Republic of the Philippines
SUPREME COURT
Manila

EN BANC

 

G.R. No. 131077 August 7, 1998

LEONISA E. SUAREZ, petitioner,
vs.
COMMISSION ON AUDIT, respondent.

 

PANGANIBAN, J.:

A public officer cannot be held responsible for unauthorized increases in public expenditures or for high cost estimates in public biddings without proof of his or her participation therein. An administrative decision holding such public officer liable, without any evidence at all to back it up, is void for being rendered with grave abuse of discretion amounting to lack of jurisdiction.

The Case

Before us is a petition for certiorari seeking the reversal of the Decision 1 dated January 18, 1996 and the Resolution 2 dated September 9, 1997, promulgated by the Commission on Audit in COA Decision No. 96-021 and 97-506, respectively.

The assailed Decision disposed as follows: 3

PREMISES CONSIDERED, the instant appeal must be as it is hereby denied for lack of merit and the herein disallowance of the Auditor is hereby affirmed.

Petitioner's Motion for Reconsideration was denied by Respondent Commission in its September 9, 1997 Resolution: 4

Accordingly, there being no new and material evidence adduced as would warrant reversal of the decision sought to be reconsidered, COA Decision No. 96-021 is hereby affirmed. However, the appeal of Messrs. Cayo E. Villanueva and Alfredo B. Adorable for exclusion from those persons found liable under the subject disallowance may now be given due course.

The Antecedent Facts

In his Comment, the solicitor general relates these undisputed facrs: 5

On June 19, 1990, the Prequalification, Bids and Awards Committee (PBAC) of the Export Processing Zone Authority (EPZA) conducted a public bidding for the supply and installation of an Electrical Distribution System, Phases I and II, Stage II in the Cavite Export Processing Zone (CEPZ).

The PBAC was composed of the following officials of EPZA, namely:

1. Tomas I. Alcantara Chairman

2. Ernesto Arrobio Vice-Chairman

3. Dante Quindoza Member

4. Sonia Valdeavilla Member

5. Floro Roco Member

6. Leonisa E. Suarez Member

(Petitioner herein)

(p. 123, Records)

Of the three (3) prospective bidders: Andrada Construction, Power Electric Co., Inc. (PELCO Inc.) and Prime Index, Inc., only two (2) participated in the aforesaid public bidding by submitting their respective bids, as follows:

1. PELCO, Inc. P2,966,155.00

2. Prime Index Phil. Inc. P3,425,096.00

(p. 123, Records)

The third bidder Andrada Construction did not submit any bid but submitted instead a letter of regret.

After evaluating the aforementioned bids, PBAC, in a Memorandum dated July 9, 1990, declared PELCO Inc. as the lowest complying bidder and thus recommended that the project be awarded to said PELCO Inc. (p. 128, Records).

The above recommendation by PBAC was based on the Approved Agency Estimate (AAE) of the project in the amount of P2,860,156.72 (p. 126, Records) and the Allowable Government Estimate (AGE) in the amount of P3,027,891.19 (p. 123, Records).

The AAE was, in turn, based on the Program of Work (POW) which indicates the amount of P2,306,578.00 as direct cost of the project (pp. 124-125, Records).

On August 2, 1990, the contract involving the bidded project was executed between EPZA, through its Administrator Romeo J. Farolan, and PELCO Inc. through the latter's President and General Manager Dionisio S. Barroga.

On November 28, 1990, the parties to the above contract executed a supplemental agreement for additional works costing P2,663,394.01.

Thereafter, the main contract and the supplemental agreement were submitted for review and evaluation by the Technical Services Office (TSO) of public respondent COA.

In an "Indorsement" dated April 3, 1991, Director Arturo D. Dadufalsa of the TSO furnished the COA resident Auditor in EPZA with the Contract Review Report and the Supplemental Agreement Review Report issued by the Technical Audit Specialist of the TSO (p. 34, Records)

The aforesaid reports show that the main contract and the supplemental agreement were above COA TSO estimates by as much as 31.55% and 34.53%, respectively, due to the "higher cost of Transformers and wrong application of the Value Added Tax (VAT)" in the Approved Agency Estimate (AAE).

Accordingly, the COA resident [a]uditor disallowed the amount of P792,034.14 an the main contract and the amount of P683,687.45 on the supplemental agreement or an aggregate amount of P1,179,719.59 for the two contracts.

