511 Phil. 629
GARCIA, J.:
Extant records show that sometime in 1981, the Department of National Defense (DND) entered into a contract with Creative Self-Reliance Enterprises, Inc., now CRESER Precision Systems, Inc. (CRESER for brevity), for the delivery of 340,450 mortar fuzes at P125 per piece for a total amount of P42,556.25.Hence, petitioner's letter-appeal dated September 27, 1996[4] for reconsideration of the audit disallowance of its claim in the amount of P11,075,650.00.
It appears that as of August 1987, CRESER had delivered 295,000 mortar fuzes and had been paid the amount of P39,957,400. On September 11, 1987, Gen. Rafael M. Ileto, then Secretary of National Defense, approved a price escalation together with the payment of P8,848,750 as price differential on the deliveries made up to July, 1986. In response to a request for review and evaluation of the price adjustment on the mortar fuzes, the Technical Services Office (TSO), this Commission, on November 11, 1987, allowed the price differential for labor cost but disallowed the price escalation for material cost effective September 1983 for being violative of paragraph 6.2 of the Manufacturing Agreement which provides that the parties may renegotiate for price adjustment not oftener than once a year. It appears that recently approved price escalation was in July 1983 which was only two months prior to the requested effectivity date of escalation of September 1, 1983.
On November 23, 1987, Mr. Francis L. Romualdez, Jr., President of CRESER Precision Systems, Inc., requested Col. Danilo C. Lazo, Acting Deputy Chief of Staff for Materiel Development, J8, to make representations with this Commission for reconsideration of the results of the review and evaluation of the material cost escalation by the Technical Services Office. Thus, in a 3rd Indorsement dated December 7, 1987, Col. Danilo C. Lazo favorably indorsed the matter to the Auditor, GHQ-AFP, who, in turn, recommended approval of the price escalation, in a 4th Indorsement dated December 8, 1987.
In a Memorandum, dated December 10, 1987, Director Arcadio B. Cuenco, Jr. then of the TSO, referred to the General Counsel, both of this Commission for a more authoritative pronouncement relative to the interpretation of paragraph 6.2 of the Manufacturing Agreement with respect to the issue on price escalation.
While the request for escalation was pending at the COA Legal Office, the Armed Forces of the Philippines, relying on the notation of Auditor Archimedes Sitjar on the face of the disbursement voucher, dated October 29, 1987, which sates: "This claim was referred to Chairman Eufemio C. Domingo and Directors Cuenco and Perez and they did not offer any objection to allowing it in audit", paid the amounts of P8,848,750 under TW No. B-05737473 dated December 16, 1987, representing price differentials on the mortar fuzes delivered up to July 21, 1987.
Meanwhile, in response to the request of Director Cuenco for the interpretation of the said provision of the contract, Director Emmanuel M. Dalman, then General Counsel of this Commission, in a Memorandum dated February 4, 1988, expressed the view that any request for material cost escalation should be effective not earlier than July 1984 in line with paragraph 6.2 of the Agreement. On account of said pronouncement, the then GHQ-AFP Auditor Manuel C. Samson on November 29, 1989, disallowed under CSB No. TW-89-0001-101 the amount of P11,075,650 representing the price escalation on mortar fuzes delivered up to July 21, 1987 and in a letter dated January 10, 1990, the Auditor requested the Commanding General, OJ9, GHQ-AFP to withhold the payment of salaries or any amount due to the persons determined liable under the said CSB.
Aggrieved by the Auditor's action, the CRESER Precision Systems, Inc., in a letter dated January 29, 1990, thru Ms. Jeannette D. Tolentino, filed an appeal with this Commission which was received by the Office of the Auditor, GHQ-AFP, requesting that the company be cleared as regards the transactions contending, among others, that an incident beyond the control of the company had happened. This incident was the assassination of Sen. Benigno Aquino which caused a tremendous downtrend in the country's economy.
