FIRST DIVISION
|
EFREN L. ALVAREZ, Petitioner, - versus - |
G.R.
No. 192591 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ. |
|
PEOPLE OF THE PHILIPPINES, Respondent. |
Promulgated: June 29, 2011 |
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DECISION
VILLARAMA, JR., J.:
Before
us is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, seeking to reverse and set aside the
Decision[1]
dated November 16, 2009 and Resolution[2]
dated June 9, 2010 of the Sandiganbayans Fourth Division finding the
petitioner guilty beyond reasonable doubt of violation of Section 3(e) of Republic
Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices
Act.
Petitioner
Efren L. Alvarez, at the time of the subject transaction, was the Mayor of the
Municipality (now Science City) of Muoz, Nueva Ecija. In July 1995, the Sangguniang Bayan
(SB) of Muoz under Resolution No.
136, S-95 invited Mr. Jess Garcia, President of the Australian-Professional,
Inc. (API) in connection with the municipal governments plan to construct a
four-storey shopping mall (Wag-wag Shopping Mall), a project included in its
Multi-Development Plan. Subsequently, it approved the adoption of the project
under the Build-Operate-Transfer (BOT) arrangement in the amount of P240
million, to be constructed on a 4,000-square-meter property of the municipal
government which is located at the back of the Municipal Hall. API submitted its proposal on November 7,
1995.[3]
On
February 9, 1996, an Invitation for proposals to be submitted within thirty
(30) days, was published in Pinoy
tabloid. On April 12, 1996, the
Pre-qualification, Bids and Awards Committee (PBAC) recommended the approval of
the proposal submitted by the lone bidder, API. On April 15, 1996, the SB
passed a resolution authorizing petitioner to enter into a Memorandum of
Agreement (MOA) with API for the project. Consequently, on September 12, 1996,
petitioner signed the MOA with API, represented by its President Jesus V.
Garcia, for the construction of the Wag-Wag Shopping Mall under the BOT scheme
whereby API undertook to finish the construction within 730 calendar days.[4]
On
February 14, 1997, the groundbreaking ceremony was held at the site once
occupied by government structures which included the old Motor Pool, the old
Health Center and a semi-concrete one-storey building that housed the Department
of Agriculture, BIR Assessor, old Post Office, Commission on Elections and
Department of Social Welfare and Development. These structures were demolished
at the instance of petitioner to give way to the construction project.
Thereafter, API proceeded with excavation on the area (3-meter deep) and a
billboard was put up informing the public about the project and its contractor.
However, no mall was constructed as API stopped work within just a few months.
On
August 10, 2006, petitioner was charged before the Sandiganbayan for violation
of Section 3(e) of R.A. No. 3019 (SB-06-CRM-0389), under the following
Information:
That on or about 12 September 1996, and sometime prior
or subsequent thereto, in the then Municipality (now Science City) of Muoz,
Nueva Ecija, and within the jurisdiction of this Honorable Court, the
above-named accused EFREN L. ALVAREZ, a high ranking public official, being
then the Mayor of Muoz, Nueva Ecija, taking advantage of his official position
and while in the discharge of his official or administrative functions, and
committing the offense in relation to his office, acting with evident bad faith
or gross inexcusable negligence or manifest partiality did then and there
willfully, unlawfully and criminally give the Australian-Professional
Incorporated (API) unwarranted benefits, advantage or preference, by awarding
to the latter the contract for the construction of Wag-Wag Shopping Mall in the
amount of Two Hundred Forty Million Pesos (Php 240,000,000.00) under a
Buil[d]-Operate-Transfer Agreement, notwithstanding the fact that API was and
is not a duly-licensed construction company as per records of the Philippine
Construction Accreditation Board (PCAB), which construction license is a
pre-requisite for API to engage in construction of works for the said municipal
government and that API does not have the experience and financial
qualifications to undertake such costly project among others, to the damage and
prejudice of the public service.
CONTRARY TO LAW.[5]
On
September 22, 2006, petitioner was duly arraigned, pleading not guilty to the
charge.
At the trial, petitioner testified
that during his term as Mayor of Muoz, the municipal government planned to
borrow money from GSIS to finance the proposed Wag-Wag Shopping Mall project. He learned about API when then Vice-Mayor
Romeo Ruiz and other SB members showed him a copy of publication/advertisement
in the Manila Bulletin and Business Bulletin showing that API was then building
similar BOT projects for construction of shopping malls in Lemery, Batangas (P150
million) and in Calamba, Laguna (P300 million). Because it will not entail government funds
and is an alternative to availment of GSIS loan, petitioner appointed
Vice-Mayor Ruiz and other SB members to study the matter. A resolution was subsequently passed by the
SB inviting API for detailed information on their mall projects. Thereafter,
the SB approved the construction of Wag-Wag Shopping Mall under BOT scheme,
which was favorably endorsed by the Municipal Development Council. A public hearing was also conducted by
Municipal Engineer Armando E. Miranda.
On November 8, 1995, the municipal government received the unsolicited
proposal of API for the construction of Wag-Wag Shopping Mall. For three
weeks, an Invitation to Bid was published in the Pinoy tabloid. But it was
the lone bidder, API, whose proposal was eventually recommended by the PBAC and
approved by the SB.[6]
Petitioner emphasized that not a
single centavo was spent by the municipal government for the Wag-Wag Shopping
Mall project. It was an unsolicited proposal under the BOT law. API was required to submit pre-qualification
statements containing, among others, their accomplished projects. Eventually the SB passed a resolution
authorizing him to enter into the MOA with API.
The municipal government issued the notice of award to API on September
16, P500,000.00 as disturbance or relocation fee considering that the
municipal government has caused the demolition of old buildings at the
site. A certification[7]
of such payment was issued by City Treasurer Luzviminda P. De Leon and City
Accountant June Franklyn A. Fernandez on February 5, 2007. The materials were then utilized for the
construction of the new motor pool and new City Library. Thereafter, API began excavating an area of
30 x
On cross-examination, petitioner
claimed that had the municipal government then borrowed funds from the GSIS,
they envisioned annual return of P5 million from a P40 million
loan for a modest mall (but for an area of P80 million). For a period of 8 years, the
municipality would have an income of P40 million and the GSIS can be
paid. As to the contractors financial capability, it presented a credit line
of P150 million to P250 million for Australian-Professionals
Realty, Inc. (APRI). Petitioner
clarified that API and APRI were one and the same entity having the same board
of directors, but when asked if he verified this from the Securities and
Exchange Commission (SEC), he answered in the negative. Petitioner asserted
that it was the Vice-Mayor who is accountable for this project as he headed the
working panel. As to whether API was a
licensed contractor, he admitted that he did not verify this before awarding
the BOT contract involving an infrastructure project. He insisted that the Wag-Wag Shopping Mall
Project, being an unsolicited proposal under BOT law, is exempt from the
pre-qualification requirement although they still conducted it. As far as he knows, the project proponent in
this case is the Municipality of Muoz.
