THEO-PAM TRADING CORPORATION, PETITIONER, VS.
BUREAU OF
PLANT INDUSTRY AND THE COMMISSION ON AUDIT, RESPONDENTS.
DECISION
INTING, J.:
This resolves the Petition for Certiorari[1] assailing the Commission on Audit (COA)
Decision No. 2016-135[2] dated July 28, 2016 and Resolution No. 2018-33[3] dated July
18, 2018 (assailed issuances). In the assailed issuances, the COA Commission Proper
(COA Proper) denied Theo-Pam Trading Corporation (Theo-Pam)'s Money Claim
against respondent Bureau of Plant Industry (BPI) for the payment of various laboratory
chemicals amounting to P2,361,060.00.
The Antecedents
This case stemmed from a Petition[4] filed by Theo-Pam against BPI before the COA
Proper for the payment of the latter's obligation amounting to P2,361,060.00 plus interest,
attorney's fees, and litigation expenses (Money Claim).
On various dates between May and October 2009, BPI prepared four purchase orders
(POs)[5] naming Theo-Pam as the supplier and directing/requesting the latter to furnish
BPI various types of chemicals. BPI Director Joel S. Rudinas (BPI Director Rudinas), as
the head of the agency, and Susana SG. Gonzalo, OIC, Laboratory Services Division, as
the head of the requisitioning office/department (end user), signed and approved the
POs. Leonida L. Morales, Budget Officer, also signed the POs and certified them as to
the availability of funds for the corresponding transactions.
In turn, Theo-Pam issued wholesale invoices corresponding to each BPI PO, viz.:
PO No. PO Date Invoice No. Invoice Date Amount
May 25,
154-09 185906 June 4, 2009 P88,000.00
2009
June 15,
206-09 186335 June 20, 2009 724,600.00
2009
July 10,
240-09 186584 June 29, 2009 240,500.00
2009
October 2, October 20,
397-09 189804 1,307,960.00
2009 2009
===========
Outstanding balance due from BPI P2,361,060.00
===========
German T. Yatco, National Pesticide Analytical Laboratory (NPAL) Senior
Agriculturalist, and Noreen D. Escobar, NPAL Chemist I,[6] affixed their signatures on
Wholesale Invoice Nos. 186335 and 186584, respectively, indicating that they have
"[r]eceived the above articles in good order and condition."[7]
On May 26, 2010, Theo-Pam informed[8] then BPI Director Dr. Larry R. Lacson (BPI
Director Lacson) that it has delivered the aforementioned orders to the end user, NPAL of
the BPI Laboratory Services Division. However, it has not yet received any payment for
the orders.
To "settle different issues regarding the chemicals and re-agents procured by the
[NPAL]"[9] as detailed in the above-enumerated POs, BPI Director Lacson issued
Memorandum Order No. 34,[10] Series of 2010, dated June 21, 2010 forming an
Inspection/Verification Team, viz.:
The team is tasked to perform the following functions with the objective of determining
whether the subject chemicals where [sic] delivered and consumed by NPAL
Conducts/documents physical inventory of all chemicals and their empty
containers delivered to NPAL on the aforementioned POs;
Inventory/Review all residue analysis certificates issued relative to the
subject chemical purchased;
Does interview works [sic] on NPAL staffs [sic] regarding the receipt and
use of chemicals.
