Frauds and Illegal

Exactions and
Transactions
ART.213-216

Frauds against the public treasury and

similar offenses (Art. 213) (1)

ELEMENTS

1.

2.
HE HAS TAKEN ADVANTAGE OF HIS OFFICE, THAT IS, HE INTERVENED IN THE
TRANSACTION IN HIS OFFICIAL CAPACITY;

3.
HE ENTERED INTO AN AGREEMENT WITH ANY INTERESTED PARTY OR
SPECULATOR OR MADE USE OF ANY OTHER SCHEME WITH REGARD TO FURNISHING
SUPPLIES, THE MAKING OF CONTRACTS, OR THE ADJUSTMENT OR SETTLEMENT OF
ACCOUNTS RELATING TO PUBLIC PROPERTY OR FUNDS;

4.

OFFENDER IS A PUBLIC OFFICER;

HE HAD INTENT TO DEFRAUD THE GOVERNMENT.

ACTS PUNISHED

1.
ENTERING INTO AN AGREEMENT WITH ANY INTERESTED PARTY OR SPECULATOR OR
MAKING USE OF ANY OTHER SCHEME, TO DEFRAUD THE GOVERNMENT, IN DEALING WITH ANY
PERSON WITH REGARD TO FURNISHING SUPPLIES, THE MAKING OF CONTRACTS, OR THE
ADJUSTMENT OR SETTLEMENT OF ACCOUNTS RELATING TO PUBLIC PROPERTY OR FUNDS;

2.
DEMANDING, DIRECTLY OR INDIRECTLY, THE PAYMENT OF SUMS DIFFERENT FROM OR
LARGER THAN THOSE AUTHORIZED BY LAW, IN COLLECTION OF TAXES, LICENSES, FEES, AND
OTHER IMPOSTS;

3.
FAILING VOLUNTARILY TO ISSUE A RECEIPT, AS PROVIDED BY LAW, FOR ANY SUM OF
MONEY COLLECTED BY HIM OFFICIALLY, IN THE COLLECTION OF TAXES, LICENSES, FEES, AND
OTHER IMPOSTS;

4.
COLLECTING OR RECEIVING, DIRECTLY OR INDIRECTLY, BY WAY OF PAYMENT OR
OTHERWISE, THINGS OR OBJECTS OF A NATURE DIFFERENT FROM THAT PROVIDED BY LAW, IN
THE COLLECTION OF TAXES, LICENSES, FEES, AND OTHER IMPOSTS.

The essence of this crime is making the government pay for something not
received or making it pay more than what is due. It is also committed by
refunding more than the amount which should properly be refunded.

This occurs usually in cases where a public officer whose official duty is to
procure supplies for the government or enter into contract for government
transactions, connives with the said supplier with the intention to defraud
the government.

Also when certain supplies for the government are purchased for the high
price but its quantity or quality is low.

EXAMPLE

The Quezon City government ordered 10,000 but what was delivered was only
1,000 T-shirts, the public treasury is defrauded because the government is
made to pay that which is not due or for a higher price.

One thousand pieces of blanket for certain unit of the Armed Forces of the
Philippines were paid for but actually, only 100 pieces were bought.

IMPORTANT: Not all frauds will constitute this crime. There must be no fixed allocation or
amount on the matter acted upon by the public officer.

The allocation or outlay was made the basis of fraudulent quotations made by the public
officer involved.

For example, there was a need to put some additional lighting along the a street and no one
knows how much it will cost. An officer was asked to canvass the cost but he connived with
the seller of light bulbs, pricing each light bulb at P550.00 instead of the actual price of
P500.00. This is a case of fraud against public treasury.

If there is a fixed outlay of P20,000.00 for the lighting apparatus needed and the public
officer connived with the seller so that although allocation was made a lesser number was
asked to be delivered, or of an inferior quality, or secondhand. In this case there is no fraud
against the public treasury because there is a fixed allocation. The fraud is in the
implementation of procurement. That would constitute the crime of other fraud in
Article 214,

ELEMENTS OF ILLEGAL EXACTIONS UNDER

PARAGRAPH 2

1.
OFFENDER IS A PUBLIC OFFICER ENTRUSTED WITH THE COLLECTION OF
TAXES, LICENSES, FEES AND OTHER IMPOSTS;

2.

He is guilty of any of the following acts or omissions:

a.
Demanding, directly or indirectly, the payment of sums different from or
larger than those authorized by law; or

b.
Failing voluntarily to issue a receipt, as provided by law, for any sum of
money collected by him officially; or

c.
Collecting or receiving, directly or indirectly, by way of payment or
otherwise, things or objects of a nature different from that provided by law.

NOTE:

The essence of the crime is not misappropriation of any of the amounts but
the improper making of the collection which would prejudice the accounting
of collected amounts by the government.

This can only be committed principally by a public officer whose official duty
is to collect taxes, license fees, import duties and other dues payable to the
government.

Fixers cannot commit this crime unless he conspires with the public officer
authorized to make the collection.

Also, public officers with such functions but are in the service of the Bureau
of Internal Revenue and the Bureau of Customs are not to be prosecuted
under the Revised Penal Code but under the Revised Administrative Code.

On the first form of illegal exaction

Mere demand will consummate the crime, even if the taxpayer shall refuse
to come across with the amount being demanded. That will not affect the
consummation of the crime.

In the demand, it is not necessary that the amount being demanded is bigger
than what is payable to the government. The amount being demanded
maybe less than the amount due the government.

Note: this is often committed with malversation or estafa because when a

public officer shall demand an amount different from what the law provides,
it can be expected that such public officer will not turn over his collection to
the government

EXAMPLES

A taxpayer goes to the local municipal treasurer to pay real estate taxes on
his land. Actually, what is due the government is P400.00 only but the
municipal treasurer demanded P500.00. By that demand alone, the crime of
illegal exaction is already committed even though the taxpayer does not pay
the P500.00.

A taxpayer pays his taxes. What is due the government is P400.00 and the
public officer issues a receipt for P500.00 upon payment of the taxpayer of
said amount demanded by the public officer involved. But he altered the
duplicate to reflect only P400.00 and he extracted the difference of P100.00.

In this case, the entire P500.00 was covered by an official receipt. That act
of covering the whole amount received from the taxpayer in an official
receipt will have the characteristics of becoming a part of the public funds.
The crimes committed, therefore, are the following:

(a) Illegal exaction for collecting more than he is authorized to collect.

The mere act of demanding is enough to constitute this crime.

(b) Falsification because there was an alteration of official document

which is the duplicate of the official receipt to show an amount less than the
actual amount collected.

(c) Malversation because of his act of misappropriating the P100.00

excess which was covered by an official receipt already, even though not
payable to the government. The entire P500.00 was covered by the receipt,
therefore, the whole amount became public funds. So when he appropriated
the P100 for his own benefit, he was not extracting private funds anymore
but public funds.

Should the falsification be complexed with

the malversation?

As far as the crime of illegal exaction is concerned, it will be the subject of

separate accusation because there, the mere demand regardless of whether
the taxpayer will pay or not, will already consummate the crime of illegal
exaction. It is the breach of trust by a public officer entrusted to make the
collection which is penalized under such article. The falsification or
alteration made on the duplicate can not be said as a means to commit
malversation. At most, the duplicate was altered in order to conceal the
malversation. So it cannot be complexed with the malversation.

It cannot also be said that the falsification is a necessary means to commit

the malversation because the public officer can misappropriate the P100.00
without any falsification. All that he has to do is to get the excess of
P100.00 and misappropriate it. So the falsification is a separate accusation.

However, illegal exaction may be complexed with malversation because

illegal exaction is a necessary means to be able to collect the P100.00 excess
which was malversed.

NOTE:

In this crime, pay attention to whether the offender is the one charged
with the collection of the tax, license or impost subject of the
misappropriation. If he is not the one authorized by disposition to do the
collection, the crime of illegal exaction is not committed.

On the second form of illegal exaction

The act of receiving payment due to the government without issuing a

receipt will give rise to illegal exaction even though a provisional receipt has
been issued. What the law requires is a receipt in the form prescribed by
law, which means official receipt.

EXAMPLE

If a government cashier or officer to whom payment is made issued a receipt

in his own private form, which he calls provisional, even though he has no
intention of misappropriating the amount received by him, the mere fact
that he issued a receipt not in the form prescribed by law, the crime of
illegal exaction is committed. There must be voluntary failure to issue the
Official Receipt.

On the third form of illegal exaction

Under the rules and regulations of the government, payment of checks not
belonging to the taxpayer, but that of checks of other persons, should not be
accepted to settle the obligation of that person.

EXAMPLE:

A taxpayer pays his obligation with a check not his own but pertaining to
another. Because of that, the check bounced later on.

The crime committed is illegal exaction because the payment by check is not
allowed if the check does not pertain to the taxpayer himself, unless the
check is a managers check or a certified check, amended already as of 1990.

Other Frauds (Article 214.)

Elements

1.

Offender is a public officer;

2.

He takes advantage of his official

3.
He commits any of the frauds or deceits enumerated in Article 315 to
318. (ESTAFA, SWINDLING A MINOR, OTHER DECEITS.)

position;

Article 215. Prohibited Transactions

Elements

1.

2.
He becomes interested, directly or indirectly, in any transaction of
exchange or speculation;

3.
The transaction takes place within the territory subject to his
jurisdiction;

4.

Offender is an appointive public officer;

He becomes interested in the transaction during his incumbency.

NOTE:

It is sufficient under this article that the appointive officer has an interest in
any transaction of exchange or speculation, such as, buying and selling stocks,
commodities, lands, etc., hoping to take advantage of an expected rise or fall
in price.

Examples of appointive public officer which may not engage in the

commercial profession either in person or by proxy:

1. JUSTICES, JUDGES or FISCALS

2. Employees engaged in the collection and administration of public funds.

THUS, a fiscal of manila who engages in commerce in Manila is guilty under

this article.

Article 216. Possession of Prohibited

Interest By A Public Officer

Persons liable

1.
Public officer who, directly or indirectly, became interested in any
contracts or business in which it was his official duty to intervene;

2.
Experts, arbitrators, and private accountants who, in like manner, took
part in any contract or transaction connected with the estate or property in
the appraisal, distribution or adjudication of which they had acted;

3.
Guardians and executors with respect to the property belonging to their
wards or the estate.

EXAMPLE:

A municipal mayor who took direct part in the lease of the municipal
fishponds to himself may be held liable under the first paragraph of art.216 it
being his official duty to intervene in behalf of the municipality in the
contract of lease of the fishponds.

NOTE:

ACTUAL AFRAUD IS NOT NECESSARY

The act is punished because of the possibility that fraud may be committed or
that the officer may place his own interest above that of the government or
party which he represents.

Intervention must be by virtue of public office held.

Section 14, Article VI of the Constitution

No Senator or Member of the House of Representatives may personally appear

as counsel before any court of justice or before the Electoral Tribunals, or
quasi-judicial and other administrative bodies. Neither shall he, directly or
indirectly, be interested financially in any contract with, or in any franchise
or special privilege granted by the Government or any subdivision, agency or
instrumentality thereof, including any government-owned or controlled
corporation or its subsidiary, during his term of office. He shall not intervene
in any matter before any office of the government for his pecuniary benefit
or where he may be called upon to act on account of his office.

