CRISTINA AMPOSTA-MORTEL, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

1. Violating the simplified bidding rules because they shortlisted bidders not based on the PCAB master list;
2. Conducting the bidding and recommending the award to accused
   Legaspi without detailed engineering in violation of P.D. 1594 and
   without the required appropriation and actual availability of funds for
   the total contract price;

3. Creating and confirming the artificial phases in the Construction
   Agreement and dividing the contract into Phase I and Phase II just to
   enable PEA to circumvent the requirement under P.D. No. 1445 about
   funding requirements. In the case of Mortel. . .

4. In the case of accused Beriña[, Jr.] and Millan, recommending the
   approval of Variation Order No. 2 and the contract price adjustment, and
   the payment thereof without the required presidential approval and in
   violation of P.D. No. 1594;

5. In the case of San Juan, Chan, Dayan, Malbarosa, Padilla and
   Damaso, for approving and confirming the Legaspi contract without
   sufficient funding and the Seaside Drive Extension without public
   bidding;

6. In the case of Legaspi, for conspiring with Beriña[, Jr.] and
   Millan in having the Seaside Drive Extension contract awarded to him
   under a negotiated contract.^[175]

At the outset, it must be clarified that a violation of the law and
rules of procurement does not automatically equate to a violation of
R.A. No. 3019. As explained in Sabaldan v. Office of the Ombudsman:^[176]

[E]ven granting that there may be violations of the applicable
procurement laws, the same does not mean that the elements of violation
of Section 3(e) of R.A. No. 3019 are already present as a matter of
course. For there to be a violation under Section 3(c) of R.A. No. 3019
based on a breach of applicable procurement laws, one cannot solely rely
on the mere fact that a violation of procurement laws has been
committed. It must be shown that (1) the violation of procurement laws
caused undue injury to any party or gave any private patty unwarranted
benefits, advantage or preference; and (2) the accused acted with
evident bad faith, manifest partiality, or gross inexcusable negligence.^[177]

Thus, despite findings for violation of the procurement law, it is
the elements comprising R.A. No. 3019 that must be materially proven,
especially that an information charges a criminal offense, as defined by
R.A. No. 3019, and not by P.D. No. 1594 or R.A. No. 9184.^[178] These elements were further elaborated in Chung v. Ombudsman^[179] as follows:

By the very language of Section 3, paragraph (e) of RA 3019, which
defines “corrupt practices of public officers,” the elements of
manifest partiality, evident bad faith, and gross inexcusable negligence
and of giving unwarranted benefit, advantage or preference to another
must go hand in hand with a showing of fraudulent intent and corrupt
motives.

Evident bad faith “does not simply connote bad judgment or
negligence” but of having a “palpably and patently fraudulent and
dishonest purpose to do moral obliquity or conscious wrongdoing for some
perverse motive or ill will. It contemplates a state of mind
affirmatively operating with furtive design or with some motive or
self-interest or ill will or for ulterior purposes.”

Manifest partiality, on the other hand, is defined as a clear,
notorious, or plain inclination or predilection to favor one side or
person rather than another, while gross inexcusable negligence is
defined as negligence characterized by the want of even the slightest
care. It presupposes acting or omitting to act in a situation where
there is a duty to act, not inadvertently but willfully and
intentionally, with conscious indifference to consequences insofar as
other persons may be affected.^[180] (Citations omitted)

Guided by the foregoing, the acts found by the Sandiganbayan that led to the conviction of petitioners must be re-examined.

DPWH list versus PCAB Masterlist

In holding that petitioners violated the rules on simplified public
bidding, the Sandiganbayan relied on the IRR of P.D. No. 1594 as
amended,^[181] stating that
there is an obligation on the part of the PEA to consult the separate
list of the PCAB before the negotiated bidding of the PDMB Project could
proceed. The provision reads:

a. Participation in simplified public bidding for a project shall be limited to bona fide
contractors duly accredited and classified for the project category and
size and who are included in a separate master list to be prepared by
the Philippine Contractors Accreditation Board (PCAB) pursuant to
the uniform guidelines promulgated by the PCAB. The guidelines shall
put emphasis on strict requirements of good track record performance
and/or capability requirements, among others.

On his part, Lacson, a member of the Ad Hoc Committee,
explained that Atty. Enriquez had reported that the “separate
masterlist” that was supposed to be prepared by the PCAB was not yet
available then. Instead, he was furnished by the PCAB with a copy of a
general masterlist in the NCR containing hundreds of listed contractors
with their respective PCAB category/license.^[182]
The problem then became how to narrow down the list of pre-qualified
bidders to achieve the objective of conducting a “simplified bidding” as
approved by the Office of the President. To use the general masterlist
obtained by Atty. Enriquez could be unwieldy and militate against the
presidential instructions to immediately have the PDMB Project available
to the public. Hence, the Chairman of the Ad Hoc Committee
decided to seek the help of the DPWH for a list of PCAB contractors with
large “B,” triple “AAA” category/license for roads and bridges since
this is the nature of the PDMB Project.^[183]

On this issue, we rule in favor of petitioners.

Notably, the prosecution did not present evidence showing that a
separate masterlist, from which contractors of projects for simplified
public bidding must be chosen from, is available. To continuously
require PEA to rely on a separate masterlist that is not yet in
existence would be to punish petitioners for an inherently impossible
task, which cannot even be attributed as their fault. It was not the
obligation of PEA to produce the masterlist; rather, the responsibility
fell upon the PCAB to do so. Before PEA may be accused of its failure to
comply with an obligation imposed by law, it must first be shown that
such an obligation is capable of being performed. This is especially
true in this case where the obligation of PEA is conditioned upon the
fulfillment of the obligation of PCAB. As such, it is not simply the
obligation imposed by law that must be examined; the corresponding
obligation upon which its performance is made dependent, should also be
taken into consideration. It is thus necessary to first establish that a
separate masterlist of bona fide contractors duly accredited and
classified for the project category, indeed exists. This is in line
with the rule on burden of proof, which imposes upon the prosecution the
burden of proving its allegations. A negative fact such as the absence
of the masterlist, cannot serve as a basis for a wrongdoing, when the
prosecution itself has not first presented proof of its existence. This
flows from the maxim “semper necessitas probandi incumbit illi qui agit,” or the necessity of proof always lies with the person who lays the charges.

In the absence of a separate masterlist, PEA was left with an
alternative to consult the list of DPWH with large “B” and triple “AAA”
category/license for roads and bridges. For sure, these are the largest
in the categorization of the DPWH and among the top tier in the
classification of contractors. These are the lists of contractors with
experience to build roads and bridges.

As of November 22, 2017,
in the Board Resolution No. 201 Series of 2017 issued by PCAB, Category
AAA was defined as those contractors with minimum financial capacity of
PHP 180 million, while Category AAAA are those with minimum financial
capacity of PHP 1 billion. Those with a size range of Large B with
License Category AAA and AAAA are those with single largest project of
above PHP 225 million and allowable range of contract costs of less than
or above PHP 450 million. Notably, the amount allotted for the PDMB
Project, which is PHP 584,365,885.00, falls within the range of Category
AAA and Large B contractor. The actions taken by the PEA must thus be
treated as substantial compliance with the requirement of the law
considering the absence of the separate masterlist and taking into
consideration Section 3(b) of P.D. No. 1594, which reads:

(b) Technical Requirements. The prospective contractor must meet
the following technical requirements to be established in accordance
with the rules and regulations to be promulgated pursuant to Section 12
of this Decree, to enable him to satisfactorily prosecute the subject
project:

1) Competence and experience of the contractor in managing projects similar to the subject project.

2) Competence and experience of the contractor’s key personnel to be assigned to the subject project.

3) Availability and commitment of the contractor’s equipment to be used for the subject project.

Nowhere from the evidence presented by the prosecution was it shown
that JD Legaspi or any of the bidders was unqualified or had no
competence to undertake the PDMB Project because the PEA relied on the
DPWH list. On the contrary, the winning bidder, JD Legaspi, was able to
perform his part of the contract. As PEA was merely performing its
mandate, it cannot take the blame for the shortcoming committed by
another agency. The circumstances that led to PEA’s action in utilizing
the DPWH therefore negates the presence of manifest partiality, evident
bad faith or gross inexcusable negligence under Section 3(e) of R.A. No.
3019.

In the same manner, as there was no list prepared by
PCAB, there were also no guidelines as to how the project could be bid
out. While the Sandiganbayan found that when PEA divided the PDMB
Project into Phase I and Phase II, and respectively divided the ten
contractors under these two phases, those under Phase II were
disadvantaged because of the option given to the SM group and R1
Consortium to build on the land they were awarded, which was covered by
the Phase II, there was no sufficient proof to show that the PEA made
this to accommodate any of the contractors listed for Phase I. It was
not even shown by the prosecution that the bid of the contractors under
Phase II could match the lowest complying bid of JD Legaspi under Phase
I. A bidding was still conducted by the PEA for the Phase I Project,
which included different participants. Thus, it could not be said that
JD Legaspi was given an unwarranted preference in the award of the
project.

Detailed engineering

The Sandiganbayan also found
that the absence of a detailed engineering affected the cost estimate
of the project. With this, the cost adjustments that had to be done in
order to pursue the project became bloated.

A reading of the
pleadings made available before this Court would show that petitioners
did not deny the absence of a detailed engineering for the PDMB Project.
Rather, what was taken into consideration was the condition of the
adjacent land, which was awarded to the other contractors as part of the
PDMB Project.

This contravenes 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. (Emphasis in the original)

Section 2 of P.D. No. 1594 requires that a detailed engineering be
carried out before any bidding or contract is awarded 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
then use as basis in the evaluation of the bids.^[184]

As mentioned, the PEA, in coming up with its Agency Budget Estimate,
merely relied on the conditions of the adjacent land, which should not
be the case. The responsibility on the preparation of the bid documents
falls upon the members of the Ad Hoc Committee, who was tasked to evaluate the condition of the road before the same could be bid out.

