DECISION NO.

2020-341
January 31, 2020

Subject: Petition for Review of Mr. Nelson B. Avanceña, et al., members and secretariat of the
Bids and Awards Committee, Municipal Government of Dr. Jose P. Rizal, Palawan, of
Commission on Audit Regional Office No. IV-B Decision No. 2018-29 dated May 31,
2018, which affirmed Notice of Disallowance Nos. 17-001-100-(14), 17-003-100-(14)
to 17-008-100-(14), and 17-011-100-(14), all dated January 11, 2017, on the
procurement of office supplies, food and other items in calendar year 2014, in the total
amount of P8,191,695.83

DECISION

FACTS OF THE CASE

Before this Commission is the Petition for Review1 of Mr. Nelson R. Avanceña, et al., 2 members and secretariat of the Bids
and Awards Committee (BAC), Municipal Government of Dr. Jose P. Rizal, Palawan, of Commission on Audit (COA) Regional
Office (RO) No. IV-B Decision No. 2018-29 dated May 31, 2018. The decision affirmed eight Notices of Disallowance (NDs), all
dated January 11, 2017, on the procurement of office supplies, food and other items in calendar year (CY) 2014, in the total
amount of P8,191,695.83.

The petitioners received the NDs on various dates, the latest of which was on January 26, 2017.3 They filed their
Consolidated Appeal Memorandum on July 24, 2017. However, the corresponding filing fees were paid only on September 4,
2017.4 Despite the delay in payment of the appeal fee, the Regional Director (RD), relaxed the procedural rules and decided the
case on its merits under COA RO No. IV-B Decision No. 2018-29. The appeal was denied for lack of merit. A copy of the decision
was received by the petitioners on June 7, 2018.5 The Petition for Review was filed on September 6, 2018.6

Based on the foregoing jurisdictional facts, the petitioners had already exhausted 7 the reglementary period of six months or
180 days provided under Section 48 8 of Presidential Decree No. 1445 9 and Section 3,10 Rule VII11 of the 2009 Revised Rules of
Procedure of COA to file the Petition for Review. However, in the interest of substantial justice, this Commission will relax its
procedural rules and decide the case on its merits.

From September to December 2014, several procurements were made by the municipality from four merchants through
small value procurement (SVP) pursuant to BAC Resolution Nos. 2014-01-03,12 2014-01-04,13 2014-01-13,14 and 2014-04-34.15
On post-audit, the Audit Team Leader (ATL) and the Supervising Auditor (SA) of the Local Government Sector E, Province of
Palawan, issued the NDs on the following grounds:

1) Non-submission of the documents16 stated in the Notice of Suspension;

2) The procurement violated Republic Act (RA) No. 9184 17 and its 2009 Revised Implementing Rules and
Regulations (RIRR);

3) The purchase requests (PRs) contained brand names, in violation of Section 18 18 of RA No. 9184;

4) The contracts/purchase orders (POs) were divided into smaller quantities and amounts or splitting of
contracts were done to evade or circumvent the requirement of public bidding, contrary to Section 54.1 19
of the 2009 RIRR of RA No. 9184;

5) The BAC Resolutions recommended to the head of the procuring entity (HOPE) the resort to negotiated
procurement-SVP as an alternative mode of procurement, but the procured goods were mostly readily
available or off-the-shelf goods, contrary to Section 53.9 20 and 52 21 of the 2009 RIRR;

6) There was no certification from the Department of Budget and Management-Procurement Service that
the goods to be procured are not available, contrary to Section 52.1 22 of the same RIRR;

7) There was no request for quotations (RFQs) sent to at least three suppliers of known qualifications,
contrary to Section 53.9.1 23 of the same RIRR; and

8) The BAC did not authorize the appropriate office, committee or support unit to undertake said
procurement, contrary to Item 2(c),24 Appendix 18 25 of RA No. 9184.

