Rep of the Phil vs Sandiganbayan : 102508 : January 30, 2002 : C.J. Davide, Jr : En Banc

EN BANC

[G. R. No. 102508. January 30, 2002]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. SANDIGANBAYAN, Third Division, and JOLLY R. BUGARIN, respondents.

D E C I S I O N

DAVIDE, JR., C.J.:*

Persistent in its efforts to recover the alleged unexplained wealth amassed by private respondent Jolly R. Bugarin, a government official during the Marcos regime, petitioner Republic of the Philippines implores this Court to reverse and set aside the 13 August 1991 Decision of the Sandiganbayan[1] dismissing, for insufficiency of evidence, its petition for forfeiture of properties filed pursuant to Republic Act No. 1379,[2] as amended.

In its petition[3] filed with the Sandiganbayan on 3 August 1987, petitioner, represented by the Presidential Committee on Good Government (PCGG), averred that respondent Bugarin acquired during his incumbency as Director of the National Bureau of Investigation (NBI) real and personal properties enumerated in paragraph 5 thereof whose aggregate fair market value at the time of their acquisition was P6,313,632.56. Allegedly, those properties were manifestly in excess or out of proportion to his salaries, allowances, and other emoluments from 1 July 1967 to 15 March 1986 totalling P743, 243.65 only.

In his Answer with Explanation,[4] Bugarin claimed that some of the properties enumerated in paragraph 5 of the petition were acquired by him and his wife before he became a Director of the NBI. The acquisition cost of the properties he acquired during his incumbency was P2,793,141.26 only. He likewise alleged that apart from the P743,243.65 he received for the entire period of his service as NBI Director, he also received allowances from the Dangerous Drugs Board (DDB) totalling P74,500.00; the National Police Commission (Napolcom), P148,032.24; the Central Bank, P834,700.00; and the Law Firm of San Juan, Africa, Gonzales, and San Agustin, P490,000.00. He also derived substantial income from the investments and properties he and his wife acquired before he became a Director of the NBI.

During the trial, respondent Bugarin presented fifteen witnesses, including himself, as well as documentary evidence marked as Exhibits “1” to “48.” A summary of his property acquisitions follows:

REAL PROPERTY YEAR ACQUIRED ACQUISITION C0ST

1.Residential lot in Dasmariñas 1968 P91,140

Village, Makati [5]

2.Nine (9) Residential lots, 1968 9,340

Tagaytay City[6]

3. Residential House

Dasmariñas Village, 1969 175,900

Makati[7]

4. Residential Lot, 1973 87,288

Greenhills, San Juan, Metro Manila[8]

5. Residential Lot, Capitol District 1972 72,750

Quezon City[9]

6. Condominium Unit, Montepino 1973 100,000

Condominium, Baguio City[10]

7. Residential Lot 1976 263,165

Valle Verde, Pasig, M.M.[11]

8. Residential House 1978 250,000

Valle Verde, Pasig, M.M.[12]

9. Residential Lot 1978 5,000

Calapan, Oriental Mindoro[13]

10. Orchard & Cocoland 1978 1,000

Puerto Galera, Oriental Mindoro[14]

11. Residential House 1980 650,000

Greenhills, San Juan [15]

____________

TOTAL P1,705,583

BUSINESS INVESTMENTS YEAR AMOUNT

1. Philippine Commercial and 1968-1970; 1980 P24,800

Industrial Bank[16]

2. Social Studies Publication[17] 1971 10,000

3. Admiral Investment & 1965-1981 24,060

Financing Corp.

4. Admiral Development Corp. 3,200

5. Far East Bank & Trust Co.[18] 1971-1972 19,030

6. Lakeview Industrial Corp. 1973 10,000

7. Phil. Banking Corporation[19] 1970 4,000

1983 5,200

8. Mabuhay Airways Phils., Inc 1974 10,000

9. Menzi Development Corp. 1974 5, 000

10. LRW Realty & Development 1975 300,000

11. Astra Financing Corporation[20] 1981 25,000

12. J.R. Garments Corporation[21] 1982 300,000

1983 150,000

13. Manila Hilton 1,400

____________

TOTAL P891,690

OTHER INVESTMENTS

1. Philippine Columbian Club 1968-1975 P24,750

2. Makati Sports Club 1975 25,000

3. Manila Polo Club 1978 32,000

4. Baguio Country Club 1985 60,000

____________

TOTAL P141,750

To recapitulate, the total cost of the properties, business investments and other investments acquired by Bugarin during his incumbency as NBI Director is as follows:

