G.R. No. 117250 - Sandel vs. Court of Appeals

On 26 October 1982, the Commission on Audit (COA) issued Circular No. 82-195, lifting the system of pre-audit of government financial transactions except for certain cases.
The circular reemphasized the state policy that all government resources must be managed, expended, or utilized following laws and regulations to avoid loss or wastage.
The circular further stated that responsibility for faithful adherence to policy lies with the chief or head of the concerned government agency.
The lifting aimed to expedite government transactions without compromising their integrity.

After the 1986 revolution, serious irregularities and anomalies in government financial transactions were discovered.
Consequently, on 31 March 1986, COA issued Circular No. 86-257 reinstating selective pre-audit for certain government transactions as a temporary remedy.

With political stabilization, COA issued Circular No. 89-299 lifting again the pre-audit on national government agencies (NGAs) and government-owned or controlled corporations (GOCCs).
The circular's rationale included reaffirming fiscal responsibility resides in management and improving efficiency by reducing bureaucratic red tape.
It mandated government agencies to install and maintain adequate internal control systems under agency heads’ responsibility.
Pre-audit activities retained by COA were no longer prerequisites for project implementation or payment processes.
The COA shifted focus to post-audit of financial accounts and evaluation of fiscal controls.
Local government units (LGUs) were initially excluded from Circular No. 89-299’s coverage.

COA Circulars No. 94-006 (1994) and No. 95-006 (1995) clarified and expanded lifting of pre-audit activities to include NGAs, GOCCs, and LGUs.
Remaining audit activities by COA auditors ceased being prerequisites to project implementations, payments, or contract finalizations.

Circular No. 89-299, as amended, allowed COA to reinstitute pre-audit when internal control systems were inadequate.
Example: On 18 May 2009, COA issued Circular No. 2009-002, reinstating selective pre-audit due to rising irregular, wasteful disbursements.
On 22 July 2011, COA issued Circular No. 2011-002 lifting the pre-audit again, citing heightened vigilance of government agencies in safeguarding resources.

Petitioner Gualberto J. dela Llana wrote COA on 3 May 2006 regarding the Senate Committee recommendation for internal pre-audit service within the Department of Agriculture.
COA replied on 18 July 2006 referencing Circular No. 89-299 and Administrative Order No. 278 (1992) promoting internal audit services.
Petitioner filed a Petition for Certiorari on 15 January 2008 challenging COA Circular No. 89-299, arguing that pre-audit is a constitutional mandate under Section 2, Article IX-D of the 1987 Constitution.
He cited specific irregularities such as the P728-million fertilizer fund scam and anomalies in the Commission on Higher Education projects, blaming the lack of pre-audit for these abuses.

Respondents (COA Chairperson, Executive Secretary, National Treasurer) moved to dismiss the petition, arguing:

The petition improperly invoked certiorari as COA circulars are not judicial or quasi-judicial decisions.
There was no grave abuse of discretion.
The petition lacked certain procedural requisites like material dates and a certified copy of the circular.

Whether a pre-audit by COA is a mandatory constitutional duty which cannot be lifted by circular.
Whether certiorari is the appropriate remedy to challenge Circular No. 89-299.

Whether the petition for certiorari is a proper remedy to challenge COA Circular No. 89-299.

Whether the COA has the constitutional duty to conduct pre-audit on all government transactions or whether COA may lift pre-audit by issuing circulars.

Whether the lifting of pre-audit resulted in the dissipation of public funds and irregularities that violate constitutional mandates.