Reyes vs. Office of the Deputy Ombudsman for Luzon

The disclosure-of-relationship requirement under Section 47 of R.A. No. 9184 and its IRR applies only to competitive bidding and not to alternative methods of procurement such as Shopping, and mere violations of procurement laws do not ipso facto establish probable cause for violation of Section 3(e) of R.A. No. 3019 absent proof of manifest partiality, evident bad faith, or gross inexcusable negligence, and of undue injury or unwarranted benefit.

Petitioner Corazon C. Reyes was the Municipal Assessor of the Municipality of Palauig, Zambales, and served as Vice-Chair of its Bids and Awards Committee (BAC). The other BAC members were Roel R. Corpus (Chairman), Emy A. Reyes, Vilma C. Abdon, Benjelyn L. Cacho, and Edenia A. Fortin. The Municipality procured office supplies for Calendar Year 2006 through Shopping, an alternative method of procurement under R.A. No. 9184 (Government Procurement Reform Act) and its 2003 Implementing Rules and Regulations (IRR-A). The winning supplier, Tabing Daan Mart, was owned by Teresita Reyes Lising, petitioner's sister. The Commission on Audit conducted a post-audit examination of the procurements and issued an Audit Observation Memorandum identifying several irregularities, which became the basis of a complaint filed by the Field Investigation Office II of the Office of the Ombudsman against the BAC members.

The Municipality of Palauig, Zambales, through its Bids and Awards Committee (BAC), procured office supplies and materials for Calendar Year 2006 using Shopping as an alternative method of procurement under R.A. No. 9184. The BAC was composed of petitioner Corazon C. Reyes as Vice-Chairman, Roel R. Corpus as Chairman, and Emy A. Reyes, Vilma C. Abdon, Benjelyn L. Cacho, and Edenia A. Fortin as Members. The Annual Procurement Plan (APP) for CY 2006, approved and signed by the Municipal Mayor, expressly authorized the use of Shopping for various office supplies. The Mayor likewise signed the Purchase Requests and Purchase Orders for the procurements.

During the procurement activities, several suppliers participated, and according to the respective Abstract of Bids, Tabing Daan Mart emerged as the winning supplier by obtaining the lowest price bid and being the most advantageous to the government at the time of canvass. The Municipality disbursed a total of ₱804,678.00 across various procurement activities with Tabing Daan Mart. As certified by the Department of Trade and Industry, the owner of Tabing Daan Mart was Teresita Reyes Lising, petitioner's sister. Tabing Daan Mart was also the only supplier with sufficient inventory to accommodate the Municipality's needs and was willing to sell the supplies on credit.

Thereafter, the Commission on Audit (COA) conducted a post-audit examination of the transactions and issued Audit Observation Memorandum No. 008, noting that: (1) the procurement was made without an APP; (2) the purchase of supplies was done using Shopping, a method of procurement allegedly not provided; and (3) Tabing Daan Mart was favored over other suppliers. Based on these findings, the Field Investigation Office II of the Office of the Ombudsman filed a criminal and administrative complaint against the BAC members on February 26, 2015, charging them with violation of Sections 3(e) and (i) of R.A. No. 3019 and Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service.

In their Position Paper dated February 29, 2016, the BAC members countered that the Municipality did have an APP for CY 2006, which authorized the use of Shopping, and that the APP was approved and signed by the Municipal Mayor. They denied favoring Tabing Daan Mart, asserting that the relationship between petitioner and the supplier's owner worked to the Municipality's advantage through reduced prices. They also argued that the disclosure-of-relationship requirement applied only to competitive bidding, not to Shopping. The Ombudsman, however, found probable cause to indict the BAC members for violation of Section 3(e) of R.A. No. 3019 in relation to Section 47 of the IRR Part-A of R.A. No. 9184, reasoning that the BAC acted with evident bad faith or manifest partiality in transacting with Tabing Daan Mart despite the close relationship and that the disclosure requirement extended to alternative methods of procurement. Petitioner's Motion for Reconsideration was denied, prompting the present petition for certiorari.

