CANDELARIO L. VERZOSA, JR. (in his former capacity as Executive   Director   of   the Cooperative Development Authority),


                   – versus –


GUILLERMO N. CARAGUE (in his official  capacity  as Chairman of the

             G.R. No. 157838



             CORONA, C.J.,


             CARPIO MORALES,

             VELASCO, JR.,


             LEONARDO-DE CASTRO,




             DEL CASTILLO,


             VILLARAMA, JR.,


             MENDOZA, and

             SERENO, JJ.





             March 8, 2011

x- – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x




          The present petition for review on certiorari assails  the Decision Nos. 98-424[1] and 2003-061[2] dated October 21, 1998 and March 18, 2003, respectively, of the Commission on Audit (COA) affirming the Notice of Disallowance No. 93-0016-101 datedNovember 17, 1993 and the corresponding CSB No. 94-001-101 dated January 10, 1994.

          The facts are:

          On two separate occasions in December 1992, the Cooperative Development Authority (CDA) purchased from Tetra Corporation (Tetra) a total of forty-six (46) units of computer equipment and peripherals in the total amount of P2,285,279.00.  Tetra was chosen from among three qualified bidders (Tetra, Microcircuits and Columbia). In the technical evaluation of the units to be supplied by the qualified bidders, CDA engaged the services of the Development Academy of the Philippines-Technical Evaluation Committee (DAP-TEC).  The bidding was conducted in accordance with the Approved Guidelines and Procedures of Public Bidding for Information Technology (IT) Resources and Memorandum Order No. 237 issued by the Office of the President. Petitioner who was then the Executive Director of the CDA approved the purchase.

On May 18, 1993, the Resident Auditor sought the assistance of the Technical Services Office (TSO), COA in the determination of the reasonableness of the prices of the purchased computers.[3]   In its reply-letter dated October 18, 1993, the TSO found that the purchased computers were overpriced/excessive by a total of P881,819.00.  It was noted that (1) no volume discount was given by the supplier, considering the number of units sold; (2) as early as 1992, there were so much supply of computers in the market so that the prices of computers were relatively low already; and (3) when CDA first offered to buy computers, of the three qualified bidders, Microcircuits offered the lowest bid of P1,123,315.00 while Tetra offered the highest bid of P1,269,630.00.[4]  The Resident Auditor issued Notice of Disallowance No. 93-0016-101 dated November 17, 1993, for the amount of P881,819.00.[5]

          In a letter[6] dated May 13, 1994, CDA Chairman Edna E. Aberilla appealed for reconsideration of the disallowance to COA Chairman Celso D. Gangan, submitting the following justifications:

[1.]    The basis of comparison (Genesis vs. Trigem computers and ferro-resonant type UPS vs. ordinary UPS) is erroneous, as it is like comparing apples to oranges. x x x Genesis, a non-branded computer, is incomparable to Trigem, a branded computer in the same manner as the MAGTEK-UPS, a ferro-resonant type of UPS, should not be compared with APC-1000W, ADMATE 1000W and PK 1000W, which are all ordinary types of UPS.

         x x x It would have been more appropriate, therefore, to compare the acquired computer equipment and peripherals with the same models of other branded computers.

[2.]    The technical specifications and other added features were given due weight. x x x [T]he criteria for determining the winning bidder is as follows:

            Cost/price                                        50%

            Technical Specifications                 30%

            Support Services                             20%

[3.]    The same technical specifications and special features explained the advantages of the acquired computer equipment and peripherals with those that are being compared with.  With regards to our branded computer, the advantages include the following:

[a.]    Original and Licensed Copy of its Disk Operating System specifically MS-DOS Ver 5.0.

[b.]    Original and Licensed Operating System Diskettes and its Manuals.

         x x x x

[c.]    User’s Manual and Installation Guide x x x

[d.]   Computers offered should run PROGRESS Application Development System as indicated in the Bid Document x x x because the developing system for the establishment of the agency’s Management Information System (MIS) is based on PROGRESS Application Software.

[e.]    Legal Bios/License Agreement for the particular brand of computers offered to CDA. x x x

   With these features, the agency is assured that the computers were acquired through a legitimate process (not smuggled/“pirated”), thereby, upholding the agency’s respect for Intellectual Property Law or P.D. No. 49.

   With regard to the UPS, x x x it is a ferro-resonant type x x x [which has] advantages to ensure greater reliability and will enable users to operate without interruption.

