CASE DIGEST
Power Sector Assets and
Liabilities Management Corp. v. Commission on Audit
G.R. Nos. 213425 &
216606, [April 27, 2021]
EN BANC, LOPEZ, M.V
Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount
The essence of due process is an
opportunity to be heard, and the absence of an Audit Observation Memorandum
(AOM) before the issuance of a Notice of Disallowance (ND) did not violate due
process. Good faith or bad faith is evaluated based on the unique facts of each
case, and in this instance, non-compliance with relevant regulations justified
holding PSALM's officers and employees liable for the disallowed transactions.
The petitioner, Power Sector Assets and
Liabilities Management Corporation (PSALM), is a government-owned and
controlled corporation (GOCC) established under Republic Act No. 9136, also
known as the "Electric Power Industry Reform Act of 2001" (EPIRA).
PSALM's primary mandate is to facilitate the orderly sale, disposition, and
privatization of National Power Corporation (NPC) assets to settle NPC's
financial obligations and stranded contract costs. Since 2002, PSALM has been
reimbursing Extraordinary and Miscellaneous Expenses (EME) to its officers and
employees based on certifications, as allowed by Government Accounting and
Auditing Manual (GAAM) and COA Circular No. 89-30. In 2008 and 2009, despite a
reminder from the COA, PSALM continued to disburse EME without proper
documentation, leading to disallowance notices and subsequent legal actions.
Whether or not the Commission on Audit
(COA) Proper properly disallowed the Extraordinary and Miscellaneous Expenses
(EME) given PSALM’s officers and employees.
YES. The court ruled against PSALM, finding
no merit in both petitions. The COA's broad audit powers, enshrined in the
Constitution, aim to ensure fiscal responsibility. In addressing the claim of
due process violation regarding the 2009 EME ND, the court held that COA
Circular No. 2009-006 does not mandate an Audit Observation Memorandum (AOM)
before disallowance. PSALM was given the opportunity to be heard, and its
failure to avail itself of legal remedies led to the finality of the COA
decision.
On the equal protection claim, the
court rejected PSALM's argument, citing a lack of evidence supporting
preferential treatment for other entities. The court affirmed the COA's
decision to hold approving and certifying officers solidarily liable for the disallowed
amounts and the individual recipients liable for the amounts they received. The
court emphasized that the absence of receipts and non-compliance with COA
Circular No. 2006-001 justified the liability of PSALM's officers and
employees.
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