Case Digest From Year 2000 Up To Present

Cases/Jurisprudence in relation to Republic Act no.
9184
and its IRR from Year 2000 up to Present
Topic: Government Contracting in General
Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 128145. September 5, 2001
J.C. LOPEZ & ASSOCIATES, INC., petitioner, vs. COMMISSION ON AUDIT and
NATIONAL POWER CORPORATION, respondents.
BUENA, J :
The Facts
Petitioner entered into a contract with NAPOCOR for the dredging of the vicinity of
the Intake Tower at the Ambuklao Hydroelectric Plant in Bokod, Benguet. Pursuant to the
contract, NAPOCOR paid petitioner P10,125,150.00 representing 15% of the total contract
price and subsequently, P7,694,850.00 representing the balance of the mobilization cost.
Upon audit, however, payment of the said amounts were suspended as the contract
provided P18M mobilization fee, which is 26% of the total contract cost
. Under PD 1594, the allowed mobilization fee is only 15% of the total contract price.
The contract also provided for advance payment in violation of Sec. 88 of PD 1445.
NAPOCOR ordered the petitioner to stop its dredging operations in preparation for the joint
survey to determine the actual volume of silt dredged by the petitioner.
On February 20, 1992, NAPOCOR entered into a negotiated contract with a
consortium led by Meralco Industrial Engineering Services Corporation (MIESCOR) to
rehabilitate, operate and lease back the Ambuklao Hydroelectric Plant, including the
dredging of silt within the vicinity of the Intake Tower.
Thereafter, petitioner filed a complaint for injunction with the Regional Trial Court of
Quezon City, assailing NAPOCOR's termination of its contract, and with prayer for the
issuance of a writ of preliminary injunction.
Regional Trial Court’s Ruling
The trial court issued a writ of preliminary injunction enjoining NAPOCOR and
MIESCOR from interfering with petitioner's dredging operations and from proceeding with
the negotiated contract between them. The trial court agreed with the opinion of the
NAPOCOR SVP and General Counsel that "the dredging of the Ambuklao water reservoir is
not an infrastructure work envisioned in Section 1 of P.D. 1818 but a service contract or
undertaking." In addition, the trial court construed that "what the petitioner apparently seeks
from the Court is not to stop the dredging of the Ambuklao water reservoir but on the
contrary, to continue its dredging of the said reservoir pursuant to the contract between
plaintiff J.C. Lopez petitioner and defendant NAPOCOR.
Alleging that the trial court committed grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing the aforestated writ of preliminary injunction, MIESCOR filed
a petition for certiorari with prayer for a temporary restraining order/preliminary injunction,
with the Court of Appeals. The Court of Appeals issued a writ of preliminary injunction
prohibiting the trial court from enforcing the writ of preliminary injunction which it had earlier
issued, and enjoining NAPOCOR and MIESCOR from undertaking further activities at the
Ambuklao water reservoir until further orders from the court.
xxxx xxxx xxxx xxxx
Court of Appeals’ Ruling
In its Decision, the Court of Appeals dismissed, as being without basis, the
petitioner's allegation that the act of clearing or dredging the reservoir of a hydroelectric plant
may be considered as a mere maintenance work or service undertaking. Citing Executive
Order No. 380 which defines the term "infrastructure projects" as "construction, improvement
or rehabilitation of roads and bridges, railways, airports, seaports, communication facilities,
irrigation, flood control and drainage, water supply and sewerage systems, shore protection,
power facilities, national buildings, school buildings, hospital buildings, and other related
construction projects that form part of the government capital investment;" the Court of
Appeals ruled that "there should not be any iota of doubt" that the enumerated undertakings
which include the dredging of the reservoir, power intake, tailrace tunnel and tailrace channel
in the Memorandum of Agreement between NAPOCOR and MIESCOR, "fall under the
protection of P.D. No. 1818 and even within the definition of 'infrastructure project' under
Executive Order No. 380."
xxxx xxxx xxxx xxxx
When the matter was brought to the Commission on Audit, it ruled that the contract
involved government infrastructure project as defined by EO No. 380 and thus covered by
PD 1594 and its implementing rules and regulations. At any rate, the provision on
mobilization cost of P18M partook of advances on the contract price rather than a separate
"pay item."
Issue
Whether or not the dredging contract between the petitioner and NAPOCOR involves
an infrastructure project thus covered by PD 1594?
Ruling of the Court
Yes, in the instant case, the issue of whether the dredging contract between the
petitioner and NAPOCOR involves an "infrastructure project" as defined in Executive Order
No. 380, was already passed upon and resolved by the Court of Appeals in Meralco
Industrial Engineering Services Corporation vs. Hon. Romeo F. Zamora and J.C. Lopez.
Consequently, upon attaining finality, the said decision became the law of the case and
constituted a bar to any re-litigation of the same issue in any other proceeding under the
principle of res judicata.
We agree with the Solicitor General further that "the mobilization lump sum as
provided in the dredging contract is, and should be, considered an advance-payment item
which forms part of the contract price and not an addition thereto" and "subject to the
conditions provided under CI 4 of the Implementing Rules and Regulations for P.D. No. 1594
which reads in part, thus:
"CI 4 — ADVANCE PAYMENT
"1. The Government shall, upon a written request of the contractor which shall be
submitted as a contract document, make an advance payment to the contractor in an
amount equal to fifteen percent (15%) of the total contract price,to be made in lump sum or
the most two installments according to a schedule specified in the Instructions to Bidders
and other relevant Tender Documents.
"4. The advance payment shall be repaid by the contractor by deducting 20% from
his periodic progress payments, with the first repayment to be made when the contract value
of the work executed and material delivered shall equal or have exceeded twenty percent
(20%) of the contract price and further refunds shall be done thereafter at monthly intervals."
Having established that petitioner's dredging contract with NAPOCOR involves an
"infrastructure project," pursuant to the aforestated Court of Appeals decision, the said
contract is governed by the provisions of Presidential Decree No. 1594 and its implementing
rules and regulations. CI-4 of the implementing rules and regulations of Presidential Decree
No. 1594 clearly provides that upon the written request of the contractor, the government
shall make an advance payment in an amount equal to fifteen percent (15%) of the total
contract price, subject to recoupment from periodic progress billings submitted by the
contractor. Indeed, in compliance with Presidential Decree No. 1594 and its implementing
rules and regulations, it is provided under Article III of petitioner's contract with NAPOCOR
that fifteen percent (15%) of the total contract price shall be paid within thirty (30) calendar
days from the signing of the contract against the submission of a refund bond in the form of
an irrevocable standby letter of credit in the equivalent amount. And pursuant to the said
provision in the contract, in a letter dated January 10, 1991, and addressed to NAPOCOR,
petitioner requested for the "fifteen percent (15%) Advance Payment of our contract price."
However, the provision in the contract regarding the payment of the mobilization cost
as a "pay item" has gone beyond the requirements of the law, and should
consequently, be struck down.
While indeed, as asserted by the petitioner, contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, however, such
stipulations should not be contrary to law. Realizing the need to adopt a comprehensive,
uniform, and updated set of policies, guidelines, rules and regulations covering government
contracts for infrastructure and other construction projects in order to achieve a more
efficient and effective implementation of these projects, Presidential Decree No. 1594 was
enacted to prescribe policies, guidelines, rules and regulations for government infrastructure
contracts.
In resume, as a government infrastructure contract, petitioner's contract with
NAPOCOR is subject to the provisions of Presidential Decree No. 1594 and
its implementing rules and regulations.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED for
lack of merit.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 131367. August 31, 2000

HUTCHISON PORTS PHILIPPINES LIMITED, petitioner, vs. SUBIC BAY
METROPOLITAN AUTHORITY, INTERNATIONAL CONTAINER TERMINAL SERVICES
INC., ROYAL PORT SERVICES INC. and the EXECUTIVE SECRETARY, respondents.|||
YNARES-SANTIAGO, J :
The Facts
Petitioner Hutchison Ports Philippines Limited, a foreign corporation, was awarded by

the Pre-Qualification, Bids and Awards Committee (PBAC) of Subic Bay Metropolitan
Authority (SBMA) the concession to develop and operate a modern marine container
terminal within the Subic Bay Freeport Zone. A resolution was issued declaring the
immediate commencement of negotiations with petitioner. Before the award, however,
respondent HPC Hamburg Port Consulting GMBH (RPSI) sought the setting aside of
International Container Terminal Services, Incorporation’s bid on the ground that ICTSI is
legally barred from operating a second port pursuant to Executive Order No. 212 and DOTC
Order 95-863 as it already operates the Manila International Container Port. The issue
reached the Office of the President which originally mandated the re-evaluation of the bids
but later recommended that another bidding be conducted. SBMA was enjoined from signing
the concession contract with petitioner.
Feeling aggrieved, petitioner resorted to a judicial action with the Regional Trial Court
for specific performance claiming that a binding and legally enforceable contract had been
established between petitioner and SBMA. During the pendency of the case, SBMA opened
the rebidding of the project. This was sought to be enjoined by petitioner, but the trial court
denied the same. It ruled that under Section 21 of R.A. No. 7227, the implementation of
projects shall not be restrained or enjoined except by an order from the Supreme Court.
Hence, the present recourse, with petitioner seeking to obtain a prohibitory injunction against
re-bidding, arguing that there was already a perfected contract since it was the winning
bidder in the first bidding. During the pendency of the case, a re-bidding was ultimately
conducted where ICTSI was declared as the winning bidder. ||
In the petition for issuance of injunction, aside from the legality of the re-bidding,
HPPL’s standing to file the case was questioned due to the lack of license to engage in
business in the Philippines.
Issues
(1) Whether or not the petition for injunction should be granted?

(2) Whether participating in the bidding is a mere isolated transaction, or did it
constitute "engaging in" or "transacting" business in the Philippines such that
petitioner HPPL needed a license to do business in the Philippines before it could
come to court?
Ruling of the Court
(1) No, petitioner is not entitled to the issuance of injunction.
For an injunctive writ to be issued, the following requisites must be proven:
(a) That the petitioner/applicant must have a clear and unmistakable right;
(b) That there is a material and substantial invasion of such right;
(c) That there is an urgent and permanent necessity for the writ to prevent serious
damage.
To our mind, petitioner HPPL has not sufficiently shown that it has a clear and
unmistakable right to be declared the winning bidder with finality, such that the SBMA can
be compelled to negotiate a Concession Contract. Though the SBMA Board of Directors,
by resolution, may have declared HPPL as the winning bidder, said award cannot be said
to be final and unassailable. The SBMA Board of Directors and other officers are subject to
the control and supervision of the Office of the President. All projects undertaken by SBMA
require the approval of the President of the Philippines under Letter of Instruction No. 620,
which places the SBMA under its ambit as an instrumentality, defined in Section 10 thereof
as an "agency of the national government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through
a charter. This term includes regulatory agencies, chartered institutions and government
owned and controlled corporations."
As a chartered institution, the SBMA is always under the direct control of the
Office of the President, particularly when contracts and/or projects undertaken by the
SBMA entail substantial amounts of money. Specifically, Letter of Instruction No. 620
dated October 27, 1997 mandates that the approval of the President is required in all
contracts of the national government offices, agencies and instrumentalities, including
government-owned or controlled corporations involving two million pesos
(P2,000,000.00) and above, awarded through public bidding or negotiation. The
President may, within his authority, overturn or reverse any award made by the SBMA
Board of Directors for justifiable reasons. It is well-established that the discretion to
accept or reject any bid, or even recall the award thereof, is of such wide latitude that the
courts will not generally interfere with the exercise thereof by the executive department,
unless it is apparent that such exercise of discretion is used to shield unfairness or
injustice. When the President issued the memorandum setting aside the award
previously declared by the SBMA in favor of HPPL and directing that a rebidding be
conducted, the same was within the authority of the President and was a valid exercise
of his prerogative. Consequently, petitioner HPPL acquired no clear and unmistakable
right as the award announced by the SBMA prior to the President's revocation thereof
was not final and binding.
There being no clear and unmistakable right on the part of petitioner HPPL, the
rebidding of the proposed project can no longer be enjoined as there is no material and
substantial invasion to speak of. Thus, there is no longer any urgent or permanent
necessity for the writ to prevent any perceived serious damage. In fine, since the
requisites for the issuance of the writ of injunction are not present in the instant case,
petitioner's application must be denied for lack of merit.
(2) No, petitioner HPPL has no legal capacity to even seek redress from this
Court.
Admittedly, petitioner HPPL is a foreign corporation, organized and existing under

the laws of the British Virgin Islands. While the actual bidder was a consortium composed
of petitioner, and two other corporations, namely, Guoco Holdings (Phils.) Inc. and Unicol
Management Services, Inc., it is only petitioner HPPL that has brought the controversy
before the Court, arguing that it is suing only on an isolated transaction to evade the legal
requirement that foreign corporations must be licensed to do business in the Philippines to
be able to file and prosecute an action before Philippines courts.
There is no general rule or governing principle laid down as to what constitutes
"doing" or "engaging in" or "transacting" business in the Philippines. Each case must be
judged in the light of its peculiar circumstances. Thus, it has often been held that a
single act or transaction may be considered as "doing business" when a corporation
performs acts for which it was created or exercises some of the functions for which it was
organized. The amount or volume of the business is of no moment, for even a singular
act cannot be merely incidental or casual if it indicates the foreign corporation's intention
to do business.
Participating in the bidding process constitutes "doing business" because
it shows the foreign corporation's intention to engage in business here. The
bidding for the concession contract is but an exercise of the corporation's reason for
creation or existence. Thus, it has been held that "a foreign company invited to bid for
IBRD and ADB international projects in the Philippines will be considered as doing
business in the Philippines for which a license is required." In this regard, it is the
performance by a foreign corporation of the acts for which it was created, regardless of
volume of business, that determines whether a foreign corporation needs a license or
not.
The primary purpose of the license requirement is to compel a foreign corporation
desiring to do business within the Philippines to submit itself to the jurisdiction of the
courts of the state and to enable the government to exercise jurisdiction over them for
the regulation of their activities in this country. If a foreign corporation operates a
business in the Philippines without a license, and thus does not submit itself to Philippine
laws, it is only just that said foreign corporation be not allowed to invoke them in our
courts when the need arises. "While foreign investors are always welcome in this land to
collaborate with us for our mutual benefit, they must be prepared as an indispensable
condition to respect and be bound by Philippine law in proper cases, as in the one at
bar." The requirement of a license is not intended to put foreign corporations at a
disadvantage, for the doctrine of lack of capacity to sue is based on considerations of
sound public policy.
Accordingly, petitioner HPPL must be held to be incapacitated to bring this
petition for injunction before this Court for it is a foreign corporation doing
business in the Philippines without the requisite license.
WHEREFORE, in view of all the foregoing, the instant petition is hereby
DISMISSED for lack of merit. Further, the temporary restraining order issued on
December 3, 1997 is LIFTED and SET ASIDE. No costs. HTC
SUPREME COURT
Manila
FIRST DIVISION
[G.R. No. 230322. February 19, 2020.]
JESSIE L. JOMADIAO and WILMA F. PASTOR, petitioners, vs. MANUEL L.

ARBOLEDA, respondent.
PERALTA, C.J:
The Facts
The Bureau of Soils and Water Management (BSWM) of the Department of

Agriculture (DA) implemented a Small Water Impounding Project (SWIP) which fully funded
constructions or rehabilitations of water structures within certain provinces. The Municipality
of Looc in Romblon was one of the grantees of SWIP, and Nine Million Pesos
(P9,000,000.00) were allotted for the rehabilitation of several of its canals and dams.
An Invitation to Apply for Eligibility and to Bid (IAEB) was published twice in Romblon
Sun, a local newspaper, on September 25 to October 1, 2007, and on October 2 to 8, 2007.
Another IAEB was posted on Looc's Municipal Bulletin Board from October 15, 2007, to
November 20, 2007.
The opening of bids was conducted on November 12, 2007, and R.G. Florentino
Construction and Trading (R.G. Florentino) was the lone bidder with the bid amount of Eight
Million Nine Hundred Ninety-Nine Thousand Five Hundred Pesos (P8,999,500.00). The BAC
accepted and recommended R.G. Florentino's bid after determining that it was compliant
with the eligibility, technical and financial requirements.
On November 20, 2007, a Notice of Award was published in favor of R.G. Florentino,
followed by the issuance of the SWIP contract on November 29, 2007, and a Notice to
Proceed on December 4, 2007.
On September 2, 2008, a Certificate of Acceptance and Turn Over was issued by the
Municipality of Looc in favor of R.G. Florentino, indicating therein that the SWIP was
completed in accordance with the guidelines and specifications under the contract
agreement.
On May 4, 2009, Regional Office No. IV of the Commission on Audit (COA)
forwarded an Annual Audit 12 Report on the Municipality of Looc for the Year Ended
December 31, 2008 to Fiel. The COA observed that pertinent provisions of RA 9184 and its
Implementing Rules and Regulations-A (IRR-A) were violated when the BAC awarded the
SWIP to R.G. Florentino, to the detriment of Looc.
On August 26, 2009, Manuel Arboleda (Respondent) filed a Complaint before the
Office of the Ombudsman against Fiel and the BAC members for the following irregularities:
a. Non-submission of pre-procurement conference, making it appear that

the Bids and Awards Committee (BAC) did not convene to determine
the readiness of the procuring entity in terms of legal, technical, and
financial requirements, to ensure the availability of funds for the
contract, and to review all relevant documents in relation to their
adherence to the law, considering that the amount involved is more
than P5 Million. This is a clear violation of Section 20 of RA 9184,
Section 20.1 of its IRR-A.
b. (b) Violation of Sections 21.2.1(a), 21.2.1(b), 21.2.1(c), 21.1.3, 21.1.5,

41, 13.1 of RA 9184 relative to the publication of the Invitation to Apply
for Eligibility to Bid. Likewise, it is noteworthy that per the certification
issued by the Local Newspaper, Romblon Sun, hereto appended as
ANNEX "B", paragraph two (2) clearly says that: "That the said
publication was paid by Engineer Romeo Florentino of RG
Florentino Construction."
c. The BAC appears to have shown negligence or bias in favor of the

lone prospective bidder, R.G. Florentino and Trading, when it failed to
determine that the said bidder was "ineligible," contrary to Sections
23.2, 23.6 and 23.11.2 of RA 9184 IRR-A, thus it was allowed to
participate in the bidding.
d. The Bidding conducted on 12 November 2007 was prior to the receipt

of funds on 13 and 27 December 2007.
e. The BAC was not able to rate the bid as "failed" due to the
incompleteness and insufficiency of the bid security, contrary to
Section 30.1 of RA 9184 IRR-A.
f. Excess advance payment of P126,525.00 was given to the contractor,

contrary to Item 4.1 of the Contract Implementation Guidelines for the
Procurement of Infrastructure Projects of RA 9184 IRR-A. The law
only allows the payment of 15% advance payment.
Arboleda prayed that the following be imposed upon the BAC members and Fiel:
dismissal from service, cancellation of eligibility, forfeiture of their retirement benefits and
perpetual disqualification for reemployment in the government service.
The Ombudsman found untoward bias towards R.G. Florentino when: (1) the BAC
allowed Romeo Florentino of R.G. Florentino to pay for the publication of the IAEB in
Romblon Sun; (2) the BAC declared R.G. Florentino's bid as "eligible" even if the bid security
was not present at the opening of bids; and (3) the SWIP was not posted on the Philippine
Government Electronic Procurement System (PhilGEPS) website.
On April 28, 2015, herein petitioners, Jomadiao and Pastor filed a Motion for
Reconsideration, by themselves, and submitted therein that they never underwent any
training and were never informed of the procedures, duties, and responsibilities of the BAC.
Their participation, as BAC members, only included attending the public bidding on
November 12, 2007, and they alleged that they were no longer privy to any transaction that
occurred thereafter. They also averred that the publication of the IAEB in the Romblon Sun
was made without their knowledge nor consensus and that the non-posting of the SWIP
project on the PhilGEPS website was not their direct duty. The Order dated May 15, 2015, of
the Office of the Ombudsman however upheld the November 14, 2014 Decision.
The CA noted that the BAC must duly ensure faithful compliance to the provisions of
R.A. 9184 and its IRR-A during the bidding process. Allowing R.G. Florentino to pay for the
IAEB was, therefore, a blatant disregard of R.A. 9184, particularly Section 21 thereof.
Issue
Whether or not Petitioners willfully violated or disregarded procurement process and

procure in order to give unwarranted advantage and preference to R.G. Florentino
Construction and Trading?
Ruling of the Court
Yes, the basic rule in public bidding that bids should be evaluated on the basis
of the required documents submitted before and not after the opening of bids must be
strictly observed in order to safeguard a fair, honest and competitive public bidding. A
bid security is one of the documents that Section 25.3 and its IRR-A mandates to be
included at the opening of bids.
The Ombudsman determined that R.G. Florentino did not submit a bid security at the
time of bidding on November 12, 2007, because the Acknowledgment on the Bidder's Bond
was dated 2008 and the Official Receipt of Eastern Assurance & Surety Company (EASC),
the bonding company, was issued on March 8, 2008. Hence, the Ombudsman held that the
BAC violated RA 9184 for declaring R.G. Florentino as eligible even in the absence of a Bid
Security at the time of bidding.
On the other hand, attached on record is a Bidder's Bond dated November 11, 2007,
and valid until February 11, 2008, on which R.G. Florentino was named as the principal and
EASC as the surety. It also provides that "THIS BOND IS CALLABLE ON DEMAND UNDER
R.A. 9184" for the amount of Two Hundred Twenty-Five Thousand Pesos (P225,000.00), the
condition of which states:
NOW THEREFORE, the conditions of this obligation are such that if the
above-bounded principal shall, in the event of his becoming successful
bidder in the above proposal (1) fails to guarantee the true and faithful
performance in case of the award; (2) shall refuse to accept the same or
(3) shall not answer for any delay and/or default in the execution of the
contract as provided in the proposal; then the MUNICIPALITY OF LOOC
shall be entitled to be indemnified of any loss or damage it may suffer by
reason thereof not to exceed the sum of TWO HUNDRED TWENTY-FIVE
THOUSAND PESOS (P225,000.00) PESOS (sic), Philippine Currency,
otherwise this obligation shall be void and without effect.
A reading of the Bidder's Bond would show that it satisfied the required form of a Bid
Security as provided for in Sections 27.2 29 27.3 30 and 28 31 and its IRR-A which must be:
(a) Two and a half percent (2 1/2%) of the approved budget for the contract to be bid; (b)
callable upon demand issued by a reputable surety or insurance company; (c) in Philippine
Peso; and (d) not valid for more than 120 days from the opening of the bid.
Furthermore, the Bidder's Bond was notarized on November 11, 2007 which
contradicts the complaint and the finding of the Ombudsman.
Hence, the BAC did not err in accepting the bid offer of R.G. Florentino because the
bid security shows that it had been issued regularly and for purposes only of securing R.G.
Florentino's performance on the SWIP. The Court cannot contradict the BAC's finding on
record that a Bid Security was included in the technical proposal during the opening of bids
and, thus, upholds its presumption of regularity.
Section 21 of RA 9184 mandates that the procuring entity, in this case the Municipality
of Looc, shall cause the advertisement of the invitation to bid, thus:
SEC. 21. Advertising and Contents of the Invitation to Bid. — In line

