DECISION NO.

2019-182
May 24, 2019

Subject: Petition for Review of the Provincial Government of Agusan del Norte, of Commission
on Audit Regional Office No. XIII Decision No. 2015-006 dated March 25, 2015,
which affirmed Notice of Disallowance No. 14-001-101(13) dated January 17, 2014,
on the procurement of accountable forms from Ready Form Inc., amounting to
P934,125.00

DECISION

FACTS OF THE CASE

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Before this Commission is the Petition for Review of Commission on Audit (COA) Regional Office (RO) No. XIII Decision
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No. 2015-006 dated March 25, 2015, which denied the appeal of Ms. Percianita G. Racho, Provincial Administrator; Mr. Raul T.
Cabalan, Provincial Assistant Department Head; Mr. Daniel A. Valido, Provincial Accountant; Mr. George T. Tan, Bids and
Awards Committee (BAC) Chairman; Ms. Nemia D. Alegarbes, BAC Vice-Chairman; Ms. Belen Aruelo and Mr. Regiel S. Esguerra,
BAC Members; and Ms. Isabelita N. Lucino, end-user’s representative; all of the Provincial Government of Agusan del Norte,
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from Notice of Disallowance (ND) No. 14-001-101(13) dated January 17, 2014, in the amount of P934,125.00, on the
procurement of accountable forms from Ready Form Inc.

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On February 4 to 5, 2014, petitioners received the ND and subsequently filed their consolidated appeal with the Regional
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Director (RD), COA RO No. XIII, on June 6, 2014. The RD rendered the assailed decision, a copy of which was received by the
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petitioners on April 20, 2015. They filed their Petition for Review with the Commission Proper on May 26, 2015, or 155 days
from the date of receipt of the ND. Hence, the petition was filed within the 180 days reglementary period provided under Section
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3, Rule VII of the 2009 Revised Rules of Procedure of the COA.

Upon audit of the accounts and operations of the province, covering the period of January 1 to June 30, 2013, the Audit
Team Leader (ATL) and the Supervising Auditor (SA) concerned observed the following deficiencies and errors:

1. The procurement of 9,700 pads of various accountable forms from a private printing company, amounting to
P987,000.00, was in violation of Sections 25 and 22 of the 2011 and 2012 General Appropriations Acts
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(GAAs), respectively, which may result to the proliferation of fake accountable forms to the prejudice of the
government and the public.

2. The checks drawn to facilitate payment of 9,700 pads of various accountable forms amounting to
P934,125.00, net of tax, was issued in favor of Ready Form, Inc., a private printing company not recognized
as a government printer allowed to print accountable forms and sensitive high quality/volume printing
requirements of the government.

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Hence, Audit Observation Memorandum (AOM) No. 2013-005 dated August 22, 2013 was issued, recommending
compliance with the requirements set forth in Sections 25 and 22 of the 2011 and 2012 GAAs.

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The province, through the Office of the Governor, in its Reply to the AOM, averred that the procurement of the
accountable forms was conducted in strict compliance with Republic Act (RA) No. 9184, relying in good faith on the provisions
of Executive Order (EO) No. 378, which was held valid and constitutional by the Supreme Court (SC). Further, it contended that
local government units (LGUs) are governed by the provisions of the Local Government Code and not by the GAA.

Unsatisfied, the ATL and the SA issued ND No. 14-001-101(13) dated January 17, 2014, disallowing the amount of
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P934,125.00, representing the payment of 8,400 pads of Official Receipts for use of the province, on the ground that the
purchase was made in violation of Sections 25 and 22 of the 2011 and 2012 GAAs.