Real Property P1,705,583

Business Investments 891,690

Other Investments 141,750

_______________

TOTAL P2,739,023

As to his income, he attempted to prove that aside from those mentioned in his Answer, he also earned the following amounts:

Proceeds from the sale of a

parcel of land in Iloilo City in 1968[22] P15,000.00

Proceeds from the sale of his

real property in Quezon City in 1984[23] P300,000.00

Profits in stock transaction in 1983 P63,862.00

Pensions from the Philippine Government

as veteran at P220 per month from July

1967 to March 1986 P49,000.00

Professional Fee received from the China

Bank and Africa Law office[24] P55,000.00

Outstanding balance as of 28 February 1989 of

GSIS loan obtained in 1983[25] P775,073.38

Pension from the United States Government

as World War I veteran $8,512.00

Rental income from the lease of his houses in

Dasmariñas Village, Makati; Valle Verde, Pasig;

and Greenhills, San Juan, from 1981 to 1986 P1,748,640

In its 71-page decision, the Sandiganbayan excluded the allowances from the DDB, Napolcom and Central Bank on the ground that they were given to Bugarin in the nature of reimbursement, which would imply that they had been spent for the purpose for which they were earmarked and could not have therefore been used in purchasing the subject properties. Anent the professional fees, the Sandiganbayan held that “while the same may be considered as unlawful income, forfeiture thereof … or … of the properties equivalent to said amount is not part of the subject matter of the petition.” As to the amount of P63,862.50 alleged to have been his profits from stock transactions, the same turned out to be the tax paid on the gains realized by him in stock transactions in 1983 and, hence, not allowable as part of his income. Also excluded from his disposable funds were the alleged pensions from the U.S. and Philippine governments, since the evidence presented were merely checks dated 1 February 1990 in the amount of $38[26] and 31 January 1990 in the amount of P220,[27] respectively, albeit payable to Bugarin. It then summarized respondent’s lawful income and disposable funds, thus:

Source of Income Amount

1. Salary, allowances and other emoluments of respondent as

NBI Director (not disputed by the petitioner) ……………… P743,243.65

2. Proceeds from sale of Quezon City lot

(Exhs. 35, 35-A and 36) ………………..…………… . P300,000.00

3. Proceeds from sale of Iloilo City lot

(Exh. 3-B)……..…………………………………………………. P15,000.00

4. Rental Income earned by respondent from the lease of his houses in

Dasmariñas Village, Makati; Valle Verde, Pasig; and San Juan

(Exhs.39-A, 40-A, 41-A, 43-A and 44-A)………..................……P1,748,640.00

______________

Total lawful income earned by respondent from

1967 – 1986 ………………………………………………P2,806,883.65

Outstanding loan balance re:

GSIS loan obtained by respondent in 1983,

representing additional disposable funds by him

(Exh. 2) …………………………………….........………… P775,073.38

------------------

Respondent’s total lawful income and additional

disposable funds………………………………………… P3,581,957.03[28]

Respondent’s real property acquisitions and investments were summarized by the Sandiganbayan as follows:

Real property acquisitions / Investments Amount

1. Real properties P1,705,583

2. Business investments 906,690

3. Other investments 141,750

___________

Total P2,754,023

Apart from the amounts necessary for funding his property acquisitions and business investments, the Sandiganbayan declared as chargeable against his lawful income and disposable funds the amount of P497,094 representing tax payments made by the respondent from 1981 to 1986, as well as P310,000 representing family and personal expenses, using as basis therefor his Statement of Assets and Liabilities for the period ending 31 December 1969, which states that his family and personal expenses for the years 1967 and 1968 were P15,000 and P16,000, respectively. Hence, from 1967 to 1986, respondent’s total cash outflow amounted to P3,561,117. The Sandiganbayan then concluded in this wise:

