A.M. No. 17-12-02-SC. Jul 16, 2019
EN BANC [A.M. No. 17-12-02-SC, July 16, 2019] RE: CONSULTANCY SERVICES OF HELEN P. MACASAET R E S O L U T I O N. CARPIO, J.:
The Case
This administrative matter involves the legality of the Contracts of Services between the Court and Ms. Helen P. Macasaet (Ms. Macasaet) for her rendition of consultancy services for the Enterprise Information Systems Plan (EISP) for the years 2010-2014.
The Facts
The EISP is intended to serve as the framework of the Information and Communications Technology (ICT) initiatives of the Judiciary. INDRA Sistemas S.A. (INDRA) was designated to provide Management and Consultancy Services for the development of the Judiciary's ICT Capability as part of the Judicial Reform Support Project financed by the World Bank. In the 23 June 2009 Resolution in A.M. No. 08-11 -09-SC,[1] the Court approved the EISP submitted by INDRA. However, the 2009 Budget did not include a budget for the judiciary-wide technical infrastructure, nationwide connectivity, and network security, which are prerequisites to the nationwide implementation of the EISP and on-going ICT projects like the eCourts.[2] Thus, there was a need to hire the services of an ICT consultant to review the status of the implementation of the EISP and related ICT and computerization projects.
In its 10 September 2013 Memorandum,[3] the Bids and Awards Committee for Consultancy Services (BAC-CS) considered the procurement as highly technical in nature and primarily requires trust and confidence owing to the fact that the EISP is a priority program of the Court. In the same Memorandum, the BAC-CS recommended three (3) consultants who may be considered by the Supreme Court for the procurement of consultancy services. In a Joint Memorandum dated 12 September 2013[4] to then Chief Justice Maria Lourdes P. A. Sereno, Atty. Michael B. Ocampo (Atty. Ocampo) of the Office of the Chief Justice (OCJ) and Mr. Edilberto A. Davis (Mr. Davis), then the Acting Chief of the Management Information Systems Office (MISO), stated that after reviewing and evaluating the three proposed consultants by the BAC-CS, they found Ms. Macasaet to be the most qualified. Their recommendation that Ms. Macasaet be hired for the procurement was approved by the then Chief Justice. The Supreme Court, ostensibly represented by its then Chief Administrative Officer Atty. Eden T. Candelaria (Atty. Candelaria), entered into a six-month Contract of Services with Ms. Macasaet on 1 October 2013.[5] The consultancy fee of Ms. Macasaet under the Contract of Services dated 1 October 2013 was P600,000.00, to be paid in six (6) equal monthly installments.
In a Memorandum to the Chief Justice dated 16 April 2014,[6] Atty. Ocampo stated that there was a need for a technical and policy consultant for the implementation of the Updated EISP Work Plan. Atty. Ocampo proposed to directly negotiate a six-month contract with the consultant, who would be paid a fee of P250,000.00 a month, inclusive of all applicable taxes. Atty. Ocampo based his proposal on Section 53.7 of the Revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184 (Government Procurement Reform Act),[7] where a procuring entity can forego public bidding and directly negotiate a six-month contract with a consultant, who will perform work that is highly technical, proprietary, primarily confidential or policy determining. Atty. Ocampo stated that the proposed consultancy is clearly highly technical and policy determining, which would be subject to the confirmation of the BAC-CS.[8] Again, in its 15 May 2014 Memorandum,[9] the BAC-CS reiterated that the subject procurement can proceed without the Committee's involvement as it was "highly technical in nature and primarily requires trust and confidence, owing to the fact that it is a priority program of the Supreme Court." The BAC-CS stated, in the same Memorandum, that in addition to the consultant previously engaged, the other consultants named in their previous memorandum should also be considered for the procurement of the consultancy services.[10] Acting on the Memorandum of the BAC-CS, Atty. Ocampo and Mr. Davis determined, in their Joint Memorandum dated 20 May 2014,[11] that Ms. Macasaet was the most qualified among the three proposed consultants. This Joint Memorandum was approved by then Chief Justice Sereno.However, the records are bereft of any explanation as to how the three (3) consultants were chosen by the BAC-CS for the purpose of recommending to the Supreme Court the procurement of consultancy services. As aptly pointed out by the report of the Office of the Chief Attorney (OCAt) dated 6 November 2017 (OCAt Report):
In the meantime, the Court issued an En Banc Resolution dated 16 September 2014[14] in A.M. No. 14-09-06-SC, approving the updated EISP work and its budget (2014-2019), which were supposedly the output of the 1 October 2013 Contract of Services with Ms. Macasaet.
In the Joint Memorandum dated 1 December 2014,[15] Mr. Davis and Atty. Ocampo stated that there was a continuing need for the services of a consultant to provide technical advice and assistance in the first year implementation of the plan and in developing ICT policies to support it. Thus, they recommended the extension of Ms. Macasaet's contract for another six (6) months.[16] Then Chief Justice Sereno approved the Joint Memorandum, and a Contract of Services was entered into on 10 December 2014[17] between Ms. Macasaet and the Court, where Atty. Candelaria signed for and in behalf of the Court. Thereafter, the Contract of Services was extended five more times, for a total of six extensions of six months for every extension. In total, the Court entered into a Contract of Services with Ms. Macasaet for a total of eight times.
The Issue
The issue at hand is the legality of the eight Contracts of Services, entered into by the Court by negotiated procurement, ostensibly represented by Atty. Candelaria, with Ms. Macasaet. This issue was initially part of A.M. No. 17-08-05-SC entitled "Re: Letter-Request of Atty. Lorenzo G. Gadon for Certified True Copies of Certain Documents in Connection with the Filing of an Impeachment Complaint."
In a Resolution dated 19 September 2017,[18] the question of the legality of the Contracts of Services was referred to the OCAt and former Chief Justice Sereno was given the opportunity to comment on Atty. Gadon's request for documents in relation to the Contracts of Services with Ms. Macasaet. In compliance with the Court's Resolution dated 19 September 2017,[19] the OCAt submitted the OCAt Report.[20] Acting on the OCAt Report, then Chief Justice Sereno submitted her Preliminary Comment on 20 November 2017 to the other members of the Court En Banc.[21] The Court, in its Resolution dated 21 November 2017,[22] required the BAC-CS and Ms. Macasaet to comment. The BAC-CS and Ms. Macasaet filed their respective Comments on 25 January 2018[23] and 22 January 2018.[24] The Court noted the Comment of Ms. Macasaet in its Resolution dated 23 January 2018.[25] In its Resolution dated 30 January 2018,[26] the Court noted the Comment of the BAC-CS. In the same Resolution, Attys. Candelaria and Ocampo were required by the Court to comment on the OCAt Report, which comment they filed on 20 February 2018 and 25 April 2018, respectively.
The Ruling of the Court
Based on the facts and applicable laws and regulations, all the Contracts of Services should be declared void ab initio.
SIGNATORY HAD NO WRITTEN AUTHORITY
The signatory in all the eight (8) Contracts of Services with Ms. Macasaet was Atty. Candelaria in her capacity as Chief Administrative Officer and Deputy Clerk of Court.[27] However, the records fail to show that she was authorized in writing by the Supreme Court En Banc to act as signatory of the Court in entering into these Contracts of Services with Ms. Macasaet. In fact, in her Comment dated 20 February 2018,[28] Atty. Candelaria herself admitted that she was not given any express full written authority by then Chief Justice Sereno to sign the Contracts of Services with Ms. Macasaet. In her Comment, Atty. Candelaria states:
EO No. 423 dated 20 April 2005[31] prescribed the rules and procedures on the review and approval of all government contracts to conform with the Government Procurement Reform Act.[32] EO No. 423 was issued in accordance with Section 75 of the Government Procurement Reform Act, which provides:
The Head of the Procuring Entity is defined by the IRR of the Government Procurement Reform Act as follows:
Article VIII, Section 6 of the Constitution provides that the Supreme Court "shall have administrative supervision over all courts and the personnel thereof." Thus, the administrative powers of the Court - which include entering into government contracts in the exercise of these powers of administration - are vested in the members of the Supreme Court sitting en banc, as a collegial body. To repeat, any government contract entered into on and in behalf of the Supreme Court must be authorized by the Supreme Court En Banc.
The powers of the Supreme Court - whether judicial or administrative supervision - are exercised by the members of the Court sitting en banc or by the members sitting in their respective Divisions. Rule 2, Section 1 of the Internal Rules of the Supreme Court[33] provides:
In particular, A.M. No. 99-12-08-SC (Revised) authorized the Divisions, the Chief Justice, and the Chairpersons of the Divisions, to act on certain administrative matters to relieve the Supreme Court En Banc from additional burden brought about by the considerable number of administrative matters or judicial cases. Specifically, the Chief Justice was authorized to act or resolve the following matters:
The Court [r]esolved, upon the recommendation of the Procurement Planning Committee (PPC), to
Based on the foregoing, it is clear that the Chief Justice is not authorized by the Court En Banc to independently act on behalf of the Supreme Court to enter into government contracts that are highly technical, proprietary, primarily confidential or policy determining such as the subject Contracts of Services. The power to enter into such contracts was clearly not delegated by the Supreme Court En Banc to the Chief Justice. Thus, the Contracts of Services should have been authorized by the Supreme Court En Banc which has administrative power over all courts and personnel thereof, and not merely by the then Chief Justice. A.M. No. 99-12-08-SC (Revised) expressly provides that those administrative matters not referred in the said resolution shall be acted upon by the Court En Banc, to wit:
A general authority to sign contracts on behalf of a government entity is insufficient for the official to sign a government contract entered into through any of the alternative methods of procurement. A government contract procured through any of the alternative methods of procurement is an exceptional method of entering into government contracts because the policy of the government is to conduct public bidding in all procurements in order to extend equal opportunity to all eligible and qualified private parties to participate in government procurement.[38] Thus, the alternative methods of procurement such as negotiated contracts are an exception to the general practice of procurement of government contracts which generally involves public bidding. As such, the law explicitly requires the Head of the Procuring Entity to be responsible for such government contract. Section 5 of EO No. 423 provides:
Atty. Candelaria alleges in her Comment that her authority to enter into the Contracts of Services with Ms. Macasaet on behalf of this Court was the Joint Memorandum recommending Ms. Macasaet to be hired as ICT consultant and that steps be undertaken to execute a contract for consultancy services between the Court and Ms. Macasaet.[39] This is not the written "full authority" required by EO No. 423.
As expressly stated in Section 4 of EO No. 423, "full authority" must be delegated in writing to the authorized official by the Head of the Procuring Entity. Being a special authority availed as an exception to the general rule on public bidding, the written "full authority" must refer specifically to the particular contract that is being entered into through the alternative method of procurement. The Joint Memorandum dated 20 May 2014 prepared for then Chief Justice Sereno and signed by Atty. Ocampo and Mr. Davis cannot be considered as a delegation by the Supreme Court En Banc of full authority to Atty. Candelaria to act and sign on behalf of the Supreme Court. The Joint Memorandum was not even addressed to the Supreme Court En Banc - it was prepared only for then Chief Justice Sereno. Thus, the other members of the Supreme Court were not informed of the subject Contracts of Services. The Supreme Court En Banc was notified of the existence of the Contracts of Services only upon the filing of the letter-request of Atty. Gadon. Since the other members of the Supreme Court En Banc were clearly unaware of the Contracts of Services with Ms. Macasaet, it is obvious that the power to enter into such contracts was not delegated to anyone. The Supreme Court En Banc could not have delegated the power to enter into such contracts which it did not know even existed.
While then Chief Justice Sereno signed the Joint Memorandum dated 20 May 2014 to signify her approval to the Joint Memorandum prepared by Atty. Ocampo and Mr. Davis, it does not vest any authority on Atty. Candelaria to sign the Contracts of Services with Ms. Macasaet. To repeat, then Chief Justice Sereno had no authority to delegate the power to enter into the Contracts of Services with Ms. Macasaet. Such power is vested only with the Supreme Court En Banc and not with the Chief Justice. Likewise, under Section 4 of EO No. 423, only the Head of the Procuring Entity may delegate in writing the full authority to give approval and/or enter into government contracts. Thus, the Supreme Court En Banc, as Head of the Procuring Entity, exercises the power to delegate the signing of government contracts entered into through alternative methods of procurement as allowed by law. The delegated official could have been the Chief Justice, another member or members of the Supreme Court En Banc, or any other official of the Court. However, in this case, it is clear that the Supreme Court En Banc did not delegate such power to anyone because it was not informed of the Contracts of Services with Ms. Macasaet.
Moreover, even assuming that the Supreme Court En Banc had delegated to the then Chief Justice the power to enter into the Contracts of Services, then Chief Justice Sereno could no longer re-delegate such power to another official. It is well-settled that what has been delegated can no longer be further delegated or re-delegated by the original delegate to another - Delegata potestas non potest delegari.[40] The power of administrative supervision over all courts and its personnel is vested by the Constitution in the Supreme Court En Banc. It is the Supreme Court En Banc which exercises administrative power over the courts and personnel, which includes the authority to enter into government contracts through alternative methods of procurement allowed by law. While the Supreme Court En Banc may delegate its administrative powers to another such as its Divisions, the Chairpersons of the Divisions or the Chief Justice - as it has done in A.M. No. 99-12-08-SC (Revised) - the delegates may no longer re-delegate the authority or power delegated to them. Therefore, even assuming that the Supreme Court En Banc delegated to the then Chief Justice the power to enter into the government contracts with Ms. Macasaet, then Chief Justice Sereno could no longer re-delegate such authority.
Even assuming for the sake of argument, although incorrectly, that then Chief Justice Sereno had the authority to delegate the power to enter into the Contracts of Services, Atty. Candelaria still failed to show any written authority from the then Chief Justice authorizing her to enter into the said Contracts of Services. Atty. Candelaria attached several Memoranda where authority was given to her to sign for and in behalf of previous Chief Justices. This is not the full written delegation of authority required by Section 4 of EO No. 423. Evidently, any written authority, if ever such authority could be delegated by a Chief Justice, should have been given by then Chief Justice Sereno, who was the Chief Justice at the time the contracts were entered into with Ms. Macasaet, and not by any other previous Chief Justices. Previous Chief Justices had no authority to sign, much less delegate the authority to sign, government contracts after their term of office.
