G.R. No. 261207 , August 22, 2023
TOPBEST PRINTING CORPORATION, AS DULY REPRESENTED BY SHIRLEY L. DIONISIO, PETITIONER, VS. SOFIA C. GEMORA, IN HER CAPACITY AS DIRECTOR IV OF THE COMMISSION ON AUDIT, EDNA P. SALAGUBAN, SUPERVISING AUDITOR, FAHAD BIN ABDUL MALIK N. TOMAWIS, AUDIT TEAM LEADER, RESPONDENTS.

FACTS

On May 23, 2016, the National Printing Office (NPO) awarded a contract to petitioner Topbest Printing Corporation (Topbest) for the lease of a printing machine for PHP 49,500,000.00. The parties executed an Equipment Lease Agreement (ELA) on June 28, 2016. The ELA stipulated that the rental fee would be computed “on the value of the output from the machines on running basis only” and that maintenance and repair expenses would be for the account of the lessor (Topbest). Subsequently, the NPO issued an Invitation to Bid for a Joint Venture Undertaking for Printing Capacity Augmentation. Topbest submitted a proposal and received a Notice of Award for Lot 2 of the project on September 13, 2017. However, Topbest admitted that the NPO applied the same terms and conditions of the existing ELA, except that payment would be on a “per-usage basis” as shown in work orders.
The Commission on Audit (COA) Audit Team issued an Audit Observation Memorandum on October 16, 2017, stating that the NPO was subcontracting the printing of accountable forms under the guise of Equipment Lease Agreements, contrary to Government Procurement Policy Board (GPPB) Resolution No. 05-2010. On January 22, 2019, the Audit Team issued a Notice of Disallowance, disallowing transactions between NPO and twelve private printers, including Topbest, for the period April to December 2017, totaling PHP 499,376,515.60. The disallowance was based on a violation of Section 4.6 of GPPB Resolution No. 05-2010, which prohibits procuring entities from subcontracting printing services. The Notice held Topbest liable to return the rental fees it received.
Topbest filed an Appeal Memorandum before COA Director Sofia C. Gemora on August 6, 2019, arguing it was denied due process and that its contract with NPO was a valid lease, not a subcontract. Director Gemora denied the appeal in a Decision dated January 22, 2019 (received by Topbest on May 24, 2022), affirming the disallowance. The Decision found that the payment scheme was not merely a rental fee computed on machine output but was actually a division where Topbest received 85% of the total job order cost (covering materials, labor, power, etc.) and NPO retained 15% as profit. This arrangement constituted prohibited subcontracting. Instead of appealing this Decision to the COA Commission Proper as required by its rules, Topbest filed a Petition for Certiorari directly with the Supreme Court on June 23, 2022.

ISSUE

Whether the Supreme Court should take cognizance of the Petition for Certiorari despite Topbest’s failure to exhaust the available administrative remedy of appealing the COA Director’s Decision to the COA Commission Proper.

RULING

No. The Supreme Court dismissed the Petition for failure of Topbest to exhaust administrative remedies. Under the 2009 COA Revised Rules of Procedure, a party aggrieved by a decision of a Director may appeal to the COA Commission Proper. The appeal must be filed within six months after receipt of the Director’s decision. Topbest received the adverse Decision on May 24, 2022. Instead of filing an appeal with the COA Commission Proper, it filed the instant Petition directly with the Supreme Court on June 23, 2022. This failure to exhaust the plain, speedy, and adequate remedy provided by law is fatal. The doctrine of exhaustion of administrative remedies is a cornerstone of judicial procedure, and its disregard deprives the Court of jurisdiction. Certiorari is not a substitute for a lost appeal. The Court found no compelling reason to excuse non-compliance, such as a clear showing of grave abuse of discretion, which was not sufficiently established. Consequently, the Court declined to rule on the substantive merits of the case regarding the nature of the contract and the propriety of the disallowance. The Petition was dismissed.