1. Violating the simplified bidding rules because they shortlisted bidders not based on the PCAB master list;
   
   
2. Conducting the bidding and recommending the award to accused Legaspi without detailed engineering in violation of P.D. 1594 and without the required appropriation and actual availability of funds for the total contract price;
   
   
3. Creating and confirming the artificial phases in the Construction Agreement and dividing the contract into Phase I and Phase II just to enable PEA to circumvent the requirement under P.D. No. 1445 about funding requirements. In the case of Mortel. . .
   
   
4. In the case of accused Beriña[, Jr.] and Millan, recommending the approval of Variation Order No. 2 and the contract price adjustment, and the payment thereof without the required presidential approval and in violation of P.D. No. 1594;
   
   
5. In the case of San Juan, Chan, Dayan, Malbarosa, Padilla and Damaso, for approving and confirming the Legaspi contract without sufficient funding and the Seaside Drive Extension without public bidding;
   
   
6. In the case of Legaspi, for conspiring with Beriña[, Jr.] and Millan in having the Seaside Drive Extension contract awarded to him under a negotiated contract.^[175]

At the outset, it must be clarified that a violation of the law and rules of procurement does not automatically equate to a violation of R.A. No. 3019. As explained in Sabaldan v. Office of the Ombudsman:^[176]

[E]ven granting that there may be violations of the applicable procurement laws, the same does not mean that the elements of violation of Section 3(e) of R.A. No. 3019 are already present as a matter of course. For there to be a violation under Section 3(c) of R.A. No. 3019 based on a breach of applicable procurement laws, one cannot solely rely on the mere fact that a violation of procurement laws has been committed. It must be shown that (1) the violation of procurement laws caused undue injury to any party or gave any private patty unwarranted benefits, advantage or preference; and (2) the accused acted with evident bad faith, manifest partiality, or gross inexcusable negligence.^[177]

Thus, despite findings for violation of the procurement law, it is the elements comprising R.A. No. 3019 that must be materially proven, especially that an information charges a criminal offense, as defined by R.A. No. 3019, and not by P.D. No. 1594 or R.A. No. 9184.^[178] These elements were further elaborated in Chung v. Ombudsman^[179] as follows:

By the very language of Section 3, paragraph (e) of RA 3019, which defines "corrupt practices of public officers," the elements of manifest partiality, evident bad faith, and gross inexcusable negligence and of giving unwarranted benefit, advantage or preference to another must go hand in hand with a showing of fraudulent intent and corrupt motives.

Evident bad faith "does not simply connote bad judgment or negligence" but of having a "palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. It contemplates a state of mind affirmatively operating with furtive design or with some motive or self-interest or ill will or for ulterior purposes."

Manifest partiality, on the other hand, is defined as a clear, notorious, or plain inclination or predilection to favor one side or person rather than another, while gross inexcusable negligence is defined as negligence characterized by the want of even the slightest care. It presupposes acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences insofar as other persons may be affected.^[180] (Citations omitted)

Guided by the foregoing, the acts found by the Sandiganbayan that led to the conviction of petitioners must be re-examined.

DPWH list versus PCAB Masterlist

In holding that petitioners violated the rules on simplified public bidding, the Sandiganbayan relied on the IRR of P.D. No. 1594 as amended,^[181] stating that there is an obligation on the part of the PEA to consult the separate list of the PCAB before the negotiated bidding of the PDMB Project could proceed. The provision reads:

a. Participation in simplified public bidding for a project shall be limited to bona fide contractors duly accredited and classified for the project category and size and who are included in a separate master list to be prepared by the Philippine Contractors Accreditation Board (PCAB) pursuant to the uniform guidelines promulgated by the PCAB. The guidelines shall put emphasis on strict requirements of good track record performance and/or capability requirements, among others.

On his part, Lacson, a member of the Ad Hoc Committee, explained that Atty. Enriquez had reported that the "separate masterlist" that was supposed to be prepared by the PCAB was not yet available then. Instead, he was furnished by the PCAB with a copy of a general masterlist in the NCR containing hundreds of listed contractors with their respective PCAB category/license.^[182] The problem then became how to narrow down the list of pre-qualified bidders to achieve the objective of conducting a "simplified bidding" as approved by the Office of the President. To use the general masterlist obtained by Atty. Enriquez could be unwieldy and militate against the presidential instructions to immediately have the PDMB Project available to the public. Hence, the Chairman of the Ad Hoc Committee decided to seek the help of the DPWH for a list of PCAB contractors with large "B," triple "AAA" category/license for roads and bridges since this is the nature of the PDMB Project.^[183]

On this issue, we rule in favor of petitioners.

Notably, the prosecution did not present evidence showing that a separate masterlist, from which contractors of projects for simplified public bidding must be chosen from, is available. To continuously require PEA to rely on a separate masterlist that is not yet in existence would be to punish petitioners for an inherently impossible task, which cannot even be attributed as their fault. It was not the obligation of PEA to produce the masterlist; rather, the responsibility fell upon the PCAB to do so. Before PEA may be accused of its failure to comply with an obligation imposed by law, it must first be shown that such an obligation is capable of being performed. This is especially true in this case where the obligation of PEA is conditioned upon the fulfillment of the obligation of PCAB. As such, it is not simply the obligation imposed by law that must be examined; the corresponding obligation upon which its performance is made dependent, should also be taken into consideration. It is thus necessary to first establish that a separate masterlist of bona fide contractors duly accredited and classified for the project category, indeed exists. This is in line with the rule on burden of proof, which imposes upon the prosecution the burden of proving its allegations. A negative fact such as the absence of the masterlist, cannot serve as a basis for a wrongdoing, when the prosecution itself has not first presented proof of its existence. This flows from the maxim "semper necessitas probandi incumbit illi qui agit," or the necessity of proof always lies with the person who lays the charges.

In the absence of a separate masterlist, PEA was left with an alternative to consult the list of DPWH with large "B" and triple "AAA" category/license for roads and bridges. For sure, these are the largest in the categorization of the DPWH and among the top tier in the classification of contractors. These are the lists of contractors with experience to build roads and bridges.

As of November 22, 2017, in the Board Resolution No. 201 Series of 2017 issued by PCAB, Category AAA was defined as those contractors with minimum financial capacity of PHP 180 million, while Category AAAA are those with minimum financial capacity of PHP 1 billion. Those with a size range of Large B with License Category AAA and AAAA are those with single largest project of above PHP 225 million and allowable range of contract costs of less than or above PHP 450 million. Notably, the amount allotted for the PDMB Project, which is PHP 584,365,885.00, falls within the range of Category AAA and Large B contractor. The actions taken by the PEA must thus be treated as substantial compliance with the requirement of the law considering the absence of the separate masterlist and taking into consideration Section 3(b) of P.D. No. 1594, which reads:

(b) Technical Requirements. The prospective contractor must meet the following technical requirements to be established in accordance with the rules and regulations to be promulgated pursuant to Section 12 of this Decree, to enable him to satisfactorily prosecute the subject project:

1) Competence and experience of the contractor in managing projects similar to the subject project.

2) Competence and experience of the contractor's key personnel to be assigned to the subject project.

3) Availability and commitment of the contractor's equipment to be used for the subject project.

Nowhere from the evidence presented by the prosecution was it shown that JD Legaspi or any of the bidders was unqualified or had no competence to undertake the PDMB Project because the PEA relied on the DPWH list. On the contrary, the winning bidder, JD Legaspi, was able to perform his part of the contract. As PEA was merely performing its mandate, it cannot take the blame for the shortcoming committed by another agency. The circumstances that led to PEA's action in utilizing the DPWH therefore negates the presence of manifest partiality, evident bad faith or gross inexcusable negligence under Section 3(e) of R.A. No. 3019.

In the same manner, as there was no list prepared by PCAB, there were also no guidelines as to how the project could be bid out. While the Sandiganbayan found that when PEA divided the PDMB Project into Phase I and Phase II, and respectively divided the ten contractors under these two phases, those under Phase II were disadvantaged because of the option given to the SM group and R1 Consortium to build on the land they were awarded, which was covered by the Phase II, there was no sufficient proof to show that the PEA made this to accommodate any of the contractors listed for Phase I. It was not even shown by the prosecution that the bid of the contractors under Phase II could match the lowest complying bid of JD Legaspi under Phase I. A bidding was still conducted by the PEA for the Phase I Project, which included different participants. Thus, it could not be said that JD Legaspi was given an unwarranted preference in the award of the project.

Detailed engineering

The Sandiganbayan also found that the absence of a detailed engineering affected the cost estimate of the project. With this, the cost adjustments that had to be done in order to pursue the project became bloated.

A reading of the pleadings made available before this Court would show that petitioners did not deny the absence of a detailed engineering for the PDMB Project. Rather, what was taken into consideration was the condition of the adjacent land, which was awarded to the other contractors as part of the PDMB Project.

This contravenes Section 2 of P.D. No. 1594, which reads:

Section 2. Detailed Engineering. No bidding and/or award of contract for a construction project shall be made unless the detailed engineering investigations, surveys, and designs for the project have been sufficiently carried out in accordance with the standards and specifications to be established under the rules and regulations to be promulgated pursuant to Section 12 of this Decree so as to minimize quantity and cost overruns and underruns, change orders and extra work orders, and unless the detailed engineering documents have been approved by the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be. (Emphasis in the original)

Section 2 of P.D. No. 1594 requires that a detailed engineering be carried out before any bidding or contract is awarded for a construction project. Obviously, this requirement is addressed to the agency concerned, not to a bidder. It is from this detailed engineering that the concerned agency can get an estimate of the project, which it will then use as basis in the evaluation of the bids.^[184]

As mentioned, the PEA, in coming up with its Agency Budget Estimate, merely relied on the conditions of the adjacent land, which should not be the case. The responsibility on the preparation of the bid documents falls upon the members of the Ad Hoc Committee, who was tasked to evaluate the condition of the road before the same could be bid out.

