COMMISSION ON AUDIT

Guevarra v Gimenez 6 SCRA 813

FACTS:
In 1954, the District Engineer of Sorsogon prepared a program of work and detailed estimate for the
reconstruction of the Sorsogon Central School building. Specifications consisting of five pages were likewise
prepared. The Cost of painting was left out in the detailed estimate and specifications. The papers were
submitted to the Division Engineer in Lucena, Quezon, who returned them duly approved with an authorized
appropriation of P40,000.00 "provided that painting shall be included". Whereupon, the specification for
painting was accordingly made and appended to the specifications as page six.
In August 1954 the District Engineer advertised an invitation to bid for “furnishing of all materials, labor
and plant, for reconstruction” project. Fernando Guevarra's bid of P37,500 was declared lowest and the contract
was awarded to him. Eighty five days after completion of the project, Guevarra file with the Director of Public
Works a written claim for the payment of P4,620.00 representing cost of painting not covered by the contract.
After hearing, Secretary of Public Works and Communications denied the claim and two motion for
reconsideration were also denied. On appeal,the Auditor General also denied the claim. Guevarra appealed to
the Supreme Court pursuant to CA 327.

ISSUE:
Whether the contract for the reconstruction of the school building included the painting.

HELD:
Yes. Testimonies of the employees' should be given more weight than those of the contractors. These
government employees testified as to what transpired in the performance of their duties. The presumption is that
official duty has been regularly performed.
[Note:The main issue of the case has nothing to do with COA. However, note that, claims and
disbursements of public funds should have be coursed to COA]

Orocio v COA 213 SCRA 109

FACTS:
On accident occurred at the Malaya Power Plant of the National Power Corporation (NPC) where two
individuals suffered injury – Ernesto Pumaloy, an NPC employee, and Domingo Abodizo, a casual employee
OPLGS, the janitorial contractor of the NPC. The two injured personnel were brought to the hospital.
NPC initially advanced the amount for hospitalization expenses for the treatment of Abodizo, and set up
this as an account receivable from OPLGS deducted on a staggared basis from the latter's billing against the
NPC util the same was fully satisfied. Subsequently, OPLGS requested a refund of the total amount deducted
from their billings representing payment of the advances made by the NPC. In the light of the favorable
recommendation of the NPC legal counsel, the amount of hospitalization expenses was refunded to the
contractor OPLGS.
The Unit Auditor of the Commission on Audit disallowed the refund of the hospitalizattion expenses of
Abodizo contending that under the contract, there is no employee-employer relation between the NPC and the
OPLGS employees. Hence,NPC is not answerable for such expenses. General Counsel asked for a
reconsideration of the said disallowance denied. The COA Regional Director, herein respondent, confirmed the
disallowance. NPC General Counself submitted a second request for reconsideration and justifies that his legal
opinion is based on Sec 15-A of RA 6395 (NPC Charter) which provides that “... all legal matters shall be
handled by the General Counsel of the Corporation...”

POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA)