The following persons were held liable:

Name Position/ Designation Nature of Participation in the Transaction

1. Mr. Alrie D. Nobleza Former Mayor Approved and signed the undated and unnumbered
disbursement vouchers (DVs);
Signed the unnumbered and undated obligation
requests;
Requested and approved the undated and
unnumbered POs;
Accepted the goods delivered and affixed his
signature on the inspection and acceptance reports;
Requested, approved, and received the undated and
unnumbered requisition and issue slips;
Approved BAC resolutions
 2. Ms. Rufina B. Bungalso Municipal Treasurer/ BAC Signed the undated and unnumbered DVs;
Member Disbursed and paid the supplier;
Signed the report of disbursements;
Failed to comply with the posting requirement of the
subject procurement; and
Failed to observe the guidelines and procedures of
procurement in accordance with RA No. 9184

3. Mr. Edgardo P. Cayaon Senior Bookkeeper Prepared the journal entry vouchers (JEVs); and
Received the submitted report of disbursements
4. Mr. Hilarion M. Torres, Jr. Municipal Accountant/ Inspection Certified and approved the JEVs;
Officer Signed undated and unnumbered DVs as to the
completeness of supporting documents and allotment
obligated for the specific purpose;
Signed the unnumbered and undated obligation
requests;
Signed the inspection and acceptance reports; and
Signed the requisition and issue slips

5. Mr. Henry V. Palarca Municipal Agriculturist/BAC Failed to comply with the posting requirement of the
Member subject procurement; and
6. Mr. Jerry V. Calamba, Jr. Municipal Environmental and Failed to observe the guidelines and procedures of
procurement in accordance with RA No. 9184
Natural Resources Office/BAC
Member
7. Mr. Rodel B. Lobaton Municipal Engineer/ BAC Member

8. Mr. Nelson B. Avanceña Head, BAC Secretariat

9. Ms.Nena B. Bungalso26 Administrative Assistant II Disbursed and paid the supplier; and
10. Ms. Melinda G. Silapan27 Ticket Checker/ special disbursing Signed the report of disbursement
Officer
11. NBL Smart Source Enterprises28 Payees Received the payment
12. EECC Store29

13. One Source the Uniform30

14. Dulsora Trading31

On appeal, the RD rendered COA RO No. IV-B Decision No. 2018-29, affirming the NDs. Thus, this Petition for Review
raising the following arguments:

1. The petitioners performed their functions as BAC members and secretariat in accordance with law, after
verification and consideration of valid and lawful documents, to wit:

a) The PRs on file with their office, as well as those on file with the General Services Officer were
dated, and contained the PR number; and it is shown from the face of the documents the name of
the procuring agency and the approval of the HOPE;

b) RFQs were prepared and sent to only one supplier of known qualifications because of unforeseen
contingencies requiring immediate purchase pursuant to Item 3(c),32 Guidelines for Shopping
and SVP, Government Procurement Policy Board (GPPB) Resolution No. 09-2009;33

c) There was compliance with the posting requirement in a conspicuous place as shown in the
certificate of posting. However, the posting in the Philippine Government Electronic
Procurement System was dispensed with due to the unforeseen contingency and necessity to
immediately purchase the items, in accordance with paragraph 3(d)34 of the aforementioned
guidelines, GPPB Resolution No. 09-2009. Moreover, the internet signal in the Municipality of
Rizal, Palawan, is very poor;

d) The contention of the RD that Shopping should be availed of considering that the goods
purchased were ordinary or regular office supplies, is misplaced. Resort to SVP was proper
because the goods procured, such as cow, pig, goat, nipa, rattan, coral materials, etc. are not
ordinary or regular supplies as defined in Section 52.2 35 of the 2009 RIRR of RA No. 9184; and

e) The petitioners did not commit splitting of contracts for the following reasons:

i. They have no hand in the preparation of the PRs, more so with the other documents
prepared or processed for the actual purchase of the items mentioned in the PRs;

ii. All PRs submitted for their consideration appears to be sufficient in form and even bears
the approval of the HOPE or the Office of the Mayor; and

iii. Although there were several PRs submitted, it appears that the total amount for each PR
of the concerned procuring entity does not exceed the P100,000.00 threshold. Thus,
procurement through SVP is warranted;
 2. From the time they received the PRs, the petitioners diligently performed their duty to verify the
availability of funds, determine the proper procedure for procurement, comply with the requirements of
sending quotations to qualified suppliers and posting the RFQs. They likewise exerted efforts to post the
RFQs and notice of awards with PhilGEPS but to no avail, in view of the poor or lack of internet
connection in Rizal, Palawan, as substantiated in the certification issued by the Municipal Accountant;
and

3. The petitioners are not personally liable for the disallowance because they merely performed their
functions in good faith.