More importantly, the authority given to Atty. Candelaria by the previous Chief Justices, which was also the same authority given to her by then Chief Justice Sereno, referred only to the authority to sign for and in behalf of their communications with other government agencies and the transmittal of Court En Banc Resolutions to concerned agencies, as well as to "internal personnel matters."[41] The Memorandum of Atty. Candelaria dated 29 August 2012[42] approved by then Chief Justice Sereno specifically enumerated the documents for which Atty. Candelaria asked authority to sign on Chief Justice Sereno's behalf: "Notice of Salary Adjustment; Notice of Step Increment; Notice of Entitlement/Adjustment of Longevity Pay; Notice of Acceptance of Resignation; Permission to Transfer; and the like, except those pertaining to the Honorable Justices of the Supreme Court."[43] This is not the full written authority to be delegated by the Head of the Procuring Entity as expressly required by law for the approval of government contracts entered into through alternative methods of procurement such as the directly negotiated contracts in this case.
Justice Caguioa, in his Dissenting Opinion, maintains that Atty. Candelaria was actually given the authority by then Chief Justice Sereno to sign the Contracts of Services with Ms. Macasaet, and that the basis of this authority is the action slip issued by Atty. Ocampo which states:
First, the action slip merely stated that the authority from then Chief Justice Sereno was attached to it, without expressly stating what the attachment was.
Second, the action slip was not even addressed to Atty. Candelaria, the actual signatory to the Contract of Services with Ms. Macasaet, but rather, it was addressed to Deputy Court Administrator Raul B. Villanueva. The name of Atty. Candelaria, or her position as Chief Administrative Officer and Deputy Clerk of Court, is not even mentioned in the action slip.
Third, there were two (2) attachments to the action slip of Atty. Ocampo: (1) the Contract of Services dated 23 May 2014; and (2) the Joint Memorandum dated 20 May 2014 prepared by Atty. Ocampo and Mr. Davis. The Contract of Services dated 23 May 2014 signed by Atty. Candelaria and Ms. Macasaet does not contain any written authorization from then Chief Justice Sereno to Atty. Candelaria. On the other hand, the Joint Memorandum merely contained the recommendation by Atty. Ocampo and Mr. Davis to then Chief Justice Sereno that Ms. Macasaet is the most qualified among the proposed consultants. This recommendation is entirely different from a recommendation to authorize Atty. Candelaria to sign the Contract of Services, a recommendation not found in the Joint Memorandum.
There is no mention or statement whatsoever in the Joint Memorandum delegating to Atty. Candelaria or to the Chief Administrative Officer and Deputy Clerk of Court the full authority to enter into the Contract of Services with Ms. Macasaet. The Joint Memorandum does not even mention the name of Atty. Candelaria or her position as Chief Administrative Officer and Deputy Clerk of Court. The Joint Memorandum merely states that "[i]f the Honorable Chief Justice approves the recommendation of the undersigned, appropriate steps shall be undertaken to execute a contract of consultancy services between the Supreme Court and Ms. Macasaet."[46] One essential appropriate step is an express full written authority given by the Supreme Court En Banc, or by the then Chief Justice, assuming arguendo, although incorrectly, she had the power, authorizing Atty. Candelaria as the signatory to the Contract of Services, which essential step was never taken.
To repeat, there is no mention whatsoever in the Joint Memorandum that Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court was being designated as the authorized signatory on behalf of the Supreme Court En Banc or on behalf of the Chief Justice for the Contract of Services with Ms. Macasaet. For ready reference, attached are copies of (1) the action slip of Atty. Ocampo (Annex "A"); the (2) Joint Memorandum dated 20 May 2014 of Atty. Ocampo and Mr. Davis (Annex "B"); and (3) the Contract of Services with Ms. Macasaet (Annex "C").
The approval of then Chief Justice Sereno of this Joint Memorandum was merely for the execution of the Contract of Services to proceed. This is not the full written authority required by law delegating to a specific official the power to sign and approve a government contract entered into under an alternative method of procurement as this written authority should specify not only the particular contract to be signed but more importantly the name of the authorized signatory to whom the delegation of power is being entrusted. Thus, the statement of Atty. Ocampo in the action slip that there was "authorization from the Chief Justice to execute the said Contract of Services" is misleading, or even false because the attached Joint Memorandum refers only to the approval by then Chief Justice Sereno of the recommendation of Atty. Ocampo and Mr. Davis that Ms. Macasaet is the most qualified consultant, and there is no delegation whatsoever of any authority to Atty. Candelaria or to any other official to execute and sign the Contract of Services on behalf of the Court En Banc or even on behalf of then Chief Justice Sereno.
To reiterate, there is no mention whatsoever in the Joint Memorandum that Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court is authorized to sign the Contract of Services. The name of Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court is not even mentioned in the Joint Memorandum. In fact, there is no one named in the Joint Memorandum as the authorized signatory to sign the Contract of Services.
Indisputably, all of the Contracts of Services with Ms. Macasaet were signed by Atty. Candelaria without the written "full authority" of the Supreme Court En Banc or even the then Chief Justice. There was a blatant violation of Section 4 of EO No. 423. Thus, these Contracts of Services must be declared "invalid and not binding on the Government," as expressly mandated in Section 5 of EO No. 423.
QUALIFICATIONS OF MS. MACASAET
Aside from the lack of authority of the signatory to the said Contracts of Services in violation of Sections 4 and 5 of EO No. 423, the procurement of the services of Ms. Macasaet was also in violation of the provisions of the Government Procurement Reform Act.
The Contracts of Services between the Court and Ms. Macasaet did not pass through the regular process of engaging consultants because it was considered to be "highly technical in nature and primarily requires trust and confidence owing to the fact that it is a priority program of the Supreme Court."[47] The BAC-CS considered the procurement to be highly technical in nature, citing Section 53.7 of the IRR of the Government Procurement Reform Act which provides:
The Updated EISP Project includes, among others, the upgrading of the Judiciary Data Center, cabling and site preparation and connectivity and network security. These activities require highly specialized technical ICT expertise, not general business management expertise. More specifically, based on the Scope of Work of the 23 May 2014 Contract of Services as quoted below, the Updated EISP Project includes the upgrade of existing judiciary Data Center and the design and construction of the Judiciary Data Center Disaster Site. Thus, the Updated EISP Project is not merely a general business project, but primarily a highly technical ICT infrastructure project, which Ms. Macasaet is not specially qualified to review or oversee.
The Scope of Work of the Contract of Services will show that the work did not require the additional services of a general business management consultant. More specifically, Article I, Section 1.1 of the Contract of Services dated 23 May 2014 provides:
While the Contract of Services evidently requires the procurement of the services of a highly technical consultant, the Terms of Reference for the said contract requires the consultant to have an advanced degree in business management OR any ICT-related degree, and be a certified customer relationship management system (CRM) specialist and manager.[51] Justice Caguioa argues in his Dissenting Opinion that since Ms. Macasaet has an advanced degree in business management and has a certification in Customer Relationship Management in accordance with the Terms of Reference, she is a qualified consultant for the Updated EISP Project.[52] We find otherwise.
A highly technical project requires a highly technical consultant. To require in the alternative that a consultant may only have a business management degree and a certification as a Customer Relationship Management specialist truly defies reason or logic. Simply put, this is a tell-tale sign that the Terms of Reference for the consultancy was expressly tailor-made for Ms. Macasaet who is merely a general business consultant and who does not possess the qualifications to handle a highly technical ICT project. One cannot rely on a business management degree holder for the implementation of a highly technical ICT project. This is simply absurd. For the implementation of a highly technical project such as the EISP, a consultant with highly technical qualifications is required. For the Terms of Reference to substitute an advanced degree in ICT with an advanced degree in business management is a highly irregular and inconsistent requirement. This Court cannot give its imprimatur to such a contract.
Ms. Macasaet's experience in developing and participating in ICT systems in both private and public sectors is not the highly technical qualification required for the implementation of the Updated EISP Project. Ms. Macasaet's experience is on the business and management side of ICT systems. As the Updated EISP Project was already approved by the Supreme Court En Banc, the general ICT services required under such EISP could have been implemented by the Supreme Court's MISO. The Chief of MISO is also already qualified to oversee the general implementation of such project. There was no need to engage the services of a general business consultant for the mere implementation of the Updated EISP Project.
The qualifications of the Chief of MISO, as provided in A.M. No. 06-3-07-SC,[53] are as follows:
Any highly technical consultancy agreement, if needed, should have been for specific and highly specialized ICT consultancy services, such as for security of information systems, which the MISO may identify as an area where it needs special assistance during the implementation of the Updated EISP Project. General business and management consultancy services, such as those provided by Ms. Macasaet, cannot be considered highly technical consultancy services for the purpose of reviewing and implementing the Updated EISP Project and related ICT and computerization projects.
As the services that Ms. Macasaet provided, based on her qualifications and experience, were mere general business and management services, these services do not fall under the requirement of being a highly technical ICT consultant which would justify the procurement through direct negotiation. Thus, the procurement of her services and the method through which such services were procured - direct negotiation - were unnecessary and unwarranted.
AMOUNT OF COMPENSATION WAS NOT JUSTIFIED
The compensation for Ms. Macasaet for the first contract was P600,000.00 for six (6) months, or P100,000.00 per month.[54] From the Second Contract of Services until the Eighth Contract of Services, she received a monthly compensation of P250,000.00.[55] This Court finds these amounts to be unreasonable and without any basis in law.
When the Contracts of Services were entered into with Ms. Macasaet, DBM Circular Letter No. 2000-11 dated 1 June 2000[56] was applicable in determining the ceiling or maximum amount of compensation that may be paid to individual professional consultants such as Ms. Macasaet.[57] DBM Circular Letter No. 2000-11 provides in part:
In this case, to determine the maximum amount of compensation that may be paid to Ms. Macasaet under the Contracts of Services, the equivalent position to the consultant must be determined. As correctly found by the OCAt Report, based on the various positions in the Supreme Court, the equivalent position of Ms. Macasaet as a technical consultant to implement the Updated EISP Project is the post of Chief of the MISO.[58] The Chief of the MISO is a highly technical or policy determining position, and one that requires knowledge and expertise in computer science or information and communications technology. A.M. No. 05-9-29-SC[59] provides in part:
At this point, this Court notes that DBM Circular Letter No. 2000-11 has been expressly revoked by DBM Circular Letter No. 2017-9[62] dated 16 May 2017. DBM Circular Letter No. 2017-9 provides:
Moreover, DBM Circular Letter No. 2017-9 set the guidelines on how to determine the proper amount of compensation for individual professional consultants:
On the other hand, Joint Circular No. 1, series of 2017, dated 15 June 2017 (Joint Circular) provided guidelines on how the payment of services under Individual Contract of Services should be determined, to wit:
Atty. Ocampo conducted his market research for the prevailing market rates in his Memorandum dated 16 April 2014,[64] which was referred to in his Memorandum dated 22 June 2015, and again in his Memorandum dated 7 December 2015.[65] In his Memorandum dated 7 December 2015, Atty. Ocampo benchmarked the compensation of Ms. Macasaet using an online tool, and found that the fees were comparable to and within the pay scale range of ICT positions in the Philippines.[66] This was the justification given for the amount of P250,000.00 monthly compensation for Ms. Macasaet under the Second to Eighth Contracts of Services.
Again, before the revocation on 15 June 2017 by the Joint Circular of DBM Circular Letter 2000-11, the amount of compensation for individual consultants such as Ms. Macasaet could not exceed 120% of the minimum basic salary of an equivalent position in the Supreme Court, which is that of the Chief of MISO. Thus, prevailing market rates could not have applied to the Contracts of Services entered into from 2013 to 2016, or prior to 15 June 2017. Worse, there was absolutely no basis given for the cost of consultancy services in the first Contract of Services with Ms. Macasaet. The first market research was embodied only in Atty. Ocampo's Memorandum dated 16 April 2014,[67] which was long after the First Contract of Services dated 1 October 2013.[68]
If we assume that Ms. Macasaet should have been paid according to the prevailing market rates for her consultancy services for the contract entered into in 2017, which was the last Contract of Services between the Court and Ms. Macasaet - as DBM Circular Letter No. 2000-11 had been revoked by then, this Court still finds her compensation to be unjustified as there was no proper market research made to determine such rates as of 2017. The market research conducted by Atty. Ocampo was in 2015 while the last Contract of Services was entered into in 2017, more than two (2) years thereafter. Thus, when the eighth and last Contract of Services was entered into on 24 July 2017, there was no proper market research conducted to determine the prevailing market rates as of 2017, which prevailing market rates should be the applicable amount of compensation payable to an individual professional consultant.
PROCUREMENT WAS NOT IN ACCORDANCE WITH THE
ANNUAL APPROPRIATION PLAN
There was a violation of Section 7 of the Government Procurement Reform Act when the second Contract of Services was entered into on 23 May 2014 without the proper Annual Procurement Plan (APP).
The APP is defined as the document that consolidates the various Project Procurement Management Plans (PPMPs) submitted by the various Project Management Offices and end-user units within the Procuring Entity.[69] It reflects the entirety of the procurement activities that will be undertaken by the Procuring Entity within the calendar year.[70] Section 7 of the Government Procurement Reform Act provides that all procurements shall be included in the APP, and the APP must be consistent with the yearly approved budget of the Procuring Entity.
Thus, the inclusion of all the planned procurements in the APP is crucial to ensure that all expenses and expenditures of a government entity in relation to its procurement are within the approved appropriation as reflected in the corresponding GAA.
In this case, when the second Contract of Services dated 23 May 2014 was entered into, the APP for the year 2014 did not include the line item for "Technical and Policy Consultants" for purposes of procurement.[71] This was only included when the APP was subsequently revised, in accordance with the Memorandum of the Procurement Planning Committee (PPC), where the PPC requested the amendment of the APP with the inclusion of the line item for "Technical and Policy Consultants" to be sourced from the savings of the Court.[72] The recommendation to include the line item for "Technical and Policy Consultants" in the addendum to the 2014 Annual Procurement Plan was only approved by the Court in A.M. No. 10-1-10-SC dated 23 September 2014.[73] Clearly, when the Contract of Services dated 23 May 2014 was entered into with Ms. Macasaet, the APP did not cover the hiring of services of a technical and policy consultant for procurement purposes.
