October 14, 2009

COA DECISION NO. 2009-101

SUBJECT

:
Appeal of Hon. Juliana A. Villasin, former Municipal Mayor, Atty. Aluino O. Ala,
Former Municipal Accountant and Mr. Gil A. Acuin, Municipal Agricultural Technologist,
All of the Municipal Government of Barugo, Leyte, from LAO-Local Resolution No.
2007-028 Dated 11 December 2007, Denying their Motion for Reconsideration of LAOLocal Decision No. 2007-011 Dated 24 January 2007 Affirming Notice of Disallowance
(ND) No. 05-131-101 (04) Dated 5 December 2005

DECISION

FACTS OF THE CASE

The subject matter of this appeal is the purchase of three thousand nine hundred (3,900) liters of Fil-Ocean
liquid fertilizer from Bals Enterprises, at a cost of P500.00 per liter, for a total amount of P1,950,000.00. The
fertilizers were obtained as a result of the Memorandum of Agreement (MOA) dated 26 April 2004 entered
into among the Municipality of Barugo, Leyte, represented by herein appellant, former Mayor Juliana A.
Villasin, the Department of Agriculture (DA) Regional Field Oce No. 8, represented by its Executive
Director Leo P. Caneda, and Congresswoman Trinidad G. Apostol. The MOA was executed to implement the
DA Farm Inputs/Farm Implements Program pursuant to Republic Act (R.A.) No. 8435, otherwise known as
the Agricultural and Fisheries Modernization Act of 1997. As culled from the records, the fertilizers were
procured through Direct Contracting because of the purported failure of the alleged public bidding, there
being no bidders thereto. However, the Audit Team Leader of the Municipality of Barugo, after auditing the
transaction, issued Audit Observation Memorandum (AOM) Nos. 2004-001-300 (2004) dated 24 September
2004 and 2005-001-300 (2004) dated 7 July 2005, due to the absence of certain bidding documents
required by the Implementing Rules and Regulations (IRR) of R. A. No. 9184 , and of the product registration
of Fil-Ocean liquid fertilizer from the Fertilizer and Pesticide Authority.
Subsequently, the then Regional Legal and Adjudication Oce (RLAO), COA Regional Oce No. VIII, issued
ND No. 05-131-101 (04) dated 5 December 2005, disallowing payment to Bals Enterprises in the amount of
P1,950,000.00, on the following grounds:
(1)

Absence of a pre-bid conference required under Section 22, IRR-A of R. A. No. 9184;

(2)

A re-bidding was not conducted after the rst failed bidding, in violation of Section 35(a)
of the IRR of R. A. No. 9184; and

(3)

No bidding documents were submitted as required under Section 17, Rule VI, of the IRR
of R.A. No. 9184.

Named liable for the disallowance were the following: Hon. Juliana A. Villasin, Municipal Mayor, Aluino O. Ala,
Municipal Accountant, Gil A. Acuin, Municipal Agricultural Technologist; the Chairman and all Members of
the Bids and Awards Committee (BAC).
The BAC Chairman, Engr. Judith M. Borrel, and BAC Vice-Chairman Engr. Teolo Glenn M. Avestruz led
requests for exclusion from liability. Likewise, Ms. Dinah G. Avorque, BAC member, also led her own
separate request for exclusion. These requests were granted by the RLAO as embodied in letters dated 4
July 2006 and 5 July 2006, respectively. However, the Urgent Joint Motion for Reconsideration of Hon.
Villasin, Mr. Ala and Mr. Acuin was denied in a 6 June 2006 letter. Their appeal to the Legal and Adjudication
Oce (LAO)-Local was denied under LAO-Local Decision No. 2007-011 dated 24 January 2007 and so was
their Motion for Reconsideration which was decided under LAO Local Resolution No. 2007-028 dated 11
December 2007. Hence, this appeal, which is anchored on the following assignment of errors:
(1)

The COA-LAO erred in claiming that competitive bidding is the only mode of
procurement under the circumstances;

(2)

The COA-LAO erred in nding irregularities in the distribution of the fertilizers based on
the combined "land-area based" method and those with the "no-land-area basis" method;

(3)

The COA-LAO erred in nding disallowance based on alleged technical defects in the
quality of the Fil-Ocean liquid fertilizer despite the technical evidence to the contrary; and

(4)

The COA-LAO erred in nding noted disparities in denominating purchases in boxes visa-vis distribution in liters as a basis for disallowance.

