Suarez v. Commission on Audit
REITERATIONFacts
1. The Antecedents: The Export Processing Zone Authority (EPZA) conducted a public bidding for the supply and installation of an Electrical Distribution System. The Prequalification, Bids and Awards Committee (PBAC), of which petitioner Leonisa E. Suarez was a member, evaluated bids. Power Electric Co., Inc. (PELCO Inc.) was declared the lowest complying bidder. Subsequently, a contract and a supplemental agreement were executed between EPZA and PELCO Inc. The Technical Services Office (TSO) of the Commission on Audit (COA) reviewed these agreements and found them to be significantly higher than COA TSO estimates, citing issues with transformer costs and Value Added Tax (VAT) computation in the Approved Agency Estimate (AAE). Consequently, the COA resident auditor disallowed an aggregate amount of P1,179,719.59 from the two contracts and issued notices of disallowance to several EPZA officials, including petitioner Suarez, holding them jointly and severally liable. 2. Procedural History: Following the disallowance by the COA resident auditor, EPZA officials, including petitioner Suarez, appealed to the Commission on Audit. The COA denied this appeal in a Decision dated January 18, 1996. A subsequent Motion for Reconsideration filed by the appellants, including Suarez, was also denied by the COA in a Resolution dated September 9, 1997. However, in this Resolution, the COA granted the appeal for exclusion from liability for Messrs. Cayo E. Villanueva and Alfredo B. Adorable, but not for petitioner Suarez. Aggrieved, petitioner Suarez filed the present petition for certiorari with the Supreme Court. 3. The Petition: Petitioner Leonisa E. Suarez seeks reversal of the COA's Decision and Resolution through a petition for certiorari, arguing that the COA committed grave abuse of discretion. She contends that she had no participation in the preparation or approval of the Program of Work (POW) and the Approved Agency Estimate (AAE), which were the basis for the disallowance. Her role was limited to being a member of the PBAC, and the bidding process itself was not found to be irregular. Petitioner asserts that there is no substantial evidence of bad faith, malice, or gross negligence on her part, and that she was singled out for liability while other PBAC members and officials with similar or greater involvement were excluded. She argues that the COA's decision lacks factual support and violates administrative due process and equal protection principles. The Solicitor General, in his comment, agreed with the petitioner and recommended that the petition be given due course, a stance adopted by the COA itself in its manifestation to the Court.
Issue(s)
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. 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. 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. 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.
Ruling
The petition is meritorious. The assailed Decision and Resolution of the Commission on Audit are REVERSED AND SET ASIDE, insofar as they refer to petitioner Leonisa E. Suarez, who is EXONERATED from liability.
Ratio Decidendi
On the issue of petitioner's participation in the preparation and approval of the POW and AAE: The Court ruled that there was absolutely no basis for petitioner's liability for the disallowed sum. Presidential Decree 1445 provides that expenditures in violation of law or regulations shall be a personal liability of the official or employee directly responsible therefor. The disallowance arose from the erroneous preparation of the Approved Agency Estimate (AAE), which was based on the Program of Work (POW). The POW was prepared and approved by officials of the EPZA engineering department, and petitioner had no part in its preparation. Similarly, the AAE was prepared and approved by other EPZA officials, and petitioner had no part in its preparation either. Her participation was limited to being a member of the PBAC that conducted the bidding, evaluated bids, and recommended the award. The COA found no irregularity in the bidding process itself, but rather in the erroneous preparation of the AAE. Therefore, her membership in the PBAC did not render her liable for the disallowed amounts. On the issue of substantial evidence of bad faith, malice, or gross negligence: The Court found that 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." COA anchored the disallowance on the failure to canvass other brands and the submission of an erroneous AAE. However, the assailed Decision did not show that petitioner was directly responsible for these acts. The Court noted that COA exonerated Messrs. Villanueva and Adorable because their involvement had no bearing or relevance on the preparation of the AAE, which was the ground for the disallowance. The Court questioned why the same principle was not applied to petitioner, who was similarly situated as a member of the PBAC, and was the only PBAC member held liable. On the issue of EPZA suffering damage or injury: While the disallowance implies a financial loss to the government, the core issue was the liability of the petitioner for such disallowance. The Court focused on whether there was sufficient proof of her direct responsibility for the erroneous AAE, which was the basis of the disallowance. Since the Court found no such proof of direct responsibility, the extent of damage to EPZA became secondary to the lack of evidence against the petitioner. On the issue of equal protection: The Court observed that petitioner was the only member of the PBAC held liable for the amounts disallowed, despite the presence of other members, including the chairman and vice-chairman. This selective imposition of liability, without a clear showing of petitioner's direct and sole responsibility for the erroneous AAE, raised concerns about fairness and equal treatment among members of the committee. The Court highlighted that the same principle used to exonerate Villanueva and Adorable, whose involvement was deemed irrelevant to the AAE preparation, should have been applied to petitioner.
Main Doctrine
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.