This  action was instituted by the Government of  the Philippine Islands, on December 16,  1929, for the purpose of recovering from the defendant Jose Topacio, former Director of Posts of the Government of the Philippine Islands, the sum of P281,772.23, alleged shortage in the accounts of the defendant as said director.  The defendant answered, denying liability, and  by way of cross-complaint,  he asked for judgment against the plaintiff for the sum of P3,600, as travel  expense  incurred  on official business, under direction of the Governor-General, and for the further sum of P4,200 as unpaid salary due to him  as Director of Posts.  In connection  with the  filing of the  original complaint the plaintiff caused an attachment to be issued and levied upon various properties belonging to the defendant; and, in the cross-complaint of the latter, judgment was sought, in the amount of P100,000, against the plaintiff for the wrongful suing out of said  attachment.  On January  8, 1930, an amended  complaint was  filed on behalf of the Government,  in which the amount of the claim of the plaintiff was reduced to P153,470.63.

Upon hearing the cause the trial court absolved the defendant  from the  plaintiff's  complaint;  and,  under  the cross-complaint, gave judgment for the defendant to recover of the plaintiff the sum of P2,773.42, in reimbursement of travel expense, as well as  for P4,200, as unpaid  salary. The court, however,  dismissed the cross-complaint with respect  to the item of damages for the  wrongful suing out of the attachment.

From this judgment both parties appealed: The Government from so much of the decision as absolved the defendant from liability for the shortage claimed, as well as from the affirmative judgment given in  favor of the defendant against the plaintiff under the cross-complaint for  travel expenses and  salary; while the defendant  appealed  from that feature of the decision which denied damages for the wrongful suing  out of the attachment.

The liability sought to be fixed  upon the defendant in this action arises under section 634 of the Administrative Code, which makes a director primarily accountable for all Government property pertaining to his bureau.  It  is not pretended in this case that the defendant personally appropriated or misapplied any of the property of the Bureau of Posts during the period with which we are here concerned, or at any other time; and the trial court in our opinion properly found that, in accordance with the proven facts, there was neither fraud nor collusion on the part of the defendant in the creation of any part of the alleged  shortage.  The question is purely a legal question as to the civil responsibility  of the defendant for a shortage imputed to him by the former Insular Auditor, Ben F. Wright,  under the circumstances hereinafter  stated.

The defendant Jose Topacio became Director of Posts on September  17, 1920, and remained such until March 27, 1930, when he resigned, upon request of the Governor-General, after the initiation of the present action.  The  shortage, or supposed shortage,  with which we are concerned pertains mostly,  if not entirely, to the years 1924 and 1925. The accounts  of the bureau  for  these  years were duly audited and approved by the Bureau of Audits.  Also, during the period when said shortage is  supposed  to  have occurred, one  Raymundo Reyes was superintendent of the property division of the Bureau of Posts.  Raymundo Reyes died on June 13, 1925, and his accounts were settled and cleared in ordinary course by the Bureau  of Audits without question.  At  the same time his liability under the Public-Bonding Law was canceled and payment was made to his heirs of the amounts due him for past services.

It should be noted that the Bureau  of Audits maintains a division in the Bureau of Posts, and the duties incumbent upon the Bureau  of Audits with respect to the business transacted from day to day in the Bureau of Posts are performed by this division.  During the  years referred to it had been the practice  in the accounting division to accept the certificate of the proper dispatching officer as sufficient proof of the dispatch of supplies  into the provinces.  The letter of the law requires that receipts should be presented for all property sent out, into the provinces or elsewhere; but the practice above-mentioned, of accepting the certificate of the dispatching officials as proof of the dispatch of property had long been followed, almost from necessity, as a result of the length of time necessary to receive receipts for proper  audit from the  places to which the materials were sent.   It was not  a good accounting practice to  be sure, but it  was followed with the entire consent of  the Bureau of Audits, and without objection from any one.

After the accounts of  the Bureau  of Posts for the years mentioned had long been settled, officials of the Bureau of Audits had their attention called, in 1926,  to irregularities in the business transacted  between the Bureau of Posts and the  firm of Viuda e Hijos de  Zamora, consisting  of what appeared to be short deliveries of material which the firm had contracted to supply for the use of the telegraph division of the Bureau of Posts.  The investigation that followed  did not  result in  fixing liability upon any one, but the incident  left an atmosphere of suspicion.   As a consequence, a reexamination of  the accounts of the Bureau  of Posts  for several  years back was thought  desirable.   In addition to this a physical inventory of the property in the hands of the bureau was made at the end of the year 1926. This  investigation brought two  facts into  prominence, which were: First, that  the books of the bureau showed a duplication  of  credit for property  to  the value of over P50,000, and, secondly, that there was an overage of stock on hand to the amount of P38,780.40.  The duplication of credit is called double-dropping and it consists of the apparent letting out of property, or the dropping  of materials from the accounts of the bureau, in separate items, duplicating each other as to the property involved.  An overage reveals  the existence of hidden property not  discoverable from the books.  The overage in this case apparently connects itself with the double-dropping that had occurred in the accounts of the bureau prior to the taking  of the physical inventory.