Nevertheless, violation of this provision alone, without clear showing
of bad faith, malice, or gross negligence should not be automatically
equated to a violation of Section 3(e) of R.A. No. 3019. There must be
proof amounting to a corrupt motive in doing so, for as explained in Martel v. People:^[185]

At this juncture, the Court emphasizes the spirit that animates
R.A. 3019. As its title implies, and as what can be gleaned from the
deliberations of Congress, R.A. 3019 was crafted as an anti-graft and
corruption measure. At the heart of the acts punishable under R.A. 3019
is corruption. As explained by one of the sponsors of the law,
Senator Arturo M. Tolentino, “while we are trying to penalize, the main
idea of the bill is graft and corrupt practices. x x x Well, the idea of
graft is the one emphasized.” Graft entails the acquisition of gain in dishonest ways.^[186] (Emphasis in the original; citations omitted)

At the most, the absence of a detailed engineering could affect the
budget or cost for which government must spend for the completion of the
project. Overpricing should however be proven to have been committed
with deliberate corrupt ways before one can be indicted for violation of
R.A. No. 3019. As held in Macairan v. People:^[187]

Jurisprudence teaches that in assessing whether there was
overpricing, a specific comparison with the same brand, features and
specifications as those purchased in the questioned transaction should
be made. Further, the report upon which the proof of overpricing is
based should include a canvass of the different suppliers of the
identical product with their corresponding prices. Absent this evidence,
the Court cannot reasonably conclude that the price of the goods
subject of the questioned transaction was actually exorbitant.^[188] (Citations omitted)

In this case, the Special Audit Report of the COA found that there
was no overpricing in the portion of the contract awarded to Legaspi.
Its findings stated the following:

Source of Fund

The contract with J.D. Legaspi Construction amounting to
P584,365,885.00 was further increased to P837,317,343.77 due to contract
price adjustments, variation orders, overrun/underrun and supplemental
agreement. The funding source was the P300 Million loan with Land Bank
of the Philippines, which was released on April 7, 2000, and the P1
Billion loan from the Government Service Insurance System of which the
initial drawdown amounting to P600 Million was released on August 15,
2002.

. . . .

Summary of Audit Findings

Finding No. 1

The technical evaluation of the project shows that the total
project cost, including the price adjustment was found to be reasonable
and, therefore, not overpriced. The project was constructed in
accordance with the approved design, scope of work and as-built plans
and specifications.

The allegation of overpricing raised in the complaint of Mr.
Sulpicio Tagud, Director, Public Estates Authority (PEA), based on the
cost comparison per linear meter of road and bridge constructed by three
(3) developers/contractors, appears to be untenable. The road networks
undertaken by the three (3) developers/contractors are not comparable
considering that Central Business Park (CBP) I-A, CBP I-B & C
(reclaimed by SM/R-1 Consortium) were reclaimed by
pre-loading/surcharging method to attain the required soil consolidation
and stability. On the other hand, Financial Center Area (FCA), CBP-2
and Asiaworld area are existing reclaimed areas prior to the 1988 Manila
Cavite Coastal Road and Reclamation Project (MCCRRP) Master Development
which have poor subgrade materials as confirmed by the Bureau of
Research and Standards (BRS) and the R.R. Ignacio Construction as shown
in the results of the Borehole tests conducted in November of 1999.
Logically, the actual cost per linear meter incurred by the SM Group and
R1 Construction as against the cost incurred by J.D. Legaspi
Construction cannot be compared because the areas assigned for each of
these contractors are with different soil conditions requiring different
design for each project.

The technical evaluation conducted has clearly established the
reasonableness of the project cost. The audit team, therefore, finds no
sufficient basis to support the allegation of overpricing.^[189]

Considering that the COA, the constitutionally bound auditor of
government funds, declared that no overpricing occurred, such findings
should be given considerable weight. This further shows that no injury
was proven to have been caused to the government; neither any manifest
partiality in favor of a party was given. As part of the elements of
violation of R.A. No. 3019, failure to prove these would be tantamount
to a failure to prove violation of the law, beyond reasonable doubt.

The requirement of availability of funds

With respect to the availability of funds, Section 86 of P.D. No. 1445 provides:

SECTION 86. 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 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 fiscal 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.
(Emphasis supplied)

The foregoing provision requires that the appropriation necessary
in order to consider a contract as sufficiently funded must cover that
portion of the needed expenditures for the particular current year.
Necessarily, when a contract transcends beyond a period of one year, and
must be completed within a multi-year period, the availability of
appropriations must be examined for each of the current fiscal year that
arrives. This does not however mean that the implementing agency should
look for funds only when the current fiscal year arrives. Rather, the
source from which the funding for the entire project must already be
determined, for while the actual release of funds may be made on a
yearly basis, continuous payment to a contractor on a multi-year project
could only be made if the source of funds has already been determined.
This is supported by R.A. No. 9184 which requires that the invitation to
bid identify the source of fund of the project, thus:

SEC. 21. Advertising and Contents of the Invitation to Bid.
– In line with the principle of transparency and competitiveness, all
Invitations to Bid for contracts under competitive bidding shall be
advertised by the Procuring Entity in such manner and for such length of
time as may be necessary under the circumstances, in order to ensure
the widest possible dissemination thereof, such as, but not limited to,
posting in the Procuring Entity’s premises, in newspapers of general
circulation, the G-EPS and the website of the Procuring Entity, if
available. The details and mechanics of implementation shall be provided
in the IRR to be promulgated under this Act.

The Invitation to Bid shall contain, among others:

(a) A brief description of the subject matter of the Procurement;
(b) A general statement on the criteria to be used by the
Procuring Entity for the eligibility check, the short listing of
prospective bidders, in the case of the Procurement of Consulting
Services, the examination and evaluation of Bids, and
post-qualification;

(c) The date, time and place of the deadline for the submission
and receipt of the eligibility requirements, the pre-bid conference if
any, the submission and receipt of bids, and the opening of bids;

(d) The Approved Budget for the Contract to be bid;

(e) The source of funds;

(f) The period of availability of the Bidding Documents, and the place where these may be secured;
(g) The contract duration; and,
(h) Such other necessary information deemed relevant by the Procuring Entity. (Emphasis supplied)

In the case of projects funded by the national budget, it is even
required for the agency to secure a multi-year obligational authority to
secure its commitment of paying the multi-year project and ultimately
complete the project. This was explained in Jacomille v. Abaya^[190] as follows:

MYOA or Multi-Year Obligational Authority is an authorization
document issued by the DBM to government agencies that undertake MYP
with funding requirements spread over two (2) years or more. Such
projects are evidenced by MYC entered into by the parties. In GAA 2013,
the requirement of MYOA is stated as follows:

Sec. 21. Contracting Multi-Year Projects. In the
implementation of multi-year projects where the total cost is not
provided in this Act, department, bureaus and offices shall request the
DBM for the issuance of a Multi-Year Obligational Authority following
the guidelines under DBM Circular Letter No. 2004-12 dated October 27,
2004. Notwithstanding the issuance of a Multi-Year Obligation Authority,
the obligation to be incurred in any given year, shall in no case
exceed the allotment released for the purpose during the year.

As early as October 27, 2004, the DBM issued the DBM Circular No.
2004-12 to prescribe the guidelines and procedure to implement the MYOA
requirement. The circular defines the different terms affecting MYOA,
such as:

3.1 Multi-Year Obligational Authority (MYOA) – refers to
an authority issued by the Department of Budget and Management (DBM) to
enable an agency to enter into a multi-year contract whether for locally
funded projects (LFPs) or foreign assisted projects (FAPs).

. . . .

The DBM explained the nature of MYOA. When the government entered
into MYC, it was committed to annually pay a given amount to the
contractor/supplier of the project, even without the government planning
for its payment. Thus, the imperative for MYOA arose, which gave an
assurance that the financial commitments included in MYC are considered
in the succeeding proposed budget submitted to Congress. With the
issuance of MYOA, the DBM commits to recommend to Congress the funding
of the MYP until its completion. Evidently, without MYOA, the government
runs the risk of breach of contractual obligations if its financial
commitments are not met for lack of funding.^[191] (Emphasis in the original)

The absence of a multi-year obligational authority would ultimately result in a void contract, as applied in COMELEC v. Quijano-Padilla,^[192] as follows:

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, the only fund appropriated
for the project was P1 Billion Pesos and under the Certification of
Available Funds (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 or should have withdrawn the
Notice of Award on the ground that in the eyes of the law, the same is
null and void.

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 is only
P1.2 Billion and, thus, within the certified available funds, the same
covers only Phase 1 of the VRIS Project, i.e., the issuance of
identification cards for only 1,000,000 voters in specified areas. 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. 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,] 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.”‘^[193] (Emphasis in the original, citations omitted)

It is thus important to have an assurance that the funding of the
project will continue. This assumes more significance when the budget is
part of the national budget every year.

In this case however,
the PDMB Project was not funded by the national budget. Rather, it was
funded by a loan to be obtained, which was authorized by the PEA Board
as early as October 4, 1999, when Resolution No. 2017 was issued
approving the One Billion Loan Facility in the Form of Convertible Notes
to Finance the Construction and Development of portions of the Central
Boulevard,^[194] pertinent portion of which reads as follows:

RESOLVED FURTHER, that the following items are likewise approved, to wit:

1. The Term Sheet covering One Billion Pesos Loan Facility which
   will be in the form of Convertible Notes herein attached as Annex “A”
2. The appointment of Land Bank of the Philippines (LBP) as
   Trustee of the Mortgage Trust Indenture under the terms and conditions
   as contained in their proposal herein attached as Annex “B”
3. The appointment of the law firm Picazo Buyco Tan Fider and
   Santos as legal counsel for this undertaking under the terms of their
   proposal herein attached as Annex “C”
4. The extension of the mandate of Land Bank and All Asia Capital
   with regards to this undertaking for a period of six months; and
5. The interim loan of Three Hundred Million Pesos to be sourced
   from Land Bank against the One Billion Facility under such terms and
   conditions as may be agreed upon.^[195]

The authority to contract loan is authorized under the charter of PEA, being a government instrumentality. In Republic v. City of Parañaque,^[196] the nature of PEA, later renamed as PRA, was described as follows:

In the case at bench, PRA is not a GOCC because it is neither a
stock nor a non-stock corporation. It cannot be considered as a stock
corporation because although it has a capital stock divided into no par
value shares as provided in Section 7 of P.D. No. 1084, it is not
authorized to distribute dividends, surplus allotments or profits to
stockholders. There is no provision whatsoever in P.D. No. 1084 or in
any of the subsequent executive issuances pertaining to PRA,
particularly, E.O. No. 525, E.O. No. 654 and EO No. 798 that authorizes
PRA to distribute dividends, surplus allotments or profits to its
stockholders.

