G.R. No. 115221 March 17, 2000

JULIUS G. FROILAN, petitioner, vs. THE HONORABLE SANDIGANBAYAN, respondent.

Once again, the issue of whether or not the constitutional right of an accused to be presumed innocent has been overcome so as to warrant a judgment of conviction confronts this Court.

On a petition for certiorari, petitioner, Julius Froilan, has challenged the judgment of conviction of respondent court finding him as well as three (3) other co-accused guilty of the crime of violation of Section 3(g) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt practices Act, for being contrary to law and jurisprudence.

The facts of the case as found by the Sandiganbayan and quoted both by petitioner and the Office of the Solicitor General in their respective pleadings filed before us are quoted verbatim, to wit:

Needing chemicals for its laboratory, the Bohol Agricultural College, a government educational institution in Bilar, Bohol, purchased on June 13, 1984, chemicals priced at P10,633.00 from the JDS Traders, a business firm in Tagbilaran City. As required in the procurement of government supplies, an RIV (Requisition and Issue Voucher) was prepared on May 30, 1984 by Benigno V. Mandin, Supply Officer, and approved by Mateo M. Limbago, Superintendent of the school (Exhibit A). It would appear that requests for price quotations were sent out to and filled out by three suppliers, namely: Farmacia Libertad, Tower View General Merchandise and JDS Traders, all of Tagbilaran City (Exhibits B, C and D). On the basis of the quotations submitted by these suppliers, an abstract of canvass (Exhibit E) was prepared by Supply Officer Benigno Mandin, and recommended for approval by a Committee on Award, composed of Sergio L. Salubre, Rutillo G. Real and Victorio S. Pabe. The award was in favor of JDS Traders which supposedly submitted the lowest quotation of P10,633.00, broken down as follows:

Qty.

Unit

Name of Article

Unit Price

Amount

1 gal. Ether Solution AR P1,455.00/gal. P1,455.00

1 gal. Carbon Tetra-Chloride AR

1,55.00/gal. 1550.00

1 Kilo Glucose Powder AR 1,420.00/kilo 1,420.00

1 lit. Nitric Acid AR 1,320.00/lit. 1,320.00

1 lit. Hydrochloric Acid AR 1,358.00/lit. 1,358.00

1 kilo Sodium Hydroxide AR 1,380.00/kilo 1,380.00

1 lit. Sodium Chloride AR 1,425.00/lit. 1,425.00

1 lit. Acetone AR 725.00/lit 725.00

Total

P10,633.00

On June 13, 1984, Purchase Order No. 84-61 was approved by accused Mateo M. Limbago. The purchase order, however, appears to have been received by accused Julius Froilan, the supplier, on June 11, 1984 or two days earlier. Froilan signed a certification stamped on the purchase order, stating that he will refund the difference if the prices are found to be overpriced.

It was Josef Enerio who operated JDS Traders; accused Froilan merely acted as an agent and used its receipts in the transaction. Thus, on June 14, 1984, accused Froilan issued JDS Traders Sales Invoice No. 057 in the total amount of P10,633.00. On the same date, Anastacio Macalolot, acting as authorized representative of the Bohol Agricultural College, accepted the articles described in Invoice No. 057 (Exhibit H). The corresponding Request for Obligation of Allotment (ROA) for sum of P10,633.00 was then prepared by accountant Wenceslao Guimadan and approved by accused Mateo M. Limbago (Exhibit I). On June 22, 1984, the corresponding disbursement voucher (Exhibit J) was processed and approved. Finally, on June 26, 1984, accused Froilan received payment and issued an Official Receipt for P10,633.00 under the business name of JDS Traders (Exhibit K).

Almost three years later, on March 24, 1987, Lebe C. Siono, Auditor I of the Commission on Audit, acting on a complaint made by unspecified concerned parties, wrote a letter (Exhibit N) to the COA Price Monitoring Division (PMD), Central Office, Quezon City, requesting for confirmation of the prices of various chemicals delivered to the Bohol Agricultural College covered by the said Purchase Oorder No. 84-61. Director Jose F. Mabanta of the COA Technical Services Office wrote a reply on May 15, 1987, stating that based on actual canvass made in the open market and verification from purchase documents or other government agencies with similar purchases, the prices in Metro Manila for the articles in question as compared to the quoted prices thereof, were as follows:

Item/Description

Quoted Price (as of 6-13-84) Price

Price Findings

Date

1 gal. Ether solution AR P1,455.00/gal P2,007.70/20 lit. or 401.5/gal.

(12/86)

1 gal. Carbon Tetrachloride AR

1,550.00/gal. 110.00/lit. or 440.00/gal. (1/86)

1 kilo Glucose Powder AR 1,420.00/kilo 22.00/kilo (4/87)

1 lit. Nitric Acid AR 1,320.00/lit. 380.00/2.5 lit. or 152.00/lit.

( /87)

1 lit. Hydrochloric Acid AR 1,358.00/lit. 313.60/lit. or 52.27/lit. Baker

(10/86)

1 kilo Sodium Hydroxide AR

1,380.00/kilo 190.00/kilo (1/87)

1 lit. Sodium Chloride AR 1,425.00/lit. 190.00/kilo (1/87)

1 lit. Acetone AR 725.00/lit. 380.00/4 lit. or 95.00/lit. (5/86)

(Exhibit P)

Using the above-quoted prices, State Auditor Lebe C. Siono Submitted to the Director of the COA Technical Services Office, a formula for computing the refund of the overprice by the dealer in the total amount of P5,233.17, which was arrived at as follows:

Article Description Qty. Unit

Quoted Unit Price

PMD Findings per Unit

Action taken by Auditor Unit Price allowed in Audit

Ether Solution AR 1 gal. P1,455/gal. P401.54 (P1,003.85)

Carbon Tetrachloride AR 1 gal. 1,550/gal. 440.00 ( 1,100.00)

Glucose Powder AR 1 kilo 1,420/kilo 22.00 ( 55.00)

Nitric Acid AR 1 liter 1,320/ltr 152.00 ( 380.00)

Hydrochloric Acid AR 1 liter 1,358/ltr 52.27 ( 130.67)

Sodium Hydroxide AR 1 kilo 1,380/kilo 190.00 ( 475.00)

Sodium Chloride AR 1 liter 1,425/ltr. 190.00 ( 475.00)

Acetone AR 1 liter 725/ltr. 95.00 ( 237.50)

P10,633.00

P1,542.81

P3,857.02

Add: 100% Allowance for price fluctuations from 1984-87

P1,542.81

Provincial delivery 50% 771.41

Total allowable price in audit P3,857.02 ==========

Total original purchase price P10,633.00

Less: Quoted PMD price findings 1,542.81

Total overprice 9,090.19

Less allowable price 3,857.02

Net overprice P5,233.17 =========

(Exhibit Q-1)

On June 17, 1987, Auditor Siono wrote a letter addressed to JDS Traders, accused Limbago, Salubre, Real and Pabe informing them of the disallowance of P5,232.87 and demanding the settlement thereof (Exhibit 15). On February 17, 1988, accused Froilan refunded the full amount of P5,232.87, as evidenced by Official Receipt No. 1683654-L (Exhibit 16-Froilan), the certification dated February 19, 1988 issued by Disbursing Officer Ranulfo Opus (Exhibit 17-Froilan), and the certification dated September 22, 1988 issued by Auditor Lebe Siono (Exhibit 18-Froilan). This notwithstanding, an Information for the violation of Sec. 3 (g) of Republic Act No. 3019 was filed against all the herein accused. 1

The Sandiganbayan found petitioner together with the three (3) other co-accused guilty of the crime as charged. The dispositive portion of the judgment of conviction is quoted hereunder:

WHEREFORE, judgment is hereby rendered, finding accused SERGIO SALUBRE, RUTILLO REAL, VICTORIO PABE AND JULIUS FROILAN, GUILTY beyond reasonable doubt in the Violation of Sec. 3 (g) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, for which they are hereby sentenced to each suffer the indeterminate penalty of Six (6) Years and One (1) Month as the minimum, to Nine (9) Years as the maximum; to each suffer perpetual disqualification from public office, to jointly and severally indemnify the government in the additional amount of P1,542.81; and, to pay their proportionate share of the costs of the action.

Accused MATEO M. LIMBAGO and JOSEF ENERIO are hereby ACQUITTED for insufficient evidence; accordingly, the bail bond posted by Mateo M. Limbago and the property bond filed by Josef Enerio for their respective provisional liberty are hereby ordered cancelled.

SO ORDERED. 2

Petitioner filed this petition for certiorari assailing the said decision on the following assignment of errors:

I

THE HONORABLE SANDIGANBAYAN ERRED IN FINDING PETITIONER, A PRIVATE INDIVIDUAL, GUILTY OF VIOLATING SECTION 3 (g) OF RA 3019.

II

THE HONORABLE SANDIGANBAYAN ERRED IN GIVING CREDENCE TO THE PROSECUTION'S WITNESS, MS. BELMONTE AND IN RULING THAT PETITIONER WAS GUILTY OF OVERPRICING THE CHEMICALS HE SUPPLIED TO THE BOHOL AGRICULTURAL COLLEGE.

III

THE HONORABLE SANDIGANBAYAN ERRED IN FINDING THAT THERE WAS A CONSPIRACY AMONG PETITIONER AND HIS OTHER CO-ACCUSED.

IV

THE HONORABLE SANDIGANBAYAN ERRED IN NOT FINDING THAT THE GOVERNMENT WAS AMPLY PROTECTED IN THE TRANSACTION BETWEEN PETITIONER AND THE BOHOL AGRICULTURAL COLLEGE. 3

Meanwhile, the other accused, Sergio L. Salubre, Rutillo Real and Victorio S. Pabe also filed a petition forcertiorari with this Court. 4 Said petition was denied on August 31, 1994 for failure to comply with the requirements of Supreme Court Revised Circular No. 1-88. Said accused filed a motion for reconsideration which was denied with finality on October 19, 1994. Unfated, they filed a motion for leave to file second motion for reconsideration. This, again, was denied by this Court in a Resolution dated February 1, 1995. Another motion for reconsideration was filed which was likewise denied on April 3, 1995. In an apparent attempt to revive their petition, the said accused moved to consolidate G.R. No. 115977 with this petition, but their motion was denied on May 29, 1995. Subsequent motions for reconsideration and relief from judgment filed by the three accused were all denied by this Court considering that judgment had already been entered in the Book of Entries of Judgments.

On November 22, 1995, accused Salubre, Real and Pabe filed with this Court a petition for habeas corpus, 5praying for their immediate release from commitment. This petition was consolidated with G.R. No. 115977 and the instant case. On February 7, 1996, this Court denied the petition for habeas corpus upon a finding that their commitment was a necessary consequence of the finality of the judgment of their conviction by the Sandiganbayan in Criminal Case No. 12881. Petitioners' motion for reconsideration was denied on June 26, 1996.

Going back to the instant petition for certiorari, we rule in favor of petitioner.

Petitioner strongly argues that there was no reason for him to be convicted of the offense charged because he was the one who gave the guarantee to the government that in case there would be a finding of an overprice by the Commission on Audit (COA), he would refund the same. It is undisputed that an actual refund of P5,232.87 was made by petitioner, which was the amount found by the COA to have been the overprice. Further, petitioner contends that if one of his co-accused, Mr. Mateo Limbago, the Superintendent of the Bilar Agricultural College (BAC), was acquitted by the Sandiganbayan on the ground that the government was amply protected by the guarantee given by him, then why should he be convicted when he was the one who gave the very same guarantee that protected the government from any possible injury brought about by the contract he executed with the BAC, the same contract alleged to be grossly and manifestly disadvantageous to the government in the Information?

After carefully reviewing the records of the case, we are constrained to agree with petitioner. The Information filed with the Sandiganbayan charged petitioner and five (5) other accused with the crime of entering into a contract that was alleged to be grossly and manifestly disadvantageous to the government. In this connection, it is axiomatic that in conspiracy the act of one is the act of all. 6 Too, conspiracy is never presumed. Like the physical acts constituting the crime itself, the elements of conspiracy must be proven beyond reasonable doubt. 7

In this case, we are not persuaded with the theory of the prosecution that there was a conspiracy by and among the accused to defraud the government by overpricing the acquisition cost of the goods supplied to the BAC. We find it difficult to imagine how conspiracy in this case could have existed in the criminal act of causing damage to the government in terms of overpricing the goods bought by the latter from petitioner when, in reality, petitioner gave his guarantee to refund whatever overpricing the Commission on Audit will find out later on. In fact, it is not disputed that when the COA found an overprice in the amount of P5,232.87 and sought a refund thereof, petitioner, true to his promise, did actually make a refund.

Significantly, we note that one of petitioner's co-accused in the criminal case below, namely, Mr. Mateo Limbago, the Superintendent of the Bilar Agricultural College, was acquitted by the Sandiganbayan on the ground, among others, that the government after all was amply protected by petitioner in the transaction. The Sandiganbayan held:

. . . With such important things to attend to, it is plausible that accused Limbago really did not bother to read the unit prices of the chemicals being purchased and merely satisfied himself with the assurance that the purchase order was awarded to the supplier who submitted the lowest quotation and that, with the written undertaking of the winning supplier to refund the difference in case of an overprice, the government was amply protected.. . .8

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 — the only entity which the law seeks to protect — was amply protected by virtue of the written undertaking issued by petitioner, as the winning bidder, to refund whatever amount may be found as the overprice. Petitioner, being the one who gave the written guarantee and who saved the government from any perceived injury, must likewise be acquitted.

Likewise, the fact of the government being protected at all times by petitioner assumes another significance insofar as the innocence of petitioner is concerned. It must be remembered that in the crime for which petitioner was charged, i.e., Section 3 (g) of Republic Act No. 3019, 9 the elements are: (a) that the accused is a public officer; (b) that he entered into a contract or transaction on behalf of the government; and (c) that such contract or transaction is grossly and manifestly disadvantageous to the government.

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 petitioner, is absent in this case. Conviction must rest on nothing less than a moral certainty of guilt. 10

In essence, the prosecution has failed to overcome the constitutional presumption of innocence enjoyed by petitioner.1âwphi1 Failure of the prosecution's evidence to overcome the constitutional presumption of innocence entitles the accused to an acquittal. 11

Lastly, in the challenged decision, we note that the Sandiganbayan found the computation of the Commission on Audit erroneous in that, there should still be a payable of P1,541.81 due from petitioner. We have reviewed the records of the case and find no basis to uphold such finding by the Sandiganbayan. Assuming arguendo that there was indeed an error in the computation as declared by the Sandiganbayan, the same cannot be ascribed to petitioner but to the COA, Petitioner cannot be held liable therefor.

WHEREFORE, the petition is GRANTED, The Decision of the Sandiganbayan in Criminal Case No. 12281, insofar as it found petitioner guilty of violation of Section 3 (g)

of Republic Act No. 3019, is REVERSED and SET ASIDE. Consequently, petitioner is ACQUITTED of the crime charged.SO ORDERED.

G.R. No. 126151 January 20, 2000 MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), former SECRETARY JESUS B. GARCIA, in his capacity as the Secretary of the Department of Transportation and Communication (DOTC), and GEN. FRANCISCO E. ATAYDE (RET.), in his capacity as the General Manager of the Ninoy Aquino International Airport, petitioners, vs. HON. SERGIO D. MABUNAY, Presiding Judge, Regional Trial Court of Manila, Branch 24 and LANTING SECURITY AND WATCHMAN AGENCY, respondents.

In their petition for review on certiorari under Rule 45 of the Rules of Court, the Manila International Airport Authority (MIAA), former Secretary Jesus B. Garcia, in his capacity as the Secretary of the Department of Transportation and Communication (DOTC), and Gen. Francisco E. Atayde (Ret.) in his capacity as the General Manager of the Ninoy Aquino International Airport, assail the decision dated August 30, 1996 of respondent Judge Sergio D. Mabunay, Presiding Judge Regional Trial Court of Manila, Branch 24, insofar as it ruled that under the laws and regulations, it is necessary for the Manila International Airport Authority to contract for security services through public bidding. The petitioners claim that the ruling interferes with "the absolute prerogative" of the petitioners to award security services either through negotiated contract or public bidding.1âwphi1.nêt

Private respondent Lanting Security and Watchman Agency ("Lanting" for brevity) is a bonded security agency, which entered into an Agreement with the Manila International Airport Authority to render security services on a month-to-month basis to commence on April 31, 1987 renewable at the sole option of the MIAA. The contract was renewed by MIAA from 1988 to 1995. In 1995, upon the recommendation of the MIAA's former General Manager for the privatization of the Aviation Security Services of MIAA, a subsidiary company, the Philippine Aviation Security Services Corporation (PASSCOR) was formed, and the MIAA Board of Directors approved the award of security services in favor of PASSCOR effective September 1, 1995. Having been informed that PASSCOR would take over the operations and management of the security of the MIAA, and that the security services contract that MIAA entered into with Lanting would be terminated by August 31, 1995, Lanting filed a complaint for injunction, which was docketed as Civil Case No. 95-75048 with the respondent Regional Trial Court of Manila, Branch XXIV, challenging the "highly irregular" awarding by MIAA of the security services contract to PASSCOR without going through public bidding, as being not only contrary to law, but likewise against public policy. The respondent Regional Trial Court issued a writ of preliminary injunction ordering MIAA not to terminate the security services of Lanting and not to award the security contract in favor of PASSCOR.

On August 30, 1996, the parties formulated and submitted a Compromise Agreement, which was approved by the Regional Trial Court and which contained the following terms and conditions:

1. MIAA shall not implement the termination of Lanting's security services by August 31, 1996 and instead shall extend as it hereby extends such services by a period of ten (10) months beginning 01 September 1996 to 30 June 1997. For this purpose, MIAA and Lanting shall execute the necessary Extension Contract.

2. To effect the above extension, MIAA shall allow Lanting to redeploy a total of 274 guards within the NAIA Complex which shall be inclusive of the currently deployed 114 Lanting guards effective not later than midnight of August 28, 1996.

3. Upon execution hereof, MIAA shall be free to engage immediately the services of other security agencies, including that of Philippine Aviation Security Services Corp. (PASSCOR), to meet the security needs at the NAIA Complex, also for a period of ten (10) months beginning 01 September 1996 up to 30 June 1997.

4. Subject to paragraph 6 hereof, Lanting shall withdraw as it hereby withdraws its instant complaint.

5. The parties shall jointly move as they so move and pray for this Honorable Court to lift the writ of preliminary injunction dated September 15, 1995 which it issued in the above-captioned case.

6. Further, the parties shall jointly move as they respectfully move and pray for the Honorable Court to resolve the following residual issues:

6.1 Whether or not the 160 Lanting security guards whose services phased-out effective July 31, 1996 are entitled to back wages for the period during the month of August 1996 when they were not deployed at the NAIA Complex;

6.2 Whether or not MIAA has the option, under existing laws, rules and regulations, to contract security services by negotiation of through public bidding.

7. Finally, MIAA undertakes to effect compliance with the trial court's order on paragraph 6.1 in the event said issue is resolved in favor of payment of the security guard's backwages, within seven (7) days from receipt of said order of the trial court. MIAA may however opt to appeal any adverse resolution on paragraph 6.2 hereof.1

On the issue defined in 6.2 above, which was left to the Court for resolution, the court ruled as follows:

With respect to 6.2 in the Compromise Agreement, the court rules that under the laws and regulations, it is necessary for the defendant to contract for security services through public bidding.

The following grounds are invoked to support the instant petition for certiorari:

PETITIONER MIAA HAS THE OPTION TO RESORT TO NEGOTIATED CONTRACT OR PUBLIC BIDDING.

SECTION 62, CHAPTER 13, BOOK IV OF THE ADMINISTRATIVE CODE OF 1987 HAS NO APPLICATION TO THE CASE AT BAR.2

Petitioners allege that the "only issue to be resolved in this petition refers to the right of MIAA to award security services through negotiated contract or public bidding". Petitioners submit that the option to make such award is addressed to the exclusive and sole discretion of the MIAA, and the awarding of the contract to PASSCOR cannot be branded as highly irregular despite the fact that no public bidding was conducted. The petitioners point out that the Philippines is a signatory to the convention for international civil aviation, and the selection of an airport security agency is of paramount importance involving as it does national security and safety.

Petitioners contend that the applicable law is Section 68 of R.A. 7845, whereunder the government agency concerned has the option to resort to public bidding or negotiated contract wherever it is impractical or more expensive for the government to directly undertake certain functions and operations.

In its Comment, private respondent Lanting alleges that Section 68 of R.A. 7845 does not give government agencies the unqualified discretion to choose by what manner they may contract out services which they themselves cannot directly undertake. Lanting submits that the applicable legal provision is Section 62, referring to public bidding of contracts and the exceptions thereto, is applicable. Since none of the exceptional circumstances provided under Section 62 is present to justify an award by negotiated contract, the award should go through a public bidding. Respondent Lanting also points to Section 417 of the Government Auditing Rules and Regulations of the COA, which lays down the criteria for evaluating offers for security and janitorial services.

The only legal question posed herein is whether the court a quo erred in ruling that under existing laws and regulations the contract for security services should be awarded through public bidding.

We hold that it did not. The petition must perforce be dismissed.

Section 68 of R.A. 7845 which is the General Appropriations Act for 1995, specifically refers to contracts for services related to the functions and operations of the government and its agencies. It reads:

Sec. 68. Service Contracts. — Departments, bureaus, offices or agencies of the National Government are hereby authorized to enter into contracts with other government agencies, private firms or individuals and non-governmental organizations for services related or incidental to their respective functions and operations, through public bidding or negotiated contracts whenever it is impractical or more expensive for the government to directly undertake such functions and operations, subject to pertinent accounting and auditing rules and regulations: PROVIDED, That the execution of the service contracts shall not operate to automatically abolish or render vacant any existing occupied position in the contracting office or agency.

Petitioners' position that the above-quoted section gives the government agency concerned the sole option to resort to public bidding or to negotiated contract whenever it is impractical or more expensive for the government to directly undertake a certain function or operation, is not tenable. There is nothing in said provision which does away with the general requirement of public bidding in the award of government contract. This was the ruling in National Food Authority vs. Court of Appeals,3 involving the award of a contract for security services by the National Food Authority wherein the said government agency relied on Section 31 of Republic Act No. 7645, which is the counterpart provision of Section 78 of Republic Act No. 7845. This Court held:

Petitioners' manifest reluctance to hold a public bidding and award a contract to the winning bidder smacks of favoritism and partiality toward the security agencies to whom it awarded the negotiated contracts and cannot be countenanced. A competitive public bidding aims to protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts.

The General Appropriations Act (GAA) of 1993 cannot be used by petitioners to justify their actuations. An appropriations acts is primarily a special type of legislation whose content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unit. Section 31 on the General Provisions of the GAA of 1993 merely authorizes the heads of departments, bureaus, offices or agencies of the national government to hire, through public bidding or negotiated contracts, contractual personnel to perform specific activities or services related or incidental to their functions. This law specifically authorizes expenditures for the hiring of these personnel. It is not the governing law on the award of the service contracts by government agencies nor does it do away with the general requirement of public bidding.

Indeed, public bidding in government contracts has been observed in this jurisdiction since the time of the Philippine Commission:

Bidding was introduced in the Philippines by the American Laws on Public Bidding until finally Act No. 22 (1900) of the Philippine Commission was enacted

which became the first law on public bidding in this jurisdiction. This was followed by several related Acts such as Act Nos. 74(1901), 82(1901) and 83(1901) culminating in the promulgation by President Quezon on February 3, 1936, of Executive Order No. 16 declaring as a general policy that public bidding must be the means adopted in the purchase of supplies, materials and equipment except on very extraordinary cases and with his prior approval. These Acts and Executive Order as well as the rules and regulations promulgated pertinent thereto were later incorporated in the Administrative Code and in subsequent Public Works Acts, although with slight modifications. Up to the present, this policy and medium still hold both in procurement and construction contracts of the government, and the latest enactment relative thereto is Presidential Decree No. 1594 (1978) and its Implementing Rules and Regulations.4

As early as 1936, then President Quezon declared as a matter of general policy that Government contracts for public service or for furnishing supplies, materials and equipment to the Government should be subjected to public bidding.5 There were a number of amendments,6 the latest of which, Executive Order No. 40 dated June 1, 1963 of President Diosdado Macapagal, reiterated the directive that no government contract for public service or for furnishing supplies, materials and equipments to the government or any of its branches, agencies or instrumentalities, shall be entered into without public bidding except for very extraordinary reasons to be determined by a Committee constituted thereunder. Of more recent date is Executive Order No. 301, S. 1987, issued by President Corazon Aquino, which prescribed the guidelines for decentralization of negotiated contracts. Section 1 of this issuance reiterated the legal requirement of public bidding for the award of contracts for public services and for furnishing supplies, materials and equipment to the government, and expressly specified the exceptions thereto.

By positive provision of the annual General Appropriations Acts7 government offices and agencies are authorized to enter into contracts for services related or incidental to their respective functions and operations, either through public bidding or negotiated contract, whenever it is impractical or more expensive for the government to directly undertake such functions and operation, subject to accounting or auditing rules and regulations. As earlier stated, these provisions are not to be construed as doing away with the general requirement of public bidding. Indeed, public bidding is the accepted method for arriving at a fair and reasonable price and it ensures that overpricing and favoritism, and other anomalous practices are eliminated or minimized8 and we reiterate that Section 68 of the General Appropriations Act has not dispensed with such requirement for contracts for services awarded thereunder. Although the legislature in making appropriations under its exclusive jurisdiction leaves largely to administrative discretion the choice of ways and means to accomplish the object of appropriation, that administrative discretion may not transcend the statutes.9

WHEREFORE, the petition is denied for lack of merit. SO ORDERED.1âwphi1.nêt

[G.R. No. 143684. July 31, 2000]

RODOLFO MADRID, JR., vs. HON. ANIANO A. DESIERTO, et al.

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JUL 31 2000.

G.R. No. 143684 (Rodolfo Madrid, Jr., vs. Hon. Aniano A. Desierto, et al.)

This is a special civil action for certiorari wherein petitioner seeks the nullification of the

Resolution and Order of the Office of the Ombudsman in OMB-1-98-0215, entitled "Albay

Accredited Constructors Association, Inc. vs. Mayor Imelda Roces, et al." which dismissed

petitioner’s complaint and denied his motion for reconsideration, respectively.

This case started when the City Government of Legazpi City, Albay, invited bidders to

participate in the development and construction of the Legazpi City Public Market. Portland

Trade and Realty Corporation, Chanelay Development Corporation and Liberty Commercial

Center (hereinafter, "Liberty") participated in the bidding. After submitting their bid

statements, the bidding committee announced that it was awarding the project to Liberty.

Thus, the city Government of Legazpi, through Mayor Imelda Roces, entered into

renewable 50-year contract of lease with Liberty wherein the latter will construct a public

market on the property of the city government and, thereafter, pay the city government a P5.5

million annual lease for the use of the property. It was also stipulated in the contract that after

the end of the 50-year lease, Liberty will transfer ownership of the public market in favor of the

City Government of Legazpi City.

Claiming the irregularities, amounting to violations of Sec. 3(e), (g) and (j) of Republic Act No.

3019, attended the awarding of the project to Liberty, petitioner filed a complaint on 9January

1998, against respondents before the Office of the Ombudsman. In its resolution, dated 29

November 1999, the Ombudsman discussed each of the seven issues raised by petitioner and

found no probable cause to hold respondents liable for allegedly violating Republic Act No. 019.

Thus, petitioner’s complaint was dismissed. Petitioner filed a motion for reconsideration but

the same was denied in his Order dated 16 March 2000. Undaunted, petitioner filed the instant

special civil action for certiorari.

In dismissing the complaint for lack of probable cause, the Ombudsman stated:

First. On the issue of procedural infirmity due to the lack of approval from the ICC of NEDA

Board as required under R.A. 6957, the respondent public officers have sufficiently established

that the said procedural requirement is not necessary in the subject transaction. The

requirements under R.A. 6957 refer to transaction under the build-operate-transfer scheme of

the government and not to contract involving lease of property just like the one involved in the

instant case.

All the elements of a contract of lease are present in the transaction.

There is a subject matter, the use of the property of the Legazpi City; a cause or

consideration which is the amount of rental that shall be paid by the LCC; and consent among

the parties. The mere provision in the contract that the building shall belong to the city

government of Legazpi at the termination of the contract will not be sufficient to classify the

transaction under the BOT scheme. This kind of provision is ordinary in long-term lease

agreement.

However, even granting that the transaction properly falls under the BOT scheme, We

likewise submit that the mere lack of the required approval from NEDA would not be a cause

for violation of the Anti-Graft and Corrupt Practices Act. If, at all, this defect may be a ground

for the rescission or cancellation of the contract.

Second. The issue that another bidder, Chanelay Corporation, ought to have won the

bidding is mere conjectural. There was no evidence presented to show that the Chanelay

Corporation offered a better bid than the LCC. Moreover, if this allegation has some semblance

of truth, We submit that the Chanelay Corporation would have been the first to complain.

Third. On the issue that the conduct of lease failed to specify the value of the market

that LCC would construct, the approved plans and specifications attached to the contract

negate this charge. In addition, We submit that appropriate measures were resorted by the

ublic respondents to assure that the construction of the market would comply with the

approved plans and specifications by providing under the contract that the City Engineer of

Legazpi shall oversee the construction of the project.

Fourth. On the issue that the government is prejudiced by the option given to LCC to pay

rent on a monthly basis (instead on an annual basis), We find in the negative. Whether the rent

is paid monthly or annually would result in the same thing – the receipt by the government of

the same sum of money. Moreover, We submit that mere reference made in the contract that

the amount of rent shall be such amount annually does not necessarily mean that payment

should be made in an annual basis. On the issue raised on the grant of tax relief, We find that it

is allowed under Ordinance No. 96-016 (Legazpi City Investment Incentive Code of 1996).

Fifth. The issue that the period of lease granted to LCC may be extended indefinitely

without public bidding and the required government approval is belied by the provision

contained in the contract. The contract provides that after the term of the lease, the

government shall have the option to negotiate for its renewal. This provision, which incidentally

is standard in any contract of lease, does not mean that the procedural requirement in the

execution of the contract as well as the limit in the term of the contract shall not be observed in

case the contract is renewed.

Sixth. The issue raised that the LCC has the absolute right to determine and fix

reasonable fees, rentals and charges on the market is misplaced. It is but proper that being the

lessee of the leased premises and the operator of the market, discretion and prerogatives must

be exercised by the LCC in the management of the market.

Seventh. The issue that the LCC did not post any performance bond was adequately

explained by the fact that the city government of Legazpi has failed to completely surrender the

leased premises to the LCC free from any occupant. In effect, the obligation of LCC to proceed

with the construction of the commercial complex and the concomitant obligation to post

performance are conditional upon the fulfillment by the city government of Legazpi of its

obligation to clear the premises from its old market tenants. We find that the non-fulfillment by

the lessor of its obligation has the effect of suspending the obligation of the lessee-LCC.The

prevailing rule is that the court will not interfere with the decision of the Ombudsman in

prosecuting or dismissing a complaint. Only in instances where there is a showing of patent

abuse of discretion will this Court step in and substitute its judgment over that of the

ombudsman. Our review of the very exhaustive pleading of petitioner shows that the decision

of the Office of the Ombudsman must be upheld. Petitioner failed to sufficiently show that any

grave abuse of discretion was committed by the Ombudsman in rendering the challenged

resolution and order which, on the contrary, appear to be in accord with the facts and

applicable law.

IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED.

Very truly yours, VIRGINIA ANCHETA-SORIANO Clerk of Court (Sgd.) ENRIQUETA ESGUERRA-VIDAL Asst. Clerk of Court

G.R. No. 126204 November 20, 2001 NATIONAL POWER CORPORATION, petitioner, vs. PHILIPP BROTHERS OCEANIC, INC., respondent.

Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the fact that damages are thereby suffered by another will not make him liable.1

This principle finds useful application to the present case.

Before us is a petition for review of the Decision2 dated August 27, 1996 of the Court of Appeals affirming in toto the Decision3 dated January 16, 1992 of the Regional Trial Court, Branch 57, Makati City.

The facts are:

On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO) prequalified and was allowed to participate as one of the bidders. After the public bidding was conducted, PHIBRO's bid was accepted. NAPOCOR's acceptance was conveyed in a letter dated July 8, 1987, which was received by PHIBRO on July 15, 1987.The "Bidding Terms and Specifications"4provide for the manner of shipment of coals, thus:

"SECTION V

SHIPMENT

The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk carrier for the shipment of coal to arrive at discharging port on or before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER or its nominee as per Section XIV hereof to meet the vessel arrival schedules at Calaca, Batangas, Philippines as follows:

60,000 +/ - 10 % July 20, 1987

60,000 +/ - 10% September 4, 1987"5

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon plague Australia, the shipment's point of origin, which could seriously hamper PHIBRO's ability to supply the needed coal.6 From July 23 to July 31, 1987, PHIBRO again apprised NAPOCOR of the situation in Australia, particularly informing the latter that the ship owners therein are not willing to load cargo unless a "strike-free" clause is incorporated in the charter party or the contract of carriage.7 In order to hasten the

transfer of coal, PHIBRO proposed to NAPOCOR that they equally share the burden of a "strike-free" clause. NAPOCOR refused.

On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of credit. Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO effected its first shipment only on November 17, 1987.

Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant. PHIBRO participated anew in this subsequent bidding. On November 24, 1987, NAPOCOR disapproved PHIBRO's application for pre-qualification to bid for not meeting the minimum requirements.8 Upon further inquiry, PHIBRO found that the real reason for the disapproval was its purported failure to satisfy NAPOCOR's demand for damages due to the delay in the delivery of the first coal shipment.

This prompted PHIBRO to file an action for damages with application for injunction against NAPOCOR with the Regional Trial Court, Branch 57, Makati City.9 In its complaint, PHIBRO alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in all subsequent biddings was tainted with malice and bad faith. PHIBRO prayed for actual, moral and exemplary damages and attorney's fees.

In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28, 1987 those strikes had already ceased. And, even assuming that the strikes were still ongoing, PHIBRO should have shouldered the burden of a "strike-free" clause because their contract was "C and F Calaca, Batangas, Philippines," meaning, the cost and freight from the point of origin until the point of destination would be for the account of PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBRO's failure to deliver the coal on time, it was compelled to purchase coal from ASEA at a higher price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73, representing the increase in the price of coal, and a claim of P500,000.00 as litigation expenses.10

Thereafter, trial on the merits ensued.

On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said defendant NAPOCOR:

1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future tenders of National Power Corporation for the supply and delivery of imported steam coal;

2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);

a. The peso equivalent at the time of payment of $864,000 as actual damages,

b. The peso equivalent at the time of payment of $100,000 as moral damages;

c. The peso equivalent at the time of payment of $50,000 as exemplary damages;

d. The peso equivalent at the time of payment of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees;

3. To pay the costs of suit;

4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.

SO ORDERED."11

Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of Appeals. On August 27, 1996, the Court of Appeals rendered a Decision affirming in toto the Decision of the Regional Trial Court. It ratiocinated that:

"There is ample evidence to show that although PHIBRO's delivery of the shipment of coal was delayed, the delay was in fact caused by a) Napocor's own delay in opening a workable letter of credit; and b) the strikes which plaqued the Australian coal industry from the first week of July to the third week of September 1987. Strikes are included in the definition of force majeure in Section XVII of the Bidding Terms and Specifications, (supra), so Phibro is not liable for any delay caused thereby.

Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be effected thirty (30) days from Napocor's opening of a confirmed and workable letter of credit. Napocor was only able to do so on August 6, 1987.

By that time, Australia's coal industry was in the middle of a seething controversy and unrest, occasioned by strikes, overtime bans, mine stoppages. The origin, the scope and the effects of this industrial unrest are lucidly described in the uncontroverted testimony of James Archibald, an employee of Phibro and member of the Export Committee of the Australian Coal Association during the time these events transpired.

xxx xxx xxx

The records also attest that Phibro periodically informed Napocor of these developments as early as July 1, 1987, even before the bid was approved. Yet, Napocor did not forthwith open the letter of credit in order to avoid delay which might be caused by the strikes and their after-effects.

"Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines force majeure as "an event which takes place by accident and could not have been foreseen." (Civil Code of the Philippines, Volume IV, Obligations and Contracts, 126, [1991]) He further states:

"Fortuitous events may be produced by two general causes: (1) by Nature, such as earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc."

Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In order that acts of man such as a strike, may constitute fortuitous event, it is necessary that they have the force of an imposition which the debtor could not have resisted. He cites a parallel example in the case of Philippine National Bank v. Court of Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that the outbreak of war which prevents performance exempts a party from liability.

Hence, by law and by stipulation of the parties, the strikes which took place in Australia from the first week of July to the third week of September, 1987, exempted Phibro from the effects of delay of the delivery of the shipment of coal."12

Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of Appeals the following errors:

I

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO's delay in the delivery of imported coal was due to NAPOCOR's alleged delay in opening a letter of credit and to forcemajeure, and not to PHIBRO's own deliberate acts and faults."13

II

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in the December 8, 1987 and future biddings for the supply of imported coal despite the existence of valid grounds therefor such as serious impairment of its track record."14

III

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and exemplary damages, attorney's fees and litigation expenses despite the clear absence of legal and factual bases for such award."15

IV

"Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated period."16

V

"Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCOR's counterclaims for damages and litigation expenses."17

It is axiomatic that only questions of law, not questions of fact, may be raised before this Court in a petition for review under Rule 45 of the Rules of Court.18 The findings of facts of the Court of Appeals are conclusive and binding on this Court19 and they carry even more weight when the said court affirms the factual findings of the trial court.20 Stated differently, the findings of the Court of .Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of review by this Court.21

With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual issues raised by petitioner. The existence of strikes in Australia having been duly established in the lower courts, we are left only with the burden of determining whether or not NAPOCOR acted wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public bidding.

Let us consider the case in its proper perspective.

The Court of Appeals is justified in sustaining the Regional Trial Court's decision exonerating PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the evidence, testimonial and documentary, that what prevented PHIBRO from complying with its obligation under the July 1987 contract was the industrial disputes which besieged Australia during that time. Extant in our Civil Code is the rule that no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.22 This means that when an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure, he cannot be held liable for damages for non-performance.23

In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR explicitly agreed in Section XVII of the "Bidding Terms and Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the

performance of its obligations, other than the payment of money due, if any such delay or failure is due to Force Majeure." Specifically, they defined force majeure as "any disabling cause beyond the control of and without fault or negligence of the party, which causes may include but are not restricted to Acts of God or of the public enemy; acts of the Government in either its sovereign or contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons, storms, epidemics and quarantine restrictions."

The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we have no reason to rule otherwise.

However, proceeding from the premise that PHIBRO was prevented by force majeure from complying with its obligation, does it necessarily follow that NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBRO's application for pre-qualification to bid?

First, it must be stressed that NAPOCOR was not bound under any contract to approve PHIBRO's pre-qualification requirements. In fact, NAPOCOR had expressly reserved its right to reject bids. The Instruction to Bidders found in the "Post-Qualification Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca, Batangas Philippines,"25 is explicit, thus:

"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS

NAPOCOR reserves the right to reject any or all bids, to waive any minor informality in the bids received.The right is also reserved to reject the bids of any bidder who has previously failed to properly perform or complete on time any and all contracts for delivery of coal or any supply undertaken by a bidder."26(Emphasis supplied)

This Court has held that where the right to reject is so reserved, the lowest bid or any bid for that matter may be rejected on a mere technicality.27 And where the government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown. Accordingly, a bidder has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid. Even the lowest bid or any bid may be rejected.28 In Celeste v. Court of Appeals,29 we had the occasion to rule:

"Moreover, paragraph 15 of the Instructions to Bidders states that 'the Government hereby reserves the right to reject any or all bids submitted.' In the case of A.C. Esguerra and Sons v. Aytona, 4 SCRA 1245, 1249 (1962), we held:

'x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that the bidders shall be subject to the right of the government to reject any and all bids subject to its discretion. Here the

government has made its choice, and unless an unfairness or injustice is shown, the losing bidders have no cause to complain, nor right to dispute that choice.'

Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners in evaluating the bids, we rule that the private respondents are not entitled to damages representing lost profits." (Emphasis supplied)

Verily, a reservation of the government of its right to reject any bid, generally vests in the authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.30 In Bureau Veritas v. Office of the President,31 we decreed:

"The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]) x x x. The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgresses its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making. x x x." (Emphasis supplied)

Owing to the discretionary character of the right involved in this case, the propriety of NAPOCOR's act should therefore be judged on the basis of the general principles regulating human relations, the forefront provision of which is Article 19 of the Civil Code which provides that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith."32Accordingly, a person will be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse.33

Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding?

We rule in the negative.

In practice, courts, in the sound exercise of their discretion, will have to determine under all the facts and circumstances when the exercise of a right is unjust, or when there has been an abuse of right.34

We went over the record of the case with painstaking solicitude and we are convinced that NAPOCOR's act of disapproving PHIBRO's application for pre-qualification to bid was without any intent to injure or a purposive motive to perpetrate damage. Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be faulted from believing so. At this juncture, it is worth mentioning that at the time NAPOCOR issued its subsequent Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first shipment of coal under the July 1987 contract, which was due on or before September 5, 1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or capability to assume an obligation under a new contract.

Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation of the coal industry in Australia. It appears from the records that when NAPOCOR was constrained to consider an offer from another coal supplier (ASEA) at a price of US$33.44 per metric ton, PHIBRO unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00 per metric ton for arrival at Calaca, Batangas on September 20-21, 1987."35 Of course, NAPOCOR had reason to ponder — how come PHIBRO could assure the immediate delivery of 60,000 metric tons of coal from the same source to arrive at Calaca not later than September 20/21, 1987 but it could not deliver the coal it had undertaken under its contract?

Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in relations to contracts, is that "the concurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner."36 Faced with the above circumstance, NAPOCOR is justified in assuming that, may be, there was really no fortuitous event or force majeure which could render it impossible for PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in treating PHIBRO's failure to deliver a serious impairment of its track record. That the trial court, thereafter, found PHIBRO's unexpected offer actually a result of its desire to minimize losses on the part of NAPOCOR is inconsequential. In determining the existence of good faith, the yardstick is the frame of mind of the actor at the time he committed the act, disregarding actualities or facts outside his knowledge. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected offer a mere attempt on the latter's part to undercut ASEA or an indication of PHIBRO's inconsistency. The circumstances warrant such contemplation.

That NAPOCOR believed all along that PHIBRO's failure to deliver on time was unfounded is manifest from its letters37 reminding PHIBRO that it was bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the Letter of Credit, otherwise it would be constrained to take legal action. The same honest belief can be deduced from NAPOCOR's Board Resolution, thus:

"On the legal aspect, Management stressed that failure of PBO to deliver under the contract makes them liable for damages, considering that the reasons invoked were not valid. The measure of the damages will be limited to actual and compensatory damages. However, it was reported that Philipp Brothers advised they would like to have continuous business relation with NPC so they are willing

to sit down or even proposed that the case be submitted to the Department of Justice as to avoid a court action or arbitration.

xxx xxx xxx

On the technical-economic aspect, Management claims that if PBO delivers in November 1987 and January 1988, there are some advantages. If PBO reacts to any legal action and fails to deliver, the options are: one, to use 100% Semirara and second, to go into urgent coal order. The first option will result in a 75 MW derating and oil will be needed as supplement. We will stand to lose around P30 M. On the other hand, if NPC goes into an urgent coal order, there will be an additional expense of $786,000 or P16.11 M, considering the price of the latest purchase with ASEA. On both points, reliability is decreased."38

The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification documents is to ensure that only those "responsible" and "qualified" bidders could bid and be awarded with government contracts. It bears stressing that the award of a contract is measured not solely by the smallest amount of bid for its performance, but also by the "responsibility" of the bidder. Consequently, the integrity, honesty, and trustworthiness of the bidder is to be considered. An awarding official is justified in considering a bidder not qualified or not responsible if he has previously defrauded the public in such contracts or if, on the evidence before him, the official bona fide believes the bidder has committed such fraud, despite the fact that there is yet no judicial determination to that effect.39 Otherwise stated, if the awarding body bona fide believes that a bidder has seriously impaired its track record because of a particular conduct, it is justified in disqualifying the bidder. This policy is necessary to protect the interest of the awarding body against irresponsible bidders.

Thus, one who acted pursuant to the sincere belief that another willfully committed an act prejudicial to the interest of the government cannot be considered to have acted in bad faith. Bad faith has always been a question of intention. It is that corrupt motive that operates in the mind. As understood in law, it contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill-will or for ulterior purpose.40While confined in the realm of thought, its presence may be ascertained through the party's actuation or through circumstantial evidence.41 The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to the latter. The measure it adopted was one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of action it took. NAPOCOR cannot be made liable for actual, moral and exemplary damages.

Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent public bidding. It ruled that "PHIBRO would have won the tenders for the supply of about 960,000 metric tons out of at least 1,200,000 metric tons" from the public bidding of December 1987 to 1990. We quote the trial court's ruling, thus:

". . . PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning December 1987 to 1990, for the supply and delivery of imported coal with a total volume of about 1,200,000 metric tons valued at no less than US$32 Million. (Exhs. "AA," "AA-1-1," to "AA-2"). The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$41.35 to US$43.95 per metric ton (Exh. "JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. "J-1"); in November 1988 at US$39.00 to US$48.50 per metric ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35 to US$47.35 per metric ton (Exh. "J-3") and US$38.00 to US$48.25 per metric ton in September 1990 (Exh. "JJ-6" and "JJ-7"). PHIBRO would have won the tenders for the supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons awarded during said period based on its proven track record of 80%. The Court, therefore finds that as a result of its disqualification, PHIBRO suffered damages equivalent to its standard 3% margin in 960,000 metric tons of coal at the most conservative price of US$30,000 per metric ton, or the total of US$864,000 which PHIBRO would have earned had it been allowed to participate in biddings in which it was disqualified and in subsequent tenders for supply and delivery of imported coal."

We find this to be erroneous.

Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.42 A court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages. Thus, while indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain,43 it is imperative that the basis of the alleged unearned profits is not too speculative and conjectural as to show the actual damages which may be suffered on a future period.

In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the plaintiff's claim for actual damages which was premised on a contract he was about to negotiate on the ground that there was still the requisite public bidding to be complied with, thus:

"As to the alleged contract he was about to negotiate with Minister Hipolito, there is no showing that the same has been awarded to him. If Tandoc was about to negotiate a contract with Minister Hipolito, there was no assurance that the former would get it or that the latter would award the contract to him since there was the requisite public bidding. The claimed loss of profit arising out of that alleged contract which was still to be negotiated is a mere expectancy. Tandoc's claim that he could have earned P2 million in profits is highly speculative and no concrete evidence was presented to prove the same. The only unearned income to which Tandoc is entitled to from the evidence presented is that for the one-month period, during which his business was interrupted, which is P6,125.00, considering that his annual net income was P73,500.00."

In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise disallowed the trial court's award of actual damages for unrealized profits in the amount of US$75,000.00 for being highly speculative. It was held that "the realization of profits by respondent . . . was not a certainty, but depended on a number of factors, foremost of which was his ability to invite investors and to win the bid." This Court went further saying that actual or compensatory damages cannot be presumed, but must be duly proved, and proved with reasonable degree of certainty.

And in National Power Corporation v. Court of Appeals,46 the Court, in denying the bidder's claim for unrealized commissions, ruled that even if NAPOCOR does not deny its (bidder's) claims for unrealized commissions, and that these claims have been transmuted into judicial admissions, these admissions cannot prevail over the rules and regulations governing the bidding for NAPOCOR contracts, which necessarily and inherently include the reservation by the NAPOCOR of its right to reject any or all bids.

The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad faith. Moreover, moral damages are not, as a general rule, granted to a corporation.47 While it is true that besmirched reputation is included in moral damages, it cannot cause mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that an individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court of Appeals,49 we ruled:

"Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life — all of which cannot be suffered by respondent bank as an artificial person."

Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the court may consider the question of whether or not exemplary damages should be awarded, the plaintiff must show that he is entitled to moral, temperate, or compensatory damages.

NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees.

We agree with NAPOCOR.

This Court has laid down the rule that in the absence of stipulation, a winning party may be awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to amount to gross and evident bad faith.50 This cannot be said of the case

at bar. NAPOCOR is justified in resisting PHIBRO's claim for damages. As a matter of fact, we partially grant the prayer of NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification to bid.

Trial courts must be reminded that attorney's fees may not be awarded to a party simply because the judgment is favorable to him, for it may amount to imposing a premium on the right to redress grievances in court. We adopt the same policy with respect to the expenses of litigation. A winning party may be entitled to expenses of litigation only where he, by reason of plaintiff's clearly unjustifiable claims or defendant's unreasonable refusal to his demands, was compelled to incur said expenditures. Evidently, the facts of this case do not warrant the granting of such litigation expenses to PHIBRO.

At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO another opportunity to participate in future public bidding. As earlier mentioned, the delay on its part was due to a fortuitous event.

But before we dispose of this case, we take this occasion to remind PHIBRO of the indispensability of coal to a coal-fired thermal plant. With households and businesses being entirely dependent on the electricity supplied by NAPOCOR, the delivery of coal cannot be venturesome. Indeed, public interest demands that one who offers to deliver coal at an appointed time must give a reasonable assurance that it can carry through. With the deleterious possible consequences that may result from failure to deliver the needed coal, we believe there is greater strain of commitment in this kind of obligation.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated August 27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual, moral and exemplary damages, reimbursement for expenses, cost of litigation and attorney's fees, and costs of suit, is DELETED.

SO ORDERED.

G.R. No. 120287 May 28, 2002 G & S TRANSPORT CORPORATION, petitioner, vs. COURT OF APPEALS, HON. ENRICO A. LANZANAS, TWO THOUSAND (2000) TRANSPORT CORPORATION, NISSAN CAR LEASE PHILIPPINES, INC., MANILA INTERNATIONAL AIRPORT AUTHORITY AND GUILLERMO G. CUNANAN, respondents.

This resolves the consolidated Petition for Review of the Decision of the Court of Appeals in CA-G.R. SP No. 36345, "Two Thousand (2000) Transport Corporation v. Hon. Guillermo L. Loja, Sr., as Judge, RTC, Manila, Branch 26, and G & S Transport Corporation," and in CA-G.R. SP No. 36356, "Nissan Car Lease Philippines, Inc. v. Hon. Guillermo L. Loja, Sr., as Judge RTC of Manila, Branch 26, and G & S Transport

Corporation," andPetition for Certiorari of the Order of the Regional Trial Court, Branch 7, Manila, in Civil Case No. 95-72586, "G & S Transport Corporation v. Manila International Airport Authority, Guillermo G. Cunanan, Two Thousand (2000) Transport Corporation and Nissan Car Lease Philippines, Inc."

Petitioner G & S Transport Corporation (G & S), with the name and style Avis Rent-A-Car, was the exclusive operator of coupon taxi services at the Ninoy Aquino International Airport (NAIA) under a five (5)-year contract of concession with respondent Manila International Airport Authority (MIAA).1 The concession contract expired on 31 January 1994 but was renewed by the parties on a monthly basis "until such time when a new concessionaire (shall have been) chosen."2 Under the arrangement, G & S was able to operate the coupon taxi service uninterruptedly beyond the period of five (5) years originally awarded by MIAA.1âwphi1.nêt

On 12 July 1994 MIAA initiated proceedings for public bidding to choose two (2) concessionaires of the coupon taxi services at the NAIA. Five (5) firms pre-qualified to join the bidding including petitioner G & S and respondents Two Thousand (2000) Transport Corporation (2000 TRANSPORT) and Nissan Car Lease Philippines, Inc. (NISSAN), after complying with the terms of reference, the instructions to bidders and the invitation to bid.3 On 23 September 1994 MIAA announced the ranking of the bidders on the basis of the fares per kilometer they each tendered -

1. Philippine International Transport Service Cooperative

. . . . . . . . . . . . .

. . P16.00 / km

2. 2000 Transport Cooperative . . . . . . . . . . . . . . . P17.00 / km

3. Nissan Car Lease Philippines . . . . . . . . . . . . . . . P18.00 / km

4. G&S Transport Corp. . . . . . . . . . . . . . . . P18.50 / km

5. Hyatt Transport Co., Inc. . . . . . . . . . . . . . . .

P24.00 / km4

The highest ranking bidder which offered the lowest rate per kilometer was Philippine International Transport Service Cooperative but was however disqualified as the bond it submitted was not a cash bond as required by the bidding rules.5 Consequently, on 5 December 1994 MIAA selected 2000 TRANSPORT and NISSAN as the winning bidders and issued in their favor the respective notice of awards of the coupon taxi service concession.6

On 10 January 1995 petitioner G & S filed a complaint for injunction and mandamus with preliminary injunction and temporary restraining order against MIAA and its General Manager Guillermo G. Cunanan, 2000 TRANSPORT and NISSAN, which was

docketed as Civil Case No. 95-72586 and subsequently raffled to RTC-Br. 26, Manila. The complaint sought to disqualify 2000 TRANSPORT from the award of the concession contract for submitting itsArticles of Incorporation with the signature of one (1) of its incorporators allegedly falsified and its income tax returns falsely attested to by its treasurer, and for the existence of allegedly reasonable grounds to believe that 2000 TRANSPORT was a dummy corporation for two (2) Korean nationals. It also asserted that the concession contract should have been executed in favor of G & S since it was more deserving than both 2000 TRANSPORT and NISSAN in terms of facilities, financial standing, organizational set-up and capability. G & S subsequently amended the complaint to state that no new legitimate concessionaire had been properly chosen as a result of the failure of MIAA to disqualify 2000 TRANSPORT from the entire process of selecting two (2) coupon taxi service concessionaires and to allege that G & S remainded to be the only legitimate service provider, and prayed that the month-to-month renewal of the concession contract with G & S should instead be enforced until a more deserving concessionaire would have been selected.

As prayed for in the complaint, the trial court issued a temporary restraining order enjoining MIAA from awarding to 2000 TRANSPORT and NISSAN the new concessions to operate the NAIA coupon taxi service and from removing G & S as such concessionaire, and thereafter scheduled for hearing the application for preliminary injunction.

Meanwhile respondents 2000 TRANSPORT and NISSAN each moved to dismiss the complaint for failure to state a cause of action and for improper venue and to lift the temporary restraining order. On 30 January 1995, after the parties were heard although the motions were still pending, the trial court granted the writ of preliminary injunction which barred MIAA from doing any of the acts earlier restrained.

Respondents 2000 TRANSPORT and NISSAN assailed before the Court of Appeals the issuance of the writ of preliminary injunction through their respective petitions for certiorari with prayer for temporary restraining order and preliminary injunction under Rule 65 of the Revised Rules of Court.7 Respondent 2000 TRANSPOT belied the claims that it falsified its Articles of Incorporation and that it was a dummy corporation. On the other hand, NISSAN alleged that the complaint of G & S did not state a cause of action since the allegations concerned exclusively the disqualification of 2000 TRANSPORT.

On 6 February 1995 the appellate court issued a temporary restraining order prohibiting the enforcement of the writ of preliminary injunction. While the temporary restraining order was in place, MIAA terminated the month-to-month renewal of the concession contract with G & S and executed the concession contracts with the winning bidders 2000 TRANSPORT and NISSAN which immediately commenced their respective coupon taxi services at the NAIA.8 The temporary restraining order (issued by the Court of Appeals) had already expired when the appellate court conducted hearings on the application of 2000 TRANSPORT and NISSAN for a writ of preliminary injunction.

On 3 March 1995, upon separate motions of 2000 TRANSPORT and NISSAN, the presiding judge9 of RTC-Br. 26, Manila, inhibited himself from hearing Civil Case No. 95-72586. The case was re-raffled and in due time referred to the RTC-Br. 7 which extensively heard the motions to dismiss separately filed by 2000 TRANSPORT and NISSAN.

On 11 April 1995 the trial court dismissed the complaint in Civil Case No. 95-72586.10 It ruled that the complaint failed to state a cause of action against herein respondents and that mandamus was unavailable to compel the award of the concession contract in favor of G & S since such decision was discretionary upon the MIAA. On 16 June 1995 the trial court denied reconsideration of the Order of dismissal.

On 16 May 1995 the Court of Appeals granted the petitions for certiorari of 2000 TRANSPORT and NISSAN in CA-G.R. SP No. 36345 and CA-G.R. SP No. 36356, set aside the 30 January 1995 Order of the trial court issuing the writ of preliminary injunction, and prohibited the trial court from "hearing and taking further cognizance of Civil Case No. 95-72586 except to dismiss the same."11 The appellate court held that the trial court gravely abused its discretion when it issued the writ of preliminary injunction since under PD 1818 no court would have jurisdiction to restrain the operation of a public utility and since the selection of winning bidders was solely the discretion of the sponsoring government agency. Hence, the instant petition for review under Rule 45 of the Revised Rules of Courtassailing the 16 May 1995 Decision of the Court of Appeals, which was joined with the instant petition for certiorari under Rule 65, seeking to nullify and set aside the 11 April 1995 Order of the trial court dismissing Civil Case No. 95-72586.

G & S argues in its petition for review that irregularities attending the bidding for the coupon taxi service at the NAIA warranted the issuance of the writ of preliminary injunction and that PD 1818 was not applicable to divest the trial court of jurisdiction to hear the complaint in Civil Case No. 95-72586. G & S asserts in its petition under Rule 65 that allegations in the complaint that 2000 TRANSPORT falsified its Articles of Incorporation and income tax returns, and was a dummy corporation for two (2) Korean nationals, and that irregularities rigged the bidding stated fully a cause of action against 2000 TRANSPORT and NISSAN which would have justified the disqualification of respondent 2000 TRANSPORT from the bidding and the continuation of the month-to-month renewal of the concession contract in favor of G & S. Petitioner also justified resorting to Rule 65 in lieu of an ordinary appeal before the Court of Appeals to question the Order of dismissal of the trial court on grounds of expediency and necessity for a speedier remedy than appeal and further explains that joining the petitions for review and for certiorari in just one (1) pleading was essential to avoid conflicting rulings in case the petitions were brought separately in different fora.

To begin with, petitioner could have joined together all his allegations of error in one petition for review under Rule 45 of the 1997 Rules of Civil Procedure since only questions of law are raised in the instant casse. At any rate, there is nothing irregular in joining both petitions for review (Rule 45) and certiorari (Rule 65) in one pleading for

purposes of resolving the issues raised by petitioner G & S. This procedural step may even avoid inconsistency of rulings which might result in case the writ of preliminary injunction is validated but the civil case from which the writ emanated is ordered dismissed. Although a petition for review under Rule 45 is an appeal process while a petition for certiorari under Rule 65 is an original action and the rule is that joinder of causes of action shall not include special civil actions governed by special rules,12 the conceptual and procedural differences between them are overshadowed by the more significant probability of divergent rulings in case the two (2) petitions are not joined which in the end would only cause difficulties in determining which of the conflicting decisions should be enforced.

For the same reason, resort to certiorari under Rule 65 before this Court in lieu of an ordinary appeal to the Court of Appeals to assail the final Order of dismissal is fully justified by the necessity to bring all the issues before one (1) forum to ensure harmony of rulings. It must however be emphasized that in disposing of the issue regarding the propriety and legality of the Order, the applicable standard will of course be whether the trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction,13 and the only reversible errors will be errors of jurisdiction and not errors of judgment.14

We find that the trial court did not abuse its discretion in dismissing the complaint in Civil Case No. 95-72586 for failure to state a cause of action against respondents 2000 TRANSPORT and NISSAN. As admitted by petitioner G & S itself, the trial court used the correct "guidelines by which the failure of the complaint to state a cause of action as a ground in a motion to dismiss must be considered."15 Concededly therefore the only errors involved in this petition are mere errors of judgment, if any, and not errors of jurisdiction for which the instant petition would be the inappropriate mode for seeking a reversal. The allegations of errors of judgment are in fact fairly obvious on the face of the instant petition for certiorari under Rule 65.

We nonetheless examine the Order of the trial court in the interest of justice. The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein?16 Only ultimate facts and not legal conclusions or evidentiary facts which in the first place should not have been alleged in the complaint are considered for purposes of applying the test.17 Furthermore, actions which are prematurely commenced would fall under the objection.18

Petitioner G & S prayed for a permanent injunction to bar the award of the concession contract to 2000 TRANSPORT and NISSAN; a writ of mandamus compelling MIAA to grant to it the concession contract; the disqualification of 2000 TRANSPORT from the bidding; the nullification of the entire bidding process; and the payment of damages which would of course be a mere consequence of the other relief sought.19 The ultimate facts supposedly justifying the complaint for injunction and mandamus were -

15. On October 26, 1994, the Manila Standard published a news item reporting that (2000) Transport has been accused of submitting to MIAA falsified documents in connection with their bid for the NAIA coupon taxi service. Investigating this report, plaintiff [G & S] discovered that on October 8, 1994, a certain Meliton Solpot had executed an Affidavit, wherein he stated that the corporate tax returns submitted by [2000 Transport] to MIAA during the bidding are (sic) falsified as his purported signatures thereon are (sic) not his signatures x x x x Plaintiff further discovered that on October 25, 1994, the same Meliton Solpot executed a Sworn Statement before the National Bureau of Investigation (NBI) alleging that his signatures on the partnership annual income tax return of [2000 Transport] dated December 1993 and February 3, 1994 as well as those found in the Articles of Incorporation of [2000 Transport] on file with the Securities and Exchange Commission are (sic) not his genuine signatures x x x x 17. In the meantime, plaintiff [G & S] was able to secure from the SEC a copy of the Articles of Incorporation of [2000 Transport]. In said Articles, it clearly appears that one of the alleged incorporators is a certain Meliton Solpot. It further appears that the two (2) Korean incorporators who appear to have subscribed to twenty percent (20%) of the authorized capital stock of the corporation had paid up eighty percent (80%) of the paid-in capital, thereby indicating that in fact, and for all intents and purposes, the Korean incorporators were in control of the corporation x x x x Moreover, plaintiff was also able to secure a copy of the General Information Sheet for 1994 filed by [2000 Transport] with the SEC which shows that Sooja Park Lim, a Korean, is the Chairman and President of [2000 Transport] while Young Kon Jo, a Korean, is the Vice President of [2000 Transport] x x x x 23. Since [2000 Transport] was not duly qualified to participate in the bidding and has flagrantly violated the Constitution, MIAA and Cunanan have neither factual nor legal basis to declare said defendant as one of the winning bidders, to award to said defendant, a Contract of Concession for the NAIA coupon taxi service and allowing it to operate the said service. Furthermore, the participation of a disqualified bidder in the bidding affects the integrity of the entire bidding process and renders the same ineffective, null and void. Consequently, MIAA and Cunanan should be finally and permanently enjoined from awarding to [2000 Transport and Nissan] a Contract of Concession for the NAIA coupon taxi service and / or otherwise authorizing or allowing them to operate the NAIA coupon taxi service x x x x 25. While plaintiff had made the third lowest bid insofar as the fare is concerned, it certainly is way ahead of all other bidders, insofar as the other factors stated in the Instruction to Bidders are concerned. As the present operator and concessionaire of the NAIA coupon taxi service for the last five (5) years, its existing facilities, financial standing, organizational set-up, relevant experience, quality, capability and kind of services offered far outrank any of the other bidders. Thus, assuming, without conceding, that [2000 Transport] was not disqualified to participate in the bidding and / or the bidding process is not fatally flawed, plaintiff should be declared as one of the winning bidders based on these other factors. The other winning bidder should be determined between [2000 Transport and Nissan] based on these other factors.20

It is clear that the allegations would not call for any relief against respondent NISSAN. The alleged defects in the bidding process center on the incapacity and fraudulent act of 2000 TRANSPORT in submitting its Articles of Incorporation with one (1) falsified signature and in being a dummy corporation for two (2) Korean nationals. Under these set of facts, we see no basis for declaring NISSAN to be similarly disqualified or for nullifying the entire bidding process. Indeed it has not been shown that the alleged irregularities committed by 2000 TRANSPORT were induced by or participated in by any of the other bidders. No rule would justify compromising the interests of NISSAN for an act it was not the author of or even privy to. If at all, liability should attack only to the responsible party for the alleged prejudice sustained by G & S as a result of the anomalies described above.

Neither would the allegations authorize us to issue the writ of mandamus compelling MIAA to award the concession contract in favor of petitioner G & S. It is a settled rule that mandamus will lie only to compel the performance of a ministerial duty but does not lie to require anyone to fulfill contractual obligations.21 Only such duties as are clearly and peremptorily enjoined by law or by reason of official station are to be enforced by the writ.22 Whether MIAA will enter into a contract for the provision of a coupon taxi service at the international airport is entirely and exclusively within its corporate discretion. It does not involve a duty the performance of which is enjoined by law and thus this Court cannot direct the exercise of this prerogative.

Indeed the determination of the winning bidders should be left to the sound judgment of the MIAA which is the agency in the best position to evaluate the proposals and to decide which bid would most complement the NAIA's services. The Terms of Reference for Coupon Taxi Service Concession observed, "[t]he professional transport service plays a very important role in enhancing and maintaining a good image of the country that will speak of trust, honesty, efficiency and modernity."23 In this regard only the most advantageous bids would be selected on the basis of the best bid offer in relation to the bidders' existing facilities, financial standing, organizational set-up, relevant experience, quality, capability and kind of services offered.24 The exercise of such discretion is a policy decision that necessitates such procedures as prior inquiry, investigation, comparison, evaluation and deliberation.25 This process would necessarily entail the technical expertise of MIAA which the courts do not possess in order to evaluate the standards affecting this matter -

x x x x courts, as a rule, refuse to interfere with proceedings undertaken by administrative bodies or officials in the exercise of administrative functions. This is so because such bodies are generally better equipped technically to decide administrative questions and that non-legal factors, such as government policy on the matter, are usually involved in the decision.26

Nor would the allegations, even if admitted to be true, compel a permanent restraint on the execution of the respective concession contracts of respondents 2000 TRANSPORT and NISSAN with MIAA. In Bureau Veritas v. Office of the President27 we ruled that "the discretion to accept or reject a bid and award contracts is vested in the

Government agencies entrusted with that function." Furthermore, Sec. 1 of PD 1818 (the governing statute in all the relevant dates alleged in the complaint) distinctly provides that "[n]o court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction x x x in any case, dispute, or controversy involving x x x any public utility operated by the government, including among others public utilities for the transport of the goods or commodities x x x to prohibit any person or persons x x x from proceeding with, or continuing the execution or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation." We stress that the provision expressly deprives courts of jurisdiction to issue injunctive writs against the implementation or execution of contracts for the operation of a public utility.28 Undeniably, both respondent MIAA and the concession contracts it wanted to bid out involve a public utility which would therefore enjoy the protective mantle of the decree.

While the rule is that courts may set aside or enjoin the award of a contract made by a government entity, this may be done only upon a clear showing of grave abuse of discretion29 or only in cases involving issues definitely outside the exercise of discretion in technical cases and questions of law.30 We however find nothing of this sort in the allegations of petitioner G & S in Civil Case No. 95-72586. Even if admitted to be true, the allegations do not demonstrate grave abuse of discretion nor raise issues definitely outside the exercise of discretion in technical cases which would survive a motion to dismiss for failure to state cause of action and warrant a trial on the merits of the complaint.1âwphi1.nêt

Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power.31 The abuse of discretion must be patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as not to act at all in contemplation of law, or where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.32 In the case at bar, the allegations of G & S in the civil case do not call for the assumption that MIAA accepted the bid of 2000 TRANSPORT and NISSAN and declared them winning bidders with grave abuse of discretion.

For one, the claim that 2000 TRANSPORT is a dummy corporation for two (2) Korean nationals is a legal conclusion from allegations which would not even compel the adoption of such inference -

It further appears that the two (2) Korean incorporators who appear to have subscribed to twenty percent (20%) of the authorized capital stock of the corporation had paid up eighty percent (80%) of the paid-in capital, thereby indicating that in fact, and for all intents and purposes, the Korean incorporators were in control of the corporation x x x x Moreover, plaintiff was also able to secure a copy of the General Information Sheet for 1994 filed by [2000 Transport] with the SEC which shows that Sooja Park Lim, a Korean, is the Chairman and President of [2000 Transport] while Young Kon Jo, a Korean, is the Vice President of [2000 Transport] x x x x

Judicial notice of the Articles of Incorporation referred to in the allegations and attached as one of the annexes to the instant petition would show that the two (2) Korean nationals subscribed to only 1,000 shares out of the total 20,000 shares, which were fully paid up by them at P100.00 per share for P50,000.00 each.33 On its face, theArticles of Incorporation merely showed the subscription by the two (2) Korean nationals of only five percent (5%) of the capital stock and the full payment thereof in the total amount of P100,000.00.

Since factual premises as well as legal conclusions which by judicial notice are determined to be false are not deemed admitted to be true for purposes of disposing of an objection on the ground of failure to state a cause of action,34 it was incumbent upon G & S to have alleged additional facts from which could be inferred that 2000 TRANSPORT was truly a front of the Korean shareholders.

In the same manner, it is irrelevant that the Korean nationals were the President and the Vice President, respectively, of 2000 TRANSPORT as shown in the General Information Sheet on file with the Securities and Exchange Commission. What is material for purposes of stating a cause of action are allegations showing that they were such officers during the operational stages of the coupon taxi service. As we have held in Tatad v. Garcia35 -

x x x x Private respondent EDSA LRT Corporation, Ltd., to whom the contract to construct the EDSA LRT III was awarded by public respondent, is admittedly a foreign corporation "duly incorporated and existing under the laws of Hong Kong" x x x x What private respondent owns are the rail tracks, rolling stocks like the coaches, rail station, tracks, rolling stocks like the coaches, rail stations, terminals and the power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to serve the public x x x x The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However, it does not require a franchise before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public x x x x In law, there is a clear distinction between the "operation" of a public utility and the ownership of the facilities and equipment used to serve the public. The exercise of the rights encompassed in ownership is limited by law so that a property cannot be operated and used to serve the public as a public utility unless the operator has a franchise x x x x The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof x x x x Indeed, a mere owner and lessor of the facilities used by a public utility is not a public utility x x x x Even the mere formation of a public utility corporation does not ipso facto characterize the corporation as one operating a public utility.

Moreover, the allegations that the documents submitted by 2000 TRANSPORT, i.e., Article of Incorporation and income tax returns, contained one (1) falsified signature even if admitted to be true court not be characterized as showing grave abuse of discretion on the part of MIAA in not disqualifying 2000 TRANSPORT from the bidding and in not nullifying the bidding process. It is clear that under the Terms of Reference for Coupon Taxi Service Concession the required pre-qualification documents consisted of, among others, certified true copy of the Article of Incorporation and certified true copy of the income tax returns of the corporation for the last two (2) years immediately preceding the date of the bidding.36 MIAA acted within the bounds of reasonable discretion when it accepted the Articles of Incorporation and income tax returns of 2000 TRANSPORT since they were duly verified by the proper administrative agencies. It appears from the records that 2000 TRANSPORT had long been operating as a corporation engaged in common carriage so that MIAA had reasonable ground to rely upon the documents submitted to it to prove the corporate personality and status as public carrier of the bidder for purposes of the bidding. Moreover, because of the presumption of regular performance of powers and functions, MIAA should be deemed to have performed its functions in accordance with law and duly considered all the relevant documents before pre-qualifying 2000 TRANSPORT.

It goes without saying that the action in Civil Case No. 95-72586 is premature and consequently fails to state a cause of action. The allegations of the complaint therein focused on the irregularity in the process of obtaining corporate personality, that is, the alleged falsification of the Article of Incorporation of 2000 TRANSPORT, and the misdeed in securing a certificate of public convenience for operating taxi services when 2000 TRANSPORT was allegedly a dummy corporation for two (2) Korean nationals. Clearly, in the absence of any finding of irregularity from the appropriate government agencies tasked to deal with these concerns, which at all the time relevant to the civil case would be the Securities and Exchange Commission37 and the Land Transportation Franchising and Regulatory Board,38 courts must defer to the presumption that these agencies had performed their functions regularly. The ultimate facts upon which depends the complaint in Civil Case No. 95-72586 would be matters which fall within the technical competence of government agencies over which courts could not prematurely rule upon and enter relief as prayed for in the complaint -

In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases involving matters that demand the special competence of administrative agencies. It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of

issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such case the judicial process is suspended pending referral of such issues to the administrative body for its view" x x x x "Uniformity and consistency in the regulation of business entrusted to an administrative agency are secured, and the limited function of review by the judiciary are more rationally exercised, by preliminary resort, for ascertaining and interpreting the circumstances underling legal issues, to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure" x x x x39

The propriety of the Order of dismissal of Civil Case No. 95-72586 should render moot and academic the instant petition for review of the Decision of the Court of Appeals in CA-G.R. SP No. 36345, "Two Thousand (2000) Transport Corporation v. Hon. Guillermo L. Loja, Sr., as Judge, RTC of Manila, Branch 26, and G & S Transport Corporation," and in CA-G.R. SP No. 36356, "Nissan Car Lease Philippines, Inc. v. Hon. Guillermo L. Loja, Sr., as Judge, RTC of Manila, Branch 26, and G & S Transport Corporation." It is well settled that the issue of propriety of obtaining a preliminary injunction dies with the main case from which it logically sprang. Such a provisional remedy, like any other interlocutory order, cannot survive the main case of which it is but an incident.40 Indeed what more could this Court enjoin when the complaint has already been dismissed? To be sure, even a ruling granting the petition at bar would not revive the civil case much less change our ruling in the petition for certiorari under Rule 65.41 The remedy in question is precisely termed preliminary since it is meant to restrain acts prior to the rendition of a judgment or a final order.42

Be that as it may, we find the assailed Decision of the Court of Appeals to be in accord with law and jurisprudence. For starters, it is well settled that before a writ of preliminary injunction may be issued, there must be a clear showing by the complainant that there exists a right to be protected and that the acts against which the writ is to be directed are violative of established right.43 In the instant case, it is an undisputed fact that the contract of petitioner G & S for coupon taxi service with MIAA had already expired and that a new concessionaire had been chosen. Admittedly there was no existing contractual relationship between MIAA and petitioner G & S since the former was under no legal obligation to renew the concession contract. Consequently petitioner had no right which needed protection by a writ of preliminary injunction.

Furthermore, PD 1818 was clearly applicable to divest the trial court of authority to issue the injunctive writ against the execution of the concession contracts with 2000 TRANSPORT and NISSAN. Their respective contracts involved public utility which were within the protective mantle of the decree. Moreover, as shown above, the issues raised in the complaint in Civil Case No. 95-72586 did not involve matters outside the technical competence of MIAA or veritable questions of law. The contentions of petitioner G & S were precisely directed towards urging the trial court to substitute its judgment for that of MIAA in determining to which bidders the concession contracts should be awarded. Hence, the appellate court correctly nullified the injunctive writ on the ground that it violatedPD 1818.

We also share the view of the Court of Appeals that determination of the winning bidders is a matter falling within the exclusive jurisdiction of the sponsoring government agency. While petitioner G & S asserts that MIAA committed grave abuse of discretion in pre-qualifying 2000 TRANSPORT, there certainly was no cause of action in similarly seeking the nullification of the winning bid of NISSAN. From the beginning, G & S had no reason to restrain NISSAN from the fruits of its efforts in winning the bid. Similarly, MIAA was merely relying upon the Terms of Reference for Coupon Taxi Service Concession when it pre-qualified 2000 TRANSPORT and proceeded with the bidding, hence, MIAA could not have abused its discretion in doing so. On the contrary, it would have been grave abuse of discretion if MIAA were to suddenly abandon the Terms of Reference if only to accommodate the objections of G & S.

Be it understood that in the instant proceedings we have confined ourselves within the parameters of the propriety of the dismissal of Civil Case No. 95-72586 and the impropriety of the issuance of a writ of preliminary injunction by the trial court. Hence we are not putting to rest, indeed not by a long shot on the ground of res judicata, the contentions ardently raised by petitioner G & S on the absence of qualifications of respondent 2000 TRANSPORT as a corporate entity to operate a public utility. In the instant case, our emphasis has been the proper observance of the procedure in the assertion of grievances which in this regard would be to bring up the alleged irregularities in the creation and operation of 2000 TRANSPORT to the proper authorities as discussed above.

It is important to note that the claims of petitioner G & S assume great importance when argued in the proper forum in light of the sudden desertion by respondent 2000 TRANSPORT from the instant proceedings without leaving word on its new address nor advice as to its new counsel or attorney-in-fact. Without so much as a by-your-leave, 2000 TRANSPORT abandoned the instant case after filing its comment to the instant petition and ignored all court processes requiring the submission of a memorandum in its behalf. The contemptuous conduct of 2000 TRANSPORT has unfortunately wasted our efforts in trying to deliver the various court orders to its address on record,44 and has embarrassingly caused the imposition of fine upon and the detention of one (1) of its lawyers for direct contempt of court arising from his failure to file the memorandum for 2000 TRANSPORT despite repeated warnings.45

WHEREFORE, the consolidated Petition for Review under Rule 45 and Petition for Certiorari under Rule 65 areDENIED and DISMISSED, respectively. The Decision of the Court of Appeals in CA-G.R. SP No. 36345, "Two Thousand (2000) Transport Corporation v. Hon. Guillermo L. Loja, Sr., as Judge, RTC of Manila, Branch 26, and G & S Transport Corporation," and in CA-G.R. SP No. 36356, "Nissan Car Lease Philippines, Inc. v. Hon. Guillermo L. Loja, Sr., as Judge, RTC of Manila, Branch 26, and G & S Transport Corporation," as well as theOrder of the RTC-Br. 7, Manila, in Civil Case No. 95-72586, "G & S Transport Corporation v. Manila International Airport Authority, Guillermo G. Cunanan, Two Thousand (2000) Transport Corporation and Nissan Car Lease Philippines, Inc." is AFFIRMED. The writ of preliminary injunction issued in Civil Case No. 95-72586 is SET ASIDEand NULLIFIED, and Civil Case No.

95-72586 is DISMISSED without prejudice to the filing of the appropriate complaint/action with the concerned regulatory agencies.1âwphi1.nêt

Let copy of this Decision be served upon the Land Transportation Franchising and Regulatory Board and the Securities and Exchange Commission for their information and appropriate action. No pronouncement as to costs.SO ORDERED.

[G.R. No. 147465, January 30, 2002] METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA, respondents.

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure filed by petitioner Metropolitan Manila Development Authority (MMDA), seeking to reverse and set aside the November 13, 2000 decision of the Court of Appeals declaring valid nd perfected the waste management contract entered into by the Republic of the Philippines, represented by the Secretary of National Resources and the Executive Committee to oversee the build-operate-transfer implementation of solid waste management projects, and JANCOM Environmental Corporation.

The pertinent facts are as follows:

In 1994, then President Fidel V. Ramos issued Presidential Memorandum Order No. 202 creating the Executive Committee (EXECOM) to oversee the BOT implementation of solid waste management projects, headed by the Chairman of the MMDA and the Cabinet Officer for Regional Development-National Capital Region (CORD-NCR). The EXECOM was to oversee and develop waste-to-energy projects for the waste disposal sites in San Mateo, Rizal and Carmona, Cavite under the build-operate-transfer (BOT) scheme. The terms of reference for the waste-to-energy projects provided that its proponents should have the capability to establish municipal solid waste thermal plants using incineration technology.

This type of technology was selected because of its alleged advantages of greatly

reduced waste volume, prolongation of the service life of the disposal site, and generation of electricity. While eleven (11) proponents submitted their pre-qualification documents, most failed to comply with the requirements under Section 5.4 of the Implementing Rules and Regulations (IRR) of Republic Act No. 6957, otherwise known as the Build-Operate-Transfer Law. On July 21, 1995, the Pre-qualification, Bids and Awards Committee (PBAC) recommended the pre-qualification of three proponents, namely: i) JANCOM International Pty. Ltd.; ii) First Philippine International W-E Managers; and iii) PACTECH Development Corporation. On July 26, 1995, the EXECOM approved the recommendation of the PBAC. On July 27, 1995, MMDA forwarded to the Investment Coordinating Committee (ICC) Secretariat the pre-feasibility study on the privatization of the Carmona and San Mateo landfill sites. The project was later

presented to the ICC-Technical Board (ICC-TB) and then endorsed to the ICC-Cabinet Committee (ICC-CC).

On May 2, 1996, the PBAC conducted a pre-bid conference where it required the three pre-qualified bidders to submit, within ninety (90) days, their bid proposals. On August 22, 1996, JANCOM and First Philippines requested for an extension of time to submit their bids. PACTECH, on the other hand, withdrew from the bidding. Subsequently, JANCOM entered into a partnership with Asea Brown Boveri (ABB) to form JANCOM Environmental Corporation while First Philippines formed a partnership with OGDEN. Due to the change in the composition of the proponents, particularly in their technology partners and contractors, the PBAC conducted a post pre-qualification evaluation.

During the second bid conference, the bid proposals of First Philippines for the Carmona

site and JANCOM for the San Mateo site were found to be complete and responsive. Consequently, on February 12, 1997, JANCOM and First Philippines were declared the winning bidders, respectively, for the San Mateo and the Carmona projects.

In a letter dated February 27, 1997, then MMDA Chairman Prospero I. Oreta informed JANCOM’s Chief Executive Officer Jay Alparslan that the EXECOM had approved the PBAC recommendation to award to JANCOM the San Mateo Waste-to-Energy Project on the basis of the final Evaluation Report declaring JANCOM International Ltd., Pty., together with Asea Brown Boveri (ABB), as the sole complying (winning) bidder for the San Mateo Waste Disposal site, subject to negotiation and mutual approval of the terms and conditions of the contract of award. The letter also notified Alparslan that the EXECOM had created a negotiating team — composed of Secretary General Antonio Hidalgo of the Housing and Urban Development Coordinating Council, Director Ronald G. Fontamillas, General Manager Roberto Nacianceno of MMDA, and Atty. Eduardo Torres of the host local government unit — to work out and finalize the contract award. Chairman Oreta requested JANCOM to submit to the EXECOM the composition of its own negotiating team.

Thereafter, after a series of meetings and consultations between the negotiating teams

of EXECOM and JANCOM, a draft BOT contract was prepared and presented to the Presidential Task Force on Solid Waste Management.

On December 19, 1997, the BOT Contract for the waste-to-energy project was signed

between JANCOM and the Philippine Government, represented by the Presidential Task Force on Solid Waste Management through DENR Secretary Victor Ramos, CORD-NCR Chairman Dionisio dela Serna, and MMDA Chairman Prospero Oreta.

On March 5, 1998, the BOT contract was submitted to President Ramos for approval but this was too close to the end of his term which expired without him signing the contract. President Ramos, however, endorsed the contract to incoming President Joseph E. Estrada. With the change of administration, the composition of the EXECOM also changed. Memorandum Order No. 19 appointed the Chairman of the Presidential Committee on Flagship Programs and Project to be the EXECOM chairman. Too, Republic Act No. 8749, otherwise

known as the Clean Air Act of 1999, was passed by Congress. And due to the clamor of residents of Rizal province, President Estrada had, in the interim, also ordered the closure of the San Mateo landfill. Due to these circumstances, the Greater Manila Solid Waste Management Committee adopted a resolution not to pursue the BOT contract with 3JANCOM. Subsequently, in a letter dated November 4, 1999, Roberto Aventajado, Chairman of the Presidential Committee on Flagship Programs and Project informed Mr. Jay Alparslan, Chairman of JANCOM, that due to changes in policy and economic environment (Clean Air Act and non-availability of the San Mateo landfill), the implementation of the BOT contract executed and signed between JANCOM and the Philippine Government would no longer be pursued. The letter stated that other alternative implementation arrangements for solid waste management for Metro Manila would be considered instead.

JANCOM appealed to President Joseph Estrada the position taken by the EXECOM not to pursue the BOT Contract executed and signed between JANCOM and the Philippine Government, refuting the cited reasons for non-implementation. Despite the pendency of the appeal, MMDA, on February 22, 2000, caused the publication in a newspaper of an invitation to pre-qualify and to submit proposals for solid waste management projects for Metro Manila. JANCOM thus filed with the Regional Trial Court of Pasig a petition for certiorari to declare i) the resolution of the Greater Metropolitan Manila Solid Waste Management Committee disregarding the BOT Contract and ii) the acts of MMDA calling for bids and authorizing a new contract for Metro Manila waste management, as illegal, unconstitutional, and void; and for prohibition to enjoin the Greater Metropolitan Manila Solid Waste Management Committee and MMDA from implementing the assailed resolution and disregarding the Award to, and the BOT contract with, JANCOM, and from making another award in its place. On May 29, 2000, the trial court rendered a decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of

petitioners JANCOM ENVIRONMENTAL CORPORATION, and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY., LIMITED OF AUSTRALIA, and against respondent GREATER METROPOLITAN MANILA SOLID WASTE MANAGEMENT COMM., and HON. ROBERTO N. AVENTAJADO, in his Capacity as Chairman of the said Committee, METRO MANILA DEVELOPMENT AUTHORITY and HON. JEJOMAR C. BINAY, in his capacity as Chairman of said Authority, declaring the Resolution of respondent Greater Metropolitan Manila Solid Waste Management Committee disregarding petitioners’ BOT Award Contract and calling for bids for and authorizing a new contract for the Metro Manila waste management ILLEGAL and VOID. Moreover, respondents and their agents are hereby PROHIBITED and ENJOINED from implementing the aforesaid Resolution and disregarding petitioners’ BOT Award Contract and from making another award in its place. Let it be emphasized that this Court is not preventing or stopping the government from implementing infrastructure projects as it is aware of the proscription under PD 1818. On the contrary, the Court is paving the way for the necessary and modern solution to the perennial garbage problem that has been the major headache of the government and in the process would serve to attract more investors in the country. (Rollo,p. 159.) 4

Instead of appealing the decision, MMDA filed a special civil action for certiorari with prayer for a temporary restraining order with the Court of Appeals which was later docketed therein as CA-G.R. SP No. 59021. The appellate court not only required JANCOM to comment on the petition, it also granted MMDA’s prayer for a temporary restraining order. During the pendency of the petition for certiorari, JANCOM moved for the execution of the RTC decision, which was opposed by MMDA. However, the RTC granted the motion for execution on the ground that its decision had become final since MMDA had not appealed the same to the Court of Appeals. MMDA moved to declare respondents and the RTC judge in contempt of court, alleging that the RTC’s grant of execution was abuse of and interference with judicial rules and processes.

On November 13, 2001, the Court of Appeals dismissed the petition in CA-G.R. SP No. 59021 and a companion case, CA-G.R. SP No. 60303. MMDA’s motion for reconsideration of said decision having been denied; MMDA filed the instant petition, alleging that the Court of Appeals gravely erred in finding that: 1) There is a valid and binding contract between the Republic of the Philippines and JANCOM given that: a) the contract does not bear the signature of the President of the Philippines; b) the conditions precedent specified in the contract were not complied with; and c) there was no valid notice of award. 2) The MMDA had not seasonably appealed the Decision of the lower court via a petition for certiorari. Before taking up the substantive issue in question, we shall first dispose of the question as to whether it is fatal to petitioner’s cause, that rather than appealing the trial court’s decision to the Court of Appeals, it instead filed a petition for certiorari. While petitioner claims that the trial court’s decision never became final by virtue of its having appealed by certiorari to the Court of Appeals, the trial court ruled that petitioner’s failure to file an appeal has made its decision final and executory. At bottom, the question involves a determination of the propriety of petitioner’s choice of the remedy of certiorari in questioning the decision of the trial court.

Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides: Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. 5The petition shall be accompanied by a certified true copy of the judgment, order, or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of nonforum shopping as provided in the third paragraph of section 3, Rule 46. Plain it is from a reading of the above provision that certiorari will lie only where a court has acted without or in excess of jurisdiction or with grave abuse of discretion. If the court has jurisdiction over the subject matter and of the person, its rulings upon all questions involved are within its jurisdiction, however irregular or erroneous these may be, they cannot be corrected by certiorari. Correction may be obtained only by an appeal from the final decision. Verily, Section 1, Rule 41 of the 1997 Rules of Civil Procedure provides:

SEC. 1. Subject of appeal.— An appeal may be taken from a judgment or final order that completely disposes of the case or of a particular matter therein when declared by these Rules to be appealable. xxx xxx xxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. There can be no dispute that the trial court’s May 29, 2000 decision was a final order or judgment which MMDA should have appealed, had it been so minded. In its decision, the trial court disposed of the main controversy by “declaring the Resolution of respondent Greater Metropolitan Manila Solid Waste Management Committee disregarding petitioner’s BOT Award Contract and calling for bids for and authorizing a new contract for the Metro Manila waste management ILLEGAL and VOID.” This ruling completely disposed of the controversy between MMDA and JANCOM. In BA Finance Corporation vs. CA (229 SCRA 5667 *1994+), we held that a “final” order or judgment is one which “disposes of the whole subject matter or terminates a particular proceeding or action, leaving nothing to be done but to enforce by execution what has been determined.” An order or judgment is deemed final when it finally disposes of the pending action so that nothing more can be done with it in the trial court. In other words, a final order is that which gives an end to the litigation. A final order or judgment finally disposes of, adjudicates, or determines the rights, or some right or rights of the parties, either on the entire controversy or on some definite and separate branch thereof, and concludes them until it is reversed or set aside. Where no issue is left for future consideration, except the fact of compliance or non-compliance with the terms of the judgment or doer, such judgment or order is final and appealable (Investments, Inc. vs. Court of Appeals, 147 SCRA 334 [1987]).

However, instead of appealing the decision, MMDA resorted to the extraordinary remedy of certiorari, as a mode of obtaining reversal of the judgment. This cannot be done. The judgment was not in any sense null and void ab initio, incapable of producing any legal effects whatever, which could be resisted at any time and in any court it was attempted. It 6was a judgment which could or may have suffered from some substantial error in procedure or in findings of fact or of law, and on that account, it could have been reversed or modified on appeal. But since it was not appealed, it became final and has thus gone beyond the reach of any court to modify in any substantive aspect. The remedy to obtain reversal or modification of the judgment on the merits is appeal. This is true even if the error, or one of the errors, ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the decision. The existence and availability of the right of appeal proscribes a resort to certiorari, because one of the requirements for availment of the latter remedy is precisely that “there should be no appeal” (Mercado vs. CA, 162 SCRA 75 *1988+). As incisively observed by the Court of Appeals:

The special civil action for certiorari is available only when there is no appeal nor any

plain, speedy and adequate remedy in the ordinary course of law (Sec. 1, rule 65, id.) Admittedly, appeal could have been taken from the assailed RTC decision. However, petitioners

maintain that appeal is not a speedy remedy because the RTC decision prohibiting them from conducting a bidding for a new waste disposal project has adverse and serious effects on the city’s garbage situation.

Nevertheless, the RTC decision is not immediately executory. Only judgments in actions

for injunction, receivership, accounting and support and such other judgments as are now or may hereafter be declared to be immediately executory shall be enforced after their rendition and shall not be stayed by an appeal therefrom, unless otherwise ordered by the trial court (Sec. 4, rule 39, id.). Since the RTC decision is not immediately executory, appeal would have stayed its execution. Consequently, the adverse effects of said decision will not visit upon petitioners during the appeal. In other words, appeal is a plain, speedy and adequate remedy in the ordinary course of the law. But as no appeal was taken within the reglementary period, the RTC decision had become final and executory. Well-settled is the rule that the special civil action for certiorari may not be invoked as a substitute for the remedy of appeal (BF Corporation vs. Court of Appeals, 288 SCRA 267). Therefore, the extraordinary remedy of certiorari does not lie. Moreover, petitioners instituted the instant action without filing a motion for reconsideration of the RTC decision. Doctrinal is the rule that certiorari will not lie unless a motion for reconsideration is first filed before the respondent tribunal to allow it an opportunity to correct its errors (Zapanta vs. NLRC, 292 SCRA 580). (Rollo, p. 47-48.) 7 Admittedly, there are instances where the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal. In Ruiz, Jr. vs. Court of Appeals (220 SCRA 490 [1993]), we held: Considered extraordinary, [certiorari] is made available only when there is no appeal, nor any plain, speedy or adequate remedy in the ordinary course of the law (Rule 65, Rules of Court, Section 1). The long line of decisions denying the petition for certiorari, either before appeal was availed or specially in instances where the appeal period has lapsed, far outnumbers the instances when certiorari was given due course. The few significant exceptions were: when public welfare and the advancement of public policy dictate; or when the broader interests of justice so require, or when the writs issued are null . . . or when the questioned order amounts to an oppressive exercise of judicial authority. In the instant case, however, MMDA has not sufficiently established the existence of any fact or reason to justify its resort to the extraordinary remedy of certiorari. Neither does the record show that the instant case, indeed, falls under any of the exceptions aforementioned. The Court thus holds that the Court of Appeals did not err in declaring that the trial court’s decision has become final due to the failure of MMDA to perfect an appeal within the reglementary period. With the foregoing disquisition, it would appear unnecessarily to discuss and resolve the substantive issue posed before the Court. However, the procedural flaw notwithstanding, the Court deems it judicious to take cognizance of the substantive question, if only to put petitioner’s mind to rest. In its second assignment of errors, petitioner MMDA contends that there is no valid and binding contract between the Republic of the Philippines and respondents because: a) the BOT contract does not bear the signature of the President of the Philippines; b) the conditions precedent specified in the contract were not complied with; and that c) there was no valid notice of award. These contentions hold no water. Under Article 1305 of the Civil Code, “*a+ contract is a meeting of minds between two persons whereby one binds himself, with respect to the other,

to give something or to render some service.” A contract undergoes three distinct stages — preparation or negotiation, its perfection, and finally, its consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. The last stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof (Bugatti vs. CA, 343 SCRA 335 [2000]). Article 1315 of the Civil Code, provides that a contract is perfected by mere consent. Consent, on the other hand, is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract (See Article 1319, Civil Code). In the case at bar, the signing and execution of the contract by the parties clearly show that, as between the parties, there was a concurrence of offer and acceptance with respect to the material details of the contract, thereby giving rise to the perfection of the contract. The execution and signing of the contract is not disputed by the parties. As the Court of Appeals aptly held: [C]ontrary to petitioners’ insistence that there was no perfected contract, the meeting of the offer and acceptance upon the thing and the cause, which are to constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by the records.

Admittedly, when petitioners accepted private respondents’ bid proposal (offer), there was, in effect, a meeting of the minds upon the object (waste management project) and the cause (BOT scheme). Hence, the perfection of the contract. In City of Cebu vs. Heirs of Candido Rubi (306 SCRA 108), the Supreme Court held that “the effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder. (Rollo, p. 48-49.)

In fact, in asserting that there is no valid and binding contract between the parties, MMDA can only allege that there was no valid notice of award; that the contract does not bear the signature of the President of the Philippines; and that the conditions precedent specified in the contract were not complied with.

In asserting that the notice of award to JANCOM is not a proper notice of award, MMDA

points to the Implementing Rules and Regulations of Republic Act No. 6957, otherwise known as the BOT Law, which require that i) prior to the notice of award, an Investment Coordinating Committee clearance must first be obtained; and ii) the notice of award indicate the time within which the awardee shall submit the prescribed performance security, proof of commitment of equity contributions and indications of financing resources. Admittedly, the notice of award has not complied with these requirements. However, the defect was cured by the subsequent execution of the contract entered into and signed by authorized representatives of the parties; hence, it may not be gainsaid that there is a perfected contract existing between the parties giving to them certain rights and obligations (conditions precedents) in accordance with the terms and conditions thereof.

We borrow the words of the Court of Appeals:

Petitioners belabor the point that there was no valid notice of award as to constitute acceptance of private respondent’s offer. They maintain that former MMDA Chairman Oreta’s letter to JANCOM EC dated February 27, 1997 cannot be considered as a valid notice of award as it does not comply with the rules implementing Rep. Act No. 6957, as amended. The argument is untenable.

The fact that Chairman Oreta’s letter informed JANCOM EC that it wasthe “sole

complying (winning) bidder for the San Mateo project leads to no other conclusion than that the project was being awarded to it. But assuming that said notice of award did not comply with the legal requirements, private respondents cannot be faulted therefore as it was the government representatives’ duty to issue the proper notice.In any event, petitioners, as successors of those who previously acted for the government (Chairman Oreta, et al), are estopped from assailing the validity of the notice of award issued by the latter. As private respondents correctly observed, in negotiating on the terms and conditions of the BOT contract and eventually signing said contract, the government had led private respondents to believe that the notice of award given to them satisfied all the requirement of the law. While the government cannot be estopped by the erroneous acts of its agents, nevertheless, petitioners may not now assail the validity of the subject notice of award to the prejudice of private respondents. Until the institution of the original action before the RTC, invalidity of the notice of award was never invoked as a ground for termination of the BOT contract. In fact, the reasons cited for terminating the San Mateo project, per Chairman Aventajado’s letter to JANCOM EC dated November 4, 1999, were its purported non-implementability and non-viability on account of supervening events, e.g., passage of the Clean Air Act, etc. (Rollo, p. 49-50.)

MMDA also points to the absence of the President’s signature as proof that the same has not yet been perfected. Not only that, the authority of the signatories to bind the Republic has even been put to question. Firstly, it is pointed out that Memorandum Order No. 202 creating the Executive Committee to oversee the BOT implementation of solid waste management projects only charged the officials thereof with the duty of recommending to the President the specific project to be implemented under the BOT scheme for both San Mateo and Carmona sites. Hence, it is concluded that the signatories, CORD-NCR Chairman Dionisio dela Serna and MMDA Chairman Prospero Oreta, had no authority to enter into any waste management project for and in behalf of the Government.

Secondly, Section 59 of Executive Order No. 292 is relied upon as authority for the

proposition that presidential approval is necessary for the validity of the contract. The first argument conveniently overlooks the fact that then Secretary of Environment and Natural Resources Victor Ramos was likewise a signatory to the contract. While dela Serna and Oreta may not have had any authority to sign, the Secretary of Environment and Natural Resources has such an authority. In fact, the authority of the signatories to the contract was not denied by the Solicitor General. Moreover, as observed by the Court of Appeals, “*i+t was not alleged, much less shown, that those who signed in behalf of the Republic had acted beyond the scope of their authority.”

In truth, the argument raised by MMDA does not focus on the lack of authority of the signatories, but on the amount involved as placing the contract beyond the authority of the signatories to approve. Section 59 of Executive Order No. 292 reads:

Section 59. Contracts for Approval by the President. Contracts for infrastructure

projects, including contracts for the supply of materials and equipment to be used in said projects, which involve amounts above the ceilings provided in the preceding section shall be approved by the President: Provided, That the President may, when conditions so warrant, and upon recommendation of the National Economic and Development Authority, revise the aforesaid ceilings of approving authority. However, the Court of Appeals trenchantly observed in this connection: As regards the President’s approval of infrastructure projects required under Section 59 of Executive Order No. 292, said section does not apply to the BOT contract in question. Sec. 59 should be correlated with Sec. 58 of Exec. Order No. 292. Said sections read:

SECTION 58. Ceiling for Infrastructure Contracts.— The following shall be the ceilings for all civil works, construction and other contracts for infrastructure projects, including supply contracts for said projects, awarded through public bidding or through negotiation, which may be approved by the Secretaries of Public Works and Highways, Transportation and Communications, Local Government with respect to Rural Road improvement Project and governing boards of government-owned or controlled corporations: xxx xxx xxx Save as provided for above, the approval ceilings assigned to the departments/agencies involved in national infrastructure and construction projects shall remain at the levels provided in existing laws, rules and regulations.

Contrary to petitioner’s claim that all infrastructure contracts require the President’s approval (Petition, p. 16), Sec. 59 provides that such approval is required only in infrastructure contracts involving amounts exceeding the ceilings set in Sec. 58. Significantly, the infrastructure contracts treated in Sec. 58 pertain only to those which may be approved by the Secretaries of Public Works and Highways, Transportation and Communications, Local Government (with respect to Rural Road Improvement Project) and the governing boards of certain government-owned or controlled corporations. Consequently, the BOT contract in question, which was approved by the 11DENR Secretary and the EXCOM Chairman and Co-Chairman, is not covered by Exec. Order No. 292. (Rollo, p. 51-52.)

The provision pertinent to the authority of the Secretary of Environment and Natural

Resources would actually be Section 1 of Executive Order No. 380, Series of 1989 which provides that “The Secretaries of all Departments and Governing Boards of governmentowned or controlled corporations [except the Secretaries of Public Works and Highways, Transportation and Communication, and Local Government with respect to Rural Road Improvement projects] can enter into publicly bidded contracts regardless of amount (See also Section 515, Government Accounting and Auditing Manual — Volume I).” Consequently, MMDA may not claim that the BOT contract is not valid and binding due to the lack of presidential approval. Significantly, the contract itself provides that the signature of the President is

necessary only for its effectivity (not perfection), pursuant to Article 19 of the contract, which reads:

This contract shall become effective upon approval by the President of the Republic of

the Philippines pursuant to existing laws subject to the condition, precedent in Article 18. This contract shall remain in full force and effect for twenty-five (25) years subject to renewal for another twenty-five (25) years from the date of Effectivity. Such renewal will be subject to mutual agreement of the parties and approval of the President of the Republic of the Philippines. (Rollo, p. 94.)

Stated differently, while the twenty-five year effectivity period of the contract has not

yet started to run because of the absence of the President’s signature, the contract has, nonetheless, already been perfected. As to the contention that there is no perfected contract due to JANCOM’s failure to comply with several conditions precedent, the same is, likewise, unmeritorious. Article 18 of the BOT contract reads:

ARTICLE 18 CONDITIONS PRECEDENT xxx 18.2.1. The BOT COMPANY hereby undertakes to provide the following within 2 months from execution of this Contract as an effective document: a) sufficient proof of the actual equity contributions from the proposed shareholders of the BOT COMPANY in a total amount not less than PHP500,000,000 in accordance with the BOT Law and the implementing rules and regulations; 12b) sufficient proof of financial commitment from a lending institution sufficient to cover total project cost in accordance with the BOT Law and the implementing rules and regulations; c) to support its obligation under this Contract, the BOT COMPANY shall submit a security bond to the CLIENT in accordance with the form and amount required under the BOT Law. xxx

18.2.3. Completion of Documentary Requirements as per Schedule 4 by the BOT Company As clearly stated in Article 18, JANCOM undertook to comply with the stated conditions within 2 months from execution of the Contract as an effective document. Since the President of the Philippines has not yet affixed his signature on the contract, the same has not yet become an effective document. Thus, the two-month period within which JANCOM should comply with the conditions has not yet started to run. It cannot thus be said that JANCOM has already failed to comply with the “conditions precedent” mandated by the contract. By arguing that “failure *of JANCOM+ to comply with the conditions results in the failure of a contract or prevents the judicial relation from coming into existence,” MMDA reads into the contract something which is not contemplated by the parties. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control (Art. 1370, Civil Code). We, therefore, hold that the Court of Appeals did not err when it declared the existence of a valid and perfected contract between the Republic of the Philippines and JANCOM. There being a perfected contract, MMDA cannot revoke or renounce the same without the consent of the other. From the moment of

perfection, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage, and law (Article 1315, Civil Code). The contract has the force of law between the parties and they are expected to abide in good faith by their respective contractual commitments, not weasel out of them. Just as nobody can be forced to enter into a contract, in the same manner, once a contract is entered into, no party can renounce it unilaterally or without the consent of the other. It is a general principle of law that no one may be permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other party. Nonetheless, it has to be repeated that although the contract is a perfected one, it is still ineffective or unimplementable until and unless it is approved by the President.

Moreover, if after a perfected and binding contract has been executed between the

parties, it occurs to one of them to allege some defect therein as reason for annulling it, the alleged defect must be conclusively proven, since the validity and the fulfillment of contracts cannot be left to the will of one of the contracting parties. In the case at bar, the reasons cited by MMDA for not pushing through with the subject contract were: 1) the 13passage of the Clean Air Act, which allegedly bans incineration; 2) the closure of the San Mateo landfill site; and 3) the costly tipping fee. These reasons are bereft of merit Once again, we make reference to the insightful declarations of the Court of Appeals: Sec. 20 of the Clean Air Act pertinently reads:

SECTION 20. Ban on Incineration.— Incineration, hereby defined as the burning of municipal, bio-chemical and hazardous wastes, which process emits poisonous and toxic fumes, is hereby prohibited: x x x.” Section 20 does not absolutely prohibit incineration as a mode of waste disposal; rather only those burning processes which emit poisonous and toxic fumes are banned. As regards the projected closure of the San Mateo landfill vis-à-vis the implementability of the contract, Art. 2.3 thereof expressly states that “*i+n the event the project Site is not delivered x x x, the Presidential task Force on Solid Waste Management (PTFSWM) and the Client, shall provide within a reasonable period of time, a suitable alternative acceptable to the BOT COMPANY.” With respect to the alleged financial non-viability of the project because the MMDA and the local government units cannot afford the tipping fees under the contract, this circumstance cannot, by itself, abrogate the entire agreement. Doctrinal is the rule that neither the law nor the courts will extricate a party from an unwise or undesirable contract, or stipulation for that matter, he or she entered into with full awareness of its consequences (Opulencia vs. CA, 293 SCRA 385). Indeed, the terms and conditions of the subject contract were arrived at after due negotiations between the parties thereto. (Rollo, p. 54.)

WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit and the decision of the Court of Appeals in CA-G.R. SP No. 59021 dated November 13, 2001 AFFIRMED. No costs. SO ORDERED. [G. R. No. 151992. September 18, 2002]

COMMISSION ON ELECTIONS, COMELEC CHAIRMAN ALFREDO L. BENIPAYO, COMELEC COMMISSIONERS RESURRECCION Z. BORRA and FLORENTINO A. TUASON, JR., petitioners, vs. JUDGE MA. LUISA QUIJANO-PADILLA, REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 215 and PHOTOKINA MARKETING CORP., respondents.

The contracting prerogative of public officers is circumscribed with a heavy burden of responsibility. They must exercise utmost caution and observe the law in order to protect the public from unjust and inequitable government contracts.

The case at bar provides us with another occasion to stress that with respect to government contracts, statutes take precedence over the public officers‘ freedom to contract. Here, the primordial question to be resolved is -- may a successful bidder compel a government agency to formalize a contract with it notwithstanding that its bid exceeds the amount appropriated by Congress for the project?

