845 Phil. 982
GESMUNDO, J.:
II. Special Uniform/Field UniformThen SBMA Administrator and CEO Armand C. Arreza approved the recommendations and a Uniform Committee was constituted. Thereafter, the different department heads of SBMA solicited price quotations for special and field uniforms from SBMA's accredited suppliers. The said department heads then conducted negotiations and contracts for the special and field uniforms, which were awarded to the supplier with the lowest quotation and who met their specification requirements. It was the Uniform Committee that provided for the pro-forma contracts and process flowchart for the acquisition of the said uniforms. After the delivery and acceptance of the uniforms, the winning contractors were paid out of the trust fund created for the uniforms.
Special Uniform refers to the uniform of employees performing special task, e.g. Nurses, medical technologies, law enforcers, [firefighters]. On the other hand, Field uniform refers to those worn by our ground and maintenance staff, and members of the green brigade.
After a series of meetings conducted by the Uniform Committee, it was agreed that departments/officer[s] with special or field uniforms will be allowed to procure their uniforms on their own following a set of guidelines or procedures, in the flowchart form, hereto attached as Annex A. For uniformity purposes, each department with special or field uniform will also be provided with a template contract.
To avoid a repeat of the problems that occurred in CY 2007, no uniform allowances shall be released to the department managers. The budget allocated for CY 2009 uniform shall, with the approval of the Administrator, be placed in a Trust Fund. Payment to the supplier will only be made upon delivery and acceptance of uniforms. Likewise, unlike in CY 2007, only department managers will be allowed to engage the services of, and execute agreements with [bona fide] suppliers.
III. Thus, in view of the foregoing, may we request for the Administrator's approval:
- To authorize, on exclusive basis, all managers of departments with special field uniforms, to handle and to be on top of the procurement of uniforms for their respective offices. This shall include the signing of contract.
- To authorize the transfer of the budgeted funds for the uniform for CY 2009, to a Trust Fund Account. Payment will be made directly to the suppliers after the special and field uniforms are delivered, certified completed and accepted in 2010 by the end-user's Department Head.[6] (emphases supplied)
Thus, the following SBMA officers and department heads, and suppliers were held liable under the ND:Absence of the above requirements/documents constituted irregular transactions as defined under COA Circular No. 85-55A and Section 162 of GAAM Volume I. Pursuant to Section 10 of COA Circular No. 2009-006 dated September 15, 2009, irregular disbursement may be disallowed in audit.[8]
- The uniform requirements of the departments were not included in the 2010 and 2011 Annual Procurement Plans (APP).
- Management failed to post the procurement and the results of bidding and related information in the PhilGEPs bulletin board.
- The procurement process in each department was not conducted by a duly created Bids and Awards Committee.
- Uniforms were procured through negotiated procurement without adhering to the set criteria, terms and conditions for the use of Alternative Methods of Procurement.
Aggrieved, SBMA and its officers, collectively referred as petitioners, filed an appeal before the COA-Region III.
Name Position/Designation Nature of Participation in the Transaction Ms. Lolita S. Mallari Manager, HRM Department Certified that expense/charges to budget were necessary, lawful and incurred under her direct supervision. Executed contract with supplier in the amount of P100,332.00. Capt. Dante A. Romano Manager, Construction and Maintenance Department Executed contract with supplier in the amount of P1,215,543.00 Gen. Orlando M. Maddela[,] Jr. Manager, Law Enforcement Department Executed contract with supplier in the amount of P435,032.00 Mr. Perfecto C. Pascual Manager, Seaport Department Executed contract with supplier in the amount of P140,580.99 Mr. Zharrex R. Santos OIC-Manager, Airport Department Executed contract with supplier in the amount of P71,736.00 Mr. Ranny D. Magno Manager, Fire Department Executed contract with supplier in the amount of P427,000.00 Ms. Armila Llamas Manager, Public Relations Department Executed contract with supplier in the amount of P30,380.00 Ms. Paulita R. Yee OIC-DA for Finance Approved the obligation of the expenditures/approved the release of payment Mr. Armand C. Arreza Administrator Approved payment Mr. Gregg M. Macatuno General Manager, Baxley Tailor Shop Received payment in the amount of P862.032.00 Mr. Gregorio V. Daya General Manager, Commercio Enterprise Received payment in the amount of P1,427,859.99 Mr. Rolando D. Mangente Representative, Topnotch Apparel Corp. Received payment in the amount of P100,332.00 Essential Tailor Shop Supplier Received payment in the amount of P30,380.00[9]
WHEREFORE, the foregoing premises considered, instant appeal is hereby DENIED. Accordingly, Special Audit Notice of Disallowance (ND) No. 2012-001-(2011) COA Regional Office No. 2011-133 dated March 26, 2012, disallowing P2,420,603.99 is hereby AFFIRMED.[10]Undaunted, petitioners filed a petition for review before the COA.
