FIRST DIVISION

[G.R. No. 142738. December 14, 2001.]

DR. HONORATA BAYLON , petitioner, vs . OFFICE OF THE OMBUDSMAN

AND SANDIGANBAYAN , respondents.

Castillo Laman Tan Panteleon & San Jose for petitioner.

Emmanuel Pelaez for intervenor.

SYNOPSIS

In 1993, the Secretary of Health appointed petitioner Dr. Honorata Baylon as the
Program Manager of the Government's National Voluntary Blood Donation Program. The
National Kidney and Transplant Institute (NKTI) was the lead agency of the blood program.
On March 8, 1994, NKTI decided to purchase Terumo blood bags for immediate
distribution to the regional hospitals and medical centers. NKTI obtained a quotation of
the prices of blood bags (Terumo brand) from FVA-Exim Trading (FVA). FVA is the
exclusive distributor of Terumo blood bags and the only supplier which could supply all
sizes of the blood bags. The Commission on Audit, however, concluded that the
government incurred a total loss of one million nine hundred sixty-four and three hundred
and four pesos and seventy centavos (P1,964,304.70) arising from the transaction
between NKTI and FVA. A complaint-a davit was then led with the Ombudsman against
Dr. Baylon and other DOH o cials for violation of the Anti-Graft and Corrupt Practices Act.
A panel composed of members of the Evaluation and Preliminary Investigation Bureau
(EPIB), O ce of the Ombudsman, issued a resolution recommending that the complaint
for violation of the anti-graft law against petitioner and her co-accused be dismissed for
insu ciency of evidence. The O ce of the Ombudsman, however, disapproved the
recommendation and approved a memorandum recommending the prosecution of the
criminal case against petitioner. Hence, the present petition.
The Supreme Court reversed and set aside the resolution of the Ombudsman and
ordered the Sandiganbayan to dismiss the criminal case against petitioner. The Court
found no probable cause to hold petitioner liable under Section 3(e) of the Anti-Graft and
Corrupt Practices Act (R.A. 3019) According to the Court, in order to be held guilty under
Section 3(e) of R.A. 3019, the act of the accused that caused undue injury must have been
done with evident bad faith or with gross inexcusable negligence. In the case at bar, the
Court found no evident bad faith on the part of petitioner. Petitioner was merely doing her
job and only acted in response to an emergency brought about by the shortage in the
blood supply available to the public. The Court also held that the Ombudsman committed
grave abuse of discretion in his determination of probable cause when he did not take into
consideration the fact that it was the urgency of the situation, brought about by the
shortage, that drove petitioner to purchase the Terumo blood bags. HTcADC

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; POLICY OF NON-

INTERFERENCE WITH THE OMBUDSMAN'S DETERMINATION OF THE EXISTENCE OF
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 PROBABLE CAUSE; NOT APPLICABLE WHEN THERE IS GRAVE ABUSE OF DISCRETION IN
THE EXERCISE OF SUCH DISCRETION. — As a general rule, this Court does not interfere
with the Ombudsman's determination of the existence of probable cause. However, this
non-interference does not apply when there is grave abuse in the exercise of such
discretion. In such a situation, the petitioner may le a petition for certiorari under Rule 65
of the Revised Rules of Court. There is "grave abuse of discretion" where "a power is
exercised in an arbitrary, capricious, whimsical or despotic manner by reason of passion or
personal hostility so patent and gross as to amount to evasion of positive duty or virtual
refusal to perform a duty enjoined by, or in contemplation of law."
2. CRIMINAL LAW; ANTI-GRAFT AND CORRUPT PRACTICES ACT (R.A. 3019); NO
PROBABLE CAUSE TO HOLD PETITIONER LIABLE UNDER SECTION 3(e) THEREOF; UNDUE
INJURY TO THE GOVERNMENT MUST BE DONE WITH EVIDENT BAD FAITH OR WITH
GROSS INEXCUSABLE NEGLIGENCE; CASE AT BAR. — In the case at bar, there is no
showing of probable cause. "Probable cause" signi es a reasonable ground of suspicion
supported by circumstances su ciently strong in themselves to warrant a cautious man's
belief that the person accused is guilty of the offense with which he is charged. The
grounds for suspicion must be reasonable and supported by su ciently strong
circumstances. The law violated is R.A. No. 3019, Section 3(e). There are two ways of
violating Section 3(e), Republic Act No. 3019, to wit: (a) by causing any undue injury to any
party, including the Government; and (b) by giving any private party unwarranted bene t,
advantage or preference. In order to be held guilty of violating Section 3(e), R.A. No. 3019,
the act of the accused that caused undue injury must have been done with evident bad
faith or with gross inexcusable negligence. Bad faith per se is not enough for one to be
held liable under 'the law, the "bad faith" must be "evident."
3. ID.; ID.; ID.; NO UNDUE INJURY TO THE GOVERNMENT. — We note the
absence of some essential elements of the offense charged, to wit: (1) There was no
undue injury to the Government. The records show that in 1994, the price of Terumo blood
bags offered by FVA and accepted by NKTI was in fact lower than the price offered to
other government hospitals. We further note that when the COA made a nding that the
government suffered a loss, comparing the prices at which the bags were offered to
PNRC, Mother Seaton and Our Lady of Fatima with the prices offered to NKTI, it committed
a signi cant error. The prices compared cover two different years. The COA based its
ndings on prices offered in 1995, whereas the actual purchase of the blood bags was
made by NKTI in 1994. The COA recognized its own error and reversed itself in its decision
of June 21, 2001, when it lifted the audit disallowance in so far as the procurement of the
Terumo blood bags by NKTI from FVI is concerned. We cannot ignore the reasons behind
this, reasons that we accept in this decision as well.
4. ID.; ID.; ID.; NO BAD FAITH OR INEXCUSABLE NEGLIGENCE ON THE PART OF
PETITIONER. — Even assuming there was injury to the Government, there was no bad faith
or inexcusable negligence on the part of petitioner. Here, there is no evident bad faith on
the part of petitioner and her co-accused. "Bad faith" does not simply connote bad moral
judgment or negligence. There must be some dishonest purpose or some moral obliquity
and conscious doing of a wrong, a breach of a sworn duty through some motive or intent
or ill will. It partakes of the nature of fraud. It contemplates a state of mind a rmatively
operating with furtive design or some motive of self-interest or ill will for ulterior purposes.
Neither is there "gross negligence." "Gross negligence" is characterized by the want of even
slight care, acting or omitting to act in a willful or intentional manner displaying a
conscious indifference to consequences as far as other persons may be affected.

