Eleven out of 15 government contracts awarded by the Davao City local government to a firm linked to Vice President Sara Duterte did not undergo competitive public bidding but were processed through negotiated small-value procurement, a witness told the Senate impeachment court Monday.

The 11 contracts had a combined value of roughly P7 to P8 million and formed part of the P34.2 million bagged by Gencorp Industries Inc. from the LGU from 21 July 2022 to 23 June this year, overlapping with Duterte’s tenure as VP. 

Duterte identified herself as an incorporator and stockholder of Gencorp, based on her past Statement of Assets, Liabilities and Net Worth (SALNs), though Securities and Exchange Commission records do not list her as one. 

According to Philippine Government Electronic Procurement System (PhilGEPS) Division Chief Rendell Sopeña, the P34.2 million represents the 15 contracts. Of the total, only four underwent competitive bidding. 

“I remember correctly, 11 did not undergo public bidding...[but] through negotiated small value procurement,” he said in response to a question posed by Senator-judge Risa Hontiveros.

Negotiated small-value procurement is one of the alternative modes under the procurement law, although competitive bidding is the default mode for government transactions.

Sopeña said the costs of the 11 contracts are as follows: P501,600, P414,000, P249,000, P49,800, P498,000, P805,500, P381,000, P508,000, P381,000, P254,000, P554,000.

The P34.2 million represents the largest share of the about P36 million in contracts awarded to Gencorp by several government offices in Davao, Duterte’s political bailiwick. 

PhilHealth-Davao accounted for most contracts, with 33 contracts totaling P1.33 million. OWWA-Davao awarded P330,000 to Gencorp, while the largest share came from the Davao LGU at P34.2 million.

Several senior judges questioned the lack of PhilGEPS safeguard measures to ensure that contracting parties are not bypassed by those who hold public office, but Sopeña countered that PhilGEPS is merely a repository of procurement data and is not empowered to conduct independent verification. 

PhilGEPS relies solely on bidders’ declarations, though upgraded digital platforms will soon feature automated red-flagging and owner-tracing tools.

Senator-judge Raffy Tulfo pressed Sopeña on why Gencorp was not flagged for conflict of interest.

“The fact remains that the vice president is part owner of Gencorp and under Article VII, Section 13, the vice president should not own or participate in any business or company, for that matter,” he argued.

In the same vein, Senator-judge Joel Villanueva raised concerns that, without precautionary measures, such as active verification mechanisms, the government can be bypassed when public officials with direct or indirect conflicts of interest join bidding processes and win government contracts. 

Meanwhile, Senator-judge Imee Marcos asked Sopeña whether procurement records from the PhilGEPS could establish Duterte’s role in the Gencorp at the time of the transactions. 

Sopeña replied that PhilGEPS records reflect no such information and that corporate records would be needed to determine her status during the period in question.

Marcos then pressed Sopeña on whether he had personal knowledge of Duterte’s participation in preparing or submitting Gencorp’s bids or negotiating its contracts to PhilGEPS, and whether the VP received any portion of the contract value. The PhilGEPS official denied any. 

Sopeña was one of the prosecution's witnesses in Article II of the Articles of Impeachment, which accuses the VP of acquiring unexplained wealth.

The prosecution has accused Duterte of deliberately misrepresenting entries in her SALNs to conceal unexplained wealth and non-compliance with the mandatory divestment of business interests. 

The Constitution bars the President, Vice President, Cabinet members, among others, from directly or indirectly participating in any business or holding a financial interest in any government contract during their term. 

Lead prosecutor Gerville Luistro pointed out that Davao City Mayor Baste Duterte, the VP’s younger brother, was the official responsible for approving the LGU’s dealings with Gencrop, as the head of the procuring entity. 

The younger Duterte is expected to testify at the Senate impeachment court tomorrow, Tuesday, after being subpoenaed.