G.R. No. 197886 - Office of the Ombudsman vs. De Guzman

In 2001, the Philippine Postal Corporation (PCP) entered into a contract with Aboitiz Air Transport Corporation for mail carriage at a rate of P5.00 per kilogram, which expired on December 31, 2002.
By October 2003, following the expiry of the previous contract, the PCP purchased 40 vehicles for mail deliveries in Luzon and employed 25 drivers on a contractual basis—with nearly all employment contracts set to expire on March 31, 2004.
A post-study by the Central Mail Exchange Center revealed that continuing with in-house delivery incurred higher expenses compared to outsourcing; it recommended that outsourcing could save the government over P6 million per annum if mail was delivered at P8.00 per kilogram.

On April 15, 2004, the Central Mail Exchange Center submitted its cost-benefit analysis recommending the outsourcing of mail deliveries in Luzon.
On April 29, 2004, a Special Board Meeting of the PCP was held wherein De Guzman, then Officer-in-Charge (OIC) of the Postmaster General due to the latter’s leave of absence, endorsed the recommendation for outsourcing.
During the meeting, although a transcript of stenographic notes reflected discussions on the proposal, there was no formal vote, board resolution, or clear majority approval—one director even requested the presentation of a draft contract before any final approval.

On May 7, 2004, relying on the impression of tacit board approval from the April 29 meeting, De Guzman sent a letter to Aboitiz One (formerly Aboitiz Air) authorizing the resumption of mail delivery operations with revised terms, including an increased rate of P8.00 per kilogram.
Aboitiz One accepted the proposal and commenced mail delivery services in Luzon on May 20, 2004.
When Postmaster General Villanueva resumed work, he approved the payments made to Aboitiz One, and later Postmaster General Rama likewise approved subsequent payments, actions that were seen as a subsequent ratification of De Guzman’s act despite the initial procedural lapses.

On October 20, 2005, an administrative complaint was filed against De Guzman alleging that the renewal of the Aboitiz One contract was done without competitive bidding, and that the rate increase was unilaterally imposed without the necessary board approval.
In his counter-affidavit, De Guzman claimed that the Board of Directors had implicitly approved his actions during the April 29 meeting and justified the contract by pointing to the urgency occasioned by the impending expiration of the drivers’ employment contracts.
On August 31, 2007, the Office of the Ombudsman rendered a decision finding De Guzman guilty of grave misconduct and dishonesty, ordering his dismissal from service along with accessory penalties.
De Guzman subsequently filed a Motion for Reconsideration, which was denied, and then a Petition for Review with the Court of Appeals.
In its May 4, 2011 Decision and the July 14, 2011 Resolution, the Court of Appeals annulled the Ombudsman’s decision on the ground that the board, by its silence and later approvals, had effectively ratified his actions.

The conflicting interpretations of whether the absence of a formal board resolution and subsequent “ratification” through silence and payment approvals could validate the contract execution.
The question of whether De Guzman’s reliance on negotiated procurement (bypassing public bidding) was justified under the circumstances created by the expiration of the drivers’ contracts.

Whether De Guzman acted beyond his authority in entering into the contract with Aboitiz One given that there was no formal board resolution approving the procurement.
Whether the procurement method chosen—negotiated procurement instead of the mandatory competitive bidding—was legally justified by the alleged urgency resulting from the expiration of the drivers’ employment contracts.
Whether the subsequent ratification, implied by the silence of the Board of Directors and the approval of payments by successive Postmaster Generals, can validate an act originally executed without proper authority.
Whether the deviations from proper procurement procedures and the execution of an unauthorized contract constitute grave misconduct and dishonesty or are more appropriately characterized as gross neglect of duty.