Development Bank of the Philippines v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner Development Bank of the Philippines (DBP) purchased nineteen (19) units of motor vehicles in 1988 for P5,525,000.00 as part of its modernization program to bolster fund generation and reach a wider clientele. These vehicles were utilized to support its thrust of providing financial assistance to small and medium enterprises in the countryside. Procedural History: In its 1992 Annual Audit Report, the Commission on Audit (COA) noted non-compliance with Letter of Instruction No. 667 and Letter of Implementation No. 29, which require Presidential approval for the purchase of transport. Although no Notice of Disallowance was issued at the time, administrative charges were recommended but not pursued. On April 23, 1998, the COA Auditor issued a Notice of Disallowance on the subject transaction. DBP, through its President, requested the lifting of the disallowance, justifying the purchase as necessary for its modernization program and rehabilitation efforts. The COA Auditor initially recommended lifting the disallowance, but the Director, Corporate Audit Office I, recommended otherwise, citing the want of Presidential approval. Subsequently, the COA, in COA Decision No. 98-320, lifted the disallowance for two vehicles purchased by DBP-Baguio Branch amounting to P525,000.00. On August 2, 2001, COA Decision No. 2001-151 denied DBP's motion for reconsideration, affirming the disallowance but modifying the amount to P5,000,000.00. DBP's motion for reconsideration of this decision was denied by COA Decision No. 2003-052 dated February 27, 2003. The Petition: DBP filed a Petition for Certiorari before the Supreme Court, alleging grave abuse of discretion on the part of COA. DBP claimed it learned of the February 27, 2003 resolution only on February 8, 2005, making its February 21, 2005 petition timely. DBP argued that COA gravely abused its discretion by not considering the urgency and necessity of the purchases and by not applying the doctrine adopted in COA Decision No. 98-320.
Issue(s)
Whether the petition for certiorari was filed within the reglementary period. Whether the Commission on Audit committed grave abuse of discretion in disallowing the purchase of motor vehicles by the Development Bank of the Philippines for want of prior Presidential approval. Whether the Commission on Audit committed abuse of discretion in not applying the doctrine it adopted in COA Decision No. 98-320.
Ruling
The petition is DENIED. The assailed COA Decision No. 2001-151 and Resolution No. 2003-052 are AFFIRMED.
Ratio Decidendi
On the timeliness of the petition: The Court held that the petition was filed within the reglementary period. Service of the COA resolution to Lolet Toledo, who was the resident corporate auditor of DBP, was not valid service upon DBP. The resident corporate auditor is an extension of COA, not an employee of DBP, and does not fall under the definition of a "clerk or person having charge" of the office for purposes of valid service under the Rules of Court. Therefore, DBP should be considered served only when it received a copy of the resolution from the COA Office of Legal Affairs on February 8, 2005, making the February 21, 2005 petition timely filed within the 30-day period prescribed by Rule 64. On the grave abuse of discretion and disallowance of vehicle purchase: The Court ruled that the COA did not commit grave abuse of discretion. Letter of Instruction No. 667 and Letter of Implementation No. 29 clearly require prior Presidential authorization for the purchase of motor vehicles by government-owned and controlled corporations like DBP. The requirement for Presidential approval is not a mere technicality but a substantive legal mandate to prevent the free utilization of funds without proper justification. The Court emphasized that "mere abuse of discretion is not enough" for certiorari; it must be "grave abuse of discretion" amounting to a capricious or whimsical exercise of judgment, or a virtual refusal to perform a duty. Since the disallowance was made pursuant to applicable law, it cannot be assailed as an act of grave abuse of discretion. On the application of the doctrine in COA Case No. 98-320: While the Court viewed with disfavor the COA's differing decisions in similar cases (COA Decision No. 2001-151 versus COA Case No. 98-320), it could not find grave abuse of discretion because the COA acted pursuant to law in the present case. The fact that a previous, similar request was granted does not compel the COA to grant subsequent requests if the law mandates otherwise. The Court reiterated that the disallowance was based on the clear requirement of Presidential approval under LOI 667 and LOI 29, which was not met by DBP.
Main Doctrine
The purchase of motor vehicles by a government-owned and controlled corporation requires prior Presidential authorization as mandated by Letter of Instruction No. 667 and Letter of Implementation No. 29. Failure to secure such authorization renders the disallowance by the Commission on Audit valid and not an act of grave abuse of discretion.