[4.]    [As declared in] COA Circular No. 85-55-A, “the price is not necessarily excessive when the service/item is offered with warranty or special features which are relevant to the needs of the agency and are reflected in the offer or award.  As will be seen from the criteria adopted by the agency, both the warranty and special features were considered and given corresponding weights in the computation for the support services offered by the bidder.

[5.]    x x x [T]here is no overpricing because in the process of comparing “apples vs. apples”, the other buyers in effect procured their units at a higher price than those of the CDA.  We x x x are still in the process of gathering additional data of other transactions to further support our stand. x x x

[6.]    x x x The rapid changes due to research and development in Information Technology (I.T.) results in the significant reduction of prices of computer equipment.  x x x [M]aking a comparison given two different periods (December 1992 vs. August 1993) may be invalid x x x.

[7.]    The procedures of the public bidding as adopted by the [CDA] x x x demonstrate a very effective mechanism for avoiding any possible overpricing.[7]

            In compliance with the request of the Legal Office Director, the TSO submitted its comments on the justifications submitted by the CDA.  On the non-comparability of Genesis and Trigem brands, it explained that the reference values were in accordance with the same specifications but exclusive of the “branded” information, since this was not stated in the P.O./Invoice, which was used as basis of the canvass.  Since the said brands are both computers of the same general characteristics/attributes, the branded and non-branded labels propounded by the supplier is of scant consideration.  As regards the UPS, it was pointed out that the enumerated advantages of the delivered items are the same advantages that can be generated from a UPS of the same specifications and standard features; in this case, the reference value pertains to a UPS with the same capacity, input, output, battery pack and back-up time, except for the brand.  As to the period of purchase by the CDA, the TSO noted that based on its monitoring from October 1993 to May 1994, prices of Star and Epson printers and hard disk (120 MB Model St-3144A) either remained the same or even increased by 2% to 5%.  It is therefore valid that the price of an item is the same from one period to another, and that an item may be available unless it is out of stock, or phased out, with or without a replacement.  In this case, the reference value cannot be considered as the reduced price as a result of rapid changes due to research since the said reference value is the price for the same model already existing in December 1992 when the purchase was made and still available in August 1993, and not an equivalent nor replacement of a phased out model.[8]

          On the other hand, the Resident Auditor maintained her stand on the disallowance and  submitted to Assistant Commissioner Raul C. Flores  her replies to the CDA’s justifications, as follows: (1) on the allegedly erroneous comparison between Genesis and Trigem brands, if this will be the basis, then their bidding will not be acceptable because in the Abstract of Bids, the comparison of prices was not based on similar brands, i.e., Tetra offered Trigem-Korean for P1,269,620, Microcircuits offered Arche-US brand forP1,123,315, and Columbia offered Acer-Taiwan brand for P1,476,600; what is important is that, the specifications and functions are similar; (2) the 2nd, 3rd and 4th justifications are of no moment as all the offers of the three qualified bidders were of similar technical specifications, features and warranty as contained in the Proposal Bid Form; (3) on the 5th justification — the companies referred to procured only one unit each and of much higher grade; (4) on the 6th justification — while the date of the canvass conducted by the TSO does not coincide with the date of purchase, there is no showing that foreign exchange rate changed during the latter part of 1992 which will significantly increase the prices of computers; and (5) on the 7th justification — while the COA witnessed the public bidding, the post-evaluation was left to the Pre-qualifications, Bids and Awards Committee (PBAC).  The National Government Audit Office I concurred with the opinion of the Resident Auditor that CDA’s request may not be given due course.[9]

On October 21, 1998, respondent COA issued the assailed decision affirming the disallowance.  It held that whether or not the product is branded is irrelevant in the determination of the reasonableness of the price since the brand was not stated in the Call for Bids nor in the Purchase Order.  The bids of the three qualified bidders were based on similar technical specifications, features and warranty as contained in their proposals.  It was also found that the performance of the competing computer equipment would not vary or change even if the attributes or characteristics of said computers cited by petitioner were to be factored in.  The difference in brands, microprocessors, BIOSes, as well as casings will not affect the efficiency of the computer’s performance.[10]

          Further, COA declared that CDA should not have awarded the contract to Tetra but to the other competing bidders, whose bid is more advantageous to the government.  It noted that Microcircuits offered the lowest bid of P1,123,315.00 for the US brand said to be more durable than the Korean brand supplied by Tetra.  CDA also should have been entitled to volume discount considering the number of units it procured from Tetra.  Lastly, COA emphasized that the requirements and specifications of the end-user are of prime consideration and the other added features of the equipment, if not specified or needed by the end-user, should not be taken into account in determining the purchase price. The conduct of public bidding should be made objectively with the end in view of purchasing quality equipment as needed at the least cost to the government.  The price for the equipment delivered having been paid, when such equipment could be acquired at a lower cost, the disallowance of the price difference was justified.[11]

