Republic of the Philippines

oFFTGE OF THE OMBUDSMAN (VISAYAS)Deportment of Agriculture RO-7 Compound, M. Velez St., Guadalupe, 60A0 Cebu City

MAI\IIJEL P. MEJORADA,Complainant,

-versus-OMB-V-A-12-0091-B

JED PATRICK E. MABILOG,City Mayor,ATTY. JOSE JUNIO G. JACELA,Chairman, Bids & Awards Committee,ENGR. KARL QUIMSING,BAC Vice Chairman,

, MR. NORLITO BAUTISTA,MR. JESS SIO,MR. AGUSTIN SANGRADOR, JRMS. JOY ANN TOLEDO,BAC MembersAll of the Iloilo City Govemment,Iloilo City,

ResPondents.X---- --------X

POSITIONPAPER

COMES NOW COMPLAINANT by himself and to this Honorable Office most respectfullysubmits this POSITION PAPER in compliance with its Order dated June 18, 2013 which hereceived on July 16,2013.

FACTS OF THE CASE

Respondent Jed Patrick E. Mabilog was the City Mayor of Iloilo City for the term 2010'2013and Head of the Procuring Entity (HOPE) who approved the award of a contract for Php224,171,752.59 to the FF Cruz and Co./Ireyssinet Filipinas Co. Joint Venture for thesupplementary works on the Iloilo City Hall project by way of negotiated procurement underSection 53.4 of the Revised Implementing Rules and Regulations of Republic Act No. 9184.

Respondents Jose Junio Jacela, Engr. Karl Quimsing, Norlito Bautista, Jess Sio, AgustinSagrador, Jr., and Joy Ann Toledo were Members of the Bids and Awards Committee (BAC)constituted under Section 11 of Republic Act No. 9184. Respondent Jacela was the chairmanand respondent Quimsing was the vice chairman of the BAC.

, On May 24,2}Il,the respondents Jacela, Quimsing, Bautista, Sio, Sangrador and Toledo, intheir capacity as Chairrnan, Vice Chairman and Members of the BAC, adopted BACResolution No. 11-05-046-Q entitled "A Resolution Justiffing and Recommending forApproval of Negotiated Procurement as a Mode of Procurement for the Works of the UpdatedPlans for the New Iloilo City Hall Building as the I't Eco Friendly 'Green' Building Bid No.0051";l

fn sum, the BAC justified the resort to a Negotiated Procurement as the mode for the award ofthe contract on the ground that "the scopes of work (have) actual and physical contact withand closely connected to the original contract" and deemed it as complying with therequirements set forth in Section 53.4 of the RIRR, RA 9184.2In one of the'o'Whereas"clauses contained in the aforesaid BAC Resolution, respondents stated that'NegotiatedProcurement, as an alternative method of procurement, shall promote economy and efficiencyand that the most advantageous price for the government shall be obtained."

Respondent Mabilog approved the recommendation of the BAC as shown by his signature onthe last page of the BAC Resolution No. 11-05-046-Q. Subsequently, respondent Mabilogsigned the contact with F.F. Cruz and Co.lFreyssinet Filipinas, Inc. Joint Venture. Theimplementation of the supplementary contract was ca:ried out, and the City Governmentoccupied the building sometime in December 2011.

In an Audit Observation Memorandum dated December 12,2A113, the Commission on Auditmade the following comments:

1. "The Contract -

Supplemental Agreement No. 1 covering the construction of theUpdated Plans of the New Iloilo City Hall Building did not mention the mode ofprocurement that was opted to by the Iloilo City Govemment.

2. "No document was submifted to show that a public bidding was conducted on thesupplemental works, considering the materiality of the cost, neither was there a BACResolution on the altemative mode of procurement resorted to by the CityGovernment.

3. "There was no proof that the Notice of Award for the Supplemental Works was postedin the PHILGEPS website.

4. "The payment to the contractor of the 15% mobilization expenses for the supplementalworks was contrary to COA Ctt.82-177 dated March A4, L982, since mobilization hadalready been paid to the same contractor. The stated Circular provides that the advancepayment covers the cost of mobilizing equipment to the job site. Considering that this

t Annex "3" of the Counter-affidavit of Respondent Jose Junio Jacela.2

"Section 53,4 - Adjacent or Contiguous. Where the subject contract is adjacent or contiguous toan on-going lnfrastructure Project or Consulting Service where the consultants haveunique experience and expertise to deliver the required service: Provided, however,That (a) the original contract is the result of a Competitive Bidding; (b) the subjectcontract to be negotiated has similar or related scopes of work; (c) it is within thecontracting capacity ofthe contractor/consultant; (d) the contractor/consultant usesthe same prices or lower unit prices as in the original contract less mobilization cosU(e) the amount involved does not exceed the amount of the ongoing project; and (f)

