Facts:
Development Bank of the Philippines and individual petitioners filed a petition for review on certiorari challenging two letter-decisions of the
Commission on Audit dated August 29, 1988 and May 20, 1989, and sought a temporary restraining order; the petition was resolved by this Court in an En Banc decision promulgated January 16, 2002 (G.R. No. 88435). In 1986 the Philippine government obtained from the World Bank a US$310 million Economic Recovery Loan conditioned, inter alia, on the rehabilitation of DBP and on the requirement that DBP have a private external audit in addition to the COA, a commitment embodied in the Policy Statement for DBP and implemented by
Central Bank Circular No. 1124 of December 5, 1986. Pursuant to that Circular and the loan condition, DBP sought COA concurrence on December 12, 1986, and received an initial letter of non-objection from COA Chairman Teofisto Guingona on January 20, 1987, whereupon DBP engaged Joaquin Cunanan & Co. as private external auditor and paid P487,321.14 for the 1986 audit and P529,947.00 for 1987 billings. A change in COA leadership led Chairman Eufemio Domingo to object to Circular No. 1124 as infringing COA’s constitutional powers and to direct resident auditors to disallow payments to the private auditor; on October 30, 1987 the COA Chairman issued a memorandum disallowing the payments and declaring certain DBP officers personally liable, and on August 29, 1988 and May 20, 1989 the COA chair and COA en banc respectively denied DBP’s requests and directed cessation of the private audit and restitution. DBP filed the present petition on June 14, 1989, a temporary restraining order issued June 15, 1989 enjoining COA from enforcement, the Solicitor General declined to represent COA, and the case was submitted for decision.
Issues:
Does
Section 2, Article IX-D, 1987 Constitution vest in the
Commission on Audit the sole and exclusive power to examine and audit government banks so as to prohibit concurrent audit by private external auditors under any circumstance? Does any existing statute prohibit government banks from hiring private auditors in addition to the COA? Does any existing statute expressly authorize government banks to hire private auditors in addition to the COA? If no legal impediment exists, was DBP’s hiring of a private auditor necessary and were the fees paid reasonable under the circumstances?
Ruling:
Ratio:
Doctrine: