FILOMENA G. DELOS SANTOS, JOSEFA A. BACALTOS, NELANIE A.

ANTONI, AND
MAUREEN A. BIEN
vs.
COMMISSION ON AUDIT, REPRESENTED BY ITS COMMISSIONERS
Facts: Delos Santos, Bacaltos, Antoni and Bien, officials of the Vicente Sotto Memorial Medical Center
(VSMMC or hospital), are being held solidarily liable for the amount of P3,386,697.10. The amount was
the disallowance (A disallowance is a disapproval by the CoA, in whole or in part, of a disbursement by
a government agency.) of several disbursements from the PDAF of Congressman Antonio V. Cuenco
(Cuenco) of the Second District of Cebu City.
Cuenco had made a MoA with the previous VSMMC hospital chief appropriating to the hospital
the amount of P1,500,000.00 from his Priority Development Assistance Fund (PDAF) to cover the
medical assistance of indigent patients under the Tony N' Tommy (TNT) Health Program (TNT
Program).
The CoA found that there were forgery and falsification of prescriptions and referrals for the
availment of medicines under the TNT Program.
Delos Santos explained that during the initial stage of the implementation of the MOA (i.e., from
2000 to 2002) the hospital screened, interviewed, and determined the qualifications of the patients-
beneficiaries through the hospital’s social worker. However, sometime in 2002, Cuenco put up the TNT
Office in VSMMC, which was run by his own staff who took all pro forma referral slips bearing the
names of the social worker and the Medical Center Chief, as well as the logbook. From then on, the
hospital had no more participation in the said program and was relegated to a mere “bag keeper.” Since
the benefactor of the funds chose Dell Pharmacy as the sole supplier, anti-rabies medicines were
purchased from the said pharmacy and, by practice, no public bidding was anymore required
Examination by the SAT (Special Audit Team, which was constituted to conduct a special
audit investigation with respect to the findings of the previous team.) of the records and interviews with
the personnel involved showed that the purported patients-beneficiaries of the TNT Program were
mostly non-existent and there was no actual procedure followed except for the mere preparation of
payment documents which were found to be falsified as evidenced.
The SAT Team Supervisor, Boado disallowed the amount of P3,386,697.10 for the payment of
drugs and medicines for anti-rabies with falsified prescription and documents, and holding petitioners,
together with other VSMMC officials, solidarily liable. Petitioners’ respective participations were
detailed as follows:
(a) for Delos Santos, in her capacity as Medical Center Chief, for signing and approving the
disbursement vouchers and checks;
(b) for petitioner Dr. Josefa A. Bacaltos, in her capacity as Chief Administrative Officer, for
certifying in Box A that the expenses were lawful, necessary and incurred in her direct
supervision;
(c) for Antoni, in her capacity as Chief of the Pharmacy Unit, for approving the supporting
documents when the imputed delivery of the medicines had already been consummated;
 (d) for petitioner Maureen A. Bien, in her capacity as Hospital Accountant, for certifying in Box
B of the disbursement voucher that the supporting documents for the payment to Dell Pharmacy
were complete and proper.
Delos Santos et al. argue that VSMMC was merely a passive entity in the disbursement of funds
under the TNT Program and, thus, invoke good faith in the performance of their respective duties,
capitalizing on the failure of the assailed Decisions of the CoA to show that their lapses in the
implementation of the TNT Program were attended by malice or bad faith.
Issue:
1. Did the CoA commit grave abuse of discretion in holding petitioners solidarily liable for the
disallowed amount of P3,386,697.10?
2. May Delos Santos et al. invoke good faith in the performance of their duties as a defense?
Ruling:
1. No, the CoA did not.
At the outset, it must be emphasized that the CoA is endowed with enough latitude to determine,
prevent, and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of
government funds. It is tasked to be vigilant and conscientious in safeguarding the proper use of the
government's, and ultimately the people's, property. The exercise of its general audit power is among the
constitutional mechanisms that gives life to the check and balance system inherent in our form of
government.
It is the general policy of the Court to sustain the decisions of administrative authorities,
especially one which is constitutionally-created, such as the CoA, not only on the basis of the
doctrine of separation of powers but also for their presumed expertise in the laws they are
entrusted to enforce. Findings of administrative agencies are accorded not only respect but also
finality when the decision and order are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court
entertains a petition questioning its rulings. There is grave abuse of discretion when there is an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law
as when the judgment rendered is not based on law and evidence but on caprice, whim, and despotism.
In this case, the Court finds no grave abuse of discretion on the part of the CoA in issuing the
assailed Decisions as will be discussed below.
The CoA correctly pointed out that VSMMC, through its officials, should have been deeply
involved in the implementation of the TNT Program as the hospital is a party to the MOA and, as such,
has acted as custodian and disbursing agency of Cuenco’s PDAF. Further, under the MOA executed
between VSMMC and Cuenco, the hospital represented itself as “willing to cooperate/coordinate and
monitor the implementation of a Medical Indigent Support Program.” More importantly, it undertook to
ascertain that “[a]ll payments and releases under [the] program x x x shall be made in accordance with
existing government accounting and auditing rules and regulations.” It is a standing rule that public
officers who are custodians of government funds shall be liable for their failure to ensure that such funds
are safely guarded against loss or damage, and that they are expended, utilized, disposed of or
transferred in accordance with the law and existing regulations, and on the basis of prescribed
documents and necessary records. However, as pointed out by the SAT, provisions of the National
Budget Circular No. (NBC) 476 were not followed in the implementation of the TNT Program, as well
as other existing auditing laws, rules and regulations governing the procurement of medicines.
The TNT Program was not implemented by the appropriate implementing agency, i.e., the
Department of Health, but by the office set up by Cuenco. Further, the medicines purchased from Dell
Pharmacy did not go through the required public bidding in violation of the applicable procurement laws
and rules. Similarly, specific provisions of the MOA itself setting standards for the implementation of
the same program were not observed. For instance, only seven of the 133 prescriptions served and paid
were within the maximum limit of P5,000.00 that an indigent patient can avail of from Cuenco’s PDAF.
Also, several indigent patients availed of the benefits more than once, again in violation of the
provisions of the MOA. By allowing the TNT Office and the staff of Cuenco to take over the entire
process of availing of the benefits of the TNT Program without proper monitoring and observance
of internal control safeguards, the hospital and its accountable officers reneged on their
undertaking under the MOA to “cooperate/coordinate and monitor” the implementation of the
said health program. They likewise violated paragraph 5 of NBC 476 which requires a “regular
monitoring activity” of all programs and projects funded by the PDAF, as well as Sections 123 and 124
of Presidential Decree No. 1445, otherwise known as the “Government Auditing Code of the
Philippines” (Auditing Code), which mandates the installation, implementation, and monitoring of a
“sound system of internal control” to safeguard assets and check the accuracy and reliability of the
accounting data.

