Villanueva vs. People

A private individual may be convicted under Section 3(e) of RA 3019 when conspiracy with public officers is proven, and the giving of unwarranted benefits, advantage, or preference to a private party is sufficient to satisfy the third element of the offense, independent of proof of actual damage or injury to the government. The corporate fiction may be pierced when juridical entities are used as vehicles to commit illegal acts, and the Court is not a trier of facts, with the Sandiganbayan's factual findings being conclusive upon the Court absent recognized exceptions.

The Municipality of Janiuay, Iloilo, through Mayor Franklin A. Locsin, entered into a Memorandum of Agreement with the Department of Health Center for Health Development for Western Visayas to implement the Rescue and Emergency Disaster Program of then Senator Vicente S. Sotto III. The program funded the purchase of medicines and equipment for distribution to municipalities in Iloilo, with the amount of P15,000,000.00 released to the municipal government of Janiuay. The execution and implementation of the MOA was coursed through the municipal government by virtue of Sangguniang Bayan Resolution No. 318-2000, with Mayor Locsin acting as president of the League of Municipalities of the Philippines, Iloilo Chapter.

On December 19, 2000, the Municipality of Janiuay, Iloilo, through Mayor Franklin A. Locsin, entered into a Memorandum of Agreement with the Department of Health Center for Health Development for Western Visayas to implement the Rescue and Emergency Disaster Program for the purchase of medicines and equipment for distribution to municipalities in Iloilo. The DOH released P15,000,000.00 to the municipal government of Janiuay to carry out the program. The Office of the Mayor caused the Invitation to Bid to be published in three local newspapers, and on January 4, 2001, another Invitation to Bid was issued by the Office of the Municipal Treasurer. Three companies responded: AM Europharma Corporation, Mallix Drug Center, and Phil. Pharmawealth, Inc. The scheduled bidding on January 12, 2001 was postponed to January 15, 2001 due to the provincial auditor's absence.

On January 15, 2001, the Committee on Awards, composed of Municipal Accountant Carlos C. Moreno, Municipal Budget Officer Ramon T. Tirador, Municipal Treasurer Luzviminda P. Figueroa, and Ricardo S. Minurtio, Mayor Locsin's representative, proceeded with the opening of bids despite the continued absence of the provincial auditor. The committee recommended the award of contracts to Europharma in the amount of P13,191,223.00 and to Mallix Drug in the amount of P1,744,926.00, which Mayor Locsin approved. Purchase orders and certificates of acceptance, both dated January 16, 2001, were issued, and the medicines were immediately delivered to and received by Mayor Locsin on even date. On January 17, 2001, the municipality issued two checks in favor of Europharma and Mallix Drug as payment, and official receipts were subsequently issued.

The Bureau of Food and Drugs conducted a medical analysis on the delivered medicines, and the drug cotrimoxazole worth P240,000.00 failed the test. It was only on October 16, 2001 that Mallix Drug delivered replacement drugs found compliant with BFAD standards. On post-audit, the provincial auditor issued a Notice of Suspension and Notice of Disallowance, ordering Mayor Locsin and Treasurer Figueroa to justify the municipality's failure to notify the Office of the Provincial Auditor of the bidding, require a performance bond, explain why Europharma and Mallix Drug were allowed to bid despite being owned by petitioner, and submit the list of recipient municipalities. It was uncovered during the annual audit that both companies were owned by petitioner and that Europharma had a suspended accreditation at the time of the bidding.

On May 29, 2002, the president of Pharmawealth, Dr. Ferjenel O. Biron, issued a press statement disowning Pharmawealth's participation in the bidding and sent a letter to the Commission on Audit confirming the disclaimer, which led to the discovery that Europharma was 99% owned by petitioner. Due to the irregularities, the matter was referred to the Office of the Ombudsman-Visayas, which found probable cause to indict the municipal officers and petitioner for violation of Section 3(e) of RA 3019. The Sandiganbayan found all accused guilty, finding that the signatures of the committee members in the Minutes of Meeting, the undue haste in delivery, the speed of payments without the required 10% performance bond, and irregularities in the qualification and accreditation of the companies revealed manifest partiality and evident bad faith.

