Facts:

The case involves Minerva P. Franco, the Executive Director of the Product Development and Design Center of the Philippines (PDDCP), as the petitioner against the Commission on Audit (COA) and the Secretary of the Department of Budget and Management (DBM) as respondents. The events leading to the case began in December 1990 when Franco granted incentive awards to PDDCP officers and employees, which included Performance Awards amounting to P140,900.00 and Loyalty Awards totaling P379,200.00, culminating in a total of P520,100.00. However, the disbursement of these funds was suspended by State Auditor Lourdes S. de la Cruz due to the lack of authority from the DBM to utilize PDDCP's savings for these payments and the absence of approval from the Civil Service Commission (CSC) regarding the proposed guidelines for the awards.

In her September 2, 1991 letter, State Auditor de la Cruz cited various legal provisions that required prior approval from the DBM for the use of sa...

Facts:

1. Background of the Case:

   • Petitioner Minerva P. Franco, Executive Director of the Product Development and Design Center of the Philippines (PDDCP), granted incentive awards to PDDCP officers and employees in December 1990. The awards included Performance Awards (P140,900.00) and Loyalty Awards (P379,200.00), totaling P520,100.00.

2. Suspension of Disbursement:

   • State Auditor Lourdes S. de la Cruz suspended the disbursement of the loyalty awards due to:
     • Lack of authority from the Department of Budget and Management (DBM) to use PDDCP savings for the payment of incentive awards.
     • Lack of approval from the Civil Service Commission (CSC) for the proposed guidelines for the grant of the awards.

3. Efforts to Secure Approval:

   • Petitioner wrote to DBM Secretary Guillermo N. Carague on September 20, 1991, requesting authority to use PDDCP savings for the payment of the awards.
   • Petitioner also wrote to CSC Chairman Patricia A. Sto. Tomas on September 23, 1991, seeking approval of the guidelines for the grant of the awards.
   • The DBM did not respond to petitioner’s letters, while the CSC opined that the grant of incentive awards was in order and did not require CSC approval since the guidelines were implemented in 1990, prior to the effectivity of the Omnibus Rules Implementing Book V of Executive Order No. 292.

4. Partial Allowance and Disallowance:

   • State Auditor de la Cruz allowed the disbursement of P140,900.00 for performance awards but disallowed P379,200.00 for loyalty awards due to the absence of DBM authority.

5. COA Decision:

   • The Commission on Audit (COA) affirmed the disallowance, citing the lack of DBM authority and CSC approval as grounds.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Requirement of DBM Authority:

   • Under Section 49 of Book VI of Executive Order No. 292, prior authority from the DBM is required to use savings for the payment of incentive awards.

2. Procedural Prudence:

   • The COA should have awaited the DBM’s action on PDDCP’s request before disallowing the disbursement, as the DBM could have granted the authority.

3. Remedy for Inaction:

   • The proper remedy for the DBM’s inaction was to compel it to act on the request, rather than disallowing the disbursement outright.

4. Partial Disallowance:

   • The COA’s decision to allow the performance awards while disallowing the loyalty awards was not explained in the record, highlighting the need for consistency in audit decisions.