Title
Chozas vs. Commission on Audit
Case
G.R. No. 226319
Decision Date
Oct 8, 2019
BulSU officials and employees challenged COA's disallowance of an Accomplishment Incentive Award (AIA) for lack of legal basis. SC upheld COA, ruling AIA unlawful; recipients must refund amounts received.
university
disallowance
return of amounts received

Case Summary (G.R. No. 226319)

Factual Background: The BulSU Incentive and the COA Notices of Disallowance

The Board of Regents (BoR) of BulSU adopted Resolution No. 39, Series of 2012, authorizing the grant of an Accomplishment Incentive Award to BulSU officials, faculty members, and non-academic personnel as recognition for efforts and achievements in sustaining BulSU’s program of excellence in education, sports, and culture.

Pursuant to the resolution, BulSU distributed one hundred sixty-four (164) Disbursement Vouchers for Special Trust Fund (STF), aggregating P37,876,296.57, to various BulSU regular employees, part-time faculty, and personnel by job order/contract. After post-audit, COA auditors issued ND Nos. 13-001-164(12) to 13-042-164(12) dated March 12, 2013, disallowing payment of the incentive award in the total amount of P37,876,296.57. COA found the award irregular, allegedly bereft of legal basis, and inconsistent with Article IX-B, Section 8 of the 1987 Constitution, R.A. No. 6758, and other related rules, as reiterated under COA Circular No. 2013-003.

Administrative Appeals Before COA Regional Office

Aggrieved, the petitioners-officials and petitioners-employees pursued separate appeals before COA Regional Office No. III, San Fernando, Pampanga, which were consolidated. On February 28, 2014, the Regional Director upheld the NDs. The Regional Director reasoned that the Accomplishment Incentive Award could not be treated as part of the “programs/projects” contemplated by Section 4(d) of R.A. No. 8292 (the Higher Education Modernization Act of 1997). The Regional Director also found that the BoR violated Sub-item 4.5 of DBM Circular No. 16 dated November 26, 1998, by granting the incentives without a prior Administrative Order from the Office of the President. The Regional Director ordered the approving officers and all recipients to return the disallowed benefits.

COA Decisions: June 6, 2016 and September 27, 2017

On March 21, 2014, the petitioners-employees filed a Petition for Review before COA. On May 13, 2014, the petitioners-officials filed a similar Petition for Review. COA then rendered Decision No. 2016-096 on June 6, 2016, upholding the NDs and affirming the disallowance. COA held that Section 4(d) of R.A. No. 8292 limits the STF to expenditures for the basic and primary objectives of state universities and colleges to attain quality education. Since the Accomplishment Incentive Award was not considered part of BulSU’s academic program, COA declared the petitioners-employees and several BulSU officials liable to refund the illegal disbursement. The decision included a list of individuals and their participation, including the agency heads, approving officers, budget and accounting personnel, and the recipients.

Separately, on September 27, 2017, COA issued Decision No. 2017-326 dismissing the petitioners-officials’ Petition for Review for being filed out of time. COA observed that the petition for review was filed on May 13, 2014, or after 231 days from the time the petitioners-officials received the NDs. COA declared that the Regional Director’s February 28, 2014 decision had attained finality. COA further stated that the petition also failed on the merits because the incentive award was allegedly granted in contravention of applicable rules.

Court Petitions and Consolidation

The petitioners-employees filed a Petition for Certiorari before the Court under Rule 64, in relation to Rule 65, docketed as G.R. No. 226319, seeking nullification of the COA ruling. The petitioners-officials, dissatisfied with COA Decision No. 2017-326, filed another Petition for Certiorari under Rule 64, in relation to Rule 65, docketed as G.R. No. 235031. On January 15, 2019, the Court consolidated the petitions.

The Parties’ Contentions

The petitioners argued that COA erred in ordering the refund of the incentive award. They maintained that BulSU’s BoR was empowered under Section 4(d) of R.A. No. 8292 to use the STF for instruction, research, extension, or other programs/projects of the university. They also invoked COA Circular No. 2000-002, which they claimed recognized that STF may be used to pay authorized allowances and fringe benefits to teachers and students rendering services to the school. They further contended that economic benefits accruing to personnel should be treated as part of academic programs, since BulSU’s core functions could not be performed without teaching, research, and extension services. Lastly, the petitioners asserted good faith in believing the award was authorized and thus argued against personal liability to refund.

