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154108

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Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 154108 December 10, 2008

FIRST UNITED CONSTRUCTION CORPORATION, petitioner,

vs.
MENANDRO G. VALDEZ and RAMON E. ADEA, respondents.

x--------------------------------------------x

G.R. No. 157505 December 10, 2008

NATIONAL HOUSING AUTHORITY, petitioner,

vs.
HON. ROSE MARIE ALONZO-LEGASTO, Presiding Judge, Regional Trial Court of Quezon City, Branch 99,
MENANDRO G. VALDEZ, and RAMON ADEA IV, respondents.

DECISION

CARPIO MORALES, J.:

In February 1998, the National Housing Authority (NHA), petitioner in G.R. No. 157505, contracted the First United
Construction Corporation (FUCC), petitioner in G.R. No. 154105, for its Freedom Valley Resettlement Project (the
Project) in Sitio Boso-Boso, Antipolo, Rizal.

Menandro G. Valdez (Valdez) and Ramon E. Adea (Adea) who are respondents in both petitions, Principal
Engineers of the NHA, formed part of the NHA team tasked to oversee FUCC’s contract works and provide
guidance for the proper implementation of the Project.

The technical specifications of the Project called for the laying of a subbase course and base course on the roads
before pouring concrete. FUCC instead substituted concrete treated base course (CTBC) for subbase course,
despite repeated written reminders by respondents to follow the specifications of the Project.1 And FUCC refused to
have the necessary materials and field density tests conducted before pouring concrete on portions of the roads,
and even poured concrete without proper approval, its attention having been called by respondents to its failure to
comply with requirements notwithstanding.2

On December 11, 1998, FUCC submitted its Second Progress Billing, attaching thereto the Abstract of
Accomplishment3 for the Project from July 1, 1998 to November 30, 1998. It billed the NHA a total of
P50,701,846.80 inclusive of P2,305,240 representing cost for subbase course on major roads, P129,800
representing cost for subbase course on minor roads, and an additional P376,040 representing cost for subbase
course or a total cost of P2,811,080 for subbase course.4

In the meantime, the road leading to the Project collapsed after a typhoon. The collapse of the road was the subject
of three articles by Art A. Borjal (Borjal) in The Philippine Star in which he wrote about the poor construction of the
roads and the massive wastage of government funds on the Project.5 The first of the three articles was published on
December 27, 1998.

During a NHA-Contractor’s meeting on January 12, 1999, respondent Valdez raised the non-compliance by FUCC
with the approved plans and specifications of the Project, particularly the use of CTBC instead of subbase course.
Mariano Raner (Raner), the Officer-in-Charge of the Project, explained that the technical practice is acceptable
provided that the subgrade course has a sufficient California Bearing Ratio value to support the pavement and that
CTBC is most advantageous during rainy season. It was resolved during the same meeting that before payment per
road works would be considered, tests would be first conducted to find out if the constructed roads met the
acceptable standard.6

Respondent Valdez later recommended to the Officer-in- Charge (OIC) of the Project that only P16,342,226.23 be
paid to FUCC based on the NHA’s own Abstract of Physical Accomplishment, he explaining as follows:

Last 18 February 1999, the General Manager and the Manager, SLB visited the site and conducted a
meeting. The General Manager instructed the NHA staff to process the billing of the Contractor within one
week. One of the issues resolved at that meeting was the use of Official Receipt[s] as support for payment
with regards to the furnishing of equipment and furniture, which unfortunately as of this date have not yet
been submitted by the Contractor.

Pending the result of the tests conducted by JSR Geotechnical Services on the structural layer of the roads,
the NHA engineers evaluated the request for payment, which was given to the Contractor last 24 January
1999. This was the basis for the meeting held on 25 February 1999 between the Contractor and the NHA
technical staff, which you have presided. It was discuss[ed] then that a meeting with JSR be held since you
informed us that they have completed the report on the test conducted.

