G.R. No. 179344. August 3, 2011.
* procedure, the same holds true only for as long as the
PEOPLE OF THE PHILIPPINES, plaintiff-
appellee, vs. EDGARDO FERMIN y GREGORIO AND JOB
MADAYAG, JR., yBALDERAS, accused-appellants.
Criminal Law; Comprehensive Dangerous Drugs Act of
2002; In a prosecution for illegal sale of dangerous drugs, the
following elements must be proven: (1) that the transaction or
sale took place; (2) that the corpus delicti or the illicit drug was
presented as evidence; and (3) that the buyer and seller were
identified.—In a prosecution for illegal sale of dangerous drugs,
the following elements must be proven: (1) that the transaction
or sale took place; (2) that the corpus delicti or the illicit drug
was presented as evidence; and (3) that the buyer and seller
were identified. The presence of these elements is sufficient to
support the trial court’s finding of appellants’ guilt.
Same; Buy-bust Operations; The delivery of the contraband
to the poseur-buyer and the receipt of the marked money
consummate the buy-bust transaction between the entrapping
officers and the accused.—The delivery of the contraband to
the poseur-buyer and the receipt of the marked money
consummate the buy-bust transaction between the entrapping
officers and the accused. The presentation in court of the corpus
delicti—the body or substance of the crime—establishes the fact
that a crime has actually been committed.
_______________
* SECOND DIVISION.
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VOL. 655, AUGUST 3, 2011
People vs. Fermin
Same; Comprehensive Dangerous Drugs Act of 2002; While
Section 21(a) of the Implementing Rules and Regulations of
Republic Act No. 9165 excuses non-compliance with the afore-
quoted procedure, the same holds true only for as long as the
integrity and evidentiary value of the seized items are
properly preserved by the apprehending officers.—While Section
21(a) of the Implementing Rules and Regulations of Republic
Act No. 9165 excuses non-compliance with the afore-quoted
integrity and evidentiary value of the seized items are
properly preserved by the apprehending officers. Here,
the failure of the buy-bust team to comply with the procedural
requirements cannot be excused since there was a break in the
chain of custody of the substance taken from appellant.
APPEAL from a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Solicitor General for plaintiff-appellee.
Job B. Madayag for accused-appellant.
PEREZ, J.:
For our review is the Decision1 of the Special Fifteenth
Division of the Court of Appeals in CA-G.R. CR-HC No.
01852 dated 31 May 2007, convicting the herein accused-
appellants Edgardo Fermin y Gregorio and Job Madayag,
Jr. y Balderas guilty beyond reasonable doubt of violation of
Section 5, Article II of Republic Act No. 9165. The dispositive
portion of the assailed decision reads:
“WHEREFORE, the Decision of the Regional Trial Court of
Quezon City, Branch 103 in Criminal Case No. Q-03-119028,
finding accused-appellants Edgardo Fermin y Gregorio and Job
Madayag, Jr. y Balderas guilty beyond reasonable doubt of
violation of Article 5 [Section 5], Article II of R.A. 9165, and
sentencing them to suffer the
_______________
1 Penned by Associate Justice Marlene Gonzales-Sison with Associate Justices
Vicente S.E. Veloso and Arturo G. Tayag, concurring. Rollo, pp. 2-27.
93 94
94 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
penalty of LIFE IMPRISONMENT and to pay a fine of FIVE
HUNDRED THOUSAND PESOS (PhP 500, 000) each is
AFFIRMED in toto.”
The facts as presented by the prosecution follow:
At around 9 a.m. of 9 July 2003, a police informant went
to La Loma Police Station in Quezon City and reported that
two (2) male persons are engaged in illegal sale of drugs at
No. 93 Iba St., Brgy.San Isidro, Quezon City. The two were
eventually identified as the herein accused Job B. Madayag,
Jr. (Madayag, Jr.) alias “Rolan” and Edgardo G. Fermin
(Fermin) alias “Jon-Jon.” Acting upon the report, Station
Chief Police Senior Inspector Oliver M. Villanueva (Senior
Inspector Villanueva) created a team to conduct a buy-bust
operation. The team was composed of the police members of
the station namely, PO1 Roderick Valencia (PO1 Valencia),
PO1 Albert Mabutol (PO1 Mabutol), PO2 Ronald Pascua
(PO2 Pascua), PO2 Edsel Ibasco (PO2 Ibasco) and one
identified only as PO De Guzman. In their briefing, Senior
Inspector Villanueva gave each member of the team their
respective assignments; PO2 Ibasco will act as the poseur-
buyer with the rest of the team completing the cast. Senior
Inspector Villanueva gave PO2 Ibasco one (1) One Hundred
Peso Bill for use as marked money. PO2 Ibasco, in turn, put
his initial “EI” on the bill.2
At around 11 a.m. of the same day, the buy-bust team,
together with Senior Inspector Villanueva and the
confidential informant, went to the target area of operation
at No. 93 Iba St., Brgy. San Isidro in Quezon City on board
a Tamaraw FX. PO2 Ibasco and the confidential informant
proceeded to the area where they saw the subject, Madayag,
Jr., in front of the house. The rest of the team positioned
themselves, more or less ten to fifteen meters away from the
location of PO2 Ibasco, the informant and Madayag, Jr. The
informant then
_______________
2 TSN, 15 June 2004, pp. 1-6.
95
VOL. 655, AUGUST 3, 2011
People vs. Fermin
introduced PO2 Ibasco to Madayag, Jr. as a drug-dependent
who wanted to buy drugs. When Madayag, Jr. asked for
payment, PO2 Ibasco paid in the one-hundred-peso marked
money. Madayag, Jr. then called another person from inside
the house. The man, later identified as the co-accused
Fermin, came out and gave three (3) plastic sachets to
Madayag, Jr. Madayag, Jr. turned again to PO2 Ibasco and
showed him the three (3) plastic sachets at his palm and told
the poseur-buyer, “Dahil kasama ka na namin, mamili ka
dito sa tatlo para makasigurado kang di ka talo,
sisiguraduhin kong babalik ka.”3 PO2 Ibasco then took one
plastic sachet from Madayag Jr.’s palm and examined its
content. Being convinced that the content was positive
for shabu, PO2 Ibasco made the pre-arranged signal of
scratching his head in order to alert the other members of
the buy-bust team. The members then immediately rushed
to the location and introduced themselves as police officers.
PO2 Ibasco testified in his Direct Examination4 that PO2
Pascua got hold of Fermin while PO1 Valencia got hold of
Madayag, Jr. He added that PO2 Pascua was able to recover
the buy-bust money and plastic sachet from Fermin while
PO1 Valencia recovered a bente nueve knife from Madayag,
Jr. PO2 Ibasco added that the plastic sachet which was the
subject of illegal sale remained in his possession which he
marked “EI-JM,” while the rest were in the custody of PO2
Pascua. The buy-bust team returned to the police station
with the two (2) accused and all the [pieces of] of evidence
were turned over to the desk officer, and the desk officer
turned them over to the police investigator.5
PO2 Pascua affirmed in open court that he arrested and
bodily frisked Fermin and was able to recover one plastic
_______________
3 Id., at pp. 6-11; Id., at pp. 9-20.
95 4 TSN, 15 June 2004, pp. 1-36.
5 Id., at pp. 11-16.
96
96 SUPREME COURT REPORTS ANNOTATED
 People vs. Fermin 13 Id., at p. 24.
14 TSN, 15 June 2004, p. 33.
sachet and one (1) .38 Paltik Revolver. However, he
6
15 Id., at p. 32.
contradicted the previous statement of PO2 Ibasco that PO1 97
Valencia was the one who got hold of Madayag, Jr. He VOL. 655, AUGUST 3, 2011 97
testified that it was PO2 Ibasco who arrested Madayag, Jr. People vs. Fermin
and recovered from the latter the buy-bust money.7 He
Madayag, Jr. testified that before 12 noon of 9 July 2003,
contradicted himself when, on the earlier part of his
while he was buying some cigarettes from a nearby store, he
testimony he said that all the pieces of evidence including the
noticed that around eight (8) armed male persons wearing
plastic sachet which was the subject of sale were in his
civilian clothes, who turned out to be police officers, were in
possession until they were turned over to the
front of his house located at No. 93 Iba St., Brgy. San Isidro,
investigator,8 he later testified that PO2 Ibasco recovered one
Quezon City. He approached them to ask what they were
plastic sachet from Madayag, Jr.9
looking for. However, instead of answering, two of the police
Nonetheless, the two police officers were one in testifying
officers, one identified as PO1 Valencia, drew their firearms
that a Joint Affidavit about the conducted operation was
and poked them at Madayag, Jr.’s head.16 One of them then
executed by them at the police station.10
pulled the accused inside the house. He was then made to lie
PO2 Ibasco identified the one (1) hundred peso bill with
down on the cement floor of the veranda. The police officers
serial number ZT-427430 bearing his initial “EI” as the
entered the house and when they came out after around ten
marked money used in the buy-bust operation.11 PO2
minutes, the other accused Fermin, who was then sleeping
Pascua, on the other hand, admitted that he put his initial
inside one of the bedrooms of the same house, and his mother
“RP-EF” in all the plastic sachets he recovered12 and in the
were brought to the veranda.17 Fermin was also forced to lie
.38 paltik revolver.13
down by the police officers.18 PO1 Valencia recovered a
The confiscated sachets of shabu were turned over to the
cigarette lighter from Madayag, Jr., which the police
Police Crime Laboratory at Central Police District in Quezon
described as, “eto ang gamit mo sa shabu.”19 The police then
City for examination.14 Police Forensic Chemist Officer
took the two accused and Fermin’s mother to the police
Bernardino Banac, Jr. executed Chemistry Report No. D-
station where they were detained.20
605-03 finding the submitted specimen positive
Fermin, the other accused, said his mother was later
for methylamphetamine hydrochloride, a dangerous rug.15
released because she paid the police officers the amount of
The factual version presented by the defense is:
P11,000.00.21 He added that they remained in detention
_______________
6 TSN, 19 April 2004, p. 21. because they could not produce the additional demanded
7 Id., at p. 20. amount of P14,000.00.22
8 Id., at p. 23. Fermin corroborated the testimony of Madayag, Jr. in
9 Id., at p. 26. court. He said that at around 11:00 a.m. of 9 July 2003, while
10 Id., at p. 28.
11 TSN, 15 June 2004, p. 15. he was sleeping, together with his nieces, at one of the rooms
12 TSN, 19 April 2004, p. 23. of the house at No. 93 Iba St., Brgy. San Isidro, Quezon City,
 _______________
16 TSN, 28 February 2005, pp. 4-9.
17 TSN, 18 April 2005, p. 3.
18 TSN, 28 February 2005, pp. 10-14.
19 Id.
20 Id., at pp. 13-14 and 19.
21 TSN, 18 April 2005, p. 7.
22 Id., at p. 9.
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98 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
police officers entered the room and grabbed him on his nape
and arrested his mother.23 Then they were brought to the
veranda of the house where he saw Madayag, Jr. lying
facedown on the floor.24 He was ordered to lie down by
Valencia. He denied that a gun was taken from him or that
he was called by Madayag, Jr.25 He further denied having
given three (3) plastic sachets to Madayag, Jr. or that he was
frisked by the police for plastic sachets and money.26
Eventually, an Information was filed against
Fermin alias “Jon-Jon” and Madayag, Jr. alias “Rolan”
dated 14 July 2003 which reads:
“That on or about 9th day of July 2003, in Quezon city,
Philippines, the said accused, conspiring together,
confederating with and mutually helping one another, not being
authorized by law to sell, deliver, transport or distribute any
dangerous drug, did, then and there, willfully and unlawfully
sell, dispense, deliver, transport, distribute or act as a broker in
the said transaction, zero point eleven (0.11) gram of white
crystalline substance
containing Methylamphetamine Hydrochloride, a dangerous
drug.” 27
Upon arraignment, both the accused entered a plea of not
guilty.
On 19 December 2005, the trial court found both the
accused guilty of the crime charged. The dispositive portion
reads:
“WHEREFORE, in view of the foregoing, the court hereby
finds accused Job Madayag, Jr. y Balderas and accused
Edgardo Fermin y Gregorio GUILTY as conspirator of the crime
of drug pushing and each is hereby sentenced to suffer Life
Imprisonment and to pay a fine of P500,000 each.”
_______________
23 TSN, 26 April 2005, pp. 4-6.
24 Id., at p. 14.
25 Id., at pp. 14-15.
26 Id., at pp. 16-17.
27 RTC Decision. CA Rollo, p. 26.
99
VOL. 655, AUGUST 3, 2011 99
People vs. Fermin
Upon appeal before the Court of Appeals, the accused in
its Appellee’s Brief assigned the following errors:28
1. THE TRIAL COURT COMMITTED SERIOUS AND
REVERSIBLE ERROR IN FINDING THAT A BUY-
BUST OPERATION WAS CONDUCTED AGAINST
APPELLANT AT ABOUT 11:30 O’CLOCK IN THE
MORNING OF JULY 9, 2003 IN FRONT OF HOUSE
NO. 93 IBA ST., BRGY. SAN ISIDRO LABRADOR,
QUEZON CITY.
2. THE TRIAL COURT COMMITTED SERIOUS AND
REVERSIBLE ERROR IN FINDING APPELLANTS
GUILTY AS CONSPIRATORS OF THE CRIME OF
DRUG PUSHING AND SENTENCING EACH TO
SUFFER LIFE IMPRISONMENT AND TO PAY A
FINE OF P500,000.00 EACH.
3. THE TRIAL COURT COMMITTED SERIOUS AND
REVERSIBLE ERROR IN FAILING TO ACQUIT
APPELLANTS OF THE CHARGE ALLEGED IN THE
INFORMATION.
In its Decision, the Court of Appeals agreed with the
judgment of the trial court that the two accused were guilty
beyond reasonable doubt of the offense charged against
him.29
The appellate court found that the testimonies of PO2
Ibasco and PO2 Pascua were straightforward and candid as
against the claim of alibi or frame-up and extortion of the
two accused. Further, the appellate court found no motive on
the part of the police officers to frame up both of the accused.
Finally, it ruled against the alleged lack of “verisimilitude”
of the prosecution’s version because the improbabilities,
inconsistencies contradictions and self-contradictions did not
pertain to the actual buy-bust itself but only to peripheral
matters.
_______________
28 Appellee’s Brief. Id., at p. 46.
29 Decision of the Court of Appeals. Rollo, p. 44.
100
100 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
The Court’s Ruling
The defense’s main argument is whether or not there was
really a buy-bust operation on 9 July 2003. While we are not
in total agreement with all the submissions of the defense,
this Court is reversing the ruling of the lower courts
and now acquits the two accused of the crime charged.
In a prosecution for illegal sale of dangerous drugs, the
following elements must be proven: (1) that the transaction
or sale took place; (2) that the corpus delicti or the illicit drug
was presented as evidence; and (3) that the buyer and seller
were identified.30 The presence of these elements is sufficient
to support the trial court’s finding of appellants’ guilt.31 What
is material is the proof that the transaction or sale actually
took place, coupled with the presentation in court of the
prohibited or regulated drug. The delivery of the contraband
to the poseur-buyer and the receipt of the marked money
consummate the buy-bust transaction between the
entrapping officers and the accused.32 The presentation in
court of the corpus delicti—the body or substance of the
crime—establishes the fact that a crime has actually been
committed.33
We have repeatedly held that the trial court’s evaluation
of the credibility of witnesses and their testimonies is
entitled to
_______________
30 People v. Orteza, G.R. No. 173051, 31 July 2007, 528 SCRA 750, 757
citing People v. Bandang, G.R. No. 151314, 3 June 2004, 430 SCRA 570,
579.
31 People v. Miranda, G.R. No. 174773, 2 October 2007, 534 SCRA 552,
567.
32 People v. Nazareno, G.R. No. 174771, 11 September 2007, 532 SCRA
630, 636-637 citing People v. Orteza, supra note 30 at p. 758 citing
further People v. Zeng Hua Dian, G.R. No. 145348, 14 June 2004, 432
SCRA 25, 34.
33 People v. Gutierrez, G.R. No. 179213, 3 September 2009, 598 SCRA
92, 101 citing People v. Del Mundo, G.R. No. 169141, 6 December 2006,
510 SCRA 554, 562.
101
VOL. 655, AUGUST 3, 2011 101
People vs. Fermin
great respect and will not be disturbed on appeal. However,
this is not a hard and fast rule. We have reviewed such
factual findings when there is a showing that the trial judge
overlooked, misunderstood, or misapplied some fact or
circumstance of weight and substance that would have
affected the case.34
Cognate to this, while the entrenched rule is that the
assessment of witnesses and their testimonies is a matter
best undertaken by the trial court which had the opportunity
to observe the demeanor, conduct or attitude of the
witnesses, the findings of the lower court on this point will
be reversed on appeal, if it overlooked substantial facts and
circumstances which, if considered, would materially affect
the result of the case.35
 This Court believes that on application of the rule to the Q: After your companion Pascua and Valencia arrested
testimonies of the prosecution witnesses, the exception to the them, what happened next?
high value of the trial court’s findings surfaces. We find A: After the arrest, Pascua was able to get the buy-bust
irreconcilable conflicts in the recollections about the money and the plastic sachet sir.
principal factum probandumwhich is the buy-bust itself. The Q: From whom?
varying versions about the pre-operation, the illegal sale A: Fermin sir.
itself and the immediately preceding actions put doubts Q: How about from Madayag, was there anything
about what really transpired on 9 July 2003. recovered from him?
PO2 Ibasco, in his testimony of 15 June 2004, stated that A: Knife bente nueve sir.
after the transaction, PO2 Pascua arrested Fermin and Q: How about the plastic sachet that you able to buy
recovered the buy-bust money and the two plastic sachets; from him, where was it?
while PO1 Valencia was the one who arrested Madayag, Jr. A: At that time I was holding it sir.
and recovered from him a bente nueve knife. Q: You said Pascua arrested Fermin, he was able to
_______________ recover the buy-bust money and plastic sachets and
34 People v. Racho, G.R. No. 186529, 3 August 2010, 626 SCRA from Madayag, Valencia recovered the bente nueve?
633; Valdez v. People, G.R. No. 170180, 23 November 2007, 538 SCRA 611,
621-622; People v. Chua, G.R. Nos. 136066-67, 4 February 2003, 396 SCRA A: Yes sir.
657, 664. Q: What bente nueve?
35 People v. Hajili, 447 Phil. 283, 296; 399 SCRA 188, 197-198 A: Balisong sir.36
(2003); People v. Gonzales, Jr., 424 Phil. 336, 352-353; 373 SCRA 283, 298 However, PO2 Pascua in his 19 April 2004 testimony
(2002) citing People v. Tabones, 364 Phil. 439, 449; 304 SCRA 781, 791
(1999); People v. Ticalo, 425 Phil. 912, 917; 375 SCRA 278, 282 (2002).
stated that it was PO2 Ibasco who arrested Madayag, Jr. and
102 recovered the buy-bust money while he, on the other hand,
_______________
102 SUPREME COURT REPORTS ANNOTATED 36 TSN, 15 June 2004, pp. 11-13.
People vs. Fermin 103
Fiscal Araula: After giving the pre-arranged signal, what VOL. 655, AUGUST 3, 2011 103
happened? People vs. Fermin
Ibasco: My companions rushed towards us and arrested Fermin and recovered the .38 paltik revolver and
approached us sir. two plastic sachets.
Q: Now you said your companions approached the both Fiscal Araula: When Ibasco made the pre-arranged
accused at that time? signal what happened Mr. Witness?
A: Yes sir. Pascua: When we saw Ibasco made the pre-arranged
Q: Who approached Fermin? signal we rushed towards him.
A: It was Ronald Pascua sir. Q: Were you able to approach them at that time?
Q: How about Job Madayag? A: Yes, sir.
A: It was Valencia sir. Q: What happened when you rushed to the transaction?
 A: We introduced ourselves as police officer and I got
hold of Fermin, sir.
Q: How about Madayag, where was he when you got hold
of Fermin?
A: Ibasco got hold of him, sir.
Q: When you got hold of accused Fermin, what
happened?
A: After it bodily frisked.
Q: You frisked Fermin at that time?
A: Yes, sir.
Q: What was the result?
A: We recovered one plastic sachet.
Q: From whom?
A: Fermin and one (1) .38 paltik Revolver, sir.
Q: How about Madayag, where was he when you frisked
Fermin and got hold the two plastic sachets and got
one (1) .38 paltik?
A: I saw that the buy-bust money was recovered.
Q: Who recovered that buy-bust money?
A: Ibasco, sir.
Q: After you frisked Fermin and got two plastic sachets
and paltik revolver and Police Officer Ibasco recovered
the buy-bust money which was held in possession of
Madayag, what happened after that?
A: We proceeded to the vehicle.37
_______________
37 TSN, 19 April 2004, pp. 19-22.
104
104 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
There is another material contradiction. The testimony of
PO2 Ibasco dated 7 December 2004 corroborated by PO2
Pascua in his 5 October 2004 testimony was that
coordination was made with the Philippine Drug
Enforcement Agency (PDEA). However, as per Certification
of PDEA dated 26 July 2003,38 none was made. This was
affirmed by Police Inspector Avelino Ecaldre39 when he
testified that no coordination was made by the La Loma
Police Station with the PDEA.40 This was viewed by the trial
court as an administrative matter and not an element of a
valid entrapment. Nonetheless, the difference in the
prosecution testimonies is evident. And, evident too is the
attempt to project regularity in the buy-bust operation by the
disputed testimony on coordination. These are what matter.
Finally, PO2 Ibasco testified that the sachet which is the
subject of the illegal sale remained in his possession and was
subsequently marked as EI-JM.41 However, PO2 Pascua,
contradicted this statement when he testified on 19 April
2004 that the sachet was in his possession. This
contradiction will be underscored in the discussion on the
chain of custody of the corpus delicti.
The clear inconsistencies on important points cannot be
disregarded where the issue is one’s liberty. The
contradictory statements of the main prosecution witnesses
need not even be appreciated together with the defense
position. The proof of the supposed buy-bust operation rests
exclusively on the prosecution.42
_______________
38 RTC Decision. Rollo, p. 71.
39 Police Inspector and Chief, National Operation Center, Philippine
Drug Enforcement Agency (PDEA).
40 RTC Decision. Rollo, p. 73.
41 TSN, 15 June 2004, p. 13.
42 People v. Sanchez, G.R. No. 175832, 15 October 2008, 569 SCRA
194, 222.
105
VOL. 655, AUGUST 3, 2011 105
People vs. Fermin
We now examine the chain of custody of the corpus
delicti of this case. Section 21, paragraph 1, Article II of
Republic Act No. 9165 provides for the custody and
disposition of the confiscated illegal drugs, to wit:
(1) The apprehending team having initial custody and
control of the drugs shall, immediately after seizure
and confiscation, physically inventory and photograph
the same in the presence of the accused or the person/s
from whom such items were confiscated and/or seized,
or his/her representative or counsel, a representative
from the media and the Department of Justice (DOJ),
and any elected public official who shall be required to
sign the copies of the inventory and be given a copy
thereof;
Further, the Implementing Rules and Regulations of
Republic Act No. 9165, provides:
“SECTION 21. Custody and Disposition of Confiscated,
Seized and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential
Chemicals, Instruments/Paraphernalia and/or Laboratory
Equipment.—The PDEA shall take charge and have custody of
all dangerous drugs, plant sources of dangerous drugs,
controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so
confiscated, seized and/or surrendered, for proper disposition in
the following manner:
(a) The apprehending officer/team having initial
custody and control of the drugs shall, immediately after
seizure and confiscation, physically inventory and
photograph the same in the presence of the accused or the
person/s from whom such items were confiscated and/or
seized, or his/her representative or counsel, a
representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given
a copy thereof; Provided, that the physical inventory and
photograph shall be conducted at the place where the
search warrant is served; or at the nearest police station
or at the nearest office of the apprehending officer/team,
whichever is practicable, in case of warrantless
seizures; Provided, further, that non-
106
106 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
compliance with these requirements under justifiable
grounds, as long as the integrity and evidentiary value of
the seized items are properly preserved by the
apprehending officer/team, shall not render void and
invalid such seizures of and custody over said items
x x x.”
Strict compliance with the prescribed procedures is
required because of the unique characteristic of illegal drugs,
rendering them indistinct, not readily identifiable, and easily
open to tampering, alteration or substitution either by
accident or otherwise. Hence, we have the rules on the
measures to be observed during and after the seizure, during
the custody and transfer of the drugs for examination, and at
all times up to their presentation in court.43
While Section 21(a) of the Implementing Rules and
Regulations of Republic Act No. 9165 excuses non-
compliance with the afore-quoted procedure, the same
holds true only for as long as the integrity and
evidentiary value of the seized items are properly
preserved by the apprehending officers. Here, the
failure of the buy-bust team to comply with the procedural
requirements cannot be excused since there was a break in
the chain of custody of the substance taken from appellant. It
should be pointed out that the identity of the seized
substance is established by showing its chain of
custody.44
The following are the links that must be established in
the chain of custody in a buy-bust situation: first, the seizure
and marking, if practicable, of the illegal drug recovered from
the accused by the apprehending officer; second, the turnover
of the illegal drug seized by the apprehending officer to the
investigating officer; third, the turnover by the investigating
officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and
submission of the
_______________
43 People v. Magpayo, G.R. No. 187069, 20 October 2010, 634 SCRA
441.
44 Id.
107
VOL. 655, AUGUST 3, 2011
People vs. Fermin
marked illegal drug seized from the forensic chemist to the
court.45
As provided by the implementing rules and
jurisprudence, strict compliance of the requisites under
Section 21 of Republic Act No. 9165 can be disregarded as
long as the evidentiary value and integrity of the illegal drug
are properly preserved; and its preservation can be well
established if the chain of custody of illegal drug was
unbroken. The break is clear in this case.
It must be noted that the police officer who had the initial
custody and control of the illegal drug was not clearly
identified. In the preceding discussion on the inconsistency
in the statements of PO2 Ibasco and PO2 Pascua, it was
pointed out that PO2 Ibasco admitted that he was in
possession of the confiscated drug, but this was contradicted
by PO2 Pascua who testified that he was the one who was in
possession of the illegal drug which was the subject of sale
when it was brought to the police station.
Fiscal Araula: After both accused were arrested and recovered
buy-bust money and two plastic sachet[s], in which you
recovered from the accused, what happened next?
PO2 Ibasco: We turned over all the evidence to the desk officer
and the desk officer turned it to the police investigator for
proper investigation sir.
xxxx
Fiscal Araula: All the recovered evidence that we recovered
from the accused, can you tell to this Honorable Court what are
these?
PO2 Ibasco: The plastic sachet that I bought, paltik, two
sachets, one bente nueve and the buy-bust money sir.
Fiscal Araula: Who was in possession of the evidence
when your group went to the police station?
107 _______________
45 Id.
108
108 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
PO2 Ibasco: I was the one holding the plastic sachet what
I was able to buy, my companion was holding on the
items that they recovered, sir. 46
In his direct examination, PO2 Pascua testified
differently:
Fiscal Araula: Now, who was in possession of that two plastic
sachets and the paltik revolver taken from Fermin at that time
when you proceeded to La Loma Police Station?
PO2 Pascua: I was in possession of that, together with
the paltik, sir.
Fiscal Araula: How about the P100.00 bill and the plastic
sachet which was the subject of sell [sale], who was in
possession?
PO2 Pascua: All of them were in my possession, sir. 47
Additionally, no photograph was taken of the substance
immediately after its supposed seizure.
Atty. Madayag: When the alleged shabu was confiscated,
was there any photographs taken?
PO2 Pascua: No sir.
Atty. Madayag: That is in violation of Section 21 of [R.A. No.]
9165. So there was no inventory and photographs?
PO2 Pascua: There was an inventory.
Atty. Madayag: On the night of the incident?
PO2 Pascua: All the evidences were turned over to Villanueva.
xxxx
Atty. Madayag: Where was the inventory made?
PO2 Pascua: At the office.
Atty. Madayag: At the office there was no
photographing?
PO2 Pascua: None, sir. 48
_______________
46 TSN, 15 June 2004, pp. 15-16.
47 TSN, 19 April 2004, pp. 22-23.
48 TSN, 5 October 2004, pp. 20-23.
109
VOL. 655, AUGUST 3, 2011
People vs. Fermin
The fundamentals of a criminal prosecution were, indeed,
disregarded. In considering a criminal case, it is critical to
start with the law’s own starting perspective on the status of
the accused—in all criminal prosecutions, he is presumed
innocent of the charged laid unless the contrary is proven
beyond reasonable doubt.49 The burden lies on the
prosecution to overcome such presumption of innocence by
presenting the quantum of evidence required. To repeat, the
prosecution must rest on its own merits and must not rely on
the weakness of the defense. And if the prosecution fails to
meet the required amount of evidence, the defense may
logically not even present evidence on its own behalf. In
which case, the presumption prevails and the accused should
necessarily be acquitted.50
The prosecution failed to prove beyond reasonable doubt
the guilt of the two accused. The rule that high respect must
be accorded the lower courts in their findings of facts cannot
be misused to diminish the required evidence to overcome
the presumption of innocence of the accused as guaranteed
by the Constitution.
WHEREFORE, the appeal is GRANTED. The 31 May
2007 Decision of the Court of Appeals in CA-G.R. CR-HC No.
01852 in affirming the judgment of conviction dated 19
December 2005 of the Regional Trial Court, Branch 103 of
Quezon City in Criminal Case No. Q-03-119028 is hereby
REVERSED and SET ASIDE. Accused-appellant Edgardo
Fermin y Gregorio and Job Madayag, Jr. yBalderas are
hereby ACQUITTED and ordered immediately released from
detention unless their continued confinement is warranted
from some other cause or ground.
_______________
49 People v. Capuno, G.R. No. 185715, 19 January 2011, 640 SCRA
233; People v. Sanchez, supra note 42 at p. 207.
50 People v. Dela Cruz, G.R. No. 177222, 29 October 2008, 570 SCRA
109 273, 283.
110
110 SUPREME COURT REPORTS ANNOTATED
People vs. Fermin
SO ORDERED.
Carpio (Chairperson), Leonardo-De
Castro, Brion and Sereno, JJ., concur.
**
Appeal granted, judgment reversed and set aside.
Accused-appellants acquitted and ordered immediately
released.
Note.—Neither law nor jurisprudence requires the
presentation of any of the money used in a buy-bust
operation. Much less is it required that the money be
marked. In fact, not even the absence or non-presentation of
the marked money would weaken the evidence for the
prosecution. (People vs. Suan, 613 SCRA 367 [2010])
——o0o——

G.R. No. 192591. June 29, 2011.*
EFREN L. ALVAREZ, petitioner, vs. PEOPLE OF THE
PHILIPPINES, respondent.
Words and Phrases; The use of the disjunctive “or” connotes
that the two modes need not be present at the same time. In other
words, the presence of one would suffice for conviction.—This
Court has clarified that the use of the disjunctive word “or”
connotes that either act of (a) “causing any undue injury to any
party, including the Government”; and (b) “giving any private
party any unwarranted benefits, advantage or preference,”
qualifies as a violation of Section 3(e) of R.A. No. 3019, as
amended. The use of the disjunctive “or” connotes that the two
modes need not be present at the same time. In other words, the
presence of one would suffice for conviction.
_______________
** Designated acting member per Special Order No. 1006 dated 10 June
2011.
* FIRST DIVISION.
53
VOL. 653, JUNE 29, 2011
Alvarez vs. People
Anti Graft and Corrupt Practices Act; Section 3(e) of R.A.