In her Answer, 36 the RD prayed that the petition be denied for lack of merit and recommended that a Supplemental ND be
issued to include Engr. Gregorio V. Baluyut, BAC Chairman, as one of the persons liable for the disallowed transactions.

ISSUE

The issue to be resolved is whether or not the petition is meritorious.

DISCUSSION

The petition is unmeritorious.

Foremost, the procurement of supplies for the festivals were not included in the Annual Procurement Plan (APP) and in the
revised APP of the municipality for CY 2014, except for the Beri-Berian Program, This is in violation of Section 7, 37 RA No. 9184
which provides that no government procurement shall be undertaken unless it is in accordance with the approved APP of the
procuring entity.

In addition, Section 48 38 of Rule XVI of the 2009 RIRR of RA No. 9184 states:

In accordance with Section 10 of this IRR, as a general rule, the Procuring Entities shall adopt public bidding
as the general mode of procurement and shall see to it that the procurement program allows sufficient lead
time for such public bidding. Alternative methods shall be resorted to only in the highly exceptional cases
provided for in this Rule.

In this case, the petitioners’ resort to SVP was not justified. Under the law, 39 SVP may be resorted to if the procurement will
not exceed the threshold, in this case, P100,000.00. As observed by the RD and this Commission, while the supporting documents
disclose that the procurements were within the threshold of P100,000.00, records show that the municipality made several and
repeated procurements of the same supplies for the same purpose and from the same supplier.

A case in point is ND No. 17-003-100-(14) wherein the municipality, through cash payment, made a total of 16 separate
procurements from EECC store for food supplies (e.g. rice, Maggi chicken and beef, and sardines, etc.), in the total amount of
P1,466,105.00. The JEV of these 16 transactions disclosed that 15 procurements were made in November 2014 and one
procurement in December 2014. In COA Circular No. 1976-41, splitting is defined as follows:

1) Splitting of requisitions consists in the non-consolidation of requisitions for one or more items needed at
or about the same time by the requisitioner;

2) Splitting of POs consists in the issuance of two or more purchase orders based on two or more
requisitions for the same or at about the same time by different requisitioners; and

3) Splitting of payments consists in making two or more payments for one or more items involving one
purchase order.

Under Section 54.1 40 of the RIRR of RA No. 9184, the splitting of government contracts is not allowed for being an
irregular transaction. In this case, there is no justifiable reason as to why the procurements should be separately made considering
that the items bought from the same suppliers are of the same kind. Thus, the municipality split the procurement below the
P100,000.00 threshold under the guise of SVP to avoid public bidding.

The argument that the municipality was time-constrained and thus resorted to SVP is not tenable. Time constraint should
never be made as a basis to forego public bidding. The alternative modes of procurement can only be resorted to in certain
circumstances and for compelling reasons in order to promote economy and efficiency, pursuant to Section 48, 41 RA No. 9184. In
this case, the municipality had ample time to plan and prepare the budget for the festivals and programs subject of the BAC
resolutions, considering that said festivals were being celebrated regularly by the municipality.

Moreover, it should be emphasized that the BAC shall be responsible for ensuring that the procuring entity abides by the
standards set forth in RA No. 9184 and its IRR. 42 However, it was the BAC which violated the law by recommending to the
municipality the resort to SVP as an alternative mode of procurement when there is no basis to do so. In view of this violation, the
disallowance should be sustained. Likewise, the persons liable under the ND shall continue to be liable having participated in the
transaction, except Mr. Edgardo P. Cayaon, Senior Bookkeeper, who is excluded from liability. His participation in the transaction
is limited in the preparation of the JEV and receiving the DVs, which is not related with the grounds for the disallowance.

