705 Phil. 524
LEONARDO-DE CASTRO, J.:
[Respondent] Arnel A. Bernardo was hired by the Bureau of Internal Revenue (BIR) on September 3, 1979 and therein rendered continuous and uninterrupted service until his promotion to his present position as Attorney V with Salary Grade of 25 and assigned as Technical Assistant at the Office of the Deputy Commissioner of Internal Revenue – Criminal Prosecution Group. Primarily, the [respondent] derived his income from his employment with the BIR.
On various dates in 1979 up to 2001 [respondent] acquired various properties and had business interests in BP Realty Corporation which was registered in 1988, and in Rina’s Boutique and Gift Shop-Gel’s Gift Center where his wife is the owner/proprietress. He and his family also made several foreign travels during the period 1995 to 2002. However, petitioner’s SALN for the years 1993 up to 2001 did not disclose any business interest and/or financial connection, but showed a steady increase of his net worth.
Based on the foregoing, [respondent] was administratively and civilly charged with acquiring unexplained wealth by the FFIB (hereafter, the “OMBUDSMAN”). Accordingly, on November 12, 2003 the OMBUDSMAN filed the appropriate administrative action against the [respondent] for Violation of Section 8 of Republic Act No. 3019, in relation to Republic Act No. 1379. This case was docketed as OMB-C-A-03-0531-K (LSC) entitled “Fact-Finding and Intelligence Bureau (FFIB), Represented by Atty. Ma. Elena A. Roxas versus Arnel A. Bernardo, Attorney V, Bureau of Internal Revenue (BIR)”.
In its Complaint, the OMBUDSMAN alleged that the [respondent] is an incorporator and director of BP Realty Corporation as shown by its Article[s] of Incorporation dated October 15, 1998 and that his wife, Ma. Lourdes I. Bernardo is the owner/proprietress of Rina’s Boutiques and Gift Shop-Gel[’]s Gift Center as may be shown by Business Permits for CY 1999-2003. On various dates in 1979 up to 2001 the [respondent] purchased parcels of residential and agricultural land, the purchase prices and costs of which were manifestly out of proportion or not commensurate to his and his wife’s lawful incomes, allowances, savings or declared assets. He and his family also made several foreign travels during the period 1995 to 2002. The [respondent’s] cash on hand and net worth also consistently increased. However, [respondent’s] SALN for the years 1993 up to 2001 did not disclose any business interest and/or financial connection.
The evidence for the Ombudsman consists of the CERTIFICATION (dated July 7, 2003) of the annual salary compensation and allowances received by the [respondent] from 1998 to 2002; Articles of Incorporation and By-Laws of BP Realty Corporation which shows that the [respondent] is one of the incorporators of the said corporation; Business Permits of Rina’s Boutiques and Gift Shop; Certificate of Corporate Filing/Information dated June 24, 2003 issued by the Securities and Exchange Commission (SEC) which shows that BP Realty Corporation is registered with the (SEC) on November 4, 1988 and is on active status and that said corporation failed to file the General Information Sheet for 1990-2003 as well as its Financial Statement from 1989 to 2002; SALNs for the years 1993 to 2001; Transfer Certificate of Title (TCT) Nos. 166204, 244954, 191636, CLOA-T-9835, CLOA-T-9834, T-118783; Declaration of Real Property No. D-105-03089, D-105-05849; Deed of Absolute Sale dated October 23, 1997 over a parcel of land covered by TCT No. RT-57064 (T-113488) of the Registry of Deeds of Bulacan; Deed of Absolute Sale dated May 27, 1985 over a parcel of land covered by TCT No. 151157 of the Registry of Deeds Manila; Deed of Absolute Sale dated August 10, 1999 over a parcel of land covered by TCT No. 190651 of the Registry of Deeds of Manila; Certification dated June 3, 2003 issued by the Bureau of Immigration which shows the travel records from January 1995 to May 31, 2003 of the [respondent], his wife, Ma. Lourdes I. Bernardo, and his children Lorina I. Bernardo and Adrian I. Bernardo, Angeline I. Bernado, and Aldrin I. Bernardo; and Certification dated June 3, 2003 which shows the travel records of the [respondent’s] wife, Ma. Lourdes I. Bernardo from January 1995 to May 31, 2003.
