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1003. Candelario L. Verzosa, Jr. v. Guillermo N. Carague, et al., G.R. No.

March 8, 2011.

Sometime almost twenty years ago, the CDA conducted a public bidding for the
supply to the CDA of computer equipment and peripherals. The three entities that
took part were Tetra Corporation-Trigem Computers (Tetra), Microcircuits Co.
(Microcircuits), and Columbia Computers (Columbia).
Following the bidding, the evaluation (which also included a technical evaluation
made by the Development Academy of the Philippines (DAP) at the request of the
CDA) and the ensuing approval given by Candelario L. Versoza, Jr. as the CDAs
Executive Director, in December 1992, Tetra was awarded the supply contract for
the total amount of P2,285,279.00, which was eventually paid by the CDA to Tetra.
Months after the purchase, the COA Resident Auditor assigned to the CDA sought
the assistance of the Technical Services Office (TSO) of the COA to determine the
reasonableness of the prices of the purchased computers. The TSO found that the
purchased computers were overpriced/excessive by a total of P881,819.00. Among
other things, the TSO 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 the CDA first offered to buy computers, of the three
qualified bidders, Microcircuits offered the lowest bid price while Tetra offered the
highest bid. The Resident Auditor thus issued a Notice of Disallowance in November
1993, for the amount of P881,819.
The CDA sought a reconsideration and provided its basis as to why, on the whole,
the purchase from Tetra was justified.
Unconvinced, the COA issued its decision affirming the disallowance thereby
upholding the comparison process undertaken by the Resident Auditor and the TSO.
The CoA held that CDA should not have awarded the contract to Tetra but to the
other competing bidder, whose bid is more advantageous to the government. In
addition, the COA held Verzosa personally and solidarily liable for the disallowed
amount of P881,819 on account of his having acted in bad faith.
The CDA therefore petitioned the High Court to reverse the COAs rulings.

The COA, under the Constitution, is empowered to examine and audit the use of
funds by an agency of the national government on a post-audit basis. For this
purpose, the Constitution has provided that the COA shall have exclusive authority,
subject to the limitations in this Article, to define the scope of its audit and
examination, establish the techniques and methods required therefor, and
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.