I ~STELA TERI ITA C. ROSETE Executive C erk of Court IlL ~1!.'rlb'IED 'rR~UEXEROX COP,! •• Firs DiviBionJ..-y\lo-1~\~
Republic of the Philippines SANDTGAJ\JBA Y AN Quezon City
FIRST DIVISION
PEOPLE OF TIlE PIIILIPPINES, PlaintifT,
CRIM. C!\SI~ NO. 27813
-Versus- PRESENT: CiERALDI·~/,.j., Chairman DE 1~ACRUZ, & PONFERRADA, J.J.
MATEO A.T. CAPARAS, MAXIMO A. MACEREN, ZOSIMO C. MALABANAN, ISMAEL B. SANCHEZ, MARIO Y. GALANG, BENITO CUEVO, & JOI-TN DOES, Accused.
Promulgat~,d:, U'I x ------~=~1~l~ci1j------_LL,--_~------L----lf-=- .' x
DECISION
PONFERRADA, [.:
II, \ Accused MATEO A.T. CAPARAS, MAXIMO A. MACEREN,~, ~ .."" ZOSIMO C. MALABANAN, ISMALL B. SANCHEZ, MARIO Y. ~._/ \ ..J
GALANG, BENITO CtJEVO and several JOliN DOES are charged with \ "1r-\ DECISION - PEOPLE vs. MA TEO A. 7: CIPARAS, ETAL. Page Crim. Case No. 27813 violation of Section 3(e) ofRA 3019, otherwise known as the Anti-Graft and
I Corrupt Practices Act, as amended, under the following Information which reads -
"That on or about September 28, 1989. or sometime prior or subsequent thereto, in Pasig City, Metro Manila. Philippines. and within the jurisdiction of this Honorable Court. the above named accused MATEO A.T. CAPARAS. MAXIMO A. MACEREN. ZOSIMO C. MALABANAN, and ISMAEL B. SANCHEZ. being then the Chairman. Acting Commissioner. Director for Operations/Chairman. Bidding Committee and Senior Executive Assistant/Attorncy V. respecti\ely. of the Presidential Commission on Goocl Government (PCG(]). the first three accused being then high ranking public officials. together \vith MARIO Y. GALANG of the Commission on Audit (COA). private individual BENITO CUEVO of International Merchandising Development Corporation (lMDC) and several JOI-IN D01::S, with accused public officials taking advantage of their respective official positions and committing the offense in relation to otlice, conspiring. confederating and mutually helping one another. with evident bad I~jith (or at the very least. with gross inexcusable negligence). did then and there willfully. unlawfully and criminally cause undue injury to the government by selling, without the Sandiganbayan's authority. to Walter Fuller Aircraft Sales, Inc. (Walter FuIJer), an alleged sequestered property which is uncler the Sandiganbayan's jurisdiction. and described as foIIO\vs:
A VIONS DASSAULT - BREGUET FAL.CON 30 JET MODEL - 1982 MANUFACTURER'S SERIAL NO. 082 CERTIFICATE OF REGISTRATION NO. RP-C754
also known as the Falcon jet. for thc sum of FIVE MILLION TWENTY FIVE THOUSAND US DOLLARS (US$3.023.000.00). which aircraft has been previously leascd to United Chemicals. Inc. by its registered owner Faysound Limited. a United States based corporation, but which sale was subsequently nuJli fied by the District Court of the States of Arkansas. USA, upon a suit filed by Faysound Limited. and \\hich court directed \Valter Fuller to turn over and restore ownership and possession of the aforesaid aircraft to Faysound Limited. thus rendering the Philippine Government liable for breach of warranty and damages in the total amount of SEVEN MILLION SIX HUNDRED FORTY ONE THOUSAND DOLLARS (US$7.641.568.34). and which amount eventually was paid by the Philippine Government to Walter Fuller. thereby causing undue injur) and prejudice to the governmcnt in the af()resaid amount.
CONTRAR Y TO LA \\/.,-1
Upon arraignment, accused Benito Cuevo,1 Maximo A. Maccrcn,
I Records, Vol. I, pp. 1-).
2 Id., at pp. 438-440. Zosimo, Records. Vol.C. II.Malabanan,pp. 497-499-A. and Ismael B. Sanchez,; assisted by their rcsrcet::~l J
rw ri -, DECISION - PEOPLE vs. MA TEO A. T. C>tPARAS, ETAL. Page .' Crim. Case No. 27813 counsels, entered a plea of NOT GUILTY. The other accused Mateo A.T.
Caparas and Mario Y. Galang are sti II at-large.
After the pre-trial conference held on July IS, .2005, the Court issued a
Pre-trial Order4 \vhich contains, infer olia, the parties' stipulation or I~lcts and issues, to wi t.
III Stipulations
The prosecution and the accused puhlic officials stipulated on the public positions held by the rcspective accused during the time rcIc\'ant to the case as follows:
I. Maximo A. Maceren - was the acting Commissioner of the Presidential Commission on Clood Government (PCCIC;) from April 1989 until the cnd or his term in December 1990: ) Zosimo C. Malabanan \\as the Director t()I' Operations and Chairman of the Bidding Committee of the PCGG: and ], Ismacl 8. Sanchez - was the Senior Exccutive Assistant. Attorney V, of the PCGCI.
The prosecution and all the accused stipulated on the following facts:
I. On 31 July 1987. the Republic of the Philippines and the PCClC! filed Civil Case No. 0033 against Eduardo Cojuangco. Jr. and sixty (60) other defendants for reconveyance. reversion. accounting. restitution and damages. Among the seq uestered assets i11\'01 ved in the said case \vas an aircraft more particularly described as follows·-
A vions Dassaul I - Brcgucl Falcon 50 Jet ]'v10del - 1982 Manufacturer Serial No. 082 Cert. of Reg. No. RP-C754
which was registered in the name of Faysound LId .. a Hongkong registered corporation with United Coconut Chemicals. Inc. ("Unichem") as lessee. the same aircraft subject of ihe transaction complaint of in the instant criminal case.
