Joson v. Commission on Audit
REITERATIONFacts
The Antecedents: The Commission on Audit (COA) conducted a special audit of the Provincial Government of Nueva Ecija for calendar years 2004-2007. The audit uncovered an irregular award of a contract for the construction of the Nueva Ecija Friendship Hotel to A.V.T. Construction. Consequently, COA issued Notice of Disallowance ND No. L-09-05-005(2004-2007), disallowing payments totaling Php155,036,681.77 on grounds of awarding the contract to an ineligible contractor without proper eligibility checks, awarding additional works through alternative procurement despite the ineligibility issue, and the project's failure to be completed, rendering the hotel unoperational. Procedural History: The COA, through its Fraud Audit and Investigation Office, denied Petitioner Tomas N. Joson III's appeal and affirmed the disallowance. Petitioner then filed a petition for exclusion from liability with the COA, arguing that the Bids and Awards Committee (BAC) was solely responsible for determining bidder eligibility. The COA denied this petition, finding Petitioner liable for failing to exercise due diligence and for being a signatory to the contracts, thus presuming prior knowledge of the bidding irregularities. The COA's Resolution dated January 19, 2016, denied Petitioner's motion for reconsideration. The Petition: Petitioner filed a Petition for Certiorari before the Supreme Court, challenging the COA's decision and resolution, alleging grave abuse of discretion amounting to lack or excess of jurisdiction in holding him personally liable for the disallowed amount. He argued that the BAC's duty was to check eligibility, and he could reasonably rely on his subordinates. He also contended that the COA completely disregarded the fact that the project was completed, accepted, and utilized by the provincial government.
Issue(s)
Whether the Commission on Audit committed grave abuse of discretion amounting to lack or excess of jurisdiction when it held that Petitioner failed to exercise due diligence in the performance of his duty relative to the award of the contract. Whether the Commission on Audit committed grave abuse of discretion amounting to lack or excess of jurisdiction when it completely disregarded the fact that the project was completed, accepted, and now being utilized by the Provincial Government.
Ruling
The Supreme Court granted the Petition for Certiorari. The Decision dated January 29, 2015, and Resolution dated January 19, 2016, rendered by the Commission on Audit (COA) in Decision No. 2015-019 were reversed and set aside insofar as they held petitioner Tomas N. Joson III solidarily liable for the amount of the disallowance.
Ratio Decidendi
On the issue of whether the Commission on Audit committed grave abuse of discretion amounting to lack or excess of jurisdiction when it held that Petitioner failed to exercise due diligence in the performance of his duty relative to the award of the contract: The Supreme Court held that the COA committed grave abuse of discretion in holding Petitioner Tomas N. Joson III personally liable for the disallowed amount. The Court emphasized that the determination of a prospective bidder's eligibility is the primary responsibility of the Bids and Awards Committee (BAC) under Republic Act No. 9184 and its Implementing Rules and Regulations (IRR). Petitioner, as the head of the procuring entity and the provincial governor, had the right to reasonably rely on the faithful performance of the BAC's duties. The COA's presumption of Petitioner's prior knowledge of the ineligibility, based solely on his signature on the contract, was insufficient to overcome the Arias doctrine. Unlike in cases where foreknowledge of infirmity was established by positive evidence, here, no such evidence was presented to show that Petitioner had actual prior knowledge of A.V.T. Construction's ineligibility. The Court reiterated that public officers are not automatically liable for every transaction that passes through their hands; their guilt must be established by positive evidence, and good faith is always presumed. The COA failed to overcome this presumption. On the issue of whether the Commission on Audit committed grave abuse of discretion amounting to lack or excess of jurisdiction when it completely disregarded the fact that the project was completed, accepted, and now being utilized by the Provincial Government: The Supreme Court found it unjust to hold Petitioner personally liable for the disallowed amount, especially considering that the government had already received and accepted benefits from the utilization of the hotel, which is now fully functional and operating as an economic enterprise. The Court noted that there was no showing that Petitioner was ill-motivated or had personally profited from the transaction. To make him personally liable under these circumstances would result in unjust enrichment to the prejudice of the Petitioner. The Court also pointed out that mistakes committed by a public officer are not actionable absent clear showing of malice or gross negligence amounting to bad faith, and in this case, there was no evidence of such malice or bad faith on Petitioner's part. The fact that the hotel is being enjoyed and utilized by the provincial government further supports the reversal of the COA's disallowance against the Petitioner.
Main Doctrine
The Supreme Court reversed the Commission on Audit's finding of liability against former Governor Tomas N. Joson III, holding that the COA committed grave abuse of discretion in holding him solidarily liable for a disallowed amount. The Court emphasized that the determination of bidder eligibility is primarily the responsibility of the Bids and Awards Committee (BAC), and the Governor, as head of the procuring entity, can rely to a reasonable extent on the good faith of his subordinates. Absent positive evidence of malice or bad faith, or actual prior knowledge of the ineligibility, the Governor cannot be held liable solely based on his signature approving the contract, especially when the government has already benefited from the project.