While it is true that the APP refers to and pertains to the entire fiscal year, and that an APP may be revised in accordance with the guidelines set forth in the IRR,[74] the fact remains that before procurement is actually undertaken, such procurement must have been included in the existing APP of the Procuring Entity. Thus, the inclusion of the line item for "Technical and Policy Consultants" in the revised APP must have first been approved before any contract with technical and policy consultants could be entered into by the Court. To repeat, while the APP may be revised in accordance with the applicable guidelines, such revision should precede the procurement of services not found in the original APP for the applicable fiscal year.
Moreover, it is doubtful that the savings of the Court could be transferred to the hiring of a technical and policy consultant, which was a non-existent item before the APP was amended. In Sanchez v. Commission on Audit,[75] the Court held that for a transfer of appropriation, two essential requisites must be complied with - first, there must be savings in the programmed appropriation of the transferring agency, and second, there must be an existing item, project or activity with an appropriation in the receiving agency to which the savings will be transferred. In Sanchez v. Commission on Audit, the Court held:
Moreover, since the line item for "Technical and Policy Consultants" was not initially included in the APP for 2014,[78] it was also not considered in the evaluation of the budgetary proposal of the Supreme Court for consistency and compliance with existing budget rules. The budget proposal is submitted to Congress for the enactment of the GAA. Thus, the GAA for 2014 did not include the procurement of Technical and Policy Consultants. Before the APP was amended, there was clearly no budget or appropriation for the Contract of Services for ICT consultancy services.
The funds for the proposed line item for "Technical and Policy Consultants" were to be sourced from the savings of the Court.[79] However, before the approval of the revised APP, there was no appropriation for the consultancy agreement of Ms. Macasaet that could be augmented from the savings of the Court. The procurement of consultancy services without the prior amendment of the APP clearly renders void the Contract of Services dated 23 May 2014 with Ms. Macasaet. To hold otherwise would be to contravene the requirement that there must first be a proper appropriation before public funds are expended.
Under Presidential Decree No. 1445[80] or the Government Auditing Code of the Philippines, the expenditure of public funds without the required appropriation renders the contract void:
It is clear that there must first be an appropriation before any contract involving expenditure of public funds is entered into, and any contract entered into in violation of this requirement renders such contract void. In this case, before the approval of the revised APP, there was no proper appropriation for the Contract of Services dated 23 May 2014.
Further, based on the Contract of Services dated 23 May 2014, the payment for the services was to be made in six equal monthly installments -the first payment to be made within fifteen (15) days from the signing of the Contract, and the next installment to be paid every 15th of the month beginning on 15 July 2014.[81] Thus, from the signing of the Contract and until 15 September 2014, there was actual payment for consultancy fees which was not covered by proper appropriation. It was only on 23 September 2014 when the APP was revised to include the line item for "Technical and Policy Consultants."[82] Thus, not only was a contract entered into without proper appropriation, there was even actual expenditure of public funds without the required appropriation. Thus, the Contract of Services dated 23 May 2014 is in blatant violation of Section 85 of PD No. 1445, and must be declared void as expressly mandated in Section 87 of PD No. 1445.
LACK OF CERTIFICATE OF AVAILABILITY OF FUNDS
Finally, we address the lack of Certificate of Availability of Funds (CAF) for the Contracts of Services with Ms. Macasaet.[83] The CAF was issued only for the first two Contracts of Services in the amounts of P600,000.00 and P1,500,000.00, respectively.[84] The rest of the six Contracts of Services, which had a consultancy fee of P1,500,000.00 each, were not covered by any CAF. The absence of the CAF for the procurement of the consultancy services of Ms. Macasaet is in blatant violation of Sections 86 and 87 of PD No. 1445, which provide:
The CAF cannot be attached to the contract after the contract is entered into because Section 86 expressly requires that "no contract x x x shall be entered into" without the required CAF being "attached to x x x the proposed contract." Unless the CAF is so attached to the contract so as to become an integral part of the contract before the signing of the contract, the contract "shall be void" as expressly declared in Section 87 of PD No. 1445. In the present case, no CAF was attached to the third and subsequent contracts at the time these contracts were entered into, rendering these contracts clearly void.
EO No. 292 (Administrative Code of 1987) also provides a similar provision on the requirement of a CAF before expenditures are incurred. Section 40, Chapter 5, Book VI of the Administrative Code of 1987 provides:
This Court finds his arguments untenable.
The law is absolutely clear on the requirement that before any obligation chargeable against any authorized allotment is incurred, there must be a CAF or a certification from the Chief Accountant as to the allotment against which the expenditure will be charged, and that funds are available for such expenditure. This certificate required by law cannot be replaced by mere Obligation Requests and Disbursement Vouchers, which serve different purposes from that of a CAF which certifies that there are funds actually appropriated for the contract to be executed, and that such funds are actually available to be expended. The Obligation Requests and Disbursement Vouchers are not the certification from the chief accountant that is required by Section 40 of Book VI, Chapter 5 and Section 47, Title I, Book V, Subtitle B, Chapter 8 of the Administrative Code of 1987 or Section 86 of PD No. 1445.
In an Obligation Request, the Head of the Requesting Office or his authorized representative certifies on the necessity and legality of the charges to the budget under his supervision, and the validity, propriety and legality of the supporting documents.[89] In the same Obligation Request, the Head of the Budget Unit or his authorized representative certifies on the availability of allotment obligated for the purpose as indicated therein. In particular, COA Circular No. 003-06[90] provides:
On the other hand, a Disbursement Voucher contains the certification by the Head of Accounting Unit or his authorized representative on the availability of cash, subject to Advice to Debit Accounts, on the completeness of the supporting documents.[91] It also contains the approval by the Head of the Agency or his authorized representative on the payment covered by the Disbursement Voucher. Finally, the same Disbursement Voucher contains the acknowledgment by the claimant or his duly authorized representative for the receipt of the check or cash, and the date of such receipt. Simply put, the Disbursement Voucher merely records the mode of payment made to the payee indicated therein, and certifies that the cash for such disbursement is available and that the supporting documents for such disbursement are complete.
It is clear, therefore, that the Obligation Requests and the Disbursement Vouchers are not the certification required by law to be secured before an obligation is incurred by the government, which certification shows that funds have been appropriated by law and that such funds are available therefor. Obligation Request, Budget Utilization Request, and Disbursement Voucher are mere forms prescribed by the Commission on Audit, to be used in recording obligations incurred, budget utilization, and disbursements.[92]
Justice Caguioa, in his Dissenting Opinion, agrees with the finding of the OCAt that no CAF was issued prior to entering into the third to eighth Contracts of Services with Ms. Macasaet[93] but raises the argument that since there is no particular form required to be followed for the issuance of the CAF, the Obligation Requests and Disbursement Vouchers which were issued before the payments to Ms. Macasaet are compliant with the CAF requirement under the law.
The Court disagrees.
Again, what is required by law is a CAF before any obligation chargeable against any authorized allotment is incurred. This also means that the CAF must be secured before the services are performed or the goods are delivered. That there were an Obligation Request and a Disbursement Voucher before payment was made to Ms. Macasaet is entirely irrelevant and immaterial because the law requires the CAF before the obligation is incurred - not thereafter when the obligation is paid. Clearly, when payment is made, the obligation had already been incurred and performed.
The Obligation Request and Disbursement Voucher, while made before payment, are issued after the obligation chargeable against the authorized allotment is incurred. Even if the law does not require the CAF to be in any particular form, an Obligation Request or a Disbursement Voucher cannot replace the CAF required by law because the law clearly states that there must be a CAF before such obligation is actually incurred or authorized.
ALL THE CONTRACTS OF SERVICES ARE VOID
In summary, all the eight (8) Contracts of Services must be declared void ab initio.
It is beyond doubt that (1) the lack of authority of the government signatory; (2) lack of qualifications of Ms. Macasaet; (3) the excessive amount of consultancy fees; (4) the incurrence of obligation and the expenditure of public funds without the proper appropriation; and (5) the absence of the required CAFs render the subject Contracts of Services with Ms. Macasaet void ab initio.
WHEREFORE, the Court DECLARES the subject eight (8) Contracts of Services with Ms. Helen P. Macasaet, for Information and Communications Technology consultancy services in relation to the Supreme Court's Enterprise Information Systems Plan, VOID ab initio.
Ms. Helen P. Macasaet is hereby DIRECTED to reimburse all the amounts received as consultancy fees from the subject eight (8) Contracts of Services with the Supreme Court of the Philippines amounting to Eleven Million One Hundred Thousand Pesos (P11,100,000.00) less whatever taxes were withheld, within thirty (30) days from finality of this Resolution, with legal interest at the rate of six percent (6%) per annum from the expiration of the same thirty (30) day period until the same shall have been fully paid.
SO ORDERED.
Bersamin (C.J.), Peralta, Leonen, A. Reyes, Jr., Gesmundo, J. Reyes, Jr., Hernando, Carandang, Lazaro-Javier, and Inting, JJ., concur.
Caguioa, J., see dissenting opinion.
Del Castillo and Jardeleza, JJ., join the dissent of J. Caguioa.
Perlas-Bernabe, J., on official leave.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on July 16, 2019 a Resolution, copy attached herewith, was rendered by the Supreme Court in the above-entitled administrative matter, the original of which was received by this Office on September 16, 2019 at 11:40 a.m.
[1] Rollo, pp. 50-51.
[2] Id. at 2 (OCAt Report).
[3] Id. at 61-62.
[4] Id. at 63-64.
[5] Id. at 67-70.
[6] Id. at 80-83.
[7] Approved on 10 January 2003 and took effect on 1 April 2003.
[8] Rollo, p. 83.
[9] Id. at 95-96.
[10] Id. at 96.
[11] Id. at 614-616.
[12] Id. at 27.
[13] Id. at 606-613.
[14] Id. at 77.
[15] Id. at 114-117.
[16] Id. at 115.
[17] Id. at 118-126.
[18] Id. at 49-49A.
[19] Id.
[20] Id. at 1-48.
[21] Id. at 409-421.
[22] Id. at 407.
[23] Id. at 464-488.
[24] Id. at 433-460.
[25] Id. at 462-463.
[26] Id. at 668-669.
[27] Id. at 46 (OCAt Report).
[28] Id. at 670-672.
[29] Id. at 671-672.
[30] Id.
[31] Repealing Executive Order No. 109-A, dated 18 September 2003, Prescribing the Rules and Procedures on the Review and Approval of All Government Contracts to Conform with Republic Act No. 9184, Otherwise Known as "The Government Procurement Reform Act."
[32] Under Chapter 2, Title 1, Book III of the Administrative Code of 1987, the President has the authority to issue Executive Orders to implement and execute statutes. In particular, Section 2 provides:
Chapter 2. Ordinance Power
[34] Id.
[35] Flight Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc., G.R. No. 178083, 13 March 2018.
[36] Referral of Administrative Matters and Cases to the Divisions of the Court, the Chief Justice, and to the Chairmen of the Divisions for Appropriate Action or Resolution. Dated 22 April 2003.
[37] Re: [2018] Procurement Plan for the Supreme Court and the Lower Courts. Dated 6 March 2018.
[38] See Section 3(b), Government Procurement Reform Act.
[39] Rollo, p. 672.
[40] Gonzales v. Philippine Amusement and Gaming Corporation, 473 Phil. 582 (2004). See Heirs of Santiago v. Lazaro, 248 Phil. 593 (1988).
[41] Rollo, p. 675.
[42] Id.
[43] Id.
[44] Id. at 605.
[45] J. Caguioa's Dissenting Opinion, p. 63.
[46] Rollo, p. 616.
[47] Id. at 95.
[48] Id. at 607.
[49] Id. at 455.
[50] Id.
[51] Id. at 87.
[52] J. Cagiuoa's Dissenting Opinion, pp. 22-23.
[53] Re: Request for Approval of the Revised Qualification Standard for the Chief of MISO. Dated 25 November 2009.
[54] Rollo, pp. 67-70.
[55] Id. at 39 (OCAt Report). See rollo, pp. 100-107, 118-126, 138-146, 156-164, 177-185, 200-208 and 221- 229.
[56] Compensation of Contractual Personnel and Individual Professional Consultants.
[57] Rollo, p. 41 (OCAt Report).
[58] Id.
[59] In the Matter of Classifying as Highly Technical and/or Policy Determining the Third Level Positions Below that of Chief Justice and Associate Justices in the Supreme Court, Including those in the Philippine Judicial Academy and the Judicial and Bar Council, and for Other Purposes. Dated 27 September 2005.
[60] Rollo, p. 42 (OCAt Report).
[61] Id.
[62] Clarification on the Guidelines on the Procurement of Consulting Services.
[63] Manual of Procedures for the Procurement of Consulting Services.
[64] Rollo, pp. 80-83.
[65] Id. at 397-406.
[66] Id. at 399-406.
[67] Id. at 80-83.
[68] Id. at 67-70.
[69] Procurement Manual, Volume 1 - Guidelines on the Establishment of Procurement Systems and Organizations.
[70] Id.
[71] Rollo, p. 22 (OCAt Report).
[72] Id. See also rollo, p. 252.
[73] Id. at 710 (OCAt Report).
[74] See Section 7.3, Rule III, Revised IRR of the Government Procurement Reform Act.
[75] 575 Phil. 428 (2008).
[76] Id. at 454-455.
[77] Id. at 462-463.
[78] Rollo, p. 710 (OCAt Report).
[79] Id.
[80] Dated 11 June 1978.
[81] Rollo, pp. 102-103.
[82] Id. at 710 (OCAt Report).
[83] Id. at 35 (OCAt Report).
[84] See rollo, pp. 53 and 89.
[85] 662 Phil. 771 (2011).
[86] Id. at 779-780.
[87] 807 Phil. 555 (2017).
[88] Rollo, pp. 769-770.
[89] See Annex A1 of COA Circular No. 003-06 dated 31 January 2006.