During the meeting with JSR, Contractor, and the NHA technical staff held last 02 March 1999, the result of
the tests were presented and validated our observation that the Contractor ha[s] indeed not laid sub-base
coarse [sic] materials on the roads. In addition, all of the in-placed Field Density Tests for base coarse
materials laid do not conform with the FDT as required by the approved specifications. Moreover, the
thickness of some of the said base coarse materials does not conform with the required thickness based on
the approved plans of 180mm. It was the opinion of the NHA technical staff at that time that additional tests

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be conducted on the roads with respect to the laid base course materials to have a conclusive report on its
acceptability and conformity with the approved plans and specifications.

With these development[s], the NHA technical staff prepared the Abstract of Physical Accomplishment xxx
from the period 01 July 1998 to 31 December 1998 in the total amount of P16,342,226.23, incorporating
among others the agreement reached with the Contractor in the 25 February 1999 meeting, for your review
and perusal. This, however, would still need the required Official Receipt (OR) of the Contractor with regards
to the equipment and furniture.7

On March 29, 1999, FUCC, through its Executive Vice-President Ben S. Dumaliang (Dumaliang) and the Project
Manager Samuel A. Aquino (Aquino), filed an administrative complaint against respondents before the Office of the
Ombudsman for dishonesty, grave misconduct, gross neglect of duty, and conduct prejudicial to the best interest of
the service.

FUCC alleged that respondents tried to extort money from it but failed, hence, they refused to act with dispatch on
its Second Progress Billing and to officially document various variation orders despite instructions by their
superiors.8

FUCC further alleged that respondents consistently arrived late at the Project site, used for personal purposes the
service vehicles leased by it to NHA for the Project, and used the Project site as their private gun firing range.9

In their Joint-Counter Affidavit,10 respondents alleged that FUCC filed the complaint to coerce them into
recommending full payment of its Second Progress Billing amounting to P50,701,846.80 and force them to assist
the NHA Management and FUCC in the cover-up on the investigations resulting from the allegations in Borjal’s
newspaper articles.

Respondents further alleged that the Project OIC Raner and the NHA General Manager Angelo F. Leynes (Leynes)
pressured them to attribute the collapse of the road to natural causes and to justify payment on the works done
outside of the specifications.11

At the preliminary conference held on August 8, 1999,12 respondents manifested that they were foregoing the
conduct of a formal hearing and were submitting the case for resolution on the basis of the available evidence on
record.13

By Order of August 30, 1999, the Ombudsman limited the issues of the case as follows:

1. Whether respondents tried to extort money from the complainant;

2. Whether respondents used for their personal use the vehicles leased to the NHA by FUCC; and

3. Whether respondents unjustly failed to act on FUCC’s requests.14

And it ordered the parties to submit their respective memoranda which they complied with.15

By Decision16 of January 13, 2000 bearing his January 28, 2000 approval, the Ombudsman absolved respondents
of negligence in acting on FUCC’s Second Progress Billing,17 but found them liable for extortion and using the
vehicles leased to the NHA for personal use, and accordingly dismissed them from the service.18

Thus, the Ombudsman decision disposed:

WHEREFORE, PREMISES CONSIDERED, this Office hereby finds the respondents guilty of GRAVE
MISCONDUCT punishable by DISMISSAL FROM THE SERVICE and CONDUCT PREJUDICIAL TO THE
BEST INTEREST OF THE SERVICE which carries the penalty of SUSPENSION FROM WORK FOR SIX
MONTHS WITHOUT PAY; the former offense carrying a heavier penalty, Respondents MENANDRO G.
VALDEZ and RAMON G. ADEA, are both hereby meted the penalty of DISMISSAL FROM SERVICE.

Further, the General Manager of the NHA is hereby ordered to implement the instant Decision in accordance
with law and advice of action taken thereof be furnished this Office within ten (10) days from receipt hereof.

