G.R. No. 197886, 4 October 2017

FACTS:

Sometime in 2001, the Philippine Postal Corporation entered into a contract with Aboitiz Air Transport Corporation (Aboitiz Air) for the carriage of mail at a rate of P5.00 per kilogram. This contract expired on December 31, 2002. After the expiry of its contract with Aboitiz Air, the Philippine Postal Corporation purchased 40 vehicles for mail deliveries in Luzon. It also hired 25 drivers for these vehicles on a contractual basis. The Central Mail Exchange Center of the Philippine Postal Corporation conducted a post study of the delivery system and found that the expenses for the salaries and maintenance of its vehicles for Luzon deliveries were higher than its previous system of outsourcing deliveries to Aboitiz Air. On April 15, 2004, it submitted a recommendation that the Philippine Postal Corporation would save P6.1M per annum if deliveries were outsourced instead at the cost of P8.00 per kilogram.

On April 29, 2004, the Board of Directors of the Philippine Postal Corporation held a Special Board Meeting where De Guzman, the Officer-in-Charge, endorsed for approval the Central Mail Exchange Center’s recommendation to outsource mail delivery in Luzon. On May 7, 2004, De Guzman sent a letter to Aboitiz One, Inc. stating therein their proposal for the renewal of their contract. Aboitiz One accepted the proposal and commenced its delivery operations in Luzon on May 20, 2004. When Postmaster General Diomedo P. Villanueva (Postmaster General Villanueva) resumed work, the Aboitiz One contract had already been fully implemented. Thus, the Postmaster General approved payments made to Aboitiz One for services rendered.

On October 20, 2005, Atty. Sim Oresca Mata, Jr. filed an administrative complaint with the Office of the Ombudsman against De Guzman. He alleged that the Aboitiz One contract renewal was done without public bidding and without the Philippine Postal Corporation Board of Directors’ approval.

The Office of the Ombudsman rendered its Decision finding De Guzman guilty of grave misconduct and dishonesty. De Guzman filed a Petition for Review with the Court of Appeals. The Court of Appeals rendered its Decision annulling the Decision and Order of the Office of the Ombudsman. Hence, this Petition was filed.

ISSUE:

Whether or not the respondent committed grave misconduct and dishonesty in (a) engaging the services of Aboitiz One, Inc. allegedly without the approval of the Philippine Postal Corporation Board of Directors, and (b) in procuring Aboitiz One, Inc.’s services through negotiated procurement.

RULING:

To determine whether or not respondent acted without authority when he procured Aboitiz One’s services in outsourcing mail deliveries in Luzon, it is necessary to determine first the scope of his authority under the law.

Respondent was designated Officer-in-Charge when the contract between the Philippine Postal Corporation and Aboitiz One was effected, he is considered to have been exercising the functions of the Postmaster General during this period. Under Republic Act No. 7354 the Postmaster General manages the Philippine Postal Corporation and has the power to sign contracts on behalf of the corporation as “authorized and approved by the Board [of Directors].” Valid corporate acts are those that have “the vote of at least a majority of the members present at a meeting at which there is a quorum.”

There was no board resolution issued after approving it. As there was no majority vote or a board resolution, respondent was not authorized to enter into the contract dated May 7, 2004. A contract entered into by corporate officers who exceed their authority generally does not bind the corporation except when the contract is ratified by the Board of Director . However, there was no evidence presented that the Board of Directors repudiated the contract dated May 7, 2004 with Aboitiz One. The contract remained effective until January 31, 2006. Postmaster General Villanueva approved the payments when he resumed work. Subsequent Postmaster General Rama, upon his assumption to office, also approved the payments to Aboitiz One. The Corporate Auditor Commission on Audit likewise certified that it did not issue any notice of disallowance on the Aboitiz One contract.

Considering that the Board of Directors remained silent and the Postmaster Generals continued to approve the payments to Aboitiz One, they are presumed to have substantially ratified respondent’s unauthorized acts. Therefore, respondent’s action is not considered ultra vires. However, the ratification of respondent’s unauthorized acts does not necessarily mean that the May 7, 2004 contract was validly executed. To determine if respondent committed grave misconduct when he entered into this contract, it must first be determined if public bidding was necessary.

Respondent argues that the expiration of the drivers’ employment contracts on March 31, 2004 is an emergency situation where immediate action was warranted since the non-renewal of the contracts “would cause delay, if not stoppage, of delivery of mails to various parts of the country.” He cites Republic Act No. 9184, Section 53(b), which provides:

Section 53. Negotiated Procurement. – Negotiated Procurement shall be allowed only in the following instances:……. (b) In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.

The expiration of the mail carriage drivers’ employment contracts is not a calamitous event contemplated under Republic Act No. 9184, Section 53(b). However, respondent chose to wait until the contracts expired to offer the Board of Directors a viable solution. Under the guise of an “emergency,” he was able to skirt the requirement of competitive bidding and directly contract with Aboitiz One.

Petitioner may have incorrectly characterized respondent’s offense as grave misconduct and dishonesty. In this instance, petitioner has not presented evidence to show that respondent benefited from the lack of public bidding in the procurement of Aboitiz One’s services. While there was a transgression of the established rules on public bidding, there must be evidence, independent from this transgression, which would show that respondent or some other person on his behalf benefited from the Aboitiz One contract. There is no evidence presented that respondent in this case deliberately resorted to negotiated procurement to benefit himself or some other person. Respondent should, instead, be held administratively liable for gross neglect of duty.

Respondent, as the acting Postmaster General, had the duty to first secure the Board of Directors’ approval before entering into the May 7, 2004 contract with Aboitiz One. The Board of Directors did not actually give its approval since it required him to first fulfill certain conditions. Instead of complying, he went ahead and executed the contract with Aboitiz One without ensuring that the procurement of its services by the Philippine Postal Corporation would be done through the proper procedures and at the most advantageous price. Accordingly, he is found guilty of gross neglect of duty.

*Case Digest by Paul C. Gandola, Refresher, Andres Bonifacio Law School, SY 2019-2020