Nevertheless, violation of this provision alone, without clear showing of bad faith, malice, or gross negligence should not be automatically equated to a violation of Section 3(e) of R.A. No. 3019. There must be proof amounting to a corrupt motive in doing so, for as explained in Martel v. People:^[185]

At this juncture, the Court emphasizes the spirit that animates R.A. 3019. As its title implies, and as what can be gleaned from the deliberations of Congress, R.A. 3019 was crafted as an anti-graft and corruption measure. At the heart of the acts punishable under R.A. 3019 is corruption. As explained by one of the sponsors of the law, Senator Arturo M. Tolentino, "while we are trying to penalize, the main idea of the bill is graft and corrupt practices. x x x Well, the idea of graft is the one emphasized." Graft entails the acquisition of gain in dishonest ways.^[186] (Emphasis in the original; citations omitted)

At the most, the absence of a detailed engineering could affect the budget or cost for which government must spend for the completion of the project. Overpricing should however be proven to have been committed with deliberate corrupt ways before one can be indicted for violation of R.A. No. 3019. As held in Macairan v. People:^[187]

Jurisprudence teaches that in assessing whether there was overpricing, a specific comparison with the same brand, features and specifications as those purchased in the questioned transaction should be made. Further, the report upon which the proof of overpricing is based should include a canvass of the different suppliers of the identical product with their corresponding prices. Absent this evidence, the Court cannot reasonably conclude that the price of the goods subject of the questioned transaction was actually exorbitant.^[188] (Citations omitted)

In this case, the Special Audit Report of the COA found that there was no overpricing in the portion of the contract awarded to Legaspi. Its findings stated the following:

Source of Fund

The contract with J.D. Legaspi Construction amounting to P584,365,885.00 was further increased to P837,317,343.77 due to contract price adjustments, variation orders, overrun/underrun and supplemental agreement. The funding source was the P300 Million loan with Land Bank of the Philippines, which was released on April 7, 2000, and the P1 Billion loan from the Government Service Insurance System of which the initial drawdown amounting to P600 Million was released on August 15, 2002.

. . . .

Summary of Audit Findings

Finding No. 1

The technical evaluation of the project shows that the total project cost, including the price adjustment was found to be reasonable and, therefore, not overpriced. The project was constructed in accordance with the approved design, scope of work and as-built plans and specifications.

The allegation of overpricing raised in the complaint of Mr. Sulpicio Tagud, Director, Public Estates Authority (PEA), based on the cost comparison per linear meter of road and bridge constructed by three (3) developers/contractors, appears to be untenable. The road networks undertaken by the three (3) developers/contractors are not comparable considering that Central Business Park (CBP) I-A, CBP I-B & C (reclaimed by SM/R-1 Consortium) were reclaimed by pre-loading/surcharging method to attain the required soil consolidation and stability. On the other hand, Financial Center Area (FCA), CBP-2 and Asiaworld area are existing reclaimed areas prior to the 1988 Manila Cavite Coastal Road and Reclamation Project (MCCRRP) Master Development which have poor subgrade materials as confirmed by the Bureau of Research and Standards (BRS) and the R.R. Ignacio Construction as shown in the results of the Borehole tests conducted in November of 1999. Logically, the actual cost per linear meter incurred by the SM Group and R1 Construction as against the cost incurred by J.D. Legaspi Construction cannot be compared because the areas assigned for each of these contractors are with different soil conditions requiring different design for each project.

The technical evaluation conducted has clearly established the reasonableness of the project cost. The audit team, therefore, finds no sufficient basis to support the allegation of overpricing.^[189]

Considering that the COA, the constitutionally bound auditor of government funds, declared that no overpricing occurred, such findings should be given considerable weight. This further shows that no injury was proven to have been caused to the government; neither any manifest partiality in favor of a party was given. As part of the elements of violation of R.A. No. 3019, failure to prove these would be tantamount to a failure to prove violation of the law, beyond reasonable doubt.

The requirement of availability of funds

With respect to the availability of funds, Section 86 of P.D. No. 1445 provides:

SECTION 86. Certificate Showing Appropriation to Meet Contract. — Except in the case of a contract. for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three months, or banking transactions of government-owned or controlled banks no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished. (Emphasis supplied)

The foregoing provision requires that the appropriation necessary in order to consider a contract as sufficiently funded must cover that portion of the needed expenditures for the particular current year. Necessarily, when a contract transcends beyond a period of one year, and must be completed within a multi-year period, the availability of appropriations must be examined for each of the current fiscal year that arrives. This does not however mean that the implementing agency should look for funds only when the current fiscal year arrives. Rather, the source from which the funding for the entire project must already be determined, for while the actual release of funds may be made on a yearly basis, continuous payment to a contractor on a multi-year project could only be made if the source of funds has already been determined. This is supported by R.A. No. 9184 which requires that the invitation to bid identify the source of fund of the project, thus:

SEC. 21. Advertising and Contents of the Invitation to Bid. – In line with the principle of transparency and competitiveness, all Invitations to Bid for contracts under competitive bidding shall be advertised by the Procuring Entity in such manner and for such length of time as may be necessary under the circumstances, in order to ensure the widest possible dissemination thereof, such as, but not limited to, posting in the Procuring Entity's premises, in newspapers of general circulation, the G-EPS and the website of the Procuring Entity, if available. The details and mechanics of implementation shall be provided in the IRR to be promulgated under this Act.

The Invitation to Bid shall contain, among others:

(a) A brief description of the subject matter of the Procurement;
(b) A general statement on the criteria to be used by the Procuring Entity for the eligibility check, the short listing of prospective bidders, in the case of the Procurement of Consulting Services, the examination and evaluation of Bids, and post-qualification;
(c) The date, time and place of the deadline for the submission and receipt of the eligibility requirements, the pre-bid conference if any, the submission and receipt of bids, and the opening of bids;
(d) The Approved Budget for the Contract to be bid;
(e) The source of funds;
(f) The period of availability of the Bidding Documents, and the place where these may be secured;
(g) The contract duration; and,
(h) Such other necessary information deemed relevant by the Procuring Entity. (Emphasis supplied)

In the case of projects funded by the national budget, it is even required for the agency to secure a multi-year obligational authority to secure its commitment of paying the multi-year project and ultimately complete the project. This was explained in Jacomille v. Abaya^[190] as follows:

MYOA or Multi-Year Obligational Authority is an authorization document issued by the DBM to government agencies that undertake MYP with funding requirements spread over two (2) years or more. Such projects are evidenced by MYC entered into by the parties. In GAA 2013, the requirement of MYOA is stated as follows:

Sec. 21. Contracting Multi-Year Projects. In the implementation of multi-year projects where the total cost is not provided in this Act, department, bureaus and offices shall request the DBM for the issuance of a Multi-Year Obligational Authority following the guidelines under DBM Circular Letter No. 2004-12 dated October 27, 2004. Notwithstanding the issuance of a Multi-Year Obligation Authority, the obligation to be incurred in any given year, shall in no case exceed the allotment released for the purpose during the year.

As early as October 27, 2004, the DBM issued the DBM Circular No. 2004-12 to prescribe the guidelines and procedure to implement the MYOA requirement. The circular defines the different terms affecting MYOA, such as:

3.1 Multi-Year Obligational Authority (MYOA) - refers to an authority issued by the Department of Budget and Management (DBM) to enable an agency to enter into a multi-year contract whether for locally funded projects (LFPs) or foreign assisted projects (FAPs).

. . . .

The DBM explained the nature of MYOA. When the government entered into MYC, it was committed to annually pay a given amount to the contractor/supplier of the project, even without the government planning for its payment. Thus, the imperative for MYOA arose, which gave an assurance that the financial commitments included in MYC are considered in the succeeding proposed budget submitted to Congress. With the issuance of MYOA, the DBM commits to recommend to Congress the funding of the MYP until its completion. Evidently, without MYOA, the government runs the risk of breach of contractual obligations if its financial commitments are not met for lack of funding.^[191] (Emphasis in the original)

The absence of a multi-year obligational authority would ultimately result in a void contract, as applied in COMELEC v. Quijano-Padilla,^[192] as follows:

Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on account of its bid in the amount of P6.588 Billion Pesos. However, under Republic Act No. 8760, the only fund appropriated for the project was P1 Billion Pesos and under the Certification of Available Funds (CAF) only P1.2 Billion Pesos was available. Clearly, the amount appropriated is insufficient to cover the cost of the entire VRIS Project. There is no way that the COMELEC could enter into a contract with PHOTOKINA whose accepted bid was way beyond the amount appropriated by law for the project. This being the case, the BAC should have rejected the bid for being excessive or should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is null and void.

The objections of then Chairman Demetriou to the implementation of the VRIS Project, ardently carried on by her successor Chairman Benipayo, are therefore in order.

Even the draft contract submitted by Commissioner Sadain, that provides for a contract price in the amount of P1.2 Billion Pesos is unacceptable. Indeed, we share the observation of former Chairman Demetriou that it circumvents the statutory requirements on government contracts. While the contract price under the draft contract is only P1.2 Billion and, thus, within the certified available funds, the same covers only Phase 1 of the VRIS Project, i.e., the issuance of identification cards for only 1,000,000 voters in specified areas. In effect, the implementation of the VRIS Project will be "segmented" or "chopped" into several phases. Not only is such arrangement disallowed by our budgetary laws and practices, it is also disadvantageous to the COMELEC because of the uncertainty that will loom over its modernization project for an indefinite period of time. Should Congress fail to appropriate the amount necessary for the completion of the entire project, what good will the accomplished Phase I serve? As expected, the project failed "to sell" with the Department of Budget and Management. Thus, Secretary Benjamin Diokno, per his letter of December 1, 2000, declined the COMELEC's request for the issuance of the Notice of Cash Availability (NCA) and a multi-year obligational authority to assume payment of the total VRIS Project for lack of legal basis. Corollarily, under Section 33 of R.A. No. 8760, no agency shall enter into a multi-year contract without a multi-year obligational authority, thus:

"SECTION 33. Contracting Multi-Year Projects. - In the implementation of multi-year projects, no agency shall enter into a multi-year contract without a multi-year Obligational Authority issued by the Department of Budget and Management for the purpose. Notwithstanding the issuance of the multi-year Obligational Authority, the obligation to be incurred in any given calendar year, shall in no case exceed the amount programmed for implementation during said calendar year."