Before us is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, alleging that respondent Judge Ma. Luisa Quijano-Padilla of the Regional Trial Court, Branch 215, Quezon City, committed grave abuse of discretion in issuing the (a) Resolution[1] dated December 19, 2001 granting private respondent‘s application for a writ of preliminary prohibitory injunction in Special Civil Action No. Q-01-45405[2]; and (b) Resolution[3] dated February 7, 2002 denying petitioners‘ Omnibus Motion to dismiss the petition and their motion for reconsideration of the same Resolution and granting private respondent's application for a writ of preliminary mandatory injunction.

The facts are undisputed.

In 1996, the Philippine Congress passed Republic Act No. 8189, otherwise known as the "Voter's Registration Act of 1996," providing for the modernization and computerization of the voters' registration list and the appropriate of funds therefor "in order to establish a clean, complete, permanent and updated list of voters."[4]

Pursuant thereto, the Commission on Elections (COMELEC) promulgated Resolution No. 00-0315[5] approving in principle the Voter's Registration and Identification System Project (VRIS) Project for brevity). The VRIS Project envisions a computerized database system for the May 2004 Elections. The idea is to have a national registration of voters whereby each registrant's fingerprints will be digitally entered into the system and upon completion of registration, compared and matched with other entries to eliminate double entries. A tamper-proof and counterfeit-resistant voter's identification card will then be issues to each registrant as a visual record of the registration.

On September 9, 1999, the COMELEC issued invitations to pre-qualify and bid for the supply and installations of information technology equipment and ancillary services for its VRIS Project.[6] Private respondent Photokina Marketing Corporation (PHOTOKINA) pre-qualified and was allowed to participate as one of the bidders. After the public bidding was conducted, PHOTOKINA's bid in the amount of P6.588 Billion Pesos garnered the highest total weighted score and was declared the winning bidder. Thus, on September 28, 2000, the COMELEC issued Resolution No.

3252[7] approving the Notice of Award to PHOTOKINA, which, in turn, immediately accepted the same. The parties then proceeded to formalize the contract, with Commissioner Mehol K. Sadain and Atty. Rodrigo D. Sta. Ana, acting as negotiators for the COMELEC and PHOTOKINA, respectively.

However, under Republic Act No. 8760[8] the budget appropriated by Congress for the COMELEC‘s modernization project was only One (1) Billion Pesos and that the actual available funds under the Certificate of Availability of Funds (CAF) issued by the Chief Accountant of the COMELEC was only P1.2 Billion Pesos.

In December 2000, then COMELEC Chairman Harriet O. Demetriou issued a memorandum to the COMELEC en banc expressing her objections to the contract. Commissioner Sadain, for his part, submitted a draft of the contract[9] providing a price that would not exceed the certified available appropriation but covering only Phase I of the VRIS Project, i.e., issuance of registration cards for 1,000,000 voters in certain areas only.[10] Under the draft, the ―subsequent completion of the whole project shall be agreed upon in accordance with the Bid Documents and the annual funds available for it.‖ [11]

On February 2, 2001, the term of former Chairman Demetriou and those of Commissioners Julio F. Desamito and Teresita Dy-Liacco Flores expired. Appointed as their successors were Alfredo L. Benipayo as Chairman and Resurreccion Z. Borra and Florentino A. Tuason, Jr. as Commissioners.

Meanwhile, PHOTOKINA, as the winning bidder, wrote several letters to the COMELEC requesting the formal execution of the contract, but to no avail.[12]

Then Chairman Benipayo, through various press releases and public statements, announced that the VRIS Project has been ―scrapped, dropped, junked, or set aside.‖ He further announced his plan to ―re-engineer‖ the entire modernization program of the COMELEC, emphasizing his intention to replace the VRIS Project with his own version, the ―Triple E Vision‖.[13]

On October 2, 2001, Senator Edgardo J. Angara directed the creation of a technical working group to ―assist the COMELEC in evaluating all programs for the modernization of the COMELEC which will also consider the PHOTOKINA contract as an alternative program and various competing programs for the purpose.‖

Unsatisfied with the adverse turn of events, PHOTOKINA filed with the Regional Trial Court, Branch 215, Quezon City a petition for mandamus, prohibition and damages (with prayer for temporary restraining order, preliminary prohibitory injunction and preliminary mandatory injunction) against the COMELEC and all its Commissioners,[14] docketed as Special Civil Action No. Q- 01- 45405. PHOTOKINA alleged three causes of action: first, the deliberate refusal of the COMELEC and its Commissioners to formalize the contract rendered nugatory the perfected contract between them; second, in announcing that the VRIS Project has been junked and that he has plans to re-engineer the COMELEC‘s entire modernization program, Chairman Benipayo committed grave abuse of discretion; and third, the COMELEC‘s failure to perform its duty under the contract has caused

PHOTOKINA to incur damages since it has spent substantial time and resources in the preparation of the bid and the draft contract.

In support of its application for writs of preliminary prohibitory and mandatory injunction, PHOTOKINA adopted the evidence it adduced during the hearing of its application for the issuance of a temporary restraining order.

On December 19, 2001, respondent Judge Ma. Luisa Quijano-Padilla issued the first assailed Resolution granting PHOTOKINA‘s application for a writ of preliminary prohibitory injunction, thus:

"WHEREFORE, premises considered, the Court resolves to: (1) grant the application for the

issuance of a writ of preliminary prohibitory injunction; and (2) deny the application for the

issuance of a writ of preliminary mandatory injunction.

Accordingly, let a writ of preliminary prohibitory injunction issue enjoining respondents, their

agents, successors and assigns from replacing the VRIS Project upon petitioner‟s posting of a

bond in the amount of P20,000,000.00, which bond shall answer for whatever damages which

may be sustained by reason of the issuance of the said writ, if it turns out that the plaintiffs are

not entitled thereto.

SO ORDERED"[15]

Both parties filed their respective motions for reconsideration. PHOTOKINA reiterated its plea for a writ of preliminary mandatory injunction.[16] For their part, the COMELEC and its Commissioners, through the Solicitor General, prayed that the writ of preliminary prohibitory injunction be set aside and that the petition for mandamus, prohibition and damages be dismissed.[17]

On February 8, 2002, respondent judge issued the second assailed Resolution denying the COMELEC‘s Omnibus Motion and, this time, granting PHOTOKINA‘s application for a writ of preliminary mandatory injunction, thus:

"WHEREFORE, premises considered, this Court resolves to: (1) deny Respondents’

Omnibus Motion for the dismissal of this case and for the reconsideration of this Court’s

Resolution granting the writ of preliminary prohibitory injunction; (2) grant Petitioner‟s

Motion dated January 2, 2002 insofar as it prays for the issuance of a writ of preliminary

mandatory injunction; (3) Grant the prayer for the reduction of the preliminary prohibitory

injunction bond from P20,000,000.00 to P10,000,000.00; (4) Clarify its Resolution dated

December 19, 2001 to the extent that the writ of preliminary prohibitory injunction will also

enjoin Respondents, their agents, successors and assigns from disregarding the contract for the

VRIS Project between Petitioner and Respondent COMELEC; (5) deny Petitioner‟s motion to

declare Respondents in default.

"Accordingly, let a writ of preliminary mandatory injunction issue directing all respondent

Commissioners to immediately resume negotiations to formalize the execution of the contract

with Petitioner for the VRIS Project upon petitioner‟s posting of a bond, separate from the

above bond for the writ of preliminary prohibitory injunction, in the amount of P20,000,000.00,

which bond shall answer for whatever damages that may be sustained by reason of the

issuance of the said writ, if it turns out that Petitioner is not entitled thereto.

"SO ORDERED."[18]

Hence, the instant petition for certiorari filed by the Office of the Solicitor General (OSG) in behalf of then COMELEC Chairman Alfredo L. Benipayo and Commissioners Resurreccion Z. Borra and Florentino A. Tuason, Jr..

Petitioners contend that: (1) a petition for mandamus and prohibition does not lie to enforce contractual obligations, hence, PHOTOKINA‘s proper recourse before the Regional Trial Court should have been an action for specific performance; (2) respondent judge, by issuing the injunctive writs, already assumed that the VRIS Project was lawfully awarded by the COMELEC to PHOTOKINA, and that there is a valid perfected contract between them, thus, manifesting her prejudgment; and (3) injunctive writs should not be issued when an action for damages can adequately compensate for the injuries. Petitioners pray that the two assailed Resolutions be nullified and Special Civil Action No. Q-01-45405 be dismissed outright.[19]

On February 21, 2002, the majority of the COMELEC Commissioners -- Luzviminda G. Tancangco, Rufino S.B. Javier, Ralph C. Lantion and Mehol K. Sadain – filed with this Court a Manifestation[20] that ―the Chairman and the two Commissioners who filed the instant Petition acted without authority from the COMELEC en banc to take such action.‖

PHOTOKINA filed a Comment with Motion to Dismiss,[21] the present petition, on two procedural grounds. First, the petition violates the doctrine of hierarchy of courts. And second, the OSG has no authority and/or standing to file the petition considering that the petitioners have not been authorized by the COMELEC en banc to take such action. Without the concurrence of at least a majority of the members of the COMELEC, neither petitioners nor the OSG could file the petition in behalf of the COMELEC.

In refutation of petitioners‘ arguments, PHOTOKINA contends that mandamus is an appropriate remedy since what is involved in Special Civil Action No. Q-01-45405 is the performance of a ministerial duty. Citing Isada vs. Bocar,[22] PHOTOKINA maintains that mandamus may be availed of by private parties to compel public officers to act on a contract entered into pursuant to law. In its Supplemental Comment,[23] PHOTOKINA invites the Court‘s attention to Metropolitan Manila Development Authority vs. Jancom Environmental Corporation[24]whereby the winning bidder was afforded every right to seek enforcement of its perfected contract with the government.

The petition is impressed with merit.

Initially, we must resolve the procedural roadblocks.

PHOTOKINA alleges that the OSG has no standing to file the present petition since its legal position is contrary to that espoused by the majority of the COMELEC

Commissioners. This is a leap to a non-sequitur conclusion. The OSG is an independent office. Its hands are not shackled to the cause of its client agency. In the discharge of its task, the primordial concern of the OSG is to see to it that the best interest of the government is upheld.[25] This is regardless of the fact that what it perceived as the ―best interest of the government‖ runs counter to its client agency‘s position.[26] Endowed with a broad perspective that spans the legal interest of virtually the entire government officialdom, the OSG may transcend the parochial concerns of a particular client agency and instead, promote and protect the public weal.[27] Our ruling in Orbos vs. Civil Service Commission,[28] is relevant, thus:

"x x x It is incumbent upon him (Solicitor General) to present to the court what he

considers would legally uphold the best interest of the government although it may run

counter to a client’s position. x x x.

"In the present case, it appears that after the Solicitor General studied the issues he found merit

in the cause of the petitioner based on the applicable law and jurisprudence. Thus, it is his

duty to represent the petitioner as he did by filing this petition. He cannot be disqualified

from appearing for the petitioner even if in so doing his representation runs against the

interests of the CSC.

"This is not the first time that the Office of the Solicitor General has taken a position

adverse to his clients like the CSC, the National Labor Relations Commission, among

others, and even the People of the Philippines. x x x” (Emphasis supplied)

Hence, while petitioners‘ stand is contrary to that of the majority of the Commissioners, still, the OSG may represent the COMELEC as long as in its assessment, such would be for the best interest of the government. For, indeed, in the final analysis, the client of the OSG is not the agency but no less than the Republic of the Philippines in whom the plenum of sovereignty resides.[29]

Moreover, it must be emphasized that petitioners are also public officials entitled to be represented by the OSG. Under Executive Order No. 292[30] and Presidential Decree No. 478,[31] the OSG is the lawyer of the government, its agencies and instrumentalities, and its officials or agents. Surely, this mandate includes the three petitioners[32] who have been impleaded as public respondents in Special Civil Action No. Q-01-45405.

Anent the alleged breach of the doctrine of hierarchy of courts, suffice it to say that it is not an iron-clad dictum. On several instances where this Court was confronted with cases of national interest and of serious implications, it never hesitated to set aside the rule and proceed with the judicial determination of the case.[33] The case at bar is of similar import. It is in the interest of the State that questions relating to government contracts be settled without delay. This is more so when the contract, as in this case, involves the disbursement of public funds and the modernization of our country‘s election process, a project that has long been overdue.

We now resolve the following substantive issues:

1) Is a petition for mandamus the appropriate remedy to enforce contractual obligations? and 2) May a successful bidder compel a government agency to formalize a contract with it notwithstanding that its bid exceeds the amount appropriated by Congress for the project?

I

No rule of law is better settled than that mandamus does not lie to enforce the performance of contractual obligations.[34] As early as 1924, Justice Street, in Quiogue vs. Romualdez,[35]already set forth the justification of this rule, thus:

“Upon the facts above stated we are of the opinion that the writ of mandamus is not the

appropriate, or even an admissible remedy. It is manifest that whatever rights the petitioner

may have, upon the facts stated, are derived from her contract with the city; and no rule of law

is better settled than that mandamus never lies to enforce the performance of private

contracts. x x x The petitioner’s remedy, if any she has, is by an original action in the

Court of First Instance to compel the city to pay the agreed price or to pay damages for

the breach of contract.

"x x x. As said in Lowe vs. Phelps (14 Bush, 642):

„It must, therefore, appear upon every application for a mandamus that it is the legal duty of the

respondent to do that which it is sought to compel him to do, and that he has upon proper

application refused to perform that duty.' (Citing numerous authorities).

"It was not intended to aid a plaintiff in the enforcement of a mere contract right, or to

take the place of the other remedies provided by law for the adjudication of disputed

claims. Looking at the case from the standpoint of appellant, it involves nothing more than an

ordinary breach of contract. If, as contended, the appellant had a valid contract with the school

board, it also had an adequate remedy at law to recover damages for its breach; and to permit

the writ of mandamus to be used for the purpose of enforcing a mere contract right would

be a wide departure from the settled practice in respect to the character of cases in which

relief by mandamus may be obtained.

"In Parrott vs. City of Bridgeport (44 Conn., 180), the writ was refused where the petitioner

sought to compel a city to construct a public street in a certain manner agreeably to the terms of

a special agreement between the petitioner and the city. In the course of the opinion the court

said:

"* * * The duty, therefore, if any, which rests upon the city in this regard, is one which it owes

to the petitioner as an individual, not to the public, and the special contract is the foundation

upon which it rests. But the writ of mandamus has never been considered as an

appropriate remedy for the enforcement of contract rights of a private and personal

nature and obligations which rest wholly upon contract and which involve no questions of

public trusts or official duty. Indeed, strictly speaking, it never lies where the party

aggrieved has adequate remedy at law, and its aid is only to be invoked to prevent an

absolute failure of justice in cases where ordinary legal processes furnish no

relief.” (Emphasis supplied)

The passage of time has not eroded the wisdom of the foregoing rule. Its invocation by this Court in Province of Pangasinan vs. Reparation Commission,[36] Aprueba vs. Ganzon,[37] City of Manila vs. Posadas,[38] Jacinto vs. Director of Lands,[39] National Marketing Corporation vs. Cloribel,[40] Astudillo vs. The Board of Directors of People’s Homesite and Housing Corporation,[41] and Sharp International Marketing vs. Court of Appeals,[42] virtually reinforces the rule. The present case is our latest addition to the above catena of jurisprudence. We carefully read the pleadings filed in Special Civil Action No. Q-01-45405 and we are convinced that what PHOTOKINA sought to enforce therein are its rights under the accepted bid proposal. Its petition alleged that notwithstanding the COMELEC‘s issuance of a Notice of Award and its (PHOTOKINA‘s) subsequent acceptance thereof, the COMELEC still refused to formalize the contract. As a relief, PHOTOKINA prayed that after trial, petitioners be directed ―to review and finalize the formal contract‖ and to ―implement the VRIS Project.‖[43] Petitioners, on their part, specifically denied the existence of a perfected contract and asserted that even if there was one, the same is null and void for lack of proper appropriation. Petitioners labeled the contract as illegal and against public policy.

Akin to our rulings cited above, we hold that mandamus is not the proper recourse to enforce the COMELEC's alleged contractual obligations with PHOTOKINA. It has other adequate remedy in law. Moreover, worth stressing is the judicial caution that mandamus applies as a remedy only where petitioner's right is founded clearly in law and not when it is doubtful.[44] In varying language, the principle echoed and reechoed is that legal rights may be enforced by mandamus only if those rights are well-defined, clear and certain.[45] Here, the alleged contract, relied upon by PHOTOKINA as source of its rights which it seeks to be protected, is being disputed, not only on the ground that it was not perfected but also because it is illegal and against public policy.

Of course, there are cases in which the writ of mandamus has been used to compel public officers to perform certain acts, but it will be generally observed that in such cases, the contracts have been completely performed by the petitioner, and nothing remained to be done except for the government to make compensation. These exceptional cases are cited in Isada vs. Bocar[46]where the act of the respondent public officer has the effect of setting aside contracts already in the process of consummation. In contrast with Isada, the alleged contract here has not yet been fully performed by PHOTOKINA; and though it avers readiness to perform, petitioners raised serious questions as to its validity. Their posture is tenable.

II

To spare PHOTOKINA the drudgery of a fruitless pursuit, we deem it appropriate to lay down the principles governing government contracts and to apply them to the instant case. Meanwhile, as PHOTOKINA will later on deduce from the discussion, the

contract subject of this controversy is one that can be slain in sight for being patently void and unenforceable.

Enshrined in the 1987 Philippine Constitution is the mandate that "no money shall be paid out of the Treasury except in pursuance of an appropriation made by law."[47] Thus, in the execution of government contracts, the precise import of this constitutional restriction is to require the various agencies to limit their expenditures within the appropriations made by law for each fiscal year.

Complementary to the foregoing constitutional injunction are pertinent provisions of law and administrative issuances that are designed to effectuate the above mandate in a detailed manner.[48] Sections 46 and 47, Chapter 8, Subtitle B, Title I, Book V of Executive Order No. 292, otherwise known as "Administrative Code of 1987," provide:

"SEC. 46. Appropriation Before Entering into Contract. - (1) No contract involving the

expenditure of public funds shall be entered into unless there is an appropriation therefor, the

unexpended balance of which, free of other obligations, is sufficient to cover the proposed

expenditure; and x x x

"SEC. 47. Certificate Showing Appropriation to Meet Contract. - Except in the case of a

contract for personal service, for supplies for current consumption or to be carried in stock not

exceeding the estimated consumption for three (3) months, or banking transactions of

government-owned or controlled banks, no contract involving the expenditure of public funds

by any government agency shall be entered into or authorized unless the proper

accounting official of the agency concerned shall have certified to the officer entering into

the obligation that funds have been duly appropriated for the purpose and that the amount

necessary to cover the proposed contract for the current calendar year is available for

expenditure on account thereof, subject to verification by the auditor concerned. The

certificate signed by the proper accounting official and the auditor who verified it, shall be

attached to and become an integral part of the proposed contract, and the sum so certified shall

not thereafter be available for expenditure for any other purpose until the obligation of the

government agency concerned under the contract is fully extinguished.

It is quite evident from the tenor of the language of the law that the existence of appropriations and the availability of funds are indispensable pre-requisites to or conditions sine qua non for the execution of government contracts. The obvious intent is to impose such conditions as a priori requisites to the validity of the proposed contract.[49] Using this as our premise, we cannot accede to PHOTOKINA's contention that there is already a perfected contract. While we held in Metropolitan Manila Development Authority vs. Jancom Environmental Corporation[50] that "the effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder," however, such statement would be inconsequential in a government where the acceptance referred to is yet to meet certain conditions. To hold otherwise is to allow a public officer to execute a binding contract that would obligate

the government in an amount in excess of the appropriations for the purpose for which the contract was attempted to be made.[51] This is a dangerous precedent.

In the case at bar, there seems to be an oversight of the legal requirements as early as the bidding stage. The first step of a Bids and Awards Committee (BAC) is to determine whether the bids comply with the requirements. The BAC shall rate a bid "passed" only if it complies with all the requirements and the submitted price does not exceed the approved budget for the contract."[52]

Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on account of its bid in the amount of P6.588 Billion Pesos. However, under Republic Act No. 8760,[53] the only fund appropriated for the project was P1 Billion Pesos and under the Certification of Available Funds[54] (CAF) only P1.2 Billion Pesos was available. Clearly, the amount appropriated is insufficient to cover the cost of the entire VRIS Project. There is no way that the COMELEC could enter into a contract with PHOTOKINA whose accepted bid was way beyond the amount appropriated by law for the project. This being the case, the BAC should have rejected the bid for being excessive[55] or should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is null and void.[56]

The objections of then Chairman Demetriou to the implementation of the VRIS Project, ardently carried on by her successor Chairman Benipayo, are therefore in order.

Even the draft contract submitted by Commissioner Sadain, that provides for a contract price in the amount of P1.2 Billion Pesos is unacceptable. Indeed, we share the observation of former Chairman Demetriou that it circumvents the statutory requirements on government contracts. While the contract price under the draft contract[57] is only P1.2 Billion and, thus, within the certified available funds, the same covers only Phase I of the VRIS Project, i.e., the issuance of identification cards for only 1,000,000 voters in specified areas.[58] In effect, the implementation of the VRIS Project will be "segmented" or "chopped" into several phases. Not only is such arrangement disallowed by our budgetary laws and practices, it is also disadvantageous to the COMELEC because of the uncertainty that will loom over its modernization project for an indefinite period of time. Should Congress fail to appropriate the amount necessary for the completion of the entire project, what good will the accomplished Phase I serve? As expected, the project failed "to sell" with the Department of Budget and Management. Thus, Secretary Benjamin Diokno, per his letter of December 1, 2000, declined the COMELEC's request for the issuance of the Notice of Cash Availability (NCA) and a multi-year obligational authority to assume payment of the total VRIS Project for lack of legal basis.[59] Corollarily, under Section 33 of R.A. No. 8760, no agency shall enter into a multi-year contract without a multi-year obligational authority, thus:

"SECTION 33. Contracting Multi-Year Projects. - In the implementation of multi-year projects,

no agency shall enter into a multi-year contract without a multi-year Obligational Authority

issued by the Department of Budget and Management for the purpose. Notwithstanding the

issuance of the multi-year Obligational Authority, the obligation to be incurred in any given

calendar year, shall in no case exceed the amount programmed for implementation during said

calendar year."

Petitioners are justified in refusing to formalize the contract with PHOTOKINA. Prudence dictated them not to enter into a contract not backed up by sufficient appropriation and available funds. Definitely, to act otherwise would be a futile exercise for the contract would inevitably suffer the vice of nullity. In Osmeña vs. Commission on Audit,[60] this Court held:

"The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving

the expenditure of public funds shall be entered into unless there is an appropriation therefor and

the proper accounting official of the agency concerned shall have certified to the officer entering

into the obligation that funds have been duly appropriated for the purpose and the amount

necessary to cover the proposed contract for the current fiscal year is available for expenditure

on account thereof. Any contract entered into contrary to the foregoing requirements shall be

VOID.

"Clearly then, the contract entered into by the former Mayor Duterte was void from the very

beginning since the agreed cost for the project (P8,368,920.00) was way beyond the appropriated

amount (P5,419,180.00) as certified by the City Treasurer. Hence, the contract was properly

declared void and unenforceable in COA's 2nd Indorsement, dated September 4, 1986. The

COA declared and we agree, that:

'The prohibition contained in Sec. 85 of PD 1445 (Government Auditing Code) is explicit and

mandatory. Fund availability is, as it has always been, an indispensable prerequisite to the

execution of any government contract involving the expenditure of public funds by all

government agencies at all levels. Such contracts are not to be considered as final or binding

unless such a certification as to funds availability is issued (Letter of Instruction No. 767, s.

1978). Antecedent of advance appropriation is thus essential to government liability on contracts

(Zobel vs. City of Manila, 47 Phil. 169). This contract being violative of the legal requirements

aforequoted, the same contravenes Sec. 85 of PD 1445 and is null and void by virtue of Sec.87.'"

Verily, the contract, as expressly declared by law, is inexistent and void ab initio.[61] his is to say that the proposed contract is without force and effect from the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of time or ratification.[62]

Of course, we are not saying that the party who contracts with the government has no other recourse in law. The law itself affords him the remedy. Section 48 of E.O. No. 292 explicitly provides that any contract entered into contrary to the above-mentioned requirements shall be void, and ―the officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same as if the transaction had been wholly between private parties." So when the contracting officer transcends his lawful and legitimate powers by acting in excess of or beyond the limits of his contracting authority, the Government is not bound under the contract. It would be as if the contract in such case were a private one, whereupon, he binds only himself, and thus, assumes personal liability

thereunder.[63] Otherwise stated, the proposed contract is unenforceable as to the Government.

While this is not the proceeding to determine where the culpability lies, however, the constitutional mandate cited above constrains us to remind all public officers that public office is a public trust and all public officers must at all times be accountable to the people. The authority of public officers to enter into government contracts is circumscribed with a heavy burden of responsibility. In the exercise of their contracting prerogative, they should be the first judges of the legality, propriety and wisdom of the contract they entered into. They must exercise a high degree of caution so that the Government may not be the victim of ill-advised or improvident action.[64]

In fine, we rule that PHOTOKINA, though the winning bidder, cannot compel the COMELEC to formalize the contract. Since PHOTOKINA‘s bid is beyond the amount appropriated by Congress for the VRIS Project, the proposed contract is not binding upon the COMELEC and is considered void; and that in issuing the questioned preliminary writs of mandatory and prohibitory injunction and in not dismissing Special Civil Action No. Q-01-45405, respondent judge acted with grave abuse of discretion. Petitioners cannot be compelled by a writ ofmandamus to discharge a duty that involves the exercise of judgment and discretion, especially where disbursement of public funds is concerned.

WHEREFORE, the petition is GRANTED. The Resolutions dated December 19, 2001 and February 7, 2002 issued by respondent Judge Padilla are SET ASIDE. Special Civil Action No. Q-01-45405 is hereby ordered DISMISSED.

G.R. No. 127624 November 18, 2003 BPI LEASING CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, COURT OF TAX APPEAL AND COMMISSIONER OF INTERNAL REVENUE, respondents.

The present petition for review on certiorari assails the decision1 of the Court of Appeals in CA-G.R. SP No. 38223 and its subsequent resolution2 denying the motion for reconsideration. The assailed decision and resolution affirmed the decision of the Court of Tax Appeals (CTA) which denied petitioner BPI Leasing Corporation‘s (BLC) claim for tax refund in CTA Case No. 4252.

The facts are not disputed.

BLC is a corporation engaged in the business of leasing properties.3 For the calendar year 1986, BLC paid the Commissioner of Internal Revenue (CIR) a total of P1,139,041.49 representing 4% "contractor‘s percentage tax" then imposed by Section 205 of the National Internal Revenue Code (NIRC), based on its gross rentals from equipment leasing for the said year amounting to P27,783,725.42.4

On November 10, 1986, the CIR issued Revenue Regulation 19-86. Section 6.2 thereof provided that finance and leasing companies registered under Republic Act 5980 shall be subject to gross receipt tax of 5%-3%-1% on actual income earned. This means that companies registered under Republic Act 5980, such as BLC, are not liable for "contractor‘s percentage tax" under Section 205 but are, instead, subject to "gross receipts tax" under Section 260 (now Section 122) of the NIRC. Since BLC had earlier paid the aforementioned "contractor‘s percentage tax," it re-computed its tax liabilities under the "gross receipts tax" and arrived at the amount of P361,924.44.

On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount of P777,117.05, representing the difference between the P1,139,041.49 it had paid as "contractor‘s percentage tax" and P361,924.44 it should have paid for "gross receipts tax."5 Four days later, to stop the running of the prescriptive period for refunds, petitioner filed a petition for review with the CTA.6

In a decision dated May 13, 1994,7 the CTA dismissed the petition and denied BLC‘s claim of refund. The CTA held that Revenue Regulation 19-86, as amended, may only be applied prospectively such that it only covers all leases written on or after January 1, 1987, as stated under Section 7 of said revenue regulation:

Section 7. Effectivity – These regulations shall take effect on January 1, 1987 and shall be applicable to all leases written on or after the said date.

The CTA ruled that, since BLC‘s rental income was all received prior to 1986, it follows that this was derived from lease transactions prior to January 1, 1987, and hence, not covered by the revenue regulation.

A motion for reconsideration of the CTA‘s decision was filed, but was denied in a resolution dated July 26, 1995.8BLC then appealed the case to the Court of Appeals, which issued the aforementioned assailed decision and resolution.9 Hence, the present petition.

In seeking to reverse the denial of its claim for tax refund, BLC submits that the Court of Appeals and the CTA erred in not ruling that Revenue Regulation 19-86 may be applied retroactively so as to allow BLC‘s claim for a refund of P777,117.05.

Respondents, on the other hand, maintain that the provision on the date of effectivity of Revenue Regulation 19-86 is clear and unequivocal, leaving no room for interpretation on its prospective application. In addition, respondents argue that the petition should be dismissed on the ground that the Verification/Certification of Non-Forum Shopping was signed by the counsel of record and not by BLC, through a duly authorized representative, in violation of Supreme Court Circular 28-91.

In a resolution dated March 29, 2000,10 the petition was given due course and the Court required the parties to file their respective Memoranda. Upon submission of the Memoranda, the issues in this case were delineated, as follows:11

WHETHER THE INSTANT PETITION FOR REVIEW ON CERTIORARI SUBSTANTIALLY COMPLIES WITH SUPREME COURT CIRCULAR 28-91.

WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS LEGISLATIVE OR INTERPRETATIVE IN NATURE.

WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS PROSPECTIVE OR RETROACTIVE IN ITS APPLICATION.

WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, FAILED TO MEET THE QUANTUM OF EVIDENCE REQUIRED IN REFUND CASES.

WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, IS ESTOPPED FROM CLAIMING ITS PRESENT REFUND.

As to the first issue, the Court agrees with respondents‘ contention that the petition should be dismissed outright for failure to comply with Supreme Court Circular 28-91, now incorporated as Section 2 of Rule 42 of the Rules of Court. The records plainly show, and this has not been denied by BLC, that the certification was executed by counsel who has not been shown to have specific authority to sign the same for BLC.

In BA Savings Bank v. Sia,12 it was held that the certificate of non-forum shopping may be signed, for and on behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document. This ruling, however, does not mean that any lawyer, acting on behalf of the corporation he is representing, may routinely sign a certification of non-forum shopping. The Court emphasizes that the lawyer must be "specifically authorized" in order validly to sign the certification.

Corporations have no powers except those expressly conferred upon them by the Corporation Code and those that are implied by or are incidental to its existence. These powers are exercised through their board of directors and/or duly authorized officers and agents. Hence, physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by specific act of the board of directors.13

The records are bereft of the authority of BLC‘s counsel to institute the present petition and to sign the certification of non-forum shopping. While said counsel may be the counsel of record for BLC, the representation does not vest upon him the authority to execute the certification on behalf of his client. There must be a resolution issued by the board of directors that specifically authorizes him to institute the petition and execute the certification, for it is only then that his actions can be legally binding upon BLC.

BLC however insists that there was substantial compliance with SC Circular No. 28-91 because the verification/certification was issued by a counsel who had full personal knowledge that no other petition or action has been filed or is pending before any other

tribunal. According to BLC, said counsel‘s law firm has handled this case from the very beginning and could very well attest and/or certify to the absence of an instituted or pending case involving the same or similar issues.

The argument of substantial compliance deserves no merit, given the Court‘s ruling in Mendigorin v. Cabantog:14

…The CA held that there was substantial compliance with the Rules of Court, citing Dimagiba vs. Montalvo, Jr. [202 SCRA 641] to the effect that a lawyer who assumes responsibility for a client's cause has the duty to know the entire history of the case, especially if any litigation is commenced. This view, however, no longer holds authoritative value in the light of Digital Microwave Corporation vs. CA [328 SCRA 286], where it was held that the reason the certification against forum shopping is required to be accomplished by petitioner himself is that only the petitioner himself has actual knowledge of whether or not he has initiated similar actions or proceedings in other courts or tribunals. Even counsel of record may be unaware of such fact. To our mind, this view is more in accord with the intent and purpose of Revised Circular No. 28-91.

Clearly, therefore, the present petition lacks the proper certification as strictly required by jurisprudence and the Rules of Court.

Even if the Court were to ignore the aforesaid procedural infirmity, a perusal of the arguments raised in the petition indicates that a resolution on the merits would nevertheless yield the same outcome.

BLC attempts to convince the Court that Revenue Regulation 19-86 is legislative rather than interpretative in character and hence, should retroact to the date of effectivity of the law it seeks to interpret.

Administrative issuances may be distinguished according to their nature and substance: legislative and interpretative. A legislative rule is in the matter of subordinate legislation, designed to implement a primary legislation by providing the details thereof. An interpretative rule, on the other hand, is designed to provide guidelines to the law which the administrative agency is in charge of enforcing.15

The Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all needful rules and regulations for the effective enforcement of the provisions of the NIRC. In Paper Industries Corporation of the Philippines v. Court of Appeals,16 the Court recognized that the application of Section 277 calls for none other than the exercise of quasi-legislative or rule-making authority. Verily, it cannot be disputed that Revenue Regulation 19-86 was issued pursuant to the rule-making power of the Secretary of Finance, thus making it legislative, and not interpretative as alleged by BLC.

BLC further posits that, assuming the revenue regulation is legislative in nature, it is invalid for want of due process as no prior notice, publication and public hearing attended the issuance thereof. To support its view, BLC cited CIR v. Fortune Tobacco, et al.,17 wherein the Court nullified a revenue memorandum circular which reclassified certain cigarettes and subjected them to a higher tax rate, holding it invalid for lack of notice, publication and public hearing.

The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier Pawnshop, Inc.,18 is that when an administrative rule goes beyond merely providing for the means that can facilitate or render less cumbersome the implementation of the law and substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard and, thereafter, to be duly informed, before the issuance is given the force and effect of law. In Lhuillier and Fortune Tobacco, the Court invalidated the revenue memoranda concerned because the same increased the tax liabilities of the affected taxpayers without affording them due process. In this case, Revenue Regulation 19-86 would be beneficial to the taxpayers as they are subjected to lesser taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the very basis of its claim for refund. If it were invalid, then petitioner all the more has no right to a refund.

After upholding the validity of Revenue Regulation 19-86, the Court now resolves whether its application should be prospective or retroactive.

The principle is well entrenched that statutes, including administrative rules and regulations, operate prospectively only, unless the legislative intent to the contrary is manifest by express terms or by necessary implication.19 In the present case, there is no indication that the revenue regulation may operate retroactively. Furthermore, there is an express provision stating that it "shall take effect on January 1, 1987," and that it "shall be applicable to all leases written on or after the said date." Being clear on its prospective application, it must be given its literal meaning and applied without further interpretation.20 Thus, BLC is not in a position to invoke the provisions of Revenue Regulation 19-86 for lease rentals it received prior to January 1, 1987.

It is also apt to add that tax refunds are in the nature of tax exemptions. As such, these are regarded as in derogation of sovereign authority and are to be strictly construed against the person or entity claiming the exemption. The burden of proof is upon him who claims the exemption and he must be able to justify his claim by the clearest grant under Constitutional or statutory law, and he cannot be permitted to rely upon vague implications.21 Nothing that BLC has raised justifies a tax refund.

It is not necessary to rule on the remaining issues.

WHEREFORE, the petition for review is hereby DENIED, and the assailed decision and resolution of the Court of Appeals are AFFIRMED. No pronouncement as to costs.

G.R. No. 155001 January 21, 2004

DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL ANTONIO B. BOÑE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR WORKERS UNION-NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, respondents,

MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS CORPORATION, Petitioners-in-Intervention,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA, NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO, MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA, NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-in-Intervention,

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC., Respondents-in-Intervention,

x - - - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 155547 January 21, 2004

SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners, vs.

PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, and SECRETARY SIMEON A. DATUMANONG, in his capacity as Head of the Department of Public Works and Highways, respondents, JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O. MACARANBON, Respondents-Intervenors,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA, NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO, MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA, NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-in-Intervention,

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC., Respondents-in-Intervention,

x - - - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 155661 January 21, 2004

CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN, LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN, RONALD SCHLOBOM, ANGELITO SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS (SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, respondents,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA, NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO, MINETTE BRAVO, KAREN

BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA, NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-in-Intervention,

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC., Respondents-in-Intervention.

R E S O L U T I O N

PUNO, J.:

Before this Court are the separate Motions for Reconsideration filed by respondent Philippine International Air Terminals Co., Inc. (PIATCO), respondents-intervenors Jacinto V. Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie Buyson Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, all members of the House of Representatives (Respondent Congressmen),1 respondents-intervenors who are employees of PIATCO and other workers of the Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT III) (PIATCO Employees)2 and respondents-intervenors Nagkaisang Maralita ng Tañong Association, Inc., (NMTAI)3 of the Decision of this Court dated May 5, 2003 declaring the contracts for the NAIA IPT III project null and void.

Briefly, the proceedings. On October 5, 1994, Asia‘s Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the Philippine Government through the Department of Transportation and Communication (DOTC) and Manila International Airport Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operate-and-transfer arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law).4 In accordance with the BOT Law and its Implementing Rules and Regulations (Implementing Rules), the DOTC/MIAA invited the public for submission of competitive and comparative proposals to the unsolicited proposal of AEDC. On September 20, 1996 a consortium composed of the People‘s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium), submitted their competitive proposal to the Prequalification Bids and Awards Committee (PBAC).

After finding that the Paircargo Consortium submitted a bid superior to the unsolicited proposal of AEDC and after failure by AEDC to match the said bid, the DOTC issued the notice of award for the NAIA IPT III project to the Paircargo Consortium, which later

organized into herein respondent PIATCO. Hence, on July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997 Concession Agreement). On November 26, 1998, the 1997 Concession Agreement was superseded by the Amended and Restated Concession Agreement (ARCA) containing certain revisions and modifications from the original contract. A series of supplemental agreements was also entered into by the Government and PIATCO. The First Supplement was signed on August 27, 1999, the Second Supplement on September 4, 2000, and the Third Supplement on June 22, 2001 (collectively, Supplements) (the 1997 Concession Agreement, ARCA and the Supplements collectively referred to as the PIATCO Contracts).

On September 17, 2002, various petitions were filed before this Court to annul the 1997 Concession Agreement, the ARCA and the Supplements and to prohibit the public respondents DOTC and MIAA from implementing them.

In a decision dated May 5, 2003, this Court granted the said petitions and declared the 1997 Concession Agreement, the ARCA and the Supplements null and void.

Respondent PIATCO, respondent-Congressmen and respondents-intervenors now seek the reversal of the May 5, 2003 decision and pray that the petitions be dismissed. In the alternative, PIATCO prays that the Court should not strike down the entire 1997 Concession Agreement, the ARCA and its supplements in light of their separability clause. Respondent-Congressmen and NMTAI also pray that in the alternative, the cases at bar should be referred to arbitration pursuant to the provisions of the ARCA. PIATCO-Employees pray that the petitions be dismissed and remanded to the trial courts for trial on the merits or in the alternative that the 1997 Concession Agreement, the ARCA and the Supplements be declared valid and binding.

I Procedural Matters

a. Lack of Jurisdiction

Private respondents and respondents-intervenors reiterate a number of procedural issues which they insist deprived this Court of jurisdiction to hear and decide the instant cases on its merits. They continue to claim that the cases at bar raise factual questions which this Court is ill-equipped to resolve, hence, they must be remanded to the trial court for reception of evidence. Further, they allege that although designated as petitions for certiorari and prohibition, the cases at bar are actually actions for nullity of contracts over which the trial courts have exclusive jurisdiction. Even assuming that the cases at bar are special civil actions for certiorari and prohibition, they contend that the principle of hierarchy of courts precludes this Court from taking primary jurisdiction over them.

We are not persuaded.

There is a question of fact when doubt or difference arises as to the truth or falsity of the facts alleged.5 Even a cursory reading of the cases at bar will show that the Court decided them by interpreting and applying the Constitution, the BOT Law, its Implementing Rules and other relevant legal principles on the basis of clearly undisputed facts. All the operative facts were settled, hence, there is no need for a trial type determination of their truth or falsity by a trial court.

We reject the unyielding insistence of PIATCO Employees that the following factual issues are critical and beyond the capability of this Court to resolve, viz: (a) whether the National Economic Development Authority- Investment Coordinating Committee (NEDA-ICC) approved the Supplements; (b) whether the First Supplement created ten (10) new financial obligations on the part of the government; and (c) whether the 1997 Concession Agreement departed from the draft Concession Agreement contained in the Bid Documents.6

The factual issue of whether the NEDA-ICC approved the Supplements is hardly relevant. It is clear in our Decision that the PIATCO contracts were invalidated on other and more substantial grounds. It did not rely on the presence or absence of NEDA-ICC approval of the Supplements. On the other hand, the last two issues do not involve disputed facts. Rather, they involve contractual provisions which are clear and categorical and need only to be interpreted. The interpretation of contracts and the determination of whether their provisions violate our laws or contravene any public policy is a legal issue which this Court may properly pass upon.

Respondents‘ corollary contention that this Court violated the hierarchy of courts when it entertained the cases at bar must also fail. The rule on hierarchy of courts in cases falling within the concurrent jurisdiction of the trial courts and appellate courts generally applies to cases involving warring factual allegations. For this reason, litigants are required to repair to the trial courts at the first instance to determine the truth or falsity of these contending allegations on the basis of the evidence of the parties. Cases which depend on disputed facts for decision cannot be brought immediately before appellate courts as they are not triers of facts.

It goes without saying that when cases brought before the appellate courts do not involve factual but legal questions, a strict application of the rule of hierarchy of courts is not necessary. As the cases at bar merely concern the construction of the Constitution, the interpretation of the BOT Law and its Implementing Rules and Regulations on undisputed contractual provisions and government actions, and as the cases concern public interest, this Court resolved to take primary jurisdiction over them. This choice of action follows the consistent stance of this Court to settle any controversy with a high public interest component in a single proceeding and to leave no root or branch that could bear the seeds of future litigation. The suggested remand of the cases at bar to the trial court will stray away from this policy.7

b. Legal Standing

Respondent PIATCO stands pat with its argument that petitioners lack legal personality to file the cases at bar as they are not real parties in interest who are bound principally or subsidiarily to the PIATCO Contracts. Further, respondent PIATCO contends that petitioners failed to show any legally demandable or enforceable right to justify their standing to file the cases at bar.

These arguments are not difficult to deflect. The determination of whether a person may institute an action or become a party to a suit brings to fore the concepts of real party in interest, capacity to sue and standing to sue. To the legally discerning, these three concepts are different although commonly directed towards ensuring that only certain parties can maintain an action.8 As defined in the Rules of Court, a real party in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.9Capacity to sue deals with a situation where a person who may have a cause of action is disqualified from bringing a suit under applicable law or is incompetent to bring a suit or is under some legal disability that would prevent him from maintaining an action unless represented by a guardian ad litem. Legal standing is relevant in the realm of public law. In certain instances, courts have allowed private parties to institute actions challenging the validity of governmental action for violation of private rights or constitutional principles.10 In these cases, courts apply the doctrine of legal standing by determining whether the party has a direct and personal interest in the controversy and whether such party has sustained or is in imminent danger of sustaining an injury as a result of the act complained of, a standard which is distinct from the concept of real party in interest.11Measured by this yardstick, the application of the doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case and is not purely a procedural issue.12

Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms its ruling that the petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001 and 155661 are employees of service providers operating at the existing international airports and employees of MIAA while petitioners-intervenors are service providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of the PIATCO Contracts. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of operations at the NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international passenger terminals.13 Further, the ARCA provides:

(d) For the purpose of an orderly transition, MIAA shall not renew any expired concession agreement relative to any service or operation currently being undertaken at the Ninoy Aquino International Airport Passenger Terminal I, or extend any concession agreement which may expire subsequent hereto, except to the extent that the continuation of the existing services and operations shall lapse on or before the In-Service Date.14

Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and petitioners-intervenors denounce as unconstitutional and illegal, would deprive them of their sources of livelihood. Under settled jurisprudence, one's employment, profession, trade, or calling is a property right and is protected from wrongful interference.15 It is also self evident that the petitioning service providers stand in imminent danger of losing legitimate business investments in the event the PIATCO Contracts are upheld.

Over and above all these, constitutional and other legal issues with far-reaching economic and social implications are embedded in the cases at bar, hence, this Court liberally granted legal standing to the petitioning members of the House of Representatives. First, at stake is the build-operate-and–transfer contract of the country‘s premier international airport with a projected capacity of 10 million passengers a year. Second, the huge amount of investment to complete the project is estimated to be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion and interpretation of the Constitution, the BOT Law and its implementing rules which have not been passed upon by this Court in previous cases. They can chart the future inflow of investment under the BOT Law.

Before writing finis to the issue of legal standing, the Court notes the bid of new parties to participate in the cases at bar as respondents-intervenors, namely, (1) the PIATCO Employees and (2) NMTAI (collectively, the New Respondents-Intervenors). After the Court‘s Decision, the New Respondents-Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury. PIATCO employees claim that "they have a direct and personal interest [in the controversy]... since they stand to lose their jobs should the government‘s contract with PIATCO be declared null and void."16 NMTAI, on the other hand, represents itself as a corporation composed of responsible tax-paying Filipino citizens with the objective of "protecting and sustaining the rights of its members to civil liberties, decent livelihood, opportunities for social advancement, and to a good, conscientious and honest government."17

The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a Motion to Intervene should be filed "before rendition of judgment...." The New Respondents-Intervenors filed their separate motions after a decision has been promulgated in the present cases. They have not offered any worthy explanation to justify their late intervention. Consequently, their Motions for Reconsideration-In-Intervention are denied for the rules cannot be relaxed to await litigants who sleep on their rights. In any event, a sideglance at these late motions will show that they hoist no novel arguments.

c. Failure to Implead an Indispensable Party

PIATCO next contends that petitioners should have impleaded the Republic of the Philippines as an indispensable party. It alleges that petitioners sued the DOTC, MIAA and the DPWH in their own capacities or as implementors of the PIATCO Contracts and not as a contract party or as representatives of the Government of the Republic of the

Philippines. It then leapfrogs to the conclusion that the "absence of an indispensable party renders ineffectual all the proceedings subsequent to the filing of the complaint including the judgment."18

PIATCO‘s allegations are inaccurate. The petitions clearly bear out that public respondents DOTC and MIAA were impleaded as parties to the PIATCO Contracts and not merely as their implementors. The separate petitions filed by the MIAA employees19 and members of the House of Representatives20 alleged that "public respondents are impleaded herein because they either executed the PIATCO Contracts or are undertaking acts which are related to the PIATCO Contracts. They are interested and indispensable parties to this Petition."21 Thus, public respondents DOTC and MIAA were impleaded as parties to the case for having executed the contracts.

More importantly, it is also too late in the day for PIATCO to raise this issue. If PIATCO seriously views the non-inclusion of the Republic of the Philippines as an indispensable party as fatal to the petitions at bar, it should have raised the issue at the onset of the proceedings as a ground to dismiss. PIATCO cannot litigate issues on a piecemeal basis, otherwise, litigations shall be like a shore that knows no end. In any event, the Solicitor General, the legal counsel of the Republic, appeared in the cases at bar in representation of the interest of the government.

II Pre-qualification of PIATCO

The Implementing Rules provide for the unyielding standards the PBAC should apply to determine the financial capability of a bidder for pre-qualification purposes: (i) proof of the ability of the project proponent and/or the consortium to provide a minimum amount of equity to the project and (ii) a letter testimonial from reputable banks attesting that the project proponent and/or members of the consortium are banking with them, that they are in good financial standing, and that they have adequate resources.22 The evident intent of these standards is to protect the integrity and insure the viability of the project by seeing to it that the proponent has the financial capability to carry it out. As a further measure to achieve this intent, it maintains a certain debt-to-equity ratio for the project.

At the pre-qualification stage, it is most important for a bidder to show that it has the financial capacity to undertake the project by proving that it can fulfill the requirement on minimum amount of equity. For this purpose, the Bid Documents require in no uncertain terms:

The minimum amount of equity to which the proponent‘s financial capability will be based shall be thirty percent (30%) of the project cost instead of the twenty percent (20%) specified in Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-to-equity ratio of 70:30 in Section 2.01a of the draft concession agreement. The debt portion of the project financing should not exceed 70% of the actual project cost.23

In relation thereto, section 2.01 (a) of the ARCA provides:

Section 2.01 Project Scope.

The scope of the project shall include:

(a) Financing the project at an actual Project cost of not less than Three Hundred Fifty Million United States Dollars (US$350,000,000.00) while maintaining a debt-to-equity ratio of 70:30, provided that if the actual Project costs should exceed the aforesaid amount, Concessionaire shall ensure that the debt-to-equity ratio is maintained;24

Under the debt-to-equity restriction, a bidder may only seek financing of the NAIA IPT III Project up to 70% of the project cost. Thirty percent (30%) of the cost must come in the form of equity or investment by the bidder itself. It cannot be overly emphasized that the rules require a minimum amount of equity to ensure that a bidder is not merely an operator or implementor of the project but an investor with a substantial interest in its success. The minimum equity requirement also guarantees the Philippine government and the general public, who are the ultimate beneficiaries of the project, that a bidder will not be indifferent to the completion of the project. The discontinuance of the project will irreparably damage public interest more than private interest.

In the cases at bar, after applying the investment ceilings provided under the General Banking Act and considering the maximum amounts that each member of the consortium may validly invest in the project, it is daylight clear that the Paircargo Consortium, at the time of pre-qualification, had a net worth equivalent to only6.08% of the total estimated project cost.25 By any reckoning, a showing by a bidder that at the time of pre-qualification its maximum funds available for investment amount to only 6.08% of the project cost is insufficient to satisfy the requirement prescribed by the Implementing Rules that the project proponent must have the ability to provide at least 30% of the total estimated project cost. In peso and centavo terms, at the time of pre-qualification, the Paircargo Consortium had maximum funds available for investment to the NAIA IPT III Project only in the amount of P558,384,871.55, when it had to show that it had the ability to provide at least P2,755,095,000.00. The huge disparity cannot be dismissed as of de minimis importance considering the high public interest at stake in the project.

PIATCO nimbly tries to sidestep its failure by alleging that it submitted not only audited financial statements but also testimonial letters from reputable banks attesting to the good financial standing of the Paircargo Consortium. It contends that in adjudging whether the Paircargo Consortium is a pre-qualified bidder, the PBAC should have considered not only its financial statements but other factors showing its financial capability.

Anent this argument, the guidelines provided in the Bid Documents are instructive:

3.3.4 FINANCING AND FINANCIAL PREQUALIFICATIONS REQUIREMENTS

· Minimum Amount of Equity

Each member of the proponent entity is to provide evidence of networth in cash and assets representing the proportionate share in the proponent entity. Audited financial statements for the past five (5) years as a company for each member are to be provided.

· Project Loan Financing

Testimonial letters from reputable banks attesting that each of the members of the ownership entity are banking with them, in good financial standing and having adequate resources are to be provided.26

It is beyond refutation that Paircargo Consortium failed to prove its ability to provide the amount of at least P2,755,095,000.00, or 30% of the estimated project cost. Its submission of testimonial letters attesting to its good financial standing will not cure this failure. At best, the said letters merely establish its credit worthiness or its ability to obtain loans to finance the project. They do not, however, prove compliance with the aforesaid requirement of minimum amount of equity in relation to the prescribed debt-to-equity ratio. This equity cannot be satisfied through possible loans.

In sum, we again hold that given the glaring gap between the net worth of Paircargo and PAGS combined with the amount of maximum funds that Security Bank may invest by equity in a non-allied undertaking, Paircargo Consortium, at the time of pre-qualification, failed to show that it had the ability to provide 30% of the project cost and necessarily, its financial capability for the project cannot pass muster.

III Concession Agreement

Again, we brightline the principle that in public bidding, bids are submitted in accord with the prescribed terms, conditions and parameters laid down by government and pursuant to the requirements of the project bidded upon. In light of these parameters, bidders formulate competing proposals which are evaluated to determine the bid most favorable to the government. Once the contract based on the bid most favorable to the government is awarded, all that is left to be done by the parties is to execute the necessary agreements and implement them. 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, after the contract award. If there were changes and the contracts end up unfavorable to government, the public bidding becomes a mockery and the modified contracts must be struck down.

Respondents insist that there were no substantial or material amendments in the 1997 Concession Agreement as to the technical aspects of the project, i.e., engineering

design, technical soundness, operational and maintenance methods and procedures of the project or the technical proposal of PIATCO. Further, they maintain that there was no modification of the financial features of the project, i.e., minimum project cost, debt-to-equity ratio, the operations and maintenance budget, the schedule and amount of annual guaranteed payments, or the financial proposal of PIATCO. A discussion of some of these changes to determine whether they altered the terms and conditions upon which the bids were made is again in order.

a. Modification on Fees and Charges to be collected by PIATCO

PIATCO clings to the contention that the removal of the groundhandling fees, airline office rentals and porterage fees from the category of fees subject to MIAA regulation in the 1997 Concession Agreement does not constitute a substantial amendment as these fees are not really public utility fees. In other words, PIATCO justifies the re-classification under the 1997 Concession Agreement on the ground that these fees are non-public utility revenues.

We disagree. The removal of groundhandling fees, airline office rentals and porterage fees from the category of "Public Utility Revenues" under the draft Concession Agreement and its re-classification to "Non-Public Utility Revenues" under the 1997 Concession Agreement is significant and has far reaching consequence. The 1997 Concession Agreement provides that with respect to Non-Public Utility Revenues, which include groundhandling fees, airline office rentals and porterage fees,27 "[PIATCO] may make any adjustments it deems appropriatewithout need for the consent of GRP or any government agency."28 In contrast, the draft Concession Agreement specifies these fees as part of Public Utility Revenues and can be adjusted "only once every two years and in accordance with the Parametric Formula" and "the adjustments shall be made effective only after the written express approval of the MIAA."29 The Bid Documents themselves clearly provide:

4.2.3 Mechanism for Adjustment of Fees and Charges

4.2.3.1 Periodic Adjustment in Fees and Charges

Adjustments in the fees and charges enumerated hereunder, whether or not falling within the purview of public utility revenues, shall be allowed only once every two years in accordance with the parametric formula attached hereto as Annex 4.2f. Provided that the adjustments shall be made effective only after the written express approval of MIAA. Provided, further, that MIAA‘s approval, shall be contingent only on conformity of the adjustments to the said parametric formula. …

The fees and charges to be regulated in the above manner shall consist of the following:

. . . .

c) groundhandling fees;

d) rentals on airline offices;

. . . .

(f) porterage fees;

. . . .30

The plain purpose in re-classifying groundhandling fees, airline office rentals and porterage fees as non-public utility fees is to remove them from regulation by the MIAA. In excluding these fees from government regulation, the danger to public interest cannot be downplayed.

We are not impressed by the effort of PIATCO to depress this prejudice to public interest by its contention that in the 1997 Concession Agreement governing Non-Public Utility Revenues, it is provided that "[PIATCO] shall at all times be judicious in fixing fees and charges constituting Non-Public Utility Revenues in order to ensure that End Users are not unreasonably deprived of services."31 PIATCO then peddles the proposition that the said provision confers upon MIAA "full regulatory powers to ensure that PIATCO is charging non-public utility revenues atjudicious rates."32 To the trained eye, the argument will not fly for it is obviously non sequitur. Fairly read, it is PIATCO that wields the power to determine the judiciousness of the said fees and charges. In the draft Concession Agreement the power was expressly lodged with the MIAA and any adjustment can only be done once every two years. The changes are not insignificant specks as interpreted by PIATCO.

PIATCO further argues that there is no substantial change in the 1997 Concession Agreement with respect to fees and charges PIATCO is allowed to impose which are not covered by Administrative Order No. 1, Series of 199333as the "relevant provision of the 1997 Concession Agreement is practically identical with the draft Concession Agreement."34

We are not persuaded. Under the draft Concession Agreement, PIATCO may impose fees and charges other than those fees and charges previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, subject to the written approval of MIAA.35 Further, the draft Concession Agreement provides that MIAAreserves the right to regulate these new fees and charges if in its judgment the users of the airport shall be deprived of a free option for the services they cover.36 In contrast, under the 1997 Concession Agreement, the MIAA merely retained the right to approve any imposition of new fees and charges which were not previously collected at the Ninoy Aquino International Airport Passenger Terminal I. The agreement did not contain an equivalent provision allowing MIAA to reserve the right to regulate the adjustments of these new fees and charges.37 PIATCO justifies

the amendment by arguing that MIAA can establish terms before approval of new fees and charges, inclusive of the mode for their adjustment.

PIATCO‘s stance is again a strained one. There would have been no need for an amendment if there were no change in the power to regulate on the part of MIAA. The deletion of MIAA‘s reservation of its right to regulate the price adjustments of new fees and charges can have no other purpose but to dilute the extent of MIAA‘s regulation in the collection of these fees. Again, the amendment diminished the authority of MIAA to protect the public interest in case of abuse by PIATCO.

b. Assumption by the Government of the liabilities of PIATCO in the event of the latter’s default

PIATCO posits the thesis that the new provisions in the 1997 Concession Agreement in case of default by PIATCO on its loans were merely meant to prescribe and limit the rights of PIATCO‘s creditors with regard to the NAIA Terminal III. PIATCO alleges that Section 4.04 of the 1997 Concession Agreement simply provides that PIATCO‘s creditors have no right to foreclose the NAIA Terminal III.

We cannot concur. The pertinent provisions of the 1997 Concession Agreement state:

Section 4.04 Assignment.

. . . .

(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default has resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be substituted as concessionaire and operator of the Development Facility in accordance with the terms and conditions hereof, or designate a qualified operator acceptable to GRP to operate the Development Facility, likewise under the terms and conditions of this Agreement; Provided that if at the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have elected to take over the Development Facility with the concomitant assumption of Attendant Liabilities.

(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the latter shall form and organize a concession company qualified to take over the operation of the Development Facility. If the concession company should elect to designate an operator for the Development Facility, the concession company shall in good faith identify and designate a qualified

operator acceptable to GRP within one hundred eighty (180) days from receipt of GRP‘s written notice. If the concession company, acting in good faith and with due diligence, is unable to designate a qualified operator within the aforesaid period, then GRP shall at the end of the 180-day period take over the Development Facility and assume Attendant Liabilities.

A plain reading of the above provision shows that it spells out in limpid language the obligation of government in case of default by PIATCO on its loans. There can be no blinking from the fact that in case of PIATCO‘s default, the government will assume PIATCO‘s Attendant Liabilities as defined in the 1997 Concession Agreement.38 This obligation is not found in the draft Concession Agreement and the change runs roughshod to the spirit and policy of the BOT Law which was crafted precisely to prevent government from incurring financial risk.

In any event, PIATCO pleads that the entire agreement should not be struck down as the 1997 Concession Agreement contains a separability clause.

The plea is bereft of merit. The contracts at bar which made a mockery of the bidding process cannot be upheld and must be annulled in their entirety for violating law and public policy. As demonstrated, the contracts were substantially amended after their award to the successful bidder on terms more beneficial to PIATCO and prejudicial to public interest. If this flawed process would be allowed, public bidding will cease to be competitive and worse, government would not be favored with the best bid. Bidders will no longer bid on the basis of the prescribed terms and conditions in the bid documents but will formulate their bid in anticipation of the execution of a future contract containing new and better terms and conditions that were not previously available at the time of the bidding. Such a public bidding will not inure to the public good. The resulting contracts cannot be given half a life but must be struck down as totally lawless.

IV. Direct Government Guarantee

The respondents further contend that the PIATCO Contracts do not contain direct government guarantee provisions. They assert that section 4.04 of the ARCA, which superseded sections 4.04(b) and (c), Article IV of the 1997 Concession Agreement, is but a "clarification and explanation"39 of the securities allowed in the bid documents. They allege that these provisions merely provide for "compensation to PIATCO"40 in case of a government buy-out or takeover of NAIA IPT III. The respondents, particularly respondent PIATCO, also maintain that the guarantee contained in the contracts, if any, is an indirect guarantee allowed under the BOT Law, as amended.41

We do not agree. Section 4.04(c), Article IV42 of the ARCA should be read in conjunction with section 1.06, Article I,43 in the same manner that sections 4.04(b) and (c), Article IV of the 1997 Concession Agreement should be related to Article 1.06 of the same contract. Section 1.06, Article I of the ARCA and its counterpart provision in the 1997 Concession Agreement define in no uncertain terms the meaning of "attendant

liabilities." They tell us of the amounts that the Government has to pay in the event respondent PIATCO defaults in its loan payments to its Senior Lenders and no qualified transferee or nominee is chosen by the Senior Lenders or is willing to take over from respondent PIATCO.

A reasonable reading of all these relevant provisions would reveal that the ARCA made the Government liable to pay "all amounts ... from time to time owed or which may become owing by Concessionaire [PIATCO] to Senior Lenders or any other persons or entities who have provided, loaned, or advanced funds or provided financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal 3]."44 These amounts include "without limitation, all principal, interest, associated fees, charges, reimbursements, and other related expenses... whether payable at maturity, by acceleration or otherwise."45 They further include amounts owed by respondent PIATCO to its "professional consultants and advisers, suppliers, contractors and sub-contractors" as well as "fees, charges and expenses of any agents or trustees" of the Senior Lenders or any other persons or entities who have provided loans or financial facilities to respondent PIATCO in relation to NAIA IPT III.46 The counterpart provision in the 1997 Concession Agreement specifying the attendant liabilities that the Government would be obligated to pay should PIATCO default in its loan obligations is equally onerous to the Government as those contained in the ARCA. According to the 1997 Concession Agreement, in the event the Government is forced to prematurely take over NAIA IPT III as a result of respondent PIATCO‘s default in the payment of its loan obligations to its Senior Lenders, it would be liable to pay the following amounts as "attendant liabilities":

Section 1.06. Attendant Liabilities

Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually used for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements and other related expenses, and further including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors.47

These provisions reject respondents‘ contention that what the Government is obligated to pay, in the event that respondent PIATCO defaults in the payment of its loans, is merely termination payment or just compensation for its takeover of NAIA IPT III. It is clear from said section 1.06 that what the Government would pay is the sum total of all the debts, including all interest, fees and charges, that respondent PIATCO incurred in pursuance of the NAIA IPT III Project. This reading is consistent with section 4.04 of the ARCA itself which states that the Government "shall make a termination payment to Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter defined) of the Development Facility [NAIA Terminal III] or the sum of the Attendant Liabilities, if greater." For sure, respondent PIATCO will not receive any amount less than sufficient to cover its debts, regardless of whether or not the value of

NAIA IPT III, at the time of its turn over to the Government, may actually be less than the amount of PIATCO’s debts. The scheme is a form of direct government guarantee for it is undeniable that it leaves the government no option but to pay the "attendant liabilities" in the event that the Senior Lenders are unable or unwilling to appoint a qualified nominee or transferee as a result of PIATCO‘s default in the payment of its Senior Loans. As we stressed in our Decision, this Court cannot depart from the legal maxim that "those that cannot be done directly cannot be done indirectly."

This is not to hold, however, that indirect government guarantee is not allowed under the BOT Law, as amended. The intention to permit indirect government guarantee is evident from the Senate deliberations on the amendments to the BOT Law. The idea is to allow for reasonable government undertakings, such as to authorize the project proponent to undertake related ventures within the project area, in order to encourage private sector participation in development projects.48 An example cited by then Senator Gloria Macapagal-Arroyo, one of the sponsors of R.A. No. 7718, is the Mandaluyong public market which was built under the Build-and-Transfer ("BT") scheme wherein instead of the government paying for the transfer, the project proponent was allowed to operate the upper floors of the structure as a commercial mall in order to recoup their investments.49 It was repeatedly stressed in the deliberations that in allowing indirect government guarantee, the law seeks to encourage both the government and the private sector to formulate reasonable and innovative government undertakings in pursuance of BOT projects. In no way, however, can the government be made liable for the debts of the project proponent as this would be tantamount to a direct government guarantee which is prohibited by the law. Such liability would defeat the very purpose of the BOT Law which is to encourage the use of private sector resources in the construction, maintenance and/or operation of development projects with no, or at least minimal, capital outlay on the part of the government.

The respondents again urge that should this Court affirm its ruling that the PIATCO Contracts contain direct government guarantee provisions, the whole contract should not be nullified. They rely on the separability clause in the PIATCO Contracts.

We are not persuaded.

The BOT Law and its implementing rules provide that there are three (3) essential requisites for an unsolicited proposal to be accepted: (1) the project involves a new concept in technology and/or is not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government unit has invited by publication other interested parties to a public bidding and conducted the same.50 The failure to fulfill any of the requisites will result in the denial of the proposal. Indeed, it is further provided that a direct government guarantee, subsidy or equity provision will "necessarily disqualify a proposal from being treated and accepted as an unsolicited proposal."51 In fine, the mere inclusion of a direct government guarantee in an unsolicited proposal is fatal to the proposal. There is more reason to invalidate a contract if a direct government guarantee provision is inserted later in the contract via a backdoor amendment. Such an

amendment constitutes a crass circumvention of the BOT Law and renders the entire contract void.

Respondent PIATCO likewise claims that in view of the fact that other BOT contracts such as the JANCOM contract, the Manila Water contract and the MRT contract had been considered valid, the PIATCO contracts should be held valid as well.52 There is no parity in the cited cases. For instance, a reading of Metropolitan Manila Development Authority v. JANCOM Environmental Corporation53 will show that its issue is different from the issues in the cases at bar. In the JANCOM case, the main issue is whether there is a perfected contract between JANCOM and the Government. The resolution of the issue hinged on the following: (1) whether the conditions precedent to the perfection of the contract were complied with; (2) whether there is a valid notice of award; and (3) whether the signature of the Secretary of the Department of Environment and Natural Resources is sufficient to bind the Government. These issue and sub-issues are clearly distinguishable and different. For one, the issue of direct government guarantee was not considered by this Court when it held the JANCOM contract valid, yet, it is a key reason for invalidating the PIATCO Contracts. It is a basic principle in law that cases with dissimilar facts cannot have similar disposition.

This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.

II. Temporary takeover of business affected with public interest in times of national emergency

Section 17, Article XII of the 1987 Constitution grants the State in times of national emergency the right to temporarily take over the operation of any business affected with public interest. This right is an exercise of police power which is one of the inherent powers of the State.

Police power has been defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare."54 It consists of two essential elements. First, it is an imposition of restraint upon liberty or property. Second, the power is exercised for the benefit of the common good. Its definition in elastic terms underscores its all-encompassing and comprehensive embrace.55 It is and still is the "most essential, insistent, and illimitable"56 of the State‘s powers. It is familiar knowledge that unlike the power of eminent domain, police power is exercised without provision for just compensation for its paramount consideration is public welfare.57

It is also settled that public interest on the occasion of a national emergency is the primary consideration when the government decides to temporarily take over or direct the operation of a public utility or a business affected with public interest. The nature and extent of the emergency is the measure of the duration of the takeover as well as the terms thereof. It is the State that prescribes such reasonable terms which will guide the implementation of the temporary takeover as dictated by the exigencies of the time. As we ruled in our Decision, this power of the State can not be negated by any party nor should its exercise be a source of obligation for the State.

Section 5.10(c), Article V of the ARCA provides that respondent PIATCO "shall be entitled to reasonable compensation for the duration of the temporary takeover by GRP, which compensation shall take into account the reasonable cost for the use of the Terminal and/or Terminal Complex."58 It clearly obligates the government in the exercise of its police power to compensate respondent PIATCO and this obligation is offensive to the Constitution. Police power can not be diminished, let alone defeated by any contract for its paramount consideration is public welfare and interest.59

Again, respondent PIATCO‘s reliance on the case of Heirs of Suguitan v. City of Mandaluyong60 to justify its claim for reasonable compensation for the Government‘s temporary takeover of NAIA IPT III in times of national emergency is erroneous. What was involved in Heirs of Suguitan is the exercise of the state‘s power of eminent domain and not of police power, hence, just compensation was awarded. The cases at bar will not involve the exercise of the power of eminent domain.

III. Monopoly

Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or regulate monopolies when public interest so requires. Monopolies are not per se prohibited. Given its susceptibility to abuse, however, the State has the bounden duty to regulate monopolies to protect public interest. Such regulation may be called for, especially in sensitive areas such as the operation of the country‘s premier international airport, considering the public interest at stake.

By virtue of the PIATCO contracts, NAIA IPT III would be the only international passenger airport operating in the Island of Luzon, with the exception of those already operating in Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in Laoag City. Undeniably, the contracts would create a monopoly in the operation of an international commercial passenger airport at the NAIA in favor of PIATCO.

The grant to respondent PIATCO of the exclusive right to operate NAIA IPT III should not exempt it from regulation by the government. The government has the right, indeed the duty, to protect the interest of the public. Part of this duty is to assure that respondent PIATCO‘s exercise of its right does not violate the legal rights of third parties. We reiterate our ruling that while the service providers presently operating at

NAIA Terminals I and II do not have the right to demand for the renewal or extension of their contracts to continue their services in NAIA IPT III, those who have subsisting contracts beyond the In-Service Date of NAIA IPT III can not be arbitrarily or unreasonably treated.

Finally, the Respondent Congressmen assert that at least two (2) committee reports by the House of Representatives found the PIATCO contracts valid and contend that this Court, by taking cognizance of the cases at bar, reviewed an action of a co-equal body.61 They insist that the Court must respect the findings of the said committees of the House of Representatives.62 With due respect, we cannot subscribe to their submission. There is a fundamental difference between a case in court and an investigation of a congressional committee. The purpose of a judicial proceeding is to settle the dispute in controversy by adjudicating the legal rights and obligations of the parties to the case. On the other hand, a congressional investigation is conducted in aid of legislation.63 Its aim is to assist and recommend to the legislature a possible action that the body may take with regard to a particular issue, specifically as to whether or not to enact a new law or amend an existing one. Consequently, this Court cannot treat the findings in a congressional committee report as binding because the facts elicited in congressional hearings are not subject to the rigors of the Rules of Court on admissibility of evidence. The Court in assuming jurisdiction over the petitions at bar simply performed its constitutional duty as the arbiter of legal disputes properly brought before it, especially in this instance when public interest requires nothing less.

WHEREFORE, the motions for reconsideration filed by the respondent PIATCO, respondent Congressmen and the respondents-in-intervention are DENIED with finality.

G.R. No. 157013 July 10, 2003 ATTY. ROMULO B. MACALINTAL, petitioner, vs. COMMISSION ON ELECTIONS, HON. ALBERTO ROMULO, in his official capacity as Executive Secretary, and HON. EMILIA T. BONCODIN, Secretary of the Department of Budget and Management, respondents.

Before the Court is a petition for certiorari and prohibition filed by Romulo B. Macalintal, a member of the Philippine Bar, seeking a declaration that certain provisions of Republic Act No. 9189 (The Overseas Absentee Voting Act of 2003)1 suffer from constitutional infirmity. Claiming that he has actual and material legal interest in the subject matter of this case in seeing to it that public funds are properly and lawfully used and appropriated, petitioner filed the instant petition as a taxpayer and as a lawyer.

The Court upholds the right of petitioner to file the present petition.

R.A. No. 9189, entitled, "An Act Providing for A System of Overseas Absentee Voting by Qualified Citizens of the Philippines Abroad, Appropriating Funds Therefor, and for

Other Purposes," appropriates funds under Section 29 thereof which provides that a supplemental budget on the General Appropriations Act of the year of its enactment into law shall provide for the necessary amount to carry out its provisions. Taxpayers, such as herein petitioner, have the right to restrain officials from wasting public funds through the enforcement of an unconstitutional statute.2 The Court has held that they may assail the validity of a law appropriating public funds3 because expenditure of public funds by an officer of the State for the purpose of executing an unconstitutional act constitutes a misapplication of such funds.4

The challenged provision of law involves a public right that affects a great number of citizens. The Court has adopted the policy of taking jurisdiction over cases whenever the petitioner has seriously and convincingly presented an issue of transcendental significance to the Filipino people. This has been explicitly pronounced in Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan,5 where the Court held:

Objections to taxpayers‘ suit for lack of sufficient personality standing, or interest are, however, in the main procedural matters. Considering the importance to the public of the cases at bar, and in keeping with the Court‘s duty, under the 1987 Constitution, to determine whether or not the other branches of government have kept themselves within the limits of the Constitution and the laws and that they have not abused the discretion given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of these petitions.6

Indeed, in this case, the Court may set aside procedural rules as the constitutional right of suffrage of a considerable number of Filipinos is involved.

The question of propriety of the instant petition which may appear to be visited by the vice of prematurity as there are no ongoing proceedings in any tribunal, board or before a government official exercising judicial, quasi-judicial or ministerial functions as required by Rule 65 of the Rules of Court, dims in light of the importance of the constitutional issues raised by the petitioner. In Tañada vs. Angara,7 the Court held:

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld." Once a "controversy as to the application or interpretation of constitutional provision is raised before this Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to decide."

In another case of paramount impact to the Filipino people, it has been expressed that it is illogical to await the adverse consequences of the law in order to consider the

controversy actual and ripe for judicial resolution.8 In yet another case, the Court said that:

. . . despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will not hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the Constitution and God as its conscience gives it in the light to probe its meaning and discover its purpose. Personal motives and political considerations are irrelevancies that cannot influence its decisions. Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress and Executive, the Court will not hesitate "to make the hammer fall heavily," where the acts of these departments, or of any official, betray the people‘s will as expressed in the Constitution . . .9

The need to consider the constitutional issues raised before the Court is further buttressed by the fact that it is now more than fifteen years since the ratification of the 1987 Constitution requiring Congress to provide a system for absentee voting by qualified Filipinos abroad. Thus, strong reasons of public policy demand that the Court resolves the instant petition10 and determine whether Congress has acted within the limits of the Constitution or if it had gravely abused the discretion entrusted to it.11

The petitioner raises three principal questions:

A. Does Section 5(d) of Rep. Act No. 9189 allowing the registration of voters who are immigrants or permanent residents in other countries by their mere act of executing an affidavit expressing their intention to return to the Philippines, violate the residency requirement in Section 1 of Article V of the Constitution?

B. Does Section 18.5 of the same law empowering the COMELEC to proclaim the winning candidates for national offices and party list representatives including the President and the Vice-President violate the constitutional mandate under Section 4, Article VII of the Constitution that the winning candidates for President and the Vice-President shall be proclaimed as winners by Congress?

C. May Congress, through the Joint Congressional Oversight Committee created in Section 25 of Rep. Act No. 9189, exercise the power to review, revise, amend, and approve the Implementing Rules and Regulations that the Commission on Elections shall promulgate without violating the independence of the COMELEC under Section 1, Article IX-A of the Constitution?

The Court will resolve the questions in seriatim.

A. Does Section 5(d) of Rep. Act No. 9189 violate Section 1, Article V of the 1987 Constitution of the Republic of the Philippines?

Section 5(d) provides:

Sec. 5. Disqualifications. – The following shall be disqualified from voting under this Act:

. . . . . . . . .

d) An immigrant or a permanent resident who is recognized as such in the host country, unless he/she executes, upon registration, an affidavit prepared for the purpose by the Commission declaring that he/she shall resume actual physical permanent residence in the Philippines not later than three (3) years from approval of his/her registration under this Act. Such affidavit shall also state that he/she has not applied for citizenship in another country. Failure to return shall be cause for the removal of the name of the immigrant or permanent resident from the National Registry of Absentee Voters and his/her permanent disqualification to vote in absentia.

Petitioner posits that Section 5(d) is unconstitutional because it violates Section 1, Article V of the 1987 Constitution which requires that the voter must be a resident in the Philippines for at least one year and in the place where he proposes to vote for at least six months immediately preceding an election. Petitioner cites the ruling of the Court in Caasi vs. Court of Appeals12 to support his claim. In that case, the Court held that a "green card" holder immigrant to the United States is deemed to have abandoned his domicile and residence in the Philippines.

Petitioner further argues that Section 1, Article V of the Constitution does not allow provisional registration or a promise by a voter to perform a condition to be qualified to vote in a political exercise;13 that the legislature should not be allowed to circumvent the requirement of the Constitution on the right of suffrage by providing a condition thereon which in effect amends or alters the aforesaid residence requirement to qualify a Filipino abroad to vote.14 He claims that the right of suffrage should not be granted to anyone who, on the date of the election, does not possess the qualifications provided for by Section 1, Article V of the Constitution.

Respondent COMELEC refrained from commenting on this issue.15

In compliance with the Resolution of the Court, the Solicitor General filed his comment for all public respondents. He contraposes that the constitutional challenge to Section 5(d) must fail because of the absence of clear and unmistakable showing that said provision of law is repugnant to the Constitution. He stresses: All laws are presumed to be constitutional; by the doctrine of separation of powers, a department of government owes a becoming respect for the acts of the other two departments; all laws are presumed to have adhered to constitutional limitations; the legislature intended to enact a valid, sensible, and just law.

In addition, the Solicitor General points out that Section 1, Article V of the Constitution is a verbatim reproduction of those provided for in the 1935 and the 1973 Constitutions. Thus, he cites Co vs. Electoral Tribunal of the House of Representatives16 wherein the

Court held that the term "residence" has been understood to be synonymous with "domicile" under both Constitutions. He further argues that a person can have only one "domicile" but he can have two residences, one permanent (the domicile) and the other temporary;17 and that the definition and meaning given to the term residence likewise applies to absentee voters. Invoking Romualdez-Marcos vs. COMELEC18 which reiterates the Court‘s ruling in Faypon vs. Quirino,19 the Solicitor General maintains that Filipinos who are immigrants or permanent residents abroad may have in fact never abandoned their Philippine domicile.20

Taking issue with the petitioner‘s contention that "green card" holders are considered to have abandoned their Philippine domicile, the Solicitor General suggests that the Court may have to discard its ruling in Caasi vs. Court of Appeals21 in so far as it relates to immigrants and permanent residents in foreign countries who have executed and submitted their affidavits conformably with Section 5(d) of R.A. No. 9189. He maintains that through the execution of the requisite affidavits, the Congress of the Philippines with the concurrence of the President of the Republic had in fact given these immigrants and permanent residents the opportunity, pursuant to Section 2, Article V of the Constitution, to manifest that they had in fact never abandoned their Philippine domicile; that indubitably, they would have formally and categorically expressed the requisite intentions, i.e., "animus manendi" and "animus revertendi;" that Filipino immigrants and permanent residents abroad possess the unquestionable right to exercise the right of suffrage under Section 1, Article V of the Constitution upon approval of their registration, conformably with R.A. No. 9189.22

The seed of the present controversy is the interpretation that is given to the phrase, "qualified citizens of the Philippines abroad" as it appears in R.A. No. 9189, to wit:

SEC. 2. Declaration of Policy. – It is the prime duty of the State to provide a system of honest and orderly overseas absentee voting that upholds the secrecy and sanctity of the ballot. Towards this end, the State ensures equal opportunity to all qualified citizens of the Philippines abroad in the exercise of this fundamental right.

SEC. 3. Definition of Terms. – For purposes of this Act:

a) "Absentee Voting" refers to the process by which qualified citizens of the Philippines abroad, exercise their right to vote;

. . . (Emphasis supplied)

f) "Overseas Absentee Voter" refers to a citizen of the Philippines who is qualified to register and vote under this Act, not otherwise disqualified by law, who is abroad on the day of elections. (Emphasis supplied)

SEC. 4. Coverage. – All citizens of the Philippines abroad, who are not otherwise disqualified by law, at least eighteen (18) years of age on the day of

elections, may vote for president, vice-president, senators and party-list representatives. (Emphasis supplied)

in relation to Sections 1 and 2, Article V of the Constitution which read:

SEC. 1. Suffrage may be exercised by all citizens of the Philippines not otherwise disqualified by law, who are at least eighteen years of age, and who shall have resided in the Philippines for at least one year and in the place wherein they propose to vote for at least six months immediately preceding the election. No literacy, property, or other substantive requirement shall be imposed on the exercise of suffrage.

SEC. 2. The Congress shall provide a system for securing the secrecy and sanctity of the ballot as well as a system for absentee voting by qualified Filipinos abroad.

. . . . . . . . . (Emphasis supplied)

Section 1, Article V of the Constitution specifically provides that suffrage may be exercised by (1) all citizens of the Philippines, (2) not otherwise disqualified by law, (3) at least eighteen years of age, (4) who are residents in the Philippines for at least one year and in the place where they propose to vote for at least six months immediately preceding the election. Under Section 5(d) of R.A. No. 9189, one of those disqualified from voting is an immigrant or permanent resident who is recognized as such in the host country unless he/she executes an affidavit declaring that he/she shall resume actual physical permanent residence in the Philippines not later than three years from approval of his/her registration under said Act.

Petitioner questions the rightness of the mere act of execution of an affidavit to qualify the Filipinos abroad who are immigrants or permanent residents, to vote. He focuses solely on Section 1, Article V of the Constitution in ascribing constitutional infirmity to Section 5(d) of R.A. No. 9189, totally ignoring the provisions of Section 2 empowering Congress to provide a system for absentee voting by qualified Filipinos abroad.

A simple, cursory reading of Section 5(d) of R.A. No. 9189 may indeed give the impression that it contravenes Section 1, Article V of the Constitution. Filipino immigrants and permanent residents overseas are perceived as having left and abandoned the Philippines to live permanently in their host countries and therefore, a provision in the law enfranchising those who do not possess the residency requirement of the Constitution by the mere act of executing an affidavit expressing their intent to return to the Philippines within a given period, risks a declaration of unconstitutionality. However, the risk is more apparent than real.

The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights must be determined

and all public authority administered.23 Laws that do not conform to the Constitution shall be stricken down for being unconstitutional.

Generally, however, all laws are presumed to be constitutional. In Peralta vs. COMELEC, the Court said:

. . . An act of the legislature, approved by the executive, is presumed to be within constitutional limitations. The responsibility of upholding the Constitution rests not on the courts alone but on the legislature as well. The question of the validity of every statute is first determined by the legislative department of the government itself.24

Thus, presumption of constitutionality of a law must be overcome convincingly:

. . . To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the statute allows it to be done.25

As the essence of R.A. No. 9189 is to enfranchise overseas qualified Filipinos, it behooves the Court to take a holistic view of the pertinent provisions of both the Constitution and R.A. No. 9189. It is a basic rule in constitutional construction that the Constitution should be construed as a whole. In Chiongbian vs. De Leon,26 the Court held that a constitutional provision should function to the full extent of its substance and its terms, not by itself alone, but in conjunction with all other provisions of that great document. Constitutional provisions are mandatory in character unless, either by express statement or by necessary implication, a different intention is manifest.27 The intent of the Constitution may be drawn primarily from the language of the document itself. Should it be ambiguous, the Court may consider the intent of its framers through their debates in the constitutional convention.28

R.A. No. 9189 was enacted in obeisance to the mandate of the first paragraph of Section 2, Article V of the Constitution that Congress shall provide a system for voting by qualified Filipinos abroad. It must be stressed that Section 2 does not provide for the parameters of the exercise of legislative authority in enacting said law. Hence, in the absence of restrictions, Congress is presumed to have duly exercised its function as defined in Article VI (The Legislative Department) of the Constitution.

To put matters in their right perspective, it is necessary to dwell first on the significance of absentee voting. The concept of absentee voting is relatively new. It is viewed thus:

The method of absentee voting has been said to be completely separable and distinct from the regular system of voting, and to be a new and different manner of voting from that previously known, and an exception to the customary and usual manner of voting. The right of absentee and disabled voters to cast their

ballots at an election is purely statutory; absentee voting was unknown to, and not recognized at, the common law.

Absentee voting is an outgrowth of modern social and economic conditions devised to accommodate those engaged in military or civil life whose duties make it impracticable for them to attend their polling places on the day of election, and the privilege of absentee voting may flow from constitutional provisions or be conferred by statutes, existing in some jurisdictions, which provide in varying terms for the casting and reception of ballots by soldiers and sailors or other qualified voters absent on election day from the district or precinct of their residence.

Such statutes are regarded as conferring a privilege and not a right, or an absolute right. When the legislature chooses to grant the right by statute, it must operate with equality among all the class to which it is granted; but statutes of this nature may be limited in their application to particular types of elections. The statutes should be construed in the light of any constitutional provisions affecting registration and elections, and with due regard to their texts prior to amendment and to predecessor statutes and the decisions thereunder; they should also be construed in the light of the circumstances under which they were enacted; and so as to carry out the objects thereof, if this can be done without doing violence to their provisions and mandates. Further, in passing on statutes regulating absentee voting, the court should look to the whole and every part of the election laws, the intent of the entire plan, and reasons and spirit of their adoption, and try to give effect to every portion thereof.29 (Emphasis supplied)

Ordinarily, an absentee is not a resident and vice versa; a person cannot be at the same time, both a resident and an absentee.30 However, under our election laws and the countless pronouncements of the Court pertaining to elections, an absentee remains attached to his residence in the Philippines as residence is considered synonymous with domicile.

In Romualdez-Marcos,31 the Court enunciated:

Article 50 of the Civil Code decrees that "[f]or the exercise of civil rights and the fulfillment of civil obligations, the domicile of natural persons is their place of habitual residence." In Ong vs. Republic, this court took the concept of domicile to mean an individual‘s "permanent home," "a place to which, whenever absent for business or for pleasure, one intends to return, and depends on facts and circumstances in the sense that they disclose intent." Based on the foregoing, domicile includes the twin elements of "the fact of residing or physical presence in a fixed place" and animus manendi, or the intention of returning there permanently.

Residence, in its ordinary conception, implies the factual relationship of an individual to a certain place. It is the physical presence of a person in a given area, community or country. The essential distinction between residence and domicile in law is that residence involves the intent to leave when the purpose for which the resident has taken up his abode ends. One may seek a place for purposes such as pleasure, business, or health. If a person‘s intent be to remain, it becomes his domicile; if his intent is to leave as soon as his purpose is established it is residence. It is thus, quite perfectly normal for an individual to have different residences in various places. However, a person can only have a single domicile, unless, for various reasons, he successfully abandons his domicile in favor of another domicile of choice. In Uytengsu vs. Republic, we laid this distinction quite clearly:

"There is a difference between domicile and residence. ‗Residence‘ is used to indicate a place of abode, whether permanent or temporary; ‗domicile‘ denotes a fixed permanent residence to which, when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time. A man can have but one domicile for the same purpose at any time, but he may have numerous places of residence. His place of residence is generally his place of domicile, but it is not by any means necessarily so since no length of residence without intention of remaining will constitute domicile."

For political purposes the concepts of residence and domicile are dictated by the peculiar criteria of political laws. As these concepts have evolved in our election law, what has clearly and unequivocally emerged is the fact that residence for election purposes is used synonymously with domicile.32 (Emphasis supplied)

Aware of the domiciliary legal tie that links an overseas Filipino to his residence in this country, the framers of the Constitution considered the circumstances that impelled them to require Congress to establish a system for overseas absentee voting, thus:

MR. OPLE. With respect to Section 1, it is not clear whether the right of suffrage, which here has a residential restriction, is not denied to citizens temporarily residing or working abroad. Based on the statistics of several government agencies, there ought to be about two million such Filipinos at this time. Commissioner Bernas had earlier pointed out that these provisions are really lifted from the two previous Constitutions of 1935 and 1973, with the exception of the last paragraph. They could not therefore have foreseen at that time the phenomenon now described as the Filipino labor force explosion overseas.

According to government data, there are now about 600,000 contract workers and employees, and although the major portions of these expatriate communities

of workers are to be found in the Middle East, they are scattered in 177 countries in the world.

In a previous hearing of the Committee on Constitutional Commissions and Agencies, the Chairman of the Commission on Elections, Ramon Felipe, said that there was no insuperable obstacle to making effective the right of suffrage for Filipinos overseas. Those who have adhered to their Filipino citizenship notwithstanding strong temptations are exposed to embrace a more convenient foreign citizenship. And those who on their own or under pressure of economic necessity here, find that they have to detach themselves from their families to work in other countries with definite tenures of employment. Many of them are on contract employment for one, two, or three years. They have no intention of changing their residence on a permanent basis, but are technically disqualified from exercising the right of suffrage in their countries of destination by the residential requirement in Section 1 which says:

Suffrage shall be exercised by all citizens of the Philippines not otherwise disqualified by law, who are eighteen years of age or over, and who shall have resided in the Philippines for at least one year and in the place wherein they propose to vote for at least six months preceding the election.

I, therefore, ask the Committee whether at the proper time they might entertain an amendment that will make this exercise of the right to vote abroad for Filipino citizens an effective, rather than merely a nominal right under this proposed Constitution.

FR. BERNAS. Certainly, the Committee will consider that. But more than just saying that, I would like to make a comment on the meaning of "residence" in the Constitution because I think it is a concept that has been discussed in various decisions of the Supreme Court, particularly in the case of Faypon vs. Quirino, a 1954 case which dealt precisely with the meaning of "residence" in the Election Law. Allow me to quote:

A citizen may leave the place of his birth to look for greener pastures, as the saying goes, to improve his lot and that, of course, includes study in other places, practice of his avocation, reengaging in business. When an election is to be held, the citizen who left his birthplace to improve his lot may decide to return to his native town, to cast his ballot, but for professional or business reasons, or for any other reason, he may not absent himself from the place of his professional or business activities.

So, they are here registered as voters as he has the qualifications to be one, and is not willing to give up or lose the opportunity to choose the officials who are to run the government especially in national elections.

Despite such registration, the animus revertendi to his home, to his domicile or residence of origin has not forsaken him.

This may be the explanation why the registration of a voter in a place other than his residence of origin has not been deemed sufficient to consider abandonment or loss of such residence of origin.

In other words, "residence" in this provision refers to two residence qualifications: "residence" in the Philippines and "residence" in the place where he will vote. As far as residence in the Philippines is concerned, the word "residence" means domicile, but as far as residence in the place where he will actually cast his ballot is concerned, the meaning seems to be different. He could have a domicile somewhere else and yet he is a resident of a place for six months and he is allowed to vote there. So that there may be serious constitutional obstacles to absentee voting, unless the vote of the person who is absent is a vote which will be considered as cast in the place of his domicile.

MR. OPLE. Thank you for citing the jurisprudence.

It gives me scant comfort thinking of about two million Filipinos who should enjoy the right of suffrage, at least a substantial segment of these overseas Filipino communities. The Committee, of course, is aware that when this Article of the Constitution explicitly and unequivocally extends the right of effective suffrage to Filipinos abroad, this will call for a logistical exercise of global proportions. In effect, this will require budgetary and administrative commitments on the part of the Philippine government, mainly through the COMELEC and the Ministry of Foreign Affairs, and perhaps, a more extensive elaboration of this mechanism that will be put in place to make effective the right to vote. Therefore, seeking shelter in some wise jurisprudence of the past may not be sufficient to meet the demands of the right of suffrage for Filipinos abroad that I have mentioned. But I want to thank the Committee for saying that an amendment to this effect may be entertained at the proper time. . . . . . . . . . 33 (Emphasis supplied)

Thus, the Constitutional Commission recognized the fact that while millions of Filipinos reside abroad principally for economic reasons and hence they contribute in no small measure to the economic uplift of this country, their voices are marginal insofar as the choice of this country‘s leaders is concerned.

The Constitutional Commission realized that under the laws then existing and considering the novelty of the system of absentee voting in this jurisdiction, vesting overseas Filipinos with the right to vote would spawn constitutional problems especially because the Constitution itself provides for the residency requirement of voters:

MR. REGALADO. Before I act on that, may I inquire from Commissioner Monsod if the term "absentee voting" also includes transient voting; meaning, those who

are, let us say, studying in Manila need not go back to their places of registration, for instance, in Mindanao, to cast their votes.

MR. MONSOD. I think our provision is for absentee voting by Filipinos abroad.

MR. REGALADO. How about those people who cannot go back to the places where they are registered?

MR. MONSOD. Under the present Election Code, there are provisions for allowing students and military people who are temporarily in another place to register and vote. I believe that those situations can be covered by the Omnibus Election Code. The reason we want absentee voting to be in the Constitution as a mandate to the legislature is that there could be inconsistency on the residence rule if it is just a question of legislation by Congress. So, by allowing it and saying that this is possible, then legislation can take care of the rest.34 (Emphasis supplied)

Thus, Section 2, Article V of the Constitution came into being to remove any doubt as to the inapplicability of the residency requirement in Section 1. It is precisely to avoid any problems that could impede the implementation of its pursuit to enfranchise the largest number of qualified Filipinos who are not in the Philippines that the Constitutional Commission explicitly mandated Congress to provide a system for overseas absentee voting.

The discussion of the Constitutional Commission on the effect of the residency requirement prescribed by Section 1, Article V of the Constitution on the proposed system of absentee voting for qualified Filipinos abroad is enlightening:

MR. SUAREZ. May I just be recognized for a clarification. There are certain qualifications for the exercise of the right of suffrage like having resided in the Philippines for at least one year and in the place where they propose to vote for at least six months preceding the elections. What is the effect of these mandatory requirements on the matter of the exercise of the right of suffrage by the absentee voters like Filipinos abroad?

THE PRESIDENT. Would Commissioner Monsod care to answer?

MR. MONSOD. I believe the answer was already given by Commissioner Bernas, that the domicile requirements as well as the qualifications and disqualifications would be the same.

THE PRESIDENT. Are we leaving it to the legislature to devise the system?

FR. BERNAS. I think there is a very legitimate problem raised there.

THE PRESIDENT. Yes.

MR. BENGZON. I believe Commissioner Suarez is clarified.

FR. BERNAS. But I think it should be further clarified with regard to the residence requirement or the place where they vote in practice; the understanding is that it is flexible. For instance, one might be a resident of Naga or domiciled therein, but he satisfies the requirement of residence in Manila, so he is able to vote in Manila.

MR. TINGSON. Madam President, may I then suggest to the Committee to change the word "Filipinos" to QUALIFIED FILIPINO VOTERS. Instead of "VOTING BY FILIPINOS ABROAD," it should be QUALIFIED FILIPINO VOTERS. If the Committee wants QUALIFIED VOTERS LIVING ABROAD, would that not satisfy the requirement?

THE PRESIDENT. What does Commissioner Monsod say?

MR. MONSOD. Madam President, I think I would accept the phrase "QUALIFIED FILIPINOS ABROAD" because "QUALIFIED" would assume that he has the qualifications and none of the disqualifications to vote.

MR. TINGSON. That is right. So does the Committee accept?

FR. BERNAS. "QUALIFIED FILIPINOS ABROAD"?

THE PRESIDENT. Does the Committee accept the amendment?

MR. REGALADO. Madam President.

THE PRESIDENT. Commissioner Regalado is recognized.

MR. REGALADO. When Commissioner Bengzon asked me to read my proposed amendment, I specifically stated that the National Assembly shall prescribe a system which will enable qualified citizens, temporarily absent from the Philippines, to vote. According to Commissioner Monsod, the use of the phrase "absentee voting" already took that into account as its meaning. That is referring to qualified Filipino citizens temporarily abroad.

MR. MONSOD. Yes, we accepted that. I would like to say that with respect to registration we will leave it up to the legislative assembly, for example, to require where the registration is. If it is, say, members of the diplomatic corps who may be continuously abroad for a long time, perhaps, there can be a system of registration in the embassies. However, we do not like to preempt the legislative assembly.

THE PRESIDENT. Just to clarify, Commissioner Monsod‘s amendment is only to provide a system.

MR. MONSOD. Yes.

THE PRESIDENT. The Commissioner is not stating here that he wants new qualifications for these absentee voters.

MR. MONSOD. That is right. They must have the qualifications and none of the disqualifications.

THE PRESIDENT. It is just to devise a system by which they can vote.

MR. MONSOD. That is right, Madam President.35 (Emphasis supplied)

Clearly therefrom, the intent of the Constitutional Commission is to entrust to Congress the responsibility of devising a system of absentee voting. The qualifications of voters as stated in Section 1 shall remain except for the residency requirement. This is in fact the reason why the Constitutional Commission opted for the termqualified Filipinos abroad with respect to the system of absentee voting that Congress should draw up. As stressed by Commissioner Monsod, by the use of the adjective qualified with respect to Filipinos abroad, the assumption is that they have the "qualifications and none of the disqualifications to vote." In fine-tuning the provision on absentee voting, the Constitutional Commission discussed how the system should work:

MR. SUAREZ. For clarification purposes, we just want to state for the record that in the case of qualified Filipino citizens residing abroad and exercising their right of suffrage, they can cast their votes for the candidates in the place where they were registered to vote in the Philippines. So as to avoid any complications, for example, if they are registered in Angeles City, they could not vote for a mayor in Naga City.

In other words, if that qualified voter is registered in Angeles City, then he can vote only for the local and national candidates in Angeles City. I just want to make that clear for the record.

MR. REGALADO. Madam President.

THE PRESIDENT. What does Commissioner Regalado say?

MR. REGALADO. I just want to make a note on the statement of Commissioner Suarez that this envisions Filipinos residing abroad. The understanding in the amendment is that the Filipino is temporarily abroad. He may not be actually residing abroad; he may just be there on a business trip. It just so happens that the day before the elections he has to fly to the United States, so he could not cast his vote. He is temporarily abroad, but not residing there. He stays in a hotel for two days and comes back. This is not limited only to Filipinos temporarily residing abroad. But as long as he is temporarily abroad on the date of the

elections, then he can fall within the prescription of Congress in that situation.

MR. SUAREZ. I thank the Commissioner for his further clarification. Precisely, we need this clarification on record.

MR. MONSOD. Madam President, to clarify what we mean by "temporarily abroad," it need not be on very short trips. One can be abroad on a treaty traders visa. Therefore, when we talk about registration, it is possible that his residence is in Angeles and he would be able to vote for the candidates in Angeles, butCongress or the Assembly may provide the procedure for registration, like listing one’s name, in a registry list in the embassy abroad. That is still possible under the system.

FR. BERNAS. Madam President, just one clarification if Commissioner Monsod agrees with this.

Suppose we have a situation of a child of a diplomatic officer who reaches the voting age while living abroad and he has never registered here. Where will he register? Will he be a registered voter of a certain locality in the Philippines?

MR. MONSOD. Yes, it is possible that the system will enable that child to comply with the registration requirements in an embassy in the United States and his name is then entered in the official registration book in Angeles City, for instance.

FR. BERNAS. In other words, he is not a registered voter of Los Angeles, but a registered voter of a locality here.

MR. MONSOD. That is right. He does not have to come home to the Philippines to comply with the registration procedure here.

FR. BERNAS. So, he does not have to come home.

MR. BENGZON. Madam President, the Floor Leader wishes to inquire if there are more clarifications needed from the body.

Also, the Floor Leader is happy to announce that there are no more registered Commissioners to propose amendments. So I move that we close the period of amendments.36 (Emphasis supplied)

It is clear from these discussions of the members of the Constitutional Commission that they intended to enfranchise as much as possible all Filipino citizens abroad who have not abandoned their domicile of origin. The Commission even intended to extend to young Filipinos who reach voting age abroad whose parents‘ domicile of origin is in the Philippines, and consider them qualified as voters for the first time.

It is in pursuance of that intention that the Commission provided for Section 2 immediately after the residency requirement of Section 1. By the doctrine of necessary implication in statutory construction, which may be applied in construing constitutional provisions,37 the strategic location of Section 2 indicates that the Constitutional Commission provided for an exception to the actual residency requirement of Section 1 with respect to qualified Filipinos abroad. The same Commission has in effect declared that qualified Filipinos who are not in the Philippines may be allowed to vote even though they do not satisfy the residency requirement in Section 1, Article V of the Constitution.

That Section 2 of Article V of the Constitution is an exception to the residency requirement found in Section 1 of the same Article was in fact the subject of debate when Senate Bill No. 2104, which became R.A. No. 9189, was deliberated upon on the Senate floor, thus:

Senator Arroyo. Mr. President, this bill should be looked into in relation to the constitutional provisions. I think the sponsor and I would agree that the Constitution is supreme in any statute that we may enact.

Let me read Section 1, Article V, of the Constitution entitled, "Suffrage." It says:

Section 1. Suffrage may be exercised by all citizens of the Philippines not otherwise disqualified by law, who are at least eighteen years of age, and who shall have resided in the Philippines for at least one year and in the place wherein they propose to vote for at least six months immediately preceding the election.

Now, Mr. President, the Constitution says, "who shall have resided in the Philippines." They are permanent immigrants. They have changed residence so they are barred under the Constitution. This is why I asked whether this committee amendment which in fact does not alter the original text of the bill will have any effect on this?

Senator Angara. Good question, Mr. President. And this has been asked in various fora. This is in compliance with the Constitution. One, the interpretation here of "residence" is synonymous with "domicile."

As the gentleman and I know, Mr. President, "domicile" is the intent to return to one‘s home. And the fact that a Filipino may have been physically absent from the Philippines and may be physically a resident of the United States, for example, but has a clear intent to return to the Philippines, will make him qualified as a resident of the Philippines under this law.

This is consistent, Mr. President, with the constitutional mandate that we – that Congress – must provide a franchise to overseas Filipinos.

If we read the Constitution and the suffrage principle literally as demanding physical presence, then there is no way we can provide for offshore voting to our offshore kababayan, Mr. President.

Senator Arroyo. Mr. President, when the Constitution says, in Section 2 of Article V, it reads: "The Congress shall provide a system for securing the secrecy and sanctity of the ballot as well as a system for absentee voting by qualified Filipinos abroad."

The key to this whole exercise, Mr. President, is "qualified." In other words, anything that we may do or say in granting our compatriots abroad must be anchored on the proposition that they are qualified. Absent the qualification, they cannot vote. And "residents" (sic) is a qualification.

I will lose votes here from permanent residents so-called "green-card holders", but the Constitution is the Constitution. We cannot compromise on this. The Senate cannot be a party to something that would affect or impair the Constitution.

Look at what the Constitution says – "In the place wherein they propose to vote for at least six months immediately preceding the election."

Mr. President, all of us here have run (sic) for office.

I live in Makati. My neighbor is Pateros where Senator Cayetano lives. We are separated only by a creek. But one who votes in Makati cannot vote in Pateros unless he resides in Pateros for six months. That is how restrictive our Constitution is. I am not talking even about the Election Code. I am talking about the Constitution.

As I have said, if a voter in Makati would want to vote in Pateros, yes, he may do so. But he must do so, make the transfer six months before the election, otherwise, he is not qualified to vote.

That is why I am raising this point because I think we have a fundamental difference here.

Senator Angara. It is a good point to raise, Mr. President. But it is a point already well-debated even in the constitutional commission of 1986. And the reason Section 2 of Article V was placed immediately after the six-month/one-year residency requirement is to demonstrate unmistakably that Section 2 which authorizes absentee voting is an exception to the six-month/one-year residency requirement. That is the first principle, Mr. President, that one must remember.

The second reason, Mr. President, is that under our jurisprudence – and I think this is so well-entrenched that one need not argue about it – "residency" has been interpreted as synonymous with "domicile."

But the third more practical reason, Mr. President, is, if we follow the interpretation of the gentleman, then it is legally and constitutionally impossible to give a franchise to vote to overseas Filipinos who do not physically live in the country, which is quite ridiculous because that is exactly the whole point of this exercise – to enfranchise them and empower them to vote.38 (Emphasis supplied)

Accordingly, Section 4 of R.A. No. 9189 provides for the coverage of the absentee voting process, to wit:

SEC. 4. Coverage. – All citizens of the Philippines abroad, who are not otherwise disqualified by law, at least eighteen (18) years of age on the day of elections, may vote for president, vice-president, senators and party-list representatives.

which does not require physical residency in the Philippines; and Section 5 of the assailed law which enumerates those who are disqualified, to wit:

SEC. 5. Disqualifications. – The following shall be disqualified from voting under this Act:

a) Those who have lost their Filipino citizenship in accordance with Philippine laws;

b) Those who have expressly renounced their Philippine citizenship and who have pledged allegiance to a foreign country;

c) Those who have committed and are convicted in a final judgment by a court or tribunal of an offense punishable by imprisonment of not less than one (1) year, including those who have committed and been found guilty of Disloyalty as defined under Article 137 of the Revised Penal Code, such disability not having been removed by plenary pardon or amnesty: Provided, however, That any person disqualified to vote under this subsection shall automatically acquire the right to vote upon expiration of five (5) years after service of sentence; Provided, further, That the Commission may take cognizance of final judgments issued by foreign courts or tribunals only on the basis of reciprocity and subject to the formalities and processes prescribed by the Rules of Court on execution of judgments;

d) An immigrant or a permanent resident who is recognized as such in the host country, unless he/she executes, upon registration, an affidavit prepared for the purpose by the Commission declaring that he/she shall resume actual physical permanent residence in the Philippines not later than three (3) years from

approval of his/her registration under this Act. Such affidavit shall also state that he/she has not applied for citizenship in another country. Failure to return shall be cause for the removal of the name of the immigrant or permanent resident from the National Registry of Absentee Voters and his/her permanent disqualification to vote in absentia.

e) Any citizen of the Philippines abroad previously declared insane or incompetent by competent authority in the Philippines or abroad, as verified by the Philippine embassies, consulates or foreign service establishments concerned, unless such competent authority subsequently certifies that such person is no longer insane or incompetent.

As finally approved into law, Section 5(d) of R.A. No. 9189 specifically disqualifies an immigrant or permanent resident who is "recognized as such in the host country" because immigration or permanent residence in another country implies renunciation of one‘s residence in his country of origin. However, same Section allows an immigrant and permanent resident abroad to register as voter for as long as he/she executes an affidavit to show that he/she has not abandoned his domicile in pursuance of the constitutional intent expressed in Sections 1 and 2 of Article V that "all citizens of the Philippines not otherwise disqualified by law" must be entitled to exercise the right of suffrage and, that Congress must establish a system for absentee voting; for otherwise, if actual, physical residence in the Philippines is required, there is no sense for the framers of the Constitution to mandate Congress to establish a system for absentee voting.

Contrary to the claim of petitioner, the execution of the affidavit itself is not the enabling or enfranchising act. The affidavit required in Section 5(d) is not only proof of the intention of the immigrant or permanent resident to go back and resume residency in the Philippines, but more significantly, it serves as an explicit expression that he had not in fact abandoned his domicile of origin. Thus, it is not correct to say that the execution of the affidavit under Section 5(d) violates the Constitution that proscribes "provisional registration or a promise by a voter to perform a condition to be qualified to vote in a political exercise."