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 5. ID.; ID.; ID.; PETITIONER WAS MERELY DOING HER JOB AND ONLY ACTED IN
RESPONSE TO AN EMERGENCY BROUGHT ABOUT BY THE SHORTAGE IN BLOOD SUPPLY
AVAILABLE TO THE PUBLIC. — We cannot discount the fact that a sense of urgency drove
petitioner to purchase the Terumo blood bags. The project could not be delayed without
causing detriment to the public service. There was a shortage in the blood supply available
to the public. To determine whether there was bad faith, these essential facts should not
have been ignored. When the Ombudsman did not take these facts into consideration in
the determination of probable cause, he gravely abused his discretion. When the
Ombudsman chose not to dismiss the case despite the recommendations of the EPIB
dated March 17, 1999 and the ndings of the Special Prosecutor, dated January 18, 2000,
he unduly harassed petitioner and her co-accused. The petitioner was merely doing her job
and only acted in response to an emergency brought about by the shortage in the blood
supply available to the public. The shortage in the blood supply available to the public was
a matter recognized and addressed by Secretary of Health Juan M. Flavier. Secretary
Flavier attests that he "directed the NKTI to do something about the situation and
immediately fast-track the implementation of the Voluntary Blood Donation Program of
the government in order to prevent further deaths owing to the lack of blood." In fact, more
than nding fault in petitioner's quick action, she and her co-accused, should be
commended for acting "promptly" and "diligently" in response to a crisis.

DECISION

PARDO , J : p

"Agencies tasked with the preliminary investigation and prosecution of

crimes must always be wary of undertones of political harassment. They should
never forget that the purpose of a preliminary investigation is to secure the
innocent against hasty, malicious and oppressive prosecution, and to protect one
from an open and public accusation of a crime, from the trouble, expense and
anxiety of a public trial, and also to protect the State from useless and expensive
trial. It is, therefore, imperative upon such agencies to relieve any person from the
trauma of going through a trial once it is ascertained that the evidence is
insufficient to sustain a prima facie case or that no probable cause exists to form
a sufficient belief as to the guilt of the accused." 1

The Case
Before this Court is a petition 2 assailing the decision of the Ombudsman 3 for
having been issued with grave abuse of discretion. The decision disapproved a
recommendation of the Special Prosecutor 4 for the dismissal of the criminal case against
petitioner Dr. Honorata G. Baylon (hereafter, Dr. Baylon) and co-accused, and approved a
memorandum 5 recommending the prosecution of the criminal case. The petition prays
that the Sandiganbayan be enjoined from further proceedings in the criminal case.
The Facts
In 1993, the Secretary of Health appointed Dr. Baylon as the Program Manager of
the Government's National Voluntary Blood Donation Program (hereafter, the blood
program). 6 The National Kidney and Transplant Institute (hereafter, NKTI) was the lead
agency of the blood program. In the same year, the Department of Health (hereafter, DOH),
assisted by the USAID made a study on the safety of the Philippine blood banking system.
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 On February 3, 1994, the DOH called a meeting of all the managers of the
department's several programs. During the meeting, a comprehensive work plan for a new
project "STOP D.E.A.T.H.: Hospitals for Philippines 2000" (hereafter, the project) was
discussed. The blood program was one of the six (6) new programs included in the
project.
A week later, 7 on February 11, 1994, the DOH allotted two million pesos
(P2,000,000.00) to the NKTI as start-up money for the blood program. 8 The o cial
disbursement was made on February 18, 1994. 9
On February 18, 1994, the DOH issued Department Order Nos. 73-f and 73-g, series
of 1994. 1 0 Department Order No. 73-f launched the project. The sum of fty-one million
pesos (P51,000,000.00) was allocated for the blood program. 1 1 Department Order No.
73-g created an Executive Committee and a National Secretariat for the Project. 1 2
On February 24, 1994, Secretary of Health Juan M. Flavier revealed to the public the
results of the USAID study, to wit:
(a) the blood transfusion service of the country failed to adequately meet the
public demand for safe blood; and
(b) the blood sourced from commercial blood banks had a contamination
rate of 4%.