with the principle of transparency and competitiveness, all Invitations to Bid for
contracts under competitive bidding shall be advertised by the Procuring Entity
in such manner and for such length of time as may be necessary under the
circumstances, in order to ensure the widest possible dissemination thereof,
such as, but not limited to, posting in the Procuring Entity's premises, in
newspapers of general circulation, the G-EPS and the website of the Procuring
entity, if available. The details and mechanics of implementation shall be
provided in the IRR to be promulgated under this ACT.
The IRR-A then provides:
21.2. Advertising and Posting of the Invitation to Apply for Eligibility

and to Bid
21.2.1. Except as otherwise provided in Sections 21.2.3 and 21.2.4
of this IRR-A and for the procurement of common-use goods and supplies, the
Invitation to Apply for Eligibility and to Bid shall be:
a. Advertised at least twice within a maximum period of fourteen (14)

calendar days, with a minimum period of six (6) calendar days in
between publications, in a newspaper of general nationwide
circulation which has been regularly published for at least two (2)
years before the date of issue of the advertisement;
b. Posted continuously in the website of the procuring entity concerned,

if available, the website of the procuring entity's service provider, if
any, as provided in Section 8 of this IRR-A, and the G-EPS during the
maximum period of fourteen (14) calendar days stated above; and
c. Posted at any conspicuous place reserved for this purpose in the
premises of the procuring entity concerned, as certified by the head of
the BAC Secretariat of the procuring entity concerned.
RA 9184 intends to reach the broadest number of prospective participants to join the
public bidding. This is in line with the law's policy of promoting transparency and
competitiveness during the entire bidding process.
It is undisputed that the IAEB was published in the Romblon Sun, a newspaper of
general local circulation. The charge against petitioners, on the other hand, was centered on
the seemingly partial action of the BAC in allowing R.G. Florentino to pay for the publication
of the IAEB.
At the onset, the duty of publication falls upon the BAC Secretariat, and his or her
certification as to the fact of posting refutes allegations to the contrary.
The petitioners, as provisional BAC members, are not responsible for the actual
posting of the IAEB and the corresponding payment, if any, of the same. Be that as it may,
the Court is of the view that allowing a prospective bidder to pay for any advertisement or
publication will not give him or her a leverage in public bidding. Such act is actually against
any bidder's interest because it publicizes the existence of a bidding and persuades
competition.
On the issue of non-posting of the IAEB on the PhilGEPS website, respondent did
not show that the Municipality of Looc had an electronic registry with the PhilGEPS nor that it
had access to the internet. Posting on the PhilGEPS website requires not only prior
coordination with the G-EPS but also a stable network of the procuring entity. Since the
viability of posting on the PhilGEPS website had not been duly proven during trial, the Court
could not postulate on the assumption that the lack of posting on PhilGEPS was deliberate.
Nonetheless, the BAC still fell short in the publication requirement when it failed to
advertise the IAEB in a newspaper of general nationwide circulation, or a newspaper that is
published nationally. The minutes of the September 24, 2007 meeting uncovers that the
BAC acceded to forego publication in a newspaper of general nationwide circulation
because the breakdown per project was below P5,000,000.00. This reveals that the BAC
was still ascribing to the posting requirements of P.D. 1594, or otherwise known as
Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure
Contracts, the IRR of which provides:
IB 3 — Invitation to Prequalify/Apply for Eligibility and to Bid
1. For locally funded contracts, contractors shall be invited to apply for

eligibility and to bid through:
a. For contracts to be bid costing more than P5,000,000 the

advertisement shall be made at least three (3) times within a reasonable
period depending upon the size and complexity of the contract to be bid
but in no case less than two (2) weeks in at least two (2) newspapers of
general nationwide circulation which have been regularly published for at
least two (2) years before the date of issue of the advertisement. During
the same period that the advertisement is posted in the newspaper or for
a longer period as determined by the head of the
office/agency/corporation concerned, the same advertisement shall be
posted in the website of the office/agency/corporation concerned and at
the place reserved for this purpose in the premises of the
office/agency/corporation concerned. However, for contracts to be bid
costing P5,000,000 and below or for contracts authorized to be bid by the
regional/district offices involving costs as may be delegated by the head
of office/agency/corporation, the invitation to bid shall be advertised at
least two (2) times within two (2) weeks in a newspaper of general local
circulation in the region where the contract to be bid is located, which
newspaper has been regularly published for at least six (6) months before
the date of issue of the advertisement.
This has already been superseded by Section 21.2.3 and its IRR-A which states that:
21.2.3. For contracts to be bid with an ABC costing two million pesos
(P2,000,000.00) and below for the procurement of goods, and five million pesos
(P5,000,000.00) and below for the procurement of infrastructure projects, the
Invitation to Apply for Eligibility and to Bid shall be posted at least in the website of
the procuring entity concerned, if available, the website of the procuring entity's
service provider, if any, as provided in Section 8 of this IRR-A the G-EPS, and
posted at any conspicuous place reserved for this purpose in the premises of the
procuring entity concerned, as certified by the head of the BAC Secretariat of the
procuring entity concerned, during the same period as above.
Yet, the BAC gave an incorrect interpretation of the law because the easing of the
posting requirement refers to contracts that are below P5,000,000.00. The SWIP contract
was for the entire amount of P9,000,000.00 and it was without regard to the value of the
infrastructure project per barangay.
The Court has been consistent in holding that the functions of BAC members are not
merely ceremonial. Theirs is the obligation to ensure the proper conduct of public bidding,
because it is the policy and medium adhered to in Government procurement and
construction contracts under existing laws and regulations. It is the accepted method for
arriving at a fair and reasonable price and ensures that overpricing, favoritism and other
anomalous practices are eliminated or minimized.
Petitioners are charged for the less grave offense of simple neglect of duty, which is the
failure to give attention to a task, or the disregard of a duty due to carelessness or
indifference. They are hereby penalized for six (6) months suspension, considering that this
is their first offense after several years in public service.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated July 21, 2016
and the Resolution dated March 1, 2017 of the Court of Appeals in CA-G.R. SP No. 142029
are hereby SET ASIDE. A new one is ENTERED finding petitioners Jessie L. Jomadiao and
Wilma F. Pastor GUILTY of SIMPLE NEGLECT OF DUTY and the penalty of six (6) months
suspension is hereby imposed unto them.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
[G.R. No. 201112, June 13, 2012]
ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI AND MARY ANNE L.

SUSANO, Petitioners, v. THE HONORABLE COMMISSION ON ELECTIONS,
Respondent.
[G.R. NO. 201121]
SOLIDARITY FOR SOVEREIGNTY (S4S), REPRESENTED BY MA. LINDA OLAGUER;

RAMON PEDROSA, BENJAMIN PAULINO SR., EVELYN CORONEL, MA. LINDA
OLAGUER MONTAYRE, AND NELSON T. MONTAYRE, Petitioners, v. COMMISSION
ON ELECTIONS, REPRESENTED BY ITS CHAIRMAN, COMMISSIONER SIXTO S.
BRILLANTES, JR., Respondent.
[G.R. NO. 201127]
TEOFISTO T. GUINGONA, BISHOP BRODERICK S. PABILLO, SOLITA COLLAS

MONSOD, MARIA CORAZON MENDOZA ACOL, FR. JOSE DIZON, NELSON JAVA
CELIS, PABLO R. MANALASTAS, GEORGINA R. ENCANTO AND ANNA LEAH E.
COLINA, Petitioners, v. COMMISSION ON ELECTIONS AND SMARTMATIC TIM
CORPORATION, Respondents.
[G.R. NO. 201413]
TANGGULANG DEMOKRASYA (TAN DEM), INC., EVELYN L. KILAYKO, TERESITA D.

BALTAZAR, PILAR L. CALDERON AND ELITA T. MONTILLA, Petitioners, v.
COMMISSION ON ELECTIONS AND SMARTMATIC-TIM CORPORATION, Respondents.
PERALTA, J.:
The Facts
On July 10, 2009, the Comelec and Smartmatic-TIM entered into a Contract for the
Provision of an Automated Election System for the May 10, 2010 Synchronized National and
Local Elections,(AES Contract). The contract between the Comelec and Smartmatic-TIM
was one of “lease of the AES with option to purchase (OTP) the goods listed in the contract.”
In said contract, the Comelec was given until December 31, 2010 within which to exercise
the option. In September 2010, the Comelec partially exercised its OTP 920 units of PCOS
machines with corresponding canvassing/consolidation system (CCS) for the special
elections in certain areas in the provinces of Basilan, Lanao del Sur and Bulacan. In a letter
dated December 18, 2010, Smartmatic-TIM, through its Chairman Flores, proposed a
temporary extension of the option period on the remaining PCOS machines until March 31,
2011, waiving the storage costs and covering the maintenance costs. The Comelec did not
exercise the option within the extended period. Several extensions were given for the
Comelec to exercise the OTP until its final extension on March 31, 2012.
On March 29, 2012, the Comelec issued a Resolution resolving to accept

Smartmatic-TIM’s offer to extend the period to exercise the OTP until March 31, 2012 and to
authorize Chairman Brillantes to sign for and on behalf of the Comelec the Agreement on the
Extension of the OTP Under the AES Contract (Extension Agreement). Comelec again
issued a Resolution resolving to approve the Deed of Sale between the Comelec and
Smartmatic-TIM to purchase the latter’s PCOS machines to be used in the upcoming May
2013 elections and to authorize Chairman Brillantes to sign the Deed of Sale for and on
behalf of the Comelec. The Deed of Sale was forthwith executed.
Petitioners assail the constitutionality of the Comelec Resolutions on the grounds that
the option period provided for in the AES contract had already lapsed; that the extension of
the option period and the exercise of the option without competitive public bidding
contravene the provisions of RA 9184; and that the Comelec purchased the machines in
contravention of the standards laid down in RA 9369.
On the other hand, respondents argue on the validity of the subject transaction based
on the grounds that there is no prohibition either in the contract or provision of law for it to
extend the option period; that the OTP is not an independent contract in itself, but is a
provision contained in the valid and existing AES contract that had already satisfied the
public bidding requirements of RA 9184; and that exercising the option was the most
advantageous option of the Comelec.
Claiming that the foregoing issuances of the Comelec, as well as the transactions
entered pursuant thereto, are illegal and unconstitutional, petitioners come before the Court
in four separate Petitions for Certiorari, Prohibition, and Mandamus imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the Comelec in issuing
the assailed Resolutions and in executing the assailed Extension Agreement and Deed.
Issue
Whether or not there was grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Comelec in issuing the assailed Resolutions and in executing
the assailed Extension Agreement and Deed?
Ruling of the Court
No, A reading of the other provisions of the AES contract would show that the parties
are given the right to amend the contract which may include the period within which to
exercise the option. There is, likewise, no prohibition on the extension of the period, provided
that the contract is still effective.
In this case, the extension of the option period means that the Comelec had more
time to determine the propriety of exercising the option. With the extension, the Comelec
could acquire the subject PCOS machines under the same terms and conditions as earlier
agreed upon. The end result is that the Comelec acquired the subject PCOS machines with
its meager budget and was able to utilize the rentals paid for the 2010 elections as part of
the purchase price.
While we concede that a winning bidder is not precluded from modifying or

amending certain provisions of the contract bidded upon, such changes must not
constitute substantial or material amendments that would alter the basic parameters
of the contract and would constitute a denial to the other bidders of the opportunity to
bid on the same terms. Hence, the determination of whether or not a modification or
amendment of a contract bidded out constitutes a substantial amendment rests on whether
the contract, when taken as a whole, would contain substantially different terms and
conditions that would have the effect of altering the technical and/or financial proposals
previously submitted by other bidders. The alterations and modifications in the contract
executed between the government and the winning bidder must be such as to render such
executed contract to be an entirely different contract from the one that was bidded upon.
It must be pointed out that public biddings are held for the best protection of the
public and to give the public the best possible advantages by means of open competition
between the bidders, and to change them without complying with the bidding requirement
would be against public policy. What are prohibited are modifications or amendments which
give the winning bidder an edge or advantage over the other bidders who took part in the
bidding, or which make the signed contract unfavorable to the government. In this case, as
thoroughly discussed in our June 13, 2012 Decision, the extension of the option period and
the eventual purchase of the subject goods resulted in more benefits and advantages to the
government and to the public in general.
While movants may have apprehensions on the effect to government contracts of

allowing "advantage to the government" as justification for the absence of competitive public
bidding, it must be stressed that the same reasoning could only be used under similar
circumstances.
The "advantage to the government," time and budget constraints, the application of
the rules on valid amendment of government contracts, and the successful conduct of the
May 2010 elections are among the factors looked into in arriving at the conclusion that the
assailed Resolutions issued by the Comelec and the agreement and deed entered into
between the Comelec and Smartmatic-TIM, are valid.
WHEREFORE, premises considered, the petitions are DENIED for lack of merit.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 221134, March 01, 2017

OFFICE OF THE OMBUDSMAN-MINDANAO, Petitioner, v. RICHARD T. MARTEL AND
ABEL A. GUIÑARES, Respondents.
MENDOZA, J.:
The Facts
In 2003, Martel was the Provincial Accountant of Davao del Sur while Guiñares
was its Provincial Treasurer. They both served as ex officio members of the Provincial Bids
and Awards Committee (PBAC) of Davao del Sur, together with Mier, Provincial Budget
Officer; Gan, Provincial Board Member; and Putong, Provincial General Services Officer
(PGSO).
In the Purchase Requests, the Office of the Governor of Davao del Sur requested
the acquisition of five service vehicles for the use of the Governor and the Vice-Governor,
namely:
Two (2) Toyota Hilux 4x4 SR5,
One (1) Mitsubishi L300 Exceed DX,
Two (2) Ford Ranger XLT 4x4 M/T
The procurement of the five (5) vehicles was not subjected to a public bidding as it
was immediately effected through direct purchase pursuant to the recommendation of
Putong as PGSO. The recommendation was approved by the members of the PBAC,
which included Martel and Guiñares. Accordingly, the said vehicles were purchased and
delivered to the provincial government. The disbursement vouchers for the five (5) vehicles
were signed by Martel and Guiñares as Provincial Accountant and Provincial Treasurer,
respectively.
Subsequently, a concerned citizen wrote to the Ombudsman, reporting the lack of
public bidding of the said procurement. Acting thereon, the Ombudsman launched an
investigation concerning the acquisition of the said vehicles.
Ombudsman’s Ruling
In its Decision, dated June 14, 2012, the Ombudsman found Martel, Guiñares,
Putong, and Mier guilty of grave misconduct and gross neglect of duty. The Ombudsman
opined that these PBAC officers improperly resorted to direct purchase, completely
disregarding the required public bidding. Gan, however, was relieved of his administrative
liability due to his re-election as provincial board member. The decretal portion reads:
WITH THE FOREGOING PREMISES, this Office finds substantial evidence to
sanction respondents Richard Tan Martel, Allan Cudera Putong, Victoria Givero Mier and
Abel Arquillano Guiñares for Grave Misconduct and Gross Neglect of Duty. Pursuant to
Administrative Order No. 17, this Office hereby orders said respondents DISMISSED from
service together with all its accessory penalties. The incumbent Honorable Governor of the
Province of Davao del Sur is hereby directed to implement this Office's Decision and to
submit a compliance report within ten (10) days from the implementation thereof.
xxxx xxxx xxxx xxxx
Undaunted, Martel and Guiñares appealed before the CA under Rule 43 of the
Rules of Court.
Court of Appeals Ruling
In its assailed decision, dated February 4, 2015, the CA found that the PBAC
members committed a violation when they resorted to a negotiated purchase even without
a prior public bidding. Under Republic Act (R.A.) No. 9184 and R.A. No. 7160, negotiated
procurement can only be resorted to when there are two (2) failed biddings. The CA ruled
that there was no failure of bidding because no public bidding was ever conducted. It also
observed that the PBAC violated (1) Section 18 of R.A. No. 9184 prohibiting the reference
of brand names for the purpose of procurement; and (2) COA Circular No. 75-6 precluding
government officials or employees from using more than one motor vehicle.
The CA disposed the appeal in this wise:
WHEREFORE, foregoing premises considered, the 25 February 2011 Decision of
the Office of the Ombudsman is AFFIRMED with MODIFICATION. The penalty of
dismissal meted upon petitioners RICHARD T. MARTEL and ABEL A. GUIÑARES is
hereby lowered to ONE YEAR SUSPENSION WITHOUT PAY.
SO ORDERED.
xxxx xxxx xxxx xxxx
The Ombudsman moved for reconsideration, but its motion was denied by the CA.
Hence, this petition.
Issue
Whether or not the procurement of five (5) vehicles violated R.A. 9184?
Ruling of the Court
Yes, the procurement of the vehicles violated R.A No. 9184 and R.A No. 7160
and CO A Circular No. 92-386.
Section 10 of R.A. No. 9184 provides that “all procurement shall be done through
Competitive Bidding, except as provided for in Article XVI of this Act." Likewise, Section 27
of COA Circular 92-386 provides that “except as otherwise provided herein, acquisition of
supplies or property by local government units shall be through competitive public bidding."
Hence, there is a clear mandate by R.A. No. 9184 and COA Circular 92-386 that public
bidding is the primary process to procure goods and services for the government.
A competitive public bidding aims to protect public interest by giving it the best
possible advantages thru open competition. It is precisely the mechanism that enables the
government agency to avoid or preclude anomalies in the execution of public contracts.
Strict observance of the rules, regulations, and guidelines of the bidding process is the
only safeguard to a fair, honest and competitive public bidding.
Only in exceptional circumstances that R.A. No. 9184 and R.A No 7610 allow the
procuring entity to forego the strict requirement of a public bidding. Section 53 of R.A. No.
9184 provides that negotiated procurement may be availed by the procuring entity only in
specific occasions, such as when there are two (2) failed biddings. Similarly, Section 369
of R.A. No. 7160 provides that negotiated purchase may be availed in case where public
bidding has failed for two (2) consecutive times. Section 35 of R.A. No. 9184 provides,
among others, that there is a failure to bid if no bids are received.
In this case, no public bidding was conducted in the procurement of the service
vehicles for the Governor and Vice-Governor. The absence of public bidding was a glaring
violation of R.A. No. 9184 and R.A. No. 7160 and COA Circular No. 92-386, unless the
respondents could prove that the resort to a negotiated bidding, as approved by the PBAC,
was proper.
The respondents, however, reasoned out that it was upon the recommendation of
the PGSO that they resorted to the direct purchase of the vehicles and the PBAC merely
approved the recommendation of the PGSO.
The argument utterly lacks merit. Accordingly, as members of the PBAC, the
respondents were not bound by the recommendation of the PGSO to determine the mode
of procurement. As an independent committee, the PBAC was solely responsible for the
conduct of the procurement and could not pass the buck to others. As correctly stated by
the CA, the PBAC had control over the approval of the mode of procurement and the
respondents could not wash their hands from liability thereof. Their role in choosing the
mode of procurement was clearly an active action, and not a passive one as the
respondents would want to convey.
In this case, respondents Martel and Guiñares, as members of the PBAC, being
the Provincial Treasurer and the Provincial Auditor, respectively, committed the following
transgressions:
(1) They failed to conduct a public or competitive bidding as a mode of procurement;
(2) Without any basis in law, they allowed the resort to negotiated procurement in
violation of Sections 35, 48, 50 and 53 of R.A. No. 9184; Sections 356, 366 and
369 of R.A. No. 7160; and COA Circular No. 92-386;
(3) In the direct purchase of the vehicles, they specified the brand name of the units
they wanted to procure, instead of technical descriptions only, which violated
Section 18 of R.A. No. 9184;
(4) They approved the purchase of more than one service vehicle for the use of the
governor, in violation of COA Circular No. 75-6;
(5) They signed and issued the disbursement vouchers for the vehicles despite their
illegal procurement.
Notwithstanding these glaring violations of the procurement laws and the illegal
approval of the vehicles' procurement by the PBAC, Martel and Guiñares actively
participated in the acquisition of the same by signing the disbursement vouchers as
Provincial Accountant and Provincial Treasurer, respectively. Hence, due to the acts of the
respondents, the government disbursed public funds for illegally procured service vehicles.
WHEREFORE, the petition is GRANTED. The February 4, 2015 Decision and the
October 16, 2015 Resolution of the Court of Appeals in CA-G.R. SP No. 05473-MIN are
REVERSED and SET ASIDE. The February 28, 2013 Order of the Ombudsman in OMB-
M-A-05-450-L, is hereby REINSTATED.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 194763-64, July 20, 2016
WILFRED GACUS YAMSON, ASSISTANT GENERAL MANAGER A, REY CAÑETE

