G.R. No. 151987 - Villanueva vs. Commission on Audit

The case involves petitioners Director Fredric Villanueva, Atty. Joseph Humiding, Engr. Francis Basali, and Tessie B. Bringas.
In August 1993, an unnumbered Special Order by the Department of Environment and Natural Resources (DENR) designated them as members of the Bids and Awards Committee of the DENR-Cordillera Administrative Region (DENR-CAR).
In 1994, the petitioners continued in a hold-over capacity while new appointments had yet to be made.

The DENR-CAR, as the lead agency for the Adopt-A-Street/Park Program mandated under Executive Order No. 100 (1993) and Joint Memorandum Circular No. 1 (1993), needed to procure polyethylene plastic bags for the production and handling of pine tree seedlings.
Owing to the urgency imposed by the seasonal constraints (prior to the end of the rainy season), petitioner Veneracion, then OIC-RED, initiated the procurement process.
The procurement process involved the preparation of an Invitation to Bid, canvassing of bids, and distribution of relevant documents to pre-identified suppliers.

Invitations to bid and canvass papers were prepared, posted, and distributed by the DENR-CAR.
The bidding committee (PBAC) comprised of petitioners Villanueva, Humiding, Basali, and Tessie B. Bringas was tasked with evaluating the sealed bids.

The suppliers who participated included Fluid Air Technologies, Kinship Industrial Sales and Services, Torquoise Commercial, and Prince Enterprises.
During the bidding event, COA Regional Office’s resident auditor, Estrellita B. Belandres, was present strictly in her capacity as an observer to ensure documentary integrity.

A Special Audit was conducted between March and May 1995 by the Special Audit Office (SAO) of COA on selected financial transactions of DENR-CAR.

The audit focused on the procurement of polyethylene plastic bags and related transactions spanning 1992–1994.
SAO Report No. 95-31 found that the plastic bags were overpriced, with allegations of an overprice of between P316,138.50 and P344,098.50.

Notices of Disallowance were issued in March 1997 against plastic bag purchases from Kinship Industrial and Fluid Air.
Petitioners filed a letter-request for reconsideration on 2 July 1997, which was ultimately dismissed by COA in a decision issued on 12 September 2000, and a subsequent Resolution on 06 December 2001.

The COA representative’s role was limited to observing and ensuring documentary integrity.
Their reliance on the COA auditor’s representations, as well as their adherence to prescribed bidding procedures, should preclude criminal liability for the alleged overpricing.

The COA auditor’s role, as outlined by COA Circular No. 78-87, was strictly limited to post-audit and documentary functions.
The ultimate responsibility for the bidding, evaluation, and determination of overpricing lay with the PBAC, not with the COA representative.

The central controversy thus centered on the proper limits of COA’s authority and the legality of the bidding process undertaken by the PBAC.

Whether the Commission on Audit (COA) committed grave abuse of discretion by:

Holding the petitioners criminally liable and recommending the filing of criminal charges based on alleged irregularities in the bidding process.
Imposing liability on petitioners for an alleged overpricing in the purchase of polyethylene plastic bags.

Whether the role of the COA representative during the public bidding—being strictly limited to ensuring documentary integrity—exempts the petitioners from liability for irregular procurement procedures.
Whether the petitioners’ reliance on the COA representative’s presence and representations during the opening of bids constitutes a valid defense against the allegations of irregularity and overpricing.