Section 13, Article VII of the Constitution

The President, Vice-President, the Members of the Cabinet and their deputies
or assistant shall not, unless otherwise provided in this Constitution, hold any
other office or employment during their tenure. They shall not, during said
tenure, directly or indirectly, practice any other profession, participate in any
business, or be financially interested in any contract with, or in any franchise,
or special privilege granted by the Government or any subdivision, agency or
instrumentality thereof, including government-owned or controlled
corporations or their subsidiaries. They shall strictly avoid conflict of interest
in the conduct of their office.

Section 2, Article IX-A of the Constitution

No member of a Constitutional Commission shall, during his tenure, hold any

office or employment. Neither shall he engage in the practice of any
profession or in the active management or control of any business which in
any way may be affected by the functions of his office, nor shall he be
financially interested, directly or indirectly, in any contract with, or in any
franchise or privilege granted by the government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned or controlled
corporations or their subsidiaries.

MALVERSATION OF PUBLIC FUNDS OR

PROPERTY:
ART.217-222

ART. 222 Officers included in the

preceding provisions

PERSONS WHO MAY BE HELD LIABLE UNDER ART.217 to 221

Private individual who in any capacity have charge of any national, provincial
or municipal funds, revenue or property.

Administrator or depositary of funds or property that has been attached,

seized or deposited by public authority even if owner by a private individual.

Sheriffs and receiver fall under the term administrator

A judicial administrator in charge of settling the estate of the deceased is not

covered by the article.

Article 217. Malversation of Public Funds

or Property Presumption of Malversation

Acts punished

1.

Appropriating public funds or property;

2.

Taking or misappropriating the same;

3.
Consenting, or through abandonment or negligence, permitting any
other person to take such public funds or property; and

4.
Being otherwise guilty of the misappropriation or malversation of such
funds or property.

Elements common to all acts of malversation

under Article 217

1.

Offender is a public officer;

2.
He had the custody or control of funds or property by reason of the
duties of his office;

3.
Those funds or property were public funds or property for which he was
accountable;

4.
He appropriated, took, misappropriated or consented or, through
abandonment or negligence, permitted another person to take them.

NOTE:

It is not necessary that the offender profited because somebody else may
have misappropriated the funds in question for as long as the accountable
officer was remiss in his duty of safekeeping public funds or property. He is
liable for malversation if such funds were lost or otherwise misappropriated
by another.

The offender must be accountable for the property misappropriated. (If he is

not the one accountable but somebody else, the crime committed is theft. It
will be qualified theft if there is abuse of confidence)

There is no malversation through simple negligence or reckless imprudence,

whether deliberately or negligently. This is one crime in the Revised Penal
Code where the penalty is the same whether committed with dolo or
culpa.

Accountable officer does not refer only to cashier, disbursing officers or

property custodian. Any public officer having custody of public funds or
property for which he is accountable can commit the crime of malversation if
he would misappropriate such fund or property or allow others to do so.

EXAMPLE:An unlicensed firearm was confiscated by a policeman. Instead of

turning over the firearm to the property custodian for the prosecution of the
offender, the policeman sold the firearm. What crime was committed?

The crime committed is malversation because that firearm is subject to his

accountability.

Having taken custody of the firearm, he is supposed to account for it as

evidence for the prosecution of the offender.

A private person may also commit

malversation under the following situations:

(1)

Conspiracy with a public officer in committing malversation;

(2) When he has become an accomplice or accessory to a public officer who

commits malversation;

(3) When the private person is made the custodian in whatever capacity of
public funds or property, whether belonging to national or local government,
and he misappropriates the same;

(4) When he is constituted as the depositary or administrator of funds or

property seized or attached by public authority even though said funds or
property belong to a private individual.

When does presumption of

misappropriation arise?

When a demand is made upon an accountable officer and he cannot produce

the fund or property involved, there is a prima facie presumption that he
had converted the same to his own use.
There must be indubitable proof that thing unaccounted for exists.