The agreement was ratified by the Sangguniang Panglungsod of the City and authorized the City Budget Officer of Cebu to include in Supplemental Budget No. However.000. The City of Cebu filed a Motion for Reconsideraton but was denied. is under the COA's audit power. Abodizo's employer. There can be no question of COA's competence to act on the supplemental budget for 1989 of the City of Cebu. stupidity and incompetence of the medical staff” of the Medical Center. the respondent COA disallowed the financial assistance granted to the spouses de la Cerna holding that it is not within the power of the Sangguniang to provide financial assistance. to promote economic and private interests of certain individual only. but one which necessitates the exercise of discretion. ISSUE: Whether COA committed grave abuse of discretion in disallowing the city's appropriaton of P30. authority and duty. a compromise agreement was entered into by the plaintiffs and defendant City of Cebu for the payment of the sum of P30.000 for financial assistance to the parents of the late Reynaldo de la Cerna”. as a government-owned corporation. the OPLGS.000 made conformably with the compromise agreement in the civil suit against the City? HELD: YES. The matter of allowing in audit a disbursement account is not a ministerial function. Respondent further stressed that not being a party to the compromise agreement. Hence this instant petition. audit and settle all accounts pertaining to the expenditures or uses of funds and property pertaining to the Government or any of its subdivisions. It appears that respondent COA greivously misconstrued the undertaking of Cebu City to pay P30.000 to the heirs of the deceased Reynaldo de la Cerna. To put an end to the controversy. it was not bound by it and that any money claim arising therefrom was subjected to its usual audit in the pursuance of the valid exercis and discharge of its constitutional power. His parents claimed that Reynaldo would not have died were it not for the “ineptitude. agencies or instrumentalities. The NPC. admitted that the incident was purely accidental and that there is no showing whatsoever in the accident report of any negligence on the part of the NPC or its employees. irresponsibility. Besides. gross negligence. The parents subsequently instituted in the RTC an action for recovery of damages which the City of Cebu was impleaded as defendant on the theory that as employer of the alleged negligent doctors. either on general welfare clause or humanitarian grounds.ISSUE: Whether the disbursement on the basis of the legal opinion of the legal counsel of the NPC (quasi- judicial function) is within the scope of the auditing power of the COA? HELD: The Constitution grants the COA the power. The COA should not be bound by the opinion of the legal counself of said agency or instrumentality which may have been the basis for the questioned disbursements. it is vicariously responsible for the latters' negligence. authority and duty to examine. Osmena v COA 238 SCRA 363 FACTS: Reynaldo de la Cerna was stabbed and was rushed to Cebu City Medical Center but died in the same day due to severe loss of blood. including government-owned or controlled corporations. It was construed as intended only to promote the POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . otherwise it would become a toothless tiger and its auditing functions would be a meaningless and futile exercise. 6 of the Ciy for the year 1989 the amount of P30.

893. IX D.20 exists out of the total price of P761. and 1 set of radio communication equipment. Hence this instant petition. Petitioner assails the ruling of the COA as not valid. The petitioner moved for reconsideration of the disallowance of the claim for transportation allowance which was denied. . for being highly irregular or unnecessary. unnecessary excessive. Provincial Auditor formally forwarded the matter with the Regional Director who formally endorsed the stand. it is allegedly incumbent upon COA to authorize the payment of the balance because to act otherwise will constitute an impairment of contract. including those for the prevention and disallowance of irregular. 81-95 authorizing the monthly disbursement of transportation allowance. 1990 from respondent Regional Auditor Martha Roxana Caburian disallowing P1. the Provincial Auditor advised the Provincial Treasurer that an overpriced in the total amount of P619. . excessive or extravagant expenditures or uses of such funds and property should be prevented.20 offered by ECS Enterprises or an overpayment of P195. Based on the finding of the Price Evaluation Division – COA Technical Services Office.00 representing aforesaid transportation allowance. It recommended that the future claim of ECS Enterprises be withheld. and promulgate accounting and auditing rules and regulations.250. the petitioner. it behooves the Commission on Audit to put a stop thereto. As such he was issued a government vehicle with plate number SCC 387. Judicial compromise is conclusive and binding on all the parties. claimed his transportation allowance for the month of January 1989. 1990. extravagant or unconscionable expenditures or use of government funds and properties. On May 31. It contends that the contract of sale has not only 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. (Art. The respondent is well aware that the appropriation was a part of the package agreed upon by all parties in a civil case for the amicable settlement of the controversy. POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . 2 (2) 1987 Constitution of the Philippines) Bustamante v COA 216 SCRA 134 FACTS: Petitioner is the Regional Legal Counsel of National Power Corporation (NPC). ECS appealed the decision but was denied for lack of merit. offends the sovereign people's will. 837 pieces of shovels.10. the petitioner received an Auditor's Notice to Person Liable dated April 17. No less than the Constitution has ordained that the COA shall have exclusive authority to define the scope of its audit and examination. Pursuant to NPC policy as reflected in the Board Resolution No. unnecessary. Thus. or scandalously excessive or extravagant. . On the proposition that improper or wasteful spending of public funds or immoral use of government property. Sec. Sambeli v Province of Isabela 210 SCRA 80 FACTS: An agreement was entered into by and between the City of Isabela and ECS Enterprise for the purchase of 300 units of wheelbarrows.042.private welfare and interest of the de la Cerna family. the Commission on Audit adheres to the policy that government funds and property should be fully protected and conserved and that irregular. establish the techniques and methods required therefor. in addition to the use of government vehicle. ISSUE: Whether the ruling of COA is invalid so far as it will constitute impairment of contracts? HELD: In the exercises of the regulatory power vested upon it by the Constitution.077.