PRA cannot be considered a non-stock corporation either because it
does not have members. A non-stock corporation must have members.
Moreover, it was not organized for any of the purposes mentioned in
Section 88 of the Corporation Code. Specifically, it was created to
manage all government reclamation projects.

Furthermore, there is another reason why the PRA cannot be
classified as a GOCC. Section 16, Article XII of the 1987 Constitution
provides as follows:

Section 16. The Congress shall not, except by general
law, provide for the formation, organization, or regulation of private
corporations. Government-owned or controlled corporations may be created
or established by special charters in the interest of the common good
and subject to the test of economic viability.

The fundamental provision above authorizes Congress to create
GOCCs through special charters on two conditions: 1) the GOCC must be
established for the common good; and 2) the GOCC must meet the test of
economic viability. In this case, PRA may have passed the first
condition of common good but failed the second one — economic viability.
Undoubtedly, the purpose behind the creation of PRA was not for
economic or commercial activities. Neither was it created to compete in
the market place considering that there were no other competing
reclamation companies being operated by the private sector. As mentioned
earlier, PRA was created essentially to perform a public service
considering that it was Primarily responsible for a coordinated,
economical and efficient reclamation, administration and operation of
lands belonging to the government with the object of maximizing their
utilization and hastening their development consistent with the public
interest.^[197] (Emphasis in the original, citations omitted)

Being a government instrumentality, PEA is authorized by its charter
to contract loans to be able to carry into effect the mandate it was
given under P.D. No. 1084. Section 5 thereof reads:

Section 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following powers and functions:

. . . .

(m) To enter into, make, perform and carry out contracts of every
class and description, including loan agreements, mortgages and other
types of security arrangements, necessary or incidental to the
realization of its purposes with any person, firm or corporation,
private or public, and with any foreign government or entity. (Emphasis
in the original)

Section 12 of P.D. No. 1084 likewise provides:

Section 12. Loans. The Authority, as
well as any affiliate corporation in which it holds, owns and/or
controls by itself or jointly with one or more government-owned or
controlled corporations at least seventy-five per cent (75%) of the
issued and outstanding shares of stock entitled to vote, when
specifically authorized by the President of the Philippines, is hereby
authorized to contract loans, credits, in any convertible foreign
currency or capital goods, and indebtedness from time to time from
foreign governments, or any international financial institutions or fund
sources, or any entities, on such terms and conditions as it shall deem
appropriate for the accomplishment of its purposes and to enter into
and execute agreements and other documents specifying such terms and
conditions. (Emphasis in the original)

The PDMB Project, as funded by loan obtained by the PEA, was thus
authorized by its charter, and whatever fond it may obtain therefrom
could be utilized for the current fiscal year. While the Sandiganbayan
found that dividing the project to Package 1 and Package 2 was a
subterfuge to do away with the requirement of funding, pertinent laws
only require that the funding of a project be viewed on a yearly basis.
The requirement of the law is funding for the current fiscal year. Be it
divided into several phases, as long as the project could be
implemented within the end of the year with the corresponding amount for
such project, the same could not be said to have violated the law.

The need to secure funding for the project covering the current fiscal
year is understandable. Under Section 47 of the Administrative Code, the
contract for the expenditure of public funds shall be for that amount
necessary to cover the proposed contract for the current calendar year,
thus:

SECTION 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 thereat: 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. (Emphasis supplied)

Considering that the amount of PHP 300 million was identified as the
budget to cover the expenses for the current year when the PDMB Project
was to be implemented the same should already suffice as compliance
with the requirement of the law.

Presidential approval

Another ground relied upon by the Sandiganbayan in convicting petitioners is the failure to secure presidential approval.

A reading of the Memorandum dated January 29, 2000 from the Executive Secretary^[198]
would show that it was an approval of the Construction Agreement with
PEA for the construction of the Central Boulevard Road Project in the
amount of PHP 584,365,885.05 subject to certain conditions, foremost of
which are the inclusion of a provision in the Agreement that all extra
works and price adjustments should first be submitted to the President
for approval and that the final approval and actual release of the loan
proceeds from the LandBank/All Asia Capital must be secured.

It
must nonetheless be clarified that the additional condition for
presidential approval concerning extra works and price adjustments were
imposed by the Office of the President. In the same manner, the various
executive orders issued by the President are directives of the
executive, which does not necessarily amount to a violation of R.A. No.
3019.

Insofar as the contract itself was concerned, the approval
of the President was already given, subject to certain conditions,
which are in the nature of resolutory conditions. In an obligation with a
resolutory condition, the obligation is already effective, subject to
the happening of the condition. Thus, the approval of the president
should already be considered as given, subject to the happening of the
conditions it imposed, non-fulfillment of which could be a ground for
appropriate action between entities that imposed the same and those
required to fulfill the condition.

With respect to the
determination as to whether a violation of R.A. No. 3019 occurred, such
an infraction should first be proven to have been committed with
manifest partiality, evident bad faith, or gross inexcusable negligence
that resulted into undue injury to the government or any party, or any
unwarranted benefit to a private party. In the absence of proof of the
elements constituting violation of R.A. No. 3019, mere failure to comply
with a directive of the president cannot be considered a violation of
said criminal law.

Award of the Seaside Drive Extension

As found by the Sandiganbayan, Variation Order No. 2 comprised of the
Inland Bridge Channel and the Seaside Drive Extension. Considering that
it found the construction of the inland bridge channel under this
variation order as legal and necessary for the construction of the PDMB
Project, the same would no longer be disturbed on appeal. Rather, it is
the award of the Seaside Drive Extension under Variation Order No. 2
that will have to be examined.

Variation Orders are classified under the IRR of P.D. No. 1594 as follows:

CI 1 – VARIATION ORDERS – CHANGE ORDER/EXTRA WORK ORDER/SUPPLEMENTAL AGREEMENT

1. Variation orders may be issued by the concerned
agency/office/corporation to cover any increase/decrease in quantities,
including the introduction of new work items that are not included in
the original contract or reclassification of work items that are either
due to change of plans, design or alignment to suit actual field
conditions resulting in disparity between the preconstruction plans used
for purposes of bidding and the “as staked plans” or construction
drawings prepared after a joint survey by the contractor and the
government after award of the contract. The addition/deletion of works
should be within the general scope of the project as bid and awarded. A variation order may either be in the form of a change order, extra work order or a supplemental agreement. (Emphasis supplied)

No substantial change was introduced by the IRR of R.A. No. 9184^[199], which defined variation order as follows:

1. Variation Orders – Change Order/Extra Work Order

1.1 Variation Orders may be issued by the procuring entity to
cover any increase/decrease in quantities, including the introduction of
new work items that are not included in the original contract or
reclassification of work items that are either due to change of plans,
design or alignment to suit actual field conditions resulting in
disparity between the preconstruction plans used for purposes of bidding
and the “as staked plans” or construction drawings prepared after a
joint survey by the contractor and the Government after award of the
contract, provided that the cumulative amount of the positive or
additive Variation Order does not exceed ten percent (10%) of the
original contract price. The addition/deletion of works under Variation
Orders should be within the general scope of the project as bid and
awarded. The scope of works shall not be reduced so as to accommodate a
positive Variation Order. A Variation Order may either be in the form of either a change order or extra work order.^[200] (Emphasis supplied)

Clearly, a change order or extra work order is considered as a form
of variation order. Petitioners’ claim that the award of the Seaside
Drive Extension does not need the approval of the president is therefore
erroneous. When the Memorandum and the Contract with JD Legaspi
specified as a condition, the approval of the President before any extra
works may be performed on the project, this includes variation orders,
for an extra work is in reality, a form of a variation order. Suffice it
to state, the approval of the President should have been secured before
additional expenses on additional works, irrespective of their
nomenclature, may be awarded to the contractor. This is a condition
imposed by then Executive Secretary Zamora as early as the award of the
contract itself and made a condition in the various PEA Board
Resolutions, and the contract itself.

While Executive Order No.
109 expressly repealed Memorandum Circular No. 25, the same was issued
only on May 27, 2002 after the presidential approval was already given.
The Office of the President’s Memorandum dated January 29, 2000, which
approved the Construction Agreement, carried a condition that all extra
works and price adjustments should first be submitted to the president
for approval. Failure to secure presidential approval on the award of
the Seaside Drive Extension thus raises a circumstance that should be
considered in assessing whether a violation of R.A. No. 3019 occurred.
Nevertheless, this circumstance must be examined vis a vis the elements of the law alleged to have been violated.

Further, a variation order must still fall within the general
scope of the project as bid and awarded. In this case, the Seaside Drive
Extension was characterized by the Sandiganbayan as follows:

With respect, however, to the Seaside Drive Extension under
Variation Order No. 2, it appears that the same cannot legally qualify
to be covered by a Variation Order. This is because it is a road outside
of the PDMB project and nowhere along the original PDMB roadway plan.
It is, in fact, a roadway connecting PDMB and Roxas Boulevard. As
recommended by accused Beriña[, Jr.], the Seaside Extension Drive had to
be constructed to ease up traffic flow to and from Roxas Boulevard.
However, this road was never within the general scope of the PDMB
Project as bid and awarded. Accused Millan admitted this when he
testified that it was part of another project that was supposed to be
implemented but fell through. The Construction Agreement only defines
the Project as the Central Boulevard Road Project, without any mention
of any arterial roads or any additional roadway such as the Seaside
Drive Extension. No documents, whether it be the original action plan of
the Boulevard Project, the Construction Agreement signed between PEA
and accused Legaspi or the Bid Documents, show that the Seaside Drive
Extension was envisioned to be part of the general scope of the PDMB
Project.^[201]

Indeed, nowhere was the Seaside Drive Extension found in any of
the documents bid out for the PDMB Project. It was not even located
along the stretch of President Diosdado Macapagal Boulevard, but a road
to connect the PDMB to the Roxas Boulevard, going to NAIA. A separate
bidding for the award of the Seaside Drive Extension should thus have
been undertaken.