• Vagueness of Amended Information: Petitioner argued that the Sandiganbayan seriously erred in convicting him for supposed violations not stated under the allegedly fatally amended Information dated January 7, 2009, depriving him of his constitutional right to be informed of the nature and cause of the accusations against him.
• COA Circular Not a Penal Law: Petitioner argued that the Sandiganbayan erred in convicting him under COA Circular No. 92-386, which is not a penal law.
• Emergency Procurement: Petitioner argued that the accused committee members acted only in accordance with the nature of the transaction as an emergency procurement, and that Section 368 of RA 7160 allows emergency purchases without public bidding.
• LMP's Separate Personality: Petitioner argued that the Sandiganbayan disregarded the statutory personality of the League of Municipalities of the Province of Iloilo when it ruled that the accused public officers acted in discharge of their duties as municipal officers.
• Pharmawealth's Denial: Petitioner argued that the Sandiganbayan erred in accepting Pharmawealth's denial of participation in the bidding when at least three documents, including its DOH BFAD License to Operate, belied such denial.
• Europharma's Qualification: Petitioner argued that the Sandiganbayan erred in faulting the public officers for considering Europharma as a qualified bidder since its renewal of License to Operate was under process and it had not lost any qualifications as a drug manufacturer.
• DOH Accreditation Requirement: Petitioner argued that the Sandiganbayan insisted on DOH accreditation as a requirement for local government procurements for medicines when no legal basis supports such requirement.
• Corporate Veil: Petitioner argued that the Sandiganbayan erred in piercing the veil of corporate fiction in ruling that Europharma and Mallix Drug should have been considered just one bidder.
• Conspiracy Based on Circumstantial Evidence: Petitioner argued that the Sandiganbayan found conspiracy based on circumstantial evidence capable of exculpatory interpretation under the equipoise doctrine.
• Lack of Damage: Petitioner argued that there was no damage or actual injury on the part of the Government, and as such he was not liable under RA 3019.
• Private Individual Liability: Petitioner argued that he cannot be convicted under Section 3(e) of RA 3019 since he is a doctor and businessman, not a public official.

N/A — The decision does not separately recount the arguments of the respondent beyond the prosecution's case as presented before the Sandiganbayan.

• Sufficiency of the Amended Information: Whether the Amended Information was fatally defective for failing to state the acts constituting the offense, thereby depriving petitioner of his right to be informed of the nature and cause of the accusation against him.
• Applicability of COA Circular No. 92-386: Whether the Sandiganbayan erred in convicting petitioner under COA Circular No. 92-386, which is not a penal law.
• Emergency Purchase Exception: Whether the transaction could be characterized as an emergency purchase under Section 368 of the Local Government Code, dispensing with the requirement of public bidding.
• DOH Accreditation Requirement: Whether DOH accreditation was a valid requirement for local government procurements of medicines.
• Piercing the Corporate Veil: Whether the Sandiganbayan erred in piercing the veil of corporate fiction in ruling that Europharma and Mallix Drug should have been considered one bidder.
• Conspiracy: Whether conspiracy was established based on circumstantial evidence.
• Third Element of Section 3(e): Whether the giving of unwarranted benefits, advantage, or preference to a private party is sufficient to satisfy the third element of Section 3(e) of RA 3019, independent of proof of actual damage or injury.
• Liability of Private Individuals: Whether a private individual may be held liable under Section 3(e) of RA 3019.

• Sufficiency of the Amended Information: No. The Amended Information sufficiently alleged the acts constituting the offense, and petitioner, having allowed himself to be arraigned and proceeded to trial under the Amended Information, is estopped from claiming after conviction that the Information was vague.
• Applicability of COA Circular No. 92-386: No. The citation of COA Circular No. 92-386 was a direct reference to how petitioner and his co-accused violated Section 3(e) of RA 3019, and their noncompliance with the Circular and willful omission to declare a failed bidding were badges of manifest partiality and giving of unwarranted benefits.
• Emergency Purchase Exception: No. The transaction could not be characterized as an emergency purchase since the requisites of Section 368 of the Local Government Code were not present; otherwise, the public officers would have dispensed altogether with the steps for competitive bidding and would not have issued Invitations to Bid.
• DOH Accreditation Requirement: No. The prosecution satisfactorily established that there was a failure of bidding since the accreditation of Europharma and Pharmawealth were still suspended by the DOH at the time of the bidding, and petitioner himself recognized that Europharma's accreditation was issued only on January 17, 2001.
• Piercing the Corporate Veil: No. The corporate fiction of Europharma was properly pierced since petitioner used his companies as vehicles for the circumvention of statutes governing procurement of government supplies through competitive bidding.
• Conspiracy: Yes. Conspiracy was established through petitioner's conduct prior, during, and after the bidding, including his participation in the bidding, acceptance of the bid award, failure to submit Declarations of Business Interests, authorizing the Gasapos spouses as representatives, failure to post the performance bond, immediate delivery of medicines, and immediate processing and acceptance of payment.
• Third Element of Section 3(e): Yes. The third element refers to two separate acts — causing undue injury or giving unwarranted benefits, advantage, or preference — and the use of the disjunctive "or" connotes that either act qualifies as a violation; proof of the extent or quantum of damage is not essential.
• Liability of Private Individuals: Yes. 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 RA 3019.

