This Supreme Court decision clarifies the responsibilities of public officials in ensuring compliance with bidding processes and proper fund disbursement. The ruling emphasizes that government officials cannot blindly rely on subordinates, especially when circumstances raise red flags. The court affirmed the conviction of officials who showed manifest partiality, evident bad faith, or gross inexcusable negligence in awarding contracts and disbursing public funds, setting a precedent for accountability in government projects.

ARMM Infrastructure Anomalies: Who Bears Responsibility for Graft and Corruption?

This case stems from alleged irregularities in infrastructure projects within the Autonomous Region of Muslim Mindanao (ARMM). After the national government allocated P615,000,000.00 for regional and provincial infrastructure, reports of anomalies surfaced, prompting an investigation by the Commission on Audit (COA). The probe revealed overpayments, unauthorized advance payments, and bidding irregularities in several road projects. As a result, criminal charges were filed against several DPWH-ARMM officials, including Farouk B. Abubakar, Ulama S. Baraguir, and Datukan M. Guiani. The central question before the Supreme Court was whether these officials violated Section 3(e) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act, and whether they could be exonerated based on the principle of good faith reliance on subordinates.

The petitioners Abubakar, Baraguir, and Guiani, former high-ranking officials of the Department of Public Works and Highways in ARMM (DPWH-ARMM), were found guilty by the Sandiganbayan of multiple counts of violating Section 3(e) of Republic Act No. 3019. Abubakar served as Director III, Administrative, Finance Management Service, while Baraguir was the Director of the Bureau of Construction, Materials and Equipment. Guiani held the position of DPWH-ARMM Regional Secretary. The charges arose from irregularities discovered in the implementation of several road concreting projects. These included the Cotabato-Lanao Road, the Awang-Nuro Road, the Highway Linek-Kusiong Road, and the Highway Simuay Seashore Road.

The COA special audit team found several violations. These included an overpayment of P17,684,000.00 due to bloated accomplishment reports, advance payments of P14,400,000.00 for sub-base aggregates in violation of Section 88(l) of Presidential Decree No. 1445, and public bidding for the Cotabato-Lanao Road Project conducted without a detailed engineering survey. Furthermore, the team discovered that the engineering survey for the centerline relocation and profiling of the Cotabato-Lanao Road appeared unnecessary and involved excessive advance payment to the contractor. These findings led the Ombudsman to file 21 separate Informations against the accused.

During the trial, the prosecution presented evidence, including testimonies from COA officials, to substantiate the irregularities. Leodivina A. De Leon testified on bidding irregularities, highlighting instances where contractors were allowed to mobilize equipment before the actual bidding. Heidi L. Mendoza detailed the irregular payment scheme for sub-base aggregates, noting the alteration of disbursement vouchers to reflect the payment as being for cement. The defense, in turn, argued that the accused acted in good faith, relying on their subordinates and following established procedures. The defense also attempted to justify the increased mobilization fees by claiming the peace and order situation warranted such increase and that the discrepancy between the COA report and the DPWH-ARMM report was due to a more extensive inspection conducted by the latter.

The Sandiganbayan, however, found the accused guilty beyond reasonable doubt. It held that Guiani, Baraguir, and Masandag conspired to give unwarranted benefits to contractors by allowing them to deploy equipment before the public bidding. Records showed that certifications of mobilization were issued prior to the actual bidding date. The Sandiganbayan also rejected the defense’s claim that contractors mobilized their equipment at their own risk, emphasizing that no contractor would risk such an investment without assurance of being awarded the project. Additionally, the court found Guiani, Mamogkat, Abubakar, Baraguir, and Suasin guilty for disbursing excessive mobilization fees to Arce Engineering Services and for facilitating advance payments for sub-base aggregates.

On appeal, the petitioners raised several issues, including the alleged incompetence of their former counsel, a violation of their right to equal protection due to selective prosecution, and the failure of the prosecution to establish their guilt beyond reasonable doubt. They also invoked the Arias doctrine, arguing that they should be exonerated based on their good faith reliance on their subordinates. The Supreme Court, however, denied their petitions, affirming the Sandiganbayan’s decision.

Addressing the claim of counsel incompetence, the Court reiterated that clients are generally bound by the actions of their counsel. While an exception exists for gross and inexcusable negligence, the Court found that the petitioners failed to demonstrate that their former counsel’s actions deprived them of their day in court. The Court emphasized that the petitioners presented evidence and made their case before the Sandiganbayan; thus, they could not simply allege a failure of due process without showing that the omitted evidence would likely lead to their acquittal.

Regarding the argument of selective prosecution, the Court held that such a claim requires extrinsic evidence of intentional discrimination. The mere fact that other DPWH-ARMM officials were not charged does not automatically entail a violation of the equal protection clause. There must be a clear showing of discriminatory intent, which the petitioners failed to provide.