[90] Restatement with Amendments of COA Circular No. 2005-001 on Accounting Policies Related to the Budget, Accounting and Disbursement Functions in National Government Agencies Under the New Government Accounting System (NGAS). Dated 31 January 2006.
[91] See Annex B of COA Circular No. 003-06 dated 31 January 2006.
[92] COA Circular No. 003-06 dated 31 January 2006.
[93] J. Caguioa's Dissenting Opinion, pp. 53, 55.
The Facts
The EISP is intended to serve as the framework of the Information and Communications Technology (ICT) initiatives of the Judiciary. INDRA Sistemas S.A. (INDRA) was designated to provide Management and Consultancy Services for the development of the Judiciary's ICT Capability as part of the Judicial Reform Support Project financed by the World Bank. In the 23 June 2009 Resolution in A.M. No. 08-11 -09-SC,[1] the Court approved the EISP submitted by INDRA. However, the 2009 Budget did not include a budget for the judiciary-wide technical infrastructure, nationwide connectivity, and network security, which are prerequisites to the nationwide implementation of the EISP and on-going ICT projects like the eCourts.[2] Thus, there was a need to hire the services of an ICT consultant to review the status of the implementation of the EISP and related ICT and computerization projects.
In its 10 September 2013 Memorandum,[3] the Bids and Awards Committee for Consultancy Services (BAC-CS) considered the procurement as highly technical in nature and primarily requires trust and confidence owing to the fact that the EISP is a priority program of the Court. In the same Memorandum, the BAC-CS recommended three (3) consultants who may be considered by the Supreme Court for the procurement of consultancy services. In a Joint Memorandum dated 12 September 2013[4] to then Chief Justice Maria Lourdes P. A. Sereno, Atty. Michael B. Ocampo (Atty. Ocampo) of the Office of the Chief Justice (OCJ) and Mr. Edilberto A. Davis (Mr. Davis), then the Acting Chief of the Management Information Systems Office (MISO), stated that after reviewing and evaluating the three proposed consultants by the BAC-CS, they found Ms. Macasaet to be the most qualified. Their recommendation that Ms. Macasaet be hired for the procurement was approved by the then Chief Justice. The Supreme Court, ostensibly represented by its then Chief Administrative Officer Atty. Eden T. Candelaria (Atty. Candelaria), entered into a six-month Contract of Services with Ms. Macasaet on 1 October 2013.[5] The consultancy fee of Ms. Macasaet under the Contract of Services dated 1 October 2013 was P600,000.00, to be paid in six (6) equal monthly installments.
In a Memorandum to the Chief Justice dated 16 April 2014,[6] Atty. Ocampo stated that there was a need for a technical and policy consultant for the implementation of the Updated EISP Work Plan. Atty. Ocampo proposed to directly negotiate a six-month contract with the consultant, who would be paid a fee of P250,000.00 a month, inclusive of all applicable taxes. Atty. Ocampo based his proposal on Section 53.7 of the Revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184 (Government Procurement Reform Act),[7] where a procuring entity can forego public bidding and directly negotiate a six-month contract with a consultant, who will perform work that is highly technical, proprietary, primarily confidential or policy determining. Atty. Ocampo stated that the proposed consultancy is clearly highly technical and policy determining, which would be subject to the confirmation of the BAC-CS.[8] Again, in its 15 May 2014 Memorandum,[9] the BAC-CS reiterated that the subject procurement can proceed without the Committee's involvement as it was "highly technical in nature and primarily requires trust and confidence, owing to the fact that it is a priority program of the Supreme Court." The BAC-CS stated, in the same Memorandum, that in addition to the consultant previously engaged, the other consultants named in their previous memorandum should also be considered for the procurement of the consultancy services.[10] Acting on the Memorandum of the BAC-CS, Atty. Ocampo and Mr. Davis determined, in their Joint Memorandum dated 20 May 2014,[11] that Ms. Macasaet was the most qualified among the three proposed consultants. This Joint Memorandum was approved by then Chief Justice Sereno.However, the records are bereft of any explanation as to how the three (3) consultants were chosen by the BAC-CS for the purpose of recommending to the Supreme Court the procurement of consultancy services. As aptly pointed out by the report of the Office of the Chief Attorney (OCAt) dated 6 November 2017 (OCAt Report):
There are no documents from the BAC-CS that would show the following: (i) posting of opportunity in PhilGEPS website, SC website and SC bulletin boards or letter/s addressed to prospective individual consultant/s to submit his/her/their resume with respective financial proposal/s; (ii) that any or all three (3) prospective individual consultants named by the BAC-CS submitted his/her/their resume with respective financial proposal/s to the BAC-CS; (iii) the conduct of the negotiation; [iv] resolution recommending the award; [v] notice of award; [vi] proof that the notice of award was posted in the PhilGEPS website, SC website and in the SC bulletin boards; and [vii] notice to proceed.On 23 May 2014, the Court, ostensibly represented by Atty. Candelaria as Chief Administrative Officer, entered into a second six-month Contract of Services with Ms. Macasaet.[13]
If at all, the BAC-CS terminated its role after having "resolved to consider the subject procurement as highly technical in nature and primarily requires trust and confidence owing to the fact that it is the priority program of the Supreme Court." After holding "that there is no need for said procurement to pass through the regular process of engaging consultants being conducted by it", the procurement got off the hands of the BAC-CS through a disposition "that the Supreme Court, through the Office of the Chief Justice, can and should exercise its discretion to act on the subject procurement so as not to delay the same." The BAC-CS, instead of proceeding as prescribed, merely submitted three (3) names of "consultants which can be considered by the Supreme Court for the subject procurement." Even the process through which the BAC-CS had this list of three (3) names, which includes Ms. Macasaet, is not on record.[12] (Emphasis supplied)
In the meantime, the Court issued an En Banc Resolution dated 16 September 2014[14] in A.M. No. 14-09-06-SC, approving the updated EISP work and its budget (2014-2019), which were supposedly the output of the 1 October 2013 Contract of Services with Ms. Macasaet.
In the Joint Memorandum dated 1 December 2014,[15] Mr. Davis and Atty. Ocampo stated that there was a continuing need for the services of a consultant to provide technical advice and assistance in the first year implementation of the plan and in developing ICT policies to support it. Thus, they recommended the extension of Ms. Macasaet's contract for another six (6) months.[16] Then Chief Justice Sereno approved the Joint Memorandum, and a Contract of Services was entered into on 10 December 2014[17] between Ms. Macasaet and the Court, where Atty. Candelaria signed for and in behalf of the Court. Thereafter, the Contract of Services was extended five more times, for a total of six extensions of six months for every extension. In total, the Court entered into a Contract of Services with Ms. Macasaet for a total of eight times.
The Issue
The issue at hand is the legality of the eight Contracts of Services, entered into by the Court by negotiated procurement, ostensibly represented by Atty. Candelaria, with Ms. Macasaet. This issue was initially part of A.M. No. 17-08-05-SC entitled "Re: Letter-Request of Atty. Lorenzo G. Gadon for Certified True Copies of Certain Documents in Connection with the Filing of an Impeachment Complaint."
In a Resolution dated 19 September 2017,[18] the question of the legality of the Contracts of Services was referred to the OCAt and former Chief Justice Sereno was given the opportunity to comment on Atty. Gadon's request for documents in relation to the Contracts of Services with Ms. Macasaet. In compliance with the Court's Resolution dated 19 September 2017,[19] the OCAt submitted the OCAt Report.[20] Acting on the OCAt Report, then Chief Justice Sereno submitted her Preliminary Comment on 20 November 2017 to the other members of the Court En Banc.[21] The Court, in its Resolution dated 21 November 2017,[22] required the BAC-CS and Ms. Macasaet to comment. The BAC-CS and Ms. Macasaet filed their respective Comments on 25 January 2018[23] and 22 January 2018.[24] The Court noted the Comment of Ms. Macasaet in its Resolution dated 23 January 2018.[25] In its Resolution dated 30 January 2018,[26] the Court noted the Comment of the BAC-CS. In the same Resolution, Attys. Candelaria and Ocampo were required by the Court to comment on the OCAt Report, which comment they filed on 20 February 2018 and 25 April 2018, respectively.
The Ruling of the Court
Based on the facts and applicable laws and regulations, all the Contracts of Services should be declared void ab initio.
SIGNATORY HAD NO WRITTEN AUTHORITY
The signatory in all the eight (8) Contracts of Services with Ms. Macasaet was Atty. Candelaria in her capacity as Chief Administrative Officer and Deputy Clerk of Court.[27] However, the records fail to show that she was authorized in writing by the Supreme Court En Banc to act as signatory of the Court in entering into these Contracts of Services with Ms. Macasaet. In fact, in her Comment dated 20 February 2018,[28] Atty. Candelaria herself admitted that she was not given any express full written authority by then Chief Justice Sereno to sign the Contracts of Services with Ms. Macasaet. In her Comment, Atty. Candelaria states:
In these particular Contracts of Services with Ms. Macasaet, since the Chief Justice as the Head of the Procuring Entity has already approved the award of the contract to the consultant and that the contract was already prepared by the Office of the Chief Justice (OCJ) indicating therein the Deputy Clerk of Court and Chief Administrative Officer as the Court's representative, it was understood as an implied authority and designation for the undersigned to act as signatory for and in behalf of the Court.[29] (Boldfacing and italicization supplied)Atty. Candelaria stated that since the then Chief Justice had already approved the contract with Ms. Macasaet and the Office of the Chief Justice had already prepared the contract, she took it as an "implied authority" to sign on behalf of the Court.[30] Even assuming for the sake of argument that there was an "implied authority," as in fact nothing of such authority can be implied from the contract, an "implied authority" is not the "full authority" in writing required under Sections 4 and 5 of Executive Order (EO) No. 423.
EO No. 423 dated 20 April 2005[31] prescribed the rules and procedures on the review and approval of all government contracts to conform with the Government Procurement Reform Act.[32] EO No. 423 was issued in accordance with Section 75 of the Government Procurement Reform Act, which provides:
SEC. 75. Implementing Rules and Regulations and Standard Forms. — Within sixty (60) days from the promulgation of this Act, the necessary rules and regulations for the proper implementation of its provisions shall be formulated by the GPPB, jointly with the members of the Oversight Committee created under Section 74 hereof. The said rules and regulations shall be approved by the President of the Philippines. For a period not later than thirty (30) days upon the approval of the implementing rules and regulations, the standard forms for Procurement shall be formulated and approved.Specifically, Sections 4 and 5 of EO No. 423 provide:
Section 4. Approval of Government Contract Entered Into Through Alternative Methods of Procurement. -From the foregoing, it is clear that it is the Head of the Procuring Entity who is authorized to enter into binding government contracts, when such contracts are entered into through alternative methods of procurement such as directly negotiated contracts like the Contracts of Services with Ms. Macasaet. This authority may be delegated, but this must be done only "in writing" with "full authority" to give "final approval and/or to enter into" the contract delegated to such duly authorized official. Since the alternative method of procurement is an exception to the general rule that procurement shall be through public bidding, the written "full authority" cannot be general, but must refer specifically to the particular contract being entered into through the alternative method of procurement.
x x x x
b. For Government Contracts Involving An Amount Below Five Hundred Million Pesos (P500 Million). — Except for Government contracts required by law to be acted upon and/or approved by the President, the Heads of the Procuring Entities shall likewise have full authority to give final approval and/or to enter into Government contracts of their respective agencies, entered into through alternative methods of procurement allowed by law. Provided, that the Department Secretary certifies under oath that the contract has been entered into in faithful compliance with all applicable laws and regulations.
The Heads of the Procuring Entities may delegate in writing this full authority to give final approval and/or to enter into Government contracts involving an amount below Five Hundred Million Pesos (P500 Million) entered into through alternative methods of procurement allowed by law, as circumstances may warrant (i.e., decentralization of procurement in a Government Agency), subject to existing laws and such limitations imposed by the Head of the Procuring Entity concerned (Section 5(j), Republic Act No. 9184).
Section 5. Authority to Bind the Government. — All Government contracts shall require the approval and signature of the respective Heads of the Procuring Entities or their respective duly authorized officials, as the case may be, as required by law, applicable rules and regulations, and by this Executive Order, before said Government contracts shall be considered approved in accordance with law and binding on the government, except as may be otherwise provided in Republic Act No. 9184. For Government contracts required by law to be acted upon and/or approved by the President, Section 6 of this Executive Order governs the process by which such Government contracts shall be considered entered into with authority and binding on the Government.
The Heads of the Procuring Entities or their respective duly authorized officials, as the case may be, shall be responsible and accountable for ensuring that all Government contracts they approve and/or enter into are in accordance with existing laws, rules and regulations and are consistent with the spending and development priorities of Government.
All Government contracts entered into in violation of the provisions of law, rules and regulations, and of this Executive Order shall be considered contracts entered into without authority and are thus invalid and not binding on the Government. (Boldfacing and italicization supplied)
The Head of the Procuring Entity is defined by the IRR of the Government Procurement Reform Act as follows:
Section 5. Definition of TermsIn this case, the Procuring Entity is the Supreme Court. The Head of the Supreme Court is the Supreme Court En Banc. Thus, any government contract below P500 Million entered into by the Supreme Court through alternative methods of procurement should be approved by the Supreme Court En Banc as Head of the Procuring Entity.
x x x x
t)
Article VIII, Section 6 of the Constitution provides that the Supreme Court "shall have administrative supervision over all courts and the personnel thereof." Thus, the administrative powers of the Court - which include entering into government contracts in the exercise of these powers of administration - are vested in the members of the Supreme Court sitting en banc, as a collegial body. To repeat, any government contract entered into on and in behalf of the Supreme Court must be authorized by the Supreme Court En Banc.
