2/20/2019 COA DECISION NO.

2012-238

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DECISION NO. 2012-238
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December 10, 2012

COA DECISION NO. 2012-238

SUBJECT : Petition of Supplier Contractor and

Telecommunications, Inc. (SCANTEL) for Review of COA
Decision No. RX-2010-002 Dated September 3, 2010, Which
Denied the Appeal from Notice of Disallowance (ND) No.
2008-07-001-100 Dated July 8, 2008 on the Payments for the
Barangay Telephone System Project (BTSP) of the City
Government of Cagayan de Oro, in the Amount of
P31,544,761.94

DECISION

FACTS OF THE CASE

Before the Commission is a petition for review of SCANTEL, praying for the reversal
and setting aside of ND No. 2008-07-001-100 dated July 8, 2008, issued by the Audit
Team Leader (ATL), Team I-City Accounts of Cagayan De Oro City, Local
Government Sector-Mindanao. The said ND was affirmed under COA Decision No.
RX-2010-002 dated September 3, 2010 rendered by the Regional Director (RD), COA
Regional Office (R.O.) No. X, Cagayan de Oro City. In connection with the petition,
also submitted for review is a Memorandum dated July 18, 2012 of the RD, COA R.O.
No. X.

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Records show that in 2003, the City Government of Cagayan de Oro decided to
implement a BTSP, which entailed the purchase and installation of a fixed wireless
access system through the use of a Synchronous Code Division Multiple Access
System. Towards this end, the Cagayan de Oro City Council (CDO City Council)
enacted Ordinance No. 8627-2003 dated February 3, 2003, reverting the sum of
P50,000,000.00 from the item "Land Expropriation/Acquisition" in the 2003 Annual
Budget and reappropriating it for the implementation of the BTSP. The CDO City
Council likewise approved a Supplemental Ordinance dated February 24, 2003,
where the amount of P57,562,666.00 was included in the City's Annual Budget to
support, among others, the BTSP.
The City Government of Cagayan de Oro resorted to Limited Source Bidding as a
means of procurement for the BTSP, and SCANTEL's bid emerged as the lowest
calculated bid. A Notice of Award was issued to SCANTEL, and on May 28, 2003, the
City and SCANTEL executed a contract for the construction of the BTSP. The contract
price was P49,746,000.00.
Due to the National Telecommunications Commission's delays in the release of
necessary permits, the Office of the City Mayor of Cagayan de Oro issued two (2)
Suspension Orders halting work on the project. The first Suspension Order, effective
September 30, 2003, was lifted on August 25, 2004. The second Suspension Order
was implemented on September 21, 2004, and the records do not bear whether this
second Order was lifted. Nonetheless, between 2004 and 2005, a total amount of
P31,544,761.94 was disbursed in favor of SCANTEL.
Thereafter, the ATL issued Notice of Suspension (NS) No. 2008-01-001-101 dated
January 3, 2008, which noted deficiencies in connection with the review of the BTSP
contract, and suspended the amount paid to SCANTEL. The NS noted that at least 12
required documents were not submitted by the City Government of Cagayan de Oro,
including among others, the duly approved budget for the contract and the duly
approved bid evaluation report with the copy of the Minutes of Bid Opening. The NS
required the submission of these documents which the City Government had failed to
submit, the effecting of adjustments in the books of accounts by preparing the Journal
Entry Voucher for account used so as to be consistent with the recording of
disbursements, and the issuance by the City Government of a Resume Order to
SCANTEL so that problems encountered due to the low signal can be addressed.
The Office of the City Administrator of Cagayan de Oro acting by authority of the City
Mayor, requested for reconsideration of the NS, arguing, among others, that the City
had substantially submitted all necessary documents. Nonetheless, the challenged
ND was issued on July 8, 2008, citing "non-compliance with the fundamental
principles of handling financial transaction[s] and operations within reasonable time."
The ND held no less than 23 people liable for the disallowed transaction. Of the 23, it
appears from the record that only one (1) of the 23 filed an appeal to the ND. The
appeal, filed by Ms. Estrella F. Sagaral, City Planning and Development Coordinator
and former Bids and Awards Committee Chairperson for the City Government of
Cagayan de Oro, sought for the lifting of the audit disallowances as contained in the
ND. The appeal, however, was denied by the RD, COA R.O. No. X, in COA Decision
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No. RX-2010-002 dated September 3, 2010, which noted that Ms. Sagaral had
received a copy of the ND on July 17, 2008, but filed the appeal only on July 1, 2009,
beyond the six (6) month reglementary period prescribed under Section 48 of
Presidential Decree (P.D.) No. 1445 . Hence, according to the Decision, the ND
issued by the ATL had become final upon the expiration of six (6) months from the
date of receipt thereof.
It is COA R.O. Decision No. RX-2010-002 which is the subject of the present petition,
this time filed by SCANTEL, which itself never filed an appeal with the RD, COA R.O.
No. X. SCANTEL argues that despite the lapse of the 6-month reglementary period,
there was no corresponding Notice of Finality of Decision (NFD) issued; hence, the
ND could not have become final and executory yet, and thus still appealable.
Moreover, since SCANTEL was not issued a copy of the ND until January 2011
despite being an interested party, it still could file the instant petition for review. Finally,
SCANTEL argues that the requirements of the ATL, as stated in the NS, were
substantially, if not completely, complied with by the City Government of Cagayan de
Oro.
It appears that the petition was supplemented by a letter dated June 4, 2012,
prepared by counsel for SCANTEL, reiterating the arguments made in the petition,
and stressing in addition that "SCANTEL completed the communication project, duly
accepted by the CDO City government, and has since been fully operational and used
by all the Barangays of CDO City." The letter was referred for appropriate evaluation
to the RD, COA R.O. No. X, who in turn prepared a Memorandum dated July 18,
2012. In the Memorandum, the RD cited a report prepared by the Technical Services
Office, COA R.O. No. X, which contradicts the position of SCANTEL's counsel.
ISSUES
The issues to be resolved are:
1) Whether or not the RD, COA R.O. No. X, erred in considering
the ND as final notwithstanding the non-issuance of the
corresponding NFD after the period to appeal had lapsed; and
2) Whether or not ND No. 2008-07-001-100 dated July 8, 2008
should be affirmed.
DISCUSSION
Section 51 of P.D. No. 1445 specifically provides a period when a decision of an
auditor, such as the challenged ND, becomes final and executory. Section 51 states:
Finality of decisions of the Commission or any auditor. — A decision of the
Commission or of any auditor upon any matter within its or his jurisdiction, if
not appealed as herein provided, shall be final and executory.
Section 48 of P.D. No. 1445 states:
Appeal from decision of auditors. — Any person aggrieved by the decision of
an auditor of any government agency in the settlement of an account or claim

