CA affirms Ombudsman ruling that Lao, 3 others administratively liable over Pharmally deal

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The Court of Appeals says former DBM-PS officials Lloyd Christopher Lao and several others 'diminished public faith in the government's capacity to act honorably in a time of national crisis'

MANILA, Philippines – The Court of Appeals (CA) has affirmed the Office of the Ombudsman’s ruling that former Department of Budget and Management-Procurement Service (DBM-PS) head Lloyd Christopher Lao and three others are administratively liable for giving preferential treatment to Pharmally Pharmaceutical Corporation for procurement contracts during the COVID-19 pandemic.

The three others are former DBM-PS officials Warren Liong, Christine Suntay, and Augusto Ylagan, who, the CA affirmed, are also administratively liable for grave misconduct, gross neglect of duty, serious dishonesty, and conduct prejudicial to the best interest of the service in relation to awarding a P4.2-billion contract to Pharmally for the procurement of COVID-19 test kits during the pandemic.

The four were dismissed from the service and perpetually disqualified for reemployment in the government service.     

In its March 31 decision junking the former officials’ petitions that sought the reversal of the Ombudsman’s ruling, the CA said the four allowed the emergency procurement process for the test kits “to be marred by irregularity and undue accommodation.”

This, it said, “diminished public faith in the government’s capacity to act honorably in a time of national crisis.”

“By their actions, they reduced the safeguards of the procurement process into hollow forms and contributed to the institutional failure of the PS-DBM in transactions of immense public consequence,” the CA said.

“What renders their conduct all the more reprehensible is the context in which it occurred. These acts were committed during a state of calamity, at a time when the government was expected to act with the highest degree of fidelity in securing critical medical supplies for the Filipino people,” it added.

Case details

On June 2, 2022, and October 10, 2022, then-senator Richard Gordon and Senator Risa Hontiveros wrote the Ombudsman to refer for investigation the partial Senate blue ribbon committee report on some of the panel’s findings from its hearings on the use of public funds in the government’s COVID-19 response. 

The committee report had noted the preferential treatment of DBM-PS under Lao for Pharmally despite red flags, such as its measly capitalization, business experience, and capacity to discharge multibillion-peso contracts. (LIST: Everything you need to know about the Pharmally pandemic deals scandal)

The four officials had questioned the administrative proceedings against them before the CA, saying that such were not properly initiated. They said that the letters sent by Gordon and Hontiveros to the Ombudsman did not comply with the requirements of an administrative complaint under the Rules of Procedure of the Office of the Ombudsman.

They had also argued that their administrative liability was not established by substantial evidence and that the Ombudsman had erred in deeming them administratively liable for grave misconduct, gross neglect of duty, serious dishonesty, and conduct prejudicial to the best interest in connection with the Pharmally case.

In its March 31 ruling, the CA said that Gordon’s and Hontiveros’ letters were not meant to serve as formal complaints.

“They were not intended to perform that function, and the rules did not require them to do so. It was enough that, as requests for assistance, they validly placed the matter before the Ombudsman and supplied a sufficient basis for official action,” the court said. – Rappler.com