CHAVEZ, DEPARTMENT MANAGER C, ARNOLD DOMINGO NAVALES,
DEPARTMENT MANAGER C, ROSINDO JAPAY ALMONTE, DIVISION MANAGER C,
ALFONSO EDEN LAID, ASSISTANT GENERAL MANAGER A, AND WILLIAM V.
GUILLEN, DEPARTMENT MANAGER C, (ALL OF) DAVAO CITY WATER DISTRICT,
BAJADA, DAVAO CITY, Petitioners, v. DANILO C. CASTRO AND GEORGE F.
INVENTOR, Respondents.
REYES, J.:
The Facts
The petitioners and Danilo C. Castro and George F. Inventor (respondents) are all
officials and employees of the Davao City Water District (DCWD). Engr. Yamson, Engr.
Chavez, Navales and Atty. Guillen occupied concurrent membership in its Pre-Bidding and
Awards Committee-B (PBAC-B). Almonte, meanwhile, was the Division Manager of
DCWD's Engineering and Construction Department, while Laid was the Assistant General
Manager for Administration.
In Board Resolution No. 97-2488 adopted on November 21, 1997, the DCWD
Board of Directors approved the recommendation of DCWD General Manager
Carbonquillo to undertake the Cabantian Water Supply System Project stage by stage,
with a budgetary cost of Thirty-Three Million Two Hundred Thousand Pesos
(P33,200,000.00). Initial activities for the project were the simultaneous drilling of two wells
separately located in Cabantian (identified as VES 15 Project) and Communal (identified
as VES 21 Project) in Davao City, both estimated at Four Million Pesos (P4,000,000.00)
each. Included in Carbonquillo's recommendation was the direct negotiation of the well
drilling phase of the project to Hydrock Wells, Inc. (Hydrock).
Thereafter, in Resolution No. 05-9711, the PBAC-B resolved to dispense with the
advertisement requirement in the conduct of the bidding and instead, opted to send letters
to accredited well drillers and invited their participation in the VES 15 and VES 21 well
drilling projects. Invited were Hydrock, AMG Drilling and Construction, Inc. (AMG) and Drill
Mechanics Incorporated (DMI).
Thereafter, in Resolution No. 06-9714 dated December 16, 1997, the PBAC-B
resolved, "due to the urgency, importance and necessity of the well drilling project," to
endorse the matter to the head of agency for approval, with a "recommendation that the
project be pursued by a negotiated agreement contract with HYDROCK taking into
account its track record, efficiency of performance, and quoted price."
The PBAC-B's recommendation was well-taken by the DCWD Board of Directors,

and in Resolution No. 98-2716 dated February 13, 1998, it resolved to award to Hydrock
the VES 15 Project at P2,807,100.00, and the VES 21 Project at P2,349,180.00. On the
same date, February 13, 1998, Carbonquillo issued a notice of award to Hydrock,
informing the latter that the contract for the VES 21 Project has been awarded to it at the
cost of P2,244,780.00.17 Notice to proceed was then issued on February 20, 1998.
The respondents filed a joint Affidavit-Complaint19 with the Ombudsman, charging

the petitioners with Violation of Section 3(e) of Republic Act (R.A.) No. 3019, or the Anti-
Graft and Corrupt Practices Act, for the alleged non-observance of the proper bidding
procedure in the VES 21 Project and for allegedly giving Hydrock unwarranted benefits,
advantage or preference in the "surreptitious" grant of the contract to it.. Moreover, the
respondents filed another joint Affidavit-Complaint with the Ombudsman, likewise charging
the petitioners with Violation of Section 3(e) of R.A. No. 3019, this time for the VES 15
Project.
For the VES 21 Project, the administrative case against the petitioners was
docketed as OMB-M-A-05-093-C, while the administrative case for the VES 15 Project
was docketed as OMB-M-A-05-104-C.
OMB-M-A-05-093-C (VES 21 Project)
The Ombudsman did not accept the petitioners' explanation as regards the PBAC-
B's resort to a "simplified bidding", finding that the circumstances of the project do not call
for the application of the exception to the general rule on competitive public bidding, viz.:
(1) the "public outcry" was not a natural calamity;
(2) there was no prior failure of competitive public bidding;
(3) there was no adjacent or continuous project being undertaken by Hydrock; and
(4) the VES 21 Project was not a take-over project.
Thus, the Ombudsman found the petitioners guilty of Grave Misconduct, ruling that:
(1) the petitioners failed to conduct the required public bidding;
(2) the project was implemented by Hydrock ahead of the contract award, with the
knowledge and approval of Carbonquillo, and with the cooperation of the petitioners;
(3) the petitioners' justification that Carbonquillo was responsible for the
mobilization of Hydrock prior to contract award is self-serving considering that the
petitioners hold managerial positions and should not follow orders blindly; and
(4) the change order was allowed even before proper documentation was
accomplished, among others.
xxxx xxxx xxxx xxxx
OMB-M-A-05-104-C (VES 15 Project)
The Ombudsman's findings and conclusion on the petitioners' accountability

under the VES 15 Project are similar to its discussion regarding the petitioners'
liability under the VES 21 Project. Thus, it ruled that the VES 15 Project did not fall
under the exceptions to competitive bidding in Presidential Decree (P.D.) No. 1594,
and that the VES 15 Project was riddled with irregularities.
xxxx xxxx xxxx xxxx

The CA rejected the petitioners' argument that the filing of the separate complaints
filed against them in the Ombudsman constituted forum shopping. According to the CA,
the rule on forum shopping applies exclusively to judicial cases/proceedings and not to
administrative cases, and as such, the filing of the identical complaints with the
Ombudsman does not violate the rule.
The CA also found no reversible error in the Ombudsman's ruling that the
petitioners are liable for grave misconduct, finding that they violated the mandatory
provisions of P.D. No. 1594, particularly the absence of a public bidding on the award of
the VES 15 and VES 21 Projects to Hydrock. The CA ruled that the attendant
circumstances do not justify dispensing with, the public bidding and entering into a
negotiated contract with Hydrock as trie conditions set in P.D. No. 1594 were not met.
xxxx xxxx xxxx xxxx
Thus, the petitioners are now before this Court, arguing that the CA Decision dated
December 6, 2010 was not in accord with law or with the applicable decisions of the Court.
Issue
Whether or not petitioners are liable for administrative sanction by violating the
provisions of P.D. No. 1594, particularly the absence of a public bidding on the award of
the VES 15 and VES 21 Projects to Hydrock?
Ruling of the Court
Yes, petitioners are liable for simple neglect of duty and simple misconduct.
P.D. No. 1594, and even the subsequent laws on procurement, set the order of
priority in the procurement of government construction projects. First, by competitive public
bidding and second, by negotiated procurement (or by administration or force account, as
the case may be).62 Its Implementing Rules and Regulation (IRR),63 meanwhile, provide
for the specific instances when a negotiated contract may be entered into, viz.:
(1) in times of emergencies arising from natural calamities where immediate action
is necessary to prevent imminent loss of life and/or property;
(2) when there is a failure to award the contract after competitive bidding for valid
cause or causes, in which case bidding is undertaken through sealed canvass
of at least three (3) contractors; and
(3) in cases of adjacent or contiguous contracts.
In this case, the petitioners justify their resort to a negotiated

procurement/simplified bidding by claiming that "there was a public outcry for water in the
areas of Buhangin, Cabantian, Lanang, Sasa and Panacan." Thus, they dispensed with
the public bidding and instead, opted to send out invitations to "accredited well drillers."
But as correctly concluded by both the Ombudsman and the CA, such "public
outcry for water" does not qualify as an emergency arising from natural calamities,
as required by both P.D. No. 1594 and E.O. No. 164. Natural calamities, as opposed to
man-made calamities, usually refer to catastrophic events that result from the natural
processes of the earth and which give rise to loss of lives or property or both. These
include floods, earthquakes, storms and other similar natural events. Water shortage,
clearly, does not belong to the list of natural calamities. In fact, the "public outcry for water"
relied upon by the petitioners was brought about by insufficient water supply connections
in the affected areas.
Records also show that as early as May 1997, residents of the affected area have
already been demanding for the improvement in their water supply system; yet, it was only
in November 1997 that DCWD started to act on the matter and apparently, only after the
clamour has been publicized in the local newspapers. This contradicts the petitioners'
claim of urgency given the lapse of time that it took the DCWD to address the situation.
The petitioners, clearly, had no justifiable reason to dispense with the public bidding of the
VES 21 Project.
To restate, before the petitioners can resort to a negotiated procurement through

sealed canvass of at least three qualified contractors, whether under Section II, IB 10.6.2
of the IRR of P.D. No. 1594 or Section 5 of E.O. No. 164, there must first be a failure of a
competitive public bidding undertaken in accordance with the IRR of P.D. No. 1594. In this
regard, the Court has emphasized that "violation of the provisions of the IRR of P.D. No.
1594 will subject the erring government official/employee to the sanctions provided under
existing laws particularly R.A. No. 3019 (known as the "Anti-Graft and Corrupt Practices
Act") and R.A. No.] 6713 (known as the "Code of Conduct and Ethical Standards for Public
Officials and Employees"), and the Civil Service Law, among others." Consequently, the
petitioners should be held administratively liable.
In this case, it has been established that there was no competitive bidding held in
the first place and hence, there was no justification for the negotiated contract with
Hydrock. Petitioners Yamson, Chavez, Navales and Guillen were obliged to faithfully
comply with the rules on competitive public bidding, as mandated by P.D. No. 1594, which
states: "[e]ach office/agency/corporation shall have in its head office or in its implementing
offices a [BAC] which shall be responsible for the conduct of prequalification, bidding,
evaluation of bids, and recommending award of contracts." Consequently, they should
only be liable for Simple Neglect of Duty.
WHEREFORE, the Decision dated December 6, 2010 of the Court of Appeals in

CA-G.R. SP No. 105868 and CA-G.R. SP No. 105869 is hereby MODIFIED as follows:
(1) OMB-M-A-05-104-C is DISMISSED on ground of forum shopping;
(2) Petitioners Wilfred G. Yamson, Rey C. Chavez and Arnold D. Navales are
found GUILTY of Simple Neglect of Duty, aggravated by Simple Misconduct and are
imposed the penalty of six (6) months suspension;
(3) Petitioner William V. Guillen is found GUILTY of Simple Neglect of Duty and is
imposed the penalty of three (3) months suspension;
(4) Petitioners Rosindo J. Almonte and Alfonso E. Laid are found GUILTY of
Simple Misconduct and are imposed the penalty of three (3) months suspension;
(5) Petitioners Rey C. Chavez, Arnold D. Navales, Rosindo J. Almonte and Alfonso
E. Laid are hereby ordered REINSTATED to their former or equivalent positions without
loss of seniority rights, but without backwages/back salaries; and cralawlawlibrary
(6) Let a copy of this Decision be reflected in the permanent employment records of
petitioners Wilfred G Yamson and William V. Guillen.
SO ORDERED.
Topic: Due Diligence in Government Transactions dealing with

Procurement

SUPREME COURT
Manila
EN BANC
G.R. No. 230566. January 22, 2019.
SUBIC BAY METROPOLITAN AUTHORITY, ET AL., petitioners, vs. COMMISSION ON

AUDIT, respondent.
GESMUNDO, J:
The Facts
In 2009, SBMA procured special and field uniforms for its employees through regular
public bidding, and the winning bidder with the lowest price was Topnotch Apparel
Corporation (Topnotch Apparel). However, SBMA claimed that the quality and craftsmanship
of the uniforms of the employees were compromised due to the current procurement laws.
Thus, in a memorandum dated December 10, 2009, Lolita S. Mallari, then Human
Resource Management Officer of the SBMA, provided several recommendations to the
SBMA Administrator and CEO regarding the acquisition of special and field uniforms for the
SBMA employees under the supervision of a Uniform Committee.
Then SBMA Administrator and CEO Armand C. Arreza approved the

recommendations, and a Uniform Committee was constituted. Thereafter, the different
department heads of SBMA solicited price quotations for special and field uniforms from
SBMA's accredited suppliers. The said department heads then conducted negotiations and
contracts for the special and field uniforms, which were awarded to the supplier with the
lowest quotation and who met their specification requirements. It was the Uniform
Committee that provided for the pro-forma contracts and process flowchart for the
acquisition of the said uniforms. After the delivery and acceptance of the uniforms, the
winning contractors were paid out of the trust fund created for the uniforms.
Notice of Disallowance
On March 26, 2012, the Special Audit Team of the SBMA issued Special Audit ND No.
2012-001-(2011) against several SBMA officers, department heads and suppliers regarding
the procurement of special and field uniforms of the SBMA employees. The Special Audit
Team stated that the total disallowed amount was P2,420,603.99 because several
requirements of R.A. No. 9184 and its Implementing Rules and Regulations (IRR) were
violated, to wit:
1. The uniform requirements of the departments were not included in the

2010 and 2011 Annual Procurement Plans (APP).
2. Management failed to post the procurement and the results of bidding

and related information in the PhilGEPs bulletin board.
3. The procurement process in each department was not conducted by a

duly created Bids and Awards Committee.
4. Uniforms were procured through negotiated procurement without

adhering to the set criteria, terms and conditions for the use of
Alternative Methods of Procurement.
Absence of the above requirements/documents constituted irregular

transactions as defined under COA Circular No. 85-55A and Section 162 of
GAAM Volume I. Pursuant to Section 10 of COA Circular No. 2009-006
dated September 15, 2009, irregular disbursement may be disallowed in
audit.
COA-Region III Ruling
The COA-Region III issued a decision denying the appeal made by the petitioner. It
held that petitioners neither considered public bidding as the mode for procurement nor
secured the recommendation of the Bids and Awards Committee (BAC) in resorting to the
alternative method of negotiated procurement. The COA-Region III highlighted that the
procurement of the uniforms did not comply with the requirements set forth by R.A. No. 9184
and its IRR. The fallo of the decision states:
WHEREFORE, the foregoing premises considered, instant appeal is

hereby DENIED. Accordingly, Special Audit Notice of Disallowance (ND) No.
2012-001-(2011) COA Regional Office No. 2011-133 dated March 26, 2012,
disallowing P2,420,603.99 is hereby AFFIRMED.
The COA Ruling
In its decision dated December 29, 2015, the COA dismissed the petition because it
was filed out of time. It observed that petitioners only had six (6) months or 180 days to file the
petition before the COA. As the petition was filed beyond the 180-day period, the COA denied
it outright. The dispositive portion of the COA decision reads:
WHEREFORE, premises considered, the petition for review of former

Administrator Armand C. Arreza, et al., Subic Bay Metropolitan Authority, Subic
[Bay] Freeport Zone, Zambales, is hereby DISMISSED for having been filed out
of time. Accordingly, COA RO3 Decision No. 2014-28 dated April 7, 2014,
affirming Special Audit Notice of Disallowance No. 2012-001-(2011),
Commission on Audit Regional Office No. 2011-133 dated March 26, 2012, in
the amount of P2,420,603.99, is FINAL AND EXECUTORY.
Petitioners filed a motion for reconsideration, but it was dismissed by the COA in its
resolution dated December 21, 2016.
Petitioners argue that the 180-day period to file the petition for review before the
COA fell on May 31, 2014, a Saturday, hence, it timely filed the petition on the next working
day or June 2, 2014; that COA did not even consider the weekends in its computation of time;
that on the substantial aspect, their petition has merit; and that they properly complied with the
alternative method of procurement because it was approved by the head of the procuring
authority and the procurement of the uniforms was justified by the conditions provided by R.A.
No. 9184 to promote economy and efficiency.
Issue
Whether or not the petitioner exercised good faith and transparency in procuring the
uniforms of their employees; and that they still acquired the most advantageous price for the
government based on R.A No. 9184?
Ruling of the Court
Yes, the Court finds the petition partially meritorious.
In this case, petitioners resorted to the alternative method of procurement to acquire

the most advantageous price and quality for the uniform of their employees. SBMA had a
terrible experience in procuring their employees' uniform in the past, thus, they subsequently
considered other viable options in good faith. Hence, the Court is of the view that the case of
petitioners should be adjudicated on the merits in order to determine whether they may be
held liable for the chosen procurement method.
Requisites of negotiated procurement were not proven
Public bidding as a method of government procurement is governed by the principles

of transparency, competitiveness, simplicity and accountability. 18 By its very nature and
characteristic, a competitive public bidding aims to protect the public interest by giving the
public the best possible advantages through open competition. Another self-evident purpose
of public bidding is to avoid or preclude suspicion of favoritism and anomalies in the execution
of public contracts.
Alternative methods of procurement, however, are allowed under R.A. No. 9184,
which would enable dispensing with the requirement of open, public and competitive bidding,
but only in highly exceptional cases and under the conditions set forth in Article XVI thereof.
In this case, petitioners admit that they did not conduct public bidding to procure the
uniforms of their employees. However, they argue that they properly used the alternative
modes of procurement to obtain the uniforms with the most advantageous price for the
government through negotiation with accredited SBMA suppliers subject to the control
measures provided for by the uniform committee. They further assert that they negotiated with
the accredited SBMA suppliers to obtain the uniforms with the most advantageous price for
the government.
The Court finds that petitioners exercised good faith. As to the first requisite,
petitioners acted in good faith when they disbursed public funds to procure the uniforms of
their employees. They merely wanted to address their problem regarding their previous
procurement of uniforms because the lowest bidder considerably compromised the quality of
the said uniforms. Also, SBMA has as many as twenty-six (26) different uniforms, thus, they
resorted to a Uniform Committee to devise a procurement method specifically for the varied
uniforms of their employees.
Notably, petitioners resorted to their chosen procurement method for the benefit of its
employees — to ensure that they will receive the uniform with superior quality based on the
budget provided by the government — and not for some selfish or ulterior motive. Evidently,
while there may be irregular expenditure because petitioners did not strictly comply with the
IRR of R.A. No. 9184, they may not be held personally liable under the ND based on their
exercise of good faith.
While the disbursement of funds for the procurement of the employees' uniforms
must be disallowed because it particularly contravenes the provisions of IRR of R.A. No.
9184, the good faith exercised by petitioners exempts them from liability under the ND. The
COA committed grave abuse of discretion when it did not properly appreciate the
circumstance of good faith on petitioners' part.
In conclusion, it is unfair to penalize public officials based on overly stretched and
strained interpretations of rules which were not that readily capable of being understood at the
time such functionaries acted in good faith. If there is any ambiguity, which is actually clarified
years later, then it should only be applied prospectively. A contrary rule would be
counterproductive. It could result in paralysis, or lack of innovative ideas getting tried. In
addition, it could dissuade others from joining the government. When government service
becomes unattractive, it could only have adverse consequences for society.
WHEREFORE, the petition is PARTIALLY GRANTED. The December 29, 2015

Decision and the December 21, 2016 Resolution of the Commission on Audit in Decision No.
2015-437 are AFFIRMED with MODIFICATION that the persons identified by the March 26,
2012 Notice of Disallowance under Special Audit ND No. 2012-001-(2011) are not required to
refund the disallowed amounts therein.
SO ORDERED.

SUPREME COURT
Manila
THIRD DIVISION
[G.R. NO. 158812 October 5, 2005]
PUBLIC ESTATES AUTHORITY and MANUEL R. BERINA, JR., in his capacity as the
Acting General Manager of the Public Estates Authority, Petitioners v. BOLINAO
SECURITY AND INVESTIGATION SERVICE, INC., Respondent.
CARPIO MORALES, J.
The Facts
On February 1, 1990, the Public Estates Authority, a government corporation,

entered into a Contract for Security Services with Bolinao Security and Investigation
Services, Inc., to secure and protect PEA's properties, personnel and premises at Villa Porta
Vaga Subdivision, Cavite City. The contract was effective February 1, 1990 until January 31,
1991, extendible at the option of PEA. PEA published in several newspapers an Invitation to
Bid in Metro Manila including those in Cavite City. The Invitation to Bid contains a stipulation
that “PEA reserves the right to reject any proposal or waive any defects or formality,
impose additional terms and conditions and accept the proposal most advantageous
to the Government”.
For alleged "general non-compliance by bidders with bid qualification," PEA's

Prequalification Bids and Awards Committee (PBAC) rejected all the 6 bids and thus
scheduled a rebidding for security services contract. In the meantime, after the contract with
Bolinao Security expired on January 31, 1991, it was extended monthly by PEA up to July
29, 1991. A pre-bid conference was held and on April 10, 1991 and the bids were opened.
The report, noting that Integrated Security submitted the highest bid in terms of
liquidated damages but had no SSS clearance, and Bolinao Security submitted the next
highest bid but had no current license to operate, recommended that Masada Security
which proffered the third highest bid be considered the winning bidder.
For alleged "general non-compliance by bidders with bid qualification," PEA's

Prequalification Bids and Awards Committee (PBAC) rejected all the 6 bids and thus
scheduled a rebidding for security services contract. In the meantime, after the contract with
Bolinao Security expired on January 31, 1991, it was extended monthly by PEA up to July
29, 1991. A pre-bid conference was held and on April 10, 1991 and the bids were opened.
Heeding the PBAC's recommendation, PEA awarded the contract to Masada

Security effective September 1, 1991 up to April 30, 1993.13 Bolinao Security whose
contract with PEA expired on January 31, 1991 but was, as earlier stated, extended monthly
up to July 29, 1991, refused to turn over the PEA properties in Cavite City, however, to
Masada Security, prompting PEA to send a demand letter to Bolinao Security to turn over
the property to Masada Security. PEA explained that the bid of Bolinao Security was rejected
because it failed to submit a current license to operate and to award the contract to it despite
that would violate Presidential Decree (P.D.) No. 1919.
Bolinao Security filed with the Regional Trial Court of Makati a complaint for
annulment of bid award, damages, injunction with special prayer for the issuance of a
temporary restraining order against PEA, and Masada Security, averring that, among other
things, the attempt of Masada Security to take over the Cavite City premises from it based
on the result of the bidding was improper, illegal, criminal and violative of the provisions of
the Anti-Graft and Corrupt Practices Act.
Regional Trial Court’s Ruling
The trial court issued a writ of preliminary injunction enjoining the defendants from
terminating the contract with Bolinao Security covering PEA's Cavite City property
"WHEREFORE, premises considered, judgment is rendered in favor of the plaintiff
with the following dispositions:
1) The writ of preliminary injunction issued in this case, which enjoins defendants
from terminating the existing contract for security services with plaintiff, and from
implementing the questioned contract in favor of Masada Security Agency effective
September 17, 1991, and from ejecting plaintiff from the Villa Porta Vaga Subdivision,
Canacao, Cavite City, is made permanent.
2) The award of the bid in favor of defendant Masada Security Agency is declared
null and void and plaintiff Bolinao is declared as the winning bidder during the public bidding
held on April 10, 1991.
3) Directing the defendants to jointly and severally pay to the plaintiff the amount of
P50,000.00 as nominal damages, P50,000.00 as exemplary damages; attorney's fees; and
the costs of suit.
xxxx xxxx xxxx xxxx
Court of Appeal’s Ruling
The Court of Appeals affirmed the decision of the trial court. In affirming the trial
court's decision, the appellate court held that disqualifying Bolinao Security for the simple
reason that on the day of the bidding its application for renewal of its license was still being
processed was "most unfair, arbitrary and has no legal basis" as the period for processing
thereof "is a bureaucratic requirement which should not work against the interest of Bolinao
Security, absent any badge of fraud or negligence.
xxxx xxxx xxxx xxxx
Issues
(1) Whether or not Bolinao Security is a qualified bidder, despite its non-compliance
with the bidding requirements?
(2) Whether or not the stipulation "right to reject any or all bids" in the Invitation to
Bid valid?
Ruling of the Court
(1) No, Bolinao Security is not a qualified bidder.
As priorly stated, the contract for security services between Bolinao Security
and PEA took effect on February 1, 1990 until January 31, 1991. As its license to
operate was to expire on March 31, 1991, Bolinao Security filed an application for a
new license which was granted and issued only on May 16, 1991, after the April 10,
1991 bidding. Evidently, at the time of the bidding, Bolinao Security had no "current
license to operate" as required by the TOR.
Extension of the effectivity of the security service contract cannot be

interpreted as an extension of the effectivity of license to operate a security agency.
Neither can the new license issued to Bolinao Security be given retroactive effect
without running afoul of the rule in public biddings that qualifications of bidders
shall be determined at the time of the opening of the bids, and not at any other
time.
The basic rule in public bidding that bids should be evaluated on the basis of
the required documents submitted before and not after the opening of bids must be
strictly observed in order to safeguard a fair, honest and competitive public bidding.
At all events, as PEA argues, assuming arguendo that Bolinao Security was
deemed to have complied with the current license requirement, since the Invitation to
Bid expressly provided that "PEA reserves the right to reject any proposal or waive
any defects or formality, impose additional terms and conditions and accept the
proposal most advantageous to the Government," Bolinao Security voluntarily
submitted itself to the terms and conditions thereof and acknowledged the said right
of the government.
(2) Yes, the stipulation in the Invitation to Bid is valid.
The government is granted broad discretion in choosing who among the

bidders can offer the "most advantageous" terms and courts will not interfere
therewith or direct the committee on bids to do a particular act or to enjoin such act
within its prerogatives, except when in the exercise of its authority, it gravely abuses
or exceeds its jurisdiction.
It is well-settled rule that where such reservation is made in an Invitation to

Bid, the highest or lowest bidder, as the case may be, is not entitled to an
award as a matter of right. Even the lowest Bid or any Bid may be rejected or, in
the exercise of sound discretion, the award may be made to another than the lowest
bidder.
In fine, the PEA did not commit grave abuse of discretion in selecting the bid
of Masada Security as the most advantageous to the government.
WHEREFORE, the decision of the Court of Appeals dated May 30, 2002 is
REVERSED and SET ASIDE and the complaint of respondent, Bolinao Security and
Investigation Service, Inc. is DISMISSED.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 184785. July 9, 2014.
RUBY P. LAGOC, petitioner, vs. MARIA ELENA MALAGA, OFFICE OF THE

OMBUDSMAN and the OFFICE OF THE DEPUTY OMBUDSMAN (VISAYAS),
respondents.
G.R. No. 184890. July 9, 2014.

