DECISION NO.

2019-292
July 4, 2019

Subject: Petition for Review of Mr. Danilo V. Roleda, General Contractor, B. Vicencio
Construction (BVC), of Commission on Audit Legal Services Sector Decision No.
2009-244 dated June 3, 2009, which affirmed Notice of Disallowance (ND) No. 04-
069-101 dated October 8, 2004, in the amount of P815,000.00, representing the
payment for rental of service vehicle and sleeping quarters under SPCL II-General
Items of BVC’s contract agreement with the Department of Public Works and
Highways Regional Office No. VIII for the construction of Calbayog Diversion Road,
Calbayog City, and included him among the persons liable in the ND

DECISION

FACTS OF THE CASE

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Before this Commission is the Petition for Review of Mr. Danilo V. Roleda, General Contractor, B. Vicencio Construction
(BVC), of Commission on Audit (COA) Legal Services Sector (LSS) Decision No. 2009-244 dated June 3, 2009. The decision
affirmed Notice of Disallowance (ND) No. 04-069-101 dated October 8, 2004 in the amount of P815,000.00, representing the
payment for rental of service vehicle and sleeping quarters under SPCL II-General Items of BVC’s contract agreement for the
construction of Calbayog Diversion Road, Calbayog City, and included Mr. Roleda among the persons liable in the ND.

On November 5, 2001, the Department of Public Works and Highways (DPWH) Regional Office (RO) No. VIII entered into
a contract agreement with BVC for the construction of Calbayog Diversion Road, Station 7+674.68 to Station 9+173.36, Calbayog
City, for a contract price of P24,952,351.17 and for a duration of 300 calendar days.

Upon contract review, the Technical Services Office (TSO), COA RO No. VIII, issued Contract Review Report dated August
24, 2002, stating, among others, the following:

1. The SPCL II-General Items which comprised of (a) rental of service vehicle and (b) rental of field office/sleeping
quarters, in the amount of P815,000.00, should not be included in the contract price;

2. If the items are used by the government engineers, the cost should be charged against the Estimated Government
Expenditures under the Engineering and Administrative Overhead (EAO) 2 per Individual Program of Work (POW)
consistent with the Special Provisions of DPWH Approved Budget for Fiscal Year (FY) 2001 under Republic Act (RA)
No. 8760;3 and

3. Since the said items are not directly related to the project construction, the amount of P815,000.00 should be deducted
from the contract price.

Pursuant to the above findings, the Audit Team Leader (ATL), DPWH RO No. VIII, issued Audit Observation Memorandum
(AOM) No. 04-2002 (Fund 101) dated November 18, 2002, requesting the latter to comment on the observation that the rental of
service vehicles and field office/sleeping quarters should not be included as direct cost of the contract. The Director, DPWH RO
No. VIII, in its comment, averred the following:

1. The items are to be used by the DPWH engineers and personnel assigned for day-to-day supervision of the project;
hence, the same are directly involved in the project supervision pursuant to Part A, Facilities for the Engineers, DPWH
Standard Specifications for Highways, Bridges and Airports (SSHBA) Revised 1995; and

2. The cost of SPCL II-General Items cannot be charged to EAO because rental of service vehicle and sleeping quarters are
not included in the items to be charged against EAO. EAO is limited to 3.5% of the appropriations which must be
utilized exclusively for payment of salary, per diems and related remuneration of the personnel assigned in the
supervision of the project.

Unsatisfied with the comments/justification of the DPWH, the Regional Cluster Director (RCD), Regional Legal and
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Adjudication (RLA), COA RO No. VIII, issued ND No. 04-069-101 dated October 8, 2004, disallowing the total amount of
P815,000.00, representing the payment for items under SPCL II-General Items of the contract on the ground that the same should
not be included in the direct contract cost of the DPWH. The following persons were held liable for the ND:

Name Position/Designation Nature of Participation in

the Transaction
Pastor T. Tabale Officer-in-Charge Regional For approving the payment
Director
 Romualdo T. Baltazar Officer-in-Charge Construction For certifying that expenses
Division were necessary, lawful, and
incurred under his direct
supervision
Norma S. Tabale Accountant IV For certifying the availability
of funds
Lilia P. Castro Accountant I For certifying the
completeness and propriety of
supporting document

DPWH RO No. VIII sought reconsideration of the ND, which was denied by the RCD, RLA, COA RO No. VIII, in his letter
dated June 2, 2006. Hence, DPWH RO No. VIII filed an appeal with the COA LSS.