The Ombudsman thus sought that the [respondent] be adjudged guilty of acquiring unexplained wealth and be dismissed from the service, as well as the forfeiture of his properties.
In his Counter-Affidavit dated January 30, 2004 the [respondent] (respondent below) averred that: he is engaged in various legitimate businesses; he had divested his interest and/or shares from BP Realty Corporation as may be shown by a Deed of Assignment dated November 28, 1988, and that its certificate of registration had been revoked as may be shown by the Certificate of Corporate Filing/Information issued by the Securities and Exchange Commission on September 29, 2003 for being inactive pursuant to Presidential Decree No. 902-A; he religiously paid corresponding internal revenue taxes from income of the business disclosed in his SALN, as may be shown by his Income Tax Returns covering the period 1998, 1999, 2000, and 2001; on his earnings derived not purely from compensation income, but also from legitimate business as well as business interest or financial connection to Rina’s Boutique and Gift Shop/Gel[’]s Gift Center managed by his wife as shown by business permits for Rina’s Boutique and Gift Shop, he stated that he disclosed in his SALNs filed during the period 1993 to 2001 under “B. Personal and Other Properties” the following: “Merchandise Inventory”, “Building Improvement”, “Store Equipment” and “Depreciation” accounts; on the [respondent’s] non-declaration of an agricultural land purchased in Bulacan in 1995, the [respondent] points out that the agricultural land declared in his SALNs for 1995 to 2001 appeared to refer to only one (1) parcel although in truth and in fact, the acquisition covered two (2) parcels of land awarded to him under the Comprehensive Agrarian Reform Program of the government, covered by TCT No. CLOA-T9834 (consisting of 8,969 sq.m.) and TCT No. 9835 (consisting of 20,004 sq.m.) both registered on November 27, 1995 with the Registry of Deeds of Bulacan. The reason for this is because he honestly believed that it was sufficient to declare the two (2) lots as one, with the total cost indicated in his SALN, since the two parcels were acquired at the same time in 1995; [respondent] had availed of Tax Amnesty under the following laws: Executive Order No. 41 dated August 22, 1986 (for the years 1981 to 1985), PD No. 213 dated June 16, 1973 (for the years 1969 to 1972), PD No. 631 dated January 6, 1975, and PD No. 1840 dated December 31, 1980.[4] (Citations omitted.)
WHEREFORE, PREMISES CONSIDERED:
1. Respondent ARNEL A. BERNARDO is hereby found GUILTY of Dishonesty, in accordance with the provision of Section 8 of Republic Act No. 3019, in relation to Republic Act No. 1379, for which the penalty of DISMISSAL FROM THE SERVICE, with cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification for reemployment in the government service, is hereby recommended pursuant to Sections 53 and 58, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service[.]
2. That the Honorable Commissioner of the Bureau of Internal Revenue be furnished a copy of the Resolution, for the implementation of this administrative penalty in accordance with law, with the request to inform this Office of the action taken hereon.
3. Finally, it is respectfully recommended that copies of the case records be referred to the Fact Finding and Intelligence Bureau, this Office for the preparation and filing of the appropriate complaint pursuant to Section 2 of Republic Act No. 1379.[5]
WHEREFORE, reversible error having been committed by the Ombudsman, the instant petition is hereby GRANTED and its Decision dated April 21, 2004 as well as the Order dated July 22, 2004 are both REVERSED and SET ASIDE.[6]
I.
