The Sandiganbayan has acquitted former Cagayan Gov. Edgar Ramones Lara of two graft charges in connection with the construction of the P213.7 million Cagayan Town Center (CTC) that was primarily funded out of the proceeds of the province’s bonds floatation in 2001.
In a decision promulgated on Feb. 19, 2021, the Sandiganbayan ruled that the prosecutors of the Office of the Ombudsman “failed to prove beyond reasonable doubt” that Lara violated Section 3 (e) of Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act.
The anti-graft court also ruled that “no civil liability may be adjudged against the accused (Lara) as the act or omission from which the civil liability might arise did not exist.”
It also ordered the release of the bail bonds Lara posted for his provisional liberty and the lifting and setting aside of the hold departure order (HDO) issued against him.
Among other things, Section 3 (e) of RA 3019 penalizes a public official or employee for “causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference… through manifest partiality, evident bad faith or gross inexcusable negligence.”
In a decision written by Associate Justice Karl B. Miranda, the Sandiganbayan said the hiring of a private consultant for the bonds floatation, the construction of the CTC -- also by a private firm -- and the payments to them were backed up by resolutions and ordinances issued by Cagayan’s Sangguniang Panlalawigan (provincial council).
Even the provincial augmentation of the funds generated from the bonds floatation was authorized by the provincial council in its resolution, the court said.
Lara was represented in the Sandiganbayan case by lawyer Levito D. Baligod.
Case records showed that Lara requested the provincial council to pass a resolution which will allow him to engage the services of Preferred Ventures, Inc. (PVI) as financial consultant and advisor on bonds floatation. The council issued a resolution on Nov. 5, 2001 and on Nov 13, 2001 Lara signed an agreement that committed the province to pay three per cent of the floated bonds payable upon receipt of the proceeds.
The Rizal Commercial Banking Corp. (RCBC) was designated as trustee of the proceeds of the floated bonds that amounted to P205 million, of which P6.1 million representing PVI’s fee was taken.
On Oct. 20, 2003, the provincial council ratified a resolution that awarded to Asset Builders Corporation (ABC) the planning, design, and construction of CTC, now known as Paseo Reale Mall, for P213.79 million.
While the prosecution claimed that the agreements with PVI and ABC were done without public bidding, Lara maintained -- and the Sandiganbayan agreed with him -- that at the time of the transactions, the prevailing laws were Executive Order No. 40, Presidential Decree No 1594, and Republic Act No. 7160, the Local Government Code, and not Republic Act No. 9184, the Government Procurement Reform Act of 2003.
Section 77 of RA 9184 states that “in all procurement activities, if the advertisement or invitation for bids, was done prior to the effectivity of the Act, the provisions of EO 40, PD 1594, and RA 7160 or other applicable laws shall govern.”
Also, the anti-graft court agreed with Lara that the additional payment to ABC for the construction of CTC was due to the price escalation of materials and other costs of construction provided for under the Construction Agreement dated Sept. 8, 2003.
It said “there is no basis for the prosecution’s claim that the provincial government of Cagayan suffered undue injury for paying PVI its service fee.”
It pointed out that the province of Cagayan was able to raise funds for the construction of its CTC “because of PVI’s consultancy services, and thus, “it was imperative for the province of Cagayan to pay PVI the agreed amount for the services it rendered… and the payment does not constitute unwarranted benefits, advantage….”
Also, it said the CTC had been constructed and is now providing additional income to the provincial government.
The decision, concurred in by Associate Justices Sarah Jane T. Fernandez and Kevin Narce B. Vivero, also stated:
“To bring progress to the countryside and financially empower local government units (LGUs), the Local Government Code gave LGUs the authority to issue bonds that would finance self-liquidating, income-producing development or livelihood projects to support priority projects and local development.
“With that authority, LGUs are no longer limited to using local taxes and fees collection and their internal revenue allotment (IRA) share to fund projects.
“The power of the LGUs to issue bonds to finance their projects, if done in accordance with law, should not be hindered.
“While the Court will not tolerate corruption, neither will it stifle an LGU’s aspirations for development if carried out properly. To do so would create a chilling effect making LGUs wary of exercising a lawful power and impede local development.”