G.R. No. 96915 July 3, 1992
CONCEPCION DUMAGAT, petitioner, vs. THE HONORABLE SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.

FACTS

Petitioner Concepcion Dumagat was the Special Disbursing Officer of the National Food Authority (NFA) in Zamboanga del Norte from 1982 to 1988, officially stationed in Sindangan but with functions extending to multiple NFA stations, including Dipolog City, Tampilisan, and Labason. In May 1988, State Auditor I Liliosa P. Eway conducted a spot audit examination of petitioner’s cash and accounts in Dipolog City, covering the period from May 31, 1986, to May 18, 1988. The audit revealed an alleged shortage of P98,122.51. A formal demand letter was sent to petitioner to produce the missing funds. Petitioner subsequently tendered payments: P5,000 on June 6, 1988, P50,000 on June 7, 1988, and the remaining balance of P43,127.24 on June 30, 1988. Despite full restitution, a complaint was filed against her. After preliminary investigation, Second Assistant City Prosecutor Charles D. Adraincem recommended dismissal due to lack of prima facie evidence, but this was disapproved by Deputy Special Prosecutor Jose De G. Ferrer and Acting Special Prosecutor Jesus F. Guerrero. An information was filed with the Sandiganbayan, charging petitioner with malversation of public funds under Article 217 of the Revised Penal Code. The Sandiganbayan found her guilty beyond reasonable doubt, sentencing her to an indeterminate penalty and imposing perpetual special disqualification and a fine. The conviction was based on the prima facie presumption under Article 217 arising from her failure to produce the funds upon demand and her signing of the audit report without reservation. However, the audit examination was confined to Dipolog City and did not include petitioner’s other stations, vaults in Tampilisan and Sindangan, or records from those locations. The prosecution admitted during pre-trial that petitioner had two safety vaults in Sindangan and Tampilisan, that her Dipolog collections were deposited with the NFA cashier, and that collections from other stations were deposited in those vaults.

ISSUE

Whether the Sandiganbayan erred in convicting petitioner of malversation of public funds based on an incomplete audit examination that failed to consider all relevant accounts and records, thereby not establishing guilt beyond reasonable doubt.

RULING

The Supreme Court reversed and set aside the decision of the Sandiganbayan and acquitted petitioner. The Court held that the audit examination conducted by Auditor Eway was incomplete and did not comply with standard auditing procedures under the Manual of Instructions to Treasurers and Auditors. Specifically, the audit failed to include the contents of petitioner’s vaults in Tampilisan and Sindangan and the records from other NFA stations under her responsibility. The Manual requires that a cash examination must inspect the total contents of all safes and cash receptacles and be thorough and complete to the last detail. The haphazard examination could not serve as a reliable basis for establishing a shortage or for invoking the prima facie presumption under Article 217 of the Revised Penal Code. Petitioner’s signature on the audit report merely acknowledged the demand, not the accuracy of the accountability, given the incomplete examination. Her failure to immediately account for the alleged shortage was understandable due to the geographical dispersion of her stations and the auditor’s refusal to examine the other vaults. The Court cited Tinga vs. People, emphasizing that auditors must act with great care and caution, and that the prima facie presumption arises only when the audit findings are accurate, correct, and regular, and the missing funds are indubitably established. Here, the prosecution failed to prove petitioner’s guilt beyond reasonable doubt. The Solicitor General’s recommendation for acquittal was noted.