However, petitioner admitted that he is not familiar with the BOT
law. He also admitted that the
Invitation published stated a shorter period of submission of proposal (30 days
instead of 60 days provided under the BOT law) and that he just signed the said
notice without consulting their legal counsel.[9]
On November 16, 2009, the
Sandiganbayan rendered judgment convicting the petitioner after finding that:
(1) petitioner railroaded the project; (2) there was no competitive bidding;
(3) the contractor was totally unqualified to undertake the project; and (4)
the provisions of the BOT law and relevant rules and regulations were
disregarded and not followed. The said
court also found that the municipal government suffered damage and prejudice
with the resulting loss of several of its buildings and offices, and having
deployed its resources including equipment, personnel and financial outlay for
fuel and repairs in the demolition of the said structures. Damage suffered by the municipal government
was quantified at P4.8 million, or 2% of the total project cost of P240
million, representing the amount of liquidated damages due under the
performance security had the same been posted by the contractor as required by
law. As to the allegation of conspiracy, the Sandiganbayan held that such was
adequately shown by the evidence, noting that this is one case where the
Ombudsman should have included the entire Municipal Council in the information
for the latter had conspired if not abetted all the actions of the petitioner
in his dealings with API to the damage and prejudice of the municipality.
The dispositive portion of the
decision reads:
ACCORDINGLY, accused Efren L. Alvarez is found guilty
beyond reasonable doubt for [sic] violation
of Section 3 (e) of Republic Act No. 3019 and is sentenced to suffer in prison
the penalty of 6 years and 1 month to 10 years.
He also has to suffer perpetual disqualification from holding any public
office and to indemnify the City Government of Muoz (now Science), Nueva Ecija
the amount of Four Million Eight Hundred Thousand Pesos (Php 4,800,000.00) less
the Five Hundred Thousand Pesos (Php 500,000.00) API earlier paid the
municipality as damages.
Costs against the accused.
SO ORDERED.[10]
The Sandiganbayan likewise denied
petitioners motion for reconsideration.
It ruled that upon examination of Section 4-A of R.A. No. 6957 as
amended by R.A. No. 7718, it was clear that petitioner, with manifest
partiality and gross inexcusable negligence, failed to comply with the
requirements and procedures for competitive bidding in unsolicited
proposals. It also reiterated that API
was a contractor and not a mere project proponent; hence, the license
requirement applies to it. Petitioners
defense that he merely executed the resolutions of the SB was also rejected
because as Chief Executive of the Municipality of Muoz, it was his duty to
protect the credits, rights and properties of the municipality and to exercise
efficient, effective and economical governance for the general welfare of the
municipality and its inhabitants under Section 444, R.A. No. 7160 (Local
Government Code of 1991). Significant
acts of the petitioner also showed that he opted to enter into the contract
with API despite reckless disregard of the law.
Hence, this petition raising the
following issues:
1. Whether or not the Honorable Sandiganbayan failed to
observe the requirement of proof beyond reasonable doubt in convicting the
Accused-Petitioner;
2. Whether or not the Honorable Sandiganbayan failed to
appreciate the legal intent of the BOT project;
3. Whether or not the Honorable Sandiganbayan utterly
failed to appreciate that the BOT was a lawful project of the Sangguniang Bayan
and not the project of the Mayor Accused-Petitioner herein; and
4. Whether or not the Honorable Sandiganbayan utterly
failed to appreciate that there was no damage on the then Municipality of Muoz
as contemplated by law, to warrant the conviction of the Accused-Petitioner.[11]
We deny the petition.
Petitioner was charged with violation
of Section 3(e) of R.A. No. 3019. To be
convicted under the said provision, the following elements must be established:
1. The accused
must be a public officer discharging administrative, judicial or official
functions;
2. He must have
acted with manifest partiality, evident bad faith or inexcusable negligence;
and
3. That his
action caused any undue injury to any party, including the government, or
giving any private party unwarranted benefits, advantage or preference in the
discharge of his functions.[12]
In
this case, the information alleged that while being a public official and in
the discharge of his official functions and taking advantage of such position,
petitioner acting with evident bad faith or gross inexcusable negligence or
manifest partiality unlawfully gave API unwarranted benefits, advantage or
preference by awarding to it the
contract for the construction of the Wag-Wag Shopping Mall under the BOT scheme
despite the fact that it was not a licensed contractor and does not have the
experience and financial qualifications to undertake such costly project, among
others, to the damage and prejudice of the public service.
Petitioner argues that he cannot be
held liable under Section 3(e) of R.A. No. 3019 since the Municipality of Muoz
did not disburse any money and the buildings demolished on the site of construction
have been found to be a nuisance and declared structurally unsafe, as per
notice issued by the Municipal Building Official. He points out that in fact, a
demolition permit has been issued upon his application in behalf of the
municipal government. API also paid P500,000.00 demolition/relocation
fee.
We
disagree.
This
Court has clarified that the use of the disjunctive word or connotes that
either act of (a) causing any undue injury to any party, including the
Government; and (b) giving any private party any unwarranted benefits,
advantage or preference, qualifies as a violation of Section 3(e) of R.A. No.
3019, as amended.[13] The use of the disjunctive or connotes that
the two modes need not be present at the same time. In other words, the
presence of one would suffice for conviction.[14]
As we explained in Bautista v. Sandiganbayan[15]:
Indeed, Sec. 3, par. (e), RA 3019, as amended,
provides as one of its elements that the public officer should have acted by
causing any undue injury to any party, including the government, or by
giving any private party unwarranted benefits, advantage or preference in the
discharge of his functions. The use of the disjunctive term or connotes
that either act qualifies as a violation of Sec. 3, par. (e), or as aptly held
in Santiago, as two (2) different modes of committing the offense. This
does not, however, indicate that each mode constitutes a distinct offense, but
rather, that an accused may be charged under either mode or under both.[16] (Underscoring
supplied.)
