Facts:

Petitioner Cresencio D. Arcena filed this petition in his capacity as the President of the Berlyn Construction and Development Corporation, seeking to contest decisions made by the Commission on Audit (COA). The case arises from events that transpired from 1995 to 1996, during which the Philippine Marine Corps (PMAR) undertook various infrastructure projects, specifically the relocation and replication of the Philippine Marine Headquarters from Fort Bonifacio, Makati City to the Marine Base in Ternate, Cavite. These projects, referred to as the MBT projects, had a total funding of P69,983,830.00. An audit was conducted on these projects at the request of the Office of the Ombudsman, leading to the discovery that expenditures exceeded the actual as-built plans by 2.33%, translating to a financial overrun of P1,590,173.66. Consequently, Notice of Disallowance No. PMAR-MBT-2008-01 was issued on November 25, 2008, which held Arcena, as the contractor, liable for the excess amount.

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Facts:

Background of the MBT Projects and Audit

• The Philippine Marine Corps (PMAR) implemented various infrastructure projects from 1995 to 1996 related to the relocation and replication of the Philippine Marine Headquarters from Fort Bonifacio, Makati City to the Marine Base in Ternate, Cavite.
• The projects, known as the MBT Projects, had a total funding of P69,983,830.00, sourced partly from Philippine Navy funds and chiefly from the Bases Conversion Development Authority.
• Following an Ombudsman request, the MBT Projects were audited as part of an investigative review, during which it was discovered that the funds disbursed exceeded the approved plans by 2.33% (P1,590,173.66).

Initiation of Audit and Subsequent Notice of Disallowance (ND)

• An audit report entitled “Report on the Special Audit/Investigation of the 1995-1996 Marine Base Ternate Projects” revealed the excessive disbursement.
• On November 25, 2008, the ND No. PMAR-MBT-2008-01 was issued, holding Cresencio D. Arcena—acting as proprietor, payee, and president of Berlyn Construction and Development Corporation (Berlyn Construction)—liable for the discrepant amount.
• Arcena’s initial appeal was denied when the COA-Fraud and Audit Investigation Office (FAIO) rendered Decision No. 2010-002 on August 26, 2010, affirming the ND.

Procedural History and Filing of the Petition for Review

• Arcena filed a Petition for Review with the COA Proper, seeking to contest the ND and alleging grave abuse of discretion.
• The COA Proper dismissed the petition on November 24, 2015, on the ground that it was filed out of time because Arcena failed to indicate the exact date of receipt of the ND.
• According to the COA rules, the petition for review had to be filed within the remaining portion of the six-month period (as determined from the receipt of the ND and subsequent appeal actions).
• Arcena further moved for reconsideration, claiming a different receipt date for the FAIO Decision; however, he failed to support this allegation with proof, and the motion was denied.

Contentions Raised by Arcena in His Petition

• Arcena contended that the MBT Projects were already settled accounts and could not be reopened or revised without violating Section 52 of Presidential Decree No. 1445.
• He argued that the audit team’s use of Sub-Allotment Advices (SAAs) as the basis for the COA Cost Estimate was incorrect and not in accordance with the COA standards.
• Arcena further alleged that the COA gravely abused its discretion by not considering the meritorious grounds he raised regarding the audit discrepancies.
• He sought to challenge both the timeliness of his appeal and the merits of the COA’s audit findings.

COA’s Stand and Supporting Evidence

• The COA maintained that the petition was filed beyond the reglementary period, thereby rendering it inadmissible regardless of its merits.
• COA officials and the Office of the Solicitor General reiterated that Arcena did not contest the dismissal on timeliness in his petition but only on the merits.
• The audit team’s cost computations were based on multiple sources including data from the Construction Industry Authority of the Philippines, DPWH cost manuals, and relevant price indices.
• Comparative analyses were made between the actual disbursement (P69,983,698.76) and the COA Cost Estimate (P62,175,931.88), showing an excess even when a 10% allowance had been factored in.

Issue:

Timeliness of the Petition for Review

• Whether the COA gravely abused its discretion in dismissing Arcena’s petition based solely on the alleged failure to indicate the exact date of receipt of the ND.
• Whether the petition for review was actually filed within the prescribed six-month (or 180-day) period as required by the COA Rules of Procedure.

Merits of the COA’s Audit Findings and Cost Computation

• Whether the MBT Projects’ accounts should be considered settled and thus immune from reopening or revision under Section 52 of PD No. 1445.
• Whether the COA’s use of Sub-Allotment Advices (SAAs) and other comparative methods conform to the mandatory COA standards and established audit practices.
• Whether the COA correctly computed the disallowed sum by comparing approved estimates, actual disbursements, and the allowed 10% variance stipulated in COA Resolution No. 91-52.

Abuse of Discretion Claim

• Whether the procedural irregularity, particularly the failure to state specific dates in the petition, constitutes grave abuse of discretion by the COA.
• Whether Arcena’s additional allegations regarding misapplication of legal principles and technical rules have sufficient merit to relax the strict application of the COA’s procedural rules.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)