          Petitioner’s motion for reconsideration having been denied, he now comes to this Court for relief on the following grounds:



            Petitioner reiterates his argument that price was not the sole criteria in determining the winning bid for the purchased computers, price comprising only 50% of the criteria, while technical evaluation and support services were accorded 30% and 20%, respectively.  He points out that the computer/hardware of generic class which was provided to the COA-TSO with low-priced quotations for comparison with the winning bid and as bases for disallowance in audit, never underwent technical or physical evaluation as did the computer equipment of the three final bidders.  Moreover, the CDA-PBAC Bidding Procedure was designed in such a way that generic type (cloned) computers were eliminated even in the pre-qualification stage.  It is for this reason that the final bidders all offered branded computers which, by their very nature, were all considered to be efficient by no less than the Information Technology Center (ITC) of the COA, as mentioned in the memorandum dated December 9, 1996 of Director Marieta SF. Acorda. The mere fact that the offered computers had different manufacturers can lead to a reasonable conclusion that the life spans of the same and reliability would also vary.[13]

          As to the COA’s position that even if only the price was considered, the contract should have been awarded to Microcircuits, petitioner points out that in such a case, CDA’s disallowance would have been only P140,000.00, much lower than the present P881,819.00 disallowance.  But as it is, on the basis of the three criteria applied during the pre-qualification stage, Tetra garnered the highest points as certified by the PBAC in its memorandum-update dated November 20, 1992.  The application of all three criteria meets the standard set by COA Circular No. 85-55-A.  Thus, although Microcircuits got the highest percentage on Cost/Price factor, it only ranked second in over-all performance, to Tetra, as evaluated by the PBAC.[14]

          Petitioner cites the dissenting opinion[15] of COA Commissioner Emmanuel M. Dalman who found no overpricing in this case and the CDA decision as one done in good faith and with the presumption of regularity in the performance of official functions. Indeed, it behooved on COA to prove that the standards set by the COA circular were met in audit disallowance; it even failed to produce actual canvass sheets and/or price quotations from identified suppliers. The Summary of Price Data and comparison sheets attached to the Notice of Disallowance by themselves are not sufficient basis for the disallowance herein since they do not satisfy the requirement highlighted in the case of Arriola v. Commission on Audit.[16]  The COA auditor herself (author of the Notice of Disallowance) admitted that she did not personally prepare actual canvass sheets and only a telephone canvass was conducted.  As to the volume discount, again no evidence was adduced to show that the other bidders would have given the same if the contract was awarded to them.  What is certain is that, owing to the consideration of the two major criteria of “technical evaluation” and “after-sales support”, most of the computer equipments provided by Tetra pursuant to the disallowed transaction are still functioning to date, even after twelve (12) years of continued use.[17]

          Finally, petitioner contends that he should not be made personally liable for the disallowed expense.  He invokes the prevailing doctrine that unless they have exceeded their authority, corporate officers, as a general rule, are not personally liable for their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and members. CDA though a government corporation, there is no single allegation or imputation, much less any evidence of any act, constituting bad faith, malice or negligence on the part of petitioner during his service as Executive Director of the CDA, he being a mere signatory to the documents after the winning bidder had been chosen, and was only a recommending officer on these matters.[18]

          In its Manifestation and Motion[19] dated September 10, 2003, the Office of the Solicitor General stated that after a thorough review of the records of the case, it is constrained to adopt a position adverse to the COA.

          Respondents filed their Comment, arguing that this Court’s jurisdiction was not correctly invoked by petitioner who filed a petition for review under Rule 45 and not a petition for certiorari under Rule 65.  Petitioner failed to allege that respondents acted without or in excess of their jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.  On the allegation that their finding of overprice was not supported by evidence, respondents assert that the evaluation report of the DAP-TEC clearly showed that Tetra ranked last in its evaluation while Microcircuits ranked the highest.  It was clear that the most advantageous deal for the government should have been concluded with Microcircuits since their computer specifications were at par with those of Tetra and they offered a much lower cost to the government – lower than half the price offered by Tetra.[20]

          Moreover, respondents point out that petitioner’s contention that price was not the only basis for the award is negated by the finding of the Resident Auditor (Luzviminda V. Rubico) that the DAP-TEC technical evaluation report which became the basis for declaring Tetra as the winning bidder, was fraudulently acquired.  Director Mesina signed the same unaware that it was already another version of the technical evaluation report which she had signed earlier, when Tetra’s computers were found to be the most inferior in quality.  It can be safely asserted that the computers of Tetra and Microcircuits were of the same quality, and therefore, the only basis left in determining the winning bid was the price/cost of the computers (P1,123,315.00 for  Microcircuits andP2,285,279.00 for Tetra).[21]