Petitioners are justified in refusing to formalize the contract with PHOTOKINA. Prudence dictated them not to enter into a contract not backed up by sufficient appropriation and available funds. Definitely, to act otherwise would be a futile exercise for the contract would inevitably suffer the vice of nullity. In [Osmeña vs. Commission on Audit,] this Court held:

"The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor and the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and the amount necessary to cover the proposed contract for the current fiscal year is available for expenditure on account thereof. Any contract entered into contrary to the foregoing requirements shall be VOID.

"Clearly then, the contract entered into by the former Mayor Duterte was void from the very beginning since the agreed cost for the project (P8,368,920.00) was way beyond the appropriated amount (P5,419,180.00) as certified by the City Treasurer. Hence, the contract was properly declared void and unenforceable in COA's 2nd Indorsement, dated September 4, 1986. The COA declared and we agree, that:

'The prohibition contained in Sec. 85 of PD 1445 (Government Auditing Code) is explicit and mandatory. Fund availability is, as it has always been, an indispensable prerequisite to the execution of any government contract involving the expenditure of public funds by all government agencies at all levels. Such contracts are not to be considered as final or binding unless such a certification as to funds availability is issued (Letter of Instruction No. 767, s. 1978). Antecedent of advance appropriation is thus essential to government liability on contracts ([Zobel vs. City of Manila,] 47 Phil. 169). This contract being violative of the legal requirements aforequoted, the same contravenes Sec. 85 of PD 1445 and is null and void by virtue of Sec. 87."'^[193] (Emphasis in the original, citations omitted)

It is thus important to have an assurance that the funding of the project will continue. This assumes more significance when the budget is part of the national budget every year.

In this case however, the PDMB Project was not funded by the national budget. Rather, it was funded by a loan to be obtained, which was authorized by the PEA Board as early as October 4, 1999, when Resolution No. 2017 was issued approving the One Billion Loan Facility in the Form of Convertible Notes to Finance the Construction and Development of portions of the Central Boulevard,^[194] pertinent portion of which reads as follows:

RESOLVED FURTHER, that the following items are likewise approved, to wit:

1. The Term Sheet covering One Billion Pesos Loan Facility which will be in the form of Convertible Notes herein attached as Annex "A"
2. The appointment of Land Bank of the Philippines (LBP) as Trustee of the Mortgage Trust Indenture under the terms and conditions as contained in their proposal herein attached as Annex "B"
3. The appointment of the law firm Picazo Buyco Tan Fider and Santos as legal counsel for this undertaking under the terms of their proposal herein attached as Annex "C"
4. The extension of the mandate of Land Bank and All Asia Capital with regards to this undertaking for a period of six months; and
5. The interim loan of Three Hundred Million Pesos to be sourced from Land Bank against the One Billion Facility under such terms and conditions as may be agreed upon.^[195]

The authority to contract loan is authorized under the charter of PEA, being a government instrumentality. In Republic v. City of Parañaque,^[196] the nature of PEA, later renamed as PRA, was described as follows:

In the case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock corporation. It cannot be considered as a stock corporation because although it has a capital stock divided into no par value shares as provided in Section 7 of P.D. No. 1084, it is not authorized to distribute dividends, surplus allotments or profits to stockholders. There is no provision whatsoever in P.D. No. 1084 or in any of the subsequent executive issuances pertaining to PRA, particularly, E.O. No. 525, E.O. No. 654 and EO No. 798 that authorizes PRA to distribute dividends, surplus allotments or profits to its stockholders.

PRA cannot be considered a non-stock corporation either because it does not have members. A non-stock corporation must have members. Moreover, it was not organized for any of the purposes mentioned in Section 88 of the Corporation Code. Specifically, it was created to manage all government reclamation projects.

Furthermore, there is another reason why the PRA cannot be classified as a GOCC. Section 16, Article XII of the 1987 Constitution provides as follows:

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

The fundamental provision above authorizes Congress to create GOCCs through special charters on two conditions: 1) the GOCC must be established for the common good; and 2) the GOCC must meet the test of economic viability. In this case, PRA may have passed the first condition of common good but failed the second one — economic viability. Undoubtedly, the purpose behind the creation of PRA was not for economic or commercial activities. Neither was it created to compete in the market place considering that there were no other competing reclamation companies being operated by the private sector. As mentioned earlier, PRA was created essentially to perform a public service considering that it was Primarily responsible for a coordinated, economical and efficient reclamation, administration and operation of lands belonging to the government with the object of maximizing their utilization and hastening their development consistent with the public interest.^[197] (Emphasis in the original, citations omitted)

Being a government instrumentality, PEA is authorized by its charter to contract loans to be able to carry into effect the mandate it was given under P.D. No. 1084. Section 5 thereof reads:

Section 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following powers and functions:

. . . .

(m) To enter into, make, perform and carry out contracts of every class and description, including loan agreements, mortgages and other types of security arrangements, necessary or incidental to the realization of its purposes with any person, firm or corporation, private or public, and with any foreign government or entity. (Emphasis in the original)

Section 12 of P.D. No. 1084 likewise provides:

Section 12. Loans. The Authority, as well as any affiliate corporation in which it holds, owns and/or controls by itself or jointly with one or more government-owned or controlled corporations at least seventy-five per cent (75%) of the issued and outstanding shares of stock entitled to vote, when specifically authorized by the President of the Philippines, is hereby authorized to contract loans, credits, in any convertible foreign currency or capital goods, and indebtedness from time to time from foreign governments, or any international financial institutions or fund sources, or any entities, on such terms and conditions as it shall deem appropriate for the accomplishment of its purposes and to enter into and execute agreements and other documents specifying such terms and conditions. (Emphasis in the original)

The PDMB Project, as funded by loan obtained by the PEA, was thus authorized by its charter, and whatever fond it may obtain therefrom could be utilized for the current fiscal year. While the Sandiganbayan found that dividing the project to Package 1 and Package 2 was a subterfuge to do away with the requirement of funding, pertinent laws only require that the funding of a project be viewed on a yearly basis. The requirement of the law is funding for the current fiscal year. Be it divided into several phases, as long as the project could be implemented within the end of the year with the corresponding amount for such project, the same could not be said to have violated the law.

The need to secure funding for the project covering the current fiscal year is understandable. Under Section 47 of the Administrative Code, the contract for the expenditure of public funds shall be for that amount necessary to cover the proposed contract for the current calendar year, thus:

SECTION 47. Certificate Showing Appropriation to Meet Contract. — Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three (3) months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current calendar year is available for expenditure on account thereat: subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished. (Emphasis supplied)

Considering that the amount of PHP 300 million was identified as the budget to cover the expenses for the current year when the PDMB Project was to be implemented the same should already suffice as compliance with the requirement of the law.

Presidential approval

Another ground relied upon by the Sandiganbayan in convicting petitioners is the failure to secure presidential approval.

A reading of the Memorandum dated January 29, 2000 from the Executive Secretary^[198] would show that it was an approval of the Construction Agreement with PEA for the construction of the Central Boulevard Road Project in the amount of PHP 584,365,885.05 subject to certain conditions, foremost of which are the inclusion of a provision in the Agreement that all extra works and price adjustments should first be submitted to the President for approval and that the final approval and actual release of the loan proceeds from the LandBank/All Asia Capital must be secured.

It must nonetheless be clarified that the additional condition for presidential approval concerning extra works and price adjustments were imposed by the Office of the President. In the same manner, the various executive orders issued by the President are directives of the executive, which does not necessarily amount to a violation of R.A. No. 3019.

Insofar as the contract itself was concerned, the approval of the President was already given, subject to certain conditions, which are in the nature of resolutory conditions. In an obligation with a resolutory condition, the obligation is already effective, subject to the happening of the condition. Thus, the approval of the president should already be considered as given, subject to the happening of the conditions it imposed, non-fulfillment of which could be a ground for appropriate action between entities that imposed the same and those required to fulfill the condition.

With respect to the determination as to whether a violation of R.A. No. 3019 occurred, such an infraction should first be proven to have been committed with manifest partiality, evident bad faith, or gross inexcusable negligence that resulted into undue injury to the government or any party, or any unwarranted benefit to a private party. In the absence of proof of the elements constituting violation of R.A. No. 3019, mere failure to comply with a directive of the president cannot be considered a violation of said criminal law.

Award of the Seaside Drive Extension

As found by the Sandiganbayan, Variation Order No. 2 comprised of the Inland Bridge Channel and the Seaside Drive Extension. Considering that it found the construction of the inland bridge channel under this variation order as legal and necessary for the construction of the PDMB Project, the same would no longer be disturbed on appeal. Rather, it is the award of the Seaside Drive Extension under Variation Order No. 2 that will have to be examined.

Variation Orders are classified under the IRR of P.D. No. 1594 as follows:

CI 1 - VARIATION ORDERS - CHANGE ORDER/EXTRA WORK ORDER/SUPPLEMENTAL AGREEMENT

1. Variation orders may be issued by the concerned agency/office/corporation to cover any increase/decrease in quantities, including the introduction of new work items that are not included in the original contract or reclassification of work items that are either due to change of plans, design or alignment to suit actual field conditions resulting in disparity between the preconstruction plans used for purposes of bidding and the "as staked plans" or construction drawings prepared after a joint survey by the contractor and the government after award of the contract. The addition/deletion of works should be within the general scope of the project as bid and awarded. A variation order may either be in the form of a change order, extra work order or a supplemental agreement. (Emphasis supplied)

No substantial change was introduced by the IRR of R.A. No. 9184^[199], which defined variation order as follows:

1. Variation Orders - Change Order/Extra Work Order

1.1 Variation Orders may be issued by the procuring entity to cover any increase/decrease in quantities, including the introduction of new work items that are not included in the original contract or reclassification of work items that are either due to change of plans, design or alignment to suit actual field conditions resulting in disparity between the preconstruction plans used for purposes of bidding and the "as staked plans" or construction drawings prepared after a joint survey by the contractor and the Government after award of the contract, provided that the cumulative amount of the positive or additive Variation Order does not exceed ten percent (10%) of the original contract price. The addition/deletion of works under Variation Orders should be within the general scope of the project as bid and awarded. The scope of works shall not be reduced so as to accommodate a positive Variation Order. A Variation Order may either be in the form of either a change order or extra work order.^[200] (Emphasis supplied)

Clearly, a change order or extra work order is considered as a form of variation order. Petitioners' claim that the award of the Seaside Drive Extension does not need the approval of the president is therefore erroneous. When the Memorandum and the Contract with JD Legaspi specified as a condition, the approval of the President before any extra works may be performed on the project, this includes variation orders, for an extra work is in reality, a form of a variation order. Suffice it to state, the approval of the President should have been secured before additional expenses on additional works, irrespective of their nomenclature, may be awarded to the contractor. This is a condition imposed by then Executive Secretary Zamora as early as the award of the contract itself and made a condition in the various PEA Board Resolutions, and the contract itself.

