Baghari-Regis v. Commission on Audit

EN BANC

[G.R. No. 210900. June 6, 2017.]

MAURA BAGHARI-REGIS, petitioner,vs. COMMISSION ON AUDIT, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court en banc issued a Resolution dated JUNE 6, 2017, which reads as follows: AIDSTE

"G.R. No. 210900 (Maura Baghari-Regis vs. Commission on Audit). — Before the Court is the petition for certiorari1 filed by Maura Baghari-Regis (petitioner) seeking to nullify and set aside the following: the Decision 2 dated September 13, 2012 of the Commission on Audit (COA) in Decision No. 2012-140; its Notice of Finality of Decision 3 (NFD) dated December 18, 2012; and the COA Resolution 4 dated December 6, 2013, in COA CP Case No. 2011-399, which denied the petitioner's Motion for Reconsideration 5 dated December 26, 2012.

Antecedent Facts

The Philippine Postal Corporation (PPC), a government-owned and controlled corporation created under Republic Act (R.A.) No. 7354, 6 entered into a Contract of Carriage of Mail with Aboitiz Air Transport Corporation (AATC) for the transportation of mails by land for the year 2002. Under the contract, PPC shall pay AATC P5.00 per kilogram of mail inclusive of Value-Added Tax (VAT). PPC then entered into a separate Contract of Carriage of Mail with Transpac Air Cargo Corporation (TACC) for the transportation by air of PPC express, priority and foreign registered mail via Philippine Airlines for the period of August 19, 2002 to December 31, 2002. Under the contract, PPC shall pay TACC P18.00 per kg of mail inclusive of VAT. 7

The contract of PPC with AATC expired in 2002 and was not renewed. Meanwhile, PPC's contract with TACC also expired in 2003 without being renewed. Hence, in 2003, PPC purchased 40 units of motor vehicles to be used for delivery of mail in the Luzon area. However, PPC realized that it was cheaper to outsource the carriage of mails and opted to renew its contract with AATC and TACC. Pending the renewal of contract, Atty. Antonio Z. De Guzman (Atty. De Guzman), then Postmaster General and Chief Executive Officer of PPC, advised Efren E. Uy, Chief Operating Officer of AATC, to undertake the contract of carriage of mail to and from Regions 1, 2, and 5 and the Cordillera Administrative Region at the rate of P8.00 per kg starting May 11, 2004. 8

On post audit, Elena L. Agustin, the Supervising Auditor, issued Audit Observation Memorandum (AOM) No. 2004-004, 9 noting that about P3,683,845.86 was paid to AATC in 2004 without a formal written contract, and that the said transactions continued even after the contract ended in December 2002. The Supervising Auditor also noted the increase in the rate of transportation by land from P5.00 to P8.00 per kg of mail made without proper evaluation. Moreover, the disbursement vouchers revealed that PPC paid a total of P25,472,551.36 to TACC in 2004 without formal renewal of the contract, which expired on December 31, 2003. Contrary to the terms of the contract, TACC transported mails via other airlines, namely, Pacific East Asia Airlines and Asian Spirit. 10

Upon evaluation of the AOM, the Director of the Legal and Adjudication Office-Corporate (LAO-C) of COA issued a Notice of Disallowance 11 (ND) disallowing payments made to AATC and TACC in the amount of P29,156,397.22 in Calendar Year (CY) 2004 for failure to conduct public bidding and to execute a formal written contract between PPC and the service contractors. The Director of the LAO-C found that the P8.00 per kg exclusive of VAT rate charged by AATC was grossly disadvantageous to the government considering that the offer of the winning bidder for the carriage of mail by land for CY 2005 is only P4.95 per kg inclusive of VAT. SDAaTC

The petitioner, then PPC's Director of Central Mail Exchange Center (CMEC), was held liable together with other officials under the ND for certifying that the expenses were necessary and lawful. 12 Thus, she filed a Motion for Exclusion 13 with the COA, claiming that her duty is merely to certify or report the services rendered by the service contractors. She further averred that to desist from performing her duties directed by the Central Office would lead to delays in the service to the detriment of the general public.