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The Director, in COA LSS Decision No. 2009-244 dated June 3, 2009, denied the appeal on the following grounds:

1. Special Provision No. 9 of the DPWH Approved Budget for FY 2011 under RA No. 8760 did not state that the EAO is
intended only for payment of salary, per diems, and other related remuneration of DPWH personnel assigned to
supervise the project. Since the items under SPCL II-General Items are intended for government supervision of the
project, the expenses should be included in the construction project management under the EAO of the Estimated
Government Expenditures;

2. Pursuant to Department of Budget and Management (DBM) National Budget Circular (NBC) No. 446,6 series of 1995,
no appropriations shall be used for rental of motor transport equipment for a continuous period of more than 15 days,
except when authorized by the Secretary of the DBM. The inclusion of rental of service vehicle in the contract
agreement for a period of 10 months without proof of prior authorization from the DBM Secretary violates NBC No.
446; and

3. Part A, Facilities for the Engineer, DPWH SSHBA covers offices and laboratories and vehicle for the Engineer.

Thus, the decision affirmed the ND with modification to include Mr. Danilo V. Roleda, as payee, among the persons liable
for the disallowance.

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On July 31, 2015, Mr. Roleda received a copy of Notice of Finality of Decision (NFD) dated February 4, 2015 stating that
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the decision has become final and executory and of COA Order of Execution (COE) dated July 3, 2015. Petitioner’s receipt of
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NFD and COE prompted him to file the petition on September 10, 2015, where the following arguments are proffered:

1. Petitioner did not receive a copy of ND No. 04-069-101 dated October 8, 2004 and COA LSS Decision No. 2009-244
dated June 3, 2009. Neither did he receive a copy of AOM No. 04-2002 (Fund 101) dated November 18, 2002. Petitioner
has no knowledge whatsoever that the contract agreement for the construction of Calbayog Diversion Road, Calbayog
City, has been subject of a disallowance;

2. The ND did not include Mr. Roleda as one of the persons liable for the disallowance. It was only in the assailed decision
that he was made liable for the disallowed amount of P815,000.00;

3. Petitioner’s right to due process was violated when the COA LSS decision included him as one of the persons liable for
the disallowed amount of P815,000.00, contrary to the findings of the auditor as stated in the ND;

4. Petitioner was deprived of his right to avail of the remedies afforded to him by law when he was not furnished a copy of
the ND and the assailed decision;

5. Petitioner cannot be made liable for the disallowance because he has no participation in the preparation and approval of
POW, Agency Approved Estimate (AAE), and contract agreement. Petitioner merely participated in the public bidding
where SPCL II-General Items was incorporated as direct contract cost; and

6. Petitioner merely complied with the provisions of the contract agreement by providing service vehicle and sleeping
quarters to the DPWH personnel. The services performed by the petitioner inured to the benefit of the government. To
order petitioner to refund the amount of P815,000.00 paid by the DPWH for his services would tantamount to unjust
enrichment on the part of the government.

ISSUE

The issue to be resolved is whether or not the Petition for Review is meritorious.
DISCUSSION

The petition is filed on time but is bereft of merit.

Under Section 9, Rule X of the 2009 Revised Rules of Procedure of the COA (RRPC), a decision or resolution of this
Commission upon any matter within its jurisdiction shall become final and executory after the lapse of 30 days from notice of the
decision or resolution, unless a motion for reconsideration is seasonably made or an appeal to the Supreme Court is filed. If no
appeal is filed within the time provided by the rules of this Commission, the decision shall be entered by the Commission
Secretary in the Docket which shall contain the dispositive part of the decision and shall be signed by the Secretary with a
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certificate that such decision has become final and executory. Such recording of the decision shall constitute the entry.
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Accordingly, an NFD and COE shall be issued upon a decision that has become final and executory.

