G.R. No. 261207 - Topbest Printing Corporation vs. Sofia C. Gemora, et al.

Petitioner Topbest Printing Corporation (Topbest) filed a Petition for Certiorari on June 23, 2022, challenging the January 22, 2019 Decision No. 2022-014 issued by the Commission on Audit (COA) National Government Audit Sector (NGAS) Cluster 1 and the corresponding Notice of Disallowance No. 19-001-207542-17 dated January 22, 2019.
Respondents are Sofia C. Gemora, Director IV of COA; Edna P. Salaguban, Supervising Auditor; and Fahad Bin Abdul Malik N. Tomawis, Audit Team Leader.
Topbest contended that respondents committed grave abuse of discretion in issuing the COA Decision and Notice of Disallowance.

On May 23, 2016, the National Printing Office (NPO) awarded Topbest a contract for the lease of a "4 Stations Web/Continuous Form Machine with Collator" for PHP 49,500,000.00.
The Equipment Lease Agreement (ELA) was entered into on June 28, 2016. Key provisions included:

NPO to use its operators at Topbest's premises to operate the leased machine.
The rental fee was PHP 49,500,000 for one year, computed based on the machine's output on a running basis.
Topbest (lessor) responsible for machine maintenance, repair, materials, and labor at its expense.

On July 10, 2017, NPO issued an Invitation to Apply and Submit Proposal for a Joint Venture Undertaking in the Printing Capacity Augmentation Phase I project.
Topbest submitted a proposal and was awarded Lot 2 on September 13, 2017.
The joint venture required capital and operating expenses be borne exclusively by the private JV partner, with revenue sharing arrangements stipulated.
Despite a joint venture framework, NPO maintained terms similar to the ELA but applied payment on a "per-usage basis" via work orders.

On October 16, 2017, NPO Audit Team issued Audit Observation Memorandum highlighting subcontracting practices masked as ELAs, violating GPPB Resolution No. 05-2010.
NPO argued it could contract joint ventures given its status as a government instrumentality.
The January 22, 2019 Notice of Disallowance disallowed PHP 499,376,515.60 paid to 12 private printers, including Topbest, stating such payments violated Section 4.6 of GPPB Resolution No. 05-2010 prohibiting subcontracting of printing services.
Topbest received the Notice on February 8, 2019 and filed an appeal memorandum before Director Gemora on August 6, 2019.

The COA Director affirmed the Notice of Disallowance, denying Topbest's appeal.
Due process was deemed observed as Topbest was notified of charges and provided opportunity to defend.
Evidence basis included voluminous transactional records obtained from both Topbest and NPO.
The actual payment scheme showed 85% of job order value paid to Topbest (covering rental, material, maintenance, labor costs) with 15% retained by NPO as profit.
COA concluded that despite the lease contract format, this payment and operational scheme constituted an illegal subcontracting agreement.
Topbest was found liable for the rental fee amounting to PHP 6,039,057.54.

Instead of appealing to the COA Commission Proper, Topbest filed the Petition for Certiorari before the Supreme Court on June 23, 2022.
Topbest claimed it had insufficient time to file timely appeal to COA Commission Proper after receipt of COA Director’s decision.

Did Topbest avail of the correct remedy by filing a Petition for Certiorari directly with the Supreme Court instead of appealing before the COA Commission Proper?

Did the respondents commit grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the COA Director's Decision and the Notice of Disallowance?

Is Topbest liable for the return of the disallowed rental fees received from the NPO?