G.R. No. 248699 – PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JEORGE EJERCITO ESTREGAN, ARLYN LAZARO-TORRES, TERRYL GAMIT-TALABONG, KALAHI U. RABAGO, ERWIN P. SACLUTI, GENER C. DIMARANAN, and MARILYN M. BRUEL, accused-appellants.

ROSARIO, J.

Rule Synopsis

Violations of procurement laws, rules, and regulations do not per se lead to the conviction of the public officer under Section 3(e) of RA 3019. To be found guilty, the prosecution must prove that: (a) the accused must be a public officer discharging administrative, judicial, or official functions; (b) accused must have acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and (c) accused caused any undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage, or preference in the discharge of his or her functions.

Facts

In 2009, the United Boatmen Association of Pagsanjan (UBAP) filed a complaint before the Office of the Ombudsman (OMB) against the following:

• Jeorge Ejercito Estregan (Estregan), Municipal Mayor of Pagsanjan, Laguna;
• Crisostomo B. Vilar (Vilar), Municipal Vice-Mayor;
• Arlyn Lazaro-Torres (Torres), Terryl Gamit-Talabong (Talabong), Kalahi U. Rabago (Rabago), Erwin P. Sacluti (Sacluti), Gener C. Dimaranan (Dimaranan), and Ronaldo C. Sablan (Sablan), Sangguniang Bayan (SB) Members;
• Marilyn M. Bruel (Bruel), private individual.

The complaint was for violation of Section 3 (e), (g), (h), (i) and (j) of Republic Act (RA) 3019 and RA 9184. UBAP alleged that the accused public officials unlawfully entered a Memorandum of Agreement (MOA) for Accident Protection and Assistance (APA) with Bruel, proprietor of First Rapids Care Ventures (FRCV), without public bidding and despite the fact that FRCV holds no Certificate of Authority from the Insurance Commission.

The OMB found probable cause to indict all accused for violation of Section 3 (e) of RA 3019. In March 2016, the Office of the Special Prosecutor (OSP) filed an Information before the Sandiganbayan (SBN).

The SBN acquitted Vilar but convicted Estregan, Torres, Talabong, Rabago, Sacluti, Dimaranan, and Bruel. The SBN also denied their motions for reconsideration.

Hence, the instant appeal.

Issues

1. Did the accused-appellants correctly file a notice of appeal?
2. Was the MOA a contract of insurance? If so, was public bidding necessary for its procurement?
3. Should the accused-appellants be held guilty for violating Section 3 (e) of RA 3019?

Ruling and Discussion

1. Yes. The accused-appellants correctly filed a notice of appeal.
   
   Since the appeal to the Supreme Court was from a criminal case decided by the SBN in the exercise of its original jurisdiction, accused-appellants correctly filed a notice of appeal pursuant to the 2018 Revised Internal Rules of the Sandiganbayan. The latter prevails over the procedure in Presidential Decree No. 1606.
2. Yes. The MOA was a contract of insurance. Further, public bidding was necessary for its procurement.
   
   The MOA was a contract of insurance.
   
   A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent event.
   
   Here, the indemnification of loss is the principal object of the MOA. Its provisions show an agreement whereby FRCV undertakes to indemnify tourists and/or boatmen for accidental death or dismemberment, and the Municipality for actual expenses that it pays for the treatment and/or confinement of tourists and/or boatmen who suffer accidental injury, but not to exceed the amounts stated in the tables of coverage. FRCV is certainly an accident insurer, albeit operating without authority from the Insurance Commission.
   
   Moreover, the fact that no profit is derived from the making of insurance contracts, agreements, or transactions or that no separate or direct consideration is received therefore is not conclusive to show that the making thereof does not constitute the doing or transacting of an insurance business.
   
   Hence, Bruel contention that there is nothing in the MOA obliging the Municipality to pay an insurance premium is of no moment. In any case, the Insurance Commissioner found that the consideration or premium under the MOA is termed as “coverage outlay” in the amount of PHP48.00 per tourist.
   
   Public bidding was necessary for the procurement of insurance contracts.
   
   An insurance contract falls within the definition of goods under RA 9184. Assuming arguendo that FRCV’s services were primarily for providing training to boatmen, such services would fall within the ambit of consulting services which are still within the purview of RA 9184.
   