However, it is emphasized that a decision should be served to each of the persons liable for the disallowance through
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personal service, or if not practicable through registered mail. Service of decision is crucial since it serves as the reckoning
point to determine whether a decision was appealed within the reglementary period, because otherwise, i.e., in the absence of an
15
appeal or if the appeal was made beyond the reglementary period, the decision would, as a consequence, become final. Stated
otherwise, if a party concerned was not served with a copy of a decision, the same could not attain finality as to him.

In this case, absent any proof that petitioner had been properly served with a copy of the COA LSS Decision No. 2009-244
dated June 3, 2009, said decision cannot attain finality as to him. Consequently, the NFD and COE cannot be enforced against the
petitioner and he may validly appeal the assailed decision to this Commission, through a Petition for Review, as what he did in
this case.

As to the alleged non-service of AOM to the petitioner, Section 8.2, Chapter III of t h e Rules and Regulations on the
Settlement of Accounts, is clear that the AOM is addressed to the head of agency and the officer/s concerned stating the
deficiencies noted and/or the requirements to be complied with and requiring a response thereto. Mr. Roleda, not being a head or
officer of the auditee agency, has no right to be furnished with a copy of an AOM.

He also asserted that the ND did not include him as one of the persons liable therein; thus, the COA LSS Decision No. 2009-
244 which included him among the persons liable in the ND violates his right to due process. His assertion is untenable. In
resolving cases brought before it on appeal, this Commission or its lower adjudicating body is not required to limit its review to
the grounds relied upon by a government agency’s auditor with respect to disallowing certain disbursements of public funds. In
consonance with its general audit power, COA is not merely legally permitted, but is also duty-bound to make its own assessment
of the merits of the disallowed disbursement and not simply restrict itself to reviewing the validity of the ground relied upon by
the auditor of the government agency concerned. To hold otherwise would render COA’s vital constitutional power unduly
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limited and thereby useless and ineffective. Clearly, even if petitioner was not originally included in the ND as one of the
persons liable, a COA decision finding him liable for the disallowance may be validly rendered.

On the other hand, he filed this petition and the fact that this Commission entertains the same negates petitioner’s
contention that he was denied of his right to avail of legal remedies.

As regards the propriety of the issuance of the ND, this Commission finds no compelling reason to disturb the findings of
COA LSS as stated in its Decision No. 2009-244. As correctly found by COA LSS, the items under SPCL II-General Items should
not be included in the contract because the same are to be charged to the EAO of the Estimated Government Expenditures of the
DPWH. Also, the continuous rental of service vehicle for 10 months without the approval of the DBM Secretary was a violation of
Section 3.3 of DBM NBC No. 446, series of 1995. The payment for rentals of service vehicle and sleeping quarters under SPCL II-
General in the amount of P815,000.00 was not valid; hence, properly disallowed.

As to the liability of petitioner in the ND, the COA LSS decision correctly included him among the persons liable for the
disallowance. The Supreme Court has ruled that public officials who are directly responsible for, or participated in making the
illegal expenditures, as well as those who actually received the amounts therefrom shall be solidarily liable for their
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reimbursement.

Consistent with the foregoing rule, the obligation to refund the payment received falls upon both those directly
responsible, i.e., the approving officers and those who actually received the disallowed amount. This is in line with Section 43,
Chapter 5, Book VI of the Administrative Code on 1987 (Executive Order No. 292), which provides in part:

Liability for Illegal Expenditures - Every expenditure or obligation authorized or incurred in violation of the
provisions of the Code or of the general and special provisions contained in the annual General or other
Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every
official or employee authorizing or making such payment, or taking part therein, and every person receiving
such payment shall be jointly and severally liable to the Government for the full amount so paid or received.
(Underscoring supplied)

Clearly then, the approving officers and each person who received the disallowed amount are obligated, jointly and
severally, to refund the amount so received.