To repeat, the affidavit is required of immigrants and permanent residents abroad because by their status in their host countries, they are presumed to have relinquished their intent to return to this country; thus, without the affidavit, the presumption of abandonment of Philippine domicile shall remain.

Further perusal of the transcripts of the Senate proceedings discloses another reason why the Senate required the execution of said affidavit. It wanted the affiant to exercise the option to return or to express his intention to return to his domicile of origin and not to preempt that choice by legislation. Thus:

Senator Villar. Yes, we are going back.

It states that: "For Filipino immigrants and those who have acquired permanent resident status abroad," a requirement for the registration is the submission of "a Sworn Declaration of Intent to Return duly sworn before any Philippine embassy or consulate official authorized to administer oath…"

Mr. President, may we know the rationale of this provision? Is the purpose of this Sworn Declaration to include only those who have the intention of returning to be qualified to exercise the right of suffrage? What if the Filipino immigrant has no purpose of returning? Is he automatically disbarred from exercising this right to suffrage?

Senator Angara. The rationale for this, Mr. President, is that we want to be expansive and all-inclusive in this law. That as long as he is a Filipino, no matter whether he is a green-card holder in the U.S. or not, he will be authorized to vote. But if he is already a green-card holder, that means he has acquired permanent residency in the United States, then he must indicate an intention to return. This is what makes for the definition of "domicile." And to acquire the vote, we thought that we would require the immigrants and the green-card holders . . . Mr. President, the three administration senators are leaving, maybe we may ask for a vote [Laughter].

Senator Villar. For a merienda, Mr. President.

Senator Angara. Mr. President, going back to the business at hand. The rationale for the requirement that an immigrant or a green-card holder should file an affidavit that he will go back to the Philippines is that, if he is already an immigrant or a green-card holder, that means he may not return to the country any more and that contradicts the definition of "domicile" under the law.

But what we are trying to do here, Mr. President, is really provide the choice to the voter. The voter, after consulting his lawyer or after deliberation within the family, may decide "No, I think we are risking our permanent status in the United States if we file an affidavit that we want to go back." But we want to give him the opportunity to make that decision. We do not want to make that decision for him. 39(Emphasis supplied)

The jurisprudential declaration in Caasi vs. Court of Appeals that green card holders are disqualified to run for any elective office finds no application to the present case because the Caasi case did not, for obvious reasons, consider the absentee voting rights of Filipinos who are immigrants and permanent residents in their host countries.

In the advent of The Overseas Absentee Voting Act of 2003 or R.A. 9189, they may still be considered as a "qualified citizen of the Philippines abroad" upon fulfillment of the requirements of registration under the new law for the purpose of exercising their right of suffrage.

It must be emphasized that Section 5(d) does not only require an affidavit or a promise to "resume actual physical permanent residence in the Philippines not later than three years from approval of his/her registration," the Filipinos abroad must also declare that they have not applied for citizenship in another country. Thus, they must return to the Philippines; otherwise, their failure to return "shall be cause for the removal" of their names "from the National Registry of Absentee Voters and his/her permanent disqualification to vote in absentia."

Thus, Congress crafted a process of registration by which a Filipino voter permanently residing abroad who is at least eighteen years old, not otherwise disqualified by law, who has not relinquished Philippine citizenship and who has not actually abandoned his/her intentions to return to his/her domicile of origin, the Philippines, is allowed to register and vote in the Philippine embassy, consulate or other foreign service establishments of the place which has jurisdiction over the country where he/she has indicated his/her address for purposes of the elections, while providing for safeguards to a clean election.

Thus, Section 11 of R.A. No. 9189 provides:

SEC. 11. Procedure for Application to Vote in Absentia. –

11.1. Every qualified citizen of the Philippines abroad whose application for registration has been approved, including those previously registered under Republic Act No. 8189, shall, in every national election, file with the officer of the embassy, consulate or other foreign service establishment authorized by the Commission, a sworn written application to vote in a form prescribed by the Commission. The authorized officer of such embassy, consulate or other foreign service establishment shall transmit to the Commission the said application to vote within five (5) days from receipt thereof. The application form shall be accomplished in triplicate and submitted together with the photocopy of his/her overseas absentee voter certificate of registration.

11.2. Every application to vote in absentia may be done personally at, or by mail to, the embassy, consulate or foreign service establishment, which has jurisdiction over the country where he/she has indicated his/her address for purposes of the elections.

11.3. Consular and diplomatic services rendered in connection with the overseas absentee voting processes shall be made available at no cost to the overseas absentee voter.

Contrary to petitioner‘s claim that Section 5(d) circumvents the Constitution, Congress enacted the law prescribing a system of overseas absentee voting in compliance with the constitutional mandate. Such mandate expressly requires that Congress provide a system of absentee voting that necessarily presupposes that the "qualified citizen of the Philippines abroad" is not physically present in the country. The provisions of Sections

5(d) and 11 are components of the system of overseas absentee voting established by R.A. No. 9189. The qualified Filipino abroad who executed the affidavit is deemed to have retained his domicile in the Philippines. He is presumed not to have lost his domicile by his physical absence from this country. His having become an immigrant or permanent resident of his host country does not necessarily imply an abandonment of his intention to return to his domicile of origin, the Philippines. Therefore, under the law, he must be given the opportunity to express that he has not actually abandoned his domicile in the Philippines by executing the affidavit required by Sections 5(d) and 8(c) of the law.

Petitioner‘s speculative apprehension that the implementation of Section 5(d) would affect the credibility of the elections is insignificant as what is important is to ensure that all those who possess the qualifications to vote on the date of the election are given the opportunity and permitted to freely do so. The COMELEC and the Department of Foreign Affairs have enough resources and talents to ensure the integrity and credibility of any election conducted pursuant to R.A. No. 9189.

As to the eventuality that the Filipino abroad would renege on his undertaking to return to the Philippines, the penalty of perpetual disenfranchisement provided for by Section 5(d) would suffice to serve as deterrence to non-compliance with his/her undertaking under the affidavit.

Petitioner argues that should a sizable number of "immigrants" renege on their promise to return, the result of the elections would be affected and could even be a ground to contest the proclamation of the winning candidates and cause further confusion and doubt on the integrity of the results of the election. Indeed, the probability that after an immigrant has exercised the right to vote, he shall opt to remain in his host country beyond the third year from the execution of the affidavit, is not farfetched. However, it is not for this Court to determine the wisdom of a legislative exercise. As expressed in Tañada vs. Tuvera,40 the Court is not called upon to rule on the wisdom of the law or to repeal it or modify it if we find it impractical.

Congress itself was conscious of said probability and in fact, it has addressed the expected problem. Section 5(d) itself provides for a deterrence which is that the Filipino who fails to return as promised stands to lose his right of suffrage. Under Section 9, should a registered overseas absentee voter fail to vote for two consecutive national elections, his name may be ordered removed from the National Registry of Overseas Absentee Voters.

Other serious legal questions that may be raised would be: what happens to the votes cast by the qualified voters abroad who were not able to return within three years as promised? What is the effect on the votes cast by the non-returnees in favor of the winning candidates? The votes cast by qualified Filipinos abroad who failed to return within three years shall not be invalidated because they were qualified to vote on the date of the elections, but their failure to return shall be cause for the removal of the

names of the immigrants or permanent residents from the National Registry of Absentee Voters and their permanent disqualification to vote in absentia.

In fine, considering the underlying intent of the Constitution, the Court does not find Section 5(d) of R.A. No. 9189 as constitutionally defective.

B. Is Section 18.5 of R.A. No. 9189 in relation to Section 4 of the same Act in contravention of Section 4, Article VII of the Constitution?

Section 4 of R.A. No. 9189 provides that the overseas absentee voter may vote for president, vice-president, senators and party-list representatives.

Section 18.5 of the same Act provides:

SEC. 18. On-Site Counting and Canvassing. –

. . . . . . . . .

18. 5 The canvass of votes shall not cause the delay of the proclamation of a winning candidate if the outcome of the election will not be affected by the results thereof. Notwithstanding the foregoing, the Commission is empowered to order the proclamation of winning candidates despite the fact that the scheduled election has not taken place in a particular country or countries, if the holding of elections therein has been rendered impossible by events, factors and circumstances peculiar to such country or countries, in which events, factors and circumstances are beyond the control or influence of the Commission. (Emphasis supplied)

Petitioner claims that the provision of Section 18.5 of R.A. No. 9189 empowering the COMELEC to order the proclamation of winning candidates insofar as it affects the canvass of votes and proclamation of winning candidates for president and vice-president, is unconstitutional because it violates the following provisions of paragraph 4, Section 4 of Article VII of the Constitution:

SEC. 4 . . .

The returns of every election for President and Vice-President, duly certified by the board of canvassers of each province or city, shall be transmitted to the Congress, directed to the President of the Senate. Upon receipt of the certificates of canvass, the President of the Senate shall, not later than thirty days after the day of the election, open all the certificates in the presence of the Senate and the House of Representatives in joint public session, and the Congress, upon determination of the authenticity and due execution thereof in the manner provided by law, canvass the votes.

The person having the highest number of votes shall be proclaimed elected, but in case two or more shall have an equal and highest number of votes, one of them shall forthwith be chosen by the vote of a majority of all the Members of both Houses of the Congress, voting separately.

The Congress shall promulgate its rules for the canvassing of the certificates.

. . .

which gives to Congress the duty to canvass the votes and proclaim the winning candidates for president and vice-president.

The Solicitor General asserts that this provision must be harmonized with paragraph 4, Section 4, Article VII of the Constitution and should be taken to mean that COMELEC can only proclaim the winning Senators and party-list representatives but not the President and Vice-President.41

Respondent COMELEC has no comment on the matter.

Indeed, the phrase, proclamation of winning candidates, in Section 18.5 of R.A. No. 9189 is far too sweeping that it necessarily includes the proclamation of the winning candidates for the presidency and the vice-presidency.

Section 18.5 of R.A. No. 9189 appears to be repugnant to Section 4, Article VII of the Constitution only insofar as said Section totally disregarded the authority given to Congress by the Constitution to proclaim the winning candidates for the positions of president and vice-president.

In addition, the Court notes that Section 18.4 of the law, to wit:

18.4. . . . Immediately upon the completion of the canvass, the chairman of the Special Board of Canvassers shall transmit via facsimile, electronic mail, or any other means of transmission equally safe and reliable the Certificates of Canvass and the Statements of Votes to the Commission, . . . [Emphasis supplied]

clashes with paragraph 4, Section 4, Article VII of the Constitution which provides that the returns of every election for President and Vice-President shall be certified by the board of canvassers to Congress.

Congress could not have allowed the COMELEC to usurp a power that constitutionally belongs to it or, as aptly stated by petitioner, to encroach "on the power of Congress to canvass the votes for president and vice-president and the power to proclaim the winners for the said positions." The provisions of the Constitution as the fundamental law of the land should be read as part of The Overseas Absentee Voting Act of 2003 and hence, the canvassing of the votes and the proclamation of the winning

candidates for president and vice-president for the entire nation must remain in the hands of Congress.

C. Are Sections 19 and 25 of R.A. No. 9189 in violation of Section 1, Article IX-A of the Constitution?

Petitioner avers that Sections 19 and 25 of R.A. No. 9189 violate Article IX-A (Common Provisions) of the Constitution, to wit:

Section 1. The Constitutional Commissions, which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on Audit. (Emphasis supplied)

He submits that the creation of the Joint Congressional Oversight Committee with the power to review, revise, amend and approve the Implementing Rules and Regulations promulgated by the COMELEC, R.A. No. 9189 intrudes into the independence of the COMELEC which, as a constitutional body, is not under the control of either the executive or legislative departments of government; that only the COMELEC itself can promulgate rules and regulations which may be changed or revised only by the majority of its members; and that should the rules promulgated by the COMELEC violate any law, it is the Court that has the power to review the same via the petition of any interested party, including the legislators.

It is only on this question that respondent COMELEC submitted its Comment. It agrees with the petitioner that Sections 19 and 25 of R.A. No. 9189 are unconstitutional. Like the petitioner, respondent COMELEC anchors its claim of unconstitutionality of said Sections upon Section 1, Article IX-A of the Constitution providing for the independence of the constitutional commissions such as the COMELEC. It asserts that its power to formulate rules and regulations has been upheld in Gallardo vs. Tabamo, Jr.42 where this Court held that the power of the COMELEC to formulate rules and regulations is implicit in its power to implement regulations under Section 2(1) of Article IX-C43 of the Constitution. COMELEC joins the petitioner in asserting that as an independent constitutional body, it may not be subject to interference by any government instrumentality and that only this Court may review COMELEC rules and only in cases of grave abuse of discretion.

The COMELEC adds, however, that another provision, vis-à-vis its rule-making power, to wit:

SEC. 17. Voting by Mail. –

17.1. For the May, 2004 elections, the Commission shall authorize voting by mail in not more than three (3) countries, subject to the approval of the Congressional Oversight Committee. Voting by mail may be allowed in countries that satisfy the following conditions:

a) Where the mailing system is fairly well-developed and secure to prevent occasion for fraud;

b) Where there exists a technically established identification system that would preclude multiple or proxy voting; and

c) Where the system of reception and custody of mailed ballots in the embassies, consulates and other foreign service establishments concerned are adequate and well-secured.

Thereafter, voting by mail in any country shall be allowed only upon review and approval of the Joint Congressional Oversight Committee . . . . . . . . . (Emphasis supplied)

is likewise unconstitutional as it violates Section 1, Article IX-A mandating the independence of constitutional commissions.

The Solicitor General takes exception to his prefatory statement that the constitutional challenge must fail and agrees with the petitioner that Sections 19 and 25 are invalid and unconstitutional on the ground that there is nothing in Article VI of the Constitution on Legislative Department that would as much as imply that Congress has concurrent power to enforce and administer election laws with the COMELEC; and by the principles of exclusio unius est exclusio alterius and expressum facit cessare tacitum, the constitutionally enumerated powers of Congress circumscribe its authority to the exclusion of all others.

The parties are unanimous in claiming that Sections 19, 25 and portions of Section 17.1 are unconstitutional. Thus, there is no actual issue forged on this question raised by petitioner.

However, the Court finds it expedient to expound on the role of Congress through the Joint Congressional Oversight Committee (JCOC) vis-à-vis the independence of the COMELEC, as a constitutional body.

R.A. No. 9189 created the JCOC, as follows:

SEC. 25. Joint Congressional Oversight Committee. – A Joint Congressional Oversight Committee is hereby created, composed of the Chairman of the Senate Committee on Constitutional Amendments, Revision of Codes and Laws, and seven (7) other Senators designated by the Senate President, and the Chairman of the House Committee on Suffrage and Electoral Reforms, and seven (7) other Members of the House of Representatives designated by the Speaker of the House of Representatives: Provided, That, of the seven (7) members to be designated by each House of Congress, four (4) should come from the majority and the remaining three (3) from the minority.

The Joint Congressional Oversight Committee shall have the power to monitor and evaluate the implementation of this Act. It shall review, revise, amend and approve the Implementing Rules and Regulations promulgated by the Commission. (Emphasis supplied)

SEC. 19. Authority of the Commission to Promulgate Rules. – The Commission shall issue the necessary rules and regulations to effectively implement the provisions of this Act within sixty (60) days from the effectivity of this Act. The Implementing Rules and Regulations shall be submitted to the Joint Congressional Oversight Committee created by virtue of this Act for prior approval.

. . . . . . . . . (Emphasis supplied)

Composed of Senators and Members of the House of Representatives, the Joint Congressional Oversight Committee (JCOC) is a purely legislative body. There is no question that the authority of Congress to "monitor and evaluate the implementation" of R.A. No. 9189 is geared towards possible amendments or revision of the law itself and thus, may be performed in aid of its legislation.

However, aside from its monitoring and evaluation functions, R.A. No. 9189 gives to the JCOC the following functions: (a) to "review, revise, amend and approve the Implementing Rules and Regulations" (IRR) promulgated by the COMELEC [Sections 25 and 19]; and (b) subject to the approval of the JCOC [Section 17.1], the voting by mail in not more than three countries for the May 2004 elections and in any country determined by COMELEC.

The ambit of legislative power under Article VI of the Constitution is circumscribed by other constitutional provisions. One such provision is Section 1 of Article IX-A of the 1987 Constitution ordaining that constitutional commissions such as the COMELEC shall be "independent."

Interpreting Section 1, Article X of the 1935 Constitution providing that there shall be an independent COMELEC, the Court has held that "[w]hatever may be the nature of the functions of the Commission on Elections, the fact is that the framers of the Constitution wanted it to be independent from the other departments of the Government."44In an earlier case, the Court elucidated:

The Commission on Elections is a constitutional body. It is intended to play a distinct and important part in our scheme of government. In the discharge of its functions, it should not be hampered with restrictions that would be fully warranted in the case of a less responsible organization. The Commission may err, so may this court also. It should be allowed considerable latitude in devising means and methods that will insure the accomplishment of the great objective for which it was created – free, orderly and honest elections. We may not agree fully with its choice of means, but unless these are clearly illegal or constitute gross

abuse of discretion, this court should not interfere. Politics is a practical matter, and political questions must be dealt with realistically – not from the standpoint of pure theory. The Commission on Elections, because of its fact-finding facilities, its contacts with political strategists, and its knowledge derived from actual experience in dealing with political controversies, is in a peculiarly advantageous position to decide complex political questions.45 (Emphasis supplied)

The Court has no general powers of supervision over COMELEC which is an independent body "except those specifically granted by the Constitution," that is, to review its decisions, orders and rulings.46 In the same vein, it is not correct to hold that because of its recognized extensive legislative power to enact election laws, Congress may intrude into the independence of the COMELEC by exercising supervisory powers over its rule-making authority.

By virtue of Section 19 of R.A. No. 9189, Congress has empowered the COMELEC to "issue the necessary rules and regulations to effectively implement the provisions of this Act within sixty days from the effectivity of this Act." This provision of law follows the usual procedure in drafting rules and regulations to implement a law – the legislature grants an administrative agency the authority to craft the rules and regulations implementing the law it has enacted, in recognition of the administrative expertise of that agency in its particular field of operation.47 Once a law is enacted and approved, the legislative function is deemed accomplished and complete. The legislative function may spring back to Congress relative to the same law only if that body deems it proper to review, amend and revise the law, but certainly not to approve, review, revise and amend the IRR of the COMELEC.

By vesting itself with the powers to approve, review, amend, and revise the IRR for The Overseas Absentee Voting Act of 2003, Congress went beyond the scope of its constitutional authority. Congress trampled upon the constitutional mandate of independence of the COMELEC. Under such a situation, the Court is left with no option but to withdraw from its usual reticence in declaring a provision of law unconstitutional.

The second sentence of the first paragraph of Section 19 stating that "[t]he Implementing Rules and Regulations shall be submitted to the Joint Congressional Oversight Committee created by virtue of this Act for prior approval," and the second sentence of the second paragraph of Section 25 stating that "[i]t shall review, revise, amend and approve the Implementing Rules and Regulations promulgated by the Commission," whereby Congress, in both provisions, arrogates unto itself a function not specifically vested by the Constitution, should be stricken out of the subject statute for constitutional infirmity. Both provisions brazenly violate the mandate on the independence of the COMELEC.

Similarly, the phrase, "subject to the approval of the Congressional Oversight Committee" in the first sentence of Section 17.1 which empowers the Commission to authorize voting by mail in not more than three countries for the May, 2004 elections; and the phrase, "only upon review and approval of the Joint Congressional Oversight

Committee" found in the second paragraph of the same section are unconstitutional as they require review and approval of voting by mail in any country after the 2004 elections. Congress may not confer upon itself the authority to approve or disapprove the countries wherein voting by mail shall be allowed, as determined by the COMELEC pursuant to the conditions provided for in Section 17.1 of R.A. No. 9189.48 Otherwise, Congress would overstep the bounds of its constitutional mandate and intrude into the independence of the COMELEC.

During the deliberations, all the members of the Court agreed to adopt the separate opinion of Justice Reynato S. Puno as part of the ponencia on the unconstitutionality of Sections 17.1, 19 and 25 of R.A. No. 9189 insofar as they relate to the creation of and the powers given to the Joint Congressional Oversight Committee.

WHEREFORE, the petition is partly GRANTED. The following portions of R.A. No. 9189 are declared VOIDfor being UNCONSTITUTIONAL:

a) The phrase in the first sentence of the first paragraph of Section 17.1, to wit: "subject to the approval of the Joint Congressional Oversight Committee;"

b) The portion of the last paragraph of Section 17.1, to wit: "only upon review and approval of the Joint Congressional Oversight Committee;"

c) The second sentence of the first paragraph of Section 19, to wit: "The Implementing Rules and Regulations shall be submitted to the Joint Congressional Oversight Committee created by virtue of this Act for prior approval;" and

d) The second sentence in the second paragraph of Section 25, to wit: "It shall review, revise, amend and approve the Implementing Rules and Regulations promulgated by the Commission" of the same law;

for being repugnant to Section 1, Article IX-A of the Constitution mandating the independence of constitutional commission, such as COMELEC.

The constitutionality of Section 18.5 of R.A. No. 9189 is UPHELD with respect only to the authority given to the COMELEC to proclaim the winning candidates for the Senators and party-list representatives but not as to the power to canvass the votes and proclaim the winning candidates for President and Vice-President which is lodged with Congress under Section 4, Article VII of the Constitution.

The constitutionality of Section 5(d) is UPHELD.

Pursuant to Section 30 of R.A. No. 9189, the rest of the provisions of said law continues to be in full force and effect.

G.R. No. 147410 February 5, 2004 THE INSULAR LIFE ASSURANCE COMPANY, LTD., petitioner vs. ASSET BUILDERS CORPORATION, respondent.

Where the parties merely exchange offers and counteroffers, no agreement or contract is perfected. A party may withdraw its offer or counteroffer prior to its receipt of the other party's acceptance thereof. To produce an agreement, the offer must be certain and the acceptance timely and absolute.

The Case

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the September 20, 2000 Decision2 and the March 7, 2001 Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 61607. The dispositive part of the Decision reads as follows:

"IN THE LIGHT OF ALL THE FOREGOING, the appeal of the [petitioner] is DISMISSED. The Decision of the Court a quo is AFFIRMED."4

The assailed Resolution denied petitioner's Motion for Reconsideration.

The Facts

The appellate court summarized the facts of the case as follows:

"Sometime in November, 1992, the Insular Life Assurance Company, Limited, [petitioner], invited companies/corporations engaged in the building construction business to participate in the bidding of [petitioner's] proposed Insular Life building in Lucena City. [Petitioner] distributed copies of 'Bid Document[s]', including the general construction x x x contract, with the winning bidder and 'Bid Proposal Forms'[,] and furnished copies of the'Instruction to Bidders' to participating bidders, containing the rules to be followed in the bidding, including the following rules: (a) all bond proposals shall be accompanied with a bid bond from the Insular General Insurance Company, Inc., in an amount equivalent to ten (10) percent of the bid or five (5) percent of the bid in Manager's or Cashier's check payable to Insular Life, which bid bonds will be returned to the bidder after sixty (60) days from opening of bids or after award of the project, whichever date comes first;5 (b) the bid shall be valid for sixty (60) days [after] opening of bids[,] but the owner of the project (the [petitioner]) had the option to request the bidder to extend the bid validity period after expiration of the original validity period;6 [and] (c) the bidder, whose proposal had been deemed acceptable and complying with the requirements of the owner ([petitioner]) and the project, shall be notified in writing to personally appear to execute the 'Contract Agreements' within five

(5) days after the receipt of the 'Notice of Award'[,] and that failure on the part of the winning bidder to execute the contract shall constitute a breach of the agreement, as effected by acceptance of the proposal, resulting in the nullification of the award; and that the bond heretofore, offered by the winning bidder shall be retained by the owner ([petitioner]) as payment due for liquidated damages.7

"Asset Builders Corporation, [respondent], with four (4) other bidders, namely, Q.K. Calderon Construction [Co., Inc.], Specified Contractors, A.[A.] Alarilla Construction[,] and Serg Construction, submitted their respective bid proposals secured by bid bonds, valid for sixty (60) days.8 Under its 'Proposal Form' which the [respondent] submitted to the [petitioner], [respondent] bound and obliged itself to enter into a 'Contract' with the petitioner within ten (10) days from notice of the award, with good and sufficient securities for the faithful compliance thereof.9

"On November 9, 1993, the respective proposals of the bidders were opened. The [petitioner] forwarded a'Summary of Bids and Tender Documents' to Adrian Wilson International Associate[s], Inc.10 (AWIA for brevity), [petitioner's] designated 'Project Manager[,]' for the proposed Insular Life Building in Lucena City for its evaluation and analysis. AWIA, in due time, submitted a report of its evaluation to the 'Real Property Division' of the [petitioner]. As [could] be gleaned from the Report of AWIA, [respondent's] P12,962,845.5411 bid was the lowest among the bidders.

"On January 21, 1994, Engineer Pete S. Espiritu (Espiritu for brevity) of the 'Real Property Department', who was designated as 'Project Coordinator' of the petitioner[,] recommended that [respondent] and the other bidders,'Q.K. CALDERON [CONSTRUCTION] CO., INC.' AND 'SPECIFIED CONTRACTORS', be subjected to post-qualification proceedings, including the inspection of their respective offices, equipment, as well as past and present projects, and that said bidders be subjected to credit and financial investigations.12

"[Petitioner] concurred with the recommendation of Espiritu and, indeed, post-qualification, inspection[,] and evaluations of [respondent] and Q.K. Calderon Construction Co., Inc. were effected. On January 25, 1994, [petitioner], with concurrence of [respondent], visited [respondent's] main office at the Tektite Tower and its past and present projects, i.e., the four (4) and two (2) storey Air Transportation buildings in its compound; the Government Service Insurance System (GSIS) Headquarters Complex; and the National Historical Institute Building, and [respondent's] equipment. On February 14, 1994, Espiritu suggested that a bid clarification and negotiation be undertaken with prospective contractors.

"On February 23, 1994, Abraham Torrijos of [petitioner's] 'Real Property Department' (hereinafter referred to as Torrijos) recommended the approval by the Board of Directors of [petitioner] of the award of the general construction of the Proposed Lucena Building, in favor of [respondent], emphasizing that:

'2. Asset Builders Corporation is a (sic) 'AAA' category Contractor. It has extensive experience in vertical and horizontal projects. The company [has been] subjected to a post qualification and credit investigation, the results of which are satisfactory and acceptable, thus making it technically competent and financially capable of contracting the work.'13

"On February 24, 1994, a conference was held by and among the representatives of the [petitioner] and of the [respondent], including [respondent's] Operations Manager, Engineer Ramon Abu, for some clarifications. [Petitioner] proposed that [respondent] adjust its bid from P12,961,845.54 to P13,000,000.00 to accommodate the wage increase brought about by Wage Order No. 03, series of 1993, effective December 3, 1993. However, [respondent's] representatives were noncommittal, declaring that they had [to] report to the management of the [respondent] the proposal of [petitioner's] representatives, for its consideration and approval. Subsequently, the [respondent] agreed to the readjustment of the amount of its bid as proposed by the [petitioner].

"On March 9, 1994, Januario L. Flores (Flores for brevity), head of the 'Real Property Department' and Assistant Vice-President of the [petitioner], submitted to Mabini L. Juan, the Chief Operating Officer and Senior Executive Vice-President of the [petitioner], his findings on the post-qualification, evaluation and credit investigation of [respondent], with the recommendation that the award be given to the [respondent]:

'2. On the basis of the above very positive indicators, RPD[,] E.L. Mariano, [F. B.] Mariano Associates and Co.[,] and Adrian Wilson Int'l Associates, [Inc.] recommen[d] to award the Lucena [p]roject to Asset Builders Corporation. We honestly believe that they will do a good job.

'3. For your consideratio[n/a]pproval.'14

"On March 14, 1994, [Flores] signed a 'Notice to Proceed', addressed to the [respondent], for the conformity of the latter's President, Rogelio P. Centeno. Under the [ultimate] paragraph of the 'Notice to Proceed', the [respondent] may start its mobilization and proceed with the construction immediately[,] pending execution of the 'Construction Agreement'.15 The [petitioner prepared] a draft of the contract to be executed by the [petitioner] and the [respondent].

"On the same day, [Torrijos] informed, by letter, Engineer Bernardo A. Sajorda (Sajorda for brevity's sake), 'Project Manager' of AWIA, that [petitioner] had awarded the general construction contract of the proposed Lucena Building to the [respondent] and advised AWIA to coordinate with [respondent] and inform the latter that a pre-construction meeting [would] be held on March 22, 1994 at the job site.16 A copy of the 'Notice of Award' was appended to said letter.17 Sajorda forthwith informed Rogelio P. Centeno, the President of [respondent], by'Memorandum' that, pursuant to the AWARD to [respondent], of the general construction of the Proposed Lucena Building, a pre-construction conference [would] be held on March 22, 1994 at the job site, during which the following will be discussed:

'1. Contract Amount and completion time

2. Role of AWIA

3. Project Contractors Key [p]ersonnel [l]ist with [s]ignatures and [p]ositions

4. Channel of [c]ommunications among Architect, Insular Life, ASSET and AWIA

5. [Contractor submittals i.e. - Work Schedule, Schedule of] Prices, etc.

6. As-built[s] drawings

7. Submitt[al] of shop drawings prior to use of materials

8. Sanitation

9. Safety programs (first aid kit and hard hats)

10. Night work

11. CAR (Contractor's All Ris[k I]nsurance)

12. Owners review of payrolls, vouchers, etc. (sic) payments etc.

13. Sub-contracting [for] approval of subs.

14. Photographs every month

15. Billings based on actual work accomplishments. Undistributed materials not billable

16. Security measures

17. Tests as required by spec[']s

18. Take note of specific requirements before final payment is made'18

"The [respondent] received a copy of the 'Memorandum' of Sajorda, on March 17, 1994. On March 18, 1994, the [petitioner] transmitted to the [respondent] the following documents, evidenced by a 'Transmittal Sheet', received by Roy Roxas, for the [respondent], to enable the latter to secure a 'Building Permit' for the project:

'ONE (1) LOT DOCUMENTS/PLANS FOR BUILDING PERMIT

4 SETS OF STRUCTURAL COMPUTATION

5 SETS OF SPECS FOR GENERAL CONSTRUCTION

3 SETS OF ELECTRICAL LOAD COMPUTATION

5 COPIES OF PRC ID [&] PTR OF DESIGN ENGRS.

6 SETS OF ELMA PLANS

5 SETS OF [R]MDA PLANS/SPECS'19

"On March 22, 1994, the 'Pre-Construction Conference' ensued with the representatives of the [petitioner] and its Project Manager and of the [respondent], in the person of its Project Engineer, J.G. Quizon, in attendance:

'Attendees: CARLOS M. ESPIRITU -- AWIA Asst. Project Manager

BERNARDO [A]. SAJORDA -- AWIA Project Manager

EDMUNDO C. SABATER -- AWIA Resident Engineer

JANUARIO L. FLORES -- IL/RPD Manager

J.G. QUIZON -- ASSET Project Manager

PETE S. ESPIRITU -- IL/RPD Project Coordinator

ABRAHAM P. TORRIJOS -- IL/RPD Asst. Manager'20

"During the conference, the following were discussed and clarified:

'1. Contract Amount and Completion Time: Contract is for P13,000,000.00, to be completed within 210 calendar days; day one to be 5 days after receipt of NTP by the Contractor. Actual site mobilization to be first week of April 1994, per Mr. J.G. Quizon. Issuance of building and other permits being worked out by the Contractor.'21

"On March 26, 1994, Jacobo G. Quizon, the Project Manager of [respondent], sent to AWIA a letter requesting for the TCT lot description for the purpose of relocation of the monuments and the staking out of the building:

'We have the honor to request your good office, in relocating the monuments[,] as per TCT lot description[s,] prior to staking out the building[;] likewise, we can do the relocation[,] provided the cost will be reimbursed to the Owner[,] with an approximate fee of P5,000.00 lump sum.

'Further, problems may occur regarding structur[al] excavation for footing [and footing] tie beams at Grid Line A & 4. As per plan, the proposed depth [of] excavation of about 2.5[0M] along the existing adjacent building walls will expose the CHB footing.'22

"Thereafter, a Ground Breaking ceremony was held at the project site, with Rogelio B. Centeno, the President of [respondent], [and] Pete S. Espiritu and Januario L. Flores of the [petitioner] in attendance. A billboard announcing the construction of [the] Insular Life Building in Lucena City, with the [respondent] as the General Contractor, was also erected in the project site.

"However, the [respondent] did not affix its conformity to any 'Notice of Award', much less commence its construction of the project. Neither did it execute any 'Construction Agreement'. Subsequently, the [respondent] wrote the [petitioner] a letter dated April 5, 1994, informing the [petitioner] that the [respondent would] not be able to undertake the project anymore[,] because the prerequisite paper work and attendant processing could not be fast-trac[k]ed and that, since the previous two (2) weeks, prices had escalated, which rendered its bid unattractive.23 On April 25, 1994, the [petitioner] wrote a letter to the [respondent], in response to its April 5, 1994 [letter], informing the [respondent] that, in view of the unjust withdrawal of the [respondent] from the project, despite the award of the project to the [respondent], the [petitioner] was impelled to engage the services of another contractor to complete the project[,] without prejudice to further action of the [petitioner] against the [respondent] for its withdrawal, pursuant to Section 10 of the 'Instruction to Bidders', quoted, infra:

'The exact amount of damages to the Owner due to the failure to execute the Contract may be deemed difficult to determine. Failure, thereof, to execute the Contract within five (5) days after the receipt of the Notice of Award shall cause [the] annulment of the award. The amount of bid bond deposited with the proposal shall be retained by the Owner as payment due for liquidated damages incurred.

"By way of riposte, the [respondent] sent a letter to the [petitioner] averring that: (a) it never received any written'Notice of Award' from the [petitioner]; [and] (b) since its bid offer had a lifetime of sixty (60) days from November 9, 1993 or until January 8, 1993 (sic)[,] its offer was automatically withdrawn after said date, since the [petitioner] had not requested the [respondent] for the extension of the lifetime thereof.

"On December 23, 1994, the [petitioner] filed a complaint24 against the [respondent], with the Regional Trial Court25 of Makati City, for 'Damages', x x x:

x x x x x x x x x

"The [petitioner] alleged, inter alia, in its complain[t t]hat the [respondent] was duly notified by AWIA of the award, in its favor, by the [petitioner], of the project[,] but the [respondent] unjustly and arbitrarily withdrew from the project and refused to execute the 'Construction Contract' with the [petitioner,] which impelled the latter to engage the services of another contractor for the project at the price of P14,500,000.00 and that,

consequently, the [petitioner] was obliged to pay the amount of P1,500,000.00 which was [the] difference between the contract price of the project with the [respondent] in the amount of P13,000,000.00 and P14,500,000.00, by way of actual damages or, alternatively, by way of liquidated damages. In its Answer26 to the complaint, the [respondent] alleged, inter alia, that it never received any 'Notice of Award' or 'Notice to Proceed'; its bid had expired by January 8, 1994, without the [petitioner] asking the [respondent] for the extension thereof[,] and interposed counterclaims for damages against the [petitioner], praying that, after due proceedings, judgment be rendered in its favor, x x x:

x x x x x x x x x

"After due proceedings, the Court a quo rendered a Decision,27 dated December [5], 1997, in favor of the [respondent] and against the [petitioner], ordering the dismissal of the complaint of the [petitioner] and ordering the latter to pay damages to the [respondent], the dispositive portion of which is quoted, infra:

'WHEREFORE, judgment is rendered DISMISSING the Complaint with costs against [petitioner].'

'On the counter-claim, Insular Life Assurance Co., Ltd., is hereby ordered to pay Asset Builders Corporation the sums of Pesos: Five Hundred Thousand (P500,000.00) as compensation for the injury to the latter's business standing, and Pesos: Seventy Five Thousand (P75,000.00) by way of attorney's fees and expenses of litigation.

'Filing fees on the amount of P2,135,000.00 [respondent] sought in the counter-claim shall constitute a first lien on the recovery from [petitioner].'

x x x x x x x x x

"The [petitioner] interposed its appeal from the Decision of the Court a quo and posed, for [the CA's] resolution, the threshold issues of whether or not: (a) a construction contract was perfected by and between the [petitioner] and the [respondent] for the construction of petitioner's building project in Lucena City; (b) the [respondent] waived Section 9 of the Instruction to Bidders and was estopped from claiming that no construction contract was perfected between it and the [petitioner]; [and] (c) the [respondent] was liable for damages to the [petitioner]."28

Ruling of the Court of Appeals

The CA affirmed the lower court's Decision. According to the appellate court's ruling, the failure of petitioner to prove that it gave respondent a written notice of the former's unqualified acceptance of the latter's bid, as required in the Instruction to Bidders, did not give birth to consent. The appellate court explained that when the exact terms desired were not in the offer, any modification or variation therefrom would annul that

offer. Furthermore, estoppel did not apply because of petitioner's own carelessness or want of diligence.

Hence this Petition.29

The Issues

"I. The Court of Appeals gravely erred in not holding that there exists a valid contract for the construction of the building project between IL30 and ABC.31

"II. The Court of Appeals gravely erred in not holding that IL has notified ABC of the award of the construction of the building project to it before it withdrew its bid proposal.

"III. The Court of Appeals gravely erred in not holding that ABC's withdrawal from the contract constituted a breach of that contract.

"IV. The Court of Appeals gravely erred in not holding that the contract had been perfected and that its consummation stage [had] in fact been commenced.

"V. The Court of Appeals gravely erred in not holding that ABC is estopped from claiming the contract was not perfected.

"VI. The Court of Appeals gravely erred in not holding that ABC, instead of IL, is liable for damages[,] and that, at worst, there is no evidence that supported the award in favor of ABC.

"VII. In any event, there is no basis to penalize IL for going to court."32

There is really only one major issue: Was there a valid contract between petitioner and respondent?

The Court's Ruling

The Petition is unmeritorious.

Sole Issue:

Existence of a Contract

No Notice of Award,

No Contract

It is elementary that, being consensual,33 a contract34 is perfected35 by mere consent.36 From the moment of a meeting37 of the offer and the acceptance38 upon the

object and the cause that would constitute the contract,39consent arises.40 However, "the offer must be certain"41 and "the acceptance seasonable and absolute;42 if qualified,43 the acceptance44 would merely constitute a counter-offer."45

Equally important are the three distinct stages of a contract -- its "preparation or negotiation, its perfection, and finally, its consummation."46 Negotiation begins when the prospective contracting parties manifest their interest in the contract and ends at the moment of their agreement. The perfection or birth of the contract47 occurs when they agree upon the essential elements thereof.48 The last stage is its consummation, wherein they "fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof."49

In the case at bar, the parties did not get past the negotiation stage. The events that transpired between them were indeed initiated by a formal offer, but this policitación was merely an imperfect promise that could not be considered a binding commitment.50 At any time, either of the prospective contracting parties may stop the negotiation and withdraw the offer.

In the present case, in fact, there was only an offer and a counteroffer51 that did not sum up to any final arrangement containing the elements of a contract.52 Clearly, no meeting of minds was established.53 First, only after the bid bond had lapsed were post-qualification proceedings, inspections, and credit investigations conducted. Second, the inter-office memoranda issued by petitioner, as well as other memoranda between it and its own project manager, were simply documents to which respondent was not privy. Third, petitioner proposed a counteroffer to adjust respondent's bid to accommodate the wage increase of December 3, 1993.

In effect, the rule on the concurrence of the offer and its acceptance54 did not apply, because other matters or details -- in addition to the subject matter and the consideration -- would still be stipulated and agreed upon by the parties.55 While there was an initial offer made, there was no acceptance; but when there allegedly came an acceptance that could have had a binding effect, the offer was already lacking. The offer and its acceptance "did not meet to give birth to a contract."56

Moreover, the Civil Code provides that no contract shall arise unless its acceptance is communicated to the offeror.57 That is, the mere determination to accept the proposal of a bidder does not constitute a contract; that decision must be communicated to the bidder.58 Although consent may be either express or implied,59 the Instruction to Bidders prepared by petitioner itself expressly required (1) a formal acceptance and (2) a period within which such acceptance was to be made known to respondent. The effect of giving the Notice of Award to the latter would have been the perfection of the contract.60 No such acceptance was communicated to respondent; therefore, no consent was given. Without that express manifestation, as required by the terms of its proposal, there was no contract. The due execution of documents representing a contract is one thing, but its perfection is another.61

There is no issue as regards the subject of the contract or the cause of the obligation. The controversy lies in the consent -- whether there was an acceptance by petitioner of the offer made by respondent; and, if so, whether that acceptance was communicated to the latter, thereby perfecting the contract. The period given to the former within which to accept the offer was not itself founded upon or supported by any consideration. Therefore, under the law, respondent still had the freedom and the right to withdraw the offer by communicating such withdrawal to petitioner62 before the latter's acceptance of the offer;63 or, if the offer has been accepted,64 before the acceptance came to be known by respondent.65

Petitioner avers that an acceptance was made, but this allegation has not been proven. Respondent had no knowledge of such acceptance when it communicated its withdrawal to the former. Notably, this right to withdraw was not exercised whimsically or arbitrarily by respondent. It did send a formal letter on April 5, 1994, expressing and explaining its withdrawal. As of that date, the decision to award the contract had not been made according to the terms of the Instruction to Bidders.

Besides, the subsequent acts between the parties did not even serve as a confirmation of that decision. The existence of a second proposal -- petitioner's request for an adjustment of the bid to accommodate the wage increase -- in fact belies the perfection of any contract arising from the first.66 To the Court's mind, there was indeed no acceptance of the offer made by respondent. Such failure to comply with a condition imposed for the perfection of a contract resulted in failure of the contract.67

Subsistence of an Offer

Even Without a Bid Bond

Certainly, the "bid bond is an indispensable requirement for the validation of a bid proposal."68 This requisite ensures the good faith of bidders and binds them to enter into a contract with the owner, should their proposal be accepted.69 One who submits a bid not only signifies assent to the terms and conditions of a proposal, but impliedly binds oneself to them, if and when the bid is considered. The Invitation to Bidders even provided that incomplete proposals might be sufficient cause for their rejection.70 If mere insufficiency of a bond required of a bidder is a ground for rejection, a fortiori, all the more so is the total want thereof.

The proposal of respondent was merely validated by its bid bond, which was considered by petitioner. The expiration of the bond on January 8, 1994,71 did not mean that the bid also lapsed on the same date. The bond, which was an accessory, merely guaranteed the performance of the principal obligation and could not exist without the latter.72 The former was given for the benefit of petitioner, which could legally waive it. The bid continued without a bond, but still no formal acceptance was made. Again, on that basis, no contract was perfected.

In the interpretation of a contract, the literal meaning of its stipulations controls, if their terms are clear and leave no doubt as to the intention of the contracting parties.73 When "there is no ambiguity in the language of a contract, there is no room for construction,74 only compliance."75 This rule applies to the Instruction to Bidders, which provides that "failure to execute the Contract shall constitute a breach of agreement as effected by acceptance of the proposal."76 The language is clear and, like contracts in general, is the law between the parties.77 The contract must be fulfilled according to its literal sense.78

No Estoppel

As aptly held by the appellate court, respondent's acts subsequent to the expiration of the bid bond did not constitute a waiver of Section 9 of the Instruction to Bidders. To be valid and effective, waivers must be couched in clear and unequivocal terms, leaving no doubt as to the intention of those giving up a right or a benefit that legally pertains to them.79 Respondent, contrary to the claim of petitioner, despite its repeated requests, never received a copy of the Notice of Award. Indeed, the former never adopted an inconsistent position, attitude or course of conduct that caused loss or injury to the latter.80 The attendance of respondent in the pre-construction conference and the ground-breaking ceremony was part of the negotiation process. Thus, petitioner's claim of estoppel against it could not be applied.

"Estoppel cannot be sustained by mere argument or doubtful inference; it must be clearly proved in all its essential elements by clear, convincing and satisfactory evidence."81 It is hardly separable from the waiver of a right.82 The party claiming estoppel must show the following elements: "(1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment or prejudice."83

None of these elements was proven.

First, petitioner had the knowledge and the means of knowledge of the truth as to the facts in question. It had the means of knowing if respondent had been served a copy of the Notice of Award, yet the former did not preserve a copy of such Notice, which supposedly bore the signature of the latter's employee who had received it. Petitioner did not even enter in its corporate logbooks the release to and receipt by respondent of that copy. The latter had every reason to withdraw its bid, given that the "prerequisite paper work and attendant processing could not be fast-tracked."84

Second, respondent's conduct and statements were always consistent and reliable. The manner of acceptance of all bids was prescribed by petitioner itself. Applying Article 1321 of the Civil Code, such prescription must be complied with,85 yet it did not follow its own rules. Of no moment was its reliance in good faith upon respondent. Good faith is always presumed, unless contrary evidence is adduced.86

Third, the action or inaction of petitioner that caused its own injury was its own fault. The written Notice of Award, which constituted the acceptance of the proposal, was a sine qua non to the perfection of the contract.87 The misplacement of such vital document was inexcusable. Without it, there was no contract. Moreover, the March 14, 1994 Notice to Proceed clearly stated that its issuance would depend upon the execution of the construction agreement.

Estoppel is a shield against injustice; the party invoking its protection should not be allowed to use it to conceal its own lack of diligence88 or want of reasonable care and circumspection.89

G.R. Nos. 157419-20 December 13, 2004 LIBRADO M. CABRERA, FE M. CABRERA and LUTHER LEONOR, petitioners, vs. HON. SIMEON V. MARCELO, in his capacity as OMBUDSMAN, THE HON. SANDIGANBAYAN (FOURTH DIVISION) and FRANCO P. CASANOVA, respondents. Through the present Petition for Certiorari, elected local officials of the Municipality of Taal, Batangas attempt to nip in the bud criminal prosecutions lodged against them by the Ombudsman before the Sandiganbayan. They fail.

The antecedents follow.

Before the Ombudsman, complaints were filed by private respondent Franco P. Casanova against incumbent Taal, Batangas mayor Librado M. Cabrera, his wife, former Mayor Fe M. Cabrera, and Taal Municipal Councilor Luther Leonor, for violation of Article 217 in relation to Articles 171 and 48 of the Revised Penal Code (i.e., the complex crime of Malversation of Public Funds thru Falsification of Public Documents), and Section 3(e) of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act. The cases pertained to the allegedly unauthorized travels of the spouses Cabrera, and the allegedly anomalous purchase of medicines involving Leonor and the Cabreras.

The complaint pertaining to the alleged unauthorized travel, docketed as OMB-1-01-0873-J, alleges that during his previous term, Librado Cabrera had, on 13 March 1998 and 22 June 1998, collected and received from the Municipal Government of Taal, reimbursement of alleged travel expenses incurred outside of the Province of Batangas in the respective amounts of Thirteen Thousand Six Hundred Seventy Pesos and Twenty-Nine Centavos (P13,670.29) and Thirteen Thousand Nine Hundred Eighty- One Pesos and Fifty Four Centavos (P13,981.54). Likewise, Fe Cabrera, during her own

term, obtained reimbursement for alleged travel expenses incurred outside the province of Batangas in the total amount of One Hundred Seventy Thousand Nine Hundred Eighty-Seven Pesos and Sixty-Six Centavos (P170,987.66).1 The Cabreras, prior to undertaking the questioned trips, did not secure formal approval from the Provincial Governor of Batangas as required under the Local Government Code. It is also alleged that the Cabreras forged the signature of then Governor Hermilando I. Mandanas in a purported Certification dated 14 December 2000, which appeared to approve the travel orders and expenses incurred by the Cabreras.2

The complaint regarding the alleged unauthorized purchases of medicine was docketed as OMB-1-01-0874-J. It is alleged therein that on several occasions in 1998 and 1999, during the respective incumbencies of Librado and Fe Cabrera, they caused the procurement of certain medical supplies/medicines from a sole supplier, Diamond Laboratories, Inc. ("DLI"), in the total amount of One Million Five Hundred Thirteen Thousand Five Hundred Thirteen Pesos and Two Centavos (P1,513,513.02).3 These procurements were purportedly irregular, as they were made without the benefit of a public bidding; in certain cases, payments were actually made prior to the delivery and acceptance of the medical supplies; the checks issued in payment were made payable to DLI or Luther Leonor, who thereafter encashed the same; and per General Information Sheet of DLI with the Securities and Exchange Commission, the members of the Board of Directors at the time of the transactions were relatives of Librado within the fourth civil degree of consanguinity, namely: Roberto V. Cabrera, Jr., Profetiza P. Cabrera, Edrich P. Cabrera, Roberto V. Cabrera III, and Jason Paul P. Cabrera.4

The Cabreras and Leonor filed their respective counter-affidavits. They noted that the allegations were based on an audit report in the form of a memorandum dated 11 June 2001 submitted by State Auditors Ely G. Valdez and Ruben Jobil to the Director, COA Regional Office No. IV, Quezon City. They also argued that the complaints were premature, as they timely requested for reconsideration of the audit findings and therefore, the audit report had not yet attained finality and could not be the basis of the instant complaints.

In his reply, Casanova averred that on 20 January 2002, he received a copy of a letter from COA Regional Office No. IV Director Tito Nabua, advising Librado Cabrera that the latter‘s request for reconsideration had been denied.5 On 13 May 2002, the petitioners appealed the denial of their request for reconsideration with the COA Head Office.6

In a Joint Resolution dated 22 March 2002, the Office of the Deputy Ombudsman for Luzon dismissed the charge of Malversation of Public Funds Thru Falsification of Public Documents, holding that there was no sufficient showing to hold the Cabreras liable for the charge.7 However, on the same Joint Resolution said Deputy Ombudsman found sufficient basis to hold the Cabreras and Leonor liable for Section 3(e) of the Anti-Graft and Corrupt Practices Act, which penalizes "causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefit, advantage or preference in the discharge of his official administrative or judicial

functions through manifest partiality, evident bad faith, or gross inexcusable negligence."

The Joint Resolution declared improper the reimbursement of the travel expenses of the Cabreras since there was no valid travel order issued by the proper authorities when the Cabreras left their station, in contravention of Section 96(b) of the Local Government Code. Even assuming that the Certification dated 14 December 2000 is valid, the Joint Resolution countered, such could not cure the illegality of the travel and the subsequent reimbursement of the unauthorized travel expenses, as it was issued long after the trips were made, and even after the COA audit.8

It was also found in the Joint Resolution that the subject procurement of medicines was highly irregular, as it was made without public bidding and the medicines were obtained from only one company which is owned by the relatives of Librado Cabrera.9 It cited Section 356 of the Local Government Code, which lays the general rule that acquisition of supplies by a local government unit shall be through competitive public bidding. Also noted were that a total payment of Three Hundred Thousand Nine Hundred Thirty-Three Pesos and Fifty-Two Centavos (P300,933.52) was made even prior to the delivery and acceptance of the purchased medicines, and that the name Leonor, an incumbent Municipal Councilor, appeared on the canvass sheets, purchase orders, sales invoices, official receipts, disbursement vouchers and checks, with Leonor himself actually and personally encashing the checks. 10

Thus, the Joint Resolution recommended the filing before the Sandiganbayan of informations for violations of Section 3(e) of the Anti-Graft and Corrupt Practices Act against petitioners. On 12 July 2002, then Ombudsman Aniano A. Desierto approved the recommendation.11

On 23 July 2002, two related informations were filed with the Sandiganbayan against petitioners.12 Thereafter, petitioners filed two Joint Motions for Reinvestigation with the Sandiganbayan, which it granted on 29 August 2002.13 The arraignment of the petitioners was deferred pending reinvestigation.

In compliance with the order for reinvestigation, a Memorandum dated 30 October 2002 was prepared by Special Prosecution Officers Franco T. Falcon and Jaime C. Blancaflor of the Office of the Ombudsman.14 They wholly agreed with the earlier recommendation to charge petitioners with violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act. They further recommended that the petitioners be indicted also for malversation under Article 217 of the Revised Penal Code.15 However, on 16 January 2003, Ombudsman Simeon V. Marcelo approved only the maintenance of the original charges against the petitioners, and disapproved the filing of four counts of malversation cases against petitioners.16

Hence, the present Petition for Certiorari. Petitioners claim that the Ombudsman acted without or in excess of his jurisdiction or with grave abuse of discretion in approving the 22 March 2002 Resolution and the 30 October 2002Memorandum. They allege that

there is no sufficient basis in fact or in law to charge petitioners with violations of Section 3(e) of the Anti-Graft and Corrupt Practices Act.17 They also question the reliance made by the Ombudsman on the COA Audit Report, which they point out had not yet become final it being the subject of a pending appeal with the COA head office.18 They also note that the Ombudsman previously dismissed an administrative complaint lodged by Casanova with the Office of the Ombudsman, involving the same matters.19

Anent the charge pertaining to the purchases of medicines, they assert that there was no need for public bidding since, under the Implementing Rules of the Local Government Code, procurement of supplies may be made directly from a duly licensed manufacturer,20 that there was no duty on their part to canvass prices offered by other manufacturers or dealers of medicine as the canvass should have been conducted by the COA, which failed to do so;21 that there was no showing of undue injury which resulted from the purchases of medicine;22 that the participation of Leonor in the purchases was in accommodation of the request of DLI;23 and that the payments totaling P300,933.52 were actually made after, not prior to, the delivery of medicines.24

Petitioners likewise challenge the findings of the Ombudsman regarding the reimbursement of travel expenses. They assert that the Governor of Batangas had authorized their travels, albeit belatedly;25 and that the rates of reimbursed expenses were in conformity with Executive Order No. 248, which allows reimbursement of actual travel expenses in excess of Three Hundred Pesos (P300.00) if supported by official receipts and accompanied by a certification that the same were necessary in the performance of official duty.26

As a general rule, the Court does not interfere with the Ombudsman‘s determination of the existence or absence of probable cause.27 The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely swamped if they would be compelled to review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant.28

However, this principle of non-interference does not apply when there is a grave abuse of discretion which would authorize the aggrieved person to file a petition for certiorari and prohibition, such as when the Ombudsman does not take essential facts into consideration in the determination of probable cause, among others.29

A careful evaluation of the present petition warrants the conclusion that it presents another instance which calls for application of the general rule of non-interference.

Petitioners cannot fault the Ombudsman for relying on the COA Audit Report, notwithstanding that it had not yet attained finality. The initial basis for the Ombudsman‘s investigation was not the COA Audit Report, but the complaints filed by Casanova. While the allegations in the complaint happened to be similar with those contained in the COA Audit Report, the Ombudsman could very well conduct an independent investigation based on the complaints for the purpose of whether criminal charges should be filed against the petitioners. The Ombudsman is reposed with broad investigatory powers in the pursuit and of its constitutional mandate as protector of the people and investigator of complaints filed against public officials.30 It is even empowered to request from any government agency such as the COA, the information necessary in the discharge of its responsibilities and to examine, if necessary, pertinent records and documents.31

It should be borne in mind that the interest of the COA is solely administrative, and that its investigation does not foreclose the Ombudsman‘s authority to investigate and determine whether there is a crime to be prosecuted for which a public official is answerable.32 In Ramos v. Aquino, the Court ruled that the fact that petitioners‘ accounts and vouchers had passed in audit is not a ground for enjoining the provincial fiscal from conducting a preliminary investigation for the purpose of determining the criminal liability of petitioners for malversation.33 Clearly then, a finding of probable cause does not derive its veracity from the findings of the COA, but from the independent determination of the Ombudsman.

Petitioners, invoking the previous dismissal by the Ombudsman of the administrative complaint against them on the same charges, assert that if the Ombudsman could not find petitioners administratively liable on the standard of substantial evidence, there is no basis to proceed with the criminal charges considering that the quantum of proof would not be proof beyond reasonable doubt.

An examination though of the Orders of the Ombudsman dismissing the administrative complaint reveal that the dismissal was warranted not because the charges had no merit. In disposing of the administrative complaint, the Office of the Ombudsman noted that since Fe Cabrera was no longer the Mayor of Taal, the administrative complaint against her should be dismissed because the Ombudsman could no longer acquire jurisdiction over her person.34 In the cases of Librado Cabrera and Luther Leonor, it was observed that since both were subsequently reelected to their incumbent positions in 2001, their reelection, concordant to Aguinaldo v. Santos,35 operates as a condonation of whatever administrative infraction or misconduct they may have committed during their previous terms.36 Clearly then, these complaints were dismissed not because the charges were unfounded, but because of prevailing doctrines peculiar to administrative complaints. Besides, it is well settled that condonation of an officer's fault or misconduct during a previous expired term by virtue of his reelection to office for a new term can be deemed to apply only to his administrative and not to his criminal guilt.37

Admittedly, it was noted in the Order dated 18 January 2002 dismissing the administrative complaint that the preliminary records did not show that the evidence of

guilt on the charge of illegal travel expense reimbursements against the Cabreras was not strong.38 However, the remark though was made in the context of the discussion on whether the elements to justify preventive suspension of the Cabreras were met. Under Section 24(a) of the Ombudsman Act,39 the Ombudsman may issue a preventive suspension order only if the evidence of guilt against respondent is strong. Similarly, under Section 63 of the Local Government Code, local government officials may be preventively suspended if the evidence of guilt is strong. However, the standard of strong evidence of guilt, which is sufficient to deny bail to an accused in a criminal case, is markedly higher than the standard of probable cause sufficient to initiate criminal cases against defendants. A conclusion that evidence against the Cabreras is not strong does not equate to a finding of lack of probable cause against them, as the former requires a higher degree of proof than the latter.

Moreover, such comment was made in the disposition of the administrative case, which is a separate proceeding from the investigation on the criminal liability of the Cabreras. The same Order also contained an explicit caveat that the dismissal of the administrative complaint was "without prejudice to the outcome of the criminal cases filed against them arising from the same acts complained of."40

At the same time, the Office of the Ombudsman should exercise caution when it utilizes findings of the COA in support of its determination of probable cause as the prelude to the filing of a criminal complaint against a public official. The COA is not the investigatory arm of the Ombudsman; thus, the auditor‘s preliminary findings of discrepancies do not necessarily equate to a finding of probable cause, which has to be independently established by the Ombudsman. Many conclusions drawn from audit reports hinge on technical matters of appreciation and may be satisfactorily clarified by discussions between the COA and the public officer. The Ombudsman should refrain from committing undue haste in prosecuting public officials based on COA audit reports, and instead make an independent determination of his own on the existence of probable cause that a given public official has committed a penal law violation before proceeding with the institution of the criminal case.

Indeed, the petitioners attempt to demonstrate that the Ombudsman relied solely upon the COA report—which had not yet attained finality—as basis for the filing of the criminal complaints against them. However, a careful examination of the assailed issuances of the Ombudsman shows that there is a prima facie case against the petitioners.

It is the Ombudsman‘s determination that there is probable cause to charge petitioners with violating Section 3(e) of the Anti-Graft and Corrupt Practices Act. The provision reads:

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall

apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

The elements of the offense were spelled out in Sistoza v. Desierto:41

The elements of the offense are: (a) The accused is a public officer or a private person charged in conspiracy with the former; (b) The public officer commits the prohibited acts during the performance of his or her official duties or in relation to his or her public functions; (c) That he or she causes undue injury to any party, whether the government or a private party; (d) Such undue injury is caused by giving unwarranted benefits, advantage or preference to such parties; and (e) That the public officer has acted with manifest partiality, evident bad faith or gross inexcusable neglect. Evidently, mere bad faith or partiality and negligence per se are not enough for one to be held liable under the law since the act of bad faith or partiality must in the first place be evident or manifest, respectively, while the negligent deed should both begross and inexcusable. It is further required that any or all of these modalities ought to result in undue injury to a specified party.42

We are convinced that the Ombudsman did not commit a grave abuse of discretion when he found the existence of undue injury, manifest partiality, and evident bad faith, sufficient to establish a prima facie case against the petitioners for violation of the Anti-Graft and Corrupt Practices Act.

Under Section 356 of the Local Government Code, the general rule is that the acquisition of supplies by local government units shall be through competitive public bidding.43 The rule admits of exceptions, so Section 366 provides. The provision authorizes the procurement of supplies without the benefit of public bidding under any of the following modes: (a) personal canvass of responsible merchants; (b) emergency purchase; (c) negotiated purchase; (d) direct purchase from manufacturers or exclusive distributors; and (e) purchase from other government entities.

It is the fourth exception—direct purchase from manufacturers and exclusive distributors—which petitioners rely upon in submitting that there was nothing irregular in the purchase of medicines from DLI. Petitioners also cite the first paragraph of Article 437(d), Rule XXXV of the Implementing Rules to the Local Government Code, which states that "procurement of supplies or property may be made directly from duly licensed manufacturers in cases of supplies of Philippine manufacture or origin." They argue that since even the Ombudsman concedes that DLI is a duly licensed manufacturer of Philippine manufactured drugs, the procurement without prior public bidding was proper.

Conveniently, petitioners skipped the second paragraph of Article 437(d), Rule XXXV of the Implementing Rules, which states: "In case there are two or more known manufacturers of the required supplies or property, canvass of prices of the known manufacturers shall be conducted to obtain the lowest price for the same quality of said

supplies or property." This proviso reiterates Section 370 of the Local Government Code which states:

Section 370. Procurement from Duly Licensed Manufacturer. – Procurement may be made directly from duly licensed manufacturers in cases of supplies of Philippine manufacture or origin and in case there are two (2) or more manufacturers shall be conducted to obtain the lowest price for the quality of the said supplies.

The qualification is consistent with the thrust of the law that ensures the minimization of expenditures of the public fund. In the Joint Resolution, it was pointed out that the DLI was located in Diliman, Quezon City, and surely there were several other duly licensed manufacturers of medicines in Quezon City or in Metro Manila.44 Under such premises, Section 370 imposes a duty that a canvass of the known manufacturers first be conducted before the purchase is made, so as to ensure that the local government would spend the lowest possible price for such purchase. Petitioners concede that no such canvass was conducted before making the purchases from DLI; hence, it follows that the requisites of Section 370 were not met and the direct purchases accordingly tainted with irregularity. Any possible excuse on the failure to observe the process prescribed by Section 370 and the corollary precedent required in Article 437(d), Rule XXXV of the Implementing Rules, would be best evaluated during trial on the facts.

Moreover, as the Ombudsman points out in his Comment, competitive public bidding is the primary mode of procurement, and it was thus necessary on the part of the petitioners to show why an alternative mode of procurement was resorted to. This they failed to demonstrate before the Ombudsman, and such failure can be taken along with the other contemporaneous circumstances to establish probable cause. It is incumbent upon a party who invokes coverage under the exception to a general rule to prove the fulfillment of the requisites thereof.45 The rule is akin to the maxim in criminal law that whenever a person accused of the commission of a crime claims to be within the statutory exception, it is more logical and convenient that he should aver and prove the fact than that the prosecutor should anticipate such defense, and deny it.46

Petitioners insist that their good faith in the procurement of the medicines should be presumed. Yet, the glaring fact is that petitioners made the purchases from DLI, a corporation whose stockholders appear to be relatives of Librado Cabrera and all of whose officers and directors are surnamed Cabrera. Certainly, before this Court, petitioners do not dispute the apparent familial ties between Librado Cabrera, on one hand, and DLI or its stockholders and officers, on the other. That fact is suspicious in itself, and should alert all officers genuinely minded in pursuing good and transparent government not to ignore such fact in their course of action. It bears mention that the Office of the Ombudsman did not predicate the filing of the criminal cases against the petitioners from these purchases made from a corporation owned by their relatives. Still, such fact may be worth noting as a possible motive for the Cabreras‘ apparent willingness to subvert established procedure and make the purchases from DLI.

The further discovery that the procurements were made by the petitioners from DLI without them first ensuring that the local government would be acquiring the medicines at the lowest possible price is sufficient to negate any presumption of good faith, especially since such failure prima facie constitutes a contravention of the Local Government Code.

It is also argued that Leonor, the Municipal Councilor, had no financial or pecuniary interest in the business or transaction with DLI as the latter had merely requested his assistance in the collection of accountabilities of the municipality.47 Suffice it to say, as found by the Ombudsman, all the checks for payment were made payable to DLI or Leonor and the latter actually encashed the same.48

The Ombudsman also cited the findings of the COA that Leonor‘s name and signature appeared on the canvass sheets, purchase orders, sales invoices, official receipts and disbursement vouchers.49 There is little doubt that Leonor had somehow facilitated the transactions engaged with DLI, transactions which are already attendant with irregularity as earlier noted. Thus, we cannot find fault with the conclusion of the Joint Resolution evincing strong belief that Leonor had connived and conspired with Cabrera in relation to the purchases with DLI.50

Petitioners also dispute the conclusion of the Ombudsman that the Municipality of Taal, through the Cabreras, made payments up to Three Hundred Thousand Nine Hundred Thirty-Three Pesos and Fifty-Two Centavos (P300,933.52) prior to the delivery and acceptance of the purchased medicines, as observed by the COA.51 They claim that the person in charge of receiving the deliveries was indisposed on the day the medicines arrived, and that when said person was actually able to sign the invoices, he had indicated therein the date of his signature, and not the date of receipt of the deliveries. Furthermore, petitioners note that it is not disputed that all the medicines ordered by the municipality were duly delivered, and payments subsequently made for these deliveries.52

Assuming that petitioners‘ version of facts is correct, it would be for the trial court to appreciate the extent of extenuation such explanation would afford the petitioners. Still, this submission of the petitioners is ultimately irrelevant to the fact that their culpability arises from contracting with DLI in the first place, such that even if their explanation as regards the particular purchases would hold true, their criminal liability for violating Section 3(e) of the Anti-Graft and Corrupt Practices Act in relation to the transactions with DLI would remain unaffected.

As to the charge of violating Section 3(e) of the Anti- Graft and Corrupt Practices Act by way of improper reimbursement of travel expenses, the Cabreras claim that the travels were authorized by Governor Mandanas, albeit belatedly, hence the reimbursement of their travel expenses was proper. On the other hand, the Ombudsman concluded that such travels were not proper as there was no valid travel order issued by proper authorities when they had left their station, in violation of Section 96(b) of the Local Government Code.

The first two paragraphs of Section 96 of the Local Government Code bear quoting:

SEC. 96. Permission to Leave Station. — (a) Provincial, city, municipal, and barangay appointive officials going on official travel shall apply and secure written permission from their respective local chief executives before departure. The application shall specify the reasons for such travel, and the permission shall be given or withheld based on considerations of public interest, financial capability of the local government unit concerned and urgency of the travel.

Should the local chief executive concerned fail to act upon such application within four (4) working days from receipt thereof, it shall be deemed approved.

(b) Mayors of component cities and municipalities shall secure the permission of the governor concerned for any travel outside the province.

. . . .

It is apparent from the provision that those appointive officials enumerated in paragraph (a) are required expressly to secure written permission from their respective local chief executives before departure. The same explicit qualification does not obtain for officials such as the Cabreras who fall under paragraph (b), which merely states that they "shall secure the permission of the governor." Paragraph (b) leaves open the interpretation that subsequent ratification by the governor is within the purview of "permission" under that provision.

Yet, the foregoing observation aside, we are not prepared to set aside the finding of probable cause made by the Ombudsman regarding the unauthorized travel expenses for the reason that it has not been established that the Cabreras had actually secured a valid ratification from Governor Mandanas. We quote the following observation from the assailed Joint Resolution on the purported Certification.

. . . . In a belated effort to lend legal color to their unauthorized travels, respondents Cabreras submitted a purported certification from the Governor dated December 14, 2000. However, when the COA wrote Gov. Mandanas to confirm if he indeed issued the subject certification, the Governor could not categorically confirm. He also stated that the stationery used and the telephone and fax numbers printed on it are not those of the Office of the Governor. In view of the foregoing, the COA held that all reimbursement for traveling expenses that were not authorized by the proper authorities are DISALLOWED in audit. Furthermore, this Office observed that the travels of respondents (3x by respondent Librado and 9x by respondent Fe) were done in 1998 and 1999 yet, however, the alleged certification of Gov. Mandanas was issued only on December 14, 2000, when the COA has already conducted its audit and held an exit conference on December 4, 2000. Hence, even if, assuming arguendo that the purported certification was

genuine, we believe that this can not cure the illegality of their travel and the subsequent reimbursement of unauthorized travel expenses.53

Clearly then, the matter whether the questioned travels of the Cabreras were made with the permission of their governor even if made belatedly, is still disputed. The Ombudsman took into consideration the coy reply of Governor Mandanas that the stationery used in the Certification and the contact numbers stated therein were not those of the Office of the Governor. Such a remark hardly evokes any confidence that Governor Mandanas had indeed ratified the travels of the Cabreras.

As to the Cabreras‘s claim that the amount of travel expenses they reimbursed falls within the limits set by Executive Order No. 249 even if true, the claim would be of no consequence if it is established that their sojourns were not authorized at all. The Court is also mindful that the Cabreras‘ evidence on that point, which would likely consist of numerous receipts supported by testimonial evidence, would be best evaluated by a trier of facts who would determine their probative value.

All told, we are satisfied with the finding of probable cause as established by the Office of the Ombudsman, and find no grave abuse of discretion on its part that would warrant the allowance of this petition.

G.R. No. 159139 June 15, 2005 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.

Our Decision1 in the present case voided the Contract entered into by the Commission on Elections (Comelec) for the supply of automated counting machines (ACMs) because of "clear violation of law and jurisprudence" and "reckless disregard of [Comelec‘s] own bidding rules and procedure." Moreover, "Comelec awarded this billion-dollar undertaking with inexplicable haste, without adequately checking and observing mandatory financial, technical and legal requirements. x x x. The illegal, imprudent and hasty actions of the Commission have not only desecrated legal and jurisprudential norms, but have also cast serious doubts upon the poll body‘s ability and capacity to conduct automated elections." As a result, the ACMs illegally procured and improvidently paid for by Comelec were not used during the 2004 national elections.

In its present Motion, the poll body expressly admits that the Decision "has become final and executory," and that "COMELEC and MPC-MPEI are under obligation to make

mutual restitution." Otherwise stated, this admission implies that the ACMs are to be returned to MPC-MPEI, and that the sum of over one billion pesos illegally paid for them be refunded to the public purse.2 In short, ownership of the ACMs never left MPC-MPEI and the money paid for them still belongs, and must be returned, to the government.

Consequently, the ACMs, which "admittedly failed to pass legally mandated technical requirements" cannot be used during the forthcoming elections in the Autonomous Region for Muslim Mindanao (ARMM). Apart from formidable legal, jurisprudential, technical and financial obstacles, the use of the machines would expose the ARMM elections to the same electoral pitfalls and frauds pointed out in our Decision. If the ACMs were not good enough for the 2004 national elections, why should they be good enough now for the 2005 ARMM elections, considering that nothing has been done by Comelec to correct the legal, jurisprudential and technical flaws underscored in our final and executory Decision?

The Motion

Before us is the Commission on Election‘s "Most Respectful Motion for Leave to Use the Automated Counting Machines in [the] Custody of the Commission on Elections for use (sic) in the August 8, 2005 Elections in the Autonomous Region for Muslim Mindanao (ARMM)," dated December 9, 2004. In its January 18, 2005 Resolution, the Court required the parties to comment. After careful deliberation on all pleadings at hand, we now resolve the Motion.

Background Information

At the outset, we stress that the Decision in the present case, promulgated on January 13, 2004, has long attained finality.3 In our February 17, 2004 Resolution, we denied with finality Comelec‘s Motion for Reconsideration dated January 28, 2004, as well as private respondents‘ Omnibus Motion dated January 26, 2004. The Decision was recorded in the Book of Entries of Judgments on March 30, 2004.

Recall that our Decision declared Comelec to have acted with grave abuse of discretion when, by way of its Resolution No. 6074, it awarded the Contract for the supply of automated counting machines (ACMs) to private respondents. It did so, not only in clear violation of law and jurisprudence, but also with inexplicable haste and reckless disregard of its own bidding rules and procedures; particularly the mandatory financial, technical and legal requirements. It further manifested such grave abuse of discretion when it accepted the subject computer hardware and software even though, at the time of the award, these had patently failed to pass eight critical requirements designed to safeguard the integrity of the elections. Consequently, this Court was constrained to exercise its constitutional duty by voiding the assailed Resolution No. 6074 awarding the Contract to Mega Pacific Consortium, as well as the subject Contract itself executed between Comelec and Mega Pacific eSolutions, Inc.

Comelec was further ordered to refrain from implementing any other contract or agreement it had entered into with regard to the said project. We also declared that, as a necessary consequence of such nullity and illegality, the purchase of the ACMs and the software, along with all payments made for them, had no basis in law. Hence, the public funds spent must be recovered from the payees and/or the persons who made the illegal disbursements possible, without prejudice to possible criminal prosecutions against them.4

Likewise, our February 17, 2004 Resolution denying reconsideration found movants to have raised the same procedural and substantive issues already exhaustively discussed and definitively passed upon in our Decision. In that Resolution, we emphasized (and we reiterate here) that the Decision did not prohibit automation of the elections. Neither did the Court say that it was opposed to such project (or the use of ACMs) as a general proposition. We repeated our explanation that the reason for voiding the assailed Resolution and the subject Contract was the grave abuse of discretion on the part of Comelec; as well as its violations of law -- specifically RA 9184, RA 8436, and RA 6955 as amended by RA 7718; prevailing jurisprudence (the latest of which was Agan v. Philippine International Air Terminals Co., Inc.5); and the bidding rules and policies of the Commission itself.

Comelec’s Claims

Notwithstanding our Decision and Resolution, the present Motion claims, inter alia, that the ARMM elections are slated to be held on August 8, 2005, and are mandated by RA 9333 to be automated; that the government has no available funds to finance the automation of those elections; that considering its present fiscal difficulties, obtaining a special appropriation for the purpose is unlikely; that, on the other hand, there are in Comelec‘s custody at present 1,991 ACMs, which were previously delivered by private respondents; that these machines would deteriorate and become obsolete if they remain idle and unused; that they are now being stored in the Comelec Maxilite Warehouse along UN Avenue, at "storage expenses of P329,355.26 a month, or P3,979,460.24 annually."

The Motion further alleges that "information technology experts," who purportedly supervised all stages of the software development for the creation of the final version to be used in the ACMs, have unanimously confirmed that this undertaking is in line with the internationally accepted standards (ISO/IEC 12207) for software life cycle processes, "with its quality assurance that it would be fit for use in the elections x x x."

Comelec also points out that the process of "enhancement" of the counting and canvassing software has to be commenced at least six (6) months prior to the August 8, 2005 ARMM elections, in order to be ready by then. It asserts that its Motion is (a) without prejudice to the ongoing Civil Case No. 04-346 pending before the Regional Trial Court of Makati City, Branch 59, entitled "Mega Pacific eSolutions, Inc. v. Republic of the Philippines (represented by the Commission on Elections)," for the collection of a purported P200 million balance due from Comelec under the voided Contract; and (b)

with a continuing respectful recognition of the finality and legal effects of our aforesaid Decision. At bottom, Comelec prays that it be granted leave to use the ACMs in its custody during the said ARMM elections.

Private Respondents’ Contentions

Commenting on the present Motion, private respondents take the position that, since the subject ACMs have already been delivered to, paid for and used by Comelec, the Republic of the Philippines is now their owner, without prejudice to Mega Pacific eSolutions, Inc.‘s claim for damages in the case pending before the RTC of Makati; and that, consequently, as far as private respondents are concerned, the question of using the subject ACMs for the ARMM elections is dependent solely on the discretion of the owner, the Republic of the Philippines.

Petitioners’ Comment

On the other hand, petitioners contend that Comelec is asking this Court to render an advisory opinion, in contravention of the constitutional provision6 that explicitly states that the exercise of judicial power is confined to (1) settling actual controversies involving rights that are legally demandable and enforceable; and (2) determining whether there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government.

Petitioners assert that there is no longer any live case or controversy to speak of -- an existing case or controversy that is appropriate or ripe for determination, not merely conjectural or anticipatory; and that Comelec‘s allegations in its Motion do not amount to an actual case or controversy that would require this Court to render a decision or resolution in the legitimate exercise of its judicial power. This lack of actual controversy is clearly seen in the relief prayed for in the Motion: the grant of a leave to use the ACMs during the ARMM elections. Obviously, Comelec merely seeks an advisory opinion from this Court on whether its proposal to use the ACMs during the said elections might be in violation of this Court‘s Decision dated January 13, 2004, and Resolution dated February 17, 2004.

Assuming arguendo that the present Motion might somehow be justified by the government‘s fiscal difficulties, petitioners further argue that permitting Comelec to use the ACMs would nevertheless allow it to do indirectly what it was not permitted by this Court to do directly. They argue that the instant Motion is merely a subterfuge on the poll body‘s part to resurrect a lost case via a request for an advisory opinion.

The OSG’s Comment

The Office of the Solicitor General (OSG) declares in its Comment that, in compliance with this Court‘s directive for it to "take measures to protect the government and vindicate public interest from the ill effects of the illegal disbursements of public funds made by reason of the void [Comelec] Resolution and Contract," it filed on behalf of the

Republic on July 7, 2004, an Answer with Counterclaim in Civil Case No. 04-346. The OSG prayed for the return of all payments made by Comelec to Mega Pacific under the void Contract, amounting to P1,048,828,407.

The OSG also manifests that it received a copy of the Complaint-Affidavit dated September 15, 2004, filed with the Office of the Ombudsman by the Bantay Katarungan Foundation and the Kilosbayan Foundation against the Comelec commissioners who had awarded the Contract for the ACMs; and the private individuals involved, including the incorporators and officers of Mega Pacific eSolutions, Inc. This Complaint-Affidavit was for violation of the Anti-Plunder Law (RA 7030), the Anti-Graft and Corrupt Practices Act (RA 3019 as amended), and the Code of Conduct and Ethical Standards for Public Officials and Employees (RA 6713).

The complainants alleged immense kickbacks and horrendous overpricing involved in the purchase of the 1,991 ACMs. Based on the OSG‘s available records, it appears that Comelec withdrew from Land Bank P1.03 billion, but actually paid Mega Pacific only P550.81 million. Furthermore, commercial invoices and bank applications for documentary credits reveal that each ACM cost only P276,650.00, but that Comelec agreed to pay Mega PacificP430,394.17 per unit -- or a differential of P153,744.17 per unit or an aggregate differential of P306.10 million. Moreover, Mega Pacific charged P83.924 million for value-added taxes (VAT) and P81.024 million more for customs duties and brokerage fees, when in fact -- under the nullified Contract -- it was supposed to be exempt from VAT, customs duties and brokerage fees. Lastly, Comelec agreed to peg the ACM price at the exchange rate of P58 to $1, when the exchange rate was P55 to $1 at the time of the bidding, resulting in additional losses for the government amounting to about P30 million.

The OSG hews to the view that the automation of elections, if properly carried out, is a desirable objective, but is mindful of the need for mutual restitution by the parties as a result of the final Decision nullifying the Contract for the ACMs. Nevertheless, in apparent response to Comelec‘s clamor to use the ACMs in the ARMM elections, the OSG manifests that it has no objection to the proposal to use the machines, provided however that (1) Comelec should show with reasonable certainty that the hardware and software of the ACMs can be effectively used for the intended purpose; (2) Mega Pacific should be made to return to the Republic at least a substantial portion of the overprice they charged for the purchase of the ACMs; and (3) the use of these machines, if authorized by this Court, should be without prejudice to the prosecution of the related criminal cases pending before the Office of the Ombudsman (OMB).

The OMB’s Manifestation

For its part, the Office of the Ombudsman manifested that as a result of the nullification of the Contract, various fact-finding investigations had been conducted, and criminal and administrative charges filed before it against the persons who appeared to be responsible for the anomalous Contract; and that the various cases had been consolidated, and preliminary investigation conducted in respect of the non-

impeachable Comelec officials and co-conspirators/private individuals. Furthermore, the OMB is in the process of determining whether a verified impeachment complaint may be filed against the poll body‘s impeachable officials concerned.

A Supplemental Complaint prepared and filed by the Field Investigation Office of the Ombudsman reveals that the ACMs were overpriced by about P162,000.00 per unit; that, additionally, Mega Pacific unduly benefited by including VAT and import duties amounting to P194.60 million in its bid price for the ACMs, despite Section 8 of RA 8436 exempting such equipment from taxes and duties; that Comelec nonetheless awarded the Contract to Mega Pacific at the same bid price of P1.249 billion, inclusive of VAT, import duties and so on; and that the Commission allowed Mega Pacific to peg the ACM price using an exchange rate of P58 to $1 instead of P53 to $1, which further inflated Mega Pacific‘s windfall.

The foregoing notwithstanding, the OMB had allegedly prepared a comment on the present Motion, stating its position on the issue of utilizing the ACMs, but upon further reflection decided not to file that comment. It came to the conclusion that ventilating its position on the matter might engender certain impressions that it had already resolved factual and/or legal issues closely intertwined with the elements of the offenses charged in the criminal and administrative cases pending before it. "For one, utilizing illegally procured goods or the intentional non-return thereof to the supplier may have a bearing on the determination of evident bad faith or manifest partiality, an essential element in any prosecution under the anti-graft law, and may, at the same time, be constitutive of misconduct penalized under relevant disciplinary laws."

Consequently, out of prudential considerations, the OMB prayed to be excused from commenting on the merits of the present Motion, to avoid any perception of prejudgment, bias or partiality on its part, in connection with the criminal and administrative cases pending before it.

The Court’s Ruling

Decision Subverted by the Motion

There are several reasons why the present Motion must be denied. First, although it professes utmost respect for the finality of our Decision of January 13, 2004 -- an inescapable and immutable fact from which spring equally ineludible consequences -- granting it would have the effect of illegally reversing and subverting our final Decision. Plainly stated, our final Decision bars the grant of the present Motion.

To stress, as a direct result of our January 13, 2004 Decision, the Contract for the supply of the subject ACMs was voided, and the machines were not used in the 2004 national elections. Furthermore, the OSG was directed "to take measures to protect the government and vindicate public interest from the ill-effects of the illegal disbursements of public funds made by reason of the void Resolution." Accordingly, in Civil Case No. 04-346, the government counsel has prayed for mutual restitution; and for the "return of

all payments, amounting toP1,048,828,407.00 made by Comelec to Mega Pacific under the void Contract."

In the meantime, Comelec has done nothing -- at least, nothing has been reported in the present Motion -- to abide by and enforce our Decision. Apparently, it has not done anything to rectify its violations of laws, jurisprudence and its own bidding rules referred to in our judgment. Neither has it reported any attempt to correct and observe the "mandatory financial, technical and legal requirements" needed to computerize the elections.

Apparently, it has simply filed the present Motion asking permission to do what it has precisely been prohibited from doing under our final and executory Decision. If law and jurisprudence bar it from using the subject ACMs during the last elections, why should it even propose to use these machines in the forthcoming ARMM elections? True, these elections are important. But they cannot be more important than the 2004 national elections. Note that the factual premises and the laws involved in the procurement and use of the ACMs have not changed. Indeed, Comelec has not even alleged, much less proven, any supervening factual or legal circumstances to justify its Motion.

Basic and primordial is the rule that when a final judgment becomes executory, it thereby becomes immutable and unalterable. In other words, such a judgment may no longer undergo any modification, much less any reversal, even if it is meant to correct what is perceived to be an erroneous conclusion of fact or law; and even if it is attempted by the court rendering it or by this Court.7 Equally well-entrenched is the doctrine that what is not permitted to be done directly may not be done indirectly either. In the instant case, it is unarguable that the inexorable result of granting the present Motion will precisely be a subversion of the Decision, or at least a modification that would render the latter totally ineffective and nugatory.

To support its present Motion, Comelec appended as Annex 1 a letter dated January 22, 2004. Addressed to its chairman, the Annex was signed by four8 self-proclaimed "information technology experts,"9 who had gratuitously contended that this Court‘s Decision was "one of the most inopportune rulings ever to come out of the hallowed halls of that High Tribunal"; blame the Decision for supposedly forcing our people "to entrust their votes to a manual system of counting and canvassing that have been proven to be prone to massive fraud in the past"; and mouth legal/technical arguments that have already been repeatedly debunked in the Decision and Resolution here. The letter also included a long-winded, tortuous discussion of the software development life cycle.

A quick check of the case records confirmed our suspicion. The very same letter dated January 22, 2004 had previously been appended as Annex 2 to private respondents‘ "Omnibus Motion A) for reconsideration of the Decision dated 13 January 2004; b) to admit exhibits in refutation of the findings of fact of the Court; c) to have the case set for hearing and/or reception of evidence if deemed necessary by the Court." The only difference is that this time around, Comelec overlooked or failed to photocopy the last

page (page 17) of the letter, bearing the signatures of the four other purported "information technology experts."10 In other words, to support its present Motion, it merely recycled an earlier exhibit that had already been used in seeking reconsideration of our aforesaid Decision.

While expressing utmost reverence for the finality of the Decision, Comelec implicitly seeks, nevertheless, to have this Court take up anew matters that have already been passed upon and disposed of with finality.

It is a hornbook doctrine that courts are presumed to have passed upon all points that were raised by the parties in their various pleadings, and that form part of the records of the case. Our Resolution, disposing of respondents‘ arguments on reconsideration, did not explicitly and specifically address all of the matters raised in the said letter of January 22, 2004. It is presumed however, that all matters within an issue raised in a case were passed upon by the Court,11 as indeed they were in the instant case. And as we have held elsewhere,12 courts will refuse to reopen what has been decided; they will not allow the same parties or their privies to litigate anew a question that has been considered and decided with finality.

Besides, the letter of January 22, 2004, laden as it is with technical jargon and impressive concepts, does not serve to alter by even the minutest degree our finding of grave abuse of discretion by Comelec, on account of its clear violations of law and jurisprudence and its unjustifiable and reckless disregard of its own bidding rules and procedures.

Furthermore, the letter would obviously not contain anything that might serve to persuade us that the situation obtaining in January 2004 has so changed in the interim as to justify the use of the ACMs in August 2005.

The Commission seems to think that it can resurrect the dead case by waving at this Court a letter replete with technical jargon, much like a witch doctor muttering unintelligible incantations to revive a corpse.

In its main text, the Motion concedes that our Decision "has become final and executory," and that all that remains to be done is "to make mutual restitution."13 So, what is the relevance of all these useless argumentations and pontifications in Annex 1 by the Commission‘s self-proclaimed "experts"? For its own illegal acts, imprudence and grave abuse of discretion, why blame this Court? For Comelec to know immediately which culprit should bear full responsibility for its miserable failure to automate our elections, it should simply face the mirror.

Recovery of Government Funds Barred by the Motion

Second, the grant of the Motion will bar or jeopardize the recovery of government funds improvidently paid to private respondents, funds that to date the OSG estimates to be over one billion pesos. At the very least, granting the Motion will be antagonistic to the

directive in our Decision for the OSG to recover the "illegal disbursements of public funds made by reason of the void Resolution and Contract."

Indeed, if the government is conned into not returning the ACMs but instead keeping and utilizing them, there would be no need for Mega Pacific to refund the payments made by Comelec. In fact, such recovery will no longer be possible. Consequently, all those who stood to benefit (or have already benefited) financially from the deal would no longer be liable for the refund. They can argue that there was nothing wrong with the voided Resolution and Contract, nothing wrong with the public bidding, nothing wrong with the machines and software, since the government has decided to keep and utilize them. This argument can be stretched to abate the criminal prosecutions pending before the OMB and the impeachment proceedings it is considering. After all, "reasonable doubt" is all that is needed to secure acquittal in a criminal prosecution.

In brief, the poll body‘s Motion not only asks for what is legally impossible to do (to reverse and subvert a final and executory Decision of the highest court of the land), but also prevents the Filipino people from recovering illegally disbursed public funds running into billions of pesos. Verily, by subverting the Decision of this Court, the Motion would be unduly favoring and granting virtual immunity from criminal prosecution to the parties responsible for the illegal disbursement of scarce public funds.

Use of the ACMs and Software Detrimental to ARMM Elections

Third, the use of the unreliable ACMs and the nonexistent software that is supposed to run them will expose the ARMM elections to the same electoral ills pointed out in our final and executory Decision. Be it remembered that this Court expressly ruled that the proffered hardware and software had undeniably failed to pass eight critical requirements designed to safeguard the integrity of elections, especially the following three items:

"· They failed to achieve the accuracy rating criterion of 99.9995 percent set up by the Comelec itself.

"· They were not able to detect previously downloaded results at various canvassing or consolidation levels and to prevent these from being inputted again.

"· They were unable to print the statutorily required audit trails of the count/canvass at different levels without any loss of data."14

The Motion has not at all demonstrated that these technical requirements have been addressed from the time our Decision was issued up to now. In fact, Comelec is merely asking for leave to use the machines, without mentioning any specific manner in which the foregoing requirements have been satisfactorily met.

Equally important, we stressed in our Decision that "[n]othing was said or done about the software -- the deficiencies as to detection and prevention of downloading and

entering previously downloaded data, as well as the capability to print an audit trail. No matter how many times the machines were tested and retested, if nothing was done about the programming defects and deficiencies, the same danger of massive electoral fraud remains."15

Other than vaguely claiming that its four so-called "experts" have "unanimously confirmed that the software development which the Comelec undertook, [was] in line with the internationally accepted standards (ISO/IEC 12207) [for] software life cycle processes," the present Motion has not shown that the alleged "software development" was indeed extant and capable of addressing the "programming defects and deficiencies" pointed out by this Court.

At bottom, the proposed use of the ACMs would subject the ARMM elections to the same dangers of massive electoral fraud that would have been inflicted by the projected automation of the 2004 national elections.

Motion Inadequate and Vague

Fourth, assuming arguendo that the foregoing formidable legal, financial and technical obstacles could be overcome or set aside, still, the Motion cannot be granted because it is vague; it does not contain enough details to enable this Court to act appropriately.

The sham nature of the Motion is evident from the following considerations. While Comelec asserts a pressing need for the ACMs to be used in the ARMM elections, strangely enough, it has not bothered to determine the number of units that will be required for the purpose, much less tried to justify such quantification. It contracted for a total of 1,991 ACMs, intended for use throughout the entire country during the 2004 elections. Are we to believe that all 1,991 units would be utilized to count and canvass the votes cast in the ARMM elections? Such a scenario is highly unlikely, even ridiculous.

A genuine, bona fide proposal for the utilization of the ACMs would naturally have included a well-thought-out plan of action, indicating the number of units to be deployed, places of utilization, number of operators and other personnel required, methods/periods of deployment and recovery or retrieval, assessments of costs and risks involved in implementing the proposal, and concomitant justifications, among other things. Now, either "The Plan" is being kept absolutely top secret, or it is completely nonexistent.

Furthermore, once the ACMs are deployed and utilized, they will no longer be in the same condition as when they were first delivered to Comelec. In fact, it is quite probable that by the time election day comes around, some of the machines would have been mishandled and damaged, maybe even beyond repair. What steps has the poll body taken to make certain that such eventualities, if not altogether preventable, can at least be minimized so as to ensure the eventual return of the ACMs and the full recovery of

the payments made for them? A scrutiny of the 4-page Motion16 ends in futility. It is all too clear that a failure or inability of Comelec to return the machines sans damage would most assuredly be cited as a ground to refuse the refund of the moneys paid. Yet, if Comelec has given any thought at all to this or any other contingency, such fact has certainly not been made evident to us.

ARMM Elections Not Jeopardized by Nonuse of ACMs

Fifth, there is no basis for the claim that unless the subject ACMs are used, the ARMM elections would not be held.

At the outset, if such elections are not held, the blame must be laid squarely at the doorstep of Comelec. To stress, had it not gravely abused its discretion, the automation of the vote counting and canvassing processes would have already become a reality over a year ago, and the ACMs that would have been used in the 2004 national elections would now be available for the ARMM elections.

In any event, the Commission in its Motion argues that the government, given its present fiscal difficulties, has no available funds to finance the automation of the ARMM elections. Without even asking under what authority it has assumed the role of Treasury spokesman, we emphasize that there would not now be any lack of funds for election automation had it not improvidently turned over P1 billion of taxpayers‘ moneys to Mega Pacific‘s bank accounts.

Nevertheless, had the poll body been honestly and genuinely intent on implementing automated counting and canvassing for the ARMM elections, it ought to have informed Congress of the non-availability of the subject ACMs due to our Decisions and of the need for special appropriations, instead of wasting this Court‘s time on its unmeritorious Motion. In fact, if only it had taken proper heed of our Decision of January 13, 2004, it could have conducted an above-board public bidding for the supply of acceptable ACMs.

Certainly, this option or course of action was not foreclosed by our Decision. Moreover, there was sufficient time within which to conduct the public bidding process. RA 9333, which set the second Monday of August 2005 (August 8, 2005) as the date of the ARMM elections, was enacted on September 21, 2004. Undoubtedly, Comelec was made aware of the proposed date of the ARMM elections way before the passage of RA 9333. Thus, the poll body had about ten (10) months at the very least (between the end of September 2004, when RA 9333 came into force and effect, and August 8, 2005) to lobby Congress, properly conduct a public bidding, award the appropriate contracts, deliver and test the new machines, and make final preparations for the election.

Even assuming that a new public bidding for ACMs was not a viable option, still, Comelec has had more than sufficient lead time -- about ten months counted from the end of September 2004 until August 8, 2005 -- to prepare for manual counting and canvassing in the ARMM elections. It publicly declared, sometime in late January 2004,

that notwithstanding our Decision nullifying the Mega Pacific Contract, it would still be able to implement such manualization for the May 10, 2004 national elections. It made this declaration even though it had a merethree months or so to set up the mechanics. In this present instance involving elections on a much smaller scale, it will definitely be able to implement manual processes if it wants to.

There is therefore absolutely no basis for any apprehension that the ARMM elections would not push through simply because the present Motion cannot pass muster. More to the point, it would be ridiculous to regard the grant of permission to use the subject ACMs as the conditio sine qua non for the holding of the ARMM elections.

What is most odious is the resort to the present Motion seeking the use of the subject ACMs despite the availability of viable alternative courses of action17 that will not tend to disturb or render this Court‘s final Decision ineffectual. Thus, the present Motion is wholly unnecessary and unwarranted. Upon it, however has Comelec pinned all its hopes, instead of focusing on what the poll body can and ought to do under the circumstances. The consequences of granting its lamentable Motion, we repeat, will indubitably subvert and thwart the Decision of this Court in the instant case.

Equally reprehensible is the attempt of the Commission to pass the onus of its mismanagement problems on to this Court. For instance, the Motion quotes the cost of storage of the ACMs in its Maxilite Warehouse at P329,355.26 per month or P3,979,460.24 per annum. Assuming for the nonce that the machines have to be held in storage pending the decision in the civil case (as it would simply not do to throw the machines out into the streets), why must it assume the cost of storage? Per our Decision, the machines are to be returned to Mega Pacific. If it refuses to accept them back, it does not follow that Comelec must pick up the tab. Instead of further wasting the taxpayers‘ money, it can simply send the bill to Mega Pacific for collection.

It would be entirely improper, bordering on unmitigated contempt of court, for the Commission to try to pass on the problem to this Court through its Motion.

No Actual Case or Controversy

Finally, the Motion presents no actual justiciable case or controversy over which this Court can exercise its judicial authority. It is well-established in this jurisdiction that "x x x for a court to exercise its power of adjudication, there must be an actual case or controversy -- one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. x x x [C]ourts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging."18 The controversy must be justiciable -- definite and concrete, touching on the legal relations of parties having adverse legal interests.19 In other words, the pleadings must show an active antagonistic assertion of a legal right, on the one hand, and a denial thereof on the other; that is, it must concern a real and not a merely theoretical question or issue.20 There ought to be an actual and

substantial controversy admitting of specific relief through a decree conclusive in nature, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.21

A perusal of the present Motion will readily reveal the utter absence of a live case before us, involving a clash of legal rights or opposing legal claims. At best, it is merely a request for an advisory opinion, which this Court has no jurisdiction to grant.22

EPILOGUE

We close this Resolution by repeating the last two paragraphs of our final and executory Decision:

"True, our country needs to transcend our slow, manual and archaic electoral process. But before it can do so, it must first have a diligent and competent electoral agency that can properly and prudently implement a well-conceived automated election system.

"At bottom, before the country can hope to have a speedy and fraud-free automated election, it must first be able to procure the proper computerized hardware and software legally, based on a transparent and valid system of public bidding. As in any democratic system, the ultimate goal of automating elections must be achieved by a legal, valid and above-board process of acquiring the necessary tools and skills therefor. Though the Philippines needs an automated electoral process, it cannot accept just any system shoved into its bosom through improper and illegal methods. As the saying goes, the end never justifies the means. Penumbral contracting will not produce enlightened results."23

Comelec must follow and not skirt our Decision. Neither may it short-circuit our laws and jurisprudence. It should return the ACMs to MPC-MPEI and recover the improvidently disbursed funds. Instead of blaming this Court for its illegal actions and grave abuse of discretion, the Commission should, for a change, devise a legally and technically sound plan to computerize our elections and show our people that it is capable of managing the transition from an archaic to a modern electoral system.

WHEREFORE, the Motion is hereby DENIED for utter lack of merit.

G.R. No. 124293 January 31, 2005

J.G. SUMMIT HOLDINGS, INC., petitioner, vs. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and

Members; ASSET PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.

R E S O L U T I O N

PUNO, J.:

For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the Court En Banc. The petitioner questions the Resolution which reversed our Decision of November 20, 2000, which in turn reversed and set aside a Decision of the Court of Appeals promulgated on July 18, 1995.

I. Facts

The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as follows:

On January 27, 1997, the National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc. (SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, the NIDC and KAWASAKI will contribute P330 million for the capitalization of PHILSECO in the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture, viz:

1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third party without giving the other under the same terms the right of first refusal. This provision shall not apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate.

On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant to Administrative Order No. 14. On December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of non-performing assets of the National Government. Thereafter, on February 27, 1987, a trust agreement was entered into between the National Government and the APT wherein the latter was named the trustee of the National Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing KAWASAKI's shareholdings to 2.59%.

In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National Government's share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to top by five percent (5%) the highest bid for the said shares. They further agreed that KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the right to top. On September 7, 1990, KAWASAKI informed APT that Philyards Holdings, Inc. (PHI)1 would exercise its right to top.

At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the JVA between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the National Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were explained to the interested bidders who were notified that the bidding would be held on December 2, 1993. A portion of the ASBR reads:

1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of PHILSECO's outstanding capital stock), which will be sold as a whole block in accordance with the rules herein enumerated.

xxx xxx xxx

2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of Trustees and the Committee on Privatization (COP).

2.1 APT reserves the right in its sole discretion, to reject any or all bids.

3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION (P1,300,000,000.00).

xxx xxx xxx

6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting following the bidding, for the purpose of determining whether or not it should be endorsed by the APT Board of Trustees to the COP, and the latter approves the same. The APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc., that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%) percent thereof.

6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their "Option to Top the Highest Bid," they shall so notify the APT about such

exercise of their option and deposit with APT the amount equivalent to ten percent (10%) of the highest bid plus five percent (5%) thereof within the thirty (30)-day period mentioned in paragraph 6.0 above. APT will then serve notice upon Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. declaring them as the preferred bidder and they shall have a period of ninety (90) days from the receipt of the APT's notice within which to pay the balance of their bid price.

6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their "Option to Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder as the winning bidder.

xxx xxx xxx

12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid forms, including any addenda or amendments thereto issued during the bidding period. The bidder shall likewise be responsible for informing itself with respect to any and all conditions concerning the PHILSECO Shares which may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so examine and inform itself shall be its sole risk and no relief for error or omission will be given by APT or COP. . . .

At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.2 submitted a bid of Two Billion and Thirty Million Pesos (P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS'] right to top, viz:

4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APT's recommendation based on the result of this bidding. Should the COP approve the highest bid, APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%) percent thereof.

As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 "subject to the right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as specified in the bidding rules."

On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on the grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS], Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders thereby circumventing the law and prejudicing the weak winning bidder; (b) only KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI constituted unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a

public bidding or auction sale; and (e) the JG Summit consortium was not estopped from questioning the proceedings.

On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a Petition for Mandamus under G.R. No. 114057. On May 11, 1994, said petition was referred to the Court of Appeals. On July 18, 1995, the Court of Appeals denied the same for lack of merit. It ruled that the petition for mandamus was not the proper remedy to question the constitutionality or legality of the right of first refusal and the right to top that was exercised by KAWASAKI/PHI, and that the matter must be brought "by the proper party in the proper forum at the proper time and threshed out in a full blown trial." The Court of Appeals further ruled that the right of first refusal and the right to top are prima facie legal and that the petitioner, "by participating in the public bidding, with full knowledge of the right to top granted to KAWASAKI/[PHILYARDS] is…estopped from questioning the validity of the award given to [PHILYARDS] after the latter exercised the right to top and had paid in full the purchase price of the subject shares, pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of said Decision which was denied on March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging grave abuse of discretion on the part of the appellate court.

On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil action of mandamus because the petition was also one of certiorari. It further ruled that a shipyard like PHILSECO is a public utility whose capitalization must be sixty percent (60%) Filipino-owned. Consequently, the right to top granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR) drafted for the sale of the 87.67% equity of the National Government in PHILSECO is illegal — not only because it violates the rules on competitive bidding — but more so, because it allows foreign corporations to own more than 40% equity in the shipyard. It also held that "although the petitioner had the opportunity to examine the ASBR before it participated in the bidding, it cannot be estopped from questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, this Court voided the transfer of the national government's 87.67% share in PHILSECO to Philyard[s] Holdings, Inc., and upheld the right of JG Summit, as the highest bidder, to take title to the said shares, viz:

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon the finality of this Decision. In turn, APT is ordered to:

(a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;

(b) execute a Stock Purchase Agreement with petitioner;

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of PHILSECO's total capitalization;

(d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million Five Hundred Thousand Pesos (P2,131,500,000.00); and

(e) cause the cancellation of the stock certificates issued to PHI.

SO ORDERED.

In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x resolution: (1) Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its right of first refusal only up to 40% of the total capitalization of PHILSECO; and (3) Whether the right to top granted to KAWASAKI violates the principles of competitive bidding.3 (citations omitted)

In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first issue, we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public utility, as by nature, a shipyard is not a public utility4 and that no law declares a shipyard to be a public utility.5 On the second issue, we found nothing in the 1977 Joint Venture Agreement (JVA) which prevents Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECO‘s total capitalization.6 On the final issue, we held that the right to top granted to KAWASAKI in exchange for its right of first refusal did not violate the principles of competitive bidding.7

On October 20, 2003, the petitioner filed a Motion for Reconsideration8 and a Motion to Elevate This Case to the Court En Banc.9 Public respondents Committee on Privatization (COP) and Asset Privatization Trust (APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit Holdings, Inc.‘s (JG Summit‘s) Motion for Reconsideration and Motion to Elevate This Case to the Court En Banc on January 29, 2004 and February 3, 2004, respectively.

II. Issues

Based on the foregoing, the relevant issues to resolve to end this litigation are the following:

1. Whether there are sufficient bases to elevate the case at bar to the Court en banc.

2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant a reconsideration of this Court‘s Resolution of September 24, 2003.

Motion to Elevate this Case to the

Court En Banc

The petitioner prays for the elevation of the case to the Court en banc on the following grounds:

1. The main issue of the propriety of the bidding process involved in the present case has been confused with the policy issue of the supposed fate of the shipping industry which has never been an issue that is determinative of this case.10

2. The present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the Court en banc or in division may be modified or reversed.11

3. There was clear executive interference in the judicial functions of the Court when the Honorable Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a memorandum dated November 5, 2001, attaching a copy of the Foreign Chambers Report dated October 17, 2001, which matter was placed in the agenda of the Court and noted by it in a formal resolution dated November 28, 2001.12

Opposing J.G. Summit‘s motion to elevate the case en banc, PHILYARDS points out the petitioner‘s inconsistency in previously opposing PHILYARDS‘ Motion to Refer the Case to the Court En Banc. PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be referred to the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not an appellate court to which decisions or resolutions of its divisions may be appealed citing Supreme Court Circular No. 2-89 dated February 7, 1989.13 PHILYARDS also alleges that there is no novel question of law involved in the present case as the assailed Resolution was based on well-settled jurisprudence. Likewise, PHILYARDS stresses that the Resolution was merely an outcome of the motions for reconsideration filed by it and the COP and APT and is "consistent with the inherent power of courts to ‗amend and control its process and orders so as to make them conformable to law and justice.‘ (Rule 135, sec. 5)"14 Private respondent belittles the petitioner‘s allegations regarding the change in ponente and the alleged executive interference as shown by former Secretary of Finance Jose Isidro Camacho‘s memorandum dated November 5, 2001 arguing that these do not justify a referral of the present case to the Court en banc.

In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit further argued that: its Opposition to the Office of the Solicitor General‘s Motion to Refer is different from its own Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted "executive interference"; and the change

in ponente is merely noted in asserting that this case should be decided by the Court en banc.15

We find no merit in petitioner‘s contention that the propriety of the bidding process involved in the present case has been confused with the policy issue of the fate of the shipping industry which, petitioner maintains, has never been an issue that is determinative of this case. The Court‘s Resolution of September 24, 2003 reveals a clear and definitive ruling on the propriety of the bidding process. In discussing whether the right to top granted to KAWASAKI in exchange for its right of first refusal violates the principles of competitive bidding, we made an exhaustive discourse on the rules and principles of public bidding and whether they were complied with in the case at bar.16 This Court categorically ruled on the petitioner‘s argument that PHILSECO, as a shipyard, is a public utility which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a pivotal issue. In doing so, we recognized the impact of our ruling on the shipbuilding industry which was beyond avoidance.17

We reject petitioner‘s argument that the present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the court en banc or in division may be modified or reversed. The case was resolved based on basic principles of the right of first refusal in commercial law and estoppel in civil law. Contractual obligations arising from rights of first refusal are not new in this jurisdiction and have been recognized in numerous cases.18 Estoppel is too known a civil law concept to require an elongated discussion. Fundamental principles on public bidding were likewise used to resolve the issues raised by the petitioner. To be sure, petitioner leans on the right to top in a public bidding in arguing that the case at bar involves a novel issue. We are not swayed. The right to top was merely a condition or a reservation made in the bidding rules which was fully disclosed to all bidding parties. In Bureau Veritas, represented by Theodor H. Hunermann v. Office of the President, et al., 19 we dealt with this conditionality, viz:

x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April 1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the effect that the bidding shall be subject to the right of the government to reject any and all bids subject to its discretion. In the case at bar, the government has made its choice and unless an unfairness or injustice is shown, the losing bidders have no cause to complain nor right to dispute that choice. This is a well-settled doctrine in this jurisdiction and elsewhere."

