Matute v. Auditor-General
REITERATIONFacts
The Antecedents: Petitioner Amadeo Matute entered into a contract on December 24, 1936, to supply the Government with fresh meat from January 1 to June 30, 1937, at specified prices. Due to an increase in municipal slaughterhouse fees, petitioner requested a price increase. By letter dated March 2, 1937, the Acting Purchasing Agent, with the approval of the Undersecretary of Finance, granted this request. Petitioner supplied meat from March 1 to 15, 1937, under the increased prices. The Director of Prisons issued a treasury warrant for P330.73 for this supply. Procedural History: The treasury warrant was sent to the respondent Auditor-General for countersigning, but he refused and ordered its return for cancellation. The Auditor-General alleged that the price increase was illegal and null for lack of valuable consideration, no public bidding, and failure to consult the Auditor-General, Secretary of Justice, or obtain the President's approval. The Petition: Petitioner filed a petition for mandamus to compel the Auditor-General to sign the treasury warrant.
Issue(s)
Whether the Auditor-General has the right and power to judge the merits and legality of a contract for supplies entered into by the Commonwealth. Whether the amendment of the contract, raising the price of meat, is illegal and null and void.
Ruling
The petition is denied. The Auditor-General has the discretionary power to refuse to countersign the treasury warrant as the price increase was not in accordance with law.
Ratio Decidendi
On the Auditor-General's power to judge the legality of contracts: The Court held that under Section 2, Article X of the Constitution, the Auditor-General has the right and duty to examine, audit, and settle all accounts pertaining to government revenues and expenditures. This includes the power to bring to the attention of the proper administrative officer expenditures that are irregular, unnecessary, excessive, or extravagant. Therefore, the act of countersigning a treasury warrant is not merely a ministerial duty but a discretionary power, allowing the Auditor-General to determine the legality of the expenditure before authorizing disbursement. The Court cited the admitted facts where the petitioner based his right upon a renewal of his contract, which the Auditor-General found to be irregular. On the legality of the price increase: The Court ruled that the increase in the price of meat granted by the Acting Purchasing Agent constituted a novation of the original contract. This novation was not effected in accordance with Executive Order No. 16, which requires public bidding for contracts of public service or for furnishing supplies, unless there are extraordinary reasons and prior consultation with the Auditor-General, the Secretary of Justice, and the relevant Secretary of Department, along with the President's approval. Since these requirements were not met, the disbursement of money for the increased price was not legally authorized. The Court clarified that Executive Order No. 16, as interpreted by Executive Order No. 98, applies to contracts for furnishing supplies, materials, and equipment to the Government. The Court also affirmed the President's power to issue such executive orders to ensure faithful execution of laws and prevent favoritism or anomalies.
Main Doctrine
The Auditor-General has the discretionary power to refuse to countersign a treasury warrant if the expenditure is irregular, unnecessary, excessive, or extravagant, and an increase in the price of a contract for supplies, without public bidding and proper consultation/approval as required by Executive Order No. 16, constitutes an illegal disbursement.