While Executive Order No. 109 expressly repealed Memorandum Circular No. 25, the same was issued only on May 27, 2002 after the presidential approval was already given. The Office of the President's Memorandum dated January 29, 2000, which approved the Construction Agreement, carried a condition that all extra works and price adjustments should first be submitted to the president for approval. Failure to secure presidential approval on the award of the Seaside Drive Extension thus raises a circumstance that should be considered in assessing whether a violation of R.A. No. 3019 occurred. Nevertheless, this circumstance must be examined vis a vis the elements of the law alleged to have been violated.

Further, a variation order must still fall within the general scope of the project as bid and awarded. In this case, the Seaside Drive Extension was characterized by the Sandiganbayan as follows:

With respect, however, to the Seaside Drive Extension under Variation Order No. 2, it appears that the same cannot legally qualify to be covered by a Variation Order. This is because it is a road outside of the PDMB project and nowhere along the original PDMB roadway plan. It is, in fact, a roadway connecting PDMB and Roxas Boulevard. As recommended by accused Beriña[, Jr.], the Seaside Extension Drive had to be constructed to ease up traffic flow to and from Roxas Boulevard. However, this road was never within the general scope of the PDMB Project as bid and awarded. Accused Millan admitted this when he testified that it was part of another project that was supposed to be implemented but fell through. The Construction Agreement only defines the Project as the Central Boulevard Road Project, without any mention of any arterial roads or any additional roadway such as the Seaside Drive Extension. No documents, whether it be the original action plan of the Boulevard Project, the Construction Agreement signed between PEA and accused Legaspi or the Bid Documents, show that the Seaside Drive Extension was envisioned to be part of the general scope of the PDMB Project.^[201]

Indeed, nowhere was the Seaside Drive Extension found in any of the documents bid out for the PDMB Project. It was not even located along the stretch of President Diosdado Macapagal Boulevard, but a road to connect the PDMB to the Roxas Boulevard, going to NAIA. A separate bidding for the award of the Seaside Drive Extension should thus have been undertaken.

Liability for the award of the Seaside Drive Extension

As discussed, the irregularity involved in this case pertains to the award of the Seaside Drive Extension and not on the main contract for the PDMB Project. Thus, it is the surrounding circumstances of the award of this part of the project that should be examined to determine whether there is a violation of R.A. No. 3019. In the process of analysis, it bears pointing out that mere violation of the procurement law does not automatically make one liable for violation of R.A. No. 3019. As explained in Sabaldan v. Office of the Ombudsman:^[202]

More importantly, it must be emphasized that the instant case involves a finding of probable cause for a criminal case for violation of Section 3(e) of R.A. No. 3019, and not for violation of R.A. No. 9184. Hence, even granting that there may be violations of the applicable procurement laws, the same does not mean that the elements of violation of Section 3(e) of R.A. No. 3019 are already present as a matter of course. For there to be a violation under Section 3(e) of R.A. No. 3019 based on a breach of applicable procurement laws, one cannot solely rely on the mere fact that a violation of procurement laws has been committed. It must be shown that (1) the violation of procurement laws caused undue injury to any party or gave any private party unwarranted benefits, advantage or preference; and (2) the accused acted with evident bad faith, manifest partiality, or gross inexcusable negligence.^[203]

A perusal of the arguments presented by the parties shows that the participation of some of the petitioners revolved around the award of the main contract and not in the introduction of Variation Order No. 2. Thus, they cannot be held criminally liable therefor.

As regards the liability of Amposta-Mortel, considering that there was no showing that the variation order in question was submitted to her for review, she cannot be held liable. A legal officer cannot be considered to have facilitated the award of an erroneous contract when the same was not even forwarded to her office for review. This must be so when the main contract itself has already undergone the appropriate review and has been given presidential approval.

On the part of the Old PEA Board, being the governing body of the PEA tasked to formulate policy decisions, they had every right to rely on the report and recommendation of the Ad Hoc Committee as it is the members of the Ad Hoc Committee who has the first-hand knowledge of the ongoing construction and the actual location of the roads. In the absence of a clear showing of bad faith, manifest partiality or gross inexcusable negligence in the issuance of the Resolutions leading to the award of the Seaside Drive Extension, they could not have violated R.A. No. 3019.

As represented by Beriña, Jr., to facilitate the flow of traffic at the Seaside Drive Extension, it is deemed necessary to complete the construction of the proposed Seaside Drive Extension (connecting Roxas Boulevard and Central Boulevard) and that since time is of the essence, it was recommended that the additional works be awarded to JD Legaspi.^[204] The representation of Beriña, Jr. of the need to complete the construction of the Seaside Drive Extension to facilitate the flow of traffic and its necessity, especially when time is of the essence, made the Board believe of the need to approve the award of the Seaside Drive Extension, moreso, when the road has to connect the PDMB with other roads.

As it even appears, Resolution Nos. 3017 and 3102 carried conditions imposed by the PEA Board, which was supposed to safeguard the award of the Seaside Drive Extension. The conditions imposed under Resolution No. 3017 are as follows:

a. Payment will be made only on actual quantities completed based on the approved detailed plans and applicable unit bid prices and agreed prices (on new items of works)
b. No time extensions will be associated on these additional works
c. Final approval of the Office of the President as per Memo dated 29 June 2000.
d. Actual release of the loan proceeds from Land Bank of the Philippines.^[205]

As to Resolution No. 3102, the Old PEA Board, in addition to the previous conditions it imposed under Board Resolution No. 3017, further required that the implementation of Variation Order No. 2 be made subject to the provisions of P.D. No. 1594 while the appropriation of the difference resulting from the updated cost thereof must be made subject to existing accounting and auditing rules and regulations.^[206] These safeguards negate bad faith or gross inexcusable negligence on the part of the members of the Old Board of PEA.

It must be added that the subsequent approval of the new Board of Directors of the cost of the project signify their acquiescence not only to the project but also a recognition of the safeguards that were already put in place by the Old Board.

On the part of Beriña, Jr. and Millan, who issued the request for Variation Order No. 1 (later renumbered as Variation Order No. 2),^[207] the actions they took negate manifest partiality, evident bad faith, or gross inexcusable negligence. In proposing the construction of the Seaside Drive Extension, they have honestly believed that P.D. No. 1594 allows a negotiated contract where a variation order is adjacent or contiguous to an ongoing project and could be economically prosecuted by the same contractor. Further, from the ground and aerial sketches, the Integrated Framework Plan and the present Google image of the President Diosdado Macapagal Boulevard, the Seaside Drive Extension appears to be connected to JD Legaspi's PDMB Project.

Indeed, a negotiated contract is allowed where the variation order to be introduced is adjacent or contiguous to an ongoing project. Thus, even if the main contract as bid out did not include the Seaside Drive Extension, the same may still be introduced as a variation order as part of a negotiated contract. The law however requires certain requirements, to wit:

IB 10.6.2 - By negotiated Contract

. . . .

c. Where the subject project is adjacent or contiguous to an ongoing project and it could be economically prosecuted by the same contractor provided that subject project has similar or related scope of works and is within the contracting capacity of the contractor, in which case, direct negotiation may be undertaken with the said contractor at the same unit prices adjusted to price levels prevailing at the time of negotiation using the parametric formulae herein prescribed without the 5% deduction and contract conditions, less mobilization cost, provided that he has no negative slippage and has demonstrated a satisfactory performance.^[208]

Hence, the introduction of the Seaside Drive Extension is not without legal basis. While it would appear that said road does not fall along the stretch of the PDMB Project, this fact alone cannot serve as a basis to hold petitioners liable for violation of R.A. No. 3019. To stress, the focal point in determining whether there is a violation of R.A. No. 3019 is the elements comprising it, one of which is the existence of manifest partiality, evident bad faith or gross inexcusable negligence. These were defined as follows:

Under the third element, the crime may be committed through "manifest partiality," "evident bad faith," or "gross inexcusable negligence." As already held by this Court, Section 3(e) of RA 3019 may be committed either by dolo, as when the accused acted with evident bad faith or manifest partiality, or by culpa, as when the accused committed gross inexcusable negligence. 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. "Gross inexcusable negligence" refers to negligence characterized by the want of even the slightest care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences insofar as other persons may be affected.^[209] (Citations omitted)

Here, the Seaside Drive Extension was constructed at a portion of the PDMB in order to have a road that will connect it to the Roxas Boulevard. It is not a road construction that is totally alien to the PDMB Project, for it is still a road that is connected to the main project, and serves as a link to the other roads going to and from the President Diosdado Macapagal Boulevard. With a legal basis for which the actions taken by petitioners were anchored, it cannot be said that their actions were coupled with a clear inclination to favor another or that a conscious wrongdoing, ill-will or dishonest purpose was being committed.

The same must also be said as to the absence of presidential approval for the introduction of Variation Order No. 2. Such a finding does not automatically equate to a violation of R.A. No. 3019, considering the failure of the prosecution to show that it was accompanied by manifest partiality, evident bad faith or gross inexcusable negligence. To stress, the main contract has already been approved by the president. Likewise, taking into consideration the nature of a negotiated contract by which the award of the additional works must necessarily be given to the contractor of the main project provided the requisites are present, reliance on the provision of negotiated contracts by Beriña, Jr. and Millan negates the element of evident bad faith, manifest partiality or gross inexcusable negligence. Necessarily, if the PDMB Project was awarded to JD Legaspi, any negotiated contracts related thereto should also be awarded to him by operation of law. As such, with the passage of P.D. No. 1594, the requirement of presidential approval for the award of a subsequent project believed to be qualified as a negotiated contract, would be rendered unnecessary. Considering however that such an approval for subsequent works has been required by the Office of the President when it approved the main project, any infraction thereon would only be subject to the exercise of discretion of the said Office. With respect to violation of R.A. No. 3019, the good faith reliance of Beriña, Jr. and Millan as to the necessity of the Seaside Drive Extension and their appreciation of the application of P.D. No. 1594 as to negotiated contracts, would not make them liable for violation thereof on account merely of the absence of presidential approval of the award of the Seaside Drive Extension.

