MARCELO FERNANDO, PETITIONER, VS. THE HONORABLE SANDIGANBAYAN, (FIRST DIVISION) AND THE OFFICE OF THE SPECIAL PROSECUTOR, RESPONDENTS.

These consolidated petitions question the two orders of the
Sandiganbayan dated December 3, 1990 which denied the petitioners’ motion to
defer arraignment and set the date for the petitioners’ arraignment.

The petitioners are charged
with violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act
(Republic Act No. 3019, as amended) for allegedly having given, through
manifest partiality, unwarranted benefits to J.F. Tabajonda Construction. The petitioners allegedly split a contract of over P5,000,000.00 into
eight (B) smaller contracts for the repair and renovation of the Bureau of
Customs Building to avoid a public bidding and to favor J.F. Tabajonda
Construction which was awarded four (4)
of the eight (8) contracts.

Sometime in September 1987, petitioner Mison, then Bureau of
Customs Commissioner, asked President Aquino for authority to approve
government contracts below
P2,000,000.00 entered into by
the Bureau for urgent repairs and rehabilitation and to facilitate the
implementation of projects envisioned to improve the machinery of the
Bureau. The request was referred to the
Secretary of Finance for comment. Upon
advice of petitioner Fernando, then Undersecretary of Finance, who stated the
requirements regarding authority to approve contracts, the Secretary by 1st
Indorsement dated November 12, 1987 interposed no objection to the grant of the
authority.

On November 6, 1987, petitioner Mison created the Committee on
Bidding of the Bureau which was tasked to “pass upon all requests for
supplies and materials, equipment, repairs, renovations and constructions;
determine the reasonableness of the prices/costs thereof based on quotations
submitted by the bidders/contractors and recommended to the Commissioner the
approval of awards to bidders.”

On December 3, 1987, Hilario Amotan, Acting Chief, Procurement
Office of the Bureau sent out Request for Quotations to eight (8) contractors,
one of which was J.F. Tabajonda Construction, to submit their respective
quotations for labor and materials on eight (8) repair works to be done on the
main Customs Building. Of the eight (8)
repair works that were to be done, four (4) were awarded to J.F. Tabajonda
Construction, one to Lodestone Construction, Inc., one to V.F. Labao
Construction, one to F.S. Evangelista Construction and one to Pick and Shovel,
Inc. as their bids were the lowest from among six (6) submitted quotations. Thereupon, on January 21, 1988, petitioner
Mison executed the contracts with the winning bidders. The eight (8) contracts were forwarded to
the Department of Finance for approval pursuant to Executive Order No. 301. The contracts were, however, returned to the
Bureau, Undersecretary Katigbak calling the attention of the Bureau to Section
2 of Executive Order No. 301 stating that “negotiated contracts for public
services and for furnishing supplies, materials or equipment may be entered
into by the Department or agency head without need of prior approval of higher
authorities, subject to availability of funds, compliance with the standards or
guidelines prescribed in Section 1 hereof, and to the audit jurisdiction of
COA.”

On February 4, 1988, petitioner Mison wrote petitioner Fernando,
stating that the Bureau’s contract with J.F. Tabajonda Construction, subject of
Mison’s 1st Indorsement of December 21, 1987 and approved by Fernando subject
to existing rules and regulations, has the nature of a negotiated contract. Petitioner
Mison requested that it be exempt from the provisions of Executive Order
No. 164 requiring that a negotiated contract shall be resorted to only if
public bidding would negate the objective for which the project is envisioned.

On February 5, 1988, in his 1st Indorsement, petitioner Fernando
approved the negotiated contract between the Bureau and J.F. Tabajonda
Construction pursuant to Executive Order No. 301 subject to usual accounting
and auditing requirements.

On February 23, 1988, petitioner Mison forwarded to the Secretary
of Finance the eight (8) contracts between the Bureau and the contractors
reiterating his request that the contracts, having the nature of a negotiated
contract, be exempt from the provisions of Executive Order No. 164. Furthermore, he requested for immediate
approval of said contracts as the need for the repairs and renovation of the
building was urgent as parts of the building have become a hazard to life.

Petitioner Fernando, in his memorandum, recommended the approval
of petitioner Mison’s request before sending it to the acting Secretary and the
Undersecretary. On the face of the
memorandum, Acting Secretary of Finance Victor Macalincag and Undersecretary E.
del Fonso stamped their approval on March 4, 1988. By 2nd Indorsement, petitioner Fernando then returned the eight
(8) contracts to the Bureau stating that the Department has approved them
pursuant to Executive Order No. 301 with instructions that the same be subject
to usual auditing and accounting requirements.

