EFREN L. ALVAREZ, G.R. No.

G.R. No. 192591 Assessor, old Post Office, Commission on Elections and Department of Social Welfare and Development. These structures were
Petitioner, demolished at the instance of petitioner to give way to the construction project. Thereafter, API proceeded with excavation on the
Present:
area (3-meter deep) and a billboard was put up informing the public about the project and its contractor. However, no mall was
CORONA, C.J.,
constructed as API stopped work within just a few months.
- versus - Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and On August 10, 2006, petitioner was charged before the Sandiganbayan for violation of Section 3(e) of R.A. No. 3019 (SB-06-CRM-
VILLARAMA, JR., JJ.
0389), under the following Information:
PEOPLE OF THE PHILIPPINES, Promulgated:
Respondent. That on or about 12 September 1996, and sometime prior or subsequent thereto, in the then
June 29, 2011 Municipality (now Science City) of Muoz, Nueva Ecija, and within the jurisdiction of this Honorable Court,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x the above-named accused EFREN L. ALVAREZ, a high ranking public official, being then the Mayor of
Muoz, Nueva Ecija, taking advantage of his official position and while in the discharge of his official or
DECISION administrative functions, and committing the offense in relation to his office, acting with evident bad faith or
gross inexcusable negligence or manifest partiality did then and there willfully, unlawfully and criminally give
VILLARAMA, JR., J.: the Australian-Professional Incorporated (API) unwarranted benefits, advantage or preference, by awarding to
the latter the contract for the construction of Wag-Wag Shopping Mall in the amount of Two Hundred Forty
Million Pesos (Php 240,000,000.00) under a Buil[d]-Operate-Transfer Agreement, notwithstanding the fact
that API was and is not a duly-licensed construction company as per records of the Philippine Construction
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to reverse Accreditation Board (PCAB), which construction license is a pre-requisite for API to engage in construction
of works for the said municipal government and that API does not have the experience and financial
and set aside the Decision[1] dated November 16, 2009 and Resolution[2] dated June 9, 2010 of the Sandiganbayans Fourth Division qualifications to undertake such costly project among others, to the damage and prejudice of the public service.
finding the petitioner guilty beyond reasonable doubt of violation of Section 3(e) of Republic Act (R.A.) No. 3019, otherwise known
CONTRARY TO LAW.[5]
as the Anti-Graft and Corrupt Practices Act.

Petitioner Efren L. Alvarez, at the time of the subject transaction, was the Mayor of the Municipality (now Science City) of Muoz,
On September 22, 2006, petitioner was duly arraigned, pleading not guilty to the charge.
Nueva Ecija. In July 1995, the Sangguniang Bayan (SB) of Muoz under Resolution No. 136, S-95 invited Mr. Jess Garcia, President
of the Australian-Professional, Inc. (API) in connection with the municipal governments plan to construct a four-storey shopping
mall (Wag-wag Shopping Mall), a project included in its Multi-Development Plan. Subsequently, it approved the adoption of the At the trial, petitioner testified that during his term as Mayor of Muoz, the municipal government planned to borrow

project under the Build-Operate-Transfer (BOT) arrangement in the amount of P240 million, to be constructed on a 4,000-square- money from GSIS to finance the proposed Wag-Wag Shopping Mall project. He learned about API when then Vice-Mayor Romeo

meter property of the municipal government which is located at the back of the Municipal Hall. API submitted its proposal on Ruiz and other SB members showed him a copy of publication/advertisement in the Manila Bulletin and Business Bulletin showing

November 7, 1995.[3]
On February 9, 1996, an Invitation for proposals to be submitted within thirty (30) days, was published in Pinoy tabloid. On April
12, 1996, the Pre-qualification, Bids and Awards Committee (PBAC) recommended the approval of the proposal submitted by the
lone bidder, API. On April 15, 1996, the SB passed a resolution authorizing petitioner to enter into a Memorandum of Agreement
(MOA) with API for the project. Consequently, on September 12, 1996, petitioner signed the MOA with API, represented by its
President Jesus V. Garcia, for the construction of the Wag-Wag Shopping Mall under the BOT scheme whereby API undertook to
finish the construction within 730 calendar days.[4]
that API was then building similar BOT projects for construction of shopping malls in Lemery, Batangas (P150 million) and in
Calamba, Laguna (P300 million). Because it will not entail government funds and is an alternative to availment of GSIS loan,
petitioner appointed Vice-Mayor Ruiz and other SB members to study the matter. A resolution was subsequently passed by the SB
inviting API for detailed information on their mall projects. Thereafter, the SB approved the construction of Wag-Wag Shopping
Mall under BOT scheme, which was favorably endorsed by the Municipal Development Council. A public hearing was also
conducted by Municipal Engineer Armando E. Miranda. On November 8, 1995, the municipal government received the unsolicited
proposal of API for the construction of Wag-Wag Shopping Mall. For three weeks, an Invitation to Bid was published in
the Pinoy tabloid. But it was the lone bidder, API, whose proposal was eventually recommended by the PBAC and approved by the
SB.[6]

On February 14, 1997, the groundbreaking ceremony was held at the site once occupied by government structures which included
Petitioner emphasized that not a single centavo was spent by the municipal government for the Wag-Wag Shopping Mall
the old Motor Pool, the old Health Center and a semi-concrete one-storey building that housed the Department of Agriculture, BIR
project. It was an unsolicited proposal under the BOT law. API was required to submit pre-qualification statements containing, among
others, their accomplished projects. Eventually the SB passed a resolution authorizing him to enter into the MOA with API. The
municipal government issued the notice of award to API on September 16, 1996 in which it required the contractor to post notices
prior to the start of the project and to submit other requirements such as performance bond. However, API did not comply as its
counsel, Atty. Lydia Y. Marciano said these are not required under the BOT law (R.A. No. 7718) since there will be no government
