Topic: Due Diligence in Government Contracting

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

J.C. LOPEZ & ASSOCIATES, INC., petitioner, vs. COMMISSION ON AUDIT and NATIONAL
POWER CORPORATION, respondents.

The Facts

J.C. Lopez & Associates Incorporation entered into a contract with NAPOCOR for the
dredging of the vicinity of the Intake Tower at the Ambuklao Hydroelectric Plant. Pursuant to the
contract, NAPOCOR paid J.C. Lopez 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 Presidential Decree (PD) No. 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 No.1445. NAPOCOR ordered the J.C. Lopez to stop its dredging operations in
preparation for the joint survey to determine the actual volume of silt dredged by them.

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, J.C. Lopez filed a complaint with the Regional Trial Court of Quezon City,
against NAPOCOR's termination of its contract. The trial court agreed that the dredging of the
Ambuklao water reservoir is not an infrastructure work but a service contract or undertaking."
MIESCOR elevated the case to the Court of Appeals. The CA dismissed the case of JC Lopez
and ruled that the dredging of the reservoir in the Memorandum of Agreement between
NAPOCOR and MIESCOR, fall under the definition of infrastructure project.

Issue

Whether or not the dredging contract between the J.C. Lopez and NAPOCOR involves
an infrastructure project thus covered by PD 1594?

Ruling of the Court

Yes, it 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.

Having established that J.C. Lopez's dredging contract with NAPOCOR involves an
"infrastructure project," 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 J.C. Lopez'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, J.C.
Lopez 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 J.C. Lopez, 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, J.C. Lopez’s contract with

NAPOCOR is subject to the provisions of Presidential Decree No. 1594 and its implementing
rules and regulations.
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.|||

The Facts

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. Before the award, however, 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. SBMA was enjoined from signing the concession contract
with HPPL.

Feeling aggrieved, HPPL filed an action with the Regional Trial Court claiming that a
binding and legally enforceable contract had been established between Hutchison and Subic
Bay. The Supreme Court granted HPPL’s application for a temporary restraining order to stop
the re-bidding but while for the decision of the Supreme Court, the re-bidding was ultimately
conducted where ICTSI was declared as the winning bidder. ||

Moreover, HPPL’s standing to file the case was questioned due to the lack of license to
engage in business in the Philippines.

Issue

Whether participating in the bidding is a mere isolated transaction, or did it constitute

"engaging in" or "transacting" business in the Philippines such that HPPL needed a license to
do business in the Philippines before it could come to court?

Ruling of the Court

Admittedly, 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 HPPL, and two
other corporations, namely, Guoco Holdings (Phils.) Inc. and Unicol Management Services,
Inc., it is only 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, 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.
[G.R. No. 230322. February 19, 2020.]

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

respondent.

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. Another IAEB was posted on Looc's Municipal Bulletin Board. The
opening of bids was conducted on November 12, 2007, and R.G. Florentino Construction and
Trading 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. Thereafter a Notice of Award and Notice to Proceed were issued.

On May 4, 2009, Regional Office No. IV of the Commission on Audit (COA) forwarded
an Annual Audit 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 were violated when the BAC awarded the SWIP to R.G. Florentino, to the detriment
of Looc.

On August 26, 2009, Manuel Arboleda 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, 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. 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, 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. 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.
 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.

Jomadiao and Pastor filed a Motion for Reconsideration, by themselves. The Office of
the Ombudsman however upheld its earlier Decision. Jomadiao and Pastor elevated the case to
the Court of Appeals. The CA noted that 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 Jomadiao and Pastor’s acts constitute simple neglect and should be held
liable thereof?

Ruling of the Court

Yes, the BAC was remiss in their duty for failure to advertise the project.

Section 21 of RA 9184 mandates that the procuring entity 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.

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 Jomadiao and Pastor, 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.

Jomadiao and Pastor, 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.
 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.

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.

Jomadiao and Pastor 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 penalized for six (6) months suspension, considering that this is their first
offense after several years in public service.
[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.

The Facts

In July 2009, the Comelec and Smartmatic-TIM entered into a Contract of Lease of an
Automated Election System for the May 10, 2010 Synchronized National and Local Elections,
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 on the 920 units of PCOS machines with corresponding
canvassing/consolidation system (CCS). Before the initial expiration of the OTP, Smartmatic-
Tim proposed the extension of the option, but since COMELEC did not avail, the option was
extended several times 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 executed.

Several individuals including Archbishop Capalla and different groups challenge 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 Republic Act (RA)
No. 9184.

Issue

Whether or not there was grave exercise of judgement 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 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.

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, 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.

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

OFFICE OF THE OMBUDSMAN-MINDANAO, Petitioner, v. RICHARD T. MARTEL AND

ABEL A. GUIÑARES, Respondents.

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 of Davao del Sur, together with Mier, Provincial Budget Officer; Gan,
Provincial Board Member; and Putong, Provincial General Services Officer.

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 but
through direct purchase pursuant to the recommendation of Putong. 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.

In its Decision, 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.

Undaunted, Martel and Guiñares appealed before the CA. However, 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 (RA) No. 9184 and RA 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 Section 18 of R.A. No. 9184 prohibiting the reference of
brand names for the purpose of procurement.

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, R.A No. 7160, and
COA 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.

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 Martel and
Guiñares could prove that the resort to a negotiated bidding, as approved by the PBAC, was
proper.

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 Martel and Guiñares, the
government disbursed public funds for illegally procured service vehicles.

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, vs. DANILO C. CASTRO AND GEORGE F. INVENTOR, Respondents.

The Facts

Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and Inventor are all officials
and employees of the Davao City Water District. Engr. Yamson, Engr. Chavez, Navales and
Atty. Guillen occupied concurrent membership in its Pre-Bidding and Awards Committee-B.
Almonte 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, 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 and 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.

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 well drilling projects. Invited were
Hydrock, AMG Drilling and Construction, Inc. (AMG) and Drill Mechanics Incorporated (DMI).

Thereafter, in Resolution No. 06-9714, 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 two (2) projects 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, it resolved to award to Hydrock the two (2) projects. On the same
date, Carbonquillo issued a notice of award to Hydrock, informing the latter that the contract
for the two (2) projects has been awarded to it at the cost of P2,244,780.00.

Castro and Inventor filed a joint Affidavit-Complaint with the Ombudsman, charging
Yamson, Chavez, Navales, Almonte, Laid and Guillen 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 two (2) projects and for allegedly giving
Hydrock unwarranted benefits, advantage or preference in the "surreptitious" grant of the
contract to it.

The Ombudsman did not accept the Yamson and his colleague’s explanation as
regards the PBAC-B's resort to a "simplified bidding" for the project, 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 project was not a take-over project.

Thus, the Ombudsman found Yamson, Chavez, Navales, Almonte, Laid, Guillen,
Castro and Inventor guilty of Grave Misconduct. Yamson, Chavez, Navales, Almonte, Laid
and Guillen elevated the case to the Court of Appeals. However, the CA affirmed
Ombudsman's ruling that Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and
Inventor are 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
two (2) 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 the
conditions set in P.D. No. 1594 were not met.

Issue

Whether or not Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and Inventor
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 two (2) projects to Hydrock?

Ruling of the Court

Yes, Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and Inventor 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. Its Implementing Rules and Regulation 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, Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and Inventor
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
Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and Inventor 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 Yamson, Chavez,
Navales, Almonte, Laid, Guillen, Castro and Inventor’s claim of urgency given the lapse of
time that it took the DCWD to address the situation. Yamson, Chavez, Navales, Almonte,
Laid, Guillen, Castro and Inventor, clearly, had no justifiable reason to dispense with the
public bidding of the VES 21 Project.

To restate, before Yamson, Chavez, Navales, Almonte, Laid, Guillen, Castro and
Inventor 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.
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.
Yamson, Chavez, Navales and Guillen were obliged to comply with the rules on competitive
public bidding. Consequently, they should only be liable for Simple Neglect of Duty
G.R. No. 187268 September 4, 2013

JOVITO C. PLAMERAS, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

The Facts

The Department of Education, Culture and Sports (DECS) Central Office implemented a
project known as the "Purchase of School Desks Program" through the Poverty Alleviation Fund
(PAF) for the purpose of giving assistance to the most depressed provinces in the country. The
Province of Antique was among the beneficiaries.

During the incumbency of Plameras as Provincial Governor of the Province of Antique,

he received two (2) checks from the DECS-PAF drawn against the Land Bank of the Philippines
(LBP) for the purchase of school desks and armchairs. The checks were deposited with the
LBP, San Jose, Antique Branch, where the Province of Antique maintains an account. Later on,
Plameras, in his capacity as the provincial governor, issued a check drawn against its account
at the LBP San Jose, Antique Branch in the same amount and deposited it to the Pasig Branch
of the same bank. Plameras then signed a Purchaser-Seller Agreement for the Supply and
Delivery of Monoblock Grader’s Desks with CKL Enterprises, as represented by Jesusa T. Dela
Cruz, the very same enterprise which the DECS Central Office had entered a negotiated
contract into in 1996.

As a consequence, Plameras applied with the LBP Head Office for the opening of an
Irrevocable Domestic Letter of Credit in behalf of the Provincial School Board of Antique in the
amount of P5,666,600.00 in favor of CKL Enterprises. Such application was approved, and a
Letter of Credit was issued in favor of Dela Cruz. Plameras signed a Sales Invoice attesting that
he received and accepted 1,354 grader’s desks and 5,246 table armchairs in good order and
condition for the total value of P5,666,600.00. However, upon inquiry by Plameras, the Office of
the Provincial Committee on Award reported that CKL had delivered only 1,294 pieces of
grader’s desks and 1,838 pieces of tablet armchairs. Consequently, Plameras demanded from
CKL Enterprises the complete delivery of the items. But the demand remained unheeded, so he
asked the assistance of LBP to compel CKL Enterprises to complete the delivery of the items.

A case was then filed by the Province of Antique, represented by its new Governor,
Exequiel B. Javier before the Regional Trial Court of San Jose, Antique to compel CKL
Enterprises to refund the amount of P5,666,600.00. Governor Javier also instituted a criminal
complaint before the Office of the Ombudsman. Eventually, an Information was filed before the
Sandiganbayan then Plameras was convicted for violation of Section 3(e) of Republic Act No.
3019 (R.A. 3019) or Anti-Graft and Corrupt Practices Act.

In questioning the ruling of the Sandiganbayan, Plameras claims misapprehension of

facts and evidence. He contends that he never profited from the transaction. The school desk
procurement program was implemented by the then DECS, with the Province of Antique where
Plameras was then Governor, as a mere beneficiary. He insists that he had no hand in choosing
the procurement method and the means of effecting payment through Letter of Credit adopted
by DECS as the implementing agency. Also, he did not actually pay the supplier since by the
terms of the Letter of Credit, it was the LBP that was tasked to release the payment only after
compliance with some requirements, such as the delivery receipts, among others.

Issue

Whether or not Plameras violate the procurement rules on public bidding that resulted to
his gross inexcusable negligence under R.A. 3019?

Ruling of the Court

Yes. Any procurement or "acquisition of supplies or property by local government units

shall be through competitive public bidding". This was reiterated under the Local Government
Code of 1991 on procurement of supplies which provides the general rule that acquisition of
supplies by local government units shall be done through a competitive public bidding.

Plameras admitted that he was aware of such requirement. However, he proceeded just
the same due to the alleged advice of an unnamed DECS representative that there was already
a negotiated contract with which he claimed he was deceived. As a Governor, he must know
that negotiated contract can only be resorted to in case of failure of a public bidding. As it is,
there is no public bidding to speak of that has been conducted. Regardless of intent, it is his
duty to exercise due diligence to protect government funds. To do otherwise is gross
inexcusable negligence, especially so, that Plameras acted on his own initiative and without
authorization from the Provincial School Board. This was proven by his failure to present even a
single witness from the members of the Board whom he consulted as he claimed.

As correctly observed by the Sandiganbayan, certain established rules, regulations and

policies of the Commission on Audit and those mandated under the Local Government Code of
1991 were knowingly sidestepped and ignored by the Plameras which enabled CKL
Enterprises/Dela Cruz to successfully get full payment for the school desks and armchairs,
despite non-delivery – an act or omission evidencing bad faith and manifest partiality. The same
thing can be said about the act of Plameras in signing the sales invoice and the bank draft
knowing that such documents would cause the withdrawal by CKL Enterprises/Dela Cruz of the
corresponding amount covered by the Irrevocable Domestic Letter of Credit.