The powers of the Supreme Court - whether judicial or administrative supervision - are exercised by the members of the Court sitting en banc or by the members sitting in their respective Divisions. Rule 2, Section 1 of the Internal Rules of the Supreme Court[33] provides:
Section 1. Exercise of judicial and administrative functions. — The Court exercises its judicial functions and its powers of administrative supervision over all courts and their personnel through the Court en banc or its Divisions. It administers its activities under the leadership of the Chief Justice, who may, for this purpose, constitute supervisory or special committees headed by individual Members of the Court or working committees of court officials and personnel.[34] (Emphasis supplied)The Supreme Court is first and foremost a collegial body, with one vote for each Justice, including the Chief Justice, in all judicial or administrative matters for decision. The Supreme Court exercises its functions through the Court En Banc or its Divisions. As the Court is a collegial body, absent a proper authorization by the Court En Banc, even the Chief Justice who is primus inter pares cannot act on his or her own. This Court has previously emphasized the collegial nature of the Supreme Court, to wit:
To reiterate, the Court, whether sitting En Banc or in Division, acts as a collegial body. By virtue of the collegiality, the Chief Justice alone cannot promulgate or issue any decisions or orders. In Complaint of Mr. Aurelio Indencia Arrienda Against SC Justices Puno, Kapunan, Pardo, Ynares-Santiago, the Court has elucidated on the collegial nature of the Court in relation to the role of the Chief Justice, viz.:While the powers are vested in the Supreme Court as a collegial body, such powers may be delegated by the Supreme Court En Banc. In A.M. No. 99-12-08-SC (Revised),[36] the Supreme Court En Banc delegated some of its administrative functions to the Divisions of the Court, the Chief Justice, and the Chairpersons of the Divisions. The delegation of these administrative powers over all courts and its personnel was done through a resolution issued by the Supreme Court En Banc because the power of administrative supervision is vested in the Supreme Court En Banc as a collegial body.
The complainant's vituperation against the Chief Justice on account of what he perceived was the latter's refusal "to take a direct positive and favorable action" on his letters of appeal overstepped the limits of proper conduct. It betrayed his lack of understanding of a fundamental principle in our system of laws. Although the Chief Justice is primus inter pares, he cannot legally decide a case on his own because of the Court's nature as a collegial body. Neither can the Chief Justice, by himself, overturn the decision of the Court, whether of a division or the en banc.
There is only one Supreme Court from whose decisions all other courts are required to take their bearings. While most of the Court's work is performed by its three divisions, the Court remains one court - single, unitary, complete and supreme. Flowing from this is the fact that, while individual justices may dissent or only partially concur, when the Court states what the law is, it speaks with only one voice. Any doctrine or principle of law laid down by the court may be modified or reversed only by the Court en banc.[35]
In particular, A.M. No. 99-12-08-SC (Revised) authorized the Divisions, the Chief Justice, and the Chairpersons of the Divisions, to act on certain administrative matters to relieve the Supreme Court En Banc from additional burden brought about by the considerable number of administrative matters or judicial cases. Specifically, the Chief Justice was authorized to act or resolve the following matters:
III. To REFER to the Chief Justice for appropriate action or resolution, for and in behalf of the Court En Banc, administrative matters relating to, or in connection with,Similarly, in A.M. No. 10-1-10-SC,[37] the Supreme Court En Banc authorized the Clerk of Court En Banc, the Court Administrator, the Chief Justice, the Chairpersons of the Divisions to approve certain procurement requests, subject to certain threshold amounts. A.M. No. 10-1-10-SC also stated which procurement requests must be approved by the Supreme Court En Banc. A.M. No. 10-1-10-SC issued by the Supreme Court En Banc reads in part:
The Court [r]esolved, upon the recommendation of the Procurement Planning Committee (PPC), to
x x x xThus, while the Chief Justice may approve procurement requests if it meets the threshold amount approved by the Supreme Court En Banc through its resolution, this authority to approve is still delegated by the Supreme Court En Banc and is not inherent in the position of Chief Justice. To repeat, even the authority to approve procurement requests is delegated by the Supreme Court En Banc. Without such delegated authority from the Supreme Court En Banc, the Chief Justice simply cannot approve any procurement requests on behalf of the Supreme Court. It is with more reason that the Chief Justice cannot approve procurement contracts, as distinguished from procurement requests, without the delegated authority from the Supreme Court En Banc.
(d) AUTHORIZE the PPC to indorse to the appropriate Property Division the procurement of items or projects, subject to approval as follows:
Based on the foregoing, it is clear that the Chief Justice is not authorized by the Court En Banc to independently act on behalf of the Supreme Court to enter into government contracts that are highly technical, proprietary, primarily confidential or policy determining such as the subject Contracts of Services. The power to enter into such contracts was clearly not delegated by the Supreme Court En Banc to the Chief Justice. Thus, the Contracts of Services should have been authorized by the Supreme Court En Banc which has administrative power over all courts and personnel thereof, and not merely by the then Chief Justice. A.M. No. 99-12-08-SC (Revised) expressly provides that those administrative matters not referred in the said resolution shall be acted upon by the Court En Banc, to wit:
All other administrative matters or cases which are either expressly declared above to be cognizable by the Court En Banc or are not covered by the foregoing referrals shall be acted upon or resolved by the Court En Banc. The Chief Justice may likewise refer to the Court En Banc for its action or resolution any other matter which, in his opinion, should be resolved by it. (Emphasis supplied)Moreover, it is important to note that the full written authority to approve or sign to be given to the authorized official by the Head of the Procuring Entity should refer to a specific government contract to be entered into by the Procuring Entity through an alternative method of procurement.
A general authority to sign contracts on behalf of a government entity is insufficient for the official to sign a government contract entered into through any of the alternative methods of procurement. A government contract procured through any of the alternative methods of procurement is an exceptional method of entering into government contracts because the policy of the government is to conduct public bidding in all procurements in order to extend equal opportunity to all eligible and qualified private parties to participate in government procurement.[38] Thus, the alternative methods of procurement such as negotiated contracts are an exception to the general practice of procurement of government contracts which generally involves public bidding. As such, the law explicitly requires the Head of the Procuring Entity to be responsible for such government contract. Section 5 of EO No. 423 provides:
Section 5. Authority to Bind the Government. — x x x xThus, the law requires that it should be the Head of the Procuring Entity who approves or signs the government contract or in the alternative, an official who is duly authorized by the Head of the Procuring Entity through a written delegation of full authority to enter into the government contract. The requirement of a written authority is to ensure that the Head of the Procuring Entity or his or her respective duly authorized representative is responsible and accountable for the government contracts entered into on behalf of the Procuring Entity, and prevent unauthorized officials from signing and approving contracts. In this case, however, the written authority delegated to Atty. Candelaria, the alleged authorized official, is non-existent.
The Heads of the Procuring Entities or their respective duly authorized officials, as the case may be, shall be responsible and accountable for ensuring that all Government contracts they approve and/or enter into are in accordance with existing laws, rules and regulations and are consistent with the spending and development priorities of Government.
x x x x (Emphasis supplied)
Atty. Candelaria alleges in her Comment that her authority to enter into the Contracts of Services with Ms. Macasaet on behalf of this Court was the Joint Memorandum recommending Ms. Macasaet to be hired as ICT consultant and that steps be undertaken to execute a contract for consultancy services between the Court and Ms. Macasaet.[39] This is not the written "full authority" required by EO No. 423.
As expressly stated in Section 4 of EO No. 423, "full authority" must be delegated in writing to the authorized official by the Head of the Procuring Entity. Being a special authority availed as an exception to the general rule on public bidding, the written "full authority" must refer specifically to the particular contract that is being entered into through the alternative method of procurement. The Joint Memorandum dated 20 May 2014 prepared for then Chief Justice Sereno and signed by Atty. Ocampo and Mr. Davis cannot be considered as a delegation by the Supreme Court En Banc of full authority to Atty. Candelaria to act and sign on behalf of the Supreme Court. The Joint Memorandum was not even addressed to the Supreme Court En Banc - it was prepared only for then Chief Justice Sereno. Thus, the other members of the Supreme Court were not informed of the subject Contracts of Services. The Supreme Court En Banc was notified of the existence of the Contracts of Services only upon the filing of the letter-request of Atty. Gadon. Since the other members of the Supreme Court En Banc were clearly unaware of the Contracts of Services with Ms. Macasaet, it is obvious that the power to enter into such contracts was not delegated to anyone. The Supreme Court En Banc could not have delegated the power to enter into such contracts which it did not know even existed.
While then Chief Justice Sereno signed the Joint Memorandum dated 20 May 2014 to signify her approval to the Joint Memorandum prepared by Atty. Ocampo and Mr. Davis, it does not vest any authority on Atty. Candelaria to sign the Contracts of Services with Ms. Macasaet. To repeat, then Chief Justice Sereno had no authority to delegate the power to enter into the Contracts of Services with Ms. Macasaet. Such power is vested only with the Supreme Court En Banc and not with the Chief Justice. Likewise, under Section 4 of EO No. 423, only the Head of the Procuring Entity may delegate in writing the full authority to give approval and/or enter into government contracts. Thus, the Supreme Court En Banc, as Head of the Procuring Entity, exercises the power to delegate the signing of government contracts entered into through alternative methods of procurement as allowed by law. The delegated official could have been the Chief Justice, another member or members of the Supreme Court En Banc, or any other official of the Court. However, in this case, it is clear that the Supreme Court En Banc did not delegate such power to anyone because it was not informed of the Contracts of Services with Ms. Macasaet.
Moreover, even assuming that the Supreme Court En Banc had delegated to the then Chief Justice the power to enter into the Contracts of Services, then Chief Justice Sereno could no longer re-delegate such power to another official. It is well-settled that what has been delegated can no longer be further delegated or re-delegated by the original delegate to another - Delegata potestas non potest delegari.[40] The power of administrative supervision over all courts and its personnel is vested by the Constitution in the Supreme Court En Banc. It is the Supreme Court En Banc which exercises administrative power over the courts and personnel, which includes the authority to enter into government contracts through alternative methods of procurement allowed by law. While the Supreme Court En Banc may delegate its administrative powers to another such as its Divisions, the Chairpersons of the Divisions or the Chief Justice - as it has done in A.M. No. 99-12-08-SC (Revised) - the delegates may no longer re-delegate the authority or power delegated to them. Therefore, even assuming that the Supreme Court En Banc delegated to the then Chief Justice the power to enter into the government contracts with Ms. Macasaet, then Chief Justice Sereno could no longer re-delegate such authority.
Even assuming for the sake of argument, although incorrectly, that then Chief Justice Sereno had the authority to delegate the power to enter into the Contracts of Services, Atty. Candelaria still failed to show any written authority from the then Chief Justice authorizing her to enter into the said Contracts of Services. Atty. Candelaria attached several Memoranda where authority was given to her to sign for and in behalf of previous Chief Justices. This is not the full written delegation of authority required by Section 4 of EO No. 423. Evidently, any written authority, if ever such authority could be delegated by a Chief Justice, should have been given by then Chief Justice Sereno, who was the Chief Justice at the time the contracts were entered into with Ms. Macasaet, and not by any other previous Chief Justices. Previous Chief Justices had no authority to sign, much less delegate the authority to sign, government contracts after their term of office.
More importantly, the authority given to Atty. Candelaria by the previous Chief Justices, which was also the same authority given to her by then Chief Justice Sereno, referred only to the authority to sign for and in behalf of their communications with other government agencies and the transmittal of Court En Banc Resolutions to concerned agencies, as well as to "internal personnel matters."[41] The Memorandum of Atty. Candelaria dated 29 August 2012[42] approved by then Chief Justice Sereno specifically enumerated the documents for which Atty. Candelaria asked authority to sign on Chief Justice Sereno's behalf: "Notice of Salary Adjustment; Notice of Step Increment; Notice of Entitlement/Adjustment of Longevity Pay; Notice of Acceptance of Resignation; Permission to Transfer; and the like, except those pertaining to the Honorable Justices of the Supreme Court."[43] This is not the full written authority to be delegated by the Head of the Procuring Entity as expressly required by law for the approval of government contracts entered into through alternative methods of procurement such as the directly negotiated contracts in this case.
Justice Caguioa, in his Dissenting Opinion, maintains that Atty. Candelaria was actually given the authority by then Chief Justice Sereno to sign the Contracts of Services with Ms. Macasaet, and that the basis of this authority is the action slip issued by Atty. Ocampo which states:
"I am pleased to furnish your office a copy of the Contract of Services between the Supreme Court and Ms. Helen Macasaet.Contrary to the argument of Justice Caguioa that the action slip is "proof that she was in fact given express written authority by the former Chief Justice to sign and execute the Contracts of Services on the latter's behalf,"[45] the Court finds that the action slip issued by Atty. Ocampo cannot be considered at all as "proof that full written authority was issued by the Head of the Procuring Entity, as required by law.
Also attached for your reference is the authorization from the Chief Justice to execute the said Contract of Services."[44] (Emphasis supplied)
First, the action slip merely stated that the authority from then Chief Justice Sereno was attached to it, without expressly stating what the attachment was.
Second, the action slip was not even addressed to Atty. Candelaria, the actual signatory to the Contract of Services with Ms. Macasaet, but rather, it was addressed to Deputy Court Administrator Raul B. Villanueva. The name of Atty. Candelaria, or her position as Chief Administrative Officer and Deputy Clerk of Court, is not even mentioned in the action slip.
Third, there were two (2) attachments to the action slip of Atty. Ocampo: (1) the Contract of Services dated 23 May 2014; and (2) the Joint Memorandum dated 20 May 2014 prepared by Atty. Ocampo and Mr. Davis. The Contract of Services dated 23 May 2014 signed by Atty. Candelaria and Ms. Macasaet does not contain any written authorization from then Chief Justice Sereno to Atty. Candelaria. On the other hand, the Joint Memorandum merely contained the recommendation by Atty. Ocampo and Mr. Davis to then Chief Justice Sereno that Ms. Macasaet is the most qualified among the proposed consultants. This recommendation is entirely different from a recommendation to authorize Atty. Candelaria to sign the Contract of Services, a recommendation not found in the Joint Memorandum.
There is no mention or statement whatsoever in the Joint Memorandum delegating to Atty. Candelaria or to the Chief Administrative Officer and Deputy Clerk of Court the full authority to enter into the Contract of Services with Ms. Macasaet. The Joint Memorandum does not even mention the name of Atty. Candelaria or her position as Chief Administrative Officer and Deputy Clerk of Court. The Joint Memorandum merely states that "[i]f the Honorable Chief Justice approves the recommendation of the undersigned, appropriate steps shall be undertaken to execute a contract of consultancy services between the Supreme Court and Ms. Macasaet."[46] One essential appropriate step is an express full written authority given by the Supreme Court En Banc, or by the then Chief Justice, assuming arguendo, although incorrectly, she had the power, authorizing Atty. Candelaria as the signatory to the Contract of Services, which essential step was never taken.