LIMUEL P. SALES, petitioner, vs. MARIA ELENA MALAGA, OFFICE OF THE
OMBUDSMAN and the OFFICE OF THE DEPUTY OMBUDSMAN (VISAYAS),
respondents.
VILLARAMA, JR., J:
Before the Court are the consolidated petitions for review filed by Ruby P. Lagoc
(Lagoc) and Limuel P. Sales (Sales) which seek to reverse and set aside the Decision dated
January 24, 2008 of the Court of Appeals (CA) — Cebu City in CA-G.R. SP No. 00837
affirming the Decision dated September 18, 2002 of respondent Deputy Ombudsman for the
Visayas in OMB-VIS-ADM-2001-0408, and Resolution dated September 8, 2008 denying
their motion for reconsideration.
The present controversy stemmed from the implementation of two projects

undertaken by the Department of Public Works and Highways (DPWH) through the Iloilo City
District Engineering Office: (1) Construction of Skywalk/Overpass from Iloilo Supermart to
Mercury Drugstore, Valeria St., Iloilo City in the amount of P2,000,000.00; and (2)
Construction of Skywalk/Overpass from SM Shoemart to Mercury Drugstore, Delgado St.,
Iloilo City in the amount of P3,500,000.00. The funds for the said project were provided
under Republic Act (R.A.) No. 8760 otherwise known as the "General Appropriations Act, FY
2000," and was released under SARO No. BMB-A-00-0420.
The Facts
On July 20, 2001, private respondent Maria Elena Malaga filed a Complaint-Affidavit
before the Office of the Ombudsman-Visayas (OMB-Visayas) against Wilfredo Agustino
(Regional Director), Vicente M. Tingson, Jr. (OIC District Engineer), Reynold Soldevilla (Bids
and Awards Committee [BAC] Chairman), Assistant District Engineer Sales (BAC Chairman
for materials and equipment), Rodney Gustilo (BAC Member),Elizabeth H. Gardose (BAC
Member),Project Engineer Ruby P. Lagoc (BAC Member), Fema G. Guadalupe (Supply
Officer) and Blanca O. Pagal (Accountant III).
Malaga accused the above-named officials and employees of violating established

rules and regulations, making it appear that there was open, public and competitive bidding
for the materials and equipment needed for the skywalk construction projects to ensure that
their favored contractor, Helen Edith Tan of IBC Int'l. Builders Corp. (IBC) got the projects.
This was evident from the following: (1) the Invitation to Bid for the supply of materials and
lease of equipment was not actually published or advertised; (2) said invitation to bid and the
three sets of bid tenders (IBC, PKG and VN Grande) were prepared with prior knowledge
that the award will go to IBC; (3) the unit bid prices for each and every article and the rental
rate for each and every equipment quoted by IBC were exactly the same as the unit prices
appearing in the Program of Work or Approved/Calculated Agency Estimate (AAE), thus
indicating collusion with the other two bidders whose bid offers were all slightly higher than
that of IBC; the submission of bids identical to AAE/Program of Work manifestly indicates
rigging and is a ground for the blacklisting of contractors under the Construction Industry
Authority of the Philippines guidelines; (4) the winning bidder, IBC, is a licensed contractor
classified as Large B in Roads and Bridges, and hence it is no longer allowed to undertake
roads and bridges projects with an appropriation of P3 million and below; if the project was
implemented by straight contract, IBC would not be pre-qualified, a fact known to Tingson
and his accomplices, and the only way for the project to be "given" to IBC was by resorting
to the "by administration" scheme; (5) the "pakyaw" laborers hired for the projects were not
independent contractors but actually just dummies for Helen Edith Tan who actually pays for
their wages; (6) Tingson and his accomplices had agreed that no actual publication would be
done to eliminate the possibility of other contractors seeing the invitation to bid, in collusion
with the publishers who were officially paid for services not rendered and who even received
additional payments from the favored contractor; such illegal act constitutes swindling or
estafa under Article 315 of the Revised Penal Code, as amended; and (7) Tingson entered
into a fictitious contract with the publishers which was manifestly and grossly
disadvantageous to the Government, in violation of Section 3 (g) of the Anti-Graft and
Corrupt Practices Act.
In her Counter-Affidavit, Lagoc stated that as a matter of practice in their office, a

project engineer automatically becomes a provisional member of the BAC and hence she
merely acted as such provisional BAC member. She said that her main job was to prepare
the program of works of the subject projects and upon completion forward copies thereof to
the Assistant District Engineer and District Engineer for approval. After approval, she
furnishes a copy each to the Resident Auditor, Supply Officer and Accountant. She thus
claimed that "any activity relative to the bidding process is beyond [her] job" and that she
really wondered why she was included in the complaint.
On his part, Sales together with Gardose, contended that the decision to implement
the skywalk projects by administration was made after evaluation of the provision of the law
(R.A. No. 8760) where the funds therefor were provided, and also to generate savings with
the elimination of "contractor's profit" in the preparation of the program of work. He likewise
averred that the invitation to bid was duly published in The Visayan Tribune and The Visayas
Examiner on March 5-11, March 12-18, 2001 and February 19 and 26, 2001, respectively,
attaching photocopies of these publications to his counter-affidavit. The fact of publication
was supported by Publisher's Affidavit, contrary to Malaga's insinuations. He further claimed
that when the bids were opened, IBC's tendered offer was below the AAE; IBC passed the
post-evaluation/qualification made by the BAC; and it is not unusual that the bid of the
winning bidder may jibe with the AAE because the cost reflected therein is based on the
rental rates prescribed by the Association of Carriers and Equipment Lessor (ACEL) in
relation compliance with Department Order No. 58, Series of 1999 issued by the DPWH
Secretary. He stressed that Malaga filed her complaint in retaliation against Tingson who
filed a criminal complaint for falsification of public documents against her.
During the preliminary conference held on May 9, 2002, the parties through their
respective counsel, agreed to submit the case for decision on the basis of the evidence on
record and position papers/memoranda.
In a Decision dated September 18, 2002, the public respondent Deputy Ombudsman
for Visayas Primo C. Miro found substantial evidence of Misconduct against Tingson, Sales,
Gardose and Lagoc, and accordingly recommended that the penalty of one year suspension
without pay be imposed on them. On the other hand, the complaint against Agustino,
Soldevilla and Gustilo were recommended to be dismissed for lack of sufficient evidence.
Then Ombudsman Simeon V. Marcelo approved the recommendation but modified the
offense and penalty to Grave Misconduct and dismissal from the service for Tingson, Sales,
Gardose and Lagoc.
Petitioners along with Gardose appealed to the CA which affirmed the Ombudsman's
findings of fact and conclusions. The CA held that the Ombudsman correctly concluded that
petitioners committed grave misconduct when they conducted the bid process of and
awarded the subject contracts without compliance with the mandatory twin-publication
requirement. It likewise disagreed with petitioners' claim that the Ombudsman failed to
consider their evidence as they could have presented whatever evidence they had during
the preliminary conference or attach it to their memorandum.
Issue to be Resolved
Whether the Ombudsman correctly concluded that petitioners conspired to rig the
bidding in favor of IBC, the winning bidder?
Ruling of the Court
Yes, we affirm the CA in ruling that Ombudsman's finding that there was no
compliance with the requirement of publication of the Invitation to Bid is well
supported by substantial evidence.
By its very nature and characteristic, a competitive public bidding aims to protect the
public interest by giving the public the best possible advantages thru open competition.
Another self-evident purpose of public bidding is to avoid or preclude suspicion of favoritism
and anomalies in the execution of public contracts.
Presidential Decree (PD) No. 1594 established a set of rules and regulations to
ensure competitive public bidding for construction projects. The Implementing Rules and
Regulations (IRR) of said law mandates the publication of the invitation to pre-qualify/bid.
In this case, the Ombudsman found discrepancies in the evidence presented by the
complainant (Malaga) and petitioners to prove compliance with the publication requirement.
That petitioners submitted mere photocopies of the issues of The Visayan Tribune and The
Visayas Examiner added credence to the Ombudsman's conclusion that petitioners were
covering up for their omission as the invitation to bid for the materials and equipment was
actually never published.
Sales suggests there could have been errors in the printing of the pages in the
newspapers by the publisher which were beyond the control of petitioners and should not be
blamed on petitioners. He contends that the fact that the publishers of The Visayan Tribune
and The Visayas Examiner executed an affidavit of publication clearly established that the
invitations to bid were indeed published. And assuming arguendo that petitioners presented
mere photocopies of the said newspaper issues, he asserts that it is no proof that they had
knowledge and participation in the manipulation of the publication of the Invitation to Bid.
Sales maintains that as BAC Chairman, his authority is limited to recommending the
Program of Work prepared by Lagoc and it was his ministerial duty to approve the award to
the winning bidder (IBC) after the Technical Committee had submitted their
recommendation.
Similarly, Lagoc assails the CA in sustaining the Ombudsman's finding that she
conspired in rigging the bidding in favor of IBC, as she quoted portions of the comment filed
by private respondent (Malaga) herself before this Court asserting that she (Lagoc) was not
even present during the opening of the bids and that she was not in fact in good terms with
the District Engineer but being the Project Engineer she had to sign the Abstract of Bids as it
was "SOP" in their office. To Lagoc, said admission by complainant practically absolved her
(Lagoc) from any participation in the publication of the Invitation to Bid.
We find in this case clear and convincing evidence that petitioners colluded in the
rigging of the bidding process to favor IBC, the winning bidder. Petitioners signed the
Abstract of Bids and approved the award to IBC of the contract for the materials and
equipment needed for the skywalk projects despite the absence of an Invitation to Bid duly
published in accordance with the IRR of PD 1594. They cannot simply feign ignorance of
such non-compliance with a basic requirement because as Chairman (Sales) and Member
(Lagoc) of the BAC, they are responsible for the conduct of pre-qualification, or eligibility
screening, bidding, evaluation of bids, post qualification, and recommending award of
contract. As such, it is their duty to ensure that the rules and regulations for the conduct of
bidding for government projects are faithfully observed. They may thus be held liable for
collective acts and omissions as when they affixed their signatures in official documents as
BAC Chairman/Members, and recommended approval of the bids, in effect certifying to
compliance with the aforesaid rules.
Petitioner Lagoc claimed that even the complainant acknowledged that she simply
signed the Abstract of Bids in her capacity as Project Engineer and provisional member of
the BAC. Such excuse is flimsy and unacceptable. Indeed, the affixing of signatures by the
committee members are not mere ceremonial acts but proofs of authenticity and marks of
regularity. Moreover, there is nothing in the IRR that exempts a provisional BAC member
from liability in case of violation of its provisions.
We stress that the Ombudsman's finding of collusion to rig the bidding was based not
only on the non-publication of the Invitation to Bid but also the highly suspicious
circumstance that the bid submitted by IBC contained the unit prices of items/rental rates
exactly similar to those listed in the Program of Work. This unexplained fact, along with the
deliberate disregard of the requisite publication of the Invitation to Bid, convinced the
Ombudsman that the BAC Chairman and Members acted in conspiracy in committing a
misconduct.
Section 52 (A) (3), Rule IV of the Revised Uniform Rules on Administrative Cases in
the Civil Service provides that the penalty for grave misconduct is dismissal from the service,
which was correctly imposed by the Ombudsman on petitioners, along with OIC District
Engineer Tingson, Jr. and the other BAC Member Elizabeth H. Gardose.
WHEREFORE, the consolidated petitions are DENIED for lack of merit. The Decision
dated January 24, 2008 and Resolution dated September 8, 2008 of the Court of Appeals —
Cebu City in CA-G.R. SP No. 00837 AFFIRMING the Decision of the Office of the
Ombudsman in OMB-VIS-ADM-2001-0408 finding the petitioners GUILTY of Grave
Misconduct and imposing upon them the severe penalty of DISMISSAL from office are
UPHELD.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
[G.R. NO. 139984. March 31, 2005]

LEOPOLDO OANI, Petitioners, v. PEOPLE OF THE PHILIPPINES, Respondents
CALLEJO, SR., J.:
The Facts
On March 1, 1990, the DECS Secretary received a letter from the Parents Teachers
Association of the Panabo High School regarding the investigation of Principal Oani and
Bonifacio Roa, the Resident Auditor regarding, among other things, the alleged overpricing
of 12 fire extinguishers for P15,000.00 each. The Regional Office of the COA then issued
Assignment Order No. 90-137 dated March 2, 1990 to a team of auditors, composed of
Jaime P. Naranjo, as Chairman, and Bienvenido Presilda and Carmencita Enriquez, as
members.
The team discovered that, Oani had approved a Requisition and Issue Voucher for
the acquisition of 15 units of fire extinguishers for the use of the high school as mandated by
Presidential Decree No. 1185, also known as the Fire Code of the Philippines. The amount
of P55,000.00 was certified as available for the purpose. Instead of conducting a public
bidding, Oani decided to purchase the fire extinguishers from the Powerline Manufacturing
Industry for P54,747.00.
The Auditing Team conducted a review of the prices of the stereo set and school and
office supplies, and discovered that they could be purchased for only P144,621.51 instead of
the P227,857.45 paid by the school. The Auditing Team recommended the filing of
administrative and criminal complaints for violations of Rep. Act No. 3019 against Oani and
Roa.
On March 30, 1993, Informations were filed against Oani and Roa in the
Sandiganbayan for violation of Section 3(e) of Rep. Act No. 3019.
Sandiganbayan’s Ruling
After trial, the Sandiganbayan promulgated a decision acquitting Roa, but convicting
Oani of the crimes charged. The fallo of the decision reads:
WHEREFORE, judgment is hereby rendered CONVICTING accused LEOPOLDO E.
OANI of the crime[s] charged in both Criminal Cases Nos. 18885 and 18886, his guilt having
been proven beyond reasonable doubt. Accordingly, in Criminal Case No. 18885, Leopoldo
E. Oani is hereby sentenced to suffer an indeterminate penalty of SIX (6) YEARS and ONE
(1) MONTH as minimum, to EIGHT (8) YEARS as maximum, and to suffer perpetual
disqualification from public office. He is ordered to restitute to the treasurer of the Panabo
National High School the amount of TWENTY-THREE THOUSAND FORTY PESOS
(P23,040.00).
xxxx xxxx xxxx xxxx
Oani, now the petitioner, filed the instant Petition for Review on Certiorari with this
Court.
The petitioner avers that the trial court erred in finding him guilty of violating Section
3(e) of Rep. Act No. 3019 for the purchase of the fire extinguishers without any public
bidding. He maintains that since Powerline was the exclusive manufacturer of the fire
extinguishers and had not designated any dealer or subdealer of its products as evidenced
by the Certification of Cunanan, he was justified in dispensing with a public bidding and to
purchase the fire extinguishers on a negotiated basis with Powerline.
Issue
Whether or not Oani is justified in dispensing the requirement of public bidding?
Ruling of the Court
No, negotiated procurement is not applicable since none of the conditions

required by RA 9184 is present. Thus, he is liable for violation of Section 3(e) of Rep. Act
No. 3019.
The COA CIRCULAR No. 78-84 provides that:
COA Circular No. 78-84 dated August 1, 1978, provides that negotiated contracts
may be entered into where any of the following conditions exist:
1. Whenever the supplies are urgently needed to meet an emergency which may
involve the loss of, or danger to life and/or property;
2. Whenever the supplies to be used in connection with a project or activity which

cannot be delayed without causing detriment to the public service;
3. Whenever the materials are sold by an exclusive distributor or manufacturer who

does not have subdealers selling at lower prices and for which no suitable substitute can be
obtained elsewhere at more advantageous terms to the government;
4. Whenever the supplies under procurement have been unsuccessfully placed on

bid for at least two consecutive times, either due to lack of bidders or the offers received in
each instance equipment, the purchase of nine (9) units fire extinguishers were exhorbitant
or non-confirming to specifications;
5. In cases where it is apparent that the requisition of the needed supplies through
negotiated purchase is most advantageous to the government as determined by the head of
agency;
6. Whenever the purchase is made from an agency of the government;
7. Whenever the purchase is made from a foreign government.
xxxx xxxx xxxx xxxx
None of the foregoing conditions existed when the petitioner purchased the
fire extinguishers on a negotiated basis from Powerline.
The petitioner did not require Cunanan to submit any certification from the
Department of Trade and Industry that he was the exclusive distributor or manufacturer of
fire extinguishers. Neither did he require Cunanan to certify or execute an affidavit that no
subdealer had been designated to sell the said product at a lower price. The petitioner failed
to ascertain whether a suitable substitute could be obtained elsewhere, under terms more
advantageous to the government. It turned out that as declared by the trial court, another
business enterprise, Systems Products Industries, was selling the same brand and
specifications at only P2,900.00 per unit.
Finally, accused Oani failed to present proof that "no suitable substitute can be
obtained elsewhere at more advantageous terms to the government," as thus, required
by COA Circular 78-84, series of 1978. In consciously allowing the suppliers to violate the
requirements of bidding and canvass, accused Oani brazenly undermined the objective of
the process, namely, "To protect the public interest by giving the public the best possible
advantage thru open competition." Hence, not only did he act in a "wantonly careless
manner" but also in an unspeakable "breach of duty in a flagrant and palpable" way. In full
contemplation of the law, his acts constitute gross inexcusable negligence.
As occasioned by the lack of bidding and canvass, unqualified and non-bona fide
entities that only served as brokers, gained entry and participation to the transaction. Not
only did this burden the government with additional costs, as a result, but also exposed it to
unnecessary risks and disadvantages
By its very nature and characteristic, a competitive public bidding aims to protect the
public interest by giving the public the best possible advantages thru open competition.
Another self-evident purpose of public bidding is to avoid or preclude suspicion of favoritism
and anomalies in the execution of public contracts. Public bidding of government contracts
and for disposition of government assets have the same purpose and objectives. Their only
difference, if at all, is that in the public bidding for public contracts the award is generally
given to the lowest bidder while in the disposition of government assets the award is to the
highest bidder.
In the present case, the petitioner purchased the fire extinguishers and office and
school supplies without the benefit of a public bidding, in gross and evident bad faith,
resulting in the considerable overpricing of the fire extinguishers and the supplies, to the
gross prejudice of the government.
In sum then, the decision of the trial court is in accord with the law and the evidence.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Cost against the
petitioner.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 213500, March 15, 2017
OFFICE OF THE OMBUDSMAN AND THE FACT-FINDING INVESTIGATION BUREAU
(FFIB), OFFICE OF THE DEPUTY OMBUDSMAN FOR THE MILITARY AND OTHER
LAW ENFORCEMENT OFFICES (MOLEO), Petitioners, v. PS/SUPT. RAINIER A.
ESPINA, Respondent.
PER CURIAM:
The Facts
Petitioner the Fact-Finding Investigation Bureau (FFIB) of the Office of the Deputy
Ombudsman for the Military and Other Law Enforcement Offices (MOLEO) filed before the
Ombudsman an affidavit-complaint and a supplemental complaint, respectively, charging
Espina and several other PNP officers and private individuals for:
(a) violation of Republic Act No. (RA) 7080, RA 3019, RA 9184 and its
Implementing Rules and Regulations (IRR), and Malversation of Public Funds through
Falsification of Public Documents under Article 217 in relation to Article 171 of the Revised
Penal Code (RPC); and
(b) Grave Misconduct and Serious Dishonesty; arising from alleged anomalies that
attended the Philippine National Police's (PNP) procurement of 40 tires, and repair,
refurbishment, repowering, and maintenance services of a total of 28 units of V-150 Light
Armored Vehicles (LAVs), and the related transportation and delivery expenses of 18 units
of LAYs between August and December 2007.
It averred that the PNP did not comply with the bidding procedure prescribed
under RA 9184 and its IRR, in that:
(a) copies of the bid documents were not furnished to possible bidders;
(b) no pre-procurement and pre-bid conferences were held;
(c) the invitation to bid was not published in a newspaper of general circulation;
(d) the procuring agency did not require the submission of eligibility requirements
as well as the technical and financial documents from the bidders; and
(e) no post qualification was conducted.
Further, it claimed that there were "ghost deliveries," i.e., the tires were never
delivered to the PNP and no repair and refurbishment works were actually performed on
the LAVs.
Espina was impleaded in the complaints for noting/signing the Inspection Report
Forms (IRFs), which confirmed the PNP's receipt of the tires and other supplies, and the
performance of repair and refurbishment works on the LAYs. According to the FFIB-
MOLEO, by affixing his signature on the IRFs, Espina supposedly facilitated the fraudulent
disbursement of funds amounting to P409,740,000.00 when no goods were actually
delivered and no services were actually rendered.
In defense, Espina denied any participation in the bidding and/or procurement
process and maintained that he belonged to the Management Division which is
responsible for the inspection of deliveries made to the PNP after the bidding and
procurement process. He also pointed out that pursuant to the Standing Operating
Procedure, his only duty, was to note the reports. According to him, it was not his
responsibility to personally inspect and confirm deliveries and go beyond the contents of
the IRFs submitted by his subordinates, absent any irregularity reported by the property
inspectors who are tasked to check and examine deliveries.
In a Joint Resolution dated December 19, 2012, the Ombudsman found probable
cause to indict Espina and several other PNP officers for violation of Section 3 (e) of RA
3019, Section 65 (b) (4) of RA 9184, and for Malversation of Public Funds through
Falsification under Article 217 in relation to Article 171 of the RPC. The Ombudsman also
found them guilty of Grave Misconduct and Serious Dishonesty and, accordingly,
recommended their dismissal from government service.
xxxx xxxx xxxx xxxx
Aggrieved, Espina filed a petition for review before the CA, impleading both the
Ombudsman and the FFIB-MOLEO.
The CA found Espina guilty, instead, of Simple Misconduct, a less grave offense
punishable with suspension for one (1) month and one (1) day to six (6) months for the first
offense, and dismissal for the second offense. It rejected Espina's defense of reliance in
good faith on the acts of his subordinates, holding that he had the obligation to supervise
them and ensure that the IRFs and Work Orders they prepared, as well as every
procurement-related document released by his division, were regular, lawful, valid, and
accurate, considering the significance of the transaction related to the disbursement of
public funds over which great responsibility attached.
xxxx xxxx xxxx xxxx
Dissatisfied, petitioners moved for reconsideration which was, however, denied by
the CA in a Resolution dated July 15, 2014; hence, the present petition.
Issue
Whether or not Espina should be held administratively liable for the charges
imputed against him?
Ruling of the Court
Yes, Espina should be liable for Gross Neglect of Duty by failing to exercise
due diligence in government transactions dealing with procurement.
Here, the CA correctly observed that while Espina may have failed to personally
confirm the delivery of the procured items, the same does not constitute dishonesty of any
form inasmuch as he did not personally prepare the IRFs but merely affixed his signature
thereon after his subordinates supplied the details therein.
Neither can Espina's acts be considered misconduct, grave or simple. The records
are bereft of any proof that Espina was motivated by a premeditated, obstinate or
deliberate intent of violating the law, or disregarding any established rule, or that he
wrongfully used his position to procure some benefit for himself or for another person,
contrary to duty and the rights of others. However, after a circumspect review of the
records, the Court finds Espina administratively liable, instead, for Gross Neglect of Duty,
warranting his dismissal from government service. Notably, the FFIB-MOLEO's
supplemental complaint accused Espina with failure to exercise due diligence in signing
the IRFs, which is sufficient to hold him liable for Gross Neglect of Duty.
As aptly observed by the CA, Espina had the obligation to supervise his
subordinates and see to it that they have performed their respective functions in
accordance with law. To recall, Espina was the Acting Chief and Head of the PNP's
Management Division and, as such, had supervisory powers over the departments or
sections which comprise it, namely:
(a) the Internal Control and Inspection Section (ICIS);
(b) the Accountability and Assistance Section;
(c) the Management Improvement Section; and
(d) the Claims and Examination Section (CES).
Espina himself admitted that the property inspectors who were tasked to
personally inspect deliveries to the PNP belong to the ICIS which was under his
management and stewardship. The Court pointed out that the nature of the public officers'
responsibilities and their role in the procurement process are compelling factors that
should have led them to examine with greater detail the documents which they are made
to approve.
Here, while SOP No. XX4, which Espina cited does not expressly require the Head
of the Management Division to physically re-inspect, re-check, and verify the deliveries to
the PNP as reported by the property inspectors under him, his duty was not simply to
"note" or take cognizance of the existence of the IRFs, but to reasonably ensure that they
were prepared in accordance with law, keeping in mind the basic requirement that the
goods allegedly delivered to and services allegedly performed for the government have
actually been delivered and performed. As aptly pointed out by the Ombudsman in its Joint
Order, "it was incumbent upon Espinal to affix his signature only after checking the
completeness and propriety of the documents."
More so, considering the sheer magnitude of the amount in taxpayers' money
involved, i.e., P409,740,000.00, Espina should have exercised utmost care before signing
the IRFs. It is of no moment that the disbursement of the P409,740,000.00 was spread
over several transactions and not through a single payment or that only the IRFs relating to
the delivery of supplies were allegedly presented; the fact remains that taxpayers' money
was spent without the corresponding goods and services having been delivered to the
government.
Given the amounts involved and the timing of the alleged deliveries, the
circumstances reasonably impose on Espina a higher degree of care and vigilance in the
discharge of his duties. Thus, he should have been prompted to make further inquiry as to
the truth of his subordinates' reports. Had he made the proper inquiries, he would have
discovered the non-delivery of the procured items and the non-performance of the
procured services, and prevented the unlawful disbursement. However, he did not do this
at all. Instead, he blindly relied on the report and recommendation of his subordinates and
affixed his signature on the IRFs. Plainly, Espina acted negligently, unmindful of the high
position he occupied and the responsibilities it carried, and without regard to his
accountability for the hundreds of millions in taxpayers' money involved.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated February
27, 2014 and the Resolution dated July 15, 2014 of the Court of Appeals in CA-G.R. SP
No. 131114 are hereby SET ASIDE. A new one is ENTERED finding respondent Rainier
A. Espina GUILTY of GROSS NEGLECT OF DUTY. Accordingly, he is DISMISSED from
government service with all the accessory penalties.
SO ORDERED.
Topic: Delegation of Authority