The
Court En Banc likewise held in Fonacier v. Sandiganbayan[17]
that proof of the extent or quantum of damage is not essential. It is sufficient that the injury suffered or
benefits received can be perceived to be substantial enough and not merely negligible.[18] Under the second mode of the crime defined in
Section 3(e) of R.A. No. 3019 therefore, damage is not required. In order to be found guilty under the second
mode, it suffices that the accused has given unjustified favor or benefit to
another, in the exercise of his official, administrative or judicial functions.[19]
The third element of Section 3(e) of R.A. No. 3019 may be committed in three ways, i.e., through manifest partiality, evident bad
faith or gross inexcusable negligence. Proof of any of these three in
connection with the prohibited acts mentioned in Section 3(e) of R.A. No. 3019 is enough
to convict.[20] Damage or injury caused by petitioners acts
though alleged in the information, thus need not be proven for as long as the
act of giving any private party unwarranted benefits, advantage or preference
either through manifest partiality, evident bad faith or gross inexcusable
negligence was satisfactorily established.
Contrary to petitioners assertion, the prosecution was able to
successfully demonstrate that he acted with manifest partiality and gross
inexcusable negligence in awarding the BOT contract to an unlicensed and
financially unqualified private entity.
R.A.
No. 6957 as amended by R.A. No. 7718, requires that a BOT project be awarded to
the bidder who has satisfied the minimum requirements, and met the technical,
financial, organizational and legal standards provided in the BOT Law. Section 5 of said law provides:
SEC. 5. Public Bidding of Projects. -
x x x
In the case of a build-operate-and-transfer
arrangement, the contract shall be awarded to the bidder who, having satisfied
the minimum financial, technical,
organizational and legal standards required by this Act, has submitted the lowest
bid and most favorable terms for the project, based on the present value of its
proposed tolls, fees, rentals and charges over a fixed term for the facility to
be constructed, rehabilitated, operated and maintained according to the
prescribed minimum design and performance standards, plans and specifications.
x x x (Emphasis supplied.)
Foremost
of these minimum legal standards is the license accreditation of a contractor
required under R.A. No. 4566 otherwise known as the Contractors License Law. The Philippine Licensing Board for Contractors
created under said law is mandated to ensure that prospective contractors
possess at least two years of experience in the construction industry, and
knowledge of the building, safety, health and lien laws of the Republic of the
Philippines and the rudimentary administrative principles of the contracting
business which it deems necessary for the safety of the contracting business
of the public.[21] In fact, a contractor must show that he is
licensed by the board before his bid will be considered.[22] As a general rule therefore, the prospective
contractor for government infrastructure projects must have been duly licensed
as such pursuant to R.A. No. 4566. API
not being a licensed contractor as per the Certification[23]
issued by Philippine Contractors Accreditation Board (PCAB) board secretary
Aaron C. Tablazon, is thus not qualified to participate in the bidding and much
less be awarded the BOT project for the construction of Wag-Wag Shopping Mall.
Petitioner
claimed that there was compliance with the law saying that API was not a
contractor but a mere project proponent, for which a license is not a requisite
to undertake BOT projects. But the
Sandiganbayan correctly rejected this theory as the clear terms of the MOA
itself confirm that API itself undertook to construct the Wag-Wag Shopping
Mall, thus:
TERMS AND CONDITIONS
I. THE PROJECT
SITE
1. The FIRST PARTY [Municipality of Muoz] shall make
available unto the SECOND PARTY a FOUR THOUSAND (4,000) SQUARE METERS lot
located at Muoz, Nueva Ecija where the SECOND PARTY [API] shall build for the FIRST PARTY a commercial building in accordance
with this Memorandum of Agreement, RA 6957 AND RA 7718 as well as RA 7160
otherwise known as the Local Government Code of 1991.
II. PLANS AND
SPECIFICATIONS
1. The commercial building, to be known as the WAG-WAG
SHOPPING MALL, shall be constructed by
the SECOND PARTY strictly in accordance with plans, specifications, engineering
and construction designs prepared by the SECOND PARTY and duly reviewed and
approved by the FIRST PARTY. x x x
x x x x
III.
CONSTRUCTION
x x x x
3. The FIRST
PARTY shall issue a written Notice to Proceed in favor of the SECOND
PARTY. The SECOND PARTY, shall mobilize within 60 days from clearing
of the site for official groundbreaking.
4. The SECOND
PARTY hereby warrants that it shall finish
the construction of the WAG-WAG SHOPPING MALL within SEVEN HUNDRED THIRTY
(730) CALENDAR DAYS counted from the date of the official groundbreaking.
x x x x
6. x x x
Compliance with all existing laws, rules and regulations regarding the construction of the project shall be
[the] responsibility of the SECOND PARTY itself to save and hold the FIRST
PARTY harmless from any and all liabilities in respect thereto or arising from
violations thereof.
IV. BUILD-OPERATE-AND-TRANSFER
SCHEME
1. The WAG-WAG
SHOPPING MALL be constructed by the
SECOND PARTY for the FIRST PARTY in accordance with this Memorandum of
Agreement and with the Build-Operate-and-Transfer Scheme outlined RA 6957 and
RA 7718. This Agreement is of course
subject to the provisions of RA 7160 and other pertinent laws.
x x x x[24]
Section
2 of R.A. No. 6957 as amended by R.A. No. 7718, defined the terms Contractor
and Project Proponent as follows:
(k) Project
Proponent - The private sector entity which shall have
contractual responsibility for the project and which shall have an adequate
financial base to implement said project consisting of equity and firm
commitments from reputable financial institutions to provide, upon award,
sufficient credit lines to cover the total estimated cost of the project.
(l) Contractor
- Any entity accredited under
Philippine laws which may or may not be the project proponent and which shall
undertake the actual construction and/or supply of equipment for the project.
Aside from the clear language of the
MOA, the attendant circumstances unmistakably showed that API is both the project proponent and
contractor of the BOT project, as it was the one who submitted the proposal and
bid to the SB, through its President executed the MOA with petitioner, deployed
manpower and equipment for the clearing of the site, conducted groundbreaking,
performed excavation and initial construction works, and took responsibility
for the stoppage and non-completion of the project when it entered into a
compromise with the Municipality of Muoz.