The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This

task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489).

The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents when they awarded the CISS contract to Respondent SGS. In the "Invitation to Prequalify and Bid" (Annex "C," supra), the CISS Committee made an express reservation of the right of the Government to "reject any or all bids or any part thereof or waive any defects contained thereon and accept an offer most advantageous to the Government." It is a well-settled rule that where such reservation is made in an Invitation to Bid, the highest or lowest bidder, as the case may be, is not entitled to an award as a matter of right (C & C Commercial Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). 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 (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied)1awphi1.nét

Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government in the bidding rules which was made known to all parties. It was a condition imposed on all bidders equally, based on the APT’s exercise of its discretion in deciding on how best to privatize the government’s shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether and inserted in the bidding rules but a condition which the APT approved as the best way the government could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the most advantageous deal for the government. The right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the government and KAWASAKI.

Further, there is no "executive interference" in the functions of this Court by the mere filing of a memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely "noted" to acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents.

Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court20 and the Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed.21

For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.

Motion for Reconsideration

Three principal arguments were raised in the petitioner‘s Motion for Reconsideration. First, that a fair resolution of the case should be based on contract law, not on policy considerations; the contracts do not authorize the right to top to be derived from the right of first refusal.22 Second, that neither the right of first refusal nor the right to top can be legally exercised by the consortium which is not the proper party granted such right under either the JVA or the Asset Specific Bidding Rules (ASBR).23 Third, that the maintenance of the 60%-40% relationship between the National Investment and Development Corporation (NIDC) and KAWASAKI arises from contract and from the Constitution because PHILSECO is a landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional limitation.24

On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show compelling reasons to warrant a reconsideration of the Decision of the Court.25 PHILYARDS denies that the Decision is based mainly on policy considerations and points out that it is premised on principles governing obligations and contracts and corporate law such as the rule requiring respect for contractual stipulations, upholding rights of first refusal, and recognizing the assignable nature of contracts rights.26 Also, the ruling that shipyards are not public utilities relies on established case law and fundamental rules of statutory construction. PHILYARDS stresses that KAWASAKI‘s right of first refusal or even the right to top is not limited to the 40% equity of the latter.27 On the landholding issue raised by J.G. Summit, PHILYARDS emphasizes that this is a non-issue and even involves a question of fact. Even assuming that this Court can take cognizance of such question of fact even without the benefit of a trial, PHILYARDS opines that landholding by PHILSECO at the time of the bidding is irrelevant because what is essential is that ultimately a qualified entity would eventually hold PHILSECO‘s real estate properties.28 Further, given the assignable nature of the right of first refusal, any applicable nationality restrictions, including landholding limitations, would not affect the right of first refusal itself, but only the manner of its exercise.29 Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summit‘s allegations of fact regarding PHILSECO‘s landholding, it must also recognize PHILYARDS‘ assertions that PHILSECO‘s landholdings were sold to another corporation.30 As regards the right of first refusal, private respondent explains that KAWASAKI‘s reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation or loss of its contractually granted right of first refusal.31 Also, the bidding was valid because PHILYARDS exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS in raising the purchase price.32

In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:

1. The conversion of the right of first refusal into a right to top by 5% does not violate any provision in the JVA between NIDC and KAWASAKI.

2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on foreign ownership.

3. The petitioner is legally estopped from assailing the validity of the proceedings of the public bidding as it voluntarily submitted itself to the terms of the ASBR which included the provision on the right to top.

4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that PHILYARDS formed a consortium to raise the required amount to exercise the right to top the highest bid by 5% does not violate the JVA or the ASBR.

5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real property.

6. Petitioner‘s motion to elevate the case to the Court en banc is baseless and would only delay the termination of this case.33

In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and private respondents in this wise:

1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through the exercise of a right to top, which is contrary to law and the constitution is null and void for being violative of substantive due process and the abuse of right provision in the Civil Code.

a. The bidders[‘] right to top was actually exercised by losing bidders.

b. The right to top or the right of first refusal cannot co-exist with a genuine competitive bidding.

c. The benefits derived from the right to top were unwarranted.

2. The landholding issue has been a legitimate issue since the start of this case but is shamelessly ignored by the respondents.

a. The landholding issue is not a non-issue.

b. The landholding issue does not pose questions of fact.

c. That PHILSECO owned land at the time that the right of first refusal was agreed upon and at the time of the bidding are most relevant.

d. Whether a shipyard is a public utility is not the core issue in this case.

3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the right to top.

a. The history behind the birth of the right to top shows fraud and bad faith.

b. The right of first refusal was, indeed, "effectively useless."

4. Petitioner is not legally estopped to challenge the right to top in this case.

a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or against public policy.

b. Deception was patent; the right to top was an attractive nuisance.

c. The 10% bid deposit was placed in escrow.

J.G. Summit‘s insistence that the right to top cannot be sourced from the right of first refusal is not new and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual right of first refusal in the JVA.34 We also ruled that nothing in the JVA prevents KAWASAKI from acquiring more than 40% of PHILSECO‘s total capitalization.35 Likewise, nothing in the JVA or ASBR bars the conversion of the right of first refusal to the right to top. In sum, nothing new and of significance in the petitioner‘s pleading warrants a reconsideration of our ruling.

Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top can legally be exercised by the consortium which is not the proper party granted such right under either the JVA or the ASBR. Thus, we held:

The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raise P2.131 billion necessary in exercising the right to top is not contrary to law, public policy or public morals. There is nothing in the ASBR that bars the losing bidders from joining either the winning bidder (should the right to top is not exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise the purchase price. The petitioner did not allege, nor was it shown by competent evidence, that the participation of the losing bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by [PHILYARDS] of a consortium is legitimate in a free enterprise system. The appellate court is thus correct in holding the petitioner estopped from questioning the validity of the transfer of the National Government's shares in PHILSECO to respondent.36

Further, we see no inherent illegality on PHILYARDS‘ act in seeking funding from parties who were losing bidders. This is a purely commercial decision over which the State should not interfere absent any legal infirmity. It is emphasized that the case at bar involves the disposition of shares in a corporation which the government sought to privatize. As such, the persons with whom PHILYARDS desired to enter into business with in order to raise funds to purchase the shares are basically its business. This is in contrast to a case involving a contract for the operation of or construction of a government infrastructure where the identity of the buyer/bidder or financier constitutes an important consideration. In such cases, the government would have to take utmost precaution to protect public interest by ensuring that the parties with which it is contracting have the ability to satisfactorily construct or operate the infrastructure.

On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues that since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile and as such, could not subsequently be converted into the right to top. 37 Petitioner also asserts that, at present, PHILSECO continues to violate the constitutional provision on landholdings as its shares are more than 40% foreign-owned.38 PHILYARDS admits that it may have previously held land but had already divested such landholdings.39 It contends, however, that even if PHILSECO owned land, this would not affect the right of first refusal but only the exercise thereof. If the land is retained, the right of first refusal, being a property right, could be assigned to a qualified party. In the alternative, the land could be divested before the exercise of the right of first refusal. In the case at bar, respondents assert that since the right of first refusal was validly converted into a right to top, which was exercised not by KAWASAKI, but by PHILYARDS which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then there is no violation of the Constitution.40 At first, it would seem that questions of fact beyond cognizance by this Court were involved in the issue. However, the records show that PHILYARDS admits it had owned land up until the time of the bidding.41 Hence, the only issue is whether KAWASAKI had a valid right of first refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of the bidding and KAWASAKI already held 40% of PHILSECO’s equity.

We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC. First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40% ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent

proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECO‘s equity. In fact, it can even be said that if the foreign shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely affected but the capacity of the corporation to own land – that is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. This is the clear import of the following provisions in the Constitution:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

xxx xxx xxx

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.42 (emphases supplied)

The petitioner further argues that "an option to buy land is void in itself (Philippine Banking Corporation v. Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is similarly void. Hence, the right to top, sourced from the right of first refusal, is also void."43 Contrary to the contention of petitioner, the case of Lui She did not that say "an option to buy land is void in itself," for we ruled as follows:

x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real property on condition that he is

granted Philippine citizenship. As this Court said in Krivenko vs. Register of Deeds:

[A]liens are not completely excluded by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up ownership. It is just as if today the possession is transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all the rights of which ownership is made up are consolidated in an alien. And yet this is just exactly what the parties in this case did within this pace of one year, with the result that Justina Santos'[s] ownership of her property was reduced to a hollow concept. If this can be done, then the Constitutional ban against alien landholding in the Philippines, as announced in Krivenko vs. Register of Deeds, is indeed in grave peril.44 (emphases supplied; Citations omitted)

In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the land from selling, donating, mortgaging, or encumbering the property during the 50-year period of the option to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves a right of first refusal over shares of stockwhile the Lui She case involves an option to buy the land itself. As discussed earlier, there is a distinction between the shareholder‘s ownership of shares and the corporation‘s ownership of land arising from the separate juridical personalities of the corporation and its shareholders.

We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real rights.45 It cites Article 415 of the Civil Code which includes in the definition of immovable property, "contracts for public works, and servitudes and other real rights over immovable property."46 Any existing landholding, however, is denied by PHILYARDS citing its recent financial statements.47 First, these are questions of fact, the veracity of which would require introduction of evidence. The Court needs to validate these factual allegations based on competent and reliable evidence. As such, the Court cannot resolve the questions they pose. Second, J.G. Summit misreads the provisions of the Constitution cited in its own pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40% corporation, and this violates the Constitution x x x The violation continues to this day because under the law, it continues to own real property…

xxx xxx xxx

32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the JVA was signed in 1977), provided:

"Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain."

32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as amended). (emphases supplied)

As correctly observed by the public respondents, the prohibition in the Constitution applies only to ownership of land.48 It does not extend to immovable or real property as defined under Article 415 of the Civil Code.Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land49 would be limited to Filipinos and Filipino corporations only.

III.

WHEREFORE, in view of the foregoing, the petitioner‘s Motion for Reconsideration is DENIED WITH FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En Banc is likewise DENIED for lack of merit.

G.R. No. 151987. March 18, 2005

DIRECTOR FREDRIC VILLANUEVA, ATTY. JOSEPH HUMIDING, ENGR. FRANCIS BASALI, and TESSIE BRINGAS,Petitioners, vs. THE COMMISSION ON AUDIT, herein represented by GUILLERMO N. CARAGUE, RAUL C. FLORES and EMMANUEL DALMAN, in their capacity as Chairman and Commissioners, respectively, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This original action for certiorari with prayer for temporary restraining order and preliminary injunction seeks the reversal of the 12 September 2000 Decision of the Commission on Audit (COA) as well as its 06 December 2001 Resolution denying the motion for reconsideration of petitioners herein.1 The assailed decision and resolution both affirmed the Special Audit Office (SAO) Report No. 95-31 of the Special Audit Office of the COA recommending the filing of criminal charges against petitioners for violation of Section 3(e) of Republic Act No. 3019,2 as amended, and requiring petitioners to refund the amount of P316,138.50 representing an alleged overprice in the purchase of polyethylene plastic bags which the Special Audit Team disallowed on post-audit.

From the parties‘ respective pleadings, the generative facts of the case are as follows:

1. On 6 August 1993, an unnumbered Special Order of 1993 of the Department of Environment and Natural Resources (DENR) was issued designating the Chief of Planning Division (herein petitioner Engr. Francis Basali) and the Chief of the Legal Division (herein petitioner Atty. Joseph Humiding) as members of the Bids and Awards Committee of the DENR-Cordillera Administrative Region (DENR-CAR), Baguio City. They were to join the previous appointee, herein petitioners Director Fredric Villanueva and the Secretariat Tessie B. Bringas;3

2. In 1994, petitioners held the same positions in a hold-over capacity as there were yet no appointees to take their place. Petitioner Veneracion then took over as the Officer-In-Charge Regional Executive Director (OIC-RED) of DENR-CAR;4

3. During the said time, the DENR-CAR was tasked as implementing agency of a national project dubbed "Adopt-A-Street/Park Program" throughout the Cordillera Administrative Region pursuant to the provisions of Executive Order No. 100 (1993) and Joint Memorandum Circular No. 1 (1993). E.O. No. 100, in particular, specifically mandated the active participation of all government agencies nationwide in the "urban greening" program. As lead agency, the DENR-CAR had to produce as many pine tree seedlings as possible for the tree-planting activities of the other government agencies in the Cordillera Administrative Region;5

4. Polyethylene plastic bags needed by the DENR-CAR in the production of pine tree seedlings had to be purchased at the soonest possible time as the propagation of pine seedlings had to be conducted before the end of the rainy season. Hence, petitioner Veneracion, as OIC-RED, directed the conduct of a bidding for the procurement of polyethylene plastic bags;6

5. In preparation for the bidding that was to be conducted on 12 July 1994, the following steps were taken by the office of petitioner Veneracion:

(a) The preparation of the Invitation to Bid which invited "all interested bidders to submit sealed bids for the purchase of polyethylene plastic bags for use in seedling production";7

(b) The posting of said Invitation To Bid at the bulletin boards of the different sectors under the DENR-CAR;8

(c) The preparation of canvass papers inviting the submission of quotations on the lowest prices of the plastic bags sought to be purchased;9

(d) The distribution of said canvass papers and invitation to bid, by mail and personal delivery, to known suppliers of the DENR-CAR;10

6. Suppliers of the DENR-CAR were invited to submit bid offers, either by mail or through personal delivery of the canvass papers. These were:11

(a) Fluid Air Technologies (Fluid Air), based in Quezon City, Metro Manila;

(b) Kinship Industrial Sales and Services (Kinship Industrial), also based in Quezon City, Metro Manila;

(c) Torquoise Commercial and Industrial Sales and Services, Inc., based in Parañaque City, Metro Manila; and

(d) Prince Enterprises, based in Baguio City.

7. The first three (3) establishments submitted their sealed bids to the Office of the Regional Executive Director which forwarded the same to the Prequalification Bids and Awards Committee (PBAC). Petitioners Villanueva, Humiding and Basali were members of the PBAC;12

8. On 12 July 1994, the PBAC, composed of herein petitioners, conducted its deliberations. Estrellita B. Belandres, the resident auditor of the DENR-CAR from the respondent COA Regional Office of the Cordillera Administrative Region, personally attended the deliberations;13

9. During the opening of the sealed bids, with COA Auditor Belandres in attendance, the PBAC found that the bids tendered by Fluid Air and Kinship Industrial were the "most advantageous to the government," hence, they were declared the winning bidders;14

10. Pursuant thereto, the DENR-CAR purchased from Kinship Industrial and from Fluid Air polyethylene plastic bags in varying sizes and quantities;15

11. In her "Independent Auditor‘s Report" dated 14 February 1995, auditor Belandres stated in part:

In our opinion, except for the effect of any adjustments which might have been made had the agency conducted a physical count of its inventories and fixed assets as of December 31, 1994 or had the records allowed us to apply alternative procedures, the financial statements referred to above present fairly, in all material respects, the financial position of the Department of Environment and Natural Resources as of December 31, 1994, and the results of its operations for the year ended in accordance with applicable laws and regulations and in conformity with generally accepted state accounting principles;16

12. From 2 March to 5 May 1995, however, a special audit was conducted by the Special Audit Office of respondent COA, in compliance with COA Assignment Order 95-030 dated 23 February 1995, on selected financial transactions and operations of the DENR-CAR for the calendar years 1992 to 1994. The reasons behind the audit were contained in a Memorandum dated 6 March 1997, addressed to the COA Chairman, from Gregoria S. Ong, Director of the Special Audit Office, COA, where Director Ong stated that "disbursements for purchases of plastic bags, office supplies and equipment were examined for legality, regularity and propriety;"17

13. In its report (SAO Report No. 95-31), the audit team declared that the purchase of plastic bags were made without a public bidding and that the acquisition was marked by an overprice of as much as P316,138.50. The audit team thus recommended the filing of criminal charges against the officers concerned pursuant to Section 3(e) of Republic Act No. 3019, as amended, and recovery of the amount of P316,138.50 representing the alleged overprice in the purchase of said plastic bags;18

14. On 11 March 1997, the Special Audit Office, through State Auditor Vivencio C. Quiambao, Jr., issued a Notice of Disallowance of the amount of P154,664.90 representing the total alleged overprice in the purchase of plastic bags from Kinship Industrial. Another Notice of Disallowance was issued against plastic bags supplied by Fluid Air in the amount of P161,473.60;19

15. On 2 July 1997, petitioners filed a letter-request for reconsideration of the findings of the Audit Team;20

16. On 12 September 2000, respondent COA rendered the first assailed decision dismissing petitioners‘ request for reconsideration, the dispositive portion of which reads:

Accordingly, the instant appeal for reconsideration of the findings under SAO Report No. 95-31, specifically Findings No. 1, 7 and 8, except for the procurement of 24 units of overhead projectors covered by Notice of Disallowance No. 014-03-97 for P27,960.00, cannot be given due course. It is directed that a copy of this decision be furnished the Office of the Ombudsman for Luzon for filing of appropriate criminal action against those accountable officers responsible for the irregularities committed relative thereto.21

17. On 17 October 2000, petitioners filed a Motion for Reconsideration which was denied, for lack of merit by respondent COA in the second assailed Resolution dated 6 December 2001.22

Hence, the instant petition where it is averred that respondent COA gravely abused its discretion amounting to lack or excess of jurisdiction –

. . . IN FINDING THAT PETITIONERS SHOULD BE HELD LIABLE AND THUS SHOULD BE CHARGED BEFORE THE OFFICE OF THE OMBUDSMAN FOR GRAFT AND CORRUPTION PRACTICES;

. . . IN NOT EVALUATING THE FACTS AND CIRCUMSTANCES AS PRESENTED BY THE EVIDENCE OF THE PETITIONERS;

. . . IN NOT APPLYING THE CORRECT LAW AND JURISPRUDENCE IN THE CASE SUBMITTED BEFORE IT FOR RESOLUTION; [and]

. . . IN FAVORING AND EXONERATING ITS OWN AUDITOR AND INSTEAD FINDING FAULT IN THE PETITIONERS.

At the pith of the controversy is the scope of the Commission on Audit‘s authority and the limits of its participation in public biddings of government agencies.

The assailed COA Decision, among other things, stated that the various plastic bags were purchased without the benefit of public bidding and were overpriced by as much as P344,098.50.23 And, in its Resolution denying petitioners‘ motion for reconsideration, respondent COA underscored the Special Audit Team‘s observation that:

The alleged failure of the Resident Auditor in the performance of her duties can not also be given credence. COA Circular No. 78-87 dated September 6, 1978 states the extent of auditorial involvement with regard to the opening of bids, to wit:

1. maintenance of documentary integrity;

2. physical security of the records of the bidding;

3. identification and security of alteration of bids.

Parenthetically, the technical and financial evaluation of the bids rests with the members of the bidding committee who exercise discretionary functions and for that matter it is presumed that so much is reposed in their integrity, ability, acumen and judgment. The determination, therefore, of the overpricing of the bidded items is the responsibility of the bidding committee and not of the representative of this Commission.24

Petitioners, in refutation, argue in the main that they cannot be charged for causing undue injury to the government (Section 3[e] of Rep. Act No. 3019) considering that if

there had been any suspicion of irregularity or any deliberate act on their part to prejudice the government, the resident auditor should have caused the immediate stoppage or suspension of the deliberations. In contrast, during the public bidding on 12 July 1994, resident auditor Estrellita B. Belandres stated that for as long as the bidding was not contrary to Presidential Decree No. 1594,25 it can be conducted through simplified bidding even for amounts exceeding Fifty Thousand Pesos (P50,000) and that it can be done thru sealed canvass.26 During the deliberations and opening of the sealed bids, auditor Belandres never caused the stoppage of the bidding process. She even affixed her signature on the Minutes of the Proceedings, the attendance sheet, and on the Resolution of the PBAC finding Fluid Air and Kinship Industrial to be the lowest bidders whose offers were the most advantageous to the government.27 After the plastic bags were bought and paid for, auditor Belandres did not disallow the transaction as evidenced by her "Independent Auditor‘s Report" dated 14 February 1995.28 In fine, petitioners argue that as they relied on the expertise of the COA representative, they cannot be made liable for the alleged irregularities in the bidding process considering that they complied with the requirements of bidding and they conducted the bidding itself in the presence of and under the advisement of the COA representative.

Parenthetically, petitioners challenge the ruling of respondent COA that the role of the COA representative in public bidding is merely as witness as this would make government representatives tasked with protecting government interests mere automatons.

Respondent COA, as represented by the Office of the Solicitor General, replied that it did not act in grave abuse of discretion as its findings were anchored on the report of the Special Audit Office (SAO) that conducted a special audit of the financial transactions and operations of the DENR-CAR for the years 1992 to 1994. Under the "Manual On Public Bidding" published by the COA, petitioners, as members of the PBAC were "responsible for the conduct of prequalification, bidding, evaluation of bids and recommending awards of contracts." The resident auditor, as representative of the COA, on the other hand, serves only as an "observer" who can only perform post-audit functions and who cannot participate or be actively involved in the bidding "as this would be tantamount to exercising pre-audit functions and encroaching into the government agency‘s management prerogatives."29 Respondent thus concluded that the ultimate responsibility in the bidding process falls on the PBAC members.

We affirm the findings of respondent COA.

There is no doubt that the Commission on Audit, under the Constitution, is empowered to examine and audit the use of funds by an agency of the national government on a post-audit basis.30 For this purpose, the Constitution has provided that the COA "shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefore, and promulgate accounting and auditing rules, and regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties."31

Among the rules and regulations issued by the COA pursuant to the above-quoted mandate is COA Circular No. 78-87 dated 06 September 1978 which requires the attendance of an auditor or his duly authorized representative in the opening of bids. The scope of the functions of the auditor during the opening of bids is clearly delineated by the said circular, viz:

2. Authority for the Auditor's Presence:

Executive Order No. 269, Series of 1940, requires the presence of the Auditor during the above occasions.

The pertinent portion of said Executive Order reads as follows:

". . . that the opening of all bids and quotations for similar services (contract for public service or for furnishing supplies, materials, or equipment) be made in the presence of a representative of the Auditor General, who is hereby authorized to secure and identify such papers and samples of the materials submitted by the bidders as will ensure the proper safeguard of the interests of the Government."

3. Nature and Extent of the Auditor's Participation:

The Executive Order enjoins the presence of the Auditor to be present and secure the papers and samples at said bidding. The term "secure" necessarily implies:

1. Maintenance of documentary integrity.

2. Physical security of the records of the bidding.

The Auditor's presence or that of his duly authorized representative is as witness only with specific functions to perform as hereunder delineated and explained. (Emphasis supplied)

"Maintenance of documentary integrity," under the said circular, only means that "(e)very document should be properly identified by each and every member of the Committee on Bids and by the Auditor or his duly authorized representative by affixing at some convenient portion of the document, usually the right up-hand corner of the document, their initials or other identifying marks."32 On the other hand, "physical security of the records of the bidding" means that "(c)opies of the tenders or offers should be furnished the Auditor or his duly authorized representative for his file and reference and to secure the same against tampering and/or improper handling."33

As respondent COA obviously relied on the foregoing circular in affirming SAO Report No. 95-31 of the Special Audit Team finding that the responsibility for determining whether there has been an overprice in the items up for bid pertains to the members of the PBAC and not the COA auditor, it cannot be said that respondent COA acted in grave abuse of its discretion. In Danville Maritime v. Commission on Audit,34 where the

petitioner thereat likewise argued that the bidding conducted was valid as the COA representative who was then present made no objections to the same, we ruled that "the role of the COA representative at the time of the bidding was only as a witness to insure documentary integrity, i.e., by ensuring that every document is properly identified and/or marked and that the records of the bidding are securely kept."

Moreover, it must be kept in mind that as early as 1989, COA had already passed COA Circular No. 89-299 lifting the pre-audit of government transactions.35 A pre-audit is an examination of financial transactions before their consumption or payment.36 A pre-audit seeks to determine that: "(1) The proposed expenditure complies with an appropriation law or other specific statutory authority; (2) Sufficient funds are available for the purpose; (3) The proposed expenditure is not unreasonable or extravagant and the unexpended balance of appropriations where it will be charged to is sufficient to cover the entire amount thereof; and (4) The transaction is approved by proper authority and the claim is duly supported by authentic underlying evidences."37

Applying the foregoing to the facts before us, it can be safely said that at the time of the subject public bidding in 1994, the COA auditor was not conducting a pre-audit. Her presence thereat, as correctly pointed out by respondent, was merely as a witness to ensure documentary integrity.

In contrast to the duties of the COA auditor in public bidding, the PBAC members, under the Administrative Code of 1987, are specifically tasked with the "conduct of prequalification of contractors, bidding, evaluation of bids and recommending of awards of contracts."38 And rightfully so. Between the COA auditor who can only perform post-audit functions and the PBAC members of the procuring entity (i.e., DENR-CAR), it is the latter which has the technical expertise to determine the offers that will best meet the needs and requirements of its office. Upon the agency that called for the bidding, therefore, rests the burden of ensuring that the process undertaken is above-board and that the outcome thereof is most advantageous to the government.39 The presence of the COA representative, as witness or observer,40 on the other hand, is fundamental only to the extent of guaranteeing documentary integrity and transparency in the bidding process.

Petitioners, however, harp on their alleged good faith to negate criminal liability, claiming that the COA auditor did more than just observe and that they merely relied on her representations made during the opening of the bids.

This argument is a matter of defense in the criminal case, if any, filed against petitioners. Verily, whether respondent COA‘s recommendation to file criminal charges will be able to survive prosecutorial and/or judicial scrutiny is a different matter altogether. The important thing to bear in mind is that for purposes of the instant petition, respondent COA cannot be estopped by the acts of its resident auditor during the public bidding of 12 July 1994. In Development Bank of the Philippines v. Commission on Audit,41 we had occasion to rule that the COA is not estopped from questioning, in the process of post-audit, the previous acts of its officials considering the

well-established principle that estoppel does not lie against the government; more so if the acts of its officials are erroneous, let alone irregular.

The main issue having been settled thus, petitioners nevertheless advance the additional argument that, in any event, the plastic bags subject matter of the special audit were not overpriced. The special audit team that conducted the re-canvass allegedly did not take into account additional expenses incurred by the winning bidders – all of whom were Manila-based – like "freight cost, handling, insurance and other necessary expenses."

The matter of overpricing has been sufficiently studied and explained by the Special Audit Team. To quote the relevant portions of its audit report:42

In order to determine whether the agency was able to acquire the most advantageous price thru the modes of procurement adopted, the team conducted recanvass of prices from three (3) suppliers of polyethylene plastic bags with the same specifications as that purchased by the agency.

. . .

Comparing the agency‘s purchase price with the quotations of various suppliers and with the TSO price evaluation disclosed that the items purchased by the agency were overpriced by a total amount of P344,098.50. For purpose of conservatism, the team adopted the canvass prices of the thickest plastic bags. The overpricing is shown as follows: (Annex 1-E)

. . .

Supplier Description

Acquisition Price

(1)

TSO/ Recanvassed Price/pc.

(2)

COA Evaluated Price/pc. [(2) x 10%]

(3)

Difference Unit Price/pc. (1-3)

(4)

Quantity (Pcs.)

(5)

Total Overpriced Amount (4x5)

(6)

Percentage Overprice (4/3x100%)

(7)

Kinship Industrial Sales & Services

Polyethylene plastic bag, black, 4" x 6

P1.00 P0.192 P0.2112 P0.7888 P150,000 P118,320.00 373.48%

- do - - do – size: 10" x 12"

3.50 0.855 0.940 2.5595 14,200 36,344.90 272.14%

Fluid Air Technologies

- do – size: 4" x 8"

1.30 0.250 0.275 1.025 100,000 102,500.00 372.727%

- do - - do – size: 6" x 8"

2.50 0.358 0.3938 2.1062 28,000 58,973.60 534.84%

A. C. Pacheco, Inc.

Overhead Projector

17,500.00 14,850.00 16,335.00 1,165.00 24 units 27,960.00 7.49%

P344,098.50

==========

Legend:

(*) Included a mark-up of 10% allowable

price variance to the lowest price

quotation obtained.

Management‘s Comments:

On the inadequacy of the bidding process and overpricing.

Consultation made with the DENR-CAR Members of the PBAC revealed the following:

. . .

h. During the opening of the sealed bids which was done only on July 12, 1994, the PBAC relied on the quotations stated herein. In the presence of the COA Resident Auditor, Mrs. Estrellita Belandres, who together with the PBAC Members and Secretariat as well as Administrative Division representative in the person of Miss Tessie Bringas, all signed each and every copy of the canvass form as the sealed envelopes were being opened and offered for inspection.

i. Without any objection, the offers that appeared to be the lowest were chosen and the Secretariat was directed to prepare the Resolution adjudging the winning bidders who happened to be Fluid Air Technologies and Kinship Industrial Sales and Services. The said Resolution was signed by all the PBAC Members including the DENR-CAR COA Resident Auditor, Estrellita Belandres, who was the PBAC‘s resource person and guide in its proceedings.

j. The PBAC relied in good faith with the quotations given in the canvass forms, hence, it was routinary for the PBAC to award the items to the firms with the lowest quotations. The Members of the PBAC were also not familiar with the prices of the plastic bags, the Members being connected with the DENR Offices but not directly concerned with tree planting and seedling production where plastic bags are needed. Besides, the Chairman and a Member of the then PBAC are Mining Engineers by profession while the other is a Lawyer, hence, this unfamiliarity with the prices of plastic bags.

k. When the sealed bids were opened, each of the required documents therein appeared to be regular on its face and the canvass quotations were obtained from firms checked by the canvassers. If it so happens that one of the offerors is not engaged in the business of dealing in plastic bags, it is respectfully submitted that individual background checking by the PBAC of each offeror in addition to the documents submitted by each is over and beyond the work responsibility of the PBAC Members. It is stressed, however, that the then PBAC Members were exercising their duties in addition to their main and regular functions which do not provide them enough time to look deeply into such matter.

. . .

Team‘s Rejoinder:

The procedures adopted by the PBAC which is to require the submission of at least (3) sealed quotations did not ensure the widest publicity needed for competitive bidding. The PBAC left entirely to the canvassers the determination of which suppliers are to be served canvass quotations. There is no showing that notices of biddings were published in public places.

In view of the limited publicity, the PBAC was not able to draw more bidders, resulting to overpricing. In relying on the quotations of the three suppliers one of whom is not even qualified as such, PBAC took the risk of not getting the most advantageous price for the government. And this is what actually happened.

We do not perceive any abuse of discretion on the part of respondent COA in relying on the above-quoted report of the COA audit team. In sum, the discretion it exercised in ruling for the disallowance of the transaction in question must be respected as it is supported by substantial evidence. Well-established is the rule that findings of administrative agencies are accorded not only respect but also finality when the decision or order is not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion.43 It is only upon a clear showing of grave abuse of discretion that the Courts will set aside decisions of government agencies entrusted with the regulation of activities coming under their special technical knowledge and training.44

WHEREFORE, premises considered, the petition dated 18 February 2002 is DISMISSED for lack of merit. The 12 September 2000 Decision and the 06 December 2001 Resolution of the Commission on Audit are AFFIRMED. No costs.

G.R. No. 161081 May 10, 2005

RAMON M. ATIENZA, in his capacity as Vice-Governor of the Province of Occidental Mindoro, petitioner,

vs. JOSE T. VILLAROSA, in his capacity as Governor of the Province of Occidental Mindoro, respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by Ramon M. Atienza, in his capacity as Vice-Governor of the Province of Occidental Mindoro, seeking to reverse and set aside the Decision1 dated November 28, 2003 of the Court of Appeals in CA-G.R. SP No. 72069. The assailed decision dismissed the petition for prohibition under Rule 65 of the Rules of Court filed by petitioner Atienza which had sought to enjoin the implementation of the Memoranda dated June 25, 2002 and July 1, 2002 issued by Jose T. Villarosa, Governor of the same province.

The present case arose from the following undisputed facts:

Petitioner Atienza and respondent Villarosa were the Vice-Governor and Governor, respectively, of the Province of Occidental Mindoro. On June 26, 2002, the petitioner Vice-Governor received the Memorandum dated June 25, 2002 issued by the respondent Governor concerning the "AUTHORITY TO SIGN PURCHASE ORDERS OF SUPPLIES, MATERIALS, EQUIPMENT[S], INCLUDING FUEL, REPAIRS AND MAINTENANCE OF THESANGGUNIANG PANLALAWIGAN." The said memorandum reads:

For proper coordination and to ensure efficient and effective local government administration particularly on matters pertaining to supply and property management, effective immediately, all Purchase Orders issued in connection with the procurement of supplies, materials and equipment[s] including fuel, repairs and maintenance needed in the transaction of public business or in the pursuit of any undertaking, project or activity of the Sangguniang Panlalawigan, this province, shall be approved by the undersigned in his capacity as the local chief executive of the province.

The provision of DILG Opinion No. 148-1993 which states that the authority to sign Purchase Orders of supplies, materials and equipment[s] of the Sanggunian belongs to the local chief executive, serves as basis of this memorandum.

For strict compliance.2

In reply to the above memorandum, the petitioner Vice-Governor wrote the respondent Governor stating that:

We are of the opinion that … purchase orders for supplies, materials and equipment are included under those as authorized for signature by the Vice-chief

executive of the Sanggunian on the basis of the DILG Opinion No. 96-1995 as affirmed by the COA Opinions on June 28, April 11 and February 9, 1994 and coursing it to the Governor for his approval is no longer necessary, the fact that [Secs.] 466 and 468, RA 7160 already provides for the separation of powers between the executive and legislative. Such authority even include everything necessary for the legislative research program of the Sanggunian.3

Unimpressed, the respondent Governor issued the Memorandum dated July 1, 2002 relating to the "TERMINATION OF CONTRACT OF SERVICES OF CASUAL/JOB ORDER EMPLOYEES AND REAPPOINTMENT OF THE RESPECTIVE RECOMMENDEES." The said memorandum reads:

For faithful and appropriate enforcement and execution of laws and issuances and to promote efficiency in the government service, effective immediately, all existing contract of employment – casual/job order basis and reappointment of the recommendees – entered into by Vice-Governor Ramon M. Atienza are hereby terminated for being unauthorized.

Aside from being signed by the unauthorized signatory, the following facts regarding the appointments were considered:

1. The appointment of 28 clerks – on top of existing permanent employees – is a clear manifestation of an excessive and bloated bureaucracy;

2. The appointment of an X-ray Technician detailed at the Provincial Health Office and some clerks detailed at various offices in the province were not proper to be assigned by the Vice-Governor;

3. The appointment of 30 messengers, utility workers and drivers ran counter to COA Opinion as cited in the letter of the undersigned dated 28 June 2002, addressed to the Vice-Governor.

However, in order to accommodate the Vice-Governor and the members of the Sangguniang Panlalawigan, the undersigned, in his capacity as the local chief executive of the province, will allow four (4) casual/job order employees to be assigned to the Vice-Governor and one (1) casual/job order employee to be assigned to each member of the Sangguniang Panlalawigan.

The Vice-Governor and all the Sanggunian Members are hereby directed to submit immediately the names of their recommendees to the undersigned for immediate approval of their respective appointments.

Please be guided accordingly.4

On July 3, 2002, the respondent Governor issued another Memorandum regarding the "ENFORCIBILITY (sic) OF PREVIOUS MEMORANDA ISSUED ON JUNE 20, 26 AND JULY 1, 2002." It provides that:

Please be properly advised that the Memoranda dated June 20, 26 and July 1, 2002 issued by the undersigned regarding the issuance of permit to travel and authority to sign Purchase Orders of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan, is to be strictly adhered to for compliance.

Likewise for strict compliance is the Memorandum dated July 1, 2002 with reference to the Cancellation of the Appointment of Casual/Job Order Employees of the Sangguniang Panlalawigan Members/Office of the Vice-Governor previously signed by Vice-Governor Ramon M. Atienza.

Please be guided accordingly.5

In his Letter dated July 9, 2002, the petitioner Vice-Governor invoked the principle of separation of powers as applied to the local government units, i.e., the respondent, as the Governor, the head of the executive branch, and the petitioner, as the Vice-Governor, the head of the legislative branch, which is the Sangguniang Panlalawigan. The petitioner Vice-Governor reiterated his request for the respondent to make a "deeper study" on the matter before implementing his memoranda. The request, however, went unheeded as the respondent Governor insisted on obliging the department heads of the provincial government to comply with the memoranda.

The petitioner Vice-Governor thus filed with the Court of Appeals the petition for prohibition assailing as having been issued with grave abuse of discretion the respondent Governor's Memoranda dated June 25, 2002 and July 1, 2002. The petitioner Vice-Governor claimed that these memoranda excluded him from the use and enjoyment of his office in violation of the pertinent provisions of Republic Act No. 7160, or the Local Government Code of 1991, and its implementing rules and regulations. It was prayed that the respondent Governor be enjoined from implementing the assailed memoranda.

The appellate court, in its Decision dated November 28, 2003, dismissed the petition for prohibition. Citing Section 3446 of Rep. Act No. 7160, the CA upheld the authority of the respondent Governor to issue the Memorandum dated June 25, 2002 as it recognized his authority to approve the purchase orders. The said provision provides in part that "approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed."

The CA explained that Section 466(a)(1)7 of the same Code, relied upon by the petitioner Vice-Governor, speaks of the authority of the Vice-Governor to sign "all warrants drawn on the public treasury for all expenditures appropriated for the operation of the sangguniang panlalawigan." In declaring this provision inapplicable, the

CA reasoned that the approval of purchase orders is different from the power of the Vice-Governor to sign warrants drawn against the public treasury.

Section 3618 was, likewise, held to be inapplicable ratiocinating, thus:

[R]equisitioning, which is provided under Section 361 of RA 7160, is the act of requiring that something be furnished. In the procurement function, it is the submission of written requests for supplies and materials and the like. It could be inferred that, in the scheme of things, approval of purchase requests is different from approval of purchase orders. Thus, the inapplicability of Section 361.

Anent the Memorandum dated July 1, 2002, the CA ruled that the issue on whether it could be enjoined had already been rendered moot and academic. The CA pointed out that the subject of the said memorandum could no longer be enjoined or restrained as the termination of the employees had already been effected. It opined that where the act sought to be enjoined in the prohibition proceedings had already been performed and there is nothing more to restrain, the case is already moot and academic.

The petitioner Vice-Governor now seeks recourse to this Court alleging that the appellate court committed reversible error in ruling that it is the Governor, and not the Vice-Governor, who has the authority to sign purchase orders of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan. The petitioner Vice-Governor, likewise, takes exception to the holding of the CA that the issue relating to the July 1, 2002 Memorandum had been rendered moot and academic. He points out that the appointment of casual/job order employees is exercised by the appointing authority every six months in the case of casual employees and per job order as to job order employees. Thus, while the July 1, 2002 Memorandum had already been implemented, what is being sought to be enjoined is the respondent Governor's continued usurpation of the petitioner Vice-Governor's authority to appoint the employees of the Sangguniang Panlalawiganunder the pertinent provisions of Rep. Act No. 7160.

For his part, the respondent Governor maintains that his Memoranda dated June 25, 2002 and July 1, 2002 are valid. He asserts that the approval of purchase orders is different from the power of the Vice-Governor to sign warrants drawn against the provincial treasury under Section 466(a)(1) of Rep. Act No. 7160. Rather, he insists on the application of the last clause in Section 344 which states that the approval of the disbursement by the local chief executive is required whenever local funds are disbursed.

The respondent Governor likewise defends the validity of the Memorandum dated July 1, 2002 stating that it was issued upon finding that the petitioner Vice-Governor appointed, among others, 28 clerks on top of the existing permanent employees resulting in an excessive and bloated bureaucracy. He concedes the appointing power of the Vice-Governor but submits that this is limited to the employees of

the Sangguniang Panlalawigan and that he is not authorized to appoint officials and employees of the Office of the Vice-Governor.

As correctly presented by the appellate court, the issues for resolution in this case are:

A. Who between the petitioner and the respondent is authorized to approve purchase orders issued in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan?

B. Does respondent Villarosa, as local chief executive, have the authority to terminate or cancel the appointments of casual/job order employees of the Sangguniang Panlalawigan Members and the Office of the Vice-Governor?9

Before resolving the foregoing issues, it is noted that petitioner Atienza and respondent Villarosa had ceased to be the Vice-Governor and Governor, respectively, of the Province of Occidental Mindoro effective June 30, 2004 when the newly-elected officials of the province took their oaths of offices. The petitioner Vice-Governor did not run for re-election during the May 2004 elections while the respondent Governor did not succeed in his re-election bid. The expiration of their terms of offices has effectively rendered the case moot. However, even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar and the public.10 In this case, there is compelling reason for the Court to resolve the issues presented in order to clarify the scope of the respective powers of the Governor and Vice-Governor under the pertinent provisions of the Local Government Code of 1991.

To resolve the substantive issues presented in the instant case, it is well to recall that Rep. Act No. 7160 was enacted to give flesh to the constitutional mandate to "provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanism of recall, initiative and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all matters relating to the organization and operation of the local units."11

In this connection, the provisions of Rep. Act No. 7160 are anchored on principles that give effect to decentralization. Among these principles are: [t]here shall be an effective allocation among the different local government units of their respective powers, functions, responsibilities, and resources; [t]here shall be established in every local government unit an accountable, efficient, and dynamic organizational structure and operating mechanism that will meet the priority needs and service requirements of its communities; [p]rovinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions; and [e]ffective mechanisms for ensuring the accountability of local government units to their

respective constituents shall be strengthened in order to upgrade continually the quality of local leadership.12

With these guideposts, the Court shall now address the issue on who between the Governor and Vice-Governor is authorized to approve purchase orders issued in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan.

We hold that it is the Vice-Governor who has such authority.

Under Rep. Act No. 7160, local legislative power for the province is exercised by the Sangguniang Panlalawigan13and the Vice-Governor is its presiding officer.14 Being vested with legislative powers, the Sangguniang Panlalawigan enacts ordinances, resolutions and appropriates funds for the general welfare of the province in accordance with the provisions of Rep. Act No. 7160.15 The same statute vests upon the Vice-Governor the power to:

(1) Be the presiding officer of the sangguniang panlalawigan and sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the sangguniang panlalawigan. 16

Further, Section 344 provides:

Sec. 344. Certification on, and Approval of, Vouchers. – No money shall be disbursed unless the local budget officer certifies to the existence of appropriation that has been legally made for the purpose, the local accountant has obligated said appropriation, and the local treasurer certifies to the availability of funds for the purpose. Vouchers and payrolls shall be certified to and approved by the head of the department or office who has administrative control of the fund concerned, as to validity, propriety and legality of the claim involved. Except in cases of disbursements involving regularly recurring administrative expenses such as payrolls for regular or permanent employees, expenses for light, water, telephone and telegraph services, remittances to government creditor agencies such as the GSIS, SSS, LBP, DBP, National Printing Office, Procurement Service of the DBM and others, approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed.

In cases of special or trust funds, disbursements shall be approved by the administrator of the fund.

In case of temporary absence or incapacity of the department head or chief of office, the officer next-in-rank shall automatically perform his function and he shall be fully responsible therefor.

Reliance by the CA on the clause "approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed" of the above section (Section 344) to rule that it is the Governor who has the authority to approve purchase orders for the supplies, materials or equipment for the operation of theSangguniang Panlalawigan is misplaced. This clause cannot prevail over the more specific clause of the same provision which provides that "vouchers and payrolls shall be certified to and approved by the head of the department or office who has administrative control of the fund concerned." The Vice-Governor, as the presiding officer of the Sangguniang Panlalawigan, has administrative control of the funds of the said body. Accordingly, it is the Vice-Governor who has the authority to approve disbursement vouchers for expenditures appropriated for the operation of the Sangguniang Panlalawigan.

On this point, Section 39 of the Manual on the New Government Accounting System for Local Government Units, prepared by the Commission on Audit (COA), is instructive:

Sec. 39. Approval of Disbursements. – Approval of disbursements by the Local Chief Executive (LCE) himself shall be required whenever local funds are disbursed, except for regularly recurring administrative expenses such as: payrolls for regular or permanent employees, expenses for light, water, telephone and telegraph services, remittances to government creditor agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM and others, where the authority to approve may be delegated. Disbursement vouchers for expenditures appropriated for the operation of the Sanggunian shall be approved by the provincial Vice Governor, the city Vice-Mayor or the municipal Vice-Mayor, as the case may be.17

While Rep. Act No. 7160 is silent as to the matter, the authority granted to the Vice-Governor to sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the Sangguniang Panlalawigan as well as to approve disbursement vouchers relating thereto necessarily includes the authority to approve purchase orders covering the same applying the doctrine of necessary implication. This doctrine is explained, thus:

No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding of events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine states that what is implied in a statute is as much a part thereof as that which is expressed. Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis. And every statutory grant of power,

right or privilege is deemed to include all incidental power, right or privilege. This is so because the greater includes the lesser, expressed in the maxim, in eo plus sit, simper inest et minus.18

Warrants are "order[s] directing the treasurer of the municipality to pay money out of funds in city treasury which are or may become available for purpose specified to designated person[s]."19 Warrants of a municipal corporation are generally orders payable when funds are found. They are issued for the payment of general municipal debts and expenses subject to the rule that they shall be paid in the order of presentation.20

The ordinary meaning of "voucher" is a document which shows that services have been performed or expenses incurred. It covers any acquittance or receipt discharging the person or evidencing payment by him. When used in connection with disbursement of money, it implies some instrument that shows on what account or by what authority a particular payment has been made, or that services have been performed which entitle the party to whom it is issued to payment.21

Purchase order, on the other hand, is "an authorization by the issuing party for the recipient to provide materials or services for which issuing party agrees to pay; it is an offer to buy which becomes binding when those things ordered have been provided."22

When an authorized person approves a disbursement voucher, he certifies to the correctness of the entries therein, among others: that the expenses incurred were necessary and lawful, the supporting documents are complete and the availability of cash therefor. Further, the person who performed the services or delivered the supplies, materials or equipment is entitled to payment.23 On the other hand, the terms and conditions for the procurement of supplies, materials or equipment, in particular, are contained in a purchase order. The tenor of a purchase order basically directs the supplier to deliver the articles enumerated and subject to the terms and conditions specified therein.24 Hence, the express authority to approve disbursement vouchers and, in effect, authorize the payment of money claims for supplies, materials or equipment, necessarily includes the authority to approve purchase orders to cause the delivery of the said supplies, materials or equipment.

Since it is the Vice-Governor who approves disbursement vouchers and approves the payment for the procurement of the supplies, materials and equipment needed for the operation of the Sangguniang Panlalawigan, then he also has the authority to approve the purchase orders to cause the delivery of the said supplies, materials or equipment.

Indeed, the authority granted to the Vice-Governor to sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the Sangguniang Panlalawigan as well as to approve disbursement vouchers relating thereto is greater and includes the authority to approve purchase orders for the procurement of the supplies, materials and equipment necessary for the operation of the Sangguniang Panlalawigan.

Anent the second issue, the appellate court likewise committed reversible error in holding that the implementation of the Memorandum dated July 1, 2002 had rendered the petition moot and academic. It is recognized that courts will decide a question otherwise moot and academic if it is "capable of repetition yet evading review."25 Even if the employees whose contractual or job order employment had been terminated by the implementation of the July 1, 2002 Memorandum may no longer be reinstated, still, similar memoranda may be issued by other local chief executives. Hence, it behooves the Court to resolve whether the Governor has the authority to terminate or cancel the appointments of casual/job order employees of the Sangguniang Panlalawigan and the Office of the Vice-Governor.

We hold that the Governor, with respect to the appointment of the officials and employees of the Sangguniang Panlalawigan, has no such authority.

Among the powers granted to the Governor under Section 465 of Rep. Act No. 7160 are:

Sec. 465. The Chief Executive: Powers, Duties, Functions and Compensation.– (a) The provincial governor, as the chief executive of the provincial government, shall exercise such powers and perform such duties and functions as provided by this Code and other laws.

(b) For efficient, effective and economical governance the purpose of which is the general welfare of the province and its inhabitants pursuant to Section 16 of this Code, the provincial governor shall:

…

(v) Appoint all officials and employees whose salaries and wages are wholly or mainly paid out of provincial funds and whose appointments are not otherwise provided for in this Code, as well as those he may be authorized by law to appoint.

On the other hand, Section 466 vests on the Vice-Governor the power to, among others:

(2) Subject to civil service law, rules and regulations, appoint all officials and employees of the sangguniang panlalawigan, except those whose manner of appointment is specifically provided in this Code.

Thus, while the Governor has the authority to appoint officials and employees whose salaries are paid out of the provincial funds, this does not extend to the officials and employees of the Sangguniang Panlalawigan because such authority is lodged with the Vice-Governor. In the same manner, the authority to appoint casual and job order employees of the Sangguniang Panlalawigan belongs to the Vice-Governor.

The authority of the Vice-Governor to appoint the officials and employees of the Sangguniang Panlalawigan is anchored on the fact that the salaries of these employees are derived from the appropriation specifically for the said local legislative body. Indeed, the budget source of their salaries is what sets the employees and officials of the Sangguniang Panlalawigan apart from the other employees and officials of the province. Accordingly, the appointing power of the Vice-Governor is limited to those employees of the Sangguniang Panlalawigan, as well as those of the Office of the Vice-Governor, whose salaries are paid out of the funds appropriated for the Sangguniang Panlalawigan. As a corollary, if the salary of an employee or official is charged against the provincial funds, even if this employee reports to the Vice-Governor or is assigned to his office, the Governor retains the authority to appoint the said employee pursuant to Section 465(b)(v) of Rep. Act No. 7160.

However, in this case, it does not appear whether the contractual/job order employees, whose appointments were terminated or cancelled by the Memorandum dated July 1, 2002 issued by the respondent Governor, were paid out of the provincial funds or the funds of the Sangguniang Panlalawigan. Nonetheless, the validity of the said memorandum cannot be upheld because it absolutely prohibited the respondent Vice-Governor from exercising his authority to appoint the employees, whether regular or contractual/job order, of the Sangguniang Panlalawiganand restricted such authority to one of recommendatory nature only.26 This clearly constituted an encroachment on the appointment power of the respondent Vice- Governor under Section 466(a)(2) of Rep. Act No. 7160.

At this juncture, it is well to note that under Batas Pambansa Blg. 337, the Local Government Code prior to Rep. Act No. 7160, the Governor was the presiding officer of the Sangguniang Panlalawigan:

Sec. 205. Composition. (1) Each provincial government shall have a provincial legislature hereinafter known as the sangguniang panlalawigan, upon which shall be vested the provincial legislative power.

(2) The sangguniang panlalawigan shall be composed of the governor, vice-governor, elective members of the said sanggunian, and the presidents of the katipunang panlalawigan and the kabataang barangayprovincial federation who shall be appointed by the President of the Philippines.

…

Sec. 206. Sessions. –

(3) The governor, who shall be the presiding officer of the sangguniang panlalawigan, shall not be entitled to vote except in case of a tie.

…

With Rep. Act No. 7160, the union of legislative and executive powers in the office of the local chief executive under the BP Blg. 337 has been disbanded, so that either department now comprises different and non-intermingling official personalities with the end in view of ensuring a better delivery of public service and provide a system of check and balance between the two.27

Senator Aquilino Pimentel, the principal author of Rep. Act No. 7160, explained that "the Vice-Governor is now the presiding officer of the Sangguniang Panlalawigan. The City Vice-Mayor presides at meetings of the Sangguniang Panlungsod and the Municipal Vice-Mayor at the sessions of the Sangguniang Bayan. The idea is to distribute powers among elective local officials so that the legislative, which is the Sanggunian, can properly check the executive, which is the Governor or the Mayor and vice versa and exercise their functions without any undue interference from one by the other."28

The avowed intent of Rep. Act. No. 7160, therefore, is to vest on the Sangguniang Panlalawigan independence in the exercise of its legislative functions vis-a-vis the discharge by the Governor of the executive functions. The Memoranda dated June 25, 2002 and July 1, 2002 of the respondent Governor, which effectively excluded the petitioner Vice-Governor, the presiding officer of the Sangguniang Panlalawigan, from signing the purchase orders for the procurement of supplies, materials or equipment needed for the operation of the Sangguniang Panlalawigan as well as from appointing its casual and job order employees, constituted undue interference with the latter's functions. The assailed memoranda are clearly not in keeping with the intent of Rep. Act No. 7160 and their implementation should thus be permanently enjoined.

WHEREFORE, the petition is GRANTED. The Memoranda dated June 25, 2002 and July 1, 2002 issued by respondent Governor Jose T. Villarosa are NULL AND VOID.

G.R. No. 167840. June 29, 2005] J.V. LAGON CONSTRUCTION vs. PANGARUNGAN THIRD DIVISION Sirs/Mesdames: Quoted hereunder, for your information, is a resolution of this Court dated JUN 29 2005. G.R. No. 167840 (J.V. Lagon Construction Corporation vs. Nata M. Pangarungan, et al.) In this petition for certiorari under Rule 65 of the Rules of Court, with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, petitioner J.V. Lagon Construction Corporation seeks to nullify and set aside the award of the contract for the construction of the Batodo Bridge at Batodo Arc, Alabel, Saranggani to private respondent, AJYSC Marketing. The antecedent facts are as follows:

On March 8, 2005, petitioner participated in the public bidding conducted by the duly constituted Bids and Awards Committee (BAC) in accordance with Republic Act No. 9184,[1] otherwise known as the Government Procurement Reform Act, for the construction of the subject bridge, a national government infrastructure project. In that bidding, petitioner emerged as the bidder with the Lowest Calculated Bid, as shown in the results thereof, to wit: BIDDER AMOUNT a. JV LAGON Construction ----------------------------------------------P17,620,224.81 b. AJYSC Marketing -------------------------------------------------------P21,500,000.00 c. Masulot Construction --------------------------------------------------P21,520,488.33 d. Vicente T. Lao Const.--------------------------------------------------P21,526,714.43 e. DIMSON (Manila), Inc. -------------------------------------------------P21,588,270.42 f. AFG Const. & Const. Supply -----------------------------------------P21,613,865.99 g. ALGON Engineering Cost. Corp.------------------------------------P21,614,078.26 h. ULTICON Builders, Inc. -----------------------------------------------P21,614,499.98 i. MAMSAR ENT. Agro-Ind’l. Corp. -------------------------------------P25,652,333.67 j. O.G. SANTOS Const. -------------------------------------------------“Failed” (No Bid Security) k. MONOLITHIC Const. ---------------------------------------“Failed” (No Cash Flow in 2 nd Envelope) [2] During post qualification, however, the BAC found petitioner disqualified on the technical aspect of the project, allegedly because in connection with petitioner’s two ongoing government projects also in Sultan Kudarat, namely: a) construction of the Isulan-Kalamansig Road, Chua Section, Bagumbayan; and b) widening of the Kapingkong Bridge along Kidapawan-Allah Junction Road, petitioner incurred a negative slippage of 60% and 58%, respectively. Thus, on March 17, 2005, the BAC issued a resolution[3] disqualifying petitioner as awardee of the contract for the Batodo Bridge, thus: NOW THEREFORE, anent with above premises, the Committee RESOLVED as it hereby RESOLVES to declare the bid submitted by J.V. Lagon Const. Corp. to be post disqualified for award because it failed to pass the criteria on post-disqualification particularly on the technical aspect as shown by the negative slippages which are above 15% and subject bidder’s performances to be below par. Aggrieved, petitioner filed with the BAC a request for reconsideration of the same resolution. On March 28, 2005, petitioner received a Notice of Denial of its request, to which notice was attached a copy of the BAC’s denial resolution, also dated March 28, 2005, the dispositive portion of which reads: WHEREFORE, the foregoing considered, the Committee resolves as it hereby resolved to recommend for the outright denial of the request of Mr. Jose V. Lagon, Sr. to reconsider his postdisqualification on the proposed contract for the Const. of BATODO Br. BATODO ARC,

Alabel, Sarangani. (Emphasis in the original) Thereafter, petitioner filed with respondent Nata M. Pangarungan, Regional Director of the DPWH (Region XII), a verified protest/position paper. On April 25, 2005, Regional Director Pangarungan dismissed petitioner’s protest for lack of merit, thereby affirming the two (2) earlier BAC resolutions. Invoking Section 3 of R.A. 8975, petitioner went directly to this Court via the instant petition for certiorari imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the herein public respondents when they – a) Post-disqualified petitioner on alleged slippages which are totally false and baseless; b) After realizing that their alleged claim of slippages cannot be sustained in the light of the incontrovertible evidence to the contrary, consisting of progress reports on the said projects and certification of the project engineer, Engr. Nuruddin-Ali M. Magarang, of the District Engineering Office of Sultan Kudarat, in charge of the projects wherein the alleged slippages occurred, they (respondents) over-turned their own earlier finding that petitioner had submitted sufficient Bank Guarantee and Commitment for the subject project (Batodo Bridge) and, in a 180-degree turnabout, now claim there is no such Bank Guarantee and Commitment, despite the irrefutable fact and evidence that there are, adding that “graft and corruption attended or caused its (petitioner’s) postdisqualification.” Not having been filed with the proper court, the petition must be dismissed. Article XVII, Section 58 of Republic Act No. 9184, relating to protest mechanisms, expressly states that regional trial courts shall have jurisdiction over final decisions of the head of the procuring entity, in this case the respondent DPWH Regional Director. SEC. 58. Report to Regular Courts; Certiorari. – Court action may be resorted to only after the protests contemplated in this Article shall have been completed. Cases that are filed in violation of the process specified in this Article shall be dismissed for lack of jurisdiction. The regional trial court shall have jurisdiction over final decisions of the head of the procuring entity. Court actions shall be governed by Rule 65 of the1997 Rules of Civil Procedure. This procedure is without prejudice to any law conferring on the Supreme Court the sole jurisdiction to issue temporary restraining orders and injunctions relating to Infrastructure Project of Government. (Emphasis supplied) It is clear that petitioner should have filed the instant petition for certiorari with the appropriate regional trial court, and not directly with this Court. Petitioner argues, however, that since there is an extreme urgency in enjoining respondents from awarding the contract to the second lowest bidder AJYSC Marketing, its immediate resort to this Court is justified “by way of an exception to the general rule against issuances of injunctions and restraining orders by courts on infrastructure projects of the government… because if respondents are not enjoined, the government and petitioner will suffer injustice and irreparable injury due to the blatant graft and corruption collectively committed by all the respondents, in confabulation with one another, to defraud the government of its funds and deprive petitioner of its constitutional right to due process and equal protection of the law.” In justifying its direct resort to this Court, petitioner invokes Section 3 of Republic Act No. 8975, which reads: SEC. 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions. – No court, except the Supreme Court, shall issue any

temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the government’s direction, to restrain, prohibit or compel the following acts: (a) Acquisitions, clearance and development of the right-of-way and/or site or location of any national government project; (b) Bidding or awarding of contract/project of the national government as defined under Section 2 hereof; (c) Commencement, prosecution, execution, implementation, operation of any such contract or project; (d) Termination or rescission of any such contract/project; and (e) The undertaking or authorization of any other lawful activity necessary for such contract/project. This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not limited to cases filed by bidders or those claiming to have rights through such bidders involving such contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond shall accure (sic) in favor of the government if the court should finally decide that the applicant was not entitled to the relief sought. If after the hearing the court finds that the award of the contract is null and void, the court may, if appropriate under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same, without prejudice to any liability that the guilty party may incur under existing laws. (Emphasis supplied) Petitioner does not persuade. There is no doubt that under the first paragraph of Section 3, “*N+o court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or prohibitory mandatory injunction” to restrain, among others, the award of contracts for any national government project. It should be noted, however, that under the second paragraph of the same section, it is there expressly stated that “*T+his prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise.” The recent case of Republic v. Nolascois in point: Republic Act No. 8975 definitively enjoins all courts, except the Supreme Court, from issuing any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity to restrain, prohibit or compel the bidding or awarding of a contract or project of the national government, precisely the situation that obtains in this case with respect to the Agno River Project. The only exception would be if the matter is of extreme urgency involving a constitutional issue, such that unless the temporary restraining order is issued, grave injustice and irreparable injury will arise.

The TRO issued by the RTC failed to take into consideration said law. Neither did it advert to any extreme urgency involving a constitutional issue, as required by the statute. The law ordains that such TRO is void, and the judge who issues such order should suffer the penalty of suspension of at least sixty (60) days without pay. (Emphasis and underscoring supplied; citations omitted) When, as in this case, the matter of issuing a temporary restraining order, preliminary injunction or preliminary mandatory injunction is of “extreme urgency involving a constitutional issue”, i.e. deprivation of petitioner’s constitutional right to due process and equal protection of the law, as petitioner was not allowed by the public respondents to traverse the imputation of slippage against it in connection with its two (2) ongoing projects, even regional trial courts may issue injunctive remedies. Again, the case of Republic v. Nolasco,is instructive. However, it must be clarified that Republic Act No. 8975 does not ordinarily warrant the outright dismissal of any complaint or petition before the lower courts seeking permanent injunctive relief from the implementation of national government infrastructure projects. What is expressly prohibited by the statue is the issuance of the provisional reliefs of temporary restraining orders, preliminary injunctions, and preliminary mandatory injunctions. It does not preclude the lower courts from assuming jurisdiction over complaints or petitions that seek as ultimate relief the nullification or implementation of a national government infrastructure project. A statue such as Republic Act No. 8975 cannot diminish the constitutionally mandated judicial power to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. Section 3 of the law in fact mandates, thus: If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same, without prejudice to any liability that the guilty party may incur under existing laws. Thus, when a court is called upon to rule on an initiatory pleading assailing any material aspect pertinent to a national government infrastructure project, the court ordinarily may not dismiss the action based solely on Republic Act No. 8975 but is merely enjoined from granting provisional reliefs. If no other ground obtains to dismiss the action, the court should decide the case on the merits. As we recently held in Opiña v. NHA:Unquestionably, the power to issue injunctive writs against the implementation of any government infrastructure project is exclusively lodged with this Court, pursuant to Section 3 of Rep. Act No. 8975. But while lower courts are proscribed thereunder from issuing restraining orders and/or writs of preliminary injunction to stop such projects, the proscription does not mean that such courts are likewise bereft of authority to take cognizance of the issue/issues raised in the principal action, as long as such action and the relief sought are within their jurisdiction. (Emphasis and underscoring supplied; italics in the original; citations omitted) Accordingly, it was not proper for the RTC to cite Republic Act No. 8975 as basis for the dismissal of Nolasco’s petition since the statute does not bar the institution of an action that seeks to enjoin the implementation of a national government project, but merely the issuance of provisional orders enjoining the same. WHEREFORE, the instant petition is DISMISSED. Sandoval-Gutierrez and Garcia, JJ., voted to grant a Temporary Restraining Order and to require respondents to file their Comment.

Very truly yours, (Sgd.) LUCITA ABJELINA-SORIANO Clerk of Court AN ACT PROVIDING FOR THE MODERNIZATION, STANDARDIZATION AND REGULATION OF THE PROCUREMENT ACTIVITIES OF THE GOVERNMENT AND FOR OTHER PURPOSES. AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION OF GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS FROM ISSUING TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES. G.R. No. 52341-46 November 25, 2005 DELIA PREAGIDO and ULRICO BOLOTAULO, Petitioners, vs. THE SANDIGANBAYAN and THE PEOPLE OF THE PHILIPPINES, Respondents.

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioners Delia Preagido and Ulrico Bolotaulo seeking annulment of the Decision1 dated December 28, 1979 of the Sandiganbayan rendered in Criminal Case Nos. 195, 196, 197, 198, 199 and 200 finding them guilty of 6 and 3 counts, respectively, of estafa thru falsification of official and commercial documents.

In a Resolution dated July 4, 1991, the instant petition was consolidated with another group of cases which were all petitions for review on certiorari from the joint decision of the Sandiganbayan dated October 24, 1990 in Criminal Case Nos. 1143-1341 and 5585-5782 finding accused-petitioners therein guilty on different counts of violation of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act.

However, the records of Criminal Case Nos. 195-200 were not included in the voluminous records of the consolidated cases. We learned from our Judicial Records Office that the original records of Criminal Case Nos. 195-200 were with the First Division of the Sandiganbayan. Thus, in a Resolution dated May 6, 2003,2 we directed the Clerk of Court of the First Division of the Sandiganbayan to elevate the records of the instant petition. In the same Resolution, we also effected the separation of the herein petition of Preagido and Bolotaulo from the other consolidated cases so as not to delay the disposition of the latter and considering that the instant petition involves the alleged anomalous transactions in the Tagbilaran City Engineering Office (CEO) committed in 1978 which are entirely different from the other consolidated cases which involved anomalous transactions in the Cebu Second Highway Engineering District in 1977 wherein neither of herein petitioners were accused.

Later, the Executive Clerk of Court III of the Sandiganbayan, Atty. Estela Teresita C. Rosete, submitted the original records and the transcripts of stenographic notes. She

also filed a Manifestation wherein she informed us that despite her earnest efforts to locate some documentary exhibits, the same could no longer be found. Thus, in a Resolution dated March 23, 2004,3 we asked the Solictor General to furnish us copies of the other unlocated exhibits listed in said Resolution as well as the counsel of herein petitioners to furnish us copies of their exhibits offered and marked for petitioners. We also directed them to manifest whether they are willing to dispense with the other unlocated exhibits and to submit the case for resolution on the basis of the evidence already with us.

The Office of the Solicitor General (OSG) filed a Manifestation dated July 13, 2004 submitting the case for decision. Atty. Epifanio Bolando, petitioner Bolotaulo‘s new counsel, entered his appearance on December 19, 2004. Atty. Bolando filed his Compliance dated April 15, 2005 dispensing with the other exhibits and for submission of the case for resolution. He also informed us that petitioner Preagido had died on December 16, 2003.

On June 21, 2005, the Solicitor General, pursuant to our Resolution dated March 8, 2005 requiring him to verify and report the alleged death of petitioner Preagido, submitted a certified true copy of petitioner Preagido‘s death certificate issued by the Office of the City Civil Registrar, Cebu City. Petitioner Preagido‘s death during the pendency of her appeal extinguishes her criminal and civil liabilities. Thus, we will only resolve the appeal of petitioner Senior Civil Engineer Bolotaulo.

It is noteworthy to mention that when the instant petition was filed in 1980, the other co-accused of petitioner Bolotaulo in Criminal Case Nos. 195, 198 and 199 had separately filed their respective appeals which had been decided by us, to wit:

(1) Valentino G. Castillo vs. Sandiganbayan and the People of the Philippines, G.R.Nos. L-52352-57,4

(2) Jose C. Bagasao vs. Sandiganbayan and the People of the Philippines, G.R. Nos. L-53813-53818,5

(3) Isidoro Recamadas vs. Sandiganbayan and the People of the Philippines, G.R. Nos. L-53694-99,6

(4) Rolando R. Mangubat vs. Sandiganbayan and the People of the Philippines, G.R.Nos. L-53724-297

where we affirmed the decision of the Sandiganbayan.

We adopt our factual findings in those cases which we now incorporate as an integral part of herein decision, to wit:

In the regional level, the requisition of funds for public works purposes, especially in the matter of road and bridge repairs, involves a graduated series of steps. As found by the

respondent Sandiganbayan, it begins with the Sub-Allotment Advices (SAAs), as well as the Advices of Cash Disbursement Ceilings (ACDCs), issued by the Ministry of Public Highways in favor of its Highways Regional Offices. These serve as the Regional Offices' authority to obligate and disburse funds. In turn, these become the sources of funds of the various Engineering Districts apportioned throughout each region.

The Engineering District then requests for the release of these funds from the Regional Director through a Program of Work. The Regional Finance Officer issues a Letter of Advice of Allotment (LAA), certified as to availability of funds by the Regional Accountant countersigned by the Regional Director, and addressed to the District (or City, as the case may be) Engineer. At the same time, he (the Regional Finance Officer) prepares a Sub-Advice of Cash Disbursement Ceiling (SACDC) for the Regional Director.

The LAA and SACDC are subsequently entered in a logbook. The funds requested are then released.

On the strength of such LAA and SACDC, the District then prepares a Requisition for Supplies or Equipment (RSE) as well as a Request for Obligation of Allotment (ROA), pursuant to the Program of Work. Both are likewise certified as to availability of funds by the Regional Accountant and approved by the Regional Director.

Thereafter, the Property Custodian or the Purchasing Officer, as the case may be, addresses Requests for Sealed Quotations to various suppliers, usually through newspaper advertisements or notices posted in conspicuous places in the District concerned. After ten days, the Sealed Quotations are submitted to the Price Verification Committee which determines the lowest bid in the presence of representatives of the District Engineer and the Auditor. An Abstract of Sealed Quotations is then signed by the members of the Committee as well as the said local representatives. Thereafter, and subject to the approval of the District Engineer, the proper award is made in favor of the lowest bidder. On the basis thereof, the Property Custodian issues a Purchase Order (PO) in favor of the winning bidder, again subject to the approval of the District Engineer and certified as to availability of funds by the Regional Accountant.

The supplies thus to be delivered are thereafter inspected (through Request for Inspection) by the Property Custodian. The deliveries themselves are recorded in a Tally Sheet after which a Record of Inspection, certified by the Property Custodian, is prepared by the representative of the Auditor and the Property Custodian.

Payment to the supplier is evidenced by a General Voucher (GV). Among others, the GV contains five parts; (1) a certification of receipt of supplies to be accomplished by the Property Custodian; (2) a certification of correctness, that is, that the expenses are necessary and lawful, and that the prices are not in excess of the current rates in the locality, to be accomplished by the Project Engineer; (3) approval by the District Engineer; (4) a certification, to be accomplished by the Auditor, that the GV has been properly approved, its account codes proper, and that it is supported by the proper

documents; and (5) a certification that the GV has undergone pre-audit, to be accomplished by the Auditor.

The GV itself must carry with it the following: the RSE, ROA, Program of Work, Detailed Estimates, Request for Sealed Quotations, Abstract of Sealed Quotations, PO, Delivery Receipts, Request for Inspection, Record of Inspection, Test Reports, and Tax Clearance of the supplier.

The process winds up with the issuance of the check by the Cashier in the name of the supplier. Like the GV, the check is pre-audited and then released.

The District Accountant thereafter prepares a Report of Obligation Incurred (ROI) and a Report of Checks Issued (RCI) to be submitted to the Regional Office and entered in the journals and the General Ledger thereof. On the basis thereof, the Regional Accountant prepares a trial balance to be recommended by the Finance Officer and approved by the Regional Director. The same is then submitted to the Ministry of Public Highways.

…

It appears that from May through June, 1978, the Tagbilaran City Engineering Office (CEO) embarked on certain projects involving the restoration of various roads and bridges in Tagbilaran City. Pursuant to five LAAs addressed to the Ministry of Public Highways purportedly issued by the Seventh Regional Highways Office on behalf of the Tagbilaran CEO, more specifically described as follows:

LAA No. Date Amount

107-780-05-78 April 29, 1978 P 150,000.00

107-0780-07-78 No date 26,000.00

107-780-012-78 April 24, 1978 48,100.00

107-780-014-78 April 24, 1978 150,000.00

107-780-011-78 No date 100,000.00

TOTAL P 474,100.00

as well as six SACDCs, as follows:

SACDC No. Amount

022-78 P 26,000.00

167-78 48,100.00

180-78 48,100.00

193-78 150,000.00

222-78 150,000.00

086-78 225,830.00

TOTAL P 699,930.00

the Tagbilaran CEO prepared RSEs and ROAs for the procurement of materials and supplies, specifically, anapog binder, for the projects aforementioned. All five LAAs were certified as to availability of funds by Rolando Mangubat, allegedly on behalf of Angelina Escaño, Finance Officer of the Seventh Regional Highways Office (Mangubat signed over her typewritten name) and countersigned by Jose Bagasao. The six SACDs were likewise signed by Mangubat for the Regional Director. The materials requisitioned were supplied by JV Sand & Gravel & Construction Supply, a private contractorship owned by James Tiu. Six GVs were prepared therefor, as follows:

GV No. Program of Work Amount

01-780601 Restoration of Shoulders, Tagbiliaran North Road (TNR), Junction TNR-Airport Road, Junction TNR-Wharf Road and TCSR

P 49,980.00

01-780606 Restoration of Shoulders, Tagbilaran North Road (TNR), Junction TNR-Wharf Road

49,980.00

01-780641 Restoration of Shourders, Tagbilaran Corella-Sikatuna Road

49,980.00

01-780682 Restoration, Totulan-Ubos-Dauis Bridge Approaches

49,980.00

01-780684 Restoration, Totulan, Ubos-Dauis Bridge Approaches

49,980.00

01-780694 Restoration, Junction, Tagbilaran East Road-Dauis Paulao Central Road Shoulders and Bridge Approaches

49,980.00

TOTAL P 299,880.00

========

representing partial payments in favor of JV Sand & Gravel & Construction Supply, which has been named as a creditor therein. The GVs themselves were accompanied by various supporting papers, among them, the RSEs and ROAs earlier referred to.8

…

Eventually, the matter reached the Commission on Audit which constituted two teams to mount an inquiry.

The investigation disclosed that the above mentioned LAAs as well as SACDCs were spurious documents, and that the six GVs were in fact based on only two LAAs, Nos. 107-780-05-78 and 107-780-014-78. It was further established that the total sum requested under the said LAAs — P474,100.00 — supposedly to cover the Tagbilaran CEO's unliquidated obligations were not in fact supported by its statement of accounts, under which its total obligations totalled but P160,639.55. Moreover, the payee, JV

Sand & Gravel & Construction Supply, was not listed in the City's books as a creditor, for which it could have been entitled to the sums released.

The Audit Commission likewise observed certain discrepancies in the GVs in question, notably, that the Programs of Work had been "split"; that they were dated after the dates of the RSEs; that while the POs called for 9,369 to 9,375 cubic meters of anapog binder, the GVs specified but 3,123 to 3,125 cubic meters thereof apiece; that the Delivery Receipts had been issued "in lump quantities," did not bear acknowledgment signatures or were not initialled by the auditor or dated after the dates of the pre-audit; that the biddings were irregular; and that anapog had been short-delivered.

The Commission on Audit moreover found that the Highways Regional Office, as of this period, had in fact released "doubtful" allotments to ten districts, the Tagbilaran CEO among them, in the total sum ofP24,052,750.00 supposedly to cover unliquidated obligations, although the statements of account thereof showed a total of only P2,735,181.98 as and for unliquidated obligations.

The very books of the Regional Office appeared furthermore to have been doctored. For while the total unliquidated obligations totalled only P2,586,306.78, the entry in the Regional Office's general ledger wasP35,509,002.99. And in payment of such doubtful obligations, the checks issued exceeded the cash disbursement ceiling by P6,837,971.35. Apparently, it was Rolando Mangubat who recorded these entries by way of seven Journal Vouchers (JVs).

It likewise turned out that James Tiu subsequently opened certain savings accounts at the Allied Bank in favor of Niño Pilayre, Praxedes Lopena, and Miguel Bulac, although Lopena insists that as far as she was concerned, she knew nothing about it.9

The Tanodbayan filed six Informations for estafa through falsification of public and commercial documents against nine public officials10 and two private individuals11 on the basis of conspiracy. Later, additional public officials12were included in some of these Informations. It is only in Criminal Case Nos. 195, 198 and 199 that petitioner Bolotaulo is a co-accused. Except for the amounts involved, the quantities of anapog binder allegedly requisitioned and delivered, the six Informations were uniformly worded as follows:

That, in or about and during the period from the months of April to June, 1978, in the City of Tagbilaran, Philippines, and within the jurisdiction of this Honorable Court, the public officials, who by reason of the duties of their office, are accountable officers, and conspiring and conniving among themselves, as well as with their private party co-accused, after having falsified or caused to have falsified Letters of Advice of Allotment No. 107-780-05-78 and No. 107-780-014-78, both dated April 24, 1978 and Sub-Advices of Cash Disbursement Ceiling No. 193-78 dated April 28, 1978 and No. 222-78 dated May 2, 1978, which are all public documents, whereby said accused made it appear that an amount of Three Hundred Thousand (P300,000.00) had been lawfully allocated for the City of Tagbilaran from the MPH Regional Highway Office No. VII,

Cebu City, and made available "For the maintenance of existing and unabandoned roads and bridges" in the City of Tagbilaran, which falsifications had been committed in connection with the functions of their respective offices, then taking advantage of their official positions and committing in relation to the functions of their respective offices, did then and there willfully, unlawfully and feloniously falsify or cause to have falsified General Voucher,13 covering the sum of Forty-Nine Thousand Nine Hundred Eighty Pesos (P49,980.00) for the payment of road shouldering materials (anapog binder), with the use of the aforesaid falsified Letters of Advice of Allotment and Sub-advices of Cash Disbursement Ceiling to support thereof and other documents, such as the Program of Work/Budget Cost for Roads and Bridges dated May 8, 1978, Request for Obligation of Allotment dated May 16, 1978, Abstract of Sealed Quotations, Purchase Orders dated June 9, 1978, Record of Inspection dated June 9, 1978, and other papers in support thereof, by making it appear that the request for obligation of allotment was regularly prepared and approved, that the bidding of materials was properly conducted, that the corresponding purchase order was prepared in favor of the lowest bidder, and that the materials purchased were duly and fully delivered in accordance with specifications and duly inspected, when in truth and in fact, as the accused fully knew well, the foregoing transactions were false and simulated, except that, with the amount of 3,123 cubic meters of anapog binder having been purchased for the sum of P49,980.00 at the rate of P16.00 per cubic meter, accused Jimmy Tiu and his representative accused Engracio Quiroz, by previous understanding with the accused officials, had caused the delivery only of (quantity) cubic meters of anapog binders, hence causing the Government to lose (quantity) cubic meters and worth (amount) at the rate of P16.00 per cubic meter; thus, the said accused having in said manner in a narration of facts; and that, by means of the aforesaid falsifications, the said accused were able to demand, collect and receive from the government thru the Tagbilaran City Engineer‘s Office, MPH Regional office No. VII, the value of the vouchers in question although the amount due should have been only the value of the actual quantities delivered, and that, after the accused after having demanded, collected and received, did then and there willfully, unlawfully and feloniously misapply, misappropriate and convert to their own personal use and benefit, and/or consent or, through negligence, permit other persons to take, misapply, misappropriate, and convert to their own personal use and benefit, to the damage and prejudice of the Government.

All the accused pleaded not guilty to the charges against them. Joint trial thereafter ensued. In a decision dated December 28, 1979, the Sandiganbayan acquitted accused Sayson, Budget Examiner II and Quiroz, the employee of accused contractor Tiu; and convicted the rest of the accused, including Bolotaulo, of estafa thru falsification of official and commercial documents to six years of prision correccional to ten years, eight months and one day ofprision mayor each case with the accessories provided by law, pay the fine of P3,500.00 for each count and ordered them to pay certain amounts.14

The Sandiganbayan convicted petitioners and the other accused on the basis of conspiracy. It found that they were guilty of conspiring in the falsification of the following documents, to wit: (1) Letters of Advice of Allotment (LAAs); (2) Sub-Advice of Cash Disbursement Ceiling (SACDCs); (3) Programs of Work (PWs); (4) General Vouchers

(GVs); (5) Requests for Obligation of Allotment (ROAs); (6) Abstract of Sealed Quotations; (7) Purchase Orders (POs); (8) Delivery Receipts and (9) Records of Inspections (ROIs); that such falsification facilitated the unauthorized release of funds; and, the supplies allegedly requisitioned under them were short delivered or not delivered at all.

As we have stated earlier, the separate appeals of petitioner Bolotaulo‘s co-accused Castillo (City Engineer), Bagasao (Assistant Regional Director), Recamadas (Property Custodian), and Mangubat (Regional Chief Accountant), were denied and the decision of the Sandiganbayan was affirmed in Castillo vs. Sandiganbayan,15Bagasao vs. Sandiganbayan,16 Recamadas vs. Sandiganbayan,17 and Mangubat vs. Sandiganbayan.18 We found in those cases that the projects turned out to be "ghost" projects since they did not carry the imprimatur of the then Public Highways Ministry, the various requisition papers having been falsified to enable the accused to acquire the necessary funding. Furthermore, the supplies ordered were either short delivered or not delivered at all. As a result, the government suffered losses in the total sum of P240,058.0019

We now resolve the appeal of petitioner Ulrico Bolotaulo, Senior Civil Engineer, Tagbilaran CEO, Ministry of Public Highways, who was convicted in Criminal Case Nos. 195, 198 and 199.

Petitioner comes to us raising both questions of law and of fact. The OSG filed its Answer praying for the denial of the instant petition for review.20

The questions of law are as follows: (1) whether Presidential Decree No. 1486 as amended by P.D. No. 1606 creating the Sandiganbayan is an ex post facto law and violates the rights of the accused to due process and equal protection of law; (2) whether the Sandiganbayan was validly created and constituted.

The first legal issue had already been settled in Nuñez vs. Sandiganbayan,21 the very first case which upheld the constitutionality of the P.D. No. 1486 as amended, creating the Sandiganbayan. We declared that P.D. No. 1486 as amended was not an ex post facto law and does not violate the due process and equal protection clauses of the Constitution. Such ruling was reiterated in many subsequent cases.22

As to the second legal issue, petitioner claims that the Sandiganbayan was not validly constituted since at the time it rendered the judgment, it was only composed of one Presiding Justice and two Associate Justices, thus how could it possibly act in division when it was never constituted as a whole?

This issue had already been put to rest in De Guzman vs. People,23 where we held:

… Although the Sandiganbayan is composed of a Presiding Justice and eight Associate Justices, it does not mean that it cannot validly function without all of the Divisions constituted. Section 3 of PD 1606 provides that "the Sandiganbayan shall sit in three

divisions of three justices each." While Section 5 thereof provides that the unanimous vote of the three justices in a division shall be necessary for the pronouncement of a judgment.

Thus, the Sandiganbayan functions in Divisions of three Justices each and each Division functions independently of the other. As long as a Division has been duly constituted it is a judicial body whose pronouncements are binding as judgments of the Sandiganbayan.

The judgment convicting petitioner was a unanimous Decision of the First Division duly constituted. It thus met the requirement for the pronouncement of a judgment as required by Section 5 PD 1606 supra.24

Petitioner next raises the issue of the sufficiency of evidence upon which his conviction was predicated. He argues that estafa cannot be committed in the absence of any statement from the government of fund loss; that the checks covering the questioned transactions in the Tagbilaran CEO were not dishonored by the drawee bank; and that there was no concrete evidence shown by the prosecution to establish underdeliveries.

We are not impressed.

The prosecution had clearly established that because of the fake LAAs, SACDCs and the general vouchers with all its supporting documents, the government through the Tagbilaran CEO had disbursed funds for projects which were short delivered. Since there were short deliveries of anapog binder to the alleged projects sites, it resulted to the government suffering losses. We quote with approval the findings of the Sandiganbayan on this matter, thus:

… It is only logical that, if funds are disbursed without any appropriation, there is actually a payment of money out of the Treasury without any sanction in law. In such case, the Government suffers a loss of so much as is disbursed. Of course, in the cases at bar, the People adopted a more realistic approach to the situation. It opted to hold the perpetrators of the fraudulent transactions liable only up to the amount of the actual loss sustained, evidently because it concedes that there had been some deliveries, albeit minimal. And, there can be no question that, if a contract is entered into with the Government for a given quantity of materials and the entire contract price is paid but only a quantity less than that contracted for is actually delivered, the Government would naturally be prejudiced to the extent of the value of the materials not delivered. This is precisely what happened here. Therefore, it is altogether off-tangent for the accused to contend that, because no statement of loss consequent to the transactions here involved had been presented from the National Treasury or from the Philippine National Bank, no justifiable finding of damage to the Government can be made. This would be closing one‘s eyes to reality. For, the stark reality is that certain amounts have in fact been paid by the Government for materials that were short-delivered. Accordingly, we hold that damage to the extent of the value of said short-delivery was sustained. Considering that it is undeniable that the damage came about thru the deceitful medium

of the multiple falsifications here found to have been perpetrated, it is ineluctably clear that said falsifications were the means to the perpetration of a crime of estafa. As correctly formulated in the Informations herein, the crime committed in each of the cases at bar is estafa thru falsification of public documents.

This ushers the Court to the determination of the extent of the damage caused to the Government. On this score, the evidence bears looking into. Restituto Castro, testifying for the People, detailed the volume of deliveries made to various sections of the roads and bridge approaches covered by the projects here involved based on his counting of truckloads of anapog extracted from the Belderol Co and Picmao quarries and brought to the restoration sites. On the other hand, Assistant Provincial Engineer Sarmiento also made documented estimates of the volume of anapog delivered and significantly, enough, even after reckoning with pertinent factors bearing on the matter-including the time lapse between the date of spreading and the date of inspection, the effect of erosion, and a shrinkage factor of 20% and 30% as the case may be- came up with figures higher than those arrived at by Castro. So much so that, giving the defense the benefit of the doubt, the Court elects to go by the figures furnished by Engineer Sarmiento as bases for reckoning the damage caused. For this purpose, the amount to be considered as starting point should be the face value of the respective checks actually paid to accused Tiu, that is to say, deducting the amount paid to the City Treasurer for Mining Fees. And, the value of anapog delivered should be taken at the price it was supposed to have been sold to the Government, that is P16.00 per cubic meter. On this (sic) bases, the damage may be computed as follows -

Case Amount Delivery Value of DAMAGE

No. Paid Volume Delivery

195- P 47,637.75 566- P9,056.00- P 38,581.75

196- 47,636.25 12- 192.00- 47,444.25

197- 47,636.25 624- 9,984.00- 37,652.25

198- 47,637.75 none- none- 47,637.75

199- 47,637.75 1,496- 23,936.00- 23,701.75

200- 47,636.25 106- 1,696.00- 45,940.25

P 240,958.0025

It bears stressing that the fraudulent issuances of the LAAs, SACDCs, GVs and its supporting documents and the journal vouchers and short deliveries are now settled issues. As we have earlier stated, we upheld the findings of the Sandiganbayan in four petitions brought to us by the four co-accused of herein petitioners which involved the

same decision of the Sandiganbayan in Criminal Case Nos. 195 to 200 covering the same transactions.26

Thus, the only issue now is whether the Sandiganbayan is correct in finding petitioner Bolotaulo guilty of conspiracy in committing the crime charged.

Petitioner Bolotaulo was convicted for his signature in the RSEs, in the abstract of sealed quotations and for signing the general voucher certifying that the expenses are necessary, lawful and incurred under his direct supervision, and that the price is just and reasonable and not in excess of the current rates in the locality. He, however, contends that he merely performed his duties and responsibilities in affixing his signatures on those documents.

We are not persuaded.

Petitioner, as the Senior Civil Engineer of the Tagbilaran CEO, was the one who prepared the three Request for Supplies or Equipment (RSEs)27 which were all dated April 11, 1978 allegedly on the basis of three programs of work he recommended for approval which were all dated May 8, 1978. Notably, however, the RSEs antedated the programs of work which is an anomalous circumstance since the RSEs needed for the prosecution of the projects are only based on the programs of work. In fact, petitioner, in his cross-examination, admitted that he cannot prepare a RSE without an approved program of work28 and that it is the normal and regular procedure;29 that if the program of work is prepared later than the RSE, there must be something irregular about it.30

No satisfactory explanation was advanced by petitioner on why the RSEs antedated the programs of work as all he could say was that it was not his concern which of these two came ahead as long as that at the time he was signing the general voucher, the program of work was there.31 As the Sandiganbayan found, it unmasks the RSEs and/or Programs of Work as falsificiations since the former cannot be said to be "O.K. as to program of work," as therein stated since at the time of their preparation, no program of work was yet in existence and that the latter can only be said to have been subsequently prepared to plug a veritable loophole.32

In fact, the RSEs are not even in accord with the program of work. While petitioner recommended the approval of the three programs of work each calling for the use of 3,123 cubic meters of selected borrow (Item 108) as well as the detailed estimates which also called for the use of selected borrow, the three RSEs which petitioner prepared called for the use of anapog binder. No explanation was offered as to why there was such a discrepancy.

Notably, petitioner Bolotaulo recommended for approval three programs of work which all cost not more thanP50,000.00 each. As established by the testimony of prosecution witness, Miguel V. Bulac, this was so since petitioner Bolotaulo‘s co-accused City Engineer Castillo could not approve program of work exceeding P50,000.00 because in excess of that amount, the program of work has to be approved by the Regional

Director.33 In fact, Engr. Castillo admitted that program of work in excess of P50,000.00 needs the approval of the region.34 As we earlier stated, we affirmed the conviction of City Engineer Castillo.35

Petitioner Bolotaulo signed three GVs certifying that the expenses are necessary, lawful and incurred under his direct supervision, and that the price is just and reasonable and not in excess of the current rates in the locality. Attached to these GVs as supporting documents are the programs of work, the RSEs, the requests for sealed quotations and the purchase orders among others. He signed the GVs despite the fact that the RSEs antedated the programs of work. He could not have failed to notice that there was only one set of request for sealed quotation for the total of 9,369 cubic meters of anapog binders and one purchase order which supported the three GVs all for amounts less than P50,000.00 each to the same contractor/ supplier James Tiu. The issuance of three GVs for amounts less than P50,000.00 each was resorted to since a higher amount would have required the vouchers to be forwarded to the Regional Auditor for action and review. The RSEs and the GVs had been split into uniform amounts of not more than P50,000.00 each which is a clear case of splitting of requisitions and general vouchers prohibited by the Commission on Audit Circular No. 76- 41 dated July 30, 1976.

As defined by the Circular, "splitting" in its literal sense means dividing or breaking up into separate parts or portions, or an act resulting in a fissure, rupture, breach. Within the sphere of government procurement, splitting is associated with requisitions, purchase orders, deliveries and payments.

Splitting may be in the form of (1) Splitting of Requisi3tions which consists in the non-consolidation of requisitions for one or more items needed at about the same time by the requisitioner; (2) Splitting of Purchase orders which consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by the different requisitioners; and (3) Splitting of payments which consists in making two or more payments for one or more items involving one purchase order. These forms of splitting are resorted to in order to avoid (a) inspection of deliveries, (b) action, review or approval by higher authorities; or (c) public bidding.

There is also no truth to petitioner Bolotaulo‘s certification in the general voucher that the price of the materials requisitioned is just and reasonable and not in excess of the current rates in the locality considering that it was established that there was irregularity in the bidding held on May 24, 1978.36 As the Sandiganbayan found:

…

In the same vein, the record is clear that, prior to the pre-audit of all GVs here involved, defects and irregularties respecting the bidding conducted in connection with the procurement of the materials purchased were brought home to the knowledge of all concerned, particularly the District Auditor. A letter was actually written by accused Lopeña to accused Castillo officially bringing to his attention the defects and

irregularities aforesaid (Exhibit G-22). Another letter was also written by accused Lopeña to accused Castillo returning the GVs (Exhibits D, E and H) because of defects like splitting, lack of ROA, and others. And yet, without anything being done to correct the defects and/or supply the deficiencies except the mere explanation of accused Castillo that the defects are mere clerical errors or that the objections are tardy, the GVs involved herein were nevertheless eventually passed on pre-audit. Since the bidding is defective, necessarily, the certification as to the justness and reasonableness of the price and that it is not in excess of the current price in the locality becomes a falsehood.

We likewise find no merit in petitioner‘s claim that the Sandiganbayan erred in finding the existence of conspiracy in the alleged commission of the crime. We are indeed convinced that conspiracy has been clearly established by the evidence presented by the prosecution. The whole scheme started with the issuances of fake LAAs, which give the authority to obligate, and the SACDCs, the authority to disburse funds, to the Tagbilaran CEO for the alleged purpose of prosecuting certain projects. The Tagbilaran Office which was fully aware of the fake LAAs and SACDCs, made it appear that there were valid requisitions, public bidding and purchase order which all turned out to be also falsified. General vouchers were prepared and checks pursuant thereto were issued in payment to the supplier/contractor for materials which turned out to be short delivered or not delivered at all. As correctly held by the Sandiganbayan:

… It will readily be discerned from the facts in the case at bar that the defraudation perpetrated upon the Government was launched with the issuance of the fake LAAs in the Regional office, gained momentum as it wound its way thru the intricate paces of the procurement and payment processes in the District Office, and was put to rest with the execution of the fake JVs also in the Regional office. A veritable umbilical cord that ties the accused in the Regional office with those in the District Office is thus unmistakable. Such that even if the acts imputed to each accused may, at first blush, appear disconnected and separate from those of the others, there is nevertheless that common thread of sentiment, intent and purpose to attain the same end that runs thru the entire gamut of acts separately perpetrated by them. After all, conspiracy implies concert of design more than participation in every act of execution. Like links in a chain, the role played by each accused is so indispensable to the success of the fraud that, without any of them, the scheme would have failed. In this posture, a conspiracy is made out that as a result, the act of one is the act of all.37

Finally, petitioner argues that assuming that there were admissions from the other co-accused, the alleged conspiracy must first be proven by evidence other than the declaration of a co-conspirator citing Section 27 of Rule 130, Rules of Court, to wit:

Sec. 27. Admission by conspirator- The act or declaration of a conspirator relating to the conspiracy and during its existence, may be given in evidence against the co-conspirator after the conspiracy is shown by evidence other than such act or declaration.

The argument is devoid of merit.

Section 27 of Rule 130 of the Rules of Court applies only to extrajudicial acts or declarations but not to testimony given on the witness stand at the trial where the defendant has the opportunity to cross-examine the declarant.38

All told, we are convinced that the prosecution has successfully established beyond doubt that petitioner Bolotaulo is guilty of the crimes charged.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Sandiganbayan dated December 28, 1979 insofar as petitioner Ulrico Bolotaulo is concerned is AFFIRMED. The cases against petitioner Delia Preagido are DISMISSED in view of her demise on December 16, 2003.

G.R. No. 133517 January 30, 2006 ALBAY ACCREDITED CONSTRUCTORS ASSOCIATION, INC., represented herein by its duly authorized Secretary, RODOLFO L. MADRID, JR., Petitioner, vs. HONORABLE OMBUDSMAN ANIANO A. DESIERTO, LYLIA CORPORAL-SENA, OSCAR L. LANDAGAN, PRE-QUALIFICATION BIDS AND AWARDS COMMITTEE (PBAC) OF BICOL UNIVERSITY, and its members, namely: EDUARDO M. LORIA, CIELO L. REX, AMALIA A. SARET, and DONATO F. M. BAÑARES, and LUDOLFO P. MUÑOZ, JR., Respondents.

Imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of respondent Ombudsman, petitioner Albay Accredited Constructors Association, Inc. (AACA), purportedly a non-profit organization composed of legitimate and licensed contractors in the Province of Albay, herein represented by its secretary, Rodolfo L. Madrid, Jr., has come to this Court via this verified petition for certiorari and mandamus under Rule 65 of the Rules of Court to seek the annulment and setting aside of the Resolution1 dated November 17, 1997 of the Ombudsman in OMB-1-97-0924, which dismissed, for insufficiency of evidence, petitioner‘s complaint against the President of Bicol University, the chairman and members of its Pre-qualification Bids and Awards Committee (PBAC), and private respondent Ludolfo P. Muñoz, Jr., for alleged violation of certain provisions of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, in connection with the award of a construction project of Bicol University, and Order2 dated February 11, 1998, which denied petitioner‘s motion for reconsideration. The mandamus aspect of the petition prays the Court for a writ commanding the Ombudsman to file the appropriate criminal complaint against the same respondents for violation of Rep. Act No. 3019.

The material facts:

Sometime in 1996, the Bicol University of Legaspi City received Special Allocation Release Order (SARO) No. ROV-96-0139 in the amount of P15,868,800.00 for the construction of the University‘s 2-storey ESEP building. In time, the University, through

its PBAC, chaired by respondent Oscar L. Landagan with respondents Eduardo M. Loria, Cielo L. Rex, Amalia A. Saret and Donato Bañares, as members, caused the publication of an Invitation to Bid, calling on all interested contractors to file their pre-qualification bid statements.

Twenty-one (21) contractors responded, among which were herein petitioner AACA and private respondent Ludolfo P. Muñoz, Jr., sole proprietor of and doing business under the name L.P. Muñoz, Jr. Construction (Muñoz Construction). As an interested bidder, Muñoz submitted for his firm his Contractor‘s Confidential Pre-qualification Statement (Pre-C), a requirement under Presidential Decree (P.D.) No. 15943. As will be shown later, Muñoz‘s Pre-C and the documents thereto attached spawned the complaint for violation of the Anti-Graft and Corrupt Practices Act filed with the Ombudsman by ACCA‘s secretary, Rodolfo L. Madrid, Jr.

Of the 21 contractors who submitted Pre-Cs, 13 were considered pre-qualified, among which were petitioner AACA and Muñoz Construction.

Following pre-bid conferences whereat bidding procedures were discussed and technical details of the project clarified, the PBAC conducted, on March 18, 1997, an open public bidding during which no less than AACA‘s secretary and representative Rodolfo L. Madrid, Jr., representatives of the Commission on Audit (COA) and members of the PBAC, among others, were in attendance. After the bid proposals have been opened and evaluated, only eleven (11) bids were declared as complying and only seven (7) of the eleven (11) as responsive, among which were those of petitioner AACA and Muñoz Construction.

Subsequently, the PBAC, having determined Muñoz Construction to have tendered the lowest complying and most responsive bid for the project in question, recommended to respondent Lylia Corporal-Sena, President of Bicol University, the contract award to Muñoz Construction.

However, before she could act on PBAC‘s recommendation, the respondent University President received a letter from one Engr. Rafael A. Armario, Jr., who alleged that his signature in one of the documents submitted by private respondent Muñoz in connection with the Pre-C of his firm was forged. Forthwith, the University President referred Armario‘s letter to the PBAC which thereupon invited Armario himself and private respondent Muñoz for their respective comments on the matter. Private respondent Muñoz submitted a written explanation in behalf of Muñoz Construction, therein stating that Armario is still his employee. Armario, on the other hand, simply verbally informed the PBAC that his letter was merely for the committee‘s information.

Evidently finding nothing wrong with the bid of Muñoz Construction and given Armario‘s refusal to file a formal complaint against Muñoz Construction, the PBAC reiterated its recommendation for the contract award to that firm.

On April 2, 1997, the PBAC received an undated letter from Mr. Rodolfo L. Madrid, Jr., calling attention to Armario‘s aforementioned letter and suggesting that the contract be not awarded to Muñoz Construction. In its April 8, 1997 special meeting, the committee invited Madrid, COA representatives and the other bidders for their opinion on the matter. Madrid did not appear, prompting the committee to reiterate its earlier recommendation for the award of the contract to Muñoz Construction, but requiring the latter to submit a replacement project engineer.

Following the issuance of a Notice of Award in favor of Muñoz Construction, private respondent Ludolfo P. Muñoz, Jr., on April 23, 1997, submitted for his firm the name and bio-data of the replacement engineer.

On May 15, 1997, the contract for the construction of the University‘s ESEP building was executed by and between the University, thru its President, and private respondent Ludolfo P. Muñoz, Jr. for and in behalf of his firm. The following day, a Notice to Proceed was issued in favor of Muñoz Construction.

Such was the state of things when, on May 23, 1997, petitioner AACA, thru its secretary Rodolfo Madrid, Jr., filed with the Office of the Deputy Ombudsman for Luzon its complaint4 against the Bicol University President, Lylia Corporal-Sena, the chairman and members of the University‘s PBAC, the PBAC itself and private respondent Ludolfo P. Muñoz, Jr. Docketed as OMB-1-97-0924, the complaint charges respondents with violation of Sections 3(e) and (j) and 4(b) of Rep. Act No. 3019, it being substantially alleged therein that said respondents, through evident bad faith and manifest partiality and in conspiracy with one another, awarded the subject contract to Muñoz Construction despite the existence, already made known to them, of a patent anomaly in its pre-qualification bid, namely, the forged signature of Engr. Armario in one of the pre-qualification documents submitted by the firm in connection with its Pre-C. The complaint further alleged that, in awarding the contract in question to Muñoz Construction, respondents not only granted unwarranted benefit to private respondent Ludolfo P. Muñoz, Jr. but also caused undue injury to the government.

After the impleaded respondents had filed their respective counter-affidavits, to which petitioner interposed a reply, the respondent Ombudsman issued the herein assailed Resolution dated November 17, 1997, dismissing petitioner‘s complaint for insufficiency of evidence, explaining that the Pre-C requirement of actual employment or contract to employ a qualified project engineer under P.D. No. 1594 is merely permissive, and, therefore, the absence thereof did not invalidate the pre-qualification bid tendered by Muñoz Construction, nor did it furnish cause to charge respondents of evident bad faith and manifest partiality in awarding the contract to said firm. Partly says the respondent Ombudsman in his assailed Resolution:

An analysis of the records of the case indicate that the PBAC of the Bicol University followed the required procedures of bidding. Thus, their (sic) decision to recommend the award of the project to LP Muñoz is based on their study and deliberation viz-a-viz the provisions of the Pre-C requirements based on P.D. No. 1594.

The allegation of forgery of the signature of Engr. Almario is not material to the instant case because the Pre-C requirement of actual employment or contract to employ a qualified project engineer is simply permissive. The lack of it will not invalidate the bid of the bidder. As stated by the agency/office concerned, the most important and basic considerations are the financial and technical capability of the contractor and its commitment to finish and complete the project in accordance with the specifications of the government. Moreover, considering that LP Muñoz was the lowest complying bidder, the PBAC of Bicol University decided to recommend the latter as the winning bidder.

The elements therefore of Sec. 3(e) of RA 3019 will not apply to the instant case. There was no injury to the government because the award was given to the lowest bidder. Likewise, no private party was given any unwarranted benefit, preference nor advantage.

Respondents could not be held liable for having knowingly approved or granted any license, permit, privilege or benefit in favor of any person not qualified for or not legally entitled to such license, permit, privilege or benefit.5

With its motion for reconsideration having been denied by the Ombudsman in his equally challenged Order dated February 11, 1998,6 petitioner is now with us via the present recourse, raising, for our consideration, the following issues:

1. Whether the Ombudsman acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack of jurisdiction, in holding that the requirement of a resident project engineer is merely permissive;

2. Whether the Ombudsman treated the preliminary investigation as a trial; and

3. Whether the Ombudsman acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack of jurisdiction, in holding that no probable cause exists to indict respondents for violation of Sections 3(e), 3(j) and 4(b) of R.A. 3019.

We DISMISS.

It is petitioner‘s initial posture that the pre-qualification requirement of employing a qualified resident project engineer under P.D. No. 1594 is mandatory, not merely permissive as ruled by the respondent Ombudsman. To petitioner, the Ombudsman erroneously relied on Section 1B4-4C of the Implementing Rules and Regulations (IRR) of P.D. No. 1594 in dismissing its complaint. The provision reads:

The following papers shall, among others, comprise Pre-C. Each office/agency/corporation shall have the discretion to specify whether any of the documentation listed below shall form part of the Pre-C:

x x x x x x x x x

c) Actual employment or contract to employ duly qualified project manager and project engineer who have managed or supervised at least a project of similar nature as to type and costs. (Emphasis supplied)

In faulting the Ombudsman for ruling as merely permissive the resident-project-engineer requirement on the basis of the above-quoted provision of the IRR, petitioner points out that the provision thus relied upon by the Ombudsman had long been repealed by Section 1B4-5-C of the 1995 IRR of P.D. No. 1594, which recites:

5. The following papers shall, among others, comprise Pre-C:

x x x x x x xxx

c. List of key personnel employed or to be employed in the project with complete qualification and experience data sheet. (Emphasis supplied)

In stressing the mandatory, not merely permissive, nature of the resident-project-engineer requirement, petitioner made much of the word "shall" in the aforequoted provision and the fact that the phrase "shall have the discretion" found in the former Section 1B4-4C, supra, no longer appears in the repealing provision of Section 1B4-5-C.

Petitioner‘s submission does not persuade.

There is nothing in Section 1B4-5-C that deprives the contracting agency concerned of its discretion to specify whether any of the documentation listed under the former rule (Section 1B4-4C) shall form part of the Pre-C. As it were, Section 1B4-5-C (the new provision) merely classifies the "list of key personnel employed or to be employed in the project with complete qualification and experience data sheet," as among the papers to comprise the Pre-C. And even assuming that a project engineer is one of the key personnel in the construction project, Section 1B4-5-C itself allows the employment of key personnel even after the bidding. This is as should be as the provision adverted to speaks of "list of key personnel employed or to be employed" in the project. In short, both the former and new provisions of the IRR of P.D. No. 1594 do not indispensably require actual employment of a project engineer at the time of submission of the Pre-C. The old provision (Section 1B4-4C) spoke of "actual employment or contract to employ," while the 1995 version (Section 1B4-5-C) uses the clause "list of key personnel employed or to be employed" in the project. Doubtless, both versions allow post bidding employment of a project engineer. We thus sustain as correct the ruling of the Ombudsman on the permissive nature of the pre-qualification requirement relative to the employment of a project engineer.

Petitioner insists, however, that the mandatory nature of the requirement of actual hiring of a project engineer at the time of pre-qualification is made clearer in Section 2 of P.D. No. 1594 which reads:

Section 2. Detailed Engineering. No bidding and/or award of contract for a construction project shall be made unless the detailed engineering investigations, surveys, and designs for the project have been sufficiently carried out in accordance with the standards and specifications to be established under the rules and regulations to be promulgated pursuant to Section 12 of this Decree so as to minimize quantity and cost overruns and underruns, change orders and extra work orders, and unless the detailed engineering documents have been approved by the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be.

Petitioner would interpret the provision as mandating the prospective contractor-bidder to conduct detailed engineering work on a project. Ergo, so petitioner concludes, the actual hiring of a resident project engineer at the time of bidding is mandatory, the engineer hired being tasked to handle the technical and engineering aspects of the construction.

