G.R. No. 218461 - ILDEFONSO T. PATDU, JR., VS. COMMISSION ON AUDIT.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, upon the STFFP's determination that the project was in excess of P53,951,955.03 over the COA estimated cost (Excess Project Cost), the COA Auditor disallowed such excess amount. [20] On December 12, 1997, the DOTC requested the Office of the COA Chairman to lift ND No. 97-011-102 (DOTC) (95) dated June 18, 1997. [21] The COA Chairman referred the DOTC request to the COA Auditor for appropriate action which the COA Auditor treated the request as a request for reconsideration. [22] With respect to the incentive bonus, the COA Auditor determined on May 28, 1998 that the amount of P35,445,070.35 is excessive, and reduced the same to P20,129,354.80. [23] Hence, the COA Auditor disallowed the excess of P15,315,715.55 of the incentive bonus through ND No. 98-004-102 (DOTC) (96). [24] On July 14, 1999, DOTC filed a motion to dismiss [25] with the Office of the COA Chairman on the ground that foreign-assisted projects of the government are exempt from the requirement of auditorial review as provided in the September 17, 1991 COA Resolution that formed the basis of the COA disallowance. The DOTC cited the exempting clause in the Implementing Rules and Regulations (IRR) of Presidential Decree (P.D.) No. 1594, which provides: The above notwithstanding, nothing in these implementing rules and regulations shall negate any existing and future commitments with respect to the bidding, award and execution of contracts financed partly or wholly with funds from international financial institutions, as well as from bilateral and other similar sources. [26] The DOTC then stated that the above exempting clause excluded foreign-assisted projects from P.D. No. 1594 and its IRR. Hence, the September 17, 1991 COA Resolution, which lays down the rule on the reasonableness of the project cost of a contract pursuant to P.D. No. 1594 and its IRR, is not applicable. [27] On January 31, 2000, the COA Auditor issued a letter entitled "41 Indorsement" [28] to the Director of National Government Audit Office (NGAO) II, recommending the lifting of ND No. 97-011-102 (DOTC) (95) dated June 18, 1997 on the ground that the project is a foreign-assisted or Official Development Assistance (ODA)-funded project of the Philippine Government, and therefore, Philippine procurement law and procedure, specifically P.D. No. 1594 and its IRR, is not applicable. [29] The COA Auditor relied on the clarification issued by the Secretary of Justice in his Opinion [30] dated April 21, 1987 that the exempting clause in the IRR of P.D. No. 1594 effectively excluded foreign-assisted projects from the coverage of P.D. No. 1594 and its IRR, especially on the designation of ceiling in the amounts of contracts. On July 19, 2001, the NGAO II Director issued a letter entitled "5 th Indorsement" [31] to the COA Auditor, sustaining the lifting of ND No. 97-011-102 (DOTC) (95) dated June 18, 1997 based on the ground raised by the COA Auditor in the 4 th Indorsement dated January 31, 2000. On November 1