Title
De Castro vs. Commission on Audit
Case
G.R. No. 228595
Decision Date
Sep 22, 2020
Former Bulan officials challenged COA disallowances on payments for BIBT and Slaughterhouse projects, citing overpricing, delays, and procurement violations. COA upheld partial disallowances, holding some officials liable, while affirming due process and its authority to modify rulings.

Case Summary (G.R. No. 140316)

Factual Antecedents

The factual background reveals that on June 30, 2003, the Sangguniang Bayan of Bulan enacted Ordinance No. 004, authorizing the bond flotation amounting to PHP 50 million for the construction of the Bulan Integrated Bus Terminal (BIBT), the Municipal Slaughterhouse, and other projects. After conducting public bidding, contracts were awarded to S.R. Baldon Construction for the BIBT and Steven Construction for the Slaughterhouse. Following the completion and payment for the projects, COA initiated a special audit which resulted in multiple Notices of Disallowance (NDs) due to various non-compliances and deficiencies.

Initial Findings and Notices of Disallowance

The special audit led to the issuance of several NDs citing discrepancies, including unaccomplished work, overpricing, and liquidated damages. Specifically, the NDs held the involved contractors and municipal officials liable for monetary amounts disallowed due to administrative infractions concerning the project execution and procurement processes. The audit cited both uncompleted project elements and exceeded contract durations that resulted in liquidated damages.

Appeals and COA Decisions

The municipal officials and contractors appealed the NDs, resulting in a COA Regional Office decision that partially modified some disallowances while affirming others. The case was further elevated to the COA Proper, which rendered a decision affirming modifications to the Regional Office's findings. Key disputes revolved around the validity of work suspension orders issued by the municipal mayor, the interpretation of overpricing, and the administrative liabilities of the officials involved.

Grounds for Certiorari

In their certiorari petition, the petitioners argued that the COA had committed grave abuse of discretion by affirming the original findings based on erroneous legal standards, misapplying regulations, and failing to resolve their arguments adequately. They asserted violations of procedural due process, citing delayed resolutions and unclear grounds for disallowances.

Right to Speedy Disposition

The timeline of decisions and motions presented was scrutinized. The petitioners claimed delays by the COA violated their right to a speedy disposition of their case. The COA argued that the delays were justified given the complexity of audit matters, and the Court ruled that the delays were not inordinate.

Procedural Due Process

The essence of procedural due process in administrative proceedings was addressed, highlighting the significance of notice and the opportunity to be heard. The court found the NDs sufficient to alert involved parties of the bases for disallowance, dismissing claims of due process violations.

Evaluation of Liquidated Damages and Disallowances

The Court evaluated the basis for liquidated damages and found the penalties imposed on petitioners to be grounded on interpretations that did not account for valid work suspensions or delays attributable to external factors. This aspect ultimately exonerated the petitioners from respo

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