Estrella v. Commission on Audit, G.R. No. 252079, [September 14, 2021]

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Estrella v. Commission on Audit

 G.R. No. 252079, [September 14, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount 

When there are irregularities in the procurement process and non-compliance with statutory procurement requirements, the liability of approving or certifying officers, such as those involved in the Bids and Awards Committee (BAC), is up the “net disallowed amount” only. It means that the officers' liability for the disallowed amount may be reduced by the amounts due to the contractors if they have fully or substantially accomplished their obligations under the contract. This liability is grounded upon the principles of solutio indebiti and unjust enrichment. This doctrine recognizes that the government should not unjustly enrich itself at the expense of contractors who have fulfilled their obligations, even if there were irregularities in the procurement process.

 

The DPWH-NCR initiated an infrastructure project for the Restoration of the Damaged Revetment/Dredging of Flood Control of Meycauayan River (Valenzuela Side). The project was initially funded under Special Allotment Release Order (SARO) No. A-09-09064 dated December 21, 2009, with P40,000,000.00 released under Sub-Allotment No. SR2009-12-007232 dated December 22, 2009. On the same day, DPWH-NCR Regional Director Edilberto D. Tayao requested the modification of the project into eight phases, each to be separately bid out for P5,000,000.00. The request was approved by DPWH Assistant Secretary Dimas S. Soguilon and Undersecretary Manuel M. Bonoan on December 28, 2009. The DPWH-NCR Bids and Awards Committee (BAC) allegedly conducted a public bidding on the same day, with only one contractor bidding for each phase. The project was awarded and implemented by the lone bidders for each phase. Subsequently, a Notice of Disallowance (ND) was issued, disallowing payments made to the contractors amounting to P36,084,006.06 due to the alleged splitting of the SARO and contract. Assistant Regional Director Armando G. Estrella and BAC Member Lydia G. Chua were charged to settle the disallowance, along with other DPWH officers and BAC Members. 

 

Whether or not the Commission on Audit (COA) Proper committed grave abuse of discretion in sustaining ND No. 10-03 disallowing payments related to the infrastructure project.

NO. The COA National Government Section (NGS) – Cluster D ruled that there was no illegal splitting of the contract, absolving Bonoan, Soguilon, and Tayao. However, it upheld the liability of Estrella and the BAC Members due to irregularities in the procurement process, lack of compliance with pre-procurement requirements, absence of a proper public bidding, and deficiencies in the post-qualification evaluation.

The court acknowledged the importance of adhering to procurement requirements for transparency and fairness but found that DPWH-NCR did not comply with RA No. 9184 and its Revised IRR. The court held that Estrella, as BAC Chairman, was liable for the disallowance due to the absence of a public bidding and deficiencies in post-qualification evaluation. However, considering the completion of the project and rectification of defects, the court deemed it improper and unjust to hold petitioners liable for the entire disallowed amount. The liability of Estrella and Chua was reduced to the "net disallowed amount," subject to further post-audit to determine the value of the completed works. The court emphasized that this decision is without prejudice to administrative or criminal actions against responsible officers as warranted by existing laws and jurisprudence on illegal procurements.

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Abrenica v. Commission on Audit, G.R. No. 218185, [September 14, 2021]

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Abrenica v. Commission on Audit

 G.R. No. 218185, [September 14, 2021]

EN BANC, LOPEZ, M.V

 

Commission on Audit Notice of Disallowances; petition for Review;  Liability of Public Officers; Disallowance of Hazard Pay

 

Administrative rules or regulations, such as Department of Health (DOH) Administrative Order (AO) No. 2006-0011, must conform to and not contradict the provisions of the enabling law. Such administrative issuances may be considered valid only if they align with the clear letter of the law, and any discrepancy between the enabling law and an implementing rule or regulation should be resolved in favor of the former. 

Petitioners, who are employees of San Lazaro Hospital (SLH) with Salary Grades (SG) 20 to 26, received hazard allowances amounting to P4,989.75 per month from January to June 2009. However, this rate was found to be inconsistent with Section 21 of Republic Act (RA) No. 7305, also known as "The Magna Carta of Public Health Workers," and Section 7.1.5.a, Rule XV of its revised implementing rules and regulations (IRR). These provisions mandate hazard allowances to be proportional to the employee's monthly salary, specifically at least five percent (5%) of the monthly basic salary of health workers within SG 20 and above. As a result, a Notice of Disallowance (ND) No. 09-006-101MDS-(09) was issued on November 23, 2009, disallowing an aggregate amount of P1,094,188.98, representing hazard pay paid beyond the prescribed five percent (5%) of basic salaries. 

 

Whether the amounts of hazard pay given beyond the minimum rate prescribed by RA No. 7305 were validly disallowed

YES. The COA National Government Section (NGS) ruled that the hazard pay, based on Department of Health (DOH) Administrative Order (AO) No. 2006-0011, cannot be relied upon as a legