D. Commission of Audit Section 1. Qualifications; Term MISON v. COA (187 SCRA 445) FACTS: Salvador M.

. Mison, in his capacity as Commissioner of Customs. Commissioner of Customs rendered a decision on August 11, 1969, declaring illegal the seizure by elements of the Philippine Navy of the M/V "Hyojin Maru" a vessel of Japanese registry, and ordered the release of the vessel and its cargo to the claimants, Chan Chiu On and Cheung I. Return of the cargo as thus ordered was effected. Release of the vessel, however, was never effected; it sank while yet in the custody of the Bureau of Customs, and requests by the Bureau to the Philippine Navy and the CADA to refloat or salvage the ship could not be complied with for lack of funds. Chan Chiu On and Cheung I then filed a claim with the Commission of Audit for the payment of the value of the vessel. Acting thereon Mr. Rogelio B. Espiritu, Manager, Technical Service Office of the COA, denied the claim for the reasons set forth in his registered letter to the claimant's lawyer Atty. David who moved for reconsideration by letter dated February 6, 1978. Acting COA Chairman Tantuico denied the motion, in his own letter dated April 17, 1978 on the ground that it had been filed beyond the reglementary period of 30 days from the date of receipt of a copy of the subject Decision which, in consequence, had "already become final and executory." Later the Commission on Audit having been fully constituted with the appointment of the Chairman and two (2) members, Chairman Eufemio C. Domingo, acting "FOR THE COMMISSION," reconsidered the assailed decision and declared that the vessel sank while in illegal custody of the Bureau of Customs, which "should have pre-eminently taken adequate measures to preserve" it but did not; hence, he declared that "this Commission will interpose no objection" to the instant claim, subject to the usual auditing and accounting requirements." ISSUE: Whether Espiritu (Manager of the Technical Service of the COA) may validly make a decision for COA as acting chairman. HELD: NO. The "Espiritu decision" was void ab initio and cannot be ratified by the Acting COA Chairman. As manager of the COA Technical Service Office, Mr. Espiritu obviously had no power whatever to render and promulgate a decision of or for the Commission. Indeed, even the Chairman, alone, had not that power.

As clearly set out in the Constitution then in force, the power was lodged in the Commission on Audit, "composed of a Chairman and two Commissioners." It was the Commission, as a collegial body, which then as now, had the jurisdiction to "decide any case brought before it within sixty days from the date of its submission for resolution," subject to review by the Supreme Court on certiorari. The Espiritu Decision was not merely "technically invalid," as the petitioner describes it. It was substantively void ab initio, because rendered without jurisdiction. The decision of Chairman Domingo was binding as he was validly representing the Commission.

Section 2. General Function; Powers PHILIPPINE OPERATIONS, INC. v. AUDITOR (94 PHIL 868) FACTS: Petitioner Philippine Operations, Inc., entered into a barter agreement with the Respondent Bureau of Prisons whereby it agreed to deliver to the Bureau: (1) a sawmill, complete, with a diesel fuel engine, a stop saw edge and log turner, etc.; and (2) two LCMs in good turning condition, in exchange for 350,000 board feet of sawed lumber. However, the sawmill was not in good running condition and that some parts were missing but the petitioners manager agreed to reimburse the Bureau of Prisons for whatever expenses the latter may incur in putting the equipment in good running condition. Later, it became evident that it was not feasible for the Bureau of Prisons to deliver the lumber, obviously due to the delay in the installation of the sawmill. The petitioner proposed different ideas as to finally liquidate the obligations of the Bureau of Prisons however they were unsuccessful as they could not come into terms. Thus, the attorney for the petitioner filed a claim with the Auditor General. Then the Director of Prisons offered to deliver the first installment of sawed lumber after 30 days. This offer was rejected by the petitioner on the ground that the offer to deliver the lumber came too late, and it demanded that cash payment of P70,000 be paid to it, plus P35,000 for damages suffered. Upon the presentation of the claim with the Auditor General, the latter sought of the opinion of the Secretary of Justice, and this official, held that inasmuch as the contract entered into was one of barter, pure and simple, and not one of purchase and sale, and as no money consideration ever entered the minds of the parties at the time of the agreement, the demand of the petitioner for P70,000 should be denied, and that instead in view of the willingness of the Bureau of Prisons to perform its part of the obligation, the contract be carried out by the immediate delivery of the P350,000 board feet of lumber stipulated in the agreement. On the basis of this opinion, the Auditor General denied the petitioner's claim, and the latter thereafter appealed to this Court. ISSUE: Whether the Auditor Generals jurisdiction extend over private moneyed claims. HELD: NO. Commonwealth Act No. 3038 granting the Auditor General power upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a basis for civil action between private parties could not have contemplated unliquidated claims, or cases where the liability of the government or its non-liability is in issue because in these cases, the most

important questions to be determined are judicial in nature, involving the examination of evidence and the use of judicial discretion. To assume that the legislature granted this jurisdiction to an administrative officer like the Auditor General is not warranted, because it would amount to an illegal act, as a delegation of judicial power to an executive officer.

