What Is Malversation? | How Is It Committed? | and Other Derelictions

What is Malversation? Malversation is a misconduct in public office. It is a form of corruption, which misuses funds appropriated for certain public purpose. Malversation, as a term, may coincide with other criminal terms, such as embezzlement or abuse of office. It is larceny of public funds and a betrayal of public trust.

The public should always be aware where the money of the government goes. The use thereof must be aligned with certain public objective and must be subjected to government audit so as to curtail any form of misuse and corruption.

What is the crime of malversation? 

The crime of malversation is defined and penalized under Article 217 of the Revised Penal Code.

Article 217 of the Revised Penal Code provides that “Any public officer who, by reason of the duties of his office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or negligence, shall permit any other person to take such public funds or property, wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall suffer:

1. The penalty of prision correccional in its medium and maximum periods, if the amount involved in the misappropriation or malversation does not exceed two hundred pesos.

2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is more than two hundred pesos but does not exceed six thousand pesos.

3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if the amount involved is more than six thousand pesos but is less than twelve thousand pesos.

4. The penalty of reclusion temporal, in its medium and maximum periods, if the amount involved is more than twelve thousand pesos but is less than twenty-two thousand pesos. If the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to reclusion perpetua.

In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special disqualification and a fine equal to the amount of the funds malversed or equal to the total value of the property embezzled.

The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use. (As amended by RA 1060).

Malversation is also called “embezzlement”. In the case of Jacinto Davis v. Director of Prisons [G.R. No. L-6399, October 6, 1910], embezzlement was defined by the Supreme Court as “a purely statutory offense and may be defined as the fraudulent appropriation to one’s own use of money or goods entrusted to one’s care by another; the fraudulent appropriation of property by a person to whom it has been entrusted or into whose hands it has lawfully come.”

Meaning of malversation of funds

Malversation of public funds, in its simplest term, is the crime where an accountable officer had received the public funds but failed to account for the said funds upon demand without offering a justifiable explanation for the shortage, as discussed by the Court in the case of Venezuela v. People of the Philippines [G.R. No. 205693, February 14, 2018].

It is important that the offender for the crime of malversation of funds has been given the custody or control of the funds, therefore, accountable for such, and that the offender took, appropriated, or misappropriated such public funds, or even consented, either through abandonment or negligence, another person to take them.

It should be noted that the offender for this crime has been given the duty and responsibility of safekeeping the public funds. Yet, he or she violates the trust reposed on him/her since he/she received the funds or property in his/her official capacity.

Malversation Can Be Committed Either Intentionally Or Through Negligence

Malversation of public funds in the Philippines may be committed either with malice or through negligence. Nevertheless, the penalty is the same.

As emphasized by the Supreme Court in the case of Mesina v. People of the Philippines [G.R. No. 162489, June 17, 2015], “malversation is committed either intentionally or by negligence”. The dolo or the culpa is only a modality in the perpetration of the felony. Even if the mode charged differs from the mode proved, the same offense of malversation is still committed; hence, a conviction is proper.”

It is settled that good faith is a valid defense in a prosecution for malversation for it would negate criminal intent on the part of the accused. Thus, in the two significant malversation cases of U.S. v. Catolico [G.R. No. L-6486, March 2, 1911] and U.S. v. Elvina [G.R. No. L-7280, February 13, 1913], the Court stressed that:

To constitute a crime, the act must, except in certain crimes made such by statute, be accompanied by a criminal intent, or by such negligence or indifference to duty or to consequences as, in law, is equivalent to criminal intent. The maxim is actus non facit reum, nisi mens sit rea — a crime is not committed if the mind of the person performing the act complained of is innocent.

In the case of Hernan v. Sandiganbayan, the crime of malversation through negligence was pointed out by the Court when the accused, Hernan, through negligence, created an opportunity for misappropriation and that she should be convicted of malversation because in the circumstances of the case, she permitted another person to take the money accountable to her through inexcusable negligence. This is still the crime of malversation contemplated under Article 217.

