ADJUDICATION AND

SETTLEMENT BOARD
DECISION NO. 2010-047
April 27, 2010
Subject: Appeal of Mr. Teofilo C. Cailo, Jr., Executive Vice-President, Ms. Zenaida V. Merida,
Accountant III, and Ms. Lourna B. Decena, Special Disbursing Officer, all of the Samar
State College of Agriculture and Forestry (SSCAF), San Jorge, Samar, from Notice of
Suspension (NS) No. 05-008-101(02), herein treated as an appeal from Notice of
Disallowance (ND) No. 06-002-101 (02), relative to the purchase of computers in the
total amount of P616,630.91

DECISION
FACTS OF THE CASE
The SSCAF purchased twenty (20) units computer for P616,630.91 which were fully paid under Check No. 152903 dated
August 14, 2002 in favor of New Five Star Trading and Printing Press. This transaction became the subject of Audit Observation
Memoranda (AOM) Nos. 2002-004 and 2004-001 dated February 28 2003 and June 8, 2004, respectively, wherein it was noted
that the acquisition of the computers did not go through public bidding and that there was overpricing in the amount of
P214,160.00. Moreover, the purchase of 20 computers was not included in the Annual Procurement Plan (APP) of the College.
Finally, the voucher was not supported by evidence of the legitimacy of the payee due to the absence of the Department of Trade
and Industry (DTI) registration certificate, Mayors Permit and Tax Identification Number (TIN) of the supplier, among others.
In response, management commented that it adheres to the general rule on procurement through public bidding. It claimed,
however, that the conduct of public bidding entails expenses and tedious processes which are not commensurate to the objective
of achieving the best advantage on the part of the government. In justifying the procurement of the computers without public
bidding, management cited Republic Act (RA) No. 9184 and its implementing rules and regulations (IRR) which provide for
alternative methods of procurement, one of which is shopping. Management further invoked good faith and the principle of
quantum meruit in paying the transaction. Finally, management alleged that the observation of overpricing which is based on a
comparison between the purchase made by the SSCAF and The University of the Philippines (UP)-Diliman has no basis. It also
challenged the belated issuance of the AOM claiming that if there was irregularity, the transaction could have been disallowed in
audit within the prescriptive period.
After evaluation of the AOM and managements comments, the Regional Cluster Director (RCD), Legal and Adjudication
Sector (LAS), COA Regional Office No. VIII issued NS No. 05-008-101(02) dated July 29, 2005 requiring management to submit
justifications on the issues raised therein, including the non-conduct of public bidding.
In a Manifestation/Explanation dated December 15, 2005 signed by Mr. Cailo Jr., Ms. Zenaida V. Merida, Accountant III
and Ms. Lourna B. Docena, Special Disbursing Officer, it was explained that the procurement of the computers, from the
preparation of the canvass documents until payment, was attended to by Dr. Eduardo S. Caillo in his capacity as Officer-inCharge, Office of the President, SSCAF. Their certifications, according to them, were merely in pursuance of their ministerial duty
which they did after being shown that the documents were complete and proper. Being subordinate officers, they claimed that
they were under the administrative supervision and control of Dr. Caillo.
The Manifestation/Explanation, which was treated as a motion for reconsideration, was denied by the RCD in his decision
embodied in a 1 st Indorsement dated February 10, 2006 on the sole ground that it was filed out of time after establishing that it was
filed beyond the ninety (90) day reglementary period. Conformably thereto, he issued on the same date ND No. 06-002-101 (02)
dated February 10, 2006. Named as persons liable for the transaction were: Mr. Feliciano B. Sadullo for certifying that the
expenses were necessary and lawful; Ms. Merida for certifying as to the availability of cash and for passing the transaction in
pre-audit; Dr. Eduardo S. Caillo, for approving the transaction; Mr. Teofilo Cailo, Jr. - for certifying as to the completeness and
propriety of supporting documents; and New Five Star Trading and Printing Press for being the payee.
Mr. Cailo, Jr., Ms. Merida and Ms. Docena now filed the instant appeal dated March 10, 2006 from NS No. 05-008-101
(02) which is herein treated as an appeal from ND No. 06-002-101 (02).
Appellants claimed that the purchase of the 20 computers was carried out through the sole machinations of Dr. Caillo, the
SSCAF President. They claimed that they were instructed to prepare the requisition documents by Dr. Caillo who himself did the
canvassing when he went on official travel to Tacloban City. After his return, he asked them to prepare the disbursement voucher
for the payment of the computers which they signed in their respective capacities. They believed that the purchase of the
computers without public bidding was in order after Dr. Caillo explained to them that such transaction falls under the IRR of
Executive Order (E.O.) No. 40. Now that the purchase was found by COA to be overpriced, appellants realized that they were
made unwitting instruments of Dr. Caillos unlawful and irregular activities.
ISSUE
The issue to be resolved herein is whether or not the herein appellants are liable for the disallowance of the purchase of the
computers.
DISCUSSION

DISCUSSION
The liability of public officers for audit disallowance is based on the pertinent provisions of Presidential Decree (P.D.) No.
1445 and the Manual on Certificate of Settlement and Balances (CSB). The general liability for unlawful expenditures is stated in
Section 103 of P.D. No. 1445 in this wise:
Sec. 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.
On the other hand, the basis for the determination of specific liability is laid down in Section 19 of the Manual on CSB,
thus:
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. The following are illustrative examples:
xxx
19.1.2 Public officers who certify to the necessity, legality and availability of funds/budgetary
allotments, adequacy of documents, etc. involving the expenditure of funds or uses of government
property shall be liable according to the respective certifications.

The herein disallowance was anchored on the failure of the agency to conduct public bidding which resulted in
overpricing. It can be gleaned from the records that appellants Zenaida V. Merida and Lourna B. Docena had no direct
participation in deciding the purchase of computers, more so in choosing the mode of procurement. It is shown from the records
that Dr. Caillo alone orchestrated the purchase of the computers such as the canvass documents on which his name appeared both
as requisitioner and approving officer and the fact that he conducted the canvassing himself. In his response to the AOM, he
justified the use of other modes of procurement aside from bidding such as negotiated purchase under E.O. No. 301 dated July 26,
1987 for purchases not exceeding P1 Million. He likewise invoked good faith and the principle of quantum meruit as ground for
his action.
It is true that the herein Appellant Merida had no direct participation in the procurement of the computers. However, she
cannot escape liability in view of her certification in the disbursement voucher passing the transaction in pre-audit. Well
entrenched is the policy that government contracts can be awarded only through open and competitive public bidding unless there
are exceptional circumstances, which are not shown to be present in the herein case. In the case of Mr. Cailo, Jr., he certified the
completeness and propriety of supporting documents although the proper supporting documents which were those for public
bidding were not present. Both of them knew fully well that there was no public bidding conducted for the purpose and that the
voucher was not supported by evidence of the legitimacy of the transaction. Their certifications gave the impression of regularity
of the transaction despite the absence of public bidding. On having acted only upon the instruction of their superior, Section 29.5
of the Manual on CSB establishes the rule on the liability of subordinate officers, thus:
29.5 Liability of Subordinate Officers. - No subordinate officer or employee shall be civilly liable for acts
done by him in good faith in the performance of his duties. However, he shall be liable for willful or negligent
acts done by him which are contrary to law, morals, public policy and good customs even if he acted under
order or instructions of his superiors. (underscoring ours)
On the other hand, Ms. Lourna B. Docena, the Special Disbursing Officer, is not named as a person liable in the ND, and
cannot therefore be made liable for the disallowance.
The other persons identified in the ND as liable for the transaction, namely: Mr. Feliciano V. Sadullo, who certified that the
expenses were necessary and lawful, Dr. Eduardo S. Caillo, and New Five Star Trading and Printing Press shall remain liable for
the disallowance.
RULING
WHEREFORE, the herein appeal is hereby denied and ND No. 06-002-101 (02) dated February 10, 2006, in the total
amount of P616,630.91, is affirmed. However, Ms. Lourna B. Docena, one of the appellants herein, is actually not a person liable
under the ND and this Board reiterates that she is not liable for the disallowance. Except for Ms. Docena, all the persons named
liable under the ND shall remain liable therefor.

(Sgd.) ELIZABETH S. ZOSA

Asst. Commissioner Legal Services
Chairperson

(Sgd.) EMMA M. ESPINA

Asst. Commissioner - National
Member
(Sgd.) JAIME P. NARANJO
Asst. Commissioner - Corporate

(Sgd.) ARCADIO B. CUENCO

Asst. Commissioner - Special Services
Member
(Sgd.) GLORIA S. CORNEJO
Asst. Commissioner - Local

Asst. Commissioner - Corporate

Member

Copy furnished:
Mr. Teofilo C. Cailo, Jr.
Ms. Zenaida V. Merida
Ms. Lourna B. Docena
Samar State College of Agriculture and Forestry
San Jorge, Samar

The Audit Team Leader

Samar State College of Agriculture and Forestry
San Jorge, Samar

The Regional Director

COA Regional Office No. VIII
Candahug, Palo, Leyte

The Assistant Commissioners

National Government Sector
Legal Services Sector
Both of this Commission
LSS-FAIO
LDB/MDV
dec-cailo sscaf

Asst. Commissioner - Local

Member