Miñao vs. Office of the Ombudsman (Mindanao)

A public official who implements a SARO by entering into multiple identical procurement contracts for the same materials from a single supplier, thereby splitting a single procurement project to evade the public bidding requirements of RA 9184 and its IRR, is administratively liable for Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of the Service; neither reliance on the SARO nor acquittal in the related criminal case excuses administrative liability.

Petitioner Arturo O. Miñao was then OIC District Engineer of the DPWH Zamboanga del Norte 1st District Engineering Office in Dipolog City. The Office of the Ombudsman (Mindanao) is the respondent. The procurement at issue involved guardrails and guardrail posts for the Dipolog-Oroquieta and Dipolog-Sindangan national roads under SARO No. ROIX-2003-353 issued by the DBM. RA 9184, the Government Procurement Reform Act, and its IRR, including Section 54.1 prohibiting splitting of government contracts, supply the governing statutory framework.

Aurelio Cadavedo filed a letter-complaint dated October 14, 2005 concerning the alleged anomalous purchase of guardrails and guardrail posts worth P5,500,000.00 sometime in 2004 by the 1st Engineering District of the DPWH in Sta. Isabel, Dipolog City. The COA-IX constituted an audit team to investigate and submitted an audit investigation report dated October 5, 2006. The report alleged that the 1st Engineering District committed splitting of contracts in procuring guardrails and guardrail posts under SARO No. ROIX-2003-353, issued by the DBM for the Dipolog-Oroquieta and Dipolog-Sindangan national roads. Specifically, it alleged that the district (a) resorted to splitting by awarding 11 purchase orders worth P500,000.00 each to AUF Enterprises without public bidding, (b) purchased overpriced guardrails and guardrail posts from AUF Enterprises, and (c) left guardrails and guardrail posts at the project site, causing wastage of P40,110.00.

Petitioner Arturo O. Miñao, then OIC District Engineer of the DPWH Zamboanga del Norte 1st District Engineering Office, Dipolog City, and his co-respondents denied the allegations in a joint-counter affidavit. They claimed that under the SARO, the main project was split into 11 projects, and that these projects, with an aggregate amount of P5,500,000.00, were already divided in the amount of P500,000.00 per project under the SARO. They further maintained that they could not have violated RA 9184 because RA 9184 took effect on October 8, 2003, whereas the SARO was issued only on December 16, 2003; since RA 9184 took effect shortly before the SARO, the procurement should be governed by the old procurement law.

The OMB-Mindanao found that while the specific kind of project was not indicated in the SARO, the 11 abstracts of bids, 11 cost estimates, and 11 purchase orders indicated that there was only one kind of project for the national roads. The abstracts and purchase orders showed that the guardrails and accessories were all procured from one supplier, AUF Enterprises. The OMB-Mindanao considered it absurd to purchase in 11 installments the same materials from the same supplier when the budget for the procurement of the materials for the whole project was readily available under the SARO. Because the materials were identical and could be supplied by a single supplier, the OMB-Mindanao concluded that there could only be one procurement contract/project, and that petitioner, together with Abapo and Tabiliran, resorted to the prohibited act of splitting government contracts under RA 9184. It also found failure to conduct public bidding under both the old and new procurement law, and cited COA-IX findings that the concrete posts and machine bolts delivered for the national roads were substandard and overpriced compared to the specifications in the purchase orders and approved plans.

The CA affirmed, observing that the intent behind the execution of 11 identical contracts involving the national roads was to avoid the requirement of public bidding under Section 54.1 of the IRR of RA 9184. The CA noted that even if the project was composed of 11 sub-sections, all 11 involved the procurement of the same materials of the same specifications, so only one procurement contract was needed; entering into 11 identical contracts with one supplier was ridiculous and nonsensical.

The OMB-Mindanao and the CA found that the 11 sections in Annex “A” of the SARO referred to locations along the national roads, and the P500,000.00 opposite each section pertained to budget allocation for each location, not to 11 separate procurement projects. They also found that the same materials and specifications were procured for the national roads and that no public bidding or other lawful method of procurement was observed. In a January 11, 2015 Joint Resolution in Criminal Case Nos. 18879 and 18880, the RTC, Branch 8 of Dipolog City, acquitted petitioner and his co-defendants for violating Section 65(A)(4), Article XXI of RA 9184 in relation to Section 56.1.4 of the IRR of RA 9184.

• Interpretation and Implementation of SARO: Petitioner argued that the CA erred in disregarding the actions taken by his office in interpreting and implementing SARO No. RO-IX 2003-353; he maintained that his office was primarily and merely tasked to implement the projects indicated in the SARO, which supposedly already identified 11 projects for the national roads, including the allocated budget per project.
• No Splitting of Contracts: Petitioner denied splitting or dividing a single procurement contract into 11 identical contracts to circumvent public bidding under RA 9184; he claimed that it was the DBM that first divided the project into smaller quantities and amounts in Annex “A” of the SARO, and that his office merely implemented the SARO and had no discretion to consolidate the total amount released.
• Good Faith and DO 319: Petitioner insisted that he implemented the SARO in good faith consistent with its basic guidelines; he argued that the DBM was cognizant of DO 319, series of 2002, which limited district engineers’ authority to approve purchase requests to not more than P750,000.00, and that the P500,000.00 allocations per sub-section meant DBM empowered his office to approve the purchase requests.
• Applicability of RA 9184 and Public Bidding: Petitioner maintained that he did not circumvent or avoid the requirements of public bidding under RA 9184 or its IRR, and that he resorted to the simplified bidding process under the old procurement law; he also argued that the requirements of bidding under RA 9184 were not required prior to March 1, 2005 pursuant to GPPB Resolution No. 010-2004.
• Effect of Criminal Acquittal: Petitioner claimed that the dismissal of the criminal aspect of the case by the RTC in its January 11, 2015 Joint Resolution should absolve him from any administrative liability.
• Difficulty of Compliance: Petitioner admitted awareness of RA 9184 and its IRR during implementation but resorted to the old procurement law due to the difficulty of complying with the bidding process requirements under RA 9184 and its IRR.

• Disregard of RA 9184: The OMB-Mindanao maintained that the CA did not err in finding petitioner guilty of disregarding the provisions of RA 9184 on public bidding involving procurement activities.
• Good Faith Not a Defense: The OMB-Mindanao countered that petitioner’s defense of good faith—that he only acted in accordance with the guidelines stated in the SARO—was untenable since petitioner was duty-bound to ensure that the amounts provided therein were spent in accordance with RA 9184.
• Unfamiliarity with Bidding Process: The OMB-Mindanao argued that petitioner’s reason that he was unfamiliar with the bidding process under RA 9184 did not excuse him from complying with the provisions of the law.

• Governing Law: Whether RA 9184 and its IRR governed the procurement of guardrails and guardrail posts under SARO No. RO-IX-2003-353, notwithstanding petitioner’s claim that the old procurement law applied.
• Splitting of Government Contracts: Whether petitioner is administratively liable for splitting government contracts by entering into 11 purchase orders/contracts worth P500,000.00 each with AUF Enterprises for identical materials.
• Public Bidding: Whether petitioner failed to conduct public bidding as required by RA 9184 and its IRR.
• Good Faith and Reliance on SARO/DO 319: Whether petitioner may escape administrative liability on the ground of good faith, claiming that he merely implemented the SARO and DBM’s allocation under DO 319.
• Effect of Criminal Acquittal: Whether petitioner’s acquittal in the related criminal case bars administrative liability.
• Administrative Liability and Penalty: Whether the findings of Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service are supported by substantial evidence and warrant dismissal from government service.

• Governing Law: Yes. RA 9184 and its IRR controlled because the SARO was issued on December 16, 2003 and procurements were initiated on July 12, 2004, after the effectivity of RA 9184 and its IRR on January 26, 2003 and October 8, 2003, respectively.
• Splitting of Government Contracts: Yes. The procurement involved only one procurement contract for identical materials from a single supplier; dividing it into 11 P500,000.00 contracts constituted splitting prohibited by Section 54.1 of the IRR of RA 9184.
• Public Bidding: Yes. Petitioner failed to conduct public bidding or any other lawful method of procurement under RA 9184 and its IRR; the abstracts of bids were not evidence of public bidding.
• Good Faith and Reliance on SARO/DO 319: No. Reliance on the SARO, DO 319, and good faith did not excuse noncompliance with RA 9184; the SARO did not mandate 11 separate contracts, and DO 319 did not authorize splitting.
• Effect of Criminal Acquittal: No. The RTC acquittal did not bar administrative liability because criminal cases require proof beyond reasonable doubt while administrative cases require only substantial evidence.
• Administrative Liability and Penalty: Yes. Substantial evidence supported the findings of Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service, and the penalty of dismissal was affirmed.

• Governing Law: A petition for review under Rule 45 is limited to questions of law; the Court is not a trier of facts and will not re-weigh evidence unless an exception applies. None applied. Petitioner did not question the factual findings of the OMB-Mindanao and COA on substandard and overpriced materials, so those findings were affirmed. The alleged acts were committed pursuant to the SARO issued by the DBM on December 16, 2003, and procurements by petitioner’s office were initiated on July 12, 2004. Since RA 9184 and its IRR took effect on January 26, 2003 and October 8, 2003, respectively, RA 9184 was the governing law.
• Splitting of Government Contracts: Section 54.1 of the IRR of RA 9184 defines splitting of government contracts as the division or breaking up of contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts, for the purpose of evading or circumventing the requirements of law and the IRR, especially competitive bidding and alternative methods of procurement. GPPB Non-Policy Matter Opinion No. 136-2014 clarified that division alone is not splitting; it must be clearly shown that the act was done to circumvent or evade legal and procedural requirements. COA guidance states that splitting is deemed present when a project is funded under a single obligating authority and implemented in several phases, whether by the same or different contractors; COA Circular No. 76-41 adds that proof of loss or damage is immaterial. Article 5 of the Civil Code provides that acts executed against mandatory or prohibitory laws are void unless the law authorizes their validity. RA 9184 does not prohibit splitting projects into sub-sections; it penalizes splitting contracts. Here, the OMB-Mindanao and CA found that the 11 abstracts of bids, 11 cost estimates, and 11 purchase orders showed only one kind of project for the national roads—construction of guardrails—and that the materials were identical and procured from one supplier, AUF Enterprises. The 11 sections in Annex “A” of the SARO referred to locations along the national roads, and the P500,000.00 opposite each section was a budget allocation for each location, not a mandate for 11 procurement projects. Since the same materials and specifications were needed for all sub-sections, only one procurement contract was required. Entering into 11 identical contracts with one supplier was absurd and constituted splitting to evade public bidding. Petitioner’s claim that the DBM had split the project to fit his authority under DO 319 was speculative; the SARO did not state that implementation required 11 separate projects or contracts, and it was not within the DBM’s mandate to dictate how the DPWH should implement the project. Even if the DBM had identified 11 projects, petitioner was duty-bound to ensure the SARO was carried out in accordance with relevant rules and regulations.
• Public Bidding: The SARO was issued on December 16, 2003 and procurements were initiated on July 12, 2004, after RA 9184 and its IRR took effect. Petitioner admitted awareness of RA 9184 and its IRR but resorted to the simplified bidding process under the old procurement law due to the difficulty of complying with RA 9184. A public official cannot disregard prevailing statutory requirements on bidding and procurement based on personal sentiment that they are difficult to carry out. GPPB Resolution No. 010-2004 only standardized the Philippine Bidding Documents and made their use mandatory effective March 1, 2005; it did not state that bidding requirements under RA 9184 and its IRR were not required before that date. The OMB-Mindanao and CA found no evidence of public bidding or any other method of procurement under the old or new law. The 11 abstracts of bids were not evidence of public bidding because they were not substantiated with individual bid offers and appeared to have been manufactured by the respondents; no evidence of publication of invitation to bid was presented. Petitioner’s intent in entering into 11 identical contracts with AUF Enterprises was to avoid the requirements of public bidding under RA 9184 and its IRR.
• Good Faith and Reliance on SARO/DO 319: Petitioner’s reliance on the SARO and DO 319 did not exculpate him. A SARO is a specific authority issued to an agency to incur obligations not exceeding a given amount during a specified period for the purpose indicated; it covers expenditures subject to compliance with specific laws or regulations or separate approval or clearance by competent authority. It is an authority, like a green light, to enter into contracts pursuant to the purpose indicated, and the funds released are subject to compliance with DO 319, RA 9184, and its IRR. The SARO did not state that the rehabilitation or improvement of the national roads should be implemented through 11 separate projects or contracts. Petitioner was duty-bound to take necessary steps to ensure the SARO was properly carried out in compliance with applicable laws. Accepting petitioner’s arguments would allow public officials to implement SAROs based on their own erroneous interpretations despite the mandatory nature of RA 9184 and would let a standalone good faith defense exculpate them, hampering enforcement of procurement laws. Petitioner’s resort to the old procurement law despite awareness of RA 9184 constituted gross negligence and negated good faith.
• Effect of Criminal Acquittal: The RTC’s January 11, 2015 Joint Resolution in Criminal Case Nos. 18879 and 18880 acquitted petitioner and his co-defendants for violating Section 65(A)(4), Article XXI of RA 9184 in relation to Section 56.1.4 of the IRR. The dismissal of the criminal case had no bearing on the administrative case because different degrees of evidence are required: proof beyond reasonable doubt in criminal cases and only substantial evidence in administrative proceedings. Petitioner’s acquittal did not affect the administrative decision nor carry with it relief from administrative liability.
• Administrative Liability and Penalty: The OMB-Mindanao and CA found petitioner guilty of Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service. Findings of the OMB are accorded great weight and respect, if not finality, due to its specialized knowledge and expertise; findings of fact by the OMB are conclusive when supported by substantial evidence, or such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. The requirement is satisfied where there is reasonable ground to believe that the petitioner is guilty of the act or omission complained of, even if the evidence might not be overwhelming. No cogent reason existed to overturn the OMB-Mindanao’s conclusions, especially since they were affirmed by the CA. The penalty of dismissal from government service was affirmed.