the charge was dropped by COA. Saligumba now wants the Supreme Court of review the COA decision. owned or held in trust by this government-owned and controlled corporation. The charge was that the respondent raped Editha Saligumba on several occasions. and ultimately. among others. Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. or in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility. in the Auditor's Office of Misamis Occidental. audit and settle accounts pertaining to this particular expenditures or use of funds and property. can put to naught a constitutional provision which has been ratified by the majority of the Filipino people. Hence this petition. and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 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. 75-6) ISSUE: Whether such denial to give due course to the appeal of herein petitioner constitutes grave abuse of discretion amounting to lack of jurisdiction? Whether NPC takes an exception from such coverage of the said circular contending that such circular did not mention NPC as one of the corporations/offices covered by it. Saligumba v COA 117 SCRA 669 FACTS: On the basis of the sworn complaint of Editha Saligumba. It is very patent that the circular is addressed. We likewise cannot sustain petitioner's contention that the Commission. Our power to review COA decisions refers to money matters and not to administrative cases involving the discipline of its personnel. She insists that the decision of the COA is contrary to the evidence and the same time raises factual issues. If We will not sustain the Commission's power and duty to examine. the NPC being held under such category of corporations. the NPC. POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . to managing heads of Government- owned or Controlled Corporations. the COA instituted the administrative case against Leonardo Estella. in the exercise of its power granted by the Constitution. the people's property. Auditing Examiner III. NO. usurped the statutory functions of the NPC Board of Directors for its leads to the absurd conclusion that a mere Board of Directors of a government-owned and controlled corporation. ISSUE: Whether the action will prosper? HELD: The petition has to be dismissed for the following reasons: 1. Petitioner appealed this denial to the Commission on Audit which denied do due course. The petitioner takes exception from the coverage of said circular contending that such circular did not mention the NPC as one of the corporations/offices covered by it ( COA Circular No. by issuing a resolution. HELD: NO. For insufficiency of evidence.

2008) FACTS: Petitioners are officials of the Local Water Utilities Administration (LWUA) and designated members of the Interim Board of Directors of the San Fernando Water District (SFWD). the Constitution specifically vests in the COA the authority to determine whether government entities comply with laws and regulations in disbursing government funds. Our power to review is limited to legal issues. 954073 in relation to Section 13 of Presidential Decree (PD) No. EME. 198 as amended. Christmas Bonus. Citing Section 2. Pursuant to the said Board Resolutions. the DBM. Petitioner were directed to refund the benefits and allowances subject to the disallowance. 39. Pampanga audited the financial accounts of SFWD for the period covering January 1. These Board Resolutions authorized the Board of Directors of SFWD to receive reimbursable allowances in the form of Representation and Transportation Allowance (RATA). 313 and 39 are consistent with Section 13 of PD No. Rice Allowance. a Special Audit Team of COA Regional Office No. 2. Medical and Dental Benefits. POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . 1996. 39. prohibiting petitioners' entitlement to RATA. de Jesus [Catbalogan Water District] v. 1996. as amended by Resolution No. Article IX of the 1987 Constitution the Court declared that it is the mandate of the COA to audit all government agencies. Whether Sec 13. Christmas Bonus. On June 30. as amended. 162 and 163 of the Government Accounting and Auditing Manual (GAAM) and to Civil Service Commission (CSC) Resolution No. 313. COA. The Regional Director affirmed the disallowance. in Rodolfo S. the LWUA Board of Trustees issued Board Resolution No. Series of 1996 respectively. Whether respondent has the jurisdiction to motu proprio declare LWUA Board Resolution No. PD 198. Indeed. 1995. COA declared that the subject bonuses and allowances received by petitioners constituted additional compensation or remuneration. and to disallow illegal or irregular disbursements of government funds. Hence this instant petition. Even assuming that We have jurisdiction to review decisions on administrative matters as mentioned above. 1994 to July 15. We can not do so on factual issues. Petitioners' motion for reconsideration was denied. and Extraordinary & Miscellaneous Expense (EME). Uniform Allowance. on matters pertaining to the compensation and "other benefits" of the Directors of the LWD. to bbe totally in conflict with Sec. ISSUE: 1. Rice Allowance. This is allegedly the function of the courts. S. This independent constitutional body is tasked to be vigilant and conscientious in safeguarding the proper use of the government's. 2. 198. the Court upheld the authority and jurisdiction of the COA to rule on the legality of the disbursement of government funds by a water district and declared that such power does not conflict with the jurisdiction of the courts. Series of 1995 and Board Resolution No. Petitioners contend that the COA lacks jurisdiction to declare whether or not LWUA Board Resolution Nos. III at San Fernando. Petitioners elevated the matter to COA. and ultimately the people's. 313. including government-owned and controlled corporations with original charters. petitioners received EME. HELD: The Court has already settled this issue in a myriad of cases. property. On December 4. Subdivision D. 13 of PD No. Travel Allowance. 1997. Particularly. 1995 and February 12 1996. Bonuses and Other Benefits and Allowances. 198 (Provincial Water Utilities Act of 1973) as amended. and Productivity Incentive Bonus. Rebecca Barbo v Commission on Audit (October 10. and Productivity Bonus from SFWD during the calendar years starting 1994 until 1996. as amended. The COA Special Audit Team disallowed the payment of the above-mentioned benefits and allowances received by petitioners after the same were found to be excessive and contrary to Sections 228. and the LWUA. S.