SO ORDERED.19 (Emphasis in the original)

Respondents thereupon wrote a letter20 to the NHA informing it that as they intended to file a Motion for
Reconsideration of the decision of the Ombudsman pending its finality, they had the right to remain in office.
Respondents’ letter was served on the NHA on February 15, 2000 at about 4:00 PM.21 The following day,
respondents received a Memorandum of February 14, 2000 signed by Leynes informing them of their termination
from employment,22 drawing them to file before the Regional Trial Court (RTC) of Quezon City a complaint23
against the NHA, its General Manager Leynes, and NHA Human Resource Department Manager Lorna M. Seraspe,
for injunction with application and prayer for the issuance of preliminary prohibitory injunction and/or a temporary
restraining order. Branch 99 of the Quezon City RTC issued a temporary restraining order and a preliminary
prohibitory injunction,24 prompting the NHA to file before the Court of Appeals a petition25 against the RTC trial
judge and herein respondents for certiorari and prohibition with prayer for the issuance of writ of preliminary
injunction and temporary restraining order. The NHA petition was docketed as C.A. G.R. No. 57963.

Respondents did file a Motion for Reconsideration of the Ombudsman decision which was denied, hence, they
challenged the decision via petition before the Court of Appeals which was docketed as C.A. G.R. No. 62534.

The Court of Appeals, in C.A. G.R. No. 62534, issued a temporary restraining order26 enjoining the Ombudsman
and the NHA from implementing the Ombudsman decision of January 13, 2001.

By Decision of February 28, 2002 rendered in C.A. G.R. No. 62534, the Court of Appeals, finding FUCC’s
administrative complaint to be bereft of substantial evidence,27 reversed the Ombudsman’s decision and
accordingly dismissed the administrative cases against respondents. Thus, it disposed:

WHEREFORE, the instant petition is hereby GIVEN DUE COURSE and GRANTED. The Decision of 13
January 2000 of the Office of the Ombudsman, as well as its Orders dated 18 May 2000 and 27 December
2000 are hereby SET ASIDE and declared NULL AND VOID. The administrative case against petitioners is
DISMISSED.

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SO ORDERED.28 (Emphasis and underscoring supplied)

FUCC’s Motion for Reconsideration29 was denied.30

In view of its decision in C.A. G.R. No. 62534, the Court of Appeals dismissed C.A. G.R. No. 57963 for having
become moot and academic.31

FUCC appealed the appellate court’s decision in C.A. G.R. No. 62534 via the first subject petition, for review,32
docketed as G.R. No. 154108. FUCC faults the appellate court:

x x x IN HOLDING THAT THE OMBUDSMAN ALLEGEDLY RELIED SOLELY UPON "THE MERE
AFFIDAVITS OF FUCC’S WITNESSES" WHICH ALLEGEDLY DO "NOT FALL UNDER THE REQUIRED
SUBSTANTIAL EVIDENCE IN AN ADMINISTRATIVE PROCEEDINGS [SIC].

II

x x x IN MISAPPRECIATING CERTAIN FACTS INDUBITABLY ESTABLISHED BY THE EVIDENCE ON

RECORD TO FAVOR RESPONDENTS.

III

x x x IN [TAKING] AS GOSPEL TRUTH RESPONDENTS’ PATENT, VICIOUS AND MALICIOUS LIE THAT
FUCC ALLEGEDLY FLAGRANTLY VIOLATED THE TERMS OF THE CONTRACT.33 (Emphasis in the
original)

The NHA appealed the dismissal of C.A. G.R. No. 57963 via petition for review,34 G.R. No. 157505. NHA faults the
appellate court

1. x x x in denying due course and dismissing NHA petition for certiorari and prohibition for being moot and
academic.

