G.R. No. 127073 , January 29, 1998.
JOSE P. DANS, JR., petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.

G.R. No. 126995 , January 29, 1998.
IMELDA R. MARCOS, petitioner, vs. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION), AND THE PEOPLE OF THE PHILIPPINES, respondents.

FACTS

In 1984, petitioners Imelda R. Marcos and Jose P. Dans, Jr., then Minister of Human Settlements and Minister of Transportation and Communications, respectively, entered into contracts involving the Light Rail Transit Authority (LRTA) and the Philippine General Hospital Foundation, Inc. (PGHFI). Marcos and Dans concurrently served as ex-oficio Chairman and ex-oficio Vice-Chairman of the LRTA, and as Chairman and Director of the Board of Trustees of the PGHFI. By virtue of these agreements, two vacant LRTA lots (a Pasay lot and a Sta. Cruz lot) were leased to PGHFI. The lease agreements, dated June 8 and June 18, 1984, were for 25 years with a 7.5% annual escalation, and granted PGHFI the right to sublease. The monthly lease was P102,760.00 for the Pasay lot and P92,437.20 for the Sta. Cruz lot. Within the same month, PGHFI, through Marcos, subleased the Pasay lot to Transnational Construction Corporation (TNCC) for P734,000.00 a month, and allegedly subleased the Sta. Cruz lot to Joy Mart Consolidated Corporation for P199,710.00 per month.
Petitioners were charged with violations of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). They were separately charged under Section 3(d) for accepting employment in/acting as Chairman and Director of PGHFI while it had pending business with LRTA. They were jointly charged under Section 3(g) in three cases for entering into the “Agreement for the Development” and the two lease agreements on behalf of LRTA with PGHFI under terms grossly disadvantageous to the government.
When arraigned, petitioners pleaded not guilty. The Sandiganbayan acquitted petitioners in Criminal Case Nos. 17449 (Agreement for Development), 17451 (Section 3(d) for Marcos), and 17452 (Section 3(d) for Dans). However, it convicted them in Criminal Case Nos. 17450 (Pasay lease) and 17453 (Sta. Cruz lease) for violation of Section 3(g). The court found the lease agreements grossly disadvantageous because PGHFI could sublease the properties at rates significantly higher than what it paid LRTA, with the government receiving no share in the profits.

ISSUE

Whether the Sandiganbayan erred in convicting petitioners Jose P. Dans, Jr. and Imelda R. Marcos for violation of Section 3(g) of R.A. 3019.

RULING

The Supreme Court AFFIRMED the conviction of Jose P. Dans, Jr. but REVERSED the conviction of Imelda R. Marcos.
The Court held that for a conviction under Section 3(g) of R.A. 3019, the prosecution must prove: (1) the accused is a public officer; (2) he entered into a contract or transaction on behalf of the government; and (3) such contract or transaction is grossly and manifestly disadvantageous to the government.
The Court found these elements present. Petitioners were public officers as Chairman and Vice-Chairman of LRTA. They entered into the lease contracts on behalf of LRTA. The contracts were grossly disadvantageous because they allowed PGHFI, a private entity, to profit immensely from subleasing the properties at rates far exceeding the rental paid to LRTA, without any stipulation for the government to share in the profits. The Court rejected the defense that the leases were advantageous as they generated income from otherwise idle land, stating the law aims to prevent precisely such arrangements where a private intermediary reaps excessive profits at the government’s expense.
However, the Court acquitted Imelda R. Marcos based on reasonable doubt. The prosecution failed to formally offer in evidence the sublease agreement for the Sta. Cruz lot (Exhibit “E”) against her. The Sandiganbayan itself had earlier excluded this exhibit as to Marcos due to her challenge to the authenticity of her signature thereon. Without this sublease document, there was insufficient evidence to prove the gross disadvantage for the Sta. Cruz lot transaction as to her. Consequently, her conviction for both leases (which were tried jointly and based on the same body of evidence) could not stand.
The conviction of Jose P. Dans, Jr. was affirmed because the sublease documents were properly admitted in evidence against him, and his defense of good faith (reliance on board approval and expert advice) was unavailing as his signatures on the contracts were clear acts of approval.