Law Summary
Composition and Authority of Committees Handling Bidding
- Former GM Carlos P. Doble created an Ad Hoc Committee for bidding which was unauthorized and violated the required Prequalification, Bid and Award Committee (PBAC) composition as mandated by IRR of PD 1594.
- The ad hoc committee had only four members and lacked board approval.
- The legally constituted PBAC must have seven members, including representatives from the private sector, per PD 1594 IRR.
- The irregular formation tainted the bidding process and procurement procedures.
Contract Price Adjustments, Overruns, and Variation Orders
- Several contract price adjustments and variation orders significantly increased the project cost beyond the original contract price.
- Article 8 of the Construction Agreement requires prior approval from the Office of the President for such changes.
- No Presidential approval was secured for the major price adjustments, overruns, or variation orders.
- Respondents erroneously argued that EO 109 repealed the need for prior Presidential approval, which was found incorrect as EO 109 requires NEDA Board (chaired by the President) approval.
- Failure to secure Presidential and NEDA approvals reflects negligence and disregard of government protocols.
Nature of the Contract and Justification for Price Adjustments
- The contract with JDLC was a fixed-price contract covering all labor, materials, and supplies.
- Article 3 of the contract fixed the price at approximately Php 584 million.
- Respondents argued price adjustments were due to additional work and material cost increases.
- The Commission found the price escalation unjustified; contractors SM and R-I working on similar scope did not request adjustments.
- The increase amounted to 43.29% over the original contract, with no sufficient cause.
- Legal precedents support holding contractors to fixed prices despite market fluctuations.
Legal Violations Charged Against Respondents
- Violations include:
- Items under the IRR of PD 1594 regarding bidding and contracting procedures.
- Sections 3 (e), (g), and (i) of Republic Act No. 3019 (Anti-Graft Law): manifestly disadvantageous contracts, undue injury to the government, and personal interest in transactions.
- Article 217 of the Revised Penal Code (Malversation of public funds).
- Sections 46 (b)(3), (4), (9), and (27) of Executive Order No. 292 (Administrative Code): neglect of duty, misconduct, acts punishable under Anti-Graft Laws, and conduct prejudicial to the service.
- Breach of Article 8 of the Construction Agreement requiring prior Presidential approval for changes.
Jurisdiction and Due Process
- Despite the resignation of some respondents, PAGC retained jurisdiction per EO No. 12 Sect. 7.
- Resignation does not divest PAGC of power to investigate or impose accessory penalties such as perpetual disqualification from government service.
- The Commission observed due process by conducting preliminary conferences and allowing submission of position papers and counter-affidavits.
Findings and Penalties Recommended
- Respondents Villareal, Cario, Gerochi, Tagud, Sanciego, Tuazon, and Villanueva found guilty of violations under RA 3019.
- Non-presidential appointees involved were also found guilty of violating Executive Order No. 292.
- The main penalty recommended is removal or dismissal from service.
- Due to resignations, the recommended penalty is perpetual disqualification from reemployment in government service.
Key Legal Principles and Concepts
- The importance of conformity with prescribed bidding procedures and committee compositions to prevent irregularities.
- Fixed-price contracts bind contractors to agreed sums despite increased costs, with contingencies factored in bids.
- Necessity of securing prior approval from the President or NEDA Board for contract price changes to uphold government accountability.
- Public officers are expected to exercise utmost good faith and care in managing government projects.
- Resignation or retirement from service does not preclude administrative or disciplinary actions for offenses committed while in office.
Summary of Irregular Acts Committed
- Unauthorized creation of Ad Hoc Committee to conduct bidding.
- Approval and implementation of contract price adjustments and variation orders without required Presidential and NEDA approval.
- Failure to justify massive contract price escalations.
- Causing manifestly disadvantageous contracts and undue injury to government interests.
- Violations of multiple provisions of anti-graft laws, administrative code, and contractual obligations.