No. 3019; The third element of Section 3(e) of R.A. No. 3019 may
be committed in three ways, i.e., through manifest partiality,
evident bad faith or gross inexcusable negligence. Proof of any of
these three in connection with the prohibited acts mentioned in
Section 3(e) of R.A. No. 3019 is enough to convict.—The third
element of Section 3(e) of R.A. No. 3019 may be committed in
three ways, i.e., through manifest partiality, evident bad faith
or gross inexcusable negligence. Proof of any of these three in
connection with the prohibited acts mentioned in Section 3(e) of
R.A. No. 3019 is enough to convict. Damage or injury caused by
petitioner’s acts though alleged in the information, thus need
not be proven for as long as the act of giving any private party
unwarranted benefits, advantage or preference either through
manifest partiality, evident bad faith or gross inexcusable
negligence was satisfactorily established. Contrary to
petitioner’s assertion, the prosecution was able to successfully
demonstrate that he acted with manifest partiality and gross
inexcusable negligence in awarding the BOT contract to an
unlicensed and financially unqualified private entity.
PETITION for review on certiorari of the decision and
resolution of the Sandiganbayan, Fourth Division.
The facts are stated in the opinion of the Court.
Aguirre, Aportadera, Gavero, Sandico & Associates for
petitioner.
The Solicitor General for respondent.
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule
45 of the 1997 Rules of Civil Procedure, as amended, seeking
to reverse and set aside the Decision1 dated November 16,
2009 and Resolution2 dated June 9, 2010 of the Sandigan-
_______________
53 1 Rollo, pp. 53-85. Penned by Associate Justice Jose R. Hernandez with
Associate Justices Gregory S. Ong and Roland B. Jurado, concurring.
2 Id., at pp. 109-117.
54
54 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
bayan’s Fourth Division finding the petitioner guilty beyond
reasonable doubt of violation of Section 3(e) of Republic Act
(R.A.) No. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act.
Petitioner Efren L. Alvarez, at the time of the subject
transaction, was the Mayor of the Municipality (now Science
City) of Muñoz, Nueva Ecija. In July 1995, the Sangguniang
Bayan (SB) of Muñoz under Resolution No. 136, S-95 invited
Mr. Jess Garcia, President of the Australian-Professional,
Inc. (API) in connection with the municipal government’s
plan to construct a four-storey shopping mall (“Wag-wag
Shopping Mall”), a project included in its Multi-Development
Plan. Subsequently, it approved the adoption of the project
under the Build-Operate-Transfer (BOT) arrangement in the
amount of P240 million, to be constructed on a 4,000-square-
meter property of the municipal government which is located
at the back of the Municipal Hall. API submitted its proposal
on November 7, 1995.3
On February 9, 1996, an Invitation for proposals to be
submitted within thirty (30) days, was published
in Pinoy tabloid. On April 12, 1996, the Pre-qualification,
Bids and Awards Committee (PBAC) recommended the
approval of the proposal submitted by the lone bidder, API.
On April 15, 1996, the SB passed a resolution authorizing
petitioner to enter into a Memorandum of Agreement (MOA)
with API for the project. Consequently, on September 12,
1996, petitioner signed the MOA with API, represented by
its President Jesus V. Garcia, for the construction of the
Wag-Wag Shopping Mall under the BOT scheme whereby
API undertook to finish the construction within 730 calendar
days.4
On February 14, 1997, the groundbreaking ceremony was
held at the site once occupied by government structures
which included the old Motor Pool, the old Health Center and
a Agreement, notwithstanding the fact that API was and is not a
_______________
3 Id., at pp. 153-155, 166-195.
4 Id., at pp. 147-152.
55
VOL. 653, JUNE 29, 2011
Alvarez vs. People
semi-concrete one-storey building that housed the
Department of Agriculture, BIR Assessor, old Post Office,
Commission on Elections and Department of Social Welfare
and Development. These structures were demolished at the
instance of petitioner to give way to the construction project.
Thereafter, API proceeded with excavation on the area (3-
meter deep) and a billboard was put up informing the public
about the project and its contractor. However, no mall was
constructed as API stopped work within just a few months.
On August 10, 2006, petitioner was charged before the
Sandiganbayan for violation of Section 3(e) of R.A. No. 3019
(SB-06-CRM-0389), under the following Information:
“That on or about 12 September 1996, and sometime prior or
subsequent thereto, in the then Municipality (now Science City)
of Muñoz, Nueva Ecija, and within the jurisdiction of this
Honorable Court, the above-named accused EFREN L.
ALVAREZ, a high ranking public official, being then the Mayor
of Muñoz, Nueva Ecija, taking advantage of his official position
and while in the discharge of his official or administrative
functions, and committing the offense in relation to his office,
acting with evident bad faith or gross inexcusable negligence or
manifest partiality did then and there willfully, unlawfully and
criminally give the Australian-Professional Incorporated (API)
unwarranted benefits, advantage or preference, by awarding to
the latter the contract for the construction of Wag-Wag
Shopping Mall in the amount of Two Hundred Forty Million
Pesos (Php 240,000,000.00) under a Buil[d]-Operate-Transfer
duly-licensed construction company as per records of the
Philippine Construction Accreditation Board (PCAB), which
construction license is a pre-requisite for API to engage in
construction of works for the said municipal government and
55 that API does not have the experience and financial
qualifications to undertake such costly project among others, to
the damage and prejudice of the public service.
CONTRARY TO LAW.” 5
_______________
5 Records (Vol. 1), pp. 1-2.
56
56 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
On September 22, 2006, petitioner was duly arraigned,
pleading not guilty to the charge.
At the trial, petitioner testified that during his term as
Mayor of Muñoz, the municipal government planned to
borrow money from GSIS to finance the proposed Wag-Wag
Shopping Mall project. He learned about API when then
Vice-Mayor Romeo Ruiz and other SB members showed him
a copy of publication/advertisement in the Manila Bulletin
and Business Bulletin showing that API was then building
similar BOT projects for construction of shopping malls in
Lemery, Batangas (P150 million) and in Calamba, Laguna
(P300 million). Because it will not entail government funds
and is an alternative to availment of GSIS loan, petitioner
appointed Vice-Mayor Ruiz and other SB members to study
the matter. A resolution was subsequently passed by the SB
inviting API for detailed information on their mall projects.
Thereafter, the SB approved the construction of Wag-Wag
Shopping Mall under BOT scheme, which was favorably
endorsed by the Municipal Development Council. A public
hearing was also conducted by Municipal Engineer Armando
E. Miranda. On November 8, 1995, the municipal
government received the “unsolicited proposal” of API for the
construction of Wag-Wag Shopping Mall. For three weeks, an
Invitation to Bid was published in the Pinoy tabloid. But it
was the lone bidder, API, whose proposal was eventually
recommended by the PBAC and approved by the SB.6
Petitioner emphasized that not a single centavo was spent
by the municipal government for the Wag-Wag Shopping
Mall project. It was an unsolicited proposal under the BOT
law. API was required to submit pre-qualification
statements containing, among others, their accomplished
projects. Eventually the SB passed a resolution authorizing
him to enter into the MOA with API. The municipal
government issued the notice of award to API on September
16, 1996 in which it
_______________
6 TSN, April 8, 2008, pp. 5-24.
57
VOL. 653, JUNE 29, 2011 57
Alvarez vs. People
required the contractor to post notices prior to the start of
the project and to submit other requirements such as perfor-
mance bond. However, API did not comply as its counsel,
Atty. Lydia Y. Marciano said these are not required under
the BOT law (R.A. No. 7718) since there will be no
government undertaking, equity or subsidy in the project.
After securing an environmental clearance certificate from
DENR, the groundbreaking ceremony was held on February
1, 1997. API, as promised, paid P500,000.00 as disturbance
or relocation fee considering that the municipal government
has caused the demolition of old buildings at the site. A
certification7 of such payment was issued by City Treasurer
Luzviminda P. De Leon and City Accountant June Franklyn
A. Fernandez on February 5, 2007. The materials were then
utilized for the construction of the new motor pool and new
City Library. Thereafter, API began excavating an area of 30
x 30 meters (1,000 sq. ms.), about 3 meters deep. However,
only the sales office was constructed. The project was not
completed and API gave as excuse the 1997 financial crisis.
They wrote a letter to Mr. Garcia reminding him of the 730-
days completion period but then he was nowhere to be found
and did not answer the letter. Hence, the SB authorized him
to file a case against API, and later also granted him
authority to enter into a compromise agreement in Civil Case
No. 161-SD 98). Their compromise agreement was approved
but they could not find a copy anymore because the Regional
Trial Court at Balok, Sto. Domingo, Nueva Ecija where the
settlement was done, was burned down.8
On cross-examination, petitioner claimed that had the
municipal government then borrowed funds from the GSIS,
they envisioned annual return of P5 million from a P40
million loan for a modest mall (but for an area of 4,000 square
meters, the loan would have to be P80 million). For a period
of 8 years, the municipality would have an income of P40
million
_______________
7 Rollo, p. 146.
8 TSN, April 8, 2008, pp. 24-50.
58
58 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
and the GSIS can be paid. As to the contractor’s financial
capability, it presented a credit line of P150 million to P250
million for Australian-Professionals Realty, Inc. (APRI).
Petitioner clarified that API and APRI were one and the
same entity having the same board of directors, but when
asked if he verified this from the Securities and Exchange
Commission (SEC), he answered in the negative. Petitioner
asserted that it was the Vice-Mayor who is
accountable for this project as he headed the working
panel. As to whether API was a licensed contractor, he
admitted that he did not verify this before awarding the BOT
contract involving an infrastructure project. He insisted that
the Wag-Wag Shopping Mall Project, being an unsolicited
proposal under BOT law, is exempt from the pre-
qualification requirement although they still conducted it. As
far as he knows, the project proponent in this case is the
Municipality of Muñoz. However, petitioner admitted that he
is not familiar with the BOT law. He also admitted that the
Invitation published stated a shorter period of submission of
proposal (30 days instead of 60 days provided under the BOT
law) and that he just signed the said notice without
consulting their legal counsel.9
On November 16, 2009, the Sandiganbayan rendered
judgment convicting the petitioner after finding that: (1)
petitioner railroaded the project; (2) there was no competitive
bidding; (3) the contractor was totally unqualified to
undertake the project; and (4) the provisions of the BOT law
and relevant rules and regulations were disregarded and not
followed. The said court also found that the municipal
government suffered damage and prejudice with the
resulting loss of several of its buildings and offices, and
having deployed its resources including equipment,
personnel and financial outlay for fuel and repairs in the
demolition of the said structures. Damage suffered by the
municipal government was quantified at P4.8 million, or 2%
of the total project cost of
_______________
9 Id., at pp. 53-77.
59
VOL. 653, JUNE 29, 2011 59
Alvarez vs. People
P240 million, representing the amount of liquidated
damages due under the performance security had the same
been posted by the contractor as required by law. As to the
allegation of conspiracy, the Sandiganbayan held that such
was adequately shown by the evidence, noting that this is
one case where the Ombudsman should have included the
entire Municipal Council in the information for the latter had
conspired if not abetted all the actions of the petitioner in his
dealings with API to the damage and prejudice of the
municipality.