   Under Rule IV, Section 10 of the Revised Implementing Rules and Regulations (IRR) of RA 9184, all procurement shall be done through competitive bidding, except as provided in Rule XVI on alternative methods of procurement. Further, Alternative methods of procurement may be allowed but only in highly exceptional cases.
   
   Here, instead of going through competitive bidding, the SB passed Municipal Ordinance No. 15-2008 authorizing Estregan to transact, negotiate, and enter a contract between the Municipality and any competent and qualified entity which can provide APA services to tourists and boatmen. The accused public officials immediately authorized resort to the alternative method of procurement known as negotiated procurement despite absence of the conditions for the same under the IRR of RA 9184 such as two failed biddings, emergency cases, etc. Aside from Estregan’s bare allegation, there is no proof on record that the BAC or the GPPB opined that competitive bidding is not required.
3. Estregan and Bruel should be held guilty for violating Section 3 (e) of RA 3019. Meanwhile, Torres, Talabong, Rabago, Sacluti, and Dimaranan should be acquitted.
   
   Violations of procurement laws, rules, and regulations do not per se lead to the conviction of the public officer under Section 3(e) of RA 3019. To be found guilty, the prosecution must prove that: (a) the accused must be a public officer discharging administrative, judicial, or official functions; (b) accused must have acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and (c) accused caused any undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage, or preference in the discharge of his or her functions. The first element is undisputed.
   
   Estregan and Bruel should be held guilty.
   
   On second element. – Estregan’s manifest partiality and evident bad faith was indubitably shown when he entered a MOA with FRCV despite glaringly questionable circumstances.
   
   There is “manifest partiality” when there is a clear, notorious, or plain inclination or predilection to favor one side or person rather than another. “Evident bad faith” connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. “Evident bad faith” contemplates a state of mind affirmatively operating with furtive design or with some motive or self-interest or ill will or for ulterior purposes.
   
   Here, FRCV was registered with the Department of Trade and Industry (DTI) and the Bureau of Internal Revenue (BIR) only a few days prior to its letter-offer. It also lacked Certificate of Authority from the Insurance Commission. Moreover, the supposed public consultative meetings conducted had nothing to do with determining the qualifications of FRCV. Estregan even made FRCV present before the SB despite the absence of public bidding and despite irregularities surrounding it.
   
   On the third element. – Estregan gave FRCV unwarranted benefit, advantage, or preference.
   
   Undue injury has been consistently interpreted as actual damage, akin to that in civil law. Under the second mode, i.e., by giving any private party unwarranted benefits, advantage, or preference, “unwarranted” means lacking adequate or official support; unjustified; unauthorized; or without justification or adequate reasons. “Advantage” means a more favorable or improved position or condition; benefit or gain of any kind. “Preference” signifies priority, higher evaluation, or desirability; choice or estimation above another.
   
   Here, Estregan purposely spared FRCV from the rigors of the processes under the procurement law and consciously turned a blind eye to irregularities. It was utterly unwarranted for FRCV to receive benefit, advantage, or preference. Aside from not undergoing the proper procurement process, it did not have legal authority to engage in the insurance business.
   
   As to Bruel, she fraudulently claimed that FRCV was fully capacitated to engage in the services enumerated in the MOA. Further, FRCV was merely created for the purpose of rendering the “specialized services” for the Municipality sans prior experience as shown by its registration dates with the DTI and BIR merely a few days prior to its letter-offer. Its Certificate of Registration with the BIR indicates that its line of business or industry is “Other Computer Related Activities” which has nothing to do with APA services. Plainly, Bruel conspired with Estregan for her company to be given preferential treatment and unwarranted benefit.
   
   Torres, Talabong, Rabago, Sacluti, and Dimaranan should be acquitted.
   
   The SB members did not show manifest partiality and give unwarranted benefit to any particular entity because the ordinance they passed states that “any competent and qualified entity” and such entity was yet to be determined. Moreover, it did not prevent Estregan from resorting to public bidding as it merely authorized negotiated procurement, albeit erroneously. Their ratification of the MOA through a resolution did not make them liable as the validity of the MOA did not depend on the issuance of the same.

dispositive

Appeal partially granted. Decision and Resolution of SBN finding Estregan and Bruel guilty affirmed. Torres, Talabong, Rabago, Sacluti, and Dimaranan are acquitted.