Liability for the award of the Seaside Drive Extension

As discussed, the irregularity involved in this case pertains to the
award of the Seaside Drive Extension and not on the main contract for
the PDMB Project. Thus, it is the surrounding circumstances of the award
of this part of the project that should be examined to determine
whether there is a violation of R.A. No. 3019. In the process of
analysis, it bears pointing out that mere violation of the procurement
law does not automatically make one liable for violation of R.A. No.
3019. As explained in Sabaldan v. Office of the Ombudsman:^[202]

More importantly, it must be emphasized that the instant case
involves a finding of probable cause for a criminal case for violation
of Section 3(e) of R.A. No. 3019, and not for violation of R.A. No.
9184. Hence, even granting that there may be violations of the
applicable procurement laws, the same does not mean that the elements of
violation of Section 3(e) of R.A. No. 3019 are already present as a
matter of course. For there to be a violation under Section 3(e) of R.A.
No. 3019 based on a breach of applicable procurement laws, one cannot
solely rely on the mere fact that a violation of procurement laws has
been committed. It must be shown that (1) the violation of procurement
laws caused undue injury to any party or gave any private party
unwarranted benefits, advantage or preference; and (2) the accused acted
with evident bad faith, manifest partiality, or gross inexcusable
negligence.^[203]

A perusal of the arguments presented by the parties shows that the
participation of some of the petitioners revolved around the award of
the main contract and not in the introduction of Variation Order No. 2.
Thus, they cannot be held criminally liable therefor.

As regards
the liability of Amposta-Mortel, considering that there was no showing
that the variation order in question was submitted to her for review,
she cannot be held liable. A legal officer cannot be considered to have
facilitated the award of an erroneous contract when the same was not
even forwarded to her office for review. This must be so when the main
contract itself has already undergone the appropriate review and has
been given presidential approval.

On the part of the Old PEA
Board, being the governing body of the PEA tasked to formulate policy
decisions, they had every right to rely on the report and recommendation
of the Ad Hoc Committee as it is the members of the Ad Hoc
Committee who has the first-hand knowledge of the ongoing construction
and the actual location of the roads. In the absence of a clear showing
of bad faith, manifest partiality or gross inexcusable negligence in the
issuance of the Resolutions leading to the award of the Seaside Drive
Extension, they could not have violated R.A. No. 3019.

As
represented by Beriña, Jr., to facilitate the flow of traffic at the
Seaside Drive Extension, it is deemed necessary to complete the
construction of the proposed Seaside Drive Extension (connecting Roxas
Boulevard and Central Boulevard) and that since time is of the essence,
it was recommended that the additional works be awarded to JD Legaspi.^[204]
The representation of Beriña, Jr. of the need to complete the
construction of the Seaside Drive Extension to facilitate the flow of
traffic and its necessity, especially when time is of the essence, made
the Board believe of the need to approve the award of the Seaside Drive
Extension, moreso, when the road has to connect the PDMB with other
roads.

As it even appears, Resolution Nos. 3017 and 3102 carried
conditions imposed by the PEA Board, which was supposed to safeguard the
award of the Seaside Drive Extension. The conditions imposed under
Resolution No. 3017 are as follows:

a. Payment will be made only on actual quantities completed based
on the approved detailed plans and applicable unit bid prices and agreed
prices (on new items of works)

b. No time extensions will be associated on these additional works
c. Final approval of the Office of the President as per Memo dated 29 June 2000.
d. Actual release of the loan proceeds from Land Bank of the Philippines.^[205]

As to Resolution No. 3102, the Old PEA Board, in addition to the
previous conditions it imposed under Board Resolution No. 3017, further
required that the implementation of Variation Order No. 2 be made
subject to the provisions of P.D. No. 1594 while the appropriation of
the difference resulting from the updated cost thereof must be made
subject to existing accounting and auditing rules and regulations.^[206] These safeguards negate bad faith or gross inexcusable negligence on the part of the members of the Old Board of PEA.

It must be added that the subsequent approval of the new Board of
Directors of the cost of the project signify their acquiescence not only
to the project but also a recognition of the safeguards that were
already put in place by the Old Board.

On the part of Beriña,
Jr. and Millan, who issued the request for Variation Order No. 1 (later
renumbered as Variation Order No. 2),^[207]
the actions they took negate manifest partiality, evident bad faith, or
gross inexcusable negligence. In proposing the construction of the
Seaside Drive Extension, they have honestly believed that P.D. No. 1594
allows a negotiated contract where a variation order is adjacent or
contiguous to an ongoing project and could be economically prosecuted by
the same contractor. Further, from the ground and aerial sketches, the
Integrated Framework Plan and the present Google image of the President
Diosdado Macapagal Boulevard, the Seaside Drive Extension appears to be
connected to JD Legaspi’s PDMB Project.

Indeed, a negotiated
contract is allowed where the variation order to be introduced is
adjacent or contiguous to an ongoing project. Thus, even if the main
contract as bid out did not include the Seaside Drive Extension, the
same may still be introduced as a variation order as part of a
negotiated contract. The law however requires certain requirements, to
wit:

IB 10.6.2 – By negotiated Contract

. . . .

c. Where the subject project is adjacent or contiguous to an
ongoing project and it could be economically prosecuted by the same
contractor provided that subject project has similar or related scope of
works and is within the contracting capacity of the contractor, in
which case, direct negotiation may be undertaken with the said
contractor at the same unit prices adjusted to price levels prevailing
at the time of negotiation using the parametric formulae herein
prescribed without the 5% deduction and contract conditions, less
mobilization cost, provided that he has no negative slippage and has
demonstrated a satisfactory performance.^[208]

Hence, the introduction of the Seaside Drive Extension is not without
legal basis. While it would appear that said road does not fall along
the stretch of the PDMB Project, this fact alone cannot serve as a basis
to hold petitioners liable for violation of R.A. No. 3019. To stress,
the focal point in determining whether there is a violation of R.A. No.
3019 is the elements comprising it, one of which is the existence of
manifest partiality, evident bad faith or gross inexcusable negligence.
These were defined as follows:

Under the third element, the crime may be committed through
“manifest partiality,” “evident bad faith,” or “gross inexcusable
negligence.” As already held by this Court, Section 3(e) of RA 3019 may
be committed either by dolo, as when the accused acted with evident bad
faith or manifest partiality, or by culpa, as when the accused committed
gross inexcusable negligence. There is “manifest partiality” when there
is a clear, notorious, or plain inclination or predilection to favor
one side or person rather than another. “Evident bad faith” connotes not
only bad judgment but also palpably and patently fraudulent and
dishonest purpose to do moral obliquity or conscious wrongdoing for some
perverse motive or ill will. “Evident bad faith” contemplates a state
of mind affirmatively operating with furtive design or with some motive
or self-interest or ill will or for ulterior purposes. “Gross
inexcusable negligence” refers to negligence characterized by the want
of even the slightest care, acting or omitting to act in a situation
where there is a duty to act, not inadvertently but willfully and
intentionally, with conscious indifference to consequences insofar as
other persons may be affected.^[209] (Citations omitted)

Here, the Seaside Drive Extension was constructed at a portion of
the PDMB in order to have a road that will connect it to the Roxas
Boulevard. It is not a road construction that is totally alien to the
PDMB Project, for it is still a road that is connected to the main
project, and serves as a link to the other roads going to and from the
President Diosdado Macapagal Boulevard. With a legal basis for which the
actions taken by petitioners were anchored, it cannot be said that
their actions were coupled with a clear inclination to favor another or
that a conscious wrongdoing, ill-will or dishonest purpose was being
committed.

The same must also be said as to the absence of
presidential approval for the introduction of Variation Order No. 2.
Such a finding does not automatically equate to a violation of R.A. No.
3019, considering the failure of the prosecution to show that it was
accompanied by manifest partiality, evident bad faith or gross
inexcusable negligence. To stress, the main contract has already been
approved by the president. Likewise, taking into consideration the
nature of a negotiated contract by which the award of the additional
works must necessarily be given to the contractor of the main project
provided the requisites are present, reliance on the provision of
negotiated contracts by Beriña, Jr. and Millan negates the element of
evident bad faith, manifest partiality or gross inexcusable negligence.
Necessarily, if the PDMB Project was awarded to JD Legaspi, any
negotiated contracts related thereto should also be awarded to him by
operation of law. As such, with the passage of P.D. No. 1594, the
requirement of presidential approval for the award of a subsequent
project believed to be qualified as a negotiated contract, would be
rendered unnecessary. Considering however that such an approval for
subsequent works has been required by the Office of the President when
it approved the main project, any infraction thereon would only be
subject to the exercise of discretion of the said Office. With respect
to violation of R.A. No. 3019, the good faith reliance of Beriña, Jr.
and Millan as to the necessity of the Seaside Drive Extension and their
appreciation of the application of P.D. No. 1594 as to negotiated
contracts, would not make them liable for violation thereof on account
merely of the absence of presidential approval of the award of the
Seaside Drive Extension.

The need to prove all the elements of
the crime of R.A. No. 3019, as in all other cases of violation of
criminal laws, springs from the constitutional presumption of innocence.
As elaborated in Villarosa v. People:^[210]

The settled rule is that conviction in criminal actions demands
proof beyond reasonable doubt. This rule places upon the prosecution the
task of establishing the guilt of an accused, relying on the strength
of its own evidence, and not banking on the weakness of the defense of
an accused. Indeed, the burden is on the prosecution to prove guilt
beyond reasonable doubt, not on the accused to prove his innocence.
Requiring proof beyond reasonable doubt finds basis not only in the due
process clause of the Constitution, but similarly, in the right of an
accused to be “presumed innocent until the contrary is proved.”
Undoubtedly, it is the constitutional presumption of innocence that lays
such burden upon the prosecution. (Citations omitted)^[211]

With respect to Legaspi, the Sandiganbayan also convicted him for
violation of Section 3(e) of R.A. No. 3019 because of its finding of
implied conspiracy, holding that the PEA Management would not have
presented the same to the Board had Legaspi not submitted documents
pertaining to the possibility of constructing the same as a change order
to the original Construction Agreement, thereby violating all the
public bidding rules in place.^[212]

In Tan v. People,^[213] this Court explained the liability of private individuals charged with violation of R.A. No. 3019, to wit:

Private persons, when acting in conspiracy with public officers,
may be indicted and, if found guilty, held liable for the pertinent
offenses under Section 3 of R.A. 3019, including (e) thereof. This is in
consonance with the avowed policy of the anti-graft law to repress
certain acts of public officers and private persons alike constituting graft or corrupt practices act or which may lead thereto.