On March 3, 1994, in view of the afore-quoted ndings, Secretary Flavier issued a

closure order on the provincial retail outlets of commercial blood banks.
The events led to an acute shortage of blood available to the public as the
commercial blood banks intentionally refused to sell blood in retaliation to the closure
order. Thus, Secretary Flavier instructed the immediate implementation of the voluntary
blood donation system as the only alternative source of blood.
The NKTI expedited the installation of the blood program. On March 8 and 17, 1994,
requisition vouchers for the initial purchase of containers for blood were issued. 1 3
On March 8, 1994, NKTI decided to purchase Terumo blood bags for immediate
distribution to the regional hospitals and medical centers.
On March 16, 1994, NKTI obtained a quotation of the prices of blood bags (Terumo
brand) from FVA-Exim Trading (hereafter, FVA). FVA is the exclusive distributor of Terumo
blood bags and the only supplier which could supply all sizes of the blood bags.
The prices quoted were: 1 4
a. Single - P72.29
b. Double - P171.00
c. Triple - P263.70

On March 29, 1994, upon NKTI's request, FVA submitted a quotation at reduced
prices, thus: 1 5
a. Single - P63.54
b. Double - P150.00
c. Triple - P209.09

In March 1995, the Commission on Audit (hereafter, COA) through its Resident
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 Auditor, Ms. Blesida Gutierrez, disallowed in post-audit the above purchase on the
ground that the NKTI failed to conduct a public bidding. The COA Auditor averred that
the cost of the blood bags was overpriced and grossly disadvantageous to the
government. The COA auditor made a comparison of the prices of the blood bags
quoted by FVA to NKTI with the prices offered to other medical institutes such as the
Philippine National Red Cross (PNRC), Mother Seaton and to Our Lady of Fatima, 1 6 to
wit:
Blood NKTI PNRC Mother Our Price
Bag Seaton Lady of Difference
Capacity Fatima

Single P63.54 P38.00 P43.00 P43.00 P22.21

Double P150.00 P100.00 — — P50.00
Triple P209.09 P155.00 — — P54.09

Based on the above price differences, the COA concluded that the government
incurred a total loss of one million nine hundred sixty-four and three hundred and four
pesos and seventy centavos (P1,964,304.70) arising from the transaction between
NKTI and FVA. We quote the NKTI Annual Audit Report for the year 1995 prepared by
the COA: ADaEIH

"Procurement of supplies for the National Voluntary Blood Donation

Program was made without public bidding in violation of COA Circular No. 85-554
and Hospital Order No. 12, s. 1995 resulting to an overpricing in the amount of
P1.964 M."

On February 4, 1997, a complaint-a davit was led with the Ombudsman 1 7 against
Dr. Baylon and other DOH o cials. The complaint-a davit alleged criminal and
administrative charges: 1 8
(1) The criminal complaint was for violation of Section 3 (e) and (g) of R.A.
3019 and was led against Dr. Juan M. Flavier, 1 9 Dr. Jaime Galvez-Tan,
2 0 Dr. Juan R. Nañagas, 2 1 Dr. Filoteo A. Alano, 2 2 Dr. Aileen R. Javier, 2 3 Dr.
Honorata G. Baylon, 2 4 Ms. Diana Jean F. Prado 2 5 and Ms. Maribel U.
Estrella. 2 6

(2) The administrative complaint was for gross misconduct in violation of

R.A. 6713 2 7 and was led against Dr. Nanagas, Dr. Alano, Dr. Javier, Dr.
Baylon, Ms. Prado and Ms. Estrella.

On March 17, 1999, a panel composed of members of the Evaluation and

Preliminary Investigation Bureau (hereafter, EPIB), 2 8 O ce of the Ombudsman issued a
resolution recommending 2 9 that the complaint for violation of the anti-graft law against
petitioner and her co-accused be dismissed for insu ciency of evidence. According to the
resolution: 3 0
"We therefore subscribe to the nding of the Department of Health
Investigation Committee which concluded that there was no overpricing for lack
of legal and factual basis. Finally, there was no injury caused to the government
hence there is no violation of RA 3019.
"Premises considered, it is respectfully recommended that this complaint
for violation of the Anti-graft law against all respondents be dismissed for
insufficiency of evidence.
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 "SO RESOLVED."