2. On 2 I February 1989. the PCGC thru Commissioners Augusto Villarin. David Castro. Rosalia de Leon and Acting Commissioner Nievelina Rosete. issued a Memorandum authorizing the salc of the a irc ra ft. 3. On 20 March 1989. the Office of the Solicitor General filed before the Sancliganbayan a "rvlotion for Authority to Sell Sequestered Aircraft Pending Litigation" in Ci\'il Case No. 0033. 4. On 25 April 1989. the PCGG issued a Resolution creating a Bidding Committee composed of the following:
-JRecords. Vol. III. pp. 259-270, DECISION - PEOPLE vs. MA TEO A.I: CAPARAS, ET AL. Page 4 Crim. Case No. 27813
Chairman Director Zosimo Malabanan Members Ilerll1enigildo Reyes Atty. Manuel T. Buyson Mario Galang (COA)
). On 18 May 1989. the Sandiganbayan DEN IED the "Motion for Authority to Sell Sequestered Aircraft"' and f()Und "no justification prima facie or otherwise xxx for the seizure from the lessee." 6. Not satisfied with the ruling of the Sandiganbayan. the PCGC! liled a Petition for Certiorari before the Supreme Court docketed as C!.R. No. 88336, alleging grave abuse of discretion on the part of the Sandiganbayan in the denying the motion to sell the aircraft and praying that the 18 May 1989 Resolution in Civil Case No. 0033 be nullified. 7. On June 2, 1989. the Office of the Solicitor Ceneral (OSe;) wrote a letter to Commissioner Rosalio de Leon with the advise that ..the auction sale may still proceed as sale pendente Ii/e." 8. On 06 June 1989. the Supreme Court issued. in C.R. No. 88336 a Temporary Restraining Order directing the Sandiganbayan to cease and desist from enforcing its assailed 18 May 1989 Resolution in Civil Case No. 0033. 9. On July J 7. ] 989, a letter was written by the aSCI addressed to Director Zosimo Malabanan \vith the statement that "V,itll the issuance of the above temporary restraining order by the Supreme Court in G.R. 883361 it is believed that there is no legal obstacle to the projected sale of the subject aircraft under the circumstances mentioned in your letter dated May 24. 1989." 10. On 21 September 1989. the PCGG thru Chairman Mateo A.T. Caparas issued a letter of even date. giving notice of 3\vard to Walter Fuller Aircraft. Inc. and accepting the otTer of US$5.025 Million as the full purchase price. J J. On 26 December J990. the Supreme Court en !Junc dismissed the PCGG's petition in G.R. No. 88336 (Republic vs. Sancliganbayan). reported in ]92 SCRA 743 119901. ruling that ··the decision to sell the aircraft is not within the limited administrativc po\vers of the PCGCI, but requires the sanction of the Sandiganbayan which can grant or withhoJd the same in the exercise of sound discretion and on the basis of the evidence before it.·· As a consequence thereoL the Supreme Court ordered the PCGC; to deposit the proceeds of the sale of the subject aircraft with the PNB "for the account of the Sandiganbayan in escrow for the person or persons. natural or juridical. who may be adjudged lawfully entitled thereto." 12. In order to pay Walter Fuller. the PCGG filed on 13 April 1998 with the Sandiganbayan in Civil Case No. 0033 an "Ex-Parte Motion to Withdraw" the PNB Escrow Deposit for transmission to \Valter Fuller, wherein it sought that ··... the PNI3 be immediately directed to release the funds on deposit to the Bureau of Treasury for transmission to Walter Fuller Sales, Inc. [in accordance] with the above Agreement and decisions of the US Federal Courts." J3. On March 20. 2001. the Supreme Court issued its Decision in G.R. No. ]42476. Republic vs. Sandiganbayan (reported in 354 SCRA 756) granting the PCGG's petition and ordering the Sandiganbayan to release the PNB Escrow Deposit for transmission to Walter Fuller. In ruling that sale of the aircralt is null and \oie!. the Supreme Court stated that the Republic cannot be bound by the terms of the PCCCI Agreement with Walter Fuller and thus. there can he no cause of DECISION - PEOPLE I'S. MA 1'EO A.1: CAI~4RA5,', E1'AL. Page ) Crim. Case No. 27813
------.------~------_._-~_._----~--_.._-~-_.~---~--~--_._------.-.------.----.------action against it. and that "Petitioner [Republiclmust. therefore. take immediate appropriate action against the PCCCi personnel involved in the unauthorized sale of the aircraft,"
IV Issues
The parties agreed that the three main issues to be resolved are:
], Whether or not each of the individual accused participated in the sale of the subject aircraft; 2. Whether or not there was conspiracy among the accused: and 3. Whether or not their acts constituted (a) violation (of the) crime charged. "
In view of the death of accused Maximo A. Maceren on November
30, 2005, the case against him \vas dismissed per Resolution of this Court
June 15, 2009.5 Thus, this case proceeded against accused Zosimo C.
Malabanan, Ismael B. Sanchez, and Benito Cuevo.
Evidencefor the Prosecution
At the trial, the prosecution presented the following witnesses and
documentary exhibits -
'NITNESSES
I. Atty. Randolph P. Dacanay - a practicing lawyer and
former Special Counsel of the Philippine Commission on
Good Government (PCGG). He testified that in 1987, he
started working \vith the PCGG as a researcher when he was
sti!! a law student and len sometime in 1988; that in 1999, (\ f\ i '\
after passing the bar, he was employed again with the PCGG \ \
2003as a lawyeronly to untilrejoinhetherelinquishedPCGG in 2005his positionas SpecialsometimeCounsel;in'"\\J~ '\"J~
of the PCGG is to conduct research and studies on cases that among his duties and responsibilities as Special Counsel A'.. 'Records, Vol. 5. p. 160 ~) DECISION - PEOPLE I's. MA T/:X} A. T. CAPARAS, ET AL. Page 6 Crim. Case No. 27813
\vhich the commission may from time to time assign to him
including the preparation of complaints and other related
documents; and that it \Vas during his tenure as Special
Counsc\ that he was instructed by then PCGG Commissioner
Ruben Carranza to conduct a study or research on the case of
an A vions Dassault Breguet Falcon 50 Jet, that \Vas
sequestered by the PCGG pursuant to a \vrit of sequestration
and thereafter sold by the PCGG to Walter Fuller Aircraft
Sales, Inc. (Vialter Fuller) at the price of US$5,025,OOO.00,
He thus testified that based on hi.s' Sll/{~V and research, alter
the subject aircraft \vas sequestered, the PCGG filed before
this Court Civil Case No. 0033 for reconveyance, reversion,
account ing, restitution and damages against [duarclo
Conjuangco, .II'. and 60 other deICndants; that alter the filing
of the complaint, a certain Art B. Condes, who appears to be
the President of International Enterprise, Inc., \\Tote the
PCGCi and Asset Privatization 'rrust, a letter dated
November 17, 19886 and proposed to act as broker for all the
aircrafts sequestered by the PCGG and cited the subject
[<'alcon Jet as a test case; that in a letter dated January 6,
19897 addressed to PCGG Commissioner De Leon, !'vir.
Condes proposed instead to buy the subject aircraft for an
amount not 100ver than Four Mi 11ion US Dollars; that in
response to said letter, Commissioner De Leon issued a
Letter of Authorization dated January 16, 1989x authorizing
Art Con des to examine the sequestered Falcon Jet at the r\
domestic airport in Nichols Airbase; that in a Memorandum, \ \, '", Commissionersdated February A. E.21,Villarin,1989')D. IVI.(approvedCastro, R. byA. de PCCiGLeon, '\ ~ \0'\
(,Exhibit "G", .,bhibit 'E', 8 Exhibit 'r', 9 Exhibit "D" DECISION - PEOPLE "s. MA TEO /1.1: CAPARAS, ETAL. Page 7 Crim. Case No. 27813
to sell the sequestered Falcon .let on account of its
deteriorating condition, the same ·to be sold after securing
approval of the Sandiganbayan; and that af1er the issuance of
the said memorandum, the Office of the Solicitor General
(OSG), in behalf of the PCGCJ, filed before this Court, in
Civil Case No. 0033, a k/otion for Authority to Sell
Sequestered Aircrc~(t Pending Utigotion datcd March 14,
19891°, and a I'vlotion for Early Resolution dated April 7,
1989;11 and that in a j\;/otion to IVithdrmv j\;/otion for
Authority to Sell Sequestered Aircrq(t dated April 26, ]989, the PCGCI moved far the withdrawal of its motion for
authority to sell sequestered aircraft pending litigation.'2 I-Ie
also testified that based on his study and research, while the
said OSCI motions are pending, a Bidding Committee
composed of Mr. Zosimo Malabanan, as Chairman, and Mr.
I-Ierminigildo P. Reyes, Mr. Manucl T. 13uyson, and a COA
Representative, as members, was created by the PCGG
pursuant to a Resolution dated April 25, 19891:\ to sell in a
public bidding the subject sequestered Falcon Jet under the
terms and conditions set forth thcrcin; and that on ]'v1ay 11,
1989, a public bidding on the subject aircraft was conductcd
by the Bidding Committee as shO\vn by the Abstract of
Bidding dated May II, 1989,101 the Memorandum dated May
11,1989 of the Bidding Committee,15 and the Minutes of the
Public Bidcling,'(' but it was subsequently declared "a l~lilLire
of bid" by the PCGG in an undated Memorandum'7 because '\ the bidders f~liled to attach, or accompany their bids, with the
required Letters of Credit duly approved by an acceptab\I~,
10 Exhibit "Ir. II Exhibit ''1''. I" Exhibit ·T. " Exhibit "K".
14 Exhibit "L".
15 Exhibit "M".
16 Exhibit "N",
17 Exhibits "0", &"0-1", DECISION - PEOPLE' I'S. MA TEO A. 7: (APARA,<"', ETAL. Page Crim. Case No. 27813
bank. Further, he testi fled that in' view of the denial of the
OSG's Aiotion for Authority to Sell Sequestered Aircrafi in
Civil Case No. 0033 in a Resolution dated May 18, 1989 the
First Division of this Court, IX Commissioner Dc Leon sought
the advice of the Commission's Legal Counsel, then
Solicitor General Francisco Chavez, in a letter dated May 24,
198919 on what to do on the bidding of the subject aircraft
\vhile awaiting the result of their projected certiorari petition
before the Supreme Court; that in response to this letter,
Solicitor General Chavez opined in his letter dated May 24,
198920 that in the absence of a Supreme Court Temporary
Restraining Order against the Sandiganbayan, and a
Sandiganbayan Temporary Restraining Order against the
PCGG, the auction sale may still proceed as a sale pendente
elite in the Supreme Court, no longer in the Sandiganbayan,
but such is a tenuous argument; that the PCGG, thru the
OSG, subsequently filed with the Supreme Court in C.R. No.