, the contractor/consultant has no negative slippage/delay: Provided, further, Thatnegotiations for the procurement are commenced before the expiry of the originalcontract"' Annex

o6" of the Counter-affidavit of respondent Jose Junio Jacela.

is a supplemental agreement and the scope of works do not require heavy equipment,the payment of the additional l5Yo for mobilization is unnecessary-

5. "The submission of the subject Contract to this Office was not compliant to COA Cir.2009-001 dated February 12,2009. Audited agencies should furnish the auditor withcopies of perfected contracts within 5 working days upon apptoval together with thesupporting documents forreview. While the contract was perfected on July 22,2011,the same was submitted to COA only on August 22,2011.-

The same COA-AOM added that the "observations were brougtrt to the attention of LGUmanagement on October 05,2011 thru a Memorandum dated October A3,2011. However, noreply or managoment comment was received to date."

It is noteworlhy to mention that these same audit observations were reiterated in tlre AnnualAudit Report of the COA for Iloilo City for the year 2011. A copy of this report could beviewed on the COA website www.coa.gov.ph/audit/AARhtm.

ISSUES

Did respondents, conspiring and confederating with each other, violate Republic ActNo. 91844 when they awarded the supplementary contract involving the amount ofPhp 224,171,752.59 for the construction of the Iloilo City Hall Building without acompetitive public bidding?Did the respondents, as a direct consequence of their actions in the perfonnance oftheir offrcial functions, cause undue injury to the Government in entering into acontract grossly disadvantageous to t}re same with evident bad faith, violate Section 3,(3) of Republic ActNo. 3019?

DISCUSSION AI\ID ARGT]MENT

THE AWARD OF THE CONTRACT WITHOUT UNDERGOING A COMPETITIVEPUBLIC BIDDING WAS ILLEGAL

At issue in this case is whether or not the scopes of work covered by the supplementarycontract for Php 224,171,752.59 between the Iloilo City Government and F.F. Cruz andCo.ffreyssinet Filipinas Co. Joint Venture for the construction of the New Iloilo City HallBuilding fall under the definition of "Adjacent and contiguous" provided for under Section53.4 of the Revised Implementing Rules and Regulations of RA 9184.

Section 10 of RA 9184 provides that all procurement shall be done through competitivepublic bidding except for situations provided for under Article XVI. The rationale behind therequirement of a public bidding, as a mode of awarding govemment contaots, is to ensurethat the people get maximum beuefits and quality serviees fromthe.eontraetsr$rIorc

o 'Section 10. Competitive Bidding.- All Procurement shall be done through Competitive Bidding, except as

provided for in Article XVI of this A1."

1.

2.

significantly, the strict compliance with the requirements of a public bidding echoes the callfor transparency in government transactions and accountability of public offrcers. Publicbiddings are intended to minimize occasions for comrption and temptations to abuse ofdiscretion on the part of government authorities in awarding contracts.)

Competitive public bidding may not be dispensed with nor circumvented, and altemativemodes of procurement for public service contracts and for supplies, materials, and equipmentmay only be resorted to in the instances provided for by law.6

Section 53.4 of the Revised Implementing Rules and Regulations is one of the exceptionsfrom the rule on public bidding under the Government Procurement Reform Act, and it setsthe following conditions for the same to be allowed:

a) The original contact is the result of a Competitive Bidding;b) The subject contract to be negotiated has similar or related scopes of work;c) it is within the contracting capacity of the contractor/consultant;d) The contractor/consultant uses the same prices or lower unit prices as in the original

contract less mobilization cost;e) The amount involved does not exceed the amount of the ongoing project; and0 The contractor/consultant has no negative slippage/delay.

In the case at bar, the scopes of work for the contract that was negotiated did not meet thecondition ("b") that it must involye "similar or related scopes ofwork". (Italics supplied.)This phrase has a strict and technical meaning. By "similar or related", the law contemplatesscopes of work that can be compared in terms of unit cost and the work involved. It must beviewed with letter "d", that "the contractor/consultant uses the same prices or lower unitprices as in the originnl contract less mobilization cosf'(italics supplied). of the conditionsunder Section 53.4 in mind. It is comparing apples with apples.

The original contract involved primarily civil works as the scope of works. Thesupplementary contract involved mechanical, electrical, sanitary, data management,architectural works, fire fighting and others. Hence, there can be no basis for comparison inthe unit costs for the scopes of work. Without such basis for comparison of the unit prices, theGovernment was left vulnerable to price manipulation, and padded costs.