In another Letter[11] dated June 23, 2010, Theo-Pam, through counsel, reiterated BPI's
outstanding balance and demanded BPI to settle its account within five days. Otherwise,
Theo-Pam will proceed with the appropriate legal actions. On even date, BPI Director
Lacson responded as follows:
This is to acknowledge the receipt of your letter date[d] 23 June 2010 regarding the BPI's
outstanding and overdue account in the amount of Two Million Three Hundred Sixty One
Thousand and Sixty Pesos (PhP 2,361,060.00)
We would like to assure you that this Office is doing everything to ensure that [Theo-
Pam] will get what is due to them without prejudice to the interest of the government.[12]
Subsequently, the Inspection/Verification Team detailed their findings in a
Memorandum[13] dated July 9, 2010 (Team Report), viz.:
A. During our ocular inspection in the area where the waste materials/ empty containers of the
subject chemicals are stored, the group find [sic] it difficult to identify which of the waste
materials/ empty containers (x x x) in the area belong to the subject chemicals and which are
not belong [sic] x x x:
xxxx
B. The group reviewed the records of Residue Analysis Certificates issued by the National
Pesticide Analytical Laboratory (NPAL) and found out that there is neither name nor
amount of chemicals used being indicated in the certificate. The name and amount of
chemicals used by the said office can be seen only in their RIS, monthly report and
accomplishment report.
C. During our interview with some of the NPAL stuff who are involved either in the receipt,
consumption and/ or utilization of the subject chemicals, the said staff categorically denied
any ghost delivery x x x and confirmed that the subject chemicals were delivered and the
same were used and consumed for their operations. It has been said and affirmed that the
subject chemicals were necessary for the analysis of Okra and Mango, otherwise the
exportation of said commodities to Japan will be greatly affected. (x x x)
CONCLUSION
While the group found difficulty in determining the delivery and consumption of the subject
chemicals on the basis of the Waste Materials and Certificates of Residue Analysis
available, yet there are substantial evidences [sic] to prove that such chemicals had been
delivered and consumed by the end-user. These evidences [sic] include the Delivery
Receipts issued by the supplier (Theo-Pam) as well as the testimonies made by the NPAL
Staff who are involved either in the receipt, consumption and/or utilization of the said
chemicals. It is worth mentioning however, that if there are lapses committed in the
procurement process that led to the delay of the payment, the team believes that such lapses
cannot justify the non-payment of the subject chemicals. Therefore, it is respectfully
recommended that immediate settlement of this account be made in accordance with the
Delivery Receipts issued (x x x), in order to uphold the good relationship with the supplier
Theo-Pam, who in one way or the other, help [sic] BPI in extending its technical services to
the different stakeholders particularly the exporters by offering/providing chemicals at
reasonable prices.[14] (Italics supplied.)
Thereafter, in a Letter[15] dated July 26, 2010, BPI Director Lacson inquired from the
COA, through Resident Auditor Adora Rimando, regarding the aforementioned
orders, viz.:
Dear Ms. Rimando:
The Bureau of Plant Industry would like to inquire from your Office the best course of
action concerning the unpaid chemicals delivered by Theo Pam to the Bureau of Plant
Industry. Below are the circumstances which may help your Office in assessing the
situation:
A. That there were deliveries done by Theo-Pam of various chemicals,
covered by the approved Purchase Order Nos. 154-09, 206-09, 240-09 and
397-09. Considering the urgency/ necessity of the subject chemicals in their
operation, the same were received and accepted in good faith by the end-
user, National Pesticide Analytical Laboratory. (x x x)
B. To further attest to the truth of the deliveries, Ms. Noreen D. Escobar and
Mr. German Yatco of BPI NPAL submitted a certification appertaining
thereto; (x x x)
C. That there were BAC Resolutions Declaring Single Calculated Responsive
Bids for the aforementioned transactions (x x x);
D. Despite of the certification of the BPI Budget Office on the availability of
funds to pay the subject PO's, the same remained outstanding due to the
refusal of the Property Officer and the BPI Inspector to affix their
respective signature on the Inspection Reports because of the alleged
failure of the end-user to inform them before using the delivered chemicals;
E. The undersigned in so many times had talked to the persons involved to try
to find out the truth and come up with the solutions favorable to the
government but fair and just to supplier, since it was established during the
February 10, 2010 meeting that there were indeed deliveries;
F. A Team was created under Memorandum Order No. 34, to conduct
inventory and verification of the waste materials/ empty containers of the
subject chemicals and was also directed to submit a definite findings and
conclusion [sic] within 10 working days (x x x). In a report submitted to the
Director, the Inventory Team recommended the immediate settlement of
the Account in accordance with the Delivery Receipts (x x x).