ISSUE
Whether or not there is merit in the herein appeal.
DISCUSSION
The appeal should be denied for lack of merit.
The rst assignment of error is unfounded. The assailed LAO-Local Decision No. 2007-011 did not contend
that competitive bidding was the only allowable mode of procurement for the fertilizer. What the decision
emphasized was that direct contracting should have been resorted to only after there was a failure of
bidding. That would have been the time when it could be ascertained that the fertilizers could be obtained
only through other modes of procurement in accordance with the conditions prescribed by R.A. No. 9184.
Under Section 50 of R.A. No. 9184, Direct Contracting may be resorted to only in any of the following

Under Section 50 of R.A. No. 9184, Direct Contracting may be resorted to only in any of the following
conditions:
(a)

Procurement of goods of proprietary nature, which can be obtained only from the
proprietary source, i.e. when patents, trade secrets and copyrights prohibit others from
manufacturing the same item;

(b)

When the procurement of critical components from a specic manufacturer, supplier or

distributor is a condition precedent to hold a contractor to guarantee its project
performance, in accordance with the provisions of his contract; or,

(c)

Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers
selling at lower prices and for which no suitable substitute can be obtained at more
advantageous terms of the government.

Further, appellants did not comply with the requirement of public bidding because reference to a specic
brand name (Fil-Ocean liquid fertilizer), as in this case, only ensured the failure of the bidding and defeated
the mandated competitiveness of the bidding since there was only one supplier of Fil-Ocean liquid fertilizer.
This was in violation of Section 18 of the same law which provides: "Reference to Brand Names.
Specications for the Procurement of Goods shall be based on relevant characteristics and/or performance
requirements. Reference to brand names shall not be allowed." (Underscoring supplied)
More importantly, records would show that there was no bonade public bidding conducted as evidenced by
the following:
First, the entire BAC membership, from its Chairman, Vice-Chairman and Member, unequivocally disclaimed
any knowledge, much less participation and involvement, in the alleged conduct of public bidding. Thus, it
may be deduced that with the total exclusion of the BAC, it was only the herein appellants who conducted
the negotiation and the awarding of the contract to Bals Enterprises.
It must be stressed that the BAC Chairman Engr. Judith M. Borrel and Vice-Chairman Engr. Teolo Glenn M.
Avestruz, as well as BAC Member Dinah G. Avorque, were ultimately excluded from the list of persons liable
in the said disallowance. The grounds they relied upon in their requests for exclusion from liability have
decisive signicance, and would spell the success or failure of this appeal. Engrs. Borrel and Avestruz
submitted the following:
a.

That the procuring agency undertook the transaction clandestinely.

b.

That the BAC Chairman had no knowledge when the transaction took place. She was
ocially on leave of absence from 17-21 May 2004. (22 May was a Saturday and 23 May
was a Sunday), and on maternity leave from 24 May 2004 to 16 July 2004.

c.

That while the rules of procurement require the BAC Chairman to certify Invitations to
Apply for Eligibility and to Bid, she had not certied any such Invitation and she never
saw a copy of the alleged Invitation to Apply for Eligibility and to Bid. The BAC shall not
validate the same for lack of knowledge.

d.

That the BAC was not called to convene in order to act on the subject purchase. Neither
was it ordered to conduct a pre-bid conference. The direct contracting should have been
recommended or at least known by the BAC also. Technically, the BAC was bypassed.

BAC Member Ms. Avorque declared in her 26 June 2006 letter:

a.

That the BAC had no participation in the purchase of the fertilizer.

b.

That she was temporarily assigned at Isabel, Leyte from 23 April 2004 to 24 May 2004.

c.

That prior to said dates, she was not aware that the BAC convened.

d.

That there was no bidding conducted for that purpose.