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 142738. December 14, 2001.
DR. HONORATA BAYLON, petitioner, vs. OFFICE OF THE OMBUDSMAN AND

SANDIGANBAYAN, respondents.
PARDO, J :
The Facts
In 1993, the Secretary of Health appointed Dr. Baylon as the Program Manager of
the Government's National Voluntary Blood Donation Program. The National Kidney and
Transplant Institute (NKTI) was the lead agency of the blood program. On February 3, 1994,
the DOH called a meeting of all the managers of the department's several programs. During
the meeting, a comprehensive work plan for a new project "STOP D.E.A.T.H.: Hospitals for
Philippines 2000" was discussed. The blood program was one of the six (6) new programs
included in the project. A week later, the DOH allotted two million pesos (P2,000,000.00) to
the NKTI as start-up money for the blood program.
On February 18, 1994, the DOH issued Department Order Nos. 73-f and 73-g, series
of 1994. Department Order No. 73-f launched the project. The sum of fifty-one million pesos
(P51,000,000.00) was allocated for the blood program. Department Order No. 73-g created
an Executive Committee and a National Secretariat for the Project.
||| On February 24, 1994, Secretary of Health Juan M. Flavier revealed to the public
the results of the USAID study, to wit:
(a) the blood transfusion service of the country failed to adequately meet the public
demand for safe blood; and
(b) the blood sourced from commercial blood banks had a contamination rate of 4%.
On March 3, 1994, in view of the afore-quoted findings, Secretary Flavier issued a
closure order on the provincial retail outlets of commercial blood banks. The events led to an
acute shortage of blood available to the public as the commercial blood banks intentionally
refused to sell blood in retaliation to the closure order. Thus, Secretary Flavier instructed the
immediate implementation of the voluntary blood donation system as the only alternative
source of blood.
The NKTI expedited the installation of the blood program. On March 8 and 17, 1994,
requisition vouchers for the initial purchase of containers for blood were issued.13 NKTI
decided to purchase Terumo blood bags for immediate distribution to the regional hospitals
and medical centers. NKTI obtained a quotation of the prices of blood bags (Terumo brand)
from FVA-Exim Trading. FVA is the exclusive distributor of Terumo blood bags and the only
supplier which could supply all sizes of the blood bags.
In March 1995, the Commission on Audit (COA) disallowed in post audit the sale
transactions entered into by the NKTI with FVA on the ground that the blood bags were
purchased without public bidding, contrary to the applicable laws or rules, thereby allegedly
resulting to overpricing. The COA found that FVA sold "Terumo" blood bags to the Philippine
National Red Cross (PNRC) and to blood banks Our Lady of Fatima and Mother Seaton at
prices lower than those at which it sold to the NKTI, leading to a consequent total loss to the
government in the amount of P1,964,304.70.
A complaint-affidavit for violation of Section 3 (e) and (g) of R.A. 3019 was filed with
the Ombudsman against Dr. Baylon and other DOH officials. The Special Prosecutor found
probable cause to indict the petitioner and her co-accused. Thus, the Ombudsman filed with
Sandiganbayan 33 an information for violation of Section 3(e), R.A. No. 3019 34 against Dr.
Baylon and her co-accused.
Issue
Whether or not the Ombusman acted with grave abuse of discretion in finding
probable cause against Dr. Baylon and her co-accused for violation of Section 3(e), R.A. No.
3019?
Ruling of the Court
Yes, the Ombudsman acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in finding probable cause against Dr. Baylon and co-accused
for violation of Section 3(e), R.A. No. 3019, as amended, and in ordering their
prosecution before the Sandiganbayan.
In order to be held guilty of violating Section 3(e), R.A. No. 3019, the act of the
accused that caused undue injury must have been done with evident bad faith or with gross
inexcusable negligence. Bad faith per se is not enough for one to be held liable under the
law, the "bad faith" must be "evident.
We note the absence of some essential elements of the offense charged, to wit:
(1) There was no undue injury to the Government

The records show that in 1994, the price of Terumo blood bags offered by FVA and
accepted by was in fact lower than the price offered to other government hospitals.
NKTI was able to secure the Terumo blood bags from FVA at a price advantageous
to the government.
The COA recognized its own error and reversed itself when it lifted the audit
disallowance in so far as the procurement of the Terumo blood bags by NKTI from FVI is
concerned. The fact is that NKTI chose FVA as its supplier since it is the sole distributor of
Terumo blood bags, and no sub-dealer or dealer could offer the bags at lower prices or at
better conditions.
(2) Even assuming there was injury to the Government, there was no bad faith or
inexcusable negligence on the part of petitioner.
Here, there is no evident bad faith on the part of petitioner and her co-accused
neither is there gross negligence.
We cannot discount the fact that a sense of urgency drove petitioner to purchase the
Terumo blood bags. The project could not be delayed without causing detriment to the public
service. There was a shortage in the blood supply available to the public. To determine
whether there was bad faith, these essential facts should not have been ignored. When the
Ombudsman did not take these facts into consideration in the determination of probable
cause, he gravely abused his discretion.
The petitioner was merely doing her job and only acted in response to an emergency
brought about by the shortage in the blood supply available to the public. The shortage in
the blood supply available to the public was a matter recognized and addressed by
Secretary of Health Juan M. Flavier. Secretary Flavier attests that he "directed the NKTI to
do something about the situation and immediately fast-track the implementation of the
Voluntary Blood Donation Program of the government in order to prevent further deaths
owing to the lack of blood." In fact, more than finding fault in petitioner's quick action, she
and her co-accused, should be commended for acting "promptly" and "diligently" in response
to a crisis.
The facts of the case also readily show that the circumstances surrounding the
purchase of Terumo blood bags exempted it from the requirement of a public bidding
as per Executive Order No. 301, Section 1 paragraph (b), (c) and (e).
EXECUTIVE ORDER NO. 301
DECENTRALIZING ACTIONS ON GOVERNMENT NEGOTIATED CONTRACTS, LEASE

CONTRACTS AND RECORDS DISPOSAL
Sec. 1. Guidelines for Negotiated Contracts. Any provision of law, decree, executive
order or other issuances to the contrary notwithstanding, no contract for public services or
for furnishing supplies, materials and equipment to the government or any of its branches,
agencies or instrumentalities shall be renewed or entered into without public bidding, except
under any of the following situations:
xxx xxx xxx|
b. Whenever the supplies are to be used in connection with a project or activity
which cannot be delayed without causing detriment to the public service;
c. Whenever the materials are sold by an exclusive distributor or manufacturer
who does not have subdealers selling at lower prices and for which no suitable
substitute can be obtained elsewhere at more advantageous terms to the
government;
xxx xxx xxx|
e. In cases where it is apparent that the requisition of the needed supplies
through negotiated purchase is most advantageous to the government to be
determined by the Department Head concerned;
WHEREFORE, we GRANT the petition. We REVERSE and SET ASIDE the

resolution of the Ombudsman dated February 28, 2000, finding probable cause. We ORDER
the Sandiganbayan TO DISMISS forthwith Criminal Case No. 25703 against petitioner and
her co-accused with costs de oficio.
No costs.
SO ORDERED.
Topic: Authority of an Office-in-Charge
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 135294. November 20, 2000
ANDRES S. SAJUL, petitioner, vs. SANDIGANBAYAN (First Division), and THE

PEOPLE OF THE PHILIPPINES, respondents.
The Facts
This is an appeal from the Decision of the Sandiganbayan (First Division)

promulgated on July 31, 1998, finding petitioner Andres Sajul guilty beyond reasonable
doubt of having violated Section 3 (g) of R.A. 3019 and imposing upon him the
indeterminate prison term of six (6) years and one (1) day as minimum to ten (10) years
as maximum with perpetual disqualification from holding public office.
This case against petitioner arose when Lilia Cadores who was the Acting
Property Officer of the Land Transportation Commission – National Capital Region
(LTC-NCR) from 1984 to 1988 was called by Director Andres Sajul to his office
sometime in April 1985. She was shown certain documents such as the Request to
Issue Voucher (RIV), Purchase Order (PO), Certification, etc. She was told to sign the
RIV and the PO for the purchase of the 23 units of fire extinguishers from Bato-Bato
Enterprises. She refused to sign the request forms on the ground that the previous
deliveries of Bato-Bato Enterprises were defective and the price exorbitant.
She proposed/suggested to Director Sajul to subject the transaction to a public
bidding or open canvass so they will be able to purchase the same at a lower price.
Director Sajul, however, got mad and even slammed shut his attaché case in front of
her, uttering bad words such as “bullshit” and similar words. Cadores got out of the room
and proceeded to the comfort room and cried.
She reported the incident to Ms. Edna Garvida, the chief of Administrative
Division. The matter was referred for consultation to the Regional Accountant, Resident
Auditor, Asst. Regional Director and the Chief of Administrative Division and all the
members thereof agreed that the transaction be subjected to public bidding and open
canvass.
Issue
Whether or not the transaction or contract entered into was manifestly or grossly
disadvantageous to the government?
Ruling of the Court
No, given the circumstances of the case, we do not see how the contract
entered into by the petitioners would cause obvious or glaring injury to the government
when petitioner merely continued the purchase from a regular supplier which he had
authority to do so.
The Supreme court ruled that the Petitioner is ACQUITTED of violating Section 3
(g) of R.A 3019. Manifest," meaning evident to the senses, open, obvious, notorious,
unmistakable etc. while "gross" is defined as glaring, reprehensible, culpable, flagrant,
shocking etc.
It must be noted that Bato-Bato Enterprises had long been supplying the Central
Office since 1982 after winning in a competitive bidding. Its price in 1982 and that in
1985 remained the same. No evidence was adduced to show that there were other fire
extinguishers which cost less than that of Bato-Bato Enterprises in 1982. In order to
show that there was an overpricing in the subject transaction, a canvass of different
suppliers with their corresponding prices should have been procured which could readily
show the differences in the price quotations.
Absent this competent evidence, it is rather unfair to conclude that the price of
Bato-Bato Enterprises was exorbitant on the basis alone of a submitted quotation of one
company and to further rule that the contract was grossly injurious to the government.
Moreover, it is undisputed that petitioner, with his position as Regional Director

had also the authority to enter into a negotiated contract without the benefit of a bidding.
Section 441 Article 6 of the Government Accounting and Auditing Manual (GAAM)
provides:
Section 441. Conditions for negotiated purchase. — Negotiated is a
system of purchase which dispenses with the stringent requirements of public
bidding. Purchases through this mode may be allowed in the following cases.
a. Whenever the supplies are urgently needed to meet an emergency which
may involve the loss of, or danger to life and/or property;
b. Whenever the supplies are to be used in connection with a project or

activity which can not be delayed without causing detriment to the public
service;
c. Whenever the materials are sold by an exclusive distributor or

manufacturer who does not have sub-dealers selling at lower prices and for
which no suitable substitute can be obtained elsewhere at more
advantageous terms to the government;
d. Whenever the supplies under procurement have been unsuccessfully

placed on bid for at least two consecutive times, either due to lack of bidders
or the offers received in each instance were exorbitant or non-conforming to
specifications;
e. In cases where it is apparent that the requisition or the needed supplies

through negotiated purchase is most advantageous to the government to be
determined by the department head concerned;
f. Whenever the purchase is made from an agency of the government.
xxxx xxxx xxxx xxxx
It bears stressing that Bato-Bato Enterprises won in a competitive bidding in

1982 to supply fire extinguishers to the Central Office of the LTO and has since then
supplying the needed fire extinguishers in the Regional Offices including the NCR
Office. Its bid price was quoted as P2,500 per fire extinguisher in 1982. No evidence
was presented that a similar kind of fire extinguisher cost less than P2,500 at that time.
Its price remained the same in 1985 when this incident occurred. Its track record with
the government is quite impressive as he testified that he has been dealing with the
government since 1979, supplying the regional offices of the LTO with his fire
extinguishers. Under the attendant circumstances, it was no fault of petitioner to have
continued the transaction with Bato-Bato Enterprises for the purchase of fire
extinguishers under a negotiated contract when petitioner was under the impression that
Bato-Bato Enterprises was a regular supplier of the LTO. Thus, a canvass or bidding
was dispensed with.
With the above testimonies, petitioner's failure to go through the standard

procedure of bidding was at the least an error of judgment on his part, an omission
which merits administrative sanctions only and not enough to convict him of the crime as
charged. In fact, the Minister was aware of such fault as he merely admonished
petitioner to be more careful and discreet in the exercise of his duties and
responsibilities.
Notwithstanding, it cannot be denied that the Minister also recognized

petitioner's authority to enter into a negotiated contract with Bato-Bato Enterprises which
was a regular supplier of fire extinguishers for the Central Office of the LTO after it won
in a competitive bidding in 1982.
Whether or not petitioner failed to conduct a bidding is not really the paramount
issue in the case at bar. The real issue is whether or not the transaction or contract
entered into was manifestly or grossly disadvantageous to the government. "Manifest,"
meaning evident to the senses, open, obvious, notorious, unmistakable etc. while
"gross" is defined as glaring, reprehensible, culpable, flagrant, shocking etc. Given the
circumstances of the case, we do not see how the contract entered into by the
petitioners would cause obvious or glaring injury to the government when petitioner
merely continued the purchase from a regular supplier which he had authority to do so.
Following from this disquisition, we do not see how the disadvantage allegedly
caused by the subject transaction to the government was gross and manifest as to
warrant petitioner's conviction under this section given the facts and circumstances of
the case. To justify a conviction, a man's guilt must be established to a moral certainty,
that is, precluding all reasonable doubt as to his guilt. Regrettably, the respondent
court's decision failed in this respect.
WHEREFORE, the petition is hereby GRANTED. Petitioner is ACQUITTED of

violating Section 3 (g) of R.A. 3019.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 197886. October 4, 2017
OFFICE OF THE OMBUDSMAN, petitioner, vs. ANTONIO Z. DE GUZMAN, respondent.
LEONEN, J :
|||
The Facts
Sometime in 2001, the Philippine Postal Corporation entered into a contract with
Aboitiz Air Transport Corporation (Aboitiz Air) for the carriage of mail at a rate of P5.00
per kilogram. This contract would expire on December 31, 2002.
Sometime in October 2003, or after the expiry of its contract with Aboitiz Air, the
Philippine Postal Corporation purchased 40 vehicles for mail deliveries in Luzon. It also
hired 25 drivers for these vehicles on a contractual basis. All of these drivers' contracts
would expire on March 31, 2004, except that of a certain Oliver A. Cruz.
The Central Mail Exchange Center of the Philippine Postal Corporation conducted
a post study of the delivery system and found that the expenses for the salaries and
maintenance of its vehicles for Luzon deliveries were higher than its previous system of
outsourcing deliveries to Aboitiz Air. On April 15, 2004, it submitted a recommendation
that the Philippine Postal Corporation would save P6,110,152.44 per annum if deliveries
were outsourced instead at the cost of P8.00 per kilogram.
On April 29, 2004, the Board of Directors of the Philippine Postal Corporation held
a Special Board Meeting where De Guzman, the Officer-in-Charge, endorsed for
approval the Central Mail Exchange Center's recommendation to outsource mail delivery
in Luzon.
On May 7, 2004, De Guzman sent a letter to Aboitiz Air, now Aboitiz One, Inc.
(Aboitiz One), through its Chief Operating Officer, Efren E. Uy.
Aboitiz One accepted the proposal and commenced its delivery operations in
Luzon on May 20, 2004. When Postmaster General Diomedo P. Villanueva (Postmaster
General Villanueva) resumed work, the Aboitiz One contract had already been fully
implemented. Thus, the Postmaster General approved payments made to Aboitiz One
for services rendered.
On October 20, 2005, Atty. Sim Oresca Mata, Jr. filed an administrative complaint
with the Office of the Ombudsman against De Guzman. He alleged that the Aboitiz One
contract renewal was done without public bidding and that the rate per kilogram was
unilaterally increased without the Philippine Postal Corporation Board of Directors'
approval.
In his Counter-Affidavit, De Guzman alleged that the Office of the Ombudsman no
longer had jurisdiction over the case since it was filed one (1) year and five (5) months
after the commission of the act complained of, or after he sent his May 7, 2004 letter to
Aboitiz. He also alleged that the contract renewal was approved by the Board of
Directors in the April 29, 2004 Special Meeting. He maintained that the expiration of the
employment contracts of the drivers caused a delay in the delivery of mail, which justified
the approval of the outsourcing of deliveries.
On August 31, 2007, the Office of the Ombudsman rendered its Decision finding
De Guzman guilty of grave misconduct and dishonesty.
Petitioner argues that respondent committed grave misconduct since he was not
authorized to enter into a contract with Aboitiz One or to allow the rate increase per
kilogram of mail considering that in the April 29, 2004, Special Board Meeting,
respondent was merely instructed to provide more information on Aboitiz One and to
submit a copy of the proposed contract. It insists that the approval of the contract was
contingent upon respondent's compliance with the conditions set by the Board of
Directors and that the Board of Directors was not fully apprised of the details during the
meeting. Petitioner likewise submits that negotiated procurement was not applicable. It
alleges that Aboitiz One took over only two (2) months after the expiration of the mail
delivery drivers' employment contracts, showing no urgency in the situation. It also avers
that the Board of Directors could only exercise negotiated procurement when there are
substantiated claims of losses.
Respondent counters that he obtained the Board of Directors' approval of his
request for authority to enter into the outsourcing contract with Aboitiz One after a full
disclosure to the Board of Directors of the cost-benefit analysis submitted by the Central
Mail Exchange Center. Respondent likewise contends that he had no legal duty to
conduct a public bidding since he was not the procuring entity. The Board of Directors,
as the procuring entity, did not direct or suggest the conduct of a public bidding. He
insists that negotiated procurement was necessary, arguing that the non-renewal of the
mail delivery drivers' employment contracts would cause delay or stoppage of mail
delivery to various parts of the country.
Respondent explains that the Philippine Postal Corporation had been incurring
costs of P21.00 per kilogram and that if services were outsourced at P8.00 per kilogram,
it could save P13.00 per kilogram or a total of P6,110,152.44 per annum. He alleges that
this price would have been the most advantageous for the government since no other
company offered a rate lower than P8.00 per kilogram for its Luzon mail deliveries.
Respondent further asserts that a public bidding was conducted in 2005, and Airfreight
2100, Inc., the winning bidder, refused the award and did not sign the contract. He states
that due to the cancellation of Aboitiz One's contract on January 31, 2006, the Philippine
Postal Corporation has incurred costs of more than P25.00 per kilogram in Luzon mail
deliveries. Respondent contends that if he was the only official of the Philippine Postal
Corporation found liable of grave misconduct and dishonesty, it would violate his right to
due process since he merely endorsed for approval a recommendation by the Central
Mail Exchange Center.
Issue
Whether or not respondent acted without authority when he procured Aboitiz One’s
services in outsourcing mail deliveries in Luzon?
Ruling of the Court
Yes, De Guzman acted without authority when he procured the services of