It is to be noted that even as project proponent, API failed to meet the
minimum financial standard considering that it has no adequate financial base to
implement the Wag-Wag Shopping Mall project. APIs paid-up capital was only P2.5
million, while its stand-by credit line issued by Brilliant Star Capital
Lending Co., Inc. was only for the amount of P150 million, way below the
P240 million total project cost.
While APIs proposal passed through
the pre-qualification stage, it failed to submit, except for the SEC
registration certificate, a complete set of documents required for a BOT
project, in accordance with the BOT Law Implementing Rules and Regulations
(IRR):
Sec. 5.4. Pre-qualification
Requirements. - To pre-qualify, a project proponent must comply
with the following requirements:
a.
Legal Requirements
i. For projects to be implemented under
the BOT scheme whose operations require a public utility franchise, the project
proponent and the facility operator must be a Filipino or, if a corporation,
must be duly registered with the Securities and Exchange Commission (SEC) and
owned up to at least sixty percent (60%) by Filipinos.
x x x x
v. If the contractor to be engaged by the project proponent to undertake
the construction works of the project under bidding needs to be pre-identified
as prescribed in the published Invitation to Pre-qualify and Bid and is a
Filipino, it must be duly licensed and accredited by the Philippine
Contractors Accreditation Board (PCAB). However, if the contractor is a
foreigner, PCAB registration will not be required at pre-qualification stage,
rather it will be one of the contract milestones.
b. Experience or Track Record: The
proponent-applicant must possess adequate experience in terms of the following:
i. Firm
Experience: By itself or through the member-firms in case of a joint
venture/consortium or through a contractor(s) which the project proponent may
have engaged for the project, the project proponent and/or its contractor(s)
must have successfully undertaken a project(s) similar or related to the
subject infrastructure/development project to be bid. The individual firms
and/or their contractor(s) may individually specialize on any or several phases
of the project(s). A joint venture/consortium proponent shall be evaluated
based on the individual or collective experience of the member-firms of the
joint venture/consortium and of the contractor(s) that it has engaged for the
project.
x x x x
vi. Key Personnel Experience: The key
personnel of the proponent and/or its contractor(s) must have sufficient
experience in the relevant aspect of schemes similar or related to the subject
project, as specified by the Agency/LGU.
e. Financial
Capability: The project proponent must have adequate capability to
sustain the financing requirements for the detailed engineering design,
construction and/or operation and maintenance phases of the project, as the
case may be. For purposes of pre-qualification, this capability shall be
measured in terms of:
(i) proof of the ability of the project
proponent and/or the consortium to provide a minimum amount of equity to
the project measured in terms of the net worth of the company or in the case of
joint ventures or consortia the combined net worth of members or a set-aside
deposit equivalent to the minimum equity required, and
(ii) a letter testimonial from reputable
banks attesting that the project proponent and/or members of the consortium
are banking with them, and that they are in good financial standing. The
government Agency/LGU concerned shall determine on a project-to-project basis,
and before pre-qualification, the minimum amount of equity needed. In addition,
the Agency/LGU will inform the proponents of the minimum debt-equity ratio
required by the monetary authority for projects to be financed by foreign
loans.
x x x x (Emphasis supplied.)
We have held that the Implementing Rules provide for the
unyielding standards the PBAC should apply to determine the financial capability
of a bidder for pre-qualification purposes: (i) proof of the ability of the
project proponent and/or the consortium to
provide a minimum amount of equity to the project and (ii) a letter
testimonial from reputable banks attesting that the project proponent and/or members of the consortium are banking with
them, that they are in good financial standing, and that they have adequate
resources. The evident intent of
these standards is to protect the integrity and insure the viability of the
project by seeing to it that the proponent has the financial capability to
carry it out.[25] Unfortunately,
none of these requirements was submitted by API during the pre-qualification
stage.
Petitioner
assails the Sandiganbayan for allegedly failing to appreciate the legal intent
of the BOT Law which allows contracts on a negotiated basis for unsolicited
proposals like the Wag-Wag Shopping Mall project. It asserts that the procedure
and requirements for bidding have been complied with when the Municipality of
Muoz caused the publication of the invitation to submit comparative bids for
the BOT project was published in Pinoy,
a newspaper of general circulation for three consecutive weeks. Since no comparative bid/proposal was
received within sixty (60) days, the BOT project was rightfully awarded to API,
the original proponent.
The contention fails.
Unsolicited
proposals refer to project proposals submitted by the private sector to
undertake infrastructure or development projects which may be entered into by a
government agency or local government unit.[26] Section 4-a of R.A. No. 6957 as amended by
R.A. No. 7718 governs unsolicited proposals:
SEC. 4-A. Unsolicited
Proposals. -- Unsolicited proposals for projects may be
accepted by any government agency or local government unit on a negotiated
basis: Provided, That, all the
following conditions are met: (1) such projects involved a new concept or
technology and/or are not part of the list of priority projects, (2) no direct
government guarantee, subsidy or equity is required, and (3) the government
agency or local government unit has invited by publication, for three (3)
consecutive weeks, in a newspaper of general circulation, comparative or
competitive proposals, and no other proposal is received for a period of sixty
(60) working days: Provided, further,
That in the event another proponent submits a lower price proposal, the
original proponent shall have the right to match that price within thirty (30)
working days.
We
note that it was the SB which invited the API to provide information on the
construction of a shopping mall project under the BOT scheme. It cannot be said thus that the development
project originated from the proponent/contractor. Nonetheless, even if the proposal is deemed
unsolicited, still the requirements of the law have not been complied
with.
The
IRR specified the requirement of publication of the invitation for submission
of proposals, as follows:
SEC. 10.11. Invitation
for Comparative Proposals. - The Agency/LGU shall publish the invitation
for comparative or competitive proposals only after ICC/Local Sanggunian
issues a no objection clearance of the draft contract. The invitation for
comparative or competitive proposals should be published at least once every
week for three (3) weeks in at least one (1) newspaper of general circulation.
It shall indicate the time, which should not be earlier than the last date
of publication, and place where tender/bidding documents could be obtained.
