G.R. No. 85285 - Danville Maritime, Inc. vs. Commission on Audit

The Philippine National Oil Company (PNOC), through a Board of Directors’ resolution in early 1988, authorized the sale by public bidding of its fourteen-year-old tanker "T/T Andres Bonifacio" due to old age and high maintenance costs.
A Disposal Committee was created to implement the sale, following the prescribed rules and regulations of the Commission on Audit (COA).
The “Amended Terms and Conditions of the Bidding” set the floor price at US$14 million, required a 10% bid deposit, and stipulated sealed bids to be submitted by a designated deadline (initially September 1, 1988).
Notice of the bidding was widely publicized in newspapers locally and internationally, and 65 foreign embassies were formally notified.

The bidding, although initially scheduled on September 1, 1988, was ultimately held on September 15, 1988, with the participation of various local and international representatives.
Danville Maritime, Inc., a Liberian corporation, was the sole bidder, offering US$14,158,888.88.
The Disposal Committee declared Danville Maritime, Inc.’s bid as the winning bid and directed the petitioner to transmit the required 10% deposit, which was promptly complied with.
On September 17, 1988, PNOC and the petitioner executed a "Memorandum of Agreement" for the sale, which conditionally provided that final government approvals—including that from the COA—were to be obtained within 30 calendar days.

On September 20, 1988, the COA, through its State Auditor IV, Tobias P. Lozada, sent a memorandum to the Disposal Committee highlighting deficiencies:

The proposed contract should have been submitted to COA for review before execution.
The bidding was deficient due to the lack of competition, as only one bid was received.
The rules under COA Circular No. 86-264 required at least two bidders, or, failing that, a second bidding before a negotiated sale could even be considered.

PNOC’s President Manuel Estrella, in a letter dated September 28, 1988, formally requested COA’s approval of the sale to Danville Maritime, Inc.
Notably, on October 6, 1988, PNOC received an offer from Fearnly Finans – a Norwegian company – proposing to purchase the vessel at a price at least US$1 million higher than the sole bid, an offer which PNOC promptly rejected.
On October 12, 1988, PNOC received the questioned letter-directive from COA (dated October 10, 1988) that disapproved the sale on the ground that the one-bidder scenario constituted a failure of public bidding as per existing rules and regulations.

Following COA’s directive, the PNOC Board of Directors ordered a rebidding of the vessel.
Danville Maritime, Inc. filed a petition for certiorari challenging the COA’s letter-directive, alleging grave abuse of discretion in its determination that a single bid equated to a bidding failure.
Simultaneously, the petitioner filed a separate complaint for injunction and damages before the Regional Trial Court (RTC) of Makati, seeking to enjoin the rebidding process and to obtain an extension for compliance with the Memorandum of Agreement’s conditions.
The petitioner further argued that the COA’s interpretation of “failure of bidding” was erroneous, emphasizing that competition is defined by fairness, equal opportunity, and proper adherence to established guidelines—conditions met by the conducted bidding despite the participation of only one bidder.

The petitioner contested that the COA should have accepted the single bid since all potential bidders were given a fair chance, and that the rejection of the bid (especially in light of the higher offer from Fearnly Finans) was improper.
The petitioner maintained that both the Memorandum of Agreement and the relevant legal provisions (Section 79 of P.D. 1445 and COA Circular No. 86-264) did not define a single bid as constituting bidding failure.
The issue of forum shopping was raised when parallel actions were simultaneously filed in different courts, questioning the jurisdiction of the RTC to review a decision that is constitutionally within the purview of the COA and subject to review by the Supreme Court.

Whether the receipt of only one bid in a public bidding process amounts to a "failure of bidding" under COA Circular No. 86-264 and the amendments to the Implementing Rules and Regulations of P.D. 1594, thus warranting a rebidding.
Whether the COA committed a grave abuse of discretion in declaring the bidding for the vessel "T/T Andres Bonifacio" a failure and consequently ordering a second bidding, despite the petitioner’s compliance with all bidding requirements.
Whether the dual filing of legal actions (the petition for certiorari and the injunction before the RTC) constituted forum shopping, thereby undermining the petitioner’s claims and justifying the dismissal of one or both actions.
Whether the jurisdiction to review and determine the validity of COA’s directive falls exclusively within the Supreme Court and the COA’s own audit authority, precluding lower courts from intervening in the matter.