• Sufficiency of the Amended Information: The Court cited Section 6, Rule 110 of the Rules of Court, which requires that a complaint or information state the name of the accused, the designation of the offense, the acts or omissions complained of as constituting the offense, the name of the offended party, the approximate date of commission, and the place where the offense was committed. The allegations in the Amended Information consisted of averments of "evident bad faith" and "manifest partiality" in giving "unwarranted benefit" to the petitioner in conspiracy with the public officers, specifically alleging that Europharma's accreditation was suspended, that Europharma was owned and controlled by petitioner, and that petitioner was also the sole proprietor of Mallix Drug. The Court held that the parameters set by the rules were fulfilled, and petitioner, having allowed himself to be arraigned and proceeded to trial, is estopped from claiming after conviction that the Amended Information was vague.

• Applicability of COA Circular No. 92-386: The Court noted that the assailed Decision cited the provisions of the then prevailing COA Circular No. 92-386 on instances when public bidding is deemed a failure, which includes when no or only one qualified bid is received, or when all bids submitted are defective or non-compliant. The citation was a direct reference to how petitioner and his co-accused public officers violated Section 3(e) of RA 3019. Their noncompliance with the COA Circular and willful omission to declare that the bidding was a "failed bidding" were badges of "manifest partiality" and "giving of unwarranted benefits" to the petitioner.

• Emergency Purchase Exception: The Court held that the transaction could not be characterized as an emergency purchase since the requisites of Section 368 of the Local Government Code of 1991 were not present. Otherwise, the public officers would have dispensed altogether with the steps for competitive bidding and would not have issued Invitations to Bid.

• DOH Accreditation Requirement: The prosecution satisfactorily established that there was a failure of bidding since at the time of the public bidding on January 15, 2001, the accreditation of Europharma and Pharmawealth were still suspended by the DOH, as shown by the November 23, 2000 letter and September 29, 2000 Memorandum of DOH Undersecretary Ma. Margarita M. Galon. Consequently, only Mallix Drug was supposedly qualified. Although petitioner averred that such accreditation was not relevant to the bidding, he recognized that Europharma's accreditation was non-existent at the time of the bidding since it was issued only on January 17, 2001.

• Piercing the Corporate Veil: The Court quoted with approval the Sandiganbayan's finding that while there is no law prohibiting companies from participating in one and the same bidding under the principle of separate corporate personalities, since petitioner used the companies as means or vehicles for the circumvention of statutes governing procurement of government supplies through competitive bidding, such act should not be countenanced. The objective of competitive bidding — to give the public the best possible advantage or bargain and curtail favoritism — would be defeated if the only two competing bidders are owned and controlled by one and the same person. The Court cited Reynoso, IV vs. CA for the principle that when the corporate fiction is used as a means of perpetuating fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of monopoly, or generally the perpetration of knavery or crime, the veil will be lifted. The Court noted that petitioner was not only the general manager and owner of 99% of Europharma's capital stock but also the sole proprietor of Mallix Drug, and that Mallix Drug has no juridical personality separate and distinct from petitioner. Even if the Court disallowed the piercing of the corporate veil, petitioner would still be held liable because his defense of denial was self-serving, and as sole proprietor of Mallix Drug, its liabilities are his.

• Conspiracy: The Court held that it is rare, if not impossible, to find direct evidence of conspiracy, and guides are in place to determine its existence. Petitioner's participation in the bidding and his acceptance of the bid award, despite the overwhelming deficiencies in the bidding process, demonstrated his conspiracy with his co-accused public officers. The following acts bolstered his connivance: (1) failure of his business entities to submit their Declaration of Business Interests, concealing the composition of the companies; (2) authorizing the spouses Antonio H. Gasapos and Luz M. Sarmiento-Gasapos to act as representatives of his company in clear disregard of arms-length dealing in bids; (3) failure to post the required performance bond and the immediate delivery of medicines just a day after the award, suggesting a pre-arranged and predetermined outcome of the bid; and (4) immediate processing and acceptance of payment. The Court quoted the Sandiganbayan's finding that conspiracy may be inferred from the conduct of the accused before, during, and after the commission of the crime, and that petitioner's authorization of the Gasapos spouses as representatives, immediate delivery of medicines on January 16, 2001, and encashment of checks on January 17, 2001, were indicative of a joint purpose, concerted action, and concurrence of sentiments.

