Supreme Court: Signatures on anomalous deals don’t prove execs’ liability

by Edu Punay (The Philippine Star) – Apr 9, 2018

MANILA, Philippines — Mere approval of anomalous contracts does not automatically make government officials liable, the Supreme Court said.

In a decision released to the media recently, the high court held that the signatures of local and provincial executives as well as heads of agencies in procurement contracts found to be anomalous or irregular are not sufficient to establish their criminal and administrative liabilities.

“Mere signature (of the head of office or local government unit) in the award of the contract and the contract itself without anything more cannot be considered as a presumption of liability,” read the full-court ruling penned by Associate Justice Noel Tijam.

“Liability depends upon the wrong committed and not solely by reason of being the head of a government agency,” the court stressed.

The SC made this ruling as it cleared former Nueva Ecija governor Tomas Joson III, who was found liable by the Commission on Audit (COA) over the P155.03-million construction of Nueva Ecija Friendship Hotel, now named Sierra Madre Suites.

The COA issued in 2007 notices of allowances on three contracts signed and approved by Joson with A.V.T. Construction for the project after its special audit team (SAT) found inadequacies in the contracts’ supporting documents and the winning bidder’s ineligibility.

COA also found the former governor liable with the members of the Bids and Awards Committee (BAC), the BAC Technical Working Group (TWG), the provincial accountant, and the provincial engineer.

Joson had filed a petition for exclusion from liability, arguing that “the determination of whether a prospective bidder is eligible or not is the exclusive responsibility of the BAC and if there is indeed a liability, the members of the BAC should be held liable since they are the persons directly responsible for the transaction.”

But COA, in its 2015 decision, denied the petition as it ruled that Joson was liable for the disallowed amount since “he failed to exercise due diligence in the performance of his duty.”
Advertisement

COA also ruled that “being a signatory in the contracts, Joson is presumed to have prior know-ledge that the bidding process was tainted with ineligibility.”

The SC however did not agree with COA’s findings.

“The fact that petitioner (Joson) is the head of the procuring entity and the governor of Nueva Ecija does not automatically make him the party ultimately liable for the disallowed amount. He cannot be held liable simply because he was the final approving authority of the transaction in question and that the employees/officers who processed the same were under his supervision,” the SC held.

“In the present case, other than the mere signature of the petitioner, no other evidence was presented by the COA to show that petitioner had actual prior knowledge of the ineligibility of AVT Construction. Nothing appears on record that would prompt petitioner to thoroughly review and go over every document submitted by AVT Construction, considering that they were already evaluated and scrutinized by the BAC,” it pointed out.

The SC bought Joson’s defense that he only approved the contract upon the BAC’s recommendation to award the contract to AVT Construction after evaluation of all the documents submitted by the firm and that he also only signed the contracts in behalf of the provincial government.

“The payments to AVT Construction were disallowed by COA for the reason that the prequalification or eligibility checklist using the ‘pass/fail’ criteria, the Net Financial Contracting Capacity, and Technical Eligibility documents are missing. It is well to note that the missing documents, the eligibility checklist using the pass/fail criteria, the NFCC and the technical eligibility documents, pertain to the pre-qualification stage of the bidding process,” the SC said.

Citing the Government Procurement Act (Republic Act 9184), the SC explained that determination of whether a prospective bidder is eligible falls on the BAC.

“The BAC sets out to determine the eligibility of the prospective bidders based on their compliance with the eligibility requirements set forth in the Invitation to Bid and their submission of the legal, technical and financial documents required under Sec. 23.6, Rule VIII of the Implementing Rules and Regulations of RA 9184,” it said.

“Thus, the presence of the eligibility checklist, the NFCC and the technical eligibility documents are the obligations and duties of the BAC. The absence of such documents is the direct responsibility of the BAC. Petitioner had no hand in the preparation of the same. He cannot therefore be held liable for its absence,” the SC further explained.

The high court stressed that even assuming that Joson did not ensure that the eligibility documents were attached to the contract, “it is settled that mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith.

“In this case, there is no showing that petitioner was motivated by malice or gross negligence amounting to bad faith in failing to ensure that the eligibility documents of AVT Construction were not attached to the contract,” it pointed out.

The SC also reiterated the doctrine it set in earlier rulings in 1989 and 2001, which held that “every person who signs or initials documents in the course of transit through standard operating procedures does not automatically become a conspirator in a crime which transpired at a stage where he had no participation.”