undertaking, equity or subsidy in the project. After securing an environmental clearance certificate from DENR, the groundbreaking
ceremony was held on February 1, 1997. API, as promised, paid P500,000.00 as disturbance or relocation fee considering that the
municipal government has caused the demolition of old buildings at the site. A certification[7] of such payment was issued by City
Treasurer Luzviminda P. De Leon and City Accountant June Franklyn A. Fernandez on February 5, 2007. The materials were then
utilized for the construction of the new motor pool and new City Library. Thereafter, API began excavating an area of 30 x 30
meters (1,000 sq. ms.), about 3 meters deep. However, only the sales office was constructed. The project was not completed and API
gave as excuse the 1997 financial crisis. They wrote a letter to Mr. Garcia reminding him of the 730-days completion period but then
he was nowhere to be found and did not answer the letter. Hence, the SB authorized him to file a case against API, and later also
granted him authority to enter into a compromise agreement in Civil Case No. 161-SD 98). Their compromise agreement was
approved but they could not find a copy anymore because the Regional Trial Court at Balok, Sto. Domingo, Nueva Ecija where the
settlement was done, was burned down.[8]
On cross-examination, petitioner claimed that had the municipal government then borrowed funds from the GSIS, they
envisioned annual return of P5 million from a P40 million loan for a modest mall (but for an area of 4,000 square meters, the loan
would have to be P80 million). For a period of 8 years, the municipality would have an income of P40 million and the GSIS can be
paid. As to the contractors financial capability, it presented a credit line of P150 million to P250 million for Australian-Professionals
Realty, Inc. (APRI). Petitioner clarified that API and APRI were one and the same entity having the same board of directors, but
when asked if he verified this from the Securities and Exchange Commission (SEC), he answered in the negative. Petitioner asserted
that it was the Vice-Mayor who is accountable for this project as he headed the working panel. As to whether API was a licensed
contractor, he admitted that he did not verify this before awarding the BOT contract involving an infrastructure project. He insisted
that the Wag-Wag Shopping Mall Project, being an unsolicited proposal under BOT law, is exempt from the pre-qualification
requirement although they still conducted it. As far as he knows, the project proponent in this case is the Municipality of
Muoz. However, petitioner admitted that he is not familiar with the BOT law. He also admitted that the Invitation published stated a
shorter period of submission of proposal (30 days instead of 60 days provided under the BOT law) and that he just signed the said
notice without consulting their legal counsel.[9]
On November 16, 2009, the Sandiganbayan rendered judgment convicting the petitioner after finding that: (1) petitioner
railroaded the project; (2) there was no competitive bidding; (3) the contractor was totally unqualified to undertake the project; and
(4) the provisions of the BOT law and relevant rules and regulations were disregarded and not followed. The said court also found
that the municipal government suffered damage and prejudice with the resulting loss of several of its buildings and offices, and
having deployed its resources including equipment, personnel and financial outlay for fuel and repairs in the demolition of the said
structures. Damage suffered by the municipal government was quantified at P4.8 million, or 2% of the total project cost of P240
million, representing the amount of liquidated damages due under the performance security had the same been posted by the
contractor as required by law. As to the allegation of conspiracy, the Sandiganbayan held that such was adequately shown by the
evidence, noting that this is one case where the Ombudsman should have included the entire Municipal Council in the information
for the latter had conspired if not abetted all the actions of the petitioner in his dealings with API to the damage and prejudice of the
municipality.
The dispositive portion of the decision reads:
ACCORDINGLY, accused Efren L. Alvarez is found guilty beyond reasonable doubt
for [sic] violation of Section 3 (e) of Republic Act No. 3019 and is sentenced to suffer in prison the penalty
of 6 years and 1 month to 10 years. He also has to suffer perpetual disqualification from holding any public
office and to indemnify the City Government of Muoz (now Science), Nueva Ecija the amount of Four Million
Eight Hundred Thousand Pesos (Php 4,800,000.00) less the Five Hundred Thousand Pesos (Php 500,000.00)
API earlier paid the municipality as damages.
Costs against the accused.
SO ORDERED.[10]
The Sandiganbayan likewise denied petitioners motion for reconsideration. It ruled that upon examination of Section 4-
A of R.A. No. 6957 as amended by R.A. No. 7718, it was clear that petitioner, with manifest partiality and gross inexcusable
negligence, failed to comply with the requirements and procedures for competitive bidding in unsolicited proposals. It also reiterated
that API was a contractor and not a mere project proponent; hence, the license requirement applies to it. Petitioners defense that he
merely executed the resolutions of the SB was also rejected because as Chief Executive of the Municipality of Muoz, it was his duty
to protect the credits, rights and properties of the municipality and to exercise efficient, effective and economical governance for the
general welfare of the municipality and its inhabitants under Section 444, R.A. No. 7160 (Local Government Code of
1991). Significant acts of the petitioner also showed that he opted to enter into the contract with API despite reckless disregard of
the law.
Hence, this petition raising the following issues:
1. Whether or not the Honorable Sandiganbayan failed to observe the requirement of proof beyond
reasonable doubt in convicting the Accused-Petitioner;
2. Whether or not the Honorable Sandiganbayan failed to appreciate the legal intent of the BOT project;
3. Whether or not the Honorable Sandiganbayan utterly failed to appreciate that the BOT was a lawful
project of the Sangguniang Bayan and not the project of the Mayor Accused-Petitioner herein; and
4. Whether or not the Honorable Sandiganbayan utterly failed to appreciate that there was no damage on
the then Municipality of Muoz as contemplated by law, to warrant the conviction of the Accused-
Petitioner.[11]
 We deny the petition.