Thereafter, notices of disallowance were issued to the following persons who were determined to have been jointly and severally liable for the amounts disallowed, viz:

1. Jorge G. Basalo

Assistant Division Chief

Engineering Department

2. Engr. Antonio M. Pulido

Chief, Construction Division

Engineering Department

3. Engr. Carlos Tangwangco

Chief, Power and Communications Division

Engineering Department

4. Engr. Ralph L. Miñoza

Manager, Engineering Department

5. Ms. Leonisa E. Suarez (herein petitioner)

Chief, Environmental Safety Division

6. Engr. Ponciano O. Ramel

Deputy Administrator

Infrastructure Services

7. Mr. Mariano T. Laxa

Manager, Financial Services Department

8. Cayo Villanueva

Deputy Administrator

Support Services

9. Alfredo B. Adorable

Manager, Internal Audit office

10. Power Electrical Co., Inc. (PELCO Inc.)

Contractor

(pp. 39-59, Records)

Except for PELCO Inc., all the aforenamed EPZA officials jointly moved for the reconsideration of the disallowance in question but the same was denied in a Memorandum dated April 14, 1994 issued by COA Corporate Auditor Flora C. Feliciano (pp. 113-115, Records).

Dissatisfied therewith, the concerned EPZA officials, including herein petitioner, appealed to public respondent COA on June 9, 1994.

However, in a Decision dated January 15, 1996, public respondent COA denied the appeal.

On February 26, 1996, appellants, including herein petitioner, filed a Motion for Reconsideration of the aforementioned Decision.

On March 16, petitioner, together with her co-appellants Cayo E. Villanueva and Alfredo Adorable, filed an "Appeal for Exclusion from [L]iability."

On September 9, 1997, public respondent COA rendered a Resolution (COA Decision No. 97-506) denying appellants' Motion for Reconsideration, but declared that "the appeal of Messrs. Cayo E. Villanueva and Alfredo B. Adorable for exclusion from those persons found liable under the subject disallowance may now be given due course." (Annex A, p. 3, Petition)

Ruling of the Commission on Audit

Respondent COA denied petitioner's appeal, ruling as follows:

This Commission finds the instant request devoid of merit. It must be pointed out that by using the price of only one brand while specifying three (3), brands, PEZA had not exercised prudence in the preparation of the AAE. There was no canvass made on the other brands specified, i.e., G.E and Westinghouse. By using the price of the Philec brand which is higher, in the preparation of AAE, the AGE necessarily increased, giving advantage to the bidder carrying/specifying such brand, thus resulting in a situation disadvantageous to the government.

Anent the allegation of non-observance of due process in the issuance of the said disallowance, the same deserves scant consideration. Upon learning that the COA-TSO source of prices was the Northwest Electrical Supply, appellants could have asked for verification, made comparison and could have raised the issue in their appeal.

As regards the allegation that COA officials themselves are to be blamed for acting without dispatch, it is worthy to note that the pre-audit of the financial transactions of national government agencies and government-owned and/or controlled corporations had been lifted as early as 1989. Thus, the review of subject contract was done as part of the post-audit.

With reference to the appeal for exclusion from liability filed by Messrs. Cayo E. Villanueva, Deputy Administrator for Support Services, Alfredo B. Adorable, Manager, Internal Audit Office and Leonisa E. Suarez, Chief Environmental Safety Division, suffice it to state that the involvement of Messrs. Villanueva and Adorable in the project has no bearing or relevance on the preparation of the AAE, which was the ground for the disallowance, as this was actually prepared by the EPZA Engineering Department Technical Staff. Thus, they cannot be held liable for the disallowance. However, this Commission finds no sufficient basis to exclude Ms. Leonisa E. Suarez who is a member of the PBAC, from those answerable for the disallowance, as she had not shown good faith and diligence in performing properly her functions as such member. 6

Hence, this petition. 7 In his Comment dated February 24, 1998, the solicitor general disagreed with the assailed judgments of respondent and prayed that the petition be given due course. Accordingly, the Court, in its Resolution dated April 21, 1998, required respondent to file its own comment. In a sudden change of heart, respondent manifested that it was "adopting in full" the aforementioned Comment. 8 Thus, the Court dispensed with the submission of memoranda and resolved to decide the petition on the basis of the pleadings already filed.

Assignment of Errors

In her petition, 9 Suarez submits the following issues and assignment of errors:

A. Whether the public respondent committed grave abuse of discretion and erred in holding the petitioner as among those liable for the disallowances despite the fact that she had no participation at all in the preparation and approval of the POW and AAE used as basis of the public bidding last June 19, 1990 for the supply and installation of electrical distribution system at the Cavite Export Processing Zone, EPZA.