A review of the resolution of the EPIB panel was made and on August 9, 1999, the
Assistant Ombudsman, EIO, Abelardo L. Aportadera, Jr. in a memorandum to Ombudsman
Aniano A. Desierto made the following recommendations: 3 1
"1. Disapproval of the EPIB Resolution dated 17 March 1999
recommending the dismissal of the case for insufficiency of evidence;
"2. Filing of charges in violation of the Anti-Graft and Corrupt
Practices Act against public respondents FILOTEO ALANO, AILEEN R. JAVIER,
HONORATA G. BAYLON and DIANA JEAN F. PRADO.
"3. Dismissal of charges against public respondents JUAN M.
FLAVIER, JAIME GALVEZ-TAN, JUAN R. NANAGAS and MARIBEL U. ESTRELLA.
"4. Dismissal of charges against FRANCISCO V. ABALOS, as President
of FVA EX-IM Trading, because, due to his death, any criminal liability is
extinguished.
"5. Blacklisting of FVA EX-IM Trading from entering into future
transactions with the government."

The memorandum further recommended that: 3 2

"In view of the foregoing, undersigned recommends for the ling of
charges in violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act
against public respondents ALANO, JAVIER, BAYLON and PRADO."

On October 15, 1999, the Special Prosecutor led with the Sandiganbayan 3 3 an
information for violation of Section 3(e), R.A. No. 3019 3 4 against Dr. Baylon and co-
accused, Alano, Javier and Prado. We quote: 3 5
"That on or about the period April, 1994, to December 1994, in Manila,
Philippines, and within the jurisdiction of this Honorable Court, accused FILOTEO
A. ALANO, AILEEN R. JAVIER, HONORATA G. BAYLON, and DIANA JEAN F.
PRADO, all public officers connected with the National Kidney Transplant Institute
and the Department of Health, and while in the performance of their o cial
functions, conspiring and confederating with Francisco V. Abalos, President of
FVA EX-IM Trading, dealer of Terumo blood bags, did then and there unlawfully
and feloniously cause undue injury to the government and gave unwarranted
bene t to FVA EX-IM Trading, in the following manner: that the accused with
evident bad faith caused the planning, preparation and purchase by the
DOH/National Kidney Transplant Institute of grossly overpriced Terumo brand
blood bags from the FVA EX-IM Trading, which price per unit of blood bag is
higher by P30.00, more or less, in comparison with the price per unit of blood
bags sold to the Philippine National Red Cross, Mother Seaton Hospital and Our
Lady of Fatima Hospital, resulting in an overprice to the government of the
amount of P1,964,304.70, more or less our of the following purchases:

"Date Voucher No. P. O. No. Amount

1. 03-27-95 143 94-00172 P2,127,137.51

2. 12-06-94 100 94-00182 487,703.63
3. 11-24-94 097 94-00132 515,926.75
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 4. 11-16-94 46978 94-00147 1,639,223.83
5. 08-25-94 039 94-00943 1,263,141.82

Contrary to Law."

On November 5, 1999, Dr. Baylon led with the Sandiganbayan a motion for
reconsideration and/or reinvestigation. 3 6
On November 9, 1999, the Sandiganbayan ordered the O ce of the Ombudsman to
conduct a reinvestigation of the case and suspended further proceedings pending review.
37

On November 25, 1999, the Sandiganbayan arraigned the petitioner, and she
pleaded "not guilty." 3 8
On January 18, 2000, acting on the motion for reconsideration, the O ce of the
Special Prosecutor found that there was no overpricing, therefore, there could be no injury
to the government and recommended thus: 3 9
"WHEREFORE, in the light of the foregoing, it is respectfully recommended
that the case against accused AILEEN R. JAVIER and DIANA JEAN F. PRADO,
HONORATA G. BAYLON and FILOTEO A. ALANO be dismissed and in the (sic)
information against them be withdrawn." ITESAc

On February 9, 2000, the O ce of the Legal Counsel, O ce of the Ombudsman,

submitted to the Ombudsman a memorandum stating that Dr. Baylon and her co-accused
did not exercise ordinary prudence in ascertaining and verifying the prices offered by FVA
Ex-Im Trading to medical institutions imbued with public interest. Dr. Baylon and her co-
accused did not exert their best efforts at obtaining the best deal for the government and
that such inaction indicated their gross inexcusable negligence. The memorandum stated
that there appears to be no cogent reason to reverse the memorandum of August 9, 1999
nding probable cause against Dr. Baylon and her co-accused. The memorandum
recommended thus: 4 0
"WHEREFORE, premises considered, it is respectfully recommended that
the motion for reconsideration be DENIED and prosecution PROCEED forthwith."

