"Can a mayor lawfully award a
P240-million Build-Operate-Transfer (BOT) project to a company without a
contractor's license, proper experience, or financial capability—yet claim
innocence because no public funds were disbursed?"
Efren L. Alvarez vs. People of the Philippines
G.R. No. 192591, June 29, 2011
Topic: Criminal Law (Anti-Graft and Corrupt Practices Act – R.A. No. 3019)
🔎 Facts of the Case
Efren L. Alvarez, then-Mayor of Muñoz,
Nueva Ecija, was convicted for violating Section 3(e) of R.A. No. 3019
(Anti-Graft and Corrupt Practices Act) after he entered into a
Build-Operate-Transfer (BOT) agreement with Australian-Professional, Inc. (API)
to construct a P240-million shopping mall called "Wag-Wag Shopping
Mall." This project was to be built on a 4,000 sqm lot behind the
Municipal Hall—government property.
Despite the lofty project goal, API
turned out to be unlicensed by the Philippine Contractors Accreditation Board
(PCAB), financially incapable, and lacking experience in handling projects of
such scale. API only had a paid-up capital of P2.5 million and a questionable
credit line of P150 million for a project estimated at P240 million. No mall
was ever built—only a 3-meter excavation and a billboard were completed before
API stopped operations.
The transaction stemmed from a supposed
unsolicited proposal under the BOT Law (R.A. No. 7718). However, the
Municipality failed to meet even the basic legal requirements for such a
proposal: no in-depth negotiations, no valid public bidding, and an incomplete
proposal lacking feasibility studies and required contractor qualifications.
The Pre-qualification, Bids and Awards
Committee (PBAC), headed by Mayor Alvarez himself, railroaded the approval
despite API’s deficiencies. The Sandiganbayan ruled that Alvarez gave
unwarranted benefits and preference to API through manifest partiality and
gross inexcusable negligence. Among other irregularities, Alvarez failed to
ensure the posting of a performance security, failed to verify API’s license,
and conducted an invalid publication for competitive proposals.
The Sandiganbayan found Alvarez guilty
beyond reasonable doubt and sentenced him to 6 years and 1 month to 10 years in
prison, perpetual disqualification from public office, and to indemnify the
Municipality of Muñoz in the amount of ₱4.8 million, less ₱500,000 already
paid.
Alvarez argued that no public funds
were lost since the project didn’t use government money and was based on an
"unsolicited proposal." He claimed it was a Sangguniang
Bayan-approved project, not his personal initiative. The Supreme Court, however,
affirmed the conviction, ruling that the element of "giving unwarranted
benefit" does not require damage to public funds.
✅ Supreme Court Ruling
The Supreme Court DENIED the petition.
It ruled that Mayor Alvarez violated
Section 3(e) of R.A. No. 3019 by giving unwarranted benefits to API, acting
with gross inexcusable negligence and manifest partiality. The Court emphasized
that non-disbursement of public funds does not negate criminal liability under
the second mode of the offense—granting "unwarranted benefit, advantage,
or preference."
🧾 Dispositive Portion
“Accordingly, accused Efren L.
Alvarez is found guilty beyond reasonable doubt for violation of Section
3(e) of Republic Act No. 3019 and is sentenced to suffer in prison the penalty
of 6 years and 1 month to 10 years. He also has to suffer perpetual
disqualification from holding any public office and to indemnify the
City Government of Muñoz the amount of ₱4,800,000.00 less ₱500,000.00
earlier paid as damages.
SO ORDERED.”
Should elected officials be allowed to
delegate due diligence to subordinates and escape criminal liability when
public assets—not funds—are wasted?
📜 Important Doctrines
- "Unwarranted
benefit" under R.A. No. 3019 does not require actual damage.
It is enough that a public officer gives unjustified favor or advantage in the performance of official duties. - Section
3(e) can be committed in three ways: manifest partiality, evident bad
faith, or gross inexcusable negligence.
Proof of any one mode is sufficient for conviction. - BOT
projects must comply with legal, financial, and technical standards—even
if unsolicited.
An “unsolicited proposal” is not exempt from competitive procedures, financial qualifications, and contractor licensing. - The
head of the local government bears full legal accountability—even if the
Sangguniang Bayan authorized the project.
Delegation of tasks is not a defense when the official remains legally accountable.
💡 Frequently Asked Questions (FAQs)
Q1: Is a government official liable
under R.A. 3019 even if no public funds were spent?
A: Yes. Liability attaches even without government spending
if unwarranted benefits were given to a private party.
Q2: Can a BOT project be awarded
without a contractor’s license?
A: No. Even under BOT arrangements, contractors must be
licensed per the Contractors' License Law (R.A. 4566).
Q3: Can a mayor be convicted under
Section 3(e) if the municipal council approved the project?
A: Yes. The mayor, as the local chief executive, has the
duty to ensure lawful execution, regardless of council action.
📚 Classification: Criminal Law
Disclaimer: For educational use only. This summary is generated using premium AI and may not be infallible. Verify with official sources when in doubt.
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