G.R. No. 85285 and G.R. No. 87150, July 28, 1989
DANVILLE MARITIME, INC., petitioner, vs. COMMISSION ON AUDIT, respondent. ( G.R. No. 85285 ) and COMMISSION ON AUDIT, petitioner, vs. REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, Branch 140, Makati, Metro Manila, presided by HONORABLE JUDGE LETICIA P. MORALES, and DANVILLE MARITIME, INC., respondents. (G.R. No. 87150)

FACTS

The Philippine National Oil Company (PNOC) resolved to sell its tanker, “T/T Andres Bonifacio,” through public bidding. After extensive publication and notification, the bidding was held on September 15, 1988. Danville Maritime, Inc. was the sole bidder, offering US$14,158,888.88, which exceeded the US$14 million floor price. The PNOC Disposal Committee declared Danville the winner, and the parties executed a Memorandum of Agreement conditioned upon obtaining government approvals, including from the Commission on Audit (COA).
The COA, through a letter-directive dated October 10, 1988, disapproved the sale. It ruled the bidding failed due to lack of competition, citing COA Circular No. 86-264, which requires at least two bidders. The COA also referenced a subsequent offer from another company, Fearnley Finans, to purchase the vessel for at least US$1 million more than Danville’s bid. Danville filed a petition for review with the Supreme Court ( G.R. No. 85285 ) to set aside the COA’s disapproval. Simultaneously, Danville filed a separate civil case in the Regional Trial Court (RTC) of Makati against PNOC. The COA then filed its own petition with the Supreme Court (G.R. No. 87150) seeking to annul the RTC proceedings for lack of jurisdiction.

ISSUE

The primary issues are: (1) Whether the COA committed grave abuse of discretion in disapproving the sale to Danville based on the lone bid; and (2) Whether the RTC has jurisdiction to review the COA’s decision.

RULING

The Supreme Court dismissed Danville’s petition and granted the COA’s petition, ordering the dismissal of the RTC case. On the substantive issue, the Court upheld the COA’s disapproval. The legal logic is anchored on the fundamental purpose of public bidding: to secure the best price and ensure fairness through competition. A bidding with only one participant cannot fulfill this objective, as it negates the competitive character essential to public auctions. COA Circular No. 86-264 implicitly requires at least two bidders for a valid bidding, a principle supported by analogous rules under P.D. No. 1594 for infrastructure contracts. The subsequent higher offer from Fearnley Finans merely underscored the potential disadvantage to the government from accepting a lone bid. The PNOC-Danville agreement itself was conditional on COA approval, which was validly withheld.
On jurisdiction, the Court ruled the RTC has no power to review COA decisions. Under the Constitution, the Commission on Audit has the exclusive authority to audit and settle all accounts pertaining to government revenue and expenditures. Decisions of constitutional commissions like the COA are reviewable only by the Supreme Court through a special civil action for certiorari, not by regular trial courts. Furthermore, Danville’s act of filing simultaneous actions in different forums constituted forum shopping, warranting dismissal. The Court made permanent the restraining order against the RTC and dismissed the lower court case.