Again, petitioner is wrong.

As may be noted, the above-quoted provision of Section 2 of P.D. No. 1594 requires that a detailed engineering be carried out before any bidding or contract award for a construction project. Obviously, this requirement is addressed to the agency concerned, not to a bidder. It is from this detailed engineering that the concerned agency can get an estimate of the project, which it will use as basis in the evaluation of the bids. A bidder has no participation in carrying out the detailed engineering of a project. This is clear from Title 1, paragraph 4(g) of the IRR of P.D. No. 1594, to wit:

g. Agency Estimate – The Agency Estimate of construction cost shall be prepared by official(s) duly designated by the Head of office/agency/corporation concerned or by his duly authorized representative. It shall be approved by the Head of the office/agency/corporation or his duly designated representative.

The approved agency estimate (AAE) shall be finalized on the day of the bidding after all bids have been received and shall be held confidential and signed, sealed and ready for presentation on the day of the opening of the bids/tenders. (Emphasis supplied)

Designating a bidder to carry out the detailed engineering of a project would doubtless be greatly prejudicial to other bidders. With this scenario, such a bidder will know in advance the agency estimate of the project and be able to offer the lowest bid.

In any event, assuming, in gratia argumenti, that the employment of a resident engineer is required to be stated in the submission of bidding documents, Muñoz Construction may be considered as having substantially complied with such requirement. Record

shows that the firm submitted the name of the replacement of Armario after the latter severed ties with his employer. Besides, under the IRR of P.D. No. 1594, the government is given the discretion to waive minor deviations from the requirements. We quote the pertinent provisions of the IRR:

A bid which does not comply with the conditions or requirements of the bid documents shall be rejected by the PBAC (or the Bid and Award Committee as the case may be) giving the reason or reasons for its rejection. The government, however, in the evaluation of bids received, reserves the right to waive the consideration of minor deviations in the bids received which do not affect the substance and validity of the bids.7

x x x x x x x x x

The government, however, reserves the right to reject any or all bids; to declare a failure of bidding if there is, among others, reason to suspect evident collusion among contractors resulting in no competition; to waive any required formality in the bids received; and to disregard any bid which is obviously unbalanced, x x x.8 (Emphasis supplied)

In the case at bench, the University‘s PBAC found the perceived infraction ascribed to Muñoz Construction too minor to warrant rejection of its bid. The Court loathes to interfere with PBAC‘s estimation on a matter within its competence, if not sound prerogative.

The discretion to accept or reject a bid and award contracts is vested in the government agencies entrusted with that function. The discretion given to authorities to accept or reject a bid is of such wide latitude that courts will not interfere, unless it is apparent that it is exercised arbitrarily, or, in the language of Bureau Veritas vs. Office of the President9, used as a shield to a fraudulent award. The exercise of that discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the concerned government agencies, not by the courts. The role of the courts is to ascertain whether a branch or instrumentality of the government has transgressed its constitutional boundaries. Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, they stray into the realm of policy decision-making. 10

Here, the PBAC contextually acted well within its bounds of discretion. Hence, no grave abuse of discretion may be imputed against respondent Ombudsman in dismissing petitioner‘s complaint.

This brings us to the second issue herein raised. Petitioner contends that the Ombudsman had treated the preliminary investigation as a trial when his duty is limited to the determination of probable cause.

There is no dispute that the function of a preliminary investigation is to determine the existence of probable cause. It must be stressed, however, that as early as in the cases of U.S. v. Grant11 and Haashim v. Boncan,12 the Court has ruled that the ultimate purpose of a preliminary investigation is "to secure the innocent against hasty, malicious, and oppressive prosecutions, and to protect him from open and public accusation of crime, from the trouble, expenses and anxiety of a public trial, and also to protect the State from useless and expensive prosecutions."13

In its petition, petitioner states:

In ruling that the complaint should be dismissed for "insufficiency of evidence" the Honorable Ombudsman earnestly treated the preliminary investigation as a trial xxx.14

A dismissal based on "insufficiency of evidence" is not tantamount to conducting the preliminary investigation as a trial. Petitioner points out that it is the purpose of a preliminary investigation to determine whether there is probable cause, as Pilapil vs. Sandiganbayan15 defined the term "probable cause":

xxx the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted.

It is to be stressed that it is only through evidence that a prosecutor, or the Ombudsman in this case, can determine the existence of such facts and circumstances constituting probable cause. Dismissing a complaint based on "insufficiency of evidence" simply means a want of evidence to warrant a finding of probable cause. Nowhere does the Ombudsman state in his assailed resolution that his dismissal of petitioner‘s complaint was based on insufficiency of evidence to sustain a conviction. Only in the latter instance could the Ombudsman be possibly accused of treating the preliminary investigation as a trial.

Petitioner has made much of Olivarez vs. Sandiganbayan16 to bolster its arguments.17 However, petitioner‘s reliance on said case is misplaced, the factual milieu thereof being entirely different from the one at hand. In Olivarez, what was assailed was the Ombudsman‘s decision to reverse a recommendation to dismiss a case. There, the Court actually upheld the decision of the Ombudsman. In fact, Olivarez argues even against the petitioner‘s cause as we further stated in that case that courts should not interfere in the exercise by the Office of the Ombudsman of investigatory and prosecutory powers granted it by the Constitution, thus:

The Ombudsman‘s conformity thereto is but an exercise of his powers based upon constitutional mandate and the courts should not interfere in such exercise. The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of

the Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely swamped if they could be compelled to review the exercise of discretion on the part of fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant.18lavvphil.net

Indeed, the Court has almost always adopted, quite aptly, a policy of non-interference in the exercise of the Ombudsman‘s constitutional mandated powers.19 The Ombudsman even has the power to dismiss a complaint outright without going through a preliminary investigation. To insulate the Office of the Ombudsman from outside pressure and improper influence, the Constitution as well as Rep. Act No. 677020 saw fit to endow that office with a wide latitude of investigatory and prosecutory powers, virtually free from legislative, executive or judicial intervention. If the Ombudsman, using professional judgment, finds the case dismissible, the Court shall respect such findings unless they are tainted with grave abuse of discretion. The Ombudsman has discretion to determine whether a criminal case, given its facts and circumstances, should be filed or not. This is basically his call.21

The last issue raised by the petitioner relative to the negative finding of the Ombudsman as to the non-existence of probable cause against respondent University officials unquestionably relates to an exercise of judgment, not of jurisdiction. It cannot be overemphasized that in certiorari proceedings under Rule 65 of the Rules of Court, the inquiry is limited essentially on whether or not the public respondent acted without or in excess of its jurisdiction or with grave abuse of discretion.22 Grave abuse of discretion presupposes that the respondent acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction.23 The grave abuse of discretion angle is completely absent in the present case.

Just like the extraordinary writ of certiorari, a writ of mandamus is unavailing to petitioner. For, basic is the rule that mandamus is employed to compel the performance, when refused, of a ministerial, as opposed to a discretionary, duty. When a decision has been reached in a matter involving discretion, mandamus may not be availed of to review or correct such decision, erroneous though it may be.24 True, mandamus is likewise available to compel action, when refused, in matters involving judgment and discretion, but not to direct the exercise of judgment or discretion in the particular way urged by the petitioner. In the performance of an official duty involving discretion, the corresponding official can only be directed by mandamus to act, but not to act one way or the other, except where there is gross abuse of discretion, manifest injustice, or palpable excess of authority.25

Petitioner‘s allegation that the act of respondent University officials of awarding the contract in question to Muñoz Construction notwithstanding the alleged flaw in its bid gave unwarranted benefits to a private party and caused undue damage to the government cannot be given cogency.

As respondents correctly assert in their Comment,26 even assuming that the employment of a resident project engineer is required to be stated in the submission of bidding documents, Muñoz Construction may still be considered to have substantially complied with such requirement since a project engineer had been named to replace its former project engineer.

Needless to stress, respondents did not grant any benefit in favor of any person not qualified therefor or not legally entitled thereto. Nor was there any injury to the government. Muñoz Construction had presented the lowest complying and responsive bid. Accordingly, the award to it of the construction contract in question is most advantageous to the government. For sure, such was the proper course of action under the circumstances obtaining in this case.

WHEREFORE, the instant petition is DISMISSED.

G.R. No. 160211 August 28, 2006 VENANCIO R. NAVA, Petitioner, vs. The Honorable Justices RODOLFO G. PALATTAO, GREGORY S. ONG, and MA. CRISTINA G. CORTEZ-ESTRADA as Members of the Sandiganbayan’s Fourth Division, and the PEOPLE OF THE PHILIPPINES,Respondents.

A meticulous review of the records and the evidence establishes the guilt of the accused beyond reasonable doubt. Clearly, the prosecution was able to prove all the elements of the crime charged. Hence, the conviction of petitioner is inevitable.

The Case

Before us is a Petition for Certiorari 1 under Rule 65 of the Rules of Court, assailing the June 2, 2003 Decision 2and September 29, 2003 Resolution of the Sandiganbayan in Criminal Case No. 23627. The dispositive portion of the challenged Decision reads:

"WHEREFORE, premises considered, judgment is hereby rendered convicting accused VENANCIO NAVA Y RODRIGUEZ of the crime of violation of the Anti-Graft and Corrupt Practices Act particularly Section 3(g) thereof, or entering on behalf of government in any contract or transaction manifestly and grossly disadvantageous to the same whether or not the pubic officer profited or will profit thereby. In the absence of any aggravating or mitigating circumstances, applying the Indeterminate Sentence Law, accused is hereby sentenced to suffer the penalty of imprisonment of six (6) years, and one (1) day as minimum to twelve (12) years and one (1) day as maximum and to suffer perpetual disqualification from public office. Accused Nava is further ordered to pay the government the amount of P380,013.60 which it suffered by way of damages because of the unlawful act or omission committed by the herein accused Venancio Nava.

"From the narration of facts, there hardly appears any circumstance that would suggest the existence of conspiracy among the other accused in the commission of the crime.

"Thus in the absence of conspiracy in the commission of the crime complained of and as the herein other accused only acted upon the orders of accused Venancio Nava, in the absence of any criminal intent on their part to violate the law, the acts of the remaining accused are not considered corrupt practices committed in the performance of their duties as public officers and consequently, accused AJATIL JAIRAL Y PONGCA, ROSALINDA MERKA Y GUANZON & JOSEPH VENTURA Y ABAD are hereby considered innocent of the crime charged and are herebyacquitted." 3

The assailed Resolution dated September 29, 2003, denied reconsideration.

The Facts

The Sandiganbayan narrated the facts of this case as follows:

"The complaint involving the herein accused was initiated by the COA, Region XI, Davao City, which resulted from an audit conducted by a team which was created by the COA Regional Office per COA Regional Assignment Order No. 91-74 dated January 8, 1991. The objective of the team [was] to conduct an audit of the 9.36 million allotment which was released in 1990 by the DECS, Region XI to its Division Offices.

"In the Audit Report, the amount of P603,265.00 was shown to have been released to the DECS Division of Davao del Sur for distribution to the newly nationalized high schools located within the region. Through the initiative of accused Venancio Nava, a meeting was called among his seven (7) schools division superintendents whom he persuaded to use the money or allotment for the purchase of Science Laboratory Tools and Devices (SLTD). In other words, instead of referring the allotment to the one hundred fifty-five (155) heads of the nationalized high schools for the improvement of their facilities, accused Nava succeeded in persuading his seven (7) schools division superintendents to use the allotment for the purchase of science education facilities for the calendar year 1990.

"In the purchase of the school materials, the law provides that the same shall be done through a public bidding pursuant to Circular No. 85-55, series of 1985. But in the instant case, evidence shows that accused Nava persuaded his seven (7) schools division superintendents to ignore the circular as allegedly time was of the essence in making the purchases and if not done before the calendar year 1990, the funds allotted will revert back to the general fund.

"In the hurried purchase of SLTD‘s, the provision on the conduct of a public bidding was not followed. Instead the purchase was done through negotiation. Evidence shows that the items were purchased from Joven‘s Trading, a business establishment with principal address at Tayug, Pangasinan; D‘[I]mplacable Enterprise with principal business address at 115 West Capitol Drive, Pasig, Metro Manila and from Evelyn Miranda of

1242 Oroqueta Street, Sta. Cruz, Manila. As disclosed by the audit report, the prices of the [SLTDs] as purchased from the above-named sellers exceeded the prevailing market price ranging from 56% to 1,175% based on the mathematical computation done by the COA audit team. The report concluded that the government lost P380,013.60. That the injury to the government as quantified was the result of the non-observance by the accused of the COA rules on public bidding and DECS Order No. 100 suspending the purchases of [SLTDs]." 4

The Commission on Audit (COA) Report recommended the filing of criminal and administrative charges against the persons liable, including petitioner, before the Office of the Ombudsman-Mindanao.

Petitioner was subsequently charged in an Information 5 filed on April 8, 1997, worded as follows:

"That on or about the period between November to December 1990, and for sometime prior or subsequent thereto, in Digos, Davao Del Sur and/or Davao City, Philippines and within the jurisdiction of this Honorable Court, the accused Venancio R. Nava (DECS-Region XI Director) and Ajatil Jairal (Division Superintendent, DECS, Davao del Sur), both high[-]ranking officials and Rosalinda Merka, and Teodora Indin (Administrative Officer and Assistant Division Superintendent, respectively of DECS-Division of Davao Del Sur), all low ranking officials, while in the discharge of their respective official functions, committing the offense in relation to their office and with grave abuse [of] authority, conniving and confederating with one another, did then and there willfully, unlawfully and feloniously enter, on behalf of the government, into transactions with D‘Implacable Enterprise and Joven‘s Trading, respectively, represented by accused Antonio S. Tan and Evelyn Miranda and Joseph Ventura for the purchase of Science Laboratory Tools and Devices (SLTD) intended for use by the public high schools in the area amounting to [P603,265.00], Philippine currency, without the requisite public bidding and in violation of DECS Order No. 100, Series of 1990, which transaction involved an overprice in the amount of P380,013.60 and thus, is manifestly and grossly disadvantageous to the government." 6

Special Prosecution Officer II Evelyn T. Lucero-Agcaoili recommended the dismissal of the foregoing Information on the ground, among others, that there was no probable cause. She argued that only estimates were made to show the discrepancy of prices instead of a comparative listing on an item to item basis. 7 The recommendation was disapproved, however, by then Ombudsman Aniano A. Desierto.

Ruling of the Sandiganbayan

After due trial, only petitioner was convicted, while all the other accused were acquitted. 8

Petitioner was found guilty of violating Section 3(g) of the Anti-Graft and Corrupt Practices Act, or entering on behalf of the government any contract or transaction

manifestly and grossly disadvantageous to the latter, whether or not the public officer profited or would profit thereby.

The Sandiganbayan (SBN) said that, in the purchase of the Science Laboratory Tools and Devices (SLTDs), petitioner had not conducted a public bidding in accordance with COA Circular No. 85-55A. As a result, the prices of the SLTDs, as purchased, exceeded the prevailing market price from 56 percent to 1,175 percent, based on the mathematical computations of the COA team. 9 In his defense, petitioner had argued that the said COA Circular was merely directory, not mandatory. Further, the purchases in question had been done in the interest of public service. 10

The Sandiganbayan did not give credence to the foregoing defenses raised by petitioner. On the contrary, it found the evidence adduced by petitioner‘s co-accused, Superintendent Ajatil Jairal, to be "enlightening," manifesting an intricate web of deceit spun by petitioner and involving all the other superintendents in the process.11

The graft court did not accept the claim of petitioner that he signed the checks only after the other signatories had already signed them. The evidence showed that blank Philippine National Bank (PNB) checks had been received by Nila E. Chavez, a clerk in the regional office, for petitioner‘s signature. The Sandiganbayan opined that the evidence amply supported Jairal‘s testimony that the questioned transactions had emanated from the regional office, as in fact, all the documents pertinent to the transaction had already been prepared and signed by petitioner when the meeting with the superintendents was called sometime in August 1990. 12

In that meeting, the superintendents were given prepared documents like the Purchase Orders and vouchers, together with the justification. 13 This circumstance prompted Jairal to conduct his own canvass. The Sandiganbayan held that this act was suggestive of the good faith of Jairal, thereby negating any claim of conspiracy with the other co-accused and, in particular, petitioner.

In its assailed Resolution, the SBN denied petitioner‘s Motion for Reconsideration. It held that the series of acts culminating in the questioned transactions constituted violations of Department of Education, Culture and Sports (DECS) Order No. 100; and COA Circular No. 85-55A. Those acts, ruled the SBN, sufficiently established that the contract or transaction entered into was manifestly or grossly disadvantageous to the government.

Hence, this Petition. 14

The Issues

Petitioner raises the following issues for our consideration:

"I. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings of the Special Audit Team that irregularly conducted the audit beyond the authorized period and which team falsified the Special Audit Report.

"II. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings in the special audit report where the Special Audit Team egregiously failed to comply with the minimum standards set by the Supreme Court and adopted by the Commission on Audit in violation of petitioner‘s right to due process, and which report suppressed evidence favorable to the petitioner.

"III. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings in the Special Audit Report considering that none of the allegedly overpriced items were canvassed or purchased by the Special Audit Team such that there is no competent evidence from which to determine that there was an overprice and that the transaction was manifestly and grossly disadvantageous to the government.

"IV. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in finding that there was an overprice where none of the prices of the questioned items exceeded the amount set by the Department of Budget and Management.

"V. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in selectively considering the findings in the decision in Administrative Case No. XI-91-088 and failing to consider the findings thereon that petitioner was justified in undertaking a negotiated purchase and that there was no overpricing.

"VI. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in selectively considering the findings of XI-91-088 and failing to consider the findings thereon that petitioner was justified in undertaking a negotiated purchase, there was no overpricing, and that the purchases did not violate DECS Order No. 100.

"VII. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in failing to absolve the petitioner where conspiracy was not proven and the suppliers who benefited from the alleged overpricing were acquitted.

"VIII. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in admitting in evidence and giving probative value to Exhibit ‗8‘ the existence and contents of which are fictitious.

"IX. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in giving credence to the self-serving and perjurious

testimony of co-accused Ajatil Jairal that the questioned transactions emanated from the regional office [in spite] of the documentary evidence and the testimony of the accused supplier which prove that the transaction emanated from the division office of Digos headed by co-accused Ajatil Jairal.

"X. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in finding that the petitioner entered into a transaction that was manifestly and grossly disadvantageous to the government where the evidence clearly established that the questioned transactions were entered into by the division office of Digos through co-accused Ajatil Jairal.

"XI. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in convicting the petitioner in the absence of proof beyond reasonable doubt." 15

All these issues basically refer to the question of whether the Sandiganbayan committed reversible errors (not grave abuse of discretion) in finding petitioner guilty beyond reasonable doubt of violation of Section 3(g), Republic Act No. 3019.

The Court‘s Ruling

The Petition has no merit.

Procedural Issue:

Propriety of Certiorari

At the outset, it must be stressed that to contest the Sandiganbayan‘s Decision and Resolution on June 2, 2003 and September 29, 2003, respectively, petitioner should have filed a petition for review on certiorari under Rule 45, not the present Petition for Certiorari under Rule 65. Section 7 of Presidential Decree No. 1606, 16 as amended by Republic Act No. 8249, 17 provides that "[d]ecisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court by petition for review on certiorari raising pure questions of law in accordance with Rule 45 of the Rules of Court." Section 1 of Rule 45 of the Rules of Court likewise provides that "[a] party desiring to appeal by certiorari from a judgment or final order or resolution of the x x x Sandiganbayan x x x whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth."

Basic is the principle that when Rule 45 is available, recourse under Rule 65 cannot be allowed either as an add-on or as a substitute for appeal. 18 The special civil action for certiorari is not and cannot be a substitute for an appeal, when the latter remedy is available. 19

This Court has consistently ruled that a petition for certiorari under Rule 65 lies only when there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law. 20 A remedy is considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency or as in this case, the Sandiganbayan. 21 Since the assailed Decision and Resolution were dispositions on the merits, and the Sandiganbayan had no remaining issue to resolve, an appeal would have been the plain, speedy and adequate remedy for petitioner.

To be sure, the remedies of appeal and certiorari are mutually exclusive and not alternative or successive. 22 For this procedural lapse, the Petition should have been dismissed outright. Nonetheless, inasmuch as it was filed within the 15-day period provided under Rule 45, the Court treated it as a petition for review (not certiorari) under Rule 45 in order to accord substantial justice to the parties. Thus, it was given due course and the Court required the parties to file their Memoranda.

Main Issue:

Sufficiency of Evidence

Petitioner argues that the Sandiganbayan erred in convicting him, because the pieces of evidence to support the charges were not convincing. Specifically, he submits the following detailed argumentation:

"1. the Special Audit Report was fraudulent, incomplete, irregular, inaccurate, illicit and suppressed evidence in favor of the Petitioner;

"2. there was no competent evidence to determine the overprice as none of the samples secured by the audit team from the Division of Davao del Sur were canvassed or purchased by the audit team;

"3. the allegedly overpriced items did not exceed the amount set by the Department of Budget and Management;

"4. the decision in an administrative investigation were selectively lifted out of context;

"5. the administrative findings that Petitioner was justified in undertaking a negotiated purchase, that there was no overpricing, and that the purchases did not violate DECS Order No. 100 were disregarded;

"6. Exhibit ‗8‘, the contents of which are fictitious, was admitted in evidence and given probative value;

"7. The suppliers who benefited from the transactions were acquitted, along with the other accused who directly participated in the questioned transactions; and

"8. The self-serving and perjury-ridden statements of co-accused Jairal were given credence despite documentary and testimonial evidence to the contrary." 23

Petitioner further avers that the findings of fact in the Decision dated October 21, 1996 in DECS Administrative Case No. XI-91-088 24 denied any overpricing and justified the negotiated purchases in lieu of a public bidding. 25Since there was no overpricing and since he was justified in undertaking the negotiated purchase, petitioner submits that he cannot be convicted of violating Section 3(g) of Republic Act No. 3019.

Validity of Audit

The principal evidence presented during trial was the COA Special Audit Report (COA Report). The COA is the agency specifically given the power, authority and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of fund and property owned by or pertaining to the government. 26 It has the exclusive authority to define the scope of its audit and examination and to establish the required techniques and methods. 27

Thus, COA‘s findings are accorded not only respect but also finality, when they are not tainted with grave abuse of discretion. 28 Only upon a clear showing of grave abuse of discretion may the courts set aside decisions of government agencies entrusted with the regulation of activities coming under their special technical knowledge and training. 29 In this case, the SBN correctly accorded credence to the COA Report. As will be shown later, the Report can withstand legal scrutiny.

Initially, petitioner faults the audit team for conducting the investigation beyond the twenty-one day period stated in the COA Regional Office Assignment Order No. 91-174 dated January 8, 1991. But this delay by itself did not destroy the credibility of the Report. Neither was it sufficient to constitute fraud or indicate bad faith on the part of the audit team. Indeed, in the conduct of an audit, the length of time the actual examination occurs is dependent upon the documents involved. If the documents are voluminous, then it necessarily follows that more time would be needed. 30 What is important is that the findings of the audit should be sufficiently supported by evidence.

Petitioner also imputes fraud to the audit team for making "it appear that the items released by the Division Office of Davao Del Sur on 21 February 1991 were compared with and became the basis for the purchase of exactly the same items on 20 February 1991." 31

The discrepancy regarding the date when the samples were taken and the date of the purchase of the same items for comparison was not very material. The discrepancy per se did not constitute fraud in the absence of ill motive. We agree with respondents in their claim of clerical inadvertence. We accept their explanation that the wrong date was written by the supplier concerned when the items were bought for comparison. Anyway, the logical sequence of events was clearly indicated in the COA Report:

"1.5.1. Obtained samples of each laboratory tools and devices purchased by the Division of Davao del Sur, Memorandum Receipts covering all the samples were issued by the agency to the audit team and are marked as Exhibits 1.2 and 3 of this Report."

"1.5.2. Bought and presented these samples to reputable business establishments in Davao City like Mercury Drug Store, Berovan Marketing Incorporated and [A]llied Medical Equipment and Supply Corporation (AMESCO) where these items are also available, for price verification.

"1.5.3. Available items which were exactly the same as the samples presented were purchased from AMESCO and Berovan Marketing Incorporated, the business establishments which quoted the lowest prices. Official receipts were issued by the AMESCO and Berovan Marketing Incorporated which are hereto marked as Exhibits 4,5,6 and 7 respectively." 32

The COA team then tabulated the results as follows: 33

Item Purchased Unit Cost

Recanvassed

Price + 10% Allow. Difference

% of Over-pricing

Quantity Purchased

Total Amount of Overpricing

Flask Brush made of Nylon P112.20 P8.80 P103.40 1,175% 400 P41,360.00

Test Tube Glass Pyrex (18x50 mm) 22.36 14.30 8.06 56% 350 2,821.00

Graduated Cylinder Pyrex (100ml) 713.00 159.50 553.50 347% 324 179,334.00

Glass Spirit Burner (alcohol lamp) 163.50 38.50 125.00 325% 144 18,000.00

Spring Balance (12.5kg)Germany 551.00 93.50 457.50 489% 102 46,665.00

Iron Wire Gauge 16.20 9.90 6.30 64% 47 296.10

Bunsen Burner 701.00 90.75 610.25 672% 150 91,537.50

Total P380,013.60

What is glaring is the discrepancy in prices. The tabulated figures are supported by Exhibits "E-1," "E-2," "E-3," and "E-4," the Official Receipts evidencing the equipment purchased by the audit team for purposes of comparison with those procured by petitioner. 34 The authenticity of these Exhibits is not disputed by petitioner. As the SBN stated in its Decision, the fact of overpricing -- as reflected in the aforementioned exhibits -- was testified to or identified by Laura S. Soriano, team leader of the audit

team. 35 It is hornbook doctrine that the findings of the trial court are accorded great weight, since it was able to observe the demeanor of witnesses firsthand and up close. 36 In the absence of contrary evidence, these findings are conclusive on this Court.

It was therefore incumbent on petitioner to prove that the audit team or any of its members thereof was so motivated by ill feelings against him that it came up with a fraudulent report. Since he was not able to show any evidence to this end, his contention as to the irregularity of the audit due to the discrepancy of the dates involved must necessarily fail.

An audit is conducted to determine whether the amounts allotted for certain expenditures were spent wisely, in keeping with official guidelines and regulations. It is not a witch hunt to terrorize accountable public officials. The presumption is always that official duty has been regularly performed 37 -- both on the part of those involved with the expense allotment being audited and on the part of the audit team -- unless there is evidence to the contrary.

Due Process

Petitioner likewise invokes Arriola v. Commission on Audit 38 to support his claim that his right to due process was violated. In that case, this Court ruled that the disallowance made by the COA was not sufficiently supported by evidence, as it was based on undocumented claims. Moreover, in Arriola, the documents that were used as basis of the COA Decision were not shown to petitioners, despite their repeated demands to see them. They were denied access to the actual canvass sheets or price quotations from accredited suppliers.

As the present petitioner pointed out in his Memorandum, the foregoing jurisprudence became the basis for the COA to issue Memorandum Order No. 97-012 dated March 31, 1997, which states:

"3.2 To firm up the findings to a reliable degree of certainty, initial findings of overpricing based on market price indicators mentioned in pa. 2.1 above have to be supported with canvass sheet and/or price quotations indicating:

a) the identities of the suppliers or sellers;

b) the availability of stock sufficient in quantity to meet the requirements of the procuring agency;

c) the specifications of the items which should match those involved in the finding of overpricing;

d) the purchase/contract terms and conditions which should be the same as those of the questioned transaction"

Petitioner‘s reliance on Arriola is misplaced. First, that Decision, more so, the COA Memorandum Order that was issued pursuant to the former, was promulgated after the period when the audit in the present case was conducted. Neither Arriola nor the COA Memorandum Order can be given any retroactive effect.

Second and more important, the circumstances in Arriola are different from those in the present case. In the earlier case, the COA merely referred to a cost comparison made by the engineer of COA-Technical Services Office (TSO), based on unit costs furnished by the Price Monitoring Division of the COA-TSO. The COA even refused to show the canvass sheets to the petitioners, explaining that the source document was confidential.

In the present case, the audit team examined several documents before they arrived at their conclusion that the subject transactions were grossly disadvantageous to the government. These documents were included in the Formal Offer of Evidence submitted to the Sandiganbayan. 39 Petitioner was likewise presented an opportunity to controvert the findings of the audit team during the exit conference held at the end of the audit, but he failed to do so. 40

Further, the fact that only three canvass sheets/price quotations were presented by the audit team does not bolster petitioner‘s claim that his right to due process was violated. To be sure, there is no rule stating that all price canvass sheets must be presented. It is enough that those that are made the basis of comparison be submitted for scrutiny to the parties being audited. Indubitably, these documents were properly submitted and testified to by the principal prosecution witness, Laura Soriano. Moreover, petitioner had ample opportunity to controvert them.

Public Bidding

Petitioner oscillates between denying that he was responsible for the procurement of the questioned SLTDs, on the one hand; and, on the other, stating that the negotiated purchase was justifiable under the circumstances.

On his disavowal of responsibility for the questioned procurement, he claims that the transactions emanated from the Division Office of Digos headed by Jairal. 41 However, in the administrative case 42 filed against petitioner before the DECS, it was established that he "gave the go signal" 43 that prompted the division superintendents to procure the SLTDs through negotiated purchase. This fact is not disputed by petitioner, who quotes the same DECS Decision in stating that his "acts were justifiable under the circumstances then obtaining at that time and for reasons of efficient and prompt distribution of the SLTDs to the high schools." 44

In justifying the negotiated purchase without public bidding, petitioner claims that "any delay in the enrichment of the minds of the public high school students of Davao del Sur is detrimental and antithetical to public service." 45Although this reasoning is quite laudable, there was nothing presented to substantiate it.

Executive Order No. 301 states the general rule that no contract for public services or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities may be renewed or entered into without public bidding. The rule however, is not without exceptions. Specifically, negotiated contracts may be entered into under any of the following circumstances:

"a. Whenever the supplies are urgently needed to meet an emergency which may involve the loss of, or danger to, life and/or property;

"b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without causing detriment to the public service;

"c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have subdealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms to the government;

"d. Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive times, either due to lack of bidders or the offers received in each instance were exorbitant or non-conforming to specifications;

"e. In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most advantageous to the government to be determined by the Department Head concerned;

"f. Whenever the purchase is made from an agency of the government." 46

National Center for Mental Health v. Commission on Audit 47 upheld the validity of the negotiated contracts for the renovation and the improvement of the National Center for Mental Health. In that case, petitioners were able to show that the long overdue need to renovate the Center "made it compelling to fast track what had been felt to be essential in providing due and proper treatment and care for the center‘s patients." 48

This justification was likewise accepted in Baylon v. Ombudsman 49 in which we recognized that the purchases were made in response to an emergency brought about by the shortage in the blood supply available to the public. The shortage was a matter recognized and addressed by then Secretary of Health Juan M. Flavier, who attested that "he directed the NKTI [National Kidney and Transplant Institute] to do something about the situation and immediately fast-track the implementation of the Voluntary Blood Donation Program of the government in order to prevent further deaths owing to the lack of blood." 50

Unfortunately for petitioner, there was no showing of any immediate and compelling justification for dispensing with the requirement of public bidding. We cannot accept his unsubstantiated reasoning that a public bidding would unnecessarily delay the purchase of the SLTDs. Not only would he have to prove that indeed there would be a delay but,

more important, he would have to show how a public bidding would be detrimental and antithetical to public service.

As the COA Report aptly states, the law on public bidding is not an empty formality. It aims to secure the lowest possible price and obtain the best bargain for the government. It is based on the principle that under ordinary circumstances, fair competition in the market tends to lower prices and eliminate favoritism. 51

In this case, the DECS Division Office of Davao del Sur failed to conduct public bidding on the subject transactions. The procurement of laboratory tools and devices was consummated with only the following documents to compensate for the absence of a public bidding:

"1.13.a Price lists furnished by the Supply Coordination Office

1.13.b. Price lists furnished by the Procurement Services of the Department of Budget and Management

1.13.c. Price lists of Esteem Enterprises" 52

The COA Report states that the Division Office merely relied on the above documents as basis for concluding that the prices offered by D‘Implacable Enterprises and Joven‘s Trading were reasonable. But as found by the COA, reliance on the foregoing supporting documents was completely without merit on the following grounds:

"a. The Supply Coordination Office was already dissolved or abolished at the time when the transactions were consummated, thus, it is illogical for the management to consider the price lists furnished by the Supply Coordination Office.

"b. The indorsement letter made by the Procurement Services of the Department of Budget and Management containing the price lists specifically mentions Griffin and George brands, made in England. However, the management did not procure these brands of [SLTDs].

"c. The price lists furnished by the Esteem Enterprises does not deserve the scantest consideration, since there is no law or regulation specifically mentioning that the price lists of the Esteem Enterprises will be used as basis for buying [SLTDs]." 53

Granting arguendo that petitioner did not have a hand in the procurement and that the transactions emanated from the Division Office of Davao del Sur, we still find him liable as the final approving authority. In fact, Exhibit "B-2" -- Purchase Order No. 90-024, amounting to P231,012 and dated December 17, 1990 -- was recommended by Jairal and approved by petitioner. 54 This exhibit was part of the evidence adduced in the Sandiganbayan to prove that the purchase of the SLTDs was consummated and duly paid by the DECS without any proof of public bidding.

Although this Court has previously ruled 55 that all heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies or enter into negotiations, it is not unreasonable to expect petitioner to exercise the necessary diligence in making sure at the very least, that the proper formalities in the questioned transaction were observed -- that a public bidding was conducted. This step does not entail delving into intricate details of product quality, complete delivery or fair and accurate pricing.

Unlike other minute requirements in government procurement, compliance or non-compliance with the rules on public bidding is readily apparent; and the approving authority can easily call the attention of the subordinates concerned. To rule otherwise would be to render meaningless the accountability of high-ranking public officials and to reduce their approving authority to nothing more than a mere rubber stamp. The process of approval is not a ministerial duty of approving authorities to sign every document that comes across their desks, and then point to their subordinates as the parties responsible if something goes awry.

Suspension of Purchases

Obviously working against petitioner is DECS Order No. 100 dated September 3, 1990 which states thus:

"In view of the Government‘s call for economy measures coupled with the deficiency in allotments intended for the payment of salary standardization, retirement benefits, bonus and other priority items, the procurement of reference and supplementary materials, tools and devices equipment, furniture, including land acquisition and land improvement shall be suspended for CY 1990. However, the following items shall be exempted from the said suspension:

a) textbooks published by the Instructional Materials Corporation and its commercial edition;

b) elementary school desks and tablet arm chairs[.]"

As the COA Report succinctly states, the Administrative Order is explicit in its provisions that tools and deviceswere among the items whose procurement was suspended by the DECS for the year 1990.

Petitioner claims that in the administrative case against him, there was no mention of a violation of DECS Order No. 100. 56 He alleges that the purchases of SLTDs by the division superintendents were entered into and perfected on July 1, 1990; that is, more than two (2) months before the issuance of DECS Order No. 100. He also alleged that the Sub-Allotment Advice (SAA) to the DECS Regional Office No. XI in the amount of P9.36M -- out of which P603,265.00 was used for the procurement of the questioned SLTDs -- had been released by the DECS Central Office in August 1990, a month before the issuance of DECS Order No. 100.

The Court notes that these arguments are mere assertions bereft of any proof. There was no evidence presented to prove that the SAA was issued prior to the effectivity of DECS Order No. 100. On the other hand, the COA Report states that the DECS Division of Davao del Sur received the following Letters of Advice of Allotments (LAA): 57

"LAA NO. AMOUNT DATE OF LAA

DO CO471-774-90 P141,956.00 October 24, 1990

DO-CO471-797-90 P161,309.00 November 16, 1990

DO-CO471-1007-90 P300,000.00 December 14, 1990"

The foregoing LAAs were attached as annexes 58 to the COA Report and were presented during trial in the Sandiganbayan. 59

Also, Schools Division Superintendent Jairal had sent a letter to petitioner, requesting favorable consideration of a forthcoming release of funding for the different barangay and municipal high schools. The letter was dated October 16, 1990, 60 and was made well within the effectivity of the DECS Order. In that letter, Jairal mentioned the receipt by his office of DECS Order No. 100, albeit wrongly interpreting it as suspending only the purchases of reference books, supplementary readers, and so on, but allegedly silent on the purchase of laboratory supplies and materials. 61

Finally, the SLTDs were purchased within the covered period of DECS Order No. 100, as evidenced by the following relevant documents adduced by the COA audit team, among others:

1) Disbursement Voucher dated November 27, 1990 for the payment of various laboratory supplies and materials by DECS, Davao del Sur in the amount of P303,29.40 62

2) Official Receipt No. 455 dated January 7, 1991 amounting to P68,424.00 issued by Joven‘s Trading 63

3) Report of Inspection dated November 26, 1990 signed by Jacinta Villareal and Felicisimo Canoy 64

4) Sales Invoice No. 044 dated November 26, 1990 issued by Joven‘s Trading in favor of DECS amounting toP303,259.40 65

5) Certificate of Acceptance dated November 27, 1990 signed by Felicismo Canoy 66

6) Purchase Order No. 90-021 in favor of Joven‘s Trading dated November 26, 1990 recommended for approval by Ajatil Jairal 67

7) Official Receipt No. 92356 dated January 7, 1991 issued by D‘Implacable Enterprises amounting toP231,012.00 68

8) Purchase Order No. 90-024 dated December 17, 1990 recommended for approval by Ajatil Jairal and approved Director Venancio Nava amounting to P231,012.00." 69

The confluence of the foregoing circumstances indubitably establishes that petitioner indeed wantonly disregarded regulations. Additionally, DECS Order No. 100 negates his claim that the negotiated transaction -- done instead of a public bidding -- was justified. If that Order suspended the acquisition of tools and devices, then there was all the more reason for making purchases by public bidding. Since the buying of tools and devices was specifically suspended, petitioner cannot argue that the purchases were done in the interest of public service.

Proof of Guilt

To sustain a conviction under Section 3(g) of Republic Act No. 3019, it must be clearly proven that 1) the accused is a public officer; 2) the public officer entered into a contract or transaction on behalf of the government; and 3) the contract or transaction was grossly and manifestly disadvantageous to the government. 70

From the foregoing, it is clear that the Sandiganbayan did not err in ruling that the evidence presented warranted a verdict of conviction. Petitioner is a public officer, who approved the transactions on behalf of the government, which thereby suffered a substantial loss. The discrepancy between the prices of the SLTDs purchased by the DECS and the samples purchased by the COA audit team clearly established such undue injury. Indeed, the discrepancy was grossly and manifestly disadvantageous to the government.

We must emphasize however, that the lack of a public bidding and the violation of an administrative order do not by themselves satisfy the third element of Republic Act No. 3019, Section 3(g); namely, that the contract or transaction entered into was manifestly and grossly disadvantageous to the government, as seems to be stated in the Resolution of the Sandiganbayan denying the Motion for Reconsideration. 71 Lack of public bidding alone does not result in a manifest and gross disadvantage. Indeed, the absence of a public bidding may mean that the government was not able to secure the lowest bargain in its favor and may open the door to graft and corruption. Nevertheless, the law requires that the disadvantage must be manifest and gross. Penal laws are strictly construed against the government. 72

If the accused is to be sent to jail, it must be because there is solid evidence to pin that person down, not because of the omission of a procedural matter alone. Indeed, all the elements of a violation of Section 3(g) of Republic Act No. 3019 should be established to prove the culpability of the accused. In this case, there is a clear showing that all the elements of the offense are present. Thus, there can be no other conclusion other than conviction.

We note, however, that petitioner was sentenced to suffer the penalty of six (6) years and one (1) day as minimum to twelve (12) years and one (1) day as maximum. Under Section 9 of Republic Act 3019, petitioner should be punished with imprisonment of not less than six (6) years and one (1) month nor more than fifteen years. Thus, we adjust the minimum penalty imposed on petitioner in accordance with the law.

WHEREFORE, the Petition is DENIED. The assailed Decision and Resolution are AFFIRMED, with the MODIFICATION that the minimum sentence imposed shall be six (6) years and one (1) month, not six (6) years and one (1) day. Costs against petitioner.

G.R. Nos. 162748-50 March 28, 2006 PEOPLE OF THE PHILIPPINES, Petitioner, vs. SANDIGANBAYAN (1st Division), SEVERINO J. LAJARA, DENNIS LANZANAS, APOLONIO ELASIGUE, SENADOR C. ALCALDE, EMILIO C. RODRIGUEZ, EFREN M. GARCIA, FRISCO L. ONA, RENATO S. BUNYI, DIOSDADO J. LAJARA, CRISPIN M. CONTRERAS, JORGE M. JAVIER, and JESUS V. GARCIA, Respondents. Challenged by the People of the Philippines via petition for certiorari under Rule 65 are the Sandiganbayan Resolutionof September 26, 2003 granting the Motion to Quashfiled by private respondents and accordingly dismissing Criminal Case Nos. 23153-23155, and the Resolution3 of January 28, 2004 denying the Motion for Reconsideration of said resolution. Private respondents then Calamba Mayor Severino J. Lajara and his fellow local public officials Dennis Lanzanas, Apolonio A. Elasigue, Senador C. Alcalde, Emilio C. Rodriguez, Efren M. Garcia, Frisco L. Ona, Renato A. Bunyi, Diosdado M. Lajara, Crispin M. Contreras, Jorge M. Javier were, together with Jesus V. Garcia, President of Australian Professional Realty (APRI), charged before the Sandiganbayan under three separate informations for violation of Sections 3(e), (g) and (j) of Republic Act No. 3019 (the Anti-Graft and Corrupt Practices Act) which provisions read: SEC. 3. Corrupt practices of public officers. - In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: x x x x (e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

x x x x (g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby. x x x x (j) Knowingly approving or granting any license, permit, privilege or benefit in favor of any person not qualified for or not legally entitled to such license, permit, privilege or advantage or of a mere representative or dummy of one who is not so qualified or entitled. The charges arose from private respondents public officials’ entering, pursuant to Municipal Ordinance No. 497, into a Memorandum of Agreement(MOA) dated December 5, 1994 with APRI represented by respondent Garcia for the construction of the Calamba Shopping Center under the "Build-Operate-Transfer" scheme in Republic Act 6957,as amended by R.A. 7718. The three separate Informations all dated January 18, 1996 read: CRIMINAL CASE NO. 23153 The undersigned Special Prosecution Officer, Office of the Special Prosecutor, hereby accuses Severino Lajara, Dennis Lanzanas, Apolonio Elasigue, Senador Alcalde, Emilio C. Rodriguez, Efren M. Garcia, Frisco L. Ona, Renato A. Bunyi, Diosdado J. Lajara, Crispin M. Contreras, Jorge M. Javier and Jesus V. Garcia for violation of Section 3 (j) of Republic Act 3019, as amended, committed as follows: That on December 5, 1994, or sometime prior or subsequent thereto, in Calamba, Laguna, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, Severino Lajara, as Municipal Mayor of Calamba Laguna, and while in the performance of his official function, conniving and confederating with the other public officers namely: Dennis Lanzanas, the Vice-Mayor, Apolinio Elasigue, Frisco Ona, Senador C. Alcalde, Renato A. Bunyi, Emilio C. Rodriguez, Diosdado J. Lajara, Efren Garcia, Jorge Javier and Crispin Contreras, all Members of the Sangguniang Bayan of Calamba, Laguna, together with the private respondent, Jesus V. Garcia, President of the Australian Professional Realty, Inc., did then and there willfully, unlawfully and criminally grant to Austalian Professional Realty, Inc., the privilege of constructing the shopping center located at Calamba, Laguna despite knowledge that the said construction firm is not qualified not being accredited by the Philippine Contractor’s Accreditation Board (PCAB) as Class AAA contractor because it has only a paid-up capital of ONE HUNDRED TWENTY FIVE THOUSAND PESOS (P125,000.00), Philippine Currency, when the subject project would cost from P200 Million to P300 Million, to the prejudice of the government. Contrary to law. (Underscoring supplied) CRIMINAL CASE NO. 23154 The undersigned Special Prosecution Officer, Office of the Special Prosecutor, hereby accuses Severino Lajara, Dennis Lanzanas, Apolonio Elasigue, Senador Alcalde, Emilio C. Rodriguez, Efren M. Garcia, Frisco L. Ona, Renato A. Bunyi, Diosdado J. Lajara, Crispin M. Contreras, Jorge M. Javier and Jesus V. Garcia for violation of Section 3 (g) of Republic Act 3019, as amended, committed as follows:

That on December 5, 1994, or sometime prior or subsequent thereto, in Calamba, Laguna, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, Severino Lajara, as Municipal Mayor of Calamba Laguna, and while in the performance of his official function, conniving and confederating with the other public officers namely: Dennis Lanzanas, the Vice-Mayor, Apolinio Elasigue, Frisco Ona, Senador C. Alcalde, Diosdado J. Lajara, Efren Garcia, Jorge Javier and Crispin Contreras, all Members of the Sangguniang Bayan of Calamba, Laguna, together with the private respondent, Jesus V. Garcia, president of the Australian Professional Realty, Inc., did then and there willfully, unlawfully and criminally enter into a Memorandum of Agreement for and in behalf of the Municipality of Calamba, Laguna with contractor Australian Professional Realty, Inc. represented by its President, private respondent Jesus V. Garcia, regarding the construction of a shopping center in Calamba, Laguna, the terms and conditions being manifestly and grossly disadvantageous to the Municipality of Calamba such that the actual operation and management of the said shopping center and the income derived therefrom for a period of twenty five (25) years will be directly under the control and supervision of the Australian Professional Realty, Inc., thus causing undue injury to the Government. CONTRARY TO LAW.(Underscoring supplied) CRIMINAL CASE NO. 23155 The undersigned Special Prosecution Officer, Office of the Special Prosecutor, hereby accuses Severino Lajara, Dennis Lanzanas, Apolonio Elasigue, Senador Alcalde, Emilio C. Rodriguez, Efren M. Garcia, Frisco L. Ona, Renato A. Bunyi, Diosdado J. Lajara, Crispin M. Contreras, Jorge M. Javier and Jesus V. Garcia for violation of Section 3 (e) of Republic Act 3019, as amended, ommitted as follows: That on December 5, 1994, or sometime prior or subsequent thereto, in Calamba, Laguna, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, Severino Lajara, as Municipal Mayor of Calamba Laguna, and while in the performance of his official function, conniving and confederating with the other public officers namely: Dennis Lanzanas, the Vice-Mayor, Apolinio Elasigue, Frisco Ona, Senador C. Alcalde, Renato A. Bunyi, Emilio C. Rodriguez, Diosdado J. Lajara, Efren Garcia, Jorge Javier and Crispin Contreras, Members of the Sangguniang Bayan of Calamba, Laguna, together with the private respondent, Jesus V. Garcia, president of the Australian Professional Realty, Inc., and acting with evident bad faith did then and there willfully, unlawfully and criminally enter into a Memorandum of Agreement on behalf of the Municipality of Calamba, Laguna with contractor Australian Professional Realty, Inc. represented by its President, private respondent Jesus V. Garcia, for the construction of the shopping center in Calamba, Laguna, under the Build Operate and Transfer (BOT) scheme, despite knowledge that the Municipal Ordinance No. 497 which gave authority to respondent Mayor to enter into the Memorandum of Agreement was still under study by the Sangguniang Panlalawigan of Laguna; that Australian Realty, Inc. is not an accredited contractor; and that no pre-qualification, bidding and awarding of the project was conducted, thus, causing undue injury to the complainants and to the Government. CONTRARY TO LAW.(Underscoring supplied) On February 6, 1996, private respondents filed a Petition for Reinvestigationand a Motion to Suspend Proceedings and to Hold in Abeyance the Issuance of Warrant of Arrestdue to the pendency of two civil actions for the nullification of the MOA, Civil Case No. 2180-95-C, "Merlinda Paner,

for herself and for the vendors of the Calamba Public Market v. Mayor Severino Lajara & Australian Professional Realty, Inc.," and Civil Case No. 2186-95-C, "Calamba Vendors Credit Cooperative and its Members v. The Municipality of Calamba, Laguna, Mayor Sereriano Lajara and Australian Professional Realty, Inc.,"at Branch 92 of the Regional Trial Court of Calamba City (the trial court), they alleging that the said civil cases raised prejudicial questions which must first be resolved as they are determinative of their innocence or guilt. By Orderof February 16, 1996, the Sandiganbayan held in abeyance the issuance of orders of arrest pending further study by the prosecution on whether the informations, as worded, canreasonably produce conviction." After reinvestigation, the Office of the Special Prosecutor submitted to the Ombudsman a Memorandum recommending the dismissal of the criminal cases upon finding that the Calamba Shopping Center was not listed as a priority project, hence, no bidding was required; APRI was a project initiator and not a contractor, hence, it did not have to register and be accredited by the Philippine Contractors Accreditation Board (PCAB); and for the purpose of constructing the shopping center, APRI has, aside from its paid-up capital stock, credit line facilities of 150 million pesos.The Ombudsman disapproved the recommendation of the Office of the Special Prosecutor, however, it holding that while "prejudicial question may be attendant, it does not warrant the dismissal of the criminal cases." Private respondents thereupon filed an Omnibus Motion for Re-investigation, contending that the Ombudsman’s disapproval of the Office of the Special Prosecutor’s memorandumrecommendation was anchored on an erroneous appreciation of the issues and facts discussed therein, and that the recommendation was based not on the existence of prejudicial questions but on a finding that there was no violation of RA No. 3019. By Resolution of August 25, 1998, the Sandiganbayan found that no prejudicial question existed in the civil cases and that, at all events, the Omnibus Motion for Reinvestigation was no longer proper since only one motion for reinvestigation may be filed under Section 27 of RA 6770. Private respondents subsequently filed a Motion to Quash the informations, alleging that the Sandiganbayan has no jurisdiction over the offenses charged or over their persons; the three informations charging three different criminal offenses arising from one and the same act of entering into a MOA violate their constitutional rights against double jeopardy; the facts charged in each information do not constitute an offense, and there is no probable cause to hold them for trial. In a separate move, private respondents filed on September 10, 1998 a Motion to Suspend Proceedingsreiterating that there are prejudicial questions involved in the pending civil actions. In the meantime, for failure to prosecute, Civil Case No. 2186-95-C was dismissed on June 30, 1999.As for Civil Case No. 2180-95-C, the trial court, by Decisionof September 8, 2000, dismissed it after it found that the MOA was not tainted with "marks of nullity." The decision was appealed by the plaintiffs to the appellate court but the appeal was withdrawn and later declared abandoned and dismissed by the said court by Resolution of January 15, 2003.The Sandiganbayan subsequently denied private respondents’ Motion to Quash, by Resolution of February 26, 2001, for lack of merit, and unaware that a decision had already been rendered in Civil Case No. 2180-

95-C, granted the Motion to Suspend Proceedings after finding that prejudicial questions exist which warrant the suspension of the criminal proceedings. The suspension of the proceedings in the criminal cases notwithstanding, private respondents Frisco L. Ona and Senador C. Alcalde were respectively arraigned on July 27, 2001 and October 11, 2002, it being necessary for the approval of their motions to travel. Both pleaded not guilty to each of the charges in the Informations. Private respondents later filed another Motion to Quash alleging that "[t]he DECISION of the Regional Trial Court in the Civil Cases [sic] raises no iota of doubt that in these three (3) INFORMATIONS [they] cannot be prosecuted after a clear and categorical pronouncement in the said decision declaring the elements of the crime under which they are being prosecuted do not exist." Treating the second Motion to Quash as a motion to dismiss, the Sandiganbayan, by Resolutionof September 26, 2003, granted the same and accordingly dismissed Criminal Case Nos. 23153-23155. The People’s motion for reconsideration having been denied by Resolution of January 28, 2004, the present petition for certiorari was filed, attributing to the Sandiganbayan the commission of grave abuse of discretion: A. . . . IN HOLDING THAT THE DECISION OF THE REGIONAL TRIAL COURT OF CALAMBA, LAGUNA, BRANCH 92, FINDING THE VALIDITY OF THE QUESTIONED MEMORANDUM OF AGREEMENT HAS RENDERED CRIMINAL CASE NOS. 23153-23155 DEVOID OF ANY PROBABLE CAUSE. B. . . . IN NOT RESOLVING THE ISSUES PUT FORTH BY PETITIONER AGAINST THE MOTION TO QUASH FILED BY PRIVATE RESPONDENTS THAT THERE IS [sic] NO IDENTITIES OF PARTIES BETWEEN CIVIL CASE NO. 2180-95-C AND CRIMINAL CASE NOS. 23153-23155, A CONDITION NEGATING THE EXISTENCE OF PREJUDICIAL QUESTION. This Court notes that instead of assailing the Sandiganbayan resolutions by petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, petitioner availed of the present petition for certiorari under Rule 65. Under Rule 65, petitioner must show that there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. In this case, an appeal from the resolution of the Sandiganbayan granting the motion to quash, which the Sandiganbayan treated as a motion to dismiss, being a final, not merely interlocutoryorder, was not only available but was also a speedy and adequate remedy. Section 7 of Presidential Decree No. 1606 (Revising Presidential Decree No. 1486 Creating a Special Court to be Known as "Sandiganbayan" and For Other Purposes"), as amended by Republic Act No. 8249, provides that decisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court by petition for review on certiorari raising pure questions of law in accordance with Rule 45 of the Rules of Court. Likewise, Section 1, Rule 45 of the Rules of Court provides that a judgment or final order or resolution of the Sandiganbayan may be appealed to the Supreme Court on a petition for review on certiorari.

While in the interest of justice, a petition for certiorari under Rule 65 may be treated as having been filed under Rule 45, a liberal application of the rules does not herein lie for the present petition for certiorari was filed beyond the reglementary period for filing a petition for review. Parenthetically, petitioner did not even endeavor to explain why it failed to adopt the proper remedy. But even gratuitously resolving the petition on the issue of grave abuse of discretion,the petition just the same fails as no grave abuse of discretion can be appreciated from the Sandiganbayan’s quashal of the informations. While the filing of Criminal Case Nos. 23153-23155 was premised on the alleged violation by private respondents of Sections 3 (j), (g), and (e) of RA No. 3019 for entering, in behalf of the municipality, into a MOA with APRI, and the filing of Civil Case No. 2180-95-C was instituted to invalidate the MOA, the following issues, identified by the trial court in the said civil case as necessary to determine the validity or nullity of the MOA: 1. Whether or not SB Resolution No. 497 of the Municipality of Calamba is valid in that it was ratified or not ratified by the Sangguniang Panlalawigan; 2. Whether or not the questioned MOA is valid when APRI is not accredited with the Philippine Contractors Accredita[tion] Board (PCAB) and has an authorized capital stock of only 2 Million Pesos and a paid up capital stock of only P125,000.00; 3. Whether or not the questioned MOA is valid without public bidding of the project; 4. Whether or not the execution of the questioned MOA complies with the mandatory requirement of the Buil[d] [sic] Operate and Transfer (BOT) RA 6957 as amended by RA 7718 and its implementing rules and regulations (IRR); 5. Whether or not the questioned MOA is grossly disadvantageous to the Municipality of Calamba.,are logical antecedents of the following issues raised in the criminal cases, the resolution of which logical antecedents belongs to the trial court in the civil case: (1) whether private respondents granted in favor of APRI the privilege of constructing the Calamba Shopping Center despite knowledge that APRI was not qualified - not having been accredited by the PBAC as Class AAA contractor because its paid up capital only amounts to P125,000 [Information in Criminal Case No. 23153]; (2) whether the terms and conditions of the MOA entered into by private respondents for and in behalf of the municipality were manifestly and grossly disadvantageous to the municipality [Information in Criminal Case No. 23154]; and (3) whether private respondents through evident bad faith caused undue injury to the complainants and to the government for entering into a MOA, knowing that (a) Municipal Ordinance No. 497 which gave authority to the Mayor to enter into said agreement was still under study by the Sangguniang Panlalawigan of Laguna, (b) APRI was not an accredited contractor, and (c) no prequalification, bidding and awarding of the project was conducted. While the resolution of Civil Case No. 2180-95-C by the trial court of the issues raised therein do not conclusively determine the guilt or innocence of private respondents, still it puts to test the sufficiency of the allegations in the informations, particularly whether further prosecution of the criminal cases may be sustained.

A challenge to the allegations in the informations on account of the issues posed for resolution in the trial court, which are deemed prejudicial questions, is in effect a question on the merits of the criminal charge through a non-criminal suit.

Indeed, there would be no reason to proceed with the criminal cases in light of the trial court’s findings, which had become final and executory after the appellate court considered the appeal therefrom abandoned and dismissed, that the MOA was valid as APRI was qualified to enter into the same; APRI and the municipality through private respondents complied with all the procedural requirements necessary for entering into the MOA; and the terms and conditions of the MOA were not grossly disadvantageous to the municipality.

. . . The fact that APRI is not accredited with the P[hilippine C[ontractors] A[djudication] B[oard] or has only a capital stock of only 2 Million Pesos and a paid-up capital of only P125,000.00 will not by itself nullify the MOA. A contractor may or may not be the project proponent (Sec. 2 (e) RA 7718). A project proponent is the private sector entity which shall have contractual responsibility for the project which shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide sufficient credit lines to cover the total estimate cost of the project (Sec. 2(k) RA 7718). APRI is a BOT project proponent and not a contractor to undertake actual construction for the project and thus, APRI need not register with and be accredited by the PCAB (p. 9, TSN of November 11, 1999). . . . x x x x The Court is convinced by the defendant’s evidence that APRI has sufficient financial base or capability to implement the project with a[n] estimated project cost of 150 Million Pesos (Exh. "16-A"). The initial authorized capital stock of APRI of 2 Million Pesos is supplemented by Brilliant Star Capital Lending in the amount of 150 Million Pesos (p. 10 TSN September 5, 1999 and Exh. "11"). On top of this, the initial authorized capital stock of 2 Million Pesos is in the process of being increased (pages 3 to 6 TSN of November 11, 1999). x x x x . . . The requirement of public bidding, as well as the process and procedures thereof, mandated by the BOT law do not apply to unsolicited proposals for projects. Projects to be implemented under unsolicited proposals need not comply with the requirements, process and procedures of public bidding. Sec. 4 of amendatory RA 7718 provides as follows to wit: "Unsolicited Proposals – Unsolicited proposals for projects may be accepted by any government agency or local government unit on a negotiated bases: Provided, that, all the following conditions are met: (1) such project involve[s] a new concept or technology and/or not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local

government unit has invited by publication, or three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals is [sic] received for a period of sixty (60) working days: Provided, further, that in the event another proponent submits a lower price proposal, the original proponent shall have the right to match that price within thirty (30) working days" (Reiterated in Rule 10, Section 10.2 and Rule 11, Section 11.1 of the IRR). x x x x . . . Atty. Marciano likewise testified that the proposal for the construction of the Calamba Shopping Center is under the Unsolicited Proposal and that there is no need for bidding based on the letter dated August 17, 1995 to APRI by NEDA Regional Director Mr. Catalino Boquiren to the effect that the Calamba Shopping Center is not covered by ICC/NEDA review and approval (p. 9, TSN of September 2, 1999). NEDA Regional Director Mr. Catalino Boquiren was presented by the plaintiffs as their witness and he identified his August 17, 1995 letter to APRI marked as Exhs. "10" and "10-A" (pages 7 to 8, TSN of March 20, 1997). . . . The qualification of APRI to enter into the MOA with the municipality having been duly established, private respondents could no longer be held accountable under Section 3 (j) which punishes the act of public officers of knowingly granting a license, permit, privilege or advantage to a person not qualified or legally entitled thereto. The absence of the element under Section 3 (g) that the MOA was grossly or manifestly disadvantageous to the municipality reflected in the following findings of the trial court bears noting: . . . The Calamba Shopping Center Project, as an Unsolicited Proposal, does not require government guarantee, subsidy or equity. Indeed the very provisions of the questioned MOA in its whereas show in unmistakable terms that no cost or expenses [sic] [o]n the part of the Municipality of Calamba shall be required in the construction of the project in this wise: WHEREAS, the first party (The Municipality of Calamba) desires to have a shopping center for the residents of Calamba, Laguna and the nearby towns and cities that would serve as one of the major trading point[s] in the Province of Laguna; WHEREAS, the second party (APRI) is willing and able to help the FIRST PARTY in achieving its aforementioned objectives by constructing and operating a shopping center with modern and sleek design without cost or expense on the part of the first party pursuant to Buil[d]-Operate-Transfer Scheme" under RA 6957, as amended by RA 7718; WHEREAS, the first party sees the benefits and economic advantages of such project of the second party…." This very clear and unmistakable terms of the questioned MOA belie the claim of the plaintiffs that said MOA is grossly disadvantageous to the municipality. On the contrary, the Court sees the construction of the Calamba Shipping Center under the MOA [as] a rare happening with tremendous benefits to the citizenry not only of Calamba but also of the neighboring towns of the province, and this without any cost or expense on the coffers of the municipality. The Court takes judicial notice of the fact that at present, the Calamba Shopping Center, which is just about a stone-throw away from this Court, has been already in operation, albeit still incomplete, with

buildings and infrastructures in modern design constructed without cost to the municipality to be enjoyed by the constituents now and in the years to come. As matters stand now, the Municipality of Calamba is the beneficiary of all the improvements constructed by APRI on its former market site. The parties may differ as to how to recompense APRI for such improvements and what will guide them in view of the re[s]cission of the BOT Contract. Certainly, the parties did not sustain damage by such re[s]cission and they cannot be heard to complain about it. To the mind of the Court, the BOT Contract did not work any damage to the municipality, much more placed the municipality in any kind of disadvantageous position. It did not either place the APRI in any disadvantageous situation, now that the contract [wa]s rescinded by the municipal council. For the charge of Section 3 (e) to prosper, the following elements must be present: (1) the accused is a public officer or private person charged in conspiracy with the former; (2) the public officer commits the prohibited acts during the performance of his official duties or his relation to his public positions; (3) he causes undue injury to any party, whether the Government or a private party; (4) such injury is caused by giving unwarranted benefits, advantage or preference to such parties; and (5) the public officer has acted with manifest partiality, evident bad faith or gross inexcusable negligence. Assuming arguendo that an ordinance awarding a contract to an unqualified entity not having been ratified by the Sangguniang Panlalawigan could result to prejudice to the government, the findings of the trial court that (1) the ordinance was indeed ratified, (2) no public bidding was required, (3) the MOA complied with the mandatory requirements under RA 6957, as amended by RA No.7718 (Build, Operate and Transfer Law), and (4) there was no evident bad faith on the part of the parties in executing the MOA negate the existence of probable cause to justify haling private respondents into court for violation of above-said Section 3 (e). Pertinent portions of the trial court’s decision are reproduced hereunder: . . . Plaintiffs contends (sic) that said SB No. 497 is not valid for the reason that the Sangguniang Panlalawigan of Laguna disapproved or did not ratify the same. Plaintiffs offered Exh. "C" which defendants likewise marked and offered as Exh. "3" to prove that the Sangguniang Panlalawigan approved Resolution No. 497. The very Exh. "C" and Exh. "3" recites [sic] the fact of the approval by the Sangguniang Panlalawigan in this wise – "January 13, 1995 C E R T I F I C A T I O N This is to certify that Resolution No. 497 S. 1994 of the Sangguniang Bayan of Calamba, Laguna was received by this Office on November 07, 1994, and calendared in the agenda of December 14, 1994 and was approved by the Sangguniang Panlalawigan on the same day. It is further certified that the approval of said Resolution was with[he]ld by [the] Sangguniang Panlalawigan in its session on January 11, 1995, and was referred to the Committee on Laws and Rules for further study, in view of a letter-request filed by the Public Market Vendors Association of Calamba."

The approval by the Sangguniang Panlalawigan of Resolution No. 497 is not shrouded by any doubt. The fact [that] the resolution was later referred to the Committee on Laws and Rules (Exh. "C-1") was only made by the Provincial Board in order to appease the public vendors association of Calamba after the provincial board received a letter-request stating that Resolution No. 497 was implemented without public hearing. Moreover, SB Resolution No. 497 having been received by the Sangguniang Panlalawigan on November 7, 1994, then on December 8, 1994 or after thirty (30) days from November 7, 1994, without the Sanggunian Panlalawigan’s action declaring SB Resolution No. 497 invalid, then said SB Resolution No. 497 shall be presumed consistent with law and therefore valid. (Sec. 56 (a) Local Government Code). Thus, it can be said that SB Resolution No. 497 was approved twice, first by the positive action of approval on December 14, 1994 and second, by inaction on December 8, 1994 upon the lapse of thirty (30) days from receipt on November 7, 1994. The reliance by plaintiffs on Exh. "C-1" (the second par. of Exh. "C") stating that on [sic] January 11, 1995 session of the Sangguniang Panlalawigan the approval of the Resolution No. 497 was with[h]eld and referred to the Committee on Rules for study is of no moment nor of any significance because as stated hereinbefore, there was a positive approval on December 14, 1994 and approval by inaction on December 8, 1994. Moreover, the establishment, construction and maintenance of municipal markets are undoubtedly pure proprietary function of the municipality (Mendoza vs. De Leon[,] 33 Phil[.] 508) with[in] the power of any municipality under the provision of Sec. 22 of the Local Government Code, thus: "(d) Local government units shall enjoy full autonomy in the exercise of their proprietary functions in the management if their economic enterprises . . ." It is the opinion of this Court that the Sangguniang Panlalawigan may not restrict or frustrate the exercise of the proprietary function of the municipality because the power to review of the Sangguniang Panlalawigan is limited only to a finding that an ordinance or resolution is beyond the power conferred upon the Sangguniang Panlungsod or Pangbayan (Sec. 56 (c) Local Government Code). The . . . letter of NEDA Regional Director Boquiren should dispel any doubt that the proposed shopping center is under the unsolicited proposal and is in conformity with the IRR of the BOT law. At the very least, said letter the good faith (sic) on the part of APRI and of the municipality in entering into an agreement (the MOA) for the Calamba Shopping Center under the unsolicited proposal scheme. This witness Boquiren was presented by the plaintiffs as their witness and therefore plaintiffs are bound by his testimony. The attempt of the plaintiffs to impeach their own witness, Mr. Igancio Santos, Jr., cannot be allowed nor considered by the Court under the mandate of Rule 132, Sec. 12 of the Revised Rules of Court which proved (sic) provides that: "Party may not impeach his own witness – except to witnesses referred to in par. (d) and (e) of Sec. 10. the party producing a witness is not allowed to impeach his credibility." It is also observed that when the MOA was entered into between the Mayor and APRI, the full implementation of the BOT Law and the Amendatory Act (RA 7718) was not clearly defined, this Court was guided by Exh. "10", the official communication of Mr.

Boqueren categorically stating that the construction of the Calamba Shopping Center falls under the Unsolicited Proposal of the BOT Law quoted herein before. In addition to the citation in the letter of Mr. Boquiren, the ICC guidelines and procedures in Annex B-2 of IRR provides that project of the private sector under relending program vis special credit facilities are excluded from the ICC review/decision (III Scope of ICC Review). The pretension of witness Ignacio Santos, Jr., for the plaintiffs that the Calamba Shopping Center should be endorsed to Regional Development Council for approval is not in accord with he provision of the BOT Law because such [e]ndorsement to and approval by the Regional Development Council is required only on priority projects (Sec. 4[,] RA 7718, Rule 27[,] IRR). Contrary to the contention of petitioner, a prejudicial question is different from the concept of res judicata. That there is no identity of parties between the civil case and the criminal cases does not abate the application of a prejudicial question. A prejudicial question is defined as that which arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. The prejudicial question must be determinative of the case before the court but the jurisdiction to try and resolve the question must be lodged in another court of tribunal. It is a question based on a fact distinct and separate from "the crime but so intimately connected with it that it determines the guilt or innocence of the accused, and for it to suspend the criminal action, it must appear not only that said case involves facts intimately related to those upon which the criminal prosecution would be based but also that in the resolution of the issue or issues raised in the civil case, the guilt or innocence of the accused would necessarily be determined. It comes into play generally in a situation where a civil action and a criminal action are both pending and there exists in the former an issue which must be preemptively resolved before the criminal action may proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case. Finally, petitioner, not having assailed the Sandiganbayan Resolutiondated February 26, 2001 that "there exists a prejudicial question which warrants the suspension of the proceedings . . . [i]n view of the similarity or close relation of the facts and issues, the issues to be resolved herein [Criminal Case Nos. 23153-23155] may be rendered moot by a finding in the Civil cases that, under the circumstances, the award of the contract and/or execution of the Memorandum of Agreement was proper, legal, valid, and beyond question,"is now precluded from questioning the existence of a prejudicial question. WHEREFORE, the petition for certiorari is DISMISSED. The September 26, 2003 Resolution of the Sandiganbayan is AFFIRMED. No pronouncement as to costs.

G.R. No. 167806 June 26, 2006 PHIL PHARMAWEALTH, INC., Petitioner, vs. PHILIPPINE CHILDREN’S MEDICAL CENTER BIDS AND AWARDS COMMITTEE, BENJAMIN T. LIM, EMMA A. MARIANO, NENA U. CALDEO AND DAHLIA CARRIOS, Respondents.

This petition for review under Rule 45 of the Rules of Court assails the December 20, 2004 Order1 of the Regional Trial Court of Quezon City, Branch 217 in Civil Case No. Q-04-54416 which dismissed petitioner‘s Petition for Certiorari, Prohibition and Mandamus with Complaint for Damages, and the March 29, 2005 Order2 denying petitioner‘s motion for reconsideration.

Petitioner Phil Pharmawealth, Inc., (PPI for brevity), is a duly organized corporation licensed to import and distribute medical devices and finished pharmaceutical products. Respondent Philippine Children‘s Medical Center Bids and Awards Committee (PCMC-BAC) was organized pursuant to Republic Act No. 9184,3 also known as the Government Procurement Reform Act (GPRA), to manage the procurement of goods and services by the Philippine Children‘s Medical Center, a government hospital created by special charter. The PCMC-BAC is composed of respondents Benjamin T. Lim, Emma A. Mariano, Nena U. Caldeo and Dahlia Carrios.

The facts as culled from the records are as follows:

Respondent PCMC-BAC undertook a public bidding for the procurement of its supplies for the first semester of calendar year 2005. Petitioner prepared to participate in the bidding by obtaining a list of eligibility requirements. When it submitted on October 25, 2004 the required documents, respondent Carrios required petitioner‘s representative to submit additional documents such as a notarized "Statement of Non-Blacklisted" which should be printed using the company‘s letterhead and also a statement of the company‘s policy on returned goods.

On November 17, 2004, petitioner re-submitted its eligibility requirements but PCMC-BAC refused to give it a copy of the "Instructions to Bidders" as well as other documents issued to the other bidders. Instead, respondents Mariano and Lim informed petitioner‘s representatives Jemalyn C. Salazar and Lalaine Rocero, that petitioner cannot participate in the bidding because it has been suspended for one year by PCMC‘s Therapeutics Committee pursuant to its finding that one of petitioner‘s products was of a substandard quality.

Petitioner requested for a copy of the order banning it from joining the bidding but despite repeated reminders, PCMC-BAC failed to issue the requested document.

The bidding proceeded as scheduled without its participation, thus petitioner filed a Petition for Certiorari, Prohibition and Mandamus with Complaint for Damages and Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court of Quezon City, which was docketed as Civil Case No. 04-54416 and raffled to Branch 217.

As already stated, the trial court dismissed the petition on December 20, 2004 for failure to attach certified true copies of the annexes. Petitioner‘s motion for reconsideration was denied, hence this petition.

Petitioner maintains that the rule requiring that the assailed decision must be attached to the petition for certiorari must be dispensed with where, as in this case, the tribunal, board or officer refuses to reduce its decision in writing and furnish the affected party with it. Otherwise, the rule will result in absurdity and manifest injustice because it would require the petitioner to do something which the tribunal, board or officer has rendered impossible.

Petitioner likewise argues that the trial court erred in denying its motion for reconsideration and holding that there exists other remedies that it could avail of. It claims that in the absence of a written decision, the aggrieved party cannot appeal the decision of the PCMC-BAC to the head of the procuring entity pursuant to Sections 55 and 58 of GPRA.

Respondents on the other hand insist that the absence of a written notice barring petitioner from participating in the bidding will not render the verbal notifications made by PCMC-BAC inoperative or defective. They maintain that petitioner had administrative remedies under the law which it unfortunately failed to avail of.

The petition lacks merit.

It is settled that a petition for certiorari under Rule 65 of the Rules of Court is availed of when there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law.4 In the instant case, petitioner failed to avail of the administrative remedies before resorting to certiorari.

Section 23.3 of Rule VIII of the Implementing Rules and Regulations of R.A. No. 9184 explicitly provides:

23.3. The BAC shall inform an eligible prospective bidder that it has been found eligible to participate in the bidding. On the other hand, the BAC shall inform an ineligible prospective bidder that it has been found ineligible to participate in the bidding, and the grounds for its ineligibility. Those found ineligible have seven (7) calendar days upon written notice or, if present at the time of opening of eligibility requirements, upon verbal notification, within which to file a request for a reconsideration with the BAC: Provided, however, That the BAC shall decide on the request for reconsideration within seven (7) calendar days from receipt thereof. The BAC may request a prospective bidder to clarify

its eligibility documents, if it is deemed necessary. The BAC shall not be allowed to receive, hold and/or open the bids of ineligible prospective bidders: Provided, however, That if an ineligible prospective bidder signifies his intent to file a motion for reconsideration, the BAC shall hold the eligibility documents of the said ineligible prospective bidder until such time that the motion for reconsideration has been resolved. Furthermore, for procurement of goods, the BAC shall hold the bid of the said ineligible prospective bidder unopened and duly sealed until such time that the motion for reconsideration has been resolved.

Following the above procedure, petitioner has until November 24, 2004, or seven days from the time it was verbally notified on November 17, 2004 of its ineligibility to participate in the bidding, within which to file a request for reconsideration. By its failure to file a motion for reconsideration with the PCMC-BAC, petitioner was precluded from protesting the decision of the BAC with the head of the procuring entity in accordance with Section 55.1, Rule XVII of the Implementing Rules and Regulations of R.A. No. 9184, which reads:

Section 55. Protests on Decisions of the BAC.

55.1. Decisions of the BAC with respect to the conduct of bidding may be protested in writing to the head of the procuring entity: Provided, however, That a prior motion for reconsideration should have been filed by the party concerned within the reglementary periods specified in this IRR-A, and the same has been resolved. The protest must be filed within seven (7) calendar days from receipt by the party concerned of the resolution of the BAC denying its motion for reconsideration. A protest may be made by filing a verified position paper with the head of the procuring entity concerned, accompanied by the payment of a non-refundable protest fee. The non-refundable protest fee shall be in an amount equivalent to no less than one percent (1%) of the ABC.

In view thereof, the petition for certiorari filed with the Regional Trial Court by the petitioner is premature. Section 58.1, Rule XVII of the Implementing Rules and Regulations of R.A. 9184 is explicit:

Section 58. Resort to Regular Courts; Certiorari.

58.1. Court action may be resorted to only after the protests contemplated in this Rule shall have been completed, i.e. resolved by the head of the procuring entity with finality. The regional trial court shall have jurisdiction over final decisions of the head of the procuring entity. Court actions shall be governed by Rule 65 of the 1997 Rules of Civil Procedure.

In Batelec II Electric Cooperative, Inc. v. Energy Industry Administration Bureau (EIAB),5 this Court held –

The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate administrative authorities to accord them the prior opportunity to decide controversies within their competence before the same may be elevated to the courts of justice for review. It is presumed that an administrative agency, if afforded an opportunity to pass upon a matter, will decide the same correctly, or correct any previous error committed in its forum. Furthermore, reasons of law, comity and convenience prevent the courts from entertaining cases proper for determination by administrative agencies. Hence, premature resort to the courts necessarily becomes fatal to the cause of action of the petitioner.

We are aware of instances when resort to administrative remedies may be dispensed with and judicial action may be validly resorted to immediately, among which are: 1) when the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is no other plain, speedy and adequate remedy; 8) when strong public interest is involved; and 9) in quo warranto proceedings.6 However, petitioner failed to satisfactorily show that the instant case falls among the recognized exceptions to the rule on exhaustion of administrative remedies.

WHEREFORE, in view of the foregoing, the petition is DENIED.

G.R. No. 170453 October 30, 2006 NESTOR A. BERNARDINO and CELEDONIA N. TOMAS, petitioners, vs. PEOPLE OF THE PHILIPPINES, respondent. x ---------------------------------------------------- x G.R. No. 170518 October 30, 2006 EUGELIO G. BARAWID, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent. Assailed in these consolidated petitions for review are the September 19, 2005 Decision1 of the Sandiganbayan which found petitioners guilty of falsification of public document in Criminal Case No. 27548 and its November 18, 2005 Resolution2 denying petitioners' motion for new trial.

The facts show that petitioner Nestor A. Benardino (Bernardino) was the former Municipal Mayor of Guimba, Nueva Ecija and Chairman of the PreQualification Bid and Awards Committee (PBAC) for the construction of the extension of the public market of Guimba; while petitioner Eugelio G. Barawid (Barawid), a Municipal Treasurer was a member of the PBAC. Petitioner Celedonia N. Tomas (Tomas) was the PBAC's acting Secretary. The other members of the PBAC were Municipal Councilors, Ernesto T. Mateo and Benito A. Rillo; Municipal Planning and Development Coordinator Efren N.

Fronda; Municipal Budget Officer Abraham P. Coloma; Municipal Engineer Jose F. Mateo; Municipal Accountant Renato L. Esquivel; and non-government organization representatives Paulino G. Quindara and Luis F. Rendon, Jr.

The "Minutes of the opening of bids"3 show that on December 8, 1997, the PBAC members convened at the Municipal Library of Guimba, Nueva Ecija. The Acting Chairman, assisted by Commission on Audit (COA) representative Rolando E. Ronquillo (Ronquillo), assessed the qualifications of the four bidders who participated and thereafter awarded the project to Mascom Design and Engineering International (MASCOM) whose bid was determined to be the lowest and most advantageous to the government of Guimba. The Minutes was signed by petitioner Tomas in her capacity as the acting Secretary of the PBAC.

On the same date, petitioners Bernardino and Barawid and the other PBAC members signed a "Prequalification Bid and Award Committee"4 stating that "after due deli[b]eration, the committee resolved as it is hereby resolved, to recommend [the] Award [of the] Contract [to MASCOM] for offering the lowest [bid]." Their signatures also appear in an "Abstract of Bidding"5 and "Abstract of Proposal"6 both reflecting the names of the four bidders and their respective bids.

Meanwhile, prior to the construction of the public market extension, prosecution witness Jose Lucius Pocholo Dizon (Mayor Dizon) was elected Municipal Mayor of Guimba, Nueva Ecija in the May 1998 local elections. He thereafter conducted a public bidding for the construction of the same extension of the public market and awarded the project to KYRO Builder as the lowest bidder. Consequently, MASCOM filed before the Office of the Ombudsman a criminal compliant against Mayor Dizon and petitioner Barawid for violation of Section 3(e) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act.

In his Rejoinder-Affidavit,7 Mayor Dizon contended that the award to KYRO is proper because the project could not be validly given to MASCOM as there was in fact no competitive public bidding held on December 8, 1997. In support thereof, he attached the similarly dated June 27, 2000 affidavits8 of former PBAC members, namely, Luis F. Rendon, Jr., Paulino G. Quindara, Renato L. Esquivel, Jose F. Mateo, Ernesto T. Mateo, Efren N. Fronda and Abraham P. Coloma, Jr., stating that no public bidding was held in connection with the construction of the Guimba public market extension nor was the local PBAC convened on December 8, 1997. Affiants also declared that the documents in connection with the alleged bidding were delivered to their residence/office; and that they signed the same upon the representation of MASCOM's representative that the documents were necessary for the Philippine National Bank loan application of the municipality in connection with the construction of the public market.9

On the basis of the admission of the said affiants, the Office of the Ombudsman dismissed the case against Mayor Dizon and petitioner Barawid and instead filed the instant case for falsification of public documents under Article 171, paragraph 2 of the

Revised Penal Code against all the members of the PBAC members including the herein petitioners.

The Information charged petitioners and the PBAC members of falsification by making it appear in the "Minutes of the opening of bids," "Prequalification Bid and Award Committee," "Abstract of Proposal," and "Abstract of Bidding," that they and COA representative conducted a public bidding on December 8, 1997, participated in by four bidders, when no such bidding was in fact conducted, to wit:

That sometime on December 8, 1997, or immediately prior or subsequent thereto, in Guimba, Nueva Ecija, Philippines, and within the jurisdiction of this Honorable Court, accused Celedonia N. Tomas, Acting Secretary of the Prequalification, Bids and Award Committee (PBAC) of the Municipal Government of Guimba, Nueva Ecija; Nestor A. Bernardino, then Mayor and PBAC Chairman; and the PBAC members, namely: Benito A. Rillo and Ernesto T. Mateo, both members of the Sangguniang Bayan; Eugelio G. Barawid, Municipal Treasurer; Efren N. Fronda, Municipal Planning and Development Coordinator; Abraham P. Coloma, Municipal Budget Officer; Jose F. Mateo, Municipal Engineer; Renato L. Esquivel, Municipal Accountant; and Paulino G. Quindara and Luis [F.] Rendon, Jr., NGO representative, while in the performance of and taking advantage of their official positions, conspiring and confederating with one another, did then and there, willfully, unlawfully and feloniously prepare and make it appear in the 'ABSTRACT OF BIDDING', the 'ABSTRACT OF PROPOSAL', the MINUTES OF THE OPENING OF BIDS' and the 'PBAC RECOMMENDATION', that a public bidding for the construction of the New Guimba Public Market Extension (wet market) was concluded, that four (4) firms, to wit:

1. Bounty Builders

2. M.O.M Enterprise

3. F.L. Reguyal Construction

4. MASCOM Design and Engineering International

purportedly participated therein and submitted their bids, that a COA representative was supposedly present during the opening of the bids, and that the PBAC supposedly convened and deliberated on the purported bids when, in truth and in fact, the aforesaid firms and the COA representative did not so participate and the PBAC did not actually convene and deliberate on the purported bids, as in fact, no such public bidding was conducted and said documents were executed to justify the award of the contract to build the aforesaid public market extension to MASCOM Design and Engineering International to the damage and prejudice of the government.

CONTRARY TO LAW.10

Upon arraignment, petitioners and the other PBAC members, except for Benito A. Rillo who died on December 5, 2001, pleaded not guilty.

At the trial, prosecution witness and COA representative Ronquillo declared that he did not attend any public bidding regarding the construction of the Guimba public market on December 8, 1997.11 He admitted, however, that he has no personal knowledge whether or not a bidding was truly conducted on said date.12 The same declaration was made by prosecution witness Mayor Dizon who admitted that he does not know whether the PBAC conducted a public bidding.13

The prosecution also offered in evidence the affidavits of PBAC members, Luis F. Rendon, Jr., Paulino G. Quindara, Renato L. Esquivel, Jose F. Mateo, Ernesto T. Mateo, Efren N. Fronda and Abraham P. Coloma, Jr., in support of its theory that no public bidding was held by the PBAC on December 8, 1997. Counsel for the said affiants admitted the genuineness of the signature appearing in the affidavits.14

Petitioners and the PBAC members filed their separate motions for leave to file demurrer to evidence but were denied. They were, however, given a 10 day period within which to file their respective demurrer to evidence without prior leave of court, subject to the legal consequences under Section 23, Rule 119 of the Rules of Court. Nevertheless, petitioners and the PBAC members filed separate demurrer to evidence.

On September 19, 2005, the Sandiganbayan rendered the assailed judgment of conviction holding that the Affidavits of Luis F. Rendon, Jr., Paulino G. Quindara, Renato L. Esquivel, Jose F. Mateo, Ernesto T. Mateo, Efren N. Fronda and Abraham P. Coloma, Jr., as corroborated by the testimonies of COA representative Ronquillo and Mayor Dizon proved beyond reasonable doubt that no public bidding was conducted by the PBAC on December 8, 1997. The dispositive portion thereof, states:

WHEREFORE, judgment is hereby rendered finding accused Nestor A. Bernardino, Ernesto T. Mateo, Eugelio G. Barawid, Efren [N.] Fronda, Abraham [P.] Coloma, Jr., Jose F. Mateo, Renato [L.] Esquivel, Paulino [G.] Quindara, Luis [F.] Rendon, Jr. and Celedonia N. Tomas guilty beyond reasonable doubt of the offense charged in the Amended Information and, with the application of the Indeterminate Sentence law and without any mitigating or aggravating circumstance, hereby sentencing each of them to suffer the indeterminate penalty of TWO (2) Years, FOUR (4) MONTHS and ONE (1) DAY of prision correccional as minimum to EIGHT (8) YEARS and ONE DAY of prision mayor as maximum with the accessories thereof and to pay a fine of TWO THOUSAND PESOS (P2,000.00) with costs against the accused.

SO ORDERED.15

Petitioners Bernardino and Tomas filed a motion for new trial16 on the basis of the alleged newly discovered evidence consisting of the affidavits executed in 2003 to 2005 by Renato L. Esquivel, Ernesto T. Mateo, Efren N. Fronda, Jose F. Mateo, Abraham P. Coloma, Jr., Eugelio G. Barawid, 17 Luis F. Rendon, Jr.,18 and Paulino G. Quindara,19 in connection with a separate administrative case filed against said affiants for dishonesty and grave misconduct before the Office of the Ombudsman. Affiants stated in the said affidavits that there was in fact a public bidding held on December 8, 1997; and that they executed their June 27, 2000 affidavit stating that no bidding occurred, because of the fear and intimidation employed by Mayor Dizon who needed said affidavits to bolster his defense in the case for violation of the Anti-Graft and Corrupt Practices Act filed against him. Petitioners Bernardino and Tomas claimed they were not party to the said administrative case against the affiants and that it was only after the promulgation of the decision in the falsification case that affiants apologized and informed them of the existence of said 2003 and 2005 affidavits.

Petitioner Barawid and the other PBAC members also filed their separate motion for new trial20 on the ground of alleged errors of law and irregularities in the trial of their case.

On November 18, 2005, the Sandiganbayan denied the separate motions for new trial.21 Renato Esquivel, Jose Mateo, Efren Fronda, Luis Rendon, Jr., and Paulino Quindara filed a petition before this Court docketed as G.R. No. 170499 but was denied in a Resolution dated June 26, 2006. Their motion for reconsideration was denied with finality on September 18, 2006.

Petitioner Barawid filed a separate petition docketed as G.R. No. 170518 which was consolidated with the petition of Bernardino and Tomas in G.R. No. 170453.22

The issue is whether the guilt of petitioners was proven beyond reasonable doubt.

In all criminal prosecutions, the accused shall be presumed innocent until the contrary is proved. To justify the conviction of the accused, the prosecution must adduce the quantum of evidence sufficient to overcome the constitutional presumption of innocence. The prosecution must stand or fall on its evidence and cannot draw strength from the weakness of the evidence of the accused. Accordingly, when the guilt of the accused-appellants have not been proven with moral certainty, it is our policy of long standing that their presumption of innocence must be favored and their exoneration be granted as a matter of right.23

In the instant case, petitioners were charged with falsification under paragraph 2, Article 171 of the Revised Penal Code, by causing it to appear that persons have participated in any act or proceeding when they did not in fact so participate. Its elements are: (1) that the offender is a public officer, employee or notary public; (2) that he takes advantage of his official position; (3) that he falsifies a document by causing it to appear that a person or persons have participated in any act or proceeding when they did not in fact so participate.24

The evidence presented by the prosecution to establish that no bidding was conducted on December 8, 1997 were the June 27, 2000 affidavits of Luis F. Rendon, Jr., Paulino G. Quindara, Renato L. Esquivel, Jose F. Mateo, Ernesto T. Mateo, Efren N. Fronda and Abraham P. Coloma, Jr. The testimonies of COA representative Ronquillo and Mayor Dizon could not be considered for purposes of determining whether a public bidding was indeed held on that day because of their admission that they do not have personal knowledge whether or not said bidding was indeed conducted.

Pertinent portions of the similarly worded affidavit of Luis F. Rendon, Jr., and Paulino G. Quindara, reads:

5) That the truth of the matter is that no public bidding for the contract to construct the new public market [extension] x x x of the Municipality of Guimba, Nueva Ecija was actually held or conducted on 08 December 1997 nor was the Local PBAC convened in connection therewith, and that bidding documents relative thereto purporting to show that a public bidding was conducted in accordance with the applicable laws, rules and regulations on public bidding and award of contracts were hand delivered to me in my residence by a representative of Mascom, a certain Caloy Santos for my signature.

6) That I have no knowledge of and/or participation in the preparation of the subject bidding documents, except my signature thereon.25

Renato L. Esquivel deposed that:

3. That no actual public bidding was held and/or conducted on 08 December 1997 in connection with the contract for the construction of the new public market [extension] x x x of the Municipality of Guimba, Nueva Ecija as supported by the following:

a. The Office of the Municipal Accountant of the Municipality of Guimba, Nueva Ecija, was not furnished any communication/letters/notice stating that such public bidding will be conducted which is normally done before any public bidding is held.

b. The covering public bidding documents were personally delivered to me in my residence by a representative of Mascom Design & Engineering International for my signature.

c. I have no knowledge of and/or participation in the preparation of the covering public bidding documents allegedly held on 08 December 1997, except for my signature thereon.

d. The covering public bidding documents were not signed by the assigned Commission on Audit representative.26

Jose F. Mateo, Efren N. Fronda and Abraham P. Coloma, Jr., similarly averred that:

3. That no actual public bidding was held and/or conducted on 08 December 1997 in connection with the contract for the construction of the new public market [extension] x x x of the Municipality of Guimba, Nueva Ecija.

4. That the covering bidding documents for the public bidding allegedly held on 08 December 1997 were hand delivered to me by a representative of Mascom Design & Engineering International (Mascom for brevity) in my office for signature.27

Likewise the Affidavit of Ernesto T. Mateo, reads:

3) That no actual public bidding was held/conducted on 08 December 1997 in connection with the contract for the construction of the new public market [extension] x x x of the Municipality of Guimba, Nueva Ecija.

4) That the covering bidding documents for the alleged public bidding conducted on 08 December 1997 were signed by me in my residence.28

As can be gathered from the foregoing, the affiants declared that no public bidding was held on December 8, 1997. However, said declaration is merely an expression of an opinion and not a fact considering that like prosecution witnesses Ronquillo and Mayor Dizon, they also have no personal knowledge as to whether or not a bidding was indeed conducted at the Municipal Library of Guimba, Nueva Ecija on December 8, 1997. Pursuant to Section 48, Rule 130 of the Rules of Court, the opinion of witnesses, as in the instant case, is not admissible. Since affiants were not in the place where the alleged bidding was held, they are not in the position to declare with moral certainty that no such bidding in fact occurred. Their statements that they signed the documents showing that they participated in the determination of the lowest bidder with knowledge that they did not in fact so participate therein, bind only them and not petitioners whose whereabouts on December 8, 1997 were not established to be known to said affiants. And while the Information alleged conspiracy such that the acts of the affiants may be attributed as well to petitioners Bernardino and Tomas, the same cannot be considered against said petitioners inasmuch as no evidence was presented by the prosecution to establish conspiracy. Conspiracy must be established by positive and conclusive evidence. It cannot be based on mere conjectures but must be established as a fact.29

Under Section 36, Rule 130 of the same Rules, witnesses can testify only to those facts which they know of their personal knowledge, that is, which is derived from their own perception, except as otherwise provided by the rules. They are not generally allowed to testify on their opinions or conclusions but must state facts within their knowledge as it is the province of the court to make deductions from pertinent facts placed in evidence and to decide matters directly in issue. Their testimony must be confined to statements of concrete facts within their own observation, knowledge, and recollection – that is, facts perceived by the use of their own senses – as distinguished from their opinions,

inferences, impressions and conclusions drawn from such facts, which are incompetent and inadmissible.30 While there are exceptions31 to the rule on inadmissibility of opinions, the subject declarations in the instant case is not one of them.

Moreover, the evidence showing that seven members of the PBAC did not attend the public bidding does not prove beyond reasonable doubt that petitioner Tomas as acting Secretary and the other three members, that is, the deceased Benito A. Rillo, and herein petitioners Bernardino and Barawid, did not convene on December 8, 1997. Otherwise, stated, the absence of the seven PBAC members did not eliminate the possibility that the rest of the members convened and carried out the public bidding with four participating bidders. Under the equipoise rule, where the evidence on an issue of fact is in equipoise or there is doubt on which side the evidence preponderates, the party having the burden of proof, which in this case is the prosecution, loses. The equipoise rule finds application if, as in the present case, the inculpatory facts and circumstances are capable of two or more explanations, one of which is consistent with the innocence of the accused and the other consistent with his guilt, for then the evidence does not fulfill the test of moral certainty, and does not suffice to produce a conviction.32

In sum, the Court finds that petitioners Bernardino and Barawid must be acquitted considering that the prosecution failed to prove their guilt beyond moral certainty. The law, to guard against injustice, requires that the offense be established by evidence beyond reasonable doubt. It is a serious matter, not only to a party, but to the state as well, to take a person from the ordinary avocations of life, brand him a felon, and deprive him of his liberty, appropriate his labor, and cast a cloud upon his future life, and humiliate his relatives and friends. To authorize the state in doing this, there must be no reasonable doubt on the accused's guilt.33

However, the same cannot be said with respect to petitioner Tomas. Even if we assume that all the PBAC members attended the bidding, including those who executed an affidavit to the contrary, petitioner Tomas is still liable for falsification. Note that she was the only one who signed the "Minutes of the opening of bids" which stated, among others, that COA representative Ronquillo attended the public bidding on December 8, 1997. As acting Secretary of the PBAC she has the duty to prepare or intervene in the preparation of the Minutes of the meetings of the PBAC which should be recorded pursuant to Section 3734 of the Local Government Code. In making it appear that COA representative Ronquillo attended the bidding when the latter categorically testified that he never attended a public bidding in the Municipality of Guimba, Nueva Ecija on December 8, 1997, petitioner Tomas took advantage of her official position,35 rendering her liable for falsification under Article 171 paragraph 2 of the Revised Penal Code. Finding the testimony of COA representative Ronquillo to be convincing and there being no ill motive shown that would impel him to perjure himself, the Court gives credence to his declaration and sustains the judgment of conviction against petitioner Tomas.

In the same vein, petitioner Tomas' motion for new trial was correctly denied by the Sandiganbayan. The evidence presented in support of said motion was that a public

bidding was truly conducted and that the PBAC members attended the same. However, this has no bearing on the culpability of petitioner Tomas which is predicated on her untruthful declaration that the COA representative attended the bidding, regardless of the presence or absence of the PBAC members.

Under Article 171 of the of the Revised Penal Code, falsification is punishable with prision mayor and a fine not to exceed P5,000.00. There being no modifying circumstance in the instant case, the penalty of petitioner Tomas shall be imposed in its medium period, ranging from 8 years and 1 day to 10 years. Applying the Indeterminate Sentence Law,36 she is entitled to an indeterminate penalty the minimum of which may be fixed anywhere within the range of the penalty next lower in degree to prision mayor, which is prision correccional with a duration of 6 months and 1 day to 6 years. Petitioner Tomas is therefore sentenced to suffer the penalty of 6 months and 1 day of prision correccional to 8 years and 1 day of prision mayor.

WHEREFORE, the September 19, 2005 Decision of the Sandiganbayan in Criminal Case No. 27548 is REVERSED and SET ASIDE with respect to petitioners Nestor A. Bernardino and Eugelio G. Barawid who areACQUITTED of the crime of falsification under Article 171 paragraph 2 of the Revised Penal Code on the ground of reasonable doubt.

Insofar as petitioner Celedonia N. Tomas is concerned, the September 19, 2005 Decision of the Sandiganbayan in Criminal Case No. 27548 finding her guilty of the crime of falsification under Article 171 paragraph 2 of the Revised Penal Code is AFFIRMED with MODIFICATION as to the indeterminate penalty which is fixed at 6 months and 1 day of prision correccional to 8 years and 1 day of prision mayor.

G.R. Nos. 144950-71 March 22, 2007 BLAS BALDEBRIN and PERPETUO LACEA,Petitioners, vs. SANDIGANBAYAN (Third Division) and PEOPLE OF THE PHILIPPINES, Respondents.

Assailed in the instant Petition for Review on Certiorari are the Joint Decision dated December 15, 1998 and Resolution dated August 24, 2000 of the Sandiganbayan in Criminal Case Nos. 3346 to 3400 and Nos. 1445 to 1499 convicting, among others, Blas Baldebrin and Perpetuo Lacea for violations of Section 3(e) of Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, as amended.

On August 8, 1981, the Tanodbayan (now Ombudsman) filed with the Sandiganbayan one hundred ten (110) Informations for violations of Section 3(e) of R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, as amended. In Criminal Case Nos. 3346 to 3400, ten (10) officials of the Ministry of Public Highways (MPH),

now Department of Public Works and Highways, were charged. In Criminal Case Nos. 1445 to 1499, thirty-eight (38) officials and eight (8) private contractors were indicted. Among these officials were petitioners Baldebrin and Lacea. Baldebrin was the administrative officer of the Negros Oriental Highway Engineering District (NOHED), while Lacea, a civil engineer, was the field supervisor.

The Informations in the second batch of fifty-five (55) cases (including those against petitioners) were identically worded, except for the dates of the commission of the crime, the names of the public officials and private individuals charged, the amounts involved and other data. Baldebrin was charged with thirteen (13) counts, while Lacea was charged with fourteen (14) counts. For brevity, we reproduce the Information in Criminal Case No. 1449 as sample, thus:

That on or about November 10, 1977 up to and including November 25, 1977, in the Cities of Cebu, Dumaguete and the Province of Negros Oriental and within the jurisdiction of the Honorable Sandiganbayan, the accused NORBERTO BERNAD, District Engineer, Negros Oriental Highway Engineering District (NOHED), Dumaguete City; MANUEL DE VEYRA, Director, MPH, Region VII, Cebu City; ADVENTOR FERNANDEZ, Highway Regional Director, MPH Region VII, Cebu City; RUFINA GREFALDE, District Accountant, NOHED, Dumaguete City; NAPOLEON CLAVANO, Supervising Civil Engineer I, NOHED, Dumaguete City; ROLANDO MANGUBAT, Regional Accountant, MPH Region VII, Cebu City; DELIA PREAGIDO, Assistant Regional Accountant; ANGELINA ESCAÑO, Finance Officer, MPH, Region VII, Cebu City; LINDY TVS ENRIQUEZ, Property Officer/Custodian, NOHED, Dumaguete City; EFREN COYOCA, District Auditor, NOHED, Dumaguete City; HERACLEO FAELNAR, then Acting Assistant Regional Director, MPH Region VII, Cebu City; BLAS BALDEBRIN, Administrative Officer I, NOHED, Dumaguete City; JAIME OBSEQUIO, Assistant District Engineer III, NOHED, Dumaguete City; JESUS PEDROZA, JR., Laborer, NOHED, Dumaguete City; ANTIPAS PONTENILLA, Auditing Examiner, District Auditor‘s Office, NOHED, Dumaguete City; PERPETUO LACEA, Civil Engineer, NOHED, Dumaguete City; and others whose identities are not yet known in conspiracy with each other, all taking advantage of their official positions, with the indispensable cooperation and/or direct participation of CLODUALDO C. GOMILLA, Proprietor of C.G. Gomilla Sand and Gravel, Private Contractor, with evident bad faith, manifest partiality and/or gross inexcusable negligence did there and then willfully, knowingly and unlawfully caused undue injury to the Republic of the Philippines in the amount of THIRTY SEVEN THOUSAND EIGHT HUNDRED PESOS (P37,800.00), Philippine Currency, by falsifying Negros Oriental Highway Engineering District General Voucher No. 1413 dated November 25, 1977 and Treasury Check No. 4215382 dated November 25, 1977 in the amount of P37,800.00 and its supporting documents, such as the Request for Obligation of Allotment (ROA), Request for Supplies and Equipment (RSE), Purchase Order (PO), Report of Inspection (ROI), Daily Tally Sheets (DTS) and Delivery Receipts (DR), simulating them to appear regular as payment for 1050 cubic meters of Item 200 and charging this General Voucher 1413 to Letter of Advice of Allotment No. 107-703-039-77, when in truth and in fact as all the accused knew there were no actual deliveries and receipts of the said Item 200, the foregoing documents

were simulated, falsified and incorrect and that the LAA No. 107-703-039-77 is without budgetary basis and not covered by any Sub-Advice of Allotment from the Ministry of Public Highways, Manila, and further by manipulating the books of accounts of the MPH, Region VII, all for the purpose of covering their criminal act, and finally, upon receipt of the said amount of THIRTY SEVEN THOUSAND EIGHT HUNDRED PESOS (P37,800.00), Philippine Currency, the accused misappropriated, converted and misapplied the same for their personal gain and profit.

CONTRARY TO LAW.

Evidence for the prosecution, oral and documentary, shows that upon investigation conducted by the Commission on Audit (COA) Regional Office No. VII in 1978, it was found that the personnel in the fifteen (15) Highway Engineering Districts of the MPH (now Department of Public Works and Highways) in that Region were involved in the irregular disbursements of "ghost" deliveries of materials used in various highway projects. The illegal disbursements were made possible through the falsification of public and commercial documents.

Due to the seriousness of the irregularities then being committed by the personnel in those fifteen (15) Highway Engineering Districts, then President Ferdinand E. Marcos created a Special Cabinet Committee in the MPH Region VII "Ghost Project Anomalies" which, in turn, organized a Special Task Force (hereinafter referred to as the team) to conduct a wider and more extensive investigation in the said Highway Engineering Districts, including the NOHED. The team was composed of representatives from the Finance Ministry (now the Department of Finance) Intelligence Bureau, National Bureau of Investigation, the Bureau of Treasury, and the COA.

During the investigation conducted by the team in the NOHED, it found twenty six (26) vouchers funded on the bases of fake supporting documents,1 twelve (12) of which were charged against Accounts Payable (8-81-400) or Prior Years‘ Obligation; and fourteen (14) were charged against Current Obligations (101-83). The team reported that the payments of obligations for the transactions entered into during the period from March to September, 1978 were attended by irregularities. These were transactions which should have been charged against the Current Account. The team also noted that there was splitting of requisitions, in violation of COA Circular No. 76-41 dated July 30, 1976.2 The splitting of requisitions is prohibited to prevent the circumvention of control measures promulgated by the government.3 In these cases, each requisition indicated the same date, the same items, the same purpose, site or area, and only one person as claimant. The amount in each requisition was always less than P50,000.00 so that it would no longer be approved by the Regional Director.4 Some of the Requisition Issue Vouchers were not numbered for purposes of identification in order that they could be used again to support other claims. The team also found that some of the reports of inspection attached to the vouchers were undated.1ªvvphi1.nét

After collating its findings, the team reported these total disbursements based on fake allotments: P745,957.00 for 1977 and P1,321,664.44 for 1978.5

Delia Preagido,6 one of those involved in the perpetuation of fraud and who later became a state witness,7narrated the events that led to the investigation,8 thus:

Sometime in February 1977, she, together with accused Rolando Mangubat (Chief Accountant), Jose Sayson (Budget Examiner), and Edgardo Cruz (Clerk II), all of the MPH Region VII, met at the Town and Country Restaurant in Cebu City and hatched an ingenious plan to siphon off large sums of money from government coffers. Mangubat found a way to withdraw government money through the use of fake LAAs, vouchers and other documents, and to conceal traces thereof, with the connivance of other government officials and employees. In fine, the fraudulent scheme involved the splitting of LAAs and RSEs so that the amount covered by each general voucher is less than P50,000.00 to do away with the approval of the Regional Director, the charging of disbursements to unliquidated obligations due the previous year to provide the supposed source of funds, and the manipulation of the books of account by negation or adjustment, i.e., the cancellation of checks through journal vouchers to conceal disbursements in excess of the CDC, so that such disbursements are not reflected in the trial balances submitted by the Regional Office to the MPH Central Office in Manila.

Mangubat enticed Preagido, Cruz and Sayson to join him. All three agreed to help him carry out his plan. They typed the fake LAAs during Saturdays. Cruz and Sayson also took charge of negotiating or selling the fake LAAs to contractors at 26% of the gross amount. On her part, Preagido manipulated the General Ledger, Journal Vouchers and General Journal through negative entries to conceal the illegal disbursements.

The four formed the nucleus of the conspiracy. Other government employees tempted by the prospect of earning big money, allowed their names to be used and signed spurious documents.

The defense presented nineteen (19) witnesses, including petitioners Baldebrin and Lacea, to prove that road construction materials were actually delivered; that the road projects were properly undertaken and fully accomplished; that accused public officers only performed their duties without any knowledge of the irregularities that had been going on; and that they did not receive any money derived from the anomalies.

Specifically, Baldebrin testified that all the bidding reports signed by him involved in fourteen (14) cases were conducted in accordance with the rules. As a member of the Bidding and Award Committee (BAC), he saw to it that the bidders had prequalified; that fifteen (15) minutes before the opening of bids, prospective bidders were called to attend and observe; and that the award was given to the lowest bidder. He stressed that he was not duty-bound to see to it that the items purchased were actually delivered; that he had no reason to suspect that there were irregularities because the materials being purchased were within the normal volume ordered by the district.9

For his part, petitioner Lacea testified that as field supervisor of the NOHED, it was his duty to check and inspect the materials delivered in his area and to sign reports of inspection, delivery receipts, and tally sheets of all materials purchased and

delivered.10 Concerning the fourteen (14) documents he signed for which he was indicted, the materials specified therein were actually delivered. He inspected them and found that the volume delivered corresponded to that stated in the inspection reports he signed.11 He denied having taken part in the conspiracy.

On December 15, 1998, the Sandiganbayan rendered its Decision finding that all the accused "connived and cooperated with each other to defraud the government, each performing his or her assigned task to attain their common objective." Both petitioners and their co-accused were found guilty beyond reasonable doubt of the crime charged. They were sentenced in each case to a penalty ranging from four (4) years and one (1) day of prision correccional, as minimum, to seven (7) years of prision mayor, as maximum; to suffer perpetual disqualification from public service; to indemnify jointly and severally the Republic of the Philippines of the amounts involved in each case; and to pay their proportionate shares of the costs.