• Retroactive Application of Section 47: Petitioner argued that the Ombudsman retroactively applied Section 47 of the IRR Part-A of R.A. No. 9184, which allegedly took effect only in 2009, to procurements that occurred in 2006.
• Scope of Disclosure Requirement: Petitioner maintained that, assuming Section 47 could be applied, the disclosure-of-relationship requirement does not apply to procurements made through Shopping and covers only the Head of the Procuring Entity, not members of the BAC.
• Absence of Elements of Section 3(e): Petitioner contended that the Ombudsman failed to show that all the elements for violation of Section 3(e) of R.A. No. 3019 were present to support a finding of probable cause.
• Posting Requirement Inapplicable to Shopping: Petitioner maintained that the posting requirement is needed only in competitive bidding and not in Shopping.

• No Retroactive Application: The Ombudsman countered that the cited Section 47 of the IRR Part-A of R.A. No. 9184 was the 2003 IRR, which took effect on October 8, 2003, prior to the subject procurements in 2006, and thus was not retroactively applied.
• Probable Cause Properly Found: The Ombudsman argued that there was no grave abuse of discretion in finding probable cause, as the BAC members acted with evident bad faith or manifest partiality in purchasing office supplies from Tabing Daan Mart despite the relationship of its owner with petitioner, and that Tabing Daan Mart should have been disqualified due to such close relationship.
• Disclosure Extends to Alternative Methods: The Ombudsman maintained that the underlying principles of R.A. No. 9184 — transparency and equity — require that the disclosure of relationship cover alternative methods of procurement as well, as such disclosure removes any advantage a bidder may gain by reason of relationship with a BAC member.

• Retroactive Application: Whether the Ombudsman retroactively applied Section 47 of the IRR Part-A of R.A. No. 9184 to the 2006 procurements.
• Applicability of Disclosure Requirement to Shopping: Whether the disclosure-of-relationship requirement under Section 47 of R.A. No. 9184 and its 2003 IRR applies to Shopping as an alternative method of procurement.
• Probable Cause for Section 3(e): Whether the Ombudsman gravely abused its discretion in finding probable cause to indict petitioner for violation of Section 3(e) of R.A. No. 3019.

• Retroactive Application: No. The Ombudsman cited the 2003 IRR, which took effect on October 8, 2003, before the 2006 procurements; no retroactive application occurred.
• Applicability of Disclosure Requirement to Shopping: No. The disclosure-of-relationship requirement under Section 47 of R.A. No. 9184 and its 2003 IRR applies only to competitive bidding, not to Shopping as an alternative method of procurement, as plainly indicated by the statutory language referring to "bidding documents" and "bids."
• Probable Cause for Section 3(e): No. The Ombudsman committed grave abuse of discretion in finding probable cause, as the second element (manifest partiality or evident bad faith) and the third element (undue injury or unwarranted benefit) of Section 3(e) of R.A. No. 3019 were absent.

• Retroactive Application: The 2003 IRR-A of R.A. No. 9184 was approved by President Gloria Macapagal-Arroyo through Memorandum Order No. 119 dated September 18, 2003, published on September 23, 2003, and took effect on October 8, 2003 — all prior to the 2006 procurements. Petitioner's reliance on Resolution No. 03-2009 was misplaced, as the provision cited by the Ombudsman was already part of the 2003 IRR. Accordingly, no retroactive application occurred.

• Applicability of Disclosure Requirement to Shopping: The Court examined the text of Section 47 of both R.A. No. 9184 and the 2003 IRR and found that the disclosure requirement expressly refers to "bidding documents" and "bids," terms defined in the IRR as documents issued for competitive bidding and signed offers submitted in response thereto. Four reasons supported the conclusion that the requirement does not extend to Shopping. First, the policy behind alternative methods of procurement — economy and efficiency — recognizes that rigid competitive bidding requirements would be impractical for small procurements; Shopping abridges the process and not all competitive bidding requirements apply. Second, the plain wording of Section 47 uses "bidding documents" and "bids," and under the verba legis doctrine, if the legislature intended to cover all procurement methods, it would have used "all procurement" instead. Third, Section 25.3 of the 2003 IRR specifically requires the sworn affidavit of compliance with the disclosure provision as part of the first bid envelope — a step that exists only in competitive bidding. Fourth, Section 54 of the 2003 IRR, which enumerates the terms and conditions for alternative methods, makes no mention of the Section 47 disclosure requirement. The Court also noted that while the BAC failed to comply with the posting requirement under Section 21.2.4, such non-compliance cannot be a ground for criminal liability and was mitigated by the fact that the BAC canvassed fifteen suppliers — far more than the three required — demonstrating compliance with the policy of competitiveness and transparency.