WHEREFORE, premises considered, the petition for review of former Administrator Armand C. Arreza, et al., Subic Bay Metropolitan Authority, Subic [Bay] Freeport Zone, Zambales, is hereby DISMISSED for having been filed out of time. Accordingly, COA RO3 Decision No. 2014-28 dated April 7, 2014, affirming Special Audit Notice of Disallowance No. 2012-001-(2011), Commission on Audit Regional Office No. 2011-133 dated March 26, 2012, in the amount of P2,420,603.99, is FINAL AND EXECUTORY.[11]Petitioners filed a motion for reconsideration but it was dismissed by the COA in its resolution dated December 21, 2016.
Petitioners argue that the 180-day period to file the petition for review before the COA fell on May 31, 2014, a Saturday, hence, it timely filed the petition on the next working day or June 2, 2014; that COA did not even consider the weekends in its computation of time; that on the substantial aspect, their petition has merit; and that they properly complied with the alternative method of procurement because it was approved by the head of the procuring authority and the procurement of the uniforms was justified by the conditions provided by R.A. No. 9184 to promote economy and efficiency.I.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT WHIMSICALLY AND CAPRISCIOUSLY SACRIFICED SUBSTANTIVE JUSTICE IN FAVOR OF PROCEDURAL TECHNICALITIES WITH ITS DISMISSAL OF PETITIONERS['] PETITION FOR REVIEW WITHOUT CONSIDERING AT ALL WHETHER OR NOT PETITIONER[S'] ARGUMENTS DESERVE FULL CONSIDERATION ON THE MERITS.II.
IN THE INTEREST OF SUBSTANTIVE JUSTICE, PETITIONERS' PETITION FOR REVIEW SHOULD HAVE BEEN [ACCEPTED] BY RESPONDENT COA CONSIDERING THAT THE ERRORS OF ITS RESIDENT AUDITORS ARE EVIDENT ON ITS FACE AND MORE SO AFTER AN EXAMINATION OF THE DOCUMENTS ON RECORD.III.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN REQUIRING THE SUBJECT TRANSACTION TO FULLY COMPLY WITH R.A. 9184 WHEN THE FUNDS USED TO PROCURE THE UNIFORMS WERE PURELY PRIVATE FUNDS, SINCE THESE CONSTITUTED THE UNIFORM ALLOWANCES OF EACH OF THE SBMA'S
FIELD EMPLOYEES.IV.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN WILLFULLY IGNORING THAT NOT ONLY WAS THE [SUBJECT] TRANSACTION ENTERED INTO IN UTMOST GOOD FAITH, BUT THAT IT WAS PURSUED FOR THE PERSONAL BENEFIT OF SBMA'S EMPLOYEES SO THAT THEY COULD GET THE BEST QUALITY AND VALUE FROM THEIR UNIFORM ALLOWANCE.[12]
SECTION 48. Appeal from decision of auditors. — Any person aggrieved by the decision of an auditor of any government agency in the settlement of an account or claim may within six months from receipt of a copy of the decision appeal in writing to the Commission. (emphasis supplied)In this case, petitioners explained that they received the ND on April 9, 2012 and they had 180 days to appeal. Then, on August 31, 2012, they filed an appeal before the COA-Region III. On April 23, 2014, petitioner received the decision of the COA-Region III denying their appeal, thus, they still had 38 days, or until May 31, 2014, to file a petition for review before the COA. As May 31, 2014 fell on a Saturday, petitioners filed their petition on the next working day, or on June 2, 2014. Thus, petitioners claim that their petition before the COA was filed on time.
SECTION 48. Alternative Methods. — Subject to the prior approval of the Head of the Procuring Entity or his duly authorized representative, and whenever justified by the conditions provided in this Act, the Procuring Entity may, in order to promote economy and efficiency, resort to any of the following alternative methods of Procurement:In this case, petitioners admit that they did not conduct public bidding to procure the uniforms of their employees. However, they argue that they properly used the alternative modes of procurement to obtain the uniforms with the most advantageous price for the government through negotiation with accredited SBMA suppliers subject to the control measures provided for by the uniform committee. They further assert that they negotiated with the accredited SBMA suppliers to obtain the uniforms with the most advantageous price for the government.
(a) Limited Source Bidding, otherwise known as Selective Bidding — a method of Procurement that involves direct invitation to bid by the Procuring Entity from a set of pre-selected suppliers or consultants with known experience and proven capability relative to the requirements of a particular contract;
(b) Direct Contracting, otherwise known as Single Source Procurement — a method of Procurement that does not require elaborate Bidding Documents because the supplier is simply asked to submit a price quotation or a pro-forma voice together with the conditions of sale, which offer may be accepted immediately or after some negotiations;
(c) Repeat Order — a method of Procurement that involves a direct Procurement of Goods from the previous winning bidder, whenever there is a need to replenish Goods procured under a contract previously awarded through Competitive Bidding;
(d) Shopping — a method of Procurement whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf Goods or ordinary/regular equipment to be procured directly from suppliers of known qualification; or
(e) Negotiated Procurement — a method of Procurement that may be resorted under the extraordinary circumstances provided for in Section 53 of this Act and other instances that shall be specified in the IRR, whereby the Procuring Entity directly negotiates a contract with a technically, legally and
financially capable supplier, contractor or consultant.
In all instances, the Procuring Entity shall ensure that the most advantageous price for the government is obtained.[21]
SECTION 53. Negotiated Procurement.The Court finds that petitioners failed to comply with the requisites of a negotiated procurement under the above-cited rules. As properly discussed by the COA, petitioners failed to prove that the existence of the circumstances under Section 53(b), IRR of R.A. No. 9184 are present to justify the negotiated procurement of specialized and field uniforms of SBMA employees.[24] Indeed, petitioners did not establish that (1) there is imminent danger to life or property during a state of calamity; or (2) or that time is of the essence arising from natural or man-made calamities; or (3) other causes, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.[25] Verily, there is no existing calamity or other cause where immediate action is necessary. Petitioners simply undertook the procurement of the uniforms because they were unsatisfied with the products of the previous supplier.
Negotiated Procurement is a method of procurement of goods, infrastructure projects and consulting services, whereby the procuring entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant only in the following cases:
x x x x
(b) In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities. In the case of infrastructure projects, the procuring entity has the option to undertake the project through negotiated procurement or by administration or, in high security risk areas, through the AFP;
(c) Take-over of contracts, which have been rescinded or terminated for causes provided for in the contract and existing laws, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities;
x x x x
SECTION 54. Terms and Conditions for the Use of Alternative Methods. —
x x x x
d) For item (b) of Section 53 of the Act and this IRR-A, the negotiation shall be made with a previous supplier, contractor or consultant of good standing of the procuring entity concerned, or a supplier, contractor or consultant of good standing situated within the vicinity where the calamity or emergency occurred. The award of contract shall be posted at the G-EPS website, website of the procuring entity, if any, and in conspicuous place within the premises of the procuring entity.
e) For item (c) of Section 53 of the Act and this IRR-A, the contract may be negotiated starting with the second lowest calculated bidder for the project under consideration at the bidder's original bid price. If negotiation fails, then negotiation shall be done with the third lowest calculated bidder at his original price. If the negotiation fails again, a short list of at least three (3) eligible contractors shall be invited to submit their bids, and negotiation shall be made starting with the lowest bidder. Authority to negotiate contracts for projects under these exceptional cases shall be subject to prior approval by the heads of the procuring entities concerned, within their respective limits of approving authority.[23]
SECTION 48. Uniform or Clothing Allowance. — The appropriations provided for each department, bureau, office or agency may be used for uniform or clothing allowance of employees at not more than Four Thousand Pesos (P4,000.00) each per annum which may be given in cash or in kind, subject to the rules and regulations prescribed under Budget Circular Nos. 2003-8 and 2003-8A. In case of deficiency, or in the absence of appropriation for the purpose, the requirements may be charged against savings in the appropriations of agencies. (emphasis supplied)Accordingly, the appropriation for the uniform allowance of the SBMA employees is provided for by the SBMA. Further, the alleged trust fund for the uniform allowance is not owned or controlled by SBMA employees. The latter have no power to decide on how to spend the said uniform allowance; instead, only the department heads of the SBMA have the discretion to utilize it. The employees do not have beneficial ownership over the uniform allowance; they are merely the end-users. Manifestly, as long as the appropriation for the uniform allowance stays in the coffers of SBMA and was not disbursed to its employees, it remains as public fund.
