TESDA v. COA (G.R. No. 204869; March 11, 2014)


FACTS: The TESDA audit team discovered that for the calendar years 2004-2007, TESDA paid Extraordinary and Miscellaneous Expenses (EME) twice each year to its officials from two sources: (1) the General Fund for locally-funded projects and (2) the Technical Education and Skills Development Project (TESDP) Fund for foreign-assisted projects. Payment of EME was authorized under the General Provisions of the 2004-2007 General Appropriations Acts (GAAs) subject to certain conditions.

The audit team disallowed the payment of EME amounting to P5,498,706.60 for being in excess of the amount allowed in the 2004-2007 GAAs. It was further discovered that EME were disbursed to TESDA officials whose positions were not of equivalent ranks as authorized by the Department of Budget and Management.

TESDA, through Director-General Augusto Boboy Syjuco, Jr., appealed and argued that the 2004-2007 GAAs and the Government Accounting and Auditing Manual allowed the grant of EME from both the General Fund and the TESDP Fund provided the legal ceiling was not exceeded for each fund. TESDA argued further that the General Fund and the TESDP Fund are distinct from each other, and TESDA officials designated as project officers concurrently with their regular functions were entitled to separate EME from both funds. The COA denied the appeal for lack of merit prompting TESDA, through its Director-General to file a petition for review with COA. The same was denied. The COA ruled that failure of TESDA officials to conform to the 2004-2007 GAAs negated their claim of good faith. Hence this petition for certiorari with prayer for issuance of temporary restraining order or writ of preliminary injunction to annul COA decision.

ISSUE: Did the COA properly disallow the payment of excessive EME by TESDA?
Should the TESDA officials refund the excess EME granted to them?

HELD: "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law."
COA did not act with grave abuse of discretion when it disallowed the disbursement of EME to TESDA officials for being excessive and unauthorized by law. Provisions in the GAA are clear in stating that the EME shall not exceed the amount fixed therein. Those entitled to claim EME not exceeding the amount provided in the GAA are as follows: (1) the officials named in the GAA, (2) the officers of equivalent rank as may be authorized by the DBM, (3) and the offices under them. However, TESDA had a different interpretation of the law. It contends that there was no prohibition under the 2004-2007 GAAs regarding the additional EME chargeable against TESDP Fund. This argument deserves scant consideration. It is worth noting that TESDA, an instrumentality of the government established under the TESDA Act of 1994, is accorded with budget for its implementation which is included in its annual GAA. The TESDP Fund, which is being sourced from the Treasury, belongs to the government. The Constitution provides that, o money shall be paid out of the Treasury except in pursuance of an appropriation made by law.No law was pointed out by TESDA authorizing it to grant additional reimbursement for EME from the TESDP Fund, contrary to the explicit requirement in the Constitution and the law.

The Director-General blatant violation of the clear provisions of the Constitution, the 2004-2007 GAAs and the COA circulars is equivalent to gross negligence amounting to bad faith. Hence, he is required to refund the EME he received from the TESDP Fund for himself. TESDA officials, on the other hand, who had no participation in the approval of the excessive EME acted in good faith and they need not refund the excess EME they received. COA AFFIRMED.