Henson v. Commission on Audit
REITERATIONFacts
The Antecedents: The Intramuros Administration (IA), a government agency tasked with restoring and developing Intramuros, entered into contracts for the construction of three houses in Plaza San Luis Cultural Commercial Complex. The bidding process resulted in bids exceeding the Agency Approved Estimate (AAE). To avoid fund reversion, IA negotiated with the lowest bidder, Argus Development Corporation, to reduce its bid. This involved IA supplying construction materials and a downgrading of architectural details. Subsequent supplemental contracts were executed for variations in the project's use, converting the houses into a boutique hotel and later a hotel laboratory school. After the project's completion and payment, a post-inspection and re-examination of related documents revealed inherent and hidden defects, leading to a Notice of Disallowance (ND) for various cost overruns, including excess contract costs for different phases and variation orders, and the cost of construction materials supplied by the agency but not deducted from the contractor's payment. Petitioner Edda V. Henson, as IA Administrator, and others were held liable for approving the payment and certifying the legality of the expenses. Procedural History: Following the issuance of Notice of Disallowance (ND) No. 97-0001-101 (92-93) by the COA audit team, petitioner Edda V. Henson and Pelagio R. Alcantara sought reconsideration and copies of supporting documents. The Director of the National Government Audit Office (NGAO) II upheld the disallowance. Petitioner and Alcantara appealed to the COA-Commission Proper (COA-CP), arguing lack of evidence, denial of due process, and absence of negligence or bad faith. Despite finding the appeal belated, the COA-CP took cognizance of it in the interest of substantial justice. The COA-CP partially granted the appeal, reconsidering some disallowed amounts due to procedural lapses in affording due process, but affirmed other disallowed amounts, including the cost of construction materials and excess contract costs due to mathematical error. The COA-CP also included additional individuals as liable parties. Petitioner's motion for reconsideration was denied. The Petition: Petitioner filed a Petition for Certiorari under Rule 64, in relation to Rule 65, of the Rules of Court, assailing the COA-CP's December 13, 2011 Decision and December 27, 2016 Resolution. The petition raises three main issues: (1) grave abuse of discretion by the COA-CP in failing to disclose findings and decide the petition for review and motion for reconsideration within a reasonable time; (2) grave abuse of discretion in upholding the disallowance of P1,016,621 representing the cost of construction materials supplied by the agency; and (3) grave abuse of discretion in finding the petitioner liable for the disallowance of P591,259 for an alleged unsupported claim in Variation Order No. 1 due to mathematical error. The petition also contests the timeliness of the COA-CP's service of its resolution.
Issue(s)
Whether the Petition for Certiorari was filed out of time. Whether petitioner was denied due process. Whether petitioner is liable for the disallowed amounts, specifically the cost of construction materials and the unsupported claim in Variation Order No. 1.
Ruling
The Petition is dismissed. The December 13, 2011 Decision and the December 27, 2016 Resolution of the Commission on Audit-Commission Proper are affirmed.
Ratio Decidendi
On the Timeliness of the Petition: The Court sided with the respondent COA-CP, holding that the burden of proving the timeliness of the petition lies with the petitioner. The Court reiterated that in the absence of a proper and adequate notice to the court of a change of address, service of orders or resolutions must be made at the last address of record of the counsel. Since petitioner's counsel belatedly informed the COA-CP of her change of address, the service made at the old address on January 17 and 26, 2017, were deemed valid and effectual. Petitioner failed to discharge the burden of proving that the service was ineffectual and that her counsel received the resolution only on March 13, 2017. Therefore, the petition was considered belatedly filed. On Due Process: The Court found that petitioner was not denied due process. The essence of due process is the opportunity to be heard, which petitioner was afforded as she exhausted all legal remedies and was informed of the basis of the disallowance. While the case took thirteen years to be decided by the COA-CP, this delay does not affect the validity of the Notice of Disallowance. Furthermore, the issue of not being furnished authenticated copies of source documents for certain disallowed amounts became moot as the COA-CP had already reconsidered those specific amounts due to the audit team's failure to comply with COA Memorandum No. 97-012. On Liability for Disallowed Amounts: The Court ruled that petitioner's reliance on the Arias v. Sandiganbayan case was misplaced. Unlike in Arias, which was a criminal case where the auditor was acquitted due to lack of evidence of conspiracy and reliance on subordinates, this case involves a disallowance. Petitioner was the Administrator during the entire process, from bidding to payment, and thus could not evade liability. The Court found blatant violations of public bidding rules, including the pre-qualification of Argus despite its "small" category license, the failure to declare a failure of bidding when bids exceeded the AAE, and the negotiation with the lowest bidder under certain conditions. The Court also noted that the difference in bid amounts matched the cost of materials supplied by IA, which were not deducted from payments. Consequently, the remaining disallowed amounts of P1,016,621.16 (cost of construction materials) and P591,259.50 (mathematical error and unsupported claim in Variation Order No. 1) were found to be in order, and petitioner was held liable.
Main Doctrine
The burden of proving the timeliness of a petition for certiorari lies with the petitioner. Failure to properly notify the court of a change of address renders service at the old address valid and effectual. The essence of due process is the opportunity to be heard, and the length of time a case is pending does not affect the validity of a disallowance.