Under the  incentive supplied  by the facts above stated, the Insular Auditor decided to exercise the power, conferred in section 657 of the Administrative Code,  of  opening the accounts of the Bureau of Posts and stating a  new balance with respect to those accounts which had been settled within three years.   The matter was accordingly taken up, and a new balance was stated, showing a debit balance against the defendant, as Director of the Bureau, in a total amount of P153,470.63.  This balance consists of two items, namely, first, the sum of P13,137.33,  representing the items improperly credited twice to the bureau in its accounts,  and, secondly, the sum of P140,333.30, representing  the value of property dispensed by the Bureau of Posts during the period covered by the inquiry, without the production of the corresponding receipts.   These are the amounts for which the Government seeks to recover judgment in this  action.

With respect to the phenomenon  of  double-dropping, it is evident that it may result either from defect  in the bookkeeping system coupled with ineptitude or lack of skill  on the part of the persons charged with the duties of keeping the accounts and letting out the property, or it may result from a fraudulent design to aid in  the  embezzlement  of the property subjected to this process; and where, as in this case, the double-dropping appears to have been in great part skillfully designed to mislead the investigator, it is difficult to escape the conclusion that these duplicitous credits may in fact have been inserted in the accounts for a fraudulent purpose.   But it  is clear that double-dropping alone does not amount to a physical misappropriation or embezzlement of the property.  If knowingly done, double-dropping constitutes the consummated crime of falsification of an official document, but it is not a misappropriation of the physical  property, since, the property, after being doubly dropped, remains  as securely in the Government  bodegas as it was before  that  act was accomplished.  In  order to constitute a physical embezzlement of the property  it is necessary that something else should occur, such as the stealing of the property from the bodega, or the use of the double credit to cover short deliveries made by persons who are obligated to supply to the Government property of the sort for  which double  credit is given in the accounts.  To illustrate this,  let  it be supposed that  a contractor is  obligated to supply the Bureau of Posts with  two thousand telegraph poles.  By collusion with the proper person in the accounting division, one thousand telegraph poles are doubly dropped from the accounts of the bureau, leaving an overage of property of that sort in the. amount of one thousand poles.  Now,  to consummate the fraud, it is necessary for  the contractor to corrupt  some person in the office receiving the supplies, to the end  that one thousand poles may be there delivered  and a receipt issued for the two thousand which the contractor is under obligation to deliver.

It will thus be seen that a fraud of the sort contemplated involves a complicated process, inasmuch as there must be collusion not only  in the bookkeeping department but also in the receiving department.  Acting alone, the bookkeeping department may go on indefinitely entering duplicated credits by double-dropping, but this process does not profit the contractor in the least until he is able  to make a short delivery  and get  pay for materials in a greater  amount. In other words, the fact of overage, so far as it goes, proves not the consummation, but possibly, the frustration of the fraud contemplated  in the  act of double-dropping.   The plan for defrauding the  Government up to the point of making a short delivery may be completely frustrated by the accidental removal of the colluding official or servant in the receiving office.  It  results that proof of double- dropping alone is not sufficient to establish the fact that the property doubly dropped was in fact embezzled, in the sense necessary to charge the Director of the Bureau with the value of the property doubly dropped, especially when overages are found in excess of  the value of the property with which he is sought to  be charged.  As already suggested, there is no  proof whatever  in this  case showing that  any piece of property belonging to the Bureau of Posts,  and involved in  these accounts,  was ever stolen or misapplied by anybody, much less by the bureau chief, the defendant in this action.

With respect to the larger  amount of P140,333.30 claimed by the Government from  the defendant in consequence of his failure to produce  receipts for  property  sent into the provinces, it should be noted that the non-production of these receipts was as well known when the accounts were first audited and approved, as it was when the accounts were reopened and the second  statement made  by the auditor. When the first audit was made, the certificates of the  dispatching officer were accepted in lieu of the receipts,  and that practice, although irregular and contrary to the letter of the law, had been followed for years with the full knowledge and assent of the auditors charged with the supervision of these accounts.   It is not proved that any piece of property, of the value  of even as much as one peso, which was certified to have been dispatched, was not in fact received and used in the place or office to which it was certified as sent.  It is true that some of the papers relating to these shipments show a certain anomaly with respect to the mode of shipment, as where  it is  made to appear that materials of large size were sent by post, when they  must have been sent, if at all, by freight.   But this circumstance, though suspicious, is not sufficient to prove embezzlement.

The assumption underlying the case of the Government is that the  auditor has  lawfully exercised the power of opening the accounts and that his second statement imports all the verity and conclusiveness possessed by  any other statement of a balance by him;  and in this connection reliance is  placed upon section 652  of the Administrative Code, where, in the part here material to be noted, it is said that,  upon the trial of any civil proceeding  to recover an amount due the Government from an accountable officer, it shall be sufficient evidence, for the purpose of showing a balance against him, to produce  a transcript from the books and proceedings of the auditor showing the civil liability of the officer. We  are of the  opinion that  this strict view of the law is not as  applicable to accounts opened and restated under section 657  of the Administrative Code as it might be to statements made upon the original audit.

