Power Sector Assets v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner Power Sector Assets and Liabilities Management Corporation (PSALM) is a government-owned and controlled corporation tasked with managing the disposition of National Power Corporation (NPC) assets to liquidate NPC's financial obligations. Since 2002, PSALM had been reimbursing Extraordinary and Miscellaneous Expenses (EME) to its officers and employees, using certifications as proof of disbursement, in accordance with older regulations. However, the Commission on Audit (COA) issued Circular No. 2006-001, which explicitly stated that such certifications were no longer acceptable supporting documents for EME reimbursements, requiring instead receipts and/or other documents evidencing disbursements. Despite being notified of this circular in 2006, PSALM continued to disburse EME in 2008 and 2009, relying solely on certifications. Procedural History: In 2009, the COA issued a Notice of Suspension (NS) for the 2008 EME reimbursements due to the lack of required supporting documents. PSALM's motion for reconsideration was denied, and the COA subsequently issued a Notice of Disallowance (ND) for the 2008 EME, totaling P2,385,334.06. This disallowance was affirmed by the COA Corporate Government Sector (CGS) and later by the COA Proper. PSALM failed to file a motion for reconsideration or a petition for certiorari, leading to the finality of the decision. Subsequently, a similar Notice of Disallowance was issued for the 2009 EME reimbursements, amounting to P2,615,500.79. This disallowance was also affirmed by the COA CGS and the COA Proper. PSALM filed a motion for reconsideration for the 2009 EME disallowance, which was denied. PSALM also filed a motion for relief from judgment regarding the 2008 EME disallowance, which was also denied. The Petition: PSALM filed two consolidated Petitions for Certiorari under Rule 64, in relation to Rule 65, of the Revised Rules of Court. G.R. No. 213425 assails the COA's Decision and Resolution concerning the 2009 EME disallowance, arguing that due process was violated by the absence of an Audit Observation Memorandum (AOM) and that COA Circular No. 2006-001 is inapplicable, asserting that certifications should suffice as proof of disbursement. PSALM also claims a violation of the equal protection clause due to alleged preferential treatment of other government entities and the difference in treatment between National Government Agencies (NGAs) and Government-Owned and Controlled Corporations (GOCCs). G.R. No. 216606 challenges the COA's Resolution denying PSALM's motion for relief from judgment concerning the 2008 EME disallowance, arguing for the review of the merits of the case, raising similar substantive issues regarding the disallowance of EME reimbursements.
Issue(s)
Whether the COA committed grave abuse of discretion in ruling that due process was not disregarded when the 2009 EME ND was issued without first issuing an Audit Observation Memorandum (AOM). Whether the COA committed grave abuse of discretion in denying PSALM's motion for relief from judgment and declaring Decision No. 2013-229 as final and executory. Whether the COA committed grave abuse of discretion in affirming the 2008 EME ND and 2009 EME ND; and whether COA Circular No. 2006-001 applies to PSALM. Whether the COA committed grave abuse of discretion in affirming the 2008 EME ND and 2009 EME ND; and whether certifications can be considered as substantial compliance with the documentary requirement under COA Circular No. 2006-001. Whether the COA committed grave abuse of discretion in affirming the 2008 EME ND and 2009 EME ND; and whether there was a violation of the equal protection clause when COA auditors allegedly failed to apply COA Circular No. 2006-001 to the NPC and TransCo. Was the principle of equal protection violated by the difference in treatment between NGAs and GOCCs? Whether the COA committed grave abuse of discretion in affirming the 2008 EME ND and 2009 EME ND; and whether the COA erred in affirming the liability of PSALM's officers and employees to settle the disallowed amounts.
Ruling
The Supreme Court found no merit in both petitions and dismissed them. The Commission on Audit's Decision No. 2013-228 and Resolution dated April 4, 2014, as well as Resolution dated November 20, 2014, were affirmed. The Court held that the officers of PSALM who approved and certified the disbursement of the 2008 and 2009 Extraordinary and Miscellaneous Expenses are solidarily liable to refund the disallowed amounts, while all the recipients are liable to refund the amounts that they individually received.