Aboitiz.
Respondent was designated Officer-in-Charge when the contract between the
Philippine Postal Corporation and Aboitiz One was effected, since the Postmaster
General had taken a leave of absence. Thus, he is considered to have been exercising
the functions of the Postmaster General during this period. Under Republic Act No. 7354,
the powers of the Philippine Postal Corporation are exercised by the Board of Directors,
with the President appointing all seven (7) members and "with the Postmaster General
as one of the members to represent the government shareholdings."
The Postmaster General manages the Philippine Postal Corporation and has the
power to sign contracts on behalf of the corporation as "authorized and approved by the
Board [of Directors]." Valid corporate acts are those that have "the vote of at least a
majority of the members present at a meeting at which there is a quorum."
There is no board resolution authorizing respondent to enter into a contract with
Aboitiz One for the outsourcing of mail deliveries in Luzon. Likewise, there are no
Minutes of the April 29, 2004 Special Board Meeting. Thus, respondent relies on the
transcript of stenographic notes taken during the April 29, 2004 Special Board Meeting to
prove that he had the Board of Directors' approval to enter into the contract.
Ideally, there would have been minutes taken after the conduct of the board
meeting. In its absence, as in this case, the transcript may be resorted to in order to
determine the Board of Directors' action on a particular measure. For a corporate act of
the Philippine Postal Corporation to be valid, it must have the vote of at least a majority
of the members in a meeting where there is a quorum. In this instance, six (6) out of
seven (7) members were present during the April 29, 2004 Special Board Meeting.
However, the Board of Directors never actually took a vote on whether or not it
should renew its contract with Aboitiz One for the outsourcing of its mail deliveries. A "no
comment" from two (2) of the directors present cannot be considered as a unanimous
approval. One (1) of the directors even required the presentation of the draft contract
before its approval. There was also no board resolution issued after approving it. As
there was no majority vote or a board resolution, respondent was not authorized to enter
into the contract dated May 7, 2004.
A contract entered into by corporate officers who exceed their authority generally
does not bind the corporation except when the contract is ratified by the Board of
Directors.
There was no evidence presented that the Board of Directors repudiated the
contract dated May 7, 2004 with Aboitiz One. The contract remained effective until
January 31, 2006. 53 While the transcript of the April 29, 2004 Special Board Meeting
does not mention the proposal to increase the cost of delivery from P5.00 to P8.00 per
kilogram, the Central Mail Exchange Center's cost-benefit analysis and recommendation
for price increase was sent to the Board of Directors on April 20, 2004. 54 This
memorandum was the reason for the April 29, 2004 Special Board Meeting. Therefore,
the Board of Directors was informed that the renewal of the Aboitiz One contract would
include an increase in costs.
Postmaster General Villanueva approved the payments when he resumed work.
Subsequent Postmaster General Rama, upon his assumption to office, also approved
the payments to Aboitiz One. The Corporate Auditor Commission on Audit likewise
certified that it did not issue any notice of disallowance on the Aboitiz One contract.
Considering that the Board of Directors remained silent, and the Postmaster
Generals continued to approve the payments to Aboitiz One, they are presumed to have
substantially ratified respondent's unauthorized acts. Therefore, respondent's action is
not considered ultra vires.
As a general rule, all government procurement must undergo competitive bidding.
This ensures transparency, competitiveness, efficiency, and public accountability in the
procurement process. However, the government entity may, subject to certain
conditions, resort to alternative methods of procurement, namely: (1) limited source
bidding, (2) direct contracting, (3) repeat order, (4) shopping, and (5) negotiated
procurement. The procuring entity must ensure that in any of these methods, it secures
the most advantageous price for the government.
In negotiated procurement, "the Procuring Entity directly negotiates a contract with
a technically, legally and financially capable supplier, contractor or consultant." Resort to
negotiated procurement is allowed only under the following conditions:
Petitioner and respondent appear to have differing views on which instance this
situation falls under. Petitioner argues that negotiated procurement does not apply in this
case as it is not a situation covered by Republic Act No. 9184, Section 53 (c).
However, this situation cannot be categorized as a takeover of contracts. Republic
Act No. 9184, Section 53 (c) requires that the rescission or termination of the contract be
for causes provided for in the contract and under the law. The drivers' employment
contracts were not terminated; they merely expired and were not renewed. Moreover,
there are certain guidelines that must be followed in terminations due to default,
convenience, insolvency, unlawful acts, work stoppage, or breach of obligation.
Respondent, in categorizing the situation as an "emergency," inevitably anchors
the negotiated procurement of the Aboitiz One contract as a situation "where immediate
action is necessary to prevent damage to or loss of life or property, or to restore vital
public services, infrastructure facilities and other public utilities." Since neither damage,
nor loss of life or property, nor restoration of infrastructure facilities or public utilities is
alleged, negotiated procurement in this instance was resorted to in restoring vital public
services.
However, negotiated procurement under Republic Act No. 9184, Section 53 (b)
involves situations beyond the procuring entity's control. Thus, it speaks of "imminent
danger . . . during a state of calamity . . . natural or man-made calamities [and] other
causes where immediate action is necessary." Following the principle of ejusdem
generis, where general terms are qualified by the particular terms they follow in the
statute, the phrase "other causes" is construed to mean a situation similar to a calamity,
whether natural or man-made, where inaction could result in the loss of life, destruction
of properties or infrastructures, or loss of vital public services and utilities.
The expiration of the mail carriage drivers' employment contracts is not a
calamitous event contemplated under Republic Act No. 9184, Section 53 (b).
Even respondent admits that in March 2005, a public bidding was eventually
conducted to outsource mail carriage in Luzon. The result of this bidding is telling. The
winning bidder, Airfreight 2100, Inc., offered the rate of P4.95 per kilogram, which was
almost half Aboitiz One's rate of P8.00 per kilogram. This rate of P4.95 per kilogram
would have been the price most advantageous to the government. If, as respondent
claims, Airfreight 2100, Inc. refused to sign the contract, the Philippine Postal
Corporation was obliged under the law to conduct a second bidding. It is only when the
second bidding fails that the Philippine Postal Corporation will be allowed to undertake a
negotiated procurement. Thus, the direct resort to negotiated procurement in this case
was highly irregular.
Respondent claims that even if public bidding was necessary, he cannot be held
liable for its non-conduct since he is not the head of the procuring entity. On the contrary,
Republic Act No. 9184, Section 5 (j) (ii) defines head of the procuring entity as "the
governing board or its duly authorized official, for government-owned and/or -controlled
corporations." As previously discussed, respondent's acts, while initially unauthorized,
were eventually ratified by the Philippine Postal Corporation Board of Directors' silence.
Thus, he was considered "its duly authorized official" in procuring Aboitiz One's services.
The petitioner has not presented evidence to show that respondent benefited from
the lack of public bidding in the procurement of Aboitiz One's services. While there was a
transgression of the established rules on public bidding, there must be evidence,
independent from this transgression, which would show that respondent or some other
person on his behalf benefited from the Aboitiz One contract.
This Court found that the proper offense was gross neglect of duty since "Espina
acted negligently, unmindful of the high position he occupied and the responsibilities it
carried, and without regard to his accountability for the hundreds of millions in taxpayers'
money involved."
Respondent's acts cannot be characterized as a mere failure to use reasonable
diligence or that which results from carelessness or indifference. He was aware that the
employment contracts would expire on March 31, 2004. He knew that the Central Mail
Exchange Center was able to propose a viable alternative for mail carriage in Luzon. He
waited until the contracts actually expired to recommend the use of outsourcing to the
Board of Directors, thereby creating a condition where the Board of Directors were left
with no choice but to acquiesce since denying the recommendation may result in
indeterminable delay or stoppage.
Respondent, as the acting Postmaster General, had the duty to first secure the
Board of Directors' approval before entering into the May 7, 2004, contract with Aboitiz
One. The Board of Directors did not actually give its approval since it required him to first
fulfill certain conditions. Instead of complying, he went ahead and executed the contract
with Aboitiz One without ensuring that the procurement of its services by the Philippine
Postal Corporation would be done through the proper procedures and at the most
advantageous price. Accordingly, he is found guilty of gross neglect of duty.
Under Rule 10, Section 46 (A) (2) of the Revised Rules on Administrative Cases,
gross neglect of duty is categorized as a grave offense punishable by dismissal from
service. In view of the constitutional principle that "public office is a public trust," erring
public officials must be held accountable not for punishment but to ensure the public's
continued trust and confidence in the civil service.
WHEREFORE, the Petition is PARTIALLY GRANTED. The May 4, 2011, Decision
and July 14, 2011, Resolution of the Court of Appeals in CA-G.R. SP No. 108182 are
REVERSED and SET ASIDE. A new judgment is ENTERED finding respondent Antonio
Z. De Guzman GUILTY of GROSS NEGLECT OF DUTY. Accordingly, he is
DISMISSED from government service with all the accessory penalties of cancellation of
eligibility, forfeiture of leave credits and retirement benefits, and disqualification for re-
employment in the government service.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 227405, September 05, 2018

OFFICE OF THE OMBUDSMAN, Petitioner, v. AMADO M. BLOR, JESUS R.
BARRERA, ANGELINA O. QUIJANO, POTENCIANO G. VICEDO, MIRAFLOR B.
SOLIVEN, AND ANNIE F. CONSTANTINO, Respondents.
CARPIO, J.:
The Facts
Per Special Order No. 11-2013, the Bids and Awards Committee (BAC) of DARPO-
Occidental Mindoro was reconstituted as follows: respondent Barrera as Chairman;
Quijano as Vice-Chairman; and respondent Vicedo, Caliboso, and the concerned
Municipal Agrarian Reform Officer as Members. Further, under PARO Special Order No.
08-2012, respondents Constantin) would head the Inspection and Canvass Committees,
respectively. Both administrative orders were issued by respondent Amado M. Blor,
Officer-in-Charge (OlC)-Provincial Agrarian Reform Officer II.
The Management Committee of DARPO-Occidental Mindoro held a meeting. The
attendees were respondent Blor as PARO, respondent Barrera as Chief Agrarian Reform
Officer, respondent Quijano as CARO of the Beneficiaries Development Coordinating
Division, respondent Vicedo as OIC-CARO of the Operations Division, and Caliboso, head
of the Planning, Monitoring and Evaluation Unit.
During the meeting, Rodrigo P. Mazo, a procurement officer, was summoned and
instructed by respondent Blor to purchase six iPad units for the use of the PARO and
CAROs. In other words, the Chairman, Vice-Chairman and two Members of the BAC, all of
whom were part of the Management Committee, happened to be the end users of the
requisition. An undated Requisition and Issue Slip (RIS) was signed by respondents
Barrera and Blor as the requesting party and approving authority, respectively.
Notably, the RIS specified "IPAD," with the purpose indicated as "for PARO and
CARPO use." Mazo created the online posting at the Philippine Government Electronic
Procurement System (PhilGEPS) and drafted the Request for Quotation. The approved
budget for the contract was PhP239,940, or PhP39,990 per unit. Unlike the RIS, the RFQ
did not specify "iPad," but described the article as "Tablet Computer".
Meanwhile, respondent Constantino, Chairperson of the Canvass Committee, sent
RFQs to three suppliers based in SM Megamall, Mandaluyong City, namely, Silicon Valley
Computer Centre, Electroworld, and Accent Micro Products, Inc. The three stores replied
to respondent Blor recommending the Apple iPad at PhP39,990 per unit.
Having submitted the lowest bid, Silicon Valley, through its owner and operator
Tiny.Com Computer, Inc., was issued Land Bank of the Philippines Check No. 127247
dated 24 June 2013 in the amount of PhP238,173.30. Respondent Blor, an authorized
signatory, signed the check. Further, three undated documents were stamped "PAID," with
the date "JUN 24 2013" superimposed and the number 127247 immediately below. These
undated documents included the following:
(1) a purchase order signed by respondent Blor as the authorized official and
respondent Barrera as head of the requisitioning office;
(2) Obligation Slip No. 200-13-06-0478A signed by respondent Barrera as the
requesting party and certifying that the allotment for the six iPad units amounting to
PhP251,940 was necessary, lawful and under his direct supervision, and respondent
Constantino as OIC-Budget Officer, certifying that the appropriation was available and
obligated for the indicated purpose; and
(3) Disbursement Voucher No. 158-06569-13 in the net amount of PhP238,173.30
signed by respondent Soliven, certifying the availability of funds, and respondent Blor
approving the payment, with the accounting entries having been prepared by respondent
Constantino as bookkeeper and approved by respondent Soliven.
Notably, the requisition for six tablet computers was not included in the 2013
Annual Procurement Plan (APP) of DARPO-Occidental Mindoro. However, the 2013 APP
was updated to include the requisition. The updated APP was signed by respondent
Barrera who prepared the document, respondent Soliven who certified that funds were
available, and respondent Blor who approved the updated APP.
Subsequently, Mazo filed with the Office of the Deputy Ombudsman for Luzon an
Affidavit Complaint dated 2 October 2013, charging respondents and Lester P. Abeleda
with Violation of Republic Act No. (RA) 9184, or the Government Procurement Reform Act.
Office of the Deputy Ombudsman’s Ruling

Finding substantial evidence on the illegal procurement of the iPad units, having
been purchased in violation of RA 9184, the Office of the Deputy Ombudsman for Luzon
held respondents administratively liable for grave misconduct. The dispositive portion of
the Decision dated 15 September 201425 reads:
WHEREFORE, respondents AMADO M. BLOR, Provincial Agrarian Reform Officer
I, JESUS R. BARRERA, Chief Agrarian Reform Program Officer, Administrative and
Finance Division, and Chairman, Bids and Awards Committee, ANGELINA O. QUIJANO,
Chief Agrarian Reform Officer, Beneficiaries Development Coordinating Division,
POTENCIANO G. VICEDO, OIC, Chief Agrarian Reform Officer, LESTER P. ABELEDA,
Legal Officer, MIRAFLOR B. SOLIVEN, OIC-Accountant II, and ANNIE CONSTANTINO,
Acting Budget Officer/Bookkeeper, all of the Department of Agrarian Reform Provincial
Office (DARPO) San Jose, Occidental Mindoro, are hereby found GUILTY of Grave
Misconduct and are meted with the penalty of DISMISSAL from the service with
cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification
from holding public office, as well as in government-owned and -controlled corporations,
pursuant to the Revised Rules on Administrative Cases in the Civil Service.
SO ORDERED.
xxxx xxxx xxxx xxxx
On 31 October 2014, respondents filed a Motion for Reconsideration to which the

Office of the Deputy Ombudsman for Luzon denied their motion.
The Court of Appeals affirmed the finding of the Office of the Deputy Ombudsman
for Luzon that the procurement of the iPad units violated RA 9184. However, only
respondents Barrera, Quijano, and Constantino were found administratively liable for being
"members of the BAC who worked actively and conceitedly to realize the acquisition of
[the] iPads." The dispositive portion of the Decision dated 22 January 2016 reads:
WHEREFORE, premises considered, the APPEAL is found PARTLY
MERITORIOUS. The assailed Decision and Order dated 15 September 2014 and 14
November 2014, respectively, are hereby MODIFIED, to the effect that only petitioners
Jesus R. Barrera, Angelina O. Quijano, and Annie [F.] Constantino are found guilty of
GRAVE MISCONDUCT, and are meted the penalty of DISMISSAL and its attendant
penalties of cancellation of eligibility, forfeiture of retirement benefits, and perpetual
disqualification for reemployment in the government service.
On the other hand, the complaint against petitioners Amado M. Blor, Potenciano G.
Vicedo, and Miraflor B. Soliven is DISMISSED.
SO ORDERED.
xxxx xxxx xxxx xxxx
Issue
Whether the procurement of the iPad units without conducting public bidding is
lawful?
Ruling of the Court

No, the purchase of the iPad units without prior public bidding violated RA
9184.
Principally, by no means can an Apple iPad be considered an ordinary or regular
office supply. Petitioners have not satisfactorily explained why they specifically need an
Apple iPad to carry out their transactions or duties. Their arguments that an iPad should be
treated as an ordinary or regular office supply borders on the absurd. They would have an
iPad be classified with pens, paper clips, bond papers, ink, and similar items and supplies
normally used and consumed in a typical office in the course of its daily operations.
Second, the acquisition of Apple iPads also contravened the "no brand name
rule" in procurement. Thus, assuming tablets were needed, the procurement need not
have been limited to Apple products. We take judicial notice that an Apple iPad occupies
the top rung on the tablet ladder and commands an expensive price. Notably, there are
cheaper tablets available on the market and which perform substantially the same
functions as an Apple iPad. Consequently, had Sec. 18 been observed, the government
would have spent substantially less for each tablet.
Aside from the nature of the goods procured by shopping, we also find that the
requirement for posting has not been complied with. This has even been admitted by the
petitioners. The defects of the procurement, however, do not stop here. A more
fundamental error lay with the non-inclusion of the purchase in the DARPO's Annual
Procurement Plan ("APP"), which under the RIRR is indispensable.
Another lapse is that no Resolution from the Bids and Awards Committee
prescribed the resort to shopping. The argument that such a Resolution is necessary only
when the procurement is included in the original APP, and not in an updated one, is weak
and baseless.
Given the above observations, we are convinced that there was a deficient
compliance with the law. The erroneous procedure to facilitate the procurement as well as
the extraordinary nature of the subject goods, which cannot be shopped, all point to a
procurement inconsistent with R.A. No. 9184 and its RIRR.
As for respondents Blor and Soliven, while they were not members of the BAC, the
role played by them, in cahoots with the other respondents who were members of the
BAC, was indispensable to the subject transaction.
To stress, Blor was the head of the procuring entity. He approved the RIS and DV.
He "gave the go signal" that prompted the BAC to procure the iPads through shopping. He
also approved the payment of the iPads despite the lack of requisite documentation. On
top of it, he is an end user. Meanwhile, respondent Soliven certified in the DV that
supporting documents are complete and proper despite the absence of a BAC Resolution
approved by the head of the entity which justifies the use of the alternative mode of
procurement, and notice of posting for seven days in the PhilGEPS, in the website of the
Procuring Entity and its electronic procurement service provider, if any, and in any
conspicuous place in the premises of the Procuring Entity.
Further, respondent Blor issued Special Order No. 11-2013, enumerating the
responsibilities of the BAC, and Special Order No. 8-2012, describing the functions of the
Inspection and Canvass Committees. Hence, respondent Blor cannot feign ignorance
about the rules on government procurement. Respondent Soliven also accompanied
respondent Constantino, a BAC member, to Manila to canvass iPads and their travel order
was signed by respondent Blor. Most telling, respondents Blor and Soliven signed the
updated APP, inserting the requisition for the six iPad units previously not found in the
original APP for 2013. Collectively, the acts of respondents evince a community of design
between the BAC officers and members, on the one hand, and the head and the
accountant of the procuring entity, on the other, to circumvent the proper procedure on
government procurement.
WHEREFORE, the petition for review on certiorari filed by the Office of the
Ombudsman is GRANTED. The Decision dated 22 January 2016 and Resolution dated 18
August 2016 of the Court of Appeals in CA-G.R. SP No. 138533 are REVERSED and SET
ASIDE. The Decision dated 15 September 2014 and Order dated 14 November 2014 of
the Office of the Deputy Ombudsman for Luzon in OMB-L-A-14-0017 are hereby
REINSTATED.
SO ORDERED.
Topic: Conflict of Interest

SUPREME COURT
Manila
SECOND DIVISION
[G.R. No. 183789 : August 24, 2011]
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION,

PETITIONER, VS. POZZOLANIC PHILIPPINES INCORPORATED, RESPONDENT.
PEREZ, J.:
The Facts
In 1986, Pozzolanic Australia won the public bidding for the purchase of the fly ash
generated by NPC's power plant in Batangas. Pozzolanic Australia then negotiated with
NPC for a long-term contract for the purchase of all fly ash to be produced by NPC's future
power plants. NPC accepted Pozzolanic Australia's offer and they entered into a long-term
contract, dated 20 October 1987, denominated as "Contract for the Purchase of Fly Ash of
Batangas Coal-Fired Thermal Power Plant Luzon" (the Batangas Contract). Under Article I
of the contract, NPC, referred to therein as the "CORPORATION," granted Pozzolanic
Australia, the "PURCHASER," a right of first refusal to purchase the fly ash generated by the
coalfired plants that may be put up by NPC in the future.
The specific provision of the contract states: PURCHASER has first option to
purchase Fly Ash under similar terms and conditions as herein contained from the second
unit of Batangas Coal-Fired Thermal Plant that the CORPORATION may construct.
PURCHASER may also exercise the right of first refusal to purchase fly ash from any new
coal-fired plants which will be put up by CORPORATION. In 1988, while the necessary
clearances and approvals were being obtained by Pozzolanic Australia in connection with
the operation of its fly ash business in the Philippines, its major stockholders decided that it
would be more advantageous for the company to organize a Philippine corporation and to
assign to such corporation Pozzolanic Australia's rights to the commercial use of fly ash in
the Philippines.
Accordingly, in April 1989, respondent Pozzolanic was formally incorporated to take

