Albert V

ALBERT V.
GANGAN
-
The Housing and Urban Development Coordination Council (HUDCC) together

with the Presidential Commission for Urban Poor (PCUP), NHMFC, and Home
Insurance Guarantee Corporation (HIGC) formed an inter-agency
committee to conceptualize and prepare the guidelines and procedures for
the Community Mortgage Program (CMP), a sub-program of the Unified Home
Lending Program (UHLP).
The CMP is an innovative scheme in mortgage financing where an undivided
tract of land may be acquired by several beneficiaries through the
concept of community ownership.
It was adopted to assist residents of blighted or depressed areas to initially
own the lots they occupy, and, eventually, to build a decent house thereon to
the extent of their affordability within the concept of low-cost-home financing
and after due compensation to the landowner.
The beneficiaries of the financing shall then form or establish an association,
or cooperative, duly registered with appropriate governmental agencies and
accredited with the PCUP. Under the financing procedure of the CMP, an
application of an association for a loan is coursed through duly accredited
originators, such as the National Housing Authority (NHA), and NonGovernment Organizations (NGOs).
On August 20, 1988, the NHMFC Board issued Resolution No. 419, Series of
1988, approved the CMP
On December 19, 1988, Carlos P. Doble, then Vice President of HIGC, issued
an appraisal policy for the CMP which was concurred in by the HIGC President,
Federico Gonzales, herein petitioner, NHMFC OIC/EVP, and HUDC Teodoro
Katigbak
On the same date, Doble likewise issued to HIGC Technical Service
Department personnel the Appraisal Policy for the CMP.
On April 12, 1989, the NHMFC board issued Resolution No. 546, Series of
1989, approving the amended/expanded guidelines for CMP.
On April 4,1989, the Sapang Palay Community Development Foundation Inc.,
(Foundation) applied for accreditation with the NHMFC as originator of land
and housing project through a Purchase Commitment Line.
The application consists of sixteen (16) project sites situated in different parts
of the country. Among these is the AMAKO Project which was submitted for
accreditation to the NHMFC by Nelson Concepcion, President of the
Foundation.
The AMAKO project refers to seventy-three (73) hectares of land located at

Sta. Catalina, Angeles City, which was offered by Severino H. Gonzales, Jr.
Construction, Co, Inc. (SHGCCI), through its shareholder, Engineer Ceres

Pajaron, to the members of AMAKO
Mr. Concepcion who was also the concurrent head of the PCUPs Housing
and Settlement Division, delivered on September 7, 1989, to the CMP Unit
then under Mortgage Takeout Department (MROD)-HMFC the project
documents of AMAKO for pre-evaluation which were returned to the
Foundation on September 22, 1989 by the CMP unit.
In October 4, 1989, Mr. Concepcion submitted an application for Purchase

Commitment Line in the amount of P36,794,250.00, specifically for the
AMAKO project
On the same day, Mr. Generozo Cruz, Foundation Vice President and PCUP
Director, redelivered the documents to the CMP unit to discuss the
Foundations proposal on the AMAKO project
On October 5, 1989, the Officer-in-charge of the Credit and Collection Group,
NHMFC, recommended to petitioner the grant of an additional line in favor of
Sapang Palay Community Development Foundation, Inc., in the total amount
of P36,8000,000.00 approved by the NHMFC Credit Committee on October
13, 1989 subject, however, to the approval of the NHMFC Board.
On December 14, 1989, the NHMFC, upon the recommendation of the CMP
Task Force, together with the Certification of Mortgage Examinations, [8] issued
a Letter of Guaranty in favor of SHGCCI.[9] Thereafter, the disbursement
voucher (No. 89F2-5732) was prepared by the CMP Task Force in favor of
SHGCCI.[10] Mr. Rogelio Olaguer, head of the CMP Task Force, likewise
inspected the project site and assured petitioner that the project is above
board and in accordance with the NHMFC-CMP guidelines. With this
assurance, petitioner approved the payment to the SHGCCI. Thus, on January
4, 1990, the amount of P36,796,711.55 under Philippine National Bank Land
Bank of the Philippines Check No. 362994, was released to Engineer Severino
A. Gonzales, Jr. of the SHGCCI.
Sometime in June 1990, petitioner instructed the Community
Mortgage Management Office (CMMO) to conduct a routine
inspection of the AMAKO Project. Upon verification, it was
discovered that the AMAKO project was three (3) months in arrears
in their amortization. As a consequence, petitioner, sometime in July
1990, tasked the Committee on Evaluation of Originating Institutions
to investigate the originators with respect to their compliance with
corporate circulars, other rules and regulations issued by NHMFC
regarding its lending programs. One of the originators investigated
was the Foundation which was instrumental in the granting of the
loan to the AMAKO Project.
On September 3, 1990, the COA Resident Auditor of NHMFC disallowed the
loan granted to the AMAKO Project for the following reasons: (a) nonsubmission of documentary requirements/non-complying or defective
documents as required under NHMFC Corporate Circular No. CMP-001; and (b)
irregular/excessive expenditures per COA Circular No. 85-55A dated
September 8, 1985. The Auditor determined the following officers of NHMFC,
as personally liable, viz.: petitioner as President; Fermin T. Arzaga, OIC,
Finance, Corpan & Computer Services Group; Roger Olaguer, Head, CMP Task
Force; Vivien Noble, Deputy Head, CMP Task Force; Ernesto Salvador,
Executive Asst. CMP Task Force; Cynthia O. Alas, Div. Chief II, Budget and Irma
Fuentes, COD, CMMO
On September 18, 1990, petitioner filed with the Ombudsman a lettercomplaint against his subordinate employees who appeared to be responsible
for the fraud with respect to the AMAKO loan transaction also filed a civil
case for sum of money, annulment, damages and attorneys fees with
preliminary attachment, against SHGCCI, AMAKO, Sapang Palay &
Development Foundation, Inc., and other persons responsible for the
misrepresentation, tortious and fraudulent acts in connection with the loan
granted to AMAKO project
On October 19, 1990, petitioner requested for the lifting of the disallowance
on the loan grant to AMAKO[17] which was denied on October 25,
1990. Petitioner moved for a reconsideration which was elevated to the COA
Corporate Audit Office pursuant to Section 65 of PD 1445
On February 19, 1993, the COA rendered Decision No. 2700, finding petitioner
as among the persons liable for the amount representing the payment of the
loan proceeds obtained by AMAKO.COA disallowed the plan payment because
it found the payment irregular and an excessive expenditure, and held
petitioner primarily liable pursuant to Section 103 of P.D. 1445 MFR
DENIED
PETITIONERS CONTENTIONS: HE ACTED ONLY IN THE PERFORMANCE
OF HIS OFFICIAL DUTIES
COA: ALBERT WAS THE LAST ONE TO APPROVE THE APPLICATION
EMPLOYEES WHO PROCESSED THE SAME WAS UNDER HIS
SUPERVISION
ISSUE: W/N PETITIONER SHOULD BE HELD LIABLE?

