CASE DIGEST: Espinas vs. COMELEC

G.R. No. 198271 : April 1, 2014

ARNALDO M. ESPINAS, LILIAN N. ASPRER, AND ELEANORA R. DE JESUS, Petitioner, v. COMMISSION ON ELECTIONS, Respondent.

PERLAS-BERNABE, J.:


FACTS:

The Local Water Utilities Administration (LWUA) is a government-owned and controlled corporation (GOCC) created pursuant to Presidential Decree No. (PD) 198, as amended, otherwise known as the Provincial Water Utilities Act of 1973.

Petitioners are department managers of the LWUA who, together with 28 other LWUA officials, sought reimbursement of their extraordinary and miscellaneous expenses (EME) for the period January to December 2006. According to petitioners, the reimbursement claims were within the ceiling provided under the LWUA Calendar Year 2006 Corporate Operating Budget approved by the LWUA Board of Trustees and the Department of Budget and Management.

On April 16, 2007, the Office of the CoA Auditor, through Priscilla DG. Cruz, the Supervising Auditor assigned to the LWUA (SA Cruz), issued Audit Observation Memorandum (AOM) No. AOM-2006-27, revealing that the 31 LWUA officials were able to reimburse 16,900,705.69 in EME, including expenses for official entertainment, service awards, gifts and plaques, membership fees, and seminars/conferences. Out of the said amount, 13,110,998.26 was reimbursed only through an attached certification attesting to their claimed incurrence (certification). According to the AOM, this violated CoA Circular No. 2006-0110 dated January 3, 2006 (CoA Circular No. 2006-01), which pertinently states that the claim for reimbursement of such expenses shall be supported by receipts and/or other documents evidencing disbursements.

During the CoA Exit Conference held sometime in April 2007, LWUA management officials, including herein petitioners, manifested that they were unaware of the existence of CoA Circular No. 2006-01, particularly during the period January to December 2006.

After the post-audit of the LWUA EME account for the same period, SA Cruz issued Notice of Disallowance No. 09-001-GF(06) dated July 21, 2009, disallowing the EME reimbursement claims of the 31 LWUA officials, in the total amount of P13,110,998.26, for the reason that they were not supported by receipts and/or [other] documents evidencing disbursements as required under [Item III(3)] of [CoA Circular No. 2006-01].

Pursuant to the CoAs 2009 Revised Rules of Procedure, petitioners appealed the notice of disallowance to the CoA Cluster Director (Corporate Sector -Cluster B), contending that the certification they attached in support of their EME reimbursement claims was originally allowed under Section 397 of the Government Accounting and Auditing Manual, Volume I (GAAM - Vol. I), which is a reproduction of Item III(4) of CoA Circular No. 89-30017 dated March 21, 1989 (CoA Circular No. 89-300) viz.:

4. x x x The corresponding claim for reimbursement of such expenses shall be supported by receipts and/or other documents evidencing disbursement, if these are available, or, in lieu thereof, by a certification executed by the official concerned that the expenses sought to be reimbursed have been incurred for any of the purposes contemplated under Section 19 and other related sections of RA 6688 (or similar provision[s] in subsequent General Appropriations Acts) in relation to or by reason of his position. In the case of miscellaneous expenses incurred for an office specified in the law, such certification shall be executed solely by the head of the office.

Further, petitioners alleged that CoA Circular No. 2006-01 is violative of the equal protection clause since officials of GOCCs, such as the LWUA officials, are, among others, prohibited by virtue of the same issuance from supporting their reimbursement claims with certifications, unlike officials of the national government agencies (NGAs) who have been so permitted.

To this end, petitioners argued that the employees of NGAs and GOCCs are similarly situated and that there exists no substantial distinction between them.

Finally, petitioners submitted that CoA Circular No. 2006-01 was not duly published in the Official Gazette, or in a newspaper of general circulation and thus, unenforceable.

Petitioners appeal was denied by CoA Cluster Director IV Divinia M. Alagon. Unconvinced, petitioners elevated the ruling to the Commission Proper which affirmed Notice of Disallowance No. 09-001-GF(06) but differed from CoA Cluster Director Alagons reasoning. Dissatisfied, petitioners filed the present certiorari petition, imputing grave abuse of discretion on the part of the CoA.

ISSUE: Whether or not grave abuse of discretion attended the CoAs ruling in this case.

HELD: The petition lacks merit.

POLITICAL LAW: commission on audit


The CoAs audit power is among the constitutional mechanisms that gives life to the check-and-balance system inherent in our system of government. As an essential complement, the CoA has been vested with the exclusive authority to promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties. This is found in Section 2, Article IX-D of the 1987 Philippine Constitution which provides that:

Sec. 2. x x x.

(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties.

