Facts:
- Parties and character of the dispute
- Petitioner Theo-Pam Trading Corporation (Theo-Pam) filed a Money Claim against respondent Bureau of Plant Industry (BPI) before the Commission on Audit (COA) Proper.
- The Money Claim sought payment for various laboratory chemicals amounting to PHP 2,361,060.00, plus interest, attorney’s fees, and litigation expenses totaling PHP 590,257.75.
- The COA Proper denied the Money Claim in COA Decision No. 2016-135 dated July 28, 2016, and likewise denied reconsideration.
- Procurement and documentary trail of the transactions
- On various dates between May and October 2009, BPI prepared four Purchase Orders (POs) naming Theo-Pam as supplier and requesting it to furnish BPI various types of chemicals.
- The BPI POs were signed/approved by:
1)
BPI Director Joel S. Rudinas as head of the agency, and
Susana SG. Gonzalo, OIC, Laboratory Services Division as head of the requisitioning office (end user); and
2)
Leonida L. Morales, Budget Officer, who also signed the POs and certified availability of funds.
- Theo-Pam issued wholesale invoices corresponding to each PO as follows:
1)
PO No. 154-09 (PO date
May 25, 2009) →
Invoice No. 185906 (Invoice date
June 4, 2009) for
PHP 88,000.00;
2)
PO No. 206-09 (PO date
June 15, 2009) →
Invoice No. 186335 (Invoice date
June 20, 2009) for
PHP 724,600.00;
3)
PO No. 240-09 (PO date
July 10, 2009) →
Invoice No. 186584 (Invoice date
June 29, 2009) for
PHP 240,500.00;
4)
PO No. 397-09 (PO date
October 2, 2009) →
Invoice No. 189804 (Invoice date
October 20, 2009) for
PHP 1,307,960.00;
5) Total outstanding balance due from BPI:
PHP 2,361,060.00.
- On Wholesale Invoice Nos. 186335 and 186584, German T. Yatco, National Pesticide Analytical Laboratory (NPAL) Senior Agriculturalist, and Noreen D. Escobar, NPAL Chemist I, affixed signatures indicating receipt of the articles in good order and condition.
- Notifications, demand for payment, and verification process created by BPI
- On May 26, 2010, Theo-Pam informed then BPI Director Dr. Larry R. Lacson that it delivered the orders to the end user, NPAL, under BPI’s Laboratory Services Division, but it had not yet received payment.
- To “settle different issues regarding the chemicals and re-agents procured by the [NPAL],” BPI Director Lacson issued Memorandum Order No. 34, Series of 2010 dated June 21, 2010, creating an Inspection/Verification Team.
- The Inspection/Verification Team was tasked to:
1) determine whether the subject chemicals were delivered and consumed by NPAL;
2) conduct physical inventory of all chemicals and empty containers delivered to NPAL under the listed POs;
3) inventory/review residue analysis certificates issued relative to the purchased chemicals; and
4) interview NPAL staff regarding receipt and use of the chemicals.
- On June 23, 2010, Theo-Pam’s counsel reiterated BPI’s outstanding balance and demanded payment within five days, with a warning of appropriate legal actions.
- On the same date, BPI Director Lacson responded acknowledging receipt of the demand and assuring that BPI was doing everything to ensure Theo-Pam would get what was due to it without prejudice to the government’s interest.
- On July 9, 2010, the Inspection/Verification Team submitted a Memorandum (Team Report) whose key findings and conclusion were:
1) during ocular inspection, it was difficult to identify which waste materials/empty containers belonged to the subject chemicals;
2) residue analysis certificates reviewed did not indicate name or amount of chemicals used, although names and amounts were found only in NPAL records such as RIS, monthly reports, and accomplishment reports;
3) interviews with NPAL staff denied “ghost delivery” and confirmed delivery and use/consumption for operations, with chemicals considered necessary for analysis of okra and mango for exportation;
4) notwithstanding difficulty in determining delivery and consumption on the basis of waste materials and certificates, there were substantial evidences proving delivery and consumption, including delivery receipts and NPAL staff testimonies; and
5) lapses in procurement that might have led to payment delay could not justify non-payment, and immediate settlement was recommended in accordance with delivery receipts.
- Continued correspondence and BPI’s position on delivery and acceptance
- On July 26, 2010, BPI Director Lacson wrote the COA Resident Auditor Adora Rimando requesting the “best course of action” concerning unpaid chemicals, stating among others:
1) Theo-Pam delivered various chemicals covered by approved POs;
2) due to the urgency/necessity, chemicals were received and accepted in good faith by the end user, NPAL;
3) NPAL personnel
Noreen D. Escobar and
German Yatco submitted certifications attesting to truth of deliveries; and
4) there was refusal by the property officer and BPI inspector to sign inspection reports due to alleged failure of the end user to inform them before using delivered chemicals, and BPI asked whether the Team Report under Memorandum Order No. 34 could be used in lieu of an Inspection Report.
- On September 13, 2010, BPI Director Clarito M. Barron informed Theo-Pam that COA noted procurement lapses, including failure to comply with requirements such as non-notification of the property officer for delivery acceptance and inspection.
- On December 21, 2010, BPI Director Barron informed Theo-Pam that the claim could not be processed due to unresolved issues and that pinpointing responsibility/accountability for release of payments was difficult because questions remained unanswered, while also noting lapses on Theo-Pam’s side despite fault on BPI’s officers.
- Filing of Money Claim and BPI’s defenses
- Theo-Pam’s Money Claim was filed with the COA Proper on May 3, 2012.
- Theo-Pam alleged:
1) BPI purchased items from Theo-Pam evidenced by four BPI POs and corresponding wholesale invoices;
2) BPI was allowed
thirty (30) days from invoice date to pay;
3) BPI admitted receiving the orders; and
4) BPI failed to settle despite repeated demands.
- In its Answer, BPI, represented by the Office of the Solicitor General, mainly denied actual delivery.
- BPI argued the wholesale invoices did not prove actual delivery due to alleged irregularities:
1) erasures in relation to the date;
2) notations on the copies retained by Theo-Pam that did not appear on copies retained by BPI; and
3) receiving personnel signatures not matching BPI’s file copy signatures.
- BPI also argued non-compliance with BPI’s new procurement process flow (BPI Process Flow) directed by BPI Director Rudinas through an office memorandum dated May 28, 2009.
- Under the BPI Process Flow, BPI claimed the internal control steps for property preparation, end user preparation, budgeting, approvals, property serving of PO, delivery of goods, and inspection/acceptance voucher preparation required proper inspection and acceptance reports signed by designated authorized officers.
- BPI pointed to Inspection Reports prepared by Romansito G. Guerrero, Inspector, BPI Internal Control Unit, observing:
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