All things considered, it can be clearly seen that while respondent earned a total lawful income of P2,806,883.65 from 1967 to 1986, and had additional funds of P775, 073.38 sourced through a loan from GSIS, thereby accounting for total funds of P3,581,957.03, he bought real properties and engaged in business and other investments having a total worth of P2,754,023.00 during the same period. At the same time, he made tax payments of P497,094.00 and incurred an estimated family and personal expenses from 1967 to 1986 of P310,000.00. Summed up, respondent Bugarin’s total cash outflow from 1967 to 1986 amounted to P3,561,117.00 out of his lawful income and source of funds (or a total cash inflow) valued at P3,581,957.03. We therefore reach the inevitable conclusion that respondent Bugarin funded his real property acquisitions and business and other investments out of his lawful income as NBI Director and other legitimate sources of financing…. Respondent Bugarin was able to explain to the satisfaction of this Court that aside from his income as NBI Director, he also earned substantial amounts from the sale by his wife of two parcels of land, and rental income from the lease of his three residential houses in Makati, Pasig, and San Juan. He also obtained a loan from the GSIS. These fund, all lawfully acquired, were utilized by him in financing his various acquisitions and business undertakings.[29]

Based on these findings, the Sandiganbayan dismissed the petition for forfeiture on the ground of insufficiency of evidence.

Hence, this petition wherein petitioner maintains that the Sandiganbayan “seriously erred” in holding that

WHILE THE AMOUNTS OF P490,000.00 (PROFESSIONAL FEES FROM THE SAN JUAN, AFRICA, GONZALES AND SAN AGUSTIN LAW OFFICE) AND P55,000.00 (PROFESSIONAL FEES CONTAINED IN THE STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1969) MAY BE CONSIDERED AS UNLAWFUL INCOME, FORFEITURE THEREOF OR OF RESPONDENT’S PROPERTIES EQUIVALENT TO SAID AMOUNT NOT BEING PART OF THE SUBJECT MATTER OF THE PETITION CANNOT BE GRANTED.

RESPONDENT’S OUTSTANDING LOAN BALANCE TO GSIS AMOUNTING TO P775,073.38 AS OF FEBRUARY 28, 1989, WHILE NOT TO BE CONSIDERED AS PART OF HIS INCOME, CONSTITUTES PART OF THE AGGREGATE OF FUNDS USED BY HIM IN CAPITALIZING HIS PROPERTY ACQUISITIONS AND BUSINESS INVESTMENTS.

RESPONDENT’S TOTAL INCOME OF P1,748,640.00 FROM THE LEASE OF HIS HOUSES IN DASMARIÑAS VILLAGE, MAKATI, VALLE VERDE, PASIG, AND SAN JUAN SHOULD BE CONSIDERED AS PART OF HIS LAWFUL INCOME.

IT IS THE ACQUISITION COST OF THE PROPERTY OR BUSINESS INVESTMENT PURCHASED OR ACQUIRED AND NOT THE FAIR MARKET VALUE THEREOF AT THE TIME OF ACQUISITION WHICH SHOULD BE MADE THE BASIS IN DETERMINING THE VALUE OF RESPONDENT’S TOTAL ACQUISITION DURING THE PERIOD CONSIDERED.

RESPONDENT’S TOTAL FAMILY AND PERSONAL EXPENSES PER YEAR WOULD AMOUNT TO P15,500.00 ONLY.

RESPONDENT BUGARIN FUNDED HIS REAL PROPERTY ACQUISITION AND BUSINESS AND OTHER INVESTMENTS OUT OF HIS LAWFUL INCOME AS NBI DIRECTOR AND OTHER LEGITIMATE SOURCES OF FINANCING. [30]

It is well-settled that the appellate jurisdiction of the Supreme Court over decisions or final orders of the Sandiganbayan is limited only to questions of law.[31] A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted.[32] A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation.[33]

The Supreme Court is not a trier of facts. It is not the Court’s function to examine and weigh all over again the evidence presented in the proceedings below.[34] Thus, it is the policy of the Court to sustain the factual findings of the trial court, such as the Sandiganbayan, on the reasonable presumption that the latter court is in a better position to assess the evidence before it.

While the petitioner concedes that the Sandiganbayan’s findings of facts are conclusive upon this Court, it invokes the exceptions laid down in Dischoso v. Court of Appeals,[35] to wit: “(1) when the conclusion is a finding grounded entirely on speculation, surmise, and conjectures; (2) when the inference made is manifestly absurd, mistaken, or impossible; (3) xxx; (4) when the judgment is premised on a misapprehension of facts; (5) xxx.”

A plain reading of the Sandiganbayan’s decision exposed manifest errors and misapprehension of facts, which impelled us to pore over the evidence extant from the records. After a careful perusal thereof and of the arguments of the parties, we have come up with the following conclusions.