Ruling of the COA

On September 13, 2012, the COA rendered the assailed Decision, 14 the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the herein motion for exclusion from liability is hereby DENIED for lack of merit. Consequently, [the petitioner] and the persons held liable under ND No. PPC 2007-002 (2004) dated July 11, 2007 shall remain liable therefor and shall settle the liability. 15

The COA ruled that the payments made to TACC and AATC for services, which were awarded without undergoing public bidding and executing a formal contract, are a clear violation of R.A. No. 9184. 16 It held the petitioner liable for the disallowed payments since it was the petitioner who certified that the expenses were necessary, lawful and incurred under her supervision. The COA also noted that the petitioner's certification was one of the primary considerations in approving the payment of the claim. 17 The Decision became final on December 18, 2012. 18

On February 18, 2013, the petitioner filed a Motion for Reconsideration. 19 However, the Commission Proper (CP) denied the motion for lack of merit. It affirmed the COA Decision No. 2012-140, which has already attained finality. Under the 2009 Revised Rules of Procedure of the COA, a motion for reconsideration on the NFD is not allowed. 20

Hence, this petition.

Issue

Essentially, the issue is whether the COA gravely abused its discretion when it disallowed the amount of P29,156,397.22, and held the petitioner personally liable for the said amount.

Ruling of the Court

The petition is dismissed.

The petitioner avers that the ND was issued in violation of the COA Rules of Procedure for having been issued by the Director IV of LAO-C instead of the auditor. 21 She further contends that the Motion for Exclusion she filed should have been treated as a motion for reconsideration on the ND. 22

The COA Memorandum No. 2002-053 dated August 26, 2002 23 provides the duties and responsibilities of the LAO, to which LAO-C belongs, thus:

A. Legal and Adjudication Office — National, Corporate and Local Sectors. (Director IV)

1. Evaluate and analyze findings contained in Audit Observation Memoranda and Audit Reports generated by Supervising Auditors/Regional Cluster Directors, Audit Team Supervisors, Audit Team Leaders and Regional Legal and Adjudication Cluster Directors to determine those findings which could be the subject of Notice of Disallowance (ND), Notice of Charge (NC) or Notice of Suspension (NS) as the case may be including those findings which indicate probable existence of fraud which could be the subject of special audit[.] (Italics ours)

Furthermore, the COA memorandum laid down the specific procedures for the adjudication of cases arising out of audit, viz.: AaCTcI

A. Cases for adjudication arising out of audit:

1. When in the course of audit, the Resident Auditors/Unit Heads of the Auditing Group in Metro Manila and the regions find or discover violationof rulesand regulations and indication of the probable existence of irregularity or fraud, they shall forthwith secure the basic documents pertaining to the transaction or events and perform initial review and evaluation to determine existence of such fraud or irregularity.

2. These Auditors shall then issue the Audit Observation Memorandum (AOM) in the proper form, requesting the head of office or his duly authorized representative to submit justification or comment thereon within fifteen (15) days from receipt of the memorandum.

xxx xxx xxx

5. The Director, Legal and Adjudication Office for the sector concerned in the Central Office and the Regional Legal and Adjudication Cluster Director shall evaluate the records submitted with the AOM. When on the basis of the documents submitted, he finds that the transaction should be suspended or disallowed, he shall issue the Notice of Disallowance (ND), Notice of Suspension (NS) or Notice of Charge as the case may be, furnishing copy thereof to the Cluster Director. However, when the AOMs and pertinent records are not sufficient to form a basis for the issuance of the ND, NS or NC, the Director may dispatch a team from his Office to conduct further investigation work to justify the contemplated action. (Italics ours)

On January 9, 2004, the COA issued Resolution No. 2004-01 confirming the guidelines provided in the memorandum to erase all possible doubts as to their validity and enforceability. Clearly, the issuance of ND is within the ambit of the powers of LAO-C. acEHCD

In this case, it was the Supervising Auditor who issued the AOM noting therein her observations, findings, and recommendations. Upon evaluation, the Director of LAO-C issued the ND rejecting the payments made to AATC and TACC in CY 2004. Thus, it cannot be said that the ND was issued in defiance of Rule IV of the COA Rules of Procedure as the case properly falls under the COA memorandum and COA resolutions.

