The Court of Appeals (CA) has affirmed the dismissal of four officials of the Department of Budget and Management (DBM) for preferential treatment to Pharmally Pharmaceutical Corporation in the purchase of P4.2 billion worth of test kits at the height of the Covid-19 pandemic in 2020.

Affirmed was the 2023 ruling of the Office of the Ombudsman which ordered the dismissal of DBM Undersecretary Llyod Christopher A. Lao and Procurement Service of DBM (PS-DBM) officials Warren Rex H. Liong, Augusto Menchavez Ylagan, and Christine Marie L. Suntay.

The Ombudsman found them guilty of grave misconduct, gross neglect of duty, serious dishonesty and conduct prejudicial to the best interest of the service.

The CA, however, ordered the dismissal of the administrative complaints against PS-DBM official Webster M. Laureñana and cleared him of the charges.

The CA decision was written by Associate Justice Marietta S. Brawner-Cualing with the concurrence of Associate Justices Gabriel T. Robeniol and Maximo M. De Leon.

In letters sent to the Ombudsman in June and October 2022, then senator Richard Gordon and Sen. Risa Hontiveros referred the partial committee report of the Senate Blue Ribbon Committee on the use of funds in the government’s response to Covid-19.

Among other issues, the report cited the alleged irregularities in the procurement of 8,000 BGI Real Time Fluorescent Covid-19 test kits on April 23, 2020 amounting to P600 million; 2,000 A Star Fortitude test kits amounting to P688 million on April 23, 2020; and 41, 400 BGI Real Time Fluorescent test kits amounting to P2.87 billion on June 9, 2020.

The report noted the alleged preferential treatment in favor of Pharmally in the procurement of test kits despite “red flags” as to its capitalization, business experience, and actual capacity to discharge contracts involving billions of pesos.

The Ombudsman’s special panel of investigators found that the contract for the procurement 8,000 BGI test kits was awarded to Pharmally although another supplier, One Tope Medical Resources, had offered the same bid price.

In the procurement of 2,000 A Star Fortitude test kits, the Ombudsman found that the PS-DBM “inflated” the quotation attributed to one of the other participating suppliers to make Pharmally’s proposal appear more favorable.

In resolving the petitions filed by the former PS-DBM officials, the CA held that they allowed the emergency procurement process for the test kits “to be marred by irregularity and undue accommodation” which “diminished public faith in the government’s capacity to act honorably in a time of national crisis.”

“By their actions, they reduced the safeguards of the procurement process into hollow forms and contributed to the institutional failure of the PS-DBM in transactions of immense public consequence,” the appellate court also said.

At the same time, the CA said: “What renders their conduct all the more reprehensible is the context in which it occurred. These acts were committed during a state of calamity, at a time when the Government was expected to act with the highest degree of fidelity in securing critical medical supplies for the Filipino people. Instead, they permitted the emergency procurement process to be marred by irregularity and undue accommodation. In so doing, they cast the public service in a disreputable light and diminished public faith in the Government’s capacity to act honorably in a time of national crisis.”

In clearing Laureñana, the CA said: “Taken together, the records do not yield substantial evidence sufficient to hold that Laureñana committed acts amounting to Grave Misconduct, Gross Neglect of Duty, Serious Dishonesty, or Conduct Prejudicial to the Best Interest of the Service. The administrative case against him should therefore be dismissed.”