Procurement violations don't automatically lead to graft conviction, says SC

MANILA, Philippines — The breach of procurement regulations by public officials does not automatically result in a graft conviction, the Supreme Court ruled.

In an 18-page decision promulgated on Aug. 7, 2024, the Supreme Court acquitted several officials of the Davao City Water District (DCWD) of charges under the Anti-Graft and Corrupt Practices Act.

The officials, members of the DCWD’s Pre-Bidding and Awards Committee-B, were accused of bypassing mandatory public bidding procedures by recommending Hydrock Wells Inc. for a water supply project through a negotiated contract, which was subsequently approved by the DCWD Board.

"To convict them for violating the special penal law, the prosecution must prove beyond a reasonable doubt not only defects in the procurement process but also all the elements of the crime," the Supreme Court’s decision read.

The case

In 2005, the petitioners were accused of failing to follow proper procurement procedures for water supply projects.

According to the complaint filed against them, the petitioners bypassed the competitive public bidding required by law for government projects, citing Presidential Decree 1594, which outlines the policies, guidelines, rules, and regulations for government infrastructure contracts.

The Pre-Bidding and Awards Committee-B circumvented the requirement to advertise the bidding, instead inviting accredited well drillers to participate. It subsequently recommended awarding the project to the company via a negotiated contract.

In their defense, the petitioners argued that public bidding requirements allow for exceptions, including urgent circumstances, failed competitive bidding, and a shortage of qualified bidders—circumstances they claimed applied to their situation.

The Sandiganbayan found the petitioners guilty of graft, saying that the prosecution had proven the elements of the crime were present:

1) petitioners were public officers discharging official functions at the time material to the case; (2) petitioners acted with evident bad faith and manifest partiality when they conspired and awarded the VES 21 Project to Hydrock through negotiated contract thus dispensing with the required public bidding and even allowing it to start the project before the notice to proceed was issued; and (3) the acts gave Hydrock unwarranted benefits, preference, and advantage.

The anti-graft court’s conviction prompted the petitioners to appeal before the Supreme Court.

Supreme Court ruling

The Supreme Court found the petitioners, as members of the Pre-Bidding and Awards Committee-B, only recommended awarding the contract to the DCWD Board, which held the actual authority to approve and grant it to the firm that ultimately acquired the contract.

According to the court, while some procurement procedures may have been bypassed, there was no evidence of bad faith or favoritism on the part of the petitioners.

The petitioners also opted for a negotiated contract, believing it was a permissible exception due to the urgency of the project and the limited number of qualified bidders, the court noted.

“It is imperative for the prosecution to prove beyond a reasonable doubt that the accused violated the procurement law through evident bad faith, manifest partiality, or gross inexcusable negligence, thereby causing undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage, or preference,” the Court’s decision read.