Even the Minutes of the Sangguniang Bayan meeting on 24 September 2004 clearly affirmed the absence or
a bidding on the subject procurement.
The foregoing are statements and declarations from the BAC members themselves which were not refuted
by herein appellants. Such statements deserve a lot of credence, coming as they did from the very persons
whose mandate was to conduct the procurement process in accordance with law.
Article V, Section 11 of R.A. No. 9184 directs that each procuring entity shall establish a single BAC for its
procurement.
Section 12 of said Article pertinently provides:
"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-qualication
proceedings, recommend award of contracts to the Head of the Procuring Entity. . . ..
In proper cases, the BAC shall also recommend to the Head of the Procuring Entity the use of
Alternative Methods of Procurement. . .
The BAC shall be responsible for ensuring that the Procuring Entity abides by the standards set forth
by this Act and the IRR. . ."

Even the tenor of the present appeal is to the eect that it was the herein appellants, to the exclusion of the
BAC, who conducted the bidding, negotiation and finally the award to Bals Enterprises.
Second, when the appellants posted the Invitation to Apply for Eligibility and to Bid, they performed an act
that did not belong to them and therefore such act was irregular. Appellants arrogated unto themselves the
powers and duties which are exclusively vested by law on the BAC. Consequently, the posting did not have

powers and duties which are exclusively vested by law on the BAC. Consequently, the posting did not have
any operative eect, whatsoever. It was as if there were no Invitation to Bid and no valid bidding process
was conducted. When the Procuring Entity is authorized by R.A. No. 9184 to avail of the alternative methods
of procurement, it was but in consequence of the prior recommendation of the BAC, and only after when the
conditions prescribed by the law are satised. Hence, appellants' negotiation with Bals Enterprises under
the Direct Contracting and their awarding the contract thereto, were all tainted with irregularity, because of
the total absence of the BAC's participation and involvement in the alleged bidding as well as the absence
of factual basis to purchase the fertilizers through Direct Contracting as prescribed by Section 50 of R.A. No.
9184. The total exclusion of the BAC would also explain the non-conduct of pre-procurement conference
required under Section 20 of the law and the absence of the bidding documents listed in Section 17 of the
same law, which were among the grounds of ND No. 05-131-101 (04).
Third, there is also credence to the contention stated in the 6 June 2006 answer of RLAO, COA Regional
Oce No. VIII to the Urgent Motion for Reconsideration that there was already a prior agreement between
the appellants and the supplier even before the invitation to bid was published. This contention was due to
the fact that the time/date of issuance of the purchase order and the time/date of delivery were separated
only by a mere forty eight hours. Appellants tried to downplay this contention by saying that supplies were
being held in Tacloban City as the seat of the Region. However, except for this statement, nowhere in the
records is it independently established that Bals Enterprises, which has a business address at Lot 18 Blk.
16, Narra Street, Hobart Subdivision, Quezon City, was maintaining stocks in Tacloban City with the specic
names of its sales agents and addresses thereat where such stocks were allegedly maintained.
Moreover, it appeared appellants have placed themselves in a contradictory position. In Item 4.d.4 of the
Appeal Memorandum, appellants say that "There will never be enough to distribute to farmerbeneciaries considering the meager amount of government support . . ." Then, in the third
paragraph of the same Item, appellants say: "A ratio of '1 bag of palay seeds to liters (sic) of liquid
fertilizers' was devised just so all farmer beneciaries can partake of the government fertilizer
assistance." These statements could not be reconciled with the statement in the third paragraph of Item
5.3 of the Appeal Memorandum that while the MOA provided for P3M funding, "the municipal ocials
ONLY AVAILED of some P1.9 million of it."
If the appellants were aware of the meager amount of government support and of the method devised 1
bag of palay seeds to a liter of fertilizer just so all farmer-beneciaries could partake of the fertilizer
assistance, it should have availed of the entire P3M assistance, not just the P1.9M.
It seems not farfetched to contend that availment of only P1.9 M instead of the entire P3M was a convenient