Petitioner was charged with violation of Section 3(e) of R.A. No. 3019. To be convicted under the said provision, the
following elements must be established:
1. The accused must be a public officer discharging administrative, judicial or official functions;
2. He must have acted with manifest partiality, evident bad faith or inexcusable negligence; and
3. That his action caused any undue injury to any party, including the government, or giving any private party
unwarranted benefits, advantage or preference in the discharge of his functions.[12]
In this case, the information alleged that while being a public official and in the discharge of his official functions and taking
advantage of such position, petitioner acting with evident bad faith or gross inexcusable negligence or manifest partiality unlawfully
gave API unwarranted benefits, advantage or preference by awarding to it the contract for the construction of the Wag-Wag Shopping
Mall under the BOT scheme despite the fact that it was not a licensed contractor and does not have the experience and financial
qualifications to undertake such costly project, among others, to the damage and prejudice of the public service.
Petitioner argues that he cannot be held liable under Section 3(e) of R.A. No. 3019 since the Municipality of Muoz did
not disburse any money and the buildings demolished on the site of construction have been found to be a nuisance and declared
structurally unsafe, as per notice issued by the Municipal Building Official. He points out that in fact, a demolition permit has been
issued upon his application in behalf of the municipal government. API also paid P500,000.00 demolition/relocation fee.
We disagree.
This Court has clarified that the use of the disjunctive word or connotes that either act of (a) causing any undue injury to any party,
including the Government; and (b) giving any private party any unwarranted benefits, advantage or preference, qualifies as a violation
of Section 3(e) of R.A. No. 3019, as amended.[13] The use of the disjunctive or connotes that the two modes need not be present at
the same time. In other words, the presence of one would suffice for conviction. [14]
As we explained in Bautista v. Sandiganbayan[15]:
Indeed, Sec. 3, par. (e), RA 3019, as amended, provides as one of its elements that the public officer
should have acted by causing any undue injury to any party, including the government, or by giving any private
party unwarranted benefits, advantage or preference in the discharge of his functions. The use of the
disjunctive term or connotes that either act qualifies as a violation of Sec. 3, par. (e), or as aptly held
in Santiago, as two (2) different modes of committing the offense. This does not, however, indicate that each
mode constitutes a distinct offense, but rather, that an accused may be charged under either mode or
under both.[16] (Underscoring supplied.)
The Court En Banc likewise held in Fonacier v. Sandiganbayan[17] that proof of the extent or quantum of damage is not essential. It
is sufficient that the injury suffered or benefits received can be perceived to be substantial enough and not merely negligible.[18] Under
the second mode of the crime defined in Section 3(e) of R.A. No. 3019 therefore, damage is not required. In order to be found guilty
under the second mode, it suffices that the accused has given unjustified favor or benefit to another, in the exercise of his official,
administrative or judicial functions.[19]
The third element of Section 3(e) of R.A. No. 3019 may be committed in three ways, i.e., through manifest partiality,
evident bad faith or gross inexcusable negligence. Proof of any of these three in connection with the prohibited acts mentioned in
Section 3(e) of R.A. No. 3019 is enough to convict.[20] Damage or injury caused by petitioners acts though alleged in the information,
thus need not be proven for as long as the act of giving any private party unwarranted benefits, advantage or preference either through
manifest partiality, evident bad faith or gross inexcusable negligence was satisfactorily established. Contrary to petitioners assertion,
the prosecution was able to successfully demonstrate that he acted with manifest partiality and gross inexcusable negligence in
awarding the BOT contract to an unlicensed and financially unqualified private entity.
R.A. No. 6957 as amended by R.A. No. 7718, requires that a BOT project be awarded to the bidder who has satisfied the minimum
requirements, and met the technical, financial, organizational and legal standards provided in the BOT Law. Section 5 of said law
provides:
SEC. 5. Public Bidding of Projects. - x x x
In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the bidder
who, having satisfied the minimum financial, technical, organizational and legal standards required by
this Act, has submitted the lowest bid and most favorable terms for the project, based on the present value of
its proposed tolls, fees, rentals and charges over a fixed term for the facility to be constructed, rehabilitated,
operated and maintained according to the prescribed minimum design and performance standards, plans and
specifications. x x x (Emphasis supplied.)
Foremost of these minimum legal standards is the license accreditation of a contractor required under R.A. No. 4566 otherwise
known as the Contractors License Law. The Philippine Licensing Board for Contractors created under said law is mandated to ensure
that prospective contractors possess at least two years of experience in the construction industry, and knowledge of the building,
safety, health and lien laws of the Republic of the Philippines and the rudimentary administrative principles of the contracting
business which it deems necessary for the safety of the contracting business of the public.[21] In fact, a contractor must show that he
is licensed by the board before his bid will be considered. [22] As a general rule therefore, the prospective contractor for government
infrastructure projects must have been duly licensed as such pursuant to R.A. No. 4566.API not being a licensed contractor as per
the Certification[23] issued by Philippine Contractors Accreditation Board (PCAB) board secretary Aaron C. Tablazon, is thus not
qualified to participate in the bidding and much less be awarded the BOT project for the construction of Wag-Wag Shopping Mall.

Petitioner claimed that there was compliance with the law saying that API was not a contractor but a mere project proponent, for
which a license is not a requisite to undertake BOT projects. But the Sandiganbayan correctly rejected this theory as the clear terms
of the MOA itself confirm that API itself undertook to construct the Wag-Wag Shopping Mall, thus:
TERMS AND CONDITIONS
I. THE PROJECT SITE
1. The FIRST PARTY [Municipality of Muoz] shall make available unto the SECOND PARTY a FOUR
THOUSAND (4,000) SQUARE METERS lot located at Muoz, Nueva Ecija where the SECOND
PARTY [API] shall build for the FIRST PARTY a commercial building in accordance with this
Memorandum of Agreement, RA 6957 AND RA 7718 as well as RA 7160 otherwise known as the Local
Government Code of 1991.
