G.R. No. 140316 - Dayrit vs. Philippine Bank of Communications

In 2003, the Sangguniang Bayan (SB) of the Municipality of Bulan, Sorsogon enacted Ordinance No. 004, Series of 2003 authorizing the municipality to float bonds up to P50,000,000.00 for constructing several priority projects including the Bulan Integrated Bus Terminal (BIBT) and the Municipal Slaughterhouse.
Section 8 of the ordinance empowered the Municipal Mayor to conduct public biddings for contracts covering these projects.

For the design and construction of the BIBT to S.R. Baldon Construction & Supply at a contract price of approximately P32,984,700.00.
For labor and materials for the construction of the municipal slaughterhouse to Steven Construction & Supply at a contract price of approximately P4,991,800.00.

On June 23, 2008, the COA Regional Cluster Director issued an Office Order directing a special audit on the BIBT and Slaughterhouse projects.
The audit led to the issuance of various NDs (Nos. 2008-06-27-001-101 to 005-101 and Supplemental ND No. 2008-06-27-006-101) in 2009 involving:

ND No. 2008-06-27-001-101 – relating to an “unaccomplished deficiency of 0.58%” observed in the BIBT project due to the installation of a 25 kva transformer instead of the 50 kva specified, with a disallowance originally of P196,526.13.
ND No. 2008-06-27-002-101 – based on findings of excessive contract cost (overpricing and overestimated quantities) in connection with the BIBT project, where the disallowance computed amounted to a gross variance of approximately 26.79% over the COA estimate.
ND No. 2008-06-27-003-101 – imposing liquidated damages of P2,638,776.00 for an 80-day delay attributable to the delay in the completion of the BIBT project.
ND No. 2008-06-27-004-101 – imposing disallowance of P169,721.20 for what was alleged to be a 34-day delay in the completion of the slaughterhouse, later tied to a certification error by the Municipal Engineer.
ND Nos. 2008-06-27-005-101 and 2008-06-27-006-101 – which declared the contracts for the BIBT and the slaughterhouse null and void on the ground that the Municipal Government of Bulan failed to post procurement opportunities on the PhilGEPS website as mandated by Section 8-IRR-A of R.A. No. 9184.

Petitioners, which include former municipal officials and contractors, appealed the original NDs before the COA Regional Director (RD) of Region V.
On June 4, 2012, the COA-RD modified the assessment on the various NDs:

Reduced ND No. 2008-06-27-001-101 from P196,526.13 to P145,770.60, holding the contractor liable due to the delay in installing additional transformer components.
Partially lifted ND No. 2008-06-27-002-101 by removing the portion based on overpricing while sustaining the overestimated quantity component.
Lifted ND No. 2008-06-27-003-101 for lack of legal basis, though noting administrative liability for the work suspension order issued by the mayor.
ND No. 2008-06-27-004-101 was lifted for insufficiency of evidence regarding a 34-day delay, with a stern warning issued to the Municipal Engineer for providing inconsistent information.
ND Nos. 2008-06-27-005/006 were lifted for want of legal basis, but with a reservation of administrative liability regarding the disallowance arising from non-posting on PhilGEPS.

The COA-RD’s decision was automatically reviewed by the COA Proper. On September 11, 2014, COA Proper affirmed the changes made by the COA-RD with modifications, and on November 9, 2016, COA issued a Resolution denying the petitioners’ motion for reconsideration.

The purported wrongful reliance on a work suspension order issued by the petitioner, Mayor De Castro.
Erroneous application of equipment rental rates (ACEL rates) which were not legally published.
Failure by COA to resolve all issues timely in violation of due process rights.
Imposition of liability on public officials without individually addressing their arguments.
Alleged unjust imputation of liability for overestimated quantities and rates in the project costing.
Alleged excessive filing fees in the appeal process.

Whether the petition for certiorari was filed within the prescribed 30-day reglementary period considering the timeline of receiving the COA decision and resolution.
Whether the delay in processing the appeals at various levels of COA violated the petitioners’ right to speedy disposition and due process.

Whether the modification of ND No. 2008-06-27-001-101—reducing the penalty based on the delay in installing the additional transformer—was proper given the subsequent rectification by the contractor.
Whether ND No. 2008-06-27-002-101 should sustain a disallowance for the overestimated quantities after partial lifting of the overpricing component.
Whether ND No. 2008-06-27-003-101 imposing liquidated damages for delay due to the work suspension order should be set aside, particularly considering that the suspension was reportedly based on an alternative financing effort.
Whether ND No. 2008-06-27-004-101 (the alleged misfeasance in giving inconsistent information on project completion) is a proper ground for disallowance and whether personal liability should be imposed on the Municipal Engineer and/or the Mayor.
Whether nullification of the contracts (ND Nos. 2008-06-27-005/006) based on failure to post procurement opportunities on PhilGEPS is legally justified, and whether the administrative liability imputed there is proper.

Whether the COA committed grave abuse of discretion by (a) relying on a work suspension order which arguably could have been justified under the General Welfare Clause, (b) applying rental cost rates that were not duly published, and (c) not resolving each individual argument raised by the petitioners.
Whether COA’s imputation of administrative liability against the officials (including the Municipal Mayor, Municipal Engineer, and BAC Chairman) is supported by the evidence and proper legal standards.