Euro-Med Laboratories, Phil, Inc. v. Province of Batangas (495 SCRA 601) FACTS: Province of Batangas purchased various Intravenous Fluids (IVF) products from the Euro-Med Laboratories, Phil., Inc., with an unpaid balance of P487,662.80. Euro-Med made several demands for defendant to pay its accountabilities, including setting up several dialogues with plaintiffs representatives, but these proved fruitless. In its answer, respondent admitted most of the allegations in the complaint, denying only those relating to the unpaid balance supposedly still due petitioner. Respondent alleged that some payments it had already made were not reflected in the computation set forth in the complaint and that it was continuously exerting genuine and earnest efforts "to find out the true and actual amount owed. Respondent filed a motion to dismiss the complaint on the ground that the primary jurisdiction over petitioners money claim was lodged with the Commission on Audit (COA). That as it did arise from a series of procurement transactions with the province, was governed by the Local Government Code provisions and COA rules and regulations on supply and property management in local governments. Respondent argued that the case called for a determination of whether these provisions and rules were complied with, and that was within the exclusive domain of COA to make. Finding the motion to be well-taken, the RTC issued on March 7, 2001 an order, dismissing petitioners complaint without prejudice to the filing of the proper money claim with the COA. ISSUE: Whether the COA and not the RTC which has primary jurisdiction to pass upon petitioners money claim against the Province of Batangas. HELD: YES. The doctrine of primary jurisdiction holds that if a case is such that its determination requires the expertise, specialized training and knowledge of an administrative body, relief must first be obtained in an administrative proceeding before resort to the courts is had even if the matter may well be within their proper jurisdiction. Such matters are not within the usual area of knowledge, experience and expertise of most judges but within the special competence of COA auditors and accountants.

Thus, it was but proper, out of fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss petitioners complaint.

Ramos v. Aquino (39 SCRA 236) FACTS: Then Provincial Fiscal of Rizal, Benjamin H. Aquino, wanted to conduct the preliminary investigation of the alleged commission of malversation through falsification of public, official and commercial documents imputed to them by the other respondent, then the Commanding General, Philippine Army, Fort Bonifacio, Rizal, Romeo Espino. It was however opposed on the ground that under the Constitution, the Auditor General, who have already approved the related vouchers used in the alleged malversation, is not only vested with the duty to examine or audit all expenditures of funds of the Government, but also to audit or investigate and "bring to the attention of the proper administrative officer expenditures of funds or property which in his opinion are irregular, unnecessary, excessive, or extravagant." It is their contention that under the above, it is incumbent on the Auditor General to determine whether criminal responsibility for the anomaly discovered in the courage of his audit or examination of the accounts lies. ISSUE: Whether the Fiscal may validly institute an investigation to determine if there is criminal liability after COA has done its part. HELD: YES. The authority of the Fiscal to investigate whether a criminal act has been committed or not in the disbursement of public funds, and finally of the Courts to try any person involved in the alleged malversation of public funds is not curtailed or in any way divested by the administrative findings of the Auditor General. To hold otherwise would be to arrogate unto the Office of the Auditor General the power which pertains to the judicial branch of the government. The Auditor General, as noted, is vested with the power to examine, audit and settle all accounts pertaining to the revenues and receipts from whatever source, and to audit, in accordance with law and administrative regulations" all expenditures of funds or property pertaining to or held in trust by the government as well as the provinces or municipalities thereof. That is one thing. The ascertainment of whether a crime committed and by whom is definitely another. The fact that petitioners' accounts and vouchers had passed in audit is not a ground for enjoining the provincial fiscal from conducting a preliminary investigation for the purpose of determining the criminal liability of petitioners for malversation. Clearly then, a finding of probable cause does not derive its veracity from the findings of the COA, but from the independent determination of the Ombudsman.