It shall likewise explicitly specify a time of sixty (60) working days
reckoned from the date of issuance of the tender/bidding documents upon
which proposals shall be received. Beyond said deadline, no proposals shall be
accepted. A pre-bid conference shall be conducted ten (10) working days after
the issuance of the tender/bidding documents. (Emphasis supplied.)
The above provision highlighted other
violations in the bidding procedure for the subject BOT project. First,
there was no prior approval by the Investment Coordinating Committee of the
National Economic Development Authority (ICC-NEDA) of the Wag-Wag Shopping Mall
project. Under the BOT Law, local
projects to be implemented by the local government units concerned costing
above P200 million shall be submitted for confirmation to the ICC-NEDA.[27] Such requisite approval shall be applied for
and should be secured by the head of the LGU prior to the call for bids for the
project.[28] Second,
the law requires publication in a newspaper of general circulation. To be a newspaper of general circulation, it is enough that it is
published for the dissemination of local news and general information, that it
has a bona fide subscription list of paying subscribers, and that it is
published at regular intervals. Over and above all these, the newspaper must be
available to the public in general, and not just to a select few chosen by the
publisher.[29] Petitioner did not submit in evidence the
affidavit of the publisher attesting to Pinoy
tabloid as such newspaper of general circulation. And third,
even assuming that Pinoy was indeed a
newspaper of general circulation, the invitation published indicated a shorter
period of submission of comparative proposals, only thirty (30) days instead of
the prescribed sixty (60) days counted from the date of issuance of tender
documents.
There
is likewise no showing that API complied with the submission of a complete
proposal required under the IRR:
SEC. 10.5
Submission of a Complete Proposal. - For a proposal to be considered by the
Agency/LGU, the proponent has to submit a complete proposal which shall include
a feasibility study, company profile as outlined in Annex A, and the basic
contractual terms and conditions on the obligations of the proponent and the
government. The Agency/LGU shall acknowledge receipt of the proposal and advice
the proponent whether the proposal is complete or incomplete. If incomplete, it
shall indicate what information is lacking or necessary. (Emphasis supplied.)
As correctly pointed out
by the Sandiganbayan, APIs proposal showed that it lacked the above
requirements as it did not include a company profile and the basic contractual
terms and conditions on the obligations of the proponent/contractor and the
government. Had such company profile been required of API, the municipal
government could have been apprised of the fact that said contractor/proponent
had been in existence for only three months at that time and had not yet
completed a project, although APRI, which actually undertook the Calamba and
Lemery shopping centers also under BOT scheme, is allegedly the same entity as
API which have the same set of incorporators and directors. But more important, the municipality could
have realized earlier, on the basis of financial statements and experience in
construction included in the company profile, that API could not possibly
comply with the huge financial outlay for the Wag-Wag Shopping Mall
project. It could have also noted the
fact that the aforesaid BOT shopping centers in Lemery and Calamba being
implemented by APRI at that time were not yet finished or completed. In any event, such existing BOT contract of
APRI with another LGU neither justified non-compliance by API with the
submission of a complete proposal for the Wag-Wag Shopping Mall project for a
competent evaluation by the PBAC.
Indeed, contrary to petitioners
stance, the process of
unsolicited proposals does involve public bidding where, in the end, the
government is free to choose the bid or proposal most advantageous to it.[30] Thus we held in Asias Emerging Dragon Corporation v. DOTC[31]:
The protestation by AEDC of our characterization of
the process on unsolicited proposal as public bidding is specious.
We call attention to the following relevant sections
of Rule 10 of the IRR specifically on Unsolicited Proposals:
Sec. 10.9. Negotiation With the Original Proponent.
- Immediately after ICC/Local Sanggunians clearance of the project, the
Agency/LGU shall proceed with the in-depth negotiation of the project scope,
implementation arrangements and concession agreement, all of which will be
used in the Terms of Reference for the solicitation of comparative proposals.
The Agency/LGU and the proponent are given ninety (90) days upon receipt of
ICCs approval of the project to conclude negotiations. The Agency/LGU and the
original proponent shall negotiate in good faith. However, should there be
unresolvable differences during the negotiations, the Agency/LGU shall have the
option to reject the proposal and bid out the project. On the other hand, if
the negotiation is successfully concluded, the original proponent shall then
be required to reformat and resubmit its proposal in accordance with the
requirements of the Terms of Reference to facilitate comparison with the
comparative proposals. The Agency/LGU shall validate the reformatted
proposal if it meets the requirements of the TOR prior to the issuance of the
invitation for comparative proposals.
Sec. 10.10. Tender Documents. - The
qualification and tender documents shall be prepared along the lines specified
under Rules 4 and 5 hereof. The concession agreement that will be part of
the tender documents will be considered final and non-negotiable by the
challengers. Proprietary information shall, however, be respected, protected
and treated with utmost confidentiality. As such, it shall not form part of the
bidding/tender and related documents.
x
x x x
After the concerned government agency or local
government unit (LGU) has received, evaluated, and approved the pursuance of the
project subject of the unsolicited proposal, the subsequent steps are
fundamentally similar to the bidding process conducted for ordinary government
projects.
The three principles of public bidding are: the offer
to the public, an opportunity for competition, and a basis for an exact
comparison of bids, all
of which are present in Sec. 10.9 to Sec. 10.16 of the IRR. First, the project is offered to the
public through the publication of the invitation for comparative proposals. Second,
the challengers are given the opportunity to compete for the project through
the submission of their tender/bid documents. And third, the exact
comparison of the bids is ensured by using the same
requirements/qualifications/criteria for the original proponent and the challengers,
to wit: the proposals of the original
proponent and the challengers must all be in accordance with the requirements
of the Terms of Reference (TOR) for the project; the original proponent and
the challengers are required to post bid bonds equal in amount and form; and
the qualifications of the original proponent and the challengers shall be
evaluated by the concerned agency/LGU using the same evaluation criteria.
(Additional emphasis supplied.)
In
this case, the only attempt made to comply with the bidding requirements is the
publication of the invitation which, as already mentioned, was even
defective. As noted by the
Sandiganbayan, there was no in-depth negotiation as to the project scope,
implementation and arrangements and concession agreement, which are supposed to
be used in the Terms of Reference (TOR).
Such TOR would have provided the interested competitors the basis for
their proposed cost, and its absence in this case is an indication that any
possible competing proposal was intentionally avoided or altogether eliminated.
