DECISION NO.

2018-382
November 21, 2018
 
Subject :      Motion  for    Reconsideration,     treated   
as   Petition    for     Review,    of  former 
Governor Milagros T. Tan, Province of Samar,
of Commission on Audit Legal Services Sector
Decision No. 2009-336 dated November 10,
2009, which affirmed Notice of Disallowance
Nos. LAS-OGC-2006-02 to LAS-OGC-2006-
04, all dated December 11, 2006, on the
purchase of assorted goods, medicines, and
electric fans in the total amount of
P45,026,638.40
 
DECISION
 
FACTS OF THE CASE
 
Before this Commission is the Motion for Reconsideration, 1 of former Governor
Milagros T. Tan, Province of Samar, , of Commission on Audit (COA) Legal Services Sector
(LSS) Decision No. 2009-336 2 dated November 10, 2009, which affirmed Notice of
Disallowance (ND) Nos. LAS-OGC-2006-02 to LAS-OGC-2006-04, all dated December 11,
2006, on the purchase of assorted goods, medicines, and electric fans in the total amount of
P45,026,638.40.
 
Special Audit Team (SAT) was created, to conduct a special audit of selected transactions
of the Province of Samar. The SAT issued the subject NDs, with the following particulars:
 
1. ND. No. LAS-OGC 2006-02
Reference Payee Amount Grounds for Disallowance
Disallowed
Check No. Date

310195 12/20/2002 Lester Lace P3,900,000.00 Highly irregular for lack of proper bidding
Enterprises documentation;
 
Purchase Order did not indicate when the supplier
received it; and
 
No valid proof of actual distribution to intended
beneficiaries or recipients.
241027 02/07/2002 Wilmart’s 2,840,640.00 Emergency purchases found not complying with
Minimart the requirements set forth under the Rules and
 241028 02/07/2002 Wilmart’s 3,680,558.40 Regulations on Supply and Property Management
Minimart in Local Governments (RRPSMLG);
 
136642 03/06/2002 Wilmart’s 2,243,700.00 Purchases were charged against calamity fund
Minimart despite the absence of any declaration from the
President that Samar was under a state of calamity,
136643 03/06/2002 Wilmart’s 1,952,900.00 in violation of Section 324(d) of Republic Act
Minimart (RA) No. 7160;
 
Splitting of requisitions and purchase orders in
violation of COA Circular No. 76-41 dated July 30,
1976;
 
No valid proof of actual distribution to intended
beneficiaries or recipients;
 
Purchase Order (PO), Purchase Request (PR),
Delivery Receipt (DR), Canvass, and Inspection
Report were all dated 12/20/2001, 12/18/2001, and
12/19/2001. The supplier is from Tacloban City,
which is 107 km away from Catbalogan;
 
The supplier’s capitalization was only P100,000.00
per business permit.

    TOTAL P14,617,798.40  
 
 

2. ND. No. LAS-OGC 2006-03

Reference Payee Amount Grounds for Disallowance
Disallowed
Check No. Date

1251 01/31/2002 RILEM P700,695.00 Highly irregular for lack of proper bidding
Pharma documentation;
 
Glaring inconsistencies in the dates appearing in
the supporting documents of the transactions
involved and the impossibility of their
occurrences;
 
Splitting of requisitions and POs in violation of
COA Circular No. 76-41 dated July 30, 1976;
 
The same items, except for the quantity, were
purchased and the dates of the POs were the
same or very close to each other; and
 
No valid proof of actual distribution to intended
 beneficiaries or recipients.

136641 03/06/2002 G.P. 568,706.00 Highly irregular for lack of proper bidding
Enterprises documentation; and

287957 07/22/2002 GRAMSIL 91,241.25  

Trading Glaring inconsistencies in the dates appearing in
the supporting documents of the transactions
involved and the impossibility of their
occurrences.
295016 10/14/2002 RILEM 683,850.00 Highly irregular for lack of proper bidding
Pharma documentation;
 
01256 10/14/2002 RILEM 559,466.00 Glaring inconsistencies in the dates appearing in
Pharma the supporting documents of the transactions
involved and the impossibility of their
01257 10/14/2002 RILEM 526,635.00 occurrences; and
Pharma
 
Splitting of requisitions and POs in violation of
295040 10/15/2002 LOYOLA 120,476.50 COA Circular No. 76-41 dated July 30, 1976.
Medical,
Dental and
Laboratory
Supplies

309714 12/04/2002 LOYOLA 51,775.00 Highly irregular for lack of proper bidding
Medical, documentation; and
Dental and  
Laboratory Glaring inconsistencies in the dates appearing in
Supplies the supporting documents of the transactions
involved and the impossibility of their
310238 01/15/2003 LOYOLA 5,996,971.00 occurrences.
Medical,
Dental and  
Laboratory
Supplies

