Salva v. Carague
REITERATIONFacts
The Antecedents: In 1992, Palawan State University (PSU), through its President Dr. Teresita L. Salva, entered into a Construction Agreement with Integrand Development Construction, Inc. (IDCI) for the Phase II construction of a Multi-Purpose Building for P1,685,883.45. Upon review, the Commission on Audit-Technical Audit Specialist (COA-TAS) found an excess of P274,726.38 in the costs for mobilization/demobilization and earthfill/compaction. The COA-TAS computed mobilization at 2% of direct costs per Department of Public Works and Highways (DPWH) standards, whereas PSU included temporary facilities like bodegas and access roads. For earthfill, COA estimated only 8 working days for a volume of 2,033.4 cubic meters, which PSU contested as insufficient for the actual site conditions. Procedural History: In COA Decision No. 95-211, the Commission affirmed the disallowance and held Salva, the PSU Vice-President, and the Accountant jointly and severally liable. This was later modified in COA Decision No. 2000-273, which excused the Vice-President and Accountant but held Salva, the project engineers (Norberto S. Dela Cruz and Lucy Janet Pasion), and the IDCI Manager liable. Salva's motion for reconsideration was denied with finality in COA Decision No. 2003-063, prompting the present petition. The Petition: Petitioner Dr. Teresita L. Salva filed an Amended Petition for Certiorari under Rule 65, alleging that the Commission on Audit (COA) committed grave abuse of discretion. She argued that she approved the award in good faith, relying on the technical expertise of the PSU engineers who prepared the Approved Agency Estimates (AAE). She further contended that she had no participation in the actual computations and that the additional expenses were justified by the need to preserve fruit trees and ensure structural integrity at the project site.
Issue(s)
Whether petitioner Dr. Teresita L. Salva should be held personally liable for the disallowed amount of P274,726.38 under Section 103 of Presidential Decree (P.D.) No. 1445.
Ruling
The petition is GRANTED. The Resolution of the Commission on Audit (COA) dated March 18, 2003, is REVERSED and SET ASIDE insofar as petitioner Dr. Teresita L. Salva is concerned. She is exonerated from liability.
Ratio Decidendi
On the Issue of Personal Liability: The Supreme Court ruled that petitioner cannot be held personally liable because she was not 'directly responsible' for the disallowed expenditure as required by Section 103 of Presidential Decree (P.D.) No. 1445. Applying the doctrine in Albert v. Gangan, the Court held that the head of an agency does not automatically become liable for questionable transactions simply by being the final approving authority. The Court noted that the Approved Agency Estimates (AAE) were prepared by technical staff, specifically PSU engineers, and petitioner's role was limited to formal approval. Following Suarez v. Commission on Audit, an official who has no hand in the technical preparation or computation of estimates should not be held liable for disallowances discovered during post-audit. Furthermore, the Court found that petitioner provided satisfactory justifications for the expenses, such as the construction of temporary access roads and the preservation of fruit trees, which necessitated specific equipment and manpower. Since there was no evidence of bad faith, ill-motive, or personal profit on the part of the petitioner, the presumption of regular performance of duty applies, and she is exonerated from personal civil liability.
Main Doctrine
Under Section 103 of Presidential Decree (P.D.) No. 1445, an official is personally liable for unauthorized expenditures only if they are found to be 'directly responsible' for the violation of law or regulation. A head of agency who approves a transaction based on the technical computations of subordinates is not an insurer of the transaction's correctness. If the official acted in good faith, did not participate in the preparation of the technical estimates, and did not personally profit from the transaction, they cannot be held personally liable for audit disallowances resulting from technical discrepancies. The determination of whether an expenditure is 'irregular' or 'excessive' is situational and must be judged based on legality, necessity, and reasonableness under the specific circumstances.