2. x x x in not holding that the court a quo has no jurisdiction over the subject matter of the complaint of
Private Respondents.35

By Resolution of July 16, 2003, the Court consolidated G.R. No. 157505 and G.R. No. 154108.36

In administrative proceedings, the complainant has the burden of proving with substantial evidence the allegations in
the complaint.37 While rules of evidence prevailing in courts of law and equity shall not be controlling, this assurance
of a desirable flexibility in administrative procedure does not go as far as to justify orders without basis in evidence
having rational probative force.38

In the administrative case against respondents subject of G.R. No. 157505, the Ombudsman found them liable for
extortion based on the affidavits of FUCC’s witnesses,39 holding that "cases of extortion virtually depend on the
credibility of complainant’s testimony because of [their] intrinsic nature where only the participants can testify to
[their] occurrences."40

The records show that Valdez’ recommendation to pay the FUCC only P16,342,226.23 came about in light of his
finding that FUCC failed to lay subbase in accordance with the specifications of the Project.

FUCC itself admits not having laid subbase, even as it charged the NHA for the cost thereof despite its claim that it
omitted the subbase "to save funds".41 The FUCC claims that the NHA approved the substitution of CTBC for
conventional base course and subbase. However, FUCC showed no evidence of such approval other than its own
letters to the NHA stating its intention to use CTBC instead of the conventional base course and subbase required
by the contract.42

Respecting the charge that respondents used for personal purposes the vehicles leased by FUCC to the NHA, the
same is unsupported by substantial evidence. Valdez’s signature on the entries in the logbook reflecting the
vehicles’ trips43 does not necessarily indicate that he and/or Adea took the trips. It could indicate that he was
attesting to the authenticity of the trips. At any rate, FUCC did not refute the claim that there were instances when
other NHA personnel used the vehicles.44

IN SUM, FUCC having failed to support its charges against respondents with substantial evidence, the Court of
Appeals did not err in reversing the Ombudsman decision and accordingly dismissing the administrative complaint
against respondents to thus render NHA’s petition in G.R. No. 157505 moot and academic.

WHEREFORE, the petitions are DENIED.

Costs against petitioners.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

DANTE O. TINGA PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

ARTURO D. BRION
Associate Justice
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ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes
1 Ombudsman records, pp. 70-82.

2 Id. at 82-93.

3 Id. at 49-62.

4 Id. at 49-50, 61.

5 Id. at 68.

6 Id. at 14.

7 Id. at 66-67.

8 Id. at 8-10.

9 Id. at 16-48, 357-364.

10 Id. at 122-126.

11 Id. at 123-124.

12 Id. at 286.

13 Ibid.

14 Ibid.

15 Ibid.

16 Id. at 372-384.

17 Id. at 380.

18 Id. at 378-380, 381-382.

19 Id. at 381-383.

20 Vide CA rollo (CA G.R. No. 57963), p. 65.

21 Id. at 66.

22 Id. at 67; rollo (G.R. No. 157505), p. 177.

23 CA rollo (CA-SP G.R. No. 57963), pp. 63-72.

24 Id. at 30-31.

25 Id. at 2-29.

26 CA rollo (CA-SP G.R. No. 62534), pp.174-175.

27 Decision penned by Court of Appeals Associate Justice Bernardo P. Abesamis, with the concurrences of
Associate Justices Bienvenido L. Reyes and Perlita J. Tria Tirona. Id. at 562-579.
28 Id. at 578-579.

29 Id. at 604-613.

30 Id. at 653.

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31 Decision of January 31, 2003, penned by Court of Appeals Associate Justice Edgardo P. Cruz, with the
concurrence of Associate justices Salvador J. Valdez, Jr. and Mario L. Guariña III. CA rollo (C.A. G.R. No.
57963), pp. 230-235.
32 Rollo (G.R. No. 154108), pp. 28-65.

33 Rollo (G.R. No. 154108), pp. 50-51.

34 Rollo (G.R. No. 157505), pp. 121-148.

35 Id. at 130.

36 Id. at 221.

37 Vide Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 483.

38 Vide Sps. Boyboy v. Atty. Yabut, Jr., 449 Phil. 664, 670 (2003).

39 Vide Ombudsman records, pp. 378-379.

40 Id. at 378.

41 Id. at 106, 172.

42 Id. at 171-174.

43 Id. at 21-44.

44 CA rollo (C.A. G.R. No. 62534), pp. 43-44. Vide Ombudsman records, pp. 280-281.

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