Furthermore, Brig. General Umberto A. Rodriguez, then Deputy Chief of Staff for Materiel Development, in a letter dated March 30, 1990, requested reconsideration of the disallowance alleging that the matter is considered closed as the same had been cleared by Honorable Chairman Eufemio C. Domingo, in a conference request by the AFP which was also participated in by Engr. Cuenco, Director Perez and Atty. Sitjar, all of this Commission and Capt. Andaya, LCDR Arcellana, and Mr. Romualdez, representing the AFP group. However, records on file show that no such appeal had been forwarded to this Commission or the pertinent documents therefor elevated for final disposition.
In a Contract Review Report dated December 29, 1990 made by the Technical Services Office, this Commission, it was found that the approved price escalation of CRESER was in order, which report was transmitted to the Office of the Auditor, GHQ-AFP, through a 4th Indorsement, dated January 25, 1991, of the Technical Services Office.
Finally, on December 6, 1995, Commodore Francis T. Mallillin, Deputy Chief of Staff for Materiel Development, in response to the request, dated January 10, 1990, of the Auditor GHQ-AFP withheld the amount of P1,591,250 representing the disallowance for material cost escalation. The request of Mr. Francis L. Romualdez, CRESER, for the Commission to intercede for the release of the said amount was returned by the Assistant Commissioner, National Government Audit Office I, this Commission, advising him to file his appeal for the release of the amount withheld being directly connected with the disallowance.
Premises considered, the instant request for reconsideration of the audit disallowance amounting to P11,075,650 is hereby denied. Accordingly, the Auditor GHQ-AFP is instructed to take the necessary steps for the enforcement of the disallowance in question.In time, petitioner moved for a reconsideration[5] but its motion was denied by the respondent Commission in its subsequent Resolution of August 17, 1999 (COA Decision No. 99-131), to wit:
Premises considered, and there being no compelling reason or valid justification to reconsider COA Decision No. 98-074, the instant motion for reconsideration is denied. Accordingly, subject decision is affirmed with finality.Petitioner is now before us upon the following cogent grounds:
RESPONDENT COA GRAVELY ABUSED ITS DISCRETION AND/OR ACTED WITHOUT OT IN EXCESS OF JURISDICTION IN RENDERING COA DECISION NO. 98-074 AND DENYING PETITIONER'S MOTION FOR RECONSIDERATION THEREOF IN COA DECISION NO. 99-131 IN THAT –As aptly put by the Solicitor General in his Comment[6] for the respondent, the issues boil down to two; namely:A
COA DECISION NO. 98-074 AND NO. 99-131 ARE NULL AND VOID FOR HAVING BEEN RENDERED IN FLAGRANT VIOLATION OF PETITIONER'S CONSTITUTIONAL RIGHT TO A SPEEDY DISPOSITION OF ITS CASE BEFORE RESPONDENT COA; SECTIONS 33 AND 34, CHAPTER 5, SUBTITLE B, BOOK V OF THE ADMINISTRATIVE CODE OF 1987 (E.O. NO. 292); AND SECTION 7, RULE IX OF THE LATTER'S OWN RULES OF PROCEDURE.B
COA DECISIONS NO. 98-074 AND 99-131 ARE NULL AND VOID AS THEY HAVE THE EFFECT OF CAUSING THE RE-OPENING AND THE REVIEW OF THE ACCOUNT INVOLVED WHEN THE SAME HAD ALREADY BECOME FINAL SIX (6) MONTHS AFTER IT HAD BEEN PASSED IN AUDIT BY GHQ-AFP STATE AUDITOR ARCHIMEDES SITJAR IN DECEMBER 1987 IN ACCORDANCE WITH SECTION 6, RULE IV OF RESPONDENT COA'S OWN RULES OF PROCEDURE AND WITHOUT THE COMMISSION PROPER HAVING ORDERED FOR SUCH REVIEW AND/OR REVISION WITHIN THREE (3) YEARS FROM DECEMBER 1987 SUCH THAT THE SAID ACCOUNT IS DEEMED SETTLED CONFORMABLY TO SECTION 37, CHAPTER 5, SUBTITLE B, BOOK V OF THE ADMINISTRATIVE CODE OF 1987 (E.O. NO. 292).C
RESPONDENT COA'S FINDING THAT ALLOWING THE PRICE ESCALATION VIOLATES PARAGRAPH 6.2 OF THE MANUFACTURING AGREEMENT IS WITHOUT FACTUAL AND LEGAL BASIS.D
THE REQUESTED PRICE ADJUSTMENTS ARE WARRANTED AND JUSTIFIABLE.E
WERE THE AFP TO BE COMPELLED TO WITHHOLD PAYMENTS DUE TO PETITIONER TO COVER FOR AND OFFSET THE SAME AGAINST THE LATTER'S ALLEGED ACCOUNTABILITY, PETITIONER WHICH OPERATES ON LOANS AND REVOLVING CREDIT LINES TO MEET THE AFP'S PRODUCTION REQUIREMENTS AND DELIVERY SCHEDULES, WOULD BE FINANCIALLY CRIPPLED, AS PAYMENTS DUE TO CREDITORS COULD BE DELAYED OR SUSPENDED, THREATENING IN TURN PETITIONER'S CREDIBILITY WITH ITS LENDERS AND RESULTANTLY, PETITIONER'S CONTINUED OPERATION, TO THE EVENTUAL DETRIMENT OF THE GOVERNMENT'S PEACE EFFORTS IN MINDANAO.