In G.R. No. 235031, petitioners-officials also challenged COA’s dismissal of their Petition for Review as untimely.

COA, through the Office of the Solicitor General, urged dismissal. In G.R. No. 235031, COA argued that the petition for review filed by petitioners-officials was beyond the reglementary period to appeal from a COA ruling. In G.R. No. 226319, COA urged dismissal due to petitioners-employees’ failure to file a motion for reconsideration against COA Decision No. 2016-096. Substantively, COA maintained that the award contravened Article IX-B, Section 8 of the 1987 Constitution and R.A. No. 6758, and that the STF could only be used for expenditures related to instruction, research, extension, and only those “other programs or projects” of the same category. COA further argued that COA Circular No. 2000-002 only covered authorized allowances, and since the incentive award was allegedly unauthorized, all recipients should refund.

Procedural Issues: Timeliness of the Appeal in G.R. No. 235031

The Court first addressed the procedural issues. It noted that under Article IX, Section 6 of the 1987 Constitution, COA could promulgate its own rules concerning pleadings and practice. The Court explained the COA 2009 Revised Rules of Procedure, under which an ND is considered an audit decision. Any aggrieved party could appeal to the Director with jurisdiction within six months from receipt of the ND. If no appeal to the Director was taken, the Auditor’s decision became final upon the lapse of the six-month period. A party could then file a Petition for Review before the Commission Proper, which had to be filed within the remaining period, with the period suspended during pendency of the Director appeal.

In this case, petitioners-officials received the NDs on March 25 and 26, 2013 and appealed to the Regional Director on September 19, 2013, by which time 176 to 177 days had already elapsed from receipt of the NDs. The petitioners-officials received the Regional Director’s decision on March 19, 2014, yet they filed the Petition for Review only on May 13, 2014, or 231 days after receipt of the NDs. The Court found that the six-month period had already lapsed.

The petitioners-officials claimed that the Petition for Review had been filed on March 21, 2014, based on the stamp that three registered mails were received by a post office addressed to the COA Regional Office. The Court rejected the excuse because the records showed that the mails were addressed to the Regional Office rather than the COA Commission Secretariat, contrary to the COA Rules requiring five legible copies filed with the Commission Secretariat and proof of payment of filing fees. The Court also observed that the petitioners-officials only filed the required copies with the Commission Secretariat, and only paid the filing fees, on May 13, 2014. By then, the period had lapsed and the Regional Director’s decision had become final and executory under the cited rules on finality and P.D. No. 1445. Thus, the Court held that there was no recourse but to dismiss G.R. No. 235031.

The Court reiterated that the right to appeal was a statutory privilege that had to be exercised strictly in accordance with COA rules, not as a matter of convenience or relaxed compliance.

Procedural Issue in G.R. No. 226319: Excuse for Failure to File Motion for Reconsideration

As to G.R. No. 226319, COA contended that the petition should be dismissed for failure to file a motion for reconsideration against COA Decision No. 2016-096. The Court acknowledged the general principle that a petition for certiorari should not prosper unless the lower tribunal was afforded an opportunity to correct alleged errors through a motion for reconsideration. The Court nonetheless adopted a liberal stance, noting that exceptions existed, including where the same issues had already been raised and passed upon in the proceedings below or where the issues in certiorari were purely of law or involved public interest.

The Court found the exception applicable because the issues raised in the Petition for Review before COA were the same as those raised before the Court. Accordingly, the Court excused the lack of a motion for reconsideration and proceeded to the substantive questions.

Legal Basis and Reasoning: COA’s Authority and the Standard of Review

On the merits, the Court underscored COA’s constitutional role as guardian of public funds. It cited Section 2 of Article IX-D of the 1987 Constitution as the source of COA’s power and duty to examine, audit, and settle all accounts involving government expenditures, including, on post-audit basis, expenditures of autonomous state colleges and universities. The Court explained that COA possessed broad authority to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, and that its determinations were generally beyond interference unless the COA acted without jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. The petitioner bore the burden of showing that COA acted arbitrarily or in a manner equivalent to a virtual evasion of a positive duty.

Applying this standard, the Court found no grave abuse of discretion in COA’s affirmance of the NDs, because the release of the Accomplishment Incentive Award lacked legal basis.

Substantive Merits: STF C

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms