G.R. No. 151987. March 18, 2005
DIRECTOR FREDRIC VILLANUEVA, ATTY. JOSEPH HUMIDING, ENGR. FRANCIS BASALI, and TESSIE BRINGAS, Petitioners, vs. THE COMMISSION ON AUDIT, Respondents.

FACTS

Petitioners, officials of the DENR-Cordillera Administrative Region (CAR), were members of the Prequalification Bids and Awards Committee (PBAC) tasked with procuring polyethylene plastic bags for a national tree-planting program. To meet an urgent deadline before the end of the rainy season, they initiated a bidding process. They prepared and posted an Invitation to Bid, distributed canvass papers to known suppliers, and received sealed bids. The PBAC deliberations were attended by the resident COA auditor. The committee declared two bidders as winners, and the DENR-CAR proceeded with the purchase. The resident auditor’s initial report for the period stated the financial statements were presented fairly.
Subsequently, a COA Special Audit Office (SAO) team conducted a post-audit. The SAO report disallowed the transaction, finding it was made without public bidding and involved an alleged overprice of P316,138.50. It recommended the filing of criminal charges under R.A. No. 3019 and required petitioners to refund the amount. The COA affirmed this decision. Petitioners filed this original action for certiorari, arguing the SAO findings contradicted the resident auditor’s initial approval and that the bidding was conducted with due diligence and transparency.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the procurement transaction and holding petitioners personally liable for refund.

RULING

No. The Supreme Court upheld the COA decision, finding no grave abuse of discretion. The Court clarified that the resident auditor’s attendance and initial report did not constitute a prior approval that would validate any procedural defects in the bidding. A resident auditor’s role is primarily observational and does not carry the authority to pre-approve or legitimize the procurement process; their presence does not cure violations of bidding rules. The COA, through its special audit, correctly found that petitioners failed to comply with the required public bidding procedures under applicable laws and regulations at the time. The essence of public bidding is to ensure the best price and quality for the government through open competition. The limited invitation to only a few pre-selected suppliers, despite the posting of the invitation, did not satisfy the requirement of a genuine public bidding designed to attract the widest possible participation. Consequently, the resulting contract was void, and the disallowance of the overprice was proper. Personal liability for refund attaches because the petitioners, as members of the PBAC, were directly responsible for executing a defective procurement process.