Assuming that petitioner Joson III committed a mistake in not ensuring that the eligibility documents were attached to the contract, it is settled that mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. In this case, there is no showing that petitioner Joson III was motivated by malice or gross negligence amounting to bad faith in failing to ensure that the eligibility documents of A.V.T. Construction were not attached to the contract. In fact, there was even no evidence that petitioner was aware that A.V.T. Construction was ineligible due to the absence of the pre-qualification or eligibility checklist using the "pass/fail" criteria, the NFCC and the Technical eligibility documents. Good faith is always presumed. Here, the COA failed to overcome the presumption of good faith.[33] (emphases supplied)Recently, in Development Bank of the Philippines v. Commission on Audit[34] (DBP v. COA), the Court discussed the different rulings regarding the appreciation of the defense of good faith with respect to notices of disallowance, to wit:
In Zamboanga City Water District v. COA, the Court held that approving officers could be absolved from refunding the disallowed amount if there was a showing of good faith, to wit:Hence, in DBP v. COA, the Court ruled that good faith may be appreciated in favor of the responsible officers under the ND provided they comply with the following requisites: (1) that they acted in good faith believing that they could disburse the disallowed amounts based on the provisions of the law; and (2) that they lacked knowledge of facts or circumstances which would render the disbursements illegal, such when there is no similar ruling by this Court prohibiting a particular disbursement or when there is no clear and unequivocal law or administrative order barring the same.[36]Further, a thorough [reading] of Mendoza and the cases cited therein would lead to the conclusion that ZCWD officers who approved the increase of GM Bucoy's are also not obliged either to refund the same. In de Jesus v. Commission on Audit, the Court absolved the petitioner therein from refunding the disallowed amount on the basis of good faith, pursuant to de Jesus and the Interim Board of Directors, Catbalogan Water District v. Commission on Audit. In the latter case, the Court absolved the Board of Directors from refunding the allowances they received because at the time they were disbursed, no ruling from the Court prohibiting the same had been made. Applying the ruling in Blaquera v. Alcala (Blaquera), the Court reasoned that the Board of Directors need not make a refund on the basis of good faith, because they had no knowledge that the payment was without a legal basis.In Mendoza v. COA, the Court held that the lack of a similar ruling disallowing a certain expenditure is a basis of good faith. At the time that the disallowed disbursement was made, there was yet to be a jurisprudence or ruling that the benefits which may be received by members of the commission were limited to those enumerated under the law.
In Blaquera, the Court did not require government officials who approved the disallowed disbursements to refund the same on the basis of good faith, to wit:Untenable is petitioners' contention that the herein respondents be held personally liable for the refund in question. Absent a showing of bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties.A careful reading of the above-cited jurisprudence shows that even approving officers may be excused from being personally liable to refund the amounts disallowed in a COA audit, provided that they had acted in good faith. Moreover, lack of knowledge of a similar ruling by this Court prohibiting a particular disbursement is a badge of good faith. (citations and emphases omitted)
Every public official is entitled to the presumption of good faith in the discharge of official duties. Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the performance of official duties.
x x x x
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.
By the same token, in SSS v. COA, the Court pronounced that good faith may be appreciated because the approving officers did not have knowledge of any circumstance or information which would render the disallowed expenditure illegal or unconscientious. The Board members therein could also not be deemed grossly negligent as they believed they could disburse the said amounts on the basis of the provisions of the R. A. No. 8282 to create their own budget.
On the other hand, in Silang v. COA, the Court ordered the approving officers to refund the disbursed CNA incentives because they were found to be in bad faith as the disallowed incentives were negotiated by the collective bargaining representative in spite of non-accreditation with the CSC.
In MWSS v. COA, the Court affirmed the disallowance of the grant of mid-year financial, bigay-pala bonus, productivity bonus and year-end financial assistance to MWSS officials and employees. It also ruled therein that the MWSS Board members did not act in good faith and may be held liable for refund because they approved the said benefits even though these patently contravened R.A. No. 6758, which clearly and unequivocally stated that governing boards of the GOCCs can no longer fix compensation and allowances of their officials or employees.[35] (citations omitted)
The amount of P2,420,603.99 was disallowed in audit because the procurements were consummated even without the following requirements under RA 9184 and its Revised Implementing Rules and Regulation (IRR):On the other hand, the COA-Region III echoed that the personal liability of petitioners was based on the stringent application of the law and rules, viz:Absence of the above requirements/documents constituted irregular transactions as defined under COA Circular No. 85-55 A and Section 162 of GAAM Volume I. Pursuant to Section 10 of COA Circular No. 2009-006 dated September 15, 2009, irregular disbursements may be disallowed in audit.[37]
- The uniform requirements of the departments were not included in the 2010 and 2011 Annual Procurement Plans (APP).
- Management failed to post the procurement and the results of bidding and related information in the PhilGEPs bulletin board.
- The procurement process in each department was not conducted by a duly created Bids and Awards Committee.
- Uniforms were procured through negotiated procurement without adhering to the set criteria, terms and conditions for the use of Alternative Methods of Procurement.
Disallowing the total amount of the transaction may be drastic and harsh, but this Office has no other option but to apply what is stated in the law (Dura lex sed lex). It should be applied exactly the way the legislature has expressed itself clearly in the law. Indeed, "the law may be harsh, but it is still the law."[38]Evidently, the COA failed to consider the jurisprudence regarding the application of good faith regarding the ND. While petitioners did not strictly follow the letter of the IRR of R.A. No. 9184, at the very least, they attempted in good faith to comply with the spirit and policy of R.A. No. 9184. As reflected in the petition, the department heads of the SBMA, through the procedure laid down by the Uniform Committee, secured quotations from the SBMA accredited suppliers and they determined the lowest and most advantageous price and superior quality for the government.[39] Again, there was no finding of overpricing or misapplication of funds.