In 2007, a Special Audit Tem (SAT) of the Commission on Audit conducted a special audit of selected transactions of the Provincial Government of Nueva Ecija for calendar years 2004-2007.
The SAT found an irregular award made by the province for the construction of the Nueva Ecija Friendship Hotel to A.V.T. Construction. Thereafter, the SAT issued a Notice of Disallowance disallowing the payments made to A.V.T. Construction in the total amount of PHP 155,036,681.77 on the grounds that AVT was an ineligible contractor and did not comply with the eligibility check process of RA 9184.
SAT found members of the Bids and Award Committee (BAC), the BAC Technical Group (TWG), the provincial accountant, the provincial engineer, and petitioner in his capacity as provincial governor of Nueva Ecija and as head of procuring entity, solidarily liable for the disallowed amount.
The Commission on Audit denied the petition of petitioner mainly on the grounds that he failed to exercise due diligence in the performance of his duty.
Issue:
Whether the Commission on Audit gravely abused its discretion in holding petitioner personally liable for the disallowed amount of PHP 155,036,681.77
Ruling:
The petition was granted. The Court held that petitioner can invoke the Arias doctrine which held that a head of an office/agency can rely to a reasonable extent on the good faith of their subordinates.
Missing documents, the eligibility checklist using the pass/fail criteria, the Net Financial Contracting Capacity (NFCC), and the technical eligibility documents pertain to the pre-qualification stage of the bidding process.
Under RA 9184, the determination of whether a prospective bidder is eligible or not falls on the BAC based on their compliance with eligibility requirements set forth in the Invitation to Bid and their submission of legal, technical, and financial documents as prescribed under RA 9184. Hence, this was the duty and direct responsibility of the BAC.
