement among Napoles, former Senator Enrile and Reyes. The conspiracy may be implied from the intentional participation in the transaction that furthers the common design and purpose. As long as the prosecution was able to prove that two or more persons aimed their acts towards the accomplishment of the same unlawful object, each doing a part so that their combined acts, though apparently independent, were in fact connected and cooperative, indicating a closeness of personal association and a concurrence of sentiment, the conspiracy may be inferred even if no actual meeting among them was proven.

Caballes also invoked the doctrine in Arias v. Sandiganbayan, arguing that he relied on the good faith of his subordinates. However, the Court rejected this argument, noting that the Arias doctrine is not an absolute rule. The Court reasoned that the circumstances in this case, particularly the obvious irregularities, should have prompted Caballes to exercise a higher degree of circumspection. His active role in signing various documents throughout the procurement process further undermined his claim of reliance on subordinates. This active involvement was a key point in distinguishing this case from situations where the Arias doctrine would apply.

As a result, the Supreme Court affirmed Caballes’ conviction in Criminal Case Nos. 24480, 24482, 24484, and 24486. In addition to the imprisonment term, the Court also imposed perpetual disqualification from public office. The Court modified the amount to be solidarily paid by Caballes, Legaspi, and Peralta in favor of the government to P350,948.00, with Caballes ordered to pay P242,569.34. This case serves as a reminder to public officials involved in procurement processes of the importance of exercising due diligence and upholding the principles of transparency and accountability. The ruling highlights that even those in seemingly minor roles can be held liable for violations of the Anti-Graft and Corrupt Practices Act if their negligence contributes to the misuse of public funds.

FAQs

What was the key issue in this case?	The key issue was whether Samson Z. Caballes, as Supply Officer, violated Section 3(e) of RA 3019 by acting with gross inexcusable negligence in the procurement of supplies, leading to undue injury to the government and unwarranted benefit to private parties.
What is Section 3(e) of RA 3019?	Section 3(e) of RA 3019 prohibits public officers from causing undue injury to any party, including the government, or giving unwarranted benefits to a private party through manifest partiality, evident bad faith, or gross inexcusable negligence.
What does gross inexcusable negligence mean in this context?	Gross inexcusable negligence refers to negligence characterized by the want of even the slightest care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences.
What was Caballes’ role in the procurement process?	Caballes was the Supply Officer III, responsible for recommending approval of purchases, signing disbursement vouchers, and receiving delivered items. He was also responsible for maintaining records and ensuring the proper handling of supplies.
What irregularities were found in the procurement process?	The irregularities included the lack of public bidding, overpriced items, purchases from non-participating suppliers, and the acquisition of items without the necessary drug registrations.
What is the significance of the Arias doctrine?	The Arias doctrine generally allows heads of offices to rely on their subordinates, but it does not apply when there are circumstances that should prompt a higher degree of circumspection. In this case, Caballes could not rely on the Arias doctrine due to the obvious irregularities.
What was the penalty imposed on Caballes?	Caballes was sentenced to imprisonment ranging from six years and one month to eight years for each count of the offense. He was also perpetually disqualified from holding public office and ordered to pay P242,569.34 to the government.
What does the phrase “unwarranted benefit, advantage, or preference” mean?	This phrase refers to the act of giving unjustified favor or benefit to another, which is one way to violate Section 3(e) of RA 3019, whether or not any specific quantum of damage has been proven.

This case reinforces the principle that public office is a public trust, and those who hold positions of responsibility must exercise due diligence to protect public funds and ensure transparency in government transactions. The Supreme Court’s ruling serves as a reminder that even seemingly minor roles in procurement carry a significant responsibility to uphold the law and prevent corruption.

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: People of the Philippines, vs. Samson Z. Caballes, G.R. Nos. 250367 & 250400-05, August 31, 2022