Anent the BAC Chairman, it is noted that he was not included among the persons liable. The ATL and the SA are directed to
re-evaluate the participation of the BAC Chairman and issue a Supplemental ND if warranted.

In view of the violation of RA 9184, the Prosecution Litigation Office, Legal Services Sector, is directed to forward the
records of the case to the Office of the Ombudsman for investigation and filing of appropriate charges, against the persons
responsible, if warranted.
RULING

WHEREFORE, premises considered, the Petition for Review of Mr. Nelson B. Avanceña, et al., members and secretariat of
the Bids and Awards Committee (BAC), Municipal Government of Dr. Jose P. Rizal, Palawan, is hereby DENIED for lack of merit.
Accordingly, Commission on Audit Regional Office No. IV-B Decision No. 2018-29 dated May 31, 2018 and Notice of
Disallowance (ND) Nos. 17-001-100(14), 17-003-100-(14) to 17-008-100-(14), and 17-011-100-(14) all dated January 11, 2017,
on the procurement of various office supplies, food and other items in calendar year 2014, in the total amount of P8,191,695.83,
are AFFIRMED with MODIFICATION, in that, Mr. Edgardo P. Cayaon, is excluded as a person liable.

The Audit Team Leader and the Supervising Auditor are hereby directed to re- evaluate the participation in the transaction
of Engr. Gregorio V. Baluyut, BAC Chairman, and to issue a Supplemental ND, if warranted.

The Prosecution and Litigation Office, Legal Services Sector, this Commission, is hereby directed to forward the case to the
Office of the Ombudsman for investigation and filing of the appropriate charges, against the persons responsible, if warranted.

(SGD.) MICHAEL G. AGUINALDO

Chairperson

(SGD.) JOSE A. FABIA (SGD.) ROLAND C. PONDOC

Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

Mr. Nelson R. Avanceña

Mr. Henry v. Palarca
Mr. Jerry V. Calamba, Sr.
Mr. Rodel B. Lobaton
Ms. Nida B. Tolentino
Ms. Teodora M. De Guzman
Municipality of Dr. Jose P. Rizal
Palawan

Atty. Rosario S. Nicanor

Counsel for the petitioners
Unit 307 DM Bldg., Visayas Ave., cor.
Congressional Ave., Quezon City

The Audit Team Leader

The Supervising Auditor
Team R4B-03
Dr. Jose P. Rizal, Palawan

The Regional Director

Commission on Audit Regional Office No. IV-B
Commonwealth Ave., Quezon City

The Director
Information Technology Office
Systems and Technical Services Sector

The Assistant Commissioners

Local Government Sector
Commission Proper Adjudication and Secretariat
Support Services Sector