In view of the aforementioned facts, we are ready to commence the payment of the said
chemicals but before that, may we solicit the opinions and recommendations of the
Commission on Audit on the legality of paying the deliveries considering the refusal on
the part of Property Officer and the Inspector to affix their respective signatures on the
Inspection and Acceptance Reports. Can the report of the Team (Memorandum Order No.
34) be used as sufficient document in lieu of the Inspection Report?[16] (Italics supplied.)
On September 6, 2010, Theo-Pam requested an update regarding the COA's
recommendation for the subject transactions. In a Letter[17] dated September 13, 2010,
BPI Director Clarito M. Barron (BPI Director Barron) expressed that the COA noted
lapses in BPI's procurement procedures, viz.:
Ms. Adora Rimando, State Auditor IV of the Commission on Audit, in a letter reply to
former BPI Director Larry R. Lacson query dated July 26, 2010 stated that there was a
failure to comply with some requirements such as non-notification of the Properly
Officer of the deliveries to be accepted and inspected by the BPI's property inspectors.
Thus, there are still issues to be resolved regarding the deliveries before any payment can
be made to your client.
As soon as the problem is resolved and payment is in order, we will immediately notify
your office.[18] (Italics supplied.)
In another Letter[19] dated December 21, 2010, BPI Director Barren informed Theo-Pam
as follows:
x x x During our exchange of notes, we already accentuated that [Theo-Pam]'s claim
cannot be processed due to some issues still unresolved at this time. We had already
looked into this situation and when we examined, the more it is difficult to pinpoint who
is responsible or accountable for the release of payments to give their concurrence
because of questions which remained unanswered. Please bear in mind that these issues
would not have happened if the proper procedures were followed.
Theo Pam Trading has been our partner for over twenty years and we believe that their
representative knows the rules to follow but for these deliveries it is unfortunate that they
were overlooked. While we do not deny that there is fault on the part of the bureau's
officers and personnel, willingly or not, it cannot be denied also that there are lapses on
your client's side. Rest assured that we are doing our very best to reconcile our
documents to resolve as carefully as possible so that we will not encounter the same
particularly in compliance with the Commission on Audit's rules and regulations. x x
x[20] (Italics supplied.)
BPI's balance remained outstanding. Thus, on May 3, 2012, Theo-Pam filed its Money
Claim before the COA Proper alleging as follows: First, BPI purchased items from them
as evidenced by four BPI POs and the corresponding Theo-Pam Wholesale
Invoices. Second, Theo-Pam allowed BPI 30 days from the invoice date to pay for the
purchase amounts. Third, BPI admitted receiving the orders. Fourth, despite repeated
demands, BPI failed to settle its outstanding balance.
In its Answer,[21] BPI, represented by the Office of the Solicitor General, mainly denied
the actual delivery of the orders. It countered as follows:
First, the aforementioned BPI POs and Theo-Pam Wholesale Invoices do not prove
actual delivery. In particular, the wholesale invoices appended to Theo-Pam's Money
Claim contained irregularities: (a) there were erasures in relation to the date; (b) it had
notations that did not appear on the wholesale invoice copies retained by BPI; and (c) the
signature of the personnel who allegedly received the delivery did not match the
signature on BPI's file copy of the same invoice.[22]
Second, the subject transactions did not comply with BPI's new procurement process
flow (BPI Process Flow) as directed by then BPI Director Rudinas through an office
memorandum[23] dated May 28, 2009 addressed to all BPI employees, viz:
(4c) Property
Preparation of Purchase Order
(5a) End User
Preparation of Obligation Request and signing of Division Chief
(5b) Budget
For obligation and signature of Budget Officer
(5c) OD/ADO
Approval of Purchase Order
(6) Property/[Internal Control Unit]
Serving of P.O.
