SC seeks probe into PNP’s contracting practices

MANILA, Philippines—The Supreme Court has recommended to investigate an alleged practice by the Philippine National Police of entering into “secret agreements” and giving commissions to its accredited contractors on certain projects.

The high court’s First Division also ordered the PNP to pay its contractor Montaguz General Merchandise (MGM) owned by Thi Thu Thuy de Guzman P2.2 million for delivered construction materials of a four-story condominium built inside Camp Crame in 1995.

“(The PNP’s) allegations of sham dealings involving our own government agencies are potentially disturbing and alarming. If (witness Edgardo Cruz’s) testimony were true, this should be a lesson to the PNP not to dabble in spurious transactions,” the court said in a recent decision.

“Obviously, if it can afford to give a 2 percent commission to other contractors for the mere use of their business names, then the petitioner is disbursing more money than it normally would in a legitimate transaction,” it said.

The high tribunal “recommended that the proper agency investigate this matter and hold the involved personnel accountable to avoid any similar occurrence in the future.”

The case stemmed from the long-drawn-out legal battle between the PNP and De Guzman over the national police’s failure to pay her.

The PNP and De Guzman’s MGM entered into a contract in December 1995 wherein the company would procure the materials for the construction of the condominium building.

The PNP insisted that it released a check to De Guzman.

The PNP presented as witness its “check releaser,” Jesusa Magtira, who said that she gave the check to De Guzman and saw the latter hand the check to Edgardo Cruz of Highland Enterprises, another PNP accredited contractor.

Magtira said that it was De Guzman who gave the logbook for Cruz to sign to indicate receipt of the check. Magtira said this was allowed because De Guzman had already given the official receipt to her.

The PNP presented Cruz as its witness to prove that the check was released and that the P2.2 million payment actually belonged to Highland Enterprises.

Cruz told the trial court that in 1995, the PNP Engineering Services (PNPES) was tasked to build the condominium, which meant it would have to do the work from canvassing of the materials to the construction.

Since the PNPES supposedly lacked the funds to undertake the project, it sought the help of Highland Enterprises, Cruz said.

“In a meeting with its accredited contractors, the PNPES asked if the other contractors would agree to the use of their business name for a two percent (2 percent) commission of the purchase order price to avoid the impression that Highland Enterprises was monopolizing the supply of labor and materials to the PNP,” the court ruling said, citing records of the case.

“Cruz alleged that on April 23, 1996, he and the respondent went to the PNP Finance Center to claim the LBP check due to MGM. Cruz said that the respondent handed him the already signed Receipt No. 001, which he filled up. He claimed that the respondent knew that the LBP check was really meant for Highland Enterprises as she had already been paid her 2 percent commission for the use of her business name in the concerned transaction,” the court records added.

In its decision, the court noted that the case stemmed from a contract between the PNP and De Guzman.

“While the (PNP), in proclaiming that (De Guzman’s) claim had already been extinguished, initially insisted on having fulfilled its contractual obligation, it now contends that the contract it executed with the respondent is actually a fictitious contract to conceal the fact that only one contractor will be supplying all the materials and labor for the PNP condominium project,” the decision said.

The court said that both the trial court and the Court of Appeals “upheld the validity of the contract between the (PNP) and (De Guzman) on the strength of the documentary evidence presented and offered in court and on (PNP’s) own stipulations and admissions during various stages of the proceedings,” it added.

The PNP elevated the case to the high court in 2006.

Aside from ordering the PNP to pay De Guzman, the Supreme Court also modified the interest from six percent per annum from November 1997, the date of the last demand, and 12 percent in lieu of six percent from the date that the high court’s decision became final until fully paid.

The Supreme Court decision, written by Associate Justice Teresita Leonardo-de Castro, was promulgated on June 15. It was concurred in by Justices Presbitero Velasco, Jr., Mariano del Castillo, Lucas Bersamin, and Jose Perez.

A number of the decisions of the high court are unannounced and are posted on its website.