The need to prove all the elements of the crime of R.A. No. 3019, as in all other cases of violation of criminal laws, springs from the constitutional presumption of innocence. As elaborated in Villarosa v. People:^[210]

The settled rule is that conviction in criminal actions demands proof beyond reasonable doubt. This rule places upon the prosecution the task of establishing the guilt of an accused, relying on the strength of its own evidence, and not banking on the weakness of the defense of an accused. Indeed, the burden is on the prosecution to prove guilt beyond reasonable doubt, not on the accused to prove his innocence. Requiring proof beyond reasonable doubt finds basis not only in the due process clause of the Constitution, but similarly, in the right of an accused to be "presumed innocent until the contrary is proved." Undoubtedly, it is the constitutional presumption of innocence that lays such burden upon the prosecution. (Citations omitted)^[211]

With respect to Legaspi, the Sandiganbayan also convicted him for violation of Section 3(e) of R.A. No. 3019 because of its finding of implied conspiracy, holding that the PEA Management would not have presented the same to the Board had Legaspi not submitted documents pertaining to the possibility of constructing the same as a change order to the original Construction Agreement, thereby violating all the public bidding rules in place.^[212]

In Tan v. People,^[213] this Court explained the liability of private individuals charged with violation of R.A. No. 3019, to wit:

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, including (e) thereof. 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 act or which may lead thereto.

Thus, for a private person to be charged with and convicted of Violation of certain offenses under Section 3 of R.A. 3019, which in this case (e), it must be satisfactorily proven that he/she has acted in conspiracy with the public officers in committing the offense; otherwise, he/she cannot he so charged and convicted thereof.

In conspiracy, the act of one is the act of all; thus, it is never presumed. Like the physical acts constituting the crime itself, the elements of conspiracy must be proven beyond reasonable doubt. To establish conspiracy, direct proof of an agreement concerning the commission of a felony and the decision to commit it is not necessary. It may be inferred from the acts of the accused before, during or after the commission of the crime which, when taken together, would be enough to reveal a community of criminal design, as the proof of conspiracy is frequently made by evidence of a chain of circumstances. While direct proof is not essential to establish conspiracy, it must be established by positive and conclusive evidence. And conviction must be founded on facts, not on mere inferences and presumptions.^[214] (Emphasis in the original, citations omitted)

A reading of the assailed Decision and Resolution would however show that the only basis relied upon by the Sandiganbayan in concluding that Legaspi had a part in the award of the Seaside Drive Extension was the Sworn Statement as attached to the Counter-Affidavit of Tagud, which was taken judicial notice of, stating that it was Legaspi who proposed to PEA the construction of the Seaside Drive Extension.^[215]

It must be noted however that neither the Sworn Statement nor the Counter Affidavit of Tagud was shown to have been offered as evidence by the prosecution. The Rules of Court specifically provides that evidence must be formally offered to be considered by the court. Evidence not offered is excluded in the determination of the case. Failure to make a formal offer within a considerable period of time shall be deemed a waiver to submit it.^[216]

The same cannot also be taken judicial notice of because it does not fulfill the condition of notoriety. In State Prosecutors v. Judge Muro,^[217] judicial notice was explained as follows:

The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the negative.

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The provincial guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety.

To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This is because the court assumes that the matter is so notorious that it will not be disputed. But judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he is not authorized to make his individual knowledge of a fact, not generally or professionally known, the basis of his action. Judicial cognizance is taken only of those matters which are "commonly" known.

Things of "common knowledge," of which courts take judicial notice, may be matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person.^[218] (Citations omitted)

The affidavit of Tagud cannot be taken judicial notice of because it is not a product of common experience in the ordinary course of things. No practice has been established for a contractor to ask for additional works in a project. Rather, the contents of Tagud's affidavit requires the presentation of evidence to prove the actions allegedly taken by Legaspi to ensure that the Seaside Drive Extension would be awarded to him. In the absence of such evidence, this Court cannot take at face value, the allegations in the affidavit of Tagud.

Further, the Sandiganbayan found that Legaspi proceeded to construct the Seaside Drive Extension without receiving an approval from the Office of the President as stated in their Construction Agreement. Suffice it to state however, that such an obligation does not fall on Legaspi, being the contractor.

Legaspi cannot therefore be held liable for the award of the Seaside Drive Extension.

With respect to the payments made to JD Legaspi, the same is justified on the basis of quantum meruit as expounded in Melchor v. Commision On Audit,^[219] to wit:

Moreover, a variation order (which may take the form of a change order, extra work or supplemental agreement) is a contract by itself and involves the expenditure of public funds to cover the cost of the work called for thereunder. (Fernandez, A Treatise on Government Contracts under Philippine Law, 115-116 [1985]) As such, it is subject to the restrictions imposed by Sections 85 and 86 of PD 1445 and LOI 968. COA Circular No. 80-122, dated January 15, 1980, likewise ensures that an extra work order is approved only when supported by available funds. Again, the petitioner has not presented proof of an appropriation to cover the extra work order.

For a failure to show the approval by the proper authority and to submit the corresponding appropriation, we declare the contract for extra works null and void.

Section 87 of PD 1445 states:

"Any contract entered into contrary to the requirements of the two immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties." (Italics supplied)

This does not mean, however, that the petitioner should be held personally liable and automatically ordered to return to the government the full amount of P172,003.26.

As previously discussed, it would be unjust to order the petitioner to shoulder the expenditure when the government had already received and accepted benefits from the utilization of the building.

In Royal Trust Construction v. Commission on Audit, supra, cited by the petitioner, the Court, in the interest of substantial justice and equity, allowed payment to the contractor on a quantum meruit basis despite the absence of a written contract and a covering appropriation.

In a more recent case, Dr. Rufino O. Eslao v. Commission on Audit, G.R. No. 89745, April 8, 1991, the Court directed payment to the contractor on a quantum meruit basis despite the petitioner's failure to undertake a public bidding. In that case, the Court held that "to deny payment to the contractor of the two buildings which are almost fully completed and presently occupied by the university would be to allow the government to unjustly enrich itself at the expense of another."

Where payment is based on quantum meruit, the amount of recovery would only be the reasonable value of the thing or services rendered regardless of any agreement as to value. (Tantuico, State Audit Code of the Philippines Annotated, 471 [1982])

Although the two cases mentioned above contemplated a situation where it is the contractor who is seeking recovery, we find that the principle of payment by quantum meruit likewise applies to this case where the contractor had already been paid and the government is seeking reimbursement from the public official who heads the school. If, after COA determines the value of the extra works computed on the basis of quantum meruit, it finds that the petitioner made an excess or improper payment for these extra works, then petitioner Melchor shall be liable only for such excess payment.^[220]

While the variation orders performed by Legaspi may have been done in advance, this does not deprive him, moreso, make him liable for payment of the cost of the project, especially that the public is now reaping the benefits of the said road construction. The principle of quantum meruit thus applies, and as the COA found no irregularity in the amount paid to him by the government, such amount should no longer be returned. Moreover, the contract price adjustment in the amount of PHP 42,418,493.64 was considered reasonable by the COA.^[221]

As to the civil liability of petitioners, Cabrera v. People^[222] discussed the basis of civil liability for violation of R.A. No. 3019 as follows:

The first punishable act is that the accused is said to have caused undue injury to the government or any party when the latter sustains actual loss or damage, which must exist as a fact and cannot be based on speculations or conjectures. The loss or damage need not be proven with actual certainty. However, there must be "some reasonable basis by which the court can measure it." Aside from this, the loss or damage must be substantial. It must be "more than necessary, excessive, improper or illegal."

The second punishable act is that the accused is said to have given unwarranted benefits, advantage, or preference to a private party. Proof of the extent or quantum of damage is not thus essential. It is sufficient that the accused has given "unjustified favor or benefit to another."^[223] (Citations omitted)

Here, there was no undue injury to the government or any party, or any unwarranted benefit that was proven by the prosecution. The government cannot be said to have suffered an actual loss since there was no showing that it had to perform acts prejudicial to its interest that would pertain to the loan obtained by PEA, or to the construction of the President Diosdado Macapagal Boulevard. To the contrary, the timely completion of the project resulted into a benefit in favor of the government with the increase in value of the land surrounding the area, as well as the public who continue to reap the benefits of having alternate routes that would let them avoid traffic congestion.

Likewise, no circumstance was shown to favor JD Legaspi in the award of the main contract and the variation orders that would amount to an unwarranted benefit in his favor. It is undeniable that the contract for the main project underwent the necessary procurement procedure. As to the award of the Seaside Drive Extension, the same was brought about by the honest belief of petitioners that it fell within the parameters of a negotiated contract. Under the rules on negotiated contract, a project may be awarded to the same contractor who was awarded with the ongoing project. Considering that JD Legaspi was awarded with the main contract, there is nothing irregular for the petitioners, believing in good faith as to the applicability of the rules on negotiated contracts, to award the Seaside Drive Extension to JD Legaspi. Thus, there was no unwarranted benefit that favored JD Legaspi in the award of the Seaside Drive Extension.

With the foregoing, the civil liability imposed by the Sandiganbayan upon the petitioners should be deleted.

ACCORDINGLY, the consolidated Petitions are GRANTED. The Decision dated February 5, 2015 and the Joint Resolution dated September 16, 2015 rendered by the Sandiganbayan are REVERSED and SET ASIDE. Petitioners Cristina Amposta-Mortel, Theron Victor Lacson, Leo Padilla, Manuel Beriña, Jr., Jaime Millan, Bernardo Viray, Raphael Pocholo Zorilla, Daniel Dayan, Frisco Francisco San Juan, Elpidio Damaso, Carmelita D. Chan, and Jesusito Legaspi are ACQUITTED of violation of Republic Act No. 3019 on the ground of reasonable doubt. The civil liability imposed by the Sandiganbayan is hereby DELETED.

Let an entry of judgment be issued immediately.