This Court is not persuaded that Plameras deserves to be exonerated. On the contrary,
evidence of undue injury caused to the Province of Antique and giving of unwarranted benefit,
advantage or preference to CKL Enterprises/Dela Cruz committed through gross in excusable
negligence was beyond reasonable doubt, proven.
G.R. No. 200740 October 2, 2013

LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, JAIME JACOB,

AS CHAIRMAN OF THE LTFRB, ARTHUR SAIPUDIN, MELCHOR FRONDA, NIDA QUIBIC,
LILIA COLOMA, CYNTHIA DIA, GLENN ZARAGOZA AND JOEL BOLANO, IN THEIR
RESPECTIVE CAPACITIES AS CHAIRMAN, VICE-CHAIRMAN AND MEMBERS OF THE
SPECIAL BIDS AND AWARDS COMMITTEE, PETITIONERS, vs. STRONGHOLD
INSURANCE COMPANY, INC., RESPONDENT.

The Facts

The Land Transportation Franchising and Regulatory Board created the Passenger
Personal Accident Insurance Program to implement Section 374 of Presidential Decree No. 612
of Insurance Code of the Philippines, that requires operators of public utility vehicles to obtain
accident insurance policies. Under the program, LTFRB will accredit two groups of insurance
providers, selected through open bidding, to provide insurance policies to public utility vehicle
operators, thereby covering their passengers against accident-related risks.

After a bidding was conducted, LTFRB accredited Universal Transport Solutions, Inc.
with Stronghold Insurance Company, Inc. (Stronghold) as one of the two groups of insurance
providers, the latter being the lead insurer. The Matching clause under the Memorandum of
Agreement between LTFRB and UNITRANS provides that after the expiration of the contract for
accreditation, all facilities used by the said groups shall be donated to the government. In
consideration of the initial investment and assumption of initial risk, the groups shall be given
the right to match the best bid/proposal in case another group qualifies at the end of the term of
the agreement.

Shortly before the First MOA expired and after its term was extended, LTFRB opened
three biddings for the accreditation of new insurance providers, although the first two were
cancelled. In each round of bidding, LTFRB required minimum capitalization for the lead and
member insurers. Unlike in the First and Second References which allowed aggregation of the
group members’ capital to comply with the capitalization threshold, the Third Reference
reckoned compliance with the minimum capital requirement on a "per insurer" basis, it also
required a minimum of ten members for each group of insurers.

Stronghold participated in all the biddings but failed to qualify in the third because its
group only had six members and its minimum capitalization was only P140 million which is
below P250 million minimum capitalization requirement under the Third Reference. As a result,
Stronghold was excluded from the pool of qualified bidders.

Stronghold sought a writ of prohibition from the Court of Appeals to prevent LTFRB from
opening the bid documents of participating bidders and to nullify the bidding proceedings.
Stronghold claimed that the “per insurer” basis for reckoning compliance with the minimum
capital requirement under the Third Reference violated not only its right of first refusal under the
First MOA but also its right to equal protection under the Constitution.

The Court of Appeals ruled in favor of Stronghold; nullified the third round of bidding, and
enjoined LTFRB from enforcing the Second MOA until Stronghold is given the chance to
exercise its right of first refusal. All of these being primarily grounded on the grave abuse of
discretion of LTFRB.

Issue

Whether or not the Matching Clause in the First Memorandum of Agreement (MOA)
valid?

Ruling of the Court

No, The Matching Clause in the First MOA is void.

In the field of public contracts, these stipulations are weighed with the taint of invalidity
for contravening the policy requiring government contracts to be awarded through public
bidding. Unless falling under statutory exceptions, government contracts for procurement of
goods or services are required to undergo public bidding to protect the public interest by giving
the public the best possible advantages through open competition. The inclusion of a right of
refusal in a government contract negates the essence of public bidding because the matching
clause gives the winning bidder an advantage over the competitors. This also discourages other
parties from submitting bids, reducing the number of possible bidders and thus preventing the
government from securing the best bid.

The right of first refusal is allowed in government contracts only when such right is based
on the beneficiary’s interest on the object over which the right is to be exercised, and that the
government stands to be benefited from the stipulation. However, the Matching Clause in this
case does not fall under that exception because the First MOA is a contract for the procurement
of services, hence, there is no object over which Stronghold has an interest, the government did
not also benefit from the inclusion of the Matching Clause. Neither is there an obligation on the
part of the government to reward the accredited insurers’ investment and risk-taking with a right
of first refusal stipulation at the expense of denying the public the benefits of public bidding,
since investment and risk-taking are inherent in the business of providing insurance to public
utility vehicle operations which the bidders took into account when they submitted their bids.
G.R. No. 190431, January 31, 2017

BAYAN MUNA PARTY-LIST REPRESENTATIVE SATUR C. OCAMPO, GABRIELA

WOMEN'S PARTY-LIST REPRESENTATIVE LIZA L. MAZA, BAYAN MUNA PARTY-LIST
REPRESENTATIVE TEODORO A. CASIÑO, ANAKPAWIS PARTY-LIST REPRESENTATIVE
JOEL B. MAGLUNSOD, PAGKAKAISA NG MGA SAMAHAN NG TSUPER AT OPERATOR
NATIONWIDE (PISTON), REPRESENTED BY ITS SECRETARY GENERAL GEORGE F. SAN
MATEO, Petitioners.

AUTOMOBILE ASSOCIATION OF THE PHILIPPINES, GLICERIO M. MANZANO, JR., RAUL

M. CONSUNJI, AND LYN C. BRONTE, Petitioners-In-Intervention, v. LEANDRO R.
MENDOZA SECRETARY OF DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS; ARTURO C. LOMIBAO, CHIEF OF THE LAND TRANSPORTATION
OFFICE, AND STRADCOM CORPORATION, Respondents.

FEDERATION OF JEEPNEY OPERATORS AND DRIVERS ASSOCIATION OF THE

PHILIPPINES (FEJODAP) REPRESENTED BY ZENAIDA "MARANAN" DE CASTRO,
ALLIANCE OF TRANSPORT OPERATORS AND DRIVERS ASSOCIATIONS OF THE
PHILIPPINES (ALTODAP) REPRESENTED BY MELENCIO "BOY" VARGAS, LAND
TRANSPORTATION ORGANIZATION OF THE PHILIPPINES (LTOP) REPRESENTED BY
ORLANDO MARQUEZ, NTUTRANSPORTER REPRESENTED BY ALEJO SAYASA,
PASANG-MASDA NATIONWIDE, INC., REPRESENTED BY ROBERTO "OBET" MARTIN,
ALLIANCE OF CONCERNED TRANSPORT ORGANIZATIONS (ACTO) REPRESENTED BY
EFREN DE LUNA, Oppositors-Intervenors.

The Facts

On December 15, 1997, the Department of Transportation and Communication (DOTC)

and or the Land Transportation Office (LTO) awarded to Stradcom a contract for the
construction and operation of an information technology structure, called the LTO IT Project
Building-Own-Operate Agreement (BOO Agreement), making Stradcom the exclusive
information technology provider of DOTC/LTO. Stradcom presented to the LTO the Radio
Frequency Identification (RFID) Project, an automatic identification technology whereby digital
data encoded in an RFID tag are captured by a reader using radio waves and serves as an
enhancement to the current motor vehicle registration system. The RFID Tag has a shelf life of
up to ten years.

The RFID Memorandum of Agreement (RFID MOA) was entered into between
DOTC/LTO and Stradcom which provides that fees due to Stradcom shall be collected and
deposited by the LTO in a government depository bank account designated by and in the name
of Stradcom. Consequently, LTO issued a Memorandum Circular (MC) entitled "Implementing
Rules and Regulations (IRR) for the RFID Tag for all Motor Vehicles Required to be registered
Under the Land Transportation and Traffic Code, as Amended" (LTO RFID IRR) which provided
for the commencement of the RFID tagging.

In a letter addressed to the LTO, Stradcom additionally undertook to (1) provide a

performance bond of 1% of the RFID fee for every day of delay in the RFID tagging of a motor
vehicle resulting from the unavailability of stock or inventory of the RFID Tag; (2) submit to the
LTO a regular month-end inventory report of RFID Tags and Readers; (3) continuously maintain
and/or source at least two suppliers of RFID tags and readers; and (4) mutually agree with
DOTC/LTO to a just revenue share that may be due to the government in the event the
database of the RFID system and/or the LTO IT project is used by third parties in consideration
of a fee.

Because of various stakeholders' concerns and requests, the LTO issued an

Memorandum Circular deferring the mandatory implementation of the RFID Project.

Issue

Whether or not the RFID Memorandum of Agreement void for failure to comply with the
rules on competitive public bidding?

Ruling of the Court

Yes. The RFID Project is distinct from the existing BOO Agreement between DOTC/LTO
and Stradcom. Competitive bidding is the policy and the medium adhered to in government
procurement construction contracts. Competitive Biddings are intended to minimize occasions
for corruption and temptations to abuse discretion on the part of the government authorities
when awarding contracts. Once the contract based on the bid most favorable to the government
is awarded, all that is left to be done by the negotiating parties is to execute the necessary
agreements and implement them. After the award of the contract, there can be no substantial or
material change to the parameters of the project, including the essential terms and conditions of
the contract bidded upon.

The RFID MOA, as a separate project, should have undergone public bidding. The RFID
MOA should be declared void for failure to comply with the rules on public bidding. There is no
guarantee that the RFID fee that will be charged to the public is a fair and reasonable price, as it
has not undergone public bidding. Likewise, there is no guarantee that the public will be
receiving maximum benefits and quality services, especially from the additional hardware, such
as the RFID tags and readers. These are to be procured by Stradcom from its two suppliers,
which have not been identified and are not even parties to the RFID MOA.
G.R. No. 200401, January 17, 2018

METRO RAIL TRANSIT DEVELOPMENT CORPORATION, Petitioner, v. GAMMON

PHILIPPINES, INC., Respondent.

The Facts

This case involves Metro Rail Transit Development Corporation's (MRTDC) MRT-3
North Triangle Description Project (Project), covering 54 hectares of land, out of which 16
hectares were allotted for a commercial center. Half of the commercial center would be used for
a podium structure (Podium), which was meant to provide the structure for the Project's
Leasable Retail Development and to serve as the maintenance depot of the rail transit system.
Parsons Interpro JV (Parsons) was the Management Team authorized to oversee the
construction’s execution. On April 30, 1997, Gammon Philippines Inc. (GPI) received from
Parsons an invitation to bid for the complete concrete works of the Podium. The scope of the
work involved supplying the necessary materials, labor, plants, tools, equipment, facilities,
supervision, and services for the construction of Level 1 to Level 4 of the Podium. On May 30,
1997, GPI submitted three (3) separate bids and several clarifications on certain provisions of
the Instruction to Bidders and the General Conditions of Contract. Thereafter, GPI won the bid.

On August 27, 1997, Parsons issued a Letter of Award and Notice to Proceed (First
Notice to Proceed) to GPI. It was accompanied by the formal contract documents. In a Letter
dated September 2, 1997 (First Letter), GPI signed and returned the First Notice to Proceed
without the contract documents. However, in a Letter dated September 8, 1997, MRTDC wrote
GPI that it would need one (1) or two (2) weeks before it could issue the latter the Formal Notice
to Proceed. On September 9, 1997, GPI transmitted the contract documents to Parsons. In a
facsimile transmission sent on the same day, Parsons directed GPI "to hold any further
mobilization activities. In a Letter dated September 10, 1997, GPI stated that a Notice of Award
and Notice to Proceed was issued by the Project Managers Parsons dated 27th August 1997
and has been signed, accepted and an original returned to them by the authorised persons,
therefore a contract exists between MTRDC and GPI. Effectively, GPI said that it is now
required to proceed with the work starting seven days from receipt of that Notice and it was
agreed they would commence dewatering of the flooded site and clean up immediately, under a
Change Order, and that the construction period would run from the date of achieving the clean-
up of the site.

