Case Summary (G.R. No. 243818)
Factual Background: Lease and Audit Proceedings
The Lung Center leased medical equipment from Himex Corporation for ₱60,200,000 with a 60-month term and purchase option. Dr. Villarete, then Deputy Director for Medical Services, certified the payments. COA’s audit in January 2004 questioned the first payment (₱8,723,000) and additional bank charges (₱786,352.50) for a standby letter of credit. The Lung Center failed to comment on the Audit Observation Memorandum and COA issued a suspension notice in May 2004. In August 2004, Dr. Juanito Rubio submitted justifications and requested lifting of the suspension.
COA Director Decision and Liability
On October 10, 2005, COA Director Decision No. 2005-067 denied the lift request and disallowed the payments for failure to comply with RA 9184’s procurement requirements. It found that the contract was negotiated without two failed biddings and that equipment specifications differed from those in the bid invitation. COA held Dr. Villarete, the Lung Center’s accounting chief, Dr. Rubio, and Himex jointly liable for the disallowed amounts.
Appeal to COA Proper and Service of Notice
The Lung Center, Dr. Rubio, and Dr. Villarete appealed in April 2006. On September 13, 2012, COA Proper Decision No. 2012-138 affirmed the disallowance (₱9,033,562.50 total). Notices were reportedly served to two office staff members—neither the petitioner’s personal secretary nor counsel—on behalf of Dr. Villarete. Only Dr. Danguilan, a successor Officer-in-Charge, filed reconsideration, which COA Proper denied in December 2013. COA then issued a Notice of Finality in June 2014 and an Order of Execution in May 2015. Dr. Villarete’s 2015 motion to lift the execution order and his 2018 motion for reconsideration were denied on the ground that the decision had become final and executory.
Due Process Analysis and Service Requirements
Under the 1987 Constitution, due process requires notice and an opportunity to be heard in administrative proceedings. Service on a party must be made personally or upon an authorized representative or counsel. COA’s certificates of service reflected delivery to “somebody” in Dr. Villarete’s office—neither he nor a duly authorized agent—thereby failing to establish proper notice. This deprived him of the chance to file a timely motion for reconsideration and to challenge his liability before the decision became final.
Writs of Certiorari and Prohibition: Standard of Review
A petition for certiorari under Rule 64 and for prohibition under Rule 65 lies only where a tribunal acts with grave abuse of discretion—an evasion of a positive duty or capricious exercise of power. COA, as an independent constitutional body, is ordinarily immune from interference except upon clear proof of such abuse. The Supreme Court must determine whether COA’s denial letters and resolution unlawfully disregarded Dr. Villare
Case Syllabus (G.R. No. 243818)
Parties and Subject Matter
- Petitioner: Dr. Raoul C. Villarete, Deputy Director for Medical Services at the Lung Center of the Philippines.
- Respondent: Commission on Audit (COA), the constitutional guardian of public funds.
- Subject: Challenge to COA’s Letter denying Motion to Lift Order of Execution No. 2015-032 and Resolution denying Motion for Reconsideration, both enforcing COA Decision No. 2012-138 disallowing payments under a lease contract.
Factual Background
- November 7, 2003: Lung Center leased medical equipment worth P60,200,000 from Himex Corporation for 60 months with six-month purchase option.
- January 30, 2004: COA Audit Observation Memorandum flagged P8,723,000 first rental payment and P786,352.50 bank charges for stand-by letter of credit as unnecessary expenses.
- May 19, 2004: COA issued Notice of Suspension on questioned transactions due to lack of comment by Lung Center.
- August 9, 2004: Lung Center submitted justifications and requested lifting of suspension.
- October 10, 2005: COA Decision No. 2005-067 disallowed rental payments and bank charges for violating RA 9184 procurement rules; held Dr. Villarete and others liable.
COA Appeals and Finality
- April 17, 2006: Lung Center, Dr. Rubio, and Dr. Villarete filed Memorandum on Appeal.
- September 13, 2012: COA Decision No. 2012-138 affirmed disallowance of P8,247,200 rental and P786,362.50 bank charges; served personally to Dr. Danguilan and Dr. Villarete’s representative.
- December 6, 2013: COA Proper denied Motion for Reconsideration filed by Dr. Danguilan.
- Se