Republic of the Philippines

COMMISSION ON AUDIT
CORDILLERA ADMINISTRATIVE REGION
LA TRINIDAD, BENGUET

CARLOS P. CATAMA IN RE: NOTICE OF DISALLOWANCE

Appellant; No. 2019-001(A)-(2011) on the
Disallowed Payment of Medical
-vs- Equipment to Klemson Medical
Supply

JOLLY D. OTGALON, Audit

Team Leader, and
EVANGELINE K. TUL-O,
Supervising Auditor,
Commission on Audit –
Province of Ifugao
Appellees.

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APPEAL MEMORANDUM

Appellant, through the undersigned counsel, unto this Honorable

Office, most respectfully submit the following Appeal Memorandum to the
Notice of Disallowance with Number 2019-001(A)-(2011), and most
respectfully avers THAT:

I. PREFATORY STATEMENT

Well-entrenched in jurisprudence is the time-honored principle that

the law bestows upon a public official the presumption of regularity in the
discharge of one’s official duties and functions. More so when he relied in
good faith on the acts of his subordinate and had no participation in the
irregular transaction. As in this instant case involves the performance by the
undersigned of his official functions as Bids and Awards Member – Goods.

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 II. STATEMENT OF THE CASE

Appellant seeks for the reversal of the audit allowance passed by

JOLLY D. OTGALON, Audit Team Leader and EVANGELINE K. TUL-O,
Supervising Auditor of Commission on Audit, Team CAR-01, Audit Group LGS
D-Province of Ifugao, concerning the payment for the medical equipment
to KLEMSON MEDICAL SUPPLY in the amount of Three Million One Hundred
Thrity-seven Thousand Six Hundred Pesos (Php3, 137, 600.00).

III. TIMELINESS OF THE APPEAL

1. On February 4, 2019, JOLLY D. OTGALON, Audit Team Leader and

EVANGELINE K. TUL-O, Supervising Auditor of Commission on Audit,
Team CAR-01, Audit Group LGS D-Province of Ifugao issued Notice of
Disallowance (ND) with Number 2019-001(A)-(2011) against the
appellant;

2. The said ND was received by appellant on February 4, 2019, hence,

pursuant to the 2009 Revised Rules of Procedure of the Commission on
Audit, the appellant have six (6) months from receipt of said ND within
which to file Appeal Memorandum or until August 4, 2019.

IV. RELEVANT ANTECEDENTS

1. The facts and antecedents are summarized in the questioned Notice

of Disallowance (ND) No. 2019-001(A)-(2011), dated February 4, 2019,
marked as Annex “A”, which amended the Notice of Disallowance
(ND) No.2019-001(2011), dated January 25, 2019, marked as Annex
“B”, to include Mr. Carlos P. Catama, former Bids and Awards
Committee (BAC) Member-Goods being a signatory to BAC
Resolution No. 2011-127, dated June 21, 2011, marked as Annex “C”,
and person liable for the disallowed payment of the medical
equipment supplied by Klemson Medical Supply amounting to
PhP3,137,600.00;

2. It must be stressed that during the BAC-goods meeting on 10 June

2011(Friday), Appellant was absent as shown in the roll call in the
minutes of meeting. Attached hereto is a copy of the Minutes of
Meeting marked as Annex “D” to form part hereof;
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3. Despite being absent, the Secretariats wrote the Appellant as mover
of the motion duly seconded and approved by the BAC and was
recommended to the Head of the Procuring Entity (HoPE) for the
award of the lowest calculated and responsive bidder as shown in
Annex ”D-1”;

4. Further, in said minutes of BAC meeting on February 10, 2011, the Post
Evaluation and Post Qualification of Publication No. 13 was reported.
The BAC-Goods moved and approved Resolution No. 2011-12,
recommending to the Provincial Governor the award to Robustan
Inc., Klemson Medical Supply and Saviour Medices as the lowest
calculate and responsive bidders for said items under Publication No.
13 (Medical Equiment), as reflected in the Abstract of Bids (Annex
“E”).

Be it a note that the Appellant was not among the signatories who
approved and signed the said resolution (Annex “D-2”);

5. The Standard Operating Procedures (SOP) minutes of meeting were

not attached in the resolutions routed to the offices of the members
of the BAC for signing. The Appellant being too busy in the Office of
the Provincial Assessor as Local Assessor’s Operation Officer (LAOO)
IV, confidently relied in good faith on the BAC Secretariats’ faithful
and diligent discharge of their duties and functions;

6. Mistakenly, Appellant in good faith affixed his signature in Resolution

No. 2011-127, Annex “C” of this appeal memorandum;

7. Consequently, Notice of Award was issued to Klemson Medical Supply

which the supplier accepted. Later on, the corresponding contract
thereto was executed by the parties;

8. An Audit Observation Memorandum was sent to those persons liable,

appellant was not included, to explain and justify why they should not
be held liable for the alleged irregular transaction;

9. On January 25, 2019, the appellant received a Notice of Disallowance

No. 2019-001 (2011). Again, appellant’s name was not among those
persons liable for the transaction;

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10. Later, on February 4, 2019, appellant received again a Notice of
Disallowance No. 2019-001 (A) – (2011) amending the ND No. 2019-
001 (2011) to include appellant as among those persons liable for the
transaction.

V. ASSIGNMENT OF ERRORS

1. WHETHER OR NOT THE NOTICE OF DISALLOWANCE (ND) NO. 2019-

001(A)-(2011) DATED FEBRUARY 4, 2019 WAS ISSUED WITHOUT LEGAL
BASIS.

2. WHETHER OR NOT CARLOS P. CATAMA IS AMONG THOSE PERSONS

LIABLE FOR THE TRANSACTION DISALLOWED.

VI. ARGUMENTS AND DISCUSSION

1. THE NOTICE OF DISALLOWANCE (ND) NO. 2019-001 (A)-(2011)

DATED FEBRUARY 4, 2019 WAS ISSUED WITHOUT LEGAL BASIS

A. First, in the case of Ramon Albert vs. Celso D. Gangan, et al, G.R.
No. 126557, dated March 6, 2001, the Supreme Court said:

“we have consistently held that every person who signs or initials
documents in the course of transit through standard operating
procedures does not automatically become a conspirator in a
crime which transpired at a stage where he had no
participation. His knowledge of the conspiracy and his active
and knowing participation therein must be proved by positive
evidence. The fact that such officer signs or initials a voucher as
it is going the rounds does not necessarily follow that the said
person becomes part of a conspiracy in an illegal scheme.”

In this case, Appellant was absent being on official business (Annex

“F”) at the time the Technical working Group (TWG) presented their
Post Evaluation and Post Qualification reports during the BAC-
Goods meeting held on June 10, 2011, as shown in the Roll Call to
the members of the BAC-Goods, TWGs, and Secretariats.

Despite being absent, the Secretariats committed a grave error in

putting Appellant as the mover of the motion.
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 Worst, the Secretariats did not mark above the Appellant’s name
on official business (OB) in the Resolution No. 2011-127.

Unfortunately, and considering the appellant being too busy in the

office, he mistakenly signed in good faith Resolution No. 2011-127
unaware that he was absent during the meeting when the Post
Evaluation and Post Qualification was presented, discussed,
moved, and approved. He had to rely to a reasonable extent on
the good faith of his subordinates (TWG) in the regular performance
of their duties. Moreover, appellant had no prior knowledge of the
incompleteness of documents and the ineligibility of the supplier,
Klemson Medical Supply.

The appellees merely presumed that appellant has prior

knowledge of the irregularities through appellant’s signature on the
resolution.

Additionally, the assailed Notice of Disallowance failed to mention

appellant’s direct participation in the fraudulent scheme. It merely
held that appellant be included and held responsible for the
disallowance, for the simple reason that, as the former BAC
Member - Goods. His reliance on the supposed review and
evaluation done by his subordinates (TWG) is also discretionary on
his part. The COA concluded that whatever misrepresentation
and/or abuse in the performance of their duties made by the
subordinates make appellant, as BAC Member – Goods, also liable,
considering that these people acted on his behalf and with his
approval. Such reasoning is non-sequitur.