The essence of
competition in public bidding is that the bidders are placed on equal footing.[32]
In the award of government contracts, the law
requires a competitive public bidding.
This is reasonable because [a] competitive public bidding aims to
protect the public interest by giving the public the best possible advantages
thru open competition. It is a mechanism
that enables the government agency to avoid or preclude anomalies in the
execution of public contracts.[33]
Despite
APIs obvious lack of financial qualification and absence of basic terms and
conditions in the submitted proposal, petitioner who chaired the PBAC,
recommended the approval of APIs proposal just forty-five (45) days after the
last publication of the invitation for comparative proposals, and subsequently
requested the SB to pass a resolution authorizing him to enter into a MOA with
API as the lone bidder for the project.
It was only in the MOA that the details of the construction, terms and
conditions of the parties obligations, were laid down at the time API was
already awarded the project. Even the MOA provisions remain vague as to the
parameters of the project, which the Sandiganbayan found as placing API at an
arbitrary position where it can do as it pleases without being accountable to
the municipality in any way whatsoever. True enough, when API failed to
execute the construction works and abandoned the project, the municipality
found itself at extreme disadvantage without recourse to a performance security
that API likewise failed to submit.
Petitioner
as the local chief executive failed to ensure that API which was awarded the
BOT contract, will submit such other requirements specified under the IRR:
Sec. 11.7. Conditions for Approval of
Contract. - The Head of Agency/LGU shall ensure that all of the following
conditions have been complied with before approving the contract:
a. Submission of
the required performance security as prescribed under Section 12.7
hereof;
b. Proof of sufficient equity
from the investors and firm commitments from reputable financial institution to
provide sufficient credit lines to cover the total estimated cost of the
project;
c. ICC clearance of the contract
on a no-objection basis;
Failure by the
winning project proponent to submit the requirements prescribed under items a,
b and c above within the time period specified by the concerned Agency/LGU in
the Notice of Award or failure to execute the contract within the specified
time shall result in the disqualification of the bidder, as well as the
forfeiture of the bid security of the bidder.
x x x x
Sec. 12.7. Performance Guarantee for
Construction Works. - To guarantee the faithful performance by the
project proponent of its obligations under the contract including the
prosecution of the construction works related to the project, the project
proponent shall post in favor of the Agency/LGU concerned, within the time and
under the terms prescribed under the project contract, a performance security
in the form of cash, managers check, cashiers check, bank draft or guarantee
confirmed by a local bank (in the case of foreign bidders bonded by a foreign
bank), letter of credit issued by a reputable bank, surety bond callable on
demand issued by the Government Service Insurance System (GSIS) or by surety or
insurance companies duly accredited by the Office of the Insurance
Commissioner, or a combination thereof, in accordance with the following
schedules:
a. Cash,
managers check, cashiers check, irrevocable letter of credit, bank draft
a minimum of two percent (2%) of the total Project Cost.
b. Bank Guarantee a minimum of
five percent (5%) of the total Project Cost.
c. Surety
Bond a minimum of ten percent (10%) of the total Project Cost. (Emphasis supplied.)
In the Notice of Award
dated September 16, 1996, petitioner directed API to submit the above
requirements. However, APIs counsel,
Atty. Lydia Y. Marciano, wrote in reply that such requirements do not apply
because APIs project does not involve any government undertaking. API at that point should have been
disqualified and its bid security forfeited, pursuant to Section 11.7 of the
IRR. Yet, API was allowed to proceed
with the execution of the project albeit only the site clearing, excavation and
construction of a sales office were accomplished.
Under the facts established, it is
clear that petitioner gave unwarranted benefits, advantage or preference to API
considering that said proponent/contractor was not financially and technically
qualified for the BOT project awarded to it, and without complying with the requirements of bidding and contract
approval for BOT projects under existing laws, rules and regulations.
The word unwarranted means lacking
adequate or official support; unjustified; unauthorized or without
justification or adequate reason. Advantage means a more favorable or
improved position or condition; benefit, profit or gain of any kind; benefit
from some course of action. Preference
signifies priority or higher evaluation or desirability; choice or estimation
above another.[34] As to
partiality, bad faith, and gross inexcusable negligence, we have
explained the meaning of these terms, as follows:
Partiality is synonymous with bias which excites
a disposition to see and report matters as they are wished for rather than as
they are. Bad faith does not simply connote bad judgment or negligence; it
imputes a dishonest purpose or some moral obliquity and conscious doing of a
wrong; a breach of sworn duty through some motive or intent or ill will; it
partakes of the nature of fraud. Gross negligence has been so defined as
negligence characterized by the want of even slight care, acting or omitting to
act in a situation where there is a duty to act, not inadvertently but wilfully
and intentionally with a conscious indifference to consequences in so far as
other persons may be affected. It is the omission of that care which even
inattentive and thoughtless men never fail to take on their own property.[35]
We sustain and affirm the Sandiganbayan
in holding that petitioner violated Section 3(e) of R.A. No. 3019, and that he
cannot shield himself from criminal liability simply because the SB passed the
necessary resolutions adopting the BOT project and authorizing him to enter
into the MOA. We find no error or grave
abuse in its ruling, which we herein quote:
It is apparent that the unwarranted benefit in this
case lies in the very fact that API was allowed to present its proposal without
compliance of [sic] the requirements
provided under the relevant laws and rules.
To begin with, the municipal government never conducted a public bidding
prior to the execution of the contract.
The project was immediately awarded to the API without delay and without
any rival proponents, when it was not qualified to participate in the first
place. The legality and propriety of the
agreement executed with the contractor is totally absent based on the
testimonies of both the prosecution and the defense.
This Court also considers these particular acts significant. First. From the testimony of then Vice-Mayor Ruiz,
Jesus V. Garcia, the president of API, attended the SB session after paying a
courtesy call to the Accused who was then the Mayor. Second. It was the Accused who signed and posted the
Invitation to Bid (Exhibit N) giving proponents 30 days to submit their
proposals. Third. The Accused is the
head of the Pre-Qualification Bids and Awards Committee which according to him
recommended the approval of APIs proposal.
This was the reason he used in requesting authority from the SB to grant
him the authority to contract with API. Fourth.
