FACTS : The Office of the Ombudsman filed criminal and administrative complaints against the members of the Bids and Awards Committee (BAC) of the Municipality of Palauig, Zambales, including petitioner Corazon C. Reyes, based on the findings of a COA post-audit of the municipality's 2006 procurement of office supplies. The COA found that the municipality procured supplies worth ₱804,678.00 through shopping/canvassing, allegedly without an Annual Procurement Plan (APP), using a procurement method not authorized by law, and favoring Tabing Daan Mart, whose owner was petitioner's sister. The Ombudsman alleged that the BAC violated Section 3(e) and (i) of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) and committed administrative offenses, asserting that Tabing Daan Mart should have been disqualified under Section 47 of the Implementing Rules and Regulations (IRR) of R.A. No. 9184 (Government Procurement Reform Act) because of its relationship with a BAC member.
The BAC members denied the allegations, claiming that the municipality had an approved Annual Procurement Plan (APP) authorizing shopping as an alternative procurement method and that Tabing Daan Mart was selected because it offered the lowest and most advantageous prices, benefiting the government. They further argued that the disclosure of relationship under Section 47 of the IRR of R.A. No. 9184 applies only to competitive bidding and not to shopping. Nevertheless, the Ombudsman found probable cause to indict the BAC members for violating Section 3(e) of R.A. No. 3019, holding that they acted with manifest partiality and evident bad faith by awarding the contracts to a supplier owned by the petitioner's sister despite the prohibition against relatives within the third civil degree participating in procurement. However, it dismissed the charge under Section 3(i) of R.A. No. 3019 for lack of evidence that respondents had any financial interest in or personally benefited from the transactions. Petitioner's motion for reconsideration was subsequently denied.
ISSUE : WON Ombudsman gravely abused its discretion in finding probable cause against petitioner for violation of Section 3(e) of R.A. No. 3019
HELD : The Supreme Court granted the petition and held that the Office of the Ombudsman committed grave abuse of discretion in finding probable cause against the petitioner for violation of Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act). While the Court reiterated that the Ombudsman enjoys broad discretion in determining probable cause pursuant to the 1987 Constitution and Republic Act No. 6770 (The Ombudsman Act of 1989), such discretion remains subject to judicial review through a petition for certiorari when exercised in a capricious or arbitrary manner amounting to grave abuse of discretion. Upon review, the Court found that the Ombudsman erred in concluding that the petitioner and the other members of the Bids and Awards Committee (BAC) violated Section 47 of the Implementing Rules and Regulations (IRR) of Republic Act No. 9184 (Government Procurement Reform Act) by failing to require the supplier to disclose its relationship with a BAC member. The Court clarified that although Section 47 of the IRR was already in force in 2006, its disclosure requirement applies only to procurements conducted through competitive public bidding and not to Shopping, which is an authorized alternative mode of procurement under Sections 48 and 52 of R.A. No. 9184. After examining the provisions of the law and its 2003 IRR, the Court found no legal basis requiring bidders in Shopping procurements to submit a sworn affidavit disclosing relationships with BAC members. It emphasized that Shopping is governed by its own statutory requirements, including procurement within an approved Annual Procurement Plan (APP) under Section 7 of R.A. No. 9184, prior approval of the Head of the Procuring Entity, observance of procurement thresholds, obtaining at least three price quotations from qualified suppliers, compliance with posting requirements under Sections 21 and 54 of the IRR, and the prohibition against splitting contracts. The records showed that the Municipality substantially complied with these requirements by having an approved APP, obtaining the mayor's approval, canvassing fifteen suppliers, and selecting the supplier offering the lowest and most advantageous price. Although the BAC admittedly failed to comply with the posting requirements under Section 54.2 of the IRR, the Court agreed with the Ombudsman that such lapse constituted, at most, an administrative infraction and did not establish criminal liability.
The Court further ruled that the essential elements of Section 3(e) of Republic Act No. 3019 were not established. Citing Sistoza v. Desierto, Sabaldan, Jr. v. Ombudsman, Duque v. Ombudsman, and Martel v. People, it reiterated that violations of procurement laws or procurement irregularities do not automatically constitute a violation of the Anti-Graft and Corrupt Practices Act. To sustain criminal liability, the prosecution must prove not only a breach of procurement rules but also that the public officer acted with manifest partiality, evident bad faith, or gross inexcusable negligence, and that such acts caused undue injury to the government or conferred unwarranted benefits, advantage, or preference upon a private party. The Court found these elements absent. It held that the BAC lawfully resorted to Shopping, complied with the applicable procurement requirements, obtained quotations from fifteen suppliers, and awarded the procurement to Tabing Daan Mart because it offered the lowest price, possessed sufficient inventory, and was willing to extend credit to the municipality. Since the disclosure requirement under Section 47 of the IRR of R.A. No. 9184 did not apply to Shopping, the supplier's familial relationship with the petitioner did not automatically disqualify it nor establish favoritism or bad faith. Accordingly, the Court found no evidence of manifest partiality, evident bad faith, gross negligence, undue injury to the government, or unwarranted benefit to the supplier. Consequently, the Ombudsman's finding of probable cause was declared tainted with grave abuse of discretion, and the criminal complaint for violation of Section 3(e) of Republic Act No. 3019 was dismissed for lack of probable cause.
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