Torres v. Commission on Audit

EN BANC

[G.R. No. 211225. January 10, 2017.]

LUDGERIO D. TORRES, M.D., GERARDO S. MANZO, M.D., FERNANDO G. AYUYAO, NOE A. BABILONIA, MARCIANO F. GATDULA, JOSE B. BARSAGA, ERIBERTO B. VACARO, CARMENCITA LINGAN, RICARDO LIMPIN, TERESITA SANTOS, AMELIA CUYUGAN, CORAZON M. PEREZ, FAUSTINO A. MIRAFLOR, ROSALITO T. OCLARES, MERCEDITA PARAZO AND RACHELLE H. CORTEZ, petitioners, vs. COMMISSION ON AUDIT, BELEN B. LADINES, IN HER OFFICIAL CAPACITY AS RESIDENT AUDITOR OF PHILIPPINE HEART CENTER, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court en banc issued a Resolution datedJANUARY 10, 2017, which reads as follows:

"G.R. No. 211225 (Ludgerio D. Torres, M.D., Gerardo S. Manzo, M.D., Fernando G. Ayuyao, Noe A. Babilonia, Marciano F. Gatdula, Jose B. Barsaga, Eriberto B. Vacaro, Carmencita Lingan, Ricardo Limpin, Teresita Santos, Amelia Cuyugan, Corazon M. Perez, Faustino A. Miraflor, Rosalito T. Oclares, Mercedita Parazo and Rachelle H. Cortez vs. Commission on Audit, Belen B. Ladines, in her official capacity as Resident Auditor of Philippine Heart Center). — This is a petition for certiorari1 under Rule 45 of the 1997 Rules of Court which seeks to set aside the Decision 2 dated November 20, 2013 of the Commission on Audit (COA) in Decision No. 2013-204 which affirmed Corporate Government Sector-C (CGS-C) Decision No. 2010-003 3 dated July 30, 2010, Notice of Finality of Decision 4 (NFD) dated September 14, 2010 and COA Order of Execution 5 dated September 30, 2010.

Factual Background

From May 2007 until August 2009, Dr. Ludgerio D. Torres and Dr. Gerardo S. Manzo, as Medical Director and Assistant Director for Administration Services of the Philippine Heart Center (PHC), respectively, authorized the grant of honoraria in the total amount of P1,867,138.76 to the members of the Bids and Awards Committee (BAC), Secretariat and Technical Working Group (TWG) of the PHC (collectively, the petitioners) in line with the Department of Budget and Management (DBM) Budget Circular No. 2004-5A. 6

Upon post audit, Resident Auditor Belen B. Ladines questioned the grant due to honoraria paid even in months when no Notice of Award was issued. Moreover, the Notices of Award submitted by PHC, pursuant to Audit Observation Memorandum No. 2009-020 issued by the Auditor requiring the submission of Notices of Award for honoraria received from 1996 to the present with the required supporting documents, was only for the period of January 2007 to September 2009. 7 And, after audit, an overpaid honoraria amounting to P1,070,428.52 covering the period May 2007 to July 2009 which resulted in the issuance of Notice of Disallowance No. 09-001-111-(07-09) 8 on November 5, 2009 which, in part, reads:

The total amount of P1,070,428.52 was disallowed in audit because the recipients were paid fixed monthly honoraria of 25% of their basic salary during the said period, which is not in accordance with the provisions of par. 5.0 of DBM Budget Circular No. 2004-5A dated October 7, 2005. Consequently, there was a total overpayment of P1,070,428.52 covering the period May 2007 to July 2009, x x x. 9

Accordingly, the following persons were considered liable in the aforesaid overpayment, 10 as follows: cHDAIS

Name	Position/Designation	Nature of Participation
		in the Transaction
Ludgerio D. Torres, MD	Director, PHC	Authorized the payment of
		honoraria
Gerardo S. Manzo, MD	Asst. Dir. for Adm. Services,	Authorized the payment of
	PHC	honoraria
Fernando G. Ayuyao	Chairman, BAC	Payee — P95,140.75
Noe A. Babilonia	Vice Chairman, BAC	Payee — P43,981.00
Marciano F. Gatdula	Member, BAC	Payee — P83,537.86
Jose B. Barsaga	Member, BAC	Payee — P31,349.80
Eriberto B. Vacaro	Member, BAC (up to January	Payee — P43,137.94
	2008)
Carmencita Lingan	Member, BAC	Payee — P123,046.42
Ricardo Limpin	Member, BAC	Payee — P106,083.75
Teresita Santos	Member, BAC	Payee — P36,553.06
Amelia Cuyugan	Member, BAC (Feb. to Oct. '08)	Payee — P16,833.75
Corazon M. Perez	Chairman, TWG	Payee — P126,998.47
Faustino A. Miraflor	Member, TWG	Payee — P127,450.75
Rosalio T. Oclares	Member, TWG	Payee — P78,142.00
Mercedita Parazo	Chairman, BAC Secretariat	Payee — P107,909.97
Rachelle H. Cortez	Member, BAC Secretariat	Payee — P50,263.00