To repeat, there is no mention whatsoever in the Joint Memorandum that Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court was being designated as the authorized signatory on behalf of the Supreme Court En Banc or on behalf of the Chief Justice for the Contract of Services with Ms. Macasaet. For ready reference, attached are copies of (1) the action slip of Atty. Ocampo (Annex "A"); the (2) Joint Memorandum dated 20 May 2014 of Atty. Ocampo and Mr. Davis (Annex "B"); and (3) the Contract of Services with Ms. Macasaet (Annex "C").
The approval of then Chief Justice Sereno of this Joint Memorandum was merely for the execution of the Contract of Services to proceed. This is not the full written authority required by law delegating to a specific official the power to sign and approve a government contract entered into under an alternative method of procurement as this written authority should specify not only the particular contract to be signed but more importantly the name of the authorized signatory to whom the delegation of power is being entrusted. Thus, the statement of Atty. Ocampo in the action slip that there was "authorization from the Chief Justice to execute the said Contract of Services" is misleading, or even false because the attached Joint Memorandum refers only to the approval by then Chief Justice Sereno of the recommendation of Atty. Ocampo and Mr. Davis that Ms. Macasaet is the most qualified consultant, and there is no delegation whatsoever of any authority to Atty. Candelaria or to any other official to execute and sign the Contract of Services on behalf of the Court En Banc or even on behalf of then Chief Justice Sereno.
To reiterate, there is no mention whatsoever in the Joint Memorandum that Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court is authorized to sign the Contract of Services. The name of Atty. Candelaria or the Chief Administrative Officer and Deputy Clerk of Court is not even mentioned in the Joint Memorandum. In fact, there is no one named in the Joint Memorandum as the authorized signatory to sign the Contract of Services.
Indisputably, all of the Contracts of Services with Ms. Macasaet were signed by Atty. Candelaria without the written "full authority" of the Supreme Court En Banc or even the then Chief Justice. There was a blatant violation of Section 4 of EO No. 423. Thus, these Contracts of Services must be declared "invalid and not binding on the Government," as expressly mandated in Section 5 of EO No. 423.
QUALIFICATIONS OF MS. MACASAET
Aside from the lack of authority of the signatory to the said Contracts of Services in violation of Sections 4 and 5 of EO No. 423, the procurement of the services of Ms. Macasaet was also in violation of the provisions of the Government Procurement Reform Act.
The Contracts of Services between the Court and Ms. Macasaet did not pass through the regular process of engaging consultants because it was considered to be "highly technical in nature and primarily requires trust and confidence owing to the fact that it is a priority program of the Supreme Court."[47] The BAC-CS considered the procurement to be highly technical in nature, citing Section 53.7 of the IRR of the Government Procurement Reform Act which provides:
53.7. Highly Technical Consultants. In the case of individual consultants hired to do work that is (i) highly technical or proprietary; or (ii) primarily confidential or policy determining, where trust and confidence are the primary consideration for the hiring of the consultant: Provided, however, That the term of the individual consultants shall, at the most, be on a six month basis renewable at the option of the appointing [Head of the Procuring Entity], but in no case shall exceed the term of the latter. (Emphasis supplied)This Court finds that Ms. Macasaet was not qualified to be considered a Highly Technical Consultant in relation to the implementation of the Updated EISP Project. Moreover, there was no actual need to hire a consultant for the mere overview of the implementation of the Updated EISP Project as the MISO Head is already sufficiently qualified to implement such project.
The Updated EISP Project includes, among others, the upgrading of the Judiciary Data Center, cabling and site preparation and connectivity and network security. These activities require highly specialized technical ICT expertise, not general business management expertise. More specifically, based on the Scope of Work of the 23 May 2014 Contract of Services as quoted below, the Updated EISP Project includes the upgrade of existing judiciary Data Center and the design and construction of the Judiciary Data Center Disaster Site. Thus, the Updated EISP Project is not merely a general business project, but primarily a highly technical ICT infrastructure project, which Ms. Macasaet is not specially qualified to review or oversee.
The Scope of Work of the Contract of Services will show that the work did not require the additional services of a general business management consultant. More specifically, Article I, Section 1.1 of the Contract of Services dated 23 May 2014 provides:
ARTICLE 1 - SCOPE OF WORK AND PERIOD OF THE ENGAGEMENTMs. Macasaet has no academic degree in any field related to Information and Communications Technology. According to Ms. Macasaet, she received her undergraduate degree in BS Mathematics for Teachers from the Philippine Normal College.[49] She also states that aside from her Master's degree in Business Administration from the Ateneo de Manila University Graduate School of Business, she has completed the academic requirements for a Doctoral Degree (PhD) in Education at the University of the Philippines.[50] However, she does not hold any educational degree directly related to ICT. Evidently, Ms. Macasaet's academic background shows that her studies focused mainly on mathematics and education - not on ICT or even the broader area of computer sciences or information systems. Ms. Macasaet's ICT training comes from several short-term non-degree courses, which can hardly be the basis to consider her as an expert in this field. Ms. Macasaet's Master's degree in Business Administration and certification in Customer Relationship Management, which were the factors considered by Atty. Ocampo and Mr. Davis to recommend Ms. Macasaet as the most qualified, are not qualifications that directly relate to ICT to justify the engagement of her consultancy services in relation to the highly technical Updated EISP Project.
1.1 SCOPE OF WORK. The CONSULTANT shall perform the following:
While the Contract of Services evidently requires the procurement of the services of a highly technical consultant, the Terms of Reference for the said contract requires the consultant to have an advanced degree in business management OR any ICT-related degree, and be a certified customer relationship management system (CRM) specialist and manager.[51] Justice Caguioa argues in his Dissenting Opinion that since Ms. Macasaet has an advanced degree in business management and has a certification in Customer Relationship Management in accordance with the Terms of Reference, she is a qualified consultant for the Updated EISP Project.[52] We find otherwise.
A highly technical project requires a highly technical consultant. To require in the alternative that a consultant may only have a business management degree and a certification as a Customer Relationship Management specialist truly defies reason or logic. Simply put, this is a tell-tale sign that the Terms of Reference for the consultancy was expressly tailor-made for Ms. Macasaet who is merely a general business consultant and who does not possess the qualifications to handle a highly technical ICT project. One cannot rely on a business management degree holder for the implementation of a highly technical ICT project. This is simply absurd. For the implementation of a highly technical project such as the EISP, a consultant with highly technical qualifications is required. For the Terms of Reference to substitute an advanced degree in ICT with an advanced degree in business management is a highly irregular and inconsistent requirement. This Court cannot give its imprimatur to such a contract.
Ms. Macasaet's experience in developing and participating in ICT systems in both private and public sectors is not the highly technical qualification required for the implementation of the Updated EISP Project. Ms. Macasaet's experience is on the business and management side of ICT systems. As the Updated EISP Project was already approved by the Supreme Court En Banc, the general ICT services required under such EISP could have been implemented by the Supreme Court's MISO. The Chief of MISO is also already qualified to oversee the general implementation of such project. There was no need to engage the services of a general business consultant for the mere implementation of the Updated EISP Project.
The qualifications of the Chief of MISO, as provided in A.M. No. 06-3-07-SC,[53] are as follows:
Thus, it is evident that the Chief of MISO, who has 10 years or more of relevant supervisory work experience and at least 5 years of relevant experience in the field of computer science or ICT, is already sufficiently qualified to oversee the implementation of the Updated EISP Project.
MISO Chief of Office
Education
or
Bachelor's Degree in computer science or information technology and post-graduate degree, preferably in computer science or information technology (Emphasis supplied)Experience
Training
32 hours of relevant experience in management and supervision Eligibility
RA 1080 (Bar), CSC Professional or IT eligibility
Any highly technical consultancy agreement, if needed, should have been for specific and highly specialized ICT consultancy services, such as for security of information systems, which the MISO may identify as an area where it needs special assistance during the implementation of the Updated EISP Project. General business and management consultancy services, such as those provided by Ms. Macasaet, cannot be considered highly technical consultancy services for the purpose of reviewing and implementing the Updated EISP Project and related ICT and computerization projects.
As the services that Ms. Macasaet provided, based on her qualifications and experience, were mere general business and management services, these services do not fall under the requirement of being a highly technical ICT consultant which would justify the procurement through direct negotiation. Thus, the procurement of her services and the method through which such services were procured - direct negotiation - were unnecessary and unwarranted.
AMOUNT OF COMPENSATION WAS NOT JUSTIFIED
The compensation for Ms. Macasaet for the first contract was P600,000.00 for six (6) months, or P100,000.00 per month.[54] From the Second Contract of Services until the Eighth Contract of Services, she received a monthly compensation of P250,000.00.[55] This Court finds these amounts to be unreasonable and without any basis in law.
When the Contracts of Services were entered into with Ms. Macasaet, DBM Circular Letter No. 2000-11 dated 1 June 2000[56] was applicable in determining the ceiling or maximum amount of compensation that may be paid to individual professional consultants such as Ms. Macasaet.[57] DBM Circular Letter No. 2000-11 provides in part:
- Pending the issuance of the guidelines governing the compensation of professional consultancy services, these individual professional consultants shall be paid remuneration of not more than 120% of the minimum basic salary of his equivalent position in the agency based on the allocation list duly approved by the Department of Budget and Management pursuant to National Budget Circular No. 433 dated March 1, 1994. (Emphasis supplied)
In this case, to determine the maximum amount of compensation that may be paid to Ms. Macasaet under the Contracts of Services, the equivalent position to the consultant must be determined. As correctly found by the OCAt Report, based on the various positions in the Supreme Court, the equivalent position of Ms. Macasaet as a technical consultant to implement the Updated EISP Project is the post of Chief of the MISO.[58] The Chief of the MISO is a highly technical or policy determining position, and one that requires knowledge and expertise in computer science or information and communications technology. A.M. No. 05-9-29-SC[59] provides in part:
IV. Classify all third level positions in the Supreme Court, including those in the OCA, PHILJA, JBC, and MCLEO, below those of Chief Justice, Associate Justices, and Regular Members of the JBC, with Salary Grade 26 and above as highly technical or policy determining, to wit:Clearly, the position of Chief of the MISO in the Supreme Court is equivalent to the position of the consultant under the Contracts of Services. Thus, the remuneration of Ms. Macasaet should not be more than 120% of the basic minimum monthly salary of the Chief of MISO. At the time the first Contract of Services was entered into with Ms. Macasaet, the basic monthly salary of the MISO Chief of Office was P73,099.99.[60] Thus, the ceiling, or maximum amount of compensation for a consultant in relation to the implementation of the Updated EISP Project, was 120% of this amount or P87,718.80.[61] The monthly consultancy fees of Ms. Macasaet which was P100,000.00 monthly under the first Contract of Services, and P250,000.00 monthly for the seven succeeding Contracts of Services, far exceeded this amount. The monthly consultancy fees of Ms. Macasaet were clearly unreasonable and excessive.
x x x x
15. Deputy Clerk of Court and Chief, Management Information System Office (MISO) (Boldfacing and underscoring supplied)
At this point, this Court notes that DBM Circular Letter No. 2000-11 has been expressly revoked by DBM Circular Letter No. 2017-9[62] dated 16 May 2017. DBM Circular Letter No. 2017-9 provides:
It was only upon the issuance of DBM Circular Letter No. 2017-9 on 16 May 2017 that the ceiling of 120% under DBM Circular Letter No. 2000-11 was revoked. Before such time, the compensation to be paid to individual professional consultants could not exceed the amount set by DBM Circular Letter No. 2000-11.
Moreover, DBM Circular Letter No. 2017-9 set the guidelines on how to determine the proper amount of compensation for individual professional consultants:
While DBM Circular Letter No. 2017-9 refers to the Manual of Procedures for the Procurement of Consulting Services to guide the agencies in determining the consultancy rate, this could not have been applicable before DBM Circular Letter No. 2000-11 was expressly revoked. Volume IV of the Generic Procurement Manuals[63] provides for the guidelines in determining the fees for procurement of consultancy services. However, this manual is merely a generic manual for procurement, while DBM Circular Letter No. 2000-11 pertained specifically to individual professional consultants. Thus, before the express revocation of DBM Circular Letter No. 2000-11, the guidelines provided for in Generic Procurement Manuals could not have applied to individual consultancy agreements such as the Contracts of Services with Ms. Macasaet.
On the other hand, Joint Circular No. 1, series of 2017, dated 15 June 2017 (Joint Circular) provided guidelines on how the payment of services under Individual Contract of Services should be determined, to wit:
8.0 Payment of Services under Individual Contract of ServiceThus, upon effectivity of the Joint Circular on 15 June 2017, the consultancy fees of individual consultants were fixed at the "prevailing market rates." To repeat, it was only upon the issuance of the Joint Circular on 15 June 2017 that "prevailing market rates" applied to consultancy fees of individuals. Nonetheless, in this case, the only Contract of Services which was entered into after 15 June 2017 was the eighth or last Contract of Services of Ms. Macasaet which was entered into on 24 July 2017. It is worth noting, however, that the period of engagement for this last contract was for a period of six (6) months from 24 May 2017, which was before the issuance of the Joint Circular.
Individuals hired through contract of service shall be paid the prevailing market rates, subject to the provisions of RA 9184 and its Implementing Rules and Regulations.
The payment of services shall be charged against the Maintenance and Other Operating Expenses in the approved agency budget.
x x x x (Emphasis supplied)
Atty. Ocampo conducted his market research for the prevailing market rates in his Memorandum dated 16 April 2014,[64] which was referred to in his Memorandum dated 22 June 2015, and again in his Memorandum dated 7 December 2015.[65] In his Memorandum dated 7 December 2015, Atty. Ocampo benchmarked the compensation of Ms. Macasaet using an online tool, and found that the fees were comparable to and within the pay scale range of ICT positions in the Philippines.[66] This was the justification given for the amount of P250,000.00 monthly compensation for Ms. Macasaet under the Second to Eighth Contracts of Services.