The Accused requested the SB to give him authority to enter into an
agreement with API through a resolution (Exhibit S)[.] Fifth. It was the Accused
who invited the SB members to go to the Mayors office to witness the signing
of the Memorandum of Agreement between the municipality and API.[36]
As
the local chief executive, petitioner is not only expected to know the proper
procedure in the bidding and award of infrastructure contracts such as BOT
projects, he is also duty bound to follow the same and his failure to discharge
this duty constitutes gross and inexcusable negligence.[37]
Petitioner
further assails the Sandiganbayan in not considering the previous dismissal of
the criminal complaint filed by Alberto Castaeda against petitioner also
involving the Wag-Wag Shopping Mall project.
The Sandiganbayan pointed out that said case (OMB-1-97-1885) was
dismissed by the Office of the Deputy Ombudsman for Luzon on March 26, 1999 at
the time the construction works were supposedly only temporarily stopped by
API, while in this case it is already apparent that the latter abandoned the
project and reneged on its obligation.
We
find nothing illegal in the reversal by the Ombudsman upon review of the
September 9, 2002 resolution of the Office of the Deputy Ombudsman for Luzon
which recommended the dismissal of the complaint-affidavit filed by Domiciano
R. Laurena IV upon the ground that a similar criminal complaint filed by Castaeda
had been dismissed in OMB-1-97-1885. The
Office of the Ombudsman Chief Legal Counsel granted the petition for review
filed by complainant Laurena IV and recommended that petitioner be indicted
before the Sandiganbayan for violation of Section 3(e) of R.A. No. 3019. It pointed out that the dismissal of
OMB-1-97-1885 was premised on the authority of a local legislature to accept
unsolicited proposals and enter into a BOT project under R.A. No. 6957 as
amended by R.A. No. 7718, and the lack of any showing of undue injury to the
Municipality of Muoz as a result of the temporary work stoppage. However, the issue of lack of APIs
construction license was never brought out in the earlier case while in the
present case, the PCAB attested to the fact that API is not a licensed
contractor and petitioners approval of APIs proposal is a clear badge of
giving unwarranted benefit, preference or advantage through manifest
partiality, evident bad faith, or at the very least, gross inexcusable
negligence. The OMB found that
petitioner could have easily discovered such fact with basic prudence
considering that a P240-million infrastructure was involved, but
apparently he threw all caution to the wind and relied solely on the
self-serving representation of API that it possesses the requisite contractors
license.[38] This ruling of the OMB Chief Legal Counsel
was affirmed upon review by the Special Prosecutor and approved by Ombudsman
Merceditas N. Gutierrez on August 4, 2006.[39]
It
may be recalled that on motion of petitioner, the Ombudsman even conducted a
reinvestigation of the case pursuant to the January 15, 2007 directive of the
Sandiganbayan. In a memorandum[40]
dated March 5, 2007, then Special Prosecutor Dennis M. Villa-Ignacio approved
the finding of probable cause against the petitioner and the recommendation
that the information already filed in this case, for which petitioner had
already been arraigned, be maintained.
Petitioner cannot claim denial of his right to due process, as he had
been given ample opportunity to present evidence on his defense in the
proceedings before the Ombudsman and Sandiganbayan.
No
grave abuse of discretion was committed by the Ombudsman in reversing the
previous dismissal of a similar criminal complaint against the petitioner involving
the anomalous award of the BOT contract to API.
Indeed, the Ombudsman is not precluded from ordering
another review of a complaint, for he or she may revoke, repeal or abrogate the
acts or previous rulings of a predecessor in office. Thus we held in Trinidad v. Office of the Ombudsman[41]:
Petitioners arguments that res judicata applies since the
Office of the Ombudsman twice found no sufficient basis to
indict him in similar cases earlier filed against him, and that the Agan
cases cannot be a supervening event or evidence per se to warrant a
reinvestigation on the same set of facts and circumstances do not lie.
Res judicata is a doctrine of civil law and thus has no
bearing on criminal proceedings.
But even if petitioners argument were to be expanded
to contemplate res judicata in prison grey or the criminal law concept
of double jeopardy, this Court still finds it inapplicable to bar the
reinvestigation conducted by the Office of the Ombudsman. For the dismissal of a case during preliminary
investigation does not constitute double jeopardy, preliminary investigation
not being part of the trial.
Insisting that the case should be barred by the prior
Joint Resolution of the Ombudsman, petitioner posits that
repeated investigations are oppressive since he as respondent and other
respondents would be made to suffer interminable prosecution since resolutions
dismissing complaints would perpetually be subject to reopening at any time and
by any party. Petitioner particularly points out that no new evidence was
presented at the reinvestigation.
Petitioners position fails to impress.
The
Ombudsman is not precluded from ordering another review of a complaint, for he
or she may revoke, repeal or abrogate the acts or previous rulings of a
predecessor in office. And Roxas
v. Hon. Vasquez teaches that new
matters or evidence are not prerequisites for a reinvestigation, which is
simply a chance for the prosecutor, or in this case the Office of the Ombudsman, to review and re-evaluate its findings and the evidence
already submitted. (Emphasis supplied.)
As
to the propriety of damages awarded by the Sandiganbayan, we find that the same
is proper and justified. The term undue
injury in the context of Section 3(e) of the Anti-Graft and Corrupt
Practices Act punishing
the act of causing undue injury to any party, has a meaning akin to
that civil law concept of actual damage.
Actual damage, in the context of these definitions, is akin to that in
civil law.[42]
Article
2199 of the Civil Code provides that except
as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by a party as he has duly
proved. Liquidated damages, on the other
hand, are those agreed upon by the parties to a contract, to be paid in case of
a breach thereof.[43]
For
approved BOT contracts, it is mandatory that a performance security be posted
by the contractor/proponent in favor of the LGU in the form of cash, managers
check, cashiers check, irrevocable letter of credit or bank draft in the
minimum amount of 2% of the total project cost.[44] In case the default occurred during the project construction stage, the
LGU shall likewise forfeit the performance security of the erring project
proponent/contractor.[45]
The IRR thus provides:
SEC. 12.13. Liquidated
Damages. - Where the project proponent of a project fails to satisfactorily
complete the work within the construction period prescribed in the contract,
including any extension or grace period duly granted, and is thereby in default
under the contract, the project proponent shall pay the Agency/LGU concerned
liquidated damages, as may be agreed upon under the contract by the parties.