2. No, they may not.

Delos Santos et al. invoke good faith in the performance of their duties, and jurisprudence holds that,
absent any showing of bad faith and malice, there is a presumption of regularity in the performance of
official duties. However, this presumption must fail in the presence of an explicit rule that was
violated.
In Reyna v. CoA (Reyna), the Court affirmed the liability of the public officers therein,
notwithstanding their proffered claims of good faith, since their actions violated an explicit rule in the
Landbank of the Philippines’ Manual on Lending Operations. In similar regard, the Court, in Casal v.
CoA (Casal), sustained the liability of certain officers of the National Museum who again,
notwithstanding their good faith participated in approving and authorizing the incentive award granted
to its officials and employees in violation of Administrative Order Nos. 268 and 29.
Just as the foregoing public officers in Reyna and Casal were not able to dispute their respective
violations of the applicable rules in those cases, the Court finds that the petitioners herein have equally
failed to make a case justifying their non-observance of existing auditing rules and regulations,
and of their duties under the MOA. Evidently, petitioners’ neglect to properly monitor the
disbursement of Cuenco's PDAF facilitated the validation and eventual payment of 133 falsified
prescriptions and fictitious claims for anti-rabies vaccines supplied by both the VSMMC and Dell
Pharmacy, despite the patent irregularities borne out by the referral slips and prescriptions related
thereto.
Had there been an internal control system installed by petitioners, the irregularities would have
been exposed, and the hospital would have been prevented from processing falsified claims and
unlawfully disbursing funds from the said PDAF. Verily, petitioners cannot escape liability for failing to
monitor the procedures implemented by the TNT Office on the ground that Cuenco always reminded
them that it was his money. Neither may deviations, from the usual procedure at the hospital, such as the
admitted bypassing of the VSMMC social worker in the qualification of the indigent-beneficiaries, be
justified as “a welcome relief to the already overworked and undermanned section of the hospital.”
In this relation, it bears stating that Delos Santos’ argument that the practices of the TNT
Office were already pre-existing when she assumed her post and that she found no reason to
change the same remains highly untenable. Records clearly reveal that Antoni disclosed to her the
irregularities occurring in the hospital specifically on pre-signed and forged prescriptions. Hence,
having known this significant information, she and Antoni should have probed into the matter
further, and, likewise, have taken more stringent measures to correct the situation. Instead, Delos
Santos contented herself with giving oral instructions to resident doctors, training officers, and Chiefs of
Clinics not to leave pre-signed prescriptions pads, which Antoni allegedly followed during the
orientations for new doctors. But, just the same, the falsification and forgeries continued, and it was only
a year after, or in December 2004, that Delos Santos ordered a formal investigation of the attendant
irregularities. By then, too much damage had already been done.