Again, before the revocation on 15 June 2017 by the Joint Circular of DBM Circular Letter 2000-11, the amount of compensation for individual consultants such as Ms. Macasaet could not exceed 120% of the minimum basic salary of an equivalent position in the Supreme Court, which is that of the Chief of MISO. Thus, prevailing market rates could not have applied to the Contracts of Services entered into from 2013 to 2016, or prior to 15 June 2017. Worse, there was absolutely no basis given for the cost of consultancy services in the first Contract of Services with Ms. Macasaet. The first market research was embodied only in Atty. Ocampo's Memorandum dated 16 April 2014,[67] which was long after the First Contract of Services dated 1 October 2013.[68]
If we assume that Ms. Macasaet should have been paid according to the prevailing market rates for her consultancy services for the contract entered into in 2017, which was the last Contract of Services between the Court and Ms. Macasaet - as DBM Circular Letter No. 2000-11 had been revoked by then, this Court still finds her compensation to be unjustified as there was no proper market research made to determine such rates as of 2017. The market research conducted by Atty. Ocampo was in 2015 while the last Contract of Services was entered into in 2017, more than two (2) years thereafter. Thus, when the eighth and last Contract of Services was entered into on 24 July 2017, there was no proper market research conducted to determine the prevailing market rates as of 2017, which prevailing market rates should be the applicable amount of compensation payable to an individual professional consultant.
PROCUREMENT WAS NOT IN ACCORDANCE WITH THE
ANNUAL APPROPRIATION PLAN
There was a violation of Section 7 of the Government Procurement Reform Act when the second Contract of Services was entered into on 23 May 2014 without the proper Annual Procurement Plan (APP).
The APP is defined as the document that consolidates the various Project Procurement Management Plans (PPMPs) submitted by the various Project Management Offices and end-user units within the Procuring Entity.[69] It reflects the entirety of the procurement activities that will be undertaken by the Procuring Entity within the calendar year.[70] Section 7 of the Government Procurement Reform Act provides that all procurements shall be included in the APP, and the APP must be consistent with the yearly approved budget of the Procuring Entity.
Sec. 7. Procurement Planning and Budgeting Linkage - All procurement[s] should be within the approved budget of the Procuring Entity and should be meticulously and judiciously planned by the Procuring Entity concerned. Consistent with government fiscal discipline measures, only those considered crucial to the efficient discharge of governmental functions shall be included in the Annual Procurement Plan to be specified in the IRR.Further, Section 7.3 of the Revised IRR of the Government Procurement Reform Act provides the guidelines on how the APP shall be formulated: the APP is prepared for the succeeding calendar year to support the Procuring Entity's proposed budget, taking into consideration the framework for that year in order to reflect the Procuring Entity's priorities and objectives. To prepare the APP, the implementing units of the Procuring Entity shall formulate the PPMPs for their different Programs, Activities, and Projects (PAPs). The PPMPs shall be submitted to the Procuring Entity's Budget Office for evaluation to ensure consistency with the budget proposal and compliance with existing budget rules. As soon as the General Appropriations Act (GAA) is enacted, the end-user or implementing units shall revise and adjust the PPMPs to reflect the budgetary allocation for their respective PAPs. The APP shall be submitted to the Government Procurement Policy Board on or before the end of January of the budget year, and shall be posted in accordance with law.
No government Procurement shall be undertaken unless it is in accordance with the approved Annual Procurement Plan of the Procuring Entity. The Annual Procurement Plan shall be approved by the Head of the Procuring Entity and must be consistent with its duly approved yearly budget. The Annual Procurement Plan shall be formulated and revised only in accordance with the guidelines set forth in the IRR. In the case of Infrastructure Projects, the Plan shall include engineering design and acquisition of right of way. (Emphasis supplied)
Thus, the inclusion of all the planned procurements in the APP is crucial to ensure that all expenses and expenditures of a government entity in relation to its procurement are within the approved appropriation as reflected in the corresponding GAA.
In this case, when the second Contract of Services dated 23 May 2014 was entered into, the APP for the year 2014 did not include the line item for "Technical and Policy Consultants" for purposes of procurement.[71] This was only included when the APP was subsequently revised, in accordance with the Memorandum of the Procurement Planning Committee (PPC), where the PPC requested the amendment of the APP with the inclusion of the line item for "Technical and Policy Consultants" to be sourced from the savings of the Court.[72] The recommendation to include the line item for "Technical and Policy Consultants" in the addendum to the 2014 Annual Procurement Plan was only approved by the Court in A.M. No. 10-1-10-SC dated 23 September 2014.[73] Clearly, when the Contract of Services dated 23 May 2014 was entered into with Ms. Macasaet, the APP did not cover the hiring of services of a technical and policy consultant for procurement purposes.
While it is true that the APP refers to and pertains to the entire fiscal year, and that an APP may be revised in accordance with the guidelines set forth in the IRR,[74] the fact remains that before procurement is actually undertaken, such procurement must have been included in the existing APP of the Procuring Entity. Thus, the inclusion of the line item for "Technical and Policy Consultants" in the revised APP must have first been approved before any contract with technical and policy consultants could be entered into by the Court. To repeat, while the APP may be revised in accordance with the applicable guidelines, such revision should precede the procurement of services not found in the original APP for the applicable fiscal year.
Moreover, it is doubtful that the savings of the Court could be transferred to the hiring of a technical and policy consultant, which was a non-existent item before the APP was amended. In Sanchez v. Commission on Audit,[75] the Court held that for a transfer of appropriation, two essential requisites must be complied with - first, there must be savings in the programmed appropriation of the transferring agency, and second, there must be an existing item, project or activity with an appropriation in the receiving agency to which the savings will be transferred. In Sanchez v. Commission on Audit, the Court held:
Clearly, there are two essential requisites in order that a transfer of appropriation with the corresponding funds may legally be effected. First, there must be savings in the programmed appropriation of the transferring agency. Second, there must be an existing item, project or activity with an appropriation in the receiving agency to which the savings will be transferred.In this case, there was no item, project or activity for the hiring of the technical and policy consultants in 2014 before the APP was amended to include such line item. Thus, clearly, any savings from the budget of the Supreme Court could not have been transferred to a then non-existent item. As this Court held in Sanchez v. Commission on Audit:
Actual savings is a sine qua non to a valid transfer of funds from one government agency to another. The word "actual" denotes that something is real or substantial, or exists presently in fact as opposed to something which is merely theoretical, possible, potential or hypothetical.
As a case in point, the Chief Justice himself transfers funds only when there are actual savings, e.g., from unfilled positions in the Judiciary.
The thesis that savings may and should be presumed from the mere transfer of funds is plainly anathema to the doctrine laid down in Demetria v. Alba as it makes the prohibition against transfer of appropriations the general rule rather than the stringent exception the constitutional framers clearly intended it to be. It makes a mockery of Demetria v. Alba as it would have the Court allow the mere expectancy of savings to be transferred.
Contrary to another submission in this case, the President, Chief Justice, Senate President, and the heads of constitutional commissions need not first prove and declare the existence of savings before transferring funds, the Court in Philconsa v. Enriquez, x x x, categorically declared that the Senate President and the Speaker of the House of Representatives, as the case may be, shall approve the realignment (of savings). However, "[B]efore giving their stamp of approval, these two officials will have to see to it that: (1) The funds to be realigned or transferred are actually savings in the items of expenditures from which the same are to be taken; and (2) The transfer or realignment is for the purpose of augmenting the items of expenditure to which said transfer or realignment is to be made."
As it is, the fact that the permissible transfers contemplated by Section 25(5), Article VI of the 1987 Constitution would occur entirely within the framework of the executive, legislative, judiciary, or the constitutional commissions, already makes wanton and unmitigated malversation of public funds all too easy, without the Court abetting it by ruling that transfer of funds ipso facto denotes the existence of savings.[76]
As regards the requirement that there be an item to be augmented, which is also a sine qua non like the first requirement on the existence of savings, there was no item for augmentation in the appropriation for the Office of the President at the time of the transfers in question. Augmentation denotes that an appropriation was determined to be deficient after the implementation of the project or activity for which an appropriation was made, or after an evaluation of the needed resources. To say that the existing items in the appropriation for the Office of the President already needed augmentation as early as 31 January 1992 is putting the cart before the horse.NO PROPER APPROPRIATION
x x x x
The absence of any item to be augmented starkly projects the illegality of the diversion of the funds and the profligate spending thereof.[77]
Moreover, since the line item for "Technical and Policy Consultants" was not initially included in the APP for 2014,[78] it was also not considered in the evaluation of the budgetary proposal of the Supreme Court for consistency and compliance with existing budget rules. The budget proposal is submitted to Congress for the enactment of the GAA. Thus, the GAA for 2014 did not include the procurement of Technical and Policy Consultants. Before the APP was amended, there was clearly no budget or appropriation for the Contract of Services for ICT consultancy services.
The funds for the proposed line item for "Technical and Policy Consultants" were to be sourced from the savings of the Court.[79] However, before the approval of the revised APP, there was no appropriation for the consultancy agreement of Ms. Macasaet that could be augmented from the savings of the Court. The procurement of consultancy services without the prior amendment of the APP clearly renders void the Contract of Services dated 23 May 2014 with Ms. Macasaet. To hold otherwise would be to contravene the requirement that there must first be a proper appropriation before public funds are expended.
Under Presidential Decree No. 1445[80] or the Government Auditing Code of the Philippines, the expenditure of public funds without the required appropriation renders the contract void:
Section 85. Appropriation before entering into contract.Sections 85 and 87 of PD No. 1445 implement Section 29(1), Article VI of the Constitution, which mandates:
1. No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure.
x x x x
Section 87. Void contract and liability of officer. Any contract entered into contrary to the requirements of the two immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties. (Emphasis supplied)
Section 29. (1) No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.A violation of Section 85 of PD No. 1445 constitutes at the same time a violation of Section 29(1), Article VI of the Constitution.
It is clear that there must first be an appropriation before any contract involving expenditure of public funds is entered into, and any contract entered into in violation of this requirement renders such contract void. In this case, before the approval of the revised APP, there was no proper appropriation for the Contract of Services dated 23 May 2014.
Further, based on the Contract of Services dated 23 May 2014, the payment for the services was to be made in six equal monthly installments -the first payment to be made within fifteen (15) days from the signing of the Contract, and the next installment to be paid every 15th of the month beginning on 15 July 2014.[81] Thus, from the signing of the Contract and until 15 September 2014, there was actual payment for consultancy fees which was not covered by proper appropriation. It was only on 23 September 2014 when the APP was revised to include the line item for "Technical and Policy Consultants."[82] Thus, not only was a contract entered into without proper appropriation, there was even actual expenditure of public funds without the required appropriation. Thus, the Contract of Services dated 23 May 2014 is in blatant violation of Section 85 of PD No. 1445, and must be declared void as expressly mandated in Section 87 of PD No. 1445.
LACK OF CERTIFICATE OF AVAILABILITY OF FUNDS
Finally, we address the lack of Certificate of Availability of Funds (CAF) for the Contracts of Services with Ms. Macasaet.[83] The CAF was issued only for the first two Contracts of Services in the amounts of P600,000.00 and P1,500,000.00, respectively.[84] The rest of the six Contracts of Services, which had a consultancy fee of P1,500,000.00 each, were not covered by any CAF. The absence of the CAF for the procurement of the consultancy services of Ms. Macasaet is in blatant violation of Sections 86 and 87 of PD No. 1445, which provide:
Section 86. Certificate showing appropriation to meet contract. Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished.Section 86 of PD No. 1445 is clear and categorical: "no contract xxx shall be entered into" without the required CAF being "attached to and become an integral part of the proposed contract." This means that no government official shall sign a contract unless the CAF is "attached" to the "proposed contract" so as to "become an integral part" of the proposed contract. The CAF must be attached to the "proposed contract," at the latest, at the time of the signing of the contract, before the "proposed contract" is entered into by the signing of the contract.
Section 87. Void contract and liability of officer. Any contract entered into contrary to the requirements of the two immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties. (Boldfacing and italicization supplied)
The CAF cannot be attached to the contract after the contract is entered into because Section 86 expressly requires that "no contract x x x shall be entered into" without the required CAF being "attached to x x x the proposed contract." Unless the CAF is so attached to the contract so as to become an integral part of the contract before the signing of the contract, the contract "shall be void" as expressly declared in Section 87 of PD No. 1445. In the present case, no CAF was attached to the third and subsequent contracts at the time these contracts were entered into, rendering these contracts clearly void.
EO No. 292 (Administrative Code of 1987) also provides a similar provision on the requirement of a CAF before expenditures are incurred. Section 40, Chapter 5, Book VI of the Administrative Code of 1987 provides:
SECTION 40. Certification of Availability of Funds.—No funds shall be disbursed, and no expenditures or obligations chargeable against any authorized allotment shall be incurred or authorized in any department, office or agency without first securing the certification of its Chief Accountant or head of accounting unit as to the availability of funds and the allotment to which the expenditure or obligation may be properly charged.Correspondingly, Section 43, Chapter 5, Book VI of the Administrative Code of 1987 provides that any contract entered into without the proper appropriation is void:
No obligation shall be certified to accounts payable unless the obligation is founded on a valid claim that is properly supported by sufficient evidence and unless there is proper authority for its incurrence. Any certification for a non-existent or fictitious obligation and/or creditor shall be considered void. The certifying official shall be dismissed from the service, without prejudice to criminal prosecution under the provisions of the Revised Penal Code. Any payment made under such certification shall be illegal and every official authorizing or making such payment, or taking part therein or receiving such payment, shall be jointly and severally liable to the government for the full amount so paid or received. (Emphasis supplied)
SECTION 43. Liability for Illegal Expenditures.— Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.This Court has consistently held that the absence of the proper appropriation and the CAF attesting to the availability of such funds shall render the government contract void. In Philippine National Railways v. Kanlaon Construction Enterprises Co., Inc.,[85] this Court held that contracts entered into without an appropriation law authorizing the expenditure in the contract and a CAF attesting that funds are available for such contract shall render the contract void. The failure to comply with any of these two requirements shall render the contract void. The Court held:
Any official or employee of the Government knowingly incurring any obligation, or authorizing any expenditure in violation of the provisions herein, or taking part therein, shall be dismissed from the service, after due notice and hearing by the duly authorized appointing official. If the appointing official is other than the President and should he fail to remove such official or employee, the President may exercise the power of removal. (Emphasis supplied)
Thus, the Administrative Code of 1987 expressly prohibits the entering into contracts involving the expenditure of public funds unless two prior requirements are satisfied. First, there must be an appropriation law authorizing the expenditure required in the contract. Second, there must be attached to the contract a certification by the proper accounting official and auditor that funds have been appropriated by law and such funds are available. Failure to comply with any of these two requirements renders the contract void.Clearly, based on the pronouncements of this Court, the CAF must be attached to the contract at the time the contract is entered into by the government and not later. Failure to do so shall render such contract void. This has been reaffirmed in the recent case of Guillermo v. Philippine Information Agency,[87] where the Court held that for the validity of contracts involving the expenditure of public funds, the requisites of Sections 46, 47 and 48 of Book V, Title I, Subtitle B, Chapter 8 of the Administrative Code of 1987 must be present, to wit:
In several cases, the Court had the occasion to apply these provisions of the Administrative Code of 1987 and the Government Auditing Code of the Philippines. In these cases, the Court clearly ruled that the two requirements - the existence of appropriation and the attachment of the certification - are "conditions sine qua non for the execution of government contracts."
