D E C I S I O N

Extant records show that the Department of Health (DOH) Regional Field Office No. V, Legazpi City, procured in 1993 various medicines and medical supplies from various suppliers in the amount of P1,911,029.61 of which the amount of P674,581.93 was disallowed in audit under CSB No. 94-003-101 dated January 21, 1994 on the ground of overpricing.

Mrs. Iluminada C. Bulaong, Management and Audit Analyst II and Internal Control Officer and Dr. Gloria Gonzales – de Vera, Chief, Technical Division, both of the Department of Health, Regional Field Office No. V, Legazpi City, were determined to be among the persons found liable therefor. It appears that Mrs. Bulaong passed in pre-audit all the questioned disbursement vouchers without making an actual canvass of the prices of subject items, while Dr. de Vera, signed Box No. 3 of Disbursement Voucher Nos. 101-93-03-0386 and 93-08-1804, in the amounts of P6,100.68 and P12,163.00, respectively, certifying that expenses are necessary, lawful and incurred under her direct supervision. In addition, she certified that in case of contracts, or purchases of goods or services, prices are reasonable and not in excess of the current rates in the locality.

In their letters dated June 20, 1994 and November 25, 1993, Mrs. Bulaong and Dr. de Vera, feeling aggrieved, appealed for the disallowed transactions.

Mrs. Bulaong contended that she passed in pre-audit the vouchers in question without making any actual canvass as -

After a careful evaluation, this Commission finds merit in the herein appeal. It should be pointed out that the Auditor did not conduct an actual canvass of the prices of specific items purchased, but relied mainly on the price data supplied by the Price Evaluation Division – Technical Services Office, this Commission. In the case of Arriola vs. COA, G.R. No. 90364, September 30, 1991, the Supreme Court declared that:

"Price findings reflected in a report are not, in the absence of the actual canvass sheets and/or price quotations from identified suppliers, valid bases for outright disallowance of agency disbursement for government projects."

and in a more regent decision in the case of National Center for Mental Health Management vs. COA. G.R. No. 114864, December 6, 1996, the Supreme Court said that:

"It would be difficult to concede, to the quoted summary of overpricing made by the Technical Audit Analyst to be a final basis for an out-and-out rejection of agency disbursement cost estimate in the absence of actual canvass sheets and/or price quotations from identified suppliers."

thus, from the afore-cited decision of the Supreme Court, it is explicit that price reference data supplied by the PED-TSO through its letter-replies to price queries from the Auditor is insufficient to support findings of overpricing. There must be an actual canvass of the prices of the same items to be made by the Auditor.

On the other hand, this Commission noted the failure of Mrs. Bulaong to examine and review the financial transactions in question, to see to it that they comply with existing regulations. Thus, she failed to uncover the alleged excessive prices which she could have easily determined through canvassing and by getting the most recent price index. She should not have relied on the 1991 price index considering that the result of the September 1992 bidding conducted for the purpose of establishing new price index could already be availed of then. Likewise, the certifications by other officials that the prices are reasonable and not in excess of the current rates in the locality is still subject to review by the Internal Control Officer. Hence, if found not to be the most economical, or the price is not reasonable, the transactions could have been aborted.

However, there being no substitute for an actual canvass to be made by the Auditor, to support the findings of overpricing, this Commission, has no recourse but to set aside the subject disallowance. Accordingly, the herein appeal is given due course.

(Sgd.) CELSO D. GAÑGAN
Chairman