• Splitting of Government Contracts — Under Section 54.1 of the IRR of RA 9184, splitting of government contracts means the division or breaking up of contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts, for the purpose of evading or circumventing the requirements of law and the IRR, especially competitive bidding and the requirements for alternative methods of procurement. Division alone is not enough; GPPB Non-Policy Matter Opinion No. 136-2014 requires a clear showing that the act was done to circumvent or evade legal and procedural requirements. COA guidance treats splitting as present when a project is funded under a single obligating authority and implemented in several phases, whether by the same or different contractors, and COA Circular No. 76-41 states that proof of loss or damage is immaterial. The Court applied the doctrine to the 11 P500,000.00 contracts for identical guardrail materials from one supplier, holding that only one procurement contract was required and that the division was made to avoid public bidding.
• SARO as Authority, Not Implementation Directive — A Special Allotment Release Order is a specific authority issued to one or more identified agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated; it covers expenditures subject to compliance with specific laws or regulations or separate approval or clearance by competent authority. It is an authority, like a green light, to enter into contracts pursuant to the purpose indicated, and the released funds must not exceed the amount stated and must be used only for the indicated purpose, subject to compliance with DO 319, RA 9184, and its IRR. The Court applied this by holding that the SARO did not mandate 11 separate procurement contracts and that petitioner could not rely on it to justify splitting.
• Good Faith Not a Defense to Noncompliance with Mandatory Procurement Laws — Good faith does not excuse a public official from complying with mandatory procurement laws. A public official is duty-bound to ensure that a SARO is carried out in accordance with applicable laws and regulations; reliance on a speculative interpretation of the SARO and DO 319 is insufficient. The Court applied this by rejecting petitioner’s defense and noting that his resort to the old procurement law despite awareness of RA 9184 constituted gross negligence.
• Distinct Quantums of Proof in Criminal and Administrative Cases — Criminal cases require proof beyond reasonable doubt, while administrative proceedings require only substantial evidence. Consequently, an acquittal in a criminal case does not bar administrative liability for the same or related acts. The Court applied this by holding that petitioner’s acquittal in Criminal Case Nos. 18879 and 18880 did not affect the administrative case.
• Substantial Evidence in Administrative Proceedings — Substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion; the requirement is satisfied where there is reasonable ground to believe that the petitioner is guilty of the act or omission complained of, even if the evidence might not be overwhelming. Findings of the OMB are conclusive when supported by substantial evidence. The Court applied this by affirming the administrative findings against petitioner.
• Respect for Factual Findings of Administrative Bodies — Factual findings of administrative bodies, especially the OMB, are accorded great weight and respect, if not finality, due to their specialized knowledge and expertise, and are conclusive when supported by substantial evidence, particularly when affirmed by the CA. The Court applied this by affirming the OMB-Mindanao and CA findings.