The parties shall agree on the amount and schedule of payment of the liquidated
damages. The performance security may be forfeited to answer for any liquidated
damages due to the Agency/LGU. The amount of liquidated damages due for every
calendar day of delay will be determined by the Agency/LGU. In no case however
shall the delay exceed twenty percent (20%)
of the approved construction time stipulated in the contract plus any time
extension duly granted. In such an event the Agency/LGU concerned shall rescind
the contract, forfeit the proponents performance security and proceed with the
procedures prescribed under Section 12.19. b.
Had the requirement of performance
security been complied with, there is no dispute that the Municipality of Muoz
would have been entitled to the forfeiture of performance security when API
defaulted on its obligation to execute the construction contract, at the very
least in an amount equivalent to 2% of the total project cost. Hence, said LGU is entitled to such damages
which the law mandates to be incorporated in the BOT contract, the parties
being at liberty only to stipulate the extent and amount thereof. To rule otherwise would mean a condonation of
blatant disregard and violation of the provisions of the BOT law and its
implementing rules and regulations which are designed to protect the public
interest in transactions between government and private business entities. While petitioner claims to have entered into
a compromise agreement as authorized by the SB and approved by the trial court,
no evidence of such judicial compromise was submitted before the Sandiganbayan.
WHEREFORE, the petition is DENIED. The Decision dated November 16, 2009 and Resolution dated June 9,
2010 of the Sandiganbayan in Criminal Case No. SB-06-CRM-0389 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
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MARTIN S. VILLARAMA, JR. Associate Justice |
WE
CONCUR: RENATO C. CORONA Chief Justice Chairperson |
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TERESITA J. LEONARDO-DE CASTRO Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
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MARIANO C. DEL CASTILLO Associate Justice |
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C E R T I F I C A T I O N
Pursuant to Section
13, Article VIII of the 1987 Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
|
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RENATO
C. CORONA Chief Justice |
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[1] Rollo, pp. 53-85. Penned by Associate Justice Jose R. Hernandez with Associate Justices Gregory S. Ong and Roland B. Jurado concurring.
[2] Id. at 109-117.
[3] Id. at 153-155, 166-195.
[4] Id. at 147-152.
[5] Records (Vol. 1), pp. 1-2.
[6] TSN, April 8, 2008, pp. 5-24.
[7] Rollo, p. 146.
[8] TSN, April 8, 2008, pp. 24-50.
[9] Id. at 53-77.
[10] Rollo, p. 84.
[11] Id. at 20.
[12] Cabrera v. Sandiganbayan, G.R. Nos. 162314-17, October 25, 2004, 441 SCRA 377, 386.
[13] Santos v. People, G.R. No. 161877, March 23, 2006, 485 SCRA 185, 194-195, citing Uy v. Sandiganbayan, G.R. No. 100334, December 5, 1991 and Santiago v. Garchitorena, G.R. No. 109266, December 2, 1993, 228 SCRA 214, 222-223.
[14] Sison v. People, G.R. Nos. 170339 & 170398-403, March 9, 2010, 614 SCRA 670, 681, citing Quibal v. Sandiganbayan (Second Division), G.R. No. 109991, May 22, 1995, 244 SCRA 224.
[15] G.R. No. 136082, May 12, 2000, 332 SCRA 126, 135.
[16] As cited in Cabrera v. Sandiganbayan, supra note 12.
[17] G.R. Nos. 50691, 52263, 52766, 52821, 53350 & 53397, December 5, 1994, 238 SCRA 655.
[18] Id. at 688. See also Soriquez v. Sandiganbayan, G.R. No. 153526, October 25, 2005, 474 SCRA 222, 230.
[19] Sison v. People, supra 14 at 682.
[20] Fonacier v. Sandiganbayan, supra note 18; Sison v. People, id. at 679.
[21] Sec. 20, R.A. 4566.
[22] Sec. 36, R.A. 4566.
[23] Exhibit H, Prosecutions Exhibits.
[24] Rollo, pp. 147-149.
[25] Agan, Jr. v. Philippine International Air Terminals Co. Inc., G.R. Nos. 155001, 155547 & 155661, January 21, 2004, 420 SCRA 575, 588-589.
[26] Sec. 1.3 (v), IRR of R.A. No. 6957 as amended by R.A. No. 7718.
[27] Sec. 4
of R.A. No. 6957 as amended by R.A. No. 7718 provides:
SEC.
4. Priority Projects. x x x
The list of local projects to be implemented by the local government units concerned shall be submitted for confirmation to the municipal development council for projects costing up to Twenty million pesos; those costing above Twenty up to Fifty million pesos to the provincial development council; those costing up to Fifty Million pesos to the city development council; above Fifty million up to Two hundred million pesos to the regional development councils; and those above Two hundred million pesos to the ICC of the NEDA.
[28] Sec. 2.3, second par., IRR.
[29] Metropolitan Bank and Trust Company, Inc. v. Peňafiel, G.R. No. 173976, February 27, 2009, 580 SCRA 352, 360-361, citing Perez v. Perez, G.R. No. 143768, March 28, 2005, 454 SCRA 72, 81.
[30] Asias Emerging Dragon Corporation v. Department of Transportation and Communications, G.R. Nos. 169914 & 174166, April 7, 2009, 584 SCRA 355, 376.
[31] Id. at 373, 375. Resolution denying with finality the motions for reconsideration of the Decision dated April 18, 2008.
[32] See JG Summit Holdings, Inc. v. Court of Appeals, G.R No. 124293, September 24, 2003, 412 SCRA 10, 33.
[33] Garcia v. Burgos, G.R. No. 124130, June 29, 1998, 291 SCRA 546, 576.
[34] Sison v. People, supra note 14 at 681-682.
[35] Id. at 680.
[36] Rollo, pp. 81-82.
[37] See Ong v. People, G.R. No. 176546, September 25, 2009, 601 SCRA 47, 56.
[38] Records (Vol. 1), pp. 4-7.
[39] Id. at 8-15.
[40] Id. at 339-347.
[41] G.R. No. 166038, December 4, 2007, 539 SCRA 415, 423-425.
[42] Santos v. People, supra note 13 at 197, citing Llorente, Jr. v. Sandiganbayan, 350 Phil. 820, 838 (1998).
[43] Art. 2226, Civil Code.
[44] Sec. 12.7 (a), IRR.
[45] Sec. 12.19 (b), IRR.