Thus, for a private person to be charged with and convicted of
Violation of certain offenses under Section 3 of R.A. 3019, which in
this case (e), it must be satisfactorily proven that he/she has acted in
conspiracy with the public officers in committing the offense;
otherwise, he/she cannot he so charged and convicted thereof.

In conspiracy, the act of one is the act of all; thus, it is never
presumed. Like the physical acts constituting the crime itself, the
elements of conspiracy must be proven beyond reasonable doubt. To
establish conspiracy, direct proof of an agreement concerning the
commission of a felony and the decision to commit it is not necessary.
It may be inferred from the acts of the accused before, during or after
the commission of the crime which, when taken together, would be enough
to reveal a community of criminal design, as the proof of conspiracy is
frequently made by evidence of a chain of circumstances. While
direct proof is not essential to establish conspiracy, it must be
established by positive and conclusive evidence. And conviction must be
founded on facts, not on mere inferences and presumptions.^[214] (Emphasis in the original, citations omitted)

A reading of the assailed Decision and Resolution would however show
that the only basis relied upon by the Sandiganbayan in concluding that
Legaspi had a part in the award of the Seaside Drive Extension was the
Sworn Statement as attached to the Counter-Affidavit of Tagud, which was
taken judicial notice of, stating that it was Legaspi who proposed to
PEA the construction of the Seaside Drive Extension.^[215]

It must be noted however that neither the Sworn Statement nor the
Counter Affidavit of Tagud was shown to have been offered as evidence by
the prosecution. The Rules of Court specifically provides that evidence
must be formally offered to be considered by the court. Evidence not
offered is excluded in the determination of the case. Failure to make a
formal offer within a considerable period of time shall be deemed a
waiver to submit it.^[216]

The same cannot also be taken judicial notice of because it does not fulfill the condition of notoriety. In State Prosecutors v. Judge Muro,^[217] judicial notice was explained as follows:

The doctrine of judicial notice rests on the wisdom and discretion
of the courts. The power to take judicial notice is to be exercised by
courts with caution; care must be taken that the requisite notoriety
exists; and every reasonable doubt on the subject should be promptly
resolved in the negative.

Generally speaking, matters of judicial notice have three material
requisites: (1) the matter must be one of common and general knowledge;
(2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the
jurisdiction of the court. The provincial guide in determining what
facts may be assumed to be judicially known is that of notoriety. Hence,
it can be said that judicial notice is limited to facts evidenced by
public records and facts of general notoriety.

To say that a court will take judicial notice of a fact is merely
another way of saying that the usual form of evidence will be dispensed
with if knowledge of the fact can be otherwise acquired. This is because
the court assumes that the matter is so notorious that it will not be
disputed. But judicial notice is not judicial knowledge. The mere
personal knowledge of the judge is not the judicial knowledge of the
court, and he is not authorized to make his individual knowledge of a
fact, not generally or professionally known, the basis of his action.
Judicial cognizance is taken only of those matters which are “commonly”
known.

Things of “common knowledge,” of which courts take judicial
notice, may be matters coming to the knowledge of men generally in the
course of the ordinary experiences of life, or they may be matters which
are generally accepted by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are universally known, and
which may be found in encyclopedias, dictionaries or other
publications, are judicially noticed, provided they are of such
universal notoriety and so generally understood that they may be
regarded as forming part of the common knowledge of every person.^[218] (Citations omitted)

The affidavit of Tagud cannot be taken judicial notice of because it
is not a product of common experience in the ordinary course of things.
No practice has been established for a contractor to ask for additional
works in a project. Rather, the contents of Tagud’s affidavit requires
the presentation of evidence to prove the actions allegedly taken by
Legaspi to ensure that the Seaside Drive Extension would be awarded to
him. In the absence of such evidence, this Court cannot take at face
value, the allegations in the affidavit of Tagud.

Further, the
Sandiganbayan found that Legaspi proceeded to construct the Seaside
Drive Extension without receiving an approval from the Office of the
President as stated in their Construction Agreement. Suffice it to state
however, that such an obligation does not fall on Legaspi, being the
contractor.

Legaspi cannot therefore be held liable for the award of the Seaside Drive Extension.

With respect to the payments made to JD Legaspi, the same is justified on the basis of quantum meruit as expounded in Melchor v. Commision On Audit,^[219] to wit:

Moreover, a variation order (which may take the form of a change
order, extra work or supplemental agreement) is a contract by itself and
involves the expenditure of public funds to cover the cost of the work
called for thereunder. (Fernandez, A Treatise on Government Contracts
under Philippine Law, 115-116 [1985]) As such, it is subject to the
restrictions imposed by Sections 85 and 86 of PD 1445 and LOI 968. COA
Circular No. 80-122, dated January 15, 1980, likewise ensures that an
extra work order is approved only when supported by available funds.
Again, the petitioner has not presented proof of an appropriation to
cover the extra work order.

For a failure to show the approval by the proper authority and to
submit the corresponding appropriation, we declare the contract for
extra works null and void.

Section 87 of PD 1445 states:

“Any contract entered into contrary to the requirements of the two immediately preceding sections shall be void, and the officer
or officers entering into the contract shall be liable to the
government or other contracting party for any consequent damage to the
same extent as if the transaction had been wholly between private
parties.” (Italics supplied)

This does not mean, however, that the petitioner should be held
personally liable and automatically ordered to return to the government
the full amount of P172,003.26.

As previously discussed, it would be unjust to order the
petitioner to shoulder the expenditure when the government had already
received and accepted benefits from the utilization of the building.

In Royal Trust Construction v. Commission on Audit, supra,
cited by the petitioner, the Court, in the interest of substantial
justice and equity, allowed payment to the contractor on a quantum
meruit basis despite the absence of a written contract and a covering
appropriation.

In a more recent case, Dr. Rufino O. Eslao v. Commission on Audit, G.R. No. 89745, April 8, 1991,
the Court directed payment to the contractor on a quantum meruit basis
despite the petitioner’s failure to undertake a public bidding. In that
case, the Court held that “to deny payment to the contractor of the two
buildings which are almost fully completed and presently occupied by the
university would be to allow the government to unjustly enrich itself
at the expense of another.”

Where payment is based on quantum meruit, the amount of recovery
would only be the reasonable value of the thing or services rendered
regardless of any agreement as to value. (Tantuico, State Audit Code of
the Philippines Annotated, 471 [1982])

Although the two cases mentioned above contemplated a situation
where it is the contractor who is seeking recovery, we find that the
principle of payment by quantum meruit likewise applies to this case
where the contractor had already been paid and the government is seeking
reimbursement from the public official who heads the school. If, after
COA determines the value of the extra works computed on the basis of
quantum meruit, it finds that the petitioner made an excess or improper
payment for these extra works, then petitioner Melchor shall be liable
only for such excess payment.^[220]

While the variation orders performed by Legaspi may have been done
in advance, this does not deprive him, moreso, make him liable for
payment of the cost of the project, especially that the public is now
reaping the benefits of the said road construction. The principle of quantum meruit
thus applies, and as the COA found no irregularity in the amount paid
to him by the government, such amount should no longer be returned.
Moreover, the contract price adjustment in the amount of PHP
42,418,493.64 was considered reasonable by the COA.^[221]

As to the civil liability of petitioners, Cabrera v. People^[222] discussed the basis of civil liability for violation of R.A. No. 3019 as follows:

The first punishable act is that the accused is said to
have caused undue injury to the government or any party when the latter
sustains actual loss or damage, which must exist as a fact and cannot be
based on speculations or conjectures. The loss or damage need not be
proven with actual certainty. However, there must be “some reasonable
basis by which the court can measure it.” Aside from this, the loss or
damage must be substantial. It must be “more than necessary, excessive,
improper or illegal.”

The second punishable act is that the accused is said to
have given unwarranted benefits, advantage, or preference to a private
party. Proof of the extent or quantum of damage is not thus essential. It is sufficient that the accused has given “unjustified favor or benefit to another.”^[223] (Citations omitted)

Here, there was no undue injury to the government or any party, or
any unwarranted benefit that was proven by the prosecution. The
government cannot be said to have suffered an actual loss since there
was no showing that it had to perform acts prejudicial to its interest
that would pertain to the loan obtained by PEA, or to the construction
of the President Diosdado Macapagal Boulevard. To the contrary, the
timely completion of the project resulted into a benefit in favor of the
government with the increase in value of the land surrounding the area,
as well as the public who continue to reap the benefits of having
alternate routes that would let them avoid traffic congestion.

Likewise, no circumstance was shown to favor JD Legaspi in the award of
the main contract and the variation orders that would amount to an
unwarranted benefit in his favor. It is undeniable that the contract for
the main project underwent the necessary procurement procedure. As to
the award of the Seaside Drive Extension, the same was brought about by
the honest belief of petitioners that it fell within the parameters of a
negotiated contract. Under the rules on negotiated contract, a project
may be awarded to the same contractor who was awarded with the ongoing
project. Considering that JD Legaspi was awarded with the main contract,
there is nothing irregular for the petitioners, believing in good faith
as to the applicability of the rules on negotiated contracts, to award
the Seaside Drive Extension to JD Legaspi. Thus, there was no
unwarranted benefit that favored JD Legaspi in the award of the Seaside
Drive Extension.

With the foregoing, the civil liability imposed by the Sandiganbayan upon the petitioners should be deleted.

ACCORDINGLY, the consolidated Petitions are GRANTED. The Decision dated February 5, 2015 and the Joint Resolution dated September 16, 2015 rendered by the Sandiganbayan are REVERSED and SET ASIDE.
Petitioners Cristina Amposta-Mortel, Theron Victor Lacson, Leo Padilla,
Manuel Beriña, Jr., Jaime Millan, Bernardo Viray, Raphael Pocholo
Zorilla, Daniel Dayan, Frisco Francisco San Juan, Elpidio Damaso,
Carmelita D. Chan, and Jesusito Legaspi are ACQUITTED
of violation of Republic Act No. 3019 on the ground of reasonable doubt.
The civil liability imposed by the Sandiganbayan is hereby DELETED.

Let an entry of judgment be issued immediately.

SO ORDERED.

Lazaro-Javier, M. Lopez, and Kho, Jr., JJ., concur.
Leonen, SAJ., dissent. See separate opinion.