Elements of Malversation of Public Funds 

The elements of malversation of public funds are as follows:

1. That the offender is a public officer, as provided by Article 217 of the RPC; or a private individual who, in any capacity, has charge of national, provincial, or municipal funds, revenues, or property, and to any administrator or depositor of funds or property attached, seized or deposited by public authority, as stated in Article 222 of the RPC, which provides liability for private individuals; or a private individual or other persons in conspiracy, or as principals by indispensable cooperation, with a public officer, as decided in the case of U. S. vs. Ponte;¹
2. That the offender had the custody or control of funds or property;
3. That those funds or property were public funds or property for which he was accountable; and
4. That the offender appropriated, took, misappropriated or consented or, through abandonment or negligence, permitted another person to take them.

How to prevent malversation of public funds? 

The crime of malversation of public funds is a crime that penalizes and punishes public officers who engage in the unlawful conduct of taking or misappropriating, or using public funds for their own benefit or personal use. The expectations of the public officers in performing their duties and responsibilities to the public should be upheld in the highest standard in the discharge of their public functions.

Under Section 4 of the Republic Act 6713, which governs the norms and conduct of public officials and employees, it gives additional responsibility to them to execute their official duties with a commitment to the public interest.

Section 4, paragraph one of the said R.A. provides that “Public officials and employees shall always uphold the public interest over and above personal interest. All government resources and powers of their respective offices must be employed and used efficiently, effectively, honestly and economically, particularly to avoid wastage in public funds and revenues.”

This should always serve as a reminder for every public official to discharge their duties as one who upholds and enforces the law, by having the intention to serve the public and not succumb to the personal interests and gains they might acquire in the service as this would be contrary to law and unfair to the general public who pay their dues and shall receive and enjoy the same.

Malversation cases in the Philippines 

In the recent case of Manuel M. Venezuela v. People of the Philippines [G.R. No. 205693, February 14, 2018], the Supreme Court found Venezuela, in his capacity as the Municipal Mayor of Pozorrubio, Pangasinan, guilty beyond reasonable doubt for the crime of Malversation of Public Funds.

All the elements for the crime of malversation of public funds were sufficiently proven in this case. Venezuela was a public officer from the period relevant to the time of the crime charged. He incurred unliquidated cash advances which constituted the funds belonging to the Municipality of Pozorrubio and for the use of the said municipality.

In People v. Pantaleon, Jr. et al. [G.R. Nos. 158694-96, March 13, 2009], the Court held that a municipal mayor, being the chief executive of his respective municipality, is deemed an accountable officer and thus responsible for all the government funds within his jurisdiction.

Venezuela failed to return the missing amount upon demand. His failure or inability to return the shortage upon demand created a prima facie that the funds were put to his personal use.

The Court also emphasized that malversation is committed from the very moment the accountable officer misappropriates public funds and fails to satisfactorily explain his inability to produce the public finds he received.

Another recent case that showed the existence of all elements of the crime of Malversation of Public Funds was the case of Bernardo U. Mesina v. People of the Philippines [G.R. No. 162489, June 17, 2015].

Mesina was a public officer being the Local Treasurer I of Caloocan City, with the responsibility to collect fees and taxes regularly levied by the Mini City Hall, including the market fees, miscellaneous fees, real property taxes, and the subject “patubig” collection. Said fees and taxes collected were public funds for which he was accountable.

He had misappropriated the subject “patubig” collection to his personal use. The supposed amount for the said collection was short by a certain amount, and conforming to Article 217 of the RPC, the failure to produce the sum of money upon demand by a duly authorized officer was prima facie evidence that he had put such missing fund to personal use. He did not rebut the evidence but just denied the same.

Likewise, in this case, the Supreme Court also discussed that “all that is necessary for a conviction is sufficient proof that the accused accountable officer had received public funds or property, and did not have them in his possession when demand therefor was made without any satisfactory explanation of his failure to have them upon demand. For this purpose, direct evidence of the personal misappropriation by the accused is unnecessary as long as he cannot satisfactorily explain the inability to produce or any shortage in his accounts”.

