G.R. No. 210936 - TEODORO B. CRUZ, JR., MELCHOR M. ALONZO, AND WILFREDO P. ALDAY, VS. COMMISSION ON AUDIT.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, premises considered, this Commission DENIES the herein appeal and AFFIRMS ND No. LRTA 2008-005 (2002) dated February 27, 2008 disallowing the payment of US$58,800.00 to TAN-CA International, Inc./Yujin Machinery Ltd., for repair of traction motor armatures. The LRTA Management is hereby directed to exert its utmost efforts to demand payment of the liquidated damages as penalty for late delivery in accordance with this Decision and to compel the Contractor to comply with its contractual obligations, or to take appropriate legal action against it to redress the violation of its rights under the TOR. Further, the LRTA Management should demand from the Contractor the return of the 10 traction motor armatures which are still in the hands of the Contractor or the payment of their money value. [18] in a Resolution [19] dated 6 December 2013 received by petitioners on 5 February 2014, the Motion for Reconsideration [20] was also denied for lack of merit. [21] Petitioners filed the instant Petition on 10 February 2014 imputing grave abuse of discretion to COA for: (1) disallowing the payment of US$58,800 and holding petitioners liable therefor, even if the release of the payment was demanded and justified by the circumstances, even if the units passed the warranty period, and even if petitioners did not know whether or not the units failed to pass that period; (2) holding the obligation indivisible; (3) surreptitiously examining a settled account; and (4) holding Cruz, the final approving authority, liable even if he claimed to have relied only on his subordinates. [22] After being granted its Motions for Extension, [23] COA filed its Comment [24] through the Office of the Solicitor General on 26 June 2014. Respondent alleged that it did not commit grave abuse of discretion in disallowing the payment of US$58,000 and in holding petitioners liable therefor. [25] It insisted that petitioners had not squarely addressed the issues raised in the Audit Observation Memorandum (AOM) or in the Notice of Disallowance. [26] It also insisted that they were not able to present any proof that the account had been settled. [27] Thus, no weight can be given to petitioners' contention that the three-year prescriptive period was violated by the issuance of the Notice of Disallowance based on an AOM issued on 27 February 2008 or almost five years after the settlement of account on 21 May 2003. [28] Respondent further argued that petitioners Cruz and Alonzo's claim that they have already resigned is of no moment because (1) the Notice of Suspension was issued on 25 September 2003, and (2) the issues of the AOM and the Notice of Disallowance were already brought to their attention. [29] Respondent claimed that petitioners were notified of the insufficiencies, to wit: lack of supporting documents; failure to file a legal action against the contractor for not complying with the terms and conditions of the contract as stated in the Terms of Reference (TOR); failure to