On April 29, 1988, Leonardo Jose, among others, a former Bureau
of Customs employee who was separated by Mison from the service as a result of
the Bureau’s reorganization pursuant to Executive Order No. 127, filed a
complaint against the petitioners, among others, charging them with violation
of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019, as amended)
for their alleged acts of having split a multi-million peso contract for the
repair and reconstruction of the main customs building into eight (8) smaller
contracts to avoid a public bidding and to favor J.F. Tabajonda Construction.

Acting on said complaint, Teresita Diaz-Baldos, Special
Investigation Officer (SIO) of the Office of the Special Prosecutor, conducted
a preliminary investigation and subsequently issued a resolution recommending
the prosecution of the petitioners, among others, for violation of Section 3(e)
of Republic Act No. 3019, as amended which reads:

“SEC. 3. Corrupt practices of public officers. – In addition to acts or omissions of public
officers already penalized by existing
law, the following shall constitute corrupt practices of any public officer and
are hereby declared to be unlawful:

xxx                            xxx                               xxx

(e) Causing any undue injury to any party, including the
Government, or giving any private party any unwarranted benefits, advantage or
preference in the discharge of his official, administrative or judicial
functions through manifest partiality, evident bad faith or gross inexcusable
negligence. This provision shall apply
to officers and employees of offices or government corporations charged with
the grant of licenses or permits or other concessions.”

Special Prosecuting Officer (SPO) Carlos Montemayor affirmed the
recommendation of SIO Diaz-Baldos after reviewing the resolution.

In the light of precedents
that a head of office is not necessarily criminally liable if all he did was
rely on the signature of subordinate officials. Deputy Special Prosecutor Jose de G. Ferrer assigned the case to
Prosecutor Wilfredo A. Orencia for a more extended review.

SPO Orencia recommended the dismissal of the complaint on grounds
of insufficiency of evidence. His
recommendation was approved by Acting Special Prosecutor Jesus F.
Guerrero. The recommendation of the
Special Prosecutor was not approved by the Ombudsman who ordered the filing of
the information against the petitioners, among others, with the
Sandiganbayan. The case was docketed as
Criminal Case No. 14461, to wit:

“That on or about the month of April, 1988 and immediately
prior and subsequent thereto, in the City of Manila and within the jurisdiction
of this Honorable Court, the above-named accused, all public officers,
COMMISSIONER SALVADOR MISON being the Commissioner of the Bureau of Customs,
UNDERSECRETARY MARCELO FERNANDO being the Undersecretary of the Department of
Finance, FRANCISCO WENCESLAO, being the Special Assistant to Commissioner
Salvador Mison, and HILARIO AMOTAN, being the Chief of the Supply Division and
General Services of the Bureau of Customs, while in the performance of their
official functions, did then and there wilfully, unlawfully, criminally, and
with manifest partiality conspire to grant, as they did in fact conspire in
granting unwarranted benefits, advantage or preference to J.F. Tabajonda
Construction, a trading firm with a capitalization of P50,000.00, by awarding
to it contracts involving the renovations and repair of the Bureau of Customs
Building at Port Area, Manila costing P3,287,945.00 through four (4) negotiated
contracts which were made possible by making four (4) separate job orders and
splitting the total construction costs in the following manner, to wit:

a)      Renovation of the
fourth floor level for P585,000.00;

b)      Repair of the roofing
of the fourth, third and second floors and the Medical and Central Division and
toilet for P755,445.00;

c)      Renovation of the
second floor level for P1,250,000.00; and

d)      Painting of all
exterior face of the wall of the main Customs Building from the second to the
fourth floor for P697.500.00, thus avoiding the awarding of the contracts through public bidding as
required by law; as a consequence, the accused freely exercised their
discretion in awarding the aforesaid four (4) negotiated contracts to J.F.
Tabajonda Construction, an unqualified, unlicensed and unregistered
construction firm, to the exclusion of other qualified, licensed and registered
contractors who may have been interested in offering their bids had the award
been coursed through a public bidding.” (G. R. No. 96182, Rollo,
pp. 60-62)

Petitioner Mison filed his
motion for reconsideration and/or reinvestigation and for deferment of
arraignment while petitioner Fernando filed his own motion for reconsideration.