over Pozzolanic Australia's business in the Philippines. Respondent then commenced to
exercise its rights under the Batangas contract in June, 1989. In 1998, the Masinloc Coal-
Fired Thermal Power Plant (Masinloc Plant) started operations to provide power for NPC.
Late that year, respondent began the installation of its fly ash processing equipment in the
Masinloc Plant and began off taking the fly ash produced therein.
Subsequently, on 15 February 1999, NPC and respondent, on an interim basis and
prior to the conduct of a public bidding for the contract to purchase the Masinloc Plant's fly
ash, executed a contract whereby respondent was given the right to purchase the said fly
ash for a period of one year. The fourth and fifth "WHEREAS" clauses of the contract
provide: WHEREAS, under the `Contract for the Purchase of the Fly Ash of Batangas Coal-
Fired Thermal Power Plant' dated 20 October 1987, PURCHASER was granted the right of
first refusal over any and all fly ash that may be produced by any of NPC's coal-fired power
plants in the Philippines;
WHEREAS, NPC intends to bid out the long term contract for the Fly Ash that may
be produced by the Masinloc Coal Fired Thermal Power Plant subject to the second
paragraph of Article I of the original contract between the parties which was signed on 20
October 1987 giving PURCHASER the right of first refusal. In October 1999, the Sual Coal-
Fired Power Plant started providing electricity in the Luzon region. NPC thereafter caused to
be published in the Philippine Star and the Manila Bulletin an "Invitation to Pre-Qualify and to
Bid," inviting all interested buyers to pre-qualify for the purchase of fly ash from the Masinloc
and/or Sual Power Plants.
As a result, respondent sent letters to NPC calling its attention to respondent's right
of first refusal under the Batangas Contract. It also demanded that any tender documents to
be issued in connection with the bidding on the right to purchase the Masinloc and Sual
Plants' fly ash include notices informing prospective bidders of respondent's right of first
refusal.
In a letter dated 7 March 2000, NPC informed respondent that it had decided to defer
indefinitely the bidding on the right to purchase the Masinloc Plant's fly ash and to proceed
first with the bidding on the right to purchase the Sual Plant's fly ash. Thus, on 7 April 2000,
NPC released the tender documents for the bidding on the Sual Plant's fly ash, which tender
documents made no reference to respondent's right of first refusal.
This prompted respondent to file a complaint with the trial court praying that NPC be
ordered to allow Pozzolanic to exercise its right of first refusal by permitting it to match the
price and terms offered by the winning bidder and by awarding the contract for the purchase
of the Sual Plant's fly ash to Pozzolanic if it matches the price and terms offered by said
winning bidder.
This complaint was dismissed by the trial court on the ground of forum shopping, it
appearing that the Province of Zambales, et al. had previously filed a case against
respondent and NPC, claiming exclusive right to withdraw the fly ash of the Masinloc Plant.
Respondent appealed the order of dismissal to the Court of Appeals. CA affirmed the
decision of the trial court.
Issue
Whether or not the right of first refusal is invalid for being contrary to public policy?
Ruling of the Court
Yes, the right of first refusal granted to respondent in the Batangas Contract
invalid for being contrary to public policy as the same violates the requirement of
competitive public bidding in the award of government contracts, for the following
reasons:
(1) The grant to respondent of the right of first refusal constitutes an unauthorized
provision in the contract that was entered into pursuant to the bidding.
By respondent's own admission, the right of first refusal granted to it was
"contractually bargained for and acquired from NPC after it won the public bidding for
the purchase of the fly ash produced by the Batangas Power Plant. This clearly
indicates that the right of first refusal was not included in the bid documents
presented to the other bidders who participated in the bidding. As a result, the
contract signed by NPC and respondent is different from that which was bidded out.
As pointed out by the Court in Agan, if the winning bidder is allowed to later
include or modify certain provisions in the contract awarded such that the contract is
altered in any material respect, then the essence of fair competition in the public
bidding is destroyed. A public bidding would be a farce if, after the contract is
awarded, the winning bidder may modify the contract and include provisions which
are favorable to it that were not previously made available to the other bidders. The
government cannot enter into a contract with the highest bidder and incorporate
substantial provisions beneficial to him, not included or contemplated in the terms
and specifications upon which the bids were invited.
The grant of the right of first refusal in this case did not only substantially
amend the terms of the contract bidded upon, so that resultantly, the other bidders
thereto were deprived of the terms and opportunities granted to respondent after it
won the public auction, it so altered the bid terms - the very admission by all parties
that the disposal of fly ash must be through public bidding - by effectively barring any
and all true biddings in the future. The grant of first refusal was a grant to respondent
of the right to buy fly ash in all coal-fired plants of NPC. Proceeding from the afore-
cited jurisprudence, the Batangas Contract is, consequently, a nullity.
(2) The right to buy fly ash precedes and is the basis of the right of first refusal,
and the consequent right cannot be acquired together with and at the same
time as the precedent right.
The right of first refusal has long been recognized, both legally and
jurisprudentially, as valid in our jurisdiction. It is significant to note, however, that in
those cases where the right of refusal is upheld by both law and jurisprudence, the
party in whose favor the right is granted has an interest on the object over which the
right of first refusal is to be exercised. In those instances, the grant of the right of first
refusal is a means to protect such interest.
In the case at bar, however, there is no basis whatsoever for the grant to
respondent of the right of first refusal with respect to the fly ash of NPC power plants
since the right to purchase at the time of bidding is that which is precisely the bidding
subject, not yet existent much more vested in respondent.
It is significant to note that, in the tender documents for the bidding of the fly
ash of the Masinloc Power Plant, NPC gave respondent the opportunity to top the
highest bid by fifteen percent (15%). Respondent protested this, however, as an
infringement upon its alleged right of first refusal to purchase the Masinloc fly ash, as
supposedly guaranteed by the Batangas Contract.
In effect, therefore, in asserting its right of first refusal, what respondent is

asking is that it be given undue advantage over any other party interested to
purchase the fly ash of NPC's power plants. Obviously, this cannot be countenanced.
It is inherent in public biddings that there shall be a fair competition among the
bidders. The specifications in such biddings provide the common ground or basis for
the bidders. The specifications should, accordingly, operate equally or
indiscriminately upon all bidders.
(3) The right of first refusal is against the public policy that contracts must be
awarded through public bidding.
In this jurisdiction, public bidding is the established procedure in the grant of

government contracts. The award of public contracts through public bidding is a
matter of public policy. Thus, respondent's right of first refusal cannot take
precedence over the dictates of public policy.
The right of first refusal of respondent being invalid, it follows that it has no
binding effect. It does not create an obligation on the part of petitioner to
acknowledge the same. Neither does it confer a preferential right upon respondent to
the fly ash of NPC's power plants.
Based on the foregoing, the Sual Contract is clearly a negotiated contract by

virtue of which, NPC awards to respondent the right to withdraw the fly ash of the
Sual Plant - without public bidding - in exchange for which, respondent (1) waives its
rights to the fly ash of the Masinloc Plant and (2) consents to withdraw its case
against NPC. As a result, the Sual Contract is invalid for failure to comply with the
rules on public bidding.
The foregoing principles on the necessity of a public bidding for all

government contracts obviously apply to the Masinloc Contract as well, the same
being a public contract since one of the parties thereto is a government entity. While
its terms do not expressly provide that the same was executed pursuant to the right
of first refusal granted to respondent under the Batangas Contract, the circumstances
under which it was drafted, as narrated above, clearly indicate that the Masinloc
Contract is a recognition of the challenged right of first refusal. The case filed by
respondent for the recognition and enforcement of its right of first refusal was settled
only after the execution of the Masinloc Contract, pursuant to which, respondent was
awarded the exclusive right to withdraw the fly ash of the Masinloc Power Plant
without the benefit of a public bidding.
As adverted to above, the disposal of NPC power plants' fly ash is governed
by COA Circular Nos. 86-264 and 89-296.These circulars direct that public auction
shall be the primary mode of disposal of assets of the government and sale through
negotiation shall be resorted to only in case of failure of public auction. For failure to
abide by the requirement of a public bidding in the disposal of government assets,
this Court is left with no option but to likewise declare the Sual and Masinloc
Contracts null and void.
In conclusion, this Court stresses that although a right of first refusal is a

contractual prerogative recognized by both law and jurisprudence, the grant of such
right in this case is invalid for being contrary to public policy.
WHEREFORE, we GRANT the petition for review on certiorari. The Decision dated
30 April 2008 and Order dated 27 June 2008 of the Regional Trial Court of Quezon City,
Branch 96 in Civil Case No. Q-00-40731 are hereby REVERSED AND SET ASIDE. Further,
the Batangas, Sual and Masinloc Contracts are hereby declared NULL AND VOID for being
contrary to law and public policy. Petitioner is hereby ordered to conduct a bidding of the
right to purchase the fly ash produced by the Batangas, Masinloc and Sual Power Plants
within thirty (30) days from the finality of this Decision.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
[G.R. No. 237837. June 10, 2019.]
EMMANUEL CEDRO ANDAYA, ATTY. SYLVIA CRISOSTOMO BANDA, JOSEFINA SAN

PEDRO SAMSON, ENGR. ANTONIO VILLAROMAN SILLONA, BERNADETTE TECSON
LAGUMEN, AND MARIA GRACIA DE LEON ENRIQUEZ, petitioners, vs. FIELD
INVESTIGATION OFFICE OF THE OFFICE OF THE OMBUDSMAN, respondent.
PERLAS-BERNABE, J:
The Facts
At the time material to this case, Andaya was Acting Director of the National Printing
Office (NPO) while Atty. Banda was Chairman, Samson was Vice Chairman, and Sillona,
Lagumen, and Enriquez were Members of the Bids and Awards Committee (BAC).
On September 2, 2010, after obtaining a certification of availability of funds, the NPO

Technical Working Group made a purchase request to the BAC for the checkup, repair, and
supply parts of Elevator II with an estimated cost of P680,000.00. Three (3) suppliers
submitted their respective quotations, namely, Eastland Printink, Inc. (EPI), C.A. Enterprises,
and Giraqui Trading.
On December 13, 2010, however, the BAC passed a Resolution stating that it
would resort to negotiated procurement for the following reasons: (a) the delay in the
elevator's repair would hamper the NPO's operations which will result in considerable losses
on the part of the government; and (b) the allocated budget for the elevator's repair must be
disbursed before the end of the fiscal year for it not to revert to the general fund. The
Resolution was approved by Andaya and the Notice of Award was thereafter issued to EPI,
having the lowest quotation in the amount of P665,000.00.
This prompted respondent Field Investigation Office (FIO) of the Ombudsman to file
a complaint against petitioners for Serious Dishonesty, Gross Neglect of Duty, Grave
Misconduct, and Conduct Prejudicial to the Interest of the Service, alleging that the BAC
failed to justify the recourse to negotiated procurement under emergency cases pursuant to
Section 53 (b) of Republic Act (RA) No. 9184 for the repair of an unserviceable elevator. The
FIO alleged that an unserviceable elevator did not pose any imminent danger to life or
property nor was immediate action necessary to prevent damage to or loss of life and
property, or to restore vital services, infrastructure facilities, and other public utilities. Further,
the contract was awarded to EPI despite the latter being a printing company and not a
contractor for elevator repair and maintenance. As for Andaya, the FIO added that he acted
with gross inexcusable negligence in allowing the BAC to adopt negotiated procurement
without complying with the formalities under RA 9184.
In defense, petitioners claimed that their resort to negotiated procurement was
justified as the elevator in question was used to transfer heavy rolls and pallets of paper, as
well as printed forms from one floor to another. Moreover, they believed in good faith that the
repair was urgent and necessary to restore public services and infrastructure facilities and
they had no intent to circumvent RA 9184 or to cause any damage to the government or the
NPO. Finally, they maintained that EPI is a qualified contractor, as the company's secondary
purpose is "to engage in general construction business."
Ombudsman Ruling
In a Decision dated June 27, 2016, the Ombudsman found petitioners guilty of
Gross Neglect of Duty and Grave Misconduct, and accordingly, dismissed them from
service. In ruling that petitioners were guilty of Grave Misconduct, the Ombudsman found
that they violated the rules of procurement under RA 9184 when they resorted to negotiated
procurement instead of conducting a public bidding, taking into account that the cost of the
contract was P665,000.00, which is beyond the threshold for alternative modes of
procurement. Likewise, the project was hastily awarded to EPI, a contractor engaged in
printing, not in elevator repair and services. Moreover, it observed that the public was not
duly notified of the award to EPI for failure to comply with the required publication of the
procurement in the Philippine Government Electronic Procurement System.
Further, petitioners failed to substantiate that immediate and compelling

justification exists in this case to dispense with public bidding. Contrary to petitioners'
explanation that immediate action was necessary to restore vital public services of the NPO,
records show that they resorted to negotiated procurement "in order not to hamper [the
NPO's] day to day transactions since the elevator has been inoperational since July 2010
and in order not to lose the budget." Likewise, the repair was undertaken only for the
convenience of the NPO employees in carrying documents in the NPO building; therefore,
the emergency procurement was not necessary to address an unforeseen emergency or to
restore vital services. Finally, the Ombudsman added that petitioners' negligence denied the
government of a fair system of determining the best possible price for its procurement.
Petitioners moved for reconsideration, which was denied in an Order 19 dated

October 10, 2016. Aggrieved, petitioners appealed to the CA via petition for review under
Rule 43 of the Rules of Court.
In a Decision dated August 31, 2017, the CA affirmed the Ombudsman's

Decision, finding that petitioners failed to justify their resort to negotiated procurement
considering that: (a) the elevator became non-functional in July 2010 but the purchase
request was made only in September 2010, thereby disproving the alleged immediacy of its
repair; (b) the elevator, which was merely used for carrying loads of paper and other printed
materials, is not indispensable to the NPO's mandate to provide printing services for the
government; and (c) the reversion of the budget allocation for the repair of the elevator to the
general fund is too flimsy a reason to dispense with the required public bidding. Stressing
that alternative modes of procurement can be resorted to only in highly exceptional cases,
the CA opined that petitioners' justifications failed to satisfy any of the extraordinary
circumstances under RA 9184 permitting resort to negotiated procurement. As such, it
affirmed the penalty of dismissal from the service meted by the Ombudsman.
Petitioners' motion for reconsideration was denied in a Resolution dated

February 23, 2018; hence, this petition.
Issue
Whether or not petitioners' resort to negotiated procurement as an alternative mode

of procurement was proper and justified?
Ruling of the Court
No, petitioners’ resort to negotiated procurement is not proper. The petition is

bereft of merit.
Section 10, Article IV, in relation to Section 5, paragraphs (n) and (o), Article I of RA
9184, mandates that all acquisition of goods, consulting services, and the contracting for
infrastructure projects by any branch, department, office, agency, or instrumentality of the
government, including state universities and colleges, government-owned and/or -controlled
corporations, government financial institutions, and local government units shall be done
through competitive bidding. This is in consonance with the law's policy and principle of
promoting transparency in the procurement process, implementation of procurement
contracts, and competitiveness by extending equal opportunity to enable private contracting
parties who are eligible and qualified to participate in public bidding.
Public bidding is the primary process to procure goods and services for the
government. A competitive public bidding aims to protect public interest by giving it the best
possible advantages through open competition. It is precisely the mechanism that enables
the government agency to avoid or preclude anomalies in the execution of public contracts.
Strict observance of the rules, regulations, and guidelines of the bidding process is the only
safeguard to a fair, honest, and competitive public bidding.
Alternative methods of procurement, however, are allowed under RA 9184 which

would enable dispensing with the requirement of open, public, and competitive bidding, but
only in highly exceptional cases and under the conditions set forth in Article XVI thereof.
One of these alternative modes of procurement is negotiated procurement, which, pursuant
to Section 53 of RA 9184, may be availed by the procuring entity only in the following
instances, to wit:
Section 53. Negotiated Procurement. — Negotiated Procurement

shall be allowed only in the following instances:
a. In case of two (2) failed biddings as provided in Section 35 hereof;
b. In case of imminent danger to life or property during a state of calamity, or

when time is of the essence arising from natural or man-made calamities or
other causes where immediate action is necessary to prevent damage to or
loss of life or property, or to restore vital public services, infrastructure
facilities and other public utilities;
c. Take-over of contracts, which have been rescinded or terminated for

causes provided for in the contract and existing laws, where immediate
action is necessary to prevent damage to or loss of life or property, or to
restore vital public services, infrastructure facilities and other public utilities;
d. Where the subject contract is adjacent or contiguous to an on-going
infrastructure project, as defined in the IRR: Provided, however, That the
original contract is the result of a Competitive Bidding; the subject contract
to be negotiated has similar or related scopes of work; it is within the
contracting capacity of the contractor; the contractor uses the same prices
or lower unit prices as in the original contract less mobilization cost; the
amount involved does not exceed the amount of the ongoing project; and,
the contractor has no negative slippage: Provided, further, That negotiations
for the procurement are commenced before the expiry of the original
contract. Whenever applicable, this principle shall also govern consultancy
contracts, where the consultants have unique experience and expertise to
deliver the required service; or,
e. Subject to the guidelines specified in the IRR, purchases of Goods from

another agency of the government, such as the Procurement Service of the
DBM, which is tasked with a centralized procurement of commonly used
Goods for the government in accordance with Letter of Instruction No. 755
and Executive Order No. 359, series of 1989.
xxxx xxxx xxxx xxx
In this case, competitive public bidding was dispensed with by petitioners for
the checkup, repair, and supply parts of Elevator II in the NPO building. However, as
correctly found by the Ombudsman and affirmed by the CA, petitioners' resort to
negotiated procurement as an alternative mode of procurement was not proper and
justified. Their reasons do not satisfy any of the highly exceptional
circumstances enumerated in Section 53 as above-quoted, particularly
paragraph (b), as records are bereft of evidence to show that the immediate
repair of the subject elevator was necessary to prevent damage to or loss of
life or property, or to restore vital public services, infrastructure facilities, and
other public utilities.
First, the alleged urgency of the repair of the subject elevator is belied by the fact that
the purchase request therefor was made only in September 2010, whereas it supposedly
became non-operational in July 2010. The delay in the submission of the purchase request
is inconsistent with the immediate nature of the service required and negates the existence
of an emergency.
Second, the elevator, which was merely used for carrying loads of paper and other
printed materials, is not indispensable to the NPO's mandate to provide printing services for
the government. To be sure, the NPO can continue with its day-to-day operations even
without the elevator, albeit, perhaps, with some inconvenience. Such inconvenience,
however, does not warrant a complete disregard of the required public bidding.
Finally, the adoption of negotiated procurement in order to utilize the funds allocated
for the repair and service of the elevator before the end of the fiscal year lest the amount
revert to the general fund is likewise devoid of legal justification. Clearly, therefore,
petitioners utterly failed to justify the negotiated procurement in this case.
All told, substantial evidence exists to hold petitioners guilty for Grave Misconduct
and Gross Neglect of Duty.
The petitioners grossly disregarded the law and were remiss in their duties in strictly
observing the directives of RA 9184, which resulted in undue benefits to EPI. Such gross
disregard of the law is so blatant and palpable that the same amounts to a willful intent to
subvert the clear policy of the law for transparency and accountability in government
contracts, thereby warranting the penalty of dismissal from the service pursuant to Section
46, Rule 10 of the Revised Rules on Administrative Cases in the Civil Service, with
accessory penalties. Considering that both Grave Misconduct and Gross Neglect of Duty are
of similar gravity and that both are punished by dismissal under the pertinent civil service
laws and rules applicable to petitioners, they are thus punished with the said ultimate
penalty, together with the attending disabilities.
Verily, it must be stressed that serious offenses, such as Grave Misconduct and
Gross Neglect of Duty, have always been and should remain anathema in the civil service.
They inevitably reflect on the fitness of a civil servant to continue in office. When an officer or
employee is disciplined, the object sought is not the punishment of such officer or employee,
but the improvement of public service and the preservation of the public's faith and
confidence in the government. Indeed, public office is a public trust, and public officers and
employees must at all times be accountable to the people, serve them with utmost
responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead
modest lives. This high constitutional standard of conduct is not intended to be mere
rhetoric and taken lightly as those in the public service are enjoined to fully comply with this
standard or run the risk of facing administrative sanctions ranging from reprimand to the
extreme penalty of dismissal from the service, as in this case.
WHEREFORE, the petition is DENIED. The Decision dated August 31, 2017 and the
Resolution dated February 23, 2018 rendered by the Court of Appeals in CA-G.R. SP No.
149420 are AFFIRMED.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
[G.R. No. 140183. July 10, 2003.]

TEODORO K. KATIGBAK and BIENVENIDO E. MERELOS, petitioners, vs. THE
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
CORONA, J :
The Facts
The National Housing Authority (NHA) entered into a contract for the land
development of the Pahanocoy Sites and Services, Phase I, in Bacolod City with Arceo
Cruz of A.C. Cruz Construction. Before the project could be completed, however, the NHA
rescinded the contract and engaged the services of Jose Cruz of Triad Construction and
Development Corporation for the unfinished portion thereof. Consequently, Arceo Cruz
lodged a complaint with the Office of the Ombudsman.
After preliminary investigation, an information was filed with the Sandiganbayan
charging petitioners Teodoro K. Katigbak and Bienvenido Merelos as Chairman of the
Board of Directors and member of the Board of Directors, respectively, of the NHA and
their co-accused with the crime of violation of Section 3, paragraph (e) of RA 3019, as
amended. Specifically, the petitioners and their co-accused were indicted for having
allegedly conspired, through evident bad faith and manifest partiality, in unilaterally
rescinding the contract for land development with the private complainant, Arceo Cruz, and
subsequently awarding the same, without public bidding and at an exorbitant rate, to
private respondent, Jose Cruz, thereby granting unwarranted benefits to said private
respondent while causing damage and undue injury to the government and the private
respondent.
Upon arraignment, the petitioners and their co-accused, assisted by their counsels,
entered the plea of "not guilty" to the charge in the amended information. Pre-trial was
waived by the parties per Order dated March 18, 1997. Thereafter, trial on the merits
ensued during which the prosecution presented four witnesses. The prosecution rested its
case after the admission of its Exhibits with submarkings.
Petitioners, with prior leave of court, jointly filed a Demurrer to Evidence. The
Sandiganbayan promulgated the questioned Resolution denying the demurrer to evidence
of all the accused. Petitioners' joint motion for reconsideration was denied by the
Sandiganbayan. Undaunted, petitioners Teodoro Katigbak and Bienvenido Merelos filed
the present petition for certiorari and prohibition assailing the questioned resolutions of the
Sandiganbayan.
Issue
Whether or not the Sandiganbayan gravely abused its discretion amounting to lack
or want of jurisdiction when it denied petitioner’s demurrer to evidence?
Ruling of the Court
Yes, petition should be granted.