Delivery of goods:
- Chemicals/Lab. Equipment (2 days)
- Goods (2 days)
- Office equipment / Furnitures, etc. (2 days)
Inspection and acceptance
Voucher preparation.[24] (Emphasis supplied.)
Verily, Romansito G. Guerrero, Inspector, BPI Internal Control Unit,[25] prepared
Inspection Reports,[26] noting that the deliveries, as reflected on the delivery receipts,
corresponded to the POs, as follows:
PO No. Observations
P.O.# 154- Deliveries are equal to the Purchase Order[27]
09-
P.O.#206- Deliveries are equal to the Purchase Order[28]
09-
P.O. #240- Deliveries are greater than the Purchase Order[29]
09
P.O. #397- Deliveries are not equal to the Purchase Order in terms of greater quantities of
09 ACETONE and ACETONITRILLE items but lesser in HEXANE quantity[30]
However, BPI countered that the acceptance of deliveries violated the BPI Procurement
Process Flow in the following respects:
11. x x x Guerrero's report was merely based on the delivery receipts which he did not
sign since the Inspection Committee was not informed when said deliveries were made in
violation of the procurement process flow of the BPI. Thus, the Inspection and
Acceptance Report forms relating to the alleged deliveries were not signed by the
designated and authorized officers and personnel of [BPI].[31]
xxxx
20. x x x [T]he delivery receipts in the possession of [BPI] were signed by the personnel
in the Laboratory Services Division. Under the BPI Procurement Process Flow, it is the
Property Officer who inspects and accepts the deliveries and prepares the corresponding
Inspection and Acceptance Report.
20.1 Without said Inspection and Acceptance Report, the corresponding disbursement
voucher will not be processed for payment."[32]
BPI insisted that Theo-Pam has been BPI's supplier for 20 years. Thus, it "cannot feign
ignorance of [these] rules."[33]
Ruling of the COA Proper
In its assailed Decision No. 2016-135, the COA Proper denied Theo-Pam's Money
Claim, viz.:
WHEREFORE, premises considered, the petition for money claim of Theo-Pam Trading
Corporation for payment of various laboratory chemicals in the total amount of
P2,361,060.00 plus 12% interest per annum, and attorney's fees and litigation expenses
amounting to P590,257.75 is hereby DENIED.[34]
The COA Proper anchored its ruling on Section 4(6) of Presidential Decree No. 1445,
otherwise known as the Government Auditing Code of the Philippines (Government
Audit Code), which requires that "[c]laims against government funds shall be supported
with complete documentation." It pointed out that Theo-Pam's claim is not supported by
evidence that sufficiently shows "actual delivery and substantial compliance with the
specifications stated [on] the POs."[35] The BPI Process Flow and relevant government
accounting procedures[36] require the property officer (i.e., BPI inspector and chief of
BPI's Property and Supply Section) to personally inspect the delivery, determine if the
quantity and specifications of the goods match those indicated in the PO, and prepare the
necessary report (i.e., Inspection and Acceptance Report) to summarize his observations.
Based on these considerations, the COA ruled that the lack of proper documentation
raised "doubt on whether delivery of the laboratory chemicals did take
place."[37] Further, Theo-Pam, “[b]eing a party to a government transaction, it is duty-
bound to know the government requirements."[38]
In his dissent,[39] Commissioner Jose A. Fabia pointed out that contrary to the majority
opinion, there is substantial evidence showing actual delivery to NPAL, the end
user, viz.: (1) the Team Report dated July 9, 2010; (2) certifications issued by NPAL
personnel; and (3) delivery receipts, the information on which match those on the
respective POs. Further, he stressed on the doctrine of quantum meruit, which allows a
private contractor in a government project "to be reimbursed for the reasonable value of
the thing or services actually rendered" in case the applicable law and regulations were
not strictly complied with.[40]
Theo-Pam filed a motion for reconsideration. However, the COA Proper denied it.