The motions of the petitioners were heard jointly and the
Sandiganbayan thereafter issued an order directing the following:

“[T]he Ombudsman look into the
sequence of events and the documents in support thereof presented by accused
Fernando, to determine the irregularity of approval by the Office of the
Secretary of Finance of this transaction as a whole, as well as the
presentation of documents basis for the resolution of Prosecutor Teresita V.
Diaz-Baldos without knowledge of, or notice to, the accused. This is without prejudice to the determination
by the Ombudsman of other items which, in his view, would also be deserving of
his attention to make a final determination as to whether or not the above and
other facts in the record indicate the existence or absence of probable cause
against all or some of the accused.” (G.R. No. 96182, Rollo, pp. 62-63)

As a result of the
order of the Sandiganbayan, evidence was submitted by the petitioners and by
the complainant.

After another investigation by SPO Tamayo, he ordered the
dismissal of Criminal Case No. 14461 for lack of evidence. He, however, directed that a preliminary
investigation be conducted against petitioner Mison and eight (8) other persons
for falsification of public documents involving another matter.

Tamayo’s order was subsequently disapproved by the Ombudsman in
his order dated November 22, 1990.

Both petitioners moved for deferment of their arraignment. This was denied by the Sandiganbayan in
their questioned December 3, 1990 order. The Sandiganbayan, thereafter issued its second questioned order setting
the arraignment of the petitioners with the pre-trial and trial to follow.

Hence, these petitions.

From a careful reading of the records of this case, it is evident
that there is substantial basis for this Court to rule that there is no prima facie case against petitioners Fernando and Mison to
sustain the prosecution of charges brought against them. It is worthy to note that the Solicitor
General, in his comment, agreed that there is no prima facie case in Criminal Case No. 14461.

We emphasize at this point that the Court has a policy of
non-interference in the Ombudsman’s exercise of his constitutionally mandated
powers. The overwhelming number of
petitions brought to us questioning the filing by the Ombudsman of charges
against them are invariably denied due course. Occasionally, however, there are rare cases when, for various reasons
there has been a misapprehension of facts, we step in with our review power. This is one such case.

It may also be stressed at this point that the approach of the
Courts to the quashing of criminal charges necessarily differs from the way a
prosecutor would handle exactly the same question. A court faced with a fifty-fifty proposition of guilt or
innocence always decides in favor of innocence. A prosecutor, conscious that he represents the offended party,
may decide to leave the problem to the discretion of the court.

In the habeas corpus case of Juan Ponce Enrile
v. Judge Salazar, et al. (186 SCRA 217 [1990]), the situation was more clear-cut, thus prompting
the undersigned ponente to state:

“All courts should
remember that they form part of an independent judicial system; they do not
belong to the prosecution service. A
court should never play into the hands of the prosecution and blindly comply
with its erroneous manifestations. Faced with an information charging a manifestly non-existent crime, the duty
of a trial court
is to throw it out. Or, at the very least and where possible,
makes it conform to the law.” (at p. 244)

Under Executive Order No. 301, Commissioner Mison had authority
to approve negotiated contracts up to P1,999,999.00. Between P2,000,000.00 and P9,999,999.00, approval may be given by
the Secretary and two Undersecretaries. For negotiated contracts P10,000,000.00 and
above, Malacañang approval is required.

The November 22, 1990 order of the Ombudsman (G.R. No. 96182,
Rollo, pp. 21-25) denying the petitioners’ motion to withdraw the information
filed against them shows that the primary basis for prosecution is the alleged
absence of the necessary authority, to wit:

xxx                            xxx                               xxx

“While the eight (8) contracts have a combined price of over
P5,000,000.00, the approval of which is required to be by the Department Head
and two Undersecretaries, it was only Fernando who expressed his approval thereof
in his aforementioned 2nd indorsement. In an apparent attempt to cure this deficiency, evidence was presented
to show that the said contracts were approved by the then Acting Secretary of
Finance and two Undersecretaries. This
attempt is a recognition in itself by
the accused that the said contracts needed the approval not only of the
Department head alone. The evidence
presented to prove compliance with the legal requirement is assailed by the
complainant as being merely ‘curative’, and this claim appears to be sustained
by the facts that such document only resurfaced during the reinvestigation, and
that the supposed approval of the contracts by the Department head and two
undersecretaries is not even mentioned in the 2nd indorsement signed by accused
Fernando alone. x x x.”

The records belie these findings. From the very inception of the plan to repair the decrepit and
unsafe offices of the Bureau of Customs, petitioner Mison sought appropriate
authority from the Office of the President, no less, and later from the
Department of Finance. The authority
was given to him. Only then did he
order the contractors to proceed with the construction.