In COMELEC v. Quijano-Padilla, we stated:
It is quite evident from the tenor of the language of the law that the existence of appropriations and the availability of funds are indispensable pre-requisites to or conditions sine qua non for the execution of government contracts. The obvious intent is to impose such conditions as a priori requisites to the validity of the proposed contract.The law expressly declares void a contract that fails to comply with the two requirements, namely, an appropriation law funding the contract and a certification of appropriation and fund availability. The clear purpose of these requirements is to insure that government contracts are never signed unless supported by the corresponding appropriation law and fund availability.
The three contracts between PNR and Kanlaon do not comply with the requirement of a certification of appropriation and fund availability. Even if a certification of appropriation is not applicable to PNR if the funds used are internally generated, still a certificate of fund availability is required. Thus, the three contracts between PNR and Kanlaon are void for violation of Sections 46, 47, and 48, Chapter 8, Subtitle B, Title I, Book V of the Administrative Code of 1987, as well as Sections 85, 86, and 87 of the Government Auditing Code of the Philippines.[86]
CHAPTER 8Atty. Ocampo, in his Comment, argues that despite the absence of the CAFs for the third to eighth contracts, there was compliance with the CAF requirement, as the payments to Ms. Macasaet were covered by an Obligation Request and a Disbursement Voucher, where the chief accountant of the Supreme Court certified the availability of the funds for the consultancy fees.[88]
Application of Appropriated Funds
SECTION 46. Appropriation Before Entering into Contract. — (1) No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure;
x x x x
SECTION 47. Certificate Showing Appropriation to Meet Contract. — Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three (3) months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current calendar year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished.
SECTION 48. Void Contract and Liability of Officer. — Any contract entered into contrary to the requirements of the two (2) immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties. (Emphasis supplied)
This Court finds his arguments untenable.
The law is absolutely clear on the requirement that before any obligation chargeable against any authorized allotment is incurred, there must be a CAF or a certification from the Chief Accountant as to the allotment against which the expenditure will be charged, and that funds are available for such expenditure. This certificate required by law cannot be replaced by mere Obligation Requests and Disbursement Vouchers, which serve different purposes from that of a CAF which certifies that there are funds actually appropriated for the contract to be executed, and that such funds are actually available to be expended. The Obligation Requests and Disbursement Vouchers are not the certification from the chief accountant that is required by Section 40 of Book VI, Chapter 5 and Section 47, Title I, Book V, Subtitle B, Chapter 8 of the Administrative Code of 1987 or Section 86 of PD No. 1445.
In an Obligation Request, the Head of the Requesting Office or his authorized representative certifies on the necessity and legality of the charges to the budget under his supervision, and the validity, propriety and legality of the supporting documents.[89] In the same Obligation Request, the Head of the Budget Unit or his authorized representative certifies on the availability of allotment obligated for the purpose as indicated therein. In particular, COA Circular No. 003-06[90] provides:
Thus, it is clear that the obligation indicated in the Obligation Request has already been incurred, and that the Head of the Budget Unit simply certifies as to the availability of the allotment obligated for such purpose. This Obligation Request is prepared in three copies and distributed as follows - the original is attached to the Disbursement Voucher, the duplicate is given to the Budget Unit, and the triplicate is given to the Accounting Unit. This differs from a CAF which is signed by the Chief Accountant and is required to be attached to the contract entered into by the government before any obligation chargeable against any authorized allotment is incurred or authorized. The obligation becomes chargeable upon perfection of the contract, and that takes place upon the signing of the contract by the parties.
On the other hand, a Disbursement Voucher contains the certification by the Head of Accounting Unit or his authorized representative on the availability of cash, subject to Advice to Debit Accounts, on the completeness of the supporting documents.[91] It also contains the approval by the Head of the Agency or his authorized representative on the payment covered by the Disbursement Voucher. Finally, the same Disbursement Voucher contains the acknowledgment by the claimant or his duly authorized representative for the receipt of the check or cash, and the date of such receipt. Simply put, the Disbursement Voucher merely records the mode of payment made to the payee indicated therein, and certifies that the cash for such disbursement is available and that the supporting documents for such disbursement are complete.
It is clear, therefore, that the Obligation Requests and the Disbursement Vouchers are not the certification required by law to be secured before an obligation is incurred by the government, which certification shows that funds have been appropriated by law and that such funds are available therefor. Obligation Request, Budget Utilization Request, and Disbursement Voucher are mere forms prescribed by the Commission on Audit, to be used in recording obligations incurred, budget utilization, and disbursements.[92]
Justice Caguioa, in his Dissenting Opinion, agrees with the finding of the OCAt that no CAF was issued prior to entering into the third to eighth Contracts of Services with Ms. Macasaet[93] but raises the argument that since there is no particular form required to be followed for the issuance of the CAF, the Obligation Requests and Disbursement Vouchers which were issued before the payments to Ms. Macasaet are compliant with the CAF requirement under the law.
The Court disagrees.
Again, what is required by law is a CAF before any obligation chargeable against any authorized allotment is incurred. This also means that the CAF must be secured before the services are performed or the goods are delivered. That there were an Obligation Request and a Disbursement Voucher before payment was made to Ms. Macasaet is entirely irrelevant and immaterial because the law requires the CAF before the obligation is incurred - not thereafter when the obligation is paid. Clearly, when payment is made, the obligation had already been incurred and performed.
The Obligation Request and Disbursement Voucher, while made before payment, are issued after the obligation chargeable against the authorized allotment is incurred. Even if the law does not require the CAF to be in any particular form, an Obligation Request or a Disbursement Voucher cannot replace the CAF required by law because the law clearly states that there must be a CAF before such obligation is actually incurred or authorized.
ALL THE CONTRACTS OF SERVICES ARE VOID
In summary, all the eight (8) Contracts of Services must be declared void ab initio.
It is beyond doubt that (1) the lack of authority of the government signatory; (2) lack of qualifications of Ms. Macasaet; (3) the excessive amount of consultancy fees; (4) the incurrence of obligation and the expenditure of public funds without the proper appropriation; and (5) the absence of the required CAFs render the subject Contracts of Services with Ms. Macasaet void ab initio.
WHEREFORE, the Court DECLARES the subject eight (8) Contracts of Services with Ms. Helen P. Macasaet, for Information and Communications Technology consultancy services in relation to the Supreme Court's Enterprise Information Systems Plan, VOID ab initio.
Ms. Helen P. Macasaet is hereby DIRECTED to reimburse all the amounts received as consultancy fees from the subject eight (8) Contracts of Services with the Supreme Court of the Philippines amounting to Eleven Million One Hundred Thousand Pesos (P11,100,000.00) less whatever taxes were withheld, within thirty (30) days from finality of this Resolution, with legal interest at the rate of six percent (6%) per annum from the expiration of the same thirty (30) day period until the same shall have been fully paid.
SO ORDERED.
Bersamin (C.J.), Peralta, Leonen, A. Reyes, Jr., Gesmundo, J. Reyes, Jr., Hernando, Carandang, Lazaro-Javier, and Inting, JJ., concur.
Caguioa, J., see dissenting opinion.
Del Castillo and Jardeleza, JJ., join the dissent of J. Caguioa.
Perlas-Bernabe, J., on official leave.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on July 16, 2019 a Resolution, copy attached herewith, was rendered by the Supreme Court in the above-entitled administrative matter, the original of which was received by this Office on September 16, 2019 at 11:40 a.m.
| Very truly yours, (Sgd.) EDGAR O. ARICHETA Clerk of Court |
[1] Rollo, pp. 50-51.
[2] Id. at 2 (OCAt Report).
[3] Id. at 61-62.
[4] Id. at 63-64.
[5] Id. at 67-70.
[6] Id. at 80-83.
[7] Approved on 10 January 2003 and took effect on 1 April 2003.
[8] Rollo, p. 83.
[9] Id. at 95-96.
[10] Id. at 96.
[11] Id. at 614-616.
[12] Id. at 27.
[13] Id. at 606-613.
[14] Id. at 77.
[15] Id. at 114-117.
[16] Id. at 115.
[17] Id. at 118-126.
[18] Id. at 49-49A.
[19] Id.
[20] Id. at 1-48.
[21] Id. at 409-421.
[22] Id. at 407.
[23] Id. at 464-488.
[24] Id. at 433-460.
[25] Id. at 462-463.
[26] Id. at 668-669.
[27] Id. at 46 (OCAt Report).
[28] Id. at 670-672.
[29] Id. at 671-672.
[30] Id.
[31] Repealing Executive Order No. 109-A, dated 18 September 2003, Prescribing the Rules and Procedures on the Review and Approval of All Government Contracts to Conform with Republic Act No. 9184, Otherwise Known as "The Government Procurement Reform Act."
[32] Under Chapter 2, Title 1, Book III of the Administrative Code of 1987, the President has the authority to issue Executive Orders to implement and execute statutes. In particular, Section 2 provides:
Chapter 2. Ordinance Power
Section 2. Executive Orders. — Acts of the President providing for rules of a general or permanent character in implementation or execution of constitutional or statutory powers shall be promulgated in executive orders.[33] A.M. No. 10-4-20-SC, as amended. Dated 4 May 2010.
[34] Id.
[35] Flight Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc., G.R. No. 178083, 13 March 2018.
[36] Referral of Administrative Matters and Cases to the Divisions of the Court, the Chief Justice, and to the Chairmen of the Divisions for Appropriate Action or Resolution. Dated 22 April 2003.
[37] Re: [2018] Procurement Plan for the Supreme Court and the Lower Courts. Dated 6 March 2018.
[38] See Section 3(b), Government Procurement Reform Act.
[39] Rollo, p. 672.
[40] Gonzales v. Philippine Amusement and Gaming Corporation, 473 Phil. 582 (2004). See Heirs of Santiago v. Lazaro, 248 Phil. 593 (1988).
[41] Rollo, p. 675.
[42] Id.
[43] Id.
[44] Id. at 605.
[45] J. Caguioa's Dissenting Opinion, p. 63.
[46] Rollo, p. 616.
[47] Id. at 95.
[48] Id. at 607.
[49] Id. at 455.
[50] Id.
[51] Id. at 87.
[52] J. Cagiuoa's Dissenting Opinion, pp. 22-23.
[53] Re: Request for Approval of the Revised Qualification Standard for the Chief of MISO. Dated 25 November 2009.
[54] Rollo, pp. 67-70.
[55] Id. at 39 (OCAt Report). See rollo, pp. 100-107, 118-126, 138-146, 156-164, 177-185, 200-208 and 221- 229.
[56] Compensation of Contractual Personnel and Individual Professional Consultants.
[57] Rollo, p. 41 (OCAt Report).
[58] Id.
[59] In the Matter of Classifying as Highly Technical and/or Policy Determining the Third Level Positions Below that of Chief Justice and Associate Justices in the Supreme Court, Including those in the Philippine Judicial Academy and the Judicial and Bar Council, and for Other Purposes. Dated 27 September 2005.
[60] Rollo, p. 42 (OCAt Report).
[61] Id.
[62] Clarification on the Guidelines on the Procurement of Consulting Services.
[63] Manual of Procedures for the Procurement of Consulting Services.
[64] Rollo, pp. 80-83.
[65] Id. at 397-406.
[66] Id. at 399-406.
[67] Id. at 80-83.
[68] Id. at 67-70.
[69] Procurement Manual, Volume 1 - Guidelines on the Establishment of Procurement Systems and Organizations.
[70] Id.
[71] Rollo, p. 22 (OCAt Report).
[72] Id. See also rollo, p. 252.
[73] Id. at 710 (OCAt Report).
[74] See Section 7.3, Rule III, Revised IRR of the Government Procurement Reform Act.
[75] 575 Phil. 428 (2008).
[76] Id. at 454-455.
[77] Id. at 462-463.
[78] Rollo, p. 710 (OCAt Report).
[79] Id.
[80] Dated 11 June 1978.
[81] Rollo, pp. 102-103.
[82] Id. at 710 (OCAt Report).
[83] Id. at 35 (OCAt Report).
[84] See rollo, pp. 53 and 89.
[85] 662 Phil. 771 (2011).
[86] Id. at 779-780.
[87] 807 Phil. 555 (2017).
[88] Rollo, pp. 769-770.
[89] See Annex A1 of COA Circular No. 003-06 dated 31 January 2006.
[90] Restatement with Amendments of COA Circular No. 2005-001 on Accounting Policies Related to the Budget, Accounting and Disbursement Functions in National Government Agencies Under the New Government Accounting System (NGAS). Dated 31 January 2006.
[91] See Annex B of COA Circular No. 003-06 dated 31 January 2006.
[92] COA Circular No. 003-06 dated 31 January 2006.
[93] J. Caguioa's Dissenting Opinion, pp. 53, 55.