The following persons were determined to be liable for the disallowance:

Nature of Participation in the

Name Position/Designation
Transaction
1. Raul T. Cabalan Provincial Assistant Approved the disbursement
Development Head voucher and Obligation Slip and
as BAC Member
2. Daniel A Valido Provincial Accountant Certified the completeness of
supporting documents
3. George T. Tan BAC Chairman Signed the BAC Resolution
4. Nemia D. Alegarbes BAC Vice-Chairman Signed the BAC Resolution
5. Belen M. Aruelo BAC Member Signed the BAC Resolution
6. Regiel S. Esguerra BAC Member Signed the BAC Resolution
7. Isabelita N. Lucino BAC Member Signed the BAC Resolution
 8. Percianita G. Racho Provincial Administrator Approved the BAC Resolution
9. Ready Form Inc. Received the payment

Petitioners Cabalan, Valido, Tan, Alegarbes, Aruelo, Esguerra, Lucino and Racho filed their Appeal Memorandum on June
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6, 2014, raising the following grounds:

1. RA No. 9184 is the sole law governing all types of government procurement including that of accountable
forms, which are defined as Goods under Section 5 thereof;

2. The disallowed transaction is neither illegal, irregular, unnecessary, excessive, extravagant nor
unconscionable expenditure since there was compliance with the requirements of public bidding and the
government did not suffer loss or prejudice from the transaction;

3. The GAA cannot be made as the basis of the disallowance, considering that LGUs are governed by the Local
Government Code, not by the GAA or the National Budget;

4. The Office of the President and the SC both ruled that accountable forms should be procured through RA No.
9184; and

5. The exact provision used by the SA and the ATL has been invalidated by Court Order.

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In their Answer, the ATL and the SA maintained that the ND should be affirmed contending that:

1. While it is true that Section 29 of the GAA for Fiscal Year 2010 does not specifically include LGUs, the law,
likewise, does not provide an exception;

2. The procuring entity failed to comply with the procedures in the procurement of accountable forms specified,
among others, in Annex A of the Government Procurement and Policy Board (GPPB) Resolution No. 05-2010
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dated October 29, 2010, as follows:

a. The procuring entity may seek the assistance of the Presidential Communications Operations Office
(PCOO) in determining whether no recognized government printer (RGP) is capable of undertaking the
printing service;

b. Upon determination by the PCOO that no recognized government printers can undertake the printing
service due to time constraints and equipment limitations, the procuring entity may engage the services
of private printers;

3. The Assistant Commissioner, General Counsel, Legal Services Sector, this Commission, rendered an
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opinion agreeing with the RD’s view, holding that the use of the term “only” in Sections 25 and 22 of the
2011 and 2012 GAAs connotes exclusivity, and limits the printing of accountable forms and sensitive high
quality/volume printing requirements to the three recognized government printers enumerated therein,
without exception. Having superseded EO No. 378 dated October 25, 2004, said provision of the GAA should
be applied.

In COA RO No. XIII Decision No. 2015-006 dated March 25, 2015, the RD denied the appeal, citing the earlier
pronouncement in COA RO No. XIII Decision No. 2014-11 dated July 16, 2014, denying the appeal of Ready Form Inc., to wit:

The applicable provision of the law relative to the printing of accountable forms at the time that the subject
transaction was consummated is Section 22 of 2012 GAA, which unequivocally states that:

Departments, bureaus, offices or agencies are hereby given the option to engage the services of private
printers in their printing and publication activities, subject to public bidding in accordance with RA
No. 9184, Its Revised Implementing Rules and Regulations, and to pertinent accounting and auditing
rules and regulations: PROVIDED, That the printing of accountable forms, shall only be undertaken by
recognized government printers, namely: Bangko Sentral ng Pilipinas, National Printing Office and
APO Production Unit, Inc.

Implementation of this section shall be subject to the guidelines issued by the GPPB. (Underscoring supplied)

The petitioners contended that:

1. The 2012 GAA cannot repeal or amend RA No. 9184 and EO No. 378;

2. Section 22 of the 2012 GAA is not applicable to the LGUs like the Provincial Government of Agusan del Norte; and

3. The transaction involving the bidding and procurement of the accountable forms was not illegal, irregular,
unnecessary, excessive, extravagant or unconscionable expenditure.
ISSUE

The issue to be resolved is whether or not the Petition for Review may be given due course.

DISCUSSION

After a careful evaluation, this Commission rules in the negative.

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As correctly pointed out by the RD, the petitioners’ argument that LGUs are excluded from the coverage of Section 25 of
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the 2011 GAA (RA No. 10147), reiterated in Section 22 of the 2012 GAA (RA No. 10155), is untenable.