SO ORDERED.

Lazaro-Javier, M. Lopez, and Kho, Jr., JJ., concur.
Leonen, SAJ., dissent. See separate opinion.

^[2] Rollo (G.R. No. 220500), vol. I, pp. 101-245. The February 5, 2015 Decision in Criminal Case No. 27808 was penned by Associate Justice Rafael R. Lagos, concurred in by Associate Justices Efren N. De La Cruz and Rodolfo A. Ponferrada, First Division, Sandiganbayan, Quezon City.

^[3] Id. at 328-384. The September 16, 2015 Joint Resolution in Criminal Case No. 27808 was penned by Associate Justice Efren N. De La Cruz, concurred in by Associate Justices Rodolfo A. Ponferrada and Napoleon E. Inoturan, First Division, Sandiganbayan, Quezon City.

^[4] Id. at 243-244.

^[5] Id. at 383-384.

^[6] As culled from the Sandiganbayan Decision.

^[7] See rollo (G.R. No. 220587), vol. I, pp. 304-306.

^[8] Rollo (G.R. No. 220500), vol. I, p. 178.

^[9] Id. at 179.

^[10] Id.

^[11] Id.

^[12] Id.

^[13] Id.

^[14] Id. at 180.

^[15] Id.

^[16] Id. at 180-181.

^[17] Id. at 181.

^[18] Id.

^[19] Id.

^[20] Rollo (G.R. No. 220587), vol. I, pp. 310-311.

^[21] Id.

^[22] Rollo (G.R. No. 220500), vol. I, p. 182.

^[23] Rollo (G.R. No. 220587), vol. I, pp. 312-323.

^[24] Id. at 315, 317; See also rollo (G.R. No. 220500), vol. I, p. 183.

^[25] Rollo (G.R. No. 220587), vol. I, p. 315.

^[26] Id. at 322. See also rollo (G.R. No. 220500), vol. I, p. 183.

^[27] Rollo (G.R. No. 220500), vol. I, p. 183.

^[28] Id.

^[29] Id. at 184. See also rollo (G.R. No. 220587), vol. I, p. 330.

^[30] Rollo (G.R. No. 220500), vol. I, p. 184.

^[31] Id.

^[32] Id. at 184.

^[33] Id. at 185. See also rollo (G.R. No. 220587), vol. I, pp. 333, 448.

^[34] Rollo (G.R. No. 220500), vol. I, p. 185.

^[35] Id. at 186.

^[36] Id. at 185.

^[37] As amended on May 24 and July 5, 2000.

^[38] Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts, July 11, 1978.

^[39] Rollo (G.R. No. 220500), vol. I, pp. 185-186.

^[40] Id. at 186.

^[41] Id.

^[42] Id. at 186-187.

^[43] Id. at 187.

^[44] Id.

^[45] Id.

^[46] Id. at 187-188.

^[47] Id. at 188.

^[48] Id at 189.

^[49] Id. at 188.

^[50] Id. at 189.

^[51] Id. at 189-190.

^[52] Id.

^[53] Rollo (G.R. No. 220587), vol. II, pp. 724-732.

^[54] Anti-Graft and Corrupt Practices Act, August 17, 1960.

^[55] Id. at 728-731.

^[56] Rollo (G.R. No. 220587), vol. I, p. 75.

^[57] Id.

^[58] Rollo (G.R. No. 220500), vol. I, p. 192.

^[59] Id. at 192-193.

^[60] Id. at 193.

^[61] Id.

^[62] Id. at 194.

^[63] Id. at 194-197.

^[64] Id. at 197-198.

^[65] Id. at 199.

^[66] Id.

^[67] Id.

^[68] Id. at 200.

^[69] Id.

^[70] Id. at 201.

^[71] Id. at 202.

^[72] Id. at 202-203.

^[73] Id. at 203.

^[74] Id. at 204.

^[75] Id. at 205.

^[76] Id. at 223.

^[77] Id. See also p. 242.

^[78] Id. at 225.

^[79] Id. at 226.

^[80] Id. at 227.

^[81] Id. at 228.

^[82] Id.

^[83] Id. at 230.

^[84] Id. at 231.

^[85] Id.

^[86] Id. at 233.

^[87] Id. at 237.

^[88] Id. at 238.

^[89] Id.

^[90] Id. at 238-239.

^[91] Id. at 239.

^[92] Id.

^[93] Id. at 242.

^[94] Id. at 328-384.

^[95] Id. at 377.

^[96] Id.

^[97] Id.

^[98] Id.

^[99] Id. at 384.

^[100] Id. at 377-378.

^[101] Id. at 377.

^[102] Id. at 378-379.

^[103] Id. at 379.

^[104] Id. at 384.

^[105] Id. at 84.

^[106] Id. at 85.

^[107] Id.

^[108] Id. at 86.

^[109] Id.

^[110] Id. at 94-95.

^[111] Id. at 92, 94-95.

^[112] Rollo (G.R. No. 220504), vol. I, p. 26.

^[113] Former PEA Chief Corporate Counsel and current PEA Corporate Secretary.

^[114] Id. at 27.

^[115] Id. at 28-29.

^[116] Id. at 30.

^[117] Id.

^[118] Id. at 34.

^[119] Id. at 35.

^[120] Id. at 37.

^[121] Rollo (G.R. No. 220580), vol. I, pp. 53-54.

^[122] Id. at 55.

^[123] Id. at 56.

^[124] Id.

^[125] Id.

^[126] Id. at 56-57.

^[127] Id. at 57.

^[128] Government Auditing Code, June 11, 1978.

^[129] Rollo (G.R. No. 220580), vol. I, p. 77.

^[130] Id. at 77.

^[131] Id. at 83.

^[132] Id. at 85.

^[133] Rollo (G.R. No. 220532), vol. I, p. 282.

^[134] Id. at 284.

^[135] Id.

^[136] Id. at 292.

^[137] Id. at 295.

^[138] Id. at 304.

^[139] Id. at 338.

^[140] Id. at 339-340.

^[141] Id. at 344-345.

^[142] Rollo (G.R. No. 220587), vol. I, p. 30.

^[143] Id. at 31-32.

^[144] Id. al 32.

^[145] Id.

^[146] Id. at 32-33.

^[147] Id. at 32-33.

^[148] Id. at 39-40.

^[149] Id. at 40.

^[150] Id.

^[151] Id. at 40.

^[152] Id. at 42.

^[153] Id. at 42-43.

^[154] Id.

^[155] Id. at 48-49.

^[156] Id. at 50.

^[157] Rollo (G.R. No. 120568), vol. I, pp. 272-326.

^[158] Id. at 294.

^[159] Id. at 296.

^[160] Id. at 302.

^[161] Id.

^[162] Id. at 308.

^[163] Id. at 308-309.

^[164] Id. at 310.

^[165] Id. at 311.

^[166] Id.

^[167] Id. at 312.

^[168] Id. at 313.

^[169] Id. at 328-340.

^[170] See rollo (G.R. No. 210505), vol. I, p. 10.

^[171] Rollo (G.R. No. 220568), vol. I, p. 21.

^[172] Rollo (G.R. No. 220504), vol. I, p. 11.

^[173] Tongohan Holdings and Dev't. Corp v. Atty. Escano, Jr., 672 Phil. 747, 756 (2011) [Per J. Mendoza, Third Division], citing Rep. of the Phils v. Malabanan, 646 Phil. 631, 637 (2010) [Per J. Villarama, Jr., Third Division].

^[174] Macairan v. People, G.R. Nos. 215104, 215120, 215147, 215212, 215354-55, 215377, 215923 & 215541, March 18, 2021 [Per J. Caguioa, First Division] at 20. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[175] Rollo (G.R. No. 220587), vol. I, pp. 212-213.

^[176] G.R. No. 238014, June 15, 2020 [Per J. Reyes, J. Jr., First Division].

^[177] Id. at 7-8. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[178] Government Procurement Reform Act, July 22, 2002.

^[179] G.R. No. 239871, March 18, 2021 [Per J. Caguioa, First Division].

^[180] Id. at 10. This pinpoint citation refers to the copy or this Decision uploaded to the Supreme Court website.

^[181] Implementing Rules and Regulation of Presidential Decree No. 1594, as amended on May 24 and July 5, 2000, IB 10.4.2.

^[182] Rollo (G.R. No. 220504), vol. I, p. 30.

^[183] Id.

^[184] Albay Accredited Constructors Association, Inc. v. Desierto, 516 Phil. 308, 320 (2006) [Per J. Garcia, Second Division].

^[185] G.R. No. 224720-23, February 2, 2021 [Per J. Caguioa, En Banc].

^[186] Id. at 29. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[187] G.R. No. 215104, March 18, 2021 [Per J. Caguioa, First Division].

^[188] Id. at 29. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[189] Rollo (G.R. No. 220587), vol. I, pp. 542-545.

^[190] 759 Phil. 248 (2015) [Per J. Mendoza, Second Division].

^[191] Id. at 279, 281.

^[192] 438 Phil. 72 (2002) [Per J. Sandoval-Gutierrez, En Banc].

^[193] Id. at 94-97.

^[194] Rollo (G.R. No. 220505), vol. I, p. 20; rollo (G.R. No. 220552), vol. I, p. 79; rollo (G.R. No. 220568), vol. I, p. 29; rollo (G.R. No. 220580), vol. I, pp. 67-68; rollo (G.R. No. 220592), vol. I, p. 234.

^[195] Id.

^[196] 691 Phil. 476 (2012) [Per J. Mendoza, Third Division].

^[197] Id. at 484-486.

^[198] Rollo (G.R. No. 220587), vol. I, p. 310.

^[199] The 2016 Revised Implementing Rules and Regulations of Republic Act No. 9184, March 31, 2021.

^[200] Id. Annex E, 1.1.

^[201] Rollo (G.R. No. 220505), vol. I, p. 215.

^[202] G.R. No. 238014, June 15, 2020 [Per J. Reyes, J. Jr., First Division].

^[203] Id. at 7-8. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[204] Rollo (G.R. No. 220505), vol. II, p. 735.

^[205] Rollo (G.R. No. 220580), vol. I, pp. 57-58.

^[206] Id. at 57.

^[207] Rollo (G.R. No. 220587), vol. I, p. 328.