• Probable Cause for Section 3(e): The Court applied the established doctrine that violations of procurement laws alone do not ipso facto establish a violation of Section 3(e) of R.A. No. 3019; the prosecution must still show the essential elements. While the first element (petitioner being a public officer) was undisputed, the second and third elements were absent. As to the second element, the BAC substantially complied with the requirements for Shopping: the APP authorized Shopping, the Mayor approved the procurements, at least three (in fact fifteen) price quotations were obtained, the most advantageous price was secured, and Section 47's disclosure requirement did not apply. The procurement was conducted above board, negating any finding of manifest partiality or evident bad faith. As to the third element, Tabing Daan Mart provided the lowest price, had sufficient inventory, and was willing to sell on credit; the BAC merely followed procurement guidelines in selecting the best supplier. No unwarranted, unjustified, or unauthorized benefit or preference was given to Lising, and no corrupt intent or dishonest design was shown. The Ombudsman's finding of probable cause was thus tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.

• Policy of Non-Interference with the Ombudsman — As a general rule, the Court does not interfere with the Ombudsman's exercise of its investigatory and prosecutorial powers, including its discretion in determining probable cause, recognizing the wide latitude bestowed on the Ombudsman by the Constitution and R.A. No. 6770. However, this policy yields where there is grave abuse of discretion amounting to lack or excess of jurisdiction, which is reviewable via certiorari under the Court's constitutional power and duty.

• Grave Abuse of Discretion — Implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction, where the Ombudsman must have exercised its powers in an arbitrary or despotic manner, as patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined.

• Procurement Violations Do Not Automatically Constitute Section 3(e) Violation — Alleged irregularities in procurement or violations of procurement laws, rules, and regulations, on their own, do not ipso facto lead to a violation of Section 3(e) of R.A. No. 3019. The prosecution must still prove: (1) that the violation of procurement laws caused undue injury to any party or gave any private party unwarranted benefits, advantage, or preference; and (2) that the accused acted with evident bad faith, manifest partiality, or gross inexcusable negligence.

• Elements of Section 3(e) of R.A. No. 3019 — The concurrence of the following is required: (1) the accused is a public officer discharging administrative, judicial, or official functions; (2) the accused acted with manifest partiality, evident bad faith, or gross inexcusable negligence in the discharge of his functions; and (3) the accused's action caused undue injury to any party, including the Government, or gave any private party unwarranted benefits, advantage, or preference in the discharge of his functions. The third element may be committed under either mode — causing undue injury or giving unwarranted benefits — the presence of one suffices.

• Verba Legis / Plain Meaning Rule — If a statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. The legislature is presumed to know the meaning of the words used and to have expressed its intent by such words.

• Disclosure of Relationship Under Section 47 Limited to Competitive Bidding — The disclosure-of-relationship requirement under Section 47 of R.A. No. 9184 and its IRR applies only to competitive bidding, as evidenced by the statutory language referring to "bidding documents" and "bids," the specific requirement in Section 25.3 of the IRR for the sworn affidavit as part of the bid envelope, and the absence of any such requirement in Section 54 governing alternative methods of procurement.

• "Notably, after combing through R.A. No. 9184 and the 2003 IRR with a fine-tooth comb, We find nothing therein which requires the disclosure of relationship as a requirement when resorting to Shopping as an alternative method of procurement." — This passage articulates a key ratio decidendi: the disclosure requirement under Section 47 is inapplicable to alternative methods of procurement such as Shopping, negating the Ombudsman's basis for finding irregularity.

• "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." — This quotation, drawn from Sabaldan, Jr. vs. Ombudsman, sets forth the controlling two-part test for establishing Section 3(e) liability premised on procurement law violations.

• "If a statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation." — This states the verba legis doctrine applied by the Court in construing Section 47's reference to "bidding documents" and "bids" as limited to competitive bidding.

• "Mere participation by a public officer in an imperfect procurement process does not automatically serve as basis for his criminal indictment for the violation of Section 3 (e) of R.A. No. 3019." — Drawn from Duque vs. Ombudsman, this formulation is frequently cited to underscore that procurement irregularities, without more, are insufficient for criminal indictment under the Anti-Graft Law.