The findings of Special Prosecutor Tamayo in his Comment dated
May 4, 1990 state that:

“It is in the light of
this procedural flow and documents relative to the administrative and
supervision (sic) that the testimony of Mr. Ramon Malarde bears great significance. On January 20, 1989, he presented certified
xerox copies of all available documents relative to the renovation
and repair of the Bureau of Customs
building and they exclusively included only the following which were marked as OPS exhibits,
and xerox copies of which are not presented as annexes to this comment, namely:

x x x                          x
x x                             x x x

Annex H    Memorandum of
Undersecretary Fernando to Acting Secretary Victor Macalincag, dated March 4,
1988 (OPS #5);”

x x x

(Emphasis supplied,
Order, pp. 9 and 10)

The February 5, 1988 indorsement of Undersecretary Fernando
approving Commissioner Mison’s request to go ahead with the proposed contracts
pursuant to Executive Order No. 301 and subject to accounting and auditing
rules is not the approval which is essential to its validity and, therefore,
forming part of the entire contract.

What is material to this case is that on March 4, 1988, Acting Secretary Macalincag, Undersecretary
del Fonso and Undersecretary Fernando approved the negotiated contracts. Only then were the eight contracts returned
to the Bureau. Only then could the
execution of the contracts be deemed
complete.

The complainants assert that the March 4, 1988 approval was only curative. In other words, was it
only an afterthought to provide evidence during an investigation?

The complaints of disgruntled employees were filed on April 29,
1988. At that time, the authority had
already been given.

The March 4, 1988 approval could not have been curative
because the contracts were investigated only in 1989 and 1990. It is not correct that the document surfaced
only during re-investigation. As early
as January 20, 1989, or more than one year before the re-investigation, it
already formed part of the records as Annex “H”.

Furthermore, the history of the records show that the procedures
and transactions involving the repair and renovations were regular and
aboveboard. This is shown by the
normal, if not bureaucratic, exchange of communications and indorsements
between the Commissioner of Customs and the Department of Finance.

As earlier stated, Mison asked the President on September 24,
1987 for authority. The President
referred the request to the Secretary of Finance. On November 3, 1987 Undersecretary Fernando prepared a memorandum
informing the Secretary of the requirements for approval of contracts entered
into by Mison. The Secretary approved
the procedure in the memorandum and then replied to the President’s referral.

Another Undersecretary, R. K. Katigbak, advised the Bureau of
Customs that the eight (8) contracts are covered by Section 2 of Executive
Order 301. Petitioner Mison answered
that what he needed was authority to enter into negotiated contracts.

Considering the urgency and need for repairs, Undersecretary
Fernando approved the Bureau’s entering into the contracts in his February 5,
1988 indorsement but “subject to the usual accounting and auditing
requirement.” On March 4, 1988, the needed signing authority was given by
the Secretary and another Undersecretary which, added to Fernando’s own
signature, constituted the authorization required by the Executive Order. There is no basis to warrant prosecution
under an Executive Order which was never violated.

The challenged November 22, 1990 order likewise states that there
was evidence “to confirm the scheme to grant unwarranted benefits due to
partiality in favor of J.F. Tabajonda Construction.”

Again, this is not supported by the records.

Quoting from the order of Special Prosecutor Tamayo dated October
19, 1990. “For a benefit to be
unwarranted, it should be unjustified. It is devoid of any consideration. In this regard, it suffices to state that the Commission on Audit
certified that all the transactions were post-audited and it found no ground for suspension/disallowance of the
disbursements.”

There was no manifest
partiality granted to J.F. Tabajonda Construction. Mr. Mison could have validly awarded all
eight (8) contracts to Tabajonda. Instead, he awarded four (4) contracts to other contractors who gave
lower bids for specific projects. This,
in itself, negates partiality. Not one
of the other contruction firms who submitted their respective quotations or
bids protested or complained of any partiality in awarding the four (4)
contracts to J. F. Tabajonda Construction or that the contracts should not have
been awarded to it but to anyone of the other participating bidders. It is clear from the determination made by
the Customs Committee on Bidding that J. F. Tabajonda Construction offered the
lowest bid price. The Committee based
its decision on a finding that the procedures adopted were regular and
fair. (Order of Special Prosecutor
Tamayo dated October 19, 1990, pp. 23-24, G.R. No. 96183, Rollo, pp. 30-56)

As regards petitioner Fernando, there is no finding by the
Ombudsman himself of any special relationship between Fernando and J.F.
Tabajonda Construction. He is
completely clear on this count.