B. Whether the public respondent committed grave abuse of discretion and erred in holding the petitioner as among those liable for the disallowances despite the absence of substantial evidence that she acted with bad faith, malice or gross negligence in connection with the subject public bidding, in her capacity as member of the EPZA PBAC.

C. Whether the public respondent committed grave abuse of discretion and erred in holding petitioner liable despite the fact that EPZA did not suffer damage or injury from the transaction.

D. Whether the public respondent committed grave abuse of discretion in holding only the petitioner liable out of the total composition of the EPZA PBAC, thereby denying her the equal protection of the laws.

The solicitor general, in his Comment, 10 summarized the main issue thus:

. . . [W]hether or not public respondent COA committed grave abuse of discretion in affirming the Decision of the COA Resident Auditor holding petitioner jointly and severally liable, with the other EPZA officials, for the disallowance in question.

The Court Ruling

The petition is clearly meritorious. Even Respondent COA conceded this when it adopted, as its own, the solicitor general's Comment urging this Court to grant due course to the petition. In fact, the Court is thoroughly surprised why, in the first place, the COA held petitioner liable; and, in the second, why it did not amend its assailed Decision upon realizing its mistake.

Liability Based on Participation

Presidential Decree 1445, "Ordaining and Instituting a Government Auditing Code of the Philippines," provides:

Sec. 103. General liability for unlawful expenditures. Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. (Emphasis supplied.)

More specifically, Section 19 of the Manual of Certificate of Settlement and Balances states:

19.1 The liability of public officers and other persons for audit disallowances shall be determined on the basis of: (a) the nature of the disallowance; (b) the duties, responsibilities or obligations of the officers/persons concerned; (c) the extent of their participation or involvement in the disallowed transaction; and (d) the amount of losses or damages suffered by the government thereby. The following are illustrative examples:

xxx xxx xxx

19.1.3 Public officers who approve or authorize transactions involving the expenditure of government funds and uses of government properties shall be liable for all losses arising out of their negligence or failure to exercise the diligence of a good father of a family.

xxx xxx xxx

19.2 The liability for audit charges shall be measured by the individual participation or involvement of persons in the charged transaction; i.e. public officers whose duties require the appraisal/assessment/collection of government revenues and receipts shall be liable for under-appraisal, under-assessment, and under-collection thereof.

On the basis of the foregoing, there is absolutely no basis for petitioner's liability for the disauthorized sum.

Respondent COA disallowed the amount in question, because the actual costs of the principal and the supplemental contracts were 31.55 percent and 34.53 percent higher than the COA-TSO estimates. The discrepancy, in turn, arose from the high cost of transformers and the wrong computation of the value-added tax appearing in the approved agency estimate (AAE).

The AAE was based on the program of work (POW), which was prepared and approved by the following officials of the EPZA engineering department: Jorge Basalo, assistant division chief; Antonio M. Pulido, chief of the construction division; and Ismael Itaas. Petitioner had no part in the preparation of the POW.

The AAE, on the other hand, was prepared and approved by two EPZA; officials: Ponciano O. Ramel, deputy administrator for infrastructure services; and Pablo V. Malixi, EPZA officer in charge. Petitioner had no part in the preparation of the AAE, either.

In fact, petitioner's participation in the transaction was limited to her membership in the PBAC that conducted the bidding, evaluated the bids and recommended the award of the contract to the lowest complying bidder. 11 COA found no irregularity in the conduct of said public bidding or in the award of the contract. It must be stressed further that it disallowed the amount in question, not because of any problem in the conduct of the public bidding, but because of the erroneous preparation of the AAE.

Clearly, petitioner's participation in the PBAC does not render her liable for the disallowed amounts. As the solicitor general correctly argued, petitioner had nothing to do with the preparation and the computation of the AAE and, thus, should not have been held liable for the amounts disauthorized during the post-audit.

Administrative Due Process

It also appears that said Decision and Resolution of Respondent COA contravene the principles of administrative due process. Admittedly, she was accorded an opportunity to present her side, because COA heard her on appeal. 12 But due process requires more than giving a person the right to be heard. In a landmark Decision, 13 the Court enumerated the following principles governing administrative due process:

1. The right to a hearing, which included the right to present one's case and submit evidence in support thereof;

2. The tribunal must consider the evidence presented;

3. The decision must have something to support itself;

4. The evidence must be substantial;

5. The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected;

6. The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy and not simply accept the view of a subordinate in arriving at a decision; and

7. The board or body should in all controversial questions, render its decision in such a manner that the parties to the proceeding can know the various issues involved and the reason for the decision rendered.