Blue Bar Coconut Philippines v. Tantuico, 163 SCRA 716 FACTS: Petitioners are all copra exporters, oil millers and desiccators referred to as end-users and as such, are levy-collectors and remitters. Then President of the Philippines issued Presidential Decree No. 232 creating a Philippine Coconut Authority. Then, the President issued Presidential Decree No. 276 establishing a coconut stabilization fund. Under this decree, the Philippine Coconut Authority, to impose levy on the sale of copra which shall be deposited with the Philippine National Bank or any
other government bank for the account of the Coconut Consumers Stabilization Fund (CCSF) as a separate trust fund which shall not form part of the general fund of the government.

In the meantime, on December 26, 1974, the President issued Presidential Decree No. 623 further amending Presidential Decree No. 232, as amended, by reducing the number and changing the composition of the PCA Governing Board to seven (7) members only. After such promulgation but before the PCA Board was formally reorganized under PD 623,
the PCA Board issued two resolutions decreasing the amount of levy and deferring the collection of the leview.

The respondent Acting Chairman of the Commission on Audit initiated a special audit of coconut end-user companies, which include herein petitioners, with respect to their Coconut Consumers Stabilization Fund levy collections and the subsidies they had received. As a result of the initial findings of the Performance Audit Office with respect only to the petitioners, respondent Acting COA Chairman directed the Chairman, the Administrator, and the Military Supervisor of PCA and the Manager of the Coconut Consumers Stabilization Fund, in various letters to them (Annexes G-2 H, I, J, L and N of petition) to collect the short levies and overpaid subsidies from the CCSF, and to apply subsidy claims to the settlement of short levies should the petitioners fail to remit the amount due. The petitioners alleged that the supposed overpayments and/or deficiencies in their remittances were due to the Acting COA Chairman's refusal to recognize the validity of the two resolutions passed by the then Governing Board of the PCA. The petitioners also question the respondents' authority to audit them.

ISSUE: Whether petitioners are outside the ambit of COAs audit power. HELD: NO. The Constitution formally embodies the long established rule that private entities who handle government funds or subsidies in trust may be examined or audited in their handling of said funds by government auditors. In view of the above considerations, we apply the principle of primary jurisdiction. In
cases involving specialized disputes, the trend has been to refer the same to an administrative agency of special competence which in this case, is COA.

It has also been the policy of the courts not to ignore or reject as incorrect the acts and determinations of administrative agencies unless there is a clear showing of arbitrary action or palpable and serious error.

NHA v. COA, 226 SCRA 55 FACTS:

Our government forged an agreement on financial cooperation with the Republic of Germany; hence a loan and Project Agreement was executed between the Republic of the

Philippines as "Borrower" and the National Housing Authority (NHA) as "Project Sponsor" on the one hand, and the Kreditanstalt Fur Weideraufbau (KFW) on the other hand, for Urban Housing Dagat-Dagatan Project II A/B. They hired the services of Engineer Brian W. Murdoch of Kinhill Pty. Ltd. (Kinhill), a foreign corporation organized under the laws of Australia. Since the project keeps on falling behind the agreed schedule of completion, the loan was extended provided that Engr. Kanhills services would also be extended. The NHA then had three supplemental contracts with KFW of Germany as well as with Engr. Kinhill from Australia. The Assistant Commissioner of the Technical Service Office of COA disallowed the supplemental contract on the basis that the The Dagat-Dagatan Project was in its finishing stage, requires simple engineering advisory services that can be undertaken by NHA or DPWH in-house technical staff or at the most a local consultant.

ISSUE: Whether the COA acted beyond its constitutionally granted powers by disallowing a duly entered contract, valid, regular, with all the formalities of law. HELD: NO. The power of the Commission on Audit to audit and examine government expenditures is enshrined in Section 2 (1), Article IX-D of the 1987 Constitution. The Constitution also granted to COA the power 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." There can be no dispute on the proposition that the continued extension of the services of Engr. Murdoch as a foreign consultant constitutes at the very least an unnecessary expense. Crystal clear from the records is that the nature of the terminal phase of the DagatDagatan project does not require the expertise of a foreign consultant.

Dingcong v. Guingona, 162 SCRA 782 (1988) FACTS: Petitioner, Atty. Praxedio P. Dingcong, was the former Acting Regional Director of Regional Office No. VI of the Bureau of Treasury in Iloilo City. On three occasions petitioner, after public bidding, contracted, admittedly on an "emergency labor basis," the services of one Rameses Layson, a private carpenter and electrician on "pakyao" basis for the renovation and improvement of the Bureau of Treasury Office, Iloilo City. When petitioner retired on 17 January 1984, among the items disallowed by the Resident Auditor was the amount of P6,574.00 from the labor contracts with Layson, by reducing the latter's daily rate from P40.00 per day to P18.00 daily. Petitioner appealed to the Chairman of the Commission on Audit, who affirmed the disallowance as being "excessive and disadvantageous to the government," but increased Layson's daily rate to P25.00 thereby reducing the total amount disallowed to P4,276.00. Despite petitioner's request for reconsideration, respondent Commission remained unmoved, hence, the instant appeal.