Being all the elements for the crime present in this case, Mesina was convicted for the crime of Malversation of Public Funds.

Can a private person commit malversation?

Article 222 of the Revised Penal Code, provides for the following private individuals who may be liable under Article 217 to 221 or malversation:

1. Private individuals who, in any capacity whatever, have charge of any national, provincial, or municipal funds, revenues or property;
2. Any administrator or depository of funds or property attached, seized, or deposited by public authority, even if such property belongs to a private individual.

The administrator and depository under this article include the sheriffs and receiver. Thus, if they misappropriate money or property under their custody, they are liable for malversation. (Reyes, L.B., 2017, The Revised Penal Code, 19th Ed.)

Malversation can also be committed by any private individuals who acted in conspiracy with an accountable public officer found guilty of malversation. The Supreme Court, in Barriga v Sandiganbayan ruled that “One who conspires with the provincial treasurer in committing six counts of malversation is also a co-principal in committing those offenses, and that a private person conspiring with an accountable public officer in committing malversation is also guilty of malversation.”

What is nonfeasance? 

Nonfeasance is “the omission of some act which ought to be performed.” It can be committed by means of maliciously abstaining or by failing to perform the duties ought to be done by any public officer or an officer of the law by virtue of his office. There must be a duty to be performed by the public officer and that they have neglected their duties by deliberately refraining or failing to do an act required.

Maliciously tolerating and deliberately favoring any law violators or any person who committed an offense as well as aiding an offender in evading any criminal liability which resulted in failure to prosecute an offender is considered nonfeasance as provided under Article 208 of the Revised Penal Code.

What is an example of nonfeasance? 

Dereliction of duty in the prosecution of an offense under Article 208 of the Revised Penal Code is an example of nonfeasance. Article 208 provides that dereliction of duty in the prosecution of offenses is committed by “any public officers or officers of the law, who, in dereliction of the duties of his office, shall maliciously refrain from instituting prosecution for the punishment of violators of the law, or shall tolerate the commission of offenses.”

This article requires that:

1. The offender is a public officer or officer of the law who has the duty to prosecute or cause the prosecution of an offense;
2. That knowing the commission of the crime, the offender maliciously refrains from instituting the prosecution of the law-violator or despite his knowledge that a crime is about to be committed, he tolerates the commission of the crime;
3. That the offender acts with malice and deliberate intent to favor the law-violator.

Thus, in People v. Mina, the chief of police who has the duty to prosecute the law-violator, deliberately failed to file the corresponding criminal action against the jueteng collector who was caught in possession of the jueteng lists and other objects relating to jueteng. He also tolerated and allowed the violator to continue acting as jueteng collector. Hence, he was held liable under Article 208.

In this case, it must be emphasized that the chief of police, despite his knowledge of the offense, maliciously refrain from instituting prosecution and with deliberate intent, tolerated the jueteng collector. Thus, to be held liable under this article, the public officer must have acted with malice and not just by mere voluntary act or an honest mistake.

Difference between malfeasance and nonfeasance 

Nonfeasance, as defined under the Revised Penal Code, is the willful neglect of an official duty or function that ought to be performed by any public officers such as willfully or maliciously refraining from apprehending or instituting a prosecution against a violator of the law as provided under Article 208 of the Code. In short, there is a non-performance of duty ought to be done.

On the other hand, malfeasance is the willful performance or doing of an act that ought not to be done as prohibited by law. Example of malfeasance in office as provided by the Revised Penal Code is Direct Bribery (Art. 210) and Indirect Bribery (Art. 211).

Direct Bribery is committed by means of agreeing to perform, or by performing, in consideration of any offer, promise, gift, or present; accepting a gift in consideration of the execution of an act which does not constitute a crime, in connection with the performance of his official duty; and by agreeing to refrain or by refraining from doing his official duty in consideration of a gift or promise.

Indirect Bribery is, likewise, done by means of accepting gifts but that said gifts are offered by reason of his office and not in consideration of the agreement to perform an unlawful act.