The dispositive portion of the decision reads:
“ACCORDINGLY, accused Efren L. Alvarez is found guilty
beyond reasonable doubt for [sic] violation of Section 3 (e) of
Republic Act No. 3019 and is sentenced to suffer in prison the
penalty of 6 years and 1 month to 10 years. He also has to suffer
perpetual disqualification from holding any public office and to
indemnify the City Government of Muñoz (now Science), Nueva
Ecija the amount of Four Million Eight Hundred Thousand
Pesos (Php 4,800,000.00) less the Five Hundred Thousand
Pesos (Php 500,000.00) API earlier paid the municipality as
damages.
Costs against the accused.
SO ORDERED.” 10
The Sandiganbayan likewise denied petitioner’s motion
for reconsideration. It ruled that upon examination of
Section 4-A of R.A. No. 6957 as amended by R.A. No. 7718, it
was clear that petitioner, with manifest partiality and gross
inexcusable negligence, failed to comply with the
requirements and procedures for competitive bidding in
unsolicited proposals. It also reiterated that API was a
contractor and not a mere project proponent; hence, the
license requirement applies to it. Petitioner’s defense that he
merely executed the resolutions of the SB was also rejected
because as Chief Executive of the Municipality of Muñoz, it
was his duty to protect the credits, rights and properties of
the municipality and to exer-
_______________
10 Rollo, p. 84.
60
60 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
cise efficient, effective and economical governance for the
general welfare of the municipality and its inhabitants under
Section 444, R.A. No. 7160 (Local Government Code of 1991).
Significant acts of the petitioner also showed that he opted
to enter into the contract with API despite reckless disregard
of the law.
Hence, this petition raising the following issues:
1. Whether or not the Honorable Sandiganbayan failed to observe the
requirement of proof beyond reasonable doubt in convicting the
Accused-Petitioner;
2. Whether or not the Honorable Sandiganbayan failed to appreciate the
legal intent of the BOT project;
3. Whether or not the Honorable Sandiganbayan utterly failed to
appreciate that the BOT was a lawful project of the Sangguniang
Bayan and not the project of the Mayor Accused-Petitioner herein;
and
4. Whether or not the Honorable Sandiganbayan utterly failed to
appreciate that there was no damage on the then Municipality of
Muñoz as contemplated by law, to warrant the conviction of the
Accused-Petitioner.11
We deny the petition.
Petitioner was charged with violation of Section 3(e) of
R.A. No. 3019. To be convicted under the said provision, the
following elements must be established:
1. The accused must be a public officer discharging administrative,
judicial or official functions;
2. He must have acted with manifest partiality, evident bad faith or
inexcusable negligence; and
3. That his action caused any undue injury to any party, including the
government, or giving any private party un-
_______________
11 Id., at p. 20.
61
VOL. 653, JUNE 29, 2011 61
Alvarez vs. People
warranted benefits, advantage or preference in the discharge of his
functions.12
In this case, the information alleged that while being a
public official and in the discharge of his official functions
and taking advantage of such position, petitioner “acting
with evident bad faith or gross inexcusable negligence or
manifest partiality” unlawfully gave API “unwarranted
benefits, advantage or preference” by awarding to it the
contract for the construction of the Wag-Wag Shopping Mall
under the BOT scheme despite the fact that it was not a
licensed contractor and “does not have the experience and
financial qualifications to undertake such costly project,
among others, to the damage and prejudice of the public
service.”
Petitioner argues that he cannot be held liable under
Section 3(e) of R.A. No. 3019 since the Municipality of Muñoz
did not disburse any money and the buildings demolished on
the site of construction have been found to be a nuisance and
declared structurally unsafe, as per notice issued by the
Municipal Building Official. He points out that in fact, a
demolition permit has been issued upon his application in
behalf of the municipal government. API also paid
P500,000.00 demolition/relocation fee.
We disagree.
This Court has clarified that the use of the disjunctive
word “or” connotes that either act of (a) “causing any undue
injury to any party, including the Government”; and (b)
“giving any private party any unwarranted benefits,
advantage or preference,” qualifies as a violation of Section
3(e) of R.A. No. 3019, as amended.13 The use of the disjunctive
“or” connotes
_______________
12 Cabrera v. Sandiganbayan, G.R. Nos. 162314-17, October 25, 2004,
441 SCRA 377, 386.
13 Santos v. People, G.R. No. 161877, March 23, 2006, 485 SCRA 185,
194-195, citing Uy v. Sandiganbayan, G.R. No. 100334, December 5, 1991
and Santiago v. Garchitorena, G.R. No. 109266, December 2, 1993, 228
SCRA 214, 222-223.
62
62 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
that the two modes need not be present at the same time.
In other words, the presence of one would suffice for
conviction.14
As we explained in Bautista v. Sandiganbayan:15
“Indeed, Sec. 3, par. (e), RA 3019, as amended, provides as
one of its elements that the public officer should have acted by
causing any undue injury to any party, including the
government, or by giving any private party unwarranted
benefits, advantage or preference in the discharge of his
functions. The use of the disjunctive term “or” connotes that
either act qualifies as a violation of Sec. 3, par. (e), or as aptly
held in Santiago, as two (2) different modes of committing the
offense. This does not, however, indicate that each mode
constitutes a distinct offense, but rather, that an accused may
be charged under either mode or under both.” (Underscoring
16
supplied.)
The Court En Banc likewise held in Fonacier v.
Sandiganbayan17that proof of the extent or quantum of
damage is not essential. It is sufficient that the injury
suffered or benefits received can be perceived to be
substantial enough and not merely negligible.18Under the
second mode of the crime defined in Section 3(e) of R.A. No.
3019 therefore, damage is not required. In order to be found
guilty under the second mode, it suffices that the accused has
given unjustified favor or benefit to another, in the exercise
of his official, administrative or judicial functions.19
The third element of Section 3(e) of R.A. No. 3019 may be
committed in three ways, i.e., through manifest partiality,
_______________
14 Sison v. People, G.R. Nos. 170339 & 170398-403, March 9, 2010, 614
SCRA 670, 681, citing Quibal v. Sandiganbayan (Second Division), G.R.
No. 109991, May 22, 1995, 244 SCRA 224.
15 G.R. No. 136082, May 12, 2000, 332 SCRA 126, 135.
16 As cited in Cabrera v. Sandiganbayan, supra note 12.
17 G.R. Nos. 50691, 52263, 52766, 52821, 53350 & 53397, December 5,
1994, 238 SCRA 655.
 18 Id., at p. 688. See also Soriquez v. Sandiganbayan, G.R. No. 153526,
October 25, 2005, 474 SCRA 222, 230.
19 Sison v. People, supra 14 at p. 682.
63
VOL. 653, JUNE 29, 2011
Alvarez vs. People
evident bad faith or gross inexcusable negligence. Proof
of any of these three in connection with the prohibited acts
mentioned in Section 3(e) of R.A. No. 3019 is enough to
convict.20 Damage or injury caused by petitioner’s acts
though alleged in the information, thus need not be proven
for as long as the act of giving any private party unwarranted
benefits, advantage or preference either through manifest
partiality, evident bad faith or gross inexcusable negligence
was satisfactorily established. Contrary to petitioner’s
assertion, the prosecution was able to successfully
demonstrate that he acted with manifest partiality and gross
inexcusable negligence in awarding the BOT contract to an
unlicensed and financially unqualified private entity.
R.A. No. 6957 as amended by R.A. No. 7718, requires that
a BOT project be awarded to the bidder who has satisfied the
minimum requirements, and met the technical, financial,
organizational and legal standards provided in the BOT Law.
Section 5 of said law provides:
“SEC. 5. Public Bidding of Projects.—x x x
In the case of a build-operate-and-transfer arrangement, the
contract shall be awarded to the bidder who, having satisfied
the minimum financial, technical, organizational and
legal standards required by this Act, has submitted the
lowest bid and most favorable terms for the project, based on
the present value of its proposed tolls, fees, rentals and charges
over a fixed term for the facility to be constructed, rehabilitated,
operated and maintained according to the prescribed minimum
design and performance standards, plans and specifications.
x x x” (Emphasis supplied.)
Foremost of these minimum legal standards is the license
accreditation of a contractor required under R.A. No. 4566
otherwise known as the Contractors’ License Law. The
63 Philippine Licensing Board for Contractors created under
said law is mandated to ensure that prospective contractors
pos-
_______________
20 Fonacier v. Sandiganbayan, supra note 18; Sison v. People, id., at
p. 679.
64
64 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
sess “at least two years of experience in the construction
industry, and knowledge of the building, safety, health and
lien laws of the Republic of the Philippines and the
rudimentary administrative principles of the contracting
business” which it deems necessary “for the safety of the
contracting business of the public.”21 In fact, a contractor
must show that he is licensed by the board before his bid will
be considered.22 As a general rule therefore, the prospective
contractor for government infrastructure projects must have
been duly licensed as such pursuant to R.A. No. 4566. API
not being a licensed contractor as per the
Certification23 issued by Philippine Contractors
Accreditation Board (PCAB) board secretary Aaron C.
Tablazon, is thus not qualified to participate in the bidding
and much less be awarded the BOT project for the
construction of Wag-Wag Shopping Mall.
Petitioner claimed that there was compliance with the
law saying that API was not a contractor but a mere project
proponent, for which a license is not a requisite to undertake
BOT projects. But the Sandiganbayan correctly rejected this
theory as the clear terms of the MOA itself confirm that API
itself undertook to construct the Wag-Wag Shopping Mall,
thus:
TERMS AND CONDITIONS
I. THE PROJECT SITE
1. The FIRST PARTY [Municipality of Muñoz] shall make
available unto the SECOND PARTY a FOUR
THOUSAND (4,000) SQUARE METERS lot located at
Muñoz, Nueva Ecija where the SECOND PARTY
[API] shall build for the FIRST PARTY a commercial
building in accordance with this Memorandum of
Agreement, RA 6957
_______________
21 Sec. 20, R.A. 4566.
22 Sec. 36, R.A. 4566.
23 Exhibit “H”, Prosecution’s Exhibits.
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Alvarez vs. People
AND RA 7718 as well as RA 7160 otherwise known as the
Local Government Code of 1991.
II. PLANS AND SPECIFICATIONS
1. The commercial building, to be known as the WAG-
WAG SHOPPING MALL, shall be constructed by
the SECOND PARTY strictly in accordance with plans,
specifications, engineering and construction designs
prepared by the SECOND PARTY and duly reviewed
and approved by the FIRST PARTY. x x x
xxxx
III. CONSTRUCTION
xxxx
3. The FIRST PARTY shall issue a written Notice to
Proceed in favor of the SECOND PARTY. The
SECOND PARTY, shall mobilize within 60 days from
clearing of the site for official groundbreaking.
4. The SECOND PARTY hereby warrants that it
shall finish the constructionof the WAG-WAG
SHOPPING MALL within SEVEN HUNDRED
THIRTY (730) CALENDAR DAYS counted from the
date of the official groundbreaking.
xxxx
6. x x x Compliance with all existing laws, rules and
regulations regarding the construction of the
project shall be [the] responsibility of the SECOND
PARTY itself to save and hold the FIRST PARTY
harmless from any and all liabilities in respect thereto
or arising from violations thereof.