On different dates, after several changes, receipt and acceptance of Notice to Proceeds
(up to Third Notice to Proceed), MRTDC rejected GPI's qualified acceptance and informed GPI
that the contract would be awarded instead to Filsystems if GPI would not accept the Fourth
Notice to Proceed within five (5) days. In a Letter dated July 8, 1998, GPI wrote MRTDC,
acknowledging the latter's intent to grant the Fourth Notice to Proceed to another party despite
having granted the First Notice to Proceed to GPI. Thus, it notified MRT of its claims for
reimbursement for costs, losses, charges, damages, and expenses it had incurred due to the
rapid mobilization program in response to MRT's additional work instructions, suspension order,
ongoing discussions, and the consequences of its award to another party.

MRTDC expressed its disagreement with GPI, and later informed GPI that it was willing
to reimburse GPI for its cost in participating in the bid amounting to about 5% of GPI's total
claim of more or less P121,000,000.00. After several follow up on GPI's claim to MRTDC, on
July 1, 1999, it filed a Notice of Claim before Construction Industry Arbitration Commission
(CIAC) against MRTDC. However, MRTDC filed a Motion to Dismiss, arguing that CIAC had no
jurisdiction to arbitrate the dispute. This Motion was denied and this matter was elevated to this
Court. The CIAC ruled to award the monetary claims in favor of GPI amounting to
P5,493,639.27.

Thus, MRT filed the Petition for Review to the Supreme Court, where it argues that GPI
was not entitled to CIAC's award considering that there is no perfected contract between
MRTDC and GPI and that Gammon's claim for lost profits was based only on an
unsubstantiated and self-serving assertion of its employee.

Issue

Whether or not there is a perfected contract between Metro Rail Transit Development
Corporation and Gammon Philippines Inc.?

Ruling of the Court

Yes. In bidding contracts, the Supreme Court has ruled that the award of the contract to
the bidder is an acceptance of the bidder's offer. Its effect is to perfect a contract between the
bidder and the contractor upon notice of the award to the bidder. Thus, the award of a contract
to a bidder perfects the contract. Failure to sign the physical contract does not affect the
contract's existence or the obligations arising from it.

Applying this principle to this case, there is a perfected contract between the parties.
MRTDC has already awarded the contract to GPI, and GPI's acceptance of the award was
communicated to MRTDC before it rescinded the contract. The Invitation to Bid issued to
Gammon stated that MRT "will select the Bidder that MRT judges to be the most suitable, most
qualified, most responsible and responsive, and with the most attractive Price and will enter into
earnest negotiations to finalize and execute the Contract. MRTDC did not contest GPI's notice
of receipt of the First Notice to Proceed, expressing that it was still valid and was not cancelled.

Additionally, when the parties were discussing the change of plans, MRTDC did not
mention that no contract was executed between them. Instead, it sought to modify its terms and
conditions. Thus, GPI was made to believe that the First Notice to Proceed was in force and
effect, albeit temporarily suspended.

Thus, the parties have become bound to consummate the contract such that the failure
by one party to comply with its obligations under the contract entitles the other party to
damages. Clearly, Gammon was expected to comply with the award when it signified its
concurrence. Thus, it is not just or equitable for the perfection of the contract to be one (1)-sided
such that the contract only binds Gammon but not MRT just because the contract documents
were not yet returned before MRT suspended the contract.

A.M. No. 17-12-02-SC, July 16, 2019

RE: CONSULTANCY SERVICES OF HELEN P. MACASAET

The Facts

The EISP is intended to serve as the framework of the Information and Communications
Technology (ICT) initiatives of the Judiciary. INDRA Sistemas S.A. (INDRA) was designated to
provide Management and Consultancy Services for the development of the Judiciary's ICT
Capability as part of the Judicial Reform Support Project financed by the World Bank. The Court
approved the EISP submitted by INDRA. However, the 2009 Budget did not include a budget for
the judiciary-wide technical infrastructure. Thus, there was a need to hire the services of an ICT
consultant to review the status of the implementation of the EISP and related ICT and
computerization projects.

In its Memorandum, the BAC-CS recommended three (3) consultants who may be
considered by the Supreme Court for the procurement of consultancy services. In its
Memorandum, BAC-CS stated that after reviewing and evaluating the three proposed
consultants by the BAC-CS, they found Ms. Macasaet to be the most qualified. Their
recommendation that Ms. Macasaet be hired for the procurement was approved by the then
Chief Justice. The Supreme Court, represented by its then Chief Administrative Officer Atty.
Candelaria, entered into a six-month Contract of Services with Ms. Macasaet.

. Atty. Ocampo stated that the proposed consultancy is clearly highly technical and
policy determining, which would be subject to the confirmation of the BAC-CS. In its
Memorandum, the BAC-CS reiterated that the subject procurement can proceed without the
Committee's involvement as it was "highly technical in nature and primarily requires trust and
confidence, owing to the fact that it is a priority program of the Supreme Court." Atty. Ocampo
and Mr. Davis determined, in their Joint Memorandum, that Ms. Macasaet was the most
qualified among the three proposed consultants. This Joint Memorandum was approved by then
Chief Justice Sereno. However, the records are bereft of any explanation as to how the three (3)
consultants were chosen by the BAC-CS for the purpose of recommending to the Supreme
Court the procurement of consultancy services.
 Mr. Davis and Atty. Ocampo stated that there was a continuing need for the services of a
consultant to provide technical advice and assistance in the first year implementation of the plan
and in developing ICT policies to support it. Thus, they recommended the extension of Ms.
Macasaet's contract for another six (6) months. Thereafter, the Contract of Services was
extended five more times, for a total of six extensions of six months for every extension. In total,
the Court entered into a Contract of Services with Ms. Macasaet for a total of eight times.

Issue

1. Does Atty. Candelaria have the authority to enter into contract with the consultant?

2. Was the procurement of consultancy services in accordance with the Annual

Procurement Plan (APP)?

Ruling of the Court

1. No. According to Sections 4 and 5 of Executive Order (EO) No. 423, it is the Head of the
Procuring Entity who is authorized to enter into binding government contracts, when
such contracts are entered into through alternative methods of procurement such as
directly negotiated contracts like the Contracts of Services with Ms. Macasaet. This
authority may be delegated, but this must be done only “in writing” with “full authority” to
give “final approval and/or to enter into” the contract delegated to such duly authorized
official.

The Supreme Court En Banc, as Head of the Procuring Entity, exercises the power to
delegate the signing of government contracts entered into through alternative methods
of procurement as allowed by law. The delegated official could have been the Chief
Justice, another member or members of the Supreme Court En Banc, or any other
official of the Court. However, in this case, the Supreme Court En Banc did not delegate
such power to anyone because it was not informed of the Contracts of Services with Ms.
Macasaet.

2. No. There was a violation of Section 7 of RA No. 9184 when the second Contract of
Services was entered into on 23 May 2014 without the proper APP. According to Section
7.3 of the, the inclusion of all the planned procurements in the APP is crucial to ensure
that all expenses and expenditures of a government entity in relation to its procurement
are within the approved appropriation as reflected in the corresponding General
Appropriations Act.

In this case, when the second Contract of Services dated 23 May 2014 was entered into,
the APP for the year 2014 did not include the line item for “Technical and Policy
Consultants” for purposes of procurement. This was only included when the APP was
subsequently revised, in accordance with the Memorandum of the Procurement
Planning Committee (PCC) where the PCC requested the amendment of APP with the
inclusion of the line item for “Technical and Policy Consultants” to be sourced from the
savings of the Court. The recommendation to include the line item for “Technical and
Policy Consultants” in the addendum to the 2014 APP was only approved by the Court in
 A.M. No. 10-1-10-SC dated 23 September 2014. Clearly, when the Contract of Services
dated 23 May 2014 was entered into with Ms. Macasaet, the APP did not cover the
hiring of services of a technical and policy consultant for procurement purposes.

G.R. No. 159139 January 13, 2004

INFORMATION TECHNOLOGY FOUNDATION OF THE PHILIPPINES, MA. CORAZON M.

AKOL, MIGUEL UY, EDUARDO H. LOPEZ, AUGUSTO C. LAGMAN, REX C. DRILON,
MIGUEL HILADO, LEY SALCEDO, and MANUEL ALCUAZ JR., petitioners, vs.
COMMISSION ON ELECTIONS; COMELEC CHAIRMAN BENJAMIN ABALOS SR.;
COMELEC BIDDING and AWARD COMMITTEE CHAIRMAN EDUARDO D. MEJOS and
MEMBERS GIDEON DE GUZMAN, JOSE F. BALBUENA, LAMBERTO P. LLAMAS, and
BARTOLOME SINOCRUZ JR.; MEGA PACIFIC eSOLUTIONS, INC.; and MEGA PACIFIC
CONSORTIUM, respondents.

The Facts

On October 29, 2002, Commission on Elections (COMELEC) adopted in its Resolution

02-0170 a modernization program for the 2004 elections. It resolved to conduct biddings for the
three (3) phases of its Automated Election System (AES); namely, Phase I — Voter Registration
and Validation System; Phase II — Automated Counting and Canvassing System; and Phase III
— Electronic Transmission. On January 24, 2003, President Macapagal-Arroyo issued
Executive Order No. 172, which allocated the sum of P2.5 billion to fund the AES for the May
10, 2004 elections. On January 28, 2003, the Commission issued an "Invitation to Apply for
Eligibility and to Bid. On February 17, 2003, the poll body released the Request for Proposal
(RFP) to procure the election automation machines.

The Bids and Awards Committee (BAC) of COMELEC convened a pre-bid conference
on February 18, 2003 and gave prospective bidders until March 10, 2003 to submit their
respective bids. Out of the 57 bidders, the BAC found Mega Pacific Consortium (MPC) and the
Total Information Management Corporation (TIMC) eligible. For technical evaluation, they were
referred to the BAC's Technical Working Group (TWG) and the Department of Science and
Technology (DOST). In its Report on the Evaluation of the Technical Proposals on Phase II,
DOST said that both MPC and TIMC had obtained a number of failed marks in the technical
evaluation. Notwithstanding these failures, COMELEC En Banc on April 15, 2003, promulgated
Resolution No. 6074 awarding the project to MPC. The Commission publicized this Resolution
and the award of the project to MPC on May 16, 2003. On May 29, 2003, five individuals and
entities (including the Information Technology Foundation of the Philippines) wrote a letter to
COMELEC Chairman Abalos Sr. They protested the award of the Contract to MPC "due to
glaring irregularities in the manner in which the bidding process had been conducted." Citing
therein the noncompliance with eligibility as well as technical and procedural requirements, they
sought a re-bidding. The COMELEC Chairperson through Atty. Paz, rejected the protest and
declared that the award "would stand up to the strictest scrutiny." Hence, the matter was raised
to the Supreme Court.

Issue

Whether or not the COMELEC committed grave abuse of discretion in awarding the
contract to MPC in violation of law and in disregard of its own bidding rules and procedure?

Ruling of the Court

The Court was confronted with a petition to cancel a billion-peso contract entered into by
COMELEC with MPC for, oddly enough, the automation of the counting and canvassing of the
ballots in the 2004 elections. The Court found that COMELEC awarded the contract to MPC
with inexplicable haste despite the latter's non-participation in the public bidding process, and
that it had even failed to adequately qualify under COMELEC's own financial, technical and
legal requirements. In striking down the contract with Mega-Pacific, the Court ruled that
COMELEC violated the policy on public biddings, especially when the latter allowed the winning
bidder to alter the contract.

The Court is beguiled by the statements of Commissioner Florentino Tuason Jr., given in
open court. The good commissioner affirmed that he was aware, of his own personal
knowledge, that there had indeed been a written agreement among the “consortium” members,
although it was an internal matter among them. However, under questioning, Commissioner
Tuason in effect admitted that, while he was the commissioner-in-charge of COMELEC’s Legal
Department, he had never seen, even up to that late date, the agreement he spoke of. Under
further questioning, he was likewise unable to provide any information regarding the amounts
invested into the project by several members of the claimed consortium. A short while later, he
admitted that the Commission had not taken a look at the agreement. Even if the BAC or the
Phase II Team had taken charge of evaluating the eligibility, qualifications and credentials of the
consortium-bidder, still, in all probability, the former would have referred the task to
Commissioner Tuason, head of COMELEC’s Legal Department. The task was the appreciation
and evaluation of the legal effects and consequences of the terms, conditions, stipulations and
covenants contained in any joint venture agreement, consortium agreement or a similar
document, assuming of course that any of these was available at the time. The fact the
Commissioner Tuason was barely aware of the situation bespeaks the complete absence of
such document, or the utter failure or neglect of the COMELEC to examine it at the time the
award was made on April 15, 2003.