Audit should be made to determine if there was shortage. Audit must be

complete and trustworthy. If there is doubt, presumption does not arise.

Presumption arises only if at the time the demand to produce the public
funds was made, the accountability of the accused is already determined and
liquidated.

NOTE: failure on his part to produce the same will not bring about this
presumption unless and until the amount of his accountability is already known.

Article 218. Failure of Accountable

Officer to Render Accounts

Elements

1.
Offender is public officer, whether in the service or separated therefrom
by resignation or any other cause;

2.

3.
He is required by law or regulation to render account to the Commission
on Audit, or to a provincial auditor;

4.
He fails to do so for a period of two months after such accounts should
be rendered.

He is an accountable officer for public funds or property;

NOTE:

Demand for accounting is not necessary

Art218 dose not require that there be a demand by the commission on audit
or provincial auditor that the public officer should render and account.

It is sufficient that there is a law or regulation requiring him to render

account

The reason why mere failure to render account by an accountable public

officer is punished is that the law does not so much contemplate the
possibility of malversation as the need of enforcing by a penal provision the
performance of the duty incumbent upon every employee who handles
government funds to render an account of all he receives or has in his charge
by reason of his employment.

Misappropritation is not necessary

It is not essential that there be misapproprtiation. If there is misaprpriation

he would be liable also for malversation under ART.217

Article 219. Failure of A Responsible Public

Officer to Render Accounts before Leaving
the Country

Elements

Offender is a public officer;

He is an accountable officer for public funds or property;

He unlawfully leaves or attempts to leave the Philippine Islands without

securing a certificate from the Commission on Audit showing that his accounts
have been finally settled.

NOTE:

The purpose of the law is to discourage responsible or accountable officers

from leaving without first liquidating their accountability.

Mere leaving without securing clearance constitutes violation of the Revised

Penal Code. It is not necessary that they really misappropriated public
funds.

Article 220. Illegal use of public funds

or property

Elements

Offender is a public officer;

There are public funds or property under his administration;

Such fund or property were appropriated by law or ordinance;

He applies such public fund or property to any public use other than for which
it was appropriated for.

NOTE:

Illegal use of public funds or property is also known as technical

malversation.

term technical malversation is used because in this crime, the fund or

property involved is already appropriated or earmarked for a certain public
purpose.

Since damage is not an element of malversation, even though the application

made proved to be more beneficial to public interest than the original
purpose for which the amount or property was appropriated by law, the
public officer involved is still liable for technical malversation.

If public funds were not yet appropriated by law or ordinance, and this was
applied to a public purpose by the custodian thereof, the crime is plain and
simple malversation, not technical malversation.

If the funds had been appropriated for a particular public purpose, but the
same was applied to private purpose, the crime committed is simple
malversation only.

EXAMPLE:

A certain road is to be cemented. Bags of cement were already being

unloaded at the side. But then, rain began to fall so the supervisor of the
road building went to a certain house with a garage, asked the owner if he
could possibly deposit the bags of cement in his garage to prevent the same
from being wet. The owner of the house, Olive, agreed. So the bags of
cement were transferred to the garage of the private person. After the
public officer had left, and the workers had left because it is not possible to
do the cementing, the owner of the garage started using some of the cement
in paving his own garage. The crime of technical malversation is also
committed.

Note that when a private person is constituted as the custodian in whatever

capacity, of public funds or property, and he misappropriates the same, the
crime of malversation is also committed.

Article 221. Failure to Make Delivery of

Public Funds of Property

Elements of failure to make payment

1.

Public officer has government funds in his possession;

2.

He is under obligation to make payment from such funds;

3.

He fails to make the payment maliciously.

Acts punished

1.
Failing to make payment by a public officer who is under obligation to
make such payment from government funds in his possession;

2.
Refusing to make delivery by a public officer who has been ordered by
competent authority to deliver any property in his custody or under his
administration.

NOTE: Penalty is based on value of funds/property to be delivered