IV. BUILD-OPERATE-AND-TRANSFER SCHEME
1. The WAG-WAG SHOPPING MALL be constructed
by the SECOND PARTY for the FIRST PARTY in
accordance with this Memorandum of Agreement and
65 with the Build-Operate-and-Transfer Scheme outlined
RA 6957
66
66 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
and RA 7718. This Agreement is of course subject to the
provisions of RA 7160 and other pertinent laws.
x x x x24
Section 2 of R.A. No. 6957 as amended by R.A. No. 7718,
defined the terms "Contractor" and "Project proponent" as
follows:
(k) Project Proponent—The private sector entity which
shall have contractual responsibility for the project and
which shall have an adequate financial base to implement
said project consisting of equity and firm commitments from
reputable financial institutions to provide, upon award,
sufficient credit lines to cover the total estimated cost of the
project.
 (l) Contractor—Any entity accredited under Philippine
laws which may or may not be the project proponent and
which shall undertake the actual construction and/or supply
of equipment for the project.
Aside from the clear language of the MOA, the attendant
circumstances unmistakably showed that API is both the
project proponent and contractor of the BOT project, as it was
the one who submitted the proposal and bid to the SB,
through its President executed the MOA with petitioner,
deployed manpower and equipment for the clearing of the
site, conducted groundbreaking, performed excavation and
initial construction works, and took responsibility for the
stoppage and non-completion of the project when it entered
into a compromise with the Municipality of Muñoz. It is to be
noted that even as project proponent, API failed to meet the
minimum financial standard considering that it has no
adequate financial base to implement the Wag-Wag
Shopping Mall project. API’s paid-up capital was only P2.5
million, while its stand-by credit line issued by Brilliant Star
Capital Lending Co., Inc. was only for the amount of P150
million, way below the P240 million total project cost.
_______________
24 Rollo, pp. 147-149.
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VOL. 653, JUNE 29, 2011
Alvarez vs. People
While API’s proposal passed through the pre-qualification
stage, it failed to submit, except for the SEC registration
certificate, a complete set of documents required for a BOT
project, in accordance with the BOT Law Implementing
Rules and Regulations (IRR):
“Sec. 5.4. Pre-qualification Requirements.—To pre-
qualify, a project proponent must comply with the following
requirements:
a. Legal Requirements
i. For projects to be implemented under the BOT
scheme whose operations require a public utility
franchise, the project proponent and the facility
operator must be a Filipino or, if a corporation, must
be duly registered with the Securities and Exchange
Commission (SEC) and owned up to at least sixty
percent (60%) by Filipinos.
xxxx
v. If the contractor to be engaged by the project
proponent to undertake the construction works of the
project under bidding needs to be pre-identified as
prescribed in the published Invitation to Pre-qualify
and Bid and is a Filipino, it must be duly licensed
and accredited by the Philippine Contractors
Accreditation Board (PCAB). However, if the
contractor is a foreigner, PCAB registration will not be
required at pre-qualification stage, rather it will be one
of the contract milestones.
b. Experience or Track Record: The proponent-applicant
must possess adequate experience in terms of the
following:
67
i. Firm Experience: By itself or through the member-
firms in case of a joint venture/consortium or through
a contractor(s) which the project proponent may have
engaged for the project, the project proponent and/or
its contractor(s) must have successfully undertaken a
project(s) similar or related to the subject
infrastructure/development project to be bid. The
individual firms and/or their contractor(s) may
individually specialize on
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68 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
any or several phases of the project(s). A joint
venture/consortium proponent shall be evaluated based on
the individual or collective experience of the member-firms
of the joint venture/consortium and of the contractor(s) that
it has engaged for the project.
xxxx
vi. Key Personnel Experience: The key personnel of
the proponent and/or its contractor(s) must have
sufficient experience in the relevant aspect of schemes
similar or related to the subject project, as specified by
the Agency/
LGU.
e. Financial Capability: The project proponent must
have adequate capability to sustain the financing
requirements for the detailed engineering design,
construction and/or operation and maintenance phases
of the project, as the case may be. For purposes of pre-
qualification, this capability shall be measured in
terms of:
(i) proof of the ability of the project proponent and/or
the consortium to provide a minimum amount of
equity to the project measured in terms of the net
worth of the company or in the case of joint ventures or
consortia the combined net worth of members or a set-
aside deposit equivalent to the minimum equity
required, and
(ii) a letter testimonial from reputable
banks attesting that the project proponent and/or
members of the consortium are banking with them,
and that they are in good financial standing. The
government Agency/LGU concerned shall determine
on a project-to-project basis, and before pre-
qualification, the minimum amount of equity needed.
In addition, the Agency/LGU will inform the
proponents of the minimum debt-equity ratio required
by the monetary authority for projects to be financed
by foreign loans.
x x x x (Emphasis supplied.)
We have held that the Implementing Rules provide for the
unyielding standards the PBAC should apply to determine
69
VOL. 653, JUNE 29, 2011 69
Alvarez vs. People
the financial capability of a bidder for pre-qualification
purposes: (i) proof of the ability of the project proponent
and/or the consortium to provide a minimum amount of
equity to the project and (ii) a letter testimonial from
reputable banks attesting that the project proponent and/or
members of the consortium are banking with them, that they
are in good financial standing, and that they have adequate
resources. The evident intent of these standards is to protect
the integrity and insure the viability of the project by seeing
to it that the proponent has the financial capability to carry
it out.25Unfortunately, none of these requirements was
submitted by API during the pre-qualification stage.
Petitioner assails the Sandiganbayan for allegedly failing
to appreciate the legal intent of the BOT Law which allows
contracts on a negotiated basis for unsolicited proposals like
the Wag-Wag Shopping Mall project. It asserts that the
procedure and requirements for bidding have been complied
with when the Municipality of Muñoz caused the publication
of the invitation to submit comparative bids for the BOT
project was published in Pinoy, a newspaper of general
circulation for three consecutive weeks. Since no
comparative bid/proposal was received within sixty (60)
days, the BOT project was rightfully awarded to API, the
original proponent.
 The contention fails.
Unsolicited proposals refer to project proposals submitted
by the private sector to undertake infrastructure or
development projects which may be entered into by a
government agency or local government unit.26 Section 4-a of
R.A. No. 6957 as amended by R.A. No. 7718 governs
unsolicited proposals:
_______________
25 Agan, Jr. v. Philippine International Air Terminals Co. Inc., G.R.
Nos. 155001, 155547 & 155661, January 21, 2004, 420 SCRA 575, 588-589.
26 Sec. 1.3 (v), IRR of R.A. No. 6957 as amended by R.A. No. 7718.
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70 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
“SEC. 4-A. Unsolicited Proposals.—Unsolicited proposals
for projects may be accepted by any government agency or local
government unit on a negotiated basis: Provided, That, all the
following conditions are met: (1) such projects involved a new
concept or technology and/or are not part of the list of priority
projects, (2) no direct government guarantee, subsidy or equity
is required, and (3) the government agency or local government
unit has invited by publication, for three (3) consecutive weeks,
in a newspaper of general circulation, comparative or
competitive proposals, and no other proposal is received for a
period of sixty (60) working days: Provided, further, That in
the event another proponent submits a lower price proposal, the
original proponent shall have the right to match that price
within thirty (30) working days.”
We note that it was the SB which invited the API to
provide information on the construction of a shopping mall
project under the BOT scheme. It cannot be said thus that
the development project originated from the proponent/con-
tractor. Nonetheless, even if the proposal is deemed
unsolicited, still the requirements of the law have not been
complied with.
The IRR specified the requirement of publication of the
invitation for submission of proposals, as follows:
“SEC. 10.11. Invitation for Comparative Proposals.—The
Agency/LGU shall publish the invitation for comparative or
competitive proposals only after ICC/Local Sanggunian
issues a no objection clearance of the draft contract. The
invitation for comparative or competitive proposals should be
published at least once every week for three (3) weeks in at least
one (1) newspaper of general circulation. It shall indicate the
time, which should not be earlier than the last date of
publication, and place where tender/bidding documents
could be obtained. It shall likewise explicitly specify a time
of sixty (60) working days reckoned from the date of
issuance of the tender/bidding documents upon which
proposals shall be received. Beyond said deadline, no proposals
shall be accepted. A pre-bid conference shall be conducted ten
(10) working days after the issuance of the tender/bidding
documents.” (Emphasis supplied.)
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Alvarez vs. People
The above provision highlighted other violations in the
bidding procedure for the subject BOT project. First, there
was no prior approval by the Investment Coordinating
Committee of the National Economic Development Authority
(ICC-NEDA) of the Wag-Wag Shopping Mall project. Under
the BOT Law, local projects to be implemented by the local
government units concerned costing above P200 million shall
be submitted for confirmation to the ICC-NEDA.27 Such
requisite approval shall be applied for and should be secured
by the head of the LGU prior to the call for bids for the
project.28 Second, the law requires publication in a
newspaper of general circulation. To be a newspaper of
general circulation, it is enough that it is published for the
dissemination of local news and general information, that it
has a bona fide subscription list of paying subscribers, and
that it is published at regular intervals. Over and above all
these, the newspaper must be available to the public in
general, and not just to a select few chosen by the
publisher.29Petitioner did not submit in evidence the affidavit
of the publisher attesting to Pinoy tabloid as such newspaper
of general circulation. And third, even assuming
that Pinoy was indeed a newspaper of general circulation,
the invitation published indicated a shorter period of
_______________
27 Sec. 4 of R.A. No. 6957 as amended by R.A. No. 7718 provides:
SEC. 4. Priority Projects.—x x x
The list of local projects to be implemented by the local government
units concerned shall be submitted for confirmation to the municipal
development council for projects costing up to Twenty million pesos; those
costing above Twenty up to Fifty million pesos to the provincial
development council; those costing up to Fifty Million pesos to the city
development council; above Fifty million up to Two hundred million pesos
to the regional development councils; and those above Two hundred
million pesos to the ICC of the NEDA.
28 Sec. 2.3, second par., IRR.
29 Metropolitan Bank and Trust Company, Inc. v. Peñafiel, G.R. No.
173976, February 27, 2009, 580 SCRA 352, 360-361, citing Perez v.
Perez, G.R. No. 143768, March 28, 2005, 454 SCRA 72, 81.
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72 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
submission of comparative proposals, only thirty (30) days
instead of the prescribed sixty (60) days counted from the
date of issuance of tender documents.