The problem is that COMELEC never bothered to check. It never based its decision on
documents or other proof that would concretely establish the existence of the claimed
consortium or joint venture or agglomeration. It relied merely on the self-serving representation
in an uncorroborated letter signed by only one individual, claiming that his company represented
a “consortium” of several different corporations. It concluded forthwith that a consortium indeed
existed, composed of such and such member, and thereafter declared that the entity was
eligible to bid. Copies of financial statements and incorporation papers of the alleged
“consortium” members were submitted. But these papers did not establish the existence of a
consortium, as they could have been provided by the companies concerned for the purposes
other than to prove that they were part of a consortium or joint venture. For instance, the papers
may have been intended to show that those companies were each qualified to be a sub-
contractor in a major project. Those documents did not by themselves support the assumption
that a consortium or joint venture existed among the companies. In brief, despite the absence of
competent proof as to the existence and eligibility of the alleged consortium (MPC), its capacity
to deliver on the Contract, and the members’ joint and several liability therefor, COMELEC
nevertheless assumed that such consortium existed and was eligible. It then went ahead and
considered the bid of MPC, to which the Contract was eventually awarded, in gross violation of
the former’s own bidding rules and procedures contained in its RFP. Therein lies COMELEC’
grave abuse of discretion.

[G.R. No. 115221. March 17, 2000.]

JULIUS G. FROILAN, Petitioner, v. THE HONORABLE SANDIGANBAYAN, Respondent.

The Facts

The Bohol Agricultural College, a government educational institution, purchased

chemicals priced at P10,633.00 from the JDS Traders. As required in the procurement of
government supplies, an RIV (Requisition and Issue Voucher) was prepared by Supply Officer
Mandin and approved Limbago, the superintendent of the school. The award was in favor of
JDS Traders which submitted the lowest quotation of P10,633.00. Purchase order No. 84-61
was approved by Limbago which appears to have been received by Froilan. Froilan signed a
certification stamped on purchase order, stating that he will refund the difference if the prices
are found to be overpriced.

Frolian merely acted as an agent and used it receipt in the transaction. Thus, Frolian
issued JDS Traders Sales Invoice No. 057 in the total amount of P10,633.00 to which the Bohol
Agricultural College accepted the articles described in Invoice No. 057. The corresponding
Request for Obligation of Allotment for the sum of P10,633.00 was then prepared by Guimadan
and approved by Limbago. The corresponding disbursement voucher was processed and
approved. Finally Froilan received payment and issued an Official Receipt for P10,633.00 under
the business name of JDS Traders.

Thereafter, Siono, Auditor of the Commission on Audit, wrote a letter to the COA Price
Monitoring Division, requesting for confirmation of the prices of various chemicals delivered to
the Bohol Agricultural College, covered by the said Purchase Order No. 84-61. Director
Mabanta of the COA Technical Services wrote a reply stating that based on actual canvass
made in the open market and verification from purchase documents of other government
agencies with similar purchases, the prices in Metro Manila for the articles in question as
compared to the quoted prices thereof. Auditor Siono wrote a letter addressed to JDS Traders,
Limbago, Salubre, Real and Pabe informing them of the disallowance of P5,232.87 and
demanding settlement thereof. Froilan refunded the full amount of P5,232.87. This
notwithstanding, an Information for the violation of Sec. 3 (g) of Republic Act No. 3019 was filed
against all the herein accused.

Issue

Whether or not the accused shall be held liable for violation of R.A. No. 3019?

Ruling of the Court

No, the Court rule in favor of Froilan. In the case at bar, it will be noted that one of the
principal reasons for Mr. Limbago’s acquittal was the fact that the government was amply
protected by virtue of the written undertaking issued by Froilan, as the winning bidder, to refund
whatever amount may be found as overprice. Froilan, being the one who gave the written
guarantee and who saved the government from any perceived injury, must likewise be
acquitted.
Readily, we find that one of the elements of the crime, i.e., that the contract or
transaction is grossly and manifestly disadvantageous to the government, is conspicuously
missing. The government was amply protected in the subject transaction, and consequently the
contract was not grossly and manifestly disadvantageous to the government. Hence, the
requirement of a moral certainty that the crime was committed, in order to uphold the judgment
of conviction of Froilan, is absent in this case. Conviction must rest on nothing less that a moral
certainty of guilt.
G.R. No. 198457, August 13, 2013

FILOMENA G. DELOS SANTOS, JOSEFA A. BACALTOS, NELANIE A. ANTONI, AND

MAUREEN A. BIEN, Petitioners, v. COMMISSION ON AUDIT, REPRESENTED BY ITS
COMMISSIONERS, Respondent.

The Facts

In October 2001, Congressman Cuenco of the Second District of Cebu City entered into
a Memorandum of Agreement (MOA) with the Vicente Sotto Memorial Medical Center,
represented by Dr. Alquizalas appropriating to the hospital the amount of P1,500,000.00 from
his Priority Development Assistance Fund to cover the medical assistance of indigent patients
under the Tony N' Tommy Health Program.

Several years after the enforcement of the MOA, allegations of forgery and falsification
of prescriptions and referrals for the availment of medicines under the TNT Program surfaced.
In the initial investigation conducted by the CoA, it was found out that there were unseen and
unnoticeable irregularities attendant to the availment of the TNT Program.

Delos Santos explained that during the initial stage of the implementation of the MOA
(i.e., from 2000 to 2002) the hospital screened, interviewed, and determined the qualifications of
the patients-beneficiaries through the hospital’s social worker. However, Cuenco put up the TNT
Office in VSMMC, which was run by his own staff who took all pro forma referral slips bearing
the names of the social worker and the Medical Center Chief, as well as the logbook. From then
on, the hospital had no more participation in the said program and was relegated to a mere bag
keeper. Since the benefactor of the funds chose Dell Pharmacy as the sole supplier, anti-rabies
medicines were purchased from the said pharmacy and, by practice, no public bidding was
anymore required.
 Subsequently, the SAT Team Supervisor, Boado, issued ND No. 2008-09-01,
disallowing the amount of P3,386,697.10 for the payment of drugs and medicines for anti-rabies
with falsified prescription and documents, and holding Delos Santos, Bacaltos, Antoni, Bien,
together with other VSMMC officials, solidarily liable therefor.

Issue

Whether or not the hospital officials failed to “cooperate/coordinate and monitor" the
implementation of the said health program?

Ruling of the Court

Yes, The CoA correctly pointed out that VSMMC, through its officials, should have been
deeply involved in the implementation of the TNT Program as the hospital is a party to the MOA
and, as such, has acted as custodian and disbursing agency of Cuenco’s PDAF. Further, under
the MOA executed between VSMMC and Cuenco, the hospital represented itself as willing to
cooperate/coordinate and monitor the implementation of a Medical Indigent Support Program.
More importantly, it undertook to ascertain that all payments and releases under the program
shall be made in accordance with existing government accounting and auditing rules and
regulations. It is a standing rule that public officers who are custodians of government funds
shall be liable for their failure to ensure that such funds are safely guarded against loss or
damage, and that they are expended, utilized, disposed of or transferred in accordance with the
law and existing regulations, and on the basis of prescribed documents and necessary records.

In particular, the TNT Program was not implemented by the appropriate implementing
agency, i.e., the Department of Health, but by the office set up by Cuenco. Further, the
medicines purchased from Dell Pharmacy did not go through the required public bidding in
violation of the applicable procurement laws and rules. Similarly, specific provisions of the MOA
itself setting standards for the implementation of the same program were not observed. Clearly,
by allowing the TNT Office and the staff of Cuenco to take over the entire process of availing of
the benefits of the TNT Program without proper monitoring and observance of internal control
safeguards, the hospital and its accountable officers reneged on its undertaking under the MOA
to cooperate/coordinate and monitor the implementation of the said health program.

Evidently, Delos Santos, Bacaltos, Antoni, and Bien neglect to properly monitor the
disbursement of Cuenco's PDAF facilitated the validation and eventual payment of 133 falsified
prescriptions and fictitious claims for anti-rabies vaccines supplied by both the VSMMC and Dell
Pharmacy, despite the patent irregularities borne by the referral slips and prescriptions related
thereto. Had there been an internal control system installed by Delos Santos, Bacaltos, Antoni,
and Bien, the irregularities would have been exposed, and the hospital would have been
prevented from processing falsified claims and unlawfully disbursing funds from the said PDAF.
Verily, Delos Santos, Bacaltos, Antoni, and Bien cannot escape liability for failing to monitor the
procedures implemented by the TNT Office on the ground that Cuenco always reminded them
that it was his money.

All told, Delos Santos, Bacaltos, Antoni, and Bien acts and/or omissions as detailed in
the assailed CoA issuances reasonably figure into the finding that they failed to faithfully
discharge their respective duties and to exercise the required diligence which resulted to the
irregular disbursements from Cuencos PDAF.

G.R. No. 197567, November 19, 2014

GOVERNOR ENRIQUE T. GARCIA, JR., Petitioner, v. OFFICE OF THE OMBUDSMAN,

LEONARDO B. ROMAN, ROMEO L. MENDIOLA, PASTOR P. VICHUACO, AURORA J.
TIAMBENG, AND NUMERIANO G. MEDINA, Respondents.

The Facts

On November 3, 2003, Roman, being the Provincial Governor at that time, entered into a
contract with V.F. Construction, as represented by Valdecañas, for the construction of a mini-
theater at the Bataan State College-Abucay Campus, Abucay, Bataan (project). Thereafter, or
on February 23, 2004, Roman signed and issued a Certificate of Acceptance, stating that the
project was "100% completed in accordance with plans and specification[s]" per the
Accomplishment Report and Certification. Valdecañas also affixed his signature on the said
Accomplishment Report and later executed an Affidavit dated May 26, 2004 stating that the
project was 100% completed. IIn view of the project's purported completion, two (2) Land Bank
of the Philippines checks were respectively issued by Roman and Vichuaco in favor of V.F.
Construction. The receipts issued by V.F. Construction show that it received the payments for
the project.

Notwithstanding the various documents attesting to the project's supposed completion,

as well as the disbursement of funds in payment therefor, Garcia, Roman's successor as
Provincial Governor, authorized the inspection of the project sometime in August 2004 and
discovered that while its construction was indeed commenced, it remained unfinished as
reflected in a Memorandum Report dated August 24, 2004. Hence, Garcia filed a Complaint-
Affidavit, however the OMB dismissed the criminal charges for lack of probable cause. Garcia
moved for reconsideration citing the COA Audit Observation Memorandum (AOM) No. 2005-
004-100 (2004) dated April 21, 2005, which stated that the project had no source of funds, thus
rendering the contract therefor void and the payments made therefor illegal.

The Ombudsman cleared Roman, Mendiola, Vichuaco, Tiambeng and Media from
liability on the ground of insuffifciency of evidence, reasoning that “mere signature on a voucher
or certification is not enough” to establish any conspiracy among them which would warrant their
conviction.

Issue

Whether or not the Ombudsman made a mistake in its decision to dismiss the case?

Ruling of the Court

Yes, the present Constitution and RA 6770, otherwise known as the “Ombudsman Act of
1989,” have endowed the Office of the Ombudsman with wide latitude, in the exercise of its
investigatory and prosecutorial powers, to pass upon criminal complaints involving public
officials and employees. Hence, as a general rule, the Court does not interfere with the
Ombudsman’s findings and respects the initiative and independence inherent in its office, which
“beholden to no one, acts as the champion of the people and the preserver of the integrity of the
public service.”

The foregoing principle does not, however, apply when the Ombudsman’s ruling is
tainted with grave abuse of discretion, subjecting the same to certiorari correction. Among other
instances, the Ombudsman may be deemed to have gravely abused its discretion when it
unjustifiably fails to take essential facts and evidence into consideration in the determination of
probable cause. It may also be committed when the Ombudsman patently violates the
Constitution, the law or existing jurisprudence. Indeed, any decision, order or resolution of a
tribunal tantamount to overruling a judicial pronouncement of the highest Court is unmistakably
grave abuse of discretion.

