D E C I S I O N

On June 30, 1993, the Executive Committee of the National Association of Tobacco Farmers in the Philippines passed a resolution requesting the National Tobacco Administration (NTA) to adopt and implement a Health Care Program designed to attend to the health needs of the tobacco producing barangays. In view of its mandate under Executive Order Nos. 116 and 245 to improve the living conditions and raise the quality of life of the tobacco farmers who depend upon the industry for their livelihood, the NTA passed Board Resolution No. 032-93, dated July 26, 1993, adopting a Health Care Program to attend to the health needs of tobacco producing barangays and allocating P5,000,000 for the program. A medical assistance in the form of medicines and vitamins was set aside for the purpose of the program.

Upon the instruction of then NTA Administrator Joaquin Ortega, the Health Care Program was established. On account of the alleged urgency of its implementation to coincide with the national registration of tobacco farmers, which rarely happens, a provision was incorporated in the program that the mode of purchase of medicines and vitamins shall be under the exception provided for under Section 1 of Executive Order (E.O) No. 301.

Nevertheless, the herein appellants recommended in writing that the mode of purchase be done through public bidding but Administrator Ortega disregarded such recommendation. Negotiated purchases were undertaken and payments were made to Leruggi Pharma, Ad Drugstel Pharma and Le Jumont Pharma in the total amount of P4,499,355.06.

The payments to the suppliers were disallowed in audit for the following reasons, to wit:

1. No bidding was made in violation of Section 1 of E.O No. 301;

2. The purchases were made in violation of COA Circular No. 76-41;

3. The transaction is unnecessary since the giving of health services is the function of the Department of Health; and

4. Overpricing attended the questioned purchases.

Appellants now seek relief from liability for the disallowed payments invoking the provisions of Section 106, Presidential Decree No. 1445.

In a letter dated November 23, 1999, the Auditor recommended the lifting of the disallowance in the absence of all basic documents from the COA-NTA files and the validity of the defense raised under Section 106 of P.D 1445 defining the liability for acts done by the direction of superior officer.

After a circumspect evaluation of the facts and circumstances attendant in the present case, this Office finds merit in the instant appeal. For one, the appellants convincingly manifested that they are relieved from liability for the disallowed purchases pursuant to the provision of Section 106, P.D 1445, which reads:

"SECTION 106- Liability for acts done by direction of superior officer.- No accountable officer shall be relieved from liability by reason of his having acted under the direction of a superior officer in paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the superior officer in writing of the illegality of the payment, application or disposition. The officer directing any illegal payment or disposition of the funds or property shall be primarily liable for the loss, while the accountable officer who fails to serve the required notice shall be secondarily liable."

It must be noted that appellants properly informed in writing the NTA Administrator of the necessity of public bidding in the purchase of medicines and vitamins. This recommendation was disregarded and NTA proceeded with the negotiated purchases. Under the attendant circumstances, this Commission is fairly convinced that the act required under Section 106 has been sufficiently complied in the instant case.

For another, Administrator Ortega, the person primarily liable for the disallowance, has already died. The civil liability is not extinguished by the death of the person determined to be liable for the disallowance, practical reasons compel this Commission to affirm the disallowance.

This Commission is not unmindful of the NTA program to alleviate the living conditions and raise the quality of life of the tobacco farmers and their families, but this can be done through other projects which can improve the quality of the tobaccos to be more competitive in the world market. Distribution of medicines and vitamins is the functions of the Department of Health. The medicines in question cannot be considered as urgently needed to meet an emergency which may involve loss of or danger to life and/or property, therefore, public bidding cannot be dispensed with. In fact, the Health Care Program approved under NTA Board Resolution No. 032-93 is not within the ambit of the corporate powers vested under the E.O. Nos.116 and 245. While the NTA is mandated to improve the living conditions and raise the quality of life of the tobacco farmers, it is plainly gratuitous to invoke this mandate to justify the dole out of medicines and vitamins to farmer-beneficiaries. This project, however well intended it may be, cannot do away with the public bidding as provided for by law.

WHEREFORE, premises considered, the herein appellants are relieved from their liabilities but subject disallowance is hereby AFFIRMED. Accordingly, the NTA Board Members who passed the Board Resolution No. 032-93 dated July 26, 1993 are held responsible therefor. The NTA administration is hereby directed to cause the settlement of the disallowance.