^[208] Implementing Rules and Regulation of Presidential Decree No. 1594, as amended on May 24 and July 5, 2000.

^[209] Villarosa v. People, G.R. No. 233155-63, June 23, 2020 [Per C.J. Peralta, En Banc] at 8-9. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[210] Id.

^[211] Id. at 7. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

^[212] Rollo (G.R. No. 220580), vol. I, p. 209.

^[213] 797 Phil. 411 (2016) [Per J. Perez, Third Division].

^[214] Id. at 428-429.

^[215] See rollo (G.R. No. 220587), vol. I, p. 210.

^[216] Republic v. Gimenez, 776 Phil. 233, 255 (2016) [Per J. Leonen, Second Division].

^[217] 306 Phil. 519 (1994) [Per Curiam, En Banc].

^[218] Id. at 537-538.

^[219] 277 Phil. 801 (1991) [Per J. Gutierrez, Jr., En Banc].

^[220] Id. at 814-815.

^[221] Rollo (G.R. No. 220505), vol. II, p. 939.

^[222] G.R. No. 191611-14, July 29, 2019 [Per J. Reyes, J. Jr., Second Division].

^[223] Id. at 6. This pinpoint citation refers to the copy of this Decision uploaded to the Supreme Court website.

LEONEN, SAJ.:

I dissent.

The public bidding process is imbued with public interest. Individuals involved in the bidding process have an important responsibility to ensure compliance with the relevant bidding rules and regulations. I disagree with the majority's decision to acquit petitioners and to remove their civil liability.

The Sandiganbayan convicted petitioners of violation of Republic Act No. 3019, Section 3(e). It found that, taking the totality of petitioners' conduct, the irregularities in the bidding process resulted in undue and unwarranted benefits or advantage to petitioner Jesusito Legaspi, with evident bad faith, manifest partiality, or gross inexcusable negligence.^[1] According to the Sandiganbayan, the basis for their conviction are:

1. Violating the simplified bidding rules because they shortlisted bidders not based on the PCAB master list.
   
   
2. Conducting the bidding and recommending the award to Legaspi without [detailed] engineering in violation of P.D. 1594 and without the required appropriation and actual availability of funds for the total contract price.
   
   
3. Creating and confirming the artificial phases in the Construction Agreement and dividing the contract into Phase I and Phase II just to enable PEA to circumvent the requirement under P.D. No. 1445 about funding requirements.
   
   
4. In the case of Beriña and Millan, recommending the approval of Variation Order No. 2 and the contract price adjustment, and the payment thereof, without the required presidential approval and in violation of P.D. No. 1594.
   
   
5. In the case of San Juan, Chan, Dayan, Malbarosa, Padilla and Damaso, for approving and confirming the Legaspi contract without sufficient funding and the Seaside Drive Extension without public bidding.
   
   
6. In the case of Legaspi, for conspiring with Beriña and Millan in having the Seaside Drive Extension contract awarded to him under a negotiated contract.^[2]

The President Diosdado Macapagal Boulevard was part of a flagship project (the Project) for the construction of a five-kilometer highway traversing the reclaimed area from Buendia Avenue to Pacific Avenue.^[3] Due to the project's importance, the then Chairperson of the Public Estates Authority (now Philippine Reclamation Authority) requested the Office of the President for authority to bid and award the project through simplified bidding. This request was approved through the Memorandum issued by then Executive Secretary Ronaldo Zamora.^[4]

As noted by the Sandiganbayan, under a simplified bidding process, participation was limited to "bona fide contractors duly accredited and classified for the project category and size and who are included in a separate list to be prepared by the Philippine Contractors Accreditation Board."^[5] Thus, despite the simplified procedure, safeguards were still put in place with the involvement of the Philippine Contractors Accreditation Board, the agency which grants, suspends, and revokes licenses to contractors,^[6] to ensure the qualification of the contractors that were to bid in the projects.

Despite this, the Public Estate Authority chose to limit its bidders to a shortlist of 10 contractors, provided not by the Philippine Contractors Accreditation Board as expressly required, but a list of 10 contractors given by the Department of Public Works and Highways.^[7]

The ponencia, however, concludes that petitioners were left with no choice but to consult the list given by the Department of Public Works and Highways because the Philippine Contractors Accreditation Board list was not yet existent. In absolving petitioners, the ponencia asserts: "[a] negative fact, such as the absence of the masterlist, cannot serve as a basis for a wrongdoing, when the prosecution itself has not first presented proof of its existence."^[8] I disagree.

The unavailability of the list by the Philippine Contractors Accreditation Board was not a reason to deviate from the standard procedure and get a separate list from the Department of Public Works and Highways. There is no substantial compliance, as the ponencia puts it,^[9] since there was no compliance at all. There is no mechanism or provision that authorizes the substitution of the Philippine Contractors Accreditation Board list by another list.

Moreover, as the Sandiganbayan has found, the entire project was divided into two separate packages for purposes of the simplified bidding without any rational basis.^[10] Package 1 included part of the Project that was eventually awarded to petitioner Legaspi, while Package II covered part of the Project where the Public Estates Authority had a prior joint venture agreement with SM, Inc. and R1 Consortium. This joint venture agreement allowed the two developers the option to construct that portion of the Project in exchange for lands or bonds. Thus, the continuation of Package II of the Project depended on the decision of SM, Inc. and R1 Consortium of whether they will pursue the Project themselves or not.^[11] Petitioner Legaspi's company was put in the list of contractors for Package I just because it was number two in the list by the Department of Public Works and Highways. The latter five of the 10 contractors were assigned as prequalified contractors for Package II, again without basis. This arbitrary decision led to unwarranted benefits in favor of petitioner Legaspi.^[12] As explained by the graft court:

[T]hose contractors assigned for the Package II bidding were, from the start, disadvantaged because of the great possibility that Package II could not be bid out because of the option open to SM and R1 consortium. In turn, those contractors which were assigned for Package I, were favored by PEA's arbitrary decision because, just by their being listed ahead in the DPWH list, they were certain to be able to bid and in the case of Legaspi, win the award for Package I. This alone gave undue advantage to the first set of contractors and prejudiced the second set. Had PEA included all ten (10) of the DPWH listed contractors for both Package I and II, no such advantage or prejudice would have resulted. Better still, if PEA followed P.D. 1594 by including ALL qualified contractors accredited by the PCAB in its master list in the simplified bidding, then no question of impropriety could arise.

JD Legaspi Construction, which was number 2 in the DPWH list therefore, gained an advantage or benefit, as it was able to bid and win Package I, to the disadvantage of those contractors in the second set of the DPWH list and also those PCAB accredited contractors in the latter's master list, who were not included in the DPWH list.

Moreover, PEA's fear that a contractor could get both Package I and II of the Boulevard project was not completely averted because during the course of Legaspi's implementation of its contract, PEA approved Variation Order No. 2 in favor of Legaspi. This included the Inland Channel Bridge which was originally part of Package II but was later turned down to be built by R1 Consortium. Variation Order No. 2 also included the Seaside Drive Extension connecting PDMB to Roxas Boulevard... No additional bidding was done for the additional works under Variation Order No. 2. Legaspi, therefore, was given unwarranted benefits and/or advantage by PEA.^[13]

Moreover, there were no detailed engineering plans when petitioner Raphael Pocholo Zorilla prepared the Approved Agency Estimate, and the Public Estates Authority bid out and awarded the Project. The ponencia makes the same observation that this clearly contravenes Section 2 of Presidential Decree No. 1594, which reads:

Section 2. Detailed Engineering. No bidding and/or award of contract for a construction project shall be made unless the detailed engineering investigations, surveys, and designs for the project have been sufficiently carried out in accordance with the standards and specifications to be established under the rules and regulations to be promulgated pursuant to Section 12 of this Decree so as to minimize quantity and cost overruns and underruns, change orders and extra work orders, and unless the detailed engineering documents have been approved by the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be. (Emphasis supplied)

However, the ponencia absolves petitioner for this violation because it finds that there was no clear showing of bad faith, malice, or gross negligence.^[14]

Further, the Sandiganbayan also found that there was no appropriation and sufficient funds to finance the project at the time the Public Estates Authority approved the signed Construction Agreement with petitioner Legaspi.^[15] All it had was a Board Resolution identifying the source of funds—the PHP 1 billion loan facility from Land Bank of the Philippines and All Asia Capital Group—but the loan was not yet existent because it was still under negotiation at that time.^[16] By the time the Construction Agreement was signed, dated, and notarized, only PHP 300 Million was actually released as proceeds of the loan from the Land Bank of the Philippines; this was still below the actual contract cost of PHP 584,365,855.05.^[17]

Additionally, the Sandiganbayan found that splitting the Project into two phases was only a ploy to circumvent this defect, but this defect remained as Phase II of the project since it "could be undertaken only if and when funds are made available again."^[18] And indeed, the Public Estates Authority ran out of funds, and could not pursue the remaining works.^[19]

The ponencia, however, maintains that the law only requires that project funding be viewed on a yearly basis, irrespective of whether the project is divided into several phases. As long as a portion of the project could be implemented by the end of the fiscal year with the corresponding amount to cover for that portion, there is no violation of the law.^[20]

As to the lack of presidential approval for contract price adjustments as required by the Memorandum by Executive Secretary Zamora, the ponencia finds that these were violations of directives from the Executive that do not necessarily amount to violations of the law. In any case, it claims that such infraction was not "proven to have been committed with manifest partiality, evident bad faith, or gross inexcusable negligence... [M]ere failure to comply with a directive of the president cannot be considered a violation of ... criminal law."^[21]

However, as to the award of the Seaside Drive Extension under Variation Order No. 2 of the Construction Agreement, the ponencia agrees that presidential approval was required because this variation order constituted a change order or extra work order under the Implementing Rules of Republic Act No. 9184. This is because the construction of the Seaside Drive Extension did not fall within the general scope of the original project; nowhere was the Extension found in any of the bidding documents for the President Diosdado Macapagal Boulevard Project, nor was it even located along the stretch of the Boulevard. Accordingly, a separate award for the Seaside Drive Extension should have been undertaken.^[22]

Despite this, the ponencia absolves petitioners, saying they had no participation in the award of Variation Order No. 2, specifically petitioners Cristina Amposta-Mortel and Zorilla.^[23]

The ponencia also finds there was no clear showing of bad faith, manifest partiality, or gross inexcusable negligence in the bid and award for Variation Order No. 2.^[24] Particularly, the ponencia states that members of the old Board of Directors of the Public Estates Authority, particularly petitioners Daniel T. Dayan, Frisco F. San Juan, Elpidio G. Damaso, Legaspi, and Carmelita Chan, "had every right to rely on the report and recommendation of the Ad Hoc Committee" when it issued the Resolutions leading to the award of the Seaside Drive Extension under Variation Order No. 2.^[25]

As to the members of the Ad Hoc Committee, specifically petitioners Manuel Beriña Jr. and Jaime R. Millan, the ponencia holds that they "honestly believed that P.D. No. 1594 allows a negotiated contract where a variation order is adjacent or contiguous to an ongoing project and could be economically prosecuted by the same contractor."^[26] This also justified the lack of presidential approval.^[27]

I disagree with the ponencia's finding of clearing petitioners of criminal and civil liability. The Sandiganbayan's decision should be affirmed.