All of this Commission

ESZ/CTS/DVG/RGA/JHMG
CPCN No. 2018-0811
1 Pursuant to Rule VII, 2009 Revised Rules of Procedure of the Commission on Audit.
2 Mr. Henry V. Palarca, Ms.Nida B. Tolentino, Ms.Teodora M. De Guzman, Mr. Jerry V. Calamba, Sr., and Mr. Rodel B. Lobaton.
3 Proofs of Service, rollo, pp. 453, 559, 590, 746, 859, 893, 1062, and 1235.
4 The initial payment of filing fee through postal money order was not accepted by the bank due to a change in form, hence, another postal money order was sent which
was received on September 4, 2017.
5 Stamp of receipt by the counsel of the appellants, rollo, p. 1364.
6 Proof of payment of filing fee under Official Receipt No. 0557391, rollo, p. 286.
7 There is a lapse of 311 days from receipt of the Notice of Disallowance (ND).
8 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 may within six
months from receipt of a copy of the decision appeal in writing to the Commission.
9 Government Auditing Code of the Philippines.
10 The appeal shall be taken within the time remaining of the six (6) months period under Section 4, Rule V, taking into account the suspension of the running thereof
under Section 5 of the same Rule in case of appeals from the Director's decision, or under Sections 9 and 10 of Rule VI in case of decision of the ASB.
11 Petition for Review to the Commission Proper.
12 Rollo, pp.1599-1600.
13 Rollo, pp.1597-1598.
14 Rollo, pp.1595-1596.
15 Rollo, pp.1593-1594.
16 (1) Obligation Requests (ObRs) duly signed by the Municipal Budget Officer to support the transactions; (2) Explanation from the Municipal Mayor, Municipal
Accountant, Municipal Treasurer, and Disbursing Officer for approving, certifying as to the completeness of documents and paying the transactions despite the absence
of duly accomplished ObRs; (3) Certification from the BAC Members and Head of the BAC Secretariat on the conduct of the required procurement procedures for the
transactions; and (4) Explanation from the Municipal Mayor, Municipal Accountant, Municipal Treasurer, and Disbursing Officer for failure to indicate the necessary
data on the attached forms required such as Disbursement Vouchers, Purchase Requests, Purchase Orders, Inspection and Acceptance Reports, Requisition and Issue Slip,
delivery slips, and official receipts/sales invoices/cash invoices. Rollo, pp. 1382-1383.
17 Also known as the Government Procurement Reform Act.
18 Specifications for the Procurement of Goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed.
19 Splitting of Government Contracts is not allowed. Splitting of Government Contracts means the division or breaking up of GOP contracts into smaller quantities and
amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and this IRR,
especially the necessity of public bidding and the requirements for the alternative methods of procurement.
20 Small Value Procurement. Where the procurement does not fall under Shopping in Section 52 of this IRR and the amount involved does not exceed the thresholds
prescribed in Annex “H” of this IRR.
21 Shopping is a method of procurement of goods whereby the procuring entity simply requests for the submission of price quotations for readily available off-the-shelf
goods or ordinary/regular equipment to be procured directly from suppliers of known qualifications.
22 Shopping is a method of procurement of Goods whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf
goods or ordinary/regular equipment to be procured directly from suppliers of known qualifications. This method of procurement shall be employed in any of the
following cases:
a) When there is an unforeseen contingency requiring immediate purchase: Provided, however, That the amount shall not exceed the thresholds prescribed in Annex
“H”20 of this IRR.
b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding the thresholds
prescribed in Annex “H” of this IRR.
23 The procuring entity shall draw up a list of at least three (3) suppliers, contractors, or consultants of known qualifications which will be invited to submit proposals, in
the case of goods and infrastructure projects, or curriculum vitae, in the case of consulting services.
24 After the decision to resort to Shopping or Small Value procurement has been made, the conduct thereof may be delegated to the appropriate bureau, committee, or
support unit duly authorized by the Bids and Awards Committee.
25 Guidelines for Shopping and Small Value Procurement.
26 For ND No. 17-004-100-(14).
27 For ND No. 17-005-100-(14).
28 For ND No. 17-001-100-(14).
29 For ND Nos. 17-003-100-(14), ND No. 17-004-100-(14), and ND No. 17-005-100-(14).
30 For ND Nos. 17-006-100-(14) and 17-007-100-(14).
31 For ND Nos. 17-008-100-(14).
32 The request for quotation (RFQ) shall be sent to at least three (3) suppliers, contractors, or consultants of known qualifications. However, during unforeseen
contingencies requiring immediate purchase under Section 52.1(a) of the Implementing Rules and Regulations (IRR), the RFQ may be sent to only one (1) supplier.
33 Approving, by Referendum, the Guidelines for Shopping and Small-Value Procurement.
34 RFQs shall also be posted for a period of seven (7) calendar days in the Philippine Government Electronic Procurement System (PhilG-EPS) website, website of the
procuring entity, if available, and at any conspicuous place reserved for this purpose in the premises of the procuring entity. However, in the following instances, this
posting requirement shall not be applicable:
i. When there is an unforeseen contingency requiring immediate purchase under Section 52.1(a) of the IRR; or
ii. RFQs with ABCs equal to Fifty Thousand Pesos (Php 50,000.00) and below.
35 The phrase “ordinary or regular office supplies” shall be understood to include those supplies, commodities, or materials which, depending on the procuring entity’s
mandate and nature of operations, are necessary in the transaction of its official businesses, and consumed in the day-to-day operations of said procuring entity.
However, office supplies shall not include services such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and
related or analogous services.
36 Rollo, pp. 1393-1404.
37 Procurement Planning and Budgeting Linkage. – All procurement should be within the approved budget of the Procuring Entity and should be meticulously and
judiciously planned by the Procuring Entity concerned. Consistent with government fiscal discipline measures, only those considered crucial to the efficient discharge
of governmental functions shall be included in the Annual Procurement Plan to be specified in the IRR.

