A.M. No. 12-6-18-SC - Re: Contracts with Artes International, Inc.

The case arises from several contracts and transactions entered into by the Supreme Court’s Program Management Office (PMO) with Artes International, Inc. (“Artes”), wherein Ms. Evelyn Toledo-Dumdum, acting as PMO Administrator, was involved.
Shortly after Chief Justice Panganiban’s assumption of office, he announced his judicial philosophy emphasizing the safeguarding of liberty and nurturing of prosperity under the rule of law. In line with this philosophy, two major events were conceptualized:

The National Forum on Liberty and Prosperity held on August 24–25, 2006 at the Manila Hotel.
The Global Forum on Liberty and Prosperity held on October 18–20, 2006 at the Makati Shangri-La Hotel.

Additional activities were conducted in connection with the retirement ceremonies of Chief Justice Panganiban, including events at the Cultural Center of the Philippines, Manila Hotel, Supreme Court Hall, and Pan Pacific Hotel.

The PMO, to meet the creative, logistical, physical, and technical demands of these events, engaged Artes as an event specialist.
Artes had rendered similar services in a previous event (the International Conference and Showcase on Judicial Reforms in November 2005) and was subsequently re-engaged for the National and Global Forums and the retirement-related activities.
Ms. Dumdum personally signed multiple letter-contracts and quotation offers with Artes, authorizing payments and several disbursements for:

Design and production of logos, video coverage, and audio-visual presentations.
Provision of production and technical services during the forums.
Procurement of supplies such as conference bags, ID holders, ball pens, and jewelry boxes.

Varying amounts charged (e.g., discrepancies in VAT computations between the contracts and actual disbursement vouchers).
Use of funds from the SC-JRSP WB LOAN and other designated sources.
Specific terms such as downpayments, final payments upon completion, and termination fee clauses if the contract were cancelled.

Additional documents such as sales invoices and abstract of bids were produced to support the procurement process.
Despite submitting canvasses (sometimes handwritten or unsigned in parts), Artes emerged as the “winning bidder” even in items where price reasonableness was questioned by the Property Division.

Noncompliance with the required procurement procedures under SC Administrative Circular No. 60-2003 and Republic Act No. 9184.
Absence of essential documents such as the Certificate of Availability of Funds (CAF).
The use of alternative procurement methods (“shopping”) without prior authorization and proper purchase orders.
Splitting of contracts—dividing the overall procurement into several small contracts within Ms. Dumdum’s approved authority—to avoid competitive bidding thresholds.

Concerns were raised regarding conflicts of interest, as Artes was involved in the canvassing process leading to its own selection.
A series of follow-up communications, memoranda, and inquiries (including threats to expose delays) reflected mounting dissatisfaction from Artes over unpaid amounts.

After prolonged negotiations and disputes with various internal offices (e.g., FMBO, Property Division), Artes eventually submitted a Release, Waiver & Quitclaim, effectively relinquishing further monetary claims against the Court.
Despite the submission of the quitclaim, questions remained regarding the legality and proper form of the contracts entered into by the PMO.

Were the contracts and letter-contracts entered into by Ms. Dumdum with Artes valid and enforceable despite alleged noncompliance with procurement procedures?
Did the absence of required documents (e.g., CAFs) and the failure to follow proper competitive bidding procedures render the contracts null and void?

Was the use of the “shopping” method and the subsequent splitting of contracts an attempt to circumvent the requirements of public bidding as mandated by law?
Does the manner in which the PMO conducted canvassing and award procedures, including the dual role of Artes as both bidder and facilitator, present a legal conflict or violation?

Were funds disbursed under the SC-JRSP WB LOAN, subject to World Bank guidelines and other statutory requirements, properly utilized even when procurement formalities were not strictly observed?
To what extent do procurement irregularities impact the legitimacy of expenditures funded by foreign loans?

Does the evidence of procurement irregularities and splitting of contracts implicate Ms. Dumdum in administrative or criminal liability for exceeding her authority?
Is there any finding of personal liability against Chief Justice Panganiban?

Does Artes’ submission of a Release, Waiver & Quitclaim extinguish its claim for unpaid balances, thereby affecting the Court’s obligation to remit disputed amounts?
Can the waiver be used to preclude any further remedial or disciplinary action regarding the procurement process despite existing irregularities?