Ratio Decidendi
On the issue of due process and the non-issuance of an AOM: The Court ruled that the COA did not commit grave abuse of discretion. COA Circular No. 2009-006 (RRSA) does not mandate an AOM before a disallowance can be issued, especially when there is a clear violation of regulations and a previous similar transaction was already disallowed. The issuance of a Notice of Disallowance (ND) is sufficient notification, and PSALM was afforded ample opportunity to be heard through appeals. The essence of due process is the opportunity to be heard, which PSALM received through various stages of appeal. On the finality of COA Proper Decision No. 2013-229 and the denial of the motion for relief from judgment: The Court affirmed the COA's denial of PSALM's motion for relief. Decision No. 2013-229 had attained finality due to PSALM's failure to file an MR or petition for certiorari within the prescribed period. The alleged mistake, inadvertence, or negligence of PSALM's staff in receiving two decisions and filing an MR for only one did not constitute excusable negligence warranting relief under Rule 38 of the Revised Rules of Court. Relief is an equitable remedy granted only in exceptional circumstances, and PSALM's failure to be vigilant in monitoring its cases prevented it from availing of its legal remedies, thus rendering the decision immutable. On the applicability of COA Circular No. 2006-001 to PSALM: The Court held that COA Circular No. 2006-001 applies to PSALM. The circular was specifically issued for all GOCCs, GFIs, and their subsidiaries, without distinction. While COA Circular No. 89-300 applied to NGAs, COA Circular No. 2006-001 governs GOCCs, even those whose authority to disburse EME is derived from the General Appropriations Act (GAA). The rationale behind the stricter requirement for GOCCs is to prevent irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, which cannot be solely addressed by compliance with ceiling amounts under the GAA. On the sufficiency of certifications as substantial compliance: The Court ruled that the certifications provided by PSALM's officials cannot be considered substantial compliance with COA Circular No. 2006-001. The circular mandates receipts and/or other documents evidencing disbursements. A certification, without specific transaction details reflecting the actual payment or disbursement, does not meet this requirement. Previous rulings in Espinas and Transco were cited, emphasizing that certifications must substantiate the 'paying out of an account payable' and reflect transaction details typically found in a receipt. On the alleged violation of the equal protection clause: The Court found no violation. PSALM failed to adduce evidence that other GOCCs were allowed to use certifications when their EME was disallowed. Furthermore, the distinction in auditing rules between NGAs and GOCCs is justified by substantial distinctions in their autonomy and allocation of EME funds. NGAs' EME is appropriated by Congress, while GOCCs' EME is allocated by their own governing boards, necessitating more stringent controls for GOCCs to prevent abuses. On the liability of approving/certifying officers and recipients: The Court affirmed the solidary liability of approving and certifying officers, citing Madera v. Commission on Audit. Their liability stems from authorizing or making payments without proper documentation. Good faith is not a defense when there is a clear defiance of applicable rules and directives, as PSALM had been repeatedly reminded of COA Circular No. 2006-001. For recipients, their liability is based on solutio indebiti and unjust enrichment, as the disallowed amounts were not genuinely substantiated by services rendered or other bona fide equitable considerations.
Main Doctrine
The Commission on Audit (COA) correctly disallowed Extraordinary and Miscellaneous Expenses (EME) reimbursements of PSALM officers and employees that were not supported by receipts or other documents evidencing disbursements, as required by COA Circular No. 2006-001, and not merely by certifications. The distinction in auditing rules between National Government Agencies (NGAs) and Government-Owned or Controlled Corporations (GOCCs) does not violate the equal protection clause, as GOCCs have greater autonomy in disbursing EME, necessitating stricter audit guidelines. Furthermore, approving and certifying officers are solidarily liable for disallowed expenses, and recipients are liable to refund amounts received based on solutio indebiti and unjust enrichment, unless they can prove genuine consideration for services rendered or other bona fide equitable exceptions.