Respondents distorted the meaning of the law when they justified the scopes of work as being"having actual physical co '.7(Underscoring supplied) The respondents attempt to redefine the conditions set forth underSection 53.4 of the Rm.& RA 9184 in an effort to cover-up the offense. This exception to therule must be strictly construed and all the conditions must be present for a negotiatedprocurement to be tenable. Absent one condition, and the contract must undergo publicbidding. In this case, it's not just one, but two, conditions that are absent.Under the circumstances, the conftact was not eligible for award through negotiatedprocurement. It should have been subjected to a competitive public bidding, especiallybecause it involved a huge sum of money.

u Gana vs. Olongapo Maintenance, etc., G.R. Nos, 146184-85, G.R. No. 161117, G.R. No. !67827,January 31,2008.t tbid.7 Paragraph 3.3 of the Counter-affidavit of respondent Jed Patrick Mabilog and paragraph 3, Page 2, of theCounter

-affidavit of respondent Jose Junio Jacela.

As the Supreme Court held, *The requirements of the law on government procurements

should never be taken for granted because grave consequences await those who violate

them."8

TIIEG0VERNMENTSUT.TEREDI]NDTIEINJURYBECAUSETImCoNTRACTENTERED INTO IS GROSSLY DISADVANTAGEOUS TO TIIE GOVERNMENT

AS

A CONSEQTIENCE OF EVIDENT BAD FAITH OF RESPONDENTS'

section 3, paragraph (e) of Republic ActNo. 3019 punishes the act of public officials or

employeesfor .ocausing any undue rniury to any party, including the Government' or

grving any private plrty any unwarranted benefits, advantage or preference in the discharge of

his official, administrative or judiciat flrnctions through manifest partiality, evident bad faithor gross inexcusable negligence. This provision shall apply to officers and employees

of

offices or govenrment corporations charged with the grant of licenses or permits or other

concessions." (Emphasis supplied')

Respondent Mabilog was the Head of procurement Entrty GIopE) defined under section 5 fi)of RA 9184 and it was in the performance of his duties as such that he approved the

recommendation of the Bids and Awards Commiuee composed of respondents Jacela"

Quimsing, Bautista, sio and Toledo. He signed the conttact in behatf of the Iloilo city

Government with the contractor, F. F. Cruz and Co.lFreyssinet Filipinas Inc. Joint Venture'

The respondent members of the BAC adopted BAC Resolution No. I 1-05-046-Q to justiff

and recomrnend to respondent Mabilog to resort to the negotiated mode of procurement for

this contract in the performance of their duties mandated by Section 12, RA 9184'

By conspiring and confederating to resort to the negotiated mode of procurement to award

this contract to F.F. Cruz and Co.lFreyssinet Filipinas, [nc. Joint Venture, respondentsmanifested partiality, evident bad faith or gross inexcusable negligence, and as a result,

caused undue injury to the government. There was no legal and factual basis to determine thereasonableness of the prices in the contract because there is nothing in the originat contract

with which the unit costs can be compared with. Undue injury was caused the Governmentbecause the project could have been undertaken at a much lower cost'e

Instead of ensuring that the project was pursued with cost-efiEciency and avoidance ofwastefirlness in the expenditure of public funds in mind, respondents clearly conspired to jackup the costs to the disadvantage and rqiury to the Government. Bad faith is evident and

manifest because prior to the BAC's adoption of its resolution aforestated, the issue about themode of procurement was discussed extensively overthe local media. In fact, complainanthad written two blog articles, entitled "Revisions and change orders" and "Adjacent andcontiguous", onhis Wordpress.com blog "Mejorada's Point of Vieu/'with URLwww.manuelboymejorada.wordpress.com on May 12,2011 and May 17,20ll respectively.

Attached are print-outs of o'Revisions and change orders" as Annex'oA" and "Adjacent andcontiguous" as Annex "B" of this Position Paper.

I Rolando Sison vs. People, G.R. Nos. 170339, 170398-403 : March 9, 2010''Felicitas Ong vs. People, G.R. No. !76546, September 25, 2009'

Respondents ignored the warnings ventilated in the media that they would be violating thelaw if they proceeded to adopt the Negotiated Procurement as mode of procurement for thiscontact. They committed the offense fi.rlly conscious of the ramifications involved.