          Lastly, respondents maintain that petitioner is personally and solidarily liable for the disallowed amount of P881,819.00.  As Executive Director, petitioner ordered the reconstitution of PBAC without any valid reason, on August 25, 1992 amending Special Order No. 91-117 dated October 24, 1991, which nullified the previous bidding conducted in December 1991.  Petitioner then engaged the services of the DAP-TEC which came out with two different technical evaluation reports, when it was no longer his duty to do so but that of the PBAC Chairman.  These acts show bad faith on the part of petitioner.  Mr. Antonio L. Quintos, Jr. of the DAP-TEC confirmed that Mr. Rey Evangelista, staff of PBAC Chairman Edwin T. Canonizado, talked to him and asked him to change and/or make alterations on the first evaluation report, which he did, as set forth in his letter[22] dated November 23, 1995 to Ms. Minnie Mesina of the Center for Information Technology Development (CITD) of the DAP.  As provided in the Manual on Certificate of Settlement and Balances (Revised 1973), “[a] public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is clear showing of bad faith, malice or gross negligence.”    [23]

          We deny the petition.

          To begin with, petitioner availed of the wrong remedy in filing a petition for review under Rule 45. Article IX-A, Section 7 of the Constitution provides that decisions, orders or rulings of the Commission on Audit may be brought to the Supreme Court on certiorari by the aggrieved party.[24]  Moreover, under Section 2, Rule 64, of the Revised Rules of Civil Procedure, a judgment or final order or resolution of the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65.  Moreover, on the merits, the petition lacks merit.

          Pursuant to its constitutional mandate to “promulgate accounting and auditing rules, and regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties,”[25] the COA promulgated the amended Rules under COA Circular No. 85-55-A[26] dated September 8, 1985.  With respect to excessive expenditures, these shall be determined by place and origin of goods, volume or quantity of purchase, service warranties, quality, special features of units purchased and the like.[27] 

          Price is considered “excessive” if it is more than the 10% allowable price variance between the price paid for the item bought and the price of the same item per canvass of the auditor.  In determining whether or not the price is excessive, the following factors may be considered[28]:

A –    Supply and demand forces in the market.

Ex. –  Where there is  a supply shortage of a particular product, such as cement or GI sheets, prices of these products may vary within a day.

B –    Government Price Quotations

C –    Warranty of Products or Special Features

The price is not necessarily excessive when the service/item is offered with warranty or special features which are relevant to the needs of the agency and are reflected in the offer or award.

D –    Brand of Products

Products of recognized brand coming from countries known for producing such quality products are relatively expensive.

Ex. –  Solingen scissors and the like which are made in Germany are more expensive than scissors which do not carry such brand and are not made in Germany.

The issue to be resolved is whether the computer units bought by CDA from Tetra were overpriced.

          Records showed that while the respondents found nothing wrong per se with the criteria adopted by the CDA in the overall evaluation of the bids, the technical aspect was seriously questioned. The final technical evaluation report was apparently manipulated to favor Tetra, which offered a Korean-made brand as against Microcircuits which offered a US-made brand said to be more durable, at a lower price.  The letter[29] dated November 3, 1992 signed by Ms. Mesina in behalf of DAP Vice-President Austere A. Panadero informed petitioner that based on their evaluation in compliance with the “grading system” specified by CDA, the DAP found the units of Tetra as “best suited” to the needs of CDA. 

Upon investigation, respondents discovered that there was an earlier report (1st report) which actually stated a contrary finding (Tetra units emerged as the most inferior in quality) but the representative from CDA (Rey Evangelista) came to the DAP-CITD and gave further instructions on “penalty points” for deviation in hardware specifications, resulting in a modified 2nd report (faxed to petitioner’s office) in which Tetra was already indicated to have the highest ranking.

          These findings were detailed by Auditor Rubico in her letter dated November 23, 1995 to the COA Legal Counsel, to wit: 

            x x x x

6.      After CDA and DAP came into an agreement, CDA PBAC Committee informed and instructed all the 3 qualified bidders to submit and brought [sic] their respective hardwares to DAP for Technical Evaluation for 3 consecutive days (As stated in the agreement) in which they all complied with.