II. PLANS AND SPECIFICATIONS
1. The commercial building, to be known as the WAG-WAG SHOPPING MALL, shall be constructed by
the SECOND PARTY strictly in accordance with plans, specifications, engineering and construction
designs prepared by the SECOND PARTY and duly reviewed and approved by the FIRST PARTY. x x
x
xxxx
III. CONSTRUCTION
xxxx
3. The FIRST PARTY shall issue a written Notice to Proceed in favor of the SECOND PARTY. The SECOND
PARTY, shall mobilize within 60 days from clearing of the site for official groundbreaking.
4. The SECOND PARTY hereby warrants that it shall finish the construction of the WAG-WAG
SHOPPING MALL within SEVEN HUNDRED THIRTY (730) CALENDAR DAYS counted from the
date of the official groundbreaking.
xxxx
6. x x x Compliance with all existing laws, rules and regulations regarding the construction of the
project shall be [the] responsibility of the SECOND PARTY itself to save and hold the FIRST PARTY
harmless from any and all liabilities in respect thereto or arising from violations thereof.
IV. BUILD-OPERATE-AND-TRANSFER SCHEME
1. The WAG-WAG SHOPPING MALL be constructed by the SECOND PARTY for the FIRST PARTY in
accordance with this Memorandum of Agreement and with the Build-Operate-and-Transfer Scheme
outlined RA 6957 and RA 7718. This Agreement is of course subject to the provisions of RA 7160 and
other pertinent laws.
x x x x[24]
Section 2 of R.A. No. 6957 as amended by R.A. No. 7718, defined the terms Contractor and Project Proponent as follows:
(k) Project Proponent - The private sector entity which shall have contractual responsibility for the
project and which shall have an adequate financial base to implement said project consisting of equity and
firm commitments from reputable financial institutions to provide, upon award, sufficient credit lines to cover
the total estimated cost of the project.
(l) Contractor - Any entity accredited under Philippine laws which may or may not be the project
proponent and which shall undertake the actual construction and/or supply of equipment for the project.
Aside from the clear language of the MOA, the attendant circumstances unmistakably showed that API is both the project
proponent and contractor of the BOT project, as it was the one who submitted the proposal and bid to the SB, through its President
executed the MOA with petitioner, deployed manpower and equipment for the clearing of the site, conducted groundbreaking,
performed excavation and initial construction works, and took responsibility for the stoppage and non-completion of the project when
it entered into a compromise with the Municipality of Muoz. It is to be noted that even as project proponent, API failed to meet the
minimum financial standard considering that it has no adequate financial base to implement the Wag-Wag Shopping Mall project.
APIs paid-up capital was only P2.5 million, while its stand-by credit line issued by Brilliant Star Capital Lending Co., Inc. was only
for the amount of P150 million, way below the P240 million total project cost.
While APIs proposal passed through the pre-qualification stage, it failed to submit, except for the SEC registration
certificate, a complete set of documents required for a BOT project, in accordance with the BOT Law Implementing Rules and
Regulations (IRR):
Sec. 5.4. Pre-qualification Requirements. - To pre-qualify, a project proponent must comply with the
following requirements:
a. Legal Requirements
i. For projects to be implemented under the BOT scheme whose operations require a public utility
franchise, the project proponent and the facility operator must be a Filipino or, if a corporation, must be
duly registered with the Securities and Exchange Commission (SEC) and owned up to at least sixty
percent (60%) by Filipinos.
xxxx
v. If the contractor to be engaged by the project proponent to undertake the construction works of the
project under bidding needs to be pre-identified as prescribed in the published Invitation to Pre-qualify
and Bid and is a Filipino, it must be duly licensed and accredited by the Philippine Contractors
Accreditation Board (PCAB). However, if the contractor is a foreigner, PCAB registration will not be
required at pre-qualification stage, rather it will be one of the contract milestones.
b. Experience or Track Record: The proponent-applicant must possess adequate experience in terms of the
following:
i. Firm Experience: By itself or through the member-firms in case of a joint venture/consortium or
through a contractor(s) which the project proponent may have engaged for the project, the project
proponent and/or its contractor(s) must have successfully undertaken a project(s) similar or related to the
subject infrastructure/development project to be bid. The individual firms and/or their contractor(s) may
individually specialize on any or several phases of the project(s). A joint venture/consortium proponent
shall be evaluated based on the individual or collective experience of the member-firms of the joint
venture/consortium and of the contractor(s) that it has engaged for the project.
xxxx
 vi. Key Personnel Experience: The key personnel of the proponent and/or its contractor(s) must have
sufficient experience in the relevant aspect of schemes similar or related to the subject project, as
specified by the Agency/LGU.
e. Financial Capability: The project proponent must have adequate capability to sustain the financing
requirements for the detailed engineering design, construction and/or operation and maintenance phases
of the project, as the case may be. For purposes of pre-qualification, this capability shall be measured in
terms of:
(i) proof of the ability of the project proponent and/or the consortium to provide a minimum amount of
equity to the project measured in terms of the net worth of the company or in the case of joint ventures
or consortia the combined net worth of members or a set-aside deposit equivalent to the minimum equity
required, and
(ii) a letter testimonial from reputable banks attesting that the project proponent and/or members of
the consortium are banking with them, and that they are in good financial standing. The government
Agency/LGU concerned shall determine on a project-to-project basis, and before pre-qualification, the
minimum amount of equity needed. In addition, the Agency/LGU will inform the proponents of the
minimum debt-equity ratio required by the monetary authority for projects to be financed by foreign
loans.
x x x x (Emphasis supplied.)