Based on the foregoing provision, respondent COA disallowed payment of the increased price of the mortar fuzes, subject of petitioner's claim, holding that "any request for material cost escalation shall be effective not earlier than July 1984, there being a price adjustment effected pursuant to such agreement in July 1983."[8]ARTICLE VI
PRICE ADJUSTMENT & RENEGOTIATIONx x x x x x x x x
6.2 Renegotiation Clause. The parties may renegotiate for price adjustment, not often than once a year due to an increase in the cost of raw materials, finished parts and/or supplies in the open market, in excess of ten (10%) percent based on quotations from at least two (2) reputable suppliers acceptable to the MANUFACTURER/AFP, the agreed price shall be adjusted accordingly by adding to said price the actual increase in the cost.
xxx. "It is a long established doctrine that the law does not relieve a party from the effects of an unwise, foolish, or disastrous contract, entered into with all the required formalities and with full awareness of what he was doing. Courts have no power to relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be disastrous deals or unwise investments." xxx.Finding the COA's ruling on the disallowance of the September 1, 1983 material cost escalation completely in accord with law and jurisprudence, the Court has no other alternative but to sustain the same.
Anent the first ground, perusal of the records yields the fact that no unreasonable and unjustifiable delay was committed in the resolution of CRESER's case. The allegation that it took this Commission a period of eight (8) years to resolve the case is misleading and smacks of irresponsibility. The span between the time CRESER filed its request for reconsideration of CSB No. 89-0001-101 on September 27, 1996 and its corresponding resolution as contained in COA Decision No. 98-074 dated February 3, 1998 clearly contradicts the sweeping statement that there was delay to the prejudice of the herein [petitioner].Upon careful review of the proceedings that transpired in relation to the disallowance of the material cost escalation in this case, we find no reason to fault COA for its alleged prolonged inaction on the subject claim of petitioner.
This Commission wishes to emphasize that it did not discriminately sleep on its duty to resolve the appeal of CRESER dated January 29, 1990 and March 30, 1990 as averred by Bgen. Umberto Rodriguez for it is on official record that no such appeal had been forwarded to this Commission or the pertinent documents therefor elevated for final resolution (page 3, COA Decision No. 98-074). No case or request pertaining to CRESER has been submitted for decision or resolution except its request dated September 27, 1996. Thus, Section 7 of Rule IX of the Revised Rules of Procedure which states that "any case brought to the Commission Proper shall be decided within sixty (60) days from the date it is submitted for decision or resolution" has negated the allegation that this rule has been violated. To reiterate, no case relative to the appeal/request of CRESER has been forwarded to the Commission Proper for decision or resolution.
Sec. 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 6 months from receipt of a copy of the said decision appeal in writing to the Commission. (Emphasis added).Appeal is not a natural right nor is it part of due process, for it is merely a statutory privilege that must be exercised in the manner and according to procedures laid down by law.[13] The COA Rules expressly spelled out how appeal from a decision or disallowance by an Auditor should be made. No such appeal in writing was filed by petitioner with the COA until September 27, 1996.