In convicting petitioner Baldebrin, the Sandiganbayan held:

The Abstracts of Bids signed by him, aside from being so many (14 in all), were opened in groups and each group had the same date. From the contents of the Abstracts of Bids, it could readily be noticed that they involved the same material (Item 200), the same suppliers or contractors, and in quantities valued at less than P50,000.00 each. The splitting of transactions or accounts was clearly evident and Baldebrin could not have failed to notice it because he signed the Abstracts of Bids in groups. "Why are there so many separate bids for the same material, from the same suppliers/contractors, for the same project on the same day?" Surely this question must have cropped up in his mind, assuming he really had no inkling of what was going on, for he knew fully well that splitting of accounts was prohibited.

To be more specific, the Abstracts of Bids (Exhibits "N-5-f", "N-6-f", "N-8-f", "N-9-f", and "N-1-f") clearly show that the bids were opened on the same date (November 17, 1977), were for the same material (Item 200); were participated in by the same suppliers; and were for quantities valued at less than P50,000.00 each. Similarly, the Abstracts of Bids marked as Exhibits "N-16-f", "N-20-f", "N-22-f" were opened on the same date (December 20, 1977), for the same material (Item 200) and for quantities valued at less than P50,000.00 each. This holds true with the rest of the Abstracts of Bids signed by him. Assuming that Baldebrin was in good faith and unaware of the anomalies going on, as he claimed to be, as Administrative Officer and member of the BAC, he could not have failed to notice that there was a splitting of accounts. He nonetheless allowed the same to be committed, thereby causing undue injury to the government through his gross negligence.12

In convicting petitioner Lacea, the Sandiganbayan found that:

The overwhelming documentary evidence presented by the prosecution, however, clearly established the fact that no deliveries were made insofar as materials covered by the fake documents are concerned. Mere denial or general allusion to deliveries based

on genuine transactions is not enough to overturn it. Accused failed to prove the deliveries mentioned by him were the ones covered by the fake documents or that the documents were not fake after all. What then was the point in faking LAAs, SACDCs and General Vouchers and their supporting documents?13

On January 15, 1999, petitioners filed a motion for reconsideration, but it was denied in a Resolution dated August 14, 2000.

Hence, the instant petition for review on certiorari.

The issue raised by petitioners is whether the Sandiganbayan erred in convicting them of the crime charged despite the failure of the prosecution to present evidence to prove their guilt beyond reasonable doubt.

Petitioner Baldebrin contends that he did not participate in the splitting of accounts or bids and that he signed the Abstracts of Bids in good faith. His contention lacks merit. As administrative officer and member of the BAC, he knew fully well that splitting of accounts was done obviously to do away with the approval by the Regional Director. Each abstract he signed was in an amount less than P50,000.00 and prepared on the same day, specifying the same construction materials, the same suppliers, and the same road projects. The splitting of accounts is too glaring to be ignored. He could not have failed to notice the splitting because the abstracts were opened, read and signed in groups. Taken singly, each abstract may appear to be regular, but when considered in groups, the abstracts clearly show splitting of accounts prohibited by COA Circular No. 76-41.

Petitioner Lacea maintains that during the delivery of materials, he was actually present. However, he admitted there were times that when he arrived at the site, delivery had already been made. Nevertheless, as soon as he reached the jobsite, he immediately conducted an inspection in the presence of the property custodian and representatives from the COA. Thereupon, he signed the delivery receipts.

The Sandiganbayan, in finding that no deliveries of materials were made, ratiocinated as follows:

The plea of guilty made by a supplier14 of materials in Criminal Case No. 1448 is an admission that he did not deliver the materials. It should also be borne in mind that the fraud was committed on a regionwide scale (DPWH Region VII) and the same modus operandi was adopted in each of the engineering districts. We take judicial notice of the fact that Juliana de los Angeles (a material supplier) and Florencio Masecampo (an administrative officer) by their plea of guilty in the other highways cases already decided by this Court, admitted that no materials were delivered. Barangay officials also testified in those cases that no materials were delivered. This same finding of non-delivery of materials can safely be made in these cases because the same accused Mangubat, Sayson, Cruz and Preagido) are involved, the same modus operandi was used, and the Oriental Highway Engineering District is part of DPWH Region VII.

In appeals to this Court from the Sandiganbayan, only questions of law may be raised, not issues of fact.15 The factual findings of the Sandiganbayan are binding upon this Court. Admittedly, this general rule is subject to some exceptions, among them are: (1) when the conclusion is a finding grounded entirely on speculation, surmise or conjecture; (2) the inference made is manifestly mistaken; (3) there is a grave abuse of discretion on the part of the lower court or agency; (4) the judgment is based on a misapprehension of facts; (5) said findings of facts are conclusions without citation of specific evidence on which they are based; and (6) the findings of fact by the Sandiganbayan are premised on the absence of evidence on record.16 However, petitioners failed to establish any of these exceptional circumstances.

Petitioners‘ roles in the irregularities are indispensable link to the attainment of their and their co-accused‘s common objective to defraud the government. As held by this Court in Alvizo v. Sandiganbayan,17 "while it is true that the fake Letters of Advice of Allotment (LAAs) and the Cash Disbursement Ceilings originated from the Regional Office, the falsity of such allotments would be useless if the district officials and employees did not consent to its implementation by making it appear that there were valid requisitions, deliveries, inspections, processing, pre-auditing, and approval of the general vouchers and the checks paid to the contractor/supplier. The individual acts of the petitioners x x x pointed to a single criminal intent, one performing one part of the transaction, and the others, another part of the same transaction, so as to complete it with a view to attaining the object which they were pursuing, i.e., to defraud the government."

In Mangubat v. Sandiganbayan,18 the Court said, "no doubt the defraudation of the government would not have been possible were it not for the cooperation respectively extended by all the accused, including herein petitioner. The scheme involved both officials and employees from the Regional Office. Some made the falsifications, others worked to cover-up the same to consummate the crime charged. Petitioner‘s role was indubitably an essential ingredient especially so because it was he who issued the false LAAs, which as previously mentioned, initiated the commission of the crime. When the defendants by their acts aimed at the same object, one performing one part, and the other performing another part so as to complete it, with a view to the attainment of the same object, and their acts though apparently independent, were in fact concerted and cooperative, indicating closeness of personal association, concerted action and concurrence of sentiments, the court will be justified in concluding that said defendants were engaged in a conspiracy."

Indeed, both petitioners‘ participation in the irregularities in question is clear. We thus find no reversible error committed by the Sandiganbayan.

WHEREFORE, we deny the petition and AFFIRM the assailed Joint Decision of the Sandiganbayan in Criminal Case Nos. 3346 to 3400 and in Criminal Case Nos. 1445 to 1499 insofar as the conviction of petitioners BLAS BALDEBRIN and PERPETUO LACEA is concerned.

PLARIDEL M. ABAYA, G.R. No. 167919 COMMODORE PLARIDEL C. GARCIA (retired) and PMA Present: ’59 FOUNDATION, INC., rep. by its President, COMMODORE CARLOS L. AGUSTIN YNARES-SANTIAGO, J. (retired), Chairperson, Petitioners, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ. - versus - HON. SECRETARY Promulgated: HERMOGENES E. EBDANE, JR., in his capacity as Secretary of the DEPARTMENT OF PUBLIC February 14, 2007 WORKS and HIGHWAYS, HON. SECRETARY EMILIA T. BONCODIN, in her capacity as Secretary of the DEPARTMENT OF BUDGET and MANAGEMENT, HON. SECRETARY CESAR V. PURISIMA, in his capacity as Secretary of the DEPARTMENT OF FINANCE, HON. TREASURER NORMA L. LASALA, in her capacity as Treasurer of the Bureau of Treasury, and CHINA ROAD and BRIDGE CORPORATION, Respondents. x----------------------------------------------------------------------------------------------------------------------------x Before the Court is the petition for certiorari and prohibition under Rule 65 of the Rules of Court seeking to set aside and nullify Resolution No. PJHL-A-04-012 dated May 7, 2004 issued by the Bids and Awards Committee (BAC) of the Department of Public Works and Highways (DPWH) and approved by then DPWH Acting Secretary Florante Soriquez. The assailed resolution recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of civil works for Contract Package No. I (CP I), which consists of the improvement/rehabilitation of the San Andres (Codon)-ViracJct. Bago-Viga road, with the length of 79.818 kilometers, in the island province of Catanduanes. The CP I project is one of the four packages comprising the project for the improvement/rehabilitation of the Catanduanes Circumferential Road, covering a total length

of about 204.515 kilometers, which is the main highway in Catanduanes Province. The road section (Catanduanes Circumferential Road) is part of the Arterial Road Links Development Project (Phase IV) funded under Loan Agreement No. PH-P204 dated December 28, 1999 between the Japan Bank for International Cooperation (JBIC) and the Government of the Republic of the Philippines. Background Based on the Exchange of Notes dated December 27, 1999,the Government of Japan and the Government of the Philippines, through their respective representatives, namely, Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines, and then Secretary of Foreign Affairs Domingo L. Siazon, have reached an understanding concerning Japanese loans to be extended to the Philippines. These loans were aimed at promoting our country’s economic stabilization and development efforts. The Exchange of Notes consisted of two documents: (1) a Letter from the Government of Japan, signed by Ambassador Ara, addressed to then Secretary of Foreign Affairs Siazon, confirming the understanding reached between the two governments concerning the loans to be extended by the Government of Japan to the Philippines; and (2) a document denominated as Records of Discussion where the salient terms of the loans as set forth by the Government of Japan, through the Japanese delegation, were reiterated and the said terms were accepted by the Philippine delegation. Both Ambassador Ara and then Secretary Siazon signed the Records of Discussion as representatives of the Government of Japan and Philippine Government, respectively. The Exchange of Notes provided that the loans to be extended by the Government of Japan to the Philippines consisted of two loans: Loan I and Loan II. The Exchange of Notes stated in part: 1. A loan in Japanese yen up to the amount of seventy-nine billion eight hundred and sixty-one million yen (Y79,861,000,000) (hereinafter referred to as “the Loan I”) will be extended, in accordance with the relevant laws and regulations of Japan, to the Government of the Republic of the Philippines (hereinafter referred to as “the Borrower I”) by the Japan Bank for International Cooperation (hereinafter referred to as “the Bank”) to implement the projects enumerated in the List A attached hereto (hereinafter referred to as “the List A”) according to the allocation for each project as specified in the List A. 2. (1) The Loan I will be made available by loan agreements to be concluded between the Borrower I and the Bank. The terms and conditions of the Loan I as well as the procedure for its utilization will be governed by said loan agreements which will contain, inter alia, the following principles: . . . (2) Each of the loan agreements mentioned in sub-paragraph (1) above will be concluded after the Bank is satisfied of the feasibility, including environmental consideration, of the project to which such loan agreement relates. 3. (1) The Loan I will be made available to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/or consultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or

services required for the implementation of the projects enumerated in the List A, provided that such purchases are made in such eligible source countries for products produced in and/or services supplied from those countries. (2) The scope of eligible source countries mentioned in sub-paragraph (1) above will be agreed upon between the authorities concerned of the two Governments. (3) A part of the Loan I may be used to cover eligible local currency requirements for the implementation of the projects enumerated in the List A. 4. With regard to the shipping and marine insurance of the products purchased under the Loan I, the Government of the Republic of the Philippines will refrain from imposing any restrictions that may hinder fair and free competition among the shipping and marine insurance companies. x x x x Pertinently, List A, which specified the projects to be financed under the Loan I, includes the Arterial Road Links Development Project (Phase IV), to wit: LIST A Maximum amount in million yen) 1. Secondary Education Development and Improvement Project 7,210 2. Rural Water Supply Project (Phase V) 9513. Bohol Irrigation Project (Phase II) 6,078 4. Agrarian Reform Infrastructure Support Project (Phase II) 16,990 5. Arterial Road Links Development Project (Phase IV) 15,384 6. Cordillera Road Improvement Project 5,852 7. Philippines-Japan Friendship Highway Mindanao Section Rehabilitation Project (Phase II) 7,434 8. Rehabilitation and Maintenance of Bridges Along Arterial Roads Project (Phase IV) 5,068 9. Maritime Safety Improvement Project (Phase C) 4,714 10. Pinatubo Hazard Urgent Mitigation Project (Phase II) 9,01311. Pasig-Marikina River Channel Improvement Project (Phase I) 1,167 Total 79,861 The Exchange of Notes further provided that: III

x x x x 3. The Government of the Republic of the Philippines will ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where such procedures are inapplicable or inappropriate. x x x x The Records of Discussion, which formed part of the Exchange of Notes, also stated in part, thus: x x x x 1. With reference to sub-paragraph (3) of paragraph 3 of Part I of the Exchange of Notes concerning the financing of eligible local currency requirements for the implementation of the projects mentioned in the said sub-paragraph, the representative of the Japanese delegation stated that: (1) such requirement of local currency as general administrative expenses, interest during construction, taxes and duties, expenses concerning office, remuneration to employees of the executing agencies and housing, not directly related to the implementation of the said projects, as well as purchase of land properties, compensation and the like, however, will not be considered as eligible for financing under the Loan I; and(2) the procurement of products and/or services will be made in accordance with the procedures of international competitive tendering except where such procedures are inapplicable and inappropriate.x x x x [5] Thus, in accordance with the agreement reached by the Government of Japan and the Philippine Government, as expressed in the Exchange of Notes between the representatives of the two governments, the Philippines obtained from and was granted a loan by the JBIC. Loan Agreement No. PH-P204 dated December 28, 1999, in particular, stated as follows: Loan Agreement No. PH-P204, dated December 28, 1999, between JAPAN BANK FOR INTERNATIONAL COOPERATION and the GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES. In the light of the contents of the Exchange of Notes between the Government of Japan and the Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese loans to be extended with a view to promoting the economic stabilization and development efforts of the Republic of the Philippines. JAPAN BANK FOR INTERNATIONAL COOPERATION (hereinafter referred to as “the BANK”) and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter referred to as “the Borrower”) herewith conclude the following Loan Agreement (hereinafter referred to as “the Loan Agreement”, which includes all agreements supplemental hereto). x x x x [6] Under the terms and conditions of Loan Agreement No. PH-P204, JBIC agreed to lend the Philippine Government an amount not exceeding FIFTEEN BILLION THREE HUNDRED EIGHTY-FOUR MILLION Japanese Yen (Y 15,384,000,000) as principal for the implementation of the

Arterial Road Links Development Project (Phase IV) on the terms and conditions set forth in the Loan Agreement and in accordance with the relevant laws and regulations of Japan. [7] The said amount shall be used for the purchase of eligible goods and services necessary for the implementation of the above-mentioned project from suppliers, contractors or consultants. [8] Further, it was provided under the said loan agreement that other terms and conditions generally applicable thereto shall be set forth in the General Terms and Conditions, dated November 1987, issued by the Overseas Economic Cooperation Fund (OECF) and for the purpose, reference to “the OECF” and “Fund” therein (General Terms and Conditions) shall be substituted by “the JBIC” and “Bank,” respectively. [9] Specifically, the guidelines for procurement of all goods and services to be financed out of the proceeds of the said loan shall be as stipulated in the Guidelines for Procurement under OECF Loans dated December 1997 (herein referred to as JBIC Procurement Guidelines). [10] As mentioned earlier, the proceeds of Loan Agreement No. PH-P204 was to be used to finance the Arterial Road Links Development Project (Phase IV), of which the Catanduanes Circumferential Road was a part. This road section, in turn, was divided into four contract packages (CP): CP I: San Andres (Codon)-Virac-Jct. Bato- Viga Road - 79.818 kms CP II: Viga-Bagamanoc Road - 10.40 kms. CP III: Bagamanoc-Pandan Road - 47.50 kms. CP IV: Pandan-Caramoran-Codon Road - 66.40 kms. [11] Subsequently, the DPWH, as the government agency tasked to implement the project, caused the publication of the “Invitation to Prequalify and to Bid” for the implementation of the CP I project in two leading national newspapers, namely, the Manila Times and Manila Standard on November 22 and 29, and December 5, 2002.

A total of twenty-three (23) foreign and local contractors responded to the invitation by submitting their accomplished prequalification documents on January 23, 2003. In accordance with the established prequalification criteria, eight contractors were evaluated or considered eligible to bid as concurred by the JBIC. One of them, however, withdrew; thus, only seven contractors submitted their bid proposals.

The bid documents submitted by the prequalified contractors/bidders were examined to determine their compliance with the requirements as stipulated in Article 6 of the Instruction to Bidders. [12] After the lapse of the deadline for the submission of bid proposals, the opening of the bids commenced immediately. Prior to the opening of the respective bid proposals, it was announced that the Approved Budget for the Contract (ABC) was in the amount ofP738,710,563.67. The result of the bidding revealed the following three lowest bidders and their respective bids vis-à-vis the ABC: [13] Name of Bidder Original Bid As Read (Pesos) As-Corrected Bid Amount (Pesos) Variance 1) China Road And Bridge Corporation P 993,183,904.98 P952,564,821.71 28.95% 2) Cavite Ideal Int’l Const. Devt. Corp. P1,099,926,598.11 P1,099,926,598.11 48.90% 3) Italian Thai Dev’t. Public Company, Ltd. P1,125,022,075.34 P1,125,392,475.36 52.35% The bid of private respondent China Road & Bridge Corporation was corrected from the original P993,183,904.98 (with variance of 34.45% from the ABC) toP952,564,821.71 (with variance of 28.95% from the ABC) based on their letter clarification dated April 21, 2004. [14] After further evaluation of the bids, particularly those of the lowest three bidders, Mr. Hedifume Ezawa, Project Manager of the Catanduanes Circumferential Road Improvement Project (CCRIP), in his Contractor’s Bid Evaluation Report dated April 2004, recommended the award of the contract to private respondent China Road & Bridge Corporation: In accordance with the Guidelines for the Procurements under ODA [Official Development Assistance] Loans, the Consultant hereby recommends the award of the contract for the

construction of CP I, San Andres (Codon) – Virac – Jct. Bato – Viga Section under the Arterial Road Links Development Projects, Phase IV, JBIC Loan No. PH-P204 to the Lowest Complying Bidder, China Road and Bridge Corporation, at its total corrected bid amount of Nine Hundred Fifty-Two Million Five Hundred Sixty-Four Thousand Eight Hundred Twenty-One & 71/100 Pesos. [15] The BAC of the DPWH, with the approval of then Acting Secretary Soriquez, issued the assailed Resolution No. PJHL-A-04-012 dated May 7, 2004 recommending the award in favor of private respondent China Road & Bridge Corporation of the contract for the implementation of civil works for CP I, San Andres (Codon) – Virac – Jct. Bato – Viga Road (Catanduanes Circumferential Road Improvement Project) of the Arterial Roads Links Development Project, Phase IV, located in Catanduanes Province, under JBIC Loan Agreement No. PH-P204. [16] On September 29, 2004, a Contract of Agreement was entered into by and between the DPWH and private respondent China Road & Bridge Corporation for the implementation of the CP I project. The PartiesPetitioner Plaridel M. Abaya claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen. Petitioner Plaridel C. Garcia likewise claims that he filed the suit as a taxpayer, former military officer, and a Filipino citizen. Petitioner PMA ’59 Foundation, Inc., on the other hand, is a non-stock, non-profit corporation organized under the existing Philippine laws. It claims that its members are all taxpayers and alumni of the Philippine Military Academy. It is represented by its President, Carlos L. Agustin. Named as public respondents are the DPWH, as the government agency tasked with the implementation of government infrastructure projects; the Department of Budget and Management (DBM) as the government agency that authorizes the release and disbursement of public funds for the implementation of government infrastructure projects; and the Department of Finance (DOF) as the government agency that acts as the custodian and manager of all financial resources of the government. Also named as individual public respondents are Hermogenes E. Ebdane, Jr., Emilia T. Boncodin and Cesar V. Purisima in their capacities as former Secretaries of the DPWH, DBM and DOF, respectively. On the other hand, public respondent Norma L. Lasala was impleaded in her capacity as Treasurer of the Bureau of Treasury. Private respondent China Road & Bridge Corporation is a duly organized corporation engaged in the business of construction. The Petitioners’ Case The petitioners mainly seek to nullify DPWH Resolution No. PJHLA-04-012 dated May 7, 2004, which recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of the civil works of CP I. They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said resolution. They pose the following issues for the Court’s resolution: I. Whether or not Petitioners have standing to file the instant Petition.

II. Whether or not Petitioners are entitled to the issuance of a Writ of Certiorari reversing and setting aside DPWH Resolution No. PJHL-A-04-012, recommending the award of the Contract Agreement for the implementation of civil works for CPI, San Andres (CODON)-VIRACJCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD IMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, to China Road & Bridge Corporation. III. Whether or not the Contract Agreement executed by and between the Republic of the Philippines, through the Department of Public Works and Highways, and the China Road & Bridge Corporation, for the implementation of civil works for CPI, San Andres (CODON)-VIRACJCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROAD IMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, is void ab initio. IV. Whether or not Petitioners are entitled to the issuance of a Writ of Prohibition permanently prohibiting the implementation of DPWH Resolution No. PJHL-A-04-012 and the Contract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the China Road & Bridge Corporation, and the disbursement of public funds by the [D]epartment of [B]udget and [M]anagement for such purpose. V. Whether or not Petitioners are entitled to a Preliminary Injunction and/or a Temporary Restraining Order immediately enjoining the implementation of DPWH Resolution No. PJHL-A-04-012 and the Contract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the China Road & Bridge Corporation, and the disbursement of public funds by the Department of Budget and Management for such purpose, during the pendency of this case. [17] Preliminarily, the petitioners assert that they have standing or locus standi to file the instant petition. They claim that as taxpayers and concerned citizens, they have the right and duty to question the expenditure of public funds on illegal acts. They point out that the Philippine Government allocates a peso-counterpart for CP I, which amount is appropriated by Congress in the General Appropriations Act; hence, funds that are being utilized in the implementation of the questioned project also partake of taxpayers’ money. The present action, as a taxpayers’ suit, is thus allegedly proper. They likewise characterize the instant petition as one of transcendental importance that warrants the Court’s adoption of a liberal stance on the issue of standing. It cited several cases where the Court brushed aside procedural technicalities in order to resolve issues involving paramount public interest and transcendental importance. [18] Further, petitioner Abaya asserts that he possesses the requisite standing as a former member of the House of Representatives and one of the principal authors of Republic Act No. 9184 (RA 9184)known as the Government Procurement Reform Act, the law allegedly violated by the public respondents.

On the substantive issues, the petitioners anchor the instant petition on the contention that the award of the contract to private respondent China Road & Bridge Corporation violates RA 9184, particularly Section 31 thereof which reads: SEC. 31. Ceiling for Bid Prices. – The ABC shall be the upper limit or ceiling for the Bid prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the amount of the award. In relation thereto, the petitioners cite the definition of the ABC, thus: SEC. 5. Definition of Terms. – x x x (a) Approved Budget for the Contract (ABC). – refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act and/or continuing appropriations, in the case of National Government Agencies; the Corporate Budget for the contract approved by the governing Boards, pursuant to E.O. No. 518, series of 1979, in the case of GovernmentOwned and/or Controlled Corporations, Government Financial Institutions and State Universities and Colleges; and the Budget for the contract approved by the respective Sanggunian, in the case of Local Government Units. x x x The petitioners theorize that the foregoing provisions show the mandatory character of ceilings or upper limits of every bid. Under the above-quoted provisions of RA 9184, all bids or awards should not exceed the ceilings or upper limits; otherwise, the contract is deemed void and inexistent. Resolution No. PJHL-A-04-012 was allegedly issued with grave abuse of discretion because it recommended the award of the contract to private respondent China Road & Bridge Corporation whose bid was more than P200 million overpriced based on the ABC. As such, the award is allegedly illegal and unconscionable. In this connection, the petitioners opine that the contract subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation is void ab initio for being prohibited by RA 9184. They stress that Section 31 thereof expressly provides that “bid prices that exceed this ceiling shall be disqualified outright from participating in the bidding.” The upper limit or ceiling is called the ABC and since the bid of private respondent China Road & Bridge Corporation exceeded the ABC for the CP I project, it should have been allegedly disqualified from the bidding process and should not, by law, have been awarded the said contract. They invoke Article 1409 of the Civil Code: ART. 1409. The following contracts are inexistent and void from the beginning: (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (2) Those which are absolutely simulated or fictitious; (3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men; (5) Those which contemplate an impossible service; (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; (7) Those expressly prohibited or declared void by law.For violating the above provision, the contract between the DPWH and private respondent China Road & Bridge Corporation is allegedly inexistent and void ab initio and can produce no effects whatsoever. It is the contention of the petitioners that RA 9184 is applicable to both local- and foreign-funded procurement contracts. They cite the following excerpt of the deliberations of the Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill No. 2248 and House Bill No. 4809: REP. ABAYA. Mr. Chairman, can we just propose additional amendments? Can we go back to Section 4, Mr. Chairman?THE CHAIRMAN (SEN. ANGARA). Section? Section ano, Del, 4? Definition – definition of terms.REP. ABAYA. Sa House bill, it is sa scope and application.THE CHAIRMAN (SEN. ANGARA). Okay.REP. ABAYA. It should read as follows: “This Act shall apply to the procurement of goods, supplies and materials, infrastructure projects and consulting services regardless of funding source whether local or foreign by the government.” THE CHAIRMAN (SEN. ANGARA). Okay, accepted. We accept. The Senate accepts it. xxx xxx xxx THE CHAIRMAN (SEN ANGARA). Just take note of that ano. Medyo nga problematic ‘yan eh. Now, just for the record Del, can you repeat again the justification for including foreign funded contracts within the scope para malinaw because the World Bank daw might raise some objection to it. REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these are the big projects. To give an example, if you allow bids above government estimate, let’s say take the case of 500 million project, included in that 500 million is the 20 percent profit. If you allow them to bid above government estimate, they will add another say 28 percent of (sic) 30 percent, 30 percent of 500 million is another 150 million. Ito, this is a rich source of graft money, aregluhan na lang, 150 million, five contractors will gather, “O eto 20 million, 20 million, 20 million.” So, it is rigged. ‘Yun ang practice na nangyayari. If we eliminate that, if we have a ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang contractor. So this promote (sic) collusion among bidders, of course, with the cooperation of irresponsible officials of some agencies. So we should have a ceiling to include foreign funded projects. The petitioners insist that Loan Agreement No. PH-P204 between the JBIC and the Philippine Government is neither a treaty, an international nor an executive agreement that would bar the application of RA 9184. They point out that to be considered a treaty, an international or an executive agreement, the parties must be two sovereigns or States whereas in the case of Loan Agreement No. PH-P204, the parties are the Philippine Government and the JBIC, a banking agency of Japan, which has a separate juridical personality from the Japanese Government.

They further insist on the applicability of RA 9184 contending that while it took effect on January 26, 2003and Loan Agreement No. PHP204 was executed prior thereto or on December 28, 1999, the actual procurement or award of the contract to private respondent China Road & Bridge Corporation was done after the effectivity of RA 9184. The said law is allegedly specific as to its application, which is on the actual procurement of infrastructure and other projects only, and not on the loan agreements attached to such projects. Thus, the petition only prays for the annulment of Resolution No. PJHL-A-04-012 as well as the contract between the DPWH and private respondent China Road & Bridge Corporation. The petitioners clarify that they do not pray for the annulment of Loan Agreement No. PHP204. Since the subject procurement and award of the contract were done after the effectivity of RA 9184, necessarily, the procurement rules established by that law allegedly apply, and not Presidential Decree No. 1594 (PD 1594)and Executive Order No. 40 (EO 40), series of 2001, as contended by the respondents. The latter laws, including their implementing rules, have allegedly been repealed by RA 9184. Even RA 4860, as amended, known as the Foreign Borrowings Act, the petitioners posit, may have also been repealed or modified by RA 9184 insofar as its provisions are inconsistent with the latter. The petitioners also argue that the “Implementing Rules and Regulations (IRR) of RA 9184, Otherwise Known as the Government Procurement Reform Act,Part A” (IRR-A) cited by the respondents is not applicable as these rules only govern domestically-funded procurement contracts. They aver that the implementing rules to govern foreign-funded procurement, as in the present case, have yet to be drafted and in fact, there are concurrent resolutions drafted by both houses of Congress for the Reconvening of the Joint Congressional Oversight Committee for the formulation of the IRR for foreign-funded procurements under RA 9184. The petitioners maintain that disbursement of public funds to implement a patently void and illegal contract is itself illegal and must be enjoined. They bring to the Court’s attention the fact that the works on the CP I project have already commenced as early as October 2004. They thus urge the Court to issue a writ ofcertiorari to set aside Resolution No. PJHLA-04-012 as well as to declare null and void the contract entered into between the DPWH and private respondent China Road & Bridge Corporation. They also pray for the issuance of a temporary restraining order and, eventually, a writ of prohibition to permanently enjoin the DPWH from implementing Resolution No. PJHL-A-04-012 and its contract with private respondent China Road & Bridge Corporation as well as the DBM from disbursing funds for the said purpose. The Respondents’ Counter-Arguments The public respondents, namely the DPWH, DBM and DOF, and their respective named officials, through the Office of the Solicitor General, urge the Court to dismiss the petition on grounds that the petitioners have no locus standi and, in any case, Resolution No. PJHL-A-04-012 and the contract between the DPWH and private respondent China Road & Bridge Corporation are valid. According to the public respondents, a taxpayer’s locus standi was recognized in the following cases: (a) where a tax measure is assailed as unconstitutional;

(b) where there is a question of validity of election laws; (c) where legislators questioned the validity of any official action upon the claim that it infringes on their prerogatives as legislators; (d) where there is a claim of illegal disbursement or wastage of public funds through the enforcement of an invalid or unconstitutional law; (e) where it involves the right of members of the Senate or House of Representatives to question the validity of a presidential veto or condition imposed on an item in an appropriation bill;or (f) where it involves an invalid law, which when enforced will put the petitioner in imminent danger of sustaining some direct injury as a result thereof, or that he has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute complained of. None of the above considerations allegedly obtains in the present case. It is also the view of the public respondents that the fact that petitioner Abaya was a former lawmaker would not suffice to confer locus standi on himself. Members of Congress may properly challenge the validity of an official act of any department of the government only upon showing that the assailed official act affects or impairs their rights and prerogatives as legislators. The public respondents further assail the standing of the petitioners to file the instant suit claiming that they failed to allege any specific injury suffered nor an interest that is direct and personal to them. If at all, the interest or injuries claimed by the petitioners are allegedly merely of a general interest common to all members of the public. Their interest is allegedly too vague, highly speculative and uncertain to satisfy the requirements of locus standi. The public respondents find it noteworthy that the petitioners do not raise issues of constitutionality but only of contract law, which the petitioners not being privies to the agreement cannot raise. This is following the principle that a stranger to a contract cannot sue either or both the contracting parties to annul and set aside the same except when he is prejudiced on his rights and can show detriment which would positively result to him from the implementation of the contract in which he has no intervention. There being no particularized interest or elemental substantial injury necessary to confer locus standi, the public respondents implore the Court to dismiss the petition. On the merits, the public respondents maintain that the imposition of ceilings or upper limits on bid prices in RA 9184 does not apply because the CP I project and the entire Catanduanes Circumferential Road Improvement Project, financed by Loan Agreement No. PH-P204 executed between the Philippine Government and the JBIC, is governed by the latter’s Procurement Guidelines which precludes the imposition of ceilings on bid prices. Section 5.06 of the JBIC Procurement Guidelines reads: Section 5.06. Evaluation and Comparison of Bids. x x x (e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.

It was explained that other foreign banks such as the Asian Development Bank (ADB) and the World Bank (WB) similarly prohibit the bracketing or imposition of a ceiling on bid prices. The public respondents stress that it was pursuant to Loan Agreement No. PH-P204 that the assailed Resolution No. PJHL-A-04-012 and the subsequent contract between the DPWH and private respondent China Road & Bridge Corporation materialized. They likewise aver that Loan Agreement No. PH-P204 is governed by RA 4860, as amended, or the Foreign Borrowings Act. Section 4 thereof states: SEC. 4. In the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when necessary, agree to waive or modify, the application of any law granting preferences or imposing restrictions on international competitive bidding, including among others [Act No. 4239, Commonwealth Act No. 138], the provisions of [CA 541], insofar as such provisions do not pertain to constructions primarily for national defense or security purposes, [RA 5183]; Provided, however, That as far as practicable, utilization of the services of qualified domestic firms in the prosecution of projects financed under this Act shall be encouraged: Provided, further, That in case where international competitive bidding shall be conducted preference of at least fifteen per centum shall be granted in favor of articles, materials or supplies of the growth, production or manufacture of the Philippines: Provided, finally, That the method and procedure in comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.DOJ Opinion No. 46, Series of 1987, is relied upon by the public respondents as it opined that an agreement for the exclusion of foreign assisted projects from the coverage of local bidding regulations does not contravene existing legislations because the statutory basis for foreign loan agreements is RA 4860, as amended, and under Section 4 thereof, the President is empowered to waive the application of any law imposing restrictions on the procurement of goods and services pursuant to such loans. Memorandum Circular Nos. 104 and 108, issued by the President, to clarify RA 4860, as amended, and PD 1594, relative to the award of foreignassisted projects, are also invoked by the public respondents, to wit: Memorandum Circular No. 104: In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise known as the “Foreign Borrowings Act” x x x It is hereby clarified that foreign-assisted infrastructure projects may be exempted from the application for the pertinent provisions of the Implementing Rules and Regulations (IRR) of Presidential Decree (P.D.) No. 1594 relative to the method and procedure in the comparison of bids, which matter may be the subject of agreement between the infrastructure agency concerned and the lending institution. It should be made clear however that public bidding is still required and can only be waived pursuant to existing laws. Memorandum Circular No. 108: In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise known as the “Foreign Borrowings Act”, it is hereby clarified that, for projects supported in whole or in part by foreign assistance awarded through international or local competitive

bidding, the government agency concerned may award the contract to the lowest evaluated bidder at his bid price consistent with the provisions of the applicable loan/grant agreement. Specifically, when the loan/grant agreement so stipulates, the government agency concerned may award the contract to the lowest bidder even if his/its bid exceeds the approved agency estimate. It is understood that the concerned government agency shall, as far as practicable, adhere closely to the implementing rules and regulations of Presidential Decree No. 1594 during loan/grant negotiation and the implementation of the projects. The public respondents characterize foreign loan agreements, including Loan Agreement No. PH-P204, as executive agreements and, as such, should be observed pursuant to the fundamental principle in international law of pacta sunt servanda.They cite Section 20 of Article VII of the Constitution as giving the President the authority to contract foreign loans: SEC. 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decisions on applications for loans to be contracted or guaranteed by the Government or Government-owned and Controlled Corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. The Constitution, the public respondents emphasize, recognizes the enforceability of executive agreements in the same way that it recognizes generally accepted principles of international law as forming part of the law of the land. This recognition allegedly buttresses the binding effect of executive agreements to which the Philippine Government is a signatory. It is pointed out by the public respondents that executive agreements are essentially contracts governing the rights and obligations of the parties. A contract, being the law between the parties, must be faithfully adhered to by them. Guided by the fundamental rule of pacta sunt servanda, the Philippine Government bound itself to perform in good faith its duties and obligations under Loan Agreement No. PH-P204. The public respondents further argue against the applicability of RA 9184 stating that it was signed into law on January 10, 2003. On the other hand, Loan Agreement No. PH-P204 was executed on December 28, 1999, where the laws then in force on government procurements were PD 1594 and EO 40. The latter law (EO 40), in particular, excluded from its application “any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and other similar foreign sources.”

The applicability of EO 40, not RA 9184, is allegedly bolstered by the fact that the “Invitation to Prequalify and to Bid” for the implementation of the CP I project was published in two leading national newspapers, namely, the Manila Times and Manila Standard on November 22, 29 and December 5, 2002, or before the signing into law of RA 9184 on January 10, 2003. In this connection, the public respondents point to Section 77 of IRRA, which reads: SEC. 77. Transitory Clause. – In all procurement activities, if the advertisement or invitation or bids was issued prior to the effectivity of the Act, the provisions of EO 40 and its IRR, PD 1594 and its IRR, RA 7160 and its IRR, or other applicable laws as the case may be, shall govern. In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting the procurement procedures, rules and regulations provided in EO 40 and its IRR, or other applicable laws, as the case may be. Section 4 of RA 9184 is also invoked by the public respondents as it provides: SEC. 4. Scope and Applications. – This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, y all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or –controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed. It is also the position of the public respondents that even granting arguendo that Loan Agreement No. PH-P204 were an ordinary loan contract, still, RA 9184 is inapplicable under the non-impairment clause of the Constitution. The said loan agreement expressly provided that the procurement of goods and services for the project financed by the same shall be governed by the Guidelines for Procurement under OECF Loans dated December 1997. Further, Section 5.06 of the JBIC Procurement Guidelines categorically provides that “*a+ny procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.” The public respondents explain that since the contract is the law between the parties and Loan Agreement No. PH-P204 states that the JBIC Procurement Guidelines shall govern the parties’ relationship and further dictates that there be no ceiling price for the bidding, it naturally follows that any subsequent law passed contrary to the letters of the said contract would have no effect with respect to the parties’ rights and obligations arising therefrom. To insist on the application of RA 9184 on the bidding for the CP I project would, notwithstanding the terms and conditions of Loan Agreement No. PH-P204, allegedly violate the constitutional provision on nonimpairment of obligations and contracts, and destroy vested ights duly acquired under the said loan agreement. Lastly, the public respondents deny that there was illegal disbursement of public funds by the DBM. They asseverate that all the releases made by the DBM for the implementation of the entire Arterial Road Links Project – Phase IV, which includes the Catanduanes Circumferential

Road Improvement Project, were covered by the necessary appropriations made by law, specifically the General Appropriations Act (GAA). Further, the requirements and procedures prescribed for the release of the said funds were duly complied with. For its part, private respondent China Road & Bridge Corporation similarly assails the standing of the petitioners, either as taxpayers or, in the case of petitioner Abaya, as a former lawmaker, to file the present suit. In addition, it is also alleged that, by filing the petition directly to this Court, the petitioners failed to observe the hierarchy of courts. On the merits, private respondent China Road & Bridge Corporation asserts that the applicable law to govern the bidding of the CP I project was EO 40, not RA 9184, because the former was the law governing the procurement of government projects at the time that it was bidded out. EO 40 was issued by the Office of the President on October 8, 2001 and Section 1 thereof states that: SEC. 1. Scope and Application. This Executive Order shall apply to the procurement of: (a) goods, supplies, materials and related services; (b) civil works; and (c) consulting services, by all National Government agencies, including State Universities and Colleges (SUCs), GovernmentOwned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), hereby referred to as the ‘Agencies.’ This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of contract. x x x The Invitation to Prequalify and to Bid was first published on November 22, 2002. On the other hand, RA 9184 was signed into law only on January 10, 2003. Since the law in effect at the time the procurement process was initiated was EO 40, private respondent China Road & Bridge Corporation submits that it should be the said law which should govern the entire procurement process relative to the CP I project. EO 40 expressly recognizes as an exception from the application of the provisions thereof on approved budget ceilings, those projects financed by international financing institutions (IFIs) and foreign bilateral sources. Section 1 thereof, quoted in part earlier, further states: SEC. 1. Scope and Application. x x x Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and other similar foreign sources.Section 1.2 of the Implementing Rules and Regulations of EO 40 is likewise invoked as it provides: For procurement financed wholly or partly from Official Development Assistance (ODA) funds from International Financing Institutions (IFIs), as well as from bilateral and other similar foreign sources, the corresponding loan/grant agreement governing said funds as negotiated and agreed upon by and between the Government and the concerned IFI shall be observed.

Private respondent China Road & Bridge Corporation thus postulates that following EO 40, the procurement of goods and services for the CP I project should be governed by the terms and conditions of Loan Agreement No. PH-P204 entered into between the JBIC and the Philippine Government. Pertinently, Section 5.06 of the JBIC Procurement Guidelines prohibits the setting of ceilings on bid prices. Private respondent China Road & Bridge Corporation claims that when it submitted its bid for the CP I project, it relied in good faith on the provisions of EO 40. It was allegedly on the basis of the said law that the DPWH awarded the project to private respondent China Road & Bridge Coporation even if its bid was higher than the ABC. Under the circumstances, RA 9184 could not be applied retroactively for to do so would allegedly impair the vested rights of private respondent China Road & Bridge Corporation arising from its contract with the DPWH. It is also contended by private respondent China Road & Bridge Corporation that even assuming arguendo that RA 9184 could be applied retroactively, it is still the terms of Loan Agreement No. PH-P204 which should govern the procurement of goods and services for the CP I project. It supports its theory by characterizing the said loan agreement, executed pursuant to the Exchange of Notes between the Government of Japan and the Philippine Government, as an executive agreement. Private respondent China Road & Bridge Corporation, like the public respondents, cites RA 4860 as the basis for the Exchange of Notes and Loan Agreement No. PH-P204. As an international or executive agreement, the Exchange of Notes and Loan Agreement No. PH-P204 allegedly created a legally binding obligation on the parties. The following excerpt of the deliberations of the Bicameral Conference Committee on the Disagreeing Provision of Senate Bill No. 2248 and House Bill No. 4809 is cited by private respondent China Road & Bridge Corporation to support its contention that it is the intent of the lawmakers to exclude from the application of RA 9184 those foreign-funded projects: x x x REP. MARCOS. Yes, Mr. Chairman, to respond and to put into the record, a justification for the inclusion of foreign contracts, may we just state that foreign contracts have, of course, been brought into the ambit of the law because of the Filipino counterpart for this foreign projects, they are no longer strictly foreign in nature but fall under the laws of the Philippine government. THE CHAIRMAN (SEN. ANGARA). Okay. I think that’s pretty clear. I think the possible concern is that some ODA are with strings attached especially the Japanese. The Japanese are quite strict about that, that they are (sic) even provide the architect and the design, etcetera, plus, of course, the goods that will be supplied. Now, I think we’ve already provided that this is open to all and we will recognize our international agreements so that this bill will not also restrict the flow of foreign funding, because some countries now make it a condition that they supply both services and goods especially the Japanese. So I think we can put a sentence that we continue to honor our international obligations, di ba Laura?

MR. ENCARNACION. Actually, subject to any treaty. THE CHAIRMAN (SEN. ANGARA). ‘Yun pala eh. That should allay their anxiety and concern. Okay, buti na lang for the record para malaman nila na we are conscious sa ODA.

Private respondent China Road & Bridge Corporation submits that based on the provisions of the Exchange of Notes and Loan Agreement No. PH-P204, it was rightfully and legally awarded the CP I project. It urges the Court to dismiss the petition for lack of merit. The Court’s Rulings Petitioners, as taxpayers, possesslocus standi to file the present suit Briefly stated, locus standi is “a right of appearance in a court of justice on a given question.” More particularly, it is a party’s personal and substantial interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged. It calls for more than just a generalized grievance. The term “interest” means a material interest, an interest in issue affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. Standing or locus standi is a peculiar concept in constitutional lawand the rationale for requiring a party who challenges the constitutionality of a statute to allege such a personal stake in the outcome of the controversy is “to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.” Locus standi, however, is merely a matter of procedure and it has been recognized that in some cases, suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest. Consequently, the Court, in a catena of cases, has invariably adopted a liberal stance on locus standi, including those cases involving taxpayers. The prevailing doctrine in taxpayer’s suits is to allow taxpayers to question contracts entered into by the national government or government- owned or controlled corporations allegedly in contravention of law. A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that there is a wastage of public funds through the enforcement of an invalid or unconstitutional law. Significantly, a taxpayer need not be a party to the contract to challenge its validity. In the present case, the petitioners are suing as taxpayers. They have sufficiently demonstrated that, notwithstanding the fact that the CP I project is primarily financed from loans obtained by the government from the JBIC, nonetheless, taxpayers’ money would be or is being spent on the project considering that the Philippine Government is required to allocate a pesocounterpart therefor. The public respondents themselves admit that appropriations for these foreign-assisted projects in the GAA are composed of the loan proceeds and the peso-counterpart. The counterpart funds, the Solicitor General explains, refer to the component of

the project cost to be financed from government-appropriated funds, as part of the government’s commitment in the implementation of the project. Hence, the petitioners correctly asserted their standing since a part of the funds being utilized in the implementation of the CP I project partakes of taxpayers’ money. Further, the serious legal questions raised by the petitioners, e.g., whether RA 9184 applies to the CP I project, in particular, and to foreignfunded government projects, in general, and the fact that public interest is indubitably involved considering the public expenditure of millions of pesos, warrant the Court to adopt in the present case its liberal policy on locus standi. In any case, for reasons which will be discussed shortly, the substantive arguments raised by the petitioners fail to persuade the Court as it holds that Resolution No. PJHL-A-04-012 is valid. As a corollary, the subsequent contract entered into by and between the DPWH and private respondent China Road & Bridge Corporation is likewise valid. History of Philippine Procurement Laws It is necessary, at this point, to give a brief history of Philippine laws pertaining to procurement through public bidding. The United States Philippine Commission introduced the American practice of public bidding through Act No. 22, enacted on October 15, 1900, by requiring the Chief Engineer, United States Army for the Division of the Philippine Islands, acting as purchasing agent under the control of the then Military Governor, to advertise and call for a competitive bidding for the purchase of the necessary materials and lands to be used for the construction of highways and bridges in the Philippine Islands. Act No. 74, enacted on January 21, 1901 by the Philippine Commission, required the General Superintendent of Public Instruction to purchase office supplies through competitive public bidding. Act No. 82, approved on January 31, 1901, and Act No. 83, approved on February 6, 1901, required the municipal and provincial governments, respectively, to hold competitive public biddings in the making of contracts for public works and the purchase of office supplies. On June 21, 1901, the Philippine Commission, through Act No. 146, created the Bureau of Supply and with its creation, public bidding became a popular policy in the purchase of supplies, materials and equipment for the use of the national government, its subdivisions and instrumentalities. On February 3, 1936, then President Manuel L. Quezon issued Executive Order No. 16 declaring as a matter of general policy that government contracts for public service or for furnishing supplies, materials and equipment to the government should be subjected to public bidding. The requirement of public bidding was likewise imposed for public works of construction or repair pursuant to the Revised Administrative Code of 1917. Then President Diosdado Macapagal, in Executive Order No. 40 dated June 1, 1963, reiterated the directive that no government contract for public service or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities, should be entered into without public bidding except for very extraordinary reasons to be determined by a Committee constituted thereunder. Then President Ferdinand

Marcos issued PD 1594 prescribing guidelines for government infrastructure projects and Section 4thereof stated that they should generally be undertaken by contract after competitive public bidding. Then President Corazon Aquino issued Executive Order No. 301 (1987) prescribing guidelines for government negotiated contracts. Pertinently, Section 62 of the Administrative Code of 1987 reiterated the requirement of competitive public bidding in government projects. In 1990, Congress passed RA 6957, which authorized the financing, construction, operation and maintenance of infrastructure by the private sector. RA 7160 was likewise enacted by Congress in 1991 and it contains provisions governing the procurement of goods and locally-funded civil works by the local government units. Then President Fidel Ramos issued Executive Order No. 302 (1996), providing guidelines for the procurement of goods and supplies by the national government. Then President Joseph Ejercito Estrada issued Executive Order No. 201 (2000), providing additional guidelines in the procurement of goods and supplies by the national government. Thereafter, he issued Executive Order No. 262 (2000) amending EO 302 (1996) and EO 201 (2000). On October 8, 2001, President Gloria Macapagal-Arroyo issued EO 40, the law mainly relied upon by the respondents, entitled Consolidating Procurement Rules and Procedures for All National Government Agencies, Government-Owned or Controlled Corporations and Government Financial Institutions, and Requiring the Use of the Government Procurement System. It accordingly repealed, amended or modified all executive issuances, orders, rules and regulations or parts thereof inconsistent therewith. On January 10, 2003, President Arroyo signed into law RA 9184. It took effect on January 26, 2004, or fifteen days after its publication in two newspapers of general circulation. It expressly repealed, among others, EO 40, EO 262 (2000), EO 302(1996) and PD 1594, as amended: SEC. 76. Repealing Clause. —This law repeals Executive Order No. 40, series of 2001, entitled “Consolidating Procurement Rules and Procedures for All National Government Agencies, Government Owned or Controlled Corporations and/or Government Financial Institutions, and Requiring the Use of the Government Electronic Procurement System”; Executive Order No. 262, series of 1996, entitled “Amending Executive Order No. 302, series of 1996, entitled Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government” and Section 3 of Executive Order No. 201, series of 2000, entitled “Providing Additional Policies and Guidelines in the Procurement of Goods/Supplies by the National Government”; Executive Order No. 302, series of 1996, entitled “Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government” and Presidential Decree No. 1594 dated June 11, 1978, entitled “Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts.” This law amends Title Six, Book Two of Republic Act No. 7160, otherwise known as the “Local Government Code of 1991”; the relevant provisions of Executive Order No. 164,

series of 1987, entitled “Providing Additional Guidelines in the Processing and Approval of Contracts of the National Government”; and the relevant provisions of Republic Act No. 7898 dated February 23, 1995, entitled “An Act Providing for the Modernization of the Armed Forces of the Philippines and for Other Purposes.” Any other law, presidential decree or issuance, executive order, letter of instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly. In addition to these laws, RA 4860, as amended, must be mentioned as Section 4 thereof provides that “*i+n the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x Provided, finally, That the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.” EO 40, not RA 9184, is applicable to the procurementprocess undertaken for the CP I project. RA 9184cannot be given retroactive application. It is not disputed that with respect to the CP I project, the Invitation to Prequalify and to Bid for its implementation was published in two leading national newspapers, namely, the Manila Times and Manila Standard on November 22, 29 and December 5, 2002. At the time, the law in effect was EO 40. On the other hand, RA 9184 took effect two months later or on January 26, 2003. Further, its full implementation was even delayed as IRR-A was only approved by President Arroyo onSeptember 18, 2003 and subsequently published on September 23, 2003 in the Manila Times and Malaya newspapers. The provisions of EO 40 apply to the procurement process pertaining to the CP I project as it is explicitly provided in Section 1 thereof that: SEC. 1. Scope and Application. – This Executive Order shall apply to see procurement of (a) goods, supplies, materials and related service; (b) civil works; and (c) consulting services, by all National Government agencies, including State Universities and Colleges (SUCs), GovernmentOwned or –Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), hereby referred to as “Agencies.” This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of the contract. Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and similar foreign sources. The procurement process basically involves the following steps: (1) pre-procurement conference; (2) advertisement of the invitation to bid; (3) pre-bid conference; (4) eligibility check of prospective bidders; (5) submission and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening and examination; (8) bid evaluation; (9) post qualification; (10) award of contract and notice to proceed. Clearly then, when the Invitation to Prequalify and to Bid for the implementation of the CP I project was published on November 22, 29 and December 5, 2002, the procurementprocess

thereof had already commenced and the application of EO 40 to the procurement process for the CP I project had already attached. RA 9184 cannot be applied retroactively to govern the procurement process relative to the CP I project because it is well settled that a law or regulation has no retroactive application unless it expressly provides for retroactivity. Indeed, Article 4 of the Civil Code is clear on the matter: “*l+aws shall have no retroactive effect, unless the contrary is provided.” In the absence of such categorical provision, RA 9184 will not be applied retroactively to the CP I project whose procurement process commenced even before the said law took effect. That the legislators did not intend RA 9184 to have retroactive effect could be gleaned from the IRR-A formulated by the Joint Congressional Oversight Committee (composed of the Chairman of the Senate Committee on Constitutional Amendments and Revision of Laws, and two members thereof appointed by the Senate President and the Chairman of the House Committee on Appropriations, and two members thereof appointed by the Speaker of the House of Representatives) and the Government Procurement Policy Board (GPPB). Section 77 of the IRR-A states, thus: SEC. 77. Transitory Clause In all procurement activities, if the advertisement or invitation for bids was issued prior to the effectivity of the Act, the provisions of E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and its IRR, or other applicable laws, as the case may be, shall govern.In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting the procurement procedures, rules and regulations provided in E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and its IRR, or other applicable laws, as the case may be. In other words, under IRR-A, if the advertisement of the invitation for bids was issued prior to the effectivity of RA 9184, such as in the case of the CP I project, the provisions of EO 40 and its IRR, and PD 1594 and its IRR in the case of national government agencies, and RA 7160 and its IRR in the case of local government units, shall govern. Admittedly, IRR-A covers only fully domestically-funded procurement activities from procurement planning up to contract implementation and that it is expressly stated that IRR-B for foreign-funded procurement activities shall be subject of a subsequent issuance. Nonetheless, there is no reason why the policy behind Section 77 of IRR-A cannot be applied to foreign-funded procurement projects like the CP I project. Stated differently, the policy on the prospective or nonretroactive application of RA 9184 with respect to domestically-funded procurement projects cannot be any different with respect to foreign-funded procurement projects like the CP I project. It would be incongruous, even absurd, to provide for the prospective application of RA 9184 with respect to domestically-funded procurement projects and, on the other hand, as urged by the petitioners, apply RA 9184 retroactively with respect to

foreign- funded procurement projects. To be sure, the lawmakers could not have intended such an absurdity. Thus, in the light of Section 1 of EO 40, Section 77 of IRR-A, as well as the fundamental rule embodied in Article 4 of the Civil Code on prospectivity of laws, the Court holds that the procurement process for the implementation of the CP I project is governed by EO 40 and its IRR, not RA 9184. Under EO 40, the award of the contract to privaterespondent China Road & Bridge Corporation is valid Section 25 of EO 40 provides that “*t+he approved budget of the contract shall be the upper limit or ceiling of the bid price. Bid prices which exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the amount of the award. x x x” It should be observed that this text is almost similar to the wording of Section 31 of RA 9184, relied upon by the petitioners in contending that since the bid price of private respondent China Road & Bridge Corporation exceeded the ABC, then it should not have been awarded the contract for the CP I project. Nonetheless, EO 40 expressly recognizes as an exception to its scope and application those government commitments with respect to bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and other similar foreign sources. The pertinent portion of Section 1 of EO 40 is quoted anew: SEC. 1. Scope and Application. – x x x Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as from bilateral and similar foreign sources. In relation thereto, Section 4 of RA 4860, as amended, was correctly cited by the respondents as likewise authorizing the President, in the contracting of any loan, credit or indebtedness thereunder, “when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x.” The said provision of law further provides that “the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.” Consequently, in accordance with these applicable laws, the procurement of goods and services for the CP I project is governed by the corresponding loan agreement entered into by the government and the JBIC, i.e., Loan Agreement No. PH-P204. The said loan agreement stipulated that the procurement of goods and services for the Arterial Road Links Development Project (Phase IV), of which CP I is a component, is to be governed by the JBIC Procurement uidelines. Section 5.06, Part II (International Competitive Bidding) thereof quoted earlier reads: Section 5.06. Evaluation and Comparison of Bids

x x x (e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.It is clear that the JBIC Procurement Guidelines proscribe the imposition of ceilings on bid prices. On the other hand, it enjoins the award of the contract to the bidder whose bid has been determined to be the lowest evaluated bid. The pertinent provision, quoted earlier, is reiterated, thus: Section 5.09. Award of Contract The contract is to be awarded to the bidder whose bid has been determined to be the lowest evaluated bid and who meets the appropriate standards of capability and financial resources. A bidder shall not be required as a condition of award to undertake responsibilities or work not stipulated in the specifications or to modify the bid. Since these terms and conditions are made part of Loan Agreement No. PH-P204, the government is obliged to observe and enforce the same in the procurement of goods and services for the CP I project. As shown earlier, private respondent China Road & Bridge Corporation’s bid was the lowest evaluated bid, albeit 28.95% higher than the ABC. In accordance with the JBIC Procurement Guidelines, therefore, it was correctly awarded the contract for the CP I project. Even if RA 9184 were to be applied retroactively, theterms of the Exchange of Notes dated December 27,1999 and Loan Agreement No. PH-P204 would stillgovern the procurement for the CP I project For clarity, Section 4 of RA 9184 is quoted anew, thus: SEC. 4. Scope and Applications. – This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, by all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or –controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed. The petitioners, in order to place the procurement process undertaken for the CP I project within the ambit of RA 9184, vigorously assert that Loan Agreement No. PH-P204 is neither a treaty, an international agreement nor an executive agreement. They cite Executive Order No. 459 dated November 25, 1997 where the three agreements are defined in this wise: a) International agreement – shall refer to a contract or understanding, regardless of nomenclature, entered into between the Philippines and another government in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments. b) Treaties – international agreements entered into by the Philippines which require legislative concurrence after executive ratification. This term may include compacts like conventions, declarations, covenants and acts.

c) Executive agreements – similar to treaties except that they do not require legislative concurrence. The petitioners mainly argue that Loan Agreement No. PH-P204 does not fall under any of the three categories because to be any of the three, an agreement had to be one where the parties are the Philippines as a State and another State. The JBIC, the petitioners maintain, is a Japanese banking agency, which presumably has a separate juridical personality from the Japanese Government. The petitioners’ arguments fail to persuade. The Court holds that Loan Agreement No. PH-P204 taken in conjunction with the Exchange of Notes datedDecember 27, 1999 between the Japanese Government and the Philippine Government is an executive agreement. To recall, Loan Agreement No. PH-P204 was executed by and between the JBIC and the Philippine Government pursuant to the Exchange of Notes executed by and between Mr. Yoshihisa Ara, Ambassador Extraordinary and Plenipotentiary of Japan to the Philippines, and then Foreign Affairs Secretary Siazon, in behalf of their respective governments. The Exchange of Notes expressed that the two governments have reached an understanding concerning Japanese loans to be extended to thePhilippines and that these loans were aimed at promoting our country’s economic stabilization and development efforts. Loan Agreement No. PH-P204 was subsequently executed and it declared that it was so entered by the parties “*i+n the light of the contents of the Exchange of Notes between the Government of Japan and the Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese loans to be extended with a view to promoting the economic stabilization and development efforts of the Republic of the Philippines.” Under the circumstances, the JBIC may well be considered an adjunct of the Japanese Government. Further, Loan Agreement No. PHP204 is indubitably an integral part of the Exchange of Notes. It forms part of the Exchange of Notes such that it cannot be properly taken independent thereof. In this connection, it is well to understand the definition of an “exchange of notes” under international law. The term is defined in the United Nations Treaty Collection in this wise: An “exchange of notes” is a record of a routine agreement that has many similarities with the private law contract. The agreement consists of the exchange of two documents, each of the parties being in the possession of the one signed by the representative of the other. Under the usual procedure, the accepting State repeats the text of the offering State to record its assent. The signatories of the letters may be government Ministers, diplomats or departmental heads. The technique of exchange of notes is frequently resorted to, either because of its speedy procedure, or, sometimes, to avoid the process of legislative approval. It is stated that “treaties, agreements, conventions, charters, protocols, declarations, memoranda of understanding, modus vivendi and exchange of notes” all refer to “international instruments binding at international law.”

It is further explained that- Although these instruments differ from each other by title, they all havecommon features and international law has applied basically the same rules to all these instruments. These rules are the result of long practice among the States, which have accepted them as binding norms in their mutual relations. Therefore, they are regarded as international customary law. Since there was a general desire to codify these customary rules, two international conventions were negotiated. The 1969 Vienna Convention on the Law of Treaties (“1969 Vienna Convention”), which entered into force on 27 January 1980, contains rules for treaties concluded between States. The 1986 Vienna Convention on the Law of Treaties between States and International Organizations (“1986 Vienna Convention”), which has still not entered into force, added rules for treaties with international organizations as parties. Both the 1969 Vienna Convention and the 1986 Vienna Convention do not distinguish between the different designations of these instruments. Instead, their rules apply to all of those instruments as long as they meet the common requirements.Significantly, an exchange of notes is considered a form of an executive agreement, which becomes binding through executive action without the need of a vote by the Senate or Congress. The following disquisition by Francis B. Sayre, former United States High Commissioner to the Philippines, entitled “The Constitutionality of Trade Agreement Acts,” quoted in Commissioner of Customs v. Eastern Sea Trading, is apropos: Agreements concluded by the President which fall short of treaties are commonly referred to as executive agreements and are no less common in our scheme of government than are the more formal instruments – treaties and conventions. They sometimes take the form of exchange of notes and at other times that of more formal documents denominated “agreements” or “protocols”. The point where ordinary correspondence between this and other government’s ends and agreements – whether denominated executive agreements orexchange of notes or otherwise – begin, may sometimes be difficult of ready ascertainment. It would be useless to undertake to discuss here the large variety of executive agreements as such, concluded from time to time. Hundreds of executive agreements, other than those entered into under the trade-agreements act, have been negotiated with foreign governments. x x x The Exchange of Notes dated December 27, 1999, stated, inter alia, that the Government of Japan would extend loans to the Philippines with a view to promoting its economic stabilization and development efforts; Loan I in the amount of Y79,8651,000,000 would be extended by the JBIC to the Philippine Government to implement the projects in the List A (including the Arterial Road Links Development Project - Phase IV); and that such loan (Loan I) would be used to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/or consultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the projects enumerated in the List A. With respect to the procurement of the goods and services for the projects, it bears reiterating that as stipulated: 3. The Government of the Republic of the Philippines will ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of

paragraph 4 of Part II are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where such procedures are inapplicable or inappropriate. The JBIC Procurements Guidelines, as quoted earlier, forbids any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified. Succinctly put, it absolutely prohibits the imposition of ceilings on bids. Under the fundamental principle of international law of pacta sunt servanda, which is, in fact, embodied in Section 4 of RA 9184 as it provides that “*a+ny treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed,” the DPWH, as the executing agency of the projects financed by Loan Agreement No. PH-P204, rightfully awarded the contract for the implementation of civil works for the CP I project to private respondent China Road & Bridge Corporation. WHEREFORE, premises considered, the petition is DISMISSED. G.R. Nos. 146184-85 January 31, 2008 MANILA INTERNATIONAL AIRPORT AUTHORITY and ANTONIO P. GANA, petitioners, vs. OLONGAPO MAINTENANCE SERVICES, INC. and TRIPLE CROWN SERVICES, INC., respondents. x-------------------------------------------x G.R. No. 161117 January 31, 2008 ANTONIO P. GANA (in his capacity as Gen. Manager of the Manila International Airport Authority) and MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioners, vs. TRIPLE CROWN SERVICES, INC., respondent. x-------------------------------------------x G.R. No. 167827 January 31, 2008 TRIPLE CROWN SERVICES, INC., petitioner, vs. MANILA INTERNATIONAL AIRPORT AUTHORITY and THE COURT OF APPEALS, respondents. x-------------------------------------------x

The rationale behind the requirement of a public bidding, as a mode of awarding government contracts, is to ensure that the people get maximum benefits and quality services from the contracts. More significantly, the strict compliance with the requirements of a public bidding echoes the call for transparency in government transactions and accountability of public officers. Public biddings are intended to minimize occasions for corruption and temptations to abuse of discretion on the part of government authorities in awarding contracts.

Before us are three separate petitions from service contractors that question the legality of awarding government contracts without public bidding.

The first petition, docketed as G.R. Nos. 146184-85, assails the November 24, 2000 Decision1 of the Court of Appeals (CA) in consolidated cases CA-G.R. SP Nos. 50087 and 50131. The CA affirmed the November 18, 1998 Order2 of the Regional Trial Court (RTC), Branch 119, Pasay City in Civil Case No. 98-1875 entitled Olongapo Maintenance Services, Inc. v. Manila International Airport Authority and Antonio P. Gana, granting an injunctive writ to respondent Olongapo Maintenance Services, Inc. (OMSI).

The same CA Decision likewise upheld the November 19, 1998 Order3 of the RTC, Branch 113, Pasay City, granting an injunctive writ to respondent Triple Crown Services, Inc. (TCSI) in Civil Case No. 98-1885 entitledTriple Crown Services, Inc. v. Antonio P. Gana (In his capacity as General Manager of the Manila International Airport Authority) and Goodline Staffers & Allied Services, Inc.

The second, docketed as G.R. No. 161117,4 assails the November 28, 2003 CA Decision5 in CA-G.R. SP No. 67092, which affirmed the Decision6 dated February 1, 2001 of the RTC, Branch 113, Pasay City and its April 16, 2001 Order7 in Civil Case No. 98-1885, extending the November 19, 1998 injunctive writ adverted to earlier, ordering petitioners to conduct a public bidding for the areas serviced by respondent TCSI, and denying petitioners‘ motion for reconsideration, respectively.

In the third, docketed as G.R. No. 167827,8 TCSI assails the September 9, 2004 CA Decision9 in CA-G.R. SP No. 76138, as veritably reiterated in the CA‘s April 13, 2005 Resolution,10 which granted Manila International Airport Authority‘s (MIAA‘s) petition for certiorari charging TCSI with forum shopping. The CA lifted the March 19, 2003 Writ of Mandamus11 issued by the RTC, Branch 115 in Civil Case No. 03-0025 entitled Triple Crown Services, Inc. v. Manila International Airport Authority for Mandamus with Damages.

We consolidated G.R. Nos. 146184-85 with G.R. No. 161117 and G.R. No. 167827 as they all arose from the cancellation of the service contracts of OMSI and TCSI with MIAA.12

The antecedent facts are as follows:

OMSI and TCSI were among the five contractors of MIAA which had janitorial and maintenance service contracts covering various areas in the Ninoy Aquino International Airport. Before their service contracts expired on October 31, 1998, the MIAA Board of Directors, through Antonio P. Gana, then General Manager (GM) of MIAA, wrote OMSI and TCSI informing them that their contracts would no longer be renewed after October 31, 1998.13

On September 28, 1998, TCSI, in a letter to Gana, expressed its concern over the award of its concession area to a new service contractor through a negotiated contract. It said that to award TCSI‘s contract by mere negotiation would violate its right to equal protection of the law. TCSI thus suggested that a public bidding be conducted and that the effectivity of its service contract be meanwhile extended until a winning bid is declared.

A similar letter from OMSI to MIAA followed.14

In reply, MIAA wrote TCSI and OMSI reiterating its disinclination to renew the latter‘s contracts, adding that it was to the government‘s advantage to instead just negotiate with other contractors. The MIAA said that awarding a contract through negotiation was in accordance with Section 9 of Executive Order No. (EO) 903; Sec. 82 of Republic Act No. (RA) 8522, otherwise known as the General Appropriations Act for 1998; and Sec. 417 of the Government Accounting and Auditing Manual (GAAM).15

Consequently, OMSI and TCSI instituted civil cases against MIAA to forestall the termination of their contracts and prevent MIAA from negotiating with other service contractors.

Civil Case Nos. 98-1875 and 98-1885

On October 26, 1998, OMSI filed with the Pasay City RTC a Complaint for Injunction and Damages with Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction16 against MIAA (OMSI case). Docketed as Civil Case No. 98-1875, the case was raffled to Branch 119 of the court.

Two days after, TCSI filed Civil Case No. 98-1885 (first TCSI case) for Prohibition, Mandamus and Damages with Prayer for Temporary Restraining Order (TRO) and Injunction17 against Gana and Goodline Staffers & Allied Services, Inc. (Goodline), a service contractor that was awarded the contract heretofore pertaining to TCSI. This was raffled to the RTC, Branch 113, Pasay City. The OMSI and TCSI cases are now the consolidated cases G.R. Nos. 146184-85.

Both Branches 113 and 119 granted TROs to OMSI and TCSI.18 Subsequently, on November 18, 1998, Branch 119 granted a preliminary injunctive writ19 in favor of OMSI. A day after, Branch 113 also granted a similar writ20 in favor of TCSI.

Without filing any motion for reconsideration, MIAA assailed as void the issuance of the injunctive writs before the CA through petitions for certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP Nos. 50087 and 50131.21

Meanwhile, even as the cases were pending before the CA, Branch 113 continued to hear the first TCSI case. On February 1, 2001, the trial court rendered a Decision declaring as null and void the negotiated contract award to Goodline and the Resolution of the MIAA Board dated October 2, 1998, which authorized Gana to negotiate the award of the service contract, and ordered the holding of a public bidding on the janitorial service contract. Branch 113 also ordered the writ of preliminary injunction in the case enforced until after a qualified bidder is determined.22

In its Decision, the trial court said MIAA and Gana violated TCSI‘s right to equal protection and that the authority to negotiate the MIAA Board granted to Gana was tainted with grave abuse of discretion as Gana‘s exercise of the management‘s prerogative to choose the awardee of a service contract was done arbitrarily. Gana, the RTC added, should have conducted a public bidding, noting that Gana erred in relying on the law and executive issuances he cited because those do not do away with the required public bidding, as held in National Food Authority v. Court of Appeals.23

Following the denial of Gana‘s motion for reconsideration, MIAA and Gana appealed before the CA, their recourse docketed as CA-G.R. SP No. 67092.

Civil Case Nos. 02-0517 and 03-0025

During the pendency of the appeal of the first TCSI case before the CA in CA-G.R. SP No. 67092, MIAA and TCSI engaged in several exchanges regarding payment of TCSI employees‘ salaries. It appears that MIAA promised to pay TCSI‘s employees who were allegedly not paid their salaries on time. According to MIAA, it had not paid TCSI the monthly billings per contract owing to the non-submission by TCSI, as required in the contract, of the proper billing requirements and proof of actual payment of TCSI‘s employees for the payroll period.

On September 9, 2002, TCSI sent a demand letter24 to MIAA for contract billings since late June 2002. In the letter, TCSI also protested MIAA‘s unilateral precondition that the former submit proof of actual wage payment to its employees. TCSI claimed MIAA‘s delay in payment resulted in financial losses for TCSI. TCSI reiterated its demand on October 4, 2002 for the periods covering July to September 2002, TCSI this time accusing MIAA of deliberately delaying payment which had adversely affected TCSI‘s business since it could not increase its manpower nor buy enough janitorial supplies and materials, making it liable to MIAA for liquidated damages. TCSI appealed to MIAA to waive the liquidated damages it was charging TCSI for the period July to September 2002.

On October 30, 2002, MIAA informed TCSI that it was terminating the latter‘s contract effective 10 days from receipt of the notice or on November 14, 2002.25 As reason

therefor, MIAA alleged that TCSI‘s manpower was insufficient and, thus, was delinquent in the delivery of supplies—both in violation of paragraph 9.0226 of the service contract.

TCSI protested the termination which it viewed as violative of the injunctive writ issued by Branch 113. It blamed MIAA for deliberately refusing and delaying to pay TCSI, which forced TCSI into a situation where it could not comply with its contract. TCSI accused MIAA of arbitrarily terminating its contract to replace TCSI with another outfit and for ignoring Article VIII of the contract, the arbitration clause. It also posited that par. 9.02 was a clause of adhesion and could not be enforced. On November 11, 2002, TCSI sent a demand letter27 for PhP 18,091,957.94 to MIAA, the amount representing, among others, claims for janitorial services, illegal deductions made from billing for janitorial services, and arbitrary deductions made for alleged undelivered supplies.

In its letter-reply28 of November 13, 2002, MIAA asserted that the termination of TCSI‘s service contract did not violate the injunctive writ as the writ covered only the extension of the contract period until such time that a new awardee was chosen through public bidding. To MIAA, the writ did not enjoin contract termination for cause, such as for violation of par. 9.02 of the contract. Moreover, MIAA asserted that TCSI did not comply with Art. 1, par. 1.03 of the "status quo contract" which stipulates that TCSI shall strictly and fully comply with the procedures/instructions issued by MIAA, as part of the invitation to bid, and instructions that may be issued by MIAA from time to time––all integral parts of the contract. According to MIAA, it was TCSI that chose to ignore these instructions and did not present proof of actual payment to TCSI employees.

On the eve of November 18, 2002, MIAA refused entry to TCSI employees and took over the janitorial services in the area serviced by TCSI.

Subsequently, on November 25, 2002, TCSI filed a Petition for Contempt with Motion to Consolidate,29 impleading Edgardo Manda who took over as GM of MIAA. The petition, entitled Triple Crown Services, Inc. v. Edgardo Manda, in his capacity as General Manager of the Manila International Airport Authority and docketed as Civil Case No. 02-0517 (second TCSI case for contempt), was raffled to the RTC, Branch 108, Pasay City. In it, TCSI mainly alleged that the unilateral termination by MIAA of their service contract on alleged contract violation brought about by MIAA‘s refusal to pay TCSI was a blatant and contumacious violation of the injunctive writ issued by Branch 113. TCSI also prayed that the petition for contempt be consolidated with the first TCSI case.

On the same day that the petition for contempt was filed, MIAA sent a reply30 to TCSI‘s demand letter asserting that MIAA could not pay the items TCSI demanded because TCSI had not presented any billings for the period it wanted to be paid, among other reasons.

Meanwhile, pending resolution of the second TCSI case for contempt, TCSI filed on January 24, 2003 a Petition for Mandamus with Damages31 against MIAA entitled Triple Crown Services, Inc. v. Manila International Airport Authority, docketed as Civil Case No. 03-0025 (third TCSI case for mandamus) and again raffled to Branch 115, wherein

TCSI sought to maintain the status quo order issued by Branch 113 in the first TCSI case and to compel MIAA to pay PhP 18 million to TCSI.

In its Comment, MIAA denied all of TCSI‘s allegations and accused TCSI of forum shopping.

On March 4, 2003, in the third TCSI case for mandamus, Branch 115 granted32 the Writ of Mandamus to TCSI and ordered MIAA to comply with the Writ of Preliminary Injunction issued by Branch 113 in the first TCSI case.

A week after and because MIAA refused to allow TCSI to peacefully continue its contract services, TCSI filed anUrgent Manifestation With Prayer for the Court to Cite Respondent Motu Proprio in Contempt.33

After the trial court denied MIAA‘s Motion for Reconsideration,34 Manda, in compliance with the trial court‘s show cause order, explained that the writ of mandamus had not yet become final and executory and a writ of execution was still needed before mandamus could be enforced.

On March 24, 2003, MIAA assailed the March 4, 2003 and March 19, 2003 Orders of the trial court before the CA through a petition for certiorari under Rule 65 in CA-G.R. SP No. 76138, praying for a TRO and/or writ of preliminary injunction for the trial court to desist from further proceedings with the third TCSI case for mandamus.

A day after, in the second TCSI case for contempt, the RTC directed the arrest of Manda for his failure to comply with the orders of the court. This did not materialize because two days after, the CA granted a TRO enjoining the enforcement of the assailed orders and the writ of mandamus and, consequently, lifted the warrant of arrest for Manda.

Thereafter, Manda filed a Manifestation and Motion to Dismiss the second TCSI case for contempt on the ground of forum shopping. The trial court denied the motion on the ground that the contempt case was an entirely distinct and separate cause of action from the mandamus case pending in another RTC branch. It said the contempt case was grounded on the alleged disobedience of Manda of the RTC, Branch 113 Order and injunctive writ in the first TCSI case appealed before the CA which could not be considered final and executory. Hence, the trial court ruled that the contempt case was prematurely filed and it thus had not acquired jurisdiction over it.

The Ruling of the Court of Appeals in the consolidated cases docketed CA-G.R. SP Nos. 50087 and 50131 involving the injunctive writs issued in the OMSI case and First TCSI case

Recall that MIAA assailed the injunctive writs issued by the trial court thru petitions for certiorari under Rule 65 before the CA, docketed as CA-G.R. SP Nos. 50087 and 50131. On November 24, 2000, the CA rendered the assailed Decision, denying due

course to and dismissing the petitions.35 The CA stated that respondents-judges did not gravely abuse their discretion in issuing the injunctive writs enjoining MIAA from terminating the service contracts of OMSI and TCSI. Relying on Manila International Airport Authority v. Mabunay (Mabunay)36 andNational Food Authority,37 the CA said that MIAA and Gana failed to satisfactorily show why the aforementioned cases should not apply. Moreover, the appellate court explained that notwithstanding the expiration of the service contracts of OMSI and TCSI, they both have extant interests as possible applicants. Aggrieved by the CA Decision, MIAA and Gana filed the instant petition docketed as G.R. Nos. 146184-85.

The Ruling of the Court of Appeals in CA-G.R. SP No. 67092

Recall likewise that the RTC in the first TCSI case granted an injunctive writ in favor of TCSI. On appeal, on November 28, 2003, the CA in CA-G.R. SP No. 67092 rendered the assailed Decision, affirming that of the RTC38and reasoning that Sec. 1(e) of EO 301, series of 1987, entitled Decentralizing Actions on Government Negotiated Contracts, Lease Contracts and Records Disposal, relied upon by Gana and MIAA, does not apply to service contracts but only to requisitions of needed supplies. The CA applied our ruling in Kilosbayan, Incorporated v. Morato (Kilosbayan),39 where we held that the "supplies" mentioned as exceptions in EO 301 refer only to contracts for the purchase of supplies, materials, and equipment, and do not refer to other contracts, such as lease of equipment, and that in the same vein, "supplies" in Sec. 1(e) of EO 301 only include materials and equipment and not service contracts, which are included in the general rule of Sec. 1. The CA, relying onMabunay40 and National Food Authority, explained that Sec. 9 of EO 903, Sec. 82 of RA 8522, and Sec. 417 of the GAAM must be harmonized with the provisions of EO 301 on public biddings in all government contracted services. The rationale for public bidding, the CA said, is to give the public the best possible advantages through open competition.

Without filing a motion for reconsideration, Gana and MIAA now question the above Decision of the appellate court in CA-G.R. SP No. 67092 through a Petition for Review on Certiorari docketed as G.R. No. 161117 before us.

The Ruling of the Court of Appeals in CA-G.R. SP No. 76138

On September 9, 2004, the CA rendered the assailed Decision, granting MIAA‘s petition for certiorari. It annulled and set aside the March 4, 2003 Order and March 19, 2003 Writ of Mandamus and dismissed the third TCSI case for mandamus with prejudice.41 The CA found TCSI guilty of forum shopping when it filed the third TCSI case for mandamus while the second TCSI case for contempt was pending. Further, the CA observed that the two cases have identical parties, prayed for the same reliefs, and were anchored on the same writ of preliminary injunction issued in the first TCSI case. Citing Philippine Commercial International Bank v. Court of Appeals,42 the CA concluded that elements of litis pendentia were present and TCSI was guilty of forum shopping.

TCSI‘s motion for reconsideration was likewise denied in the April 13, 2005 CA Resolution. TCSI now assails the above Decision and Resolution before us in a Petition for Review on Certiorari under Rule 45 docketed as G.R. No. 167827.

The Issues

In G.R. Nos. 146184-85, MIAA and Gana raise the following issues for our consideration:

1. Whether [or not] the Court of Appeals erred in declaring that respondents had extant interests in the awarding of the service contracts.

2. Whether [or not] the Court of Appeals erred in holding that petitioners had no power to award the service contracts through negotiation.43

In G.R. No. 161117, Gana and MIAA raise the following issues for our consideration:

Whether [or not] the Court of Appeals erred in holding that the exception in Section 1 (e) of [EO] 301 applies only to requisition of needed supplies and not to the contracting of public services.

Whether [or not] the Court of Appeals erred in holding that respondent is not estopped from questioning the negotiated contract between MIAA and [Goodline].

Whether there was a violation of respondent‘s right to equal protection.44

In G.R. No. 167827, TCSI raises the following issues for our consideration:

I.

Whether or not the respondent can be compelled by Mandamus to maintain the status quo ante, as earlier ordered by this Honorable Court and be held liable for damages for unilaterally terminating the service contract of the petitioner in violation of said status quo order.

II.

Whether or not the herein petitioner is guilty of forum shopping.

III.

Whether or not the herein private respondent complied with the requisites for the institution of a petition for certiorari under Rule 65 with the Court of Appeals.45

Propriety of the issuance of the injunctions

We will jointly tackle G.R. Nos. 146184-85 and 161117 since the issues raised are closely interwoven. The incidents in the two assailed decisions not only arose from the first TCSI case, but also involved the same issue of the propriety of preliminary and permanent injunctions.

MIAA and Gana strongly assert that OMSI and TCSI have no right to be protected by the injunctive writs as the term of their service contracts had already expired on October 31, 1998. Petitioners rely on National Food Authority, where we held that no court can compel a party to agree to a contract or its extension through an injunctive writ since an extension of a contract is only upon mutual consent of the parties.

MIAA and Gana also argue that OMSI and TCSI are estopped from questioning the validity of a contract acquired through negotiations since the service contracts of OMSI and TCSI with MIAA were also negotiated contracts and did not undergo public bidding. These negotiated contracts are among the exceptions in Sec. 1 of EO 301. MIAA and Gana posit that the exceptions in Sec. 1 cover both contracts for public services and contracts for supplies, materials, and equipment. And, since TCSI‘s contract expired on October 31, 1998, and MIAA refused to extend the contracts, OMSI and TCSI have no right of renewal or extension of their service contract.

We agree with MIAA and Gana.

It is undisputed that the service contracts of OMSI and TCSI expired on October 31, 1998 and were not extended by MIAA. Hence, all the rights and obligations arising from said contracts were extinguished on the last day of the term. As a result, OMSI and TCSI had already lost their rights to render janitorial and maintenance services for MIAA starting November 1, 1998.

Such being the case, the Court rules that the TROs and writs of preliminary injunction issued in favor of OMSI and TCSI are irregular and without legal basis for the following reasons, to wit:

(1) The November 18, 1998 injunctive writ in favor of OMSI in the OMSI case and the November 19, 1998 injunctive writ in favor of TCSI in the first TCSI case were in the nature of writs of mandatory preliminary injunction. In Bautista v. Barcelona,46 we made clear that a mandatory injunction is an extreme remedy and will be granted only on a showing that (a) the invasion of the right is material and substantial; (b) the right of the complainant is clear and unmistakable; and (c) there is an urgent and paramount necessity for the writ to prevent serious damage.47 It is apparent that OMSI and TCSI have no more legal rights under the service contracts and, therefore, they have not met the vital procedural requirement that they must have material and substantial rights that have to be protected by courts.

(2) The service contracts of OMSI and TCSI may not be extended through the instrumentality of an injunctive writ. It is a doctrine firmly settled in this jurisdiction that courts have no power to make a contract for the parties nor can they construe contracts

in such a manner as to change the terms of the contracts not contemplated by the parties.48 Verily, under Art. 1308 of the Civil Code, the contract between the parties is the law between them; mutuality being an essential characteristic of contracts giving rise to reciprocal obligations.49 And under Art. 1306 of the Code, the parties may establish stipulations mutually acceptable to them for as long as such are not contrary to law, morals, good customs, public order, or public policy. And where a determinate period for a contract‘s effectivity and expiration has been mutually agreed upon and duly stipulated, the lapse of such period ends the contract‘s effectivity and the parties cease to be bound by the contract.

It is undisputed that the service contracts were to terminate on October 31, 1998. Thus, by the lapse of such date, where no contract extension had been mutually agreed upon by the parties, the trial court cannot force the parties nor substitute their mutual consent to a contract extension through an injunction.

Indeed, MIAA‘s decision not to extend the service contracts of OMSI and TCSI is a valid exercise of management prerogative. Certainly, there is no law that prohibits management discretion, even if it be a governmental agency or instrumentality or a government-owned or controlled corporation, from extending or not extending a service contract. Certainly, MIAA‘s management can determine, in the exercise of its sound discretion and the options available, given the factual and economic milieu prevailing, whether or not it is to its interest to extend a service contract for janitorial and maintenance services.

From the foregoing premises, the RTCs in Civil Case Nos. 98-1875 and 98-1885 have erred in issuing the assailed writs of mandatory injunction. Hence, these writs must be nullified.

The next issue to be resolved is whether MIAA, in the context of this case, can be barred from entering into negotiated contracts after the expiration of the service contracts of OMSI and TCSI on October 31, 1998.

The answer is in the affirmative.

Exceptions in EO 301 apply to purchase of supplies, materials and equipment not to contracts for public services

We cannot agree with the contention of MIAA and Gana that the exceptions to the public bidding rule in Sec. 1 of EO 301 cover both contracts for public services and for supplies, material, and equipment. Their reliance on Sec. 1(e) of EO 301 for the award of a service contract for janitorial and maintenance services without public bidding is misplaced.

For clarity, we quote in full Sec. 1 of EO 301:

Section 1. Guidelines for Negotiated Contracts. Any provision of the law, decree, executive order or other issuances to the contrary nothwithstanding, no contract for public services or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities shall be renewed or entered into without public bidding, except under any of the following situations:

a. Whenever the supplies are urgently needed to meet an emergency which may involve the loss of, or danger to, life and/or property;

b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without causing detriment to the public service;

c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms to the government;

d. Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive times, either due to lack of bidders or the offers received in each instance were exorbitant or non-conforming to specifications;

e. In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most advantageous to the government to be determined by the Department Head concerned; and

f. Whenever the purchase is made from an agency of the government. (Emphasis supplied.)

In Andres v. Commission on Audit, this Court explained the rationale behind EO 301, upholding the general rule that contracts shall not be entered into or renewed without public bidding, thus:

Executive Order No. 301 explicitly permits negotiated contracts in particular identified instances. In its preamble, it adverted to the then existing set-up of "a centralized administrative system . . . for reviewing and approving negotiated contracts . . .," and to the unsatisfactory character thereof in that "such centralized administrative system is not at all ‘facilitative’ particularly in emergency situations, characterized as it is by red tape and too much delay in the processing and final approval of the required transaction or activity;" hence, the "need to decentralize the processing and final approval of negotiated contracts . . . " It then laid down, in its Section 1, "guidelines for negotiated contracts" thenceforth to be followed. While affirming the general policy that contracts shall not be entered into or renewed without public bidding, x x x. (Emphasis supplied.)50

It is only in the instances enumerated above that public bidding may be dispensed with and a contract closed through negotiations.

MIAA and Gana posit the view that Sec. 1(e) of EO 301 includes contracts for public services and is not limited to supplies, materials, or equipment, and applies to all forms of contracts.

We are not convinced.

In Kilosbayan,51 we ruled that Sec. 1 of EO 301 "applies only to the contracts for the purchase of supplies, materials, and equipment. It does not cover contracts of lease of equipment like the [Equipment Lease Agreement]." While the lease of equipment was the subject of Kilosbayan, the ruling therein can very well apply to the cases at bar. We agree with the apt observation of OMSI and TCSI that Sec. 1 of EO 301 and the exceptions to the bidding rule enumerated therein only pertain to contracts for the procurement of supplies, materials, and equipment. Thus, corollarily, this express enumeration excludes all others in accord with the elemental principle in legal hermeneutics, expressio unius est exclusio alterius or the express inclusion of one implies the exclusion of all others. A contract for janitorial and maintenance services, like a contract of lease of equipment, is not included in the exceptions, particularly Sec. 1(e) relied upon by MIAA and Gana.

Moreover, in Kilosbayan, in denying Kilosbayan Incorporated‘s motion for reconsideration and debunking its contention that EO 301 covers all types of contracts for public services, this Court, in a Resolution, reiterated its original ruling and held that EO 301 was promulgated merely to decentralize the system of reviewing negotiated contracts of purchase for the furnishing of supplies, materials, and equipment as well as lease contracts of buildings. We concluded:

In sum, E.O. No. 301 applies only to contracts for the purchase of supplies, materials and equipment, and it was merely to change the system of administrative review of emergency purchases, as theretofore prescribed by E.O. No. 298, that E.O. No. 301 was issued on July 26, 1987. Part B of this Executive Order applies to leases of buildings, not of equipment, and therefore does not govern the lease contract in this case. (Emphasis supplied.) 52

It is thus clear that the contention of MIAA and Gana that the exceptions in EO 301, particularly Sec. 1(e), include contracts for public services cannot be sustained.

Further, suffice it to say that Sec. 9 of EO 903,53 Sec. 82 of RA 8522 or the General Appropriations Act for 1998, and Sec. 417 of the GAAM, likewise relied upon by MIAA and Gana for grant of authority to negotiate service contract, do not do away with the general rule on public bidding. In Mabunay, we ruled that RA 7845 or theGeneral Appropriations Act for 1995 cannot be construed to eliminate public bidding in the award of a contract for security services, as RA 7845 "is not the governing law on the award of the service contracts by government agencies nor does it do away with the general

requirement of public bidding"54 and that "administrative discretion may not transcend the statutes"55 that require public bidding. Thus, RA 8522, particularly its Sec. 82, does not dispense with the requirement of public bidding to award a contract for janitorial and maintenance services.

Furthermore, our ruling in National Food Authority, cited in Mabunay, is still valid. It directly applies to the legal issue in the instant consolidated cases that public bidding is required for the award of service contracts.

RA 9184 provides for alternative procurement procedures

In sum, we reiterate the legal requirement of competitive public bidding for all government public service contracts and procurement of materials, supplies, and equipment. Competitive public bidding may not be dispensed with nor circumvented, and alternative modes of procurement for public service contracts and for supplies, materials, and equipment may only be resorted to in the instances provided for by law. In the instant case, no express provision of law has granted MIAA the right to forego public bidding in negotiating the award of contracts for janitorial and maintenance services.

In Abaya v. Ebdane,56 this Court outlined the history of Philippine procurement laws from the introduction of American public bidding through Act No. 22, enacted on October 15, 1900, and the subsequent laws and issuances. On October 8, 2001, President Arroyo issued EO 40 which repealed, amended, or modified all executive issuances, orders, rules and regulations, or parts inconsistent with her EO.57

On January 10, 2003, President Arroyo signed into law RA 9184,58 which expressly repealed, among others, EO 40, EO 262, EO 301, EO 302, and Presidential Decree No. 1594, as amended, and is the current law on government procurement. This law still requires public bidding as a preferred mode of award. However, RA 9184 allows exceptions to public bidding rule in certain instances, conditions, or extraordinary circumstances. Sec. 5359of RA 9184 in particular authorizes negotiated procurement, while other alternative methods of procurement are set forth under Art. XVI60 of RA 9184. Thus, under the present law, MIAA can enter into negotiated contracts in the exceptional situations allowed by RA 9184.

With regard to the prayer for a mandatory preliminary injunction, OMSI and TCSI have amply demonstrated their right to require the holding of a public bidding for the service contracts with MIAA. While we have previously explained that OMSI and TCSI have no right to a writ of mandatory injunction to have their service contracts extended by the courts beyond the fixed term, the situation is different with respect to their right to participate in the public bidding prescribed by law. Since they were the previous service contractors of MIAA and have manifested their desire to participate in the public bidding for the new contracts, then they have satisfactorily shown that they have material and substantial rights to be protected and preserved by a mandatory injunctive writ against MIAA. Considering that the negotiated contract is contextually illegal under EO 301, EO

903, Sec. 82 of RA 8522, and Sec. 417 of the GAAM, then MIAA can be directed to conduct a public bidding instead of resorting to a negotiated contract.

MIAA, however, eventually discarded the negotiation of new contracts with prospective service contractors and has decided to hire personnel to render janitorial and messengerial services starting July 31, 2005. Clearly, the employment of said personnel is within the realm of management prerogatives of MIAA allowed under its charter, EO 903, and other existing laws. Since the hiring of said employees dispensed with the need for getting service contractors, then the relief of requiring MIAA to conduct public bidding is already unavailing and has become moot and academic.

On the claim of OMSI and TCSI that their rights to equal protection of laws were violated by the negotiation of the contracts by MIAA with other service contractors, the Court finds no law that is discriminatory against them in relation to their expired service contracts. EO 301, EO 903, RA 8522, and the GAAM are not discriminatory against them precisely because, as the Court ruled, there has to be public bidding where OMSI and TCSI are allowed to participate. At most, what can be discriminatory is the intended negotiation of the new service contracts by MIAA which prevents OMSI and TCSI from participating in the bidding. We find such act illegal and irregular because of the wrong application of the laws by MIAA and not because the pertinent laws are discriminatory against them.

We stressed in Genaro R. Reyes Construction, Inc. v. CA:

[A]lthough the law be fair on its face, and impartial in appearance, yet if applied and administered by the public authorities charged with their administration x x x with an evil eye and unequal hand so as to practically make unjust and illegal determination, the denial of equal justice is still within the prohibition of the Constitution.61

Given the antecedent facts of these consolidated cases, we agree with the courts a quo that the constitutional right of OMSI and TCSI to equal protection is violated by MIAA and Gana when no public bidding was called precisely because the latter were going to award the subject service contracts through negotiation. Worse, the acts of MIAA and Gana smack of arbitrariness and discrimination as they not only did not call for the required public bidding but also did not even accord OMSI and TCSI the opportunity to submit their proposals in a public bidding. What OMSI and TCSI got was a terse reply that their contracts will not be renewed and that MIAA would negotiate contracts lower than those of OMSI and TCSI without granting them the opportunity to submit their own bids or proposals. On the ground of uneven protection of law, we could grant the prayer for an order directing a public bidding. Unfortunately, such action is already foreclosed by the decision of MIAA not to hire any service contractor.

The CA has discretion to give due course to the petition

We now tackle the procedural issues raised in G.R. No. 167827 on whether MIAA complied with the requirements of Rule 65 before the CA and whether forum shopping is present.

TCSI argues that MIAA‘s petition for certiorari under Rule 65 before the CA should have been outrightly dismissed for manifest violation of par. 2, Sec. 1 of Rule 65 in failing to attach the required certified true copies of the assailed RTC Orders. Moreover, TCSI contends that MIAA failed to raise any genuine jurisdictional issues correctable by certiorari, as the issues raised by MIAA were all factual matters which involved questions of error of judgment and not of jurisdiction.

We are not persuaded.

Sec. 1 of Rule 65 pertinently provides:

SECTION 1. Petition for certiorari.—When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

The above provision clearly vests the CA the authority and discretion to give due course to the petitions before it or to dismiss them when they are not sufficient in form and substance, the required pleadings and documents are not attached to them, and no sworn certificate on non-forum shopping is submitted. This discretion must be exercised, not arbitrarily or oppressively, but in a reasonable manner in consonance with the spirit of the law, always with the view in mind of seeing to it that justice is served.

The CA has exercised its discretion in giving due course to MIAA‘s petition before it. We will not delve into this issue to bear on the instant petition. Certainly, TCSI has not shown that the CA has arbitrarily or oppressively exercised its sound discretion. Nor has it shown that the appellate court was not able to or could not go over the pertinent documents in resolving the instant case on review before it. Neither has TCSI shown any manifest bias, fraud, or illegal consideration on the part of the CA to merit reconsideration for the grant of due course.

Certiorari is a proper remedy for an interlocutory order granting mandamus (Third TCSI case for Mandamus)

The March 4, 2003 and March 19, 2003 Orders granting mandamus and denying MIAA‘s motion for reconsideration, respectively, are clearly interlocutory orders. What we held in Metropolitan Bank & Trust Company v. Court of Appeals is instructive, thus:

It has been held that "[a]n interlocutory order does not terminate or finally dismiss or finally dispose of the case, but leaves something to be done by the court before the case is finally decided on the merits." It "refers to something between the commencement and end of the suit which decides some point or matter but it is not the final decision on the whole controversy." Conversely, a final order is one which leaves to the court nothing more to do to resolve the case. The test to ascertain whether an order is interlocutory or final is: "Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final."62

TCSI argues that since the trial court still has to hear the issue on damages in Civil Case No. 03-0025 for mandamus and no final decision has yet been rendered, the mandamus writ is an interlocutory one, and cannot be subject of an appeal. However, Rule 41 clearly states that while an interlocutory order cannot be subject of an appeal and the aggrieved party has to await the decision of the court, still it allows the filing of a special civil action of certiorari under Rule 65 when there is grave abuse of discretion in the issuance of the order. Moreover, under the circumstances of the case, MIAA had no other plain, speedy, and adequate remedy other than a petition for certiorari under Rule 65.

MIAA raised issues alleging grave abuse of discretion on the part of the RTC

TCSI argues that MIAA only raised factual matters before the CA which the trial court has ruled upon in the exercise of its jurisdiction and thus are not reviewable by certiorari but only by appeal.

Contrary to TCSI‘s contention, a close perusal of the issues raised by MIAA in CA-G.R. SP No. 76138 shows that not all the issues the latter raised were factual issues. MIAA assailed the lack or excess of jurisdiction of the RTC resulting from grave abuse of discretion when it issued the questioned orders. Abuse of discretion is precisely the thrust in a petition for certiorari under Rule 65.

Forum shopping exists

TCSI contends that the CA committed reversible error when it held TCSI resorted to forum shopping. TCSI argues it was not guilty of forum shopping when it filed the second TCSI case for contempt and the third TCSI case for mandamus. According to

TSCI, as these are two distinct and separate cases, the elements of litis pendentiaamounting to res judicata do not exist.

TCSI‘s contention is devoid of merit.

Forum shopping exists when the elements of litis pendentia are present, or when a final judgment in one case will amount to res judicata in another.63 There is forum shopping when the following elements concur: (1) identity of the parties or, at least, of the parties who represent the same interest in both actions; (2) identity of the rights asserted and relief prayed for, as the latter is founded on the same set of facts; and (3) identity of the two preceding particulars, such that any judgment rendered in the other action will amount to res judicata in the action under consideration or will constitute litis pendentia.64

We uphold the CA‘s finding that TCSI was guilty of forum shopping:

An examination of the two petitions filed by [TCSI] reveals that the elements of litis pendentia are present. Both petitions are based on the alleged violation by petitioner of the writ of preliminary injunction dated November 19, 1998 issued in Civil Case No. 98-1885 [first TCSI case] enjoining the latter to maintain thestatus quo until after a qualified winning bidder is chosen by way of a public bidding. The reliefs prayed for in the two petitions are likewise founded on the same fact, i.e., the alleged disobedience or violation of the writ of preliminary injunction by petitioner.

In the assailed Order dated March 4, 2003 granting the writ of mandamus, respondent Judge directed petitioner to immediately comply with the writ of preliminary injunction. In the Order dated March 12, 2003, respondent Judge directed petitioner‘s General Manager, Edgardo Manda, to explain why he should not be cited for contempt for defying the Order dated March 4, 2003. Respondent Judge found the explanation of Manda devoid of merit and directed the latter to allow private respondent to re-assume its post at the airport terminal immediately, otherwise, a warrant of arrest shall be issued against him, pursuant to Section 8, Rule 71 of the Rules of Court. In fact, a warrant of arrest was issued against Manda on March 25, 2003 for his failure to comply with the Orders dated March 4, 2003 and March 19, 2003. In other words, the same penalty could be imposed on Manda in the petition for contempt filed by private respondent with the RTC, Branch 108, Pasay City, should the Presiding Judge thereof find him guilty of violating the writ of preliminary injunction. Moreover, Section 7, Rule 71 of the Rules of Court provides that if the contempt consists in the violation of writ of injunction, temporary restraining order or status quo order, the person adjudged guilty of contempt may also be ordered to make complete restitution to the party injured by such violation of the property involved or such amount as may be alleged and proved. Thus, private respondent could likewise claim damages in the petition for contempt filed by it with Branch 108. That private respondent did not find the petition for contempt to be an adequate and speedy

remedy as no action has been taken by Branch 108 as of the date of the filing of the petition for mandamus with damages only shows that private respondent indulged in forum shopping.65

If the first TCSI case for Prohibition, Mandamus, and Damages with Prayer for TRO and Injunction would not be considered in determining whether forum shopping was resorted to by TCSI when it subsequently filed the second TCSI case for contempt and the third TCSI case for mandamus, then there could have been merit in TCSI‘s claim of non-forum shopping. The fact, however, is the second and third TCSI cases stemmed from the first TCSI case, anchored as they were on the alleged breach by MIAA of the November 19, 1998 writ of preliminary injunction. Such being the case, the court a quo did not err when it ruled that the reliefs in the second and third TCSI cases in effect prayed for the enforcement of the November 19, 1998 injunctive writ. Moreover, the causes of action in the second and third cases are substantially identical because the basis is the disobedience or breach of the writ of injunction.66 Hence, forum shopping is present.

The Court’s Dispositions

G.R. No. 146184 (CA-G.R. SP No. 50087)

Civil Case No. 98-1875 entitled OMSI v. MIAA before the Pasay City RTC, Branch 119

Re: November 18, 1998 Order granting writ of preliminary injunction in Civil Case No. 98-1875

(1) We rule to nullify the November 18, 1998 Order granting the injunctive writ for want of any legal right on the part of OMSI to be entitled to a writ of mandatory injunction.

(2) The November 24, 2000 CA Decision in CA-G.R. SP Nos. 50087 and 50131, affirming the aforementioned November 18, 1998 Order in Civil Case No. 98-1875, is accordingly reversed and set aside.

II. G.R. No. 146185 (CA-G.R. SP No. 50131)

Civil Case No. 98-1885 entitled TCSI v. Antonio P. Gana, MIAA and Goodline (first TCSI case) before the Pasay City RTC, Branch 113

Re: November 19, 1998 Order granting the injunctive writ

(1) We rule to nullify the November 19, 1998 Order granting the writ of mandatory injunction in the absence of any real and substantial right on the part of TCSI entitling it to such writ under the rules and applicable jurisprudence.

(2) The November 24, 2000 CA Decision in CA-G.R. SP. Nos. 50087 and 50131, affirming the November 18, 1998 Order in Civil Case No. 98-1875, is also accordingly reversed and set aside.

III. G.R. No. 161117 (CA-G.R. SP No. 67092)

Civil Case No. 98-1885 entitled TSCI v. Antonio P. Gana, MIAA and Goodline (first TCSI case)

Re: February 1, 2001 Decision in

Civil Case No. 98-1885

(1) We rule that the negotiated contract between MIAA and Goodline and the resolution of the MIAA Board dated October 2, 1998, authorizing MIAA‘s management and/or GM Gana to negotiate and award service contracts upon the expiration of the present service contract on October 31, 1998, are null and void. We, therefore, affirm par. 1 of the February 1, 2001 Decision of the Pasay City RTC, Branch 113.

(2) We rule that, in 1998, MIAA was required by EO 301 to conduct public bidding, and the negotiated contract for services with Goodline is prohibited and null and void. However, since MIAA decided against hiring contractors for janitorial and maintenance services and instead directly hired employees for the purpose, it would be legally improper to require MIAA to contract out such services by public bidding since this involves management decisions and prerogative. We, therefore, set aside par. 2 of the February 1, 2001 Pasay City RTC, Branch 113 Decision in Civil Case No. 98-1885, requiring MIAA and Gana to hold a public bidding, for being moot and academic.

(3) The writ of preliminary injunction is nullified, as TCSI has not shown any legal basis for the grant thereof. We, therefore, set aside par. 3 of the February 1, 2001 RTC Decision in Civil Case No. 98-1885. The November 28, 2003 CA Decision in CA-G.R. SP No. 67092, affirming the aforementioned pars. 2 and 3 of said RTC Decision, is likewise reversed and set aside.

IV. G.R. No. 167827 (CA-G.R. SP No. 76138)

Civil Case No. 03-0025 entitled TCSI v. MIAA (third TCSI case for mandamus) before the Pasay City RTC, Branch 115

Re: March 19, 2003 Writ of Mandamus in Civil Case No. 03-0025

Since the November 19, 1998 Order of the Pasay City RTC, Branch 115 in Civil Case No. 98-1885 (first TCSI case) granting the injunctive writ is, for want of legal basis, null and void, it follows that the March 19, 2003 Writ of Mandamus issued in Civil Case No. 03-0025 is likewise null and void.

WHEREFORE, the petition in G.R. Nos. 146184-85 is GRANTED. The November 24, 2000 CA Decision in CA-G.R. SP Nos. 50087 and 50131 is REVERSED and SET ASIDE. Likewise, both the November 18, 1998 Order of the Pasay City RTC, Branch 119 in Civil Case No. 98-1875 and the November 19, 1998 Order of the Pasay City RTC, Branch 113 in Civil Case No. 98-1885 are REVERSED and SET ASIDE. The Court declares the service contracts of OMSI and TCSI to have been legally and validly terminated on October 31, 1998 by virtue of the expiration of the contracts‘ term and their non-renewal. The Pasay City RTC, Branch 119 is ordered to continue with the proceedings in Civil Case No. 98-1875.

The petition in G.R. No. 161117 is PARTLY GRANTED. The November 28, 2003 CA Decision in CA-G.R. SP No. 67092 and the February 1, 2001 Decision of the Pasay City RTC, Branch 113 in Civil Case No. 98-1885, which was affirmed by the CA, are AFFIRMED with MODIFICATIONS, as follows:

WHEREFORE, a decision is hereby rendered, ordering as follows:

1. The negotiated contract by and between the respondents and the resolution of the MIAA Board, dated October 2, 1998, authorizing MIAA management and/or respondent GM Gana to negotiate and award service contracts upon the expiration of the present service contract, on October 31, 1998 are hereby declared NULL and VOID;

2. The hiring of employees to render janitorial and maintenance services by GM Gana and/or the MIAA management is declared VALID and LEGAL. However, should said petitioners decide to procure the services of a contractor for janitorial and maintenance services, then they are ordered to hold a public bidding for said services, subject to certain exceptions, set forth in RA 9184 or the Government Procurement Act, if applicable;

3. The writ of preliminary injunction is RECALLED and NULLIFIED; and

4. No pronouncement as to costs and attorney‘s fees.

The petition in G.R. No. 167827 is DENIED for lack of merit and the September 9, 2004 Decision in CA-G.R. SP No. 76138 is AFFIRMED.

G.R. No. 165276 November 25, 2009 JUDGE ADORACION G. ANGELES, Petitioner, vs. HON. MANUEL B. GAITE, Acting Deputy Executive Secretary for Legal Affairs; HON. WALDO Q. FLORES, Senior Deputy Executive Secretary, Office of the President; Former DOJ SECRETARY HERNANDO B. PEREZ (now substituted by the Incumbent DOJ Secretary RAUL GONZALES); Former PROV. PROS. AMANDO C. VICENTE (now substituted by the Incumbent PROV. PROS. ALFREDO L.

GERONIMO); PROS. BENJAMIN R. CARAIG, Malolos, Bulacan; and MICHAEL T. VISTAN, Respondents.

Before this Court is a Petition for Review,1 under Rule 43 of the 1997 Rules of Civil Procedure, assailing the February 13, 2004 Decision2 and September 16, 2004 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 76019.