We have held that the Implementing Rules provide for the unyielding standards the PBAC should apply to determine the financial
capability of a bidder for pre-qualification purposes: (i) proof of the ability of the project proponent and/or the consortium to provide
a minimum amount of equity to the project and (ii) a letter testimonial from reputable banks attesting that the project proponent
and/or members of the consortium are banking with them, that they are in good financial standing, and that they have adequate
resources. The evident intent of these standards is to protect the integrity and insure the viability of the project by seeing to it that the
proponent has the financial capability to carry it out.[25] Unfortunately, none of these requirements was submitted by API during the
pre-qualification stage.
Petitioner assails the Sandiganbayan for allegedly failing to appreciate the legal intent of the BOT Law which allows
contracts on a negotiated basis for unsolicited proposals like the Wag-Wag Shopping Mall project. It asserts that the procedure and
requirements for bidding have been complied with when the Municipality of Muoz caused the publication of the invitation to submit
comparative bids for the BOT project was published in Pinoy, a newspaper of general circulation for three consecutive weeks. Since
no comparative bid/proposal was received within sixty (60) days, the BOT project was rightfully awarded to API, the original
proponent.
The contention fails.
Unsolicited proposals refer to project proposals submitted by the private sector to undertake infrastructure or development projects
which may be entered into by a government agency or local government unit. [26] Section 4-a of R.A. No. 6957 as amended by R.A.
No. 7718 governs unsolicited proposals:
SEC. 4-A. Unsolicited Proposals. -- Unsolicited proposals for projects may be accepted by any
government agency or local government unit on a negotiated basis: Provided, That, all the following
conditions are met: (1) such projects involved a new concept or technology and/or are not part of the list of
priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government
agency or local government unit has invited by publication, for three (3) consecutive weeks, in a newspaper
of general circulation, comparative or competitive proposals, and no other proposal is received for a period
of sixty (60) working days: Provided, further, That in the event another proponent submits a lower price
proposal, the original proponent shall have the right to match that price within thirty (30) working days.
We note that it was the SB which invited the API to provide information on the construction of a shopping mall project
under the BOT scheme. It cannot be said thus that the development project originated from the proponent/contractor. Nonetheless,
even if the proposal is deemed unsolicited, still the requirements of the law have not been complied with.
The IRR specified the requirement of publication of the invitation for submission of proposals, as follows:
SEC. 10.11. Invitation for Comparative Proposals. - The Agency/LGU shall publish the invitation
for comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection clearance
of the draft contract. The invitation for comparative or competitive proposals should be published at least
once every week for three (3) weeks in at least one (1) newspaper of general circulation. It shall indicate the
time, which should not be earlier than the last date of publication, and place where tender/bidding
documents could be obtained.It shall likewise explicitly specify a time of sixty (60) working days reckoned
from the date of issuance of the tender/bidding documents upon which proposals shall be received. Beyond
said deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10) working days
after the issuance of the tender/bidding documents. (Emphasis supplied.)
The above provision highlighted other violations in the bidding procedure for the subject BOT project. First, there was no prior
approval by the Investment Coordinating Committee of the National Economic Development Authority (ICC-NEDA) of the Wag-
Wag Shopping Mall project. Under the BOT Law, local projects to be implemented by the local government units concerned costing
above P200 million shall be submitted for confirmation to the ICC-NEDA.[27] Such requisite approval shall be applied for and should
be secured by the head of the LGU prior to the call for bids for the project. [28] Second, the law requires publication in a newspaper of
general circulation. To be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and
general information, that it has a bona fide subscription list of paying subscribers, and that it is published at regular intervals. Over
and above all these, the newspaper must be available to the public in general, and not just to a select few chosen by the
publisher.[29]Petitioner did not submit in evidence the affidavit of the publisher attesting to Pinoy tabloid as such newspaper of general
circulation. And third, even assuming that Pinoy was indeed a newspaper of general circulation, the invitation published indicated a
shorter period of submission of comparative proposals, only thirty (30) days instead of the prescribed sixty (60) days counted from
the date of issuance of tender documents.
There is likewise no showing that API complied with the submission of a complete proposal required under the IRR:
SEC. 10.5 Submission of a Complete Proposal. - For a proposal to be considered by the
Agency/LGU, the proponent has to submit a complete proposal which shall include a feasibility
study, company profile as outlined in Annex A, and the basic contractual terms and conditions on the
 obligations of the proponent and the government. The Agency/LGU shall acknowledge receipt of the proposal
and advice the proponent whether the proposal is complete or incomplete. If incomplete, it shall indicate what
information is lacking or necessary. (Emphasis supplied.)
As correctly pointed out by the Sandiganbayan, APIs proposal showed that it lacked the above requirements as it did not include a
company profile and the basic contractual terms and conditions on the obligations of the proponent/contractor and the government.
Had such company profile been required of API, the municipal government could have been apprised of the fact that said
contractor/proponent had been in existence for only three months at that time and had not yet completed a project, although APRI,
which actually undertook the Calamba and Lemery shopping centers also under BOT scheme, is allegedly the same entity as API
which have the same set of incorporators and directors.But more important, the municipality could have realized earlier, on the basis
of financial statements and experience in construction included in the company profile, that API could not possibly comply with the
huge financial outlay for the Wag-Wag Shopping Mall project. It could have also noted the fact that the aforesaid BOT shopping
centers in Lemery and Calamba being implemented by APRI at that time were not yet finished or completed. In any event, such
existing BOT contract of APRI with another LGU neither justified non-compliance by API with the submission of a complete
proposal for the Wag-Wag Shopping Mall project for a competent evaluation by the PBAC.