319381 04/30/2003 ZYBERMED 125,605.00

Pharma

136114 02/05/2002 RILEM 642,090.00 Purchase through repeat orders in violation of

Pharma Section 101 of the RRSPMLG;
136231 02/08/2002 658,190.00  
Inconsistencies in dates in the supporting
documents, raising doubt on the regularity and
validity of the purchases made;
 
Splitting of requisitions and purchase orders in
violation of COA Circular No. 74-61 dated July
30, 1976;
 
The same items except for quantity were
purchased and the dates of the POs were the
same or very close to each other; and
  
245289 01/15/2002 MEDIC AID 1,689,790.00 No valid proof
Emergency of distribution.
purchases were found not complying
Distributors, with the requirements set forth under
Inc. RRSPMLG;
 
245290 01/15/2002 RILEM 2,258,815.00 Purchases were charged against calamity fund
Pharma despite the absence of any declaration from the
President that Samar was under a state of
calamity, in violation of Section 324(d), RA No.
7160;
 
Splitting of requisitions and POs in violation of
COA Circular No. 76-41 dated July 30, 1976;
 
The same items except for the quantity were
purchased and the dates of POs were the same or
very close to each other;
 
No valid proof of distribution; and
 
There was overpricing of P322,760.00 for
purchases with MEDIC AID.

    TOTAL P28,774,200.00 7  
 
 
3. ND. No. LAS-OGC 2006-04
Reference Payee Amount Grounds for Disallowance
Disallowed
Check No. Date

13257 12/20/2002 Raechel P650,545.44 Management failed to prove the necessity of the
Shoppers item because school resolutions came later (May
13271 03/03/2003 (partial and 739,454.56 2003) than the date of POs, etc., (December 18,
final 2002) aside from the fact that the veracity of the
payment for transaction was doubtful due to inconsistencies of
1,000 units dates and the result of our selective verification
of electric from recipients. Buying price was likewise
fans) exorbitant;
 
Most of those interviewed said that the fans were in
their homes because of the information that it was a
gift from the Governor;
 
There were also inconsistencies in dates. For the
DV under Check Nos. 13257 and 13271, the PO
was dated 12/18/2002 but the
Inspection/Acceptance Report was dated
12/16/2002, or the acceptance being earlier by two
 days than the date of the PO. Supporting documents
also disclosed that the end users appeared to have
received the items in May and June 2003 or five to
six months after the alleged delivery. Moreover,
there was no proof of complete distribution
submitted; and
13208 11/25/2002 Raechel 244,640.00 Management failed to prove the necessity of the
Shoppers items for public use, as it appeared from the
(partial and interview that the item was a gift from the
final Governor and therefore, treated as their personal
payment for property aside from the fact that the buying price
176 units of was exorbitant.
electric  
fans) There were also inconsistencies in the dates. The
items were allegedly received by end users in
August 2002 while the payment thereof, PO and
Inspection Report were dated November 20-22
2002, or receipt by end users were made three
months prior to its purchase; and
 
 
There was no available appropriation for the
purpose. Appropriation for supplies and materials
for 2002 was P49,592.00 only as per School Board
Resolution No. 2002-01 dated January 15, 2002.

    TOTAL P1,634,640.00  
 
On November 10, 2009, LSS Decision No. 2009-336 was rendered, denying the appeal
and affirming the NDs based on the following grounds:
  
1. LAO Office Order No. 2003-059, signed by then Assistant Commissioner
and General Counsel Raquel R. Habitan, was signed by a competent
authority which completely vested the SAT with authority to conduct the
audit. The NDs were issued by the SAT in compliance with the written
instructions of then Assistant Commissioner and General Counsel
Habitan, validly based on the Manual on Certificate of Settlement and
Balances which confers upon the SAT the authority and duty to issue
NDs;
 
2. Although the lacking bid documents may be supplanted by secondary
evidence in accordance with COA Decision No. 2000-383 dated
 December 29, 2000, it must be emphasized, however, that the reason for
the disallowances is not just the lack of proper documentation but
irregularity in the bidding process. For instance, the fact that a supplier
has been allowed to use the same bidder’s bond in the bidding of various
transactions and that no bidder’s bonds were attached to the DVs proved
the findings of irregularities;
 
3. COA Circular No. 92-386 requires, among others, submission of the
details of how the goods or items were utilized, and who the end
users/recipients were. Submission of mere affidavits to prove delivery of
assorted goods to end users is not even a substantial compliance and may
be disregarded for being self-serving; that only a few executed an
affidavit; and the affidavits were only executed in 2007 although
procurement and alleged delivery were made in 2001 and 2002;
 
4. On the issue of the legality of repeat orders, it must be emphasized that
the irregularity arose due to the fact that the repeat orders were based on a
public bidding held on a later date than the date of the repeat orders,
contrary to Section 101 of COA Circular No. 92-386.
 