Moreover, Section 10 of Rule V of the COA Rules of Procedure provides that the Director shall not entertain a motion for reconsideration of his decision and any such motion shall be returned to the movant without action and with the advice for him to file an appeal instead to the COA pursuant to Rule VII hereof. 24 The appropriate remedy in case of adverse resolution from the Director is to file an appeal before the CP in accordance with the Section 48 of Presidential Decree (P.D.) No. 1445, 25viz.:

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 six months from receipt of a copy of the decision appeal in writing to the Commission. (Emphasis ours)

Also, Section 3 of Rule VII of the COA Rules of Procedure provides:

Sec. 3. Period of Appeal. — The appeal shall be taken within the time remaining of the six (6) months period under Section 4, Rule V, taking into account the suspension of the running thereof under Section 5 of the same Rule in case of appeals from the Director's decision, or under Sections 9 and 10 of Rule VI in case of decision of the ASB. (Emphasis ours)

Accordingly, the petitioner's contention that her Motion for Exclusion should have been treated as a motion for reconsideration on the ND is unwarranted as the COA Rules of Procedure expressly prohibit a motion for reconsideration on the decision of the Director of LAO-C. The correct remedy is to file an appeal before the CP. Hence, the ND and COA decision are valid.

Likewise, the petitioner's argument that the NFD is not valid in view of the Motion for Reconsideration filed on February 18, 2013 is untenable. 26 Section 50 of P.D. No. 1445 provides for the remedy in case of adverse resolution of the CP, viz.:

Sec. 50. Appeal from decisions of the Commission. The party aggrieved by any decision, order or ruling of the Commission may within thirty days from his receipt of a copy thereof appeal on certiorari to the Supreme Court in the manner provided by law and the Rules of Court. When the decision, order, or ruling adversely affects the interest of any government agency, the appeal may be taken by the proper head of that agency. (Emphasis ours)

Also, Section 1 of Rule XII of the COA Rules of Procedure states that:

Sec. 1. Petition for Certiorari. — Any decision, order or resolution of the Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty (30) days from receipt of a copy thereof in the manner provided by law and the Rules of Court.

When the decision, order or resolution adversely affects the interest of any government agency, the appeal may be taken by the proper head of that agency. (Emphasis ours)

However, if no appeal was made during the reglementary period, the decision will become final and executory pursuant to Section 51 of P.D. No. 1445. This is also in consonance with Sections 9 and 10 of Rule X of the COA Rules of Procedure, to wit: EcTCAD

Sec. 9. Finality of Decisions or Resolutions. — A decision or resolution of the Commission upon any matter within its jurisdiction shall become final and executory after the lapse of thirty (30) days from notice of the decision or resolution.

The filing of a petition for certiorari shall not stay the execution of the judgment or final order sought to be reviewed, unless the Supreme Court shall direct otherwise upon such terms as it may deem just.

Sec. 10. Motion for Reconsideration. — A motion for reconsideration may be filed within thirty (30) days from notice of the decision or resolution, on the grounds that the evidence is insufficient to justify the decision; or that the said decision of the Commission is contrary to law. Only one (1) motion for reconsideration of a decision of the Commission shall be entertained.

Under Sections 1 and 2 of Rule XIII of the COA Rules of Procedure, execution shall issue upon a decision that finally disposes of the case. Such execution shall issue as a matter of right upon the expiration of the period to appeal therefrom if no appeal has been fully perfected. An NFD directing the persons liable to refund the amount disallowed shall be issued by the following: 1) Auditor, for ND or decision issued by him; 2) Director who supervised the special audit team, for ND issued by the audit team; or 3) Director, for decision rendered by him.

In this case, the COA decision was served to the petitioner by registered mail on September 18, 2012. 27 The petitioner had 30 days from the receipt of the COA decision within which she may file a petition for certiorari before this Court. Receiving no action on the part of the petitioner within the reglementary period, the COA issued the NFD on December 18, 2012. It was only on February 18, 2013 when the petitioner filed her Motion for Reconsideration, well past the reglementary period.

The COA Rules of Procedure do not allow a motion for reconsideration on the ND. Nevertheless, the COA still considered the petitioner's motion filed and rendered a ruling thereto. In a Resolution 28 dated December 6, 2013, the CP denied the Motion for Reconsideration for lack of merit and affirmed the assailed COA decision, which had already attained finality. Thus, the Court finds no irregularity in the issuance of the NFD, which was issued in accordance with the rules.