Notably, the Department of the Interior and Local Government (DILG) issued Memorandum Circular (MC) No. 2012-032
dated February 15, 2012, recognizing the existence of Section 21, General Provisions of the 2012 GAA, and directed all Local
Chief Executives to:

a. Strictly observe Policy Statement 1.2 of GPPB Resolution No. 05-2010, utilizing the services of Bangko
Sentral ng Pilipinas, National Printing Office, and APO Production Unit, Inc. in the printing and publication
of Accountable Forms;

b. Direct the Local Treasurer to refrain from posting the printing of accountable forms in the PhilGEPS; and

c. Direct the BAC to stop conducting public bidding as far as accountable forms are concerned, pursuant to the
GPPB Guidelines.

Clearly, the pertinent GAA provisions are applicable to the procurement of printing services by LGUs, unless it is expressly
provided in the GAA that LGUs are exempted from its coverage.

The petitioners’ contention that the disallowed transaction does not fall among those cases constituting irregular, illegal,
20
unnecessary, unconscionable, excessive and extravagant (IIUUEE) expenditures, as justification for the lifting of the
disallowance is untenable.

The GAA is enacted to appropriate funds for the operation of the government of the Republic of the Philippines for the
fiscal year covered. Any violation of the GAA renders the transaction illegal. In this case, the disallowance is proper, the same
being anchored on the prohibition against the procurement of accountable forms from a private printing company, pursuant to
Sections 25 and 22 of the 2011 and 2012 GAAs.

The GPPB issued Resolution No. 05-2010 dated October 29, 2010, implementing Section 29 of RA No. 9970 (2010 GAA),
that printing services for accountable forms and sensitive high quality/volume printing requirements be directly undertaken by
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recognized government printers, subject to the following guidelines:

1. POLICY STATEMENT

1.1. Pursuant to Section 29 of RA No. 9970 (2010 GAA), procuring entities have the option to engage the
services of private printers for their printing and publication expenditures, subject to public bidding in
accordance with RA No. 9184 and pertinent accounting and auditing rules and regulations.

1.2. However, printing of Accountable Forms and Sensitive High Quality/Volume Requirements shall only
be undertaken by the recognized government printers, namely: Bangko Sentral ng Pilipinas, National
Printing Office, and APO Production Unit, Inc.

2. SCOPE AND APPLICATION

2 .1 . These guidelines shall govern the procurement of printing services for accountable forms by the
national government, its branches, constitutional offices, departments, bureaus, offices, agencies, and
instrumentalities, including state universities and colleges, government owned/controlled corporations,
government financial institutions, and local government units. (Underscoring supplied)

Accordingly, EO No. 378 dated October 25, 2004, which removes from the exclusive jurisdiction of the National Printing
Office the printing services requirements of government agencies and instrumentalities, had already been superseded by GPPB
Resolution No. 05-2010. Hence, the challenged GAA provision is not a repeal as argued, but a reiteration of the same GPPB
Resolution on the procurement of printing services for accountable forms and sensitive high quality/volume requirements.

The General Counsel, this Commission, per 7 th Indorsement dated December 10, 2012, opined that:

The quoted provision of the 2011 and 2012 GAAs uses the term “only,” thus connoting exclusivity and limiting
the printing of AF [accountable forms] and sensitive high quality/volume printing requirements to only the
three RGP [recognized government printers] named therein. The law does not provide an exception.

It may be true that EO No. 378 allows the printing of the standard accountable forms by private printer, but the
aforequoted provisions of the GAAs of the 2011 and 2012 have superseded it.
RULING

WHEREFORE, premises considered, the Petition for Review of Raul T. Cabalan, Provincial Assistant Department Head;
Daniel A. Valido, Provincial Accountant; George T. Tan, Bids and Award Committee (BAC) Chairman; Nemia D. Alegarbes, BAC
Vice-Chairman; Belen M. Aruelo, Regiel S. Esguerra, BAC Members; Isabelita N. Lucino, End-user’s Representative; and
Percianita G. Racho, Provincial Administrator; all of the Provincial Government of Agusan Del Norte, in behalf of the Province, is
hereby DENIED for lack of merit. Accordingly, Commission on Audit Regional Office No. XIII Decision No. 2015-006 dated
March 25, 2015, denying the appeal for the reversal and lifting of Notice of Disallowance No. 14-001-101(13) dated January 17,
2014, on the procurement of accountable forms amounting to P934,125.00, is AFFIRMED.