ISSUE: Whether the disallowances by COA are invalid for being usurpation of a management function an impairment of contract. HELD: The authority of COA extends to the accounts of all person respecting funds or properties received or held by them in an accountable capacity. However, the labor contract entered into by petitioner was on the Pakyao basis. On the other hand, the transaction was audited on a daily minimum wage rate basis. The result was that the emergency nature of the contract was over looked, a different cost of labor for casuals was imposed, the assistance of two other carpenters who worked with Layson even on Saturdays was disregarded, and Laysons additional skill as an electrician and plumber was not adequately considered. Recourse to a "pakyao" labor contract, therefore, is not necessarily disadvantageous.

Danville Maritime v. COA, 175 SCRA 701 (1989) FACTS:

The PNOC, through its Board of Directors, passed a resolution authorizing the sale by public bidding of its fourteen-year old turbine tanker named "T/T Andres Bonifacio" due to old age and the high cost of maintenance. Petitioner Danville Maritime, Inc., a Liberian corporation, was the sole bidder with a bid of US$14,158,888.88. The Disposal Committee declared the bid of petitioner to be the winning bid and directed it to transmit to the PNOC 10% of their bid which they immediately complied with. On September 20, 1988, the COA thru its State Auditor IV Tobias P. Lozada issued a memorandum to the Chairman of the Disposal Committee advising the latter to wit 1) that the proposed contract must first be submitted to COA for review before it is signed; 2) that the public bidding conducted suffers from the deficiency of lack of competition as there was only one bidder and; 3) that the alternative mode of award , i.e., negotiation with the lone bidder may not be resorted to as there has been less than two public biddings held.
COA Circular No. 86-264 as follows: b. If the first bidding fails, readvertise and conduct a second bidding. c. If the second bidding fails, a negotiated sale may be resorted to subject to the approval of the Commission on Audit.' (Sec. 4.1.4, COA Circular No. 86-264).

ISSUE: Whether the public respondent COA committed a grave abuse of discretion when it ruled that there was a failure of bidding when only one bid was submitted and subsequently ordered a re-bidding. HELD: NO. The phrase public auction or public bidding imports a sale to the highest bidder with absolute freedom for competitive bidding. Competitive bidding requires that there be at least two (2) bidders who shall compete with each other on an equal footing for winning the award. If there is only one participating bidder, the bidding is non-competitive and, hence, falls short of the requirement. There would, in fact, be no bidding at all since, obviously, the lone participant, cannot compete against himself. In the case at bar, there is no showing that the COA committed grave abuse of discretion. COA has clearly shown its position to the PNOC in its questioned letterdirective advising the latter of its misgivings as to why the award was given to the lone bidder inspite of regulations previously made known to PNOC and to top it all, why the PNOC perfunctorily rejected a much higher bid which appears to be more beneficial to the corporation. Well settled is the rule that the construction by the office charged with implementing and
enforcing the provisions of a statute should be given controlling weight. In the absence of error or abuse of power or lack of jurisdiction or grave abuse of discretion already conflicting with either the letter or the spirit of a legislative enactment creating or charging a

governmental agency with the administration and enforcement thereof, the action of the agency would not be disturbed by the judicial department.

Mamaril v. Domingo, 227 SCRA 206 (1993) FACTS:

Petitioner was formerly and Evaluator/Computer of the Land Transportation Office (LTO) at its San Pablo City Branch. In the course of the performance of his duties, he committed errors in his evaluation and computation, resulting in the under collection of registration, license and other miscellaneous fees and penalties. Petitioner availed of the Early Program under RA 6683. As a result of the decision of the COA, holding that the amount of 44,515.90 be withheld from petitioner's leave pay other than his retirement gratuity, he has not received in full the due him from his retirement. Petitioner contended that he could not be held liable on the audit disallowances because he was not an accountable officer within the meaning of Section 101 of P.D. No. 1445 (1978) since: (a) his work was purely clerical; (b) he did not come into possession of any money or property for which he is now asked to pay; and (c) he did not act in bad faith or with gross

ISSUE: Whether the petitioner is within the audit jurisdiction of COA.

HELD: YES. State audit is not limited to the auditing of the accountable officers and the settlement of
accounts, but includes accounting functions and the adoption in the audited agencies of internal controls to see to it, among other matters, that the correct fees and penalties due the government are collected. The verification of the correctness of the evaluation and computation of the fees and penalties collectible under the Land Transportation Law (R.A. No. 4136) are parts of the functions of the COA, which examines and audits revenue accounts (The Government Auditing Code of the Philippines, P.D. No. 1445, sec 60).

The Commission has authority not just over accountable officers but also over other officers who perform functions related to accounting such as verification of evaluations and computation of fees collectible, and the adoption of internal rules of control. An Evaluator/Computer, for instance, is an indispensible part of the process of assessment and collection and comes with the scope of the Commissions jurisdiction.

Sambeli v. Province of Isabela, GR No. 92279, June 18, 1992 FACTS: An agreement was entered into by and between the Province of Isabela and ECS Enterprises, herein
petitioner, for the purchase of 300 units of wheelbarrows, 837 pieces of shovels and 1 set of radio communication equipment. Delivery was made but the provincial auditor only allowed 50% of the price to be paid "pending receipt of the reply to the query to the Price Evaluation Division, COA, Technical Staff Office, Quezon City." Based on the findings of the Price Evaluation Division, COA Technical Service Office, Quezon City, the Provincial Auditor advised the Provincial Treasurer in his letter that an overprice exists. Thus, the petitioner was not paid the total price but was even asked to refund the overpayment.

Petitioner assails the ruling of the COA as invalid. It contends that the contract of sale has not been perfected between the Province of Isabela and petitioner but delivery has been made by it with the corresponding partial payment by the Province of Isabela. Thus, it is allegedly incumbent upon COA to authorize the payment of the balance because to act otherwise will constitute an impairment of contract.

ISSUE: Whether the ruling of COA is invalid as it would constitute an impairment of contract. HELD: NO.
COA is empowered to review and evaluate contracts. And, after an audit has been made, its auditors issue a certificate of settlement to each officer whose account has been audited and settled in whole or in part, stating the balances found due thereon and certified, and the charges or differences arising from the settlement by reason of disallowances, charges or suspensions.

Osmena v. COA, GR No. 98355, March 2, 1994

FACTS: The city of Cebu decided to construct a modern abattoir (slaughterhouse). The City Treasurer issued a certificate of availability of funds in the amount of P5,419,180.00, specifically for the construction of the Cebu City Abbatoir. After a public bidding H. Franco Construction Company, Inc. (HFCCI) was awarded to do the construction of the abbatoir. Sen. John H. Osmena, then Officer-In-Charge of the City of Cebu, ordered the suspension of the project and review of the contract by the COA. He also wrote HFCCI asking them for the value of their progress. Later, when HFCCI, was unable to claim the said amount, HFCCI instituted a civil action, against the City of Cebu, for recovery of investoments and damages. In its answer, the City of Cebu, while admitting having entered into a contract with HFCCI, alleged that the contract it entered into was null and void as declared by the COA in its 2nd indoresement. Therefore, whatever is due to HFCCI is to the sole liability of the officer or officers who entered into the said contract. Nevertheless, the City of Cebu, through its Mayor petitioner, Tomas R. Osmea, entered
into a compromise agreement, approved by the court, to the effect that as a full and final settlement to the claim of HFCCI, the City of Cebu shall pay the amount of ONE MILLION FIVE HUNDRED THOUSAND (P1,500,000.00) PESOS. COA then ruled that the compromise is void as this was based on a void contract.

Petitioner argues that the decision of COA invalidating the contract between the City of Cebu and HFCCI was void since it was already executed and fulfilled. Petitioner further stresses that COA has no authority to declare a contract already executed void. And since the 2nd indorsement is a nullity, it never attained finality.

ISSUE: Whether the decision of the Public Respondent as contained in the 2nd indorsement is null and void for having been made, in excess of jurisdiction or with grave abuse of discretion when it invalidated a contract already executed. HELD: NO. The commission on Audit has the power, authority and duty to examine, audit settle all accounts pertaining to revenue and receipts of and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the government, or any of its subdivisions, agencies or instrumentalities. The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor and the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and the amount necessary to cover the proposed

contract for the current year is available for expenditure on account thereof. Any contract entered into contrary to the foregoing requirements shall be VOID. Clearly then, the contract entered into by the former Mayor Duterte was void from the very beginning since the agreed cost for the project (P8,368,920.00) was way beyond the appropriated amount (P5,419,180.00) as certified by the City Treasurer. Hence, the contract was properly declared void and unenforceable in COA's 2nd Indorsement. The trial court's decision based on the compromise agreement could not have ratified a contract which is void ab initio. Consequently the settlement of the supposed obligation of the City of Cebu arising out of a void contract becomes a personal liability of petitioner who is directly responsible therefor.