Accordingly. 1989. 19 applied to PAL as a government agency at the time. 1127 of the Commission on Audit (COA) dated January 5. as circularized by COA Office Memorandum No. to define the scope of its audit and examination. 88-565. reiterating its reasons contained in an earlier letter. enjoin and prevent COA from enforcing or in any way implementing Department Order No. 19. and promulgate accounting and auditing rules. 1989 advice. Philippine Air Lines v COA 245 SCRA39 FACTS: In this special civil action for certiorari and prohibition. s. considering that existing regulations require government-owned or controlled corporations and other agencies of government to procure their petroleum product requirements from PETRON Corporation. Article IX-D of the 1987 Constitution with the "exclusive authority. annul end reverse Decision No. and bonuses to members of the board of Water Districts. PAL having ceased to be a government-owned or controlled corporation. EME. COA wrote PAL a letter stating “It has come to our attention that PAL international fuel supply contracts are expiring this August 31. On August 17. At the time of the filing of the petition on February 8. s. (PAL) seeks to review. COA Decision No. for preferring to bid out and secure its fuel supply from more than one supplier and for its contention that Department Order No. establish the techniques and methods required therefor. The final appeal for reconsideration however it was denied. it nonetheless gravely abused its discretion in not exempting PAL therefrom. a government corporation. the question raised in this petition has clearly become moot and academic. PAL adopted a system of bidding out its fuel requirements under a multiple supplier set-up whereby PAL awarded to the lowest bidder sixty percent (60%) of its fuel requirements and to the second lowest bidder the remaining forty percent(40%). Hence this assailed decision. 1989. PAL would have obtained the relief sought in the instant petition. subject to the limitations in this Article. is no longer under the audit jurisdiction of the COA.. should not apply to PAL. a water district is a government-owned and controlled corporation with a special charter since it is created pursuant to a special law. 1990 and to prohibit. you are advised to desist from bidding the company's fuel supply contracts. 498 and Memorandum No. 19. petitioner Philippine Airlines. 1974 of the then Department of General Services as implemented by COA Circular No. In this connection. provided it matched the price of the lowest bidder. ISSUE: Whether the Commission on Audit committed grave abuse of discretion amount to lack or excess of jurisdiction in holding that Department Order No. PAL's shares of stock were bidded out earlier this year. principally engaged in the air transport business. For although COA was correct in ruling that Department Order No. majority of its shares of stock was owned by the Government Service Insurance System (GSIS).] Had it not been for this supervening event. resulting in the acquisition by PR Holdings. Anent the second issue. reliable and cost-efficient supply of fuel. and regulations POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . 1990. 78-84. 1974. To assure itself of continuous. 19. of the defunct department of general services applies to PAL? HELD: [the Court is compelled to dismiss the petition pursuant to the government's privitization program. a private corporation. It is undeniable that PD 198 expressly prohibits the grant of RATA. 490. both domestic and international.” PAL sought reconsideration of the August 17. The COA is clothed under Section 2(2). Inc. 1127 required PAL to purchase its fuel requirements solely from Petron Corporation (Petron). of 67% PAL's outstanding stocks. Memorandum No. Presidential Decree (PD) 198. PAL is a domestic corporation organized and existing under the Philippine laws.

