G.R. No. 193494 - Lui Enterprises, Inc. vs. Zuellig Pharma Corp.

In November 2004 and July 2005, LBP contracted MSA Academic Advancement Institute to conduct a five‐day refresher course for its bank officers.
The course was designed to enhance managerial, verbal, and analytical skills among officers holding positions at Pay Grade 9 (Career Executive Service positions) and above.
The training was initiated as a response to the Civil Service Commission’s policy on temporary appointments under CSC MC No. 20, which risked depriving LBP of competent personnel due to eligibility constraints.
The refresher course served a dual purpose:

To improve the officers’ performance and productivity in performing their official duties.
To prepare officers, especially those on temporary status or facing eligibility issues, for the unified Career Service Executive Eligibility/Management Aptitude Test Battery (CSEE/MATB) examination.

Out of the 192 participants in the July 2005 refresher course, 51 officers had previously attended the course and, having failed the November 2004 CSEE/MATB examination, were allowed a second chance.
The program was held in several venues—Metro Manila, Cebu City, and Davao City—with clearly itemized expenses including refresher course fees and travel allowances (covering board, lodging, and related expenses).

On 7 September 2005, LBP’s Supervising Auditor issued an Audit Observations Memorandum (AOM) which:

Acknowledged that the refresher course was meant for professional advancement but expressed concern over the additional course taken by the 51 officers.
Recommended the disallowance of seminar/training expenses amounting to P341,769.87 for the repeated attendance and further urged that travel expenses should be treated as personal, thereby necessitating a refund.

In response, the head of LBP’s HR Development Department (HRDD) justified the second training run by noting changes in the unified CSEE/MATB examination syllabus and emphasizing the necessity of preparing officers adequately for the new examination system.
On 16 January 2007, the COA Legal and Adjudication Office-Corporate (COA LAO-C) issued a Notice of Disallowance (ND No. LBP-001-(2005)) that disallowed:

All payments made to MSA (totalling P1,778,100.51) for the refresher course fees for both batches (122 officers in November 2004 and 192 officers in July 2005).
The travel expenses claimed by officers from various field units, totaling P98,562.00.

LBP’s filing of a petition for review and an appeal memorandum with the COA seeking reversal or modification of the disallowance.
The COA LAO-C Decision dated 4 December 2008 denying the petition on the ground that the expenses were considered an undue privilege and unwarranted government expenditure.
The COA proper’s Decision on 27 February 2012 and a later Resolution dated 4 April 2014 which affirmed the disallowance.
Ultimately, LBP filed a petition for certiorari challenging these rulings before the Supreme Court.

LBP’s justification rested on the need to address the adverse effects of CSC policies on temporary appointments and to ensure a competent and stable workforce.
The refresher course was not merely for personal enhancement but also for reinforcing professional skills and eligibility required for career advancement and job security in government service.
Documentation and memoranda indicate that the refresher course was seen as integral to LBP’s broader mandate to develop and retain a highly competent pool of officers.

Whether the COA committed grave abuse of discretion in disallowing the expenses incurred by LBP for:

Whether the refresher course should be considered a legitimate expense in view of LBP’s mandate to develop its personnel and to comply with CSC policies on temporary appointments.

Whether the disallowance, which treated the refresher course expenses as unnecessary or personal benefits, was supported by the relevant provisions of the Administrative Code (E.O. 292), COA Circular No. 85-55-A, and other guiding rules.