B. Second, under the Implementing Rules and Regulations (IRR), Part

A, of Republic Act 9184, Rule V, Section 12, to wit:

“Section 12. Functions of the BAC

12.1. 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, resolve motions for
reconsideration, recommend award of contracts to the head of
the procuring entity or his duly authorized representative:
Provided, however, 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
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 the imposition of sanctions in accordance with Rule XXIII, and
perform such other related functions as may be necessary,
including the creation of a Technical Working Group (TWG) from
a pool of technical, financial and/or legal experts to assist in the
procurement process, particularly in the eligibility screening,
evaluation of bids and postqualification. 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 Rule XVI hereof.” (Emphasis supplied)

The Technical Working Group members were selected from pool of

experts to assist the BAC. They have undergone technical trainings
and seminars on procurement law to ensure and assist in the
procurement process, particularly in the eligibility screening of
bidders, using the criteria stated in Section 23.11of the IRR-A for
goods and infrastructure projects.

In the instant case, it would be improbable for the appellant to

check all the details and conduct personal inspection and
verification of the eligibility screening of Klemson Medical Supply
considering the voluminous paperwork attendant to his office. He
has to rely mainly on the certifications, recommendations and
memoranda of the TWG in the eligibility screening process. The
processing, review and evaluation of the eligibility documents
passed through the responsible and authorized officers of the TWG.

Worthy to note that Klemson Medical Supply had submitted all the
eligibility documents including the alleged irregularities particularly
the absence of a valid Mayor’s Permit or Permit to Engage in
Business as required under Section 23.1 (a) Rule VIII of the 2009
Revised Implementing Rules and Regulations (IRR) of RA 9184.

With the foregoing, in the land mark case of Arias vs.

Sandiganbayan in G.R. No 81563, December 19, 1989, the Supreme
Court held, to wit:

“We would be setting a bad precedent if a head of office

plagued by all too common problems- dishonest or negligent
subordinates, overwork, multiple assignments or positions, or
plain incompetence- is suddenly swept into a conspiracy
conviction simply because he did not personally examine every
single detail, painstakingly trace every step from inception and
investigate the motives of every person involved in a transaction
before affixing his signature…”

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 Appellant in the instant case is covered by the protective mantle
of the above-mentioned doctrine laid down in Arias. The COA
merely presumed appellant’s foreknowledge of the infirmity of the
contract on the latter's signature.

The fact that appellant is a BAC member of the procuring entity

and signatory to said transaction does not automatically make him
a party liable for the disallowed amount. He cannot be held liable
simply because he merely signed the transaction in question and
that the employees/officers who processed the same were under
the BAC supervision.

Hence, mere signature of the appellant in the BAC Resolution No.

2011-127 dated June 21, 2011 without anything more cannot be
considered as a presumption of liability to include him in the Notice
of Disallowance;

C. Third, the Auditors were correct in the first Notice of Disallowance

issued for not including the Appellant having been absent during
the conduct of the Post Evaluation, and Post Qualification. It clearly
shows that Appellant has no participation or knowledge of the
alleged discrepancies.

Thus, in Pareño vs. Sandiganbayan we held that:

"We cannot allow this because guilt must be premised on a more

knowing personal and deliberate participation of each
individual who is charged with others as part of a
conspiracy. There must be more convincing proof…”

There is no evidence and convincing proof on record to show that

appellant should be included in the Notice of Disallowance aside
from his mere signature to the BAC Resolution. There must be more
convincing proof which in this case is wanting.

If appellant’s signature was the mere basis of his liability, why the
then Governor, Atty. Eugene Ballitang, and other signatories to the
transaction with alleged infirmities were not included? Can
Appellant not perceive this act as an application of selective
justice?

D. Finally, the ND No. 2019-001 (A)-(2011) was issued without giving the
appellant the opportunity to explain or justify his side of the alleged
irregularities since appellant was not issued an Audit Observation
Memorandum (AOM) before he should be included in the Notice
of Disallowance as part of the audit process.

