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Marietta Caugma, Amiana Abella and Rosauro Martinez v.

The Republic and Sandiganbayan

GR No 167048, April 7, 2006.


EO 888 authorized the heads of government agencies to dispose of their unserviceable equipment
through the creation of a disposal committee through sale in public bidding with the condition that their
appraised value shall be the minimum prize.

Pursuant to this, the Bureau of Fisheries and Aquatic Resources (BFAR) formed its own disposal
committee (Committee) to dispose one of its ships, M/V Malasugui, which was condemned due to old
age. The members of the committee are Caugma, Abella, Martinez, as well as a COA representative.

The ship was appraised at the value of about 87k and was to be sold at a value not less than 86k. As a
condition (Condition 8) for the sale, it was provided that the bidder agrees to pay, in addition to the
award price, taxes, duties and other costs such as berthing fees, cost of publication of the bid, etc. and
levies which may be imposed by law."

It must be noted that attached to this ship are two liabilities of BFAR to V/L Shipyard Corporation
(Corporation). The first is for the berthing fees amounting to about 33k. The second is for security
services, electrical power, gasoline, and other services amounting to about 70k. The total amount is about
103k (November Bill).

In order to sell the ship, a public auction was held. Two participated in the bidding (1) Peras and (2)
Galler, who is the general manager of the Corporation. Galler asked Caugma whether or not the 103k
owed by BFAR to the corporation would be included in the bid price. Caugma referred the matter to the
committee. During that time, the Committee had no knowledge of the November Bill.

The Committee then agreed that the bid for the vessel should be stated separately from berthing and
publication fees. The public bidding was then rescheduled.

The second auction was attended only by Galler. Through him, the Corporation submitted as its bid price,
the total amount of 139k, broken down as follows: (1) Publication fee: 2400 (2) Berthing fee: 103,000.
(3) BFAR: 33,300k.

Believing that the total amount of 139k surpassed the bid value of 86k, the Committee approved the
sale and then proceeded to give the ownership of the vessel to the corporation.

In June 1986, COA directed the BFAR Auditor, Bernaldo, to conduct and inquiry regarding this
transaction. She reported that the appraised value was NOT met (tignan niyo sa breakdown, 33k lang
ung para sa BFAR). Bernaldo manifested this to the Ombudsman. The Ombudsman filed an information
against Galler, Caugma, Abella and Martinez for violating Section 3(e) of R.A. 3019.

Sandiganbayan Proceeding:

They were convicted by the Sandiganbayan as charged. Sandigan decision stated that the Committee
members gave undue advantage to Galler and the corporation, causing injury to the government, in the
amount of 53k (the difference between 86k appraised value and the 33k paid to BFAR). Their
reconsideration denied, petitioners filed this petition for certiorari with the SC.
Issue: Whether or not the petitioners are liable for violating RA 3019.

SC: No, they are not. The petition is meritorious. Proof beyond reasonable doubt was not met by the
prosecution for two grounds: 1.) Absence of evident bad faith; 2.) There was no undue injury to the
government. Likewise, collusion was not found in them.

Here, the Supreme Court said that there was nothing wrong with the transaction. It pointed out that under
Condition 8, the bidder agrees to pay other fees such as berthing costs and other service costs. This
condition was met by the 103k payment by the Corporation of the berthing fees. There was also nothing
wrong with the bidding procedure. The bidding procedure of COA was followed. Even BFAR approved
and stated that there was nothing wrong with the transaction. 139k, taken as a whole, is substantially
more than the 86k appraised value. In fact, the full amount of 139k paid by the Corporation was paid
intact to the national treasury. In sum, there was no fault on the part of the petitioners. Neither was there
an injury sustained by the government. Therefore, the 2
and 3
elements are not present.

Note that the essential elements of violation of section 3(e) of RA 3019 are as follows:
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.


Mere bad faith is insufficient. It must be stressed that mere bad faith is not enough for one to be liable
under the law, since the act of bad faith must in the first place be evident. Evident bad faith 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. It contemplates a state of mind
affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes.
Evident bad faith connotes a manifest deliberate intent on the part of the accused to do wrong or cause

Concept of undue injury. Undue injury has been interpreted as synonymous to actual damages which is
akin to that in civil law. The prosecution is burdened to prove the factual basis and amount of loss with a
reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by
the injured party. Courts cannot simply rely on speculations, conjectures or guesswork in determining the
fact and the amount of damages.

Proof required for collusion in graft cases. Conspiracy or collusion by and among public officers, inter
se, and via private individuals to commit the crime under RA 3019 must likewise be proven by the
prosecution beyond reasonable doubt. Collusion implies a secret understanding whereby one party plays
into anothers hands for fraudulent purposes. It may take place between and every contractor resulting in
no competition, in which case, the government may declare a failure of bidding. Collusion may also ensue
between contractors and the chairman and members of an agency to simulate or rig the bidding process,
thus insuring the award to a favored bidder, to the prejudice of the government agency and public service.
Collusion by and among the members an agency and/or contractors submitting their bids may be
determined from their collective acts or omissions before, during and after the bidding process. The
complainants are burdened to prove such collusion by clear and convincing evidence because if so
proved, the responsible officials may be dismissed from the government service or meted severe
administrative sanctions for dishonesty and conduct prejudicial to the government service.