88336 a petition for certiorari assai Iing the Sandiganbayan's
Resolution denying its motion to sell the aircraft, and on
June 6, 1989, the Supreme Court issued a temporary
restraining order21 directing the Sandiganbayan to cease and
desist from enforcing its assailed May 18, 1989 Resolution;
that in view of this TRO issued by the Supreme Court.
Zosimo Malabanan, Director of the Operations Department
of the PCGG, in a letter dated June 28, 198922 requested
Solicitor General Francisco Chavez for an opinion on
\ whetherCourt onthetheCommissionpetition; andmaythatproceedin a letterwith datedthe sal~Julyof th217, \ . aircraft WIthout waItmg for the deCISIon of the Supreme \ J\~
IS Exhibit ··P'".
1<) Exhibits "Q'". "0 Exhibit "R·'. "I Exhibit ··S". I~ \ 22 Exhibit ·'T. V DECISION - PEOPLE vs. iHA TED A. T. CAPARAS, ETAL Page C) Crim. Case No. 27813
I 987, ~j-~s~iZit(~~--G-~~~:~I-CI~~~;~;~~I;i~-~d--ih-at ~~Tti;-tj;~-Ti~0
issued by the Supreme Court, there is no legal obstacle to the
projected sale of the aircraft in the light or the circumstances
mentioned in Commissioner De Leon's letter of May 24,
1989. Moreover, he testi lIed that based on his research and
study, it appears that while the case is pending with the
Supreme Court, the PCGG received I'our (4) written offers to
. purchase on negotiated basis the subject Falcon .let as shown
by a letter of one .lose M. Cabrera dated .luly7, 198921
addressed to the Chairman of the Bidding Committee, a
letter of one Doroteo Daguna dated .luly ! 0, 198925
addressed to the PCGG, a letter of International Enterprise,
Inc. dated .luly 19, 198926 addressed to the Director or the
Operations Department of the PCCC, and a letter of the
Peregrine International, Inc. dated .luly 23, 198927 addressed
to the PCGG; that acting on these offers, the PCGG issued a
Resolution dated August 7, 19892x and awarded the sale or
the Falcon Jet to Peregrine International Inc. and on the same
date, the PCGG thru its Chairman Mateo A. Caparas, wrote a
letter29 to Peregrine Internationallnc, informing the latter of
the a\vard of the sale of the subject aircraft for
LJS$5,025,OOO.OO; and that as shown in a letter dated August
24, 1987,:w the PCGG, thru its Chairman Mateo A. Caparas,
however, revoked the award granted to Peregrine
International, Inc. for the latter's f~lilure to execute the deed '\ of sale within the 24 hour deadline as expressed in PCCiC's
letter of award dated August 7, 1989. Further, he testi fled
2.' Exhibit "U",
2-1 Exhibit "V", 25 Exhibit "W", 26 Exhibit "x", n Exhibit "Y", 2R Exhibit "T, 2') Exhibit "AA", 30 Exhibit "88" DECISION - PEOPLE 1'5. MA TEO A.I: CAPARAS, ET AL. Page 10 Crim. Case No. 27813
International, Inc., the PCGG received on September 19.
1989 a letter dated September 19, 198931 from one Benito
Cuervo, President of International Merchandising and
Development Corporation, for and in beha! r of his principal
\Valter Fuller Aircraft Sales, Inc. of Texas (\Valter Fuller),
and offered to purchase the Falcon Jet for US$5,025,OOO.OO
and with an undertaking to settle any existing lien on the
aircraft; that on the same day (September 19, 1989), Zosimo
Malabanan, Director II)r Operations of the PCGC/, issued a
memorandum32 to the Commission endorsing the said offer
of Benito Cueva attaching thereto two (2) cashier's checks
given by Cuevo each amounting to US$25,OOO.OO;33 that as
shown in a letter dated September 2], 1989;,1 the PCC/G
acc'epted and awarded the sale of the Falcon .let to \\/alter
Fuller for US$5,025,OOO.OO under the terms and conditions
set forth therein; that on September 27, 1989, Walter Fuller
paid the PCGG the amount of US$4,975,OOO.OO as shown by
the Certification35 issued by the Vice President of the
Philippine National Bank (PNB),' that the said amount \vas
deposited to PCCJG's account maintained \vith PNB Ortigas
Branch; that on September 28, 1989, a Deed of Sale3h was
executed by the PCGG represented by its Chairman Mateo
A. Caparas, and Walter Fuller for the sale of the subject
Falcon Jet with the signatures and initials of accused losimo
Malabanan and Ismael Sanchez appearing therein; and that
on October 2, 1989, the PCGG issued an Order37 lifting the
sequestration of the subject Falcon .let and as shown by the
Memorandum of the rCGG previously marked as Exhibit "0", the Falcon .let was delivered to \Valter Fuller and nown
31 Exhibit ··ce. 32 Exhibit "00" ;; bhibits "00-1" & ··DD-T.
1.1 Exhibits "EE"' 15 Exhibit "FF··. ;()Exhibit ooGC"'. 17 Exhibit ··FF". DECISION - PEOPLE vs. AtA TEO A.1: C4PARAS, ETAL Page ] ] Crim. Case No. 27813
out of the country on October 4, 1989. Moreover, he testified that as shown in an undated Memorandum of
'X Agreemenr' executed by and between Walter Fuller and
International Merchandising and Development Corp.
represented by Benito Cuevo, the former agreed to pay the
latter, its broker/agent, a broker's fce in the amount of
US$2, 175,000.00 payable by way of wire transfcrs to the
foreign nominees of International Merchandising and
Development Corp., namely, ./ohn McEnroy, I,ydia Figueras,
Doroteo Daguna. He also testi fled that based on his study
and research, it appears that after the sale, r:aysound Limited, which is the owner of the Falcon ./et that was leased to
Unichem, instituted before the Arkansas Court in the US an
action against Walter Fuller claiming title to the aircraft, and
the Arkansas Court rendered .Iudgn1ent and Memorandum
Opinion39 in favor of Faysound Limited declaring the latter
as the rightful owner of the Falcon .let; that after the
promulgation of the said judgment and opinion, Walter
Fuller instituted before the Texas Court an action against the
Republic of the Philippines and the PCClC) for Breach of'
Warranty - and damages~ in the amount or US$12.9 Million;
that \vhile this case is pending, a decision'o \vas rendered by
the Philippine Supreme Court in C/.R. No. 88336 which
affirmed the Sandiganbayan's Resolution denying PCClC/'s
Motion for Authority to Sell Aircraft; that this decision of
the Suprcme Court was utilized by \Valter Fuller to amend'
its complaint as basis for its claim of additional
US$IOMillion damages; that after the Texas Court denied
the motion to dismiss of the PCGG, the Circuit Appellate
Court, on appeal by the PCGG, reversed the lower court's
,8 Exhibit "'I". ,9 Exhibits "Jr. "KK", & ·'KK-'''. ·10 Exhibit "00". 11 DECISION - PEOPLE' 1'.5. MA TED A. 7: C4PARAS, ETAL Page 12 Crim. Case No. 27813
rul ing in so far as the Republic of the Phi Iippines is
concerned but affirmed the findings against the PC(JCI; that
in view of this decision of Circuit Appellate Court, the
PCGG and Walter Fuller entered into a compromise
agreement wherein the PCGG shall pay the latter US$14
Million plus 10% interest per annum in full satisfaction of
the judgment; that in view of this compromise agreement,
the PCGG filed in Civil Case No. 0033, a Motion to
Withdraw the proceeds of the sale deposited in escrow but
the motion \vas denied prompting the PCGG to elevate the
denial to the Supreme Court in G.R. No. 142476 by way ora
petition for certiorari and mandamus; and that on March 20.
200 I, the Supreme Court rendere~i a Decisionl' reversing the
ruling of this Court and ordered the transmission of the
proceeds of the escrow deposit to \Valter Fuller andlikcwise
directed that immediate action be taken against the PCClG
personnel who \vere able to participate in the unauthorized
sale of the Falcon Jet. Lastly, he testified that upon the
directive of then PCGG Commissioner Carranza, he
prepared, on the basis of his legal research and study, the
criminal Complaint that was filed berore the Office of the
Ombudsman for the prosecution orthe herein accused.
2. Atty. Edwal'd L. IVhugarejo - a lawyer and a special counsel for the PCGG. He testified that he has been a
special counsel of the PCG(j since 2003 and as such, his
primary functions and responsibi Iities is to handle PCGG'\
cases that are assigned to hi 111 by coord in at ing wi th and \ assisting the Office of the Special Prosecutor (OSP) in the \
prosecution thereof; that since this case, Criminal Case No.
27813, is one of the cases that was assigned to him by the
PCGG, he assisted the OSP in obtaining certified true copies
~I Exhibit "LL". DECISION - PEOPLE vs. MA TEO A. T. CAPARAS, ET AL. Page 13 Crim. Case No. 27813
of the judgment, Exhibit "JJ", and memorandum opinion,
Exhibit "KK", both dated October 29, 1990 that were issued
by the United States District Court, Eastern District of
Arkansas in the case of Faysound Ltd. VS. Walter Fuller
Aircraft Sales, Inc. thru the his !etters dated May 17, 2005,12
May 26, 2005,'13 and August 17,2005,1.1 all addressed to the
Consul General of the Philippines in Chicago, Illinois and
the latter's reply-letters dated ~/lay 23, 2005;15 July 28,
2005;16 and August 17, 2005;17 and that after receipt of
certified true copies of the said judgment and memorandum
opinion, he forwarded them to the OSP in his letter dated
September 14,2005.'18
The prosecution offered its documentary evidence consisting of Exhibits "A" to "Z", "AA" to "MM", and "00" to "YY" which, except for Exhibit "RR", were all admitted by the Court in Its Resolution of December
4,2007.49
Evidencefor the Defense
For its part, the defense presented the follmving \vitnesses and documentary exhibits - \Vitnesses '\
1. Accused Zosimo C. Malabanan - a businessman and a .
former Director of Operations of the PCGG. lIe testified \ \ ~ that on February 2, 1989, he \vas appointed Director of J'\"\ Operations of the PCGCi; that pursuant to PCGCi Resolution
4" Exhibit "SS".
J.' Exhibit ··UU". II Exhibit ··wW".
15 Exhibit "Tr. 46 Exhibit "VV". j7 Exhibit "XX".
48 Exhibit "VV".
49 Records, VoI.V. at. Pp. 448-A-448-B. DECISION - PEOPLE "s. MA TEO A. 7: (/{PARAS, ET AL Page 14 C,·im. Case No. 27813
------u-----oT-X';ril 25, '989~)n he \vas appointed Chairman of the
PCGG Bidding Committee which was created to sell the
subject Falcon Jet under a Memorandum of the PCGG dated
February 21, 1989;51 that the committee conducted a public
bidding for the sale of the subject aircraft participated by
thrce (3) biddcrs, namely, Chase Manhattan, International
Trade Exponent, and International Enterprise, but the same
was declared a failure by the Commission because the
bidders failed to accompany their bids with an acceptable
letter of credit; that it was on September 19, 1989 that he
met for the first time Mr. Benito Cuevo, Prcsident of
International Merchandising and Development Corporation,
when the lattcr delivercd, as reprcsentative of his (Cuevo)
principal, vValter Fuller Aircraft Sales, Inc. of Tcxas (Walter
Fuller), a letter5:! to purchase the subject Falcon .let; that after
receipt of this letter, he transmitted it to the Commission as
shown in his memorandum of Septcmber 19, 1989;5J that on
September 21, 1989, he \vas called by PCCICI Chairman
David Castro to his orlice whel'e he was shmvn and '-'~i\'en a
copy of the letter of acceptance dated September 21, 19895\
with the instruction for him to coordinate with the Legal
Department for the preparation of the deed of sale of the
subject aircraft; that as instructed, he coordinated with Atty.
Ismael Sanchez of the PCGG Legal Department \\lh(\ prepared the Deed of Sale; and that on September 28, 1989, i\
he saw PCGG Chairman Caparas signed the Deed of Salc55
of the subject aircraft inside thc lattcr's office and, ~,s instructed, he put his initials below the signature
Chairman Caparas. Lastly, he testi lied that he has
5(1 Exhibit "L\-Malabanan" also Exhibit "\"'.
51 Exhibit ··J-r"v1alabanan··. also Exhibit "[Y". 52 Exhibit ··17-Malabanan". also bhibit "CC·. 53 Exhibit ··18-Malabanan"". also bhibit ··DIT.
54 Exhibit "19-Malabanan··. also Lhibit ""EC·.
55 Exhibit ··:2I-Malabanan··. also Exhibit "GG··. DECISION - PEOPLE I'S. MA rEO A.l: CAPARAS, ETAL. Page 15 Crim. Case No. 27813
------~- - - - -~-- ~------_ ... _---~. ----,.-----"- .._--~,. participation in the preparation of the deed of sale or in the
negotiation I~)r the purchase of the subject aircraft; and that
his participation in the sale of the subject aircraft is due to
the fact that he is the Director for Operations of the PCCiG.
2. Accused Ismael B. Sanchez - lawyer and a I~mner lawyer
of the PCCiG. Hc tcsti Ilcd that from 1986 to 1996. he was
employed as a I,nvyer in the Legal Department of thc PCCiC;
that he denied that he has any participation in the preparation
of the letter of acceptance dated September 21, 1989
addressed to Walter Fuller Aircra/1 Sales, Inc. of Dallas.
Texas, U.S.A. that was signed by PCGG Chairman Caparas,
marked as Exhibit "EE", and that none of the three (3)
initials under the signature of the PCCiC] Chairman is his;
that he first saw the said letter only on September 21, 1989
inside the office of Director Zosimo Malabanan when the
latter instructed him to help in the execution and
documentation of the deed of sale based on the decision of
the Commission to sell the subject aircrati; that since the
sale of said aircrati was being handled by Atty. Manuel
Buison who had already resigned, he was instructed by his
superior, Director Andres, to check the records of the Legal
Department and on the basis thereof. the deed of sale was
prepared and finalized for the signature and execution of the
PCGG Chairman; and that it was on September 27, 1989.
when the Legal Department received the Certi lication of the '\,
aircraft was already deposited for the account of the PCClG. ','
Vice President of the PN13 that the full consideration !~)r the that he forwarded the linalized copy of the Deed 01' Sale to \ J'," ,~ the offlce of the Chairman lor his signature. and after it was \ ~
Notarizationsigned, it wasonly; returnedand that noneto theof theLega1two (2)DcpartIT1entinitials underfor \ )
the signaturc of Chairman Caparas in the deed 01' sale is his yn J il DECISION - PEOPLE vs. lHA TEO A. T. CAPARAS, ET AL Page 16 Crim. Case No. 27813
and he does not knO\v whose initials are those. Lastly, with
respect to the three (3) initials appearing under the signature
of Chairman Caparas in his the letter of acceptance dated
September 21, 1989 addressed to Walter Fuller Aircraf1
Sales, Inc., of Dallas, Texas, U.S.A., marked as Exhibit
"EE", he testified that none of those initials is his and that he
has no participation whatsoever in the preparation or the said
letter; and that he saw the said letter only on September 22,
1989 when it \vas shown to him by Director Zosimo Malabanan in the latter's office.