Hence, the present petition.
Issues
The Court shall resolve two issues: (1) Did the COA Proper commit grave abuse of
discretion? (2) Is Theo-Pam entitled to the payment of its money claim against BPI?
The Court's Ruling
The petition is meritorious.
The prevailing rule limits the scope of petitions for certiorari under Rules 64 and 65 of
the Rules of Court only to jurisdictional errors or grave abuse of discretion.[41] Thus, in
the absence of grave abuse of discretion, certiorari proceedings cannot serve to cure mere
errors of judgment committed by the COA Proper.[42] In this regard, the COA commits
grave abuse of discretion when it renders a decision or resolution that is not based on law
and the evidence but on caprice, whim and despotism.[43]
In the instant case, the Court finds that the COA gravely abused its discretion in the
following instances: First, the COA, without justification, bypassed the Director and
Legal Services Sector's review and evaluation, despite the clear mandate provided by its
internal rules of procedure. Second, it consistently disregarded substantial evidence
supporting Theo-Pam's Money Claim.
The COA, without justification,
bypassed the Director and Legal
Services Sectors review and
evaluation, despite the clear mandate
provided by its internal rules of
procedure.
It is settled that the COA Proper has "exclusive jurisdiction to settle all debts and claims
of any sort due from or owing to the Government or any of its subdivisions, agencies, and
instrumentalities."[44]
As regards money claims filed directly before the COA Proper, the 2009 Revised Rules
of Procedure of the COA (COA Rules of Procedure)[45] provides as follows: (1) The COA
Secretary shall assign the case to the Director of the appropriate Central or Regional
Office, who shall comment on the case and submit a recommendation; (2) Thereafter, the
COA Secretary shall refer the case to the Legal Services Sector (LSS), who shall review
and evaluate the claim and prepare a draft decision; and (3) Upon receipt of the draft
decision, the COA Proper shall formally deliberate on the case.[46]
Stated differently, the COA Rules of Procedure provides a three-tiered review
mechanism in cases of money claims filed against the government: the Director, the LSS,
and the COA Proper. The use of the word "shall" in the relevant portions of the rules
denotes this mechanism's mandatory character.[47]
Notably, the money claims are original actions. They are litigated for the very first time
before the COA Proper. The Court can only interpret the COA's multi-level review
process as an institutional safeguard for a money claim's proper and thorough evaluation,
considering that these actions have not been tried previously.
In the instant case, there is nothing in the COA's decision or resolution showing that the
case was assigned to the appropriate Central or Regional Office Director and/or
subsequently referred to the LSS prior to the COA Proper's deliberation. That the
Director and/or the LSS were not even furnished a copy[48] of the assailed issuances
strongly suggests that they did not participate in the case, much less review the money
claim at all.
Verily, the Court recognizes the COA's power to install its own rules of procedure,[49] as
well as its discretion to relax them in certain cases. Furthermore, the COA Proper is not
bound by the results of the Director or LSS' review and is expected to conduct its own
independent evaluation. However, by no means is its discretion unbridled. COA's evasion
of its internal rules, at the expense of the parties involved who may have relied on the
rules' application, amounts to a denial of Theo-Pam s fundamental right to due process—
a grave abuse of its discretion.
The COA consistently disregarded
substantial evidence supporting Theo-
Pam s Money Claim.
The COA struck down Theo-Pam's claim because it failed to show actual delivery of the
subject chemicals and substantial compliance with the specifications stated on the POs.
However, Theo-Pam insists that the following documents sufficiently prove the goods'
actual delivery: (1) the wholesale invoices, (2) POs, (3) Team Report, (4) BPI's replies to
and other correspondences with Theo-Pam, and (5) certifications issued by NPAL
personnel.
The Court agrees with Theo-Pam.
We also recognize the COA's constitutionally established role as the guardian of
government funds. The COA's factual findings are generally accorded utmost respect “by
reason of their special knowledge and expertise over matters falling under their
jurisdiction."[50] However, the Court shall affirm the COA only to the extent of its
findings and conclusions supported by substantial evidence. To blindly uphold the COA
despite the absence of proof supporting its conclusions is to sanction a violation of the
adverse party's right to due process and, concomitantly, COA's grave abuse of discretion.
[51]
In the present case, the COA's final decision to deny Theo-Pam's Money Claim is
inconsistent with the following facts on record:
First, Theo-Pam's Money Claim is largely based on the wholesale invoices and POs.
Particularly, the wholesale invoices enumerated the chemicals procured by BPI,
specifically for NPAL as end user, as well as the corresponding quantities and prices.
They were signed by NPAL personnel signifying that they had "[r]eceived the above
articles in good order and condition."
The invoices are actionable documents.[52] Thus, BPI was required to specifically deny,
under oath, their genuineness and due execution.[53] However, upon examination, BPI's
Answer was not verified nor is there anything on record indicating that BPI made the
averments therein under oath. Having failed to provide the requisite specific denial, BPI
is deemed to have admitted the documents' genuineness and due execution,[54] including
the authenticity of the receiving personnel's signatures.
That NPAL personnel affixed their signatures on the wholesale invoices supports Theo-
Pam's claim that: (a) it delivered to NPAL various chemicals, the quantities and prices of
which were detailed therein; and (b) NPAL personnel acknowledged and accepted the
deliveries. They establish a prima facie case for Theo-Pam, shifting to BPI the burden of
disputing the claim.
Second, even if the Court ignores its flawed manner of contesting Theo-Pam's claim,
BPI's defense of non-delivery is inconsistent with the facts in the present case. It appears
that BPI repeatedly acknowledged NPAL's receipt and consumption of these chemicals in
the following documents: (a) the Memorandum Order No. 34 dated June 21, 2010, which
formed an Inspection/Verification Team to take a physical inventory "of all chemicals
and their empty containers delivered to NPAL on the aforementioned POs."[55] (b)
the Team Report dated July 9, 2010, which stated that, based on the
Inspection/Verification Team's inquiry, NPAL personnel "confirmed that the subject
chemicals were delivered and the same were used and consumed for their
operations."[56] (c) the Letter dated July 26, 2010, where BPI sought to clarify the Theo-
Pam purchases with the COA Auditor, and, in the process, categorically stated that Theo-
Pam delivered the subject chemicals and, in turn, NPAL received and accepted them in
good faith.[57] (d) the Inspection Reports prepared by the property officer of BPI's Internal
Control Unit,[58] noting that the deliveries, based on the delivery receipts, were equal to
the corresponding POs.
Parenthetically, it appears that the POs are orders from BPI directing/requesting Theo-
Pam to deliver the chemicals enumerated and described thereon. Having been in
possession of this order/instruction, Theo-Pam is presumed to have delivered the items
accordingly.[59] Furthermore, procedural rules consider these purchases to have been fair,
regular,[60] and executed observing the ordinary course of business.[61] The Court cannot
consider BPI's bare allegations of non-delivery sufficient to have overcome these
presumptions.
Third, the NPAL personnels certifications provide a clear categorical admission that
Theo-Pam delivered the subject chemicals in accordance with the POs. The personnel
acknowledged receipt of these goods, as well as subsequent use and consumption of these
items in the course of their operations.
Certainly, the COA Proper gravely abused its discretion when it brushed aside the above-
discussed documents and certifications' veracity on a mere technicality—a procedural
lapse not even attributable to the claimant. The deliveries' irregularities do not bar
recovery.