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In the COA Circular No. 2009-006, it mandated COA Auditors and
all others concerned to follow the prescribed use of the Rules and
Regulations on Settlement of Accounts. Section 4.9 of the 2009
Rules and Regulations on Settlement of Accounts, as embodied in
COA Circular No. 2009-006, defines Audit Observation
Memorandum as:

“a written notification to the agency head and concerned

officer/s informing of the deficiencies noted in the audit of
accounts, operations or transactions and requiring comments
thereto and/or submission of documentary and other information
and requirements within a reasonable period.”.

In the same COA issuance, specifically in Section 8, and Sub-

sections 8.1 to 8.6, Chapter III, it prescribed guidelines and
procedures in the issuance of Audit Observation Memorandum
(AOM) and Management Reply, summarized hereunder:

The Auditor will issue the observation and will require

documentary and information requirements to enable the
auditor to reach a decision in audit (8.1). It is addressed to the
head of agency and officer/s concerned officials stating the
deficiencies noted and/of the requirements to be complied with
and the requirement to response thereto (8.2). It shall be replied
to by the agency officials concerned within fifteen (15) calendar
days from receipt thereof (8.3). If the agency officials fail to reply
within the period, the audit observation on financial/operational
deficiency shall be deemed accepted and shall be included in
the Management Letter and/or Audit Report. In case of failure
to submit the required documents or information needed to
reach audit decision, a Notice of Suspension (NS)/Notice of
Disallowance (ND) may be issued by the Auditor, as warranted,
after a re-evaluation of available documents/information (8.4).
The agency reply/comment will be evaluated by the Auditor vis-
à-vis the audit observations and he shall inform the head of the
agency and concerned official in writing, of the result of the
evaluation (8.5). The documents and information submitted in
response to the requirements of an AOM may, after audit and
examination, provide a basis for the allowance in audit of the
transaction, or subsequent suspension or disallowance
thereof, as warranted (8.6).

Careful perusal of the pertinent provisions governing the settlement

of accounts will clearly reveal that an AOM is a preliminary audit
tool to prevent irregular disbursement of government funds. It is a
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 warning from the Auditor allowing the public official/s concerned
to explain or justify its action being responsible for the irregular
transaction.

Appellant should have been given the chance to explain, and

afforded the equal protection of the law as a matter of due
process, and not arbitrarily included in the persons liable
immediately through a second notice. The auditor should have
obtained, sufficient evidence which is the subject investigation or
audit observation to provide an appropriate factual bases for his
opinions, conclusions, judgments and recommendations as
mandated by the 2009 Revised Rules of Procedure of the
Commission on Audit.

Absence of the foregoing violates the rights of the appellant to due

process of law as mandated by the Constitution. Thus, the Notice
of Disallowance issued by the Auditor was without legal basis.

2. CARLOS P. CATAMA IS NOT AMONG THOSE PERSONS LIABLE FOR THE

TRANSACTION DISALLOWED.

A. Under Section 19 of the Manual on Certificate of Settlement and

Balances, which provides:

19 .1 The liability of public officers and other persons for audit

disallowances shall be determined on the basis of: (a) the nature
of the disallowance; (b) the duties, responsibilities or obligations of
the officers/persons concerned; (c) the extent of their participation
or involvement in the disallowed transaction; and (d) the amount
of losses or damages suffered by the government thereby.x x x

Related to the foregoing is Section 103 of the Presidential Decree

(P.D.) No. 1445 or the Government Auditing Code of the Philippines,
which states that:

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.

Under this provision, an official or employee shall be personally liable

for unauthorized expenditures if the following requisites are present, to
wit: (a) there must be an expenditure of government funds or use of
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 government property; (b) the expenditure is in violation of law or
regulation; and (c) the official is found directly responsible therefor.

Nothing in the instant case would clearly show that appellant had
knowledge of the alleged irregularities of the transaction. In fact,
appellant was not issued an AOM to answer or justify his side as
discussed above. He was not present during the BAC meeting when
this alleged transaction was being discussed for approval. All these
facts are indicative that he had no knowledge of the alleged
irregularities. He cannot, therefore, be held civilly liable for such acts
unless there is a clear showing of bad faith, malice or gross
negligence. In as much as no evidence was presented to show that
petitioner acted in bad faith and with gross negligence in the
performance of his official duty, he is presumed to have acted in the
regular performance of his official duty.