To compel it to do so would amount to a grave abuse of discretion on its part as this might well lead to irregular. PETRONAS and WESTMONT. The reasons given by PAL for seeking exemption from the operation of Department Order No. Inc. the Philippine government acquired ESSO through the PNOC. Its multiple supplier set-up was designed precisely to meet every contingency that might disrupt its fuel supply. careful planning and sound business judgment on the part of PAL. enables COA to adopt as its own. to our mind. Petitioners claims. 1989. Aquino promulgated Proclamation No. the Government Corporate Monitoring and Coordinating Committee (GCMCC) recommended a 100% privatization of PETRON. or (2) when all the offers are non-complying or unacceptable. and 1990 to 1991. PETRON helped alleviate the energy crises that visited the country from 1973 to 1974. 1986. In 1973. and Mobil Petroleum Company. Inc. President Corazon C. among others. the government aimed to have a buffer against the vagaries of oil prices in the international market. contend that there were only three bidders. 19 of giving preference to government sources in the filling of the needs of the government for supplies. It may also expand the coverage thereof to agencies or instrumentalities under its audit jurisdiction. POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . Citing Section V-2-a of COA Circular No. for PAL to rely solely on a single supplier would indeed be impracticable. 1993." Implicit in the Proclamation is the need to raise revenue for the Government and the ideal of leaving business to the private sector. ESSO became a wholly-owned company of the government under the corporate name PETRON and as a subsidiary of PNOC. they argue that where only one bidder qualifies. PAL's bidding requirement conformed to the accepted policy of the government to subject every transaction/contract to public bidding in order to protect public interest by giving the public the best possible advantages thru open competition and to avoid or preclude suspicion of favoritism and anomalies in the execution of public contracts. Bagatsing v Committee on Privitization 246 SCRA 334 FACTS: PETRON was originally registered with the Securities and Exchange Commission (SEC) in 1966 under the corporate name "Esso Philippines. Inc. there is a failure of bidding when: 1) there is only one offeror. They far outweigh the policy enunciated in Department Order No. 1979 to 1980. Indeed. As a business operation heavily dependent on fuel supply. In the case at bench. Under said COA Circular. that there was a failed bidding. there is a failure of public auction. 19 were. and Creating the Committee on Privatization and the Asset Privatization Trust. One of them. The Proclamation is entitled "Proclaiming and Launching a Program for the Expeditious Disposition and Privatization of Certain Government Corporations and/or the Assets thereof. failed to pre- qualify. without the necessity of repromulgation. submitted a bid lower than the floor price while a second. there were three offerors: SAUDI ARAMCO. 50 in the exercise of her legislative power under the Freedom Constitution. Thus. It was felt that PETRON can serve as a counterfoil against price manipulation that might go unchecked if all the oil companies were foreign-owned. It bespoke of foresight. The Government can then concentrate on the delivery of basic services and the performance of vital public functions. or uses of government funds and properties. In acquiring PETRON." The authority granted under this constitutional provision. at the height of the world-wide oil crisis brought about by the Middle East conflicts. 89-296 dated January 27. PETRONAS. excessive. already existing rules and regulations. being broad and comprehensive enough. On March 25. unnecessary.including those for the prevention and disallowance of irregular." (ESSO) as a subsidiary of Esso Eastern. meritorious. extravagant or unconscionable expenditures. simply by reiteration or by reference. excessive or unconscionable expenditures. the very evil sought to be avoided in the creation of the COA. On December 8.

had upheld the validity and legality of the questioned bidding. The COA itself. To constitute a failed bidding under the COA Circular. the agency that adopted the rules on bidding procedure to be followed by government offices and corporations. While two offerors were disqualified. PETRONAS for submitting a bid below the floor price and WESTMONT for technical reasons. without distinction as to whether they were disqualified. But the COA Circular does not speak of accepted bids but of offerors. Petitioners urge that in effect there was only one bidder and that it can not be said that there was a competition on "an equal footing". all the offerors must be disqualified. The interpretation of an agency of its own rules should be given more weight than the interpretation by that agency of the law it is merely tasked to administer. POLITICAL LAW REWIER: CONSTITUTIONAL COMMISSION (COA) . not all the offerors were disqualified.