When a matter is irregular on the document's face, so much so that a detailed

examination becomes warranted, the Arias doctrine is unavailing. Here, it cannot be denied that
the absence of an allotment for the project already rendered all related documents / transactions
irregular on their face. By this fact alone, Roman and others ought to have known that
something was amiss. To echo the COA Memo, Section 321 of RA 7160 provides, among
others, that "[n]o ordinance providing for a supplemental budget shall be enacted, except when
supported by funds actually available as certified by the local treasurer or by new revenue
sources." Section 8, Chapter 3 of the Manual on the NGAS for LGUs, Volume I further defines
an "[a]llotment [as] the authorization issued by the Local Chief Executive (LCE) to a department/
office of the LGU, which allows it to incur obligations, for specified amounts, within the
appropriation ordinance."

Unless the CoA's findings are substantially rebutted, the allotment's absence should
have roused Roman's suspicions, as regards the project's legality, and, in consequence,
prevented them from approving the disbursements therefor. This is especially true for Roman,
who, as the Local Chief Executive of the Province at that time, was primarily charged with the
issuance of allotments. As such, he was in the position to know if the allotment requirement had,
in the first place, been complied with, given that it was a pre-requisite before the project could
have been contracted. In addition, the Court observes the same degree of negligence on the
part of Ombudsman in seemingly attesting to the project's 100% completion when such was not
the case. Since the mini-theater project was an appropariation made in a supplemental budget,
then there should have been funds certified to be actually available for such appropriation to
even be made. However, as the COA found, no such funds were certified as available.
Likewise, the project had no supporting allotment, which means that there was basically no
authority for the provincial officials, i.e., Roman and the others, to even incur the obligations
under the V.F. Construction contract, much more for them to disburse the funds in connection
with.

G.R. No. 223768

OFFICE OF THE DEPUTY OMBUDSMAN FOR THE MILITARY AND OTHER LAW
ENFORCEMENT OFFICES, Petitioner vs. P/S SUPT. LUIS L. SALIGUMBA, Respondent

The Facts

The Annual Procurement Plan for the CY 2008 of the Philippine National Police (PNP),
under the Capability Enhancement Program Funds, included the procurement of 75 police
rubber boats (PRBs) and 18 spare engines or outboard motors (OBMs), to be used by the PNP
Maritime Group (MG). As the end-user of the PRBs and spare OBMs, the MG created a
Technical Working Group (TWG) tasked to determine the best suited watercraft for maritime law
enforcement and maritime security mandates' of the MG. Upon receipt of the initial batch of
PRBs and OBMs, the PNP MG, through its Technical Inspection Committee on Watercrafts
(MG-TICW), conducted an inspection and sea trial of the PRBs and OBMs and discovered
various deficiencies in these equipment, which make their use risky to end-users. Acting on
newspaper reports that the police rubber boats and outboard motors that were purchased by the
PNP do not function when fitted together, the Fact Finding Investigating Bureau (FFIB) of the
Ombudsman conducted an investigation on the aforesaid procurement by PNP. The
investigation of the FFIB resulted in a Complaint for Gross Neglect of Duty and Gross
Incompetence against 21 officials and officers of the PNP, including Saligumba.
 On January 9, 2013, the Ombudsman rendered a Decision finding the charged public
officials and officers administratively liable, ranging from simple neglect of duty to grave
misconduct. As regards Saligumba, the Ombudsman found him guilty of simple neglect of duty
and imposed the penalty of suspension from service for a period of six (6) months. In holding
Saligumba administratively liable for simple neglect of duty, the Ombudsman ruled that while
persons other than those formally appointed as inspectors may be authorized to conduct the
inspection, the members of the Inspection and Acceptance Committee ( IAC) are still expected
to exercise due diligence in seeing to it that the policies or guidelines for inspection are dutifully
observed, which they failed to do so. The Weapons Transportation and Communication
Division (WTCD) Reports, per the Ombudsman, relied upon by IAC members and prepared by
the actual inspectors, contained remarks that the PRBs delivered lacked some accessories. The
WTCD reports also provided information showing non-compliance with the NAPOLCOM
standard specifications. Thus, the IAC members should have not accepted the deliveries of the
PRBs.

Issue

Whether or not the Inspection and Acceptance Committee neglected their duty?

Ruling of the Court

Yes. In this case, Saligumba evidently neglected to efficiently and effectively discharge
his functions and responsibilities. In his Counter-Affidavit, he even admitted that he did not
personally inspect the deliveries since a group of experts and selected personnel
knowledgeable of rubber boats had conducted the inspection for him.

While they are not mandated to exclusively inspect the items delivered, Saligumba and
other IAC members should not have merely relied on the reports and instead confirmed such
findings by personally inspecting the deliveries, especially since there were noted discrepancies
from the report. Prudence dictates that Saligumba should have brought it upon himself to
personally check the said items. He cannot justify his acceptance of the deliveries when the
very WTCD reports IAC members relied upon already show deviations of the NAPOLCOM
specifications,

The decision has comparative table clearly showing that there is incomplete deliveries
and deviations from the NAPOLCOM approved specifications, which make Saligumba and other
IAC members liable for simple neglect of duty. Simple neglect of duty means the failure of an
employee or official to give proper attention to a task expected of him or her, signifying a
"disregard of a duty resulting from carelessness or indifference." Saligumba and other members
of the IAC fell short of the reasonable diligence required of them, for failing to perform the task
of inspecting the deliveries in accordance with the conditions of the procurement documents
and rejecting said deliveries in case of deviation. As the Ombudsman ruled, while persons other
than those formally appointed as inspectors may be authorized to conduct the inspection, the
members of the IAC are still expected to exercise due diligence in seeing to it that the policies or
guidelines for inspection are dutifully observed, which they failed to do so.
G.R. No. 210900

MAURA BAGHARI-REGIS, Petitioner, vs. COMMISSION ON AUDIT, Respondent

The Facts

The Philippine Postal Corporation (PPC) entered into a Contract of Carriage of Mail with
Aboitiz Air Transport Corporation (AATC) for the transportation of mails by land for P5.00 per
kilogram of mail inclusive of VAT. PPC then entered into a separate Contract of Carriage of Mail
with Transpac Air Cargo Corporation (TACC) for the transportation by air of PPC express,
priority and foreign registered mail via Philippine Airlines for P18.00 per kg of mail inclusive of
VAT. These contracts then expired without being renewed. However, PPC realized that it was
cheaper to outsource the carriage of mails and opted to renew its contract with AATC and
TACC. Pending the renewal of contract, Atty. Antonio Z. De Guzman (Atty. De Guzman), then
Postmaster General and Chief Executive Officer of PPC, advised Efren E. Uy, Chief Operating
Officer of AATC, to undertake the contract of carriage of mail to and from Regions 1, 2, and 5
and the Cordillera Administrative Region at the rate of P8.00 per kg starting May 11, 2004. In its
Audit Observation Memorandum (AOM), the Supervising Auditor noted that about
P3,683,845.86 was paid to AATC in 2004 without a formal written contract, and that the said
transactions continued even after the contract ended. The COA disallowed the payments made
to AATC and TACC in the amount of P29,156,397.22 for failure to conduct public bidding and to
execute a formal written contract between PPC and the service contractors.
 Issue

Whether Maura Baghari-Regis can be absolved from liability on the ground that she has
no duty to determine whether public bidding was conducted and that her duty was merely
ministerial and does not include negotiation of supporting documents in the form of contracts?

Ruling of the Court

No. As correctly ruled by the Commission on Audit (COA), the act of certifying the
legality and necessity of the claim involves certain degree of discretion and judgment on
Baghari-Regis part, and the definite duty to certify arises only when all conditions are met,
admitted or proven to exist. The validity and legality of the claims depends on the existence of a
legal basis or a valid contract entered into by and between PPC and the service contractors as
imposed by law, which is absent in this case. Evidently, Baghari-Regis’ duty to certify was a
discretionary function on her office and not a mere ministerial act on her part.

Note: In a Notice dated December 1, 2020,2 the SC ruled that Baghari-Regis’ invocation of
good faith has no leg to stand on. The explicit rule under the procurement law for public bidding
was clearly violated. While it may not have been done blatantly or with malice, there is strong
evidence that petition was grossly negligent about it, at the very least, as it was established by
the Office of the Ombudsman that, in fact, there was no board resolution authorizing the
contracts and that the cost analysis study Baghari-Regis herself authored even proved that
there was no valid exception to forego public bidding.

G.R. No. 213323, January 22, 2019

TERESITA S. LAZARO, DENNIS S. LAZARO, MARIETA V. JARA, ANTONIO P. RELOVA,

GILBERTO R. MONDEZ, PABLO V. DEL MUNDO, JR., AND ALSANEO F. LAGOS,
PETITIONERS, vs. COMMISSION ON AUDIT, REGIONAL DIRECTOR OF COA REGIONAL
OFFICE NO. IV-A, AND COA AUDIT TEAM LEADER, PROVINCE OF LAGUNA,
RESPONDENTS.

The Facts

As reported in a December 3, 2004 article of the Philippine Daily Inquirer, the Regional
Director of the Regional Office created an audit team to conduct a preliminary fact-finding audit
and investigation of irregularities in the purchase of medical items by Provincial Government of
Laguna. The audit team issued two (2) Audit Observation Memoranda, which revealed that in
the 2004 and 2005 procurement of medical items: (1) no public bidding had been conducted; (2)
purchase requests had made reference to brand names; and (3) there had been splitting of
purchase requests and purchase orders. On December 27, 2006, the Regional Cluster Director
issued a Notice of Disallowance, which held responsible several officials and provincial
government employees which includes, amongst others, Governor Teresita S. Lazaro and
Officer-in-Charge Provincial Accountant Evelyn T. Villanueva, the procurement of medical items
in 2004 and 2005.
 Governor Lazaro, et al., argued that they had factual basis for resorting to direct
contracting on the basis of brand names because: (1) there are exceptions to the prohibition
against referring to brand names under Sec. 18 of Republic Act No. 9184; (2) the Therapeutics
Committees of the Province of Laguna's district hospitals issued Certifications/Justifications
recommending the brand names selected; and (3) the Certificates of Exclusive Distributorship
and Certificates of Product Registration proved that the suppliers selected "were the exclusive
distributors" of the procured medical items.

Issue

Are the Public Officers in this case excluded from responsibility because it relied on a
statement of an expert?

Ruling of the Court

No. Lazaro and the others, in good diligence, should have supported their claims based
on their supposed reliance on expert advice. They claim that they were right to rely on the
Therapeutics Committees, which are responsible for "determining the drugs to be procured by
government hospitals" and allege to have recommended the chosen brand names, but they
have failed to allege and support with good diligence their claims of good faith.

Moreover, their contention was anchored the Department of Health's Hospital Pharmacy
Management Manual, the Pharmacy and Therapeutics Committee has the authority to
recommend or assist in the formulation of policies on evaluation, selection, and therapeutic use
of drugs in hospitals. Executive Order No. 49 issued by then President Fidel V. Ramos provides
that the Therapeutics Committee shall be responsible for determining which products are to be
procured by the respective government entities. However, upon scrutiny, these Certifications
were not issued by the Therapeutics Committees. Moreover, they did not give reasons for
referring to brand names and could not have formed the basis of Lazaro and the others’ good
faith or reliance on the Therapeutics Committees. The rest of the Annexes alleged to have been
issued by the Therapeutics Committees of various district hospitals, denominated as
Justifications, are hardly more persuasive. They should have sufficiently alleged facts that would
show that there was no collusion between them and the Therapeutics Committees to use the
committee's role as a tool to circumvent the rules on procurement.
G.R. No. 213323, January 22, 2019

TERESITA S. LAZARO, DENNIS S. LAZARO, MARIETA V. JARA, ANTONIO P. RELOVA,

GILBERTO R. MONDEZ, PABLO V. DEL MUNDO, JR., AND ALSANEO F. LAGOS,
PETITIONERS, v. COMMISSION ON AUDIT, REGIONAL DIRECTOR OF COA REGIONAL
OFFICE NO. IV-A, AND COA AUDIT TEAM LEADER, PROVINCE OF LAGUNA,
RESPONDENTS.