SUPREME COURT: THE PETITION IS MERITORIOUS
We have consistently held that every person who signs or initials documents in the
course of transit through standard operating procedures does not automatically
become a conspirator in a crime which transpired at a stage where he had no
participation. His knowledge of the conspiracy and his active and knowing
participation therein must be proved by positive evidence. The fact that such officer
signs or initials a voucher as it is going the rounds does not necessarily follow that
the said person becomes part of a conspiracy in an illegal scheme. The guilt beyond
reasonable doubt of each supposed conspirator must be established the court will
be setting a bad precedent if a head of office plagued by all too common problems-
dishonest or negligent subordinates, overwork, multiple assignments or positions, or

plain incompetence- is suddenly swept into a conspiracy conviction simply because
he did not personally examine every single detail, painstakingly trace every step
from inception and investigate the motives of every person involved in a transaction
before affixing his signature as the final approving authority
Additionally, the assailed decision failed to mention petitioners direct participation
in the fraudulent scheme. It merely held that petitioner be immediately and
primarily held responsible for the disallowance, for the simple reason that, as the
approving officer, any transaction presented to him for approval is subject to his
discretion. His reliance on the supposed review and evaluation done by his
subordinates is also discretionary on his part. The COA concluded that whatever
misrepresentation and/or abuse in the performance of their duties made by the
subordinates make petitioner, as head of the agency, also liable, considering that
these people acted on his behalf and with his approval. [31]Such reasoning is nonsequitur.1
There is no evidence on record to show that petitioner had knowledge of the
fraudulent scheme perpetrated by some employees of the NHMFC. In fact,
petitioner immediately filed a complaint before the Ombudsman against the
subordinate employees who appeared to be responsible for the fraud. He also
directed the filing of a civil case against the originator and other persons
responsible for misrepresentation. All these acts are indicative that he had no
knowledge of the fraudulent scheme perpetrated by certain officials or employees
of his agency. No less than Lakambini Q. Razon, State Auditor IV of the Commission
on Audit, in her letter dated January 8, 1991 to the Director of the Corporate Audit
Office, wrote that:
In the said memorandum, we informed Mr. Albert that we had considered his
participation in the AMAKO transaction, but we cannot lift his liability as head of the
Corporation pursuant to the provisions of Section 2, P.D. 1445 and Section 32 of the
Manual on Certificate of Settlement and Balances. This prompted Mr. Albert to
request for reconsideration on the action taken by this Office on the appeal
submitted previously.
1 Sec. 103 General liability for unauthorized expenditures. expenditures of
government funds or uses of government property in violation of law or regulations

shall be a personal liability of the official or employee found to be directly
responsible therefor. (Underscoring Ours)Under the said provision, an official or
employee shall be personally liable for unauthorized expenditures if the following requisites
are present, to wit: (a) there must be an expenditure of government funds or use of
government property; (b) the expenditure is in violation of law or regulation; and (c) the
official is found directly responsible therefor.
Considering the reasons given and circumstances surrounding the case, we

believe that the President cannot determine the irregularities committed
in this transaction
The actions taken by petitioner involved the very functions he had to
discharge in the performance of official duties. He cannot, therefore, be
held civilly liable for such acts unless there is a clear showing of bad faith,
malice or gross negligence.[34] Inasmuch as no evidence was presented to
show that petitioner acted in bad faith and with gross negligence in the
performance of his official duty, he is presumed to have acted in the
regular performance of his official duty. Similarly, it is a basic tenet of due
process that the decision of a government agency must state the facts
and the law on which the decision is based. The COA decision merely
stated conclusions of law. Facts and circumstances, as well as the whys,
the whats and the hows of the disallowance, were patently missing,
inaccurate or incomplete.

Albert V

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ALBERT V.

The Housing and Urban Development Coordination Council (HUDCC) together

The AMAKO project refers to seventy-three (73) hectares of land located at

Construction, Co, Inc. (SHGCCI), through its shareholder, Engineer Ceres

In October 4, 1989, Mr. Concepcion submitted an application for Purchase

ISSUE: W/N PETITIONER SHOULD BE HELD LIABLE?

dishonest or negligent subordinates, overwork, multiple assignments or positions, or

1 Sec. 103 General liability for unauthorized expenditures. expenditures of

government funds or uses of government property in violation of law or regulations

Considering the reasons given and circumstances surrounding the case, we

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