• "Splitting of Government Contracts means the division or breaking up of [Government of the Philippines] contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and [the IRR], especially the necessity of competitive bidding and the requirements for the alternative methods of procurement." — This is the Court’s quotation of Section 54.1 of the IRR of RA 9184, defining the prohibited act of splitting government contracts.
• "To be clear, RA 9184, including its IRR, does not prohibit or penalize the splitting of projects into sub-sections. What the law penalizes is the splitting of contracts." — This passage distinguishes the permissible division of a project into sub-sections from the prohibited splitting of procurement contracts.
• "In other words, since the same materials and same specifications were procured for the National Roads' rehabilitation and improvement, common sense dictates that there could only be ONE procurement contract for all sub-sections of the project." — This states the factual and legal conclusion that the 11 sub-sections did not require 11 separate procurement contracts.
• "The dismissal of Criminal Case Nos. 18879 and 18880 of the RTC does not have any bearing on the administrative case against petitioner as different degrees of evidence are required in these actions. In criminal cases, proof beyond reasonable doubt is needed whereas only substantial evidence will suffice in administrative proceedings." — This is the ratio for rejecting petitioner’s argument that his criminal acquittal absolved him from administrative liability.

• Office of the Ombudsman vs. Atty. Bernardo, 705 Phil. 524 (2013) — Cited for the rule that a petition for review under Rule 45 is limited to questions of law and for the recognized exceptions to the conclusiveness of the CA’s factual findings when supported by substantial evidence.
• Office of the Ombudsman vs. Santos, 520 Phil. 994 (2006) — Cited for the rule that factual findings of administrative bodies are accorded great respect by the Court.
• Office of the Deputy Ombudsman for Luzon vs. Dionisio, 813 Phil. 474 (2017) — Cited for the rule that OMB findings are accorded great weight and respect, if not finality, due to its specialized knowledge and expertise, and are conclusive when supported by substantial evidence.
• Diaz vs. Office of the Ombudsman, 834 Phil. 735 (2018) — Cited in affirming the OMB-Mindanao’s conclusions and in applying the substantial evidence standard.
• Villaseñor vs. Sandiganbayan (Resolution), 571 Phil. 373 (2008) — Cited for the rule that criminal and administrative cases require different quantums of evidence, so an acquittal does not necessarily affect administrative liability.
• Barillo vs. Gervacio, 532 Phil. 267 (2006) — Cited for the rule that acquittal in the criminal aspect of a case does not carry with it relief from administrative liability.
• Re: Contracts with Artes International, Inc., A.M. No. 12-6-18-SC (Resolution), August 7, 2018 — Cited for COA guidance on splitting of contracts, including the statement that a project funded under a single obligating authority and implemented in several phases may constitute splitting, and for citing COA Circular No. 76-41.

• Section 54.1, IRR of Republic Act No. 9184 — Prohibits splitting of government contracts and defines it as the division or breaking up of contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts, for the purpose of evading or circumventing the requirements of law and the IRR, especially competitive bidding and alternative methods of procurement. Applied to the 11 P500,000.00 contracts.
• Republic Act No. 9184 (Government Procurement Reform Act) — The governing procurement law because the SARO was issued on December 16, 2003 and procurements were initiated on July 12, 2004, after its effectivity. It requires public bidding and prohibits splitting of contracts.
• Section 65(A)(4), Article XXI, RA 9184 in relation to Section 56.1.4, IRR of RA 9184 — The criminal provision under which petitioner and his co-defendants were acquitted by the RTC; the Court ruled that the acquittal did not affect the administrative case.
• Article 5, Civil Code — Provides that acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. Cited to support the conclusion that splitting contrary to mandatory procurement rules is void.
• Department Order No. 319, series of 2002 (DO 319) — Limits the authority of District Engineers to sign purchase requests to not more than P750,000.00. Petitioner invoked it to justify the P500,000.00 allocations; the Court held it did not authorize splitting and did not excuse compliance with RA 9184.
• GPPB Resolution No. 010-2004 — Standardized the Philippine Bidding Documents and made their use mandatory effective March 1, 2005. The Court held it did not suspend the bidding requirements under RA 9184 and its IRR.
• COA Circular No. 76-41 — States that proof of loss or damage is immaterial before a government official can be considered guilty of splitting of contracts. Cited to support the finding of splitting.
• COA Circular No. 2009-002 — Cited for the COA statement that there is deemed a splitting of contracts when a project is funded under a single obligating authority and implemented in several phases whether by the same or different contractors.
• COA Circular No. 96-002 — Defines a SARO as a specific authority issued to one or more identified agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated, subject to compliance with specific laws or regulations or separate approval or clearance.
• Rule 45, Rules of Court — Governs the petition for review on certiorari and limits review to questions of law.
• Rule 43, Rules of Court — Under which petitioner filed the petition for review before the CA from the OMB-Mindanao decision.

Perlas-Bernabe (Chairperson), Zalameda, Rosario, and Marquez, JJ., concur.