Case Digest: Reynaldo A. Bodo v. Commission on Audit G.R. No. 228607, October 5, 2021 Supreme Court, En Banc Ponente: Justice Ricardo R. Rosario

 

FACTS

The Municipality of Barugo, Leyte, directly purchased 3,900 liters of "Fil-Ocean" liquid fertilizers worth ₱1,950,000.00 from Bals Enterprises in 2004 for distribution to qualified farmers under the Farm Inputs/Farm Implements Program of the Department of Agriculture. During post-audit, the Commission on Audit (COA) issued Notice of Disallowance (ND) No. 05-131-101(04), finding that the procurement violated Republic Act No. 9184 (Government Procurement Reform Act) because the municipality resorted to direct contracting despite the absence of the legal requirements, including the failure to conduct the required bidding procedures and the absence of supporting procurement documents.

The original Notice of Disallowance held several municipal officials liable but excluded the members of the Bids and Awards Committee (BAC) after COA found that they had been bypassed during the procurement process. Upon appeal, however, the COA Commission Proper modified its decision by directing the issuance of a Supplemental Notice of Disallowance to include Reynaldo A. Bodo, the Municipal Agriculturist, because he signed the purchase request for the liquid fertilizers. Consequently, Supplemental ND No. 10-001-101(04) was issued against him.

Bodo questioned the supplemental disallowance, arguing that he merely signed the purchase request in the performance of his ministerial duties and did not authorize or approve the illegal procurement. His appeals before the COA Regional Office and the COA Commission Proper were denied, prompting him to file a Petition for Certiorari before the Supreme Court under Rule 64 in relation to Rule 65 of the Rules of Court, alleging that COA gravely abused its discretion in holding him liable for the entire disallowed amount.

ISSUE

Whether or not the Commission on Audit correctly held petitioner Reynaldo A. Bodo civilly liable under the Supplemental Notice of Disallowance for the illegal procurement of liquid fertilizers despite the fact that he merely signed the purchase request.

Whether or not petitioner's participation in the procurement constituted bad faith, malice, or gross negligence sufficient to make him personally liable under Section 43, Book VI of Executive Order No. 292 (Administrative Code of 1987) and the rules governing notices of disallowance.

Whether or not petitioner should be held liable for the entire amount of ₱1,950,000.00, or whether the amount of his civil liability should first be determined in accordance with the rules laid down in Madera v. Commission on Audit on the return of disallowed amounts and the application of quantum meruit.

HELD

The Supreme Court GRANTED the petition IN PART. It sustained the Commission on Audit's finding that petitioner was properly included among the officers civilly liable for the illegal procurement. The Court held that although petitioner did not approve or authorize the direct procurement, his act of signing the purchase request constituted participation in the unlawful expenditure of public funds. Under Section 43, Book VI of Executive Order No. 292 (Administrative Code of 1987), in relation to Sections 38 and 39, Book I thereof, government officials who take part in an illegal expenditure may be held personally liable when they act with bad faith, malice, or gross negligence. The Court found that petitioner failed to exercise the diligence expected of his position because he initiated the procurement despite the absence of compliance with the mandatory requirements of Republic Act No. 9184.

The Court nevertheless ruled that the COA erred in automatically holding petitioner liable for the entire disallowed amount of ₱1,950,000.00. Applying the doctrine established in Madera v. Commission on Audit, the Court explained that where a Notice of Disallowance is upheld, the amount recoverable from approving and certifying officers must be determined after considering whether the government actually received value from the transaction. The Court emphasized that Section 43 of the Administrative Code should be read together with the Madera Rules on Return, which recognize that civil liability may be reduced when the recipient or contractor is entitled to retain the reasonable value of goods or services actually delivered under the principle of quantum meruit.

The Court further explained that quantum meruit allows the government contractor to retain the reasonable value of benefits actually received by the government despite the invalidity of the contract. Since the records did not conclusively establish the exact quantity and reasonable value of the liquid fertilizers delivered to the Municipality of Barugo, the Supreme Court held that it could not itself determine the proper amount recoverable. Such factual determination requires technical audit expertise that properly belongs to the Commission on Audit. Consequently, the amount that may lawfully be retained by Bals Enterprises must first be determined and deducted from the original disallowed amount before fixing the final civil liability of petitioner and the other responsible officers.

Accordingly, the Supreme Court AFFIRMED COA Decision No. 2016-316 with MODIFICATION. It vacated the portion fixing petitioner's liability at ₱1,950,000.00 and REMANDED the case to the Commission on Audit to determine, with dispatch, the proper amount of civil liability of petitioner and his solidary co-obligors in accordance with Madera v. Commission on Audit, Section 43 of the Administrative Code of 1987, and the principle of quantum meruit.