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may within six months from receipt of a copy of the decision appeal in writing
to the Commission . (underscoring supplied)
It is clear that under statutory terms, the failure to appeal the decision of the auditor
within six (6) months from receipt thereof is sufficient to render that decision as final
and executory. Under the 2009 Revised Rules of Procedure of the COA (RRPC), the
appeal from the decision of an auditor is taken to the Director who has jurisdiction
over the agency under audit. 1 The same Rules reiterate that "the decision of the
Auditor shall become final upon the expiration of six (6) months from the date of
receipt thereof." 2
The ND held no less than 23 different people liable for the disallowed transaction. Of
the 23, only one (1) filed an appeal to the ND, but she did so more than six (6) months
after she had received a copy of the ND. The RD, COA R.O. No. X, acted properly
and in compliance with the mandate of law in denying the appeal. The Supreme Court
has stated: "[d]octrinally entrenched is the pronouncement that the right to appeal is
merely statutory and a party seeking to avail of that right must comply with the statute
or rules." 3 Appeal is not a matter of right, but a mere statutory privilege. 4
As pointed out by SCANTEL, Section 22.2 of the Rules and Regulations on
Settlement of Accounts mandates the authorized COA official to notify the agency that
a decision has become final and executory, there being no appeal or motion for
reconsideration filed within the reglementary period. Yet, it bears stressing that
nothing in P.D. No. 1445 refers to the issuance of a "Notice of Finality of Decision" as
an additional requisite before the auditor's decision becomes final and executory, if no
appeal is taken after six (6) months. This administrative requirement, vital as it is, to
the efficient enforcement of the decisions of the Commission and its officials, is not a
statutory requisite for the lapse into finality of a decision. Neither, could it revive a right
to appeal that has been extinguished under the terms of the law.
In COA Decision No. 2011-070 dated October 17, 2011 , this Commission discussed
at length, the implications of a final and executory decision due to the failure to timely
interpose an appeal to an ND:
[T]o act on said appeal and/or motion for reconsideration would put the
audit/action/adjudication of this Commission subject to the discretion or whim
of the persons liable, thereby making the adjudication process endless. It is
well settled that once a decision becomes final, the court can no longer
amend, modify much less set aside the same. ( Adez Realty, Inc. vs. Court of
Appeals , G.R. No. 100643, December 12, 1995). Moreover, the Supreme
Court enunciated in the case of Fabular vs. Court of Appeals , G.R. No. L-
52118, December 15, 1982, that where judgments are already final, the error,
assuming one was committed, can no longer be amended or corrected,
otherwise, endless litigation will result. Once a judgment becomes final, all the
issues between the parties are deemed resolved and laid to rest ( Salva, et al.
vs. Court of Appeals , G.R. No. 132250, March 11, 1999).
Also, PDIC vs. COA , G.R. No. 171548, February 22, 2008, affirming COA
Decision No. 2006-005 dated January 19, 2006 held that when a judgment
becomes final and executory it becomes immutable and unalterable, the
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prevailing party can have it executed as a matter of right, and the issuance of
a writ of execution becomes a ministerial duty of the court. . . . .
Considering that Ms. Sagaral received a copy of the ND on July 17, 2008, but filed an
appeal therefor only on July 1, 2009, the RD, COA R.O. No. X, acted correctly in
ruling that the appeal was filed beyond the six (6)-month reglementary period for
appeal, and thus, the ND was now final and executory.
It bears notice that the Managing Director of SCANTEL, Mr. Edelito A. Badua, was
cited as among the 23 persons liable for the disallowed transaction. Neither he nor
SCANTEL itself ever filed an Appeal from the ND before the RD, COA R.O. No. X.
SCANTEL instead bypassed the appellate procedure prescribed under the 2009
RRPC, particularly under Section 1, Rule V, by filing directly with this Commission its
petition for review instead of with the RD. Interestingly, SCANTEL claims to have
received its copy of the ND only in January 2011, or several months after the appeal
of Ms. Sagaral was already denied by the RD, COA R.O. No. X. Considering that
SCANTEL places great reliance on its supposed belated receipt of the ND in arguing
for the timeliness of this petition, it is a mystery why it chose to bypass the required
appeal with the RD.
The RD, COA R.O. No. X, in his Answer filed with this Commission, contests
SCANTEL's claim that it did not duly receive a copy of the ND back in 2008. The RD
points out that a copy of the ND was mailed to SCANTEL on July 9, 2008, at 2nd
Floor, AIC Empire Tower, ADB Avenue corner Garnet Road, Ortigas Center, Pasig
City, but the mail was returned unserved. This address was the same address
indicated in the Official Receipts issued by SCANTEL when it was paid three of the
installments on the since-disallowed amounts in 2004 and 2005. The RD further
pointed out on record, SCANTEL had been utilizing at least four (4) different
addresses — two (2) of them at Empire Tower in Pasig City, while another two (2) at
YL Building in Makati City.
Considering that the ND effectively prevented the City Government from rendering
any further payments to SCANTEL, its claim that it was never aware of the existence
of such ND may be treated with suspicion, especially considering the multiple
addresses it had apparently been utilizing to the forbearance of process servers
against it. Even assuming it is arguable when SCANTEL duly received its copy of the
ND, such issue does not detract from the correctness of the action of the RD, COA
R.O. No. X. in the assailed Decision, which after all pertains to the belated appeal first
filed by a party liable. By refusing to file its own appeal with the RD and filing the
petition directly before this Commission, SCANTEL is in effect attempting to appeal
the Decision on the first appeal on the ND, instead of interposing its own appeal with
the RD based on the date it purports to have received a copy of the ND. Such a
situation is anomalous, and also contrary to the 2009 RRPC.
The above discussion sufficiently settles the petition. The arguments raised in the
letter prepared by SCANTEL's counsel fail to delegitimize the finality of the ND owing
to SCANTEL's failure to duly interpose a timely appeal as required under P.D. No.
1445 and the 2009 RRPC. It bears noting, however, that the COA Technical
Inspection/Evaluation Report dated July 4, 2012 submitted by the RD, COA R.O. No.
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X, in response to the letter extensively disputes the claims of SCANTEL's counsel.