Under the doctrine of finality of judgment or immutability of judgment, a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court of the land. Any act which violates this principle must immediately be struck down. 29 (Italics ours)

The Court finds no merit in the petitioner's argument that what transpired was a negotiated procurement, which is an exemption to the rule that all government procurements shall be done through public bidding. SDHTEC

Article IV, Section 10 of R.A. No. 9184 requires that all procurements shall be done through competitive bidding, except when alternative methods of procurement are allowed in accordance with Article XVI of the same law.

The rationale behind the requirement of a public bidding, as a mode of awarding government contracts, is to ensure that the people get maximum benefits and quality services from the contracts. More significantly, the strict compliance with the requirements of a public bidding echoes the call for transparency in government transactions and accountability of public officers. Public biddings are intended to minimize occasions for corruption and temptations to abuse of discretion on the part of government authorities in awarding contracts. 30

However, in order to promote economy and efficiency, the law recognizes negotiated procurement as one of the exceptions to the competitive bidding requirement. 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. 31

This may be resorted to under extraordinary circumstances provided for in Section 53 of R.A. No. 9184 and other instances specified in the Implementing Rules and Regulations, such as in cases 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. HSAcaE

The present case does not fall under the extraordinary circumstances contemplated by law. After few months of the in-house operation of the Luzon Mail Run, there was already a study showing that the total expenditures for the salaries of the drivers and maintenance of the delivery vehicles were higher than the previous system of outsourcing the operation for Luzon. Thus, PPC already knew that outsourcing the mail service is strategically the better option. Had proper diligence been observed, this situation should have prompted PPC to prepare and plan for the system of mail carriage that will be adopted upon the expiration of the employment contracts. Consequently, PPC could have complied with the procedural requirements in the procurement of services for the outsourcing of the operation of Luzon Mail Run, especially the conduct of public bidding.

PPC's failure to conduct public bidding due to the non-renewal of its contract with AATC and TACC and the subsequent termination of its contractual drivers are circumstances which are clearly within its control and which have been reasonably foreseen by it. Given the ample time before the expiration of the employment contracts of the drivers, PPC did not vigilantly exert effort to comply with the requirements set forth by R.A. No. 9184 but directly entered into a contract without a public bidding instead. Therefore, it cannot be said that this case falls under the exceptional circumstances allowed by law where negotiated procurement may be resorted to.

In addition, the COA found that Atty. De Guzman authorized AATC to resume its services instead of conducting a public bidding, depriving PPC of attaining the best possible terms with respect to the price, conditions and quality of service. In disallowing the amount paid to AATC in CY 2004, LAO-C ruled that the P8.00 per kg exclusive of VAT rate charged by AATC was grossly disadvantageous to the government considering that the offer of the winning bidder, Air 21, for the carriage of mail by land for CY 2005 is only P4.95 per kg inclusive of VAT. The P8.00 (inclusive of VAT) per kg charged by AATC is 77.78% higher than the offer of P4.95 per kg of Air 21.

Furthermore, the Court does not agree with the petitioner's contention that she should not be held liable because she has no duty to determine whether public bidding was conducted. The petitioner insists that her duty is merely ministerial and does not include negotiation of supporting documents in the form of contracts. 32

A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed, such duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires neither the exercise of official discretion or judgment. 33

As correctly ruled by the COA, the act of certifying the legality and necessity of the claim involves certain degree of discretion and judgment on the petitioner's part, and the definite duty to certify arises only when all conditions are met, admitted or proven to exist. The validity and legality of the claims depends on the existence of a legal basis or a valid contract entered into by and between PPC and the service contractors as imposed by law, which is absent in this case. Evidently, the petitioner's duty to certify was a discretionary function on her office and not a mere ministerial act on her part. AScHCD

Finally, Section 103 of P.D. No. 1445 provides that 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.

Section 19 of COA Circular No. 94-001 dated January 20, 1994, 34 prescribing the use of the Manual on Certificate of Settlement and Balance, states that public officers who certify to the necessity, legality and availability of funds/budgetary allotments, adequacy of documents, etc., involving the expenditure of funds or uses of government property shall be liable according to their respective certifications.

Meanwhile, Section 30.1.1 of the same circular provides that 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.

In the same vein, Section 16 of the Rules and Regulation on the Settlement of Accounts provides that public officers who certify the necessity, legality and availability of funds or adequacy of documents shall be liable according to their respective certifications.