CONTRARY TO THE RULING OF THE COURT OF APPEALS, THE FINDING OF GUILT AGAINST THE RESPONDENT WAS SUPPORTED BY MORE THAN SUBSTANTIAL EVIDENCE THAT SUFFICIENTLY ESTABLISHED THE FACT THAT HE HAS COMMITTED DISHONESTY AND SHOULD BE HELD LIABLE: (A) FOR FAILURE TO DISCLOSE HIS BUSINESS INTERESTS, (B) FOR HAVING ACCUMULATED PROPERTIES WORTH MORE THAN HIS LAWFUL MEANS TO ACQUIRE, (C) FOR HIS FAILURE TO DISCLOSE SUCH PROPERTIES IN HIS STATEMENT OF ASSETS, LIABILITIES AND NETWORTH (SALN), AND (D) FOR FAILING TO DISCLOSE IN HIS SALNs HIS AND HIS SPOUSE’S FINANCIAL AND BUSINESS TRANSACTIONS.II.
AS CONSISTENTLY HELD BY THE SUPREME COURT, THE FINDINGS OF THE OFFICE OF THE OMBUDSMAN DESERVE GREAT WEIGHT, AND MUST BE ACCORDED FULL RESPECT AND CREDIT.[7]
Section 2. Filing of petition. – Whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. x x x. (Emphasis supplied.)
Section 5. Hearing. The court shall set a date for a hearing, which may be open to the public, and during which the respondent shall be given ample opportunity to explain, to the satisfaction of the court, how he has acquired the property in question.
For the year 1989, We find that the [respondent] had satisfactorily explained how he was able to acquire a residential land in Quezon City covered by Tax Declaration Nos. D-105-02089 and D-105-05849 for P235,420.00 despite the fact that his declared income for the year 1989 only amounts to P43,140.00. As pointed out by the [respondent], the lot covered by Tax Declaration No. D-105-03089, and the property improvement thereon covered by Tax Declaration No. D-105-05849, was awarded to the [respondent] by the GSIS for P235,420.00 pursuant to a housing program for BIR employees, subject to a monthly salary deduction of P2,001.00 since June 1990. This was also secured by the [respondent’s] GSIS Insurance Policy and a Real Estate Mortgage on the same property as shown by loan documents.
Anent the Ombudsman’s claim that the [respondent] had failed to justify the increase in his “cash on hand and in bank”, and to substantiate his claim that the reason for the increase thereon was due to a cash donation of P8,000,000.00 made in favor of the [respondent] in the year 2001. The Ombudsman points out that the [respondent’s] SALN for the year 2000 showed a total networth of P12,734,083.60 while his “cash on hand and in bank” is P3,921,061.80. Then for the year 2001, the [respondent’s] SALN showed a total networth of P21,085,296.95 while his “cash on hand and in bank” is P10,431,897.45. We are convinced that the [respondent] had substantiated his claim that the reason for the increase in his “cash on hand and in bank” was due to a cash donation of P8,000,000.00 made in his favor in the year 2001. The [respondent] had voluntarily made such disclosure in his SALN as required by the law. The Deed of Donation October 8, 2001 is, indeed, a credible proof that such donation was lawful, there being no showing of its illegality. As correctly noted by the [respondent], there was no legal requirement to attach the Deed of Donation or to disclose the identity of the donor, nor to append to the SALN evidence of payment of the imposable tax due as Sec 99 (b) of RA No. 8424 or the Tax Reform Act of 1997, imposes the tax liability arising from the gratuitous act upon the donor, not upon the donee.