In order to be held liable for violation of Section 3 paragraph (e) of RA 3019, as
amended, the following elements must concur: (1) the accused is 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) his action has
caused undue injury to any party, including the Government, or has given any party any
unwarranted benefit, advantage or preference in the discharge of his functions.
The foregoing testimonies of the prosecution witnesses did not disclose any role
played by the petitioners in the so-called "conspiracy loop" alleged by the public
respondent in its Comment. The testimony of private complainant Arceo Cruz dwelt
principally on the acts of accused Robert Balao in unilaterally rescinding the contract for
land development with the private complainant and then awarding the contract for the
unfinished portion of the project, without public bidding and at an exorbitant rate, to private
respondent Jose Cruz/Triad Construction. The same testimony also told of the damage
suffered by the private complainant because of the acts of accused Balao. Nowhere,
however, in his said testimony did it appear that petitioners participated in the decision to
rescind the subject contract and to award the unfinished portion of the project to the private
respondent. On the contrary, private complainant even absolved the petitioners of any
participation in the complained acts of their co-accused Balao by admitting that he never
accused any member of the NHA Board of Directors of anything in his complaint filed with
the Office of the Ombudsman.
A careful scrutiny of the documentary evidence adduced by the prosecution does
not support the charge of violation of Section 3, paragraph (e) of RA 3019, as amended, in
the instant information against the petitioners. Significantly, the said pieces of documentary
evidence were offered only for the purpose of establishing the participation and liability of
their co-accused, Robert Balao, as noted in the written Formal Offer of Exhibits of the
prosecution. The same was prepared and signed by Atty. Nicanor V. Villarosa, counsel of
the private complainant, with the written approval of Prosecutor Manuel M. Corpuz of the
Office of the Special Prosecutor. In this connection, the rule is explicit that courts should
consider the evidence only for the purpose for which it is offered.
The prosecution relies heavily on NHA Board Resolution No. 2453 dated March 12,
1992 to establish the alleged conspiracy between the petitioners and their co-accused.
This resolution purportedly approved the cancellation of the NHA contract for land
development with the private complainant on the ground of "mutual termination" and the
award of the contract for the unfinished portion of the project to the private respondent
Jose Cruz/Triad Construction. However, the Court is bothered by the unexplained failure of
the prosecution to include in its formal offer of exhibits such a very vital piece of evidence
in proving the existence of the alleged conspiracy among the petitioners. We emphasize
that any evidence a party desires to submit for the consideration of the court must formally
be offered by him. Such a formal offer is necessary because it is the duty of the judge to
rest his findings of fact and his judgment strictly on the evidence offered by the parties at
the trial; and no finding of fact can be sustained if not supported by such evidence.
Documents not regularly received in evidence during the trial will not be considered in
disposing of the issues in an action.
In view of the complete absence of evidence, both testimonial and documentary, to
prove the liability of the petitioners for the crime charged in the information, we find no
basis for respondent Sandiganbayan's conclusion in its assailed Resolution dated April 7,
1999 "that the prosecution has sufficiently proven the allegations in the Amended
Information and the elements of the offense" as against herein petitioners. Since the
petitioners satisfactorily demonstrated that the prosecution had failed to prove the crime
charged against them, respondent Sandiganbayan's denial of their motion to dismiss the
instant criminal case on demurrer to evidence constituted grave abuse of discretion. The
denial was a capricious and whimsical exercise of judgment equivalent to lack of
jurisdiction.
Indeed, there remains no further reason to hold the petitioners for trial. They have
the right to be protected against hasty, malicious and oppressive prosecution; to be secure
from an open and public accusation of a crime and from the trouble, expense and anxiety
of a public trial. Similarly situated is the State, which must be shielded at all times from
useless and expensive litigations that only contribute to the clogging of court dockets and
take a heavy toll on its limited time and meager resources.
WHEREFORE, in view of the foregoing, the instant petition for certiorari and
prohibition is hereby GRANTED. The assailed resolutions of the Sandiganbayan in
Criminal Case No. 22647 denying petitioners' demurrer to evidence are REVERSED and
SET ASIDE. No pronouncement as to costs.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 236383, June 26, 2019
OFFICE OF THE OMBUDSMAN, PETITIONER, v. MARILYN H. CELIZ AND LUVISMINDA

H. NARCISO, RESPONDENTS.
REYES, A., JR., J.
The Facts
On November 20, 2007, the Department of Public Works and Highways (DPWH)
Region VI Director, Rolando M. Asis , submitted the approved Program of Works and
Estimates for the proposed Asphalt Overlay Project in Iloilo City to the DPWH Secretary. In
the program, it was estimated that the amount of P54,500,000.00 is necessary to
implement the project, which intends to repair about 2.4 kilometers of the Iloilo-Jaro
Diversion Road, starting from the Iloilo-Antique Road up to Dungon Bridge.
Former Iloilo City Mayor Jerry P. Treñas requested Director Asis to immediately
implement the project, in time for the upcoming Dinagyang Festival. Director Asis, thus,
requested then DPWH Secretary Ebdane for clearance to implement the project through
negotiated procurement. He reasoned that the project is urgent because this was the
primary route for the Dinagyang Festival, and there is a need to further promote tourism in
the region. On November 29, 2007, Secretary Ebdane approved the request.
On January 2, 2008, the BAC unanimously approved an unnumbered Resolution,
which recommended the direct negotiation of the contract for the Asphalt Overlay Project
to International Builders' Corporation (IBC). Director Asis approved the Resolution. Thus,
BAC Chairman Berna sent an invitation to the President of IBC, requesting them to submit
a quotation for the project, together with the other bid requirements. IBC's bid offer was
opened and negotiated at the DPWH Regional Office. The following day, the BAC
unanimously approved another unnumbered Resolution recommending the award of the
project to IBC, with an Approved Budget for the Contract in the amount of
P54,308,803.44.
Director Asis informed IBC of BAC's recommendation, with the caveat that the
Notice to Proceed cannot be issued until the funds to cover the contract cost are released.
In light of the unavailability of funds, Director Asis asked the IBC President whether they
were willing to take the risk of proceeding with the project, pending the release of an
appropriation. He likewise guaranteed to process the payment as soon as the funds for the
project are released. In response, the IBC President agreed to take on the risk, and
committed to immediately proceed with the implementation of the Asphalt Overlay Project.
Meanwhile, the Assistant Ombudsman for Visayas sent a letter to the Commission
on Audit (COA) Region VI, requesting the conduct of a special audit examination on the
Asphalt Overlay Project. The State Auditor reported that there were no entries in the books
showing that allotments were received, and that obligation requests were made for the
implementation of the project. Moreover, the DPWH Region VI informed the State Auditor
that there was no project contract submitted for certification as to the availability of
allotments and availability of funds.
Subsequently, the OMB Region VI Field Investigation Office (FIO) filed their
Complaint-Affidavit, charging the respondents and several other officials and employees of
the DPWH Region VI with violating Republic Act (R.A.) No. 9184 and R.A. No. 3019, and
holding them liable for Grave Misconduct. It was specifically alleged that the application of
negotiated procurement was unwarranted under the circumstances. There was also no
available appropriation at the time of the execution of the contract for the Asphalt Overlay
Project.
In light of their participation in the procurement and implementation of the Asphalt
Overlay Project, the OMB Region VI FIO alleged that the respondents were guilty of Grave
Misconduct for patently intending to violate or disregard the procurement law, and for
violating Section 3(e) of R.A. No. 3019.
In a Joint Resolution28 dated October 6, 2015, the OMB found probable cause to
charge the respondents with a violation of Section 3(e) of R.A. No. 3019. The OMB,
likewise, found all of them guilty of Grave Misconduct, and meted the penalty of dismissal
from the service, thus:
WHEREFORE, let the attached Information for Violation of Section 3(e) of RA No.
3019 be FILED against respondents Rolando M. Asis, Berna C. Coca, Luvisminda H.
Narciso, Fernando S. Tuares, Danilo M. Peroy and Marilyn H. Celiz.
Respondents Rolando M. Asis, Berna C. Coca, Luvisminda H. Narciso, Fernando
S. Tuares, Danilo M. Peroy and Marilyn H. Celiz are found GUILTY OF GRAVE
MISCONDUCT and hereby meted the penalty of DISMISSAL from the service, which shall
carry with it cancellation of eligibility, forfeiture of retirement benefits and the perpetual
disqualification from re-employment in the government service.
In the event that the penalty of dismissal can no longer be imposed due to their
separation from the service, it shall be converted into FINE amounting to respondents'
salary for ONE (1) YEAR, payable to the Office of the Ombudsman, and may be deducted
from their accrued leave credits or any receivable from their office. It is understood,
however, that the accessory penalties of forfeiture of retirement benefits, cancellation of
eligibility and perpetual disqualification to hold public office shall still be applied.
the CA found the respondents' appeal partially meritorious. Instead of Grave

Misconduct, they were deemed liable for Simple Misconduct because there was no
evidence of corrupt motives on their part. The dispositive portion of the CA's decision,
thus, reads:
WHEREFORE, the Petition For Review under Rule 43 filed by petitioners Marilyn
H. Celiz and Luvisminda H. Narciso is PARTIALLY GRANTED. The Office of the
Ombudsman's 6 October 2015 Joint Resolution in OMB-V-C-14-0182 and OMB-V-A-14-
0174 is MODIFIED. We find petitioners Marilyn H. Celiz and Luvisminda H. Narciso guilty
of SIMPLE MISCONDUCT and are hereby meted the penalty of SUSPENSION for ONE
(1) MONTH and ONE (1) DAY.
Petitioners who have not retired shall be REINSTATED after serving their
suspension. They shall be entitled to payment of backwages and all benefits from the time
that they served the foregoing suspension up to the time of their actual reinstatement.
xxxx xxxx xxxx xxxx

Disagreeing with the findings of the CA, the OMB filed the present petition for
review, attributing reversible errors on the CA. The OMB argues that the CA clearly found
that the respondents violated P.D. No. 1445 and R.A. No. 9184 in the procurement of the
Asphalt Overlay Project. For this reason, the OMB asserts that respondents, as BAC
members who assented to the violation of the relevant procurement laws, should be held
liable for Grave Misconduct.
Issue
Whether or not the application of negotiated procurement by DPWH Region VI was
unwarranted under the circumstances?
Ruling of the Court
No, the respondents violated R.A. No. 9184 and P.D. No. 1445 in the
procurement of the Asphalt Overlay Project.
Generally, all government procurement must be done through competitive
bidding.44 Alternative methods of procurement, however, are available under the
conditions provided in R.A. No. 9184. For infrastructure projects in particular, the only
alternative mode is negotiated procurement.
In negotiated procurement, the procuring entity directly negotiates the contract with
a technically, legally and financially capable supplier, contractor or consultant. It may be
resorted to in the following cases:
(a) when there has been a failure of public bidding for the second time;
(b) when there is imminent danger to life or property during a state of calamity, or
when time is of the essence arising from natural or man-made calamities or other causes
where immediate action is necessary to prevent damage or loss of life or property, or to
restore vital public services, infrastructure facilities and other public utilities;
(c) in take-over of contracts that were rescinded or terminated for cause and
immediate action is necessary;
(d) where the contract is adjacent or contiguous to an on-going infrastructure
project, the original contract of which was the result of a competitive bidding; or
(e) under other instances specified in the implementing rules and regulations of
R.A. No. 9184.
xxxx xxxx xxxx xxxx
As aptly held by the CA, there must be an immediate and compelling need to justify
negotiated procurement other than that provided by the respondents. The requirement of
urgency is qualified under the law as "arising from natural or man-made calamities or other
causes where immediate action is necessary to prevent damage to or loss of life or
property. As such, it does not cover situations outside this qualification.
Section 53(b), Article XVI of R.A. No. 9184 evidently does not contemplate a yearly
occasion and the promotion of tourism to justify resort to negotiated procurement. Since
the Dinagyang Festival is an annual event that has always been scheduled to take place in
the middle of January, there was plenty of time for the preparation of the necessary
infrastructure. Furthermore, aside from the promotion of tourism, there was no showing
that the repairs were necessitated by a calamity, that there was imminent danger to life or
property, or that there was a loss of vital public services and utilities.
Sufficient appropriation is also required before the government enters into a
contract. While Sections 85 and 86 of the Government Auditing Code requires an
appropriation prior to the execution of the contract, the enactment of R.A. No. 9184
modified this requirement by requiring the availability of funds upon the commencement of
the procurement process.
The requirement of availability of funds before the execution of a government
contract, however, has been modified by R.A. No. 9184. The said law presents a novel
policy which requires, not only the sufficiency of funds at the time of the signing of
the contract, but also upon the commencement of the procurement process.
Clearly, the respondents and the other DPWH officials intended to circumvent the
requirement that there should be prior appropriation. The execution of the contract with
IBC, as well as the issuance of the Notice of Award, was delayed until such time that the
SARO was issued. By the time the funds for the project were released, the award of the
contract to IBC was already a foregone conclusion. IBC had commenced construction
activities as early as January 10, 2008, almost a year prior to the execution of the contract
for the project.
WHEREFORE, premises considered, the present petition is GRANTED. The
Decision dated September 15, 2017 and the Resolution dated December 11, 2017 of the
Court of Appeals in CA-G.R. CEB-SP. No. 10438 are hereby REVERSED and SET
ASIDE. A new judgment is entered finding respondents Marilyn H. Celiz and Luvisminda
H. Narciso GUILTY of GRAVE MISCONDUCT. As such, they are DISMISSED from the
government service with all the accessory penalties of cancellation of eligibility, forfeiture
of leave credits and retirement benefits, and disqualification for re-employment in the
government service.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 204171, April 15, 2015
OFFICE OF THE OMBUDSMAN, Petitioner, v. WILFREDO B. AGUSTINO, RUDY G.

CANASTILLO, EDWARD G. CANASTILLO, CECIL C. CALIGAN, Respondent.
MENDOZA, J.:
The Facts
In 1998, the national government appropriated Twenty Eight Million Pesos

(P28,000,000.00) for the construction of Junction Bancal-Leon-Camandag Road in Leon,
Iloilo, with an approximate stretch of 1.003 kilometers, to be implemented by the
Department of Public Works and Highways.
After a public bidding, the project was awarded to Roma Construction and
Development Corporation (Roma Construction) for a total contract price of
P26,851,792.82, to be completed from January 20, 2001 until January 14, 2002. The
corresponding contract was signed by and between DPWH-Region VI Assistant Regional
Director, respondent Rudy Canastillo and Roma Construction represented by Rogelio Yap.
It was duly approved by DPWH-Regional VI Regional Director, respondent Wilfredo
Agustino. DPWH-Region VI directed the Iloilo Sub-District Engineering Office in Sta.
Barbara to manage the implementation of the project, with respondent Edward Canastillo
as the acting head and respondent Cecil Caligan as the acting assistant head.
On July 18, 2002, Rev. Fr. Meliton B. Oso, requested the Case Building Team of
the Office of the Ombudsman-Visayas to conduct the necessary fact-finding investigation.
In the course of its investigation, the Case Building Team required Romulo C. Cabana, Sr.,
then Mayor of Leon, Iloilo, who was the whistleblower of the alleged irregularities, to
substantiate his allegations.
In his affidavit, Cabana enumerated three irregularities in the controversial project.
First, the contract completion dates were unjustifiably revised several times to
delay the project;
Second, barangay officials and residents testified that it was Timberland

Construction, not Roma Construction, that was working on the project.
Lastly, under Item No. 102 (3) of the original contract, rock excavation of
15,275.50 cum. costing P6,248,443.28 was supposed to be undertaken through the use of
dynamites. Change Order No. 1, however, unnecessarily increased the volume of the solid
rock for excavation to 28,404.36 cu. m. costing P11,618,803.46 even though no increase
in blasting activities was observed. Change Order No. 1 was submitted, reviewed,
recommended and approved by respondents Caligan, Edward Canastillo, Rudy Canastillo,
and Agustino, respectively.
The Case Building Team recommended that an administrative complaint be filed

against the respondents. The recommendation was approved by the Deputy Ombudsman
for the Visayas on April 1, 2003. Thus, the subject administrative case for grave
misconduct was filed.
In its decision, dated February 28, 2005, the Ombudsman held that the
respondents committed grave misconduct. On the issue of improper extension of contract
completion, it stated that the "Time Suspension Orders/Reports" of Caligan prevailed over
the bare allegations of Cabana. Similarly, on the issue of subcontracting, the Ombudsman
held that it needed more than mere presence of heavy equipment of Timberland
Construction to conclude that Roma Construction indeed had the project illegally
subcontracted.
On the issue of the solid rock excavation under Item No. 102 (3) of the project
contract, however, the Ombudsman found that there was manifest irregularity. Because of
Change Order No. 1, the solid rock excavation with a volume of 15,275.50 cu. m. costing
P6,248,443.28, in the original project contract, was increased to 28,404.36 cu. m. at
P11,618,803.46. Caligan even testified before the Sangguniang Panlalawigan of Iloilo on
July 1, 2002 that the 28,404.38 cu. m. of solid rocks were actually excavated from the
mountainside and pushed down the ravine as excess materials.
The respondents moved for reconsideration but their motion was denied by the
Ombudsman-Visayas in its April 21, 2005 order, which was approved by Acting
Ombudsman Orlando C. Casimiro on March 6, 2008.
Aggrieved, the respondents filed a petition for review under Rule 43 of the Rules of
Court before the CA.
In its assailed November 23, 2011 Decision, the CA granted the petition. It
reversed and set aside the Ombudsman's finding of administrative liability against the
respondents. The CA was of the view that the evidence presented to prove the
respondents' culpability for grave misconduct was insufficient. It found that the
Ombudsman erroneously concluded that P11,618,803.46, the amount allotted for
28,404.38 cu. m. of rock excavation under Change Order No. 1, was the actual amount
expended, when Change Order No. 2 decreased the volume to 16,518.00 cu. m. costing
P6,738,894.23. The CA further stated that Change Order No. 2 should not be considered
as a mere afterthought absent proof that it was issued to circumvent the law. It held that "
[u]nless it can be shown cogently and clearly that Change Order No. 2 was issued to
circumvent the law, [it] will always uphold the presumption of regularity in the performance
of official functions, and authenticity of official documents."
The Ombudsman filed its motion for reconsideration, but it was denied by the CA in
the assailed September 27, 2012 Resolution. Hence, this petition.
Issue
Whether or not respondents are liable for grave misconduct?
Ruling of the Court
Yes, respondents’ actions constitute grave misconduct.
In government construction projects, both the contractor and the government

agency are required to prepare a document known as a detailed estimate to provide the
costs of the project. During the bidding process, a prospective bidder submits a detailed
estimate, which includes the unit prices of construction materials, labor rates and
equipment rentals.18 In this case, Roma Construction and the DPWH-Region VI submitted
a detailed estimate for the road construction project. The central issue revolves around
Item No. 102 (3), covering the cost for solid rock excavation.
The respondents rigorously defended the actions of Roma Construction in

deviating from the detailed estimates. Although the respondents presented proof that
16,518.00 cu. m. of solid rock were excavated, they did not present a scintilla of evidence
to establish that blasting materials were used in the project. They never enlightened this
Court if they utilized 5,092 kgs. of dynamite, as indicated in the detailed estimates. The
change orders, subsequently issued by the respondents supposedly to provide another
detailed estimate of the project cost, did not indicate the discontinuance of the use of
blasting materials by the contractor. The respondents could have easily presented
documents to support the procurement of the materials for solid rock excavation, but they
failed to do so.
The government allotted a portion of the public funds for the blasting activities and,
yet, the respondents failed to faithfully apply those funds for its intended purpose. Such
omission without any justification cannot be dismissed. If the Court were to overlook this
questionable incident, then it would set a perilous precedent that detailed estimates for
government construction projects could be treated as mere scraps of paper. It defeats the
purpose of properly delineating the cost of the project for greater accountability.
Several circumstances demonstrate that Change Order No. 2 was indeed issued
as a mere afterthought, following the July 2002 investigation of the Sangguniang
Panlalawigan of Iloilo. First, Caligan during the investigation, only mentioned Change
Order No. 1 and blasting as the method for solid rock excavation. As the Ombudsman
correctly observed, Caligan could have then easily mentioned Change Order No. 2 to
remove the clouds of doubt surrounding the project.
Second, Change Order No. 2 did not contain the required detailed estimate of the
unit cost of the project. Notably, unlike Change Order No. 1 which was issued after an "as-
staked survey," Change Order No. 2 simply emerged without any technical survey therein.
Third, the undated Change Order No. 2 was forwarded to the office of respondent
Agustino only on July 19, 2002, after the investigation of the Sangguniang Panlalawigan.
Surprisingly, even the DPWH itself, through its own Fact-Finding Committee, which was
tasked to conduct its investigation on the incident of irregularities over the project, never
mentioned Change Order No. 2.
All these circumstances, taken together, destroy the presumption of regularity in

the performance of official functions and authenticity of official records. Change Order No.
2, which was conveniently made to escape liability, cannot be given any credence by this
Court. Such order was merely issued to make the solid rock excavation more acceptable
and to prevent the scrutiny of the project. Were it not for the investigation conducted by the
Sangguniang Panlalawigan of Iloilo, the respondents would have continued their
misconduct and profited from their misdeeds. Verily, the Court can only imagine the ill
consequences if the Sangguniang Panlalawigan of Iloilo and the Office of the Ombudsman
did not intervene and uncovered the anomalies surrounding the project.
The Court holds all the respondents administratively liable for grave misconduct. As
stated in the Ombudsman decision, Caligan and Edward Canastillo had direct knowledge
of the day-to-day activities in the project site, they being the acting assistant head and
acting head of the Iloilo Sub-Engineering District, respectively. Being in the frontline, they
had actual knowledge that there were no blasting activities of that magnitude in the area.
Rudy Canastillo and Agustino did not have a direct hand in the implementation of
the project, but the questionable change orders were recommended and approved by
them. Following the IRR of P.D. No. 1594 Agustino, as Regional Director, did not only
approve the change orders, but also sent his technical staff to conduct an on-the-spot
investigation to verify the need for the work to be prosecuted.This should have allowed him
to discover the irregularities in the project. The IRR would also indicate that the change
order was recommended for approval by Rudy Canastillo, as Assistant Regional Director,
and that he was empowered to review and evaluate the change orders. Yet, he kept silent
on the anomalies of the project. Their deliberate failure to prevent the questionable
occurrences in the implementation of the project indicated that they had knowledge of the
misdeeds and were in conspiracy with Caligan and Edward Canastillo.
WHEREFORE, the petition is GRANTED. The November 23, 2011 Decision and
the September 27, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 03526 are
REVERSED and SET ASIDE. The Decision, dated February 28, 2005, and the Order,
dated April 21, 2005, of the Office of the Ombudsman in Administrative Case No. OMB-V-
A-03-0204-D, finding Wilfredo Agustino, Rudy Canastillo, Edward G. Canastillo and Cecil
C. Caligan GUILTY of GRAVE MISCONDUCT and ordering their DISMISSAL from
government service, are hereby REINSTATED. The respondents are also perpetually
disqualified for reemployment in the government service.

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Cases/Jurisprudence in relation to Republic Act no.

Topic: Government Contracting in General

Republic of the Philippines

G.R. No. 128145. September 5, 2001

Regional Trial Court’s Ruling

xxxx xxxx xxxx xxxx

Court of Appeals’ Ruling

xxxx xxxx xxxx xxxx

"CI 4 — ADVANCE PAYMENT

G.R. No. 131367. August 31, 2000

Petitioner Hutchison Ports Philippines Limited, a foreign corporation, was awarded by

(1) Whether or not the petition for injunction should be granted?

Ruling of the Court

(1) No, petitioner is not entitled to the issuance of injunction.

For an injunctive writ to be issued, the following requisites must be proven:

(b) That there is a material and substantial invasion of such right;

Admittedly, petitioner HPPL is a foreign corporation, organized and existing under

[G.R. No. 230322. February 19, 2020.]

JESSIE L. JOMADIAO and WILMA F. PASTOR, petitioners, vs. MANUEL L.

The Bureau of Soils and Water Management (BSWM) of the Department of

a. Non-submission of pre-procurement conference, making it appear that

b. (b) Violation of Sections 21.2.1(a), 21.2.1(b), 21.2.1(c), 21.1.3, 21.1.5,

c. The BAC appears to have shown negligence or bias in favor of the

d. The Bidding conducted on 12 November 2007 was prior to the receipt

f. Excess advance payment of P126,525.00 was given to the contractor,

Whether or not Petitioners willfully violated or disregarded procurement process and

Ruling of the Court

SEC. 21. Advertising and Contents of the Invitation to Bid. — In line

The IRR-A then provides:

21.2. Advertising and Posting of the Invitation to Apply for Eligibility

a. Advertised at least twice within a maximum period of fourteen (14)

b. Posted continuously in the website of the procuring entity concerned,

IB 3 — Invitation to Prequalify/Apply for Eligibility and to Bid

1. For locally funded contracts, contractors shall be invited to apply for

a. For contracts to be bid costing more than P5,000,000 the

[G.R. No. 201112, June 13, 2012]

ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI AND MARY ANNE L.

[G.R. NO. 201121]

SOLIDARITY FOR SOVEREIGNTY (S4S), REPRESENTED BY MA. LINDA OLAGUER;

[G.R. NO. 201127]

TEOFISTO T. GUINGONA, BISHOP BRODERICK S. PABILLO, SOLITA COLLAS

[G.R. NO. 201413]

TANGGULANG DEMOKRASYA (TAN DEM), INC., EVELYN L. KILAYKO, TERESITA D.

On March 29, 2012, the Comelec issued a Resolution resolving to accept

Ruling of the Court

While we concede that a winning bidder is not precluded from modifying or

While movants may have apprehensions on the effect to government contracts of

G.R. No. 221134, March 01, 2017

xxxx xxxx xxxx xxxx

xxxx xxxx xxxx xxxx

Ruling of the Court

Republic of the Philippines

G.R. Nos. 194763-64, July 20, 2016

WILFRED GACUS YAMSON, ASSISTANT GENERAL MANAGER A, REY CAÑETE

The PBAC-B's recommendation was well-taken by the DCWD Board of Directors,

The respondents filed a joint Affidavit-Complaint19 with the Ombudsman, charging

OMB-M-A-05-093-C (VES 21 Project)