In this case, the assailed COA Decision did not contain substantial evidence showing petitioner's responsibility for the disallowance. Substantial evidence means "such reasonable evidence as a reasonable mind might accept as adequate to support a conclusion." 14 COA anchored the disallowance and the liability of petitioner on the following: the failure to canvass other brands of the material purchased and the submission and the approval of an erroneous AAE. Nonetheless, the assailed Decision did not show that petitioner was directly responsible for these proven acts.

In fact, because Villanueva and Adorable were not responsible for these acts, COA exonerated them, viz.:

. . . [T]he involvement of Messrs. Villanueva and Adorable in the project has no bearing or relevance on the preparation of the AAE, which was the around for the disallowance, as this was actually prepared by the EPZA Engineering Department Technical Staff. Thus, they cannot be held liable for the disallowance. (Emphasis supplied.)

The Court wonders why the same principle was not applied to petitioner who was similarly situated. As observed by the solicitor general, the only member of the PBAC who was held liable for the amounts disallowed was petitioner not the chairman, the vice chairman, or any of the three other members.

Presumption of Regular Performance of Duty

In holding petitioner liable for having failed to show good faith and diligence in properly performing her functions as a member of the PBAC, Respondent COA misconstrued Sec. 29.2 15 of the Revised CSB Manual. The aforesaid section requires a clear showing of bad faith, malice or gross negligence before a public officer may be held civilly liable for acts done in the performance of his or her official duties. The same principle is reiterated in Book I, Chapter 9, Section 38 of the 1987 Administrative Code. 16 A public officer is presumed to have acted in the regular performance of his/her duty; therefore, he/she cannot be held civilly liable, unless contrary evidence is presented to overcome the presumption. There is no such evidence in this case. From the foregoing, it is as clear as day that Respondent COA committed grave abuse of discretion in including petitioner among those liable for the subject disallowance.

WHEREFORE, the assailed Decision and Resolution are hereby REVERSED AND SET ASIDE, insofar as they refer to petitioner who is EXONERATED from liability.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Martinez, Quisumbing and Purisima, JJ., concur.

Footnotes

1 Signed by Chairman Celso D. Gañgan and Comms. Sofronio B. Ursal and Rogelio B. Espiritu; rollo, pp. 19-20.

2 Comm. Raul C. Flores replaced Comm. Espiritu; rollo, pp. 16-18.

3 Rollo, p. 20.

4 COA Resolution, p. 2; rollo, p. 18.

5 Comment, pp. 1-5; rollo, pp. 72-77.

6 Rollo, pp. 16-17.

7 This case was deemed submitted for resolution on June 30, 1998, when the Court issued its Resolution giving due course to the petition without need of memoranda from the parties.

8 Rollo, p. 94. COA's Manifestation with Motion was signed by General Counsel Raquel R. Habitan and Atty. V Carmina Paulita B. Juguilon.

9 Petition, pp. 6-7; rollo, pp. 7-8.

10 Comment, p 6; rollo, p. 77. This was signed by Solicitor General Romeo C. De la Cruz, Asst. Solicitor General Aurora P. Cortes and Solicitor Ronald B. De Luna.

11 Petition, p. 9; rollo, p. 11.

12 Assistant Executive Secretary for Legal Affairs of the Office of the President v. Court of Appeals, 169 SCRA 27, 33, January 9, 1989, per Melencio-Herrera, J.

13 Ang Tibay v. Court of Industrial Relations, 69 Phil. 635, 642-644 [1940]; see also Fabella v. Court of Appeals, GR No. 110379, November 28, 1997, p. 11.

14 Sec. 38. Liability of Superior Officers. (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence.

xxx xxx xxx

15 29.2 Liability of Superior Officers. A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence.

16 Sec. 38. Liability of Superior Officers. (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence.

xxx xxx xxx

Sec. 39. Liability of Subordinate Officers. No subordinate officer or employee shall be civilly liable for acts done by him in good faith in the performance of his duties. However, he shall be liable for willful or negligent acts done by him which are contrary to law, morals, public policy and good customs even if he acted under orders or instructions of his superiors.


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