---

^[1] Rollo (G.R. No. 220500), vol. I, p. 462; rollo (G.R. No. 220580), vol. I, p. 125; rollo (G.R. No. 220587), vol. II, p. 1121; G.R. No. 220523 was consolidated with these cases on September 27, 2021.

^[2] Rollo (G.R. No. 220500),
vol. I, pp. 101-245. The February 5, 2015 Decision in Criminal Case No.
27808 was penned by Associate Justice Rafael R. Lagos, concurred in by
Associate Justices Efren N. De La Cruz and Rodolfo A. Ponferrada, First
Division, Sandiganbayan, Quezon City.

^[3] Id. at
328-384. The September 16, 2015 Joint Resolution in Criminal Case No.
27808 was penned by Associate Justice Efren N. De La Cruz, concurred in
by Associate Justices Rodolfo A. Ponferrada and Napoleon E. Inoturan,
First Division, Sandiganbayan, Quezon City.

^[4] Id. at 243-244.

^[5] Id. at 383-384.

^[6] As culled from the Sandiganbayan Decision.

^[7] See rollo (G.R. No. 220587), vol. I, pp. 304-306.

^[8] Rollo (G.R. No. 220500), vol. I, p. 178.

^[9] Id. at 179.

^[10] Id.

^[11] Id.

^[12] Id.

^[13] Id.

^[14] Id. at 180.

^[15] Id.

^[16] Id. at 180-181.

^[17] Id. at 181.

^[18] Id.

^[19] Id.

^[20] Rollo (G.R. No. 220587), vol. I, pp. 310-311.

^[21] Id.

^[22] Rollo (G.R. No. 220500), vol. I, p. 182.

^[23] Rollo (G.R. No. 220587), vol. I, pp. 312-323.

^[24] Id. at 315, 317; See also rollo (G.R. No. 220500), vol. I, p. 183.

^[25] Rollo (G.R. No. 220587), vol. I, p. 315.

^[26] Id. at 322. See also rollo (G.R. No. 220500), vol. I, p. 183.

^[27] Rollo (G.R. No. 220500), vol. I, p. 183.

^[28] Id.

^[29] Id. at 184. See also rollo (G.R. No. 220587), vol. I, p. 330.

^[30] Rollo (G.R. No. 220500), vol. I, p. 184.

^[31] Id.

^[32] Id. at 184.

^[33] Id. at 185. See also rollo (G.R. No. 220587), vol. I, pp. 333, 448.

^[34] Rollo (G.R. No. 220500), vol. I, p. 185.

^[35] Id. at 186.

^[36] Id. at 185.

^[37] As amended on May 24 and July 5, 2000.

^[38] Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts, July 11, 1978.

^[39] Rollo (G.R. No. 220500), vol. I, pp. 185-186.

^[40] Id. at 186.

^[41] Id.

^[42] Id. at 186-187.

^[43] Id. at 187.

^[44] Id.

^[45] Id.

^[46] Id. at 187-188.

^[47] Id. at 188.

^[48] Id at 189.

^[49] Id. at 188.

^[50] Id. at 189.

^[51] Id. at 189-190.

^[52] Id.

^[53] Rollo (G.R. No. 220587), vol. II, pp. 724-732.

^[54] Anti-Graft and Corrupt Practices Act, August 17, 1960.

^[55] Id. at 728-731.

^[56] Rollo (G.R. No. 220587), vol. I, p. 75.

^[57] Id.

^[58] Rollo (G.R. No. 220500), vol. I, p. 192.

^[59] Id. at 192-193.

^[60] Id. at 193.

^[61] Id.

^[62] Id. at 194.

^[63] Id. at 194-197.

^[64] Id. at 197-198.

^[65] Id. at 199.

^[66] Id.

^[67] Id.

^[68] Id. at 200.

^[69] Id.

^[70] Id. at 201.

^[71] Id. at 202.

^[72] Id. at 202-203.

^[73] Id. at 203.

^[74] Id. at 204.

^[75] Id. at 205.

^[76] Id. at 223.

^[77] Id. See also p. 242.

^[78] Id. at 225.

^[79] Id. at 226.

^[80] Id. at 227.

^[81] Id. at 228.

^[82] Id.

^[83] Id. at 230.

^[84] Id. at 231.

^[85] Id.

^[86] Id. at 233.

^[87] Id. at 237.

^[88] Id. at 238.

^[89] Id.

^[90] Id. at 238-239.

^[91] Id. at 239.

^[92] Id.

^[93] Id. at 242.

^[94] Id. at 328-384.

^[95] Id. at 377.

^[96] Id.

^[97] Id.

^[98] Id.

^[99] Id. at 384.

^[100] Id. at 377-378.

^[101] Id. at 377.

^[102] Id. at 378-379.

^[103] Id. at 379.

^[104] Id. at 384.

^[105] Id. at 84.

^[106] Id. at 85.

^[107] Id.

^[108] Id. at 86.

^[109] Id.

^[110] Id. at 94-95.

^[111] Id. at 92, 94-95.

^[112] Rollo (G.R. No. 220504), vol. I, p. 26.

^[113] Former PEA Chief Corporate Counsel and current PEA Corporate Secretary.

^[114] Id. at 27.

^[115] Id. at 28-29.

^[116] Id. at 30.

^[117] Id.

^[118] Id. at 34.

^[119] Id. at 35.

^[120] Id. at 37.

^[121] Rollo (G.R. No. 220580), vol. I, pp. 53-54.

^[122] Id. at 55.

^[123] Id. at 56.

^[124] Id.

^[125] Id.

^[126] Id. at 56-57.

^[127] Id. at 57.

^[128] Government Auditing Code, June 11, 1978.

^[129] Rollo (G.R. No. 220580), vol. I, p. 77.

^[130] Id. at 77.

^[131] Id. at 83.

^[132] Id. at 85.

^[133] Rollo (G.R. No. 220532), vol. I, p. 282.

^[134] Id. at 284.

^[135] Id.

^[136] Id. at 292.

^[137] Id. at 295.

^[138] Id. at 304.

^[139] Id. at 338.

^[140] Id. at 339-340.

^[141] Id. at 344-345.

^[142] Rollo (G.R. No. 220587), vol. I, p. 30.

^[143] Id. at 31-32.

^[144] Id. al 32.

^[145] Id.

^[146] Id. at 32-33.

^[147] Id. at 32-33.

^[148] Id. at 39-40.

^[149] Id. at 40.

^[150] Id.

^[151] Id. at 40.

^[152] Id. at 42.

^[153] Id. at 42-43.

^[154] Id.

^[155] Id. at 48-49.

^[156] Id. at 50.

^[157] Rollo (G.R. No. 120568), vol. I, pp. 272-326.

^[158] Id. at 294.

^[159] Id. at 296.

^[160] Id. at 302.

^[161] Id.

^[162] Id. at 308.

^[163] Id. at 308-309.

^[164] Id. at 310.

^[165] Id. at 311.

^[166] Id.

^[167] Id. at 312.

^[168] Id. at 313.

^[169] Id. at 328-340.

^[170] See rollo (G.R. No. 210505), vol. I, p. 10.

^[171] Rollo (G.R. No. 220568), vol. I, p. 21.

^[172] Rollo (G.R. No. 220504), vol. I, p. 11.

^[173] Tongohan Holdings and Dev’t. Corp v. Atty. Escano, Jr., 672 Phil. 747, 756 (2011) [Per J. Mendoza, Third Division], citing Rep. of the Phils v. Malabanan, 646 Phil. 631, 637 (2010) [Per J. Villarama, Jr., Third Division].

^[174] Macairan v. People, G.R. Nos. 215104, 215120, 215147, 215212, 215354-55, 215377, 215923 & 215541,
March 18, 2021 [Per J. Caguioa, First Division] at 20. This pinpoint
citation refers to the copy of this Decision uploaded to the Supreme
Court website.

^[175] Rollo (G.R. No. 220587), vol. I, pp. 212-213.

^[176] G.R. No. 238014, June 15, 2020 [Per J. Reyes, J. Jr., First Division].

^[177] Id. at 7-8. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[178] Government Procurement Reform Act, July 22, 2002.

^[179] G.R. No. 239871, March 18, 2021 [Per J. Caguioa, First Division].

^[180] Id. at 10. This pinpoint citation refers to the copy or this Decision uploaded to the Supreme Court website.

^[181] Implementing Rules and Regulation of Presidential Decree No. 1594, as amended on May 24 and July 5, 2000, IB 10.4.2.

^[182] Rollo (G.R. No. 220504), vol. I, p. 30.

^[183] Id.

^[184] Albay Accredited Constructors Association, Inc. v. Desierto, 516 Phil. 308, 320 (2006) [Per J. Garcia, Second Division].

^[185] G.R. No. 224720-23, February 2, 2021 [Per J. Caguioa, En Banc].

^[186] Id. at 29. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[187] G.R. No. 215104, March 18, 2021 [Per J. Caguioa, First Division].

^[188] Id. at 29. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[189] Rollo (G.R. No. 220587), vol. I, pp. 542-545.

^[190] 759 Phil. 248 (2015) [Per J. Mendoza, Second Division].

^[191] Id. at 279, 281.

^[192] 438 Phil. 72 (2002) [Per J. Sandoval-Gutierrez, En Banc].

^[193] Id. at 94-97.

^[194] Rollo (G.R. No. 220505), vol. I, p. 20; rollo (G.R. No. 220552), vol. I, p. 79; rollo (G.R. No. 220568), vol. I, p. 29; rollo (G.R. No. 220580), vol. I, pp. 67-68; rollo (G.R. No. 220592), vol. I, p. 234.

^[195] Id.

^[196] 691 Phil. 476 (2012) [Per J. Mendoza, Third Division].

^[197] Id. at 484-486.

^[198] Rollo (G.R. No. 220587), vol. I, p. 310.

^[199] The 2016 Revised Implementing Rules and Regulations of Republic Act No. 9184, March 31, 2021.

^[200] Id. Annex E, 1.1.

^[201] Rollo (G.R. No. 220505), vol. I, p. 215.

^[202] G.R. No. 238014, June 15, 2020 [Per J. Reyes, J. Jr., First Division].

^[203] Id. at 7-8. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[204] Rollo (G.R. No. 220505), vol. II, p. 735.

^[205] Rollo (G.R. No. 220580), vol. I, pp. 57-58.

^[206] Id. at 57.

^[207] Rollo (G.R. No. 220587), vol. I, p. 328.