• Third Element of Section 3(e): The Court cited Cabrera vs. People for the proposition that the third element refers to two separate acts that qualify as a violation of Section 3(e) of RA 3019. The use of the disjunctive term "or" connotes that either act qualifies as a violation. The first punishable act is causing undue injury to the government or any party, which requires actual loss or damage that must exist as a fact and cannot be based on speculations or conjectures. The second punishable act is giving unwarranted benefits, advantage, or preference to a private party, for which proof of the extent or quantum of damage is not essential. The Court quoted with approval the Sandiganbayan's conclusion, which cited Pacifico C. Velasco vs. Sandiganbayan and Alvarez vs. People, defining "unwarranted" as lacking adequate or official support, unjustified, or unauthorized, and holding that the presence of one mode would suffice for conviction.

• Liability of Private Individuals: The Court cited People vs. Go for the settled rule that 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 RA 3019, 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.

• Two Separate Acts Under Section 3(e) of RA 3019 — The third element of Section 3(e) refers to two separate acts that qualify as a violation: (a) causing undue injury to any party, including the government, and (b) giving any private party unwarranted benefits, advantage, or preference in the discharge of official functions. The use of the disjunctive "or" connotes that either act qualifies as a violation, and the presence of one suffices for conviction. Proof of the extent or quantum of damage is not essential for the second act; it is sufficient that the accused has given "unjustified favor or benefit to another." The Court applied this doctrine in affirming petitioner's conviction notwithstanding the absence of actual damage or injury to the government.

• Liability of Private Individuals Under RA 3019 — 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 RA 3019. 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. The Court applied this doctrine in affirming petitioner's conviction as a private individual who conspired with public officers.

• Conspiracy Inferred from Conduct — Conspiracy need not be proved by direct evidence and may be inferred from the conduct of the accused before, during, and after the commission of the crime, which are indicative of a joint purpose, concerted action, and concurrence of sentiments. In conspiracy, the act of one is the act of all. The Court applied this doctrine in finding that petitioner's participation in the bidding, acceptance of the bid award, failure to submit Declarations of Business Interests, authorization of the Gasapos spouses as representatives, failure to post the performance bond, immediate delivery of medicines, and immediate processing and acceptance of payment demonstrated his conspiracy with the public officers.

• Piercing the Corporate Veil — When the corporate fiction is used as a means of perpetuating fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of monopoly, or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation will be lifted to allow for its consideration merely as an aggregation of individuals. The Court applied this doctrine in upholding the Sandiganbayan's piercing of Europharma's corporate fiction, finding that petitioner used his companies as vehicles to circumvent procurement laws.

• Conclusiveness of Sandiganbayan Factual Findings — The Sandiganbayan, as the special anti-graft appellate collegial court, has jurisdiction over criminal and civil cases involving graft and corrupt practices committed by public officers. Its factual findings in the disposition of graft cases are conclusive upon the Supreme Court, subject to exceptions: (1) where the conclusion is a finding grounded entirely on speculation, surmises, and conjectures; (2) where the inference made is manifestly mistaken; (3) where there is grave abuse of discretion; (4) where the judgment is based on misapprehension of facts; and (5) where the findings of fact are premised on the absence of evidence and are contradicted by evidence on record. Exceptions must be alleged, substantiated, and proved by the parties.

• "The third element refers to two (2) separate acts that qualify as a violation of Section 3(e) of R.A. No. 3019. An accused may be charged with the commission of either or both. The use of the disjunctive term 'or' connotes that either act qualifies as a violation of Section 3(e) of R.A. No. 3019." — This passage from Cabrera vs. People, quoted by the Court, defines the two separate acts under the third element of Section 3(e) and establishes that proof of damage is not essential when the accused is charged with giving unwarranted benefits.

• "At the outset, it bears to reiterate the settled rule that 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, 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." — This passage from People vs. Go establishes the liability of private individuals under RA 3019 when conspiracy with public officers is proven, which the Court applied to affirm petitioner's conviction.