• De Guzman vs. Office of the Ombudsman, 821 Phil. 681 (2017) — Followed. The Court cited this case for the proposition that alternative methods of procurement should be read in conjunction with other provisions of R.A. No. 9184 pertinent to any procurement activity, but distinguished the additional requirements identified therein (pre-procurement conferences, observers, publication) as applicable to Limited Source Bidding and Negotiated Procurement, not necessarily to Shopping.

• Sistoza vs. Desierto, 437 Phil. 117 (2002) — Followed. The Court relied on this case to hold that defects in the bidding procedure alone do not automatically result in criminal liability under Section 3(e) of R.A. No. 3019; the prosecution must also show evident bad faith, gross inexcusable negligence, or manifest partiality.

• Sabaldan, Jr. vs. Ombudsman, G.R. No. 238014, June 15, 2020 — Followed. The Court adopted the two-part test articulated therein: that violations of procurement laws alone do not automatically establish probable cause under Section 3(e), and that both undue injury or unwarranted benefit and bad faith, partiality, or negligence must be shown.

• Duque vs. Ombudsman and Fact-Finding Investigation Bureau, G.R. Nos. 224648 & 224806-07 and 225188 & 225277, August 28, 2019 — Followed. Cited for the principle that mere participation in an imperfect procurement process does not automatically serve as basis for criminal indictment under Section 3(e) of R.A. No. 3019.

• Martel vs. People, G.R. Nos. 224720-23 and 224765-68, February 2, 2021 — Followed. The Court En Banc ruling reiterated that irregularities in procurement, on their own, do not automatically lead to conviction under Section 3(e) of R.A. No. 3019, and that the prosecution must show all essential elements are present.

• Fonacier vs. Sandiganbayan, 308 Phil. 660 (1994) — Followed. Cited for the definitions of "partiality," "bad faith," and "gross negligence" as modes of committing violation of Section 3(e) of R.A. No. 3019.

• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Penalizes public officers who, with manifest partiality, evident bad faith, or gross inexcusable negligence, cause undue injury to any party or give unwarranted benefits, advantage, or preference in the discharge of official functions. The Court found the second and third elements absent, negating probable cause.

• Section 47, Republic Act No. 9184 (Government Procurement Reform Act) — Requires all bidding documents to be accompanied by a sworn affidavit of the bidder that it is not related to the Head of the Procuring Entity by consanguinity or affinity up to the third civil degree, with failure to comply as a ground for automatic disqualification. The Court held this provision applies only to competitive bidding, not to Shopping.

• Section 47, 2003 IRR-A of R.A. No. 9184 — Expands the coverage of the disclosure requirement to include officers or employees of the procuring entity having direct access to information that may substantially affect the result of the bidding, including BAC members. The Court held this provision likewise does not apply to alternative methods of procurement.

• Section 48, Republic Act No. 9184 — Authorizes the use of alternative methods of procurement, including Shopping, subject to prior approval of the Head of the Procuring Entity and justified conditions.

• Section 52, Republic Act No. 9184 and 2003 IRR-A — Provides the conditions for resort to Shopping: (a) unforeseen contingency requiring immediate purchase not exceeding ₱50,000; or (b) procurement of ordinary or regular office supplies not available in the Procurement Service involving an amount not exceeding ₱250,000, with at least three price quotations from bona fide suppliers.

• Section 54, 2003 IRR-A — Enumerates the terms, conditions, limitations, and restrictions for the use of alternative methods of procurement, including the prohibition on splitting of contracts and posting requirements. The Court noted that Section 54 makes no mention of the Section 47 disclosure requirement.

• Section 21.2.4, 2003 IRR-A — Provides that for alternative methods of procurement, newspaper advertisement may be dispensed with, but posting must still be made on the procuring entity's website, PhilGEPS, and a conspicuous place. The BAC's non-compliance with this requirement was acknowledged but deemed not a ground for criminal liability.

• Section 25.3, 2003 IRR-A — Enumerates the required contents of the first bid envelope in competitive bidding, including a sworn affidavit of compliance with the disclosure provision under Section 47. The Court cited this as evidence that the disclosure requirement is specific to the bidding process.

• Section 7, Republic Act No. 9184 and 2003 IRR-A — Mandates that all procurement be within the approved budget and in accordance with an approved Annual Procurement Plan. The Court found the BAC had complied, as the APP for CY 2006 authorized Shopping.

Caguioa (Chairperson), Inting, Dimaampao, and Singh, JJ., concurred.