A careful reading of the assailed issuances reveals that while the COA Proper found that
NPAL personnel (i.e., German T. Yatco and Noreen D. Escobar) had in fact received the
subject chemicals upon delivery,[62] it nonetheless invalidated Theo-Pam's Money Claim
on the basis of noncompliance with "standard government procurement procedures and x
x x internal control on segregation of duties and functions."[63]
The COA Proper found the following lapses: First, there were no Inspection and
Acceptance Reports to support the alleged deliveries. Second, the inspection of the
alleged deliveries was not conducted by the authorized property officer. Third, the NPAL
personnel who received and inspected the alleged deliveries merely relied on the delivery
receipts, in violation of standard government procurement procedures and internal control
policies on the proper segregation of duties.[64]
The lapses are not disputed. However, the primary responsibility of complying with these
procedural requirements rests on BPI and NPAL because these are internal rules. That
the BPI Process Flow were internal in nature is evident from the following: (a) it was
communicated only through an office memorandum[65] addressed to all BPI employees,
and (b) none of the steps within the process flow requires a third-party supplier's active
participation.
In other words, BPI/NPAL has no one to blame other than its own personnel if the
deliveries' acceptance, inspection, and supporting documentation were not performed as
required by its process flow. On the other hand, a third-party supplier's right to recover
cannot be conditioned upon strict compliance with these requirements inasmuch as they
are strangers to these internal rules.
Verily, the Government Audit Code mandates complete supporting documentation for all
claims against government funds. Unfortunately, the documentary/procedural
deficiencies in the present case are attributable to the government's own instrumentality.
Thus, the responsible personnel who are found to have been remiss in the performance of
their duties must be liable for the consequences. BPI cannot conveniently hold a third
party liable for the agency's own procedural oversight and continue to evade payment for
goods they received and used.
To be sure, a government agency's non-compliance with its own internal control
procedures does not negate actual delivery and cannot unduly deprive a supplier of its
right to collect the amount corresponding to the goods it has delivered.
Theo-Pam is entitled to attorney's fees.
Theo-Pam claims that it is entitled to the payment of attorney's fees and litigation
expenses amounting to P590,257.75 or 25% of BPI's total outstanding balance, as
stipulated on the face of each wholesale invoice, including the appearance fee of
P5,000.00 for every court appearance.
The Court partially agrees with Theo-Pam's contention.
In the past, the Court has upheld a party's right to recover attorney's fees stipulated in a
written agreement, including those imprinted on the face of sales invoices.[66] The
wholesale invoices in the present case contain the following statement:
TERMS: Cash upon presentation of bills unless otherwise stipulated. Interest at 12% per
annum will be charge [sic] on all law suits and an additional amount equal to 25% of the
total amount due and unpaid for attorney's fee and cost of the litigation will be charged
xxx[67]
The parties' express stipulation on attorney's fees is a penal clause.[68] Thus, the payment
thereof is in the nature of liquidated damages.[69] However, the Court finds the rate of
25% excessive. Accordingly, the Court reduces the award to a more reasonable rate of
5%.
WHEREFORE, the petition is GRANTED. The assailed Decision No. 2016-135 dated
July 28, 2016 and the Resolution No. 2018-337 dated July 18, 2018 of the Commission
on Audit are REVERSED and SET ASIDE.
Respondent Bureau of Plant Industry is hereby ORDERED to pay petitioner Theo-Pam
Trading Corporation the value of the chemicals delivered in the subject wholesale
invoices in the aggregate amount of P2,361,060.00 plus applicable interest and 5%
attorney's fees.
Respondent Commission on Audit is hereby DIRECTED to allow the above-mentioned
payment, after validation of the computation of interest and other fees.
This disposition is without prejudice to any criminal or administrative action against
erring Bureau of Plant Industry/National Pesticide Analytical Laboratory officials for
violation of the law, if any.
SO ORDERED.
Peralta, C.J., Perlas-Bernabe, Leonen, Caguioa, Gesmundo, Hernando, Carandang,
Lazaro-Javier, Zalameda, Lopez, Delos Santos, and Gaerlan, JJ., concur.
Rosario, J., on official leave.