I. Income from Private Practice of Profession.

We agree with the respondent that the professional fee he received from the law firm of San Juan, Africa, Gonzales and San Agustin from 1978 to 1986 in the amount of P70,000 per annum, as well as that in the amount of P55,000 reflected in his Statement of Assets and Liabilities for the period ending 31 December 1969, should not be excluded as part of his lawful income or disposable funds.

Section 12, Rule XVIII of Civil Service Rules provides:

Sec 12. No officer or employee shall engage directly in any private business, vocation, or profession or be connected with any commercial, credit, agricultural, or industrial undertaking without a written permission from the head of the Department: Provided, That this prohibition will be absolute in the case of those officers and employees whose duties and responsibilities require that their entire time be at the disposal of the Government: Provided, further, That if an employee is granted permission to engage in outside activities, the time so devoted outside of office hours should be fixed by the chief of the agency to the end that it will not impair in any way the efficiency of the officer or employee: and provided, finally, that no permission is necessary in the case of investments, made by an officer or employee, which do not involve any real or apparent conflict between his private interests and public duties or in any way influence him in the discharge of his duties, and he shall not take part in the management of the enterprise or become an officer or member of the board of directors. (Underscoring supplied).

Respondent was engaged as a consultant on “handwriting, document examination and evaluation, ballistics, fingerprinting and other specialized projects.”[36] He claimed that he rendered his services as such outside of office hours, which services did not conflict with his official functions as NBI Director. He was given permission by his superior to act as a consultant, but he could not find among his files the written permission allegedly given to him in 1967. At any rate, he did not conceal his consultancy services and the corresponding fees he received; in fact, he stated them in the Statement of Assets and Liabilities he submitted to the Office of the Secretary of Justice, as well as in his Income Tax Returns.

Even assuming that he had no prior written authority to act as a consultant of a private entity, respondent’s violation of the Rule -- lack of prior permission -- was a technical one.[37] At most, it would subject him to the administrative penalty provided in the Civil Service Rules had the proper charge been filed against him. Such violation did not amount to a crime or graft and corrupt practice as defined by law.[38] Hence, we are of the opinion that his professional fees should be included in the computation of his lawful income.

II. Outstanding Balance of his Loan from the GSIS

It is unquestionable that the outstanding loan balance of respondent’s obligation to the GSIS in the amount of P775,073.38 as of 28 February 1989 did not constitute as respondent’s “income” in the strict sense of the word. The same, however, formed part of the disposable funds used by him in capitalizing his property acquisition and business investments.

In Republic v. Intermediate Appellate Court, which was also a case for forfeiture of unexplained wealth,[39] this Court gave weight to the evidence adduced by the respondents therein indicating that the purchase by them of real properties and the construction of a house were partly financed through personal loans, and loans from the GSIS and the Development Bank of the Philippines.

In the present case, however, the loan from the GSIS in the sum of P995,000.00 was granted only on 20 May 1983. We cannot, therefore, sustain respondent’s claim that it was his source of fund in the construction of his house in Greenhills, San Juan, which was undertaken in 1980, there being no competent evidence that he obtained other loans to initially finance such construction and that the GSIS loan proceeds were in fact used by him in repaying such loans. These loan proceeds could have been, at most, part of the funds he utilized in acquiring properties in 1983 or thereafter.

III. Rental Income from the Lease of his houses in Dasmariñas Village, Makati; Valle Verde, Pasig; and Greenhills, San Juan

It bears emphasis that, as borne out by his own summary of property acquisitions, most of his assets were acquired in 1980 and in the preceding years. The rental income of P1,748,640, which the Sandiganbayan included as part of his disposable funds, were for the period from 1981 to 1986. Thus, such income could not have been used by respondent in financing the purchase of his real properties and shareholdings in various companies prior to 1981. Besides, as will be shown later, there exists an unshakable doubt on the legality of this income, considering that the properties from which such income was derived were not wholly funded by lawful income.

IV. Basis for Determining the Value of Respondent’s Assets

In ascertaining the value of respondent’s properties and shareholdings, it is not the fair market value, as claimed by the petitioner, that should be made as basis thereof. Rather, as correctly held by the Sandiganbayan, it is the acquisition cost thereof, since it was the actual amount of money shelled out by respondent in acquiring them. It is the acquisition cost that must be charged against respondent’s lawful income and funds.