Among the findings therein are that the technical specifications of the wireless
telephone system and equipment installed by SCANTEL varied from the
specifications stipulated in Article I of the Contract; that only seven (7) of the 17
Barangay wireless telephone terminals installed were actually operational at the time
of inspection; and that two (2) of the barangays originally included in the network were
not included in the actual implementation. These findings detract from the depiction
painted by SCANTEL's counsel that his client had fully completed the works for the
full enjoyment of the project beneficiaries, and that the ND hinged merely on non-
compliance with documentary requirements. What the Report reveals is a
substandard troubled project — a flaw which could have very well been averted had
the City Government of Cagayan de Oro and SCANTEL submitted to this Commission
the missing documents for appropriate review.
RULING
WHEREFORE , the petition is DENIED . Accordingly, COA Decision No. RX-2010-
002 dated September 3, 2010 and ND No. 2008-07-001-100 dated July 8, 2008 are
AFFIRMED .

(SGD.) MA. GRACIA M. PULIDO TAN

Chairperson

(SGD.) JUANITO G. ESPINO, JR.

Commissioner

(SGD.) HEIDI L. MENDOZA

Commissioner

Attested by:

(SGD.) FORTUNATA M. RUBICO

Director IV
Commission Secretariat
Copy furnished:
Mr. Francis Z. Villapando, Jr.
President, SCANTEL
Room 406 AIC-Burgundy Empire Tower
ADB Avenue cor. Garnet Road
Ortigas Center, Pasig City
The City Mayor
Cagayan de Oro City

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Audit Team Leader

City of Cagayan de Oro
Local Government Sector-Mindanao
Team 1-City Accounts of Cagayan de Oro City
The Regional Director
COA Regional Office No. X
Cagayan de Oro City
The Director
Information Technology Office
Special Services Sector
The Assistant Commissioners
Legal Services Sector
Local Government Sector
All of this Commission
Footnotes
1. Section 1, Rule V, 2009 RRPC.
2. Section 8, Rule IV, 2009 RRPC.
3. Cu-Unjieng vs. Court of Appeals, et al. , G.R. No. 139596, January 24, 2006; citing
Raymundo Villamor and Wenefreda Villamor vs. Heirs of Sebastian Tolang , G.R.
No. 144689, June 9, 2005.
4. Badillo vs. Tayag , 400 SCRA 494 (2003).

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