In this case, the petitioner herself, as the responsible officer of CMEC, recommended the outsourcing of the carriage of mail of the Luzon Mail Run through her memorandum to the Postmaster General. Her certification that the expenses were necessary and lawful was likewise one of the primary considerations in the approval of the payment to AATC and TACC. Considering that the procurement was done without the benefit of public bidding, the petitioner nevertheless issued the said certification. Clearly, the petitioner is personally liable for the disallowed amount.

It must be emphasized that "[t]he COA is endowed with enough latitude to determine, prevent and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It has the power to ascertain whether public funds were utilized for the purpose for which they had been intended." 35 In the absence of grave abuse of discretion, the factual findings of COA, which are undoubtedly supported by the evidence on record, must be accorded great respect and finality. 36

WHEREFORE, the petition is DISMISSED in view of the finality of the Decision No. 2012-140 dated September 13, 2012 of the Commission on Audit. Accordingly, execution may be issued against the persons identified in the Notice of Disallowance No. PPC 2007-002 (2004) dated July 11, 2007, including petitioner Maura Baghari-Regis." Mendoza, J., on official leave. Jardeleza, J., no part. Martires, J., on official leave. (adv9)

Very truly yours,

(SGD.) FELIPA B. ANAMAClerk of Court

 

Footnotes

1.Rollo, pp. 3-22.

2. Composed of Chairperson Ma. Gracia M. Pulido Tan, Commissioners Juanito G. Espino, Jr. and Heidi L. Mendoza as members; id. at 24-30.

3.Id. at 32-34.

4.Id. at 35-36.

5.Id. at 70-74.

6. Otherwise known as the Postal Service Act of 1992.

7.Rollo, p. 24.

8.Id. at 96-97.

9. Dated March 30, 2005; id. at 121-125.

10.Id. at 24-25.

11. ND No. PPC 2007-002 (2004) dated July 11, 2007, signed by Janet D. Nacion, Director IV; id. at 39-42.

12.Id. at 41.

13.Id. at 46-48.

14.Id. at 24-30.

15.Id. at 29.

16. Otherwise known as the Government Procurement Reform Act.

17.Rollo, pp. 27-28.

18.Id. at 31.

19.Id. at 70-74.

20.Id. at 35.

21.Id. at 15.

22.Id. at 17.

23. This is already superseded by COA Circular No. 2009-006 dated September 15, 2009, Prescribing the Use of Rules and Regulations on Settlement of Accounts. Under this circular, the issuance of AOM and ND is now the duty of the Auditor. However, since the case transpired prior to the issuance of COA Circular No. 2009-006, the above-mentioned COA memorandum will still apply.

24. Pursuant to COA Resolution No. 2012-001 dated March 22, 2012, all appeals from the decisions of the Directors and all cases presently under the jurisdiction of the Adjudication and Settlement Board (ASB) shall be filed with the CP, and Rule VI (Proceedings Before the ASB) of the COA Rules of Procedure is hereby repealed.

25. Otherwise known as the Government Auditing Code of the Philippines.

26.Rollo, pp. 16, 18.

27.Id. at 33.

28.Id. at 35-36.

29.FGU Insurance Corporation v. RTC of Makati City, Branch 66, et al., 659 Phil. 117, 123 (2011).

30.Manila International Airport Authority, et al. v. Olongapo Maintenance Services, Inc., et al., 567 Phil. 255, 259 (2008).

31. Section 53 of the Implementing Rules and Regulations of R.A. No. 9184.

32.Rollo, pp. 14, 16-17.

33.Mallari v. Banco Filipino Savings & Mortgage Bank, 585 Phil. 657, 664 (2008), citing Spouses Espiridion v. Court of Appeals, 523 Phil. 664, 668 (2006).

34. This is already superseded by COA Circular No. 2009-006 dated September 15, 2009, Prescribing the Use of the Rules and Regulations on Settlement of Accounts. However, since the case transpired prior to the issuance of COA Circular No. 2009-006, the above-mentioned COA circular will still apply. Nevertheless, the two COA circulars essentially contain the same provisions regarding the determination of persons responsible or liable.

35.Sanchez, et al. v. COA, 575 Phil. 428, 445 (2008).

36.Daraga Press, Inc. v. COA, G.R. No. 201042, June 16, 2015, 758 SCRA 393, 412.