• "It is settled that there is conspiracy when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Conspiracy need not to be proved by direct evidence and may be inferred from the conduct of the accused before, during, and after the commission of the crime, which are indicative of a joint purpose, concerted action and concurrence of sentiments. In conspiracy, the act of one is the act of all." — This passage, quoted from the Sandiganbayan's decision, defines conspiracy and establishes that it may be inferred from circumstantial evidence, which the Court applied in affirming the finding of conspiracy against petitioner.

• "Remarkably, when the corporate fiction is used as a means of perpetuating fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of monopoly, or generally the perpetration of knavery or crime, such as in this case, the veil with which the law covers and isolates the corporation will be lifted to allow for its consideration merely as an aggregation of individuals." — This passage from Reynoso, IV vs. CA states the doctrine on piercing the corporate veil, which the Court applied in upholding the Sandiganbayan's finding that petitioner used his companies to circumvent procurement laws.

• Cabrera vs. People, G.R. No. 191611-14, July 29, 2019 — Cited as controlling precedent for the proposition that the third element of Section 3(e) of RA 3019 refers to two separate acts, and that the giving of unwarranted benefits, advantage, or preference is sufficient to satisfy the element independent of proof of damage.

• People vs. Go, 730 Phil. 362-377 (2014) — Cited as controlling precedent for the settled rule that private persons, when acting in conspiracy with public officers, may be indicted and held liable under Section 3 of RA 3019.

• Reynoso, IV vs. CA, 399 Phil. 38, 50 (2000) — Cited for the doctrine on piercing the corporate veil when the corporate fiction is used as a means of perpetuating fraud or an illegal act or as a vehicle for the circumvention of statutes.

• Cedeño vs. People, 820 Phil. 575, 601 (2017) — Cited for the exceptions to the general rule on the conclusiveness of Sandiganbayan factual findings.

• Uyboco vs. People, 749 Phil. 987, 992 (2014) — Cited in relation to the exceptions to the general rule on conclusiveness of factual findings.

• Pascual vs. Burgos, 776 Phil. 167, 169 (2016) — Cited for the rule that exceptions to the conclusiveness of factual findings must be alleged, substantiated, and proved by the parties.

• Dela Cruz vs. People, G.R. No. 236807, January 12, 2021 — Cited for the rule that the Court is not a trier of facts in petitions for review under Rule 45, and for the elements of violation of Section 3(e) of RA 3019.

• Marzan vs. People, G.R. No. 201942, February 12, 2020 — Cited for the elements of violation of Section 3(e) of RA 3019.

• Section 3(e), Republic Act No. 3019 — The Anti-Graft and Corrupt Practices Act provision penalizing public officers who cause undue injury to any party, including the Government, or give any private party unwarranted benefits, advantage, or preference in the discharge of official functions through manifest partiality, evident bad faith, or gross inexcusable negligence. The Court applied this provision in affirming petitioner's conviction.

• Section 1, Republic Act No. 3019 — Declares the policy of the Philippine Government, in line with the principle that a public office is a public trust, to repress certain acts of public officers and private persons alike which constitute graft or corrupt practices or which may lead thereto. The Court cited this provision as the policy basis for holding private individuals liable under the law.

• Section 6, Rule 110, Rules of Court — Requires that a complaint or information state the name of the accused, the designation of the offense, the acts or omissions complained of as constituting the offense, the name of the offended party, the approximate date of commission, and the place where the offense was committed. The Court applied this provision in finding the Amended Information sufficient.

• Section 368, Local Government Code of 1991 (RA 7160) — Allows emergency purchases without public bidding in cases where the need for supplies is exceptionally urgent or absolutely indispensable to prevent imminent danger to, or loss of, life or property. The Court held that the requisites of this provision were not present in the transaction.

• Section 95, COA Circular No. 92-386 — Provides the instances when public bidding is deemed a failure, including when no or only one qualified bid is received, or when all bids submitted are defective or non-compliant. The Court cited this provision as a reference to how petitioner and his co-accused violated Section 3(e) of RA 3019.

• Article XI, Section 4, 1987 Constitution in relation to Article XIII, Section 5, 1973 Constitution — Cited for the Sandiganbayan's jurisdiction over criminal and civil cases involving graft and corrupt practices committed by public officers.

Perlas-Bernabe (Chairperson), Zalameda, Rosario, and Marquez, JJ., concurred in the decision.

N/A — The case text does not mention any dissenting opinion.