Accused Zosimo Malabanan offered his documentary exhibits consisting of Exhibits "I", "14", "17", "18", "19" and "20" while accused
Ismael Sanchez offered Exhibits "I-A", "2" to "5" and "5-A" which were all admitted by the C01ll1 in its Resolution of February 9, 2009.5b In the same resolution, the Court noted the adoption by accused Benito Cuevo of accused Zosimo Malabanan's Exhibit "17". The Court also admitted
Prosecution's additional Exhibit "GG-2" and its sub-markings in a
Resolution dated June 15,2009.57
In compl iance v·;ith the Order 0 r the Court dated January 27, 2009, the parties submitted their respective memoranda.
The Facts of the Case \
From the paJ1ies' stipulation of facts and evidence adduced, the following facts are established -
On July 31, 1987, the Republic of the Philippines thru the PCGG filed with the First Division of this COl1l1, a complaint,SX docketed as Civil Case
56 Records. Vol. V. at p. 119.
57 Id .. at p. 159. 58 Exhibit "A". DEC/SION - PEOPLE liS. MA TEO A. T. CAPARAS, ETAL Page 17 Crim. Case No. 27813
No. 0033, against Eduardo Cojuangco, Jr. and sixty (60) other defendants for reconveyance, reversion, accounting, restitution and damages. Among the sequestered assets involved in the said case was an aircraft more particularly described as follO\vs -
A vions Dassault - Breguet Falcon 50 Jet Model - 1982 Ivlanut~tcturer Serial No. 082 Cert. of Reg. No. RP-C754
On February 21, 1989, the PCGG thru Commissioners Augusto
Villarin, David Castro, Rosalio de Leon and Acting Commissioner Nievelina
Rosete, issued a Memorandum dated February 21, ]9895() authorizing the
sale of the above described sequestered Falcon .Jet because or its deteriorating condition.
I-fence, on March 20, 1989, the PCGG, thru its Legal Counsel, the Office of the Solicitor General, filed in said Civil Case No. 0033 a ",\;folion for A uthority to Sell Sequestered II ircrafi Pending Lit igation"C,o alleging inter alia that -
"2. From the time it was sequestered up to the present. the aircraft has been parked at the Villamor Airbase at Pasay City and duc to non-use and continuous exposure to the elements like rust and corrosion. the same is fast deteriorating. Like\\'ise. from the time of its sequestration the said aircraft has not been properly maintained or !lown for maintenance purposes resulting in its depreciation and deterioration faster than usual: "3. In a letter dated January 27. 1989 to the PCGG. International Enterprise. Inc. offered to buy the subject aircraft xxx. '\ "4. Pursuant to such offer. the PCGG requested the Philippine Airlines (PAL) for an evaluation of the same aircraft. PAL came up with the finding that buying a brand new aircraft is more justi fied than reconditioning the subject aircraft into flying condilion which would entail an expense of not less than $6 to $8 Million US Dollars. Xxx. "5. Earlier. on January II and 20. 1989. an American firm named A VSTAR of Seattle. Washington. U.S.A. evaluated and appraised the aircraft to be worth no more than $4 J\/lillion US Dollars. Xxx. \. "6. Considering that the aircraft is 'fast depreciating and deteriorating. lhere is an imperative need for its sale so as not lo render it \'alueless pending termination of the proceedings in lhe instant case. nol to \.J mention lhe maintenance expense that \vould be saved by PCGC; if the sale were to be allowed;
59 Exhibit "0"
6U Exhibit ·'W. DECISION - PEOPLE ps. MA TEa A.l: C/IPARAS, E1'.4L Page ] 8 Crim. Case No. 27813
"7. The sale of the aircraft has been rccommended by thc PCCiC as shown in the attached copy of the rvlcmorandum dated February 2. 1989 xxx. "8. The proceeds of the sale. if allowed. may be deposited in escrow for the benefit of whoever shall be adjudged the rightful owner of the said aircraft in the instant case'"
On April 7, 1989, the PCGG filed in said Civil Case No. 0033, a
A10tion for Early Resolution,61 alleging that the PCGG's power of
administration necessarily includes the authority to sell sequestered assets
which are in immediate danger of deterioration, like the subject aircraft and
generally to such other acts and things as may be necessary to fulfill its
mission as conservator and administrator citing in surport thereof the
principle laid down in Bataan Shipyard & Engineering Co., Inc. vs. Presidential Commission on Good Government. et a!..62
While the above motions are pending, the PCGCJ created a Bidding
Committee composed of accused PCGG Director for Orerations /.osimo
Malabanan, as Chairman, and ]Vlr. I-Ierminigildo P. Reyes, Mr. Manuel T.
Buyson, and a COA I{epresentative, as members, pursuant to its Resolution
dated Apri I 25, 198963 to sell in a publ ic bidding the subject sequestered Falcon Jet under the terms and conditions set forth therein.
On April 27, 1989, the PCGG filed in Civil Case No. 0033 a j\;/otion
to IFithdrmv i\llotionfor Authority to Sell Sequestered Aircraft.6.' On May 18,
1989, however, this COllrt issued in Civil Case No. 0033, a Resolution
denying PCGG's motion to sell the subject aircral1 "since in the ven' instance, no just[(ication prima facie or othenvise has heen demonstrated
,f"or Its seizure. firom Its. Iessee.' ,.65
In view of the denial of the MOlion/or AI/thorit)' to Sell seql/estered' '~~~ Aircraft, Commissioner De Leon sought the advice of its Legal Counsel in a
61 Exhibit 'T, 62 150 SCRA 181. YI() \ 6) Exhibit "K", 61 Exhibit "1". 65 Exhibit "p" DECISION - PEOPLE vs. MA TEO A. J: C/IPARAS, 1:7AL. Page 19 Crim. Case No. 27813
letter dated ~/{a-y-24~1989(j6-;-I-~--~;Il-at--todo on the bidding of the subject
aircraft while awaiting the result of a projected certiorari petition be/ore the
Supreme Court; and that in response to this letter, Solicitor General
Francisco Chavez opined in his letter dated May 24, 198967 that "(a)hsent 0(' a Supreme Court Tempor({/}' Restraining Order against the Sandiganba.1'an, and absent any Sanc/igclI1bayan TemporCIIJ' Restraining Order against the PCGG, the auction sale may still proceed as a sale pendente lite in the
Supreme Court, no longer in the Sandiganhayan. This, hO\!Jever, may he a " tenuous argument.
Subsequently, the PCGG fi led before the Supreme Court a Petition for
Certiorari, docketed as G.R. No. 88336, alleging grave abuse of discretion
on the part of the Sandiganbayan in denying the motion to sell the subject
aircraft and praying that the JVlay 18, 1989 Resolution in Civi I Case No.
0033 be nullified. In its petition, the PCGG asseverates, inter alia, that the
sale of the subject aircrat1 is in pursuance of the exercise of its
administrative power to preserve and conserve sequestered assets under its
control and supervision; that the Sandiganbayan may not interfere with
PCGG's decision to sell the aircraft, or with act involving an exercise of
administrative discretion of PCGG consonant with PCGG's mandated duty
to preserve and conserve the sequestered asset; that the "courtesy" motion to
sell the sequestered aircraft pending litigation \vas f~led by the PCGG purely
in deference to the Sandiganbayan and by way of informing the said court
about the sale; and that equitable and pragmatic considerations justify the PCGG's decision to sell the aircra/t.
!\
SupremeOn JuneCourt 6, 1989,en hanca temporaryordering restrainingthe SancIiganbayan,order6x was issuedits agents,by the \ 'u\ '\","J
representatives or any person or persons aCli11'laee or slead 10 cease \ 66 Exhibits "Q", 67 Exhibit "R", 68 Exhibit "S", DECISION - PEOPLE 1'.1'. MA TED A.I: C4PARAS, ETA/.. Page 20 Crim. Case No. 27813 and desist from enforcing its assailed !\!lay 18, 1989 Resolution in Civil Case No. 0033.
In view of the TRO issued by the Supreme Court, accused Zosimo
Malabanan, Director for Operations of the PCGCJ, requested Solicitor
General Francisco Chavez in a letter dated .Iune 28, 198969 for an opinion on whether the Commission may still proceed with the sale' of the subject aircraft \vithout waiting for the decision of the Supreme Court on the petition.
