G.R. No. 218461 - Patdu, Jr. vs. Commission on Audit

In 1992, the Government of the Republic of the Philippines, through the then Department of Transportation and Communications (DOTC), bid out the construction of the Davao Fishing Port Complex under the National Fishing Development Program.
The project was a foreign-assisted undertaking funded by the Overseas Economic Cooperation Fund (OECF) under the 17th Yen Credit Package (PH-126).
Three proponents submitted bids, with the EEI/Manalo Joint Venture offering the lowest bid at P347,000,005.00.
The Pre-Qualification, Bids and Awards Committee recommended awarding the contract to the EEI/Manalo Joint Venture on December 7, 1992.
A construction contract was executed on April 20, 1993, obligating the Joint Venture to execute, complete, and maintain the construction works.

During construction, the EEI/Manalo Joint Venture proposed to reduce the construction period from 1,096 to 910 days.
DOTC agreed to pay an early completion incentive bonus of P35,445,070.35.
Several variation orders were issued by DOTC, amounting to P7,450,855.91 in total cost adjustments.
The specific variation orders at issue were:

Variation Order No. 5 – altering the design of the preparation/landing wharf.
Variation Order No. 7 – modifying the design of pavement, landscaping, drainage/sewerage system, fresh water supply, and masonry works.
Variation Order No. 8 – changing the quantity and materials for parts of the drainage system, fresh water supply, wharf, and breakwater.

On June 18, 1997, a COA Auditor issued ND No. 97-011-102 (DOTC) (95) disallowing P53,951,955.03, based on findings that the actual project cost (P354,450,860.91) exceeded the COA’s estimated cost (P300,498,905.88) by an excess amount.
Related to the incentive bonus, the COA later disallowed an excess of P15,315,715.55 via ND No. 98-004-102 (DOTC) (96) dated May 28, 1998.
DOTC requested the lifting of the disallowance, arguing that foreign-assisted projects are exempt from the audit review mandated by the COA Resolution based on Presidential Decree No. 1594 and its IRR.

In response to DOTC’s request, the COA Auditor treated the matter as a request for reconsideration.
A 4th Indorsement (January 31, 2000) by the COA Auditor recommended lifting ND No. 97-011-102, which was sustained by the NGAO II Director in a 5th Indorsement on July 19, 2001.
DOTC later filed a motion to dismiss based on the alleged exemption provided in the IRR of PD No. 1594.
In Decision No. 2010-133 (December 13, 2010), the COA Proper reversed the lifting by reinstating ND No. 97-011-102 and set aside the 5th Indorsement, and further maintained ND No. 98-004-102.
DOTC’s motion for reconsideration was denied in Resolution No. 2015-135 (April 6, 2015).

Petitioner, the project engineer responsible for reviewing the amounts in Variation Orders Nos. 5, 7, and 8, was held civilly liable under ND No. 97-011-102 (DOTC) (95).
He filed the petition assailing the December 13, 2010 COA decision and the April 6, 2015 resolution, arguing lack of liability due to the finality of the lifting of the notice of disallowance by the NGAO II Director.

Whether the decision by the NGAO II Director, lifting ND No. 97-011-102 (DOTC) (95) through the 5th Indorsement, attained finality and became immutable and unalterable.

Whether ND No. 97-011-102 (DOTC) (95) and ND No. 98-004-102 (DOTC) (96) should be lifted and set aside, given the prior administrative actions and the applicable laws.

Whether the petitioner should be held liable for the audit disallowance arising from the reviewed Variation Orders Nos. 5, 7, and 8.