G.R. No. 184766 , August 15, 2018
JOSIE CASTILLO-CO, Petitioner, vs. HONORABLE SANDIGANBAYAN (SECOND DIVISION), and PEOPLE OF THE PHILIPPINES, Respondents.

FACTS

Josie Castillo-Co, then Governor of Quirino, was charged with violating Section 3(g) of the Anti-Graft and Corrupt Practices Act. The Sangguniang Panlalawigan authorized her, via Resolution No. 120, to secure a loan to purchase brand new heavy equipment. However, on January 11, 1996, she entered into a contract with Nakajima Trading Co., Ltd. to purchase reconditioned equipment instead. The contract also stipulated a 40% advance payment, contravening Section 338 of the Local Government Code, which prohibits such payments. A complaint alleged the equipment was overpriced and that not all items were delivered, causing prejudice to the province.
The Office of the Ombudsman found probable cause, leading to the filing of an Information. The Sandiganbayan convicted Castillo-Co, finding that the contract was grossly and manifestly disadvantageous to the government. It emphasized her deviation from the explicit terms of the Sanggunian’s resolution and the illegal advance payment. She was sentenced to imprisonment and perpetual disqualification from public office. Castillo-Co appealed, arguing the contract was advantageous and that she acted in good faith based on her engineer’s recommendation.

ISSUE

Whether the Sandiganbayan erred in convicting petitioner Josie Castillo-Co for violating Section 3(g) of R.A. No. 3019 by entering into a contract grossly and manifestly disadvantageous to the government.

RULING

The Supreme Court denied the petition and affirmed the Sandiganbayan’s decision. The legal logic centers on the strict adherence required when a local chief executive acts under authority granted by the local legislative board. The Sangguniang Panlalawigan’s Resolution No. 120 expressly authorized the procurement of brand new equipment. By contracting for reconditioned units, Castillo-Co unilaterally altered the fundamental term of the granted authority. This deviation alone rendered the transaction disadvantageous, as it violated the specific mandate intended to protect the province’s interests.
Furthermore, the contract included a 40% advance payment, a direct violation of the explicit prohibition in Section 338 of the Local Government Code. This statutory breach constituted another clear element of disadvantage to the government. The Court rejected the defense of good faith and reliance on a subordinate’s recommendation. Good faith is not a defense in a prosecution under Section 3(g), which is a malum prohibitum offense; the law is violated once the disadvantageous contract is entered into, regardless of intent. The petitioner’s failure to adhere to the strict terms of the enabling resolution and the statutory prohibition established the grossly disadvantageous nature of the contract per se. Thus, all elements of the crime were proven beyond reasonable doubt.