G.R. No. 213324, January 22, 2019

EVELYN T. VILLANUEVA, PROVINCIAL ACCOUNTANT OF THE PROVINCE OF LAGUNA,

PETITIONER, v. COMMISSION ON AUDIT, RESPONDENT.

The Facts

As reported in a December 3, 2004 article of the Philippine Daily Inquirer, the Regional
Director of the Regional Office created an audit team to conduct a preliminary fact-finding audit
and investigation of irregularities in the purchase of medical items by Provincial Government of
Laguna. The audit team issued two (2) Audit Observation Memoranda, which revealed that in
the 2004 and 2005 procurement of medical items: (1) no public bidding had been conducted; (2)
purchase requests had made reference to brand names; and (3) there had been splitting of
purchase requests and purchase orders. On December 27, 2006, the Regional Cluster Director
issued a Notice of Disallowance, which held responsible several officials and provincial
government employees which includes, amongst others, Governor Teresita S. Lazaro and
Officer-in-Charge Provincial Accountant Evelyn T. Villanueva, the procurement of medical items
in 2004 and 2005.

Governor Lazaro, et al., argued that they had factual basis for resorting to direct
contracting on the basis of brand names because: (1) there are exceptions to the prohibition
against referring to brand names under Sec. 18 of Republic Act No. 9184; (2) the Therapeutics
Committees of the Province of Laguna's district hospitals issued Certifications/Justifications
recommending the brand names selected; and (3) the Certificates of Exclusive Distributorship
and Certificates of Product Registration proved that the suppliers selected "were the exclusive
distributors" of the procured medical items.

Issue

Are the Public Officers in this case excluded from responsibility because it relied on a
statement of an expert?

Ruling of the Court

No. Lazaro and the others, in good diligence, should have supported their claims based
on their supposed reliance on expert advice. They claim that they were right to rely on the
Therapeutics Committees, which are responsible for "determining the drugs to be procured by
government hospitals" and allege to have recommended the chosen brand names, but they
have failed to allege and support with good diligence their claims of good faith.

Moreover, their contention was anchored the Department of Health's Hospital Pharmacy
Management Manual, the Pharmacy and Therapeutics Committee has the authority to
recommend or assist in the formulation of policies on evaluation, selection, and therapeutic use
of drugs in hospitals. Executive Order No. 49 issued by then President Fidel V. Ramos provides
that the Therapeutics Committee shall be responsible for determining which products are to be
procured by the respective government entities. However, upon scrutiny, these Certifications
were not issued by the Therapeutics Committees. Moreover, they did not give reasons for
referring to brand names and could not have formed the basis of Lazaro and the others’ good
faith or reliance on the Therapeutics Committees. The rest of the Annexes alleged to have been
issued by the Therapeutics Committees of various district hospitals, denominated as
Justifications, are hardly more persuasive. They should have sufficiently alleged facts that would
show that there was no collusion between them and the Therapeutics Committees to use the
committee's role as a tool to circumvent the rules on procurement.
G.R. No. 242965. September 4, 2019.

DELFIN C. SUMINISTRADO, NELSON JOSE VINCENT B. QUERIJERO, HIDELISA P.

HERNANDEZ, EDNA K. MANANGHAYA, FIDEL REY P. NAYVE, JR., AND ALEXIS C. DEL
ROSARIO, petitioners, vs. RAND EDOUARD R. DE JESUS, respondent.

The Facts

This case originated from an administrative complaint filed by Rand Edouard De Jesus
before the Office of the Ombudsman (Ombudsman) for gross neglect of duty against the Bids
and Awards Committee (BAC) of the University of the Philippines Los Baños (UPLB). Between
February and October 2013, the UPLB-BAC conducted biddings for various contracts. De Jesus
alleged that the winning bidders were awarded the contracts despite their failure to submit their
tax clearances, or that said tax clearances were no longer valid at the time of the award. He
contended that procuring entities are mandated to require submission of valid tax return and tax
clearances from the winning bidders but Suministrado, Querijero, Hernandez, Mananghaya,
Nayve, Jr., and Del Rosario, as then member of the UPLB-BAC, gave the aforementioned
bidders unwarranted benefits through gross inexcusable neglect when they failed to require the
submission of the said documents.

On the other hand, UPLB-BAC members argued that due to the large volume of biddings
conducted by the BAC and considering the frequency of their participation, bidders who have
previously been determined to be eligible were no longer required to submit the same set of
eligibility requirements for the succeeding biddings that they participated in; that this practice
finds basis in Section 23.4 of the IRR of RA No. 9184; that the submission of tax clearance by a
bidder is not a precondition to his eligibility to bid but a condition for the award of the contract;
and that the questioned bidders have, through their years of participation in UPLB biddings
submitted tax clearances.

On May 26, 2015, the Ombudsman dismissed the complaint for gross neglect of duty,
and instead found the UPLB-BAC Officials guilty of simple neglect of duty. The case was
elevated to the Court of Appeals then after denial of the CA, it was elevated to the Supreme
Court.

Issue

Whether or not the UPLB-BAC members are accountable for neglect of duty?

Ruling of the Court

No, we have ruled in earlier cases when a public official may be held liable for simple
neglect of duty in cases involving public biddings. In Yamson v. Castro, we held that failure to
conduct a competitive bidding made members of the BAC liable for simple neglect of duty.
Citing Office of the Ombudsman v. Tongson, we held that the BAC failed to use reasonable
diligence in the performance of officially-designated duties. In Office of the Deputy Ombudsman
for the Military and Other Law Enforcement Offices v. Saligumba, we held that a member of the
Inspection and Acceptance Committee (IAC) is liable for simple neglect of duty when he failed
to personally inspect the deliveries when an earlier report submitted to him already indicated
deviations from the prescribed specifications. We held that De Jesus and other members of the
IAC fell short of the reasonable diligence required of them, for failing to perform the task of
inspecting the deliveries in accordance with the conditions of the procurement documents and
rejecting said deliveries in case of deviation.

The circumstances in these earlier cases are not present in this case. Here, public
biddings were conducted and UPLB-BAC members had no reason to deviate from the findings
of the BAC-Secretariat (SEC) and Technical Working Group (TWG). There is no showing that
they failed to exercise reasonable diligence in the performance of their functions as UPLB-BAC
members. As shown by the records, UPLB-BAC members were assigned to the BAC in addition
to their full-time work and responsibilities as UPLB faculty and staff. Before they conduct public
biddings during their weekly meetings, the bids were screened by the BAC-SEC and the TWG,
which they created to assist in managing the procurement process, including the eligibility
screening, evaluation of bids, and post qualification. Notably, RA 9184 authorizes the BAC to
create a Secretariat and a TWG. The Ombudsman, during the clarificatory hearing, found that
post-qualification of the questioned contracts were not undertaken personally by the UPLB-BAC
members but was done through the TWG. During post-qualification, there was no finding and
report from the TWG that the bidders were unable to submit their updated tax clearances.

Moreover, De Jesus owns Rand Charlie General Merchandise, a losing bidder, which
was subsequently blacklisted by the UPLB-BAC for having no license to sell the product it
claimed to be an authorized dealer of, as well as, attempting to supply UPLB a product not
registered with the Fertilizer and Pesticide Authority. From February to October 2013, when
UPLB-BAC conducted biddings, De Jesus did not raise the lack of and/or deficiency of the tax
clearances of the winning bidders. It was only on November 28, 2013, after receiving the UPLB-
BAC's decision to blacklist his company, that De Jesus filed the administrative complaint before
the Ombudsman. De Jesus' act of belatedly questioning the qualifications of the winning bidder
indicates that the administrative complaint is a mere after-thought committed by a disgruntled
bidder.

Taking together Our previous rulings and the circumstances attendant in this case, we
hold that the UPLB-BAC members cannot be held liable for simple neglect of duty. Again, we
emphasize that there was no showing that the UPLB-BAC members were aware or had reason
to suspect that there were irregularities in the bidding or that the TWG made an error in the
conduct of post-qualification.

G.R. No. 241152, March 09, 2020

DON ANTONIO MARIE V. ABOGADO, PETITIONER, vs. OFFICE OF THE OMBUDSMAN

AND TASK FORCE ABONO - FIELD INVESTIGATION OFFICE, RESPONDENTS.

The Facts

The charges arose from the alleged irregularities or anomalies committed in the
implementation of the Ginintuang Masaganang Ani (GMA) Program of the Department of
Agriculture (DA) under the Agriculture and Fisheries Modernization Act of 1997. The Field
Investigation Office (FIO), pointed out the irregularities attending the transaction between LGU-
Isabela and Equity Machineries, citing the October 28, 2004 Commission on Audit (COA)-Audit
Observation Memorandum (AOM) No. 2004-030 and the January 18, 2007 Sworn Statement of
Beatris A. Pataueg (Pataueg), COA State Auditor IV, to wit:

(a) the four units of farm tractors and four units of trailing harrows were purchased through
direct contracting with Equity Machineries instead of via public bidding;
(b) the alleged public bidding was conducted on March 18, 2004 or prior to the execution of the
MOA on March 19, 2004 between DA-RFU II and LGU-Isabela, and the receipt by the latter of
the P14,950,000.00 initial fund on March 23, 2004;
(c) no bidding documents duly authenticated by the PBAC was submitted;
(d) the purchased farm tractors and trailing harrows were not among the farm inputs, farm
implements and facilities enumerated in the Letter dated November 14, 2005 of Frisco M.
Malabanan, National Coordinator, GMA Rice Program, DA; and
(e) the memorandum receipts issued to four barangay captains of Cauayan, Isabela did not
specify the purpose or reason for the distribution of the farm tractors and trailing harrows.
Additionally specific brands, which are MF445 Massey Ferguson 4WD Farm Tractor and ACT
model 20x24 Trailing Harrow prevented possible bids from other suppliers. Thus, the charge
against Ombudsman to the Complaint, including Abogado, for Dishonesty, Grave Misconduct,
and Conduct Prejudicial to the Best interest of the Service.

Issue

Whether or not Abogado is guilty of Dishonesty, Grave Misconduct, and Conduct

Prejudicial to the Best Interest of the Service in connection with the alleged
irregularities/anomalies committed in the implementation of the GMA Program in the LGU-
Isabela?

Ruling of the Court

Yes, the Court finds Abogado's assertions to be without merit.

In this case, the specific brands, which are MF445 Massey Ferguson 4WD Farm Tractor
and ACT model 20x24 Trailing Harrow prevented possible bids from other suppliers; thus
depriving the public from having a qualitative benefit and service from a competitive bidding if
only there was a strict compliance with the procedures laid down in IRR-A of RA 9184 or the
Government Procurement Reform Act.

The Ombudsman found several irregularities in the procurement documents. Most of the
supporting documents for the procurement of the farm tractors and trailing harrows were
undated and unnumbered, including Equity Machineries' undated sales invoice and delivery
receipts which are in clear violation of the auditing and accounting rules and regulations.

It is true that Abogado, being the provincial legal officer, together with the others, as
members of the PBAC, were not prevented from looking into the legality, regularity, and
necessity of the procurement activities of the LGU-Isabela. As the Ombudsman ruled, had the
Ombudsman acted under the ordinary diligence expected of them, they would have raised
timely objections and might have ordered the suspension of the transactions instead of issuing
certifications and relying on them.

The fact that Abogado knew of the missing public bidding for the 2nd purchase of the
farm tractors and trailing harrows should have cautioned and prevented him from issuing a
certification.
 In conclusion, the acts of the Ombudsman, including Abogado, when taken together
contributed to the unwarranted benefit, advantage, and preference in favor of Equity
Machineries. Specifically, when they failed to conduct a public bidding in the procurement of the
farm tractors and trailing harrow. As aptly observed by the Ombudsman in its assailed Decision.

All told, the Court finds that indeed Abogado, together with his colleagues in the case,
failed to observe due diligence expected of them in the discharge of their functions, and for
intentionally distorting the truth in the procurement documents that shows their lack of interest
and disposition to cheat to the serious damage of the government and the public in general.