From an original estimate of Php 455 millionlo which was fxed as the approved agencyestimate when the project was advertised for public bidding in November 2009, the projectcost ballooned to an estimated Php 610 million by the time it was finished. This figure wasarived at by adding the originat contract price of Php 386 million and the supplementalcontract of Php 224 million The change orders are not included.

The final construction cost of the New Iloilo City Hall Building overshot the original budgetby Php 155 million, largely because of the machinations of respondents.

Clearly, such an end-result is not consistent with the avowed purpose for which the resort to anegotiated procurement was adopted by the respondent BAC members in stating that it wasdone to promote "economy and efficiency''.

This leads a reasonable mind to conclude that there was a high-level conspiracy to skimpublic firnds from the treasury of the Iloilo City Government by padding the unit costs of thescopes of work and avoiding a aompetitive public bidding to make sure the crime is notexposed. All that one needs to do is look at the final cost figures to establish the existenee of aconspiracy. There is not even a need to present direct evidence to prove conspiracy.ll

The Supreme Court has stated that the essential elements of this crime are: (1) the accused arepublic officers or private persons charged in conspiracy with them; (2) said public officerscommit the prohibited acts during the performance oftheir official duties or in relation to theirpublic position; (3) they caused undue injury to any party, whether the government or aprivate party; (4) such injury is caused by giving unwarranted benefits, advantage orpreference to such parties; and (5) the public officers have acted with manifestpartiality, evident bad faith or gross inexcusable negligence.l2

All the above elements are present in the commission of this offense.

In addition to the above, the Audit Observation Memorandum (AOM) of the Commission onAudit dated December 12,2011 uncovered the fact that respondents caused undue injury tothe Government when they authorized, and disbursed, a l1%a mobilization expenses to thecontractor. Paragraph "d" of Section 53.4 of the Revised Implementing Rules and Regulationsexplicitly states that the contract price should deduct the l1Yo mobilization cost. As correctlypointed out by COA, there is no need to mobilize heavy equipment because ofthe nature ofthe scopes of work. This gave F.F. Cruz and Co.lFreyssinet Filipinas, Inc. Joint Ventureunwarranted benefits.

Finally respondent Mabilog could not escape culpability and blame the anomaly on the BAC.As local chief executive, he should have been the first to follow the law and see to it that itwas followed by his constituency. Sadly, however, he was the first to break it.l3

'o Annex "D" of Complainant's Affidavit." Alvizo v. Sandiganbayan, G.R. Nos. 98494-98692,17 July 20O3, 405 SCRA 3LL,374-375.t'Dugayon

v. People, G.R. No. 747gg3,August L2,2N4,436 SCRA 262,272.13 Rolando Sison vs. People, G.R. Nos. 170339, 170398403 : March 9, 2010.

PRAYER

ryHEREFORE, premises considered, it is most respectfully prayed that this position paper be

included in the records of the herein case, and after evaluation, for this Honorable Office to

render a finding of gurlty against respondents'

Complainant prays for other reliefs just and equitable under the premises'

RESPECTFULLY SUBMITTED

Iloilo City for Cebu City, Philippines, July E-,2013'

VERIFICATION

I, MANUEL p. MEJORADA, of legal age, married, Filipino citizen and with address at No.2 Kasoy St., Villa San Lorenzo Subd., Lapaz,Iloilo City, Philippines, after having been dulysworn to in accordance with law hereby depose and state:

That I am the Complainant in the above-entitled case; that I caused the foregoing Positionpaper to be prepared; that I have read and understood the same and that a1l the allegationsstated therein are true and correct of my own knowledge and information and based onauthentic documents in my possession;

IN WITI{ESS WHEREOF, I have hereunto set my hand this -K t day of July ,2013 atIloilo City, Philippines.

\ur\^rvry'nnrei,Yp. nfr.flnma

Complainant

;;;;;";i&-flr" same in my presence and affirned rmder oath to the correetness of thecontents or allegations of the sarne-

The affiant is personally known to rne and he exhibited to me his Philippine Passport No. EB

306461s issued on July 16,2a1ll in Iloilo City, Philippines'

ATTY" GEOP6

REG, N0. 40 tit\i'il1 DECEMBEp 31, 201+SUITE .1, LEVFL 3, IRISTII}A TOLOiJIJADE ELD6.RI ZAL. HUEFU,(I]A STREE]S, T A}'* Z, I I.OiI- O CI T YpTR [i0. 1 117173 / 01 / fi7 I 13- 0, tiJGLE, lt0lL0,Bp ii0. Es'117 6/ 01/ 03/ 13-tLolL0 CHAPTEP,r?0LL ilo, 53211/ TtN

'\i0. 179-897 -e+4

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