The Supreme Court affirmed the administrative liability of Arturo O. Miñao for Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service, stemming from the anomalous purchase of guardrails. Despite arguments of good faith and reliance on a Special Allotment Release Order (SARO), the Court held that Miñao violated Republic Act No. 9184 (RA 9184) by splitting government contracts and failing to conduct public bidding. This decision underscores that government officials are duty-bound to ensure compliance with procurement laws, regardless of their interpretation of budgetary directives, and that ignorance or difficulty in complying with legal processes does not justify their circumvention.

Guardrails and Good Faith: Can a Public Official Evade Procurement Rules?

The case revolves around a letter-complaint from Aurelio Cadavedo concerning the alleged anomalous purchase of guardrails and guardrail posts worth P5,500,000.00 in 2004 by the 1st Engineering District of the Department of Public Works and Highways (DPWH) in Dipolog City. An audit investigation report (AIR) by the Commission on Audit Regional Office No. IX (COA-IX) revealed that the DPWH district committed splitting of contracts by awarding eleven purchase orders worth P500,000.00 each to AUF Enterprises without public bidding. The AIR further alleged that the purchased guardrails and guardrail posts were overpriced, and some were left at the project site, resulting in wastage of government resources. Arturo O. Miñao, then OIC District Engineer, along with his co-respondents, denied the allegations, claiming that the SARO issued by the Department of Budget and Management (DBM) already split the main project into eleven smaller projects, each with a budget of P500,000.00.

The Office of the Ombudsman – Mindanao (OMB-Mindanao) found Miñao administratively liable for Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service, imposing the penalty of dismissal from government service. The Court of Appeals (CA) affirmed the OMB-Mindanao’s decision, emphasizing that the intent behind the execution of eleven identical contracts was to avoid the requirement of public bidding under Section 54.1 of the Implementing Rules and Regulations (IRR) of RA 9184. Miñao then elevated the case to the Supreme Court, arguing that he merely implemented the SARO in good faith and resorted to the simplified bidding process under the old procurement law.

The Supreme Court, however, found no merit in Miñao’s petition. The Court reiterated that a petition for review under Rule 45 of the Rules of Court is limited to questions of law, and it is not within its function to analyze and weigh evidence already passed upon by lower courts. The Court emphasized that factual findings of administrative bodies, such as the OMB-Mindanao and the COA, are accorded great respect. Miñao did not dispute the factual findings of the OMB-Mindanao and COA regarding the procurement of substandard and overpriced materials. Furthermore, the alleged acts were committed pursuant to the SARO issued after the effectivity of RA 9184, making RA 9184 the controlling law.

The core issue, according to the Court, was whether Miñao’s actions constituted violations of RA 9184 and its IRR, warranting the administrative penalties imposed. Miñao argued that his office was not responsible for splitting the procurement project and that he implemented the SARO in good faith. He relied on Annex “A” of the SARO, which specified the names of projects, their locations, and the amounts allotted to each. Miñao claimed that the DBM had already divided the project into smaller quantities, and his office merely implemented the SARO according to the guidelines stated therein. He argued that “splitting” the project allowed his office to approve purchase requests within the limits of his authority under Department Order No. 319 (DO 319), series of 2002, which capped District Engineers’ authority to sign purchase requests at P750,000.00.

The Court then turned to the issue of splitting of government contracts, which Section 54.1 of the IRR of RA 9184 expressly prohibits. It states,

“[s]plitting 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.”

The Government Procurement Policy Board (GPPB) has clarified that not every division of a contract constitutes splitting. GPPB Non-Policy Matter Opinion No. 136-2014 emphasizes that the division must be shown to have been done for the purpose of circumventing or evading legal and procedural requirements. The COA, in COA Circular No. 76-41, further states that proof of loss or damage to the government is immaterial; the intent to circumvent control measures is sufficient.

The Supreme Court found it erroneous for Miñao to conclude that the SARO required the execution of eleven government contracts. It agreed with the OMB-Mindanao that the project was merely divided into sub-sections or phases in Annex “A” of the SARO for the convenience of the DPWH in implementing the project. Whether or not the project was split into eleven sub-sections, the same materials with the same specifications should have been procured under a single procurement contract. The Court found it implausible that eleven separate purchase requests, abstracts of bids, and purchase orders involved identical materials and a single supplier. This, the Court suggested, demonstrated Miñao’s awareness that the SARO necessitated only one procurement contract. The central point was that common sense dictated that ONE procurement contract was appropriate, regardless of whether the project was nominally split into eleven sub-sections.

Addressing Miñao’s reliance on DO 319, the Court found his contention speculative. DO 319 granted District Engineers the authority to approve purchase requests not exceeding P750,000.00. Miñao argued that the DBM’s division of the project into eleven sub-sections, each with a P500,000.00 allocation, indicated an intention to empower his office to approve purchase requests under the SARO. The Court rejected this, stating that nothing in the SARO mandated the implementation of the project through eleven separate projects. The Court deferred to the OMB-Mindanao’s finding that the eleven sections in Annex “A” referred to locations along the national roads, and the P500,000.00 allocation pertained to the budget for each location. The Court emphasized that even if the DBM had identified the eleven projects, it was Miñao’s duty as a public official to ensure that the SARO was strictly carried out in accordance with relevant rules and regulations.