For the year 1999, the Ombudsman noted that the [respondent] acquired a residential land in Manila for P1,000,000.00, and this is covered by TCT No. 244854 issued by the Register of Deeds of Manila, despite the fact that his “cash on hand and in bank” had decreased in the amount of P565,823.10, such amount together with his income for the year 1999 in the sum of only P230,628.00 are not sufficient to justify the purchase of the residential land. Even with the reported net income from Rina’s Boutique and Gift Shop/Gel’s Gift Center for 1999 amounting to only P63,857.65, the purchase still could not be justified. For his part, the [respondent] insists that this property was acquired by him and his wife from the latter’s parents. According to the [respondent], his SALN for 1999 shows that his “cash on hand and in bank” was P3,653,079.85, which is adequate to justify this purchase. To support his contention, the [respondent] submitted documentary evidence consisting of the following:We are convinced that the [respondent] had justified his purchase of the residential land in 1999 for P1,000,000.00. In his SALN for 1999, the [respondent] had declared a networth of P12,447,700.75 and cash on hand and in bank in the amount of P3,653,079.85. His aggregate tax payment of P159,974.65 would indeed negate the Ombudsman’s claim that his additional income derived from his wife’s business amounted to only P63,857.65, and this is bolstered by the fact that in the [respondent’s] annual income tax return for 1999 he reported a taxable business income of P425,904.50 while his wife reported a taxable business income of P63,857.65. We also note that the [respondent] had also derived income from lottery business as may be shown by Annexes “5-I” to “5-R” of his Counter-Affidavit. Although such exhibits are in the name of his (respondent) brother Alberto A. Bernardo, the latter had already assigned to him the operation of two (2) lotto outlets/terminals located in Sta. Mesa, Manila and in Quezon City on June 9, 1998 as shown by the Deed of Assignment. These exhibits also negate the Ombudsman’s claim that “(A)s regards the respondent’s claim of other income (rental, lottery, other income) no proof of the same was presented.”
- Annual Income Tax Return for 1999
- Financial Documents:
b.1 Audited Report
b.2 Balance Sheet
b.3 Income Statement
b.4 Rental Income Statements
b.5 Employer’s Certificate of Compensation Payment/Tax Withheld
b.6 Monthly Agents Commission/ Withholding Tax Report
b.7 Certificate of Creditable Tax Withheld at Source issued by the Philippine Charity Sweepstakes Office
b.8 Official Receipt issued by the Trader’s Royal Bank as proof of payment of income Tax Liability in the amount of P159,974.65
For the year 1990, the Ombudsman alleged that the [respondent] acquired a residential land in Manila for P230,000.00, covered by TCT No. 244854 issued by the Register of Deeds of Manila, despite the fact that his declared income for the year 1990 only amounts to P57,432.00. In defense, the [respondent] said that this acquisition was truthfully disclosed in his SALN, and that he had the capacity to make this purchase as he was engaged in lawful business, deriving lawful income. The Ombudsman in its Decision stated that in 1995, the [respondent] acquired a residential land located in Quezon City for P4,150,000.00 and an agricultural land in Bulacan worth P500,000.00. The [respondent] indicated in his SALN for the year 1995 as one of his liabilities, “notes payable” in the amount of P4,000,000.00 which the Ombudsman presumed to have been used by the [respondent] in buying the said properties. The Ombudsman noted, however, that the [respondent’s] loan payable had decreased by P2,000,000.00 in 1996, but his “cash on hand and in bank” had increased from P3,861,077.05 to P4,701,709.95. The Ombudsman emphasizes that while the [respondent] had paid out cash in the amount of P2,000,000.00, his cash on hand and in bank did not decrease, but even increased by P1,600,072.90 which means that he had earned a total amount of P3,600,072.90 for the year 1996 alone. [Respondent’s] building improvements likewise increased from P143,420.00 to P902,860.00. However, his annual income for 1996 amounted only to P177,428.00. The [respondent] however draws attention to his SALN for the year 1995 which shows that he was financially capable of purchasing property valued at P4,150,000.00 as he had a cash disposable balance of P12,323,731.75 and net worth of P6,471,782.95. The Ombudsman also makes much of the fact of the [respondent’s] and his family’s trips abroad in the years 1995, 1996, and 1997, pointing out that the [respondent’s] lawful income for the years 1995 (P157,000.00), 1996 (P177,408.00), and 1997 (P224,988.00) cannot support such travels. But this is denied by the [respondent], saying that his Cash on Hand and In Bank (Cash Flow Analysis) for the years 1995 to 2001, his Income Tax Returns for the years 1995-1996-1997, and his networth including disposable income was more than sufficient to justify his property acquisitions and foreign travels for the covered period.
