Liwanag v. Commission on Audit
REITERATIONFacts
The Antecedents: The Angeles City Water District (ACWD) granted its employees grocery allowances and year-end financial assistance totaling P14,556,195.00 for the years 2008 and 2009. These disallowances were based on the premise that the grocery allowance lacked legal basis, as similar expenses had been disallowed in prior years and affirmed by the Commission on Audit (COA). The year-end financial assistance was disallowed for not conforming to established benefits as of December 31, 1999, as per DBM and PAWAD issuances. The Audit Team Leader (ATL) issued Notices of Disallowance (NDs) for these amounts. Procedural History: The ATL issued NDs Nos. 2012-003-101 (2008), 2012-004-101 (2008), 2012-005-101 (2009), and 2012-006-101(2009) on November 26, 2012. The petitioner appealed these NDs to the COA Regional Office 3 (COA-RO3) on May 28, 2013. The Regional Director denied the appeal on September 18, 2013. Subsequently, the petitioner filed a petition for review with the COA Proper on October 7, 2013, paying the filing fee on December 27, 2013. The COA Proper dismissed the appeal on February 23, 2015, ruling it was filed out of time. The Petition: The petitioner assails the COA's Decision No. 2015-046, arguing that his petition for review was timely filed, as the disallowances were subject to automatic review by the COA Proper due to an increase in the disallowed amount. He also contends that the special audit was irregular and invalid for violating due process, as ACWD had already been audited without disallowances for similar benefits. The petitioner further argues that the COA failed to consider that the grant of allowances was an established practice and that the ATL lacked the authority to re-audit previously cleared accounts. The petition seeks the annulment of the COA decision and a declaration that the special audit is invalid and ineffectual.
Issue(s)
Whether the COA gravely abused its discretion tantamount to lack or excess of jurisdiction when it ruled that ACWD's petition for review was filed out of time. Whether the COA gravely abused its discretion tantamount to lack or excess of jurisdiction when it affirmed the disallowance of grocery allowance and year-end financial assistance granted to ACWD employees. Whether the COA gravely abused its discretion tantamount to lack or excess of jurisdiction when it failed to rule that the audit conducted by the ATL is invalid and illegal for lack of authority to audit ACWD accounts which already had been audited by previous auditors. Whether the COA gravely abused its discretion tantamount to lack or excess of jurisdiction when it failed to apply existing jurisprudence on the entitlement and refund of the subject allowances of ACWD employees.
Ruling
The Supreme Court GRANTS the petition for certiorari, ANNULS and SETS ASIDE Decision No. 2015-046 dated February 23, 2015 issued by the Commission on Audit, and DECLARES the special audit conducted by Audit Team Leader Rowena R. Bucu INVALID and INEFFECTUAL.
Ratio Decidendi
On the timeliness of the appeal to the COA Proper and the authority of the petitioner to bring the recourse: The Court found merit in the petitioner's argument that the appeal was timely. While the COA Proper insisted the petition was filed out of time under the 2009 RRPC, the Court noted that the Regional Director's decision was subject to automatic review by the Commission Proper pursuant to Section 7, Rule V of the 2009 RRPC, because the disallowed amounts had increased from P14,556,195.00 to P26,462,024.00. The Regional Director's conclusion that the decision was not yet final and was subject to automatic review was correct. Therefore, the decision of the Regional Director did not attain finality, rendering the motion for reconsideration filed by the petitioner superfluous. The Court sustained the petitioner's position that the appeal was timely filed. The Court found the COA's argument that the petitioner lacked authority to bring the recourse mistaken. Although the ACWD Board Resolution No. 19, Series of 2015, mentioned filing a "Motion for Reconsideration with the Supreme Court," the Court clarified that the Board's intent was to enable the petitioner to take necessary remedies to reverse the COA decision. The petition for certiorari under Rule 64 was the proper recourse. Furthermore, the Court reiterated its ruling in Cagayan Valley Drug Corporation v. Commission of Internal Revenue that a General Manager inherently possesses the authority to initiate proper recourses in behalf of the entity and to sign verification and certification of non-forum shopping, even without a specific board resolution for that purpose. The petitioner, as General Manager, was in a position to verify the truthfulness of the allegations. On the disallowance of grocery allowance and year-end financial assistance: The Court found that the COA Proper was likely justified in disallowing the benefits. Under Section 12 of RA 6758, all allowances not expressly excepted are deemed integrated into the standardized salary rates. The grocery allowance and year-end financial assistance were not among the excepted benefits. While the petitioner argued that Local Water Districts (LWDs) were initially outside COA, CSC, and DBM coverage, and that established practices should continue, the Court noted that LWDs became subject to these agencies' jurisdiction in 1991. Furthermore, DBM-CCC 10, re-issued and published in 1999, stipulated that allowances not mentioned in its provisions were discontinued effective November 1, 1989. Although a DBM letter allowed continuation of established practices as of December 31, 1999, the petitioner failed to demonstrate ACWD's compliance with specific parameters set forth in that letter, such as positive net income, up-to-date debt service, acceptable unaccounted-for-water ratio, inclusion in budgets, and staff-to-connection ratio. The petitioner's general assertion of compliance without documentary evidence was insufficient. The list of benefits provided by the petitioner did not even include grocery allowances. On the validity of the special audit: The Court found the petitioner's contention that the special audit was irregular and invalid to be valid. The text explicitly states that the COA did not comply with its own rules for the conduct of a special audit, specifically COA Circular 2009-006. The COA failed to show that the special audits were duly authorized through relevant office orders as required by Section 15.1.2, nor did it justify why the results were not "preliminarily" discussed with the previous auditors as mandated by Section 15.3. These procedural requirements were intended to prevent arbitrariness and ensure fairness. The non-observance of these guidelines was significant and infringed upon ACWD's right to due process of law. Therefore, the special audits and their results were declared invalid and ineffectual. The COA's failure to apply existing jurisprudence on the entitlement and refund of the subject allowances of ACWD employees is addressed within the discussion regarding the disallowance of grocery allowance and year-end financial assistance. The court's reasoning on the disallowance implicitly covers the application of relevant jurisprudence, as the court assessed the validity of the allowances based on legal provisions and administrative circulars.
Main Doctrine
The conduct of a special audit to reopen a previous audit allowing a disbursement must be in accordance with the prevailing rules and guidelines defined by the Commission on Audit (COA) itself; otherwise, the special audit is irregular and should be invalidated for violation of due process. Furthermore, the timeliness of an appeal to the COA Proper is governed by specific rules, and an increase in the disallowed amount may trigger an automatic review by the Commission Proper.