B. The COA decision merely stated conclusions of law. Facts and

circumstances, as well as the why's, the what's and the how's of the
disallowance, were patently missing, inaccurate or incomplete. The
COA cannot just perform its constitutional function of disallowing
expenditures of government funds at sheer discretion. There has to be
factual basis why the expenditure is alleged to be fraudulent or why
was there a misrepresentation. Liability depends upon the wrong
committed and not solely by reason of being the head of a
government agency.

Appellant, being a BAC member of the procuring entity in addition to

his duties as the LAOO IV of Ifugao Province, is responsible for the local
operations of the Office of the Assessor - Ifugao. With the amount of
paperwork that normally passes through in his office and the
numerous documents he has to sign, it would be counterproductive
to require appellant to specifically and meticulously examine each
and every document that passes his office. Thus, appellant has the
right to rely to a reasonable extent on the good faith of his
subordinates.

E. Assuming that appellant committed a mistake in not ensuring that

the eligibility documents were attached to the contract, it is settled
that mistakes committed by a public officer are not actionable
absent any clear showing that they were motivated by malice or
gross negligence amounting to bad faith. In this case, there is no
showing that appellant was motivated by malice or gross
negligence amounting to bad faith in failing to ensure that the
eligibility documents of Klemson Medical Supply were not attached
to the contract. In fact, during the opening of the technical and
financial envelopes of Klemson Medical Supply, both envelopes
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 were declared passed (Annex “G” and “G-1”), and even during
the Post Evaluation, and Post Qualification reported by the TWG on
June 10,2011, no adverse findings were reported.

Good faith is always presumed. Here, the COA failed to overcome

the presumption of good faith. Consequently, COA-Field Office
committed a grave abuse of its discretion when it held appellant
personally liable for the subject disallowance.

VII. PRAYER

WHEREFORE, in the light of the foregoing premises, it is most respectfully

prayed unto this Honorable Office that Carlos P. Catama be expunged
from liability subject of the Notice of Disallowance and that his name be
removed from the list of persons liable for the transaction of said
disallowance.

Please grant other reliefs just and equitable under the circumstances.
Lagawe, Ifugao for La Trinidad, Benguet, May 17, 2019.

ATTY. PRESLEY JOHN L. NAMINGIT

Counsel for Appellant
Roll No. 69260 – May 31, 2017
IBP No. 1065417 – Jan. 3, 2019
PTR No. 6048871 – Jan. 3, 2019
MCLE Compliance Exempt (New Lawyer)

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 NOTICE

The Honorable Clerk of Office

COA-CAR Regional Office
La Trinidad, Benguet

Greetings!

Please submit this foregoing Appellant’s Memorandum for the

favorable consideration of the Honorable Office. Payment of the Appeal
Fee was done through Official Receipt No. 8668645 which was included
and forming part of this appeal.

Thank you.

PRESLEY JOHN L. NAMINGIT

Copy Furnished:

COA-Field Office
Team CAR-01, Audit Group LGS D
Lagawe,Ifugao

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 VERIFICATION/CERTIFICATION

I, CARLOS P. CATAMA, of legal age, married, Filipino citizen, with

residence and postal address at Tinoc, Ifugao, after having been duly
sworn to in accordance with law do hereby depose and state:

1. That I am the appellant in the above-entitled case and have

caused the preparation of the same;

2. That I have read the contents thereof and that the same are true
and correct of my own knowledge and belief;

3. That I have not commenced any action or filed any claim involving
the same issues in any court, tribunal or quasi-judicial agency, and
to the best of my knowledge, no such other action or claim is
pending therein;

4. That if I should thereafter learn that a similar action or claim has

been filed or is pending, I shall inform this Honorable Office of such
fact.
IN WITNESS WHEREOF, I hereunto set my hand this ___ day of
_________________, at Lagawe, Ifugao, Philippines.

CARLOS P. CATAMA
Affiant

SUBSCRIBED AND SWORN to before me this ___ day of ______________,

at Lagawe, Ifugao, Philippines.

Doc. No. ___

Page No. ___
Book No. ___
Series of 2019.

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