In response to the above qucry of accused Zosimo !\!Ialabanan,
Solicitor General Francisco Chavez opined in his letter of July 17, 1987,70 that with the issuance of the TRO by the Supreme CourL "il is believed Ihal there is no legal ob5;tacle 10 Ihe prc~jecled sale (~/Ihe aircrq(t under Ihe circumstances mentioned in (Commissioner De Leon 's) letler 0/.. J\4a)' 24, 1989, 10 wil:
Considering the lack ojproper l/1ai11lenance 0/1(/ exposllre to the elements, the subject aircra/i deteriorate.1 and its 1,(t/lle depreciates/oster than usual. Accordingly, b1' the til/1e then case nm\' pending he/hre the Sandiganbayan is .finally adjudged \\'hich l/1ay lake years hiking inlo account the usually protracted process oj trial 0/1(1 (/ppe(/I. Ihe aircm/i 1\'ould then he 1'alueless or its 1'allie suh.l/untiully reduced due 10 depreciation even with proper lI/(/inlenw1ce.
To arrest delerioralion and or depreciation in rolue. Ihere is no other feosihle olle/,/wli1'e than Ihe sule oj the uircro/i pending liligalio!7. und the proceeds (~f the sole place in intere.11 hearing eSC/'()1\' 11'ilh a reputahle bank 1\'hich shall be 011'Onled to Ihe prew/iling parly in Ihe litigalion or to any porly legrt/ly enlilled Iherelo,
" \ In the meantime, while the case is pending with the Supreme Court, , \ the PCGG received four (4) written offers to purchase on negotiated basis the subject aircraft as shown by (I) the letter of one Jose M. Cabrera datech \\ \J July7, 198971 addressed to the Chairman of the Bidding Committee; (2) the \\ letter of one Doroteo Daguna dated .July 10, 198972 addressed to the PCGG;
69 Exhibit ''1'. 70 Exhibit "'IF,
71 Exhibit "'v"'. n Exhibit "'W", 1 DECISION - PEOPLI:' I'S. MA TEO A.l: CAPARAS, ET AL. Page 21 C,"im. Case No. 27813
(3) the letter of International E~terpr;~~~lC. d-;ted TL~IYl9~--1989Tc2~~I~i~'~s~~~i to the Director of the Operations Department of the PCGG; and (4) the letter of Peregrine International, Inc. dated ./uly 23, 198971 addressed to the PCGG.
Acting on the above offers, the PCGG issued a Resolution dated
August 7, 198975 which awarded the sale of the subject aircraft to Peregrine
International Inc. for US$5,025,OOO.OO, and in a Ietter76 of even date, the
PCGG, thru its Chairman Mateo A. Caparas. in formed Peregrine
International Inc. of the said award in its l~lVOr. However, in a letter dated
August 24, 1987,77 the PCGG, thru its Chairman Mateo A, Caparas, revoked the a\;llard granted to Peregrine International, Inc. because of the latter's failure to execute the deed of sale within the 24 hour deadline as expressed in PCGG's letter of award of August 7,1989.
On September 19, 1989, accused Zosimo Malabanan, as Director for
Operations of the PCGG, received a lette/x [I'om accused Benito Cuevo,
President of International Merchandising and Development Corporation
(IMDC), offering for and in behalf of his principal Walter Fuller Aircraft
Sales, Inc. of Texas (\Valter Fuller), to purchase the subject aircraft for
US$5,025,OOO.OO and with the undertaking to settle any existing Iien on the aircraft; and in his rVIemorandum79 dated September 19, 1989, accused Zosimo Malabanan endorsed the said ofTel' of Benito Cuevo to the
Commission and he attached thereto as earnest money the t\VO (2) cashier's checks each amounting to US$25,OOO.OOxo that was del ivered by accused
Benito Cueva. VII] \ \ \ \ ".,1.
" Exhibit "X", n Exhibit "1"",
75 Exhibit "Z", 76 Exhibit "AA", \ 77 Exhibit "88" 78 Exhibit "CC", 79 Exhibit "00" rJ 80 Exhibits "OD-I" & "OD-2", DECISION - PEOPLE 1'.5. MA TEO A. T. C4PARA.\', ETAL. Page )) Crim. Case No. 27813
In a letter dated September 2'1-,-1989,81-tl~~-r)CGG---;c~-~pte(~n~i a\varded the sale of the subject aircraft to \\lalter Fuller for
US$5,025,OOO.OO.
On September 27, 1989, Walter Fuller paid the PCGG the amount of
US$4,975,OOO.OO as shown by the Cerli lication~Q issucd by the Vice
President of the Philippine National Bank (PNB), that the said amount was deposited to PCGG's account maintained with PNB Ortigas Branch.
On September 28, 1989, the corresponding Deed of SaleX} was executed by the PCGG, represented by its Chairman Mateo A. Caparas, and
Walter Fuller for the sale of the subject aircraft.
On October 2, 1989, the PCGG issued an Orderx" Ii [ting the sequestration of the subject aircraft, and on October' 4, 1989, the said aircraft was delivered to Walter Fuller and Oown out of the country.
Under date of November 7, 1989, PCGG mani fested to the Supreme
Court that the aircraft subject of the petition had been sold to Walter Fuller
Aircraft, Inc. on September 28, 1989 to preserve the value of the aircraft and to prevent its rapid deterioration, pursuant to which the sequestration was lifted, and it would be substituted by the proceeds of the sale deposited in escrow. 85
On 26 December 1990, the Supreme Court en bonc rendcrcc( a \ \ \. \ \ "the decision to sell the aircraft is not within the limited administrative \ \ , ~ Decision which dismissed PCGG's petition in G.R. No. 88336 holding tl~,a~ \"'~ powers of the PCGG, but requires the sanction (?f the Sondiganboyon which ,',- can grant or withhold the same in the e.'>:erciseof sound discretion and on
81 Exhibits "EE", 82 Exhibit "FF", 8) Exhibit "GG", 8~ Exhibit "FF".
85 See Republic v, Sandiganbayan. 192 SCRA 7cJ3, 751, ,'" DECISION - PEOPLE I'S. MA 1'1":'0 A.1: CAPARAS, ETA/.. Page --' Crim. Case No. 27813 the basis of the evidence before il." As a consequence thereof, the Supreme
Court ordered the PCGG to deposit the proceeds of the sale of the subject aircraft with the PNB '~for Ihe ClCCOUI1!of Ihe SClndiganbaYCln in escro\\' fCH
Ihe person o/' persons, nCllllral or juridical. \\'ho mClY be adjudged hl\ Ijit/(\, enlitled therelo."
It appeared that after the sale of the subject aircraft, Faysound Ltd., filed v/ith the District Court of Arkansas, U.S.A. an action (No. LR-C89-
834) to recover the subject aircraft from the buyer Walter Fuller; and in a 86 87 Judgment and Memorandum Opinion both dated October 29, 1990, the said District Court ordered Walter Fuller to return to Faysound Ltd .. the title to the subject aircraft.
Considering that it was deprived of the title to the subject aircra1t that was sold to it, Walter Fuller sued the Republic of the Philippines and the
PCGG for breach of warranty with damages (No.CA3-90-2785-R) in the
District Court of Texas, Dallas Division. And on December 2. 1993, the said District Court rendered a decision against the Republic and peCiCi ordering the latter, jointly and severally, to pay \Valter Fuller the total amount of US$14,928,457.29.
On October 14, 1996, in order to settle the money judgment against it, the PCGG entered into an agreement with \Valter Fuller providing, ailiong others, that the Republic of the Philippines agreed to pay Walter Fuller
US$IIMillion on October 15, 1996 and US$3Million, in equal monthly installments, beginning November IS, 1996 and ending October] 5, 1997 in settlement of \\lalter Fuller's claim which, per decision of the Texas Court, amounted to US$14,928,457.29.88
7'--'/f)
8<> Exhibits ".Ij" & ".1.1-1" 8' Exhibits "KK", & "'I(K-I".