(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:

Ms. Percianita G. Racho

Provincial Administrator

Mr. Raul T. Cabalan

Provincial Assistant Department Head

Mr. Daniel A. Valido

Provincial Accountant

Engr. George T. Tan

Chairman

Ms. Nemia D. Alegarbes

Vice-Chairman

Dr. Belen Aruelo

Mr. Regiel S. Esguerra
Members
Bids and Awards Committee

Ms. Isabelita N. Lucino

End-User’s Representative

All of the Provincial Government of Agusan Del Norte

The Audit Team Leader

The Supervising Auditor
Office of the Team Leader
Team 1
Local Government Sector
Province of Agusan Del Norte
Capitol Building, Butuan City

The Regional Director

Commission on Audit Regional Office No. XIII
Butuan 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/LED/ERD/VBL/LRP/AMD
CMIS 2016-0324
CP Case No. 2015-808

1 Rollo, pp. 28-42.

2 Rollo, pp. 199-202.
3 Rollo, pp. 115-116.
4 Rollo, p. 115.
5 Stamped date of receipt by the Office of the Regional Director; rollo, p. 198.
6 Declared by petitioner under paragraph 2, Timeliness of this Petition for Review; rollo, p. 42.
7 Stamped date of receipt by the Office of the Regional Director; rollo, p. 28.
8 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 xxx.
9 The printing of accountable forms and sensitive high quality/volume printing requirements shall only be undertaken by recognized government printers, namely:
Bangko Sentral ng Pilipinas (BSP), National Printing Office (NPO), and APO Production Unit, Inc.
10 Rollo, pp. 113-114.
11 Rollo, pp. 185-186.
12 The amount covered the payment, net of tax, for the following accountable forms, as enumerated in Audit Observation Memorandum No. 2013-005.

AF #51 (Official Receipt) @ P100/pad for 8,400 pads P840,000.00

AF #56 (Real Property Tax) @ P158/pad for 500 pads 79,000.00

AF #55 (Cash Tickets @ 1.00) @ P85/pad for 500 pads 42,000.00

AF #55 (Cash Tickets @ 2.00) @ P85/pad for 300 pads 25,500.00

P987,000.00
​==========

13 Rollo, pp. 117-127.

14 Rollo, pp. 131-133.
15 Prescribing the Implementing Guidelines on the Procurement of Printing Services for accountable forms by the national government, its branches, constitutional offices,
departments, bureau, offices, agencies, and instrumentalities, including state universities and colleges, government owned/controlled corporations, government financial
institutions, and local government units.
16 Rollo, pp. 68-69.
17 Rollo, pp. 65-67.
18 Sec. 25. Printing and Publication Expenditures. Departments, bureaus, offices or agencies are hereby given the option to engage the services of private printers in their
printing and publication activities, subject to public bidding in accordance with Republic Act (RA) No. 9184, its Revised Implementing Rules and Regulations, and to
pertinent accounting and auditing rules and regulations: PROVIDED, That the printing of accountable forms, sensitive, high quality, or high volume printing requirements
shall only be undertaken by recognized government printers, namely: Bangko Sentral ng Pilipinas, NPO and APO Production Unit, Inc.
19 Sec. 22. Printing and Publication Expenditures. Departments, bureaus, offices or agencies are hereby given the option to engage the services of private printers in their
printing, and publication activities, subject to public bidding in accordance with RA No. 9184, its Revised Implementing Rules and Regulations, and to pertinent
accounting and auditing rules and regulations: PROVIDED, That the printing of accountable forms, sensitive, high quality, or high volume printing requirements shall
only be undertaken by recognized government printers, namely: Bangko Sentral ng Pilipinas, NPO and APO Production Unit, Inc.
20 Pursuant to COA Circular No. 85-55A dated September 8, 1985, as amended by COA Circular No. 2012-003 dated October 29, 2012.
21 Annex “A” of Government Procurement Policy Board Resolution No. 05-2010 dated October 29, 2010.