No government Procurement shall be undertaken unless it is in accordance with the approved Annual Procurement Plan of the Procuring Entity. The Annual
Procurement Plan shall be approved by the Head of the Procuring Entity and must be consistent with its duly approved yearly budget. The Annual Procurement Plan
shall be formulated and revised only in accordance with the guidelines set forth in the IRR. In the case of Infrastructure Projects, the Plan shall include engineering
design and acquisition of right-of-way.
38 Alternative Methods.
39 Section 53.9 of the Revised Implementing Rules and Regulation of RA No. 9184.
40 Splitting of Government Contracts is not allowed. Splitting of Government Contracts means the division or breaking up of GOP contracts into smaller quantities and
amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and this IRR,
especially the necessity of public bidding and the requirements for the alternative methods of procurement.
41 Subject to the prior approval of the Head of the Procuring Entity or his duly authorized representative, and whenever justified by the conditions provided in this Act,
the Procuring Entity may, in order to promote economy and efficiency, resort to any of the following alternative methods of Procurement:

a. Limited Source Bidding, otherwise known as Selective Bidding - a method of Procurement that involves direct invitation to bid by the Procuring Entity from a set of
pre-selected suppliers or consultants with known experience and proven capability relative to the requirements of a particular contract;
 b. Direct Contracting, otherwise known as Single Source Procurement - a method of Procurement that does not require elaborate Bidding Documents because the
supplier is simply asked to submit a price quotation or a pro-forma voice together with the conditions of sale, which offer may be accepted immediately or after some
negotiations;

c. Repeat Order. - a method of Procurement that involves a direct Procurement of Goods from the previous winning bidder, whenever there is a need to replenish Goods
procured under a contract previously awarded through Competitive Bidding;

d. Shopping - a method of Procurement whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf Goods or
ordinary/regular equipment to be procured directly from suppliers of known qualification; or

e. Negotiated Procurement - a method of Procurement that may be resorted under the extraordinary circumstances provided for in Section 53 of this Act and other
instances that shall be specified in the IRR, whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier,
contractor or consultant.

In all instances, the Procuring Entity shall ensure that the most advantageous price for the government is obtained.
42 Functions of the BAC. – The BAC shall have the following functions: advertise and/or post the invitation to bid, conduct pre-procurement and pre-bid conferences,
determine the eligibility of prospective bidders, receive bids, conduct the evaluation of bids, undertake post-qualification proceedings, recommend award of contracts to
the Head of the Procuring Entity or his duly authorized representative: Provided, That in the event the Head of the Procuring Entity shall disapprove such
recommendation, such disapproval shall be based only on valid, reasonable and justifiable grounds to be expressed in writing, copy furnished the BAC; recommend the
imposition of sanctions in accordance with Article XXIII, and perform such other related functions as may be necessary, including The creation of a Technical Working
Group from a pool of technical, financial and/or legal experts to assist in the procurement process.

In proper cases, the BAC shall also recommend to the Head of the Procuring Entity the use of Alternative Methods of Procurement as provided for in Article XVI hereof.

The BAC shall be responsible for ensuring that the Procuring Entity abides by the standards set forth by this Act and the IRR, and it shall prepare a procurement
monitoring report that shall be approved and submitted by the Head of the Procuring Entity to the GPPB on a semestral basis. The contents and coverage of this report
shall be provided in the IRR.