A SARO is an authority for government agencies to incur obligations, subject to compliance with specific rules and regulations. Miñao could not escape liability by claiming reliance on the DBM’s supposed directive. His actions should have been guided by the relevant provisions of law, including DO 319, RA 9184, and its IRR. The Court cautioned that accepting Miñao’s arguments would set a dangerous precedent, allowing public officials to validate their own erroneous interpretations of SAROs, undermining the mandatory nature of RA 9184.

As for the issue of failure to conduct public bidding, Miñao argued that he did not circumvent the requirements of public bidding and that he resorted to the simplified bidding process under the old procurement law. The Supreme Court emphasized that the procurements were initiated after the effectivity of RA 9184 and its IRR. Miñao’s admission that he resorted to the old procurement law due to the difficulty of complying with RA 9184 was deemed unacceptable. The Court emphasized the duty to uphold and apply the law, especially when public funds are involved. Miñao’s actions, the Court found, constituted gross negligence, negating any presumption of good faith.

Miñao also cited GPPB Resolution No. 010-2004, which standardized bidding forms, as evidence that the requirements of bidding under RA 9184 were not yet mandatory. The Court clarified that the resolution only standardized bidding forms and did not waive the bidding requirements under RA 9184. The OMB-Mindanao and the CA had found that Miñao failed to conduct public bidding under either the old or new procurement law. The abstracts of bids presented were not substantiated with individual bid offers, and there was no evidence of published invitations to bid. Therefore, the Court found that Miñao’s intent in entering into eleven identical contracts with AUF Enterprises was to avoid the requirements of public bidding under RA 9184 and its IRR.

The Court underscored that the findings of the OMB are accorded great weight and respect due to its specialized knowledge and expertise. It found no reason to overturn the OMB-Mindanao’s conclusions, which were affirmed by the CA. The Court also clarified that the dismissal of the criminal case against Miñao did not absolve him from administrative liability, as different degrees of evidence are required in criminal and administrative cases. In administrative proceedings, only substantial evidence is required, while criminal cases require proof beyond reasonable doubt.

FAQs

What was the key issue in this case?	The key issue was whether Arturo O. Miñao violated Republic Act No. 9184 by splitting government contracts and failing to conduct public bidding in the procurement of guardrails. The Supreme Court examined if Miñao’s actions warranted administrative penalties despite his claims of good faith and reliance on a Special Allotment Release Order (SARO).
What is ‘splitting of contracts’ under RA 9184?	Under RA 9184, ‘splitting of contracts’ refers to dividing government contracts into smaller quantities or amounts to evade the requirements of the law, especially the necessity of competitive bidding. The division must be done with the intent to circumvent legal and procedural requirements.
What is a Special Allotment Release Order (SARO)?	A SARO is a specific authority issued by the DBM to government agencies to incur obligations not exceeding a given amount during a specified period for a particular purpose. It serves as a “green light” for agencies to enter into contracts, subject to compliance with relevant rules and regulations.
Why was Miñao’s ‘good faith’ defense rejected?	Miñao’s ‘good faith’ defense was rejected because he was duty-bound to ensure that the SARO was strictly carried out in accordance with relevant rules and regulations, not based on his personal interpretation of the DBM’s intent. The Court held that his actions were, at the very least, grossly negligent.
What evidence did the OMB-Mindanao rely on?	The OMB-Mindanao relied on the fact that Miñao entered into eleven identical contracts with the same supplier for the same materials, indicating an intent to avoid public bidding. The evidence included abstracts of bids, cost estimates, and purchase orders.
Did the dismissal of the criminal case affect the administrative case?	No, the dismissal of the criminal case against Miñao did not affect the administrative case. Criminal cases require proof beyond reasonable doubt, while administrative cases only require substantial evidence.
What is the significance of GPPB Resolution No. 010-2004?	GPPB Resolution No. 010-2004 standardized the bidding forms to be used for all procurement activities, but it did not waive the requirements of bidding under RA 9184. It required the use of standard bidding documents starting March 1, 2005.
What administrative penalties were imposed on Miñao?	Miñao was found administratively liable for Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, and Conduct Prejudicial to the Best Interest of Service. He was dismissed from government service, with the accessory penalties of cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification for re-employment in the government service.

This case clarifies that government officials cannot use “good faith” as a shield when violating procurement laws. The ruling emphasizes the importance of adhering to RA 9184 and its IRR, regardless of personal interpretations of budgetary directives. It serves as a reminder that ignorance of the law is no excuse, and public officials are expected to act with utmost diligence and responsibility when handling public funds.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ARTURO O. MIÑAO VS. OFFICE OF THE OMBUDSMAN (MINDANAO), G.R. No. 231042, February 23, 2022