On February 20, 2000, Ombudsman Aniano A. Desierto approved the above-quoted

memorandum and ordered that the case be assigned to another prosecutor for its
aggressive prosecution. 4 1
Hence, this petition. 4 2
On June 4, 2001, co-accused 4 3 Dr. Filoteo A. Alano moved to intervene in the case.
44

On June 21, 2001, in a written decision, the COA allowed Dr. Filoteo A. Alano's
request to lift the previous audit disallowance in the amount of six million six thousand and
one hundred thirty three pesos and fty four centavos (P6,006,133.54) representing the
cost of the blood bags that NKTI purchased from FVI. According to the COA decision, the
COA came to the following conclusions: First, the purchase of the Terumo blood bags
without public bidding is not violative of P.D. 1594, R.A. 1760 and COA Circular No. 85-55A
as the supplies were to be used in connection with a project or activity that cannot be
delayed without causing detriment to public service and the materials are sold by an
exclusive distributor who does not have sub-dealers selling at lower prices for which no
suitable substitute can be obtained. Second, to determine if the price is excessive and thus
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 not advantageous to the government, a canvass should have been made by the auditor as
required by COA Memorandum No. 97-012, which it failed to do. The COA decided thus: 4 5
"Upon the foregoing considerations, the herein request of Dr. Filoteo A.
Alano for the lifting of the audit disallowance in so far as the procurement of the
Terumo blood bags from FVA is concerned, is hereby granted. Accordingly, the
same may now be allowed in audit."

On July 25, 2001, we noted the motion for intervention led by Dr. Filoteo A. Alano
and required the parties to comment on the motion. 4 6
On August 27, 2001, petitioner Dr. Baylon interposed no objection to Dr. Filoteo A.
Alano's motion to intervene. 4 7
On October 15, 2001, the O ce of the Ombudsman led its comment on the motion
for intervention stating that it is devoid of merit. 4 8
We decide the case on the merits.
The Issue
The issue raised is whether the Ombudsman acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in nding probable cause against Dr. Baylon
and co-accused for violation of Section 3(e), R.A. No. 3019, as amended, and in ordering
their prosecution before the Sandiganbayan.
The Court's Ruling
We nd the petition meritorious. We nd it unnecessary to pass upon the motion for
intervention of Dr. Filoteo A. Alano as this ruling will bene t him, whether or not the motion
is granted.
As a general rule, this Court does not interfere with the Ombudsman's determination
of the existence of probable cause. 4 9 However, this non-interference does not apply when
there is grave abuse in the exercise of such discretion. 5 0 In such a situation, the petitioner
may le a petition for certiorari under Rule 65 of the Revised Rules of Court. 5 1 There is
"grave abuse of discretion" where "a power is exercised in an arbitrary, capricious,
whimsical 5 2 or despotic manner by reason of passion or personal hostility so patent and
gross as to amount to evasion of positive duty or virtual refusal to perform a duty enjoined
by, or in contemplation of law. 5 3
In the case at bar, there is no showing of probable cause. "Probable cause" signi es
a reasonable ground of suspicion supported by circumstances su ciently strong in
themselves to warrant a cautious man's belief that the person accused is guilty of the
offense with which he is charged. 5 4 The grounds for suspicion must be reasonable and
supported by sufficiently strong circumstances. 5 5
The law violated is R.A. No. 3019, Section 3(e). It provides,
"Sec. 3. Corrupt practices of public o cers — In addition to acts or
omissions of public o cers already penalized by existing law, the following shall
constitute corrupt practices of any public o cer and are hereby declared to be
unlawful:
xxx xxx xxx

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 "(e) Causing any undue injury to any party, including the Government,
or giving any private party any unwarranted bene ts, advantage or preference in
the discharge of his o cial administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence. This provision shall
apply to o cers and employees of o ces or government corporations charged
with the grant of licenses or permits or other concessions."

There are two ways of violating Section 3(e), Republic Act No. 3019, to wit: (a) by
causing any undue injury to any party, including the Government; and (b) by giving any
private party unwarranted benefit, advantage or preference. 5 6
In order to be held guilty of violating Section 3(e), R.A. No. 3019, the act of the
accused that caused undue injury must have been done with evident bad faith or with
gross inexcusable negligence. 5 7 Bad faith per se is not enough for one to be held liable
under the law, the "bad faith" must be "evident." 5 8
The elements of the offense, essential for the conviction of an accused under
Section 3(e), R.A. No. 3019, are as follows:
"(1) The accused is a public o cer or a private person charged in
conspiracy with the former;
"(2) The said public o cer commits the prohibited acts during the
performance of his or her o cial duties or in relation to his or her public
functions;

"(3) That he or she causes undue injury to any party, whether the
government or a private party;

"(4) Such undue injury is caused by giving unwarranted bene ts,

advantage or preference to such parties; and

"(5) That the public o cer has acted with manifest partiality, evident
bad faith or gross inexcusable neglect." 5 9

We note the absence of some essential elements of the offense charged, to wit:
(1) There was no undue injury to the Government.
The records show that in 1994, the price of Terumo blood bags offered by FVA and
accepted by NKTI was in fact lower than the price offered to other government hospitals.
The price comparison is as follows: 6 0
1994 Prices of Terumo Blood Bags Sold to Government Hospitals
Hospital Single Bag Double Bag Triple Bag

NKTI P63.54 P150.00 P209.09

PGH P78.00 P185.40 P285.00
JRMMC P85.05 — —
Fabella P85.00 P199.00 —
PCMC P64.00 — P209.09
Heart Center P78.00 P190.00 —