Indeed, contrary to petitioners stance, the process of unsolicited proposals does involve public bidding where, in the end, the
government is free to choose the bid or proposal most advantageous to it.[30] Thus we held in Asias Emerging Dragon Corporation
v. DOTC[31]:
The protestation by AEDC of our characterization of the process on unsolicited proposal as public
bidding is specious.
We call attention to the following relevant sections of Rule 10 of the IRR specifically on
Unsolicited Proposals:
Sec. 10.9. Negotiation With the Original Proponent. - Immediately after
ICC/Local Sanggunians clearance of the project, the Agency/LGU shall proceed with the in-depth
negotiation of the project scope, implementation arrangements and concession agreement, all of
which will be used in the Terms of Reference for the solicitation of comparative
proposals. The Agency/LGU and the proponent are given ninety (90) days upon receipt of ICCs
approval of the project to conclude negotiations. The Agency/LGU and the original proponent shall
negotiate in good faith. However, should there be unresolvable differences during the negotiations,
the Agency/LGU shall have the option to reject the proposal and bid out the project. On the other
hand, if the negotiation is successfully concluded, the original proponent shall then be required
to reformat and resubmit its proposal in accordance with the requirements of the Terms of
Reference to facilitate comparison with the comparative proposals. The Agency/LGU shall
validate the reformatted proposal if it meets the requirements of the TOR prior to the issuance of
the invitation for comparative proposals.
Sec. 10.10. Tender Documents. - The qualification and tender documents shall be
prepared along the lines specified under Rules 4 and 5 hereof. The concession agreement that
will be part of the tender documents will be considered final and non-negotiable by the challengers.
Proprietary information shall, however, be respected, protected and treated with utmost
confidentiality. As such, it shall not form part of the bidding/tender and related documents.
xxxx
After the concerned government agency or local government unit (LGU) has received, evaluated,
and approved the pursuance of the project subject of the unsolicited proposal, the subsequent steps are
fundamentally similar to the bidding process conducted for ordinary government projects.
The three principles of public bidding are: the offer to the public, an opportunity for competition,
and a basis for an exact comparison of bids, all of which are present in Sec. 10.9 to Sec. 10.16 of the
IRR. First, the project is offered to the public through the publication of the invitation for comparative
proposals. Second, the challengers are given the opportunity to compete for the project through the submission
of their tender/bid documents. And third, the exact comparison of the bids is ensured by using the same
requirements/qualifications/criteria for the original proponent and the challengers, to wit: the proposals of the
original proponent and the challengers must all be in accordance with the requirements of the Terms
of Reference (TOR) for the project; the original proponent and the challengers are required to post bid bonds
equal in amount and form; and the qualifications of the original proponent and the challengers shall be
evaluated by the concerned agency/LGU using the same evaluation criteria. (Additional emphasis supplied.)
In this case, the only attempt made to comply with the bidding requirements is the publication of the invitation which, as
already mentioned, was even defective. As noted by the Sandiganbayan, there was no in-depth negotiation as to the project scope,
implementation and arrangements and concession agreement, which are supposed to be used in the Terms of Reference (TOR). Such
TOR would have provided the interested competitors the basis for their proposed cost, and its absence in this case is an indication
that any possible competing proposal was intentionally avoided or altogether eliminated. The essence of competition in public
bidding is that the bidders are placed on equal footing.[32]In the award of government contracts, the law requires a competitive public
bidding. This is reasonable because [a] competitive public bidding aims to protect the public interest by giving the public the best
possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in
the execution of public contracts.[33]
Despite APIs obvious lack of financial qualification and absence of basic terms and conditions in the submitted proposal,
petitioner who chaired the PBAC, recommended the approval of APIs proposal just forty-five (45) days after the last publication of
the invitation for comparative proposals, and subsequently requested the SB to pass a resolution authorizing him to enter into a MOA
with API as the lone bidder for the project. It was only in the MOA that the details of the construction, terms and conditions of the
parties obligations, were laid down at the time API was already awarded the project. Even the MOA provisions remain vague as to
the parameters of the project, which the Sandiganbayan found as placing API at an arbitrary position where it can do as it pleases
without being accountable to the municipality in any way whatsoever. True enough, when API failed to execute the construction
works and abandoned the project, the municipality found itself at extreme disadvantage without recourse to a performance security
that API likewise failed to submit.
Petitioner as the local chief executive failed to ensure that API which was awarded the BOT contract, will submit such
other requirements specified under the IRR:
Sec. 11.7. Conditions for Approval of Contract. - The Head of Agency/LGU shall ensure that all
of the following conditions have been complied with before approving the contract:
a. Submission of the required performance security as prescribed under Section 12.7 hereof;
 b. Proof of sufficient equity from the investors and firm commitments from reputable financial
institution to provide sufficient credit lines to cover the total estimated cost of the project;
c. ICC clearance of the contract on a no-objection basis;
Failure by the winning project proponent to submit the requirements prescribed under items a, b
and c above within the time period specified by the concerned Agency/LGU in the Notice of Award or failure
to execute the contract within the specified time shall result in the disqualification of the bidder, as well as
the forfeiture of the bid security of the bidder.
xxxx
Sec. 12.7. Performance Guarantee for Construction Works. - To guarantee the faithful
performance by the project proponent of its obligations under the contract including the prosecution of
the construction works related to the project, the project proponent shall post in favor of the Agency/LGU
concerned, within the time and under the terms prescribed under the project contract, a performance security
in the form of cash, managers check, cashiers check, bank draft or guarantee confirmed by a local bank (in the
case of foreign bidders bonded by a foreign bank), letter of credit issued by a reputable bank, surety bond
callable on demand issued by the Government Service Insurance System (GSIS) or by surety or insurance
companies duly accredited by the Office of the Insurance Commissioner, or a combination thereof, in
accordance with the following schedules:
a. Cash, managers check, cashiers check, irrevocable letter of credit, bank draft a minimum of two
percent (2%) of the total Project Cost.
b. Bank Guarantee a minimum of five percent (5%) of the total Project Cost.
c. Surety Bond a minimum of ten percent (10%) of the total Project Cost. (Emphasis supplied.)