In an attempt to present a clear outline of his financial capacity, the [respondent] presented a comparative Cash Flow Analysis which he had embodied in his counter-affidavit. The evidence for herein [respondent] as attached to his Counter-Affidavit consists of the Deed of Assignment dated November 28, 1988 to show that the [respondent] had absolutely transferred and conveyed his rights and interests over BP Realty Corporation to Noble Bambina B. Perez; Certificate of Corporate Filing/Information dated June 24, 2003 issued by the SEC which shows that BP Realty Corporation’s Certificate of Registration was revoked on September 29, 2003; a copy of the Sales Invoice of Rina’s Boutique and Gift Shop-Gel’s Gift Center; Annual Income Tax Return of the [respondent] for the years 1998 to 2001 with Reports of Independent Certified Public Accountants To Accompany Philippine Income Tax Return; Amended SALN for the year 1995; and Revenue Special Order dated May 5, 2003. His income tax returns clearly show that he had been paying taxes not only for compensation income, but for business incomes, as well. In fact, a big chunk thereof was derived from rental incomes of the [respondent].
Notably, the Ombudsman appeared to have heavily relied solely on the [respondent’s] SALNs for the years 1993 to 2001. We do not understand why no evidence was presented to show the [respondent’s] beginning net worth from the first day of his employment with the government as declared in the SALN’s filed by him. His beginning net worth must be considered for purposes of determining whether his disposable income was more than sufficient to justify his property acquisitions and foreign travels for the covered period, and whether he possesses the financial capability to acquire or purchase properties as reported in his SALNs. Such net worth of the [respondent] as declared in the statement filed by him from the first day of his employment with the government shall be considered as his true new worth as of such date, for purposes of determining his capacity for future property acquisitions during his tenure as a public officer. Any unexplained increase in his net worth thereafter may then fall within the ambit of the presumption provided by Republic Act No. 1379.[13] (Citations omitted.)
Neither can petitioner’s failure to answer the question, “Do you have any business interest and other financial connections including those of your spouse and unmarried children living in your house hold?” be tantamount to gross misconduct or dishonesty. On the front page of petitioner’s 2002 SALN, it is already clearly stated that his wife is a businesswoman, and it can be logically deduced that she had business interests. Such a statement of his wife’s occupation would be inconsistent with the intention to conceal his and his wife’s business interests. That petitioner and/or his wife had business interests is thus readily apparent on the face of the SALN; it is just that the missing particulars may be subject of an inquiry or investigation.[14] (Emphasis supplied.)
Dishonesty is incurred when an individual intentionally makes a false statement of any material fact, practicing or attempting to practice any deception or fraud in order to secure his examination, registration, appointment, or promotion. It is understood to imply the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; the disposition to defraud, deceive or betray. It is a malevolent act that puts serious doubt upon one’s ability to perform his duties with the integrity and uprightness demanded of a public officer or employee. Like the offense of Unexplained Wealth, Section 52(A)(1), Rule IV of the Revised Uniform Rules on Administrative Cases in Civil Service treats Dishonesty as a grave offense, the penalty of which is dismissal from the service at the first infraction. (Citations omitted.)
It also rules that while petitioner may be guilty of negligence in accomplishing his SALN, he did not commit gross misconduct or dishonesty, for there is no substantial evidence of his intent to deceive the authorities and conceal his other sources of income or any of the real properties in his and his wife’s names. Hence, the imposition of the penalty of removal or dismissal from public service and all other accessory penalties on petitioner is indeed too harsh. Nevertheless, petitioner failed to pay attention to the details and proper form of his SALN, resulting in the imprecision of the property descriptions and inaccuracy of certain information, for which suspension from office for a period of six months, without pay, would have been appropriate penalty. (Citation omitted.)