There is likewise no showing that API complied with the
submission of a complete proposal required under the IRR:
“SEC. 10.5 Submission of a Complete Proposal.—For a
proposal to be considered by the Agency/LGU, the proponent
has to submit a complete proposal which shall include a
feasibility study, company profile as outlined in Annex A,
and the basic contractual terms and conditions on the
obligations of the proponent and the government. The
Agency/LGU shall acknowledge receipt of the proposal and
advice the proponent whether the proposal is complete or
incomplete. If incomplete, it shall indicate what information is
lacking or necessary.” (Emphasis supplied.)
As correctly pointed out by the Sandiganbayan, API’s
proposal showed that it lacked the above requirements as it
did not include a company profile and the basic contractual
terms and conditions on the obligations of the
proponent/contractor and the government. Had such
company profile been required of API, the municipal
government could have been apprised of the fact that said
contractor/proponent had been in existence for only three
months at that time and had not yet completed a project,
although APRI, which actually undertook the Calamba and
Lemery shopping centers also under BOT scheme, is
allegedly the same entity as API which have the same set of
incorporators and directors. But more important, the
municipality could have realized earlier, on the basis of
financial statements and experience in construction included
in the company profile, that API could not possibly comply
with the huge financial outlay for the Wag-Wag Shopping
Mall project. It could have also noted the fact that the
aforesaid BOT shopping centers in Lemery and Calamba
being implemented by APRI at that time were not yet
finished or completed. In any event, such existing BOT
contract of APRI with another LGU neither justified non-
compliance by API with the submission of a complete
proposal for the Wag-Wag
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VOL. 653, JUNE 29, 2011 73
Alvarez vs. People
Shopping Mall project for a competent evaluation by the
PBAC.
Indeed, contrary to petitioner’s stance, the process of
unsolicited proposals does involve public bidding where, in
the end, the government is free to choose the bid or proposal
most advantageous to it.30 Thus we held in Asia’s Emerging
Dragon Corporation v. DOTC:31
“The protestation by AEDC of our characterization of the
process on unsolicited proposal as public bidding is specious.
We call attention to the following relevant sections of Rule
10 of the IRR specifically on Unsolicited Proposals:
Sec. 10.9. Negotiation With the Original
Proponent.—Immediately after ICC/Local Sanggunian’s
clearance of the project, the Agency/LGU shall proceed
with the in-depth negotiation of the project scope,
implementation arrangements and concession
agreement, all of which will be used in the Terms of
Reference for the solicitation of comparative
proposals. The Agency/LGU and the proponent are
given ninety (90) days upon receipt of ICC’s approval of
the project to conclude negotiations. The Agency/LGU
and the original proponent shall negotiate in good faith.
However, should there be unresolvable differences during
the negotiations, the Agency/LGU shall have the option
to reject the proposal and bid out the project. On the other
hand, if the negotiation is successfully concluded, the
original proponent shall then be required to
reformat and resubmit its proposal in accordance
with the requirements of the Terms of Reference to
facilitate comparison with the comparative
proposals. The Agency/LGU shall validate the
reformatted proposal if it meets the requirements of the
TOR prior to the issuance of the invitation for
comparative proposals.
_______________
30 Asia’s Emerging Dragon Corporation v. Department of Transportation and
Communications, G.R. Nos. 169914 & 174166, April 7, 2009, 584 SCRA 355, 376.
31 Id., at pp. 373, 375. Resolution denying with finality the motions for
reconsideration of the Decision dated April 18, 2008.
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74 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
Sec. 10.10. Tender Documents.—The
qualification and tender documents shall be
prepared along the lines specified under Rules 4
and 5 hereof. The concession agreement that will be
part of the tender documents will be considered final and
non-negotiable by the challengers. Proprietary
information shall, however, be respected, protected and
treated with utmost confidentiality. As such, it shall not
form part of the bidding/tender and related documents.
xxxx
After the concerned government agency or local government
unit (LGU) has received, evaluated, and approved the
pursuance of the project subject of the unsolicited proposal, the
subsequent steps are fundamentally similar to the bidding
process conducted for ordinary government projects.
The three principles of public bidding are: the offer to the
public, an opportunity for competition, and a basis for an exact
comparison of bids, all of which are present in Sec. 10.9 to
Sec. 10.16 of the IRR. First, the project is offered to the public
through the publication of the invitation for comparative
proposals. Second, the challengers are given the opportunity to
compete for the project through the submission of their
tender/bid documents. And third, the exact comparison of the
bids is ensured by using the same
requirements/qualifications/criteria for the original proponent
and the challengers, to wit: the proposals of the original
proponent and the challengers must all be in accordance
with the requirements of the Terms of Reference (TOR)
for the project; the original proponent and the challengers are
required to post bid bonds equal in amount and form; and the
qualifications of the original proponent and the challengers
shall be evaluated by the concerned agency/LGU using the same
evaluation criteria.” (Additional emphasis supplied.)
In this case, the only attempt made to comply with the
bidding requirements is the publication of the invitation
which, as already mentioned, was even defective. As noted
by the Sandiganbayan, there was no in-depth negotiation as
to the project scope, implementation and arrangements and
concession agreement, which are supposed to be used in the
Terms of Reference (TOR). Such TOR would have provided
the inter-
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VOL. 653, JUNE 29, 2011
Alvarez vs. People
ested competitors the basis for their proposed cost, and its
absence in this case is an indication that any possible
competing proposal was intentionally avoided or altogether
eliminated. The essence of competition in public bidding is
that the bidders are placed on equal footing.32 In the award
of government contracts, the law requires a competitive
public bidding. This is reasonable because “[a] competitive
public bidding aims to protect the public interest by giving
the public the best possible advantages thru open
competition. It is a mechanism that enables the government
agency to avoid or preclude anomalies in the execution of
public contracts.”33
Despite API’s obvious lack of financial qualification and
absence of basic terms and conditions in the submitted
proposal, petitioner who chaired the PBAC, recommended
the approval of API’s proposal just forty-five (45) days after
the last publication of the invitation for comparative
proposals, and subsequently requested the SB to pass a
resolution authorizing him to enter into a MOA with API as
the lone bidder for the project. It was only in the MOA that
the details of the construction, terms and conditions of the
parties’ obligations, were laid down at the time API was
already awarded the project. Even the MOA provisions
remain vague as to the parameters of the project, which the
Sandiganbayan found as placing API “at an arbitrary
position where it can do as it pleases without being
accountable to the municipality in any way whatsoever.”
True enough, when API failed to execute the construction
works and abandoned the project, the municipality found
itself at extreme disadvantage without recourse to a
performance security that API likewise failed to submit.
_______________
75 32 See JG Summit Holdings, Inc. v. Court of Appeals, G.R No. 124293,
September 24, 2003, 412 SCRA 10, 33.
33 Garcia v. Burgos, G.R. No. 124130, June 29, 1998, 291 SCRA 546,
576.
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76 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
Petitioner as the local chief executive failed to ensure that
API which was awarded the BOT contract, will submit such
other requirements specified under the IRR:
“Sec. 11.7. Conditions for Approval of Contract.—The
Head of Agency/LGU shall ensure that all of the following
conditions have been complied with before approving the
contract:
a. Submission of the required performance security as
prescribed under Section 12.7 hereof;
b. Proof of sufficient equity from the investors and firm
commitments from reputable financial institution to provide
sufficient credit lines to cover the total estimated cost of the
project;
c. ICC clearance of the contract on a no-objection basis;
 Failure by the winning project proponent to submit the
requirements prescribed under items a, b and c above within
the time period specified by the concerned Agency/LGU in the
Notice of Award or failure to execute the contract within the
specified time shall result in the disqualification of the
bidder, as well as the forfeiture of the bid security of the
bidder.
xxxx
Sec. 12.7. Performance Guarantee for Construction
Works.—To guarantee the faithful performance by the
project proponent of its obligations under the contract
including the prosecution of the construction works
related to the project, the project proponent shall post in
favor of the Agency/LGU concerned, within the time and under
the terms prescribed under the project contract,
a performance security in the form of cash, manager’s check,
cashier’s check, bank draft or guarantee confirmed by a local
bank (in the case of foreign bidders bonded by a foreign bank),
letter of credit issued by a reputable bank, surety bond callable
on demand issued by the Government Service Insurance
System (GSIS) or by surety or insurance companies duly
accredited by the Office of the Insurance Commissioner, or a
combination thereof, in accordance with the following
schedules:
a. Cash, manager’s check, cashier’s check, irrevocable letter
of credit, bank draft—a minimum of two percent (2%) of the
total Project Cost.77
VOL. 653, JUNE 29, 2011
Alvarez vs. People
b. Bank Guarantee—a minimum of five percent (5%) of the
total Project Cost.
c. Surety Bond—a minimum of ten percent (10%) of the
total Project Cost.” (Emphasis supplied.)
In the Notice of Award dated September 16, 1996,
petitioner directed API to submit the above requirements.
However, API’s counsel, Atty. Lydia Y. Marciano, wrote in
reply that such requirements do not apply because API’s
project does not involve any government undertaking. API at
that point should have been disqualified and its bid security
forfeited, pursuant to Section 11.7 of the IRR. Yet, API was
allowed to proceed with the execution of the project albeit
only the site clearing, excavation and construction of a sales
office were accomplished.
Under the facts established, it is clear that petitioner gave
unwarranted benefits, advantage or preference to API
considering that said proponent/contractor was not
financially and technically qualified for the BOT project
awarded to it, and without complying with the requirements
of bidding and contract approval for BOT projects under
existing laws, rules and regulations.
The word “unwarranted” means lacking adequate or
official support; unjustified; unauthorized or without
justification or adequate reason. “Advantage” means a more
favorable or improved position or condition; benefit, profit or
gain of any kind; benefit from some course of action.
“Preference” signifies priority or higher evaluation or
desirability; choice or estimation above another.34 As to
“partiality,” “bad faith,” and “gross inexcusable negligence,”
we have explained the meaning of these terms, as follows:
“Partiality” is synonymous with “bias” which “excites a
disposition to see and report matters as they are wished for
77 rather than as they are.” “Bad faith does not simply connote bad
judgment or negli-
_______________
34 Sison v. People, supra note 14 at pp. 681-682.
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78 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
gence; it imputes a dishonest purpose or some moral obliquity
and conscious doing of a wrong; a breach of sworn duty through
some motive or intent or ill will; it partakes of the nature of
fraud.” “Gross negligence has been so defined as negligence
characterized by the want of even slight care, acting or omitting
to act in a situation where there is a duty to act, not
inadvertently but wilfully and intentionally with a conscious
indifference to consequences in so far as other persons may be
affected. It is the omission of that care which even inattentive
and thoughtless men never fail to take on their own property.” 35
We sustain and affirm the Sandiganbayan in holding that
petitioner violated Section 3(e) of R.A. No. 3019, and that he
cannot shield himself from criminal liability simply because
the SB passed the necessary resolutions adopting the BOT
project and authorizing him to enter into the MOA. We find
no error or grave abuse in its ruling, which we herein quote:
“It is apparent that the unwarranted benefit in this case lies
in the very fact that API was allowed to present its proposal
without compliance of [sic] the requirements provided under
the relevant laws and rules. To begin with, the municipal
government never conducted a public bidding prior to the
execution of the contract. The project was immediately awarded
to the API without delay and without any rival proponents,
when it was not qualified to participate in the first place. The
legality and propriety of the agreement executed with the
contractor is totally absent based on the testimonies of both the
prosecution and the defense.