^[208] Implementing Rules and Regulation of Presidential Decree No. 1594, as amended on May 24 and July 5, 2000.

^[209] Villarosa v. People, G.R. No. 233155-63, June 23, 2020 [Per C.J. Peralta, En Banc] at 8-9. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[210] Id.

^[211] Id. at 7. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[212] Rollo (G.R. No. 220580), vol. I, p. 209.

^[213] 797 Phil. 411 (2016) [Per J. Perez, Third Division].

^[214] Id. at 428-429.

^[215] See rollo (G.R. No. 220587), vol. I, p. 210.

^[216] Republic v. Gimenez, 776 Phil. 233, 255 (2016) [Per J. Leonen, Second Division].

^[217] 306 Phil. 519 (1994) [Per Curiam, En Banc].

^[218] Id. at 537-538.

^[219] 277 Phil. 801 (1991) [Per J. Gutierrez, Jr., En Banc].

^[220] Id. at 814-815.

^[221] Rollo (G.R. No. 220505), vol. II, p. 939.

^[222] G.R. No. 191611-14, July 29, 2019 [Per J. Reyes, J. Jr., Second Division].

^[223] Id. at 6. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

---

LEONEN, SAJ.:

I dissent.

The public bidding process is imbued with
public interest. Individuals involved in the bidding process have an
important responsibility to ensure compliance with the relevant bidding
rules and regulations. I disagree with the majority’s decision to acquit
petitioners and to remove their civil liability.

The
Sandiganbayan convicted petitioners of violation of Republic Act No.
3019, Section 3(e). It found that, taking the totality of petitioners’
conduct, the irregularities in the bidding process resulted in undue and
unwarranted benefits or advantage to petitioner Jesusito Legaspi, with
evident bad faith, manifest partiality, or gross inexcusable negligence.^[1] According to the Sandiganbayan, the basis for their conviction are:

1. Violating the simplified bidding rules because they shortlisted bidders not based on the PCAB master list.
2. Conducting the bidding and recommending the award to Legaspi
   without [detailed] engineering in violation of P.D. 1594 and without the
   required appropriation and actual availability of funds for the total
   contract price.

3. Creating and confirming the artificial phases in the Construction
   Agreement and dividing the contract into Phase I and Phase II just to
   enable PEA to circumvent the requirement under P.D. No. 1445 about
   funding requirements.

4. In the case of Beriña and Millan, recommending the approval of
   Variation Order No. 2 and the contract price adjustment, and the payment
   thereof, without the required presidential approval and in violation of
   P.D. No. 1594.

5. In the case of San Juan, Chan, Dayan, Malbarosa, Padilla and
   Damaso, for approving and confirming the Legaspi contract without
   sufficient funding and the Seaside Drive Extension without public
   bidding.

6. In the case of Legaspi, for conspiring with Beriña and Millan in
   having the Seaside Drive Extension contract awarded to him under a
   negotiated contract.^[2]

The President Diosdado Macapagal Boulevard was part of a flagship
project (the Project) for the construction of a five-kilometer highway
traversing the reclaimed area from Buendia Avenue to Pacific Avenue.^[3]
Due to the project’s importance, the then Chairperson of the Public
Estates Authority (now Philippine Reclamation Authority) requested the
Office of the President for authority to bid and award the project
through simplified bidding. This request was approved through the
Memorandum issued by then Executive Secretary Ronaldo Zamora.^[4]

As noted by the Sandiganbayan, under a simplified bidding process, participation was limited to “bona fide
contractors duly accredited and classified for the project category and
size and who are included in a separate list to be prepared by the
Philippine Contractors Accreditation Board.”^[5]
Thus, despite the simplified procedure, safeguards were still put in
place with the involvement of the Philippine Contractors Accreditation
Board, the agency which grants, suspends, and revokes licenses to
contractors,^[6] to ensure the qualification of the contractors that were to bid in the projects.

Despite this, the Public Estate Authority chose to limit its
bidders to a shortlist of 10 contractors, provided not by the Philippine
Contractors Accreditation Board as expressly required, but a list of 10
contractors given by the Department of Public Works and Highways.^[7]

The ponencia,
however, concludes that petitioners were left with no choice but to
consult the list given by the Department of Public Works and Highways
because the Philippine Contractors Accreditation Board list was not yet
existent. In absolving petitioners, the ponencia asserts: “[a]
negative fact, such as the absence of the masterlist, cannot serve as a
basis for a wrongdoing, when the prosecution itself has not first
presented proof of its existence.”^[8] I disagree.

The unavailability of the list by the Philippine Contractors
Accreditation Board was not a reason to deviate from the standard
procedure and get a separate list from the Department of Public Works
and Highways. There is no substantial compliance, as the ponencia puts it,^[9]
since there was no compliance at all. There is no mechanism or
provision that authorizes the substitution of the Philippine Contractors
Accreditation Board list by another list.

Moreover, as the Sandiganbayan has found, the entire project was
divided into two separate packages for purposes of the simplified
bidding without any rational basis.^[10]
Package 1 included part of the Project that was eventually awarded to
petitioner Legaspi, while Package II covered part of the Project where
the Public Estates Authority had a prior joint venture agreement with
SM, Inc. and R1 Consortium. This joint venture agreement allowed the two
developers the option to construct that portion of the Project in
exchange for lands or bonds. Thus, the continuation of Package II of the
Project depended on the decision of SM, Inc. and R1 Consortium of
whether they will pursue the Project themselves or not.^[11]
Petitioner Legaspi’s company was put in the list of contractors for
Package I just because it was number two in the list by the Department
of Public Works and Highways. The latter five of the 10 contractors were
assigned as prequalified contractors for Package II, again without
basis. This arbitrary decision led to unwarranted benefits in favor of
petitioner Legaspi.^[12] As explained by the graft court:

[T]hose contractors assigned for the Package II bidding were, from
the start, disadvantaged because of the great possibility that Package
II could not be bid out because of the option open to SM and R1
consortium. In turn, those contractors which were assigned for Package
I, were favored by PEA’s arbitrary decision because, just by their
being listed ahead in the DPWH list, they were certain to be able to bid
and in the case of Legaspi, win the award for Package I. This alone
gave undue advantage to the first set of contractors and prejudiced the
second set. Had PEA included all ten (10) of the DPWH listed contractors
for both Package I and II, no such advantage or prejudice would have
resulted. Better still, if PEA followed P.D. 1594 by including ALL
qualified contractors accredited by the PCAB in its master list in the
simplified bidding, then no question of impropriety could arise.

JD Legaspi Construction, which was number 2 in the DPWH list
therefore, gained an advantage or benefit, as it was able to bid and win
Package I, to the disadvantage of those contractors in the second set
of the DPWH list and also those PCAB accredited contractors in the
latter’s master list, who were not included in the DPWH list.

Moreover, PEA’s fear that a contractor could get both Package I
and II of the Boulevard project was not completely averted because
during the course of Legaspi’s implementation of its contract, PEA
approved Variation Order No. 2 in favor of Legaspi. This included the
Inland Channel Bridge which was originally part of Package II but was
later turned down to be built by R1 Consortium. Variation Order No. 2
also included the Seaside Drive Extension connecting PDMB to Roxas
Boulevard… No additional bidding was done for the additional works
under Variation Order No. 2. Legaspi, therefore, was given unwarranted
benefits and/or advantage by PEA.^[13]

Moreover, there were no detailed engineering plans when petitioner
Raphael Pocholo Zorilla prepared the Approved Agency Estimate, and the
Public Estates Authority bid out and awarded the Project. The ponencia makes the same observation that this clearly contravenes Section 2 of Presidential Decree 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. (Emphasis supplied)

However, the ponencia absolves petitioner for this
violation because it finds that there was no clear showing of bad faith,
malice, or gross negligence.^[14]

Further, the Sandiganbayan also found that there was no
appropriation and sufficient funds to finance the project at the time
the Public Estates Authority approved the signed Construction Agreement
with petitioner Legaspi.^[15]
All it had was a Board Resolution identifying the source of funds—the
PHP 1 billion loan facility from Land Bank of the Philippines and All
Asia Capital Group—but the loan was not yet existent because it was
still under negotiation at that time.^[16]
By the time the Construction Agreement was signed, dated, and
notarized, only PHP 300 Million was actually released as proceeds of the
loan from the Land Bank of the Philippines; this was still below the
actual contract cost of PHP 584,365,855.05.^[17]

Additionally, the Sandiganbayan found that splitting the Project into
two phases was only a ploy to circumvent this defect, but this defect
remained as Phase II of the project since it “could be undertaken only
if and when funds are made available again.”^[18] And indeed, the Public Estates Authority ran out of funds, and could not pursue the remaining works.^[19]

The ponencia,
however, maintains that the law only requires that project funding be
viewed on a yearly basis, irrespective of whether the project is divided
into several phases. As long as a portion of the project could be
implemented by the end of the fiscal year with the corresponding amount
to cover for that portion, there is no violation of the law.^[20]

As to the lack of presidential approval for contract price
adjustments as required by the Memorandum by Executive Secretary Zamora,
the ponencia finds that these were violations of directives
from the Executive that do not necessarily amount to violations of the
law. In any case, it claims that such infraction was not “proven to have
been committed with manifest partiality, evident bad faith, or gross
inexcusable negligence… [M]ere failure to comply with a directive of
the president cannot be considered a violation of … criminal law.”^[21]

However, as to the award of the Seaside Drive Extension under Variation Order No. 2 of the Construction Agreement, the ponencia
agrees that presidential approval was required because this variation
order constituted a change order or extra work order under the
Implementing Rules of Republic Act No. 9184. This is because the
construction of the Seaside Drive Extension did not fall within the
general scope of the original project; nowhere was the Extension found
in any of the bidding documents for the President Diosdado Macapagal
Boulevard Project, nor was it even located along the stretch of the
Boulevard. Accordingly, a separate award for the Seaside Drive Extension
should have been undertaken.^[22]

Despite this, the ponencia absolves petitioners, saying
they had no participation in the award of Variation Order No. 2,
specifically petitioners Cristina Amposta-Mortel and Zorilla.^[23]

The ponencia also finds there was no clear showing of
bad faith, manifest partiality, or gross inexcusable negligence in the
bid and award for Variation Order No. 2.^[24] Particularly, the ponencia
states that members of the old Board of Directors of the Public Estates
Authority, particularly petitioners Daniel T. Dayan, Frisco F. San
Juan, Elpidio G. Damaso, Legaspi, and Carmelita Chan, “had every right
to rely on the report and recommendation of the Ad Hoc Committee” when it issued the Resolutions leading to the award of the Seaside Drive Extension under Variation Order No. 2.^[25]

As to the members of the Ad Hoc Committee, specifically petitioners Manuel Beriña Jr. and Jaime R. Millan, the ponencia
holds that they “honestly believed that P.D. No. 1594 allows a
negotiated contract where a variation order is adjacent or contiguous to
an ongoing project and could be economically prosecuted by the same
contractor.”^[26] This also justified the lack of presidential approval.^[27]

I disagree with the ponencia‘s finding of clearing petitioners of criminal and civil liability. The Sandiganbayan’s decision should be affirmed.