From the above table, it can be seen that NKTI was able to secure the Terumo
blood bags from FVA at a price advantageous to the government.
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 We further note that when the COA made a nding that the government suffered a
loss, 6 1 comparing the prices at which the bags were offered to PNRC, Mother Seaton and
Our Lady of Fatima with the prices offered to NKTI, it committed a signi cant error. The
prices compared cover two different years. The COA based its ndings on prices offered
in 1995, whereas the actual purchase of the blood bags was made by NKTI in 1994. 6 2
The COA recognized its own error and reversed itself in its decision of June 21,
2001, when it lifted the audit disallowance in so far as the procurement of the Terumo
blood bags by NKTI from FVI is concerned. 6 3 We cannot ignore the reasons behind this,
reasons that we accept in this decision as well.
The fact is that NKTI chose FVA as its supplier since it is the sole distributor of
Terumo blood bags, and no sub-dealer or dealer could offer the bags at lower prices or at
better conditions. 6 4 The choice of the Terumo brand was also su ciently explained.
Reputable medical institutions such as St. Luke's Medical Center, The Lung Center of the
Philippines, Makati Medical Center, Philippine Children's Medical Center and Cardinal
Santos Medical Center use the Terumo brand and have attested to its superior qualities
compared with other brands, thus: 6 5
Characteristic Terumo Brand Other Brands

Ability to withstand No bursting reported Bursting reported

centrifugation and leading to wastage
deep freezing

Sharpness of Needle Very sharp Not so sharp; causes

undue pain to donor

Needle shaft Does not rotate Rotates

Blood flow Fast Not so fast because

of rotation of needle

Availability of the Readily available; Less available;

multiple blood bag has a complete line single blood bag
system of single, double, only
triple and quadruple
blood bags

Transfer of blood Easy Takes longer period

components of time

(2) Even assuming there was injury to the Government, there was no
bad faith or inexcusable negligence on the part of petitioner.
Here, there is no evident bad faith on the part of petitioner and her co-accused. "Bad
faith" does not simply connote bad moral judgment or negligence. There must be some
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a
sworn duty through some motive or intent or ill will. It partakes of the nature of fraud. 6 6 It
contemplates a state of mind affirmatively operating with furtive design or some motive of
self-interest or ill will for ulterior purposes. 6 7
Neither is there "gross negligence." "Gross negligence" is characterized by the want
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 of even slight care, acting or omitting to act in a willful or intentional manner displaying a
conscious indifference to consequences as far as other persons may be affected. 6 8
We cannot discount the fact that a sense of urgency drove petitioner to purchase
the Terumo blood bags. The project could not be delayed without causing detriment to the
public service. There was a shortage in the blood supply available to the public. To
determine whether there was bad faith, these essential facts should not have been
ignored. When the Ombudsman did not take these facts into consideration in the
determination of probable cause, he gravely abused his discretion. When the Ombudsman
chose not to dismiss the case despite the recommendations of the EPIB dated March 17,
1999 and the ndings of the Special Prosecutor, dated January 18, 2000, he unduly
harassed petitioner and her co-accused.
The petitioner was merely doing her job and only acted in response to an emergency
brought about by the shortage in the blood supply available to the public. The shortage in
the blood supply available to the public was a matter recognized and addressed by
Secretary of Health Juan M. Flavier. Secretary Flavier attests that he "directed the NKTI to
do something about the situation and immediately fast-track the implementation of the
Voluntary Blood Donation Program of the government in order to prevent further deaths
owing to the lack of blood." 6 9 In fact, more than nding fault in petitioner's quick action,
she and her co-accused, should be commended for acting "promptly" and "diligently" 7 0 in
response to a crisis.
I n National Center for Mental Health Management v. COA , 7 1 we found that
respondent COA committed grave abuse of discretion when it "discarded rather hastily, if
not unfairly, the factors that were actually taken into account by petitioners before the
purchases were effected." We nd that the same haste and unfairness exist in the case at
bar. In the afore-cited case, the Court characterized expenditures as relative, adopting the
comment of then COA Chairman Francisco Tantuico, Jr., to wit: 7 2
"The terms 'irregular', 'unnecessary', 'excessive,' and 'extravagant," when
used in reference to expenditures of funds or uses of property, are relative. The
determination of which expenditure of funds or property belong to this or that
type is situational. Circumstances of time and place, behavioral and ecological
factors, as well as political, social and economic conditions, would in uence any
such determination. Viewed from this perspective, transactions under audit are to
be judged on the basis of not only the standards of legality but also those of
regularity, necessity, reasonableness and moderation."

The urgency of the situation, and the good faith of petitioner and her co-accused are
attested to by then Secretary of Health, now Senator, Juan M. Flavier. He states: 7 3
". . . it was imperative that the blood bags were procured immediately to
meet the urgent need to supply the hospitals with blood bags to start the blood
program. . .The negotiated prices that NKTI obtained were even lower than the
buying price of other tertiary government hospitals. . . . Although the Ombudsman
had already dismissed the charges against me and three others, I feel distraught
and very unhappy that my colleagues who worked hard for me during my stint as
Secretary of Health are being punished for acting promptly and diligently during
that critical period in March 1994."

