Case Summary (A.C. No. 10565)
Procedural History
Petitioner contested the AOM in writing on June 23, 2010. COA-RO V issued a Notice of Disallowance (ND) on November 15, 2011, disallowing P5,820,843.30. Petitioner’s administrative appeal was denied by COA-RO V on July 29, 2013. COA proper dismissed petitioner’s review on December 29, 2014, then denied reconsideration on September 26, 2016. Petitioner filed a petition for certiorari in the Supreme Court under Rules 64 and 65.
Issues Presented
A. Whether COA committed grave abuse of discretion by disregarding compliance with the Local Government Code.
B. Whether joint circular approval and certification requirements exceed administrative rule-making power and undermine local autonomy.
C. Whether joint certification by the Provincial HRMO and Schools Division Superintendent satisfied AOM and ND requirements.
Petitioner’s Arguments
• The SEF may properly finance allowances of both teaching and non-teaching personnel under the Local Government Code and COA v. Province of Cebu.
• The additional joint circular requirements are invalid exercises of administrative rule-making and infringe on local autonomy.
• Joint certification by local officers proves actual service rendered, fulfilling documentary requirements.
• Approving officers and personnel acted in good faith, following a decade-long practice unchallenged by COA.
Respondent’s Arguments
• SEF expenditures for extension-class personnel require prior DECS Secretary approval, regional director recommendation, and division superintendent certification per JC 01-A and JC 01-B. Only the third requirement was met.
• Non-teaching personnel allowances are not authorized by RA 5447 or COA jurisprudence.
• Joint circulars carry the force of law and cannot be collaterally attacked in certiorari.
• Joint certification by PHRMO and SDS is insufficient absent head-teacher attestations and personal observation.
Constitutional and Legal Principles
Local autonomy under Article X of the Constitution delegates administrative powers to LGUs subject only to general supervision by the President. Supervision permits oversight to ensure lawful exercise of authority but does not confer power to control or substitute local judgments. Administrative issuances implementing delegated powers enjoy presumption of validity and may not be collaterally attacked without timely challenge.
Quantum Meruit and Unjust Enrichment
The Court applied quantum meruit to prevent unjust enrichment where services were actually rendered. Certifications by PHRMO and SDS attested to the performance of services in 2008, and no bad faith was shown. Requiring refunds from service providers or approving officers who acted in good faith would unjustly penalize actual work performed.
Applicability to Teaching and Non-Teaching Personnel
The SEF’s enabling statute (RA 5447) authorizes expenditure “for the organization and operation of … extension classes,” including positions essential to their
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Facts of the Case
- From 1999 onward, the Province of Camarines Sur hired temporary teaching and non-teaching personnel to staff extension classes in public schools, charging their salaries and allowances to the Special Education Fund (SEF).
- Between July and October 2008, the province paid a total of ₱5,820,843.30 in allowances/honoraria to these locally funded DepEd-Division of Camarines Sur personnel, debiting the SEF.
- On February 18, 2009, Audit Team Leader Atty. Eleanor V. Echano issued Audit Observation Memorandum No. 2009-19 (2008), finding these charges contrary to Section 272 of Republic Act No. 7160 (Local Government Code of 1991) and DECS-DBM-DILG Joint Circular No. 1, s. 1998 on SEF utilization.
Audit Objections and Notice of Disallowance
- In a June 23, 2010 comment, the province’s OIC-Provincial Accountant, Treasurer, and Budget Officer argued that all SEF expenditures were within lawful purposes under the LGC and related circulars.
- On November 15, 2011, Audit Team Leader and Supervising Auditor-in-Charge issued Notice of Disallowance No. 2011-200-010(08), disallowing the ₱5,820,843.30 allowances for:
- Violation of Section 272, RA 7160, and DECS-DBM-DILG Joint Circulars (only teachers in approved extension classes may receive SEF allowances)
- Improper entry of allowances as “Donations” in SEF accounts
- Absence of Memoranda of Agreement and Accomplishment Reports
- Lack of required approvals by the Provincial Governor, Provincial Accountant, and Provincial Budget Officer
- Missing certifications by Head Teachers and HRMO on actual service rendered
- Five provincial officials were tagged as liable to refund the disallowed amount.
Administrative Appeal and COA-RO V Decision
- On June 19, 2012, the province appealed to the COA Regional Office V, citing Commission on Audit v. Province of Cebu (422 Phil. 519) and submitting joint certifications by the Provincial HRMO and Schools Division Superintendent (SDS) on actual 2008 service.
- In its July 11, 2012 Answer, COA-RO V maintained disallowance because:
- No prior DECS Secretary approval or DepEd Regional Director recommendation for extension classes
- No Division Superintendent certification of necessity and urgency for classes of at least 15 pupils
- No head teacher certifications of individual service periods
- On July 29, 2013, COA-RO V Decision No. 2013-L-016 denied the appeal, affirming disallowance on the ground that:
- Extension classes were not established per Joint Circulars No. 01-A (Mar. 14, 2000) and No. 01-B (Jun. 25, 2001)
- SEF ch