In the Notice of Award dated September 16, 1996, petitioner directed API to submit the above requirements. However, APIs counsel,
Atty. Lydia Y. Marciano, wrote in reply that such requirements do not apply because APIs project does not involve any government
undertaking. API at that point should have been disqualified and its bid security forfeited, pursuant to Section 11.7 of the IRR. Yet,
API was allowed to proceed with the execution of the project albeit only the site clearing, excavation and construction of a sales
office were accomplished.
Under the facts established, it is clear that petitioner gave unwarranted benefits, advantage or preference to API considering that said
proponent/contractor was not financially and technically qualified for the BOT project awarded to it, and without complying with the
requirements of bidding and contract approval for BOT projects under existing laws, rules and regulations.
The word unwarranted means lacking adequate or official support; unjustified; unauthorized or without justification or
adequate reason. Advantage means a more favorable or improved position or condition; benefit, profit or gain of any kind; benefit
from some course of action. Preference signifies priority or higher evaluation or desirability; choice or estimation above
another.[34] As to partiality, bad faith, and gross inexcusable negligence, we have explained the meaning of these terms, as follows:
Partiality is synonymous with bias which excites a disposition to see and report matters as they are
wished for rather than as they are. Bad faith does not simply connote bad judgment or negligence; it imputes
a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through
some motive or intent or ill will; it partakes of the nature of fraud. Gross negligence has been so defined as
negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is
a duty to act, not inadvertently but wilfully and intentionally with a conscious indifference to consequences in
so far as other persons may be affected. It is the omission of that care which even inattentive and thoughtless
men never fail to take on their own property.[35]
We sustain and affirm the Sandiganbayan in holding that petitioner violated Section 3(e) of R.A. No. 3019, and that he
cannot shield himself from criminal liability simply because the SB passed the necessary resolutions adopting the BOT project and
authorizing him to enter into the MOA. We find no error or grave abuse in its ruling, which we herein quote:
It is apparent that the unwarranted benefit in this case lies in the very fact that API was allowed to
present its proposal without compliance of [sic] the requirements provided under the relevant laws and
rules. To begin with, the municipal government never conducted a public bidding prior to the execution of the
contract. The project was immediately awarded to the API without delay and without any rival proponents,
when it was not qualified to participate in the first place. The legality and propriety of the agreement executed
with the contractor is totally absent based on the testimonies of both the prosecution and the defense.
This Court also considers these particular acts significant. First. From the testimony of then Vice-
Mayor Ruiz, Jesus V. Garcia, the president of API, attended the SB session after paying a courtesy call to the
Accused who was then the Mayor. Second. It was the Accused who signed and posted the Invitation to Bid
(Exhibit N) giving proponents 30 days to submit their proposals. Third. The Accused is the head of the Pre-
Qualification Bids and Awards Committee which according to him recommended the approval of APIs
proposal. This was the reason he used in requesting authority from the SB to grant him the authority to contract
with API. Fourth. The Accused requested the SB to give him authority to enter into an agreement with API
through a resolution (Exhibit S)[.] Fifth. It was the Accused who invited the SB members to go to the Mayors
office to witness the signing of the Memorandum of Agreement between the municipality and API.[36]
As the local chief executive, petitioner is not only expected to know the proper procedure in the bidding and award of infrastructure
contracts such as BOT projects, he is also duty bound to follow the same and his failure to discharge this duty constitutes gross and
inexcusable negligence.[37]
Petitioner further assails the Sandiganbayan in not considering the previous dismissal of the criminal complaint filed by Alberto
Castaeda against petitioner also involving the Wag-Wag Shopping Mall project. The Sandiganbayan pointed out that said case
(OMB-1-97-1885) was dismissed by the Office of the Deputy Ombudsman for Luzon on March 26, 1999 at the time the construction
works were supposedly only temporarily stopped by API, while in this case it is already apparent that the latter abandoned the project
and reneged on its obligation.
We find nothing illegal in the reversal by the Ombudsman upon review of the September 9, 2002 resolution of the Office of the
Deputy Ombudsman for Luzon which recommended the dismissal of the complaint-affidavit filed by Domiciano R. Laurena IV upon
the ground that a similar criminal complaint filed by Castaeda had been dismissed in OMB-1-97-1885. The Office of the Ombudsman
Chief Legal Counsel granted the petition for review filed by complainant Laurena IV and recommended that petitioner be indicted
before the Sandiganbayan for violation of Section 3(e) of R.A. No. 3019. It pointed out that the dismissal of OMB-1-97-1885 was

premised on the authority of a local legislature to accept unsolicited proposals and enter into a BOT project under R.A. No. 6957 as
amended by R.A. No. 7718, and the lack of any showing of undue injury to the Municipality of Muoz as a result of the temporary
work stoppage. However, the issue of lack of APIs construction license was never brought out in the earlier case while in the present
case, the PCAB attested to the fact that API is not a licensed contractor and petitioners approval of APIs proposal is a clear badge of
giving unwarranted benefit, preference or advantage through manifest partiality, evident bad faith, or at the very least, gross
inexcusable negligence. The OMB found that petitioner could have easily discovered such fact with basic prudence considering that
a P240-million infrastructure was involved, but apparently he threw all caution to the wind and relied solely on the self-serving
representation of API that it possesses the requisite contractors license.[38] This ruling of the OMB Chief Legal Counsel was affirmed
upon review by the Special Prosecutor and approved by Ombudsman Merceditas N. Gutierrez on August 4, 2006. [39]
It may be recalled that on motion of petitioner, the Ombudsman even conducted a reinvestigation of the case pursuant to the January
15, 2007 directive of the Sandiganbayan. In a memorandum[40] dated March 5, 2007, then Special Prosecutor Dennis M. Villa-Ignacio
approved the finding of probable cause against the petitioner and the recommendation that the information already filed in this case,
for which petitioner had already been arraigned, be maintained. Petitioner cannot claim denial of his right to due process, as he had
been given ample opportunity to present evidence on his defense in the proceedings before the Ombudsman and Sandiganbayan.