The facts of the case, as alleged by petitioner and likewise adopted by the CA, are as follows:

Petitioner [Judge Adoracion G. Angeles] was the foster mother of her fourteen (14) year-old grandniece Maria Mercedes Vistan who, in April 1990 was entrusted to the care of the former by the girl‘s grandmother and petitioner‘s sister Leonila Angeles Vda. de Vistan when the child was orphaned at the tender age of four.

Petitioner provided the child with love and care, catered to her needs, sent her to a good school and attended to her general well-being for nine (9) memorable and happy years. The child also reciprocated the affections of her foster mother and wrote the latter letters.

Petitioner‘s love for the child extended to her siblings, particularly her half-brother respondent Michael Vistan, a former drug-addict, and the latter‘s family who were regular beneficiaries of the undersigned‘s generosity. Michael would frequently run to the undersigned for his variety of needs ranging from day to day subsistence to the medical and hospital expenses of his children.

In the evening of 11 April 1999, Michael Vistan had a falling out with petitioner for his failure to do a very important errand for which he was severely reprimanded over the phone. He was told that from then on, no assistance of any kind would be extended to him and that he was no longer welcome at petitioner‘s residence.

Feeling thwarted, he, in conspiracy with his co-horts (sic), retaliated on 12 April 1999 by inducing his half-sister, Maria Mercedes, to leave petitioner‘s custody. Michael used to have free access to the undersigned‘s house and he took the girl away while petitioner was at her office.

In the evening of that day, 12 April 1999, petitioner, accompanied by her friend Ines Francisco, sought Michael Vistan in his residence in Sta. Cruz, Guiguinto, Bulacan to confront him about the whereabouts of his half-sister. He disclosed that he brought the girl to the residence of her maternal relatives in Sta. Monica, Hagonoy, Bulacan. Petitioner then reported the matter and requested for the assistance of the 303rd Criminal Investigation and Detective Group Field Office in Malolos, Bulacan to locate the girl. Consequently, PO3 Paquito M. Guillermo and Ruben Fred Ramirez accompanied petitioner and her friend to Hagonoy, Bulacan where they coordinated with police officers from the said place. The group failed to find the girl. Instead, they were given the run-around as the spouses Ruben and Lourdes Tolentino and spouses

Gabriel and Olympia Nazareno misled them with the false information that Maria Mercedes was already brought by their brother Carmelito Guevarra and the latter‘s wife Camilia to Casiguran, Quezon Province.

On 13 April 1999, petitioner filed a complaint for Kidnapping under Article 271 of the Revised Penal Code (Inducing a Minor to Abandon His Home) against Michael Vistan, the Tolentino spouses, the Nazareno spouses and Guevarra spouses, all maternal relatives of Maria Mercedes Vistan.

Warrants of arrest were subsequently issued against them and to evade the long arm of the law, Michael Vistan went into hiding. He dragged along with him his half-sister Maria Mercedes.

From 12 April 1999 to 16 April 1999, Michael Vistan, with his little sister in tow, shuttled back and forth from Guiguinto to Hagonoy, Bulacan as well as in Manila and Quezon City, living the life of a fugitive from justice. He eventually brought the girl to ABS-CBN in Quezon City where he made her recite a concocted tale of child abuse against herein petitioner hoping that this would compel the latter to withdraw the kidnapping charge which she earlier filed.

In the early morning of 16 April 1999, Michael Vistan brought Maria Mercedes to the DSWD after he felt himself cornered by the police dragnet laid for him.

Prompted by his overwhelming desire to retaliate against petitioner and get himself off the hook from the kidnapping charge, Michael Vistan had deliberately, maliciously, selfishly and insensitively caused undue physical, emotional and psychological sufferings to Maria Mercedes Vistan, all of which were greatly prejudicial to her well-being and development.

Thus, on 1 December 1999, petitioner filed a complaint against Michael Vistan before the Office of the Provincial Prosecutor in Malolos, Bulacan for five counts of Violation of Section 10 (a), Article VI of RA 7610, otherwise known as the Child Abuse Act, and for four counts of Violation of Sec. 1 (e) of PD 1829. She likewise filed a complaint for Libel against Maria Cristina Vistan, aunt of Michael and Maria Mercedes.

In a Resolution dated March 3, 2000, Investigating Prosecutor Benjamin R. Caraig recommended upheld (sic) the charge of Violation of RA 7160 but recommended that only one Information be filed against Michael Vistan. The charge of Violation of PD 1829 was dismissed. Nonetheless, the Resolution to uphold the petitioner‘s complaint against Maria Cristina Vistan must (sic) remained.

However, Provincial Prosecutor Amando C. Vicente denied the recommendation of the Investigating Prosecutor that Michael Vistan be indicted for Violation RA 7610. He also approved the recommendation for the dismissal of the charge for Violation of PD 1829.

On 14 April 2000, petitioner filed a Motion for Partial Reconsideration. This was denied in a Resolution dated 28 April 2000.

Petitioner then filed a Petition for Review before the Department of Justice on 18 May 2000. She also filed a Supplement thereto on 19 May 2000.

In a Resolution dated 5 April 2001, Undersecretary Manuel A.J. Teehankee, acting for the Secretary of Justice, denied the petition for review. The undersigned‘s Motion for Reconsideration filed on 25 April 2001 was likewise denied by then DOJ Secretary Hernando B. Perez in a Resolution dated 15 October 2001.

On 26 November 2001, the undersigned filed a Petition for Review before the Office of President. The petition was dismissed and the motion for reconsideration was denied before said forum anchored on Memorandum Circular No. 58 which bars an appeal or a petition for review of decisions/orders/resolutions of the Secretary of Justice except those involving offenses punishable by reclusion perpetua or death.4

On March 18, 2003, petitioner filed a petition for review5 before the CA assailing the Order of the Office of President. Petitioner argued that the Office of the President erred in not addressing the merits of her petition by relying on Memorandum Circular No. 58, series of 1993. Petitioner assailed the constitutionality of the memorandum circular, specifically arguing that Memorandum Circular No. 58 is an invalid regulation because it diminishes the power of control of the President and bestows upon the Secretary of Justice, a subordinate officer, almost unfettered power.6 Moreover, petitioner contended that the Department of Justice (DOJ) erred in dismissing the complaint against respondent Michael Vistan for violations of Presidential Decree No. 18297 (PD No. 1829) and for violation of Republic Act No. 76108 (RA No. 7610).9

On February 13, 2004, the CA rendered a Decision, dismissing the petition, the dispositive portion of which reads:

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit.10

The CA affirmed the position of the Solicitor General (OSG) to apply the doctrine of qualified political agency, to wit:

When the President herself did not revoke the order issued by respondent Acting Deputy Executive Secretary for Legal Affairs nor saw the necessity to exempt petitioner‘s case from the application of Memorandum Circular No. 58, the act of the latter is deemed to be an act of the President herself.11

Moreover, the CA ruled that the facts of the case as portrayed by petitioner do not warrant the filing of a separate Information for violation of Section 1(e) of PD No. 1829.12 Lastly, the CA ruled that the DOJ did not err when it dismissed the complaint for violation for RA No. 7610 as the same was not attended by grave abuse of discretion.

Petitioner filed a Motion for Reconsideration,13 which was, however, denied by the CA in a Resolution dated September 16, 2004.

Hence, herein petition, with petitioner raising the following assignment of errors, to wit:

1. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE RELIANCE OF THE OFFICE OF THE PRESIDENT IN THE PROVISIONS OF MEMORANDUM CIRCULAR NO. 58.

2. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISMISSAL BY THE DOJ SECRETARY OF THE COMPLAINT OF VIOLATION OF SECTION 1(E). P.D. 1829 (OBSTRUCTION OF JUSTICE) AGAINST PRIVATE RESPONDENT MICHAEL VISTAN.

3. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISMISSAL OF THE COMPLAINT OF VIOLATION OF R.A. 7610 (CHILD ABUSE) AGAINST PRIVATE RESPONDENT MICHAEL VISTAN.14

The petition is without merit.

Petitioner's arguments have no leg to stand on. They are mere suppositions without any basis in law. Petitioner argues in the main that Memorandum Circular No. 58 is an invalid regulation, because it diminishes the power of control of the President and bestows upon the Secretary of Justice, a subordinate officer, almost unfettered power.15 This argument is absurd. The President's act of delegating authority to the Secretary of Justice by virtue of said Memorandum Circular is well within the purview of the doctrine of qualified political agency, long been established in our jurisdiction.

Under this doctrine, which primarily recognizes the establishment of a single executive, "all executive and administrative organizations are adjuncts of the Executive Department; the heads of the various executive departments are assistants and agents of the Chief Executive; and, except in cases where the Chief Executive is required by the Constitution or law to act in person or the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive."16 The CA cannot be deemed to have committed any error in upholding the Office of the President's reliance on the Memorandum Circular as it merely interpreted and applied the law as it should be.

As early as 1939, in Villena v. Secretary of Interior,17 this Court has recognized and adopted from American jurisprudence this doctrine of qualified political agency, to wit:

x x x With reference to the Executive Department of the government, there is one purpose which is crystal-clear and is readily visible without the projection of judicial

searchlight, and that is, the establishment of a single, not plural, Executive. The first section of Article VII of the Constitution, dealing with the Executive Department, begins with the enunciation of the principle that "The executive power shall be vested in a President of the Philippines." This means that the President of the Philippines is the Executive of the Government of the Philippines, and no other. The heads of the executive departments occupy political positions and hold office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the President's bosom confidence" (7 Writings, Ford ed., 498), and, in the language of Attorney-General Cushing (7 Op., Attorney-General, 453), "are subject to the direction of the President." Without minimizing the importance of the heads of the various departments, their personality is in reality but the projection of that of the President. Stated otherwise, and as forcibly characterized by Chief Justice Taft of the Supreme Court of the United States, "each head of a department is, and must be, the President's alter ego in the matters of that department where the President is required by law to exercise authority" (Myers v. United States, 47 Sup. Ct. Rep., 21 at 30; 272 U.S., 52 at 133; 71 Law. ed., 160).18

Memorandum Circular No. 58,19 promulgated by the Office of the President on June 30, 1993 reads:

In the interest of the speedy administration of justice, the guidelines enunciated in Memorandum Circular No. 1266 (4 November 1983) on the review by the Office of the President of resolutions/orders/decisions issued by the Secretary of Justice concerning preliminary investigations of criminal cases are reiterated and clarified.

No appeal from or petition for review of decisions/orders/resolutions of the Secretary of Justice on preliminary investigations of criminal cases shall be entertained by the Office of the President, except those involving offenses punishable by reclusion perpetua to death x x x.

Henceforth, if an appeal or petition for review does not clearly fall within the jurisdiction of the Office of the President, as set forth in the immediately preceding paragraph, it shall be dismissed outright x x x.

It is quite evident from the foregoing that the President himself set the limits of his power to review decisions/orders/resolutions of the Secretary of Justice in order to expedite the disposition of cases. Petitioner's argument that the Memorandum Circular unduly expands the power of the Secretary of Justice to the extent of rendering even the Chief Executive helpless to rectify whatever errors or abuses the former may commit in the exercise of his discretion20 is purely speculative to say the least. Petitioner cannot second- guess the President's power and the President's own judgment to delegate whatever it is he deems necessary to delegate in order to achieve proper and speedy administration of justice, especially that such delegation is upon a cabinet secretary – his own alter ego.

Nonetheless, the power of the President to delegate is not without limits. No less than the Constitution provides for restrictions. Justice Jose P. Laurel, in his ponencia in Villena, makes this clear:

x x x Withal, at first blush, the argument of ratification may seem plausible under the circumstances, it should be observed that there are certain prerogative acts which, by their very nature, cannot be validated by subsequent approval or ratification by the President. There are certain constitutional powers and prerogatives of the Chief Executive of the Nation which must be exercised by him in person and no amount of approval or ratification will validate the exercise of any of those powers by any other person. Such, for instance, is his power to suspend the writ of habeas corpus and proclaim martial law (par. 3, sec. 11, Art. VII) and the exercise by him of the benign prerogative of mercy (par. 6, sec. 11, idem).21

These restrictions hold true to this day as they remain embodied in our fundamental law. There are certain presidential powers which arise out of exceptional circumstances, and if exercised, would involve the suspension of fundamental freedoms, or at least call for the supersedence of executive prerogatives over those exercised by co-equal branches of government.22 The declaration of martial law, the suspension of the writ of habeas corpus, and the exercise of the pardoning power, notwithstanding the judicial determination of guilt of the accused, all fall within this special class that demands the exclusive exercise by the President of the constitutionally vested power.23 The list is by no means exclusive, but there must be a showing that the executive power in question is of similar gravitasand exceptional import.24

In the case at bar, the power of the President to review the Decision of the Secretary of Justice dealing with the preliminary investigation of cases cannot be considered as falling within the same exceptional class which cannot be delegated. Besides, the President has not fully abdicated his power of control as Memorandum Circular No. 58 allows an appeal if the imposable penalty is reclusion perpetua or higher. Certainly, it would be unreasonable to impose upon the President the task of reviewing all preliminary investigations decided by the Secretary of Justice. To do so will unduly hamper the other important duties of the President by having to scrutinize each and every decision of the Secretary of Justice notwithstanding the latter‘s expertise in said matter.

In Constantino, Jr. v. Cuisia,25 this Court discussed the predicament of imposing upon the President duties which ordinarily should be delegated to a cabinet member, to wit:

The evident exigency of having the Secretary of Finance implement the decision of the President to execute the debt-relief contracts is made manifest by the fact that the process of establishing and executing a strategy for managing the government‘s debt is deep within the realm of the expertise of the Department of Finance, primed as it is to raise the required amount of funding, achieve its risk and cost objectives, and meet any other sovereign debt management goals.

If, as petitioners would have it, the President were to personally exercise every aspect of the foreign borrowing power, he/she would have to pause from running the country long enough to focus on a welter of time-consuming detailed activities–the propriety of incurring/guaranteeing loans, studying and choosing among the many methods that may be taken toward this end, meeting countless times with creditor representatives to negotiate, obtaining the concurrence of the Monetary Board, explaining and defending the negotiated deal to the public, and more often than not, flying to the agreed place of execution to sign the documents. This sort of constitutional interpretation would negate the very existence of cabinet positions and the respective expertise which the holders thereof are accorded and would unduly hamper the President’s effectivity in running the government.26

Based on the foregoing considerations, this Court cannot subscribe to petitioner‘s position asking this Court to allow her to appeal to the Office of the President, notwithstanding that the crimes for which she charges respondent are not punishable by reclusion perpetua to death.

It must be remembered that under the Administrative Code of 1987 (EO No. 292), the Department of Justice, under the leadership of the Secretary of Justice, is the government‘s principal law agency. As such, the Department serves as the government‘s prosecution arm and administers the government‘s criminal justice system by investigating crimes, prosecuting offenders and overseeing the correctional system, which are deep within the realm of its expertise.27 These are known functions of the Department of Justice, which is under the executive branch and, thus, within the Chief Executive's power of control.

Petitioner‘s contention that Memorandum Circular No. 58 violates both the Constitution and Section 1, Chapter 1, Book III of EO No. 292, for depriving the President of his power of control over the executive departments deserves scant consideration. In the first place, Memorandum Circular No. 58 was promulgated by the Office of the President and it is settled that the acts of the secretaries of such departments, performed and promulgated in the regular course of business are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive.28 Memorandum Circular No. 58 has not been reprobated by the President; therefore, it goes without saying that the said Memorandum Circular has the approval of the President.

Anent the second ground raised by petitioner, the same is without merit.

Petitioner argues that the evasion of arrest constitutes a violation of Section 1(e) of PD No. 1829, the same is quoted hereunder as follows:

(e) Delaying the prosecution of criminal case by obstructing the service of processes or court orders or disturbing proceedings in the fiscals' offices in Tanodbayan, or in the courts. x x x

Specifically, petitioner contends that respondent's act of going underground obstructed the service of a court process, particularly the warrant of arrest.29

This Court does not agree.

There is no jurisprudence that would support the stance taken by petitioner. Notwithstanding petitioner's vehement objection in the manner the CA had disposed of the said issue, this Court agrees with the same. The CA ruled that the position taken by petitioner was contrary to the spirit of the law on "obstruction of justice," in the wise:

x x x It is a surprise to hear from petitioner who is a member of the bench to argue that unserved warrants are tantamount to another violation of the law re: "obstruction of justice." Petitioner is like saying that every accused in a criminal case is committing another offense of "obstruction of justice" if and when the warrant of arrest issued for the former offense/ charge is unserved during its life or returned unserved after its life – and that the accused should be charged therewith re: "obstruction of justice." What if the warrant of arrest for the latter charge ("obstruction of justice") is again unserved during its life or returned unserved? To follow the line of thinking of petitioner, another or a second charge of "obstruction of justice" should be filed against the accused. And if the warrant of arrest issued on this second charge is not served, again, a third charge of "obstruction of justice" is warranted or should be filed against the accused. Thus, petitioner is effectively saying that the number of charges for "obstruction of justice" is counting and/or countless, unless and until the accused is either arrested or voluntarily surrendered. We, therefore, find the position taken by petitioner as contrary to the intent and spirit of the law on "obstruction of justice." x x x30

As correctly observed by the CA, the facts of the case, as portrayed by petitioner, do not warrant the filing of a separate information for violation of Section 1(e) of PD No. 1829. This Court agrees with the CA that based on the evidence presented by petitioner, the failure on the part of the arresting officer/s to arrest the person of the accused makes the latter a fugitive from justice and is not equivalent to a commission of another offense of obstruction of justice.31

Petitioner, however, vehemently argues that the law does not explicitly provide that it is applicable only to another person and not to the offender himself.32 Petitioner thus contends that where the "law does not distinguish, we should not distinguish."33

Again, this Court does not agree.

Petitioner conveniently forgets that it is a basic rule of statutory construction that penal statutes are to be liberally construed in favor of the accused.34 Courts must not bring cases within the provision of a law which are not clearly embraced by it. No act can be pronounced criminal which is not clearly made so by statute; so, too, no person who is not clearly within the terms of a statute can be brought within them.35 Any reasonable doubt must be resolved in favor of the accused.36

Indeed, if the law is not explicit that it is applicable only to another person and not the offender himself, this Court must resolve the same in favor of the accused. In any case, this Court agrees with the discussion of the CA, however sarcastic it may be, is nevertheless correct given the circumstances of the case at bar.

Lastly, petitioner argues that the CA erred in upholding the dismissal of the complaint against respondent for violation of Section 10 (a), Article VI, of RA No. 7610. Said Section reads:

Any person who shall commit any other act of child abuse, cruelty or exploitation or responsible for other conditions prejudicial to the child's development, including those covered by Article 59 of PD No. 603, as amended, but not covered by the Revised Penal Code, as amended, shall suffer the penalty of prision mayor in its minimum period.

On this note, the Provincial Prosecutor in disapproving the recommendation of the Investigating Prosecutor to file the information for violation of Section 10(a), Article VI, of RA No. 7610, gave the following reasons:

APPROVED for: (1) x x x (2) x x x The recommendation to file an information for viol. of Sec. 10 (a) RA # 7610 vs. M. Vistan is hereby denied. The affidavit of Ma. Mercedes Vistan, the minor involved, is to the effect that she found happiness and peace of mind away from the complainant and in the company of her relatives, including her brother, respondent Michael Vistan. How can her joining the brother be prejudicial to her with such statement?37

Said finding was affirmed by the Secretary of Justice.

This Court is guided by First Women's Credit Corporation and Shig Katamaya v. Hon. Hernando B. Perez et. al,38where this Court emphasized the executive nature of preliminary investigations, to wit:

x x x the determination of probable cause for the filing of an information in court is an executive function, one that properly pertains at the first instance to the public prosecutor and, ultimately, to the Secretary of Justice. For this reason, the Court considers it sound judicial policy to refrain from interfering in the conduct of preliminary investigations and to leave the Department of Justice ample latitude of discretion in the determination of what constitutes sufficient evidence to establish probable cause for the prosecution of supposed offenders. Consistent with this policy, courts do not reverse the Secretary of Justice‘s findings and conclusions on the matter of probable cause except in clear cases of grave abuse of discretion. Thus, petitioners will prevail only if they can show that the CA erred in not holding that public respondent‘s resolutions were tainted with grave abuse of discretion.391avvphi1

Were the acts of the Provincial Prosecutor or the Secretary of Justice tainted with grave abuse of discretion?

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment which is equivalent to an excess or lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act not at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.40

Based on the foregoing, this Court finds that the provincial prosecutor and the Secretary of Justice did not act with grave abuse of discretion, as their conclusion of lack of probable cause was based on the affidavit of the alleged victim herself. The reasons for the cause of action were stated clearly and sufficiently. Was their reliance on the victim's affidavit constitutive of grave abuse of discretion? This Court does not think so.

While petitioner would argue that the victim was "brainwashed" by respondent into executing the affidavit,41 this Court finds no conclusive proof thereof. Besides, even if their reliance on the victim‘s affidavit may be wrong, it is elementary that not every erroneous conclusion of fact is an abuse of discretion.42 As such, this Court will not interfere with the said findings of the Provincial Prosecutor and the Secretary of Justice absent a clear showing of grave abuse of discretion. The determination of probable cause during a preliminary investigation is a function that belongs to the prosecutor and ultimately on the Secretary of Justice; it is an executive function, the correctness of the exercise of which is a matter that this Court will not pass upon absent a showing of grave abuse of discretion.

WHEREFORE, premises considered, the February 13, 2004 Decision and September 16, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 76019 are hereby AFFIRMED.SO ORDERED.

G.R. No. 175527 December 8, 2008 HON. GABRIEL LUIS QUISUMBING, HON. ESTRELLA P. YAPHA, HON. VICTORIA G. COROMINAS, HON. RAUL D. BACALTOS (Members of the Sangguniang Panlalawigan of Cebu), petitioners, vs. HON. GWENDOLYN F. GARCIA (In her capacity as Governor of the Province of Cebu), HON. DELFIN P. AGUILAR (in his capacity as Director IV (Cluster Director) of COA), Cluster IV – Visayas Local Government Sector, HON. HELEN S. HILAYO (In her capacity as Regional Cluster Director of COA), and HON. ROY L. URSAL (In his capacity as Regional Legal and Adjudication Director of COA), respondents.

Gabriel Luis Quisumbing (Quisumbing), Estrella P. Yapha, Victoria G. Corominas, and Raul D. Bacaltos (Bacaltos), collectively petitioners, assail the Decision1 of the Regional Trial Court (RTC) of Cebu City, Branch 9, in Civil Case No. CEB-31560, dated July 11, 2006, which declared that under the pertinent provisions of Republic Act No. 7160 (R.A. No. 7160), or the Local Government Code, and Republic Act No. 9184 (R.A. No. 9184),

or the Government Procurement Reform Act, respondent Cebu Provincial Governor Gwendolyn F. Garcia (Gov. Garcia), need not secure the prior authorization of the Sangguniang Panlalawigan before entering into contracts committing the province to monetary obligations.

The undisputed facts gathered from the assailed Decision and the pleadings submitted by the parties are as follows:

The Commission on Audit (COA) conducted a financial audit on the Province of Cebu for the period ending December 2004. Its audit team rendered a report, Part II of which states: "Several contracts in the total amount ofP102,092,841.47 were not supported with a Sangguniang Panlalawigan resolution authorizing

the Provincial Governor to enter into a contract, as required under Section 22 of R.A. No. 7160."2 The audit team then recommended that, "Henceforth, the local chief executive must secure a sanggunian resolution authorizing the former to enter into a contract as provided under Section 22 of R.A. No. 7160."3

Gov. Garcia, in her capacity as the Provincial Governor of Cebu, sought the reconsideration of the findings and recommendation of the COA. However, without waiting for the resolution of the reconsideration sought, she instituted an action for Declaratory Relief before the RTC of Cebu City, Branch 9. Impleaded as respondents were Delfin P. Aguilar, Helen S. Hilayo and Roy L. Ursal in their official capacities as Cluster Director IV, Regional Cluster Director and Regional Legal and Adjudication Director of the COA, respectively. The Sangguniang Panlalawigan of the Province of Cebu, represented by Vice-Governor Gregorio Sanchez, Jr., was also impleaded as respondent.

Alleging that the infrastructure contracts4 subject of the audit report complied with the bidding procedures provided under R.A. No. 9184 and were entered into pursuant to the general and/or supplemental appropriation ordinances passed by the Sangguniang Panlalawigan, Gov. Garcia alleged that a separate authority to enter into such contracts was no longer necessary.

On the basis of the parties‘ respective memoranda, the trial court rendered the assailed Decision dated July 11, 2006, declaring that Gov. Garcia need not secure prior authorization from the Sangguniang Panlalawigan of Cebu before entering into the questioned contracts. The dispositive portion of the Decision provides:

WHEREFORE, premises considered, this court hereby renders judgment in favor of Petitioner and against the Respondent COA officials and declares that pursuant to Sections 22 paragraph © in relation to Sections 306 and 346 of the Local Government Code and Section 37 of the Government Procurement Reform Act, the Petitioner Governor of Cebu need not secure prior authorization by way of a resolution from theSangguniang Panlalawigan of the Province of Cebu

before she enters into a contract involving monetary obligations on the part of the Province of Cebu when there is a prior appropriation ordinance enacted.

Insofar as Respondent Sangguniang Panlalawigan, this case is hereby dismissed.5

In brief, the trial court declared that the Sangguniang Panlalawigan does not have juridical personality nor is it vested by R.A. No. 7160 with authority to sue and be sued. The trial court accordingly dismissed the case against respondent members of the Sangguniang Panlalawigan. On the question of the remedy of declaratory relief being improper because a breach had already been committed, the trial court held that the case would ripen into and be treated as an ordinary civil action. The trial court further ruled that it is only when the contract (entered into by the local chief executive) involves obligations which are not backed by prior ordinances that the prior authority of thesanggunian concerned is required. In this case, the Sangguniang Panlalawigan of Cebu had already given its prior authorization when it passed the appropriation ordinances which authorized the expenditures in the questioned contracts.

The trial court denied the motion for reconsideration6 filed by Quisumbing, Bacaltos, Carmiano Kintanar, Jose Ma. Gastardo, and Agnes Magpale, in their capacities as members of the Sangguniang Panlalawigan of Cebu, in an Order7 dated October 25, 2006.

In the Petition for Review8 dated November 22, 2006, petitioners insisted that the RTC committed reversible error in granting due course to Gov. Garcia‘s petition for declaratory relief despite a breach of the law subject of the petition having already been committed. This breach was allegedly already the subject of a pending investigation by the Deputy Ombudsman for the Visayas. Petitioners further maintained that prior authorization from theSangguniang Panlalawigan should be secured before Gov. Garcia could validly enter into contracts involving monetary obligations on the part of the province.

Gov. Garcia, in her Comment9 dated April 10, 2007, notes that the RTC had already dismissed the case against the members of the Sangguniang Panlalawigan of Cebu on the ground that they did not have legal personality to sue and be sued. Since the COA officials also named as respondents in the petition for declaratory relief neither filed a motion for reconsideration nor appealed the RTC Decision, the said Decision became final and executory. Moreover, only two of the members of the Sangguniang Panlalawigan, namely, petitioners Quisumbing and Bacaltos, originally named as respondents in the petition for declaratory relief, filed the instant petition before the Court.

Respondent Governor insists that at the time of the filing of the petition for declaratory relief, there was not yet any breach of R.A. No. 7160. She further argues that the questioned contracts were executed after a public bidding in implementation of specific items in the regular or supplemental appropriation ordinances passed by

theSangguniang Panlalawigan. These ordinances allegedly serve as the authorization required under R.A. No. 7160, such that the obtention of another authorization becomes not only redundant but also detrimental to the speedy delivery of basic services.

Gov. Garcia also claims that in its Comment to the petition for declaratory relief, the Office of the Solicitor General (OSG) took a stand supportive of the governor‘s arguments. The OSG‘s official position allegedly binds the COA.

Expressing gratitude for having been allowed by this Court to file a comment on the petition, respondent COA officials in their Comment10 dated March 8, 2007, maintain that Sections 306 and 346 of R.A. No. 7160 cannot be considered exceptions to Sec. 22(c) of R.A. No. 7160. Sec. 346 allegedly refers to disbursements which must be made in accordance with an appropriation ordinance without need of approval from the sanggunian concerned. Sec. 306, on the other hand, refers to the authorization for the effectivity of the budget and should not be mistaken for the specific authorization by the Sangguniang Panlalawigan for the local chief executive to enter into contracts under Sec. 22(c) of R.A. No. 7160.

The question that must be resolved by the Court should allegedly be whether the appropriation ordinance referred to in Sec. 346 in relation to Sec. 306 of R.A. No. 7160 is the same prior authorization required under Sec. 22(c) of the same law. To uphold the assailed Decision would allegedly give the local chief executive unbridled authority to enter into any contract as long as an appropriation ordinance or budget has been passed by the sanggunianconcerned.

Respondent COA officials also claim that the petition for declaratory relief should have been dismissed for the failure of Gov. Garcia to exhaust administrative remedies, rendering the petition not ripe for judicial determination.

The OSG filed a Comment11 dated March 12, 2007, pointing out that the instant petition raises factual issues warranting its denial. For instance, petitioners, on one hand, claim that there was no appropriation ordinance passed for 2004 but only a reenacted appropriations ordinance and that the unauthorized contracts did not proceed from a public bidding pursuant to R.A. No. 9184. Gov. Garcia, on the other hand, claims that the contracts were entered into in compliance with the bidding procedures in R.A. No. 9184 and pursuant to the general and/or supplemental appropriations ordinances passed by the Sangguniang Panlalawigan. She further asserts that there were ordinances allowing the expenditures made.

On the propriety of the action for declaratory relief filed by Gov. Garcia, the OSG states in very general terms that such an action must be brought before any breach or violation of the statute has been committed and may be treated as an ordinary action only if the breach occurs after the filing of the action but before the termination thereof. However, it does not say in this case whether such recourse is proper.

Nonetheless, the OSG goes on to discuss that Sec. 323 of R.A. No. 7160 allows disbursements for salaries and wages of existing positions, statutory and contractual obligations and essential operating expenses authorized in the annual and supplemental budgets of the preceding year (which are deemed reenacted in case the sanggunianconcerned fails to pass the ordinance authorizing the annual appropriations at the beginning of the ensuing fiscal year). Contractual obligations not included in the preceding year‘s annual and supplemental budgets allegedly require the prior approval or authorization of the local sanggunian.

In their Consolidated Reply12 dated August 8, 2007, petitioners insist that the instant petition raises only questions of law not only because the parties have agreed during the proceedings before the trial court that the case involves purely legal questions, but also because there is no dispute that the Province of Cebu was operating under a reenacted budget in 2004.

They further defend their standing to bring suit not only as members of the sanggunian whose powers Gov. Garcia has allegedly usurped, but also as taxpayers whose taxes have been illegally spent. Petitioners plead leniency in the Court‘s ruling regarding their legal standing, as this case involves a matter of public policy.

Petitioners finally draw attention to the OSG‘s seeming change of heart and adoption of their argument that Gov. Garcia has violated R.A. No. 7160.

It should be mentioned at the outset that a reading of the OSG‘s Comment13 on the petition for declaratory relief indeed reveals its view that Sec. 22(c) of R.A. No. 7160 admits of exceptions. It maintains, however, that the said law is clear and leaves no room for interpretation, only application. Its Comment on the instant petition does not reflect a change of heart but merely an amplification of its original position.

Although we agree with the OSG that there are factual matters that have yet to be settled in this case, the records disclose enough facts for the Court to be able to make a definitive ruling on the basic legal arguments of the parties.

The trial court‘s pronouncement that "the parties in this case all agree that the contracts referred to in the above findings are contracts entered into pursuant to the bidding procedures allowed in Republic Act No. 9184 or the ‗Government Procurement Reform Act‘–i.e., public bidding, and negotiated bid. The biddings were made pursuant to the general and/or supplemental appropriation ordinances passed by the Sangguniang Panlalawigan of Cebu x x x"14 is clearly belied by the Answer15 filed by petitioners herein. Petitioners herein actually argue in their Answer that the contracts subject of the COA‘s findings did not proceed from a public bidding. Further, there was no budget passed in 2004. What was allegedly in force was the reenacted 2003 budget.16

Gov. Garcia‘s contention that the questioned contracts complied with the bidding procedure in R.A. No. 9184 and were entered into pursuant to the general and

supplemental appropriation ordinances allowing these expenditures is diametrically at odds with the facts as presented by petitioners in this case. It is notable, however, that while Gov. Garcia insists on the existence of appropriation ordinances which allegedly authorized her to enter into the questioned contracts, she does not squarely deny that these ordinances pertain to the previous year‘s budget which was reenacted in 2004.

Thus, contrary to the trial court‘s finding, there was no agreement among the parties with regard to the operative facts under which the case was to be resolved. Nonetheless, we can gather from Gov. Garcia‘s silence on the matter and the OSG‘s own discussion on the effect of a reenacted budget on the local chief executive‘s ability to enter into contracts, that during the year in question, the Province of Cebu was indeed operating under a reenacted budget.

Note should be taken of the fact that Gov. Garcia, both in her petition for declaratory relief and in her Comment on the instant petition, has failed to point out the specific provisions in the general and supplemental appropriation ordinances copiously mentioned in her pleadings which supposedly authorized her to enter into the questioned contracts.

Based on the foregoing discussion, there appear two basic premises from which the Court can proceed to discuss the question of whether prior approval by the Sangguniang Panlalawigan was required before Gov. Garcia could have validly entered into the questioned contracts. First, the Province of Cebu was operating under a reenacted budget in 2004. Second, Gov. Garcia entered into contracts on behalf of the province while this reenacted budget was in force.

Sec. 22(c) of R.A. No. 7160 provides:

Sec. 22. Corporate Powers.–(a) Every local government unit, as a corporation, shall have the following powers:

x x x

(c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the local government unit without prior authorization by the sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.

As it clearly appears from the foregoing provision, prior authorization by the sanggunian concerned is required before the local chief executive may enter into contracts on behalf of the local government unit.

Gov. Garcia posits that Sections 306 and 346 of R.A. No. 7160 are the exceptions to Sec. 22(c) and operate to allow her to enter into contracts on behalf of the Province of Cebu without further authority from the Sangguniang Panlalawigan other than that

already granted in the appropriation ordinance for 2003 and the supplemental ordinances which, however, she did not care to elucidate on.

The cited provisions state:

Sec. 306. Definition of Terms.–When used in this Title, the term:

(a) "Annual Budget" refers to a financial plan embodying the estimates of income and expenditures for one (1) fiscal year;

(b) "Appropriation" refers to an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes;

(c) "Budget Document" refers to the instrument used by the local chief executive to present a comprehensive financial plan to the sanggunian concerned;

(d) "Capital Outlays" refers to appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of the local government unit concerned, including investments in public utilities such as public markets and slaughterhouses;

(e) "Continuing Appropriation" refers to an appropriation available to support obligations for a specified purpose or projects, such as those for the construction of physical structures or for the acquisition of real property or equipment, even when these obligations are incurred beyond the budget year;

(f) "Current Operating Expenditures" refers to appropriations for the purchase of goods and services for the conduct of normal government operations within the fiscal year, including goods and services that will be used or consumed during the budget year;

(g) "Expected Results" refers to the services, products, or benefits that will accrue to the public, estimated in terms of performance measures or physical targets;

(h) "Fund" refers to a sum of money, or other assets convertible to cash, set aside for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations, and constitutes an independent fiscal and accounting entity;

(i) "Income" refers to all revenues and receipts collected or received forming the gross accretions of funds of the local government unit;

(j) "Obligations" refers to an amount committed to be paid by the local government unit for any lawful act made by an accountable officer for and in behalf of the local government unit concerned;

(k) "Personal Services" refers to appropriations for the payment of salaries, wages and other compensation of permanent, temporary, contractual, and casual employees of the local government unit;

(l) "Receipts" refers to income realized from operations and activities of the local government or are received by it in the exercise of its corporate functions, consisting of charges for services rendered, conveniences furnished, or the price of a commodity sold, as well as loans, contributions or aids from other entities, except provisional advances for budgetary purposes; and

(m) "Revenue" refers to income derived from the regular system of taxation enforced under authority of law or ordinance and, as such, accrue more or less regularly every year.

x x x

Sec. 346. Disbursements of Local Funds and Statement of Accounts.–Disbursements shall be made in accordance with the ordinance authorizing the annual or supplemental appropriations without the prior approval of the sanggunian concerned. Within thirty (3) days after the close of each month, the local accountant shall furnish the sanggunian with such financial statements as may be prescribed by the COA. In the case of the year-end statement of accounts, the period shall be sixty (60) days after the thirty-first (31st) of December.

Sec. 306 of R.A. No. 7160 merely contains a definition of terms. Read in conjunction with Sec. 346, Sec. 306 authorizes the local chief executive to make disbursements of funds in accordance with the ordinance authorizing the annual or supplemental appropriations. The "ordinance" referred to in Sec. 346 pertains to that which enacts the local government unit‘s budget, for which reason no further authorization from the local council is required, the ordinance functioning, as it does, as the legislative authorization of the budget.17

To construe Sections 306 and 346 of R.A. No. 7160 as exceptions to Sec. 22(c) would render the requirement of prior sanggunian authorization superfluous, useless and irrelevant. There would be no instance when such prior authorization would be required, as in contracts involving the disbursement of appropriated funds. Yet, this is obviously not the effect Congress had in mind when it required, as a condition to the local chief executive‘s representation of the local government unit in business transactions, the prior authorization of the sanggunianconcerned. The requirement was deliberately added as a measure of check and balance, to temper the authority of the local chief executive, and in recognition of the fact that the corporate powers of the local

government unit are wielded as much by its chief executive as by its council.18 However, as will be discussed later, the sanggunianauthorization may be in the form of an appropriation ordinance passed for the year which specifically covers the project, cost or contract to be entered into by the local government unit.

The fact that the Province of Cebu operated under a reenacted budget in 2004 lent a complexion to this case which the trial court did not apprehend. Sec. 323 of R.A. No. 7160 provides that in case of a reenacted budget, "only the annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed reenacted and disbursement of funds shall be in accordance therewith."19

It should be observed that, as indicated by the word "only" preceding the above enumeration in Sec. 323, the items for which disbursements may be made under a reenacted budget are exclusive. Clearly, contractual obligations which were not included in the previous year‘s annual and supplemental budgets cannot be disbursed by the local government unit. It follows, too, that new contracts entered into by the local chief executive require the prior approval of the sanggunian.

We agree with the OSG that the words "disbursement" and "contract" separately referred to in Sec. 346 and 22(c) of R.A. No. 7160 should be understood in their common signification. Disbursement is defined as "To pay out, commonly from a fund. To make payment in settlement of a debt or account payable."20 Contract, on the other hand, is defined by our Civil Code as "a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service."21

And so, to give life to the obvious intendment of the law and to avoid a construction which would render Sec. 22(c) of R.A. No. 7160 meaningless,22 disbursement, as used in Sec. 346, should be understood to pertain to payments for statutory and contractual obligations which the sanggunian has already authorized thru ordinances enacting the annual budget and are therefore already subsisting obligations of the local government unit. Contracts, as used in Sec. 22(c) on the other hand, are those which bind the local government unit to new obligations, with their corresponding terms and conditions, for which the local chief executive needs prior authority from the sanggunian.

Elsewhere in R.A. No. 7160 are found provisions which buttress the stand taken by petitioners against Gov. Garcia‘s seemingly heedless actions. Sec. 465, Art. 1, Chapter 3 of R.A. No. 7160 states that the provincial governor shall "[r]epresent the province in all its business transactions and sign in its behalf all bonds, contracts, and obligations, and such other documents upon authority of the Sangguniang Panlalawiganor pursuant to law or ordinances." Sec. 468, Art. 3 of the same chapter also establishes the sanggunian‘s power, as the province‘s legislative body, to authorize the provincial governor to negotiate and contract loans, lease public buildings held in a proprietary capacity to private parties, among other things.

The foregoing inexorably confirms the indispensability of the sanggunian‘s authorization in the execution of contracts which bind the local government unit to new obligations. Note should be taken of the fact that R.A. No. 7160 does not expressly state the form that the authorization by the sanggunian has to take. Such authorization may be done by resolution enacted in the same manner prescribed by ordinances, except that the resolution need not go through a third reading for final consideration unless the majority of all the members of the sangguniandecides otherwise.23

As regards the trial court‘s pronouncement that R.A. No. 9184 does not require the head of the procuring entity to secure a resolution from the sanggunian concerned before entering into a contract, attention should be drawn to the very same provision upon which the trial court based its conclusion. Sec. 37 provides: "The Procuring Entity shall issue the Notice to Proceed to the winning bidder not later than seven (7) calendar days from the date of approval of the contract by the appropriate authority x x x."

R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37 thereof explicitly makes the approval of the appropriate authority which, in the case of local government units, is the sanggunian, the point of reference for the notice to proceed to be issued to the winning bidder. This provision, rather than being in conflict with or providing an exception to Sec. 22(c) of R.A. No. 7160, blends seamlessly with the latter and even acknowledges that in the exercise of the local government unit‘s corporate powers, the chief executive acts merely as an instrumentality of the local council. Read together, the cited provisions mandate the local chief executive to secure the sanggunian‘s approval before entering into procurement contracts and to transmit the notice to proceed to the winning bidder not later than seven (7) calendar days therefrom.

Parenthetically, Gov. Garcia‘s petition for declaratory relief should have been dismissed because it was instituted after the COA had already found her in violation of Sec. 22(c) of R.A. No. 7160.

One of the important requirements for a petition for declaratory relief under Sec. 1, Rule 63 of the Rules of Court is that it be filed before breach or violation of a deed, will, contract, other written instrument, statute, executive order, regulation, ordinance or any other governmental regulation.

In Martelino v. National Home Mortgage Finance Corporation,24 we held that the purpose of the action is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, contract, etc., for their guidance in its enforcement or compliance and not to settle issues arising from its alleged breach. It may be entertained only before the breach or violation of the statute, deed, contract, etc. to which it refers. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the court can no longer assume jurisdiction over the action. Under such circumstances, inasmuch as a cause of action has already accrued in favor of one or the other party, there is nothing more for the court to explain or clarify, short of a judgment or final order.

Thus, the trial court erred in assuming jurisdiction over the action despite the fact that the subject thereof had already been breached by Gov. Garcia prior to the filing of the action. Nonetheless, the conversion of the petition into an ordinary civil action is warranted under Sec. 6, Rule 6325 of the Rules of Court.

Erroneously, however, the trial court did not treat the COA report as a breach of the law and proceeded to resolve the issues as it would have in a declaratory relief action. Thus, it ruled that prior authorization is not required if there exist ordinances which authorize the local chief executive to enter into contracts. The problem with this ruling is that it fails to take heed of the incongruent facts presented by the parties. What the trial court should have done, instead of deciding the case based merely on the memoranda submitted by the parties, was to conduct a full-blown trial to thresh out the facts and make an informed and complete decision.

As things stand, the declaration of the trial court to the effect that no prior authorization is required when there is a prior appropriation ordinance enacted does not put the controversy to rest. The question which should have been answered by the trial court, and which it failed to do was whether, during the period in question, there did exist ordinances (authorizing Gov. Garcia to enter into the questioned contracts) which rendered the obtention of another authorization from the Sangguniang Panlalawigan superfluous. It should also have determined the character of the questioned contracts, i.e., whether they were, as Gov. Garcia claims, mere disbursements pursuant to the ordinances supposedly passed by the sanggunian or, as petitioners claim, new contracts which obligate the province without the provincial board‘s authority.

It cannot be overemphasized that the paramount consideration in the present controversy is the fact that the Province of Cebu was operating under a re-enacted budget in 2004, resulting in an altogether different set of rules as directed by Sec. 323 of R.A. 7160. This Decision, however, should not be so construed as to proscribe any and all contracts entered into by the local chief executive without formal sanggunian authorization. In cases, for instance, where the local government unit operates under an annual as opposed to a re-enacted budget, it should be acknowledged that the appropriation passed by the sanggunian may validly serve as the authorization required under Sec. 22(c) of R.A. No. 7160. After all, an appropriation is an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes. The appropriation covers the expenditures which are to be made by the local government unit, such as current operating expenditures26 and capital outlays.27

The question of whether a sanggunian authorization separate from the appropriation ordinance is required should be resolved depending on the particular circumstances of the case. Resort to the appropriation ordinance is necessary in order to determine if there is a provision therein which specifically covers the expense to be incurred or the contract to be entered into. Should the appropriation ordinance, for instance, already contain in sufficient detail the project and cost of a capital outlay such that all that the

local chief executive needs to do after undergoing the requisite public bidding is to execute the contract, no further authorization is required, the appropriation ordinance already being sufficient.

On the other hand, should the appropriation ordinance describe the projects in generic terms such as "infrastructure projects," "inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems projects," "reclamation projects" or "roads and bridges," there is an obvious need for a covering contract for every specific project that in turn requires approval by the sanggunian. Specific sanggunian approval may also be required for the purchase of goods and services which are neither specified in the appropriation ordinance nor encompassed within the regular personal services and maintenance operating expenses.

In view of the foregoing, the instant case should be treated as an ordinary civil action requiring for its complete adjudication the confluence of all relevant facts. Guided by the framework laid out in this Decision, the trial court should receive further evidence in order to determine the nature of the questioned contracts entered into by Gov. Garcia, and the existence of ordinances authorizing her acts.

WHEREFORE, the petition is GRANTED IN PART. The Decision dated July 11, 2006, of the Regional Trial Court of Cebu City, Branch 9, in Civil Case No. CEB-31560, and its Order dated October 25, 2006, are REVERSED andSET ASIDE. The case is REMANDED to the court a quo for further proceedings in accordance with this Decision. No pronouncement as to costs.

G.R. No. 178830 July 14, 2008 ROLEX SUPLICO, Petitioner, vs. NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, represented by NEDA SECRETARY ROMULO L. NERI, and the NEDA-INVESTMENT COORDINATION COMMITTEE, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), represented by DOTC SECRETARY LEANDRO MENDOZA, including the COMMISSION ON INFORMATION AND COMMUNICATIONS TECHNOLOGY, headed by its Chairman, RAMON P. SALES, THE TELECOMMUNICATIONS OFFICE, BIDS AND AWARDS FOR INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT), headed by DOTC ASSISTANT SECRETARY ELMER A. SONEJA as Chairman, and the TECHNICAL WORKING GROUP FOR ICT, AND DOTC ASSISTANT SECRETARY LORENZO FORMOSO, AND ALL OTHER OPERATING UNITS OF THE DOTC FOR INFORMATION AND COMMUNICATIONS TECHNOLOGY, and ZTE CORPORATION, AMSTERDAM HOLDINGS, INC., AND ALL PERSONS ACTING IN THEIR BEHALF, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 179317

AMSTERDAM HOLDINGS, INC., and NATHANIEL SAUZ, Petitioners, vs. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO MENDOZA, COMMISSION ON INFORMATION AND COMMUNICATIONS TECHNOLOGY, and ASSISTANT SECRETARY LORENZO FORMOSO III, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 179613 GALELEO P. ANGELES, VICENTE C. ANGELES, JOB FLORANTE L. CASTILLO, TRINI ANNE G. NIEVA, ROY ALLAN T. ARELLANO, CARLO MAGNO M. REONAL, ETHEL B. REGADIO, RAENAN B. MALIG, AND VINALYN M. POTOT, TOGETHER WITH LAWYERS AND ADVOCATES FOR ACCOUNTABILITY, TRANSPARENCY, INTEGRITY AND GOOD GOVERNANCE (LATIGO), Petitioners, vs. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), represented by DOTC SECRETARY LEANDRO MENDOZA, and ZHONG XING EQUIPMENT (ZTE) COMPANY, LTD., AND ANY AND ALL PERSONS ACTING ON THEIR BEHALF, Respondents.

Under consideration is the Manifestation and Motion1 dated October 26, 2007 of the Office of the Solicitor General (OSG) which states:

The Office of the Solicitor General (OSG) respectfully avers that in an Indorsement dated October 24, 2007, the Legal Service of the Department of Transportation and Communications (DOTC) has informed it of the Philippine Government‘s decision not to continue with the ZTE National Broadband Network Project (see attachment2). That said, there is no more justiciable controversy for this Honorable Court to resolve. WHEREFORE, public respondents respectfully pray that the present petitions be DISMISSED.

On November 13, 2007, the Court noted the OSG‘s manifestation and motion and required petitioners in G.R. Nos. 178830, 179317, and 179613 to comment.

On December 6, 2007, Rolex Suplico, petitioner in G.R. No. 178830, filed his Consolidated Reply and Opposition,3opposing the aforequoted OSG Manifestation and Motion, arguing that:

66. Aside from the fact that the Notes of the Meeting Between President Gloria Macapagal-Arroyo and Chinese President Hu Jintao held 2 October 2007 were not attached to the 26 October 2007 Manifestation and Motion – thus depriving petitioners of the opportunity to comment thereon – a mere verbally requested 1st Indorsement is not sufficient basis for the conclusion that the ZTE-DOTC NBN deal has been permanently scrapped.

67. Suffice to state, said 1st Indorsement is glaringly self-serving, especially without the Notes of the Meeting Between President Gloria Macapagal-Arroyo

and Chinese President Hu Jintao to support its allegations or other proof of the supposed decision to cancel the ZTE-DOTC NBN deal. Public respondents can certainly do better than that.4

Petitioner Suplico further argues that:

79. Assuming arguendo that some aspects of the present Petition have been rendered moot (which is vehemently denied), this Honorable Court, consistent with well-entrenched jurisprudence, may still take cognizance thereof.5

Petitioner Suplico cites this Court‘s rulings in Gonzales v. Chavez,6 Rufino v. Endriga,7 and Alunan III v. Mirasol8that despite their mootness, the Court nevertheless took cognizance of these cases and ruled on the merits due to the Court‘s symbolic function of educating the bench and the bar by formulating guiding and controlling principles, precepts, doctrines, and rules.

On January 31, 2008, Amsterdam Holdings, Inc. (AHI) and Nathaniel Sauz, petitioners in G.R. No. 179317, also filed their comment expressing their sentiments, thus:

3. First of all, the present administration has never been known for candor. The present administration has a very nasty habit of not keeping its word. It says one thing, but does another.

4. This being the case, herein petitioners are unable to bring themselves to feel even a bit reassured that the government, in the event that the above-captioned cases are dismissed, will not backtrack, re-transact, or even resurrect the now infamous NBN-ZTE transaction. This is especially relevant since what was attached to the OSG‘s Manifestation and Motion was a mere one (1) page written communication sent by the Department of Transportation and Communications (DOTC) to the OSG, allegedly relaying that the Philippine Government has decided not to continue with the NBN project "x x x due to several reasons and constraints."

Petitioners AHI and Sauz further contend that because of the transcendental importance of the issues raised in the petition, which among others, included the President‘s use of the power to borrow, i.e., to enter into foreign loan agreements, this Court should take cognizance of this case despite its apparent mootness.

On January 15, 2008, the Court required the OSG to file respondents‘ reply to petitioners‘ comments on its manifestation and motion.

On April 18, 2008, the OSG filed respondents‘ reply, reiterating their position that for a court to exercise its power of adjudication, there must be an actual case or controversy – one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice.9

Respondents also insist that there is no perfected contract in this case that would prejudice the government or public interest. Explaining the nature of the NBN Project as an executive agreement, respondents stress that it remained in the negotiation stage. The conditions precedent10 for the agreement to become effective have not yet been complied with.

Respondents further oppose petitioners‘ claim of the right to information, which they contend is not an absolute right. They contend that the matters raised concern executive policy, a political question which the judicial branch of government would generally hesitate to pass upon.

On July 2, 2008, the OSG filed a Supplemental Manifestation and Motion. Appended to it is the Highlights from the Notes of Meeting between President Gloria Macapagal-Arroyo and Chinese President Hu Jintao, held in XI Jiao Guesthouse, Shanghai, China, on October 2, 2007. In the Notes of Meeting, the Philippine Government conveyed its decision not to continue with the ZTE National Broadband Network Project due to several constraints. The same Notes likewise contained President Hu Jintao‘s expression of understanding of the Philippine Government decision.

We resolve to grant the motion.

Firstly, the Court notes the triple petitions to be for certiorari, prohibition and mandamus, with application for the issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction. The individual prayers in each of the three (3) consolidated petitions are:

G.R. No. 178830

WHEREFORE, it is respectfully prayed of this Honorable Court:

1. Upon the filing of this Petition, pursuant to the second paragraph of Rule 58, Section 5 of the Rules of Court, issue forthwith an ex parte temporary restraining order enjoining respondents, their subordinates, agents, representatives and any and all persons acting on their behalf from pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal;

2. Compel respondents, upon Writ of Mandamus, to forthwith produce and furnish petitioner or his undersigned counsel a certified true copy of the contract or agreement covering the NBN project as agreed upon with ZTE Corporation;

3. Schedule Oral Arguments in the present case pursuant to Rule 49 in relation to Section 2, Rule 56 of the revised Rules of Court; and,

4. Annul and set aside the award of the ZTE-DOTC Broadband Deal, and compel public respondents to forthwith comply with pertinent provisions of law regarding

procurement of government ICT contracts and public bidding for the NBN contract.11 (Emphasis supplied)

G.R. No. 179317

WHEREFORE, petitioners Amsterdam Holdings, Inc., and Nathaniel Sauz respectfully pray as follows:

A. upon the filing of this Petition for Mandamus and conditioned upon the posting of a bond in such amount as the Honorable Court may fix, a temporary restraining order and/or writ of preliminary injunction be issued directing the Department of Transportation and Communication, the Commission on Information and Communications Technology, all other government agencies and instrumentalities, their officers, employees, and/or other persons acting for and on their behalf to desist during the pendency of the instant Petition for Mandamus from entering into any other agreements and from commencing with any kind, sort, or specie of activity in connection with the National Broadband Network Project;

B. the instant Petition for Mandamus be given due course; and,

C. after due consideration of all relevant issues, judgment be rendered directing respondents to allow herein petitioners access to all agreements entered into with the Government of China, the ZTE Corporation, and/or other entities, government instrumentalities, and/or individuals with regard to the National Broadband Network Project.12 (Emphasis supplied)

G.R. No. 179613

WHEREFORE, it is respectfully prayed of this Honorable Court to:

1. Compel respondents, upon Writ of Mandamus, to forthwith produce and furnish petitioner or his undersigned counsel a certified true copy of the contract or agreement covering the NBN project as agreed upon with ZTE Corporation;

2. Schedule Oral Arguments in the present case pursuant to Rule 49 in relation to Section 2, Rule 56 of the Revised Rules of Court;

3. Annul and set aside the award of the contract for the national broadband network to respondent ZTE Corporation, upon the ground that said contract, as well as the procedures resorted to preparatory to the execution thereof, is contrary to the Constitution, to law and to public policy;

4. Compel public respondent to forthwith comply with pertinent provisions of law regarding procurement of government infrastructure projects, including public

bidding for said contract to undertake the construction of the national broadband network.13 (Emphasis supplied)

On September 11, 2007, the Court issued a TRO14 in G.R. No. 178830, enjoining the parties from "pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project" as prayed for. Pertinent parts of the said Order read:

WHEREAS, the Supreme Court, on 11 September 2007, adopted a resolution in the above-entitled case, to wit:

"G.R. No. 178830 (Rolex Suplico vs. National Economic and Development Authority, represented by NEDA Secretary Romulo L. Neri, and the NEDA Investment Coordination Committee, Department of Transportation and Communications (DOTC), represented by DOTC Secretary Leandro Mendoza, including the Commission on Information and Communications Technology, headed by its Chairman, Ramon P. Sales, The Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), headed by DOTC Assistant Secretary Elmer A. Soneja as Chairman, and The Technical Working Group for ICT, and DOTC Assistant Secretary Lorenzo Formoso, and All Other Operating Units of the DOTC for Information and Communications Technology, and ZTE Corporation, Amsterdam Holdings, Inc., and ARESCOM, Inc.—Acting on the instant petition with prayer for temporary restraining order and/or writ of preliminary injunction, the Court Resolved, without giving due course to the petition, to

x x x x

(d) Issue a TEMPORARY RESTRAINING ORDER, effective immediately and continuing until further orders from this Court, enjoining the (i) National Economic and Development Authority, (ii) NEDA-Investment Coordination Committee, (iii) Department of Transportation and Communications, Commission on Information and Communications Technology, (iv) Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), (v) Technical Working Group for ICT, and all other Operating Units of the DOTC for Information and Communications Technology, (vi) ZTE Corporation; (vii) Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc., and any and all persons acting on their behalf from ‗pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project‘ as prayed for."

NOW THEREFORE, effective immediately and continuing until further orders from this Court, You, Respondents (i) National Economic and Development Authority, (ii) NEDA-Investment Coordination Committee, (iii) Department of Transportation and Communications, Commission on Information and Communications Technology, (iv) Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), (v) Technical Working Group for ICT, and all other Operating Units of the DOTC for Information and Communications Technology, (vi) ZTE

Corporation; (vii) Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc., and any and all persons acting on their behalf are hereby ENJOINED from "pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project" as prayed for.15 (Emphasis supplied.)

Petitioners in G.R. Nos. 178830 and 179613 pray that they be furnished certified true copies of the "contract or agreement covering the NBN project as agreed upon with ZTE Corporation." It appears that during one of the Senate hearings on the NBN project, copies of the supply contract16 were readily made available to petitioners.17Evidently, the said prayer has been complied with and is, thus, mooted.

When President Gloria Macapagal-Arroyo, acting in her official capacity during the meeting held on October 2, 2007 in China, informed China‘s President Hu Jintao that the Philippine Government had decided not to continue with the ZTE-National Broadband Network (ZTE-NBN) Project due to several reasons and constraints, there is no doubt that all the other principal prayers in the three petitions (to annul, set aside, and enjoin the implementation of the ZTE-NBN Project) had also become moot.

Contrary to petitioners‘ contentions that these declarations made by officials belonging to the executive branch on the Philippine Government‘s decision not to continue with the ZTE-NBN Project are self-serving, hence, inadmissible, the Court has no alternative but to take judicial notice of this official act of the President of the Philippines.

Section 1, Rule 129 of the Rules of Court provides:

SECTION 1. Judicial Notice, when mandatory. – A court shall take judicial notice, without introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. (Emphasis supplied)

Under the rules, it is mandatory and the Court has no alternative but to take judicial notice of the official acts of the President of the Philippines, who heads the executive branch of our government. It is further provided in the above-quoted rule that the court shall take judicial notice of the foregoing facts without introduction of evidence. Since we consider the act of cancellation by President Macapagal-Arroyo of the proposed ZTE-NBN Project during the meeting of October 2, 2007 with the Chinese President in China as an official act of the executive department, the Court must take judicial notice of such official act without need of evidence.

In David v. Macapagal-Arroyo,18 We took judicial notice of the announcement by the Office of the President banning all rallies and canceling all permits for public assemblies following the issuance of Presidential Proclamation No. 1017 and General Order No. 5.

In Estrada v. Desierto,19 the Court also resorted to judicial notice in resolving the factual ingredient of the petition.

Moreover, under Section 2, paragraph (m) of Rule 131 of the Rules of Court, the official duty of the executive officials20 of informing this Court of the government‘s decision not to continue with the ZTE-NBN Project is also presumed to have been regularly performed, absent proof to the contrary. Other than petitioner AHI‘s unsavory insinuation in its comment, the Court finds no factual or legal basis to disregard this disputable presumption in the present instance.

Concomitant to its fundamental task as the ultimate citadel of justice and legitimacy is the judiciary‘s role of strengthening political stability indispensable to progress and national development. Pontificating on issues which no longer legitimately constitute an actual case or controversy will do more harm than good to the nation as a whole. Wise exercise of judicial discretion militates against resolving the academic issues, as petitioners want this Court to do. This is especially true where, as will be further discussed, the legal issues raised cannot be resolved without previously establishing the factual basis or antecedents.

Judicial power presupposes actual controversies, the very antithesis of mootness. In the absence of actual justiciable controversies or disputes, the Court generally opts to refrain from deciding moot issues. Where there is no more live subject of controversy, the Court ceases to have a reason to render any ruling or make any pronouncement.

Kapag wala nang buhay na kaso, wala nang dahilan para magdesisyon ang Husgado.

In Republic Telecommunications Holdings, Inc. v. Santiago,21 the lone issue tackled by the Court of Appeals (CA) was whether the Securities Investigation and Clearing Department (SICD) and Securities and Exchange Commission (SEC) en banc committed reversible error in issuing and upholding, respectively, the writ of preliminary injunction. The writ enjoined the execution of the questioned agreements between Qualcomm, Inc. and Republic Telecommunications Holdings, Inc. (RETELCOM). The implementation of the agreements was restrained through the assailed orders of the SICD and the SEC en banc which, however, were nullified by the CA decision. Thus, RETELCOM elevated the matter to this Court praying for the reinstatement of the writ of preliminary injunction of the SICD and the SEC en banc. However, before the matter was finally resolved, Qualcomm, Inc. withdrew from the negotiating table. Its withdrawal had thwarted the execution and enforcement of the contracts. Thus, the resolution of whether the implementation of said agreements should be enjoined became no longer necessary.

Equally applicable to the present case is the Court ruling in the above-cited Republic Telecommunications. There We held, thus:

Indeed, the instant petition, insofar as it assails the Court of Appeals‘ Decision nullifying the orders of the SEC en banc and the SICD, has been rendered moot and academic.

To rule, one way or the other, on the correctness of the questioned orders of the SEC en banc and the SICD will be indulging in a theoretical exercise that has no practical worth in view of the supervening event.

The rule is well-settled that for a court to exercise its power of adjudication, there must be an actual case or controversy – one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. Where the issue has become moot and academic, there is no justiciable controversy, and an adjudication thereon would be of no practical use or value as courts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging.

In the ultimate analysis, petitioners are seeking the reinstatement of the writ of injunction to prevent the concerned parties from pushing through with transactions with Qualcomm, Inc. Given that Qualcomm, Inc. is no longer interested in pursuing the contracts, there is no actual substantial relief to which petitioners would be entitled and which would be negated by the dismissal of the petition.

The Court likewise finds it unnecessary to rule whether the assailed Court of Appeals‘ Decision had the effect of overruling the Court‘s Resolution dated 29 January 1999, which set aside the TRO issued by the appellate court.

A ruling on the matter practically partakes of a mere advisory opinion, which falls beyond the realm of judicial review. The exercise of the power of judicial review is limited to actual cases and controversies. Courts have no authority to pass upon issues through advisory opinions or to resolve hypothetical or feigned problems.

While there were occasions when the Court passed upon issues although supervening events had rendered those petitions moot and academic, the instant case does not fall under the exceptional cases. In those cases, the Court was persuaded to resolve moot and academic issues to formulate guiding and controlling constitutional principles, precepts, doctrines or rules for future guidance of both bench and bar.

In the case at bar, the resolution of whether a writ of preliminary injunction may be issued to prevent the implementation of the assailed contracts calls for an appraisal of factual considerations which are peculiar only to the transactions and parties involved in this controversy. Except for the determination of whether petitioners are entitled to a writ of preliminary injunction which is now moot, the issues raised in this petition do not call for a clarification of any constitutional principle or the interpretation of any statutory provision.22

Secondly, even assuming that the Court will choose to disregard the foregoing considerations and brush aside mootness, the Court cannot completely rule on the merits of the case because the resolution of the three petitions involves settling factual issues which definitely requires reception of evidence. There is not an iota of doubt that

this may not be done by this Court in the first instance because, as has been stated often enough, this Court is not a trier of facts.

Ang pagpapasiya sa tatlong petisyon ay nangangailangan ng paglilitis na hindi gawain ng Hukumang ito.

Respondent ZTE, in its Comment in G.R. No. 178830,23 correctly pointed out that since petitioner Suplico filed his petition directly with this Court, without prior factual findings made by any lower court, a determination of pertinent and relevant facts is needed. ZTE enumerated some of these factual issues, to wit:

(1) Whether an executive agreement has been reached between the Philippine and Chinese governments over the NBN Project;

(2) Whether the ZTE Supply Contract was entered into by the Republic of the Philippines, through the DOTC, and ZTE International pursuant to, and as an integral part of, the executive agreement;

(3) Whether a loan agreement for the NBN Project has actually been executed;

(4) Whether the Philippine government required that the NBN Project be completed under a Build-Operate-and-Transfer Scheme;

(5) Whether the AHI proposal complied with the requirements for an unsolicited proposal under the BOT Law;

(6) Whether the Philippine government has actually earmarked public finds for disbursement under the ZTE Supply Contract; and

(7) Whether the coverage of the NBN Project to be supplied under the ZTE Supply Contract is more extensive than that under the AHI proposal or such other proposal submitted therefor.24

Definitely, some very specific reliefs prayed for in both G.R. Nos. 178830 and 179613 require prior determination of facts before pertinent legal issues could be resolved and specific reliefs granted.

In G.R. No. 178830, petitioner seeks to annul and set aside the award of the ZTE-DOTC Broadband Deal and compel public respondents to forthwith comply with pertinent provisions of law regarding procurement of government ICT contracts and public bidding for the NBN contract.

In G.R. No. 179613, petitioners also pray that the Court annul and set aside the award of the contract for the national broadband network to respondent ZTE Corporation, upon the ground that said contract, as well as the procedures resorted to preparatory to the execution thereof, is contrary to the Constitution, to law and to public policy. They also

ask the Court to compel public respondent to forthwith comply with pertinent provisions of law regarding procurement of government infrastructure projects, including public bidding for said contract to undertake the construction of the national broadband network.

It is simply impossible for this Court "to annul and set aside the award of the ZTE-DOTC Broadband Deal" without any evidence to support a prior factual finding pointing to any violation of law that could lead to such annulment order. For sure, the Supreme Court is not the proper venue for this factual matter to be threshed out.

Thirdly, petitioner Suplico in G.R. No. 178830 prayed that this Court order "public respondents to forthwith comply with pertinent provisions of law regarding procurement of government ICT contracts and public bidding for the NBN contract."25 It would be too presumptuous on the part of the Court to summarily compel public respondents to comply with pertinent provisions of law regarding procurement of government infrastructure projects without any factual basis or prior determination of very particular violations committed by specific government officials of the executive branch. For the Court to do so would amount to a breach of the norms of comity among co-equal branches of government. A perceived error cannot be corrected by committing another error. Without proper evidence, the Court cannot just presume that the executive did not comply with procurement laws. Should the Court allow itself to fall into this trap, it would plainly commit grave error itself.

Magiging kapangahasan sa Hukumang ito na pilitin ang mga pinipetisyon na tumalima sa batas sa pangongontrata ng pamahalaan kung wala pang pagtitiyak o angkop na ebidensiya ng nagawang paglabag dito.

Let it be clarified that the Senate investigation in aid of legislation cannot be the basis of Our decision which requires a judicial finding of facts.

Justice Antonio T. Carpio takes the view that the National Broadband Network Project should be declared null and void. The foregoing threefold reasons would suffice to address the concern of Our esteemed colleague.

The Court is, therefore, constrained to dismiss the petitions and deny them due course because of mootness and because their resolution requires reception of evidence which cannot be done in an original petition brought before the Supreme Court.

WHEREFORE, the petitions are DISMISSED. The Temporary Restraining Order issued on September 11, 2007 is DISSOLVED.

G.R. No. 180643 March 25, 2008 ROMULO L. NERI, petitioner, vs.

SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS, SENATE COMMITTEE ON TRADE AND COMMERCE, AND SENATE COMMITTEE ON NATIONAL DEFENSE AND SECURITY, respondents.

At bar is a petition for certiorari under Rule 65 of the Rules of Court assailing the show cause Letter1 dated November 22, 2007 and contempt Order2 dated January 30, 2008 concurrently issued by respondent

Senate Committees on Accountability of Public Officers and Investigations,3 Trade and Commerce,4 and National Defense and Security5 against petitioner Romulo L. Neri, former Director General of the National Economic and Development Authority (NEDA).

The facts, as culled from the pleadings, are as follows:

On April 21, 2007, the Department of Transportation and Communication (DOTC) entered into a contract with Zhong Xing Telecommunications Equipment (ZTE) for the supply of equipment and services for the National Broadband Network (NBN) Project in the amount of U.S. $ 329,481,290 (approximately P16 Billion Pesos). The Project was to be financed by the People's Republic of China.

In connection with this NBN Project, various Resolutions were introduced in the Senate, as follows:

(1) P.S. Res. No. 127, introduced by Senator Aquilino Q. Pimentel, Jr., entitled RESOLUTION DIRECTING THE BLUE RIBBON COMMITTEE AND THE COMMITTEE ON TRADE AND INDUSTRY TO INVESTIGATE, IN AID OF LEGISLATION, THE CIRCUMSTANCES LEADING TO THE APPROVAL OF THE BROADBAND CONTRACT WITH ZTE AND THE ROLE PLAYED BY THE OFFICIALS CONCERNED IN GETTING IT CONSUMMATED AND TO MAKE RECOMMENDATIONS TO HALE TO THE COURTS OF LAW THE PERSONS RESPONSIBLE FOR ANY ANOMALY IN CONNECTION THEREWITH AND TO PLUG THE LOOPHOLES, IF ANY IN THE BOT LAW AND OTHER PERTINENT LEGISLATIONS.

(2) P.S. Res. No. 144, introduced by Senator Mar Roxas, entitled Á RESOLUTION URGING PRESIDENT GLORIA MACAPAGAL ARROYO TO DIRECT THE CANCELLATION OF THE ZTE CONTRACT

(3) P.S. Res. No. 129, introduced by Senator Panfilo M. Lacson, entitled RESOLUTION DIRECTING THE COMMITTEE ON NATIONAL DEFENSE AND SECURITY TO CONDUCT AN INQUIRY IN AID OF LEGISLATION INTO THE NATIONAL SECURITY IMPLICATIONS OF AWARDING THE NATIONAL BROADBAND NETWORK CONTRACT TO THE CHINESE FIRM ZHONG XING TELECOMMUNICATIONS EQUIPMENT COMPANY LIMITED (ZTE CORPORATION) WITH THE END IN VIEW OF PROVIDING REMEDIAL

LEGISLATION THAT WILL PROTECT OUR NATIONAL SOVEREIGNTY, SECURITY AND TERRITORIAL INTEGRITY.

(4) P.S. Res. No. 136, introduced by Senator Miriam Defensor Santiago, entitled RESOLUTION DIRECTING THE PROPER SENATE COMMITTEE TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, ON THE LEGAL AND ECONOMIC JUSTIFICATION OF THE NATIONAL BROADBAND NETWORK (NBN) PROJECT OF THE NATIONAL GOVERNMENT.

At the same time, the investigation was claimed to be relevant to the consideration of three (3) pending bills in the Senate, to wit:

1. Senate Bill No. 1793, introduced by Senator Mar Roxas, entitled AN ACT SUBJECTING TREATIES, INTERNATIONAL OR EXECUTIVE AGREEMENTS INVOLVING FUNDING IN THE PROCUREMENT OF INFRASTRUCTURE PROJECTS, GOODS, AND CONSULTING SERVICES TO BE INCLUDED IN THE SCOPE AND APPLICATION OF PHILIPPINE PROCUREMENT LAWS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 9184, OTHERWISE KNOWN AS THE GOVERNMENT PROCUREMENT REFORM ACT, AND FOR OTHER PURPOSES;

2. Senate Bill No. 1794, introduced by Senator Mar Roxas, entitled AN ACT IMPOSING SAFEGUARDS IN CONTRACTING LOANS CLASSIFIED AS OFFICIAL DEVELOPMENT ASSISTANCE, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8182, AS AMENDED BY REPUBLIC ACT NO. 8555, OTHERWISE KNOWN AS THE OFFICIAL DEVELOPMENT ASSISTANCE ACT OF 1996, AND FOR OTHER PURPOSES; and

3. Senate Bill No. 1317, introduced by Senator Miriam Defensor Santiago, entitled AN ACT MANDATING CONCURRENCE TO INTERNATIONAL AGREEMENTS AND EXECUTIVE AGREEMENTS.

Respondent Committees initiated the investigation by sending invitations to certain personalities and cabinet officials involved in the NBN Project. Petitioner was among those invited. He was summoned to appear and testify on September 18, 20, and 26 and October 25, 2007. However, he attended only the September 26 hearing, claiming he was "out of town" during the other dates.

In the September 18, 2007 hearing, businessman Jose de Venecia III testified that several high executive officials and power brokers were using their influence to push the approval of the NBN Project by the NEDA. It appeared that the Project was initially approved as a Build-Operate-Transfer (BOT) project but, on March 29, 2007, the NEDA acquiesced to convert it into a government-to-government project, to be financed through a loan from the Chinese Government.

On September 26, 2007, petitioner testified before respondent Committees for eleven (11) hours. He disclosed that then Commission on Elections (COMELEC) Chairman Benjamin Abalos offered him P200 Million in exchange for his approval of the NBN Project. He further narrated that he informed President Arroyo about the bribery attempt and that she instructed him not to accept the bribe. However, when probed further on what they discussed about the NBN Project, petitioner refused to answer, invoking "executive privilege". In particular, he refused to answer the questions on (a) whether or not President Arroyo followed up the NBN Project,6 (b) whether or not she directed him to prioritize it,7 and (c) whether or not she directed him to approve.8

Unrelenting, respondent Committees issued a Subpoena Ad Testificandum to petitioner, requiring him to appear and testify on November 20, 2007.

However, in the Letter dated November 15, 2007, Executive Secretary Eduardo R. Ermita requested respondent Committees to dispense with petitioner's testimony on the ground of executive privilege. The pertinent portion of the letter reads:

With reference to the subpoena ad testificandum issued to Secretary Romulo Neri to appear and testify again on 20 November 2007 before the Joint Committees you chair, it will be recalled that Sec. Neri had already testified and exhaustively discussed the ZTE / NBN project, including his conversation with the President thereon last 26 September 2007.

Asked to elaborate further on his conversation with the President, Sec. Neri asked for time to consult with his superiors in line with the ruling of the Supreme Court in Senate v. Ermita, 488 SCRA 1 (2006).

Specifically, Sec. Neri sought guidance on the possible invocation of executive privilege on the following questions, to wit:

a) Whether the President followed up the (NBN) project?

b) Were you dictated to prioritize the ZTE?

c) Whether the President said to go ahead and approve the project after being told about the alleged bribe?

Following the ruling in Senate v. Ermita, the foregoing questions fall under conversations and correspondence between the President and public officials which are considered executive privilege (Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez v. PEA, G.R. 133250, July 9, 2002). Maintaining the confidentiality of conversations of the President is necessary in the exercise of her executive and policy decision making process. The expectation of a President to the confidentiality of her conversations and correspondences, like the value which we accord deference for the privacy of all citizens, is the necessity for protection of the public interest in candid, objective, and even blunt

or harsh opinions in Presidential decision-making. Disclosure of conversations of the President will have a chilling effect on the President, and will hamper her in the effective discharge of her duties and responsibilities, if she is not protected by the confidentiality of her conversations.

The context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China. Given the confidential nature in which these information were conveyed to the President, he cannot provide the Committee any further details of these conversations, without disclosing the very thing the privilege is designed to protect.

In light of the above considerations, this Office is constrained to invoke the settled doctrine of executive privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly.

Considering that Sec. Neri has been lengthily interrogated on the subject in an unprecedented 11-hour hearing, wherein he has answered all questions propounded to him except the foregoing questions involving executive privilege, we therefore request that his testimony on 20 November 2007 on the ZTE / NBN project be dispensed with.

On November 20, 2007, petitioner did not appear before respondent Committees. Thus, on November 22, 2007, the latter issued the show cause Letter requiring him to explain why he should not be cited in contempt. The Letter reads:

Since you have failed to appear in the said hearing, the Committees on Accountability of Public Officers and Investigations (Blue Ribbon), Trade and Commerce and National Defense and Security require you to show cause why you should not be cited in contempt under Section 6, Article 6 of the Rules of the Committee on Accountability of Public Officers and Investigations (Blue Ribbon).

The Senate expects your explanation on or before 2 December 2007.

On November 29, 2007, petitioner replied to respondent Committees, manifesting that it was not his intention to ignore the Senate hearing and that he thought the only remaining questions were those he claimed to be covered by executive privilege, thus:

It was not my intention to snub the last Senate hearing. In fact, I have cooperated with the task of the Senate in its inquiry in aid of legislation as shown by my almost 11 hours stay during the hearing on 26 September 2007. During said hearing, I answered all the questions that were asked of me, save for those which I thought was covered by executive privilege, and which was confirmed by the Executive Secretary in his Letter 15 November 2007. In good faith, after that exhaustive testimony, I thought that what remained were only the three

questions, where the Executive Secretary claimed executive privilege. Hence, his request that my presence be dispensed with.

Be that as it may, should there be new matters that were not yet taken up during the 26 September 2007 hearing, may I be furnished in advance as to what else I need to clarify, so that as a resource person, I may adequately prepare myself.

In addition, petitioner submitted a letter prepared by his counsel, Atty. Antonio R. Bautista, stating, among others that: (1) his (petitioner) non-appearance was upon the order of the President; and (2) his conversation with President Arroyo dealt with delicate and sensitive national security and diplomatic matters relating to the impact of the bribery scandal involving high government officials and the possible loss of confidence of foreign investors and lenders in the Philippines. The letter ended with a reiteration of petitioner's request that he "be furnished in advance" as to what else he needs to clarify so that he may adequately prepare for the hearing.

In the interim, on December 7, 2007, petitioner filed with this Court the present petition for certiorari assailing the show cause Letter dated November 22, 2007.

Respondent Committees found petitioner's explanations unsatisfactory. Without responding to his request for advance notice of the matters that he should still clarify, they issued the Order dated January 30, 2008, citing him in contempt of respondent Committees and ordering his arrest and detention at the Office of the Senate Sergeant-At-Arms until such time that he would appear and give his testimony. The said Order states:

ORDER

For failure to appear and testify in the Committee's hearing on Tuesday, September 18, 2007; Thursday, September 20, 2007; Thursday, October 25, 2007; and Tuesday, November 20, 2007, despite personal notice and Subpoenas Ad Testificandum sent to and received by him, which thereby delays, impedes and obstructs, as it has in fact delayed, impeded and obstructed the inquiry into the subject reported irregularities, AND for failure to explain satisfactorily why he should not be cited for contempt (Neri letter of 29 November 2007), herein attached) ROMULO L. NERI is hereby cited in contempt of this (sic) Committees and ordered arrested and detained in the Office of the Senate Sergeant-At-Arms until such time that he will appear and give his testimony.

The Sergeant-At-Arms is hereby directed to carry out and implement this Order and make a return hereof within twenty four (24) hours from its enforcement.

SO ORDERED.

On the same date, petitioner moved for the reconsideration of the above Order.9 He insisted that he has not shown "any contemptible conduct worthy of contempt and arrest." He emphasized his willingness to testify on new matters, however, respondent Committees did not respond to his request for advance notice of questions. He also mentioned the petition for certiorari he filed on December 7, 2007. According to him, this should restrain respondent Committees from enforcing the show cause Letter "through the issuance of declaration of contempt" and arrest.

In view of respondent Committees' issuance of the contempt Order, petitioner filed on February 1, 2008 aSupplemental Petition for Certiorari (With Urgent Application for TRO/Preliminary Injunction), seeking to restrain the implementation of the said contempt Order.

On February 5, 2008, the Court issued a Status Quo Ante Order (a) enjoining respondent Committees from implementing their contempt Order, (b) requiring the parties to observe the status quo prevailing prior to the issuance of the assailed order, and (c) requiring respondent Committees to file their comment.

Petitioner contends that respondent Committees' show cause Letter and contempt Order were issued with grave abuse of discretion amounting to lack or excess of jurisdiction. He stresses that his conversations with President Arroyo are "candid discussions meant to explore options in making policy decisions." According to him, these discussions "dwelt on the impact of the bribery scandal involving high government officials on the country's diplomatic relations and economic and military affairs and the possible loss of confidence of foreign investors and lenders in the Philippines." He also emphasizes that his claim of executive privilege is upon the order of the President and within the parameters laid down in Senate v. Ermita10 and United States v. Reynolds.11 Lastly, he argues that he is precluded from disclosing communications made

to him in official confidence under Section 712 of Republic Act No. 6713, otherwise known as Code of Conduct and Ethical Standards for Public Officials and Employees, and Section 2413 (e) of Rule 130 of the Rules of Court.

Respondent Committees assert the contrary. They argue that (1) petitioner's testimony is material and pertinent in the investigation conducted in aid of legislation; (2) there is no valid justification for petitioner to claim executive privilege; (3) there is no abuse of their authority to order petitioner's arrest; and (4) petitioner has not come to court with clean hands.

In the oral argument held last March 4, 2008, the following issues were ventilated:

1. What communications between the President and petitioner Neri are covered by the principle of 'executive privilege'?

1.a Did Executive Secretary Ermita correctly invoke the principle of executive privilege, by order of the President, to cover (i) conversations of the President in the exercise of her executive and policy decision-making and (ii) information, which might impair our diplomatic as well as economic relations with the People's Republic of China?

1.b. Did petitioner Neri correctly invoke executive privilege to avoid testifying on his conversations with the President on the NBN contract on his assertions that the said conversations "dealt with delicate and sensitive national security and diplomatic matters relating to the impact of bribery scandal involving high government officials and the possible loss of confidence of foreign investors and lenders in the Philippines" x x x within the principles laid down in Senate v. Ermita (488 SCRA 1 [2006])?

1.c Will the claim of executive privilege in this case violate the following provisions of the Constitution:

Sec. 28, Art. II (Full public disclosure of all transactions involving public interest)

Sec. 7, Art. III (The right of the people to information on matters of public concern)

Sec. 1, Art. XI (Public office is a public trust)

Sec. 17, Art. VII (The President shall ensure that the laws be faithfully executed)

and the due process clause and the principle of separation of powers?

2. What is the proper procedure to be followed in invoking executive privilege?

3. Did the Senate Committees gravely abuse their discretion in ordering the arrest of petitioner for non-compliance with the subpoena?

After the oral argument, the parties were directed to manifest to the Court within twenty-four (24) hours if they are amenable to the Court's proposal of allowing petitioner to immediately resume his testimony before the Senate Committees to answer the other questions of the Senators without prejudice to the decision on the merits of this pending petition. It was understood that petitioner may invoke executive privilege in the course of the Senate Committees proceedings, and if the respondent Committees disagree thereto, the unanswered questions will be the subject of a supplemental pleading to be resolved along with the three (3) questions subject of the present petition.14 At the same time, respondent Committees were directed to submit several pertinent documents.15

The Senate did not agree with the proposal for the reasons stated in the Manifestation dated March 5, 2008. As to the required documents, the Senate and respondent Committees manifested that they would not be able to submit the latter's "Minutes of all meetings" and the "Minute Book" because it has never been the "historical and traditional legislative practice to keep them."16 They instead submitted the Transcript of Stenographic Notes of respondent Committees' joint public hearings.

On March 17, 2008, the Office of the Solicitor General (OSG) filed a Motion for Leave to Intervene and to Admit Attached Memorandum, founded on the following arguments:

(1) The communications between petitioner and the President are covered by the principle of "executive privilege."

(2) Petitioner was not summoned by respondent Senate Committees in accordance with the law-making body's power to conduct inquiries in aid of legislation as laid down in Section 21, Article VI of the Constitution and Senate v. Ermita.

(3) Respondent Senate Committees gravely abused its discretion for alleged non-compliance with theSubpoena dated November 13, 2007.

The Court granted the OSG's motion the next day, March 18, 2008.

As the foregoing facts unfold, related events transpired.

On March 6, 2008, President Arroyo issued Memorandum Circular No. 151, revoking Executive Order No. 464 and Memorandum Circular No. 108. She advised executive officials and employees to follow and abide by the Constitution, existing laws and jurisprudence, including, among others, the case of Senate v. Ermita17 when they are invited to legislative inquiries in aid of legislation.

At the core of this controversy are the two (2) crucial queries, to wit:

First, are the communications elicited by the subject three (3) questions covered by executive privilege?

And second, did respondent Committees commit grave abuse of discretion in issuing the contempt Order?

We grant the petition.

At the outset, a glimpse at the landmark case of Senate v. Ermita18 becomes imperative. Senate draws in bold strokes the distinction between the legislative and oversight powers of the Congress, as embodied under Sections 21 and 22, respectively, of Article VI of the Constitution, to wit:

SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected.

SECTION 22. The heads of department may upon their own initiative, with the consent of the President, or upon the request of either House, or as the rules of each House shall provide, appear before and be heard by such House on any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the state or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session.

Senate cautions that while the above provisions are closely related and complementary to each other, they should not be considered as pertaining to the same power of Congress. Section 21 relates to the power to conduct inquiries in aid of legislation. Its aim is to elicit information that may be used for legislation. On the other hand, Section 22 pertains to the power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress' oversight function.19 Simply stated, while both powers allow Congress or any of its committees to conduct inquiry, their objectives are different.

This distinction gives birth to another distinction with regard to the use of compulsory process. Unlike in Section 21, Congress cannot compel the appearance of executive officials under Section 22. The Court's pronouncement in Senate v. Ermita20 is clear:

When Congress merely seeks to be informed on how department heads are implementing the statutes which it has issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in keeping with the separation of powers, states that Congress may only request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is 'in aid of legislation' under Section 21, the appearance is mandatory for the same reasons stated in Arnault.

In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the Constitutional Commission

Ultimately, the power of Congress to compel the appearance of executive officials under section 21 and the lack of it under Section 22 find their basis in the principle of separation of powers. While the executive branch is a co-equal

branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to comply with its demands for information. (Emphasis supplied.)

The availability of the power of judicial review to resolve the issues raised in this case has also been settled inSenate v. Ermita, when it held:

As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial power. It may thus be subjected to judicial review pursuant to the Court's certiorari powers under Section 1, Article VIII of the Constitution.

Hence, this decision.

I

The Communications Elicited by the Three (3) Questions are Covered by Executive Privilege

We start with the basic premises where the parties have conceded.

The power of Congress to conduct inquiries in aid of legislation is broad. This is based on the proposition that a legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change.21 Inevitably, adjunct thereto is the compulsory process to enforce it. But, the power, broad as it is, has limitations. To be valid, it is imperative that it is done in accordance with the Senate or House duly published rules of procedure and that the rights of the persons appearing in or affected by such inquiries be respected.

The power extends even to executive officials and the only way for them to be exempted is through a valid claim of executive privilege.22 This directs us to the consideration of the question -- is there a recognized claim of executive privilege despite the revocation of E.O. 464?

A- There is a Recognized Claim of Executive Privilege Despite the Revocation of E.O. 464

At this juncture, it must be stressed that the revocation of E.O. 464 does not in any way diminish our concept of executive privilege. This is because this concept has Constitutional underpinnings. Unlike the United States which has further accorded the concept with statutory status by enacting the Freedom of Information Act23 and theFederal Advisory Committee Act,24 the Philippines has retained its constitutional origination, occasionally interpreted only by this Court in various cases. The most recent of these is the case of Senate v. Ermita where this Court declared unconstitutional substantial portions of E.O. 464. In this regard, it is worthy to note that Executive

Ermita's Letter dated November 15, 2007 limits its bases for the claim of executive privilege to Senate v. Ermita,Almonte v. Vasquez,25 and Chavez v. PEA.26 There was never a mention of E.O. 464.

While these cases, especially Senate v. Ermita,27 have comprehensively discussed the concept of executive privilege, we deem it imperative to explore it once more in view of the clamor for this Court to clearly define the communications covered by executive privilege.

The Nixon and post-Watergate cases established the broad contours of the presidential communications privilege.28 In United States v. Nixon,29 the U.S. Court recognized a great public interest in preserving "the confidentiality of conversations that take place in the President's performance of his official duties." It thus considered presidential communications as "presumptively privileged." Apparently, the presumption is founded on the "President's generalized interest in confidentiality." The privilege is said to be necessary to guarantee the candor of presidential advisors and to provide "the President and those who assist him… with freedom to explore alternatives in the process of shaping policies and making decisions and to do so in a way many would be unwilling to express except privately."

In In Re: Sealed Case,30 the U.S. Court of Appeals delved deeper. It ruled that there are two (2) kinds of executive privilege; one is the presidential communications privilege and, the other is the deliberative process privilege. The former pertains to "communications, documents or other materials that reflect presidential decision-making and deliberations and that the President believes should remain confidential." The latter includes 'advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated."

Accordingly, they are characterized by marked distinctions. Presidential communications privilege applies todecision-making of the President while, the deliberative process privilege, to decision-making of executive officials. The first is rooted in the constitutional principle of separation of power and the President's unique constitutional role; the second on common law privilege. Unlike the deliberative process privilege, thepresidential communications privilege applies to documents in their entirety, and covers final and post-decisional materials as well as pre-deliberative ones31 As a consequence, congressional or judicial negation of the presidential communications privilege is always subject to greater scrutiny than denial of thedeliberative process privilege.

Turning on who are the officials covered by the presidential communications privilege, In Re: Sealed Caseconfines the privilege only to White House Staff that has "operational proximity" to direct presidential decision-making. Thus, the privilege is meant to encompass only those functions that form the core of presidential authority, involving what the court characterized as "quintessential and non-delegable Presidential

power," such as commander-in-chief power, appointment and removal power, the power to grant pardons and reprieves, the sole-authority to receive ambassadors and other public officers, the power to negotiate treaties, etc.32

The situation in Judicial Watch, Inc. v. Department of Justice33 tested the In Re: Sealed Case principles. There, while the presidential decision involved is the exercise of the President's pardon power, a non-delegable, core-presidential function, the Deputy Attorney General and the Pardon Attorney were deemed to be too remote from the President and his senior White House advisors to be protected. The Court conceded that

functionally those officials were performing a task directly related to the President's pardon power, but concluded that an organizational test was more appropriate for confining the potentially broad sweep that would result from the In Re: Sealed Case's functional test. The majority concluded that, the lesser protections of the deliberative process privilege would suffice. That privilege was, however, found insufficient to justify the confidentiality of the 4,341 withheld documents.

But more specific classifications of communications covered by executive privilege are made in older cases. Courts ruled early that the Executive has a right to withhold documents that might reveal military or state secrets,34identity of government informers in some circumstances,,35 and information related to pending investigations.36 An area where the privilege is highly revered is in foreign relations. In United States v. Curtiss-Wright Export Corp.37 the U.S. Court, citing President George Washington, pronounced:

The nature of foreign negotiations requires caution, and their success must often depend on secrecy, and even when brought to a conclusion, a full disclosure of all the measures, demands, or eventual concessions which may have been proposed or contemplated would be extremely impolitic, for this might have a pernicious influence on future negotiations or produce immediate inconveniences, perhaps danger and mischief, in relation to other powers. The necessity of such caution and secrecy was one cogent reason for vesting the power of making treaties in the President, with the advice and consent of the Senate, the principle on which the body was formed confining it to a small number of members. To admit, then, a right in the House of Representatives to demand and to have as a matter of course all the papers respecting a negotiation with a foreign power would be to establish a dangerous precedent.

Majority of the above jurisprudence have found their way in our jurisdiction. In Chavez v. PCGG38, this Court held that there is a "governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic and other security matters." In Chavez v. PEA,39 there is also a recognition of the confidentiality of Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. In Senate v. Ermita, the concept of presidential communications privilege is fully discussed.

As may be gleaned from the above discussion, the claim of executive privilege is highly recognized in cases where the subject of inquiry relates to a power textually committed by the Constitution to the President, such as the area of military and foreign relations. Under our Constitution, the President is the repository of the commander-in-chief,40 appointing,41 pardoning,42 and diplomatic43 powers. Consistent with the doctrine of separation of powers, the information relating to these powers may enjoy greater confidentiality than others.

The above cases, especially, Nixon, In Re Sealed Case and Judicial Watch, somehow provide the elements ofpresidential communications privilege, to wit:

1) The protected communication must relate to a "quintessential and non-delegable presidential power."

2) The communication must be authored or "solicited and received" by a close advisor of the President or the President himself. The judicial test is that an advisor must be in "operational proximity" with the President.

3) The presidential communications privilege remains a qualified privilege that may be overcome by a showing of adequate need, such that the information sought "likely contains important evidence" and by the unavailability of the information elsewhere by an appropriate investigating authority.44

In the case at bar, Executive Secretary Ermita premised his claim of executive privilege on the ground that the communications elicited by the three (3) questions "fall under conversation and correspondence between the President and public officials" necessary in "her executive and policy decision-making process" and, that "the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China." Simply put, the bases are presidential communications privilege and executive privilege on matters relating to diplomacy or foreign relations.

Using the above elements, we are convinced that, indeed, the communications elicited by the three (3) questions are covered by the presidential communications privilege. First, the communications relate to a "quintessential and non-delegable power" of the President, i.e. the power to enter into an executive agreement with other countries. This authority of the President to enter into executive agreements without the concurrence of the Legislature has traditionally been recognized in Philippine jurisprudence.45 Second, the communications are "received" by a close advisor of the President. Under the "operational proximity" test, petitioner can be considered a close advisor, being a member of President Arroyo's cabinet. And third, there is no adequate showing of a compelling need that would justify the limitation of the privilege and of the unavailability of the information elsewhere by an appropriate investigating authority.

The third element deserves a lengthy discussion.

United States v. Nixon held that a claim of executive privilege is subject to balancing against other interest. In other words, confidentiality in executive privilege is not absolutely protected by the Constitution. The U.S. Court held:

[N]either the doctrine of separation of powers, nor the need for confidentiality of high-level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances.

The foregoing is consistent with the earlier case of Nixon v. Sirica,46 where it was held that presidential communications are presumptively privileged and that the presumption can be overcome only by mere showing of public need by the branch seeking access to conversations. The courts are enjoined to resolve the competing interests of the political branches of the government "in the manner that preserves the essential functions of each Branch."47 Here, the record is bereft of any categorical explanation from respondent Committees to show a compelling or citical need for the answers to the three (3) questions in the enactment of a law. Instead, the questions veer more towards the exercise of the legislative oversight function under Section 22 of Article VI rather than Section 21 of the same Article. Senate v. Ermita ruled that the "the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation." It is conceded that it is difficult to draw the line between an inquiry in aid of legislation and an inquiry in the exercise of oversight function of Congress. In this regard, much will depend on the content of the questions and the manner the inquiry is conducted.

Respondent Committees argue that a claim of executive privilege does not guard against a possible disclosure of a crime or wrongdoing. We see no dispute on this. It is settled in United States v. Nixon48 that "demonstrated, specific need for evidence in pending criminal trial" outweighs the President's "generalized interest in confidentiality." However, the present case's distinction with the Nixon case is very evident. In Nixon, there is a pending criminal proceeding where the information is requested and it is the demands of due process of law and the fair administration of criminal justice that the information be disclosed. This is the reason why the U.S. Court was quick to "limit the scope of its decision." It stressed that it is "not concerned here with the balance between the President's generalized interest in confidentiality x x x and congressional demands for information." Unlike in Nixon, the information here is elicited, not in a criminal proceeding, but in a legislative inquiry. In this regard, Senate v. Ermita stressed that the validity of the claim of executive privilege depends not only on the ground invoked but, also, on the procedural setting or the context in which the claim is made. Furthermore, in Nixon, the President did not interpose any claim of need to protect military, diplomatic or sensitive national security secrets. In the present case, Executive Secretary Ermita categorically claims executive privilege on the grounds of presidential communications privilege in relation to her executive and policy decision-making process and diplomatic secrets.

The respondent Committees should cautiously tread into the investigation of matters which may present a conflict of interest that may provide a ground to inhibit the

Senators participating in the inquiry if later on an impeachment proceeding is initiated on the same subject matter of the present Senate inquiry. Pertinently, in Senate Select Committee on Presidential Campaign Activities v. Nixon,49 it was held that since an impeachment proceeding had been initiated by a House Committee, the Senate Select Committee's immediate oversight need for five presidential tapes should give way to the House Judiciary Committee which has the constitutional authority to inquire into presidential impeachment. The Court expounded on this issue in this wise:

It is true, of course, that the Executive cannot, any more than the other branches of government, invoke a general confidentiality privilege to shield its officials and employees from investigations by the proper governmental institutions into possible criminal wrongdoing. The Congress learned this as to its own privileges in Gravel v. United States, as did the judicial branch, in a sense, in Clark v. United States, and the executive branch itself in Nixon v. Sirica. But under Nixon v. Sirica, the showing required to overcome the presumption favoring confidentiality turned, not on the nature of the presidential conduct that the subpoenaed material might reveal, but, instead, on the nature and appropriateness of the function in the performance of which the material was sought, and the degree to which the material was necessary to its fulfillment. Here also our task requires and our decision implies no judgment whatever concerning possible presidential involvement in culpable activity. On the contrary, we think the sufficiency of the Committee's showing must depend solely on whether the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's functions.

In its initial briefs here, the Committee argued that it has shown exactly this. It contended that resolution, on the basis of the subpoenaed tapes, of the conflicts in the testimony before it 'would aid in a determination whether legislative involvement in political campaigns is necessary' and 'could help engender the public support needed for basic reforms in our electoral system.' Moreover, Congress has, according to the Committee, power to oversee the operations of the executive branch, to investigate instances of possible corruption and malfeasance in office, and to expose the results of its investigations to public view. The Committee says that with respect to Watergate-related matters, this power has been delegated to it by the Senate, and that to exercise its power responsibly, it must have access to the subpoenaed tapes.

We turn first to the latter contention. In the circumstances of this case, we need neither deny that the Congress may have, quite apart from its legislative responsibilities, a general oversight power, nor explore what the lawful reach of that power might be under the Committee's constituent resolution. Since passage of that resolution, the House Committee on the Judiciary has begun an inquiry into presidential impeachment. The investigative authority of the Judiciary Committee with respect to presidential conduct has an express constitutional source. x x x We have been shown no evidence indicating that Congress

itself attaches any particular value to this interest. In these circumstances, we think the need for the tapes premised solely on an asserted power to investigate and inform cannot justify enforcement of the Committee's subpoena.

The sufficiency of the Committee's showing of need has come to depend, therefore, entirely on whether the subpoenaed materials are critical to the performance of its legislative functions. There is a clear difference between Congress' legislative tasks and the responsibility of a grand jury, or any institution engaged in like functions. While fact-finding by a legislative committee is undeniably a part of its task, legislative judgments normally depend more on the predicted consequences of proposed legislative actions and their political acceptability, than on precise reconstruction of past events; Congress frequently legislates on the basis of conflicting information provided in its hearings. In contrast, the responsibility of the grand jury turns entirely on its ability to determine whether there is probable cause to believe that certain named individuals did or did not commit specific crimes. If, for example, as in Nixon v. Sirica, one of those crimes is perjury concerning the content of certain conversations, the grand jury's need for the most precise evidence, the exact text of oral statements recorded in their original form, is undeniable.We see no comparable need in the legislative process, at least not in the circumstances of this case. Indeed, whatever force there might once have been in the Committee's argument that the subpoenaed materials are necessary to its legislative judgments has been substantially undermined by subsequent events. (Emphasis supplied)

Respondent Committees further contend that the grant of petitioner's claim of executive privilege violates the constitutional provisions on the right of the people to information on matters of public concern.50 We might have agreed with such contention if petitioner did not appear before them at all. But petitioner made himself available to them during the September 26 hearing, where he was questioned for eleven (11) hours. Not only that, he expressly manifested his willingness to answer more questions from the Senators, with the exception only of those covered by his claim of executive privilege.

The right to public information, like any other right, is subject to limitation. Section 7 of Article III provides:

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

The provision itself expressly provides the limitation, i.e. as may be provided by law. Some of these laws are Section 7 of Republic Act (R.A.) No. 6713,51 Article 22952 of the Revised Penal Code, Section 3 (k)53 of R.A. No. 3019, and Section 24(e)54 of Rule 130

of the Rules of Court. These are in addition to what our body of jurisprudence classifies as confidential55 and what our Constitution considers as belonging to the larger concept of executive privilege. Clearly, there is a recognized public interest in the confidentiality of certain information. We find the information subject of this case belonging to such kind.

More than anything else, though, the right of Congress or any of its Committees to obtain information in aid of legislation cannot be equated with the people's right to public information. The former cannot claim that every legislative inquiry is an exercise of the people's right to information. The distinction between such rights is laid down in Senate v. Ermita:

There are, it bears noting, clear distinctions between the right of Congress to information which underlies the power of inquiry and the right of people to information on matters of public concern. For one, the demand of a citizen for the production of documents pursuant to his right to information does not have the same obligatory force as a subpoena duces tecum issued by Congress. Neither does the right to information grant a citizen the power to exact testimony from government officials. These powers belong only to Congress, not to an individual citizen.

Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to information.

The members of respondent Committees should not invoke as justification in their exercise of power a right properly belonging to the people in general. This is because when they discharge their power, they do so as public officials and members of Congress. Be that as it may, the right to information must be balanced with and should give way, in appropriate cases, to constitutional precepts particularly those pertaining to delicate interplay of executive-legislative powers and privileges which is the subject of careful review by numerous decided cases.

B- The Claim of Executive Privilege is Properly Invoked

We now proceed to the issue -- whether the claim is properly invoked by the President. Jurisprudence teaches that for the claim to be properly invoked, there must be a formal claim of privilege, lodged by the head of the department which has control over the matter."56 A formal and proper claim of executive privilege requires a "precise and certain reason" for preserving their confidentiality.57

The Letter dated November 17, 2007 of Executive Secretary Ermita satisfies the requirement. It serves as the formal claim of privilege. There, he expressly states that "this Office is constrained to invoke the settled doctrine of executive privilege as

refined in Senate v. Ermita, and has advised Secretary Neri accordingly." Obviously, he is referring to the Office of the President. That is more than enough compliance. InSenate v. Ermita, a less categorical letter was even adjudged to be sufficient.

With regard to the existence of "precise and certain reason," we find the grounds relied upon by Executive Secretary Ermita specific enough so as not "to leave respondent Committees in the dark on how the requested information could be classified as privileged." The case of Senate v. Ermita only requires that an allegation be made "whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc." The particular ground must only be specified. The enumeration is not even intended to be comprehensive."58The following statement of grounds satisfies the requirement:

The context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China. Given the confidential nature in which these information were conveyed to the President, he cannot provide the Committee any further details of these conversations, without disclosing the very thing the privilege is designed to protect.

At any rate, as held further in Senate v. Ermita, 59 the Congress must not require the executive to state the reasons for the claim with such particularity as to compel disclosure of the information which the privilege is meant to protect. This is a matter of respect to a coordinate and co-equal department.

II

Respondent Committees Committed Grave Abuse of Discretion in Issuing the Contempt Order

Grave abuse of discretion means "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."60

It must be reiterated that when respondent Committees issued the show cause Letter dated November 22, 2007, petitioner replied immediately, manifesting that it was not his intention to ignore the Senate hearing and that he thought the only remaining questions were the three (3) questions he claimed to be covered by executive privilege. In addition thereto, he submitted Atty. Bautista's letter, stating that his non-appearance was upon the order of the President and specifying the reasons why his conversations with President Arroyo are covered by executive privilege. Both correspondences include an expression of his willingness to testify again, provided he "be furnished in advance" copies of the questions. Without responding to his request for advance list

of questions, respondent Committees issued the Order dated January 30, 2008, citing him in contempt of respondent Committees and ordering his arrest and detention at the Office of the Senate Sergeant-At-Arms until such time that he would appear and give his testimony. Thereupon, petitioner filed a motion for reconsideration, informing respondent Committees that he had filed the present petition for certiorari.

Respondent Committees committed grave abuse of discretion in issuing the contempt Order in view of five (5) reasons.

First, there being a legitimate claim of executive privilege, the issuance of the contempt Order suffers from constitutional infirmity.

Second, respondent Committees did not comply with the requirement laid down in Senate v. Ermita that the invitations should contain the "possible needed statute which prompted the need for the inquiry," along with "the usual indication of the subject of inquiry and the questions relative to and in furtherance thereof." Compliance with this requirement is imperative, both under Sections 21 and 22 of Article VI of the Constitution. This must be so to ensure that the rights of both persons appearing in or affected by such inquiry are respected as mandated by said Section 21 and by virtue of the express language of Section 22. Unfortunately, despite petitioner's repeated demands, respondent Committees did not send him an advance list of questions.

Third, a reading of the transcript of respondent Committees' January 30, 2008 proceeding reveals that only a minority of the members of the Senate Blue Ribbon Committee was present during the deliberation. 61 Section 18 of the Rules of Procedure Governing Inquiries in Aid of Legislation provides that:

"The Committee, by a vote of majority of all its members, may punish for contempt any witness before it who disobeys any order of the Committee or refuses to be sworn or to testify or to answer proper questions by the Committee or any of its members."

Clearly, the needed vote is a majority of all the members of the Committee. Apparently, members who did not actually participate in the deliberation were made to sign the contempt Order. Thus, there is a cloud of doubt as to the validity of the contempt Order dated January 30, 2008. We quote the pertinent portion of the transcript, thus:

THE CHAIRMAN (SEN. CAYETANO, A). For clarification. x x x The Chair will call either a caucus or will ask the Committee on Rules if there is a problem. Meaning, if we do not have the sufficient numbers. But if we have a sufficient number, we will just hold a caucus to be able to implement that right away because…Again, our Rules provide that any one held in contempt and ordered arrested, need the concurrence of a majority of all members of the said committee and we have three committees conducting this.

So thank you very much to the members…

SEN. PIMENTEL. Mr. Chairman.

THE CHAIRMAN (SEN. CAYETANO,A). May I recognize the Minority Leader and give him the floor, Senator Pimentel.

SEN. PIMENTEL. Mr. Chairman, there is no problem, I think, with consulting the other committees. But I am of the opinion that the Blue Ribbon Committee is the lead committee, and therefore, it should have preference in enforcing its own decisions. Meaning to say, it is not something that is subject to consultation with other committees. I am not sure that is the right interpretation. I think that once we decide here, we enforce what we decide, because otherwise, before we know it, our determination is watered down by delay and, you know, the so-called "consultation" that inevitably will have to take place if we follow the premise that has been explained.

So my suggestion, Mr. Chairman, is the Blue Ribbon Committee should not forget it's the lead committee here, and therefore, the will of the lead committee prevails over all the other, you, know reservations that other committees might have who are only secondary or even tertiary committees, Mr. Chairman.

