LEOPOLDO OANI, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

Oani versus People of the Philippines

The Case

This is Leopoldo Oani against the People of the Philippines, a petition for review on certiorari brought by a public school principal who was convicted by the Sandiganbayan of violating Section 3(e) of Republic Act Number 3019, the Anti-Graft and Corrupt Practices Act. Oani had approved the purchase of fire extinguishers, a stereo set, and school and office supplies for Panabo High School, and the State charged that he did so without the required public bidding and canvass, at prices far above what the government should have paid, thereby causing undue injury to the Government. The case matters because it is the Court's clean statement of when a public officer may lawfully dispense with public bidding and buy by negotiation, and of what "evident bad faith" and "gross inexcusable negligence" require for a conviction under the anti-graft law.

Procedural History

Two Informations were filed against Oani and the school's Resident Auditor, Bonifacio Roa, before the Sandiganbayan for violation of Section 3(e) of Republic Act Number 3019. After trial, the Sandiganbayan acquitted Roa but convicted Oani in both cases, sentencing him in each to an indeterminate penalty of six years and one month as minimum to eight years as maximum, with perpetual disqualification from public office, and ordering restitution to the school treasurer. Oani then filed with the Supreme Court the present petition for review on certiorari, raising the sole issue of whether his guilt was proven beyond reasonable doubt.

Facts

During school year 1988 to 1989, Panabo High School in Panabo, Davao del Norte, headed by Principal Leopoldo Oani, implemented the government's free secondary school program. From November 1988 to December 1989 the school received 648,532 pesos from the Department of Education, Culture and Sports for Maintenance and Other Operating Expenses, of which 551,439.13 pesos was earmarked for supplies, materials and equipment. In March 1990 the Parents Teachers Association wrote the Department Secretary, among other things complaining of overpricing in the purchase of fire extinguishers, and the Commission on Audit sent an audit team to determine whether the funds had been spent in accordance with law and to identify any fraud.

The team found that in June 1989 Oani had approved a requisition for fifteen fire extinguishers, and instead of holding a public bidding, bought nine units from Powerline Manufacturing Industry for 54,747 pesos. A re-canvass showed that the same brand and specifications could be bought at 2,970 pesos per unit, inclusive of the ten percent allowance, so the purchase was overpriced by 23,040 pesos. Oani also approved the purchase of a stereo amplifier set from ASM Marketing for 35,650 pesos, and two purchases of office supplies from Red Lion Marketing for 61,912.35 pesos and 111,912.35 pesos. The audit team found that the stereo set and the supplies could have been bought for 144,621.51 pesos instead of the 227,857.45 pesos paid, and recommended criminal complaints.

Oani admitted that no public bidding preceded the fire extinguisher purchase. He claimed he was authorized to negotiate because Powerline's proprietor had issued a Certification dated January 1988 stating that the company was the only authorized and licensed manufacturer and exclusive distributor of the brand, with no dealer or sub-dealer appointed. He claimed that canvass and bidding were observed for the other purchases and that he acted in good faith. The Sandiganbayan found the certification incredible, convicted Oani, and acquitted Roa.

Issues

• Whether or not the guilt of the petitioner was proven beyond reasonable doubt for violation of Section 3(e) of Republic Act Number 3019.
• Whether or not the petitioner was justified in dispensing with public bidding and purchasing the fire extinguishers by negotiated contract.
• Whether or not the petitioner acted with evident bad faith or gross inexcusable negligence in causing undue injury to the Government.

Applicable Provisions

Section 3(e) of Republic Act Number 3019, the provision under which Oani was charged, provides:

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.

This is the offense itself, and the Court measures Oani's acts against its elements of undue injury caused through evident bad faith or gross inexcusable negligence.

COA Circular Number 78-84, which governs when negotiated contracts may be entered into, provides:

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.

This is the very exception Oani invoked, and the Court holds that none of its conditions was present in his purchase.

Ruling

On the first issue, the Court notes that the petitioner raises factual questions, and under Rule 45 of the Rules of Court only questions of law may be raised in a petition for review on certiorari. The Court is not a trier of facts, and the findings of the Sandiganbayan are generally conclusive; no exceptional circumstance was shown to justify review. After assiduously reviewing the records, the Court found no justification to modify or reverse the conviction.

On the second issue, the Court holds that the petitioner was not justified in dispensing with public bidding. The negotiated purchase was valid only if the conditions of COA Circular Number 78-84 existed, and none did. Oani did not require the supplier to submit a certification from the Department of Trade and Industry that he was the exclusive distributor or manufacturer, did not require an affidavit that no sub-dealer sold at a lower price, and did not ascertain whether a suitable substitute could be obtained elsewhere on more advantageous terms. Another enterprise, Systems Products Industries, was selling identical items at 2,700 pesos each, or 2,970 pesos with the ten percent allowance, against the 5,530 pesos per unit paid. The Court also found the January 1988 Certification to be a falsified document: it cited COA Circular Number 91-368, which was issued only on December 19, 1991, so Cunanan could not have executed it in January 1988, and Oani never submitted it to the auditing team.

On the third issue, the Court holds that Oani's failure to observe the requirements of government purchase, or at least the diligence of a similarly situated reasonable person, caused the school and the Government to suffer 23,040 pesos in the fire extinguisher case. On the stereo set and supplies, the Court agrees with the trial court that the Bids and Awards Committee failed to conduct any canvass and public bidding as mandated by law.

Doctrine

Public bidding is the general rule, and a negotiated purchase is a mere exception that must strictly fall within the conditions of COA Circular Number 78-84. A public officer who invokes the exclusive distributor exception must demand a Department of Trade and Industry certification, an affidavit that no sub-dealer sells at a lower price, and proof that no suitable substitute is available on more advantageous terms; failing these, the purchase is irregular. For a conviction under Section 3(e) of Republic Act Number 3019, the undue injury must be caused through manifest partiality, evident bad faith, or gross inexcusable negligence, and a principal who approves overpriced purchases without the required bidding and canvass is guilty of gross inexcusable negligence. Finally, factual findings of the Sandiganbayan are conclusive on the Supreme Court, which under Rule 45 reviews only questions of law.

Disposition

The Supreme Court denied the petition and affirmed the Sandiganbayan's decision convicting Leopoldo Oani in both criminal cases, with costs against him.

Remember This

The one line to memorize: negotiated purchase is allowed only when the exclusive distributor exception is strictly established, and failure to observe bidding and canvass is gross inexcusable negligence under Section 3(e). Examiners use this case to test the requisites of negotiated procurement and the elements of undue injury under the Anti-Graft and Corrupt Practices Act.