Above premises considered, we fail to see how the purchases of the Terumo blood
bags were made in bad faith or with gross negligence.

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 The Ombudsman's grave abuse of discretion is further made obvious by the fact
that the charges against Secretary Flavier were dropped, 7 4 but the charges against
petitioner, Dr. Baylon and her co-accused were not. The basis for this is not seen in the
records, indicating arbitrariness on the part of respondent Ombudsman.
The facts of the case also readily show that the circumstances surrounding the
purchase of Terumo blood bags exempted it from the requirement of a public bidding.
Executive Order No. 301, Section 1 provides:
"Any provision of law, decree, executive order or other issuances to the
contrary notwithstanding, no contract for public services or for furnishing
supplies, materials and equipment to the government or any of its branches,
agencies or instrumentalities shall be renewed or entered into without public
bidding, except under any of the following situations:
xxx xxx xxx

"b. Whenever the supplies are to be used in connection with a project

or activity which cannot be delayed without causing detriment to the public
service;
"c. Whenever the materials are sold by an exclusive distributor or
manufacturer who does not have any subdealers selling at lower prices and for
which no suitable substitute can be obtained elsewhere at more advantageous
terms to the government;
xxx xxx xxx
"e. In cases where it is apparent that the requisition of the needed
supplies through negotiated purchase is most advantageous to the government
to be determined by the Department Head concerned (italics ours)."

The Fallo
WHEREFORE, we GRANT the petition. We REVERSE and SET ASIDE the resolution of
the Ombudsman dated February 28, 2000, nding probable cause. We ORDER the
Sandiganbayan TO DISMISS forthwith Criminal Case No. 25703 against petitioner and her
co-accused with costs de oficio. CTDacA

No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

Footnotes

1. Venus v. Desierto, 358 Phil. 675, 699-700 (1998).

2. A Special Civil Action for Certiorari and Prohibition with a prayer for the issuance of a
temporary restraining order filed under Rules 65 of the Revised Rules of Court.

3. In S. B. Crim. Case No. 25703 (OMB-0-97-0242) entitled "People of the Philippines v.

Filoteo A. Alano, Aileen R. Javier, Honorata G. Baylon and Diana Jean F. Prado" dated
February 28, 2000, signed by Aniano A. Desierto (Ombudsman) who stated that,
"Prosecution shall be aggressively pursued as recommended by the O.L.A." and ordered
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 that the we be assigned to another prosecutor.
4. Dated January 18, 2000, prepared by Cicero D. Jurado, Jr. (Ombudsman Prosecutor II).
Recommending Approval by Robert E. Kallos (Deputy Special Prosecutor); concurred in
by Leonardo P. Tamayo (The Special Prosecutor).

5. Dated February 20, 2000, prepared by the Office of the Chief Legal Counsel, For Aniano
A. Desierto (Ombudsman) thru Director Andrew F. Ammuyutan (Chief Legal Counsel,
OIC-OLA) from Paul Elmer M. Clemente (Legal Counsel).

6. Petitioner Dr. Baylon was the former head of the Hematology and Transfusion Medicine
Division at the NKTI (Petition, Rollo, pp. 3-42, p. 5).
7. Internal DOH memorandum dated February 9, 1994 directing DOH undersecretary for
management service Ms. Teresita dela Cruz to allot the sum of two million pesos
(P2,000,000.00) to the voluntary blood donation program. (Petition, Annex "C", Rollo, p.
31).

8. Land Bank of the Philippines Check No. 0000016772-AS (Petition, Annex "D", Rollo, p.
52).

9. Official Receipt No. 166654 evidencing the official disbursement (Petition, Annex "E",
Rollo, p. 52).
10. Both signed by then Secretary of Health, now Senator Juan M. Flavier.

11. Petition, Annex "F", Rollo, pp. 53-54.

12. Petition, Annex "F-1", Rollo, pp. 55-56.

13. Petition, Annexes "I" and "J", Rollo, pp. 73-74.

14. Petition, Annex "K", Rollo, pp. 75-76.

15. Petition, Annex "L", Rollo, pp. 77-78.

16. Records of the Sandiganbayan, Review Memorandum of August 9, 1999, pp. 4-10, at p.
9.

17. Fact-Finding and Intelligence Bureau of the Office of the Ombudsman, officially
represented by Director Agapito B. Rosales.

18. Petition, Annex "O", Rollo, pp. 93-94.

19. Former DOH Secretary (Now Senator) for approving contracts relative to the purchase
of overpriced blood bags under Purchase Order (P. O.) Nos. SP94-000172; SP94-000132;
SP94-000147 and SP94-00943.

20. Former DOH Undersecretary.

21. DOH Undersecretary for approving the purchase of overpriced blood bags under
Purchase Order No. SP94-00172 in the amount of P2,209,915.00.