Petitioner Amposta-Mortel’s position as Manager of the Public
Estates Authority’s Legal Department requires her to review and
recommend the legal instruments that involve her agency. Her signatures
in these instruments precisely signifies her participation, because they
are certifications that she had read and understood these documents. As
head of the Legal Department, her signature therefore meant that she
had reviewed the original Construction Agreement despite being aware of
the lack of funds for the transaction. Her role is not simply to be a
”rubber stamp” to the Agreement, as the Sandiganbayan puts it.^[28]
The Sandiganbayan also notes her admissions in her Memorandum, where
she merely relied on the approval of the Office of the Government
Corporate Counsel and the Public. Estates Authority’s Board of Directors
without having an independent assessment of the Agreement. “Even a
cursory reading of the Construction Agreement against the Zamora
Memorandum would yield a finding of inconsistency, which should have
raised red flags in the mind of [Amposta-Mortel].”^[29]
Her argument that she merely reviews matters which are brought to her
attention only further reveals her omission to act in instances where
her participation was necessary. She should be found guilty of the
charge.

The conviction of petitioner Zorilla, being the one who
prepared the Approved Agency Estate for the Project despite lack of
detailed engineering, should likewise be upheld. Preparing this despite
the lack of a detailed engineering plan is not simple negligence; this
is a crucial part in formulating an Approved Agency Estimate.^[30]

As to petitioners who were part of the old Board of Directors of the
Public Estates Authority, namely petitioners Leo V. Padilla, Dayan, San
Juan, Damaso, Legaspi, and Chan, they should be convicted for their acts
of issuing Resolutions approving (1) the contract to Legaspi despite
the absence of actual loan proceeds, (2) the Variation Order No. 2
despite lack of bidding, and (3) the increase on the cost of Variation
Order No. 2. The Sandiganbayan also found that they failed to question
the Public Estates Authority Management on why the contract was divided
into two phases when what they approved was an “undivided” contract.^[31]

Moreover, their reliance on the report and recommendation of the Ad Hoc Committee is misplaced. While Arias v. Sandiganbayan^[32]
ruled that “[a]ll heads of offices have to rely to a reasonable extent
on their subordinates and on good faith of those who prepare bids,
purchase supplies, or enter into negotiations,” this is subject to a
qualification. In Abubakar v. People^[33]:

The application of the doctrine is subject to the qualification
that the public official has no foreknowledge of any facts or
circumstances that would prompt him or her to investigate or exercise a
greater degree of care. In a number of cases, this Court refused to
apply the Arias doctrine considering that there were circumstances that should have prompted the government official to inquire further.^[34] (Citations omitted)

The irregularities attending the bidding process for both the
President Diosdado Macapagal Boulevard Project and the Seaside Drive
Extension under Variation Order No. 2 should have prodded them, at the
very least, to investigate further. Their conviction should be upheld.

Additionally, petitioners Lacson, Beriña, Viray, and Millan were the
persons responsible for the supervision of the Project. They were
directly involved in the planning and execution of the project.

Petitioners Lacson, Beriña, and Viray, as part of the Ad Hoc Committee,
“prepare[d] the bid documents, evaluate[d] the bidders’ qualifications,
evaluate[d] their submitted bids, and recommend[ed] plans,
specifications, invitations to bid, pre-qualifications, and all
pre-construction and construction activities to the Board for approval.”^[35]
Meanwhile, petitioner Millan, who acted as Assistant General Manager,
was in charge of the “evaluation, processing, and approval of bids of
contractors, progress billings, and payments.”^[36] Having direct participation in the prohibited acts, their convictions should also be affirmed.

Finally, as to petitioner Legaspi, who is a private individual,
the Sandiganbayan found that there was no evidence to show that he
conspired with the other petitioners during the start of the Project. It
was the Public Estates Authority’s management, specifically the Ad Hoc
Committee, that designed the splitting of the Project in to two phases.
Nevertheless, petitioner Legaspi pushed for the recommendation and
approval of Variation Order No. 2, so that his company could be awarded
the construction of the Seaside Drive Extension. He also claimed for
“overruns which made the final bill for the project 43% higher than that
of the original contract price.”^[37]
It was his prompting that led the Public Estates Authority’s management
to present Variation Order No. 2 for the Seaside Drive Extension to the
Board as a simple change order to the original contract, thereby
violating the rules on public bidding.^[38]

Moreover, petitioner Legaspi proceeded with the construction of the
Seaside Extension Drive despite the lack of a Notice to Proceed and
presidential approval, in contradiction to the requirement under the
original Construction Agreement. These “surrounding circumstances and
legal provisions all yield to the same conclusion that there was implied
conspiracy between [petitioner] Legaspi and the [Public Estates
Authority’s] management.”^[39]

Despite these, the ponencia
rules that the prosecution failed to prove they acted with manifest
partiality, evident bad faith, or gross inexcusable negligence, and
acquits petitioners.

For a conviction of violation of Section 3(e), the following elements must be present:

1. The accused must be a public officer discharging administrative, judicial or official functions;
2. He [or she] must have acted with manifest partiality, evident bad faith or [gross] inexcusable negligence;
3. That his [or her] action caused any undue injury to any party,
   including the government, or giving any private party unwarranted
   benefits, advantage or preference in the discharge of his functions.^[40]

The ponencia found that the prosecution failed to show
corrupt motives in the irregularities committed during bidding and award
of the President Diosdado Macapagal Boulevard Project, as well as the
Seaside Drive Extension under Variation Order No 2. It assessed this
element as against petitioners’ individual acts. I disagree.

In Abubakar^[41]:

The second element provides the modalities by which a violation of
Section 3(e) of Republic Act No. 3019 may he committed.” Manifest
partiality,” “evident bad faith,” or “gross inexcusable negligence” are
not separate offenses, and proof of the existence of any of these three
(3) “in connection with the prohibited acts . . . is enough to convict.”^[42]

Thus, independent proof of the second element is not necessary.
Manifest partiality, evident bad faith, or gross inexcusable negligence
can be proven through the manner by which the prohibited acts are
committed. In other words, these “merely describe the mode by which the
offense penalized in Section 3(e) of the statute may be committed.”^[43]

The Sandiganbayan was correct in looking at the totality of
petitioners’ conducts to find the presence of manifest partiality,
evident bad faith, or gross inexcusable negligence. After all, corrupt
practices are often done through a series of discrete acts that, when
taken together, reveal ill motives.

The construction of the
President Diosdado Macapagal Boulevard was a flagship infrastructure
project, and this huge undertaking by the national government involved
large sums of money. “The rules on competitive bidding and those
concerning the disbursement of public funds are imbued with public
interest. Government officials whose work relates to these matters are
expected to exercise greater responsibility in ensuring compliance with
the pertinent rules and regulations.”^[44]

ACCORDINGLY, I vote to DENY
the Petitions. The Sandiganbayan Decision and Joint Resolution dated
February 5, 2015 and September 16, 2015 finding petitioners Cristina
Amposta-Mortel, Theron Victor V. Lacson, Leo V. Padilla, Manuel Beriña,
Jr., Jaime R. Millan, Bernardo T. Viray, Raphael Pocholo A. Zorilla,
Daniel T. Dayan, Frisco F. San Juan, Elpidio G. Damaso, Carmelita D.
Chan, and Jesusito Legaspi guilty of violation of Republic Act No. 3019
should be AFFIRMED.

---

^[1] Rollo (G.R. No. 220500), p. 242.

^[2] Id. at 242-243.

^[3] Ponencia, pp. 5-6.

^[4] Id. at 6.

^[5] Rollo (G.R. No. 220500), p. 92, citing Implementing Rules and Regulations of Presidential Decree No. 1594, as amended, IB 10.4.2.5, July 12, 1995.

^[6] See Republic Act No. 4566 (1965), a amended by residential Decree No. 1746 (1980).

^[7] Rollo (G.R. No. 220500), pp. 192-193.

^[8] Ponencia, pp. 43-44.

^[9] Id. at 44.

^[10] Rollo (G.R. No. 220500), p. 194.

^[11] Id. at 193.

^[12] Id. at 192-194.

^[13] Id. at 193-194.

^[14] Ponencia, p. 46.

^[15] Rollo (G.R. No. 220500), p. 199.

^[16] Id. at 198-199.

^[17] Id. at 199.

^[18] Id.

^[19] Id. at 200.

^[20] Ponencia, pp. 54-55.

^[21] Id. at 56.

^[22] Id. at 56-58.

^[23] Id. at 59.

^[24] Id.

^[25] Id.

^[26] Id. at 60-61.

^[27] Id. at 62.

^[28] Rollo (G.R. No. 220500), p. 229.

^[29] Id. at 229.

^[30] Id. at 226.

^[31] Id. at 230.

^[32] 259 Phil. 794 (1989) [Per J. Gutierrez, Jr., En Banc].

^[33] G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].

^[34] Id.

^[35] Rollo (G.R. No. 220500), p. 224.

^[36] Id. at 224.

^[37] Id. at 239.

^[38] Id.

^[39] Id. at 239-241.

^[40] Id. at 242.

^[41] G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].

^[42] Id. citing Gallego v. Sandiganbayan, 201 Phil. 379, 383 (1982) [Per J. Relova, En Banc] and Sison v. People, 628 Phil. 573, 583 (2010) [Per J. Corona, Third Division].

^[43] See Gallego v. Sandiganbayan, 201 Phil. 379, 383 (1982) [Per J. Relova, En Banc].

^[44] Abubakar v. People, G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].