88 Pages 6-7 of Exhibit "LL". DECISION - PEOPLE I'S. MA TEO .-4. T. CAPARAS, ET AL. Page 24 Crim. Case No. 27813
On April 13, 1998, in vicw of the above agreement, the PCGC:; filed in
Civil Case No. 0033, an E'\-Parte lv1otion to lYithdrCl\I' datcd April 7, 1998
wherein it sought thal the funds deposited in escrow dated October 9, 1996,
be deemed withdrawn and the PNB be immediately directed to release the
funds on deposit to the Bureau of Treasury for Trclnsmission to Walter Fuller
8'1 Sales, Inc.
On September 3, 1999, this Court issued in Civil Case No.0033 a
Resolution denying the above motion of the PCGG prompting the latter to
elevate the denial to the Supreme Court in G.R.No. 142476 by way of a
petition for certiorari and mandamus.
,On March 20, 200 I, the Supreme Court rendered a Decision<)() in G.R.
142476 reversing the ruling of this Court in Civil Case No. 0033 and ordered
the transmission of the proceeds of the escrow deposit to \,yaltcr Fuller and
likewise directed that "immediate appropriate action must be taken againsl
the PCGG personnel involved in the unauthorized sale o.lthe oir('ra)I."
Thus, because of the above dccision of the Suprcme Court, PCGG
Special Counsel Randolf Dacanay, upon the directive of then PCGG
Commissioner Carranza, conducted a legal study and research on the sale of
the subject aircraft, and on the basis thereof, he prepared the vcri fied
Complaint91 signed by Commissioncr Carranza that was IiIcd on Deccmbcl\\
12, 200 I before the 0iTiee a I' the Ombudsman 1'01' the prosecu tion 01'\ he \\ "
Ombudsman filed with this Court the afore-quoted Information chargiAg, \.J herein accused; and aller preliminary investigation, the Office 01' t,he J\ them with violation of Section 3( e) of R.A. 3019, as amcnded. , \
DISCUSSION 11 j
89 Ibid. 90 Exhibit ""LL"".
91 Exhibit ··A··. DECISION - PEOPLE vs. JHA TEO A. 7: CAPARAS. ETAL. Page Crim. Case No. 27813
The herein accused are charged with violation of Section 3 (e) of R.A.
3019, as amended, which reads as fo]lows-
"SECT!O,V 3. Corrupt Practices 0/ Puhlic Ojlicers. - III additioll to acts or omissions (~{puh!ic ojficers ulre({((1' pelluli:::ed hy existing 1mI', the following shall cOllstitute corrupl pmctices or uny puhic ojficer uml are herehy declared uillaw/it!:
xxx xxx xxx.
(e) ('ausillg UIlY ulldue injlll:1' to UIlY purty, illcludillg the Governl11ent, or gh'ing ml1' party (lIll' 11ll1l'WTollted helle/its, admntage or preference in the dischorge 0/ his ojficial,
adll1ini:·;trati"e or judicial ji/l1clions thl"Ough 111(Illifest partiality. evident hadfaith or gross inexcusahle negligence. This pl"Ol'ision shall apply to ojficers uml employees of ojfices o{ gOl'ernmellt corporatiolls charged ll'ilh the grollt oflice/l.\cs or permits or other conceSSIOllS.
In Santos P. Sandiganbayan,92 the Supreme Court enumerated the essential elements of violation of the above-quoted Section 3( e) of RA 3019, as amended, to v'lit -
a. thut the accuI'ed is a public o(ficer discharging adminislmtil'e, judicial or offi ci(f lji /I1CIions:
b. that he l77ust h(l\'e ucted Il'ith munifest partiality, evident bud fuith. or ine:rcusable negligence: ami
c. that his action has caused (Ill)' undue in/lilT 10 allY !wrty, including the Governlllent. or has given any party ony ul7\u/lTalltcd bene/ii, odl'alltoge or preference inlhe discharge o{his/illlctions.
To convict the herein accused, the prosecution must prove all the r, above elements beyond reasonable doubt. The presence of the first elemerlt is not disputed. Admittedly, on the date alleged in the information, accuse~i" \ i
Zosimo C. Malabanan and Ismael 13. Sanchez are publ ic officials byvirtuo\ \ \ of their respective positions as Director for Operations/Chairman of the '\
92G.R. No. 161877. rv1arch 23, 2006: Fonacier vs. Sandiganbayan 238 SCRA 657. 687 [1994] citing Villanueva v. Sandiganbayan. 223 SCRA 543. 5,17 and Medija. Jr. v. Sandiganbayan. 218 SCRA 219. DECISION - PEOPLE I'S. MA TEO A. T. CAPARAS, E1'AL. Page 26 Crim. Case No. 27813
-----i~the F~~~~ci~~'--C;;~~9-~-I-'~-~-Sup-r~~1-~-~-Cc-;u-rt pro~e~ded t~ ~x-pl-~in the three (3) different modes by which means the second element of the offense may be committed. "Partiali(v" is synonymous \vith "bias"'iI which' e.\'cites a disposition to see and report matters as the)' are- \\'ishedjc)J' rather than as they are ".95 "Bad faith does not simp(v C(;11I1Otehod judgment or negligence: it imputes a dishonest purpose or some morul ohliquity and conscious doing of a wrong: a breach q(sworn duty through some motive or intent or ill will; it partakes of the nature offraud" ,% "Gross negligence has been defined as negligence characterized by the want of even slight care. acting or omitting to act to a situarion 1\Jhere there is duty to oct. not inadvertently but wil([u/ly and imentional(v \Fith a conscious ind!ij'erence ro consequences in so fc/r as other persons may be affected. It is rhe omission o.(that care \vhich even inattentive and thoughtless men never/ail to rake on their own property.,,97 These three modes are distinct and di frerent ,'rom each other so that proor of the existence of any or these modes in connection with the prohibited acts under Section 3 (e) should su fflce to warrant conviction.
In this regard, the herein accused public orricials, in conspiracy with accused Benito Cueva, are charged that they acted with evident bad faith
(or at the very least, with gross inexclIsa hie negligence) when they sold, without the Sandiganbayan's authority, to Walter hI! ler A ircra It Sales, Inc., the sequestered subject Falcon Jet, for US$5,O:?5,OOO.OO but \vhich sale was subsequently nulliried by the District Court of the State or Arkansas, USA, (\
Fuller to turn over and restore ownership and possession or the aforesaid -_ \ \ \ . uponaircraft a suitto Faysoundlilcd by FaysoundLimited, thusLimited,renderingand whichthe Philippinecourt directedGovernmentwaltJ\\ \J\\'~ liable for breach of warranty and damages - in the total amollnt or \
US$7,641,568.34, and which amount \vas eventually paid by the \ \
9) Ibid_
94 Ibid citing J I WORDS AND PHRASES 212.
95 Ibid. citil;g PHILIPPINE LA 'IV DICTIONARY by F.I3_ Moreno. 3'<1 EeL. p. 96 Ibid citing Marcelo v. Sandiganbayan. 185 SCRA 3-16. 3<-19.
97 Ibid. citing Alejandro v. People. 170 SCR/\ -100. 405. DECISION - PEOPLE I'S. MA TEO A. 7: C>IP.,4RAS, ETAL. Page 27 Crim. Case No. 27813
Government to Walter Fuller thereby causing undue injury ,1Ild prejudice to the government in the aforesaid amount.
The evidence on record shows that the participations of accused
Zosimo Malabanan in the alleged "umluthorized sale qlthe su~ject aircrc{!t" are based on the fact that he was the Chairman of the PCGC Bidding
Committee that \vas created for the purpose of conducting the auction sale of the subject aircraf1; that he endorsed to the Commission the offcr of accLised
Benito Cuevo of IMDC, as agent of Walter Fuller, to purchase on a negotiated basis the subject aircraft for LJS$5,025,OOO.OO; and that hc affixed his initials below the signature of PCGG Chairman Caparas in the Deed of
Sale. Upon the other hand, the participation of accLised Ismael Sanchcz consists in his acts that as Attorney V in the Legal Departmcnt of the PCCiG, he caused the preparation, encoding or computerization of the Deed of Sale as instructed by accused Zosimo Malabanan, as Dircctor for Operations or the PCGG; that after finalizing the deed, he fonvardcd to samc to thc OITice of PCGG Chairman Caparas; and that on September 28, 1989, upon the instruction of Chairman Caparas, he signed the Deed of Sale as one of the witnesses therein, and thereafter, had it notarized in the I.egal Dep<1rtment.