22. NKTI Executive Director.

23. NKTI Dep. Exec. Director.

24. Project Manager — DOH NVBD Program.

25. NKTI Chief Property Division.

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 26. NKTI Chief Accounting Division for approving and allowing the disbursement of public
funds as payment for the grossly overpriced blood bags to FVA-Ex Im Trading.
27. Code of Conduct and Ethical Standards for Public Officials.

28. Eladia C. Reyes (Panel Head); Avelino G. Credo, Jr. (Member) and Oscar Ramos, Sr.
(Member).

29. EPIB Director Angel C. Mayoralgo, Jr. recommended approval.

30. Petition, Annex "Q", Resolution of March 17, 1999, pp. 105-124, p. 124.

31. Petition, Annex "R", Review Memorandum of August 9, 1999, Rollo, pp. 126-132.
32. Supra, p. 132.
33. By Ombudsman Special Prosecutor Aleu A. Amante.

34. Anti-Graft and Corrupt Practices Act, as amended.

35. Petition, Annex "J", Information, Rollo, pp. 133-134.

36. Petition, Annex "T", Motion for Reconsideration and Reinvestigation, Rollo, pp. 135-147.
37. Petition, "Annex U", Rollo, p. 148.

38. Records of the Sandiganbayan, p. 492.

39. Petition, Annex "A", Order of January 18, 2000, Office of the Special Prosecutor, Rollo,
pp. 43-47, at p. 47.

40. Petition, Annex "B", Memorandum of February 9, 2000, Rollo, pp. 49-50.

41. Handwritten note on Order of January 18, 2000, Petition, "Annex "A", Rollo, pp. 43-47, at
p. 47.
42. On October 2, 2000, we gave due course to the petition (Rollo, p. 194).

43. In Criminal Case No. 25703 before the Sandiganbayan.

44. Motion to Intervene, Rollo, pp. 249-308.

45. Motion to Intervene, Annex "A", COA Decision No. 2001-111, Rollo, pp. 355-360.

46. Resolution of the Court, Rollo, p. 347.

47. Manifestation dated August 24, 2001, Rollo, p. 366.

48. Comment to the Motion for Intervention, Rollo, pp. 373-388.

49. Espinosa v. Office of the Ombudsman, 343 SCRA 744 (2000).
50. Rodrigo, Jr. v. Sandiganbayan, 362 Phil. 646, 659 (1999).
51. Tirol, Jr. v. Del Rosario, 317 SCRA 779 (1999).
52. Marsaman Manning Agency, Inc. v. National Labor Relations Commission, 371 Phil.
827, 838 (1999).

53. Garcia-Rueda v. Pascasio, 344 Phil. 323, 330 (1997), citing Commissioner of Internal
Revenue v. Court of Appeals, 327 Phil. 1, 57 (1996).

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 54. People v. Valdez, 363 Phil. 481, 489 (1999).
55. People v. Chua Ho San, 367 Phil. 703 (1999).
56. Santiago v. Garchitorena, 228 SCRA 214 (1993).
57. Fernando v. Sandiganbayan, 212 SCRA 680 (1992).
58. Venus v. Desierto, 358 Phil. 675 (1998).
59. Garcia v. Office of the Ombudsman, 325 SCRA 667, 669-670 (2000); Ingco v.
Sandiganbayan, 338 Phil. 1061, 1072 (1997).
60. Records of the Sandiganbayan, Counter-Affidavit of Filoteo Asinas Alano, M.D., pp. 16-
29, at p. 25.
61. Allegedly, amounting to P1.964 Million.

62. We agree with the arguments set forth in the Counter-Affidavit of Filoteo Asinas Alano,
M.D., supra, pp. 26, 28.
63. Decision signed by Guillermo N. Carague (Chairman); Raul C. Flores (Commissioner)
and Emmanuel M. Dalman (Commissioner).

64. Records of the Sandiganbayan, Counter Affidavit of Diana Jean F. Prado, Annex 4, p.
54; Annex 5, p. 55.
65. Records of the Sandiganbayan, Counter-Affidavit of Filoteo Asinas Alano, M.D., pp. 16-
29, at pp. 17-18; See also Records of the Sandiganbayan, Counter-Affidavit of Filoteo
Asinas Alano, M.D., Annexes D, D-1, D-2, D-3, D-4, D-5, D-6, pp. 36-42.

66. Fonacier v. Sandiganbayan, 238 SCRA 687 (1994).

67. Air France v. Carrascoso, 124 Phil. 722, 737 (1966).
68. Fonacier v. Sandiganbayan, supra, Note 66.
69. Petition, Annex "G", Affidavit of Secretary Juan M. Flavier, Rollo, pp. 64-70, at p. 66.
70. Ibid., p. 69.
71. 222 Phil. 222, 235 (1996).
72. Supra, p. 239.
73. Petition, Affidavit of Senator Juan M. Flavier, Annex "G", pp. 64-70, at pp. 67-69.

74. Affidavit of Senator Juan M. Flavier, Petition, Annex "G", pp. 64-70, at p. 69.

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