7.      Eventually, on November 4, 1992 10:07 A.M., the [DAP] released/faxed the FIRST and IMPARTIAL RESULT (Exhibit 5) of the conducted technical evaluation by DAP-TEC signed by Director Minerva Mecina for and in behalf of Mr. A. Panadero.  Most, if not all, on the categories of computer testing results showed that among the 3 computer hardwares evaluated, the product of [TETRA] which is Trigem Brand is of the most inferior quality and last in the over-all ranking.  The technical evaluation was conducted by Mr. Antonio Quintos, Jr.  This result was never presented to this office nor attached to the CDA disbursement voucher as supporting document in payment made to DAP but accidentally handed over to us.

8.      On the same date, November 4, 1992 11:20 A.M., the CDA PBAC Committee together with the presence of representatives from each suppliers/bidders and this office (as witness), opened the bid documents (Exhibits 6, 6A & 6B).  Among the 3 bidders, [TETRA] offered the highest bid price quotation, (Tetra – P1,269,630; Microcircuits – P1,123,315; and Columbia – P1,177,600) in spite of the inferior quality of their products.

9.      It can be noted that CDA PBAC Committee had formulated their grading/point system (Exhibit 1).  There were three (3) factors to consider in awarding the bid such as COST (50%), TECHNICAL EVALUATION (30%) and SUPPORT SERVICE (20%).  In view of the above, as regards to the results of the technical evaluation and price bidding, there’s no way [TETRA] could possibly win and be chosen as the winning bidder.

10.    The day after the results of the technical evaluation and opening of the bid prices were known, in which it could be clearly seen who’s going to be the winner, MR. REY EVANGELISTA, staff of Mr. Canonizado (Who incidentally is the PBAC Chairman), went to DAP Office.  As confirmed by Mr. Quintos, Jr. to us, Mr. Evangelista talked to him and asked him to change and/or make alterations on the 1st evaluation result and to indicate the name of [TETRA] the number one in the over-all ranking in the evaluation result which he did.

11.    Thus, on November 5, 1992, Mr. Quintos, Jr. issued and faxed the SECOND (2nd) RESULT (Exhibit 7).  It was antedated November 3, 1992 and was signed by Director Mecina also on November 5, 1992 for and in behalf of Mr. A. Panadero.  In this 2nd result, [TETRA] became the number one (1) in the over-all ranking and apparently there was the intention to favor [TETRA] and to make sure that it will turn out to be the winning bidder.  It may be noted in attachment “A” of the letter sent by Mr. A. Panadero (Exhibit 4), which contained the manner and detailed activities the evaluation is to be conducted that there was no evaluation/testing really performed in this 2nd evaluation result.  Notice the irrelevant columns added to the said result (CDA Grading system).  We asked Mr. Quintos, Jr. if figures in the column “Below Specifications” will affect the capability and quality of the computer hardware that will make it inferior from the other and he answered in the negative.  Therefore, in our view, the purpose of adding this “penalty” column is of no relevance to the evaluation conducted but just to give the CDA PBAC Committee all the reasons to give a plus or minus  grade/percentage to the hardwares offered by the suppliers/bidders and to satisfy their need.  Moreover, we believed that DAP from which CDA paid the amount of P15,000 for the technical service rendered should give an independent report.

12.    As regard to the factor in the CDA PBAC grading system which is the Support Service (20%) (Exhibit 1), we believe that Columbia Computer Center (UPSON) offering ACER brand is of more established and has advantage in terms of support service because of its business standing, facilities and equipment than [TETRA].  Please take note on the computation the CDA PBAC made as regard to this factor.  The CDA PBAC Committee and its Secretariat never  presented nor submitted data/documents to this office to support this computation.

All the above facts were documented and confirmed.  As to authenticity and genuineness of the 1st and 2nd results, Mr. Quintos, Jr. told us that he was able to make Director Minerva Mecina signed the documents in behalf of Mr. A. Panadero without informing her of the discrepancies. On the other hand, Director Mecina admitted that it was her signature indeed but not knowing that she signed two different documents.  This irregularity, we believed, is known to all members of the CDA PBAC Committee, more so by its Chairman, since all these documents were retrieved from the file of its Secretariat with some documents stamped received by CDA Planning Division Staff.

            x x x x[30] (Emphasis supplied.)