This Court also considers these particular acts
significant. First. From the testimony of then Vice-Mayor Ruiz,
Jesus V. Garcia, the president of API, attended the SB session
after paying a courtesy call to the Accused who was then the
Mayor. Second. It was the Accused who signed and posted the
Invitation to Bid (Exhibit N) giving proponents 30 days to
submit their proposals. Third. The Accused is the head of
the Pre-Qualification Bids and Awards Committee which
according to him recommended the approval of API’s
proposal. This was the reason he used in requesting authority
from the SB to grant him the authority to contract with
API. Fourth. The
_______________
35 Id., at p. 680.
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VOL. 653, JUNE 29, 2011 79
Alvarez vs. People
Accused requested the SB to give him authority to enter into an
agreement with API through a resolution (Exhibit S)[.] Fifth. It
was the Accused who invited the SB members to go to the
Mayor’s office to witness the signing of the Memorandum of
Agreement between the municipality and API.” 36
As the local chief executive, petitioner is not only expected
to know the proper procedure in the bidding and award of
infrastructure contracts such as BOT projects, he is also
duty bound to follow the same and his failure to
discharge this duty constitutes gross and inexcusable
negligence.37
Petitioner further assails the Sandiganbayan in not
considering the previous dismissal of the criminal complaint
filed by Alberto Castañeda against petitioner also involving
the Wag-Wag Shopping Mall project. The Sandiganbayan
pointed out that said case (OMB-1-97-1885) was dismissed
by the Office of the Deputy Ombudsman for Luzon on March
26, 1999 at the time the construction works were supposedly
only temporarily stopped by API, while in this case it is
already apparent that the latter abandoned the project and
reneged on its obligation.
We find nothing illegal in the reversal by the Ombudsman
upon review of the September 9, 2002 resolution of the Office
of the Deputy Ombudsman for Luzon which recommended
the dismissal of the complaint-affidavit filed by Domiciano R.
Laurena IV upon the ground that a similar criminal
complaint filed by Castañeda had been dismissed in OMB-1-
97-1885. The Office of the Ombudsman Chief Legal Counsel
granted the petition for review filed by complainant Laurena
IV and recommended that petitioner be indicted before the
Sandiganbayan for violation of Section 3(e) of R.A. No. 3019.
It pointed out that the dismissal of OMB-1-97-1885 was
premised on the authority of a local legislature to accept
unsolic-
_______________
36 Rollo, pp. 81-82.
37 See Ong v. People, G.R. No. 176546, September 25, 2009, 601 SCRA
47, 56.
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80 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
ited proposals and enter into a BOT project under R.A. No.
6957 as amended by R.A. No. 7718, and the lack of any
showing of undue injury to the Municipality of Muñoz as a
result of the temporary work stoppage. However, the issue of
lack of API’s construction license was never brought out in
the earlier case while in the present case, the PCAB attested
to the fact that API is not a licensed contractor and
petitioner’s approval of API’s proposal is a clear badge of
giving unwarranted benefit, preference or advantage
through manifest partiality, evident bad faith, or at the very
least, gross inexcusable negligence. The OMB found that
petitioner could have easily discovered such fact with basic
prudence considering that a P240-million infrastructure was
involved, but apparently he threw all caution to the wind and
relied solely on the self-serving representation of API that it
possesses the requisite contractor’s license.38
This ruling of the OMB Chief Legal Counsel was affirmed
upon review by the Special Prosecutor and approved by
Ombudsman Merceditas N. Gutierrez on August 4, 2006.39It
may be recalled that on motion of petitioner, the
Ombudsman even conducted a reinvestigation of the case
pursuant to the January 15, 2007 directive of the
Sandiganbayan. In a memorandum40 dated March 5, 2007,
then Special Prosecutor Dennis M. Villa-Ignacio approved
the finding of probable cause against the petitioner and the
recommendation that the information already filed in this
case, for which petitioner had already been arraigned, be
maintained. Petitioner cannot claim denial of his right to due
process, as he had been given ample opportunity to present
evidence on his defense in the proceedings before the
Ombudsman and Sandiganbayan.
No grave abuse of discretion was committed by the
Ombudsman in reversing the previous dismissal of a similar
criminal complaint against the petitioner involving the
_______________
38 Records (Vol. 1), pp. 4-7.
39 Id., at pp. 8-15.
40 Id., at pp. 339-347.
81
VOL. 653, JUNE 29, 2011 81
Alvarez vs. People
anomalous award of the BOT contract to API. Indeed, the
Ombudsman is not precluded from ordering another review
of a complaint, for he or she may revoke, repeal or abrogate
the acts or previous rulings of a predecessor in office. Thus
we held in Trinidad v. Office of the Ombudsman:41
“Petitioner’s arguments—that res judicata applies since the
Office of the Ombudsman twice found no sufficient basis to
indict him in similar cases earlier filed against him, and that
the Agan cases cannot be a supervening event or evidence per
se to warrant a reinvestigation on the same set of facts and
circumstances—do not lie.
Res judicata is a doctrine of civil law and thus has no bearing
on criminal proceedings.
But even if petitioner’s argument were to be expanded to
contemplate “res judicata in prison grey” or the criminal law
concept of double jeopardy, this Court still finds it inapplicable
to bar the reinvestigation conducted by the Office of the
Ombudsman. For the dismissal of a case during
preliminary investigation does not constitute double
jeopardy, preliminary investigation not being part of the
trial.
Insisting that the case should be barred by the prior Joint
Resolution of the Ombudsman, petitioner posits that repeated
investigations are oppressive since he as respondent and other
respondents would be made to suffer interminable prosecution
since resolutions dismissing complaints would perpetually be
subject to reopening at any time and by any party. Petitioner
particularly points out that no new evidence was presented at
the reinvestigation.
Petitioner’s position fails to impress.
The Ombudsman is not precluded from ordering
another review of a complaint, for he or she may revoke,
repeal or abrogate the acts or previous rulings of a
predecessor in office. And Roxas v. Hon. Vasquezteaches
that new matters or evidence are not prerequisites for a
reinvestigation, which is simply a chance for the
prosecutor, or in this case the Office of the Ombudsman,
to review and re-evaluate its findings and the evidence
already submitted.” (Emphasis supplied.)
_______________
41 G.R. No. 166038, December 4, 2007, 539 SCRA 415, 423-425.
82
82 SUPREME COURT REPORTS ANNOTATED
Alvarez vs. People
As to the propriety of damages awarded by the
Sandiganbayan, we find that the same is proper and
justified. The term “undue injury” in the context of Section
3(e) of the Anti-Graft and Corrupt Practices Act punishing
the act of “causing undue injury to any party,” has a meaning
akin to that civil law concept of “actual damage.” Actual
damage, in the context of these definitions, is akin to that in
civil law.42
Article 2199 of the Civil Code provides that except as
provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered
by a party as he has duly proved. Liquidated damages, on the
other hand, are those agreed upon by the parties to a
contract, to be paid in case of a breach thereof.43
For approved BOT contracts, it is mandatory that a
performance security be posted by the contractor/proponent
in favor of the LGU in the form of cash, manager’s check,
cashier’s check, irrevocable letter of credit or bank draft in
the minimum amount of 2% of the total project cost.44 In case
the default occurred during the project construction stage,
the LGU shall likewise forfeit the performance security of the
erring project proponent/contractor.45 The IRR thus provides:
“SEC. 12.13. Liquidated Damages.—Where the project
proponent of a project fails to satisfactorily complete the work
within the construction period prescribed in the contract,
including any extension or grace period duly granted, and is
thereby in default under the contract, the project proponent
shall pay the Agency/LGU concerned liquidated damages, as
may be agreed upon under the contract by the parties. The
parties shall agree on the amount and schedule of payment of
the liquidated damages. The performance security may be
forfeited to answer for any liquidated damages due to the
Agency/LGU. The amount of liquidated damages due for every
_______________
42 Santos v. People, supra note 13 at p. 197, citing Llorente, Jr. v.
Sandiganbayan, 350 Phil. 820, 838; 287 SCRA 382, 399 (1998).
43 Art. 2226, Civil Code.
44 Sec. 12.7 (a), IRR.
45 Sec. 12.19 (b), IRR.
83
VOL. 653, JUNE 29, 2011 83
Alvarez vs. People
calendar day of delay will be determined by the Agency/LGU. In
no case however shall the delay exceed twenty percent (20%) of 84
the approved construction time stipulated in the contract plus 84 SUPREME COURT REPORTS ANNOTATED
any time extension duly granted. In such an event the Alvarez vs. People
Agency/LGU concerned shall rescind the contract, forfeit the
proponent’s performance security and proceed with the Note.—The elements of violation of Section 3(e), R.A.
procedures prescribed under Section 12.19. b.”
3019, as amended, are as follows: (1) The accused is a public
Had the requirement of performance security been
officer or a private person charged in conspiracy with the
complied with, there is no dispute that the Municipality of
former; (2) The said public officer commits the prohibited
Muñoz would have been entitled to the forfeiture of
acts during the performance of his or her official duties or in
performance security when API defaulted on its obligation to
relation to his or her public positions; (3) That he or she
execute the construction contract, at the very least in an
causes undue injury to any party, whether the government
amount equivalent to 2% of the total project cost. Hence, said
or a private party; (4) Such undue injury is caused by giving
LGU is entitled to such damages which the law mandates to
unwarranted benefits, advantage or preference to such
be incorporated in the BOT contract, the parties being at
parties; and (5) That the public officer has acted with
liberty only to stipulate the extent and amount thereof. To
manifest partiality, evident bad faith or gross inexcusable
rule otherwise would mean a condonation of blatant
negligence. (Suller vs. Sandiganbayan, 407 SCRA 201
disregard and violation of the provisions of the BOT law and
[2003])
its implementing rules and regulations which are designed
to protect the public interest in transactions between ——o0o——
government and private business entities. While petitioner © Copyright 2019 Central Book Supply, Inc. All rights reserved.
claims to have entered into a compromise agreement as
authorized by the SB and approved by the trial court, no
evidence of such judicial compromise was submitted before
the Sandiganbayan.
WHEREFORE, the petition is DENIED. The Decision
dated November 16, 2009 and Resolution dated June 9, 2010
of the Sandiganbayan in Criminal Case No. SB-06-CRM-
0389 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
Corona (C.J., Chairperson), Leonardo-De Castro,
Bersamin and Del Castillo, JJ., concur.

Petition denied, judgment and resolution affirmed.