G.R. No. 150870 December 11, 2002
Dra. Honorata G. Baylon, petitioner, vs. Fact-Finding Intelligence Bureau represented by Director Agapito Rosales and the Office of the Ombudsman, respondents.

FACTS

Petitioner Dr. Honorata G. Baylon was the Head of the Division of Hematology and Transfusion Medicine at the National Kidney and Transplant Institute (NKTI) and was designated Program Manager of the government’s National Voluntary Blood Donation Program. In 1994, following a study revealing safety issues in the country’s blood banking system and an ensuing acute blood shortage after the closure of commercial blood bank outlets, the Department of Health directed the full operation of the Blood Donation Program. To address the urgent need, the NKTI, through petitioner, purchased “Terumo” blood bags from its exclusive distributor, FVA EX-IM Trading, Inc. (FVA), via negotiated purchase without public bidding on several occasions in 1994. In 1995, the Commission on Audit (COA) initially disallowed these transactions, alleging overpricing due to the lack of public bidding and finding that FVA sold the same bags to other entities at lower prices. The Office of the Ombudsman filed an administrative complaint for gross misconduct against petitioner and other officials. Petitioner defended the negotiated purchases, citing exceptions under Executive Order No. 301, specifically that the supplies were for a project that could not be delayed, were from an exclusive distributor with no sub-dealers, and that the purchase was most advantageous to the government, presenting price comparisons showing NKTI’s prices were lower than other government hospitals. The Ombudsman, through a Memorandum Review, found petitioner guilty of Grave Misconduct and ordered a six-month suspension. Petitioner’s petition to the Supreme Court (G.R. No. 145000) was dismissed for being filed in the wrong forum. Her subsequent petition for review to the Court of Appeals was dismissed for being filed out of time. Meanwhile, COA Decision No. 2001-11 lifted the audit disallowance, ruling the negotiated purchases were justified and not disadvantageous. Petitioner then filed the present petition for review on certiorari with the Supreme Court.

ISSUE

Whether the Office of the Ombudsman’s finding of administrative liability (Grave Misconduct) against petitioner for the negotiated purchase of blood bags without public bidding is supported by substantial evidence.

RULING

No. The Supreme Court granted the petition, set aside the resolutions of the Court of Appeals and the Memorandum Reviews of the Ombudsman, and absolved petitioner from administrative liability. The Court held that the Ombudsman’s finding of grave misconduct was not supported by substantial evidence. The negotiated purchases fell under the exceptions to public bidding under Section 1(b), (c), and (e) of Executive Order No. 301, as the blood bags were urgently needed for a program addressing a public health emergency, were sourced from an exclusive distributor, and were obtained at prices most advantageous to the government, as evidenced by comparative data showing lower prices than other hospitals. The Court emphasized that administrative liability requires proof by substantial evidence, which was lacking. The subsequent COA decision lifting the disallowance further bolstered the conclusion that the transactions were proper. The Ombudsman’s reliance on the mere fact of a negotiated purchase, without considering the justifying circumstances and countervailing evidence, was erroneous.