Title
Bawasanta vs. People
Case
G.R. No. 219300
Decision Date
Nov 17, 2021
In 1994, Oriental Mindoro officials authorized a loan to a private ship operator to address a transportation crisis caused by typhoons and a shipping monopoly. Charged with graft, they were acquitted as the Supreme Court ruled the agreement served public interest and lacked evidence of bad faith.
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Case Digest (G.R. No. 219300)

Facts:

Background and Context
In 1992, Rodolfo G. Valencia, then Governor of Oriental Mindoro, organized provincial officials into clusters to address various issues, including the transportation and communication problems caused by a shipping monopoly in the Calapan-Batangas route. The Transportation and Communication Cluster (TCC), chaired by Manolo Brotonel, proposed that the provincial government acquire its own ships to break the monopoly.

Resolution and Typhoon Damage
On August 5, 1993, the Sangguniang Panlalawigan (SP) passed Resolution No. 169-93, authorizing Valencia to negotiate the purchase or lease of passenger vessels and to obtain loans for this purpose. However, after typhoons Monang, Naning, and Puring destroyed five bridges in Oriental Mindoro in December 1993, the province was declared under a state of calamity. The southern areas of the province became accessible only by ship, exacerbating the transportation crisis.

Introduction of Alfredo Atienza
Brotonel introduced Alfredo M. Atienza, a private ship operator, to the Executive Committee. Atienza requested a loan to repair his vessel, M/V Ace. On December 22, 1993, the SP passed Resolution No. 284-93, authorizing Valencia to enter into a Credit Agreement with Atienza for the repair of the vessel.

Execution of the Credit Agreement
On January 12, 1994, the provincial government, represented by Valencia, entered into the Credit Agreement with Atienza. Despite objections from the Provincial Treasurer and Auditor regarding the lack of SP approval and pre-audit requirements, the loan proceeds amounting to P2,500,000.00 were released to Atienza on January 19, 1994. Provincial Administrator Alfonso V. Umali, Jr. signed the disbursement voucher based on the legal opinion of Provincial Legal Officer Ben A. Delos Reyes, Jr.

Aftermath and Legal Challenges
Atienza initially made partial payments but later defaulted, leading to criminal charges against him for violation of Batas Pambansa Blg. 22. The Office of the Ombudsman also filed charges against Valencia, Umali, and Romualdo J. Bawasanta (an SP member) for violating the Anti-Graft and Corrupt Practices Act.

Issue:

  1. Whether the Credit Agreement was grossly and manifestly disadvantageous to the government.
    a. Whether the Credit Agreement served a public purpose.
    b. Whether the extension of credit to a private person was justified under the Local Government Code (LGC).
    c. Whether financing the Credit Agreement through a bank loan was disadvantageous.
    d. Whether the Credit Agreement was unsecured.
  2. Whether the Credit Agreement had no legal basis and granted unwarranted benefits to Atienza.
  3. Whether Valencia, Umali, and Bawasanta conspired in violating the Anti-Graft law.
  4. Whether Bawasanta’s vote in favor of the SP resolution made him liable under the Anti-Graft law.
  5. Whether the Sandiganbayan violated the due process rights of the petitioners by not having Justice Jose R. Hernandez inhibit himself.

Ruling:

The Supreme Court reversed the Sandiganbayan’s decision and acquitted Valencia, Umali, and Bawasanta. The Court found that the prosecution failed to prove beyond reasonable doubt that the Credit Agreement was grossly and manifestly disadvantageous to the government. The Court held that the Credit Agreement served a public purpose by addressing the transportation crisis in Oriental Mindoro and was consistent with the LGC. The Court also found no evidence of conspiracy or bad faith among the petitioners.

Ratio:

  1. Public Purpose Rule: The Credit Agreement served a public purpose by addressing the transportation crisis caused by the shipping monopoly and typhoon damage. The recitals in the agreement clearly indicated its public purpose.
  2. Legal Basis: The Credit Agreement was justified under the general welfare clause (Section 16 of the LGC) and the loan and financing powers of LGUs (Section 297(a) of the LGC).
  3. Gross and Manifest Disadvantage: The prosecution failed to prove that the Credit Agreement was grossly and manifestly disadvantageous. The government’s decision to finance the agreement through a bank loan was reasonable given the emergency situation.
  4. Conspiracy and Bad Faith: No evidence supported the claim that Valencia, Umali, and Bawasanta acted with manifest partiality, bad faith, or conspiracy. They acted in good faith based on the recommendations of the TCC and the Provincial Legal Officer.
  5. Due Process: The Court found no bias or violation of due process in Justice Hernandez’s participation in the case.

Conclusion:

The Supreme Court granted the petitions, reversed the Sandiganbayan’s decision, and acquitted the petitioners. The hold departure orders against them were lifted, and any bail bond payments were ordered returned.


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