G.R. No. 227113

RHONA JOY L. ARAGONES, Petitioner vs. DEPARTMENT OF SOCIAL WELFARE AND

DEVELOPMENT AND CIVIL SERVICE COMMISSION, Respondents

The Facts

From December 15-18, 2010, the DSWD-Cordillera Administrative Region (DSWD-CAR)

conducted its Regional Management Committee (RMANCOM), Regional Management
Development Conference (RMDC), Regional General Assembly (RGA), and Christmas Party at
the Thunderbird Pilipinas Hotel and Resorts, Inc. (Thunderbird Hotel). By email dated December
28, 2010, however, DSWD-CAR-Field Office employees reported irregularities which allegedly
attended the lease of Thunderbird Hotel for that celebration. Acting thereon, then DSWD
Secretary Juliano-Soliman issued Special Order No. 133, s. 2011, creating a Fact-Finding Task
Force to investigate the allegations.
 The investigation revealed that on December 11, 2010, Aragones, in her capacity as
Secretariat Head of the Bids and Awards Committee (BAC), DSWD-CAR-FO assumed the
obligation to canvass for a venue for the RMANCOM, RMDC, RGA, and Christmas Party to be
attended by 210 expected participants. The Approved Budget for the Contract was
P317,000.00. She visited Thunderbird Hotel and was informed that it only had 36 available
rooms which could only accommodate 144 guests. On December 13, 2010, Aragones reported
to Director Porfiria M. Bernardez, the BAC members, and Accountant Rina Claire Reyes that
Thunderbird Hotel could not accommodate the 210 participants. On December 15, 2010, the
BAC opened the procurement of a lease contract for board and lodging for the 210 expected
participants during the agency's activities, albeit the procurement was never posted on the
PhilGEPS website. Despite its lack of capacity to hold the event, Thunderbird Hotel submitted
its quotation for 210 participants.

Meanwhile, Aragones instructed Thunderbird Hotel to produce two (2) more quotations
from other establishments to make it appear there were three (3) price quotations obtained.
Thunderbird Hotel emerged as the lowest bidder. Without conducting post-evaluation to confirm
the veracity of the information submitted by Thunderbird Hotel, it was awarded the lease
contract.

Issue

Whether or not Aragones is guilty for simulating a public bidding?

Ruling of the Court

The Court finds that Aragones is guilty of Grave Misconduct and Serious Dishonesty for
causing the simulation of a public bidding, making it appear that there was actual competition
when there was none, and violating established procurement rules and regulations to unduly
favor Thunderbird Hotel. Section 5.6 of GPPB Resolution No. 08-09 mandates the procuring
entity to validate the prospective lessor's capability to meet the technical specifications in lieu of
requiring the latter to submit eligibility documents, thus:

5.6. Eligibility documents need not be submitted by prospective Lessors. The procuring
entity must nevertheless validate whether the Lessor to be awarded the contract is
technically, legally and financially capable through other means.

The procuring entity must therefore exercise due diligence in verifying the prospective
lessor's capability through ocular inspection:

7.3. The venue being offered by the Lessor with the LCB shall then be rated in
accordance with the technical specifications prepared pursuant to Appendix C.
Compliance rating with technical specifications may be conducted through ocular
inspection, interviews, or other forms of due diligence.

One of the technical specifications stated in the lease contract is that the venue must be
able to accommodate 210 individuals for the DSWD-CAR-FO events lined up for December 15-
18, 2010. As it was, however, Aragones was well aware as early as December 11, 2010 that
Thunderbird Hotel only had 36 rooms available and could only accommodate 144 guests.
Clearly, Thunderbird Hotel was ineligible to bid for the lease contract with the DSWD-CAR-FO.
The canvassers would have discovered Thunderbird Hotel's apparent ineligibility had they
performed an actual inspection of the venue. But Aragones induced and influenced the
canvassers to sign the RFQs to make it appear that the latter exerted due diligence to validate
whether Thunderbird Hotel met the technical specifications of the lease contract when in reality,
the canvassers did not.

G.R. No. 223762, November 07, 2017

TOMAS N. JOSON III, Petitioner, vs. COMMISSION ON AUDIT, Respondent.

The Facts

In 2007, a Special Audit Team (SAT) of the COA conducted a special audit of selected
transactions of the Provincial Government of Nueva Ecija for calendar years 2004-2007. The
SAT found an irregular award made by the province for the construction of the Nueva Ecija
Friendship Hotel to A.V.T. Construction. Thereafter, the SAT issued Notice of Disallowance ND
No. L-09-05-005 (2004- 2007) disallowing the payments made to A.V.T. Construction. The SAT
found the members of the Bids and Awards Committee (BAC), the BAC Technical Working
Group (TWG), the provincial accountant, the provincial engineer and herein Joson III, in his
capacity as provincial governor of Nueva Ecija and as head of the procuring entity, solidarily
liable for the disallowed amount. Joson III was held solidarily liable for entering into the contract
with A.V.T. Construction and for approving the payment vouchers to the latter. The payments to
A.V.T. Construction was disallowed by COA for the reason that the prequalification or eligibility
checklist using the "pass/fail" criteria, the Net Financial Contracting Capacity (NFCC), and
Technical Eligibility documents are missing.

Issue

Whether or not Public officials should not be held liable for signing contracts that have
been approved by bids and awards committees (BACs)

Ruling of the Court

Joson III awarded the contract to A.V.T. Construction and signed the same in behalf of
the local government of Nueva Ecija. Under R.A. No. 9184, the determination of whether a
prospective bidder is eligible or not falls on the BAC. The BAC sets out to determine the
eligibility of the prospective bidders based on their compliance with the eligibility requirements
set forth in the Invitation to Bid and their submission of the legal, technical and financial
documents required under Sec. 23.6, Rule VIII of the Implementing Rules and Regulations of
R.A. No. 9184. Thus, the presence of the eligibility checklist, the NFCC and the technical
eligibility documents are the obligations and duties of the BAC. The absence of such documents
is the direct responsibility of the BAC. Joson III had no hand in the preparation of the same. He
cannot therefore be held liable for its absence. Yet, the COA held Joson liable because of his
award of the contract to A.V.T. Construction. The COA relied on Escara v. People, where this
Court held that the doctrine in Arias vs. Sandiganbayan is unavailing due to Escara's
foreknowledge of an infirmity in the contract.

In this case, we hold that Joson can invoke the protective mantle of the doctrine laid
down in Arias. The COA merely presumed Joson 's foreknowledge of the infirmity of the contract
on the latter's signature. In the present case, other than the mere signature of Joson, no other
evidence was presented by the COA to show that Joson had actual prior knowledge of the
ineligibility of A.V.T. Construction. Nothing appears on record that would prompt Joson III to
thoroughly review and go over every document submitted by A.V.T. Construction, considering
that they were already evaluated and scrutinized by the BAC.

The COA further held that Joson III failed to exercise due diligence because under
Section 37.2.3 of the Implementing Rules of R.A. No. 9184, the eligibility requirements are part
of the contract. In failing to examine the supporting documents of the contract before he signed
the same, Joson can be held equally liable with the BAC. However, the said provision does not
provide that the head of the procuring entity, in this case, \Governor Joson III, must ensure that
each of the above-mentioned documents should be present in the contract before he signs the
same on behalf of the local government of Nueva Ecija. What the provision merely provides is
that the said documents form part of the contract. The said provision does not mention any
direct responsibility on the part of the head of the procuring entity to ensure that the said
documents are attached in the contract before signing the same. In fact, in Section 37.2.4 of the
IRR, there is no mention of eligibility documents to facilitate the approval of the contract by the
head of the procuring entity.

Assuming that Joson III committed a mistake in not ensuring that the eligibility
documents were attached to the contract, it is settled that mistakes committed by a public officer
are not actionable absent any clear showing that they were motivated by malice or gross
negligence amounting to bad faith. In this case, there is no showing that to ensure that the
eligibility documents of A.V.T. Construction were not attached to the contract. In fact, there was
even no evidence that Joson III was aware that A.V.T. Construction was ineligible due to the
absence of the pre-qualification or eligibility checklist using the "pass/fail" criteria, the NFCC and
the Technical eligibility documents. Good faith is always presumed. Here, sthe COA failed to
overcome the presumption of good faith. Further, it would be unjust to let Joson III shoulder the
disallowed amount not only because Joson was not the one directly responsible for the absence
of the eligibility documents of A.V.T. Construction, but also because the government had
already received and accepted benefits from the utilization of the hotel specially when there is
no showing that Joson III was ill-motivated or that he had personally profited from the
transaction.

G.R. No. 228812 June 17, 2020

OFFICE OF THE OMBUDSMAN, Petitioner vs. CAESAR SINGSON, VICTORIA PETEL, AND
CARLITO CABUNOT, Respondents

G.R. NO. 228798

JONATHAN M. FLOIRENDO, Petitioner vs. CAESAR SINGSON, VICTORIAL PETEL, AND

CARLITO CABUNOT, Respondents

Resolution

After a judicious study of the case, the Court resolves to DENY the instant consolidated
petitions and AFFIRM the June 13, 2016 Decision and the December 28, 2016 Resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 141388 for failure of Office of the Ombudsman and
Jonathan M. Floirendo to sufficiently show that the CA committed any reversible error in
declaring that:

(a) the condonation doctrine applies to Caesar C. Singson; and

(b) Singson, Carlito Cabunot, and Victoria Petel are not administratively liable for Misconduct.

As correctly ruled by the CA, the condonation doctrine may be applied to Singson
notwithstanding the fact that he was elected to a different position — from Barangay Kagawad
to Barangay Chairman — considering that he was elected by the same electorate and
constituency, i.e., Barangay 480, Zone 47, District IV of the City of Manila. Case law provides
that 'the [condonation] doctrine can be applied to a public officer who was elected to a different
position provided that it is shown that the body politic electing the person to another office is the
same. It is not necessary for the official to have been re-elected to exactly the same position;
what is material is that he was re-elected by the same electorate.

Moreover, the CA correctly held that Singson, Petel and Cabunot acts in connection with
the purchase of the 18 sacks of rice cannot be considered as Misconduct, as the emergency
nature of the circumstances, i.e., the fact that the entire City of Manila was placed under a State
of Calamity due to heavy floods and that the donation was intended to benefit the flood victims,
and the procurement thereof was approved by the Sangguniang Pambarangay, justified the
abbreviated procurement process. Verily, the foregoing circumstances excused their resort to
the alternative procurement method of Negotiated Procurement in emergency cases, i.e.,
imminent danger to life or property during a state of calamity, or where 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, by directly negotiating a contract with
a qualified supplier. On this note, jurisprudence instructs that negotiated procurement under
Section 53 (b) of RA 9184 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, as in this case.

G.R. No. 167219 February 8, 2011

RUBEN REYNA and LLOYD SORIA, Petitioners, vs. COMMISSION ON AUDIT, Respondent.

The Facts

The Land Bank of the Philippines (Land Bank) was engaged in a cattle-financing
program wherein loans were granted to various cooperatives. Cooperatives who wish to avail of
a loan under the program must fill up a Credit Facility Proposal (CFP) which will be reviewed by
the Ipil Branch. One of the conditions stipulated in the CFP is that prior to the release of the
loan, a Memorandum of Agreement (MOA) between the supplier of the cattle, Remad Livestock
Corporation (REMAD), and the cooperative, shall have been signed. The MOA shall further
provide for a buy-back agreement, technology, transfer, provisions for biologics requirement and
technical visits and replacement of sterile, unproductive stocks.
 The Ipil Branch granted six loans to four cooperative borrowers. Three checks were
issued by the Ipil Branch to REMAD to serve as advanced payment for the cattle. REMAD,
however, failed to supply the cattle on the dates agreed upon. Ruben Reyna and Lloyd Soria,
the Senior Field Operations Specialist and Loans and Credit Analyst II respectively, were also
made respondents in a Complaint filed by the COA Regional Office No. IX, Zamboanga City,
before the Office of the Ombudsman for Gross Negligence, Violation of Reasonable Office
Rules and Regulations, Conduct Prejudicial to the Interest of the Bank and Giving Unwarranted
Benefits to persons, causing undue injury in violation of Section 3(e) of Republic Act (R.A.) No.
3019, otherwise known as the Anti-Graft and Corrupt Practices Act.

Issue

Whether or not the Reyna and Soria are liable?

