G.R. No. 230185 , July 7, 2020
Edda V. Henson, Petitioner, vs. Commission on Audit, Respondent.

FACTS

The Intramuros Administration (IA), under Administrator Edda V. Henson, held a public bidding in December 1991 for the construction of three houses in the Plaza San Luis Cultural Commercial Complex. All bids exceeded the Agency Approved Estimate (AAE) of P13,187,162.90. Due to time constraints and to avoid fund reversion, the Bidding and Awards Committee (BAC) negotiated with the lowest bidder, Argus Development Corporation (Argus), which agreed to reduce its bid to the AAE on the condition that IA supply construction materials worth at least P3,391,000.00 and that architectural details be downgraded. Contracts for Phase I and Phase II were executed, along with supplemental contracts for Variation Orders Nos. 1 and 2 due to changes in the project’s use. Argus completed the project and was paid a total of P18,001,977.77. In 1996, a COA audit team conducted a post-inspection due to reported defects. On June 5, 1997, COA issued Notice of Disallowance (ND) No. 97-0001-101 (92-93) disallowing P2,328,186.00, citing overestimates, unsupported claims, and the cost of IA-supplied materials not deducted from payments. Held liable were Henson and Pelagio R. Alcantara. After appeals, the COA Commission Proper (COA-CP), in its December 13, 2011 Decision, partially granted the appeal, reducing the disallowance to P1,607,880.66 but including additional liable parties (Project Construction Manager and BAC members). Henson’s motion for reconsideration was denied in the December 27, 2016 Resolution. Henson filed a Petition for Certiorari, arguing grave abuse of discretion by COA-CP for procedural delays, upholding the disallowance for materials supplied, and finding her liable for the disallowed amount due to mathematical error.

ISSUE

Whether the COA-CP committed grave abuse of discretion in: (1) failing to disclose findings and decide within reasonable time; (2) upholding the disallowance of P1,016,621.16 representing the cost of construction materials supplied by IA; and (3) finding Henson liable for P591,259.50 due to mathematical error and unsupported claim in Variation Order No. 1.

RULING

The Supreme Court dismissed the petition and affirmed the COA-CP Decision and Resolution.
1. On Procedural Issues and Timeliness: The Court rejected Henson’s claim of denial of due process and unreasonable delay. COA-CP had taken cognizance of her appeal despite its belated filing in the interest of substantial justice and had partially granted it by reducing the disallowance after finding initial due process deficiencies. Regarding the timeliness of Henson’s petition to the Supreme Court, the Court held that the burden of proving timely filing lies with the petitioner. Service of the December 27, 2016 Resolution was deemed effective at her counsel’s address of record, as there was no proof that counsel promptly informed COA-CP of a change of address. Thus, the petition was filed out of time.
2. On the Disallowance of IA-Supplied Materials (P1,016,621.16): The Court upheld the disallowance, noting that the materials supplied by IA were included in the bill of materials but not deducted from payments to Argus. The negotiation where Argus lowered its bid on the condition that IA supply materials effectively meant the government bore the cost, and failure to deduct this from payments constituted a disallowable expense.
3. On Liability for Mathematical Error (P591,259.50): The Court affirmed Henson’s liability. The disallowance was due to mathematical error and unsupported claims in Variation Order No. 1. As the head of agency, Henson approved the payments despite violations of procurement laws, including the failure to conduct a second bidding as required and proceeding with negotiated procurement without legal basis. Her approval of the contract and payments made her solidarily liable for the disallowed amounts.
The Court found no grave abuse of discretion by COA-CP, as its findings were supported by evidence and consistent with audit rules and procurement laws. The petition was dismissed for lack of merit.