On November 6, 2009, the petitioners received a copy of the Notice. 11

On April 20, 2010, the petitioners filed an Appeal Memorandum 12 before the CGS-C Director of COA contending that: (a) the Annual Audit Report for the years 2007 and 2008 have undergone COA's examination and passed its auditing standards; (b) the honoraria given should be computed based on the quantity of successful projects evidenced by the Notice of Award over the year which should not exceed 25% of a recipient's monthly basic salary. Otherwise, an amount more than that prescribed would be received since the computation would be based on the rate per successful project; (c) DBM Budget Circular No. 2007-3 amended certain provisions of the DBM Budget Circular No. 2004-5A as to the source of funds of the honoraria; and (d) the total amount of honoraria granted complies with DBM Budget Circular No. 2004-5A specifically on the 25% ceiling rate specified therein.

On July 30, 2010, CGS-C Decision No. 2010-003 13 was issued affirming the Notice of Disallowance, the ruling of which reads:

Section 102 of P.D. No. 1445 mandates that the head of any agency of the government is immediately and primarily responsible for all government funds pertaining to the agency. Further, Section 103 of the same decree mandates that expenditures of government funds in violation of law or regulations shall be a personal liability of the official found to be directly responsible therefor.

xxx xxx xxx

Finally, all the payees of an expenditure shall be personally liable for disallowance for receiving the benefit which are not due them.

Thus, pursuant to Section 33 of P.D. No. 1445, it is the mandate of this Commission to prevent expenses which are illegal, irregular, excessive, extravagant and unnecessary which is implemented under COA Circular No. 85-55A dated September 8, 1985.

Accordingly, this Office hereby affirms COA Disallowance No. 09-001-111 (07-09) in the amount of P980,486.01, as amended, dated November 5, 2009. 14

On August 5, 2010, the petitioners received a copy of the CGS-C decision. Instead of an appeal, however, the petitioners sought the opinions of the Government Procurement Policy Board and the Department of Health (DOH) regarding the interpretation of paragraph 5 of the DBM Budget Circular No. 2004-5A as basis for computing the honoraria. 15 ISHCcT

On October 18, 2010, PHC received a copy of the DOH opinion regarding its interpretation of paragraph 5 of the DBM Budget Circular No. 2004-5A. It, in part, reads:

Section 5 of the Budget Circular No. 2004-5A provides the guidelines on granting honoraria for the government personnel involved in procurement. Section 5.4 states that the average amount of honoraria per month over one year shall not exceed twenty five per cent (25%) of the basic monthly salary. The honoraria, however, shall be paid only upon the successful completion of each procurement.

The Department of Health interprets this provision in an annual basis. That at the end of each year, regardless of how much honoraria is granted every month, the total amount of honoraria should not exceed the total twenty five percent (25%) of the basic monthly salary of a personnel for the whole year. 16

On October 19, 2010, the petitioners filed a Manifestation of Intent to File Appeal Memorandum with Motion to Revive the Remaining Period of Six (6) Months 17 before the Adjudication and Settlement Board (ASB) anchored on the favorable opinion of the DOH that "regardless of how much honoraria is granted every month, the total amount of honoraria should not exceed the total twenty[-]five percent (25%) of the basic monthly salary of a personnel for the whole year."18 In praying for the revival of the remaining 16-day period to appeal, PHC stated that the DOH opinion is a supervening event tantamount to newly discovered evidence that would allow the liberal application of the COA Rules of Procedure.

In a Letter 19 dated November 9, 2010, however, ASB informed the petitioners that it cannot take cognizance of the appeal since a NFD 20 and a COA Order of Execution 21 have already been issued by the CGS-C Director. The NFD explicitly stated that "the decision of the Director, CGS-C Decision No. 2010-003 dated July 30, 2010 has become final and executory, there being no appeal taken within the prescribed period." 22 The COA Order of Execution, on the other hand, instructed PHC's Credit and Collection Division Chief to withhold the salaries or any amount due from the persons liable for overpaid honoraria pursuant to the CGS-C decision. 23

On February 16, 2011, the petitioners filed a Motion to Revive Period to File Petition for Review 24 before the COA which sought for the relaxation of rules based on equitable considerations and in the interest of substantial justice. The Petition for Review 25 reiterated the arguments raised in the Appeal Memorandum.