Ruling of the Court

Yes. The Court affirmed the liability of the public officers therein, notwithstanding their
proffered claims of good faith, since their actions violated an explicit rule in the Landbank of the
Philippines' Manual on Lending Operations.

Reyna and Soria cannot rely on their supposed observance of the procedure outlined in
the Manual on Lending Operations when clearly the same provides that "payment to the dealer
shall be made after presentation of reimbursement documents (delivery/official
receipts/purchase orders) acknowledged by the authorized LBP representative that the same
has been delivered."

Reyna and Soria have not made a case to dispute the COA's finding that they violated
the foregoing provision. Any presumption, therefore, that public officials are in the regular
performance of their public functions must necessarily fail in the presence of an explicit rule that
was violated.

There is no grave abuse of discretion on the part of the COA as Reyna and Soria were
given all the opportunity to argue their case and present any supporting evidence with the COA
Regional Director. Moreover, it bears to point out that even if Reyna and Soria’s period to
appeal had already lapsed, the COA Commission Proper even resolved their August 10, 1999
letter where they raised in issue the favorable ruling of the Ombudsman.
G.R. No. 149633 November 30, 2006

EXECUTIVE DIRECTOR GABRIEL S. CASAL, ACTING DIRECTOR CECILIO SALCEDO

AND LUZVIMINDA B. HERRERA, in her personal capacity and in representation of the
rank-and-file employees of the National Museum as President of the National Museum
Rank-and-File Employees Association (NMRFEA), Petitioners, vs. THE COMMISSION ON
AUDIT, Respondents.

The Facts

In December 1993, the National Museum granted an incentive award to its officials and
employees in the amount of ₱4,000 each, or a total of ₱1,162,333.35, pursuant to Provision No.
8 of its Employees Suggestions and Incentive Awards System (ESIAS)1 approved by the Civil
Service Commission (CSC) on December 21, 1992. Resident Auditor Dorado thus disallowed
the incentive award through Notice of Disallowance No. 94-02-101 P(93) dated July 19, 1994 for
being violative of Section 7 of A.O. No. 268 and Section 2 of A.O. No. 29 and also for lack of the
requisite authorization from the DBM pursuant to P.D. No. 1177 Section 55. Named in the
Notice of Disallowance as "liable" to reimburse were Gabriel S. Casal, Cecilio Salcedo, Mrs.
Alma Cabrera, and Mrs. Corbina Vergara, for their respective roles in the approval and release
of the 1993 Incentive Award,5 and all National Museum employees who received the award.

Issue

Whether or not the COA erred in ordering the officials and employees of the National
Museum to refund the incentive awards or bonuses even in the absence of bad faith or malice
on the part of the Museum’s workforce?

Ruling of the Court

The Court sustained the liability of certain officers of the National Museum who again,
notwithstanding their good faith participated in approving and authorizing the incentive award
granted to its officials and employees in violation of Administrative Order No. 268 and 29 which
prohibit the grant of productivity incentive benefits or other allowances of similar nature unless
authorized by the Office of the President. The Court held that, even if the grant of the incentive
award was not for a dishonest purpose, the patent disregard of the issuances of the President
and the directives of the CoA amounts to gross negligence, making the["approving officers"
liable for the refund of the disallowed incentive award.

The failure of approving officers to observe all these issuances cannot be deemed a
mere lapse consistent with the presumption of good faith. Rather, even if the grant of the
incentive award were not for a dishonest purpose as they claimed, the patent disregard of the
issuances of the President and the directives of the COA amounts to gross negligence, making
them liable for the refund thereof. The following ruling in National Electrification Administration v.
COA bears repeating:

Executive officials who are subordinate to the President should not trifle with the
President’s constitutional power of control over the executive branch. There is only one Chief
Executive who directs and controls the entire executive branch, and all other executive officials
must implement in good faith his directives and orders. This is necessary to provide order,
efficiency and coherence in carrying out the plans, policies and programs of the executive
branch.

This case would not have arisen had NEA complied in good faith with the directives and
orders of the President in implementation of the last phase of the Salary Standardization Law II.
The directives and orders are clearly and manifestly in accordance with all relevant laws. The
reasons advanced by NEA in disregarding the President’s directives and orders are patently
flimsy, even ill-conceived. This cannot be countenanced as it will result in chaos and disorder in
the executive branch to the detriment of public service.

As to the employees who received the incentive award without participating in the
approval thereof, it cannot be said that they were either in bad faith or grossly negligent in so
doing. The imprimatur given by the approving officers on such award certainly tended to give it a
color of legality from the perspective of these employees. Being in good faith, they cannot be
compelled to refund the benefits already granted to them.

G.R. No. 230566, January 22, 2019

SUBIC BAY METROPOLITAN AUTHORITY, ET AL., Petitioners, v. COMMISSION ON

AUDIT, Respondent.

The Facts

The 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 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 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. After the delivery and acceptance of the uniforms, the winning contractors were
paid out of the trust fund created for the uniforms.

On March 26, 2012, the Special Audit Team of the SBMA issued Special Audit Notice of
Disallowance (ND) against several SBMA officers, department heads and suppliers regarding
the procurement of special and field uniforms of the SBMA employees because several
requirements of R.A. No. 9184 and its Implementing Rules and Regulations (IRR) were violated,
to wit:

The uniform requirements of the departments were not included in the 2010 and 2011 Annual
Procurement Plans (APP).

Management failed to post the procurement and the results of bidding and related
information in the PhilGEPs bulletin board.

The procurement process in each department was not conducted by a duly created Bids and
Awards Committee.

Uniforms were procured through negotiated procurement without adhering to the set criteria,
terms and conditions for the use of Alternative Methods of Procurement.

Aggrieved, SBMA and its officers filed an appeal before the COA-Region III to
which the COA-Region III denied the appeal. Thereafter, SBMA and its officers filed a
petition for review before the COA. The COA dismissed the petition because it was
filed out of time. The case was then elevated to the Supreme Court.

Issue

Whether or not negotiated procurement made by SBMA and its officers is proper?

Ruling of the Court

Alternative methods of procurement 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.

The Court finds that SBMA and its officers failed to comply with the requisites of a
negotiated procurement under the rules. They failed to prove that the existence of the
circumstances under Section 53(b), IRR of R.A. No. 9184 are present to justify the negotiated
procurement of specialized and field uniforms of SBMA employees. Verily, there is no existing
calamity or other cause where immediate action is necessary. SBMA and its officers simply
undertook the procurement of the uniforms because they were unsatisfied with the products of
the previous supplier. Their previous experience regarding the poor quality of the uniforms
provided by the winning bidder is not a valid and legal ground to disregard and set aside the
provisions of the law and its rules in the subsequent procurement of uniform.

However, the Court finds that SBMA and its officers exercised good faith. SBMA and its
officers 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. Notably, SBMA and its officers resorted to their chosen procurement method for the
benefit of its employees that is to ensure that they will receive the uniform with superior quality
based on the budget provided by the government. While there may be irregular expenditure
because SBMA and its officers 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.

[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.

The Facts

Public Estates Authority (PEA) 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 a subdivision in Cavite City. The contract was effective 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”.

A pre-bid conference was held and on April 10, 1991 and the bids were opened. The
report recommended that Masada Security which proffered the third highest bid be considered
the winning bidder because 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.

PEA awarded the contract to Masada Security effective September 1, 1991 up to April
30, 1993. Bolinao Security refused to turn over the PEA properties 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 (PD) No. 1919.

Bolinao Security filed with the Regional Trial Court of Makati a complaint for annulment
of bid award, among others, against PEA, and Masada Security. The trial court issued a writ
prohibiting PEA from terminating the contract with Bolinao Security covering PEA's Cavite City
property. The Court of Appeals affirmed the decision of the trial court, thus PEA appealed the
case to the Supreme Court.

Issues

Whether or not Bolinao Security is a qualified bidder, despite its non-compliance with the
bidding requirements?

Whether or not the stipulation "right to reject any or all bids" in the Invitation to Bid valid?

Ruling of the Court

No, Bolinao Security is not a qualified bidder.

Its license to operate was to expire on March 31, 1991, and issued only a renewed license 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 Terms of Reference.

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.

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.

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 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.

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. RUBY P.
LAGOC, Petitioner,

The Facts

Malaga filed a Complaint-Affidavit before the Office of the Ombudsman against Lagoc
Agustino, Tingson, Soldevilla, Sales, Gustilo, Gardose, Guadalupe and Pagal.
 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, 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 were prepared with prior
knowledge that the award will go to IBC;

(3) 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;

(4) 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; and

(5) 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 she merely acted as provisional BAC
member. 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 under Republic
Act (RA) No. 876,) 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 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.

The Ombudsman found substantial evidence of Grave Misconduct against Tingson,

Sales, Gardose and Lagoc. On the other hand, the complaint against Agustino, Soldevilla and
Gustilo were recommended to be dismissed for lack of sufficient evidence. Lagoc, Tingson,
Sales and Gardose appealed to the Court of Appeals (CA) which affirmed the Ombudsman's
findings of fact and conclusions. The CA held that they committed grave misconduct when they
conducted the bid process of and awarded the subject contracts without compliance with the
mandatory twin-publication requirement.

Issue

Whether the Ombudsman correctly concluded that Tingson, Sales, Gardose and Lagoc
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.

In this case, the Ombudsman found discrepancies in the evidence presented by the
Malaga and Tingson, Sales, Gardose and Lagoc to prove compliance with the publication
requirement. They submitted mere photocopies of the issues of The Visayan Tribune and The
Visayas Examiner added credence to the Ombudsman's conclusion that they were covering up
for their omission as the invitation to bid for the materials and equipment was actually never
published.

We find in this case clear and convincing evidence that colluded in the rigging of the
bidding process to favor IBC, the winning bidder. Tingson, Sales, Gardose and Lagoc 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. 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. Indeed, the affixing of signatures by the
committee members are proofs of authenticity and marks of regularity.

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.

G.R. NO. 139984. March 31, 2005

LEOPOLDO OANI, Petitioners, v. PEOPLE OF THE PHILIPPINES, Respondents.

The Facts

The Department of Education Culture and Sports (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 the alleged overpricing of 12
fire extinguishers for P15,000.00 each. The Regional Office of the Commission on Audit (COA)
issued Assignment Order to a team of auditors. The team discovered that, Oani had approved a
Requisition and Issue Slip for the acquisition of 15 units of fire extinguishers for the use of the
high school as mandated by Presidential Decree No. 1185. 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 recommended the filing of administrative and criminal complaints for
violations of Republic Act (RA) No. 3019 against Oani and Roa, which eventually were filed in
the Sandiganbayan. The Sandiganbayan promulgated a decision acquitting Roa, but convicting
Oani of the crimes charged. Oani 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
COA Circular No. 78-84 is present. Thus, he is liable for violation of Section 3(e) of RA 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.

None of the foregoing conditions existed when the Oani purchased the fire extinguishers
on a negotiated basis from Powerline.

Oani 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 sub-dealer had been designated
to sell the said product at a lower price. Oani 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.

Oani failed to present proof that "no suitable substitute can be obtained elsewhere at
more advantageous terms to the government,” 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."

In the present case, Oani 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.

G.R. No. 213500

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 vs. PS/SUPT. RAINIER A. ESPINA,
Respondent

The Facts
 The Fact-Finding Investigation Bureau of the Office of the Deputy Ombudsman filed
before the Ombudsman an affidavit-complaint and a supplemental complaint 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), arising from
alleged anomalies that attended the PNP procurement of 40 tires, and repair, refurbishment,
repowering, and maintenance services of a total of 28 units of V-150 Light Armored Vehicles.

It averred that the PNP did not comply with the bidding procedure prescribed under RA
No. 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 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. 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 he pointed out that 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.

The Ombudsman also found them guilty of Grave Misconduct and Serious Dishonesty
and recommended their dismissal from government service. Aggrieved, Espina elevated the
case to the Court of Appeals (CA). The CA found Espina guilty, instead, of Simple
Misconduct. The case was raised to the Supreme Court.

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.

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.
 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.

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. Espina admitted that the property inspectors who were
tasked to personally inspect deliveries to the PNP was under his management and
stewardship.

Here, 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, it was incumbent upon Espinal to affix his signature only after checking the
completeness and propriety of the documents.

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. 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 and without regard to his accountability for the hundreds of millions
in taxpayers' money involved.