THE CHAIRMAN (SEN. CAYETANO, A.) Thank you very much to the Minority Leader. And I agree with the wisdom of his statements. I was merely mentioning that under Section 6 of the Rules of the Committee and under Section 6, "The Committee by a vote of a majority of all its members may punish for contempt any witness before it who disobeys any order of the Committee."

So the Blue Ribbon Committee is more than willing to take that responsibility. But we only have six members here today, I am the seventh as chair and so we have not met that number. So I am merely stating that, sir, that when we will prepare the documentation, if a majority of all members sign and I am following the Sabio v. Gordon rule wherein I do believe, if I am not mistaken, Chairman Gordon prepared the documentation and then either in caucus or in session asked the other members to sign. And once the signatures are obtained, solely for the purpose that Secretary Neri or Mr. Lozada will not be able to legally question our subpoena as being insufficient in accordance with law.

SEN. PIMENTEL. Mr. Chairman, the caution that the chair is suggesting is very well-taken. But I'd like to advert to the fact that the quorum of the committee is only two as far as I remember. Any two-member senators attending a Senate committee hearing provide that quorum, and therefore there is more than a quorum demanded by our Rules as far as we are concerned now, and acting as Blue Ribbon Committee, as Senator Enrile pointed out. In any event, the signatures that will follow by the additional members will only tend to strengthen

the determination of this Committee to put its foot forward – put down on what is happening in this country, Mr. Chairman, because it really looks terrible if the primary Committee of the Senate, which is the Blue Ribbon Committee, cannot even sanction people who openly defy, you know, the summons of this Committee. I know that the Chair is going through an agonizing moment here. I know that. But nonetheless, I think we have to uphold, you know, the institution that we are representing because the alternative will be a disaster for all of us, Mr. Chairman. So having said that, I'd like to reiterate my point.

THE CHAIRMAN (SEN. CAYETANO, A.) First of all, I agree 100 percent with the intentions of the Minority Leader. But let me very respectfully disagree with the legal requirements. Because, yes, we can have a hearing if we are only two but both under Section 18 of the Rules of the Senate and under Section 6 of the Rules of the Blue Ribbon Committee, there is a need for a majority of all members if it is a case of contempt and arrest. So, I am simply trying to avoid the court rebuking the Committee, which will instead of strengthening will weaken us. But I do agree, Mr. Minority Leader, that we should push for this and show the executive branch that the well-decided – the issue has been decided upon the Sabio versus Gordon case. And it's very clear that we are all allowed to call witnesses. And if they refure or they disobey not only can we cite them in contempt and have them arrested. x x x 62

Fourth, we find merit in the argument of the OSG that respondent Committees likewise violated Section 21 of Article VI of the Constitution, requiring that the inquiry be in accordance with the "duly published rules of procedure." We quote the OSG's explanation:

The phrase 'duly published rules of procedure' requires the Senate of every Congress to publish its rules of procedure governing inquiries in aid of legislation because every Senate is distinct from the one before it or after it. Since Senatorial elections are held every three (3) years for one-half of the Senate's membership, the composition of the Senate also changes by the end of each term. Each Senate may thus enact a different set of rules as it may deem fit. Not having published its Rules of Procedure, the subject hearings in aid of legislation conducted by the 14th Senate, are therefore, procedurally infirm.

And fifth, respondent Committees' issuance of the contempt Order is arbitrary and precipitate. It must be pointed out that respondent Committees did not first pass upon the claim of executive privilege and inform petitioner of their ruling. Instead, they curtly dismissed his explanation as "unsatisfactory" and simultaneously issued the Order citing him in contempt and ordering his immediate arrest and detention.

A fact worth highlighting is that petitioner is not an unwilling witness. He manifested several times his readiness to testify before respondent Committees. He refused to answer the three (3) questions because he was ordered by the President to claim executive privilege. It behooves respondent Committees to first rule on the claim of

executive privilege and inform petitioner of their finding thereon, instead of peremptorily dismissing his explanation as "unsatisfactory." Undoubtedly, respondent Committees' actions constitute grave abuse of discretion for being arbitrary and for denying petitioner due process of law. The same quality afflicted their conduct when they (a) disregarded petitioner's motion for reconsideration alleging that he had filed the present petition before this Court and (b) ignored petitioner's repeated request for an advance list of questions, if there be any aside from the three (3) questions as to which he claimed to be covered by executive privilege.

Even the courts are repeatedly advised to exercise the power of contempt judiciously and sparingly with utmost self-restraint with the end in view of utilizing the same for correction and preservation of the dignity of the court, not for retaliation or vindication.63 Respondent Committees should have exercised the same restraint, after all petitioner is not even an ordinary witness. He holds a high position in a co-equal branch of government.

In this regard, it is important to mention that many incidents of judicial review could have been avoided if powers are discharged with circumspection and deference. Concomitant with the doctrine of separation of powers is the mandate to observe respect to a co-equal branch of the government.

One last word.

The Court was accused of attempting to abandon its constitutional duty when it required the parties to consider a proposal that would lead to a possible compromise. The accusation is far from the truth. The Court did so, only to test a tool that other jurisdictions find to be effective in settling similar cases, to avoid a piecemeal consideration of the questions for review and to avert a constitutional crisis between the executive and legislative branches of government.

In United States v. American Tel. & Tel Co.,64 the court refrained from deciding the case because of its desire to avoid a resolution that might disturb the balance of power between the two branches and inaccurately reflect their true needs. Instead, it remanded the record to the District Court for further proceedings during which the parties are required to negotiate a settlement. In the subsequent case of United States v. American Tel. &Tel Co.,65 it was held that "much of this spirit of compromise is reflected in the generality of language found in the Constitution." It proceeded to state:

Under this view, the coordinate branches do not exist in an exclusively adversary relationship to one another when a conflict in authority arises. Rather each branch should take cognizance of an implicit constitutional mandate to seek optimal accommodation through a realistic evaluation of the needs of the conflicting branches in the particular fact situation.

It thereafter concluded that: "The Separation of Powers often impairs efficiency, in terms of dispatch and the immediate functioning of government. It is the long-

term staying power of government that is enhanced by the mutual accommodation required by the separation of powers."

In rendering this decision, the Court emphasizes once more that the basic principles of constitutional law cannot be subordinated to the needs of a particular situation. As magistrates, our mandate is to rule objectively and dispassionately, always mindful of Mr. Justice Holmes' warning on the dangers inherent in cases of this nature, thus:

"some accident of immediate and overwhelming interest…appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend."66

In this present crusade to "search for truth," we should turn to the fundamental constitutional principles which underlie our tripartite system of government, where the Legislature enacts the law, the Judiciary interprets it and the Executive implements it. They are considered separate, co-equal, coordinate and supreme within their respective spheres but, imbued with a system of checks and balances to prevent unwarranted exercise of power. The Court's mandate is to preserve these constitutional principles at all times to keep the political branches of government within constitutional bounds in the exercise of their respective powers and prerogatives, even if it be in the search for truth. This is the only way we can preserve the stability of our democratic institutions and uphold the Rule of Law.

WHEREFORE, the petition is hereby GRANTED. The subject Order dated January 30, 2008, citing petitioner Romulo L. Neri in contempt of the Senate Committees and directing his arrest and detention, is hereby nullified.

G.R. No. 176546 September 25, 2009 FELICITAS P. ONG, Petitioner, vs. THE PEOPLE OF THE PHILIPPINES, Respondent.

Assailed in this petition for review is the Decision1 of the Sandiganbayan dated November 13, 2006 in Criminal Case No. 24416, finding petitioner Felicitas P. Ong guilty beyond reasonable doubt of violation of Sec. 3 (e) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. Also assailed is the Resolution2 dated February 2, 2007 denying the motion for reconsideration.

On August 12, 1996 petitioner in her capacity as Mayor of Angadanan, Isabela, bought3 an Isuzu dump truck4 for P750,000.00 from Josephine Ching for the use of the municipality.

On March 26, 1997, a letter-complaint5 was filed against petitioner by her successor, Mayor Diosdado Siquian6and several other Sangguniang Bayan members7 before the Office of the Ombudsman, accusing her of malversation of public funds and property in connection with several alleged irregularities committed during her term as Mayor of Angadanan, including the purchase of the dump truck for being grossly overpriced.

On August 14, 1997, Graft Investigation Officer I Germain G. Lim found no probable cause to hold petitioner liable for the charges. Upon reconsideration however, she was indicted for violation of Sec. 3 (e) of RA No. 3019, as amended, with respect to the acquisition of the dump truck.

The Information8 reads:

That on or about August 1996, or sometime prior or subsequent thereto in the Municipality of Angadanan, Isabela, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, Felicitas P. Ong, a public official, being the Municipal Mayor of Angadanan, Isabela, taking advantage of her official position and committing the offense in relation to her office, acting with manifest partiality, evident bad faith or gross inexcusable negligence, did then and there willfully, unlawfully and feloniously cause injury to the Municipality of Angadanan by causing and approving, without public bidding, the acquisition of an Isuzu dump truck with Plate Number T-BBB-206 from J.C. Trucking in the amount of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00) when the same or similar type of dump truck could have been bought at a much lower price of not more than FIVE HUNDRED THOUSAND PESOS (P500,000.00), to the damage and prejudice of the Municipality of Angadanan in the amount of TWO HUNDRED AND FIFTY THOUSAND PESOS (P250,000.00).

CONTRARY TO LAW.

On January 12, 1999, petitioner was arraigned and entered a plea of "Not guilty."9

During trial, Ramon De Guzman Sevilla, Sales Manager of Christian Motor Sales in Cabanatuan City, Nueva Ecija, testified that the cost of a ten wheeler-front drive, military type Isuzu dump truck ranges from P190,000.00-P490,000.00.10

Sangguniang Bayan members and complainants Ruben P. Lappay and Mirasol P. Lappay both testified that the dump truck was bought without conducting a public bidding or a resolution by the Sangguniang Bayan; that the truck was merely reconditioned and not brand new as can be seen from its deplorable condition, worn tires and old battery;11 and that a subsequent canvass of other suppliers showed that better quality dump trucks cost no more than P500,000.00.12

In her defense, petitioner testified that in 1996, the municipality appropriated the amount of P1,000,000.00 for the purchase of a dump truck;13 that pursuant to said appropriation, the subject vehicle was purchased on August 12, 1996 for P750,000.00

through a negotiated purchase from Josephine Ching of J.C. Trucking; that the public bidding and prior Sangguniang Bayan resolution were dispensed with pursuant to Commission on Audit (COA) Resolution Nos. 95-24414 and 95-244-A15 which do not require the conduct of a public bidding on any negotiated purchase in amounts not exceeding P10,000,000.00;16 that the truck was not in disrepair as the same was inspected by the Regional Engineer from COA who declared it fit and in good running condition;17 and that the purchase was allowed by COA because it did not issue a notice of disallowance.18

On November 13, 2006, the Sandiganbayan rendered its Decision finding petitioner guilty beyond reasonable doubt of violation of Sec. 3 (e) of RA No. 3019. The dispositive portion thereof reads:

WHEREFORE, the Court finds accused Felicitas P. Ong, GUILTY beyond reasonable doubt, for violation of Sec. 3 (e) of RA No. 3019, and is hereby sentenced to suffer the penalty of:

(A) Imprisonment of, after applying the Indeterminate Sentence Law, six years and one month as minimum, up to ten years, as maximum; and

(B) Perpetual disqualification from Public Office.

Accused is hereby ordered to RETURN to the Municipality of Angadanan the amount of P250,000.00.SO ORDERED.19

The Sandiganbayan found that as Mayor of Angadanan, there is no dispute that petitioner was a public officer discharging administrative and official functions; that there is no merit to petitioner‘s claim that the purchase of the dump truck without public bidding was justified by COA Resolution Nos. 95-244 and 95-244-A; and that the prosecution was able to prove that had petitioner observed the proper procurement procedure, the municipality could have acquired a dump truck similar to, if not better than that which she bought, for a much lesser price.

Hence, this appeal where petitioner contends that the Sandiganbayan erred in finding her guilty of violation of Section 3 (e) of RA No. 3019. In particular, petitioner denies causing injury or giving anybody any unwarranted benefits, advantage or preference in the discharge of her official or administrative functions, or that she is guilty of any manifest partiality, evident bad faith or gross negligence.

We are not persuaded.

It is a well-entrenched rule that factual findings of the Sandiganbayan are conclusive upon the Supreme Court except where: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts and the findings of fact of the Sandiganbayan are premised on the absence of

evidence and are contradicted by evidence on record.20 None of the above exceptions obtains in this case.

Section 3 (e) of RA No. 3019, as amended, provides:

Section 3. Corrupt practices of public officers.- In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful

x x x x

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

The following essential elements must be present:

1. The accused must be a public officer discharging administrative, judicial or official functions;

2. He must have acted with manifest partiality, evident bad faith or gross inexcusable negligence; and

3. His action caused any undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage or preference in the discharge of his functions.21

We find that all the elements of the offense charged have been duly established beyond reasonable doubt. Petitioner, being then the Mayor of Angadanan, Isabela is a public officer discharging administrative and official functions. The act of purchasing the subject truck without the requisite public bidding and authority from the Sangguniang Bayan displays gross and inexcusable negligence. Undue injury was caused to the Government because said truck could have been purchased at a much lower price.

The contention that the acquisition through a negotiated purchase was valid the same being pursuant to COA Resolution Nos. 95-244 and 95-244-A, is untenable. Petitioner‘s reliance on said COA Resolutions is misplaced. COA Resolution No. 95-244 as amended by Resolution No. 95-244-A states that there is no necessity of prescribing the limit of purchases not subject to public bidding since Executive Order No. 30122 authorizes the heads of an agency with the approval of the Department Heads to enter into a negotiated purchase as long as the same is advantageous to the government.

Both resolutions are implementing guidelines which must be read and applied in conjunction with Title VI,23 Book II, of Republic Act No. 7160 otherwise known as the Local Government Code of 1991. Section 356 thereof states the general rule that the acquisition of supplies by the local government units shall be through competitive bidding. The only instances when public bidding requirements can be dispensed with are provided under Section 366, to wit:

Section 366. Procurement without Public Bidding. - Procurement of supplies may be made without the benefit of public bidding under any of the following modes:

<="" p=""><="" p="">Negotiated purchase;

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negotiated purchase is further qualified by Section 369 thereof which states:

Section 369. Negotiated Purchase.- (a) In cases where public biddings have failed for two (2) consecutive times and no suppliers have qualified to participate or win in the biddings, local government units may, through the local chief executive concerned, undertake the procurement of supplies by negotiated purchase, regardless of amount, without public bidding: provided, however, that the contract covering the negotiated purchase shall be approved by the Sanggunian concerned x x x.

Thus, a local chief executive could only resort to a negotiated purchase under Section 366 of RA No. 7160 and COA Resolution Nos. 95-244 and 95-244-A, if the following two requisites are present: (1) public biddings have failed for at least two consecutive times and; (2) no suppliers have qualified to participate or win in the biddings.

The Sandiganbayan correctly ruled that by procuring the subject truck through a negotiated purchase without public bidding, petitioner failed to comply with the above stated procedure. Indeed, as the local chief executive, petitioner is not only expected to know the proper procedure in the procurement of supplies, she is also duty bound to follow the same and her failure to discharge this duty constitutes gross and inexcusable negligence.

Price quotations obtained from several suppliers24 as well as the testimonies of Ramon de Guzman Sevilla, Ruben Lappay and Mirasol Lappay proved that the dump truck purchased by petitioner was over-priced. Hence, had petitioner observed the proper procurement procedure, the municipality of Angadanan could have acquired a dump truck similar to, if not better than the one originally bought, at a much lower price of not more than P500,000.00. Without doubt, petitioner‘s negligence caused undue injury to the government while at the same time gave unwarranted benefits to Josephine Ching.

The penalty for violation of Section 3(e) of RA 3019 is "imprisonment for not less than six years and one month nor more than fifteen years, and perpetual disqualification from public office."25 Under the Indeterminate Sentence Law, if the offense is punished by

special law, as in the present case, an indeterminate penalty shall be imposed on the accused, the maximum term of which shall not exceed the maximum fixed by the law, and the minimum not less than the minimum prescribed therein.26

In view of the circumstances obtaining in the instant case, the Sandiganbayan correctly imposed the indeterminate prison term of six (6) years and one (1) month, as minimum, to ten (10) years and one (1) day, as maximum, with perpetual disqualification from public office.

WHEREFORE, the petition is DENIED. The Decision of the Sandiganbayan dated November 13, 2006 finding petitioner Felicitas P. Ong guilty beyond reasonable doubt of violation of Section 3 (e) of Republic Act No. 3019 and sentencing her to suffer the penalty of six (6) years and one (1) month, as minimum, to ten (10) years and one (1) day, as maximum, with perpetual disqualification from holding public office and with order to return the amount of P250,000.00, is AFFIRMED.

G.R. No. 177011 June 5, 2009 JOSEPH PETER SISON, ROSEMARIE SIOTING, FE P. VALENZUELA, ROBERTO L. BAUTISTA, MARIO P. ESCOBER, ARLENE PUZON, DANILO G. GERONA, NECITAS B. CLEMENTE, RAMON MACATANGAY and NEOFITO HERNANDEZ, Petitioners, vs. ROGELIO TABLANG, Director IV, Commission on Audit; ELIZABETH S. ZOSA, Assistant Commissioner - Legal Adjudication and Settlement Board Chairperson; EMMA M. ESPINA, JAIME P. NARANJO, AMORSONIA B. ESCARDA and CARMELA S. PEREZ, Members of the Commission on Audit Legal Adjudication and Settlement Board, Respondents.

This is a petition for certiorari assailing the decision1 of the Adjudication and Settlement Board (ASB) of the Commission on Audit (COA) dated March 5, 2007, which affirmed the Notices of Disallowance (ND) issued by the Legal and Adjudication Office-Corporate (LAO-C), disallowing the payment of honoraria in the amount ofP364,299.31 made by the National Housing Authority (NHA) to petitioners, as members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG).

Audit Observation Memoranda2 were issued by the Supervising Auditor of the NHA, informing that there were excess/unauthorized payments of honoraria to members of the BAC and the TWG. Thus, three (3) separate NDs were issued by the LAO-C, to wit:

(1) Notice of Disallowance No. 2004-001 (04) dated November 22, 2004 disallowing in audit the amount ofP73,768.00 as overpayment of honoraria covering the periods January and March 2004 for want of legal basis;

(2) Notice of Disallowance No. 2004-002 (03) dated December 2, 2004 disallowing in audit the amount ofP290,531.31 for honoraria paid covering the periods from March to September 2003 for want of legal basis; and for the period covering October to December 2003, on the ground that they were paid in excess of the allowed rates, contrary to Section 4.1 of Budget Circular No. 2004-5 dated March 23, 2004 of the Department of Budget and Management (DBM); and

(3) Notice of Disallowance No. 2005-001 (04) dated May 24, 2005 disallowing in audit the amount ofP68,096.00 for the period covering April to June 2004, together with the honoraria received by the regular and provisionary members of the BAC for the months of January to June 2004, the same having been paid contrary to the allowed rates provided in DBM Circular No. 2004-5 dated March 23, 2004.

On January 3, 2005, petitioner Joseph Peter Sison, Assistant General Manager and Chairperson-BAC of the NHA, and the other petitioners, as members of the BAC and the TWG, sought reconsideration of the NDs on the following grounds:

1. That the payment of honoraria was based on the number of projects completed by the BAC and TWG‘s under their respective level of responsibility and on the rate provided for under the IRR of R.A. 9184, which should be in an amount not to exceed 25% of their respective basic monthly salary subject to availability of funds.

2. Since DBM has yet to issue the necessary Implementing Rules and Regulations for the grant of honoraria, the BAC and TWG members were given straight 25% of their basic monthly salary as honoraria for every month from March 2003-March 2004.

3. That the work of BAC and its TWG is up to the Recommendation of Award to the NHA General Manager. It is Management‘s responsibility to present such recommendation to the Board for notation/confirmation/approval. The payment of honoraria should not be based on the Notice of Award but should be reckoned on the date of Recommendation of Award, as it sometimes takes several months before an award is approved by the Board.

4. That they should not be made to refund immediately whatever remaining disallowance after a computation of the same is made using the recommendation of Award as the reckoning date, but instead they request that the same be deducted from the remaining unpaid COLA which they are collecting from NHA or from succeeding honoraria they are to receive as members of the BAC and TWG.3

On September 13, 2005, the LAO-C denied the motions for reconsideration filed by petitioners in LAO-C Decision No. 2005-064.4 It also rejected petitioners‘ request for a

set-off of the disallowed amount against future collectibles from the NHA, as this was not in accordance with law and jurisprudence.5

A petition for review6 was then filed by petitioners before the ASB of the COA which was denied on March 5, 2007 for lack of merit. The LAO-C decision, covering the three (3) NDs, was affirmed.7

Aggrieved, petitioners filed the instant petition maintaining that the grant of honoraria, not exceeding 25% of the basic monthly salaries of the BAC members, was justified. They aver that the payments were in accordance with Republic Act (R.A.) No. 9184, which was the applicable law at that time, and stressed that they did not exceed the 25% limit provided under Section 15 thereof.

The petition is bereft of merit.

It must first be stressed that petitioners failed to appeal the decision of the ASB to the Commission on Audit Proper before filing the instant petition with this Court, in derogation of the principle of exhaustion of administrative remedies. The general rule is that before a party may seek the intervention of the court, he should first avail himself of all the means afforded him by administrative processes. The issues which administrative agencies are authorized to decide should not be summarily taken from them and submitted to the court without first giving such administrative agency the opportunity to dispose of the same after due deliberation.8

On January 30, 2003, the COA issued Resolution No. 2003-001 delegating the authority to adjudicate and settle appeals from the decisions of the Directors involving suspensions and disallowances in amounts not exceeding five hundred thousand pesos (P500,000.00) to the ASB of the Commission. It also clearly provides that "appeals from the decision of the Board shall be brought before the Commission Proper in the same manner as other cases under the Commission‘s existing rules and regulations."9

Correlatively, the 1997 Revised Rules of Procedure of the COA states that:

RULE VI APPEAL FROM DIRECTOR TO COMMISSION PROPER

Section 1. Who May Appeal and Where to Appeal. – The party aggrieved by a final order or decision of the Director may appeal to the Commission Proper.

x x x x

RULEXI JUDICIAL REVIEW

Section 1. Petition for Certiorari. – Any decision, order or resolution of the Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty

(30) days from receipt of a copy thereof in the manner provided by law, the Rules of Court and these Rules.

It is, therefore, imperative that the Commission Proper be first given the opportunity to review the decision of the ASB. Only after the Commission shall have acted thereon may a petition for certiorari be brought to the Court by the aggrieved party. While the principle of exhaustion of administrative remedies admits of exceptions, the Court does not find any cogent reason to apply the cited exceptions to the instant case.10 The non-observance of the doctrine results in the petition having no cause of action, thus, justifying its dismissal. In this case, the necessary consequence of the failure to exhaust administrative remedies is obvious: the disallowance as ruled by the LAO-C has now become final and executory.11

But even if we were to disregard this patent infirmity, we still find sufficient bases to uphold the three (3) NDs issued by the LAO-C.

Section 15 of R.A. No. 9184, otherwise known as the Government Procurement Act,12 provides that:

Section 15. Honoraria of BAC Members. – The Procuring Entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the Department of Budget and Management (DBM) shall promulgate the necessary guidelines.

Section 15 of the Implementing Rules and Regulations (IRR) of R.A. No. 9184, issued on October 8, 2003, reads as follows:

Section 15. Honoraria of BAC and TWG Members

The procuring entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the [Department of Budget and Management] DBM shall promulgate the necessary guidelines. The procuring entity may also grant payment of honoraria to the TWG members, subject to the relevant rules of the DBM.

There is no dispute that petitioners can be paid honoraria for the services they rendered as BAC and TWG members. However, the payment of honoraria is subject to the availability of funds and shall follow the guidelines and relevant rules which are promulgated by the DBM.

For this purpose, DBM Budget Circular No. 2004-5 was issued on March 23, 2004, prescribing the guidelines for the grant of honoraria to government personnel involved in government procurement, in accordance with the R.A. No. 9184. Paragraphs 4.1 and 4.2 of the budget circular provide that:

4.1 The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. The honoraria shall not exceed the rates indicated below per procurement project:

Honorarium Rate Per

Procurement Project

BAC Chair 3,000.00

BAC Members 2,500.00

TWG Chair and Members 2,000.00

4.2 The total amount of honoraria received in a month may not exceed twenty-five percent (25%) of the monthly basic salary.13

Given the foregoing provisions, it was, therefore, error for petitioners to remunerate themselves the amount equivalent to 25% of their basic monthly salaries as honoraria for their services rendered as BAC members even before the DBM guidelines were promulgated. We quote with favor the ASB‘s rationale for the disallowance:

A reading of the above-quoted provision would reveal that the first sentence sets the limit as to the amount of honoraria that may be granted to BAC members, that is 25% of their respective basic monthly salary subject to availability of funds. Further reading of the same would reveal that an enabling rule, a DBM guideline, is needed for its implementation as contained in the second sentence thereof. Thus, the "provision of Sec. 15 of the GPRA authorizing procuring entities or agencies to grant honoraria to BAC members is not self-executing, as it still needs an implementing guideline to be promulgated by the DBM" (Government Procurement Tool Kit, Sofronio B. Ursal, 2004 ed., p. 90).14

Petitioners contend that it would be unjust if the BAC and the TWG members were not paid their honoraria for work already performed just because the DBM had not yet promulgated the necessary guidelines.15

This contention is untenable.

An honorarium is defined as something given not as a matter of obligation but in appreciation for services rendered, a voluntary donation in consideration of services which admit of no compensation in money.16 Section 15 of R.A. No. 9184 uses the word "may" which signifies that the honorarium cannot be demanded as a matter of right.17

The government is not unmindful of the tasks that may be required of government employees outside of their regular functions. It agrees that they ought to be compensated; thus, honoraria are given as a recompense for their efforts and performance of substantially similar duties, with substantially similar degrees of responsibility and accountability.18 However, the payment of honoraria to the members of the BAC and the TWG must be circumscribed by applicable rules and guidelines prescribed by the DBM, as provided by law. Section 15 of R.A. No. 9185 is explicit as it states: "For this purpose, the DBM shall promulgate the necessary guidelines." The word "shall" has always been deemed mandatory, and not merely directory. Thus, in this case, petitioners should have first waited for the rules and guidelines of the DBM before payment of the honoraria. As the rules and guidelines were still forthcoming, petitioners could not just award themselves the straight amount of 25% of their monthly basic salaries as honoraria. This is not the intendment of the law.1avvphil

Furthermore, albeit in hindsight, the DBM Budget Circular provides that the payment of honoraria should be made only for "successfully completed procurement projects." This phrase was clarified in DBM Budget Circular No. 2004-5A dated October 7, 2005, to wit:

5.1 The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. In accordance with Section 7 of the Implementing Rules and Regulations Part A (IRR-A) of RA No. 9184, a procurement project refers to the entire project identified, described, detailed, scheduled and budgeted for in the Project Procurement Management Plan prepared by the agency.

A procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder.

No interpretation is needed for a law that is clear, plain and free from ambiguity. Now, the DBM has already set the guidelines for the payment of honoraria as required by law. Since the payment of honoraria to petitioners did not comply with the law and the applicable rules and guidelines of the DBM, the notices of disallowance are hereby upheld.

IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit.

G.R. No. 178799 January 19, 2009 FIRST UNITED CONSTRUCTORS CORPORATION, Petitioner, vs. PORO POINT MANAGEMENT CORPORATION (PPMC), THE SPECIAL BIDS & AWARDS COMMITTEE (SBAC) of PPMC, ATTY. FELIX S. RACADIO, and SATRAP CONSTRUCTION COMPANY, INC., Respondents.

First United Constructors Corporation (FUCC) filed this special civil action for certiorari and prohibition with prayer for the issuance of a temporary restraining order, seeking to annul (i) the re-bidding of the contract for the Upgrading of the San Fernando Airport Project, Phase I, held on May 8, 2007; (ii) the Notice of Award1 dated May 23, 2007 to Satrap Construction Company, Inc. (SCCI); and (iii) Notice to Proceed2 dated May 29, 2007 also to SCCI. FUCC also seeks to permanently enjoin the Special Bids and Awards Committee (SBAC) and Poro Point Management Corporation (PPMC) from implementing the Contract3 in favor of SCCI.

The factual antecedents are as follows:

On January 26, 2007, PPMC approved the Contract for the Upgrading of the San Fernando Airport Phase I. The SBAC then issued invitations to reputable contractors to pre-qualify for the project.

FUCC and two (2) other contractors - C.M. Pancho Construction, Inc. (C.M. Pancho) and EEI-New Kanlaon Construction, Inc. Joint Venture (EEI-New Kanlaon JV) responded to the invitation and were pre-qualified to bid for the project. However, upon evaluation, none of the pre-qualified bidders was chosen. C.M. Pancho was disqualified because it did not possess the required minimum years of experience in airport projects, while EEI New Kanlaon JV was disqualified because it did not submit a special license to bid as joint venture. FUCC‘s technical proposal, on the other hand, obtained a failing mark because it failed to submit the automated weather observation system (AWOS) and its authorized representative did not sign some pages of the narrative construction method and the tax returns. FUCC sought reconsideration of the SBAC decision, but it was denied.4

FUCC then filed a protest5 with the PPMC. On March 26, 2007, Atty. Felix S. Racadio, PPMC Head, resolved FUCC‘s protest, viz.:

In sum, based on the issues raised and [the] arguments presented by FUCC, this OFFICE finds NO REVERSIBLE ERROR committed by SBAC, both on its findings of 06 March 2007 (giving FUCC the FAILED rating) and 12 March 2007 (denial of FUCC’s Motion for Reconsideration).

In addition to the "NO REVERSIBLE ERROR FINDING," there exists a PRESUMPTION OF REGULARITY OF OFFICIAL ACTION OF A PUBLIC OFFICER. In the case at bar, such presumption applies. The burden of proof lies with the FUCC. On this score, FUCC failed to even just scratch the surface of the same.

The proceedings and findings of SBAC, in the Pre-Qualification stage not having been put into issue by the PROTEST, then, FUCC had opted to leave them as they were, thus, let them remain UNDISTURBED.

WHEREFORE, in view of the foregoing, the PROTEST filed by FUCC which is under consideration is herebyDISMISSED for lack of merit.

The FILING FEE paid by FUCC, the protestant, via Metro Bank Cashier‘s Check No. 0600018513, dated March 19, 2007, in the amount of Four Million Seven Hundred Twenty-One Thousand Pesos (P4,721,000.00), Philippine Currency, which is equivalent to one [percent] (%) of the ABC being NON-REFUNDABLE (Sec. 55.1, IRR-A, RA 1984), the same is hereby ordered FORFEITED in favor of PPMC.

SO ORDERED.6

SBAC then scheduled a re-bidding and issued new invitations to bid for the project. To enjoin the re-bidding set on May 8, 2007, FUCC filed a petition for injunction with prayer for the issuance of a preliminary injunction or temporary restraining order (TRO) with the Regional Trial Court (RTC) of La Union, docketed as Civil Case No. 7274.

On May 2, 2007, the RTC issued a TRO which, however, was lifted on May 4, 2007 because under Section 3 of Republic Act No. 8975,7 no court, except the Supreme Court, shall issue a TRO or injunction or prohibit the bidding or award of a government infrastructure project. SBAC thus proceeded with the re-bidding of the project on May 8, 2007 and awarded the project to SCCI as the lowest qualified bidder.8 The Contract9 for the project was signed, and a notice to proceed10 was served on SCCI on May 29, 2007.

FUCC filed an amended petition with the RTC to enjoin the implementation of the project. The Office of the Government Corporate Counsel (OGCC) moved to dismiss the petition for lack of jurisdiction.

Pending resolution of OGCC‘s motion to dismiss, FUCC moved for the dismissal of its amended petition, which was granted by the RTC on July 4, 2007, to wit:

Acting on the above-stated notice of dismissal, this Court hereby confirms the dismissal of the amended petition, in effect the dismissal of the whole action, without prejudice, pursuant to Sec. 1, Rule 17 of the Rules of Court.

WHEREFORE, this case is hereby DISMISSED.SO ORDERED.11

Claiming that there is no appeal, or any speedy and adequate remedy in the ordinary course of law, FUCC comes to us via this petition. It also asks for the issuance of a TRO to enjoin the implementation of the project, asserting that SCCI is not qualified to undertake the project and the award clearly poses a real threat to the public welfare and safety. In its November 12, 2007 Resolution, this Court denied FUCC‘s application for the issuance of a TRO for lack of merit.

FUCC filed this petition praying for the following relief, viz.:

(a) That upon receipt of this Petition, a Temporary Restraining Order (TRO) be issued enjoining the implementation of the contract for the Upgrading of the San Fernando Airport Project, Phase I with respondent [SCCI] as the contractor;

(b) That after proper proceeding, judgment be rendered: (1) permanently enjoining the implementation of the contract for the Upgrading of the San Fernando Airport Project, Phase I with respondent [SCCI] as the contractor; (2) declaring the re-bidding of the contract for the Upgrading of the San Fernando Airport Project, Phase I on 08 May 2007 illegal and nullifying the results thereof; (3) annulling the Notice of Award dated 23 May 2007, the Contract for the Upgrading of the San Fernando Airport, Phase I entered into, by and between respondent PPMC and respondent [SCCI] on 29 May 2007, and the Notice to Proceed dated 29 May 2007; and (4) directing respondent SBAC and/or respondent PPMC and/or respondent Atty. Recadio to reconsider the "Failed" rating of the bid of FUCC, open the Financial Proposal Envelope submitted by FUCC during the original bidding, declare FUCC as the winning bidder, and forthwith award the contract to FUCC, as the winning bidder and being the only qualified contractor for the project.12

It asserts that SBAC and PPMC committed grave abuse of discretion in disqualifying its bid, in denying its protest, in conducting a re-bidding and in awarding the project to SCCI. It insists that it is the only qualified contractor for the project and prays that it be declared the winning bidder.

We dismiss the petition.

Republic Act (RA) No. 9184, or the Government Procurement Reform Act, outlines the procedure to assail decisions of the SBAC in this wise:

SEC. 55. Protests on Decisions of the BAC. – Decisions of BAC in all stages of procurement may be protested to the head of the procuring entity and shall be in writing. Decisions of the BAC may be protested by filing a verified position paper and paying a nonrefundable protest fee. The amount of protest fee and the periods during which the protests may be filed and resolved shall be specified in the IRR.

SEC. 56. Resolution of Protests. - The protests shall be resolved strictly on the basis of records of the BAC. Up to a certain amount specified in the IRR, the decisions of the Head of the Procuring Entity shall be final.

SEC. 57. Non-interruption of the Bidding Process. – In no case shall any protest taken from any decision treated in this Article stay or delay the bidding process. Protests must first be resolved before any award is made.

SEC. 58. Resort to Regular Courts; Certiorari. – Court action may be resorted only after the protest contemplated in this Article shall have been completed. Cases that are filed in violation of the process specified in this Article shall be dismissed for lack of jurisdiction. The regional trial court shall have jurisdiction over final decisions of the head of the procuring entity. Court actions shall be governed by Rule 65 of the 1997 Rules of Civil Procedure.

This provision is without prejudice to any law conferring on the Supreme Court the sole jurisdiction to issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government.

FUCC challenged the decision of SBAC in a protest filed with Atty. Racadio of the PPMC who affirmed the SBAC decision. Instead of filing a petition for certiorari, as provided in Section 58, FUCC filed a petition for injunction with prayer for the issuance of a temporary restraining order and/or preliminary injunction with the RTC. FUCC, however, later moved for its dismissal theorizing that the RTC had no jurisdiction over petitions for injunction. Thereafter, it filed this petition for certiorari with this Court.

Section 4, Rule 65 of the 1997 Rules of Civil Procedure provides that a special civil action for certiorari shall be filed not later than sixty (60) days from the notice of the judgment, order or resolution.13 FUCC admitted that it received the PPMC decision on March 27, 2007.14 However, it filed this petition assailing the said decision only on July 30, 2007. It is, therefore, too late in the day for FUCC, via this petition, to assail the PPMC decision which rated its bid as failed.

Besides, FUCC violated the doctrine of judicial hierarchy in filing this petition for certiorari directly with this Court. Section 58 is clear that petitions for the issuance of a writ of certiorari against the decision of the head of the procuring agency, like PPMC, should be filed with the Regional Trial Court. Indeed, the jurisdiction of the RTC over petitions for certiorari is concurrent with this Court. However, such concurrence does not allow unrestricted freedom of choice of the court forum. A direct invocation of the Supreme Court‘s original jurisdiction to issue this writ should be allowed only when there are special and important reasons, clearly and specifically set out in the petition.15

In the present case, FUCC adduced no special and important reason why direct recourse to this Court should be allowed. Thus, we reaffirm the judicial policy that this Court will not entertain a direct invocation of its jurisdiction unless the redress desired cannot be obtained in the appropriate lower courts, and exceptional and compelling circumstances justify the resort to the extraordinary remedy of a writ of certiorari.

Similarly, the RTC is the proper venue to hear FUCC‘s prayer for permanent injunction. Unquestionably, RA No. 897516 enjoins all courts, except the Supreme Court, from issuing any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity to restrain, prohibit or compel the bidding or awarding of a contract or project of the national government. The proscription, however, covers only temporary restraining orders or writs but not decisions on the merits granting permanent injunction. Therefore, while courts below are prohibited by RA No. 8795 from issuing TROs or preliminary restraining orders pending the adjudication of the case, said statute, however, does not explicitly proscribe the issuance of a permanent injunction granted by a court of law arising from an adjudication of a case on the merits.17

As we explained in Alvarez v. PICOP Resources, Inc.:18

x x x Republic Act No. 8975 merely proscribes the issuance of temporary restraining orders and writs of preliminary injunction and preliminary mandatory injunction. [It] cannot, under pain of violating the Constitution, deprive the courts of authority to take cognizance of the issues raised in the principal action, as long as such action and the relief sought are within their jurisdiction.

Clearly, except for the prayer for the issuance of a TRO or preliminary injunction, the issues raised by FUCC and the relief it sought are within the jurisdiction of the RTC. It is a procedural faux pas for FUCC to invoke the original jurisdiction of this Court over the issuance of a writ of certiorari and permanent injunction.

In any event, the invitation to bid contains a reservation for PPMC to reject any bid. It has been held that where the right to reject is so reserved, the lowest bid, or any bid for that matter, may be rejected on a mere technicality.19The discretion to accept or reject bid and award contracts is vested in the government agencies entrusted with that function. This discretion is of such wide latitude that the Courts will not interfere therewith or direct the committee on bids to do a particular act or to enjoin such act within its prerogatives unless it is apparent that it is used as a shield to a fraudulent award;20 or an unfairness or injustice is shown;21 or when in the exercise of its authority, it gravely abuses or exceeds its jurisdiction. Thus, where PPMC as advertiser, availing itself of that right, opts to reject any or all bids, the losing bidder has no cause to complain or right to dispute that choice, unless fraudulent acts, injustice, unfairness or grave abuse of discretion is shown.

FUCC alleges that SBAC and PPMC, along with the SCCI and five (5) other bidders, colluded to rig the results of the re-bidding so that SCCI would emerge as the so-called lowest bidder. The record, however, is bereft of any proof to substantiate the allegation. Neither is there any evidence offered to establish unfairness, injustice, caprice or arbitrariness on the part of the SBAC or the PPMC in awarding the contract to SCCI, the lowest bidder. The presumption of regularity of the bidding must thus be upheld.

As we explained in JG Summit Holdings, Inc. v. Court of Appeals:22

The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489).

Accordingly, there being no showing of grave abuse of discretion, FUCC has no valid ground to demand annulment of the contract between PPMC and SCCI.

WHEREFORE, the petition is DISMISSED. The assailed Decision of the PPMC is AFFIRMED.

G.R. No. 181613 November 25, 2009 ROSALINDA A. PENERA, Petitioner, vs. COMMISSION ON ELECTIONS and EDGAR T. ANDANAR, Respondents.

We grant Rosalinda A. Penera‘s (Penera) motion for reconsideration of this Court‘s Decision of 11 September 2009 (Decision).

The assailed Decision dismissed Penera‘s petition and affirmed the Resolution dated 30 July 2008 of the COMELEC En Banc as well as the Resolution dated 24 July 2007 of the COMELEC Second Division. The Decision disqualified Penera from running for the office of Mayor in Sta. Monica, Surigao del Norte and declared that the Vice-Mayor should succeed Penera.

In support of her motion for reconsideration, Penera submits the following arguments:

1. Penera was not yet a candidate at the time of the incident under Section 11 of RA 8436 as amended by Section 13 of RA 9369.

2. The petition for disqualification failed to submit convincing and substantial evidence against Penera for violation of Section 80 of the Omnibus Election Code.

3. Penera never admitted the allegations of the petition for disqualification and has consistently disputed the charge of premature campaigning.

4. The admission that Penera participated in a motorcade is not the same as admitting she engaged in premature election campaigning.

Section 79(a) of the Omnibus Election Code defines a "candidate" as "any person aspiring for or seeking an elective public office, who has filed a certificate of candidacy x x x." The second sentence, third paragraph, Section 15 of RA 8436, as amended by Section 13 of RA 9369, provides that "[a]ny person who files his certificate of candidacy within [the period for filing] shall only be considered as a candidate at the start of the campaign periodfor which he filed his certificate of candidacy." The immediately succeeding proviso in the same third paragraph states that "unlawful acts or omissions applicable to a candidate shall take effect only upon the start of the aforesaid campaign period." These two provisions determine the resolution of this case.

The Decision states that "[w]hen the campaign period starts and [the person who filed his certificate of candidacy] proceeds with his/her candidacy, his/her intent turning into actuality, we can already consider his/her acts, after the filing of his/her COC and prior to the campaign period, as the promotion of his/her election as a candidate, hence, constituting premature campaigning, for which he/she may be disqualified."1

Under the Decision, a candidate may already be liable for premature campaigning after the filing of the certificate of candidacy but even before the start of the campaign period. From the filing of the certificate of candidacy, even long before the start of the campaign period, the Decision considers the partisan political acts of a person so filing a certificate of candidacy "as the promotion of his/her election as a candidate." Thus, such person can be disqualified for premature campaigning for acts done before the start of the campaign period. In short, the Decision considers a person who files a certificate of candidacy already a "candidate" even before the start of the campaign period. lawphil

The assailed Decision is contrary to the clear intent and letter of the law.

The Decision reverses Lanot v. COMELEC,2 which held that a person who files a certificate of candidacy is not a candidate until the start of the campaign period. In Lanot, this Court explained:

Thus, the essential elements for violation of Section 80 of the Omnibus Election Code are: (1) a person engages in an election campaign or partisan political activity; (2) the act is designed to promote the election or defeat of a particular candidate or candidates; (3) the act is done outside the campaign period.

The second element requires the existence of a "candidate." Under Section 79(a), a candidate is one who "has filed a certificate of candidacy" to an elective public office. Unless one has filed his certificate of candidacy, he is not a "candidate." The third element requires that the campaign period has not started when the election campaign or partisan political activity is committed.

Assuming that all candidates to a public office file their certificates of candidacy on the last day, which under Section 75 of the Omnibus Election Code is the day before the start of the campaign period, then no one can be prosecuted for violation of Section 80 for acts done prior to such last day. Before such last day, there is no "particular

candidate or candidates" to campaign for or against. On the day immediately after the last day of filing, the campaign period starts and Section 80 ceases to apply since Section 80 covers only acts done "outside" the campaign period.

Thus, if all candidates file their certificates of candidacy on the last day, Section 80 may only apply to acts done on such last day, which is before the start of the campaign period and after at least one candidate has filed his certificate of candidacy. This is perhaps the reason why those running for elective public office usually file their certificates of candidacy on the last day or close to the last day.

There is no dispute that Eusebio‘s acts of election campaigning or partisan political activities were committed outside of the campaign period. The only question is whether Eusebio, who filed his certificate of candidacy on 29 December 2003, was a "candidate" when he committed those acts before the start of the campaign period on 24 March 2004.

Section 11 of Republic Act No. 8436 ("RA 8436") moved the deadline for the filing of certificates of candidacy to 120 days before election day. Thus, the original deadline was moved from 23 March 2004 to 2 January 2004, or 81 days earlier. The crucial question is: did this change in the deadline for filing the certificate of candidacy make one who filed his certificate of candidacy before 2 January 2004 immediately liable for violation of Section 80 if he engaged in election campaign or partisan political activities prior to the start of the campaign period on 24 March 2004?

Section 11 of RA 8436 provides:

SECTION 11. Official Ballot. – The Commission shall prescribe the size and form of the official ballot which shall contain the titles of the positions to be filled and/or the propositions to be voted upon in an initiative, referendum or plebiscite. Under each position, the names of candidates shall be arranged alphabetically by surname and uniformly printed using the same type size. A fixed space where the chairman of the Board of Election Inspectors shall affix his/her signature to authenticate the official ballot shall be provided.

Both sides of the ballots may be used when necessary.

For this purpose, the deadline for the filing of certificate of candidacy/petition for registration/ manifestation to participate in the election shall not be later than one hundred twenty (120) days before the elections: Provided, That, any elective official, whether national or local, running for any office other than the one which he/she is holding in a permanent capacity, except for president and vice-president, shall be deemed resigned only upon the start of the campaign period corresponding to the position for which he/she is running: Provided, further, That, unlawful acts or omissions applicable to a candidate shall take effect upon the start of the aforesaid campaign period: Provided, finally, That, for purposes of the May 11, 1998 elections, the deadline for filing of the certificate of candidacy for the positions of President, Vice-President,

Senators and candidates under the party-list system as well as petitions for registration and/or manifestation to participate in the party-list system shall be on February 9, 1998 while the deadline for the filing of certificate of candidacy for other positions shall be on March 27, 1998.

The official ballots shall be printed by the National Printing Office and/or the Bangko Sentral ng Pilipinas at the price comparable with that of private printers under proper security measures which the Commission shall adopt. The Commission may contract the services of private printers upon certification by the National Printing Office/Bangko Sentral ng Pilipinas that it cannot meet the printing requirements. Accredited political parties and deputized citizens‘ arms of the Commission may assign watchers in the printing, storage and distribution of official ballots.

To prevent the use of fake ballots, the Commission through the Committee shall ensure that the serial number on the ballot stub shall be printed in magnetic ink that shall be easily detectable by inexpensive hardware and shall be impossible to reproduce on a photocopying machine, and that identification marks, magnetic strips, bar codes and other technical and security markings, are provided on the ballot.

The official ballots shall be printed and distributed to each city/municipality at the rate of one (1) ballot for every registered voter with a provision of additional four (4) ballots per precinct.

Under Section 11 of RA 8436, the only purpose for the early filing of certificates of candidacy is to give ample time for the printing of official ballots. This is clear from the following deliberations of the Bicameral Conference Committee:

SENATOR GONZALES. Okay. Then, how about the campaign period, would it be the same[,] uniform for local and national officials?

THE CHAIRMAN (REP. TANJUATCO). Personally, I would agree to retaining it at the present periods.

SENATOR GONZALES. But the moment one files a certificate of candidacy, he‘s already a candidate, and there are many prohibited acts on the part of candidate.

THE CHAIRMAN (REP. TANJUATCO). Unless we. . . .

SENATOR GONZALES. And you cannot say that the campaign period has not yet began (sic).

THE CHAIRMAN (REP. TANJUATCO). If we don‘t provide that the filing of the certificate will not bring about one‘s being a candidate.

SENATOR GONZALES. If that‘s a fact, the law cannot change a fact.

THE CHAIRMAN (REP. TANJUATCO). No, but if we can provide that the filing of the certificate of candidacy will not result in that official vacating his position, we can also provide that insofar he is concerned, election period or his being a candidate will not yet commence. Because here, the reason why we are doing an early filing is to afford enough time to prepare this machine readable ballots.

So, with the manifestations from the Commission on Elections, Mr. Chairman, the House Panel will withdraw its proposal and will agree to the 120-day period provided in the Senate version.

THE CHAIRMAN (SENATOR FERNAN). Thank you, Mr. Chairman.

x x x x

SENATOR GONZALES. How about prohibition against campaigning or doing partisan acts which apply immediately upon being a candidate?

THE CHAIRMAN (REP. TANJUATCO). Again, since the intention of this provision is just to afford the Comelec enough time to print the ballots, this provision does not intend to change the campaign periods as presently, or rather election periods as presently fixed by existing law.

THE ACTING CHAIRMAN (SEN. FERNAN). So, it should be subject to the other prohibition.

THE CHAIRMAN (REP. TANJUATCO). That‘s right.

THE ACTING CHAIRMAN (SEN. FERNAN). Okay.

THE CHAIRMAN (REP. TANJUATCO). In other words, actually, there would be no conflict anymore because we are talking about the 120-day period before election as the last day of filing a certificate of candidacy, election period starts 120 days also. So that is election period already. But he will still not be considered as a candidate.

Thus, because of the early deadline of 2 January 2004 for purposes of printing of official ballots, Eusebio filed his certificate of candidacy on 29 December 2003. Congress, however, never intended the filing of a certificate of candidacy before 2 January 2004 to make the person filing to become immediately a "candidate" for purposes other than the printing of ballots. This legislative intent prevents the immediate application of Section 80 of the Omnibus Election Code to those filing to meet the early deadline. The clear intention of Congress was to preserve the "election periods as x x x fixed by existing law" prior to RA 8436 and that one who files to meet the early deadline "will still not be considered as a candidate."3 (Emphasis in the original)

Lanot was decided on the ground that one who files a certificate of candidacy is not a candidate until the start of the campaign period. This ground was based on the

deliberations of the legislators who explained the intent of the provisions of RA 8436, which laid the legal framework for an automated election system. There was no express provision in the original RA 8436 stating that one who files a certificate of candidacy is not a candidate until the start of the campaign period.

When Congress amended RA 8436, Congress decided to expressly incorporate the Lanot doctrine into law, realizing that Lanot merely relied on the deliberations of Congress in holding that —

The clear intention of Congress was to preserve the "election periods as x x x fixed by existing law" prior to RA 8436 and that one who files to meet the early deadline "will still not be considered as a candidate."4 (Emphasis supplied)

Congress wanted to insure that no person filing a certificate of candidacy under the early deadline required by the automated election system would be disqualified or penalized for any partisan political act done before the start of the campaign period. Thus, in enacting RA 9369, Congress expressly wrote the Lanot doctrine into the second sentence, third paragraph of the amended Section 15 of RA 8436, thus:

x x x

For this purpose, the Commission shall set the deadline for the filing of certificate of candidacy/petition for registration/manifestation to participate in the election. Any person who files his certificate of candidacy within this period shall only be considered as a candidate at the start of the campaign period for which he filed his certificate of candidacy: Provided, That, unlawful acts or omissions applicable to a candidate shall take effect only upon the start of the aforesaid campaign period: Provided, finally, That any person holding a public appointive office or position, including active members of the armed forces, and officers and employees in government-owned or -controlled corporations, shall be considered ipso facto resigned from his/her office and must vacate the same at the start of the day of the filing of his/her certificate of candidacy. (Boldfacing and underlining supplied)

Congress elevated the Lanot doctrine into a statute by specifically inserting it as the second sentence of the third paragraph of the amended Section 15 of RA 8436, which cannot be annulled by this Court except on the sole ground of its unconstitutionality. The Decision cannot reverse Lanot without repealing this second sentence, because to reverse Lanot would mean repealing this second sentence.

The assailed Decision, however, in reversing Lanot does not claim that this second sentence or any portion of Section 15 of RA 8436, as amended by RA 9369, is unconstitutional. In fact, the Decision considers the entire Section 15 good law. Thus, the Decision is self-contradictory — reversing Lanot but maintaining the constitutionality of the second sentence, which embodies the Lanot doctrine. In so doing, the Decision is irreconcilably in conflict with the clear intent and letter of the second sentence, third paragraph, Section 15 of RA 8436, as amended by RA 9369.

In enacting RA 9369, Congress even further clarified the first proviso in the third paragraph of Section 15 of RA 8436. The original provision in RA 8436 states —

x x x Provided, further, That, unlawful acts or omissions applicable to a candidate shall take effect upon the start of the aforesaid campaign period, x x x.

In RA 9369, Congress inserted the word "only" so that the first proviso now reads —

x x x Provided, That, unlawful acts or omissions applicable to a candidate shall take effect only upon the start of the aforesaid campaign period x x x. (Emphasis supplied)

Thus, Congress not only reiterated but also strengthened its mandatory directive that election offenses can be committed by a candidate "only" upon the start of the campaign period. This clearly means that before the start of the campaign period, such election offenses cannot be so committed.

When the applicable provisions of RA 8436, as amended by RA 9369, are read together, these provisions of law do not consider Penera a candidate for purposes other than the printing of ballots, until the start of the campaign period. There is absolutely no room for any other interpretation.

We quote with approval the Dissenting Opinion of Justice Antonio T. Carpio:

x x x The definition of a "candidate" in Section 79(a) of the Omnibus Election Code should be read together with the amended Section 15 of RA 8436. A "‗candidate‘ refers to any person aspiring for or seeking an elective public office, who has filed a certificate of candidacy by himself or through an accredited political party, aggroupment or coalition of parties." However, it is no longer enough to merely file a certificate of candidacy for a person to be considered a candidate because "any person who files his certificate of candidacy within [the filing] period shall only be considered a candidate at the start of the campaign period for which he filed his certificate of candidacy." Any person may thus file a certificate of candidacy on any day within the prescribed period for filing a certificate of candidacy yet that person shall be considered a candidate, for purposes of determining one‘s possible violations of election laws, only during the campaign period. Indeed, there is no "election campaign" or "partisan political activity" designed to promote the election or defeat of a particular candidate or candidates to public office simply because there is no "candidate" to speak of prior to the start of the campaign period. Therefore, despite the filing of her certificate of candidacy, the law does not consider Penera a candidate at the time of the questioned motorcade which was conducted a day before the start of the campaign period. x x x

The campaign period for local officials began on 30 March 2007 and ended on 12 May 2007. Penera filed her certificate of candidacy on 29 March 2007. Penera was thus a candidate on 29 March 2009 only for purposes of printing the ballots. On 29 March 2007, the law still did not consider Penera a candidate for purposes other than the printing of ballots. Acts committed by Penera prior to 30 March 2007, the date when she

became a "candidate," even if constituting election campaigning or partisan political activities, are not punishable under Section 80 of the Omnibus Election Code. Such acts are within the realm of a citizen‘s protected freedom of expression. Acts committed by Penera within the campaign period are not covered by Section 80 as Section 80 punishes only acts outside the campaign period.5

The assailed Decision gives a specious reason in explaining away the first proviso in the third paragraph, the amended Section 15 of RA 8436 that election offenses applicable to candidates take effect only upon the start of the campaign period. The Decision states that:

x x x [T]he line in Section 15 of Republic Act No. 8436, as amended, which provides that "any unlawful act or omission applicable to a candidate shall take effect only upon the start of the campaign period," does not mean that the acts constituting premature campaigning can only be committed, for which the offender may be disqualified, during the campaign period. Contrary to the pronouncement in the dissent, nowhere in said proviso was it stated that campaigning before the start of the campaign period is lawful, such that the offender may freely carry out the same with impunity.

As previously established, a person, after filing his/her COC but prior to his/her becoming a candidate (thus, prior to the start of the campaign period), can already commit the acts described under Section 79(b) of the Omnibus Election Code as election campaign or partisan political activity, However, only after said person officially becomes a candidate, at the beginning of the campaign period, can said acts be given effect as premature campaigning under Section 80 of the Omnibus Election Code. Only after said person officially becomes a candidate, at the start of the campaign period, can his/her disqualification be sought for acts constituting premature campaigning. Obviously, it is only at the start of the campaign period, when the person officially becomes a candidate, that the undue and iniquitous advantages of his/her prior acts, constituting premature campaigning, shall accrue to his/her benefit. Compared to the other candidates who are only about to begin their election campaign, a candidate who had previously engaged in premature campaigning already enjoys an unfair headstart in promoting his/her candidacy.6 (Emphasis supplied)

It is a basic principle of law that any act is lawful unless expressly declared unlawful by law. This is specially true to expression or speech, which Congress cannot outlaw except on very narrow grounds involving clear, present and imminent danger to the State. The mere fact that the law does not declare an act unlawful ipso facto means that the act is lawful. Thus, there is no need for Congress to declare in Section 15 of RA 8436, as amended by RA 9369, that political partisan activities before the start of the campaign period are lawful. It is sufficient for Congress to state that "any unlawful act or omission applicable to a candidate shall take effect only upon the start of the campaign period." The only inescapable and logical result is that the same acts, if done before the start of the campaign period, are lawful.

In layman‘s language, this means that a candidate is liable for an election offense only for acts done during the campaign period, not before. The law is clear as daylight — any election offense that may be committed by a candidate under any election law cannot be committed before the start of the campaign period. In ruling that Penera is liable for premature campaigning for partisan political acts before the start of the campaigning, the assailed Decision ignores the clear and express provision of the law.

The Decision rationalizes that a candidate who commits premature campaigning can be disqualified or prosecuted only after the start of the campaign period. This is not what the law says. What the law says is "any unlawful act or omission applicable to a candidate shall take effect only upon the start of the campaign period." The plain meaning of this provision is that the effective date when partisan political acts become unlawful as to a candidate is when the campaign period starts. Before the start of the campaign period, the same partisan political acts are lawful.

The law does not state, as the assailed Decision asserts, that partisan political acts done by a candidate before the campaign period are unlawful, but may be prosecuted only upon the start of the campaign period. Neither does the law state that partisan political acts done by a candidate before the campaign period are temporarily lawful, but becomes unlawful upon the start of the campaign period. This is clearly not the language of the law. Besides, such a law as envisioned in the Decision, which defines a criminal act and curtails freedom of expression and speech, would be void for vagueness.

Congress has laid down the law — a candidate is liable for election offenses only upon the start of the campaign period. This Court has no power to ignore the clear and express mandate of the law that "any person who files his certificate of candidacy within [the filing] period shall only be considered a candidate at the start of the campaign period for which he filed his certificate of candidacy." Neither can this Court turn a blind eye to the express and clear language of the law that "any unlawful act or omission applicable to a candidate shall take effect only upon the start of the campaign period."

The forum for examining the wisdom of the law, and enacting remedial measures, is not this Court but the Legislature. This Court has no recourse but to apply a law that is as clear, concise and express as the second sentence, and its immediately succeeding proviso, as written in the third paragraph of Section 15 of RA 8436, as amended by RA 9369.

WHEREFORE, we GRANT petitioner Rosalinda A. Penera‘s Motion for Reconsideration. We SET ASIDE the Decision of this Court in G.R. No. 181613 promulgated on 11 September 2009, as well as the Resolutions dated 24 July 2007 and 30 January 2008 of the COMELEC Second Division and the COMELEC En Banc, respectively, in SPA No. 07-224. Rosalinda A. Penera shall continue as Mayor of Sta. Monica, Surigao del Norte.

G.R. Nos. 181999 & 182001-04 September 2, 2009 OFELIA C. CAUNAN, Petitioner, vs. PEOPLE OF THE PHILIPPINES and SANDIGANBAYAN, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. Nos. 182020-24 JOEY P. MARQUEZ, Petitioner, vs. THE SANDIGANBAYAN-FOURTH DIVISION and PEOPLE OF THE PHILIPPINES, Respondents.

At bar are consolidated petitions for review on certiorari under Rule 45 of the Rules of Court which assail the Decision1 dated August 30, 2007 and Resolution2 dated March 10, 2008 of the Sandiganbayan in Criminal Case Nos. 27944, 27946, 27952, 27953, & 27954, finding petitioners Joey P. Marquez (Marquez) and Ofelia C. Caunan (Caunan) guilty of violation of Section 3(g) of Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act.

Marquez and Caunan, along with four (4) other local government officials of Parañaque City3 and private individual Antonio Razo (Razo), were charged under five (5) Informations, to wit:

The Information in Criminal Case No. 27944 states:

That on January 11, 1996 or thereabout, in Parañaque City, Philippines, and within the jurisdiction of this Honorable Court, accused Public Officers JOEY P. MARQUEZ, a high ranking public official, being the City Mayor of Parañaque City and Chairman, Committee on Awards, together with the members of the aforesaid Committee, namely: SILVESTRE DE LEON, being then the City Treasurer, MARILOU TANAEL, the City Accountant (SG 26), FLOCERFIDA M. BABIDA, the City Budget Officer (SG 26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26) and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting as such and committing the offense in relation to their official duties and taking advantage of their official positions, conspiring, confederating and mutually helping one another and with the accused private individual ANTONIO RAZO, the owner and proprietor of ZARO Trading, a business entity registered with the Bureau of Domestic Trade and Industry, with evident bad faith and manifest partiality (or at the very least, with gross inexcusable negligence), did then and there willfully, unlawfully and criminally enter into manifestly and grossly disadvantageous transactions, through personal canvass, with said ZARO Trading, for the purchase of 5,998 pieces of "walis ting-ting" at P25 per piece as per Disbursement Voucher No. 101-96-12-8629 in the total amount of ONE HUNDRED FORTY-NINE THOUSAND NINE HUNDRED FIFTY PESOS (P149,950.00), without complying with the Commission on Audit (COA) Rules and Regulations and other requirements on Procurement and Public Bidding, and which transactions were clearly grossly overpriced as the actual cost per piece of the "walis ting-ting" was only P11.00 as found by the Commission on Audit (COA) in its Decision No. 2003-079 dated May 13, 2003

with a difference, therefore, ofP14.00 per piece or a total overpriced amount of EIGHTY THREE THOUSAND NINE HUNDRED SEVENTY TWO PESOS (P83,972.00), thus, causing damage and prejudice to the government in the aforesaid sum.

The Information in Criminal Case No. 27946 states:

That on June 30, 1997 or thereabout, in Parañaque City, Philippines and within the jurisdiction of this Honorable Court, accused Public Officers JOEY P. MARQUEZ, a high ranking public official, being the City Mayor of Parañaque City and Chairman, Committee on Awards, together with members of the aforesaid committee, namely: SILVESTRE DE LEON, being then the City Treasurer, MARILOU TANAEL, the City Accountant (SG 26), FLOCERFIDA M. BABIDA, the City Budget officer (SG 26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26) and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting as such and committing the offense in relation to their official duties and taking advantage of their official positions, conspiring, confederating and mutually helping one another and with accused private individual ANTONIO RAZO, the owner and proprietor of ZAR[O] Trading, a business entity registered with the Bureau of Domestic Trade and Industry, with evident bad faith and manifest partiality (or at the very least, with gross inexcusable negligence), did then and there willfully, unlawfully and criminally enter into manifestly and grossly disadvantageous transactions, through personal canvass, with ZAR[O] Trading for the purchase of 23,334 pieces of "walis ting-ting" at P15.00 per piece as per Disbursement Voucher No. 101-98-02-447 in the total amount of THREE HUNDRED FIFTY THOUSAND TEN PESOS (P350,010.00), without complying with the Commission on Audit (COA) Rules and Regulations and other requirements on Procurement and Public Bidding, and which transactions were clearly grossly overpriced as the actual cost per piece of the "walis ting-ting" was only P11.00 as found by the Commission on Audit (COA) in its Decision No. 2003-079 dated May 13, 2003 with a difference, therefore, of P4.00 per piece or a total overpriced amount of NINETY THREE THOUSAND THREE HUNDRED THIRTY SIX PESOS (P93,336.00), thus causing damage and prejudice to the government in the aforesaid sum.

The Information in Criminal Case No. 27952 states:

That [in] September 1997, or thereabout, in Parañaque City, Philippines and within the jurisdiction of this Honorable Court, accused Public Officers JOEY P. MARQUEZ, a high ranking public official, being the City Mayor of Parañaque City and Chairman, Committee on Awards, together with members of the aforesaid committee, namely: SILVESTRE DE LEON, being then the City Treasurer, MARILOU TANAEL, the City Accountant (SG 26), FLOCERFIDA M. BABIDA, the City Budget officer (SG 26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26) and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting as such and committing the offense in relation to their official duties and taking advantage of their official positions, conspiring, confederating and mutually helping one another and with accused private individual ANTONIO RAZO, the owner and proprietor of ZAR[O] Trading, a business entity registered with the Bureau of Domestic Trade and Industry, with evident bad faith and

manifest partiality (or at the very least, with gross inexcusable negligence), did then and there willfully, unlawfully and criminally enter into manifestly and grossly disadvantageous transactions, through personal canvass, with ZAR[O] Trading for the purchase of 8,000 pieces of "walis ting-ting" at P15.00 per piece as per Disbursement Voucher No. 101-98-02-561 in the total amount of ONE HUNDRED TWENTY THOUSAND PESOS (P120,000.00), without complying with the Commission on Audit (COA) Rules and Regulations and other requirements on Procurement and Public Bidding, and which transactions were clearly grossly overpriced as the actual cost per piece of the "walis ting-ting" was only P11.00 as found by the Commission on Audit (COA) in its Decision No. 2003-079 dated May 13, 2003 with a difference, therefore, of P4.00 per piece or a total overpriced amount of THIRTY TWO THOUSAND PESOS (P32,000.00), thus causing damage and prejudice to the government in the aforesaid sum.

The Information in Criminal Case No. 27953 states:

That during the period from February 11, 1997 to February 20, 1997, or thereabout, in Parañaque City, Philippines and within the jurisdiction of this Honorable Court, accused Public Officers JOEY P. MARQUEZ, a high ranking public official, being the City Mayor of Parañaque City and Chairman, Committee on Awards, together with members of the aforesaid committee, namely: SILVESTRE DE LEON, being then the City Treasurer, MARILOU TANAEL, the City Accountant (SG 26), FLOCERFIDA M. BABIDA, the City Budget officer (SG 26), OFELIA C. CAUNAN, the OIC General Services office (SG 26) and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting as such and committing the offense in relation to their official duties and taking advance of their official positions, conspiring, confederating and mutually helping one another and with accused private individual ANTONIO RAZO, the owner and proprietor of ZAR[O] Trading, a business entity registered with the Bureau of Domestic Trade and Industry, with evident bad faith and manifest partiality (or at the very least, with gross inexcusable negligence), did then and there willfully, unlawfully and criminally enter into manifestly and grossly disadvantageous transactions, through personal canvass, with ZAR[O] Trading for the purchase of 10,100 pieces of "walis ting-ting" on several occasions at P25.00 per piece without complying with the Commission on Audit (COA) Rules and Regulations and other requirements on procurement and Public Bidding and which purchases are hereunder enumerated as follows:

Date of Transaction Voucher No. Amount Quantity

February 20, 1997 101-97-04-1755 P 3,000.00 120 pcs.

February 12, 1997 101-97-04-1756 P100,000.00 4,000 pcs.

February 11, 1997 101-97-04-1759 P149,500.00 5,980 pcs.

in the total amount of TWO HUNDRED FIFTY TWO THOUSAND PESOS (P252,000.00), and which transactions were clearly overpriced as the actual cost per piece of the "walis ting-ting" was only P11.00 as found by the Commission on Audit (COA) in its Decision No. 2003-079 dated May 13, 2003 with a difference, therefore, ofP14.00 per piece or a total overpriced amount of ONE HUNDRED FORTY ONE THOUSAND FOUR HUNDRED PESOS (P141,400.00), thus, causing damage and prejudice to the government in the aforesaid sum.

The Information in Criminal Case No. 27954 states:

That during the period from October 15, 1996 to October 18, 1996 or thereabout, in Parañaque City, Philippines and within the jurisdiction of this Honorable Court, accused Public Officers JOEY P. MARQUEZ, a high ranking public official, being the City Mayor of Parañaque City and Chairman, Committee on Awards, together with members of the aforesaid committee, namely: SILVESTRE DE LEON, being then the City Treasurer, MARILOU TANAEL, the City Accountant (SG 26), FLOCERFIDA M. BABIDA, the City Budget officer (SG 26), OFELIA C. CAUNAN, the OIC General Services Office (SG 26) and AILYN ROMEA, the Head Staff, Office of the Mayor (SG 26), acting as such and committing the offense in relation to their official duties and taking advantage of their official positions, conspiring, confederating and mutually helping one another and with accused private individual ANTONIO RAZO, the owner and proprietor of ZAR[O] Trading, a business entity registered with the Bureau of Domestic Trade and Industry, with evident bad faith and manifest partiality (or at the very least, with gross inexcusable negligence), did then and there willfully, unlawfully and criminally enter into manifestly and grossly disadvantageous transactions, through personal canvass, with ZAR[O] Trading for the purchase of 8,000 pieces of "walis ting-ting" on several occasions at P25.00 per piece without complying with the Commission on Audit (COA) Rules and Regulations and other requirements on procurement and Public Bidding and which purchases are hereunder enumerated as follows:

Date of

Transaction

Voucher

Number

Amount Quantity

October 15, 1996 101-96-11-7604 P 100,000.00 4,000

pcs.

October 18, 1996 101-96-11-7605 P 100,000.00 4,000

pcs.

in the total amount of TWO HUNDRED THOUSAND PESOS (P200,000.00), and which transactions were clearly grossly overpriced as the actual cost per piece of the "walis ting-ting" was only P11.00 as found by the Commission on Audit (COA) in its Decision No. 2003-079 dated May 13, 2003 with a difference, therefore, ofP14.00 per piece or a

total overpriced amount of ONE HUNDRED TWELVE THOUSAND PESOS (P112,000.00), thus, causing damage and prejudice to the government in the aforesaid sum.4

The five (5) Informations were filed based on the findings of the Commission on Audit (COA) Special Audit Team that there was overpricing in certain purchase transactions of Parañaque City. In March 1999, a Special Audit Team composed of Fatima Bermudez (Bermudez), Carolina Supsup, Gerry Estrada, and Yolando Atienza, by virtue of Local Government Audit Office Assignment Order No. 99-002, audited selected transactions of Parañaque City for the calendar years 1996 to 1998, including the walis tingting purchases.

In connection with the walis tingting purchases audit, the audit team gathered the following evidence:

1. Documents furnished by the Office of the City Mayor of Parañaque City upon request of the audit team;

2. Sample walis tingting with handle likewise submitted by the Office of the City Mayor of Parañaque City;

3. Samples of walis tingting without handle actually utilized by the street sweepers upon ocular inspection of the audit team;

4. Survey forms accomplished by the street sweepers containing questions on the walis tingting;

5. Evaluation by the Technical Services Department5 of the reasonableness of the walis tingting procurement compared to current prices thereof;

6. A separate canvass by the audit team on the prices of the walis tingting, including purchases thereof at various merchandising stores;6 and

7. Documents on the conduct and process of procurement of walis tingting by the neighboring city of Las Piñas.

Parenthetically, to ascertain the prevailing price of walis tingting for the years 1996 to 1998, the audit team made a canvass of the purchase prices of the different merchandise dealers of Parañaque City. All, however, were reluctant to provide the team with signed quotations of purchase prices for walis tingting. In addition, the audit team attempted to purchase walis tingting from the named suppliers of Parañaque City. Curiously, when the audit team went to the listed addresses of the suppliers, these were occupied by other business establishments. Thereafter, the audit team located, and purchased from, a lone supplier that sold walis tingting.

As previously adverted to, the audit team made a report which contained the following findings:

1. The purchase of walis tingting was undertaken without public bidding;

2. The purchase of walis tingting was divided into several purchase orders and requests to evade the requirement of public bidding and instead avail of personal canvass as a mode of procurement;

3. The purchase of walis tingting through personal canvass was attended with irregularities; and

4. There was glaring overpricing in the purchase transactions.

Consequently, the COA issued Notices of Disallowance Nos. 01-001-101 (96) to 01-006-101 (96), 01-001-101 (97) to 01-011-101 (97), and 01-001-101 (98) to 01-004-101 (98) covering the overpriced amount ofP1,302,878.00 for the purchases of 142,612 walis tingting, with or without handle, by Parañaque City in the years 1996-1998.7

Objecting to the disallowances, petitioners Marquez and Caunan, along with the other concerned local government officials of Parañaque City, filed a request for reconsideration with the audit team which the latter subsequently denied in a letter to petitioner Marquez.

Aggrieved, petitioners and the other accused appealed to the COA which eventually denied the appeal. Surprisingly, on motion for reconsideration, the COA excluded petitioner Marquez from liability for the disallowances based on our rulings in Arias v. Sandiganbayan8 and Magsuci v. Sandiganbayan.9

On the other litigation front, the criminal aspect subject of this appeal, the Ombudsman found probable cause to indict petitioners and the other local government officials of Parañaque City for violation of Section 3(g) of R.A. No. 3019. Consequently, the five (5) Informations against petitioners, et al. were filed before the Sandiganbayan.

After trial and a flurry of pleadings, the Sandiganbayan rendered judgment finding petitioners Caunan and Marquez, along with Silvestre de Leon and Marilou Tanael, guilty of violating Section 3(g) of R.A. No. 3019. As for accused Flocerfida Babida, Ailyn Romea and private individual Razo, the Sandiganbayan acquitted them for lack of sufficient evidence to hold them guilty beyond reasonable doubt of the offenses charged. The Sandiganbayan ruled as follows:

1. The prosecution evidence, specifically the testimony of Bermudez and the Special Audit Team‘s report, did not constitute hearsay evidence, considering that all the prosecution witnesses testified on matters within their personal knowledge;

2. The defense failed to question, and timely object to, the admissibility of documentary evidence, such as the Las Piñas City documents and the Department of Budget and Management (DBM) price listing downloaded from the Internet, which were certified true copies and not the originals of the respective documents;

3. The Bids and Awards Committee was not properly constituted; the accused did not abide by the prohibition against splitting of orders; and Parañaque City had not been afforded the best possible advantage for the most objective price in the purchase of walis tingting for failure to observe the required public bidding;

4. The contracts for procurement of walis tingting in Parañaque City for the years 1996-1998 were awarded to pre-selected suppliers; and

5. On the whole, the transactions undertaken were manifestly and grossly disadvantageous to the government.

Expectedly, the remaining accused, Caunan, Marquez and Tanael, moved for reconsideration of the Sandiganbayan decision. Caunan and Tanael, represented by the same counsel, collectively filed a Motion for Reconsideration (with Written Notice of Death of Accused Silvestre S. de Leon). Marquez filed several motions,10including a separate Motion for Reconsideration.

All the motions filed by Marquez, as well as Caunan‘s motion, were denied by the Sandiganbayan. However, with respect to Tanael, the Sandiganbayan found reason to reconsider her conviction.

Hence, these separate appeals by petitioners Marquez and Caunan.

Petitioner Caunan posits the following issues:

1. [WHETHER] THE PROSECUTION‘S PROOF OF OVERPRICING [IS] HEARSAY.

2. [WHETHER THE] RESPONDENT SANDIGANBAYAN [ERRED] IN ADMITTING WITNESS FATIMA V. BERMUDEZ‘ TESTIMONY DESPITE THE FACT THAT ITS SOURCES ARE THEMSELVES ADMITTEDLY AND PATENTLY HEARSAY.

3. [WHETHER THE] RESPONDENT SANDIGANBAYAN GRAVELY [ERRED] IN APPLYING AN EXCEPTION TO THE HEARSAY RULE[.] UNDER THIS EXCEPTION, "PUBLIC DOCUMENTS CONSISTING OF ENTRIES IN PUBLIC RECORDS, ETC.," x x x ARE PRIMA FACIE EVIDENCE OF THE FACTS STATED THEREIN.

4. CONSEQUENTLY, [WHETHER] RESPONDENT SANDIGANBAYAN GRAVELY ERRED IN NOT ACQUITTING [CAUNAN].11

For his part, petitioner Marquez raises the following:

1. WHETHER [MARQUEZ] MUST BE ACQUITTED FROM THE SUBJECT CRIMINAL CASES BASED ON THE DOCTRINES LAID DOWN IN THE ARIAS AND MAGSUCI CASES EARLIER DECIDED BY THIS HONORABLE COURT AND THE PERTINENT PROVISIONS OF THE LOCAL GOVERNMENT CODE AND OTHER EXISTING REGULATIONS[;]

2. WHETHER [MARQUEZ] MUST BE ACQUITTED FROM THE SUBJECT CRIMINAL CASES SINCE HE WAS ALREADY EXCLUDED FROM LIABILITY BY THE COMMISSION ON AUDIT[;]

3. WHETHER THE ACQUITTAL OF CO-ACCUSED 1) SUPPLIER ANTONIO RAZO WHO WAS THE OTHER PARTY TO, AND RECEIVED THE TOTAL AMOUNT OF, THE QUESTIONED CONTRACTS OR TRANSACTIONS, 2) CITY ACCOUNTANT MARILOU TANAEL WHO PRE-AUDITED THE CLAIMS AND SIGNED THE VOUCHERS, 3) CITY BUDGET OFFICER FLOCERFIDA M. BABIDA, AND 4) HEAD OF STAFF AILYN ROMEA CASTS A BIG CLOUD OF DOUBT ON THE FINDING OF [MARQUEZ‘S] GUILT BY THE SANDIGANBAYAN – FOURTH DIVISION[;]

4. WHETHER [MARQUEZ] CAN BE CONVICTED ON PLAIN HEARSAY, IF NOT DUBIOUS EVIDENCE OF OVERPRICING OR ON MERE CIRCUMSTANTIAL EVIDENCE THAT DO NOT AMOUNT TO PROOF OF GUILT BEYOND REASONABLE DOUBT IN THE SUBJECT CRIMINAL CASES[;]

5. WHETHER THE ALLEGED OVERPRICING WHICH WAS THE BASIS FOR CLAIMING THAT THE CONTRACTS OR TRANSACTIONS ENTERED INTO BY [MARQUEZ] IN BEHALF OF PARAÑAQUE CITY WERE MANIFESTLY AND GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT WAS ASCERTAINED OR DETERMINED WITH REASONABLE CERTAINTY IN ACCORDANCE WITH THE REQUIREMENTS OR PROCEDURES PRESCRIBED UNDER COA MEMORANDUM NO. 97-012 DATED MARCH 31, 1997[;]

6. WHETHER THE QUANTUM OF PROSECUTION EVIDENCE HAS OVERCOME THE CONSTITUTIONAL PRESUMPTION OF INNOCENCE WHICH [MARQUEZ] ENJOYS IN THE SUBJECT CRIMINAL CASES[;]

7. WHETHER THE RIGHT OF [MARQUEZ] TO DUE PROCESS WAS VIOLATED WHEN THE CHAIRMAN (JUSTICE GREGORY ONG) OF THE SANDIGANBAYAN – FOURTH DIVISION REFUSED TO INHIBIT DESPITE SERIOUS CONFLICT OF INTEREST[;]

8. WHETHER [MARQUEZ] IS ENTITLED TO THE REOPENING OF THE SUBJECT CRIMINAL CASES[;]

9. WHETHER THE RIGHT OF [MARQUEZ] TO BE INFORMED OF THE NATURE OF THE ACCUSATION AGAINST HIM WAS VIOLATED WHEN INSTEAD OF ONLY ONE OFFENSE, SEVERAL INFORMATION HAD BEEN FILED IN THE TRIAL COURT ON

THE THEORY OF OVERPRICING IN THE PROCUREMENT OF BROOMSTICKS (WALIS TINGTING) BY WAY OF SPLITTING CONTRACTS OR PURCHASE ORDERS[; and]

10. WHETHER [MARQUEZ] IS ENTITLED TO NEW TRIAL SINCE HIS RIGHT TO AN IMPARTIAL TRIAL WAS VIOLATED IN THE SUBJECT CRIMINAL CASES WHEN THE CHAIRMAN (JUSTICE GREGORY ONG) REFUSED TO INHIBIT DESPITE THE EXISTENCE OF SERIOUS CONFLICT OF INTEREST RAISED BY THE FORMER BEFORE THE JUDGMENT BECAME FINAL.12

In a Resolution dated February 23, 2009, we directed the consolidation of these cases. Thus, we impale petitioners‘ issues for our resolution:

1. First and foremost, whether the Sandiganbayan erred in finding petitioners guilty of violation of Section 3(g) of R.A. No. 3019.

2. Whether the testimony of Bermudez and the report of the Special Audit Team constitute hearsay and are, therefore, inadmissible in evidence against petitioners.

3. Whether petitioner Marquez should be excluded from liability based on our rulings in Arias v. Sandiganbayan13 and Magsuci v. Sandiganbayan.14

Both petitioners insist that the fact of overpricing, upon which the charge against them of graft and corruption is based, had not been established by the quantum of evidence required in criminal cases, i.e., proof beyond reasonable doubt.15 Petitioners maintain that the evidence of overpricing, consisting of the report of the Special Audit Team and the testimony thereon of Bermudez, constitutes hearsay and, as such, is inadmissible against them. In addition, petitioner Marquez points out that the finding of overpricing was not shown to a reliable degree of certainty as required by COA Memorandum No. 97-012 dated March 31, 1997.16 In all, petitioners asseverate that, as the overpricing was not sufficiently established, necessarily, the last criminal element of Section 3(g) of R.A. No. 3019 — a contract or transaction grossly and manifestly disadvantageous to the government — was not proven.lavvphil

Section 3(g) of R.A. No. 3019 provides:

Section 3. Corrupt practices of public officers—In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

x x x x

(g) Entering on behalf of the Government, into any contract or transaction, manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.

For a charge under Section 3(g) to prosper, the following elements must be present: (1) that the accused is a public officer; (2) that he entered into a contract or transaction on behalf of the government; and (3) that such contract or transaction is grossly and manifestly disadvantageous to the government.17

The presence of the first two elements of the crime is not disputed. Hence, the threshold question we should resolve is whether the walis tingting purchase contracts were grossly and manifestly injurious or disadvantageous to the government.

We agree with petitioners that the fact of overpricing is embedded in the third criminal element of Section 3 (g) of R.A. No. 3019. Given the factual milieu of this case, the subject contracts would be grossly and manifestly disadvantageous to the government if characterized by an overpriced procurement. However, the gross and manifest disadvantage to the government was not sufficiently shown because the conclusion of overpricing was erroneous since it was not also adequately proven. Thus, we grant the petitions.

In criminal cases, to justify a conviction, the culpability of an accused must be established by proof beyond a reasonable doubt.18 The burden of proof is on the prosecution, as the accused enjoys a constitutionally enshrined disputable presumption of innocence.19 The court, in ascertaining the guilt of an accused, must, after having marshaled the facts and circumstances, reach a moral certainty as to the accused‘s guilt. Moral certainty is that degree of proof which produces conviction in an unprejudiced mind.20 Otherwise, where there is reasonable doubt, the accused must be acquitted.

In finding that the walis tingting purchase contracts were grossly and manifestly disadvantageous to the government, the Sandiganbayan relied on the COA‘s finding of overpricing which was, in turn, based on the special audit team‘s report. The audit team‘s conclusion on the standard price of a walis tingting was pegged on the basis of the following documentary and object evidence: (1) samples of walis tingting without handle actually used by the street sweepers; (2) survey forms on the walis tingting accomplished by the street sweepers; (3) invoices from six merchandising stores where the audit team purchased walis tingting; (4) price listing of the DBM Procurement Service; and (5) documents relative to the walis tingting purchases of Las Piñas City. These documents were then compared with the documents furnished by petitioners and the other accused relative to Parañaque City‘s walis tingting transactions.

Notably, however, and this the petitioners have consistently pointed out, the evidence of the prosecution did not include a signed price quotation from the walis tingting suppliers of Parañaque City. In fact, even the walis tingting furnished the audit team by petitioners and the other accused was different from the walis tingting actually utilized by the Parañaque City street sweepers at the time of ocular inspection by the audit team. At the barest minimum, the evidence presented by the prosecution, in order to substantiate the allegation of overpricing, should have been identical to the walis tingting purchased in 1996-1998. Only then could it be concluded that the walis tingting purchases were

disadvantageous to the government because only then could a determination have been made to show that the disadvantage was so manifest and gross as to make a public official liable under Section 3(g) of R.A. No. 3019.

On the issue of hearsay, the Sandiganbayan hastily shot down petitioners‘ arguments thereon, in this wise:

We find no application of the hearsay rule here. In fact, all the witnesses in this case testified on matters within their personal knowledge. The prosecution‘s principal witness, Ms. Bermudez, was a State Auditor and the Assistant Division Chief of the Local Government Audit Office who was tasked to head a special audit team to audit selected transactions of Parañaque City. The report which she identified and testified on [was] made by [the] Special Audit Team she herself headed. The disbursement vouchers, purchase orders, purchase requests and other documents constituting the supporting papers of the team‘s report were public documents requested from the City Auditor of Parañaque and from the accused Mayor Marquez. Such documents were submitted to the Special Audit Team for the specific purpose of reviewing them. The documents were not executed by Ms. Bermudez or by any member of the Special Audit Team for the obvious reason that, as auditors, they are only reviewing acts of others. The Special Audit Team‘s official task was to review the documents of the walis tingting transactions. In the process of [the] review, they found many irregularities in the documentations —violations of the Local Government Code and pertinent COA rules and regulations. They found that the transactions were grossly overpriced. The findings of the team were consolidated in a report. The same report was the basis of Ms. Bermudez‘s testimony. x x x.21

The reasoning of the Sandiganbayan is specious and off tangent. The audit team reached a conclusion of gross overpricing based on documents which, at best, would merely indicate the present market price of walis tingting of a different specification, purchased from a non-supplier of Parañaque City, and the price of walis tingting purchases in Las Piñas City. Effectively, the prosecution was unable to demonstrate the requisite burden of proof, i.e., proof beyond reasonable doubt, in order to overcome the presumption of innocence in favor of petitioners.

As pointed out by petitioner Caunan, not all of the contents of the audit team‘s report constituted hearsay. Indeed, as declared by the Sandiganbayan, Bermudez could very well testify thereon since the conclusions reached therein were made by her and her team. However, these conclusions were based on incompetent evidence. Most obvious would be the market price of walis tingting in Las Piñas City which was used as proof of overpricing in Parañaque City. The prosecution should have presented evidence of the actual price of the particular walis tingting purchased by petitioners and the other accused at the time of the audited transaction or, at the least, an approximation thereof. Failing in these, there is no basis to declare that there was a glaring overprice resulting in gross and manifest disadvantage to the government.

We are not unmindful of the fact that petitioners failed to conduct the requisite public bidding for the questioned procurements. However, the lack of public bidding alone does not automatically equate to a manifest and gross disadvantage to the government. As we had occasion to declare in Nava v. Sandiganbayan,22 the absence of a public bidding may mean that the government was not able to secure the lowest bargain in its favor and may open the door to graft and corruption. However, this does not satisfy the third element of the offense charged, because the law requires that the disadvantage must be manifest and gross. After all, penal laws are strictly construed against the government.

With the foregoing disquisition, we find no necessity to rule on the applicability of our rulings in Arias and Magsuci to petitioner Marquez. Nonetheless, we wish to reiterate herein the doctrines laid down in those cases. We call specific attention to the sweeping conclusion made by the Sandiganbayan that a conspiracy existed among petitioners and the other accused, most of whom were acquitted, particularly private individual Razo, the proprietor of Zaro Trading.

Our ruling in Magsuci, citing our holding in Arias, should be instructive, viz.:

The Sandiganbayan predicated its conviction of [Magsuci] on its finding of conspiracy among Magsuci, Ancla and now deceased Enriquez.

There is conspiracy "when two or more persons come to an agreement concerning the commission of a felony and decide to commit it." Conspiracy is not presumed. Like the physical acts constituting the crime itself, the elements of conspiracy must be proven beyond reasonable doubt. While conspiracy need not be established by direct evidence, for it may be inferred from the conduct of the accused before, during and after the commission of the crime, all taken together, however, the evidence therefore must reasonably be strong enough to show a community of criminal design.

x x x x

Fairly evident, however, is the fact that the actions taken by Magsuci involved the very functions he had to discharge in the performance of his official duties. There has been no intimation at all that he had foreknowledge of any irregularity committed by either or both Engr. Enriquez and Ancla. Petitioner might have indeed been lax and administratively remiss in placing too much reliance on the official reports submitted by his subordinate (Engineer Enriquez), but for conspiracy to exist, it is essential that there must be a conscious design to commit an offense. Conspiracy is not the product of negligence but of intentionality on the part of cohorts.

In Arias v. Sandiganbayan, this Court, aware of the dire consequences that a different rule could bring, has aptly concluded:

"We would be setting a bad precedent if a head of office plagued by all too common problems—dishonest or negligent subordinates, overwork, multiple assignments or

positions, or plain incompetence—is suddenly swept into a conspiracy conviction simply because he did not personally examine every single detail, painstakingly trace every step from inception, and investigate the motives of every person involved in a transaction before affixing his signature as the final approving authority.

"x x x x

"x x x. All heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies, or enter into negotiations. x x x. There has to be some added reason why he should examine each voucher in such detail. Any executive head of even small government agencies or commissions can attest to the volume of papers that must be signed. There are hundreds of documents, letters, memoranda, vouchers, and supporting papers that routinely pass through his hands. The number in bigger offices or department is even more appalling."23

WHEREFORE, premises considered, the Decision dated August 30, 2007 and Resolution dated March 10, 2008 of the Sandiganbayan in Criminal Case Nos. 27944, 27946, 27952, 27953, & 27954 are REVERSED and SET ASIDE. Petitioners Joey P. Marquez in G.R. Nos. 182020-24 and Ofelia C. Caunan in G.R. Nos. 181999 and 182001-04 are ACQUITTED of the charges against them. Costs de oficio.

G.R. No. 188456 February 10, 2010 H. HARRY L. ROQUE, JR., JOEL R. BUTUYAN, ROMEL R. BAGARES, ALLAN JONES F. LARDIZABAL, GILBERT T. ANDRES, IMMACULADA D. GARCIA, ERLINDA T. MERCADO, FRANCISCO A. ALCUAZ, MA. AZUCENA P. MACEDA, and ALVIN A. PETERS, Petitioners, vs. COMMISSION ON ELECTIONS, Represented by HON. CHAIRMAN JOSE MELO, COMELEC SPECIAL BIDS and AWARDS COMMITTEE, represented by its CHAIRMAN HON. FERDINAND RAFANAN, DEPARTMENT OF BUDGET and MANAGEMENT, represented by HON. ROLANDO ANDAYA, TOTAL INFORMATION MANAGEMENT CORPORATION and SMARTMATIC INTERNATIONAL CORPORATION, Respondents. PETE QUIRINO-QUADRA, Petitioner-in-Intervention. SENATE OF THE PHILIPPINES, represented by its President, JUAN PONCE ENRILE, Movant-Intervenor.

By Decision dated September 10, 2009, the Court denied the petition of H. Harry L. Roque, Jr., et al. for certiorari, prohibition, and mandamus to nullify the contract-award of the 2010 Election Automation Project to the joint venture of Total Information Management Corporation (TIM) and Smartmatic International Corporation (Smartmatic). The Court also denied the petition-in-intervention of Pete Q. Quadra, praying that the respondents be directed to implement the minimum requirements provided under pars.

(f) and (g), Section 6 of Republic Act No. (RA) 8436, or the Election Modernization Act, as amended by RA 9369.

Petitioners Roque, et al. are again before the Court on a motion for reconsideration, as supplemented, praying, as they did earlier, that the contract award be declared null and void on the stated ground that it was made in violation of the Constitution, statutes, and jurisprudence.1 Intervening petitioner also interposed a similar motion, but only to pray that the Board of Election Inspectors be ordered to manually count the ballots after the printing and electronic transmission of the election returns.

To both motions, private respondents TIM and Smartmatic, on the one hand, and public respondents Commission on Elections (Comelec), et al., on the other, have interposed their separate comments and/or oppositions.

As may be recalled, the underlying petition for certiorari, etc. on its face assailed the award by Comelec of the poll automation project to the TIM-Smartmatic joint venture, the challenge basically predicated on the non-compliance of the contract award with the pilot-testing requirements of RA 9369 and the minimum system capabilities of the chosen automated election system (AES), referring to the Precinct Count Optical Scan (PCOS) system. The non-submission of documents to show the existence and scope of a valid joint venture agreement between TIM and Smartmatic was also raised as a nullifying ground, albeit later abandoned or at least not earnestly pursued.

The Court, in its September 10, 2009 Decision, dismissed the petition and the petition-in-intervention on the following main grounds: (1) RA 8436, as amended, does not require that the AES procured or, to be used for the 2010 nationwide fully automated elections must, as a condition sine qua non, have been pilot-tested in the 2007 Philippine election, it being sufficient that the capability of the chosen AES has been demonstrated in an electoral exercise in a foreign jurisdiction; (2) Comelec has adopted a rigid technical evaluation mechanism to ensure compliance of the PCOS with the minimum capabilities standards prescribed by RA 8436, as amended, and its determination in this regard must be respected absent grave abuse of discretion; (3) Comelec retains under the automation arrangement its supervision, oversight, and control mandate to ensure a free, orderly, and honest electoral exercise; it did not, by entering into the assailed automation project contract, abdicate its duty to enforce and administer all laws relative to the conduct of elections and decide, at the first instance, all questions affecting elections; and (4) in accordance with contract documents, continuity and back-up plans are in place to be activated in case the PCOS machines falter during the actual election exercise.

Petitioners Roque, et al., as movants herein, seek a reconsideration of the September 10, 2009 Decision on the following issues or grounds:

1. The Comelec‘s public pronouncements show that there is a "high probability" that there will be failure of automated elections;

2. Comelec abdicated its constitutional functions in favor of Smartmatic;

3. There is no legal framework to guide the Comelec in appreciating automated ballots in case the PCOS machines fail;

4. Respondents cannot comply with the requirements of RA 8436 for a source code review;

5. Certifications submitted by private respondents as to the successful use of the machines in elections abroad do not fulfill the requirement of Sec. 12 of RA 8436;

6. Private respondents will not be able to provide telecommunications facilities that will assure 100% communications coverage at all times during the conduct of the 2010 elections; and

7. Subcontracting the manufacture of PCOS machines to Quisdi violates the Comelec‘s bidding rules.

Both public and private respondents, upon the other hand, insist that petitioners‘ motion for reconsideration should be held devoid of merit, because the motion, for the most part, either advances issues or theories not raised in the petition for certiorari, prohibition, and mandamus, and argues along speculative and conjectural lines.

Upon taking a second hard look into the issues in the case at bar and the arguments earnestly pressed in the instant motions, the Court cannot grant the desired reconsideration.

Petitioners‘ threshold argument delves on possibilities, on matters that may or may not occur. The conjectural and speculative nature of the first issue raised is reflected in the very manner of its formulation and by statements, such as "the public pronouncements of public respondent COMELEC2 x x x clearly show that there is a high probability that there will be automated failure of elections";3 "there is a high probability that the use of PCOS machines in the May 2010 elections will result in failure of elections";4 "the unaddressed logistical nightmares—and the lack of contingency plans that should have been crafted as a result of a pilot test—make an automated failure of elections very probable";5 and "COMELEC committed grave abuse of discretion when it signed x x x the contract for full automation x x x despite the likelihood of a failure of elections."6

Speculations and conjectures are not equivalent to proof; they have little, if any, probative value and, surely, cannot be the basis of a sound judgment.

Petitioners, to support their speculative venture vis-à-vis the possibility of Comelec going manual, have attributed certain statements to respondent Comelec Chairman Melo, citing for the purpose a news item on Inquirer.net, posted September 16, 2009.7

Reacting to the attribution, however, respondents TIM and Smartmatic, in their comment, described the Melo pronouncements as made in the context of Comelec‘s contingency plan. Petitioners, however, the same respondents added, put a misleading spin to the Melo pronouncements by reproducing part of the news item, but omitting to make reference to his succeeding statements to arrive at a clearer and true picture.

Private respondents‘ observation is well-taken. Indeed, it is easy to selectively cite portions of what has been said, sometimes out of their proper context, in order to assert a misleading conclusion. The effect can be dangerous. Improper meaning may be deliberately attached to innocent views or even occasional crude comments by the simple expediency of lifting them out of context from any publication. At any event, the Court took it upon itself to visit the website, whence petitioners deduced their position on the possible failure of automated elections in problem areas and found the following items:

Allaying fears of failure of elections in 2010, the x x x [Comelec] said it will prepare for manual balloting, especially for areas with problems in electricity and telecommunications network coverage. x x x

"Aside from preparations for poll automation, Comelec is also preparing for manual elections sa mga liblib na lugar [in remote places] x x x, provinces with no electricity and would have issues in electronic transmission. We are ready for manual polls in at least 30 percent or 50 percent of the country as a last contingency measure in case the contingency plans for automation are difficult to implement," said Melo.

The poll chief was reacting to statements expressing the possibility of failure of elections due to the novelty of poll automation.

"The occurrence of nationwide failure of elections as alleged by doomsayers is impossible. Under the laws of probability, all 80,000 PCOS machines nationwide cannot breakdown. Maybe several would but we have standby units for this and we also have preparations for manual elections," he said.8 (Emphasis added.)

Petitioners next maintain that the Comelec abdicated its constitutional mandate9 to decide all questions affecting elections when, under Article 3.310 of the poll automation contract, it surrendered control of the system and technical aspects of the 2010 automated elections to Smartmatic in violation of Sec. 2611 of RA 8436. Comelec, so petitioners suggest, should have stipulated that its Information Technology (IT) Department shall have charge of the technical aspects of the elections.

Petitioners‘ above contention, as well as the arguments, citations, and premises holding it together, is a rehash of their previous position articulated in their memorandum12 in support of their petition. They have been considered, squarely addressed, and found to be without merit in the Decision subject hereof. The Court is not inclined to embark on another extended discussion of the same issue again. Suffice it to state that, under the automation contract, Smartmatic is given a specific and limited technical task to assist

the Comelec in implementing the AES. But at the end of the day, the Smarmatic-TIM joint venture is merely a service provider and lessor of goods and services to the Comelec, which shall have exclusive supervision and control of the electoral process. Art. 6.7 of the automation contract could not have been more clear:

6.7 Subject to the provisions of the General Instructions to be issued by the Commission En Banc, the entire process of voting, counting, transmission, consolidation and canvassing of votes shall [still] be conducted by COMELEC‘s personnel and officials and their performance, completion and final results according to specifications and within specified periods shall be the shared responsibility of COMELEC and the PROVIDER. (Emphasis added.)

The aforequoted provision doubtless preserves Comelec‘s constitutional and statutory responsibilities. But at the same time, it realistically recognizes the complexity and the highly technical nature of the automation project and addresses the contingencies that the novelty of election automation brings.

Petitioners‘ posture anent the third issue, i.e, there no is legal framework to guide Comelec in the appreciation of automated ballots or to govern manual count should PCOS machines fail, cannot be accorded cogency. First, it glosses over the continuity and back-up plans that would be implemented in case the PCOS machines falter during the 2010 elections.13 The overall fallback strategy and options to address even the worst-case scenario—the wholesale breakdown of the 80,000 needed machines nationwide and of the 2,000 reserved units—have been discussed in some detail in the Decision subject of this recourse. The Court need not belabor them again.

While a motion for reconsideration may tend to dwell on issues already resolved in the decision sought to be reconsidered—and this should not be an obstacle for a reconsideration—the hard reality is that petitioners have failed to raise matters substantially plausible or compellingly persuasive to warrant the desired course of action.

Second, petitioners‘ position presupposes that the Comelec is, in the meanwhile, standing idly by, totally unconcerned with that grim eventuality and the scenarios petitioners envision and depict. Comelec, to reiterate, is the constitutional body tasked to enforce and administer all laws and regulations relative to the conduct of an election. In the discharge of this responsibility, Comelec has been afforded enough latitude in devising means and methods that would enable it to accomplish the great objective for which it was created. In the matter of the administration of laws relative to the conduct of elections, the Court—or petitioners for that matter—must not, by any preemptive move or any excessive zeal, take away from Comelec the initiative that by law pertains to it.14 It should not be stymied with restrictions that would perhaps be justified in the case of an organization of lesser responsibility.15

Significantly, petitioners, in support of their position on the lack-of-legal-framework issue, invoke the opinion of Associate, later Chief, Justice Artemio Panganiban in Loong

v. Comelec,16 where he made the following observations: "Resort to manual appreciation of the ballots is precluded by the basic features of the automated election system,"17 and "the rules laid down in the Omnibus Election Code (OEC) for the appreciation and counting of ballots cast in a manual election x x x are inappropriate, if not downright useless, to the proper appreciation and reading of the ballots used in the automated system."18 Without delving on its wisdom and validity, the view of Justice Panganiban thus cited came by way of a dissenting opinion. As such, it is without binding effect, a dissenting opinion being a mere expression of the individual view of a member of the Court or other collegial adjudicating body, while disagreeing with the conclusion held by the majority.19

Petitioners insist next that public respondents cannot comply with the requirement of a source code20 review as mandated by Sec. 14 of RA 8436, as amended, which provides:

SEC. 14. Examination and Testing of Equipment or Device of the AES and Opening of the Source Code of Review.—Once an AES Technology is selected for implementation, the Commission shall promptly make the source code of that technology available and open to any interested political party or groups which may conduct their own review thereof.

Pursuing the point, after citing a commentary of an IT expert on the importance of a source code review, petitioners state the observation that "there are strong indications of [the inability] to comply x x x since the source code, which runs the PCOS machines, will effectively be kept secret from the people."21

Again, petitioners engage in an entirely speculative exercise, second- guessing what the Comelec can and will probably do, or what it cannot and probably will not do, with respect to the implementation of a statutory provision. The fact that a source code review is not expressly included in the Comelec schedule of activities is not an indication, as petitioners suggest, that Comelec will not implement such review. Comelec, in its Comment on the Motion for Reconsideration, manifests its intention to make available and open the source code to all political and interested parties, but under a controlled environment to obviate replication and tampering of the source code, thus protecting, in the process, the intellectual proprietary right of Smartmatic to the source code. Absent compelling proof to the contrary, the Court accords the Comelec, which enjoys the presumption of good faith in the performance of its duties in the first place, the benefit of the doubt.

And going to another but recycled issue, petitioners would have the Court invalidate the automation contract on the ground that the certifications submitted by Smartmatic during the bidding, showing that the PCOS technology has been used in elections abroad, do not comply with Sec. 1222 of RA 8436.

We are not convinced.

As stressed in our September 10, 2009 Decision, the AES chosen by Comelec for the 2010 elections has been successfully deployed in previous electoral exercises in foreign countries, such as Ontario, Canada and New York, USA,23 albeit Smartmatic was not necessarily the system provider.

Roque, et al., in their petition, had questioned the certifications to this effect, arguing that these certifications were not issued to respondent TIM-Smartmatic, but to a third party, Dominion Voting Systems. Resolving the challenge, the Court, in effect, said that the system subject of the certifications was the same one procured by Comelec for the 2010 elections. And besides, the Licensing Agreement between Smartmatic and the Dominion Voting Systems indicates that the former is the entity licensed by the latter to use the system in the Philippines.

Presently, petitioners assert that the system certified as having been used in New York was the Dominion Image Cast, a ballot marking device.

Petitioners have obviously inserted, at this stage of the case, an entirely new factual dimension to their cause. This we cannot allow for compelling reasons. For starters, the Court cannot plausibly validate this factual assertion of petitioners. As it is, private respondents have even questioned the reliability of the website24 whence petitioners base their assertion, albeit the former, citing the same website, state that the Image Cast Precinct tabulation device refers to the Dominion‘s PCOS machines.

Moreover, as a matter of sound established practice, points of law, theories, issues, and arguments not raised in the original proceedings cannot be brought out on review. Basic considerations of fair play impel this rule. The imperatives of orderly, if not speedy, justice frown on a piecemeal presentation of evidence25 and on the practice of parties of going to trial haphazardly.26

Moving still to another issue, petitioners claim that "there are very strong indications that Private Respondents will not be able to provide for telecommunication facilities for areas without these facilities."27 This argument, being again highly speculative, is without evidentiary value and hardly provides a ground for the Court to nullify the automation contract. Surely, a possible breach of a contractual stipulation is not a legal reason to prematurely rescind, much less annul, the contract.1avvphi1

Finally, petitioners argue that, based on news reports,28 the TIM-Smartmatic joint venture has entered into a new contract with Quisdi, a Shanghai-based company, to manufacture on its behalf the needed PCOS machines to fully automate the 2010 elections.29 This arrangement, petitioners aver, violates the bid rules proscribing sub-contracting of significant components of the automation project.

The argument is untenable, based as it is again on news reports. Surely, petitioners cannot expect the Court to act on unverified reports foisted on it. And, of course, the Court is at a loss to understand how the sub-contract would, in the scheme of things, constitute grave abuse of discretion on the part of Comelec so as to nullify the contract

award of the automation project. As petitioners themselves acknowledge, again citing news reports, "Smartmatic has unilaterally made the new subcontract to the Chinese company."30 Petitioners admit too, albeit with qualification, that RA 9184 allows subcontracting of a portion of the automation project.31

The motion of intervenor Quadra deals with the auditability of the results of the automated elections. His concern has already been addressed by the Court in its Decision. As we have said, the AES procured by the Comelec is a paper-based system, which has a provision for system auditability, since the voter would be able, if needed, to verify if the PCOS machine has scanned, recorded, and counted his vote properly. All actions done on the machine can be printed out by the Board of Election Inspectors Chairperson as an audit log.32

On the basis of the arguments, past and present, presented by the petitioners and intervenor, the Court does not find any grave abuse of discretion on the part of the Comelec in awarding the automation contract to the joint venture of private respondents.

In closing, the Court harks back to its parting message embodied in its September 10, 2009 Decision, but this time even more mindful of warnings and apprehensions of well-meaning sectors of society, including some members of the Court, about the possibility of failure of elections. The Court, to repeat, will not venture to say that nothing could go wrong in the conduct of the 2010 nationwide automated elections. Neither will it guarantee, as it is not even equipped with the necessary expertise to guarantee, the effectiveness of the voting machines and the integrity of the counting and consolidation software embedded in them. That difficult and complex undertaking belongs at the first instance to the Comelec as part of its mandate to insure orderly and peaceful elections. The Comelec, as it were, is laboring under a very tight timeline. It would accordingly need the help of all advocates of orderly and honest elections, all men and women of goodwill, to assist Comelec personnel in addressing the fears expressed about the integrity of the system. After all, peaceful, fair, honest, and credible elections is everyone‘s concern.

WHEREFORE, the instant separate motions for reconsideration of the main and intervening petitioners are DENIED.