          Convinced that there was indeed manipulations in the conduct of bidding to favor Tetra, particularly the introduction of additional features in the CDA grading system after the bids have been opened in order to justify the DAP to change, upon request of CDA, the results of its first evaluation, COA General Counsel Raquel R. Habitan referred the matter to COA’s ITC to determine whether or not (1) the additional features introduced in CDA’s grading system are really irrelevant to the efficiency of the computers’ performance; and (2) the products of Tetra were the most inferior in quality as compared to those offered by the losing bidders at lower price on the basis of the specifications and function.[31]

          In her Memorandum dated December 9, 1996 to Director Habitan, Ms. Marieta SF. Acorda, Director of COA’s ITC, gave the following comments:

x x x x

1.  On the first issue – we observed that no additional computer features were introduced in CDA’s grading system, rather the bidders were penalized for non-compliance with technical specifications fixed by CDA.

On CDA’s representation with the Development Academy of the Philippines – Technical Evaluation Committee (DAP Committee) and based on the grading system devised by the former, the DAP Committee agreed to impose penalties for non-compliance of the bids with the technical specifications.  Hereunder are their reasons for the penalties and our comments thereto:

1.1  Columbia Computer Center (Columbia) and MicroCircuits Corporation (MCC) were penalized because the microprocessor of the computer hardware they delivered for evaluation were AMD and not Intel as required in the technical specification.

AMD and Intel are both microprocessor brands.  It rarely malfunctions.  Hence, the difference in brands, as in this case, will not affect the efficiency of the computer’s performance.  However, Intel microprocessors are more expensive and are manufactured by Intel Corporation which pioneered the production of microprocessors for personal computers.

1.2  Columbia was penalized because the ROM BIOSes of the computer hardware they delivered were AcerBios. a deviation from the technical specifications which requires ROM BIOSes licensed by IBM, AMI, Phoenix or Awards.

This will not affect the efficiency of the computer’s performance.  What is important is that these ROM BIOSes are legal or licensed.

1.3  Columbia was again penalized because the casing of the computer they delivered for evaluation in the Tower 386DX category has a desktop casing and not tower casing as provided in the technical specification.

Casings do not affect the efficiency of the computer’s performance but may affect office furniture requirements such as the design of computer tables.

1.4  Tetra Corporation (Tetra) was penalized because the RAM of the Notebook it delivered for evaluation was only 640K instead of 2M (expandable).

We agree that RAM capacity will affect the efficiency of the computer’s performance.

2.  On the second issue  –  the Benchmark testing conducted by DAP-Committee in which Tetra got the lowest score in terms of Technical Evaluation is not a sufficient basis for us to determine whether or not Trigem computers are inferior to the computer brands offered by the other bidders.

In Benchmark Testing, weights are allocated to the different technical features of a computer. The computers are then evaluated/appraised using diagnostic software and ranked in accordance with the results of such evaluation/appraisal.  The resulting ranking merely suggests which computer best the appraisals.[32] (Emphasis supplied.)

          Based on the foregoing findings and observations supported by documentary evidence, respondents concluded that contrary to CDA’s claims, the difference in brands, microprocessors, BIOSes, as well as casings will not affect the efficiency of the computers’ performance.    Clearly, the conduct of public bidding in this case was not made objectively with the end in view of purchasing quality equipment at the least cost to the government.  The price difference far exceeded the 10% allowable variance in the unit bought and the same item’s price, as shown by the following report submitted to the TSO Director[33]

x x x x

Subject: Summary of Price Data & Feedback Form

Agency/Address: Cooperative Development Authority – Q.C.

PED Q#/Item Classification: 93-06-370-372 / Computer

T S O Reference Code: N=060393/190.5

Particulars (purchase doc.(s) / contract, quantity, item and specifications) Purchase Price

(Per unit)

(In Pesos)

Reference Value/s as of August 1993

(Per unit)


(In Pesos)

Auditor’s Feedback Form
Unit Price allowed in audit/


P.O.#’s 92-107 dated 12/7/92

P.O.#’s 92-118 dated 12/28/92

Invoice # 18810 dated 12/29/92

23 units PC-AT 80386 SX with

21 units 80 mb Hard Disk

            – 14” Paper white


            – Trigem 386 SX

            – 4 MB on Board

            – 1.2 MB Floppy Disk


            – 1.44 MB Floppy Disk


            – Trigem VGA PW


            – VGA card

            – Mouse with mouse pad




386 SX

Genesis Brand

-100 MB

  Hard Disk

-4 MB RAM on Board

-TVS Monitor (low    radiation)  




P.O.#92107 dated 12/7/92

Invoice # 18798 dated 12/11/92

1 unit PC-AT 80386 TOWER with:

            – 600 MB Hard Disks

            – 14” TG VGA Colored

               Monitor Display

            – TG 986 XE (33 mhz.)