On the part of accused Benito Cuevo, his participation in the s<1le of the subject aircraft consists merely in his act of submitting to accused /osimo
Malabanan the orl~r of his principal, \Valter Fuller, 10 purchase on a negotiated basis the subject aircraft for LJS$5,025,OOO.OO.
Thus, the primordial issue to be resolved in this C<1seis -
Whether or not the herein accused public (jlicials. in conspiracy 11'ith accused Benito Cueva. octed with evident bod laith (or at the vel}' leQ.\;t.)\'ith gross ine:rcusable negligence) 11'hen they sold. without Sandiganhoyan 's Cluthority. the subject aircraft.
After going over the evidence on record, the Court finds that the prosecution failed to establish that accused public orlicials 7osimo C. DECISION - PEOPLE l'S. MA TEO A. T. CAPARAS, ETAL Page 28 Crim. Case No. 27813
Malabanan, and Ismael Sanchez, in conspiracy with accused Benito Cuevo, have acted with evident bad faith \vhen they participated in the sale of the subject aircraft by the PCGG. Hence, the said accused are entitled to a verdict of acquittal.
The Court takes note that the decision to sell the subject aircraft because of its deteriorating condition is an official act of the PCC:JG as a collegial body as shown by its Memorandum of February 21 , 19899x because it \vas duly approved by all of its Commissioners at that timc, namcly,
Augusto E. Villarin, David M. Castro, Rosalio de Leon and Acting
Commissioner Nievelina Rosete; and that as shown in PCGG's pleadings filed with this Court in Civil Case No. 0033 and in its petition 1~led with the
Supreme Court in G.R, No. 88336, this decision of the PCGG to sell the subject aircraft is premised on the exercise of its administrative power to preserve and conserve sequestered assets under its control and supervision contending that this Court may not interfere with PCGG's decision to sell the aircraft or with act involving the exercise of administrative discretion in consonance with PCGG's mandated duty to preserve and conserve the sequestered asset. And as legal basis thereof, the PCCIG relied on the principle laid down in Eataan Shipyard & Engineering Co., Inc. vs.
Presidential Commission on Good Government. et 01.99 to the effect that the
PCGG may "e:rercise pml'ers of administration over the property or business sequestered or provisionally taken over. m/lch like a court• appointed receiver, such as to bring ond defend act ions in its own name: receive rents: collect debts due: pay olftstanding dents dlfe: and gencralf)' do \ such other acts am.! things as may be necessOl}' conservator and administrator." '.\, J~.\ Considering that the PCGG has legal basis in its decision to sell the '\ ' subject aircraft, albeit the same was at that time pending determination as to the correctness thereof before the Supreme Court, the Court cannot,
98 Exhibit "0", 99150 SCRA 181. 186. ~() DECISION - PEOPLE I'S. MA TEO A.I: CAPARAS', ETAL. Page 29 Crim. Case No. 27813
therefore, hold and/or conclude that the ot'licials of the PCGG, namely accused Zosimo Malabanan and Ismael Sanchez to have acted with evident
bad faith \vhen they participated in the implementation of the said official
decision of the PCGG to sell of the subject aircraft to Walter Fuller because
they were just performing their respective duties and responsibi I ities as
Director for Operations, and Senior Executive Assistant/Attorney V or the
PCGG Legal Department. The fact that the legal basis of the PCGG to sell
the subject aircraft \vas not sustained by the Supreme Court alter the sale
was already consummated and therefore, renders "the sale unauthorized"
does not, in our view, change or alter the situation, because, if ever the
PCGG and its officials may have committed a mistake in their invocation of
the extent of PCGG's authority as conservator and administrator of the
subject aircraft under the existing laws and jurisprudence, sllch mistake
nevertheless can properly be the basis of good faith. By law and jurisprudence, "a mistake on a doub(jit! or d[flicult question ofla\\' mm'
I ,,100 proper Iy bibe tf1e as IS. C? lgOO(.latII' .tn.
Moreover, the fact that the PCGG sought the legal advice of the
Solicitor General on whether or not it can still proceed with the auction sale
of the subject aircra!t as sale pendente lite while the case assailing the
validity of this Court's Resolution of May 18, 1989 in Civi I Case No. 0033
is pending resolution by the Supreme Court in G.R. No. 88336. and
proceeded only with sale of the subject aircraft in l~lVor of Walter Fuller
after receipt of the Solicitor General's legal advice that ",rith the issuance (?l
the temporQlY restraining order by the Supreme Court xxx there is no legaz,\ obstacle to the prr?jected sale C?fthe subject aircrc?/i," is a clear indication 01\ \ \~
of the PCGC] and the herem accused publIC oll1clals relative to thell:\,\\ good faith~or :It least creates a. doubt of the pre~enc~_ol.' bad laitl~ on the pa,:~tJ\ participation in the questioned sale of the subject aircraft. \ \J' \
\IJ
100 Article 5:26. Civil Coele: I'vleneliola v. People. :207 SCRA 85. 96 [199:2J: De\elopment 8ank of the
Philippines v. COllrt of Appeals. 316 SCRA 650.664-665 f 1999]. CERTIFIED TRUE XEROX COl'~
DECISIONCrim. Case -No.PEOPLE27813 liS. MA TEO A. T. CAPARAS, ETAL. \llEs<."LA'~r.'I Pqge:'ER VITA30 C. ROSETF " £.."'cutzveerk of Court III
Besides, it should be pointed that the Iler~il~-;-~~~~~jpul;lic- -f," 0 ~1~ct~t1. D" 'lI~ ?>\\"J. \\0 had in their favor the presumption of ['egularity in the performance of their respective official duties when they participated in the sale of the subject aircraft pursuant to the official Memorandum of the PCCJG dated February
21, 1989 which the prosecution failed to dispute or overcome by strong and convincing evidence. Hence, the second element of evident bad faith is absent or at the very least its presence is doubtful.
Vlith the absence or doubtt"ld presence of the second element, the
Court deems it unnecessary to discuss the third element of undue injury or damage.
It bears stressing that in all criminal prosecutions, the accused is entitled to the constitutional presumption of innocence and it is incumbent upon the prosecution to rebut or controvert such presumption by proving all the elements of the offense with proof beyond reasonable doubt. Here, as afore-discussed, the evidence on record failed to prove the presence of the second element of the offense charged. Hence, as stated earlier, the herein accused are entitled to a verdict of acquittal.
fVHEREFORE, judgment is hereby rendered ACQUITTING accused ZOSIMO C. MALABANAN, ISMAEL B. SANCHEZ, and
BENITO CUEVa of the offense charged in this case on reasonable doubt, with costs de olicio, In this connection, the respective cash bonds posted by the said accused are hereby RELEASED to them upon presentation of the original receipt evidencing payment thereof and subject to the USlil{l1 f'\
aga111st them IS hereby LIFTED and SET ASIDE. Insolar as acclIsc,,\ '\ accounting and auditing procedures; and ,the Iioid Dcparture Order isslI~\4 \)' '~. MATEO A.T. CAPARAS and MARIO GALANG who are at-large and ~ beyond the jurisdiction of the Court, this case is ordered ARCHIVED. \ SO ORDERED. DECISION ~ PEOPLE I'S. MA TEO 11. T. C4PARAS. ETAL Page JI Crim. Case No. 27813
RODOI~FO A. PONFERRADA ~ Associate .J ustice
EFRENAssocieJiertl~ .J LAust icL():IHlZ
------ATTESTATION
consultationI attest beforethat thethe conFlusionscas,t was assignedin the toabove-decisionthe writer of thewcrcopinionl"Cachedof thein Court's Division. I I "
(I I ..\ I J r" ' "'-.", I .' /lo, U "" NOrA!:(~'j:,~I)~~~.//) !l C illrllla~-'-• ,/1//1I ) CERTIFICATION
Pursuant to Article VIII, Section 13, of the Constitution. and the Division Chairman's Attestation, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion oCthe Court's Division.
4~EOIL)3ERTO G.lr §ANDOVAL{~~
Acting'--' Presiding '--' Justice