way of evading the requirement of a pre-procurement conference of the BAC if the cost of the goods is P2M
and below. ( Section 20.2, Rule VII of the IRR-A, R.A. 9184 ) That way, there was an added reason not to
convene the BAC for the purpose which appellants should have convened in compliance with Section 22.1,
Rule VII of said IRR, requiring the BAC to hold a pre-bid conference for contracts with an approved budget of
more than P1 M. Moreover, the availment of only P1.9 M did away with the publication of the Invitation to
Apply for Eligibility and to Bid in a newspaper of general circulation as required in Section 21.2.1 of the Rule.
All of these merely restricted the dissemination of bid opportunities and participation of potential suppliers,
contrary to one of the governing principles on government procurement under Section 3 of the IRR.
Because of the absence of a public bidding, there was no factual basis for the availment of Direct
Contracting. It also follows that all the signatories of the documents supporting this alternative method of
procurement should likewise be liable. In this regard, the inclusion of Mr. Reynaldo Bodo, Municipal
Agriculturist, as among the persons liable would be justied in view of his signature on the Purchase
Request for 3,900 liters of Fil-Ocean liquid fertilizer.
With respect to the second assignment of error, appellants tried to explain the distribution of fertilizer to
beneciaries without listed land areas by saying that the distribution was based on two methods: the "landarea" method and the "no-land-area" method. Those without land areas fall under the latter method based
on the number of bags of palay seeds distributed.
We consider the above justication as a mere afterthought. The area need not be accurate to the last square
meter. A beneficiary could easily give a rough estimate as to the area he is tilling.
As regards the third assignment of error, appellants did not submit any countervailing evidence to squarely
refute the audit nding that the Fil Ocean liquid fertilizer was suitable only for vegetables and ower plants.
What the appellants had submitted was a document showing the provisional registration for the use of FilOcean Liquid Fertilizer on rice until 19 June 2006, not the ecacy of this fertilizer. Ironically, the document
is dated 16 May 2005, thus irrelevant to herein case, which transpired in May 2004. Appellants merely tried
to shift the blame to Mr. Reynaldo Bodo, the Municipal Agriculturist, as the person who they say "authorized
and/or recommended the procurement", signed the purchase request, and who had direct responsibility for
the qualities of the fertilizer.
Anent the fourth assignment of error, appellants have suciently explained the disparity: the quantity
procured was in liters while the quantity distributed was in number of liters based on land area. However,
this will not overturn the finding of blatant irregularity in the procurement process as discussed earlier to lift
the disallowance.
In sum, appellants could not escape liability because of the patent disregard of the law (Casal et al., vs. COA,
509 SCRA 673, 30 November 2006) and regulations on procurement, and should be held personally liable
pursuant to Section 103 of P.D. No. 1445 for their direct participation in the transaction from its inception up
to its consummation (Albert vs. Gangan, 353 SCRA 673, 6 March 2001).
RULING
WHEREFORE, premises considered, the instant appeal is DENIED. LAO-Local Resolution No. 2007-028 dated
11 December 2007, denying the Motion for Reconsideration from LAO-Local Decision No. 2007-011 dated 24

11 December 2007, denying the Motion for Reconsideration from LAO-Local Decision No. 2007-011 dated 24
January 2007 and Notice of Disallowance (ND) No. 05-131-101 (04) dated 5 December 2005, is hereby
AFFIRMED with modication for the inclusion of Mr. Reynaldo Bodo, Municipal Agriculturist, as one of the
persons liable for signing the Purchase Request for 3,900 liters of Fil-Ocean liquid fertilizer. The Audit Team
Leader (ATL) of the Municipality of Barugo, Leyte shall issue a Supplemental ND to include Mr. Reynaldo
Bodo, Municipal Agriculturist, among the persons held liable in the disallowed transaction.
(SGD.) REYNALDO A. VILLAR
Chairman
(SGD.) JUANITO G. ESPINO, JR.
Commissioner
Copy furnished:
Atty. Leticia E. Ala
Counsel for Appellants
Cruz Durian Alday and Cruz-Matters
ACC Law Building, 451-461 Cabildo St.
Intramuros, Manila
The Assistant Commissioner
Legal Services Sector
This Commission
The Assistant Commissioner
Local Government Sector
This Commission
The Regional Director
COA Regional Office No. VIII
Candahug, Palo, Leyte
The Audit Team Leader
Municipality of Barugo
Leyte