Bustamante v. COA, GR No. 103309, Nov. 27, 1992 FACTS: Petitioner is the Regional Legal Counsel of the National Power Corporation (NPC) for the
Northern Luzon Regional Center covering the provinces of Rizal up to Batanes. As such he was issued a government vehicle with plate number SCC 387. Pursuant to NPC policy as reflected in the Board Resolution No. 81-95 authorizing the monthly disbursement of transportation allowance, the petitioner, in addition to the use of government vehicle, claimed his transportation allowance for the month of January 1989. On May 31, 1990, the petitioner received an Auditor's Notice to Person Liable dated April 17, 1990 from respondent Regional Auditor Martha Roxana Caburian disallowing P1,250.00 representing aforesaid transportation allowance. In a letter to the said Regional Auditor dated June 18, 1990, the petitioner moved for reconsideration of the disallowance of the claim for transportation allowance. The Regional Auditor denied petitioner's motion in a letter dated June 27, 1990. Petitioner appealed this denial to the Commission on Audit at Quezon City, which denied do due course.

ISSUE Whether such denial to give due course to the appeal of herein petitioner constitutes grave abuse of discretion amounting to lack of jurisdiction. HELD: NO. It is beyond dispute that the discretion exercised in the denial of the appeal is within the power of the Commission on Audit as it is provided in the Constitution.
Petitioners contention that the NPC policy grants transportation allowance to employees and that COA Circulars prohibiting such allowance should not apply to NPC cannot sustain for its leads to the absurd conclusion that a mere Board of Directors of a government-owned and controlled corporation, by issuing a resolution, can put to naught a constitutional provision which has been ratified by the majority of the Filipino people. If We will not sustain the Commission's power and duty to examine, audit and settle accounts pertaining to this particular expenditures or use of funds and property, owned or held in trust by this government-owned and controlled corporation, the NPC, We will be rendering inutile this Constitutional Body which has been tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and ultimately, the people's property.

Caltex v. COA, 208 SCRA 726 (1992) FACTS: This is a petition questioning the authority of the Commission on Audit (COA) in disallowing petitioners claims for reimbursement from the Oil Price Stabilization Fund (OPSF) and seeking the reversal of said Commissions decision denying its claims for recovery of financing charges (result of the inability to fully offset financing expenses from yields in money market placements) from the Fund; Petitioner contend that the COA can neither ignore these issuances (the supplemental rules to
Department of Finance Circular No. 1-87 dated February 18, 1987 which allowed the recovery of financing charges directly from the Oil Price Stabilization Fund) nor formulate its own interpretation of the laws in the light of the determination of executive agencies. The determination by the Department of Finance and the Office of Energy Affairs that financing charges are recoverable from the OPSF is entitled to great weight and consideration. The function of the COA, particularly in the matter of allowing or disallowing certain expenditures, is limited to the promulgation of accounting and auditing rules for, among others, the disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.

ISSUE: Whether the power of COA does not extend to the disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures, or use of government funds and properties, but only to the promulgation of accounting and auditing rules.

HELD: NO. Whereas under Article XI, Section 2, of the 1935 Constitution the Auditor General could not correct
irregular, unnecessary, excessive or extravagant expenditures of public funds but could only bring the matter to the attention of the proper administrative officer, under the 1987 Constitution, as also under the 1973 Constitution, the Commission on Audit can 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. Hence, since the Commission on Audit must ultimately be responsible for the enforcement of these rules and regulations, the failure to comply with these regulations can be a ground for disapproving the payment of a proposed expenditure."

Polloso v. Gangan, 335 SCRA 750 (2000) FACTS: The National Power Corporation (NAPOCOR) hired the legal service of petitioner, a private legal practitioner. The Commission on Audit (COA) disallowed the payment of his compensation, since he was hired without complying with Circular No. 86-255 which requires prior written approval by the Solicitor General as well as the Commission on Audit. Petitioner argued that the circular is unconstitutional because it restricted the practice of law. ISSUE: Whether the circular of COA poses a restriction in the practice of law. HELD: NO. The circular simply sets forth the prerequisite for the government agency in hiring a lawyer which are reasonable safeguards to prevent irregular, unnecessary, excessive and extravagant expenditures of government funds.

DBP v. COA, 231 SCRA 202 FACTS: The Philippine Government obtained an Economic Recovery Loan from the World Bank. It was intended to support the recovery of the Philippine economy. As a condition for granting the loan, the World Bank required the Philippine government to rehabilitate the Development Bank of the Philippines (DBP). The Monetary Board adopted a resolution requiring a private external auditor for the DBP. DBP Chairman Jesus Estanislao wrote the COA seeking approval of the DBPs engagement of a private external auditor in addition to the COA. Then COA Chairman Teofisto Guingona replied that the Commission will interpose no objection to the DBPs engagement of a private e xternal auditor provided that the terms for said audit are first reviewed and approved by the Commission. After learning that the DBP had signed a contract with a private auditing firm, the new COA Chairman wrote the DBP Chairman that the COA resident auditors were under instructions to disallow any payment to the private auditor. The new COA Chairman contends that the very essence of the Commission on Audit as an independent constitutional commission in the total scheme of Government, is its singular function to examine, audit, and settle all accounts pertaining to the Government, or any of its subdivisions, including governmentowned and controlled corporations.

ISSUE: Whether the Constitution vest in COA the sole and exclusive power to examine and audit government banks so as to prohibit concurrent audit by private external auditors under any circumstance? Ruling: NO. COAs power to examine and audit under the first paragraph is not declared exclusive, while its authority under the second paragraph is expressly declared exclusive. The clear and unmistakable conclusion from a reading of the entire Section 2 is that the COAs power to examine and audit is non exclusive while its authority to define the scope of its audit, promulgate auditing rules and regulations, and disallow unnecessary expenditures is exclusive.

Strategic Alliance v. Radstock Securities, GR No. 178158, December 4, 2009 FACTS: The Philippine National Construction Corp. (PNCC) (previously Construction Development Corp. Of the Philippines or CDCP) was incorporated under the Corporation Code. In 1978 and 1981, Basay Mining Corp. (later CDCP Mining Corp.), an affiliate of PNCC, obtained loans from Marubeni Corp wherein PNCC, without a board resolution authorizing the same, obliged to pay solidarily with Basay. For 20 years, PNCC consistently refused to admit liability for the Marubeni loans. However, in October 2010, PNCC passed a board resolution recognizing a P10.7 billion liability to Marubeni Corp. Three months later, Marubeni assigned its credit to Radstock for only US $2 million (or less than P100 million, in stark contrast to the P10.7 billion admitted receivable from PNCC). Radstock immediately started actions for the collection of the amount. The Trial Court issued a writ of preliminary attachment against PNCC and garnished the latters bank accounts and real properties. It denied PNCCs MTD. CA also denied PNCCs petition for certiorari. Later, PNCC and Radstock entered into a compromise agreement whereby PNCC shall pay a reduced amount of P6.185 billion instead of the total amount of the debt, which as of 2006 has ballooned to P17 billion. COA found the terms of the compromise as fair and above board. The CA also approved it. In the SC, the bone of contention is the PNCC Boards power to compromise the obligation. ISSUE: Whether the PNCC is not a government agency making it autonomous of the government and that COA has no jurisdiction over the case. HELD: NO. The dissenters position that PNCC has the power to compromise because it was incorporated under the Corporation Code and is therefore an autonomous entity and is just like any other private corporation is wrong.

PNCC is not just like any other private corporation because it is indisputably a GOCC. Neither is PNCC an autonomous entity because it is under the DTI, over which the President exercises control. As held in Felciano v. COA, the COAs jurisdiction extends not only to government agencies or instrumentalities but also to GOCCs with original charters and other GOCCs without original charters (i.e., those created under the Corporation Code but are owned and controlled by the government). Thus, PNCC is a GOCC. As such, it is a government agency to which the provisions of RAC regarding compromises apply. Therefore, it has no power to compromise the Marubeni loan. Only the Congress can do so. Since the compromise agreement was not approved by Congress, it is void.

Uy, et al v. COA, GR No. 130685, March 21, 2000 FACTS: Petitioners were among the more than sixty permanent employees of the Provincial Engineering Office of the Province of Agusan del Sur, who were dismissed from the service by then Governor Ceferino S. Paredes, Jr. when the latter assumed office, allegedly to scale down the operations of the said office. A petition for reinstatement was then filed by petitioners before the Merit Systems Protection Board (MSPB) of the Civil Service Commission alleging that Governor Paredes was motivated by political vengeance when he dismissed them. Eventually, the MSPB rendered a decision holding that the reduction in work force was not done in accordance with civil service rules and regulations, and ordering the reinstatement of petitioners. The MSPB also ordered the Provincial Government of Agusan del Sur to pay the petitioners their back salaries and other money benefits for the period that they had been out of service until their reinstatement. The Acting Provincial Treasurer refused to release petitioners remaining back salaries and other monetary benefits. A motion for reconsideration filed by the petitioners was denied by respondent COA.