The Supreme Court also rejected the petitioners’ reliance on the Arias doctrine. The Arias doctrine, established in Arias v. Sandiganbayan, allows heads of offices to rely in good faith on the acts of their subordinates. However, this reliance is not absolute. The court noted that heads of offices cannot be completely oblivious to details and should probe records, inspect documents, and question persons when there are circumstances that would prompt them to do so. As the Court stated in Arias v. Sandiganbayan:

All heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies, or enter into negotiations. If a department secretary entertains important visitors, the auditor is not ordinarily expected to call the restaurant about the amount of the bill, question each guest whether he was present at the luncheon, inquire whether the correct amount of food was served, and otherwise personally look into the reimbursement voucher’s accuracy, propriety, and sufficiency. There has to be some added reason why he should examine each voucher in such detail.

In this case, the Court found that there were indeed circumstances that should have prompted the petitioners to make further inquiries. The certificates of mobilization bore dates earlier than the scheduled public bidding, the Contract of Survey Work contained a patently illegal stipulation, and the advance payment for sub-aggregates lacked proper supporting documents. These irregularities were evident and should have raised concerns among the petitioners.

The Court also found that the petitioners gave unwarranted benefits and advantages to several contractors by allowing them to deploy their equipment ahead of the scheduled public bidding. Competitive public bidding is crucial to protect public interest by ensuring the best possible advantages through open competition and avoiding suspicion of favoritism and anomalies. Allowing contractors to mobilize equipment before the bidding undermines the very purpose of this process.

The Court underscored the importance of adhering to bidding procedures and regulations on public funds disbursement. Public officials have a greater responsibility in ensuring compliance with these rules, and the positions held by the petitioners required them to exercise a higher degree of diligence. As the Court stated in the decision:

The rules on public bidding and on public funds disbursement are imbued with public interest. The positions and functions of petitioners Abubakar, Baraguir, and Guiani impose upon them a greater responsibility in ensuring that rules on these matters are complied with. They are expected to exercise a greater degree of diligence.

In summary, the Court found sufficient evidence of manifest partiality, evident bad faith, or gross inexcusable negligence on the part of the petitioners. The irregularities in the bidding process, the excessive mobilization fees, and the unauthorized advance payments were clear violations of Section 3(e) of Republic Act No. 3019. Therefore, the Supreme Court affirmed the Sandiganbayan’s decision, holding the petitioners guilty of the charges against them.

FAQs

What is Section 3(e) of Republic Act No. 3019?	Section 3(e) of the Anti-Graft and Corrupt Practices Act prohibits public officials from causing undue injury to any party, including the government, or giving unwarranted benefits, advantage, or preference to any private party through manifest partiality, evident bad faith, or gross inexcusable negligence.
What is the Arias doctrine?	The Arias doctrine allows heads of offices to rely in good faith on the acts of their subordinates, unless there is a reason to believe that the subordinates are not acting in accordance with the law. This reliance is not absolute and requires a degree of diligence and inquiry when circumstances warrant it.
What is the significance of competitive public bidding?	Competitive public bidding is a process where government projects are awarded through open competition, ensuring the best possible terms for the government and avoiding suspicion of favoritism. It is a fundamental principle in government procurement.
What did the COA investigation reveal in this case?	The COA investigation revealed overpayments to contractors, unauthorized advance payments, and bidding irregularities in several road projects within the Autonomous Region of Muslim Mindanao (ARMM). These findings led to the filing of criminal charges against several DPWH-ARMM officials.
What is the legal basis for prohibiting advance payments in government contracts?	Section 88(l) of Presidential Decree No. 1445 generally prohibits advance payments on undelivered supplies and unrendered services in government contracts, unless there is prior approval from the President or Prime Minister.
What were the irregularities in the advance payments for sub-base aggregates?	The advance payments for sub-base aggregates were found to be irregular because sub-base aggregates were not included in the list of construction materials that could be procured under a pre-payment scheme. Additionally, there were no purchase orders or receipts to evidence the delivery of the materials on-site.
Why was the good faith defense rejected in this case?	The good faith defense was rejected because there were clear signs of irregularities that should have prompted the officials to make further inquiries. The certificates of mobilization were dated before the public bidding, and the contract for survey work contained a patently illegal stipulation.
What are the elements of a violation of Section 3(e) of Republic Act No. 3019?	The elements are: (1) The accused is a public officer; (2) The accused acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and (3) The accused’s action caused undue injury to any party, including the government, or gave unwarranted benefits to any private party.

This case underscores the importance of due diligence and accountability in public service. It serves as a reminder that public officials cannot simply rely on their subordinates but must exercise a level of scrutiny and oversight to ensure that government funds are properly disbursed and that bidding processes are conducted fairly. It reinforces the judiciary’s commitment to fighting corruption and promoting transparency in government transactions.

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: FAROUK B. ABUBAKAR vs. PEOPLE, G.R. No. 202408, June 27, 2018