G.R. No. 254077 , August 02, 2022
MONICO O. PUENTEVELLA, PETITIONER, VS. COMMISSION ON AUDIT, RESPONDENT.

FACTS

The Philippine Sports Commission (PSC) granted financial assistance totaling ₱50.5 million to the Bacolod Southeast Asian Games Organizing Committee (BASOC), chaired by petitioner Monico O. Puentevella, for the rehabilitation of venues for the 2005 SEA Games. Due to time constraints, BASOC directly negotiated with contractors for the projects. Years later, in 2008, BASOC submitted its liquidation reports. A Commission on Audit (COA) special audit team found the documentation severely deficient, lacking contracts, detailed plans, delivery receipts, and accomplishment reports, which prevented the validation of the transactions’ validity and the reasonableness of costs.
Consequently, COA issued Notice of Disallowance (ND) No. 2014-101, disallowing ₱36,778,105.44 in expenditures. The ND was affirmed by COA Commission Proper, which held petitioner and BASOC Secretary General Eric Loretizo solidarily liable for the amount. Petitioner sought relief via a Petition for Certiorari before the Supreme Court, arguing the disallowance was unreasonable given the urgent nature of the projects and that the contractors had fully rendered services.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the Notice of Disallowance and in holding petitioner solidarily liable for the entire disallowed amount.

RULING

The Supreme Court dismissed the petition and affirmed the COA’s findings, but modified the ruling regarding liability. The Court held that COA did not commit grave abuse of discretion. The audit findings were based on substantial evidence, as the expenditures violated fundamental auditing and procurement rules requiring proper documentation, public bidding or alternative justified modes of procurement, and detailed plans to establish the reasonableness of costs. The urgency of the situation did not excuse the complete disregard for these mandatory rules designed to safeguard public funds.
However, applying the principle of quantum meruit, the Court modified the COA decision. While the contracts were irregular, the contractors had evidently delivered the projects, which were used for the SEA Games. Therefore, they are entitled to retain the reasonable value of the services and supplies they rendered. The determination of this reasonable value is a factual matter that must be ascertained by COA. Consequently, the case was remanded to COA to compute the exact reasonable value payable to the contractors. The net disallowed amount—after deducting this reasonable value—shall be the civil liability for which petitioner and Loretizo may be held solidarily liable, subject to the application of the good faith doctrine in the separate determination of their personal accountability.