Navigating Government Procurement: Avoiding Liability in Disallowed Transactions

The Supreme Court’s 2024 ruling in Avanceña v. Commission on Audit serves as a critical reminder for public officers involved in government procurement: the Bids and Awards Committee (BAC) bears direct responsibility for ensuring that every purchase follows the strict rules of Republic Act No. 9184. When a local government skirts these rules, the members who approved the transactions—not just the officials who signed the checks—can be held personally liable for the disallowed amounts.

The case arose from procurements made by the Municipality of Dr. Jose P. Rizal, Palawan, in 2014. The BAC issued four resolutions recommending the use of Small Value Procurement for various events, including a Women’s Day celebration, a year-long program, a founding anniversary, and a festival. Based on these resolutions, the municipality made purchases totaling PHP 8.19 million from four merchants. The Commission on Audit (COA) later disallowed the entire amount, citing violations of RA 9184 and its 2009 Revised Implementing Rules and Regulations (IRR).

The Violations Found

COA identified several specific irregularities. First, the purchase requests and supporting documents were undated and unnumbered, defeating the purpose of internal control. Second, the BAC failed to send requests for quotation to at least three suppliers, as required for Small Value Procurement. Third, the municipality did not post the procurement on the Philippine Government Electronic Procurement System (PhilGEPS) website. Fourth, the goods procured—office supplies, food, and other ordinary items—were readily available off-the-shelf products, meaning the proper mode should have been Shopping, not Small Value Procurement. Finally, COA found prima facie evidence of splitting contracts into smaller amounts to evade the requirement of public bidding.

The BAC’s Role and Liability

The Supreme Court emphasized that under Section 12 of RA 9184, the BAC is the central body responsible for ensuring the procuring entity abides by procurement standards. The BAC’s functions include recommending alternative procurement methods, but only when justified. In this case, the BAC resolutions were worded broadly, granting blanket authority to purchase unspecified "goods" for various events without identifying particular purchase requests. This allowed the resolutions to be used repeatedly, covering transactions that ultimately totaled over PHP 8 million.

The Court rejected the petitioners’ argument that they only acted on purchase requests submitted to them. The evidence showed the BAC processed purchase requests dated after the resolutions were issued, proving their continued participation. The Court also dismissed the claim that time pressure justified Small Value Procurement, noting that the lack of time to conduct public bidding is not an "unforeseen contingency" under the rules.

Who Was Held Liable

Applying COA Circular No. 2009-006, the Court determined liability based on each officer’s duties and extent of participation. The BAC members—Palarca, Tolentino, De Guzman, Calamba, and Lobaton—were held liable for their patent disregard of mandatory procurement procedures. They had recommended Small Value Procurement without basis and failed to ensure compliance with posting and quotation requirements.

However, the Court absolved Nelson Avanceña, the head of the BAC Secretariat. Citing the earlier ruling in PNP-CIDG v. Villafuerte, the Court noted that the Secretariat’s functions are purely administrative and ministerial. Avanceña was not a voting member of the BAC, and aside from certifying the resolutions, there was no evidence he participated in their approval or implementation.

Practical Takeaways

• Document everything properly. Undated, unnumbered, or incomplete documents will not survive audit scrutiny. Ensure all purchase requests, vouchers, and contracts are complete and properly filled out.
• Choose the correct procurement mode. Small Value Procurement is not a catch-all. If goods are readily available off-the-shelf items, Shopping is the proper mode. Review the thresholds and conditions under the IRR before recommending any alternative method.
• Comply with posting and quotation requirements. Send requests for quotation to at least three qualified suppliers and post the procurement on PhilGEPS. Poor internet access is not an acceptable excuse; document attempts and seek alternatives.
• Avoid splitting contracts. Dividing purchases into smaller amounts to stay under the threshold and evade public bidding is a serious violation. Each procurement should be planned and aggregated properly in the Annual Procurement Plan.
• Know your role. BAC members with voting and recommendatory powers are accountable for their decisions. Secretariat staff performing purely ministerial functions may be shielded from liability, but this protection is narrow.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.