Mere signature in contracts does not automatically give rise to civil or criminal charges

Published April 8, 2018, 3:02 PM

by Francine Ciasico

By Rey Panaligan

The Supreme Court (SC) has ruled that the head of a government agency or a local government unit cannot be held automatically liable, in a criminal or civil suit, for signing a procurement contract that was later on found irregular or deficient.


“Mere signature (of the head of office or local government unit) in the award of the contract and the contract itself without anything more cannot be considered as a presumption of liability,” the SC said.

“Liability depends upon the wrong committed and not solely by reason of being the head of a government agency,” it stressed.

With the full court decision written by Justice Noel G. Tijam, the SC granted the petition of then Nueva Ecija Gov. Tomas N. Joson III whose exclusion from liability in the notices of disallowance issued in 2007 by Commission on Audit (COA) involving P155.03 million was denied by the audit commission.

As governor and head of the procuring entity, Joson signed three contracts for the construction of the Nueva Ecija Friendship Hotel, now named Sierra Madre Suites.

During COA’s special audit of the provincial government’s transactions from 2004 to 2007, the audit commission found irregularities in the three contracts in favor of A.V.T. Construction and issued notices of disallowances.

The special audit team (SAT) found inadequacies in the contracts’ supporting documents and the winning bidder’s ineligibility.

Thus, the SAT found the members of the Bids and Awards Committee (BAC), the BAC Technical Working Group (TWG), the provincial accountant, the provincial engineer and Joson, as the provincial governor and head of the procuring entity, solidarily liable for the disallowed amount.

Joson was held solidarily liable for entering into the contract with A.V.T. Construction and for approving the payment vouchers.

With the affirmance of the notices of disallowance by the COA’s Legal Services Sector (LSS), Joson filed a petition for exclusion from liability “arguing that he should not be held liable for the disallowed amount since the determination of whether a prospective bidder is eligible or not is the exclusive responsibility of the BAC and if there is indeed a liability, the members of the BAC should be held liable since they are the persons directly responsible for the transaction.”

But COA, in its 2015 decision, denied the petition as it ruled that Joson was liable for the disallowed amount since “he failed to exercise due diligence in the performance of his duty.”

COA also ruled that “being a signatory in the contracts, Joson is presumed to have prior knowledge that the bidding process was tainted with ineligibility.”

The unfavorable ruling prompted Joson to elevate the issue before the SC.

Granting Joson’s petition, the SC said:

“The fact that petitioner (Joson) is the head of the procuring entity and the governor of Nueva Ecija does not automatically make him the party ultimately liable for the disallowed amount. He cannot be held liable simply because he was the final approving authority of the transaction in question and that the employees/officers who processed the same were under his supervision.

“In the present case, other than the mere signature of the petitioner, no other evidence was presented by the COA to show that petitioner had actual prior knowledge of the ineligibility of A.V.T. Construction. Nothing appears on record that would prompt petitioner to thoroughly review and go over every document submitted by A.V.T. Construction, considering that they were already evaluated and scrutinized by the BAC.”

The SC said Joson approved BAC’s recommendation to award the contract to A.V.T. Construction after it had evaluated all the documents submitted by the firm. Based on the recommendation, Joson awarded the contract and signed it in behalf of the provincial government.

“The payments to A.V.T. Construction were disallowed by COA for the reason that the prequalification or eligibility checklist using the ‘pass/fail’ criteria, the Net Financial Contracting Capacity (NFCC), and Technical Eligibility documents are missing. It is well to note that the missing documents, the eligibility checklist using the pass/fail criteria, the NFCC and the technical eligibility documents, pertain to the prequalification stage of the bidding process,” the SC said.

“Under R.A. No. 9184, the determination of whether a prospective bidder is eligible or not falls on the BAC. The BAC sets out to determine the eligibility of the prospective bidders based on their compliance with the eligibility requirements set forth in the Invitation to Bid and their submission of the legal, technical and financial documents required under Sec. 23.6, Rule VIII of the Implementing Rules and Regulations of R.A. No. 9184,” it said.

“Thus, the presence of the eligibility checklist, the NFCC and the technical eligibility documents are the obligations and duties of the BAC. The absence of such documents is the direct responsibility of the BAC. Petitioner had no hand in the preparation of the same. He cannot therefore be held liable for its absence,” it stressed.

At the same time, the SC said that “assuming that petitioner committed a mistake in not ensuring that the eligibility documents were attached to the contract, it is settled that mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith.”

“In this case, there is no showing that petitioner was motivated by malice or gross negligence amounting to bad faith in failing to ensure that the eligibility documents of A.V.T. Construction were not attached to the contract,” it said.

Finally, the SC pointed out its doctrine laid down in 1989. It states:

“We would be setting a bad precedent if a head of office plagued by all too common problems — dishonest or negligent subordinates, overwork, multiple assignments or positions, or plain incompetence — is suddenly swept into a conspiracy conviction simply because he did not personally examine every single detail, painstakingly trace every step from inception, and investigate the motives of every person involved in a transaction before affixing, his signature as the final approving authority.”

This doctrine was reiterated by the SC in 2001, to wit:

“We have consistently held that every person who signs or initials documents in the course of transit through standard operating procedures does not automatically become a conspirator in a crime which transpired at a stage where he had no participation.”