PEOPLE OF THE PHILIPPINES VS. JEORGE EJERCITO ESTREGAN

PEOPLE OF THE PHILIPPINES VS. JEORGE EJERCITO ESTREGAN  

G.R. No. 248699 

February 05, 2025  

 

FACTS: 

Accused public officers of the municipality of Pagsanjan, Laguna entered a Memorandum of Agreement (MOA) for Accident Protection and Assistance (APA) with Bruel, proprietor of First Rapids Care Ventures (FRCV), without public bidding and despite the fact that FCRV holds no Certificate of Authority from the Insurance Commission.  

Later, the United Boatmen Association of Pagsanjan (UBAP) filed a complaint for violation of Section 3(e), (g), (h), (i) and (g) of RA 3019 and RA 9184 against the said public officials as well as Bruel before the Ombudsman. The OMB found probable cause to indict the accused. The SBN acquitted Vilar but found the rest guilty. MRs were denied hence this appeal.  

ISSUES: 

1. Whether the MOA was indeed a contract of insurance, and if so, whether public bidding was necessary for its procurement.  

2. Whether the accused are guilty of violation of Section 3(e), (g), (h), (i) and (g) of RA 3019 and RA 9184.  

RULING: 

Yes, the MOA is a contract of insurance. Public bidding was necessary for its procurement. The SC reiterated that a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent event. Here, the MOA unmistakably show an agreement whereby FRCV undertakes to indemnify tourists and/or boatmen for accidental death or dismemberment, and the Municipality for actual expenses that it pays for the treatment and/or confinement of tourists and/or boatmen who suffer accidental injury. 

The SC mentioned its ruling in Philippine Health Care Providers, Inc., were the Court cited American jurisprudence distinguishing medical service corporations from health and accident insurers in that the former undertake to provide prepaid medical services through participating physicians, thus relieving subscribers of any further financial burden, while the latter only undertake to indemnify an insured for medical expenses up to, but not beyond, the schedule of rates contained in the policy. Here, FRCV is certainly an accident insurer, albeit operating without authority from the Insurance Commission, since it undertook in the MOA to indemnify tourists and/or boatmen for accidental death or dismemberment, and the Municipality for actual expenses that it pays for the treatment and/or confinement of tourists and/or boatmen who suffer accidental injury, but not to exceed the amounts stated in the tables of coverage. 

In insisting that FRCV is not in the insurance business despite the MOA, on its face, showing the contrary, it appears that FRCV is doing or proposing to do business in substance equivalent to making, as insurer, an insurance contract in a manner designed to evade the provisions of Presidential Decree No. 612 or the old Insurance Code. Nonetheless, the Code itself states that the term "doing an insurance business" within the meaning of said Code shall include "doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this Code."  

As an insurance contract, it falls within the definition of goods under Republic Act No. 9184. As the SBN correctly observed, even assuming arguendo that FRCV's services were primarily for providing training to boatmen, such services would fall within the ambit of consulting services which are still within the purview of Republic Act No. 9184. 

Under Rule IV, Section 10 of the Revised IRR of RA 9184, all procurement shall be done through competitive bidding, except as provided in Rule XVI on alternative methods of procurement.  Here, the accused public officials immediately authorized resort to the alternative method of procurement known as negotiated procurement whereby the procuring entity directly negotiates a contract with a technically, legally, and financially capable supplier, contractor, or consultant. However, under the IRR of Republic Act No. 9184, such may only be resorted to in particular cases such as when there are two failed biddings, emergency cases. None of the said cases are availing here. There is thus no doubt that the accused violated procurement law, rules and regulations. While Estregan attempts to justify the lack of public bidding by alleging that both the BAC and the Government Procurement Policy Board (GPPB) confirmed that the same was not required, there is no proof on record that the BAC or the GPPB opined so other than his bare allegation. 

Yes, the accused Estregan and Bruel were found GUILTY beyond reasonable doubt of violation of Section 3(e), Republic Act No. 3019 while No, accused-appellants Arlyn Lazaro-Torres, Terryl Gamit-Talabong, Kalahi U. Rabago, Erwin P. Sacluti, and Gener C. Dimaranan were ACQUITTED of the same crime on the ground of reasonable doubt 

To be found guilty of a Section 3(e) violation, the prosecution must prove that: (1) the accused must be a public officer discharging administrative, judicial, or official functions; (2) accused must have acted with manifest partiality, evident bad faith, or gross inexcusable negligence; and (3) accused caused any undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage, or preference in the discharge of his or her functions. 

In this case, Estregan's manifest partiality and evident bad faith was indubitably shown when he entered a MOA with FRCV despite glaringly questionable circumstances such as FRCV being registered with the DTI just five days prior to its letter-offer—and its lack of a Certificate of Authority from the Insurance Commission. Thus, Estregan's claim that FRCV was the only qualified company to render the service required by the Municipality deserves scant consideration. The supposed public consultative meetings conducted by the accused public officials with community stakeholders do not negate Estregan's manifest partiality as said meetings only pertained to the proposed increase in the boat ride service fee and had nothing to do with determining the qualifications of FRCV, as this was supposed to be the job of the BAC which Estregan arrogated upon himself. That he even made FRCV present before the SB despite the absence of public bidding and despite irregularities surrounding it further betray his manifest partiality and evident bad faith. 

As regards the third element, while there is indeed is no estimable proof of damage to any party in this case, said element is satisfied as to the second mode. By purposely sparing FRCV from the rigors of the processes under the procurement law and consciously turning a blind eye to irregularities, Estregan gave it unwarranted benefit, advantage, or preference. As earlier discussed, it was utterly unwarranted for FRCV to receive benefit, advantage, or preference because it did not have legal authority to engage in the insurance business in the first place, and did not undergo the proper procurement process. 

It was shown that Bruel conspired with Estregan for her company to be given preferential treatment and unwarranted benefit. Insofar as accused SB members Torres, Talabong, Rabago, Sacluti, and Dimaranan are concerned, however, the SC found that the prosecution failed to prove beyond reasonable doubt their guilt for violation of Section 3(e) of Republic Act No. 3019. The SB members did not thereby show manifest partiality and give unwarranted benefit to any particular entity because the ordinance itself states "any competent and qualified entity" and such entity was yet to be determined. It did not even prevent Estregan from resorting to public bidding as it merely authorized negotiated procurement, albeit erroneously. Neither did their eventual ratification of the MOA through Municipal Resolution No. 056-2008 make them liable because the validity of the MOA did not depend on the issuance of said resolution. No rights can be conferred by and be inferred from a resolution, which is but an embodiment of what the lawmaking body has to say in light of attendant circumstances. 

Estregan and Bruel were found GUILTY beyond reasonable doubt of violation of Section 3(e), Republic Act No. 3019 and were sentenced to suffer the indeterminate penalty of imprisonment of six years and one month as minimum to eight years as maximum with perpetual disqualification from holding public office. However, the SB members were ACQUITTED of the same crime on the ground of reasonable doubt. 

*Link to full case here