Petitioner Amposta-Mortel's position as Manager of the Public Estates Authority's Legal Department requires her to review and recommend the legal instruments that involve her agency. Her signatures in these instruments precisely signifies her participation, because they are certifications that she had read and understood these documents. As head of the Legal Department, her signature therefore meant that she had reviewed the original Construction Agreement despite being aware of the lack of funds for the transaction. Her role is not simply to be a ''rubber stamp" to the Agreement, as the Sandiganbayan puts it.^[28] The Sandiganbayan also notes her admissions in her Memorandum, where she merely relied on the approval of the Office of the Government Corporate Counsel and the Public. Estates Authority's Board of Directors without having an independent assessment of the Agreement. "Even a cursory reading of the Construction Agreement against the Zamora Memorandum would yield a finding of inconsistency, which should have raised red flags in the mind of [Amposta-Mortel]."^[29] Her argument that she merely reviews matters which are brought to her attention only further reveals her omission to act in instances where her participation was necessary. She should be found guilty of the charge.

The conviction of petitioner Zorilla, being the one who prepared the Approved Agency Estate for the Project despite lack of detailed engineering, should likewise be upheld. Preparing this despite the lack of a detailed engineering plan is not simple negligence; this is a crucial part in formulating an Approved Agency Estimate.^[30]

As to petitioners who were part of the old Board of Directors of the Public Estates Authority, namely petitioners Leo V. Padilla, Dayan, San Juan, Damaso, Legaspi, and Chan, they should be convicted for their acts of issuing Resolutions approving (1) the contract to Legaspi despite the absence of actual loan proceeds, (2) the Variation Order No. 2 despite lack of bidding, and (3) the increase on the cost of Variation Order No. 2. The Sandiganbayan also found that they failed to question the Public Estates Authority Management on why the contract was divided into two phases when what they approved was an "undivided" contract.^[31]

Moreover, their reliance on the report and recommendation of the Ad Hoc Committee is misplaced. While Arias v. Sandiganbayan^[32] ruled that "[a]ll heads of offices have to rely to a reasonable extent on their subordinates and on good faith of those who prepare bids, purchase supplies, or enter into negotiations," this is subject to a qualification. In Abubakar v. People^[33]:

The application of the doctrine is subject to the qualification that the public official has no foreknowledge of any facts or circumstances that would prompt him or her to investigate or exercise a greater degree of care. In a number of cases, this Court refused to apply the Arias doctrine considering that there were circumstances that should have prompted the government official to inquire further.^[34] (Citations omitted)

The irregularities attending the bidding process for both the President Diosdado Macapagal Boulevard Project and the Seaside Drive Extension under Variation Order No. 2 should have prodded them, at the very least, to investigate further. Their conviction should be upheld.

Additionally, petitioners Lacson, Beriña, Viray, and Millan were the persons responsible for the supervision of the Project. They were directly involved in the planning and execution of the project.

Petitioners Lacson, Beriña, and Viray, as part of the Ad Hoc Committee, "prepare[d] the bid documents, evaluate[d] the bidders' qualifications, evaluate[d] their submitted bids, and recommend[ed] plans, specifications, invitations to bid, pre-qualifications, and all pre-construction and construction activities to the Board for approval."^[35] Meanwhile, petitioner Millan, who acted as Assistant General Manager, was in charge of the "evaluation, processing, and approval of bids of contractors, progress billings, and payments."^[36] Having direct participation in the prohibited acts, their convictions should also be affirmed.

Finally, as to petitioner Legaspi, who is a private individual, the Sandiganbayan found that there was no evidence to show that he conspired with the other petitioners during the start of the Project. It was the Public Estates Authority's management, specifically the Ad Hoc Committee, that designed the splitting of the Project in to two phases. Nevertheless, petitioner Legaspi pushed for the recommendation and approval of Variation Order No. 2, so that his company could be awarded the construction of the Seaside Drive Extension. He also claimed for "overruns which made the final bill for the project 43% higher than that of the original contract price."^[37] It was his prompting that led the Public Estates Authority's management to present Variation Order No. 2 for the Seaside Drive Extension to the Board as a simple change order to the original contract, thereby violating the rules on public bidding.^[38]

Moreover, petitioner Legaspi proceeded with the construction of the Seaside Extension Drive despite the lack of a Notice to Proceed and presidential approval, in contradiction to the requirement under the original Construction Agreement. These "surrounding circumstances and legal provisions all yield to the same conclusion that there was implied conspiracy between [petitioner] Legaspi and the [Public Estates Authority's] management."^[39]

Despite these, the ponencia rules that the prosecution failed to prove they acted with manifest partiality, evident bad faith, or gross inexcusable negligence, and acquits petitioners.

For a conviction of violation of Section 3(e), the following elements must be present:

1. The accused must be a public officer discharging administrative, judicial or official functions;
   
   
2. He [or she] must have acted with manifest partiality, evident bad faith or [gross] inexcusable negligence;
   
   
3. That his [or her] action caused any undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage or preference in the discharge of his functions.^[40]

The ponencia found that the prosecution failed to show corrupt motives in the irregularities committed during bidding and award of the President Diosdado Macapagal Boulevard Project, as well as the Seaside Drive Extension under Variation Order No 2. It assessed this element as against petitioners' individual acts. I disagree.

In Abubakar^[41]:

The second element provides the modalities by which a violation of Section 3(e) of Republic Act No. 3019 may he committed." Manifest partiality," "evident bad faith," or "gross inexcusable negligence" are not separate offenses, and proof of the existence of any of these three (3) "in connection with the prohibited acts . . . is enough to convict."^[42]

Thus, independent proof of the second element is not necessary. Manifest partiality, evident bad faith, or gross inexcusable negligence can be proven through the manner by which the prohibited acts are committed. In other words, these "merely describe the mode by which the offense penalized in Section 3(e) of the statute may be committed."^[43]

The Sandiganbayan was correct in looking at the totality of petitioners' conducts to find the presence of manifest partiality, evident bad faith, or gross inexcusable negligence. After all, corrupt practices are often done through a series of discrete acts that, when taken together, reveal ill motives.

The construction of the President Diosdado Macapagal Boulevard was a flagship infrastructure project, and this huge undertaking by the national government involved large sums of money. "The rules on competitive bidding and those concerning the disbursement of public funds are imbued with public interest. Government officials whose work relates to these matters are expected to exercise greater responsibility in ensuring compliance with the pertinent rules and regulations."^[44]

ACCORDINGLY, I vote to DENY the Petitions. The Sandiganbayan Decision and Joint Resolution dated February 5, 2015 and September 16, 2015 finding petitioners Cristina Amposta-Mortel, Theron Victor V. Lacson, Leo V. Padilla, Manuel Beriña, Jr., Jaime R. Millan, Bernardo T. Viray, Raphael Pocholo A. Zorilla, Daniel T. Dayan, Frisco F. San Juan, Elpidio G. Damaso, Carmelita D. Chan, and Jesusito Legaspi guilty of violation of Republic Act No. 3019 should be AFFIRMED.

^[2] Id. at 242-243.

^[3] Ponencia, pp. 5-6.

^[4] Id. at 6.

^[5] Rollo (G.R. No. 220500), p. 92, citing Implementing Rules and Regulations of Presidential Decree No. 1594, as amended, IB 10.4.2.5, July 12, 1995.

^[6] See Republic Act No. 4566 (1965), a amended by residential Decree No. 1746 (1980).

^[7] Rollo (G.R. No. 220500), pp. 192-193.

^[8] Ponencia, pp. 43-44.

^[9] Id. at 44.

^[10] Rollo (G.R. No. 220500), p. 194.

^[11] Id. at 193.

^[12] Id. at 192-194.

^[13] Id. at 193-194.

^[14] Ponencia, p. 46.

^[15] Rollo (G.R. No. 220500), p. 199.

^[16] Id. at 198-199.

^[17] Id. at 199.

^[18] Id.

^[19] Id. at 200.

^[20] Ponencia, pp. 54-55.

^[21] Id. at 56.

^[22] Id. at 56-58.

^[23] Id. at 59.

^[24] Id.

^[25] Id.

^[26] Id. at 60-61.

^[27] Id. at 62.

^[28] Rollo (G.R. No. 220500), p. 229.

^[29] Id. at 229.

^[30] Id. at 226.

^[31] Id. at 230.

^[32] 259 Phil. 794 (1989) [Per J. Gutierrez, Jr., En Banc].

^[33] G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].

^[34] Id.

^[35] Rollo (G.R. No. 220500), p. 224.

^[36] Id. at 224.

^[37] Id. at 239.

^[38] Id.

^[39] Id. at 239-241.

^[40] Id. at 242.

^[41] G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].

^[42] Id. citing Gallego v. Sandiganbayan, 201 Phil. 379, 383 (1982) [Per J. Relova, En Banc] and Sison v. People, 628 Phil. 573, 583 (2010) [Per J. Corona, Third Division].

^[43] See Gallego v. Sandiganbayan, 201 Phil. 379, 383 (1982) [Per J. Relova, En Banc].

^[44] Abubakar v. People, G.R. Nos. 202408, 202409 & 202412, June 27, 2018 [Per J. Leonen, First Division].