This brings us to the consideration of the meaning of the second and third paragraphs of the section cited, which read as follows:

"SEC. 657.  *   *  *

"When  any settled  account appears to be infected  with fraud, collusion, or error of calculation, or when new and material evidence is discovered,  the Insular Auditor may, within  three years after original  settlement,  open  such account, and after written notice to the person  concerned and  after  a  reasonable time  for his reply or appearance, may certify thereon a new balance.   A district auditor may exercise the same power in respect to settled accounts pertaining to the branches of the Government under his jurisdiction.

"Accounts once finally settled shall in no case  be opened or reviewed except as herein provided."

We are of the opinion that, under the authority of these provisions, the Insular Auditor may, in his discretion, open any settled account when it appears to him to be infected with fraud, collusion, or error of calculation, or when new and material evidence  is  discovered; and we are  unable to give our assent to the proposition advanced by the attorneys for the appellee to the effect that the fraud or collusion which supplies the basis for opening an account should be capable of demonstration before  the auditor exercises his discretion to go into the account.  Furthermore, after opening the account within the time allowed by  law, the Insular Auditor may  undoubtedly  state a new balance under the conditions stated in the section cited.   But we are of the opinion that  when  the auditor undertakes to state a new balance, he must be prepared to  prove, to  the  satisfaction of the court, the existence of the particular fraud  or error which vitiates the original statement.   In  this  connection it  should be remembered that the original settlement and statement of an account by the Bureau of Audits itself imports prima facie verity, and in order to overcome the presumption  that attaches to the original settlement, it  is incumbent upon the auditor to establish the fact that such original statement is vitiated by one or more of the factors mentioned in  the second paragraph of section  657, above quoted.   The  third paragraph of section 657 declares that accounts once  settled shall in no case be opened or reviewed except as provided in the second paragraph of said section; and this provision would  be entirely meaningless if the auditor were permitted to open an account upon mere suspicion of fraud,  or when new evidence which he considers material is discovered, and thereafter to declare a new balance to which the presumption of prima facie  verity will attach, without actual proof  of fraud or of the sufficiency of the evidence upon which the account was opened. No: the auditor must be prepared to prove the  facts justifying the new statement and overcoming the presumption of correctness attaching to the original  audit.   In the case before us no error has been shown and  no  new and material evidence discovered that would justify the declaration of a new balance.  Neither has any  fraud  or collusion been proved which  would show that the property with the value of which the  defendant is  charged has been embezzled or misappropriated by anybody.  It  results  that the Government is not entitled to judgment upon  the new balance declared by the Insular Auditor as the true balance.  The judgment appealed from must therefore  be affirmed in so far as it absolves the defendant from the cause, or causes, of action involved in the original complaint.

Error is assigned on the part of the Government to the action of the trial court in awarding to the defendant, under his cross-complaint, the sum of P4,200, due to him  as the salary pertaining  to the office of Director of  Posts from the time  that  the defendant returned to the Philippine Islands from a trip abroad in 1929, until  he submitted his resignation  in the latter part of March,  1930.   Upon this point it appears that the defendant was, during the  period stated, in the City of Manila  prepared to render service in the capacity of Director  of Posts,  but refrained from reporting for duty upon the  suggestion of his Department Head, the Secretary  of Commerce and  Communications, that,  if he should  do  so, the Governor-General would suspend  him.   It will be noted further that, if the defendant had  been suspended and later exonerated, as he will be exonerated as a result of this decision, he could have been paid,  in the discretion of  his  superior, the whole  of  the salary earned  during the period of suspension.   Of  course that rule  does  not apply to the present case because suspension did not occur; but  the  majority of the Justices who take part in this decision are of the opinion that, in view of the fact that the defendant was kept from performing his duties by superior  authority, he  is entitled to the salary  that he  would have earned if he had been permitted to perform those duties.

The Government also assigns error  to  the action  of the trial court in awarding to the  defendant,  under his cross-complaint, the sum of P2,773.42, in reimbursement for his travel expense in going  abroad on  official  business, as indicated in the opening part of this  decision.  These expenses are,  in our opinion, entirely proper and sufficiently proved, and inasmuch as the  auditor has refused to allow the claim,  the defendant is entitled to judgment for the amount stated.

With respect to the claim for damages resulting to the defendant from the wrongful  suing out by the Government of an  attachment upon  the defendant's property, we are of the  opinion that no recoverable damage has been shown.

From what has been  said it follows that the judgment appealed from is in all respects correct, and the same will be affirmed, with the consequent dissolution of the attachment issued at the  instance  of the Government.  So ordered,  without pronouncement as to costs.

Avanceña,  C.  J.,  Malcolm,  Villamor, Ostrand, Johns, and Villa-Real, JJ., concur.

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DISSENTING
JOHNSON, J.  :

I am fully persuaded from the record that the recommendation of the Attorney-General, that the judgment appealed from should be reversed and  that in its stead a judgment should be  rendered  by  this court against the defendant-appellant and in favor of the Government of the Philippine Islands for the sum of P153,470.63, plus the legal interest from the institution of the present action until said amount is fully paid,  together with costs, should be adopted.