G.R. No. 239871 - Chung vs. Office of the Ombudsman

Petitioner Lynna G. Chung, former Manager of the Administrative and Finance Department of the Philippine National Railways (PNR), filed a Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
The Petition challenged:

The Joint Resolution (dated March 14, 2018) issued by the Office of the Ombudsman in OMB-C-C-16-0055 and OMB-C-A-16-0046.
The Order (dated May 8, 2018) denying petitioner’s motion for partial reconsideration.

The assailed resolution and order found probable cause to indict petitioner along with five other PNR officials for violation of Section 3(e) of Republic Act (RA) 3019.

The controversy arose in connection with PNR’s procurement of rail fastenings, clips, and insulators from Pandrol Korea Limited.
The PNR-Bids and Awards Committee (BAC) passed Resolution No. 04-2009 recommending Direct Contracting with Pandrol Korea.

The procurement involved 170,000 sets of rail fastenings and additional quantities of clips and insulators for repairing rail tracks in Quezon Province and the Bicol Region.
The BAC Resolution was justified on the basis that Pandrol Korea owned the patents for the required rail fastenings and had no sub-dealer in the Philippines.

The prices and terms were based on a quotation obtained by then-PNR General Manager Manuel D. Andal, who subsequently endorsed the resolution to the PNR Board of Directors leading to the award.

Lynna Chung, though initially a member of the PNR-BAC, was inhibited from the procurement proceedings because she is the adoptive mother of Jaewoo Chung, the Manila Liaison Officer of Pandrol Korea.
Despite her non-participation in the procurement decision, petitioner was later implicated in alleged irregularities regarding the authorization of payments.

Andal issued memoranda directing petitioner to effect payments for the importation of the rail fastening system and for additional charges.
Petitioner complied by sending letters to the managers of Philippine Veterans Bank (PVB) and Philippine National Bank (PNB) instructing debit of amounts corresponding to the full contract price rather than adhering to the stipulated 15% and 85% payment schedule.

The contract required the opening of an irrevocable letter of credit (LC) in favor of Pandrol Korea.
The delivery and payment schedule was strictly set out: a) A 15% advance payment within ten calendar days of receiving a purchase order, and b) The remaining 85% to be paid upon presentation of specific shipping documents (e.g., Packing List, Bill of Lading, Inspection Certificate, Commercial Invoice, Authenticated Export Declaration, and Marine Insurance Policy).

The Complaint filed by the OMB-Field Investigation Office alleged that petitioner, together with Andal, facilitated the irregular release of full payments without prior compliance with the required conditions.
In its preliminary investigation, the Ombudsman determined that petitioner’s actions reflected bad faith, manifest partiality, and gross inexcusable negligence, which allegedly resulted in unwarranted benefit to Pandrol Korea.
As a consequence, the Joint Resolution found probable cause to indict petitioner for violation of Section 3(e) of RA 3019.

Petitioner contended that her role was limited to executing instructions from General Manager Andal and that her letters merely authorized the opening of LCs rather than constituting final payment.
She argued that:

The mere opening of an LC does not automatically equate to the appropriation or release of funds.
There were no irregularities in the actual processing of payments, as evidenced by the installment nature of the releases according to the contractual payment schedule.
The absence of any notice of disallowance from the Commission on Audit (COA) further attested to the regular, necessary, and lawful character of the transactions.

Petitioner emphasized that a clear breach of the contractual payment schedule or evidence of corrupt intent was absent from the record against her.

The case is connected to several other criminal proceedings involving direct contracting issues within PNR’s dealings for rail components.
While other PNR officials and Andal were charged and even convicted based on separate allegations, petitioner’s act was distinguished as it was solely related to the alleged improper authorization for payment.

Whether the Office of the Ombudsman gravely abused its discretion in finding probable cause against petitioner for violation of Section 3(e) of RA 3019.

Whether the evidence supported that petitioner’s actions were executed with manifest partiality, evident bad faith, or gross inexcusable negligence.
Whether authorizing the opening of a letter of credit (LC) can be equated with making full payment contrary to the contractual payment schedule.
The proper interpretation of “unwarranted benefits, advantage or preference” in connection with corrupt practices under RA 3019.