G.R. No. 74225 . April 17, 1989.
REPUBLIC OF THE PHILIPPINES, petitioner, vs. INTERMEDIATE APPELLATE COURT, SIMPLICIO BERDON, GAUDIOSA BERDON and LUIS BERDON, respondents.

FACTS

The Republic filed a petition for forfeiture under Republic Act No. 1379 against Simplicio Berdon, an Assistant Staff Civil Engineer, his wife Gaudiosa, and his father Luis. The petition alleged that from 1963 to 1969, the spouses acquired various parcels of land and constructed a house with a total value disproportionate to their lawful incomes, savings, and declared assets. The Republic valued this alleged unexplained wealth at P124,495.82 and sought forfeiture of the properties. The trial court initially attached the properties. The Republic’s evidence centered on Berdon’s sworn statements of assets and liabilities and deeds of sale for the acquired properties, arguing these documents showed an unexplained income of over P105,000.00.
The respondents presented evidence to explain the sources of funds for the acquisitions. They testified that the purchases and construction were financed through a P3,000.00 donation and a P5,000.00 loan from Gaudiosa’s parents, a P14,000.00 GSIS loan, a P6,000.00 loan from the Development Bank of the Philippines, and a substantial loan (approximately P60,000.00 actually released) from Congressman Ramon Durano, a wedding sponsor, for agricultural investment. The Republic countered that these loans and donations were not reflected in Simplicio Berdon’s sworn statements of assets and liabilities.

ISSUE

Did the Intermediate Appellate Court err in affirming the dismissal of the forfeiture petition, thereby ruling that the respondents successfully rebutted the statutory presumption that the subject properties were unlawfully acquired?

RULING

No, the Intermediate Appellate Court did not err. The Supreme Court affirmed the dismissal. The legal logic hinges on the proper application of Republic Act No. 1379 . The law establishes a presumption that property acquired by a public officer manifestly out of proportion to his salary is unlawfully acquired. However, Section 5 of the law affords the respondent every opportunity to explain, to the satisfaction of the court, how the property was acquired. The court is not strictly bound by the entries in the respondent’s sworn statements of assets and liabilities in this forfeiture proceeding. The determinative factor is whether the respondent has presented competent evidence to rebut the presumption.
In this case, the respondents presented credible and substantiated evidence of external financial sources—donations and loans from family and financial institutions—that legitimately accounted for the capital used to purchase the disputed properties. The Court found this evidence satisfactory to explain the acquisitions. Consequently, the presumption of unlawful acquisition was successfully overturned. The purpose of the forfeiture law is to recover assets with no legitimate explanation, not to forfeit properties whose acquisition, though perhaps not meticulously documented in annual statements, is otherwise plausibly and legally justified through evidence adduced during trial.