On November 20, 2013, the COA rendered Decision No. 2013-204 26 which denied the petition for review. It, in part, reads: CAacTH

In the instant case, this Commission finds no compelling reason to observe the relaxation of the rules considering that no new and material evidence were offered to reverse the assailed decision. As stated in the Petition, the arguments and discussion raised by the Petitioners on the disallowed honoraria have already been considered and ruled upon in CGS-C Decision No. 2010-003 dated July 30, 2010.

On the other hand, strict compliance with the rules must be observed in order to facilitate the orderly administration of justice. The assailed decision, having attained finality, becomes unalterable, x x x. 27

In view thereof, CGS-C Decision No. 2010-003 dated July 30, 2010, NFD 28 dated September 14, 2010 and COA Order of Execution 29 dated September 30, 2010 were all AFFIRMED.

Hence, this petition.

Ruling of the Court

The petition has no merit.

Rule 45 versus Rule 64, in relation

In Reblora v. Armed Forces of the Philippines, 30 it has been held that:

Decisions and resolutions of the COA are reviewable by this Court, not via an appeal by certiorari under Rule 45, as is the present petition, but thru a special civil action of certiorari under Rule 64 in relation to Rule 65 of the Rules of Court. Section 2 of Rule 64, which implements the mandate of Section 7 of Article IX-A of the Constitution, is clear on this:

Section 2.  Mode of Review. — A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided. 31

Here, the pleading's title as a petition for certiorari under Rule 45 is apparently misplaced. Rule 45 is an appeal by certiorari while Rule 65 is a petition for certiorari. As provided for under the 1997 Rules of Court, the scope of inquiry under Rule 45 is confined on errors of judgment while in Rule 64, in relation to Rule 65, the inquiry is strictly limited to errors of jurisdiction or the determination of grave abuse of discretion on the part of the court, body, or tribunal when it issued the assailed decision or resolution. Therefore, unless tainted with grave abuse of discretion, simple errors of jurisdiction of the COA cannot be reviewed by this Court.

Section 3, Rule 64 of the Rules of Court states:

SEC. 3.  Time to file petition. — The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial. (Emphasis ours) IAETDc

In the instant case, the 6-month or 180-day reglementary period shall be reckoned from the petitioners' date of receipt of the Auditor's Notice of Disallowance on November 6, 2009. Based on the facts herein, the petitioners seasonably filed an appeal before the CGS-C Director on April 20, 2010, or 164 days after receipt of the Notice of Disallowance, which tolled the running of the 180-day reglementary period. The said period resumed to run from the date of receipt of the CGS-C Director's Decision dated July 30, 2010. At this point, the petitioners had a remaining period of 16 days, or until August 15, 2010, to elevate the issue before the ASB. Regrettably, no such appeal was duly taken and the Director's decision lapsed into finality. Therefore, the COA cannot be faulted for not giving due course to the belatedly filed petition for review.

It has been consistently held that procedural rules should be treated with utmost respect and due regard, since they are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice. From time to time, however, the Court has recognized exceptions to the Rules but only for the most compelling reasons where stubborn obedience to the Rules would defeat rather than serve the ends of justice. Every plea for a liberal construction of the Rules must at least be accompanied by an explanation of why the party-litigant failed to comply with the Rules and by a justification for the requested liberal construction. Where strong considerations of substantive justice are manifest in the petition, this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. 32 The same is unfortunately wanting in the instant case.

No Grave Abuse of Discretion on the part

Even if the Court should forego such procedural infirmity, the Notice of Disallowance shall still be upheld.

Section 15 of Republic Act (R.A.) No. 9184, otherwise known as the Government Procurement Reform Act, 33 provides that:

Sec. 15.  Honoraria of BAC Members. — The Procuring Entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the Department of Budget and Management (DBM) shall promulgate the necessary guidelines.

Moreover, Section 15 of the Implementing Rules and Regulations of R.A. No. 9184, issued on October 8, 2003, reads as follows:

Sec. 15.  Honoraria of BAC, BAC Secretariat, and TWG Members. —

The Procuring Entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the DBM shall promulgate the necessary guidelines. The Procuring Entity may also grant payment of honoraria to the BAC Secretariat and the TWG members, subject to the relevant rules of the DBM. DcHSEa

While it is true that the petitioners are entitled to receive honoraria for services rendered as TWG and BAC members, the payment thereof is subject to the availability of funds and shall follow the guidelines and relevant rules which are promulgated by the DBM. In this respect, DBM Budget Circular No. 2004-5A was issued on October 7, 2005 (consistent with DBM Budget Circular No. 2004-5 issued on March 23, 2004) which prescribed the guidelines for the grant of honoraria to government personnel involved in government procurement, pursuant to R.A. No. 9184. Paragraphs 5.1, 5.3 and 5.4 of the DBM Budget Circular No. 2004-5A provide that:

5.1  The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. In accordance with Section 7 of the Implementing Rules and Regulations Part A (IRR-A) of R.A. No. 9184, a procurement project refers to the entire project identified, described, detailed, scheduled and budgeted for in the Project Procurement Management Plan prepared by the Agency.

A procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder.

xxx xxx xxx

5.3  The honoraria of each person shall not exceed the rates indicated below per completed procurement project:

	Maximum Honorarium
	rate per procurement
	project
BAC Chair	P3,000[.00]
BAC Members	2,500[.00]
TWG Chair and	2,000[.00]
Members

5.4  The average amount of honoraria per month over one year shall not exceed twenty five percent (25%) of the basic monthly salary. The honoraria, however, shall be paid only upon the successful completion of each procurement. (Underlining ours) SaCIDT

As aptly stated in the CGS-C Decision No. 2010-003, viz.:

Records show that the PHC computed the honorarium by multiplying the total number of awards with the prescribed rates provided under paragraph 4.1 34 of DBM Circular No. 2004-5 dated March 23, 2004 and divided this by 12 months. The computation presupposed that there was/were notice/s of awards granted every month which was not true as evidenced by the summary of Notice of Awards prepared by the Auditor. In 2007, there were three (3) months that had no Notice of Awards; while in 2008 and 2009, a total of four (4) and three (3) months, respectively, had no awards. Clearly, the procedure adopted by PHC showed that the BAC, the [TWG] and the BAC Secretariat received monthly honoraria albeit no Notice of Award was issued in violation of paragraph 5.1 of DBM Circular No. 2004-5A which provides that the said benefit may be paid only for successfully completed procurement project as ruled by the Supreme Court in Joseph Peter Sison, et al. vs. Rogelio Tablang, et al., COA G.R. No. 177011 dated June 5, 2009 x x x. A procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder. 35 (Underlining in the original)

It is significant to note that the payment of honoraria to the BAC members and Secretariat and the TWG members is confined within the applicable rules and guidelines prescribed by the DBM, as provided by law. Section 15 of R.A. No. 9184 expressly states: "For this purpose, the [DBM] shall promulgate the necessary guidelines." The word shall has always been deemed mandatory, and not merely directory. 36 Thus, the law (paragraph 5 of the DBM Budget Circular No. 2004-5A), being clear, plain and free from ambiguity, needs no interpretation. And, considering that the DBM has already set the guidelines for the payment of honoraria as required by law, its payment to the petitioners did not comply with the law and the applicable rules and guidelines of the DBM. Thus, the Notice of Disallowance was correctly upheld.

WHEREFORE, foregoing premise considered, the Decision No. 2013-204 dated November 20, 2013 of the Commission on Audit (COA) is AFFIRMED." Jardeleza, J., no part. (adv47)

 

Very truly yours,(SGD.) FELIPA B. ANAMAClerk of Court

Footnotes

1.Rollo, pp. 3-17.

2.Id. at 32-35.

3. Rendered by Director IV Jose R. Rocha, Jr.; id. at 55-58.

4.Id. at 67-69.

5.Id. at 70-71.

6.Id. at 142.

7.Id. at 55-56.

8.Id. at 40-42.

9.Id. at 40.

10.Id. at 40-41.

11.Id. at 142.

12.Id. at 47-54.

13.Id. at 55-58.

14. Id. at 57-58.

15. Letters dated June 23, 2010 and August 26, 2010, id. at 63-64.

16. Id. at 65.

17. Id. at 59-61.

18. Id. at 60.

19. Id. at 66.

20. Id. at 67-69.

21. Id. at 70-71.

22. Id. at 68.

23. Id. at 70.

24. Id. at 73-78.

25. Id. at 79-104.

26. Id. at 32-35.

27. Id. at 34.

28. Id. at 67-69.

29. Id. at 70-71.

30. 711 Phil. 401 (2013).

31. Id. at 408.

32. Osmeña v. COA, 665 Phil. 116, 124 (2011).

33. Approved on July 22, 2002.

34. 4.1 The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. The honoraria shall not exceed the rates indicated below per procurement project:

Honorarium Rate per Procurement Project
BAC Chair	3,000[.00]
BAC Members	2,500[.00]
TWG Chair and Members	2,000[.00]

35. Rollo, p. 57.

36. Sison, et al. v. Tablang, et al., 606 Phil. 740, 750 (2009).