G.R. No. 213323 & 213324 EN BANC January 22, 2019
TERESITA S. LAZARO, ET AL., Petitioners, vs. COMMISSION ON AUDIT, ET AL., Respondents; EVELYN T. VILLANUEVA, Petitioner, vs. COMMISSION ON AUDIT, Respondent.

FACTS

The Commission on Audit (COA) disallowed the Provincial Government of Laguna’s purchase of medicines and medical supplies worth ₱118,039,493.46 for calendar years 2004 and 2005. An audit team found irregularities, including the absence of public bidding, the specification of brand names in purchase requests, and the splitting of purchase orders. A Notice of Disallowance was issued, holding liable Governor Teresita Lazaro, Provincial Accountant Evelyn Villanueva, and several other provincial officers involved in the procurement and approval process. Petitioners appealed to the COA Regional Office, which granted the appeal, citing exceptions where reference to brand names and negotiated purchases had been allowed by the Supreme Court in prior rulings.

ISSUE

Whether the COA correctly affirmed the disallowance of the procurement for violating Republic Act No. 9184 (the Government Procurement Reform Act) by specifying brand names and resorting to direct contracting without justification.

RULING

The Supreme Court DISMISSED the Petitions and AFFIRMED the COA’s decision. The legal logic is anchored on the mandatory and prohibitory nature of the Government Procurement Reform Act. Section 18 of R.A. No. 9184 explicitly prohibits reference to a brand name in specifications for procurement, allowing it only in very limited instances, such as when the item is a spare part for existing equipment. The Court found that the petitioners failed to prove that the procured medical items fell under any statutory exception. The mere issuance of certifications by hospital therapeutics committees recommending specific brands and the submission of certificates of exclusive distributorship do not, by themselves, justify a deviation from the requirement of public bidding. The law mandates public bidding as the general rule to ensure transparency, competitiveness, and the best price for the government. Direct contracting, as a modality, is strictly construed and allowed only under specific conditions enumerated in the law, which were not satisfactorily established in this case. Consequently, the procurement was illegal for violating mandatory statutory rules. The disallowance was proper, and all approving and certifying officers are solidarily liable for the amount, as they are presumed to know the law and acted with negligence in disregarding clear procurement rules.