TWO former officials of the Philippine Aerospace Development Corporation (PADC) were found guilty of violating the Anti-Graft and Corrupt Practices Act for underselling aircraft parts that resulted in the loss of over six million pesos for the government.
In an 18-page Decision penned by Justice Amy C. Lazaro-Javier, the Supreme Court’s Second Division affirmed the ruling of the Sandiganbayan convicting Danilo R. Crisologo and Roberto L. Manlavi for violation of Section 3(e) of Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, which considers as graft giving any private party unwarranted benefits, advantage, or preference through manifest partiality, evident bad faith, or gross inexcusable negligence. Crisologo and Manlavi were sentenced to imprisonment for six years and one month to 10 years, with perpetual disqualification from holding public office.
PADC, a government-owned and controlled corporation (GOCC) tasked to establish a reliable aviation and aerospace industry, sells all forms of aircraft and aviation/aerospace devices, equipment, and contraptions.
In 2006, the PADC pricing committee issued a pricing policy imposing a 30% mark-up on the cost of local aircraft parts. However, in 2007, Manlavi, as temporary Senior Vice-President of PADC, issued a memorandum essentially prescribing reduced selling prices for aircraft parts. The 2007 memorandum, while approved by Crisologo as PADC President, was not authorized by the PADC’s pricing committee nor its Board of Directors.
The next year, PADC entered into seven transactions with Wingtips Parts Corporation (Wingtips) for the sale of various aircraft parts through a negotiated sale, instead of through public bidding as required for public property disposals under the Government Auditing and Accounting Manual (GAAM).
Following an investigation in 2009, the Commission on Audit (COA) found that the aircraft parts were sold below PADC’s pricing policy and without expert appraisal on the market value of the items. COA also found that the prices under the contracts with Wingtips were unilaterally set by Manlavi based on the 2007 memorandum without the PADC Board’s approval.
Further, instead of a bonded organic personnel manning the PADC stockroom, Crisologo personally hired consultants. Crisologo also ordered the use of computer-printed receipts to replace serially pre-numbered receipts. These prompted the filing of graft charges against Crisologo and Manlawi before the Sandiganbyan.
In affirming the Sandiganbayan’s ruling, the Supreme Court held that all the elements of graft under Section 3(e) of the Anti-Graft and Corrupt Practices Act were present: (1) the accused is a public officer; (2) manifest partiality, evident bad faith, or inexcusable negligence; and (3) undue injury to any party, including the government, or unwarranted benefits, advantage, or preference in favor of a private party.
The Court held that Crisologo and Manlavi, as PADC President and Senior Vice President, were public officers whose actions showing predilection to favor Wingtips indicate bad faith and gross negligence in the performance of their duties as PADC officials. The Court likewise ruled that the government was unduly injured by Crisologo and Manlavi’s reduction of the selling prices when the government only got P849,510.22 when it could have earned P7,489,86.50. Wingtips also undeniably benefited from acquiring the aircraft parts at such lower prices.
While it may be true that the resale value of the items may no longer be the same as the original purchase, Crisologo and Manlavi failed to establish that they took into account market decline or depreciation when they determined the selling price of the aircraft parts. Neither were they able to show that they properly applied the measures for market decline inventory under the GAAM, held the Court.
The Court, however, clarified that as to the mode of the sale, PADC was authorized to resort to a negotiated sale instead of a public bidding. As a GOCC, PADC is given flexibility to generate more revenue for national development, including in the disposition of its assets such as aircraft parts. Thus, PADC is exempt under COA Circular No. 89-296 or the Audit Guidelines on the Divestment or Disposal of Property and Other Assets of National Government, Agencies andInstrumentalities, Local Government Units and GOCCs, which does not apply to items disposed for sale in the regular course of business.