No grave abuse of discretion was committed by the Ombudsman in reversing the previous dismissal of a similar criminal complaint
against the petitioner involving the anomalous award of the BOT contract to API. Indeed, the Ombudsman is not precluded from
ordering another review of a complaint, for he or she may revoke, repeal or abrogate the acts or previous rulings of a predecessor in
office. Thus we held in Trinidad v. Office of the Ombudsman[41]:
Petitioners arguments that res judicata applies since the Office of the Ombudsman twice found no
sufficient basis to indict him in similar cases earlier filed against him, and that the Agan cases cannot be a
supervening event or evidence per se to warrant a reinvestigation on the same set of facts and circumstances
do not lie.
Res judicata is a doctrine of civil law and thus has no bearing on criminal proceedings.
But even if petitioners argument were to be expanded to contemplate res judicata in prison grey or
the criminal law concept of double jeopardy, this Court still finds it inapplicable to bar the reinvestigation
conducted by the Office of the Ombudsman. For the dismissal of a case during preliminary investigation
does not constitute double jeopardy, preliminary investigation not being part of the trial.
Insisting that the case should be barred by the prior Joint Resolution of the Ombudsman, petitioner
posits that repeated investigations are oppressive since he as respondent and other respondents would be made
to suffer interminable prosecution since resolutions dismissing complaints would perpetually be subject to
reopening at any time and by any party. Petitioner particularly points out that no new evidence was presented
at the reinvestigation.
Petitioners position fails to impress.
The Ombudsman is not precluded from ordering another review of a complaint, for he or she
may revoke, repeal or abrogate the acts or previous rulings of a predecessor in office. And Roxas v. Hon.
Vasquez teaches that new matters or evidence are not prerequisites for a reinvestigation, which is simply
a chance for the prosecutor, or in this case the Office of the Ombudsman, to review and re-evaluate its
findings and the evidence already submitted. (Emphasis supplied.)
As to the propriety of damages awarded by the Sandiganbayan, we find that the same is proper and justified. The term undue injury
in the context of Section 3(e) of the Anti-Graft and Corrupt Practices Act punishing the act of causing undue injury to any party, has
a meaning akin to that civil law concept of actual damage. Actual damage, in the context of these definitions, is akin to that in civil
law.[42]
Article 2199 of the Civil Code provides that except as provided by law or by stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by a party as he has duly proved. Liquidated damages, on the other hand, are those agreed upon
by the parties to a contract, to be paid in case of a breach thereof. [43]
For approved BOT contracts, it is mandatory that a performance security be posted by the contractor/proponent in favor of the LGU
in the form of cash, managers check, cashiers check, irrevocable letter of credit or bank draft in the minimum amount of 2% of the
total project cost.[44] In case the default occurred during the project construction stage, the LGU shall likewise forfeit the performance
security of the erring project proponent/contractor.[45] The IRR thus provides:
SEC. 12.13. Liquidated Damages. - Where the project proponent of a project fails to satisfactorily
complete the work within the construction period prescribed in the contract, including any extension or grace
period duly granted, and is thereby in default under the contract, the project proponent shall pay the
Agency/LGU concerned liquidated damages, as may be agreed upon under the contract by the parties. The
parties shall agree on the amount and schedule of payment of the liquidated damages. The performance
security may be forfeited to answer for any liquidated damages due to the Agency/LGU. The amount of
liquidated damages due for every calendar day of delay will be determined by the Agency/LGU. In no case
however shall the delay exceed twenty percent (20%) of the approved construction time stipulated in the contract
plus any time extension duly granted. In such an event the Agency/LGU concerned shall rescind the contract,
forfeit the proponents performance security and proceed with the procedures prescribed under Section 12.19. b.
Had the requirement of performance security been complied with, there is no dispute that the Municipality of Muoz would have been
entitled to the forfeiture of performance security when API defaulted on its obligation to execute the construction contract, at the
very least in an amount equivalent to 2% of the total project cost. Hence, said LGU is entitled to such damages which the law
mandates to be incorporated in the BOT contract, the parties being at liberty only to stipulate the extent and amount thereof. To rule
otherwise would mean a condonation of blatant disregard and violation of the provisions of the BOT law and its implementing rules
and regulations which are designed to protect the public interest in transactions between government and private business
entities. While petitioner claims to have entered into a compromise agreement as authorized by the SB and approved by the trial
court, no evidence of such judicial compromise was submitted before the Sandiganbayan.
WHEREFORE, the petition is DENIED. The Decision dated November 16, 2009 and Resolution dated June 9, 2010 of the
Sandiganbayan in Criminal Case No. SB-06-CRM-0389 are AFFIRMED.
With costs against the petitioner.

SO ORDERED.