Moreover, the absence of any partiality on the part of Mison is
further shown by the fact that the complainant was not a losing bidder, a
disinterested party, or a crusading citizen. Rather, the complainant was a dismissed employee of the Bureau of
Customs, bitterly angry because of his summary dismissal.

The petitioners are charged with violation of Section 3 (e) of
Republic Act No. 3019, as amended. We
held in Alejandro v. People (170 SCRA 400, 405, 407
[1989]):

“In order that one may be held criminally liable under said
section, the act of the accused which caused undue injury
must have been done with evident bad
faith or with gross inexcusable negligence. Gross negligence has been defined as
negligence characterized by the want of even slight care, acting or omitting to
act in a situation where there is a duty to act, not inadvertently but
willfully and intentionally with a conscious indifference to consequences in so
far as other persons may be affected. (Ballentine’s Law Dictionary, 3rd Edition, p. 537) It is the omission of that care which even
inattentive and thoughtless men never fail to take on their own property. (Bouvier’s Law Dictionary, Vol. I, 3rd
Revision, p. 1383)

x x x                          x x x                             x x x

Moreover, one of the elements of the crime described in Sec. 3 (e)
of the Anti-Graft and Corrupt Practices Act is that there should be undue
injury caused to any party. However, in
the 30 July 1987 decision of the respondent Sandiganbayan, it is recognized
that there was no proof of damage caused to the employees of the hospital since
they were in fact paid on 27 October 1982 their salaries for the entire third
quarter of 1982.” (Emphasis supplied)

There is no evidence whatsoever to show that the acts of the
petitioners were done with evident bad faith or gross negligence. Neither is there proof that there was undue
injury caused to any party. Who is the
party injured? There is nothing in the
records to show injury to any party, least of all the government. The urgent repairs were completed. The Bureau of Customs personnel and the
public dealing with them were benefited but nobody was injured. But most of all, there was no evident
partiality.

It appears, therefore, that the questioned orders overlook what
this Court enunciated in Salonga v. Cruz Paño (134
SCRA 438, 461-462 [1985]):

x x x                             x x
x                             x x x

“The purpose of a preliminary investigation is to secure the
innocent against hasty, malicious and oppressive prosecution, and to protect
him from an open and public accusation of crime, from the trouble, expense and
anxiety of a public trial, and also to protect the state from useless and
expensive trials.

x x x                             x x
x                             x x x

“A preliminary investigation serves not only the purposes of
the State. More important, it is a part
of the guarantees of freedom and fair play which are birthrights of all who
live in our country. It is, therefore,
imperative upon the fiscal or the judge as the case may be, to relieve the
accused from the pain of going through a trial once it is ascertained that the
evidence is insufficient to sustain a prima facie case or that no probable
cause exists to form a sufficient belief as to the guilt of the accused. Although there is no general formula or
fixed rule for the determination of probable cause since the same must be
decided in the light of the conditions obtaining in given situations and its
existence depends to a large degree upon the finding or opinion of the judge
conducting the examination, such a finding should not disregard the facts
before the judge nor run counter to the clear dictates of reason (See La
Chemise Lacoste, S. A. v. Fernandez, 129 SCRA 391).”

Whether the contract was awarded as a single P5,000,000.00 award
or broken up into smaller awards for bidders who could give better services for
specific portions of the project is of no moment. Proper authority for up to P9,999,999.00 was given.

The records, therefore, do not bear out the Information’s charge
that the breaking up of the construction costs was a deliberate attempt to
avoid awards through public bidding. This is the main thrust of the prosecution. It is not partiality which resulted in unwarranted benefits to any
private party. This is only an
incidental result from the main thrust. There is also no charge of over-pricing, poor construction, kickbacks,
or any form of anomaly of this nature. And there is no prima facie showing that one of the
several contractors was given unwarranted benefits over the others.

WHEREFORE, the two petitions for certiorari are
hereby GRANTED. The petitioners are
dropped from the information in Criminal Case No. 14461 for lack of probable
cause.

SO ORDERED.

Narvasa, C.J., Feliciano, Bidin, Medialdea, Regalado, Davide,
Jr., Romero, Nocon, and Bellosillo, JJ.,
concur.

Cruz, J., No part. My son is
connected with law firm representing the petitioners.

Padilla, J., joins J.
Griño-Aquino in her separate concurring and dissenting opinion.

Grino-Aquino, J., please see
separate concurring and dissenting opinion.

Melo, J., on leave.