Clearly, the law prohibits any public officer to perform an act in consideration of a gift or promise and to accept any gift offered in anticipation of future favor. Hence, the performance or doing of these unlawful acts constitute malfeasance.

Is nonfeasance a crime? 

Nonfeasance is a Crime. It is the failure to execute an act mandated to be done by a public officer or an officer of the law under his office or position. It connotes willful neglect or breach in the official duties vested upon them and the absence of a particular act to prevent damage or harm from taking place.

Hence, Article 208 of the Revised Penal Code provides a penalty of prision correcional in its minimum period and suspension upon any public officers or officers of the law who, as a result of deliberate evil intent or motive, refrained and neglected the act ought to be performed.

What is meant by misfeasance?

Misfeasance is defined as the improper performance of some act that might lawfully be done. It can be committed by any public officers taking part in the performance of public functions or duties in any of its branches as an employee, agent, subordinate official, of any rank and class as authorized by appointment, by popular election and by direct provision of the law.

It means that the offender is mandated to perform a task but such an act was done incorrectly. Examples of misfeasance provided under the Revised Penal Code are:

• Knowingly Rendering an unjust judgment (Art. 204, RPC),
• Rendering Judgment through negligence (Art. 205),
• Rendering unjust interlocutory order (Art. 206) and
• Malicious delay in the Administration of Justice (Art. 207).

The presence of bad faith is the ground for liability and necessary to constitute misfeasance. These acts must be made deliberately and maliciously with due disregard of the law and due to inexcusable negligence. Hence, a public officer who has performed an act by mere error and without malice is not criminally liable, provided that he acts in good faith.

Is there malversation of funds if the loan payments of government employees are used to provide salary to a newly hired government employee?

There arises a crime of malversation when public funds is misappropriated by an accountable officer for his own benefit to the prejudice of the government.  An accountable officer is one who, by reason of the duties of his office, is accountable for public funds or property. He must indeed be a public officer.²

The vital fact is that he is an employee of, or in some way connected with, the government and that in the course of his employment, he receives money or property belonging to the government for which he is bound to account. It is the nature of his duties, not the relatively important name given to the office, which it the controlling factor in determining whether or not the accused is an accountable public officer. (U. S. v. Velasquez,³ 32 Phil. 157) An emergency employee entrusted with the collection and/or custody of public funds must be held liable for malversation, if he misappropriates such funds.⁴

Now, in the query above, in order to provide an answer, we must first determine:

1] Who collected, is he an accountable officer?

2] Does the one who collected misappropriate the money for his personal benefit or in conspiracy with the newly hired employee to defraud the government and utilize the money for their own private interest?

3] It the loan payment by a government employee public funds?

If the answers to these questions are in the affirmative, then, the one who is tasked to collect the loan payments by a government employee and account for them to become part of public funds of such government agency or public corporation.

However, if only government to government placement of funds not being appropriated by an accountable officer for his/her personal benefits, then, the elements of malversation as a felony may be lacking, unless such act falls within the ambit of being a technical malversation.⁵

1. G. R. No. 5952. October 24, 1911[↩]
2. Article 203 of the Revised Penal Code. Who are public officers. – For the purpose of applying the provisions of this and the preceding titles of this book, any person who, by direct provision of the law, popular election or appointment by competent authority, shall take part in the performance of public functions in the Government of the Philippine Islands, of shall perform in said Government or in any of its branches public duties as an employee, agent or subordinate official, of any rank or class, shall be deemed to be a public officer.[↩]
3. G. R. No. L-10935, February 1, 1916[↩]
4. The Revised Penal Code, Criminal Law, Book 2, Reyes, 19th Ed., p. 445[↩]
5. Article 220 of the Revised Penal Code. Illegal use of public funds or property. – Any public officer who shall apply any public fund or property under his administration to any public use other than for which such fund or property were appropriated by law or ordinance shall suffer the penalty of prision correccional in its minimum period or a fine ranging from one-half to the total of the sum misapplied, if by reason of such misapplication, any damages or embarrassment shall have resulted to the public service. In either case, the offender shall also suffer the penalty of temporary special disqualification. x x x . . .[↩]