Neither can we sustain petitioner’s bare allegation that the cost or consideration of the subject properties stated in the contracts were understated for tax evasion purposes. Absent any evidence to support it, such claim deserves a short shrift for being merely speculative or conjectural.

V. Family and Personal Expenses

In coming out with the figure P310,000 representing his personal and family expenses during his tenure as NBI Director, respondent court adopted as basis those supplied by private respondent in his Statement of Assets and Liabilities for the period ending 31 December 1969, which were P15,000 for 1967 and P16,000 for 1968. It proceeded to extrapolate the total figure for the entire period material to the forfeiture proceeding by multiplying the resulting annual average of P15,500 by 20 years.

Owing to the inflation and consequent decline of the purchasing power of the Philippine peso throughout the period in question, Bugarin’s total family and personal expenses, as conceded by the Sandiganbayan, was extremely a conservative one. But, just like the Sandiganbayan, we can neither come up with a greater amount in the absence of any other evidence in support thereof. Indeed, the determination thereof cannot be left to conjecture or guesswork.

VI. Sufficiency of Respondent’s Explanation of His Property Acquisitions

Section 2 of R.A. No. 1379 provides that whenever any public officer or employee has acquired during his incumbency property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and income from legitimately acquired property, the said property shall be presumed prima facie to have been unlawfully acquired. Section 5 thereof provides for a hearing during which the respondent is given an ample opportunity to explain, to the satisfaction of the court, how he has acquired the property in question. It is only when the respondent is unable to show that his asset acquisitions were lawfully made that such property shall be forfeited in favor of the State.

From the summary of Bugarin’s assets, it can readily be seen that all of his real properties were purchased or constructed, as the case may be, from 1968 to 1980. The total acquisition cost thereof was P1,705,583. With the exception of those that had been liquidated, those acquired from 1981 onward, and those whose year of acquisition could not be determined, his shareholdings in various corporations and other investments amounted to P464,580. Hence, for the period from 1968 to 1980, he amassed wealth in the amount of P2,170,163.

On the other hand, his total income from 1967 to 1980 amounted only to P766,548, broken down as follows:

Professional fees reflected in his Statement

of Assets and Liabilities for 31 December 1969 P55,000

Professional fees from the Law Firm of San Juan,

Africa, Gonzales, and San Agustin from 1978 to

1980 at the rate of P70,000 per annum P210,000

Proceeds from the sale of his lot in Iloilo City in 1968 P15,000

Salaries and Allowances from the NBI

as reflected in his Income Statement

(assuming that this is accurate) [40] P486,548

_______________

Total P766,548

It bears repeating that the proceeds of the loan granted to him by the GSIS in 1983 and the rental income from 1981 to 1986, as well as the proceeds of the sale of his real property in 1984, could not have been utilized by him as his funds for the real properties and investments he acquired in 1980 and in the preceding years. His lawful income for the said period being only P766,548, the same was grossly insufficient to finance the acquisition of his assets for the said period whose aggregate cost was P2,170,163. This gross disparity would all the more be emphasized had there been evidence of his actual family and personal expenses and tax payments.

Premises considered, respondent’s properties acquired from 1968 to 1980 which were out of proportion to his lawful income for the said period should be forfeited in favor of the government for failure of the respondent to show, to the Court’s satisfaction, that the same were lawfully acquired.

WHEREFORE, the appealed decision of the Sandiganbayan is hereby REVERSED and SET ASIDE. The petition is GRANTED, and the properties of respondent JOLLY BUGARIN acquired from 1968 to 1980 which were disproportionate to his lawful income during the said period are ordered forfeited in favor of petitioner Republic of the Philippines. Let this case be REMANDED to the Sandiganbayan for proper determination of properties to be forfeited in petitioner’s favor.

Melo, Vitug, Quisumbing, Buena, Ynares-Santiago, Sandoval-Gutierrez, and Carpio, JJ., concur.

Bellosillo, J., no part due to relationship to a party.

Puno, J., no part due to relation with respondent in the DOJ.

Kapunan, J., join justice Pardo in his dissenting opinion.

Mendoza, J., no part. Prior relationship with party.

Panganiban, J., no part – close family relations with a party.

Pardo, J., dissents. See dissenting opinion attached.

De Leon, Jr., J., no part. Signatory in SB Decision.