In this case, petitioner was the payee of the disallowed amount. The fact that he has no participation in the preparation of
the contract or of the POW is of no moment since the law makes him solidarily liable with the government official/s who
authorized the payment or participated in the irregular disbursement. It is clarified at this instance that while the government can
demand from the petitioner the full refund of the disallowed amount, petitioner, nonetheless, has the right as solidary debtor to
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proceed against his co-debtors/obligors for their share in the total amount of disallowance.
 All told, petitioner was correctly included as one of the persons liable in ND No. 04-069-101 and the refund in the amount
of P815,000.00 can be demanded from him.

RULING

WHEREFORE, premises considered, the Petition for Review Mr. Danilo V. Roleda, General Contractor, B. Vicencio
Construction (BVC), is hereby DENIED for lack of merit. Accordingly, Commission on Audit Legal Services Sector (LSS)
Decision No. 2009-244 dated June 3, 2009, which affirmed Notice of Disallowance (ND) No. 04-069-101 dated October 8, 2004
in the amount of P815,000.00, representing the payment for rental of service vehicle and sleeping quarters under SPCL II-General
Items of BVC’s contract agreement with the Department of Public Works and Highways Regional Office No. VIII for the
construction of Calbayog Diversion Road, Calbayog City, and included Mr. Roleda among the persons liable in the ND is
AFFIRMED.

(SGD.) MICHAEL G. AGUINALDO

Chairperson

(SGD.) JOSE A. FABIA (SGD.) ROLAND C. PONDOC

Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

Atty. Pilarita T. Lapitan

Counsel for Petitioner
18-D Ana Maria St., San Francisco Del Monte, Quezon City

The Audit Team Leader

The Regional Supervising Auditor
Department of Public Works and Highways
Regional Office No. VIII
Baras, Palo, Leyte

The Directors
Cluster 7-Public Works, Transport and Energy, National Government Sector
Information Technology Office, Systems and Technical Services Sector

The Assistant Commissioners

National Government Sector
Commission Proper Adjudication and Secretariat Support Services Sector

All of this Commission

ESZ/SUV/ERD/JISL/LDRE
CMIS 2015-012
CPCN 2015-591

1 Pursuant to Section 2, Rule VII of the 2009 Revised Rules of Procedure of the Commission on Audit (RRPC).
2 Special Provision No. 9 Engineering and Administrative Overhead- In order to ensure that at least ninety six and 50/100 percent (96.50%) of the infrastructure fund
release by the DBM is made available for direct implementation of the project, any authorized deduction for the project funds for administrative overhead, pre-
construction activities and/or detailed engineering, construction project management, testing and quality control, acquisition, rehabilitation and repair of heavy
equipment and other related equipment and parts used in the implementation of infrastructure projects and contingencies, shall not exceed there and 50/100 (3.5%) of its
project cost, subject to Section 35, Chapter 5, Book VI of Executive Order No. 292 xxx.
3 General Appropriations Act of 2000 (re-enacted for Fiscal Year 2001).
4 Rollo, pp. 7-8.
5 Rollo, pp. 9-15.
6 Re: Guidelines on the Acquisition and Rental of Motor Vehicles.
7 As alleged in the Petition for Review, rollo, p. 31.
8 Rollo, pp. 1-3.
9 Rollo, pp. 5-6.
10 Rollo, pp. 17-39.
11 As reflected in the receiving stamp of the petition, rollo, p. 39.
12 Section 13, ibid.
13 Sections 1 to 3, Rule XIII, 2009 RRPC.
14 Section 7, Rule IV, 2009 RRPC.
15 Mindanao Terminal and Brokerage Service, Inc. vs. Court of Appeals and Philippine Ports Authority, G.R. No. 163286, August 22, 2012.
16 Ramon Yap vs. Commission on Audit (COA), G.R. No. 158562, April 23, 2010.
17 Silang vs. COA, G.R. No. 213189, 8 September 2015.
18 New Civil Code of the Philippines: Article 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay,
the creditor may choose which offer to accept.