As an independent constitutional body conferred with such power, it reasonably follows that the CoAs interpretation of its own auditing rules and regulations, as enunciated in its decisions, should be accorded great weight and respect.

The CoA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and ultimately, the people's property. The exercise of its general audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our form of government.

It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally-created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings.

REMEDIAL LAW: grave abuse of discretion


The concept is well-entrenched: grave abuse of discretion exists when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim, and despotism. Not every error in the proceedings, or every erroneous conclusion of law or fact, constitutes grave abuse of discretion. The abuse of discretion to be qualified as grave must be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal to perform the duty or to act at all in contemplation of law.

Viewed in the foregoing light, the Court finds that the CoA did not commit any grave abuse of discretion as its affirmance of Notice of Disallowance No. 09-001-GF(06) is based on cogent legal grounds.

First off, the Court concurs with the CoAs conclusion that the certification submitted by petitioners cannot be properly considered as a supporting document within the purview of Item III(3) of CoA Circular No. 2006-01 which pertinently states that a claim for reimbursement of [EME] expenses shall be supported by receipts and/or other documents evidencing disbursements. Similar to the word receipts, the other documents pertained to under the above-stated provision is qualified by the phrase evidencing disbursements. Citing its lexicographic definition, the CoA stated that the term disbursement means to pay out commonly from a fund or to make payment in settlement of debt or account payable.

That said, it then logically follows that petitioners certification, so as to fall under the phrase other documents under Item III(3) of CoA Circular No. 2006-01, must substantiate the paying out of an account payable, or, in simple term, a disbursement. However, an examination of the sample certification attached to the petition does not, by any means, fit this description. The signatory therein merely certifies that he/she has spent, within a particular month, a certain amount for meetings, seminars, conferences, official entertainment, public relations, and the like, and that the certified amount is within the ceiling authorized under the LWUA corporate budget. Accordingly, since petitioners reimbursement claims were solely supported by this certification, the CoA properly disallowed said claims for failure to comply with CoA Circular No. 2006-01.

The CoA also correctly rejected petitioners invocation of the provisions of Section 397 of GAAM - Vol. I and CoA Circular No. 89-300 since, at the outset, such rules are applicable only to NGAs, and not to GOCCs, GFIs and their subsidiaries which are specifically governed by CoA Circular No. 2006-01.50 A perusal of CoA Circular No. 89-300, from which Section 397 of GAAM - Vol. I was merely reproduced, clearly indicates in Item II thereof, captioned Scope and Coverage, that the rules thereunder applies to appropriations authorized under the GAA of 1989 for National Government agencies that may be used for incurrence of extraordinary and miscellaneous expenses at the rates and by the offices and officials specified therein for, among others. A similar inference may be reached from a reading of Item I of CoA Circular No. 89-300, captioned as Rationale, which states that the circular was made in response to the increasing number of queries and requests for clarification as to the real import and true intent of the provisions of the GAA of 1989 authorizing the use by certain national government officials of appropriations authorized for their agencies for extraordinary and miscellaneous expenses.

Lastly, the Court upholds the CoAs finding that there exists a substantial distinction between officials of NGAs and the officials of GOCCs, GFIs and their subsidiaries which justify the peculiarity in regulation. Since the EME of GOCCs, GFIs and their subsidiaries, are, pursuant to law, allocated by their own internal governing boards, as opposed to the EME of NGAs which are appropriated in the annual GAA duly enacted by Congress, there is a perceivable rational impetus for the CoA to impose nuanced control measures to check if the EME disbursements of GOCCs, GFIs and their subsidiaries constitute irregular, unnecessary, excessive, extravagant, or unconscionable government expenditures. Case in point is the LWUA Board of Trustees which, pursuant to Section 69 of PD 198, as amended, is authorized to appropriate out of any funds of the Administration, such amounts as it may deem necessary for the operational and other expenses of the Administration including the purchase of necessary equipment. Indeed, the Court recognizes that denying GOCCs, GFIs and their subsidiaries the benefit of submitting a secondary-alternate document in support of an EME reimbursement, such as the certification discussed herein, is a CoA policy intended to address the disparity in EME disbursement autonomy. As pertinently stated in CoA Circular No. 2006-01, the consideration underlying the rules and regulations contained therein is the fact that governing boards of GOCCs/GFIs are invariably empowered to appropriate through resolutions such amounts as they deem appropriate for extraordinary and miscellaneous expenses.

Hence, in due deference to the CoAs constitutional prerogatives, the Court, absent any semblance of grave abuse of discretion in this case, respects the regulation, and consequently dismisses the petition. With these pronouncements, the Court finds it unnecessary to delve on the other ancillary issues raised by the parties in their pleadings. Notice of Disallowance No. 09-001-GF(06) dated July 21, 2009 is therefore upheld and the persons therein held liable are ordered to duly return the disallowed amount of 13,110,998.26.

DISMISSED.

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