ISSUE: Whether COA, in its exercise of its power to audit, can disallow the payment of back wages of illegally dismissed by the Provincial Government of Agusan del Sur which has been decreed pursuant to a final decree of the Civil Service Commission. HELD: NO. The Court ruled that the audit authority of COA is intended to prevent irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties. Payments of back wages to illegally dismissed government employees can hardly be described as irregular, unnecessary, excessive, extravagant or unconscionable. The order of COA is set aside.

Davao City Water District v. CSC and COA, GR No. 95237, September 13, 1991 Facts: Petitioners are among the more than five hundred water districts existing throughout the country formed pursuant to the provisions of Presidential Decree No. 198, as amended by Presidential Decrees Nos. 768 and 1479, otherwise known as the Provincial Water Utilities Act of 1973. It authorized the different local legislative bodies to form and create their respective water districts through a resolution they will pass subject to the guidelines, rules and regulations therein laid down. The controversy began when the COA opined that the audit of the water districts is simply an act of discharging the visitorial power vested in them by the Constitution. On the other hand, LWUA maintained that only those water districts with subsidies from the government fall within the COAs jurisdiction and only to the extent of the amount of such subsidies. The conflict between the water districts and COA is dependent on whether or not water districts are government-owned or controlled corporations with original charter. Petitioners contend that they are private corporations without original charter, hence outside the jurisdiction of respondents CSC and COA.

Issue: Whether the Local Water Districts formed and created pursuant to the provisions of Presidential Decree No. 198, as amended, are government-owned or controlled corporations with original charter thus falling under the jurisdiction of the visitorial power of the COA. Ruling: YES. PD 198 is a special law applicable only to the different water districts created pursuant thereto. Government-owned or controlled corporations are those created by special laws and not those under the Corporation Code of the Philippines. The said decree is in fact the charter of the different water districts for it clearly defines the latters primary purpose and its basic organizational set up. In other words, PD 198 is the very law which gives a water district juridical personality. The resolution of a local sanggunian is intended only to implement the provisions of said decree. Unlike a private corporation where the members of the board are elected from among the members and stockholders thereof, members of the board of a water district are appointed by the local chief executive of the local subdivision unit where such district is located.

Parreno v. COA, GR No. 162224, June 7, 2007 Facts: Parreo filed a claim before the Commission on Audit (COA) for the continuance of his pension, contesting the constitutionality of Section 27 of PD 1638 or the AFP Military Personnel Retirement and Separation Decree as amended by PD 1650, which provides that a retiree who loses his Filipino citizenship shall be removed from the retired list and consequently have his retirement benefits terminated. Citing lack of jurisdiction, COA denied the petition and advised him to file his claim with the court authorized to rule on issue of constitutionality of provisions of law. In his motion for reconsideration, petitioner argued that since his pension involves government funds, it is within COAs jurisdiction to resolve the dispute. COA dismissed his appeal, citing lack of jurisdiction. Issue: Whether COAs jurisdiction over money claims include the power to rule on the constitutionality of the laws. Ruling: NO. The Court ruled that the jurisdiction of COA over money claims defined as demands for payment of a sum of money, reimbursement, or compensation arising from law or contract due or owing to a government agency does not include the power to rule on the constitutionality of the laws.

BSP vs. COA G.R. No. 177131, June 7, 2011 Facts: The COA issued a resolution in 1999 defining its policy with respect to the audit of the Boy Scouts of the Philippine, which was created as a public corporation. For the purposes of audit supervision, the BSP shall be classified among the government corporations to be audited by employing the team audit approach. The BSP sought reconsideration of the COA Resolution in a letter signed by then BSP National President Jejomar C. Binay, saying that it is not subject to the COAs jurisdiction. Issue: Wheter the BSP is under the audit jurisdiction of COA. Held: YES. The BSP is a public corporation with juridical personality as it is called by the law creating it. Not all corporations, which are not government owned or controlled, are ipso facto to be considered private corporations as there exists another distinct class of corporations or chartered institutions which are otherwise known as "public corporations." These corporations are treated by law as agencies or instrumentalities of the government which are not subject to the tests of ownership or control and economic viability but to different criteria relating to their public purposes/interests or constitutional policies and objectives and their administrative relationship to the government or any of its Departments or Offices. Section 4. Annual Report to the President and to Congress