            – 8 MB RAM on Board

              with math co-processor

            – 1.2 MB FDD

            – 1.44 MB FDD

            – 600 MB SCSI HDD

              with controller

            – VGA card

            – 150 MB tape back-up

              with data cartridge

            – External Modern (2400


            – with mouse






P.O.# 92-107 dated 12/7/92

Invoice # 18798 dated 12/11/92

1 unit PC-AT 80386 SX Laptop

            Notebook/Notepad Type


            – 8 MB Hard Disk

            – VGA (LCD) Display

            – TG386 NP (25 Mhz.)

            – 2 MB RAM on Board

            – with mouse






P.O. #93-120 dated 12/28/92

Invoice # 1261 dated 12/29/92

I unit MAGTEX Uninterrupted

            Power Supply (UPS) 1.0


            Input: 220V 60Hz. 1 dia.

                Output: 220V 60Hz. 1 dia.

            Capacity: 1 KVA

            Battery Pack: sealed


            Back-up Time: 30 minutes






   APC 1000W  







   PK 1000W         



P.O. #92-019 dated 10/5/92

3 units Upgrade PC-XT to PC-

            AT 286

            – 1 MB RAM expandable

               /16 Mhz. (Min.)

            – 40 MB Hard Disk

            – 1.2 Mb FDD

            – 1.44 MB FDD

            – with 101 Enhanced Key-







P.O.#92-112 dated 12/15/92

Invoice # 18806 dated 12/23/92

14 units OKI ML 321 Elite

            Printer, Dot Matrix

            Printer (9 pin. 122 cols.







Number of units

Total Cost

Total Cost Allowable

% Mark-up

Total Cost Allowed

Amount Disallowed


44 Personal computer


P 1,947,836.00


P 1,038,400.00





P 1,194,160.00


P 753,676.00


1 PC-AT 80386Tower


P    177,443.00










1 PC-AT 80386SX Laptop Notebook/

Notepad type


P      74,000.00












P      86,000.00












P 881,819.00

As above-indicated, the price per item of the PC units, laptop and UPS were overpriced by almost 50%.  This comparison was based on the initial purchase of 23 PC units with the bid price by Tetra of P1,269,630.00 (23 PC units, 1 unit 386 Tower and 1 unit 386 Notebook) under Disbursement Voucher No. 01-92-12-2399.  There was an additional (repeat) purchase of 21 PC units forP929,649.00 (same price per item of P44,269.00) and one unit UPS for P86,000.00.   The total contract price obtained by Tetra wasP2,285,279.00, of which COA disallowed the amount of P881,819.00 representing the overprice per the auditor’s findings.       

As to petitioner’s objection regarding the non-presentation of actual canvass sheets used by the auditor, the same is immaterial, considering the disparity in the prices of the computers paid by CDA to Tetra and offered by the lowest bidder, Microcircuits.  The TSO report, prepared by personnel having the knowledge and expertise on computer equipment, supplied the auditor with reliable field data on which the auditor based her final computation.   “Excessive expenditures” under COA Circular No. 85-55-A covered cases of “[o]verpricing of purchases, characterized by grossly exaggerated or inflated quotations, in excess of the current and prevailing market price by a 10% variance from the purchased item.”  The telephone canvass initially done by the resident auditor was merely confirmatory of the overpricing based on similar specifications and features as indicated in the TSO report. 

Another important factor apparently ignored by the CDA was Microcircuits’ branded computers reputed to be more durable (US-made) compared with Tetra’s branded computers (Korean-made).  Had this factor been considered together with the much lower quotation from Microcircuits, CDA would have assured a deal that is most advantageous to the government at the least cost.  

          Findings of quasi-judicial agencies, such as the COA, which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence.[34]  It is only upon a clear showing that the COA acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction that this Court will set aside its decisions or final orders.[35]  We find no such arbitrariness or grave abuse on the part of the COA when it disallowed in audit the amount representing the overprice in the payment by CDA for the purchased computer units and peripherals, its findings are well-supported by the evidence on record.

          With respect to the liability of petitioner, we likewise affirm the COA’s ruling that he is personally and solidarily liable for the disallowed amount.  The doctrine of separate personality of a corporation finds no application because CDA is not a private entity but a government agency created by virtue of Republic Act No. 6939 in compliance with the provisions of Section 15, Article XII of the 1987 Constitution. Moreover, respondents satisfactorily established that petitioner acted in bad faith when he prevailed upon the DAP-TEC to modify the initial result of the technical evaluation of the computers by imposing an irrelevant grading system that was intended to favor one of the bidders, after the bids had been opened.

          Section 103 of Presidential Decree No. 1445 (Government Auditing Code of the Philippines) provides:

SECTION 103. General liability for unlawful expenditures. —  Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.  (Emphasis supplied.)