5. On the issue of overpricing, while there was no recanvass made, the price
comparison was made with the quotation of the same supplier under
another PO. Even granting without conceding that there was
no overpricing, the disallowance for that particular transaction will
nevertheless stand, bearing in mind the other irregularities surrounding the
transactions;
 
6. On the issue of Wilmar’s Minimart capitalization, the Financial
Statements submitted by the appellants as evidence to prove the capability
of said supplier to deal with the government, failed to overturn the finding
of the SAT that it was lacking in capitalization when it entered into
contract with the province because said Financial Statements are for the
years ending December 31, 2005 and 2006 which are not relevant
considering that the transactions transpired in 2001 and 2002;
 
7. Assuming that the procurement of electric fans was necessary, still, it will
not erase the irregularities surrounding the procurement, i.e., lack of
appropriation; and inconsistencies in the dates of the documents
pertaining to the transaction;
 
 8. Irregularities were committed in the procurement and delivery of assorted
goods, medicines, and electric fans and substantial documents were
adduced to prove it. In addition, affidavits of Mr. Aurelio A. Bardaje, Jr.,
former General Services Officer, and Numeriano C. Legaspi, Inspector of
the province, generally stated that the transactions disallowed were tainted
with anomalies and that they were only forced to affix their signatures on
the documents pertaining to the transaction because of intimidation and
threats from former Governor Tan. Further, Medic Pharma, one of the
alleged suppliers, in a letter dated March 17, 2006, addressed to the then
Chairman, this Commission, denied transacting with the province and
even contested the authenticity of the supporting documents. These
circumstances are substantive and positive evidence corroborating the
technical details of the documentation of the disallowance;
 
9. In several cases, the SC held inapplicable the case of Arias because the
person indicted had prior knowledge of the existence of an irregularity that
should have put him on guard regarding the transaction. From the records,
several transactions were disallowed because of irregularity in the bidding
process. Movant’s participation in the disallowed transaction did not
entirely stem from her authority as the Head of the province as she was also
the Chairman of the BAC. As Chairman of the BAC, she had personal
knowledge of the facts and circumstances suggestive of any irregularity.
Thus, she should have been more cautious in her subsequent actions like
approving the PRs, POs, and DVs.
 
Hence, this Petition for Review
 
RULING 
 
After a careful evaluation, this Commission finds the Petition for Review without merit.
 
Before issuing the NDs, the SAT conducted a special audit of selected transactions of the
Province of Samar based on documents which were necessarily from the province, i.e., the
bidding documents, DVs, POs, PRs, DRs, Canvass, Inspection and Acceptance Reports, etc. The
SAT also conducted interviews with some of the alleged recipients of the electric fans procured
by the province. As a result of their audit, they found numerous irregularities and violations of
law which were the bases for the issuance of the NDs. The surrounding circumstances more than
sufficiently justify the issuance of the NDs, negating movant’s claim that the evidence presented
by the SAT are insufficient to justify the NDs.
 
 Time and again, the SC has held that the findings of administrative agencies are generally
accorded not only respect but also finality when the decision and order are not tainted with
unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. 
 
To exclude herself from liability, movant further argues that she did not prepare the
documentation relative to the questioned transactions subject of the NDs and that the duty to
ensure the propriety, due execution and veracity of the documentation lies upon her subordinates.
 
Movant, as former Governor of the Province of Samar, should be held liable for the
disallowed transactions in accordance with the policies provided under Sections 2, 102 (1) and
103 of Presidential Decree (PD) No. 1445, viz:
 
Section 2 – It is the declared policy of the State that all resources of the
government shall be managed, expended or utilized in
accordance with law and regulations, and safeguarded against
loss or wastage through illegal or improper disposition, with a
view to ensuring efficiency, economy and effectiveness in the
operations of government. The responsibility to take care that
such policy is faithfully adhered to rests directly with the chief
or the head of the government agency concerned .
(Underscoring supplied)
 
Section 102 – Primary and secondary responsibility.
 
(1) The head of agency of the government is immediately and primarily
responsible for all government funds and property pertaining to his
agency.
 
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.
 
Moreover, it must be emphasized that aside from being the governor, she also
participated in the disallowed transactions as the BAC Chairman. As BAC Chairman, she is
presumed to have full knowledge of the pertinent laws, rules, regulations, and policies in
government procurement. 11 Thus, she cannot claim that, as Governor, she had to rely on the
competence of her subordinates and in the regularity of the performance of their official duties
and functions.
  
WHEREFORE , premises considered, the Petition for Review is hereby DENIED for
lack of merit.