          Further, Section 19 of the Manual on Certificate of Settlement and Balances under COA Circular No. 94-001 dated January 20, 1994 provides:

19.1. The liability of public officers and other persons for audit disallowances shall be determined on the basis of: a) the nature of the disallowance; b) the duties, responsibilities or obligations of the officers/persons concerned; c) the extent of their participation or involvement in the disallowed transaction; and d) the amount of losses or damages suffered by the government thereby. x x x

          Petitioner believes that there is no basis to hold him personally liable on account of the fact that the purchased computers were not inferior in quality.  In support thereof, he submitted a certification dated September 12, 2003 issued by incumbent CDA Executive Director, Atty. Niel A. Santillan, that 68% of the Tetra computers, or 30 out of 44 units, are still operational even after twelve (12) years of continuous use.  Only fourteen (14) units have become unserviceable, which means that the Tetra computers have proven their worth and thus vindicated petitioner, the CDA, CDA-PBAC and the DAP-TEC.[36]

          We are not persuaded.

          The continued serviceability of the purchased computers is not a factor in the determination of whether the price paid by the government was unreasonable or excessive.  The damage or injury caused to the government refers primarily to the amount exceeding the allowable variance in the price paid for the item purchased under a transaction which is not the most advantageous to the government.  In this case, it was clearly shown that CDA could have purchased the same quality computers with similar technical specifications at much lower cost and the result of technical evaluation was manipulated to favor one bidder, for which the COA found the petitioner to be directly responsible. 

          WHEREFORE, the petition is DENIED.    The COA Decision Nos. 98-424 and 2003-061 dated October 21, 1998 andMarch 18, 2003, respectively, are AFFIRMED and UPHELD.  Petitioner Candelario L. Verzosa, Jr. is hereby ordered toREIMBURSE the amount of P881,819.00 subject of Notice of Disallowance No. 93-0016-101 dated November 17, 1993 and the corresponding CSB No. 94-001-101 dated January 10, 1994. 

          With costs against the petitioner.




Associate Justice


No part

Chief Justice

I join the Dissenting Opinion of Justice Sereno

Associate Justice

I join the dissent of J. Sereno

Associate Justice


Associate Justice

(On official leave)


Associate Justice


Associate Justice

(On official leave)


Associate Justice


Associate Justice

I join the dissent of J. Sereno

Associate Justice


Associate Justice

I join the dissenting opinion of J.M.L.P.A. Sereno

Associate Justice


Associate Justice


Associate Justice

See dissenting opinion

Associate Justice




          Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.



Chief Justice



*       On official leave.

[1]       Rollo, pp. 50-52.

[2]       Id. at 61-63.

[3]       COA Records.

[4]       Id., Ist Indorsement dated June 6, 1994.

[5]       Rollo, pp. 165-169.

[6]       Id. at 73, 170.

[7]       Id. at 74-77, 171-174.

[8]       COA Records, Memorandum dated April 24, 1995.

[9]       Id., Memorandum dated August 29, 1994.

[10]     Rollo, p. 51.

[11]     Id. at 51-52.

[12]     Id. at 17-18.

[13]     Id. at 23-29, 80-81.

[14]     Id. at 29-33.

[15]     Id. at 92-93.

[16]     G.R. No. 90364, September 30, 1991, 202 SCRA 147.

[17]     Rollo, pp. 33-40.

[18]     Id. at 40-43.

[19]     Id. at 109-111.

[20]     Id. at 145-148.

[21]     Id. at 148.

[22]     Id. at 248-249.

[23]     Id. at 148-152.

[24]     Reyes v. Commission on Audit, G.R. No. 125129, March 29, 1999, 305 SCRA 512, 516.

[25]     Art. IX-D, Sec. 2 [2], 1987 Constitution.

[26]     Which amended, revised and/or amplified the existing rules contained in COA Circular No. 77-55 dated March 29, 1977.

[27]     COA Circular No. 85-55-A, 2.6.

[28]     Id., 3.3 (Standards for “Excessive” Expenditure).

[29]     Rollo, pp. 88-89.

[30]     Id. at 245-246.

[31]     COA Records.

[32]     Rollo, pp. 235-236.

[33]     Rollo, pp. 166-169.

[34]     Laysa v. Commission on Audit, G.R No. 128134, October 18, 2000, 343 SCRA 520, 526.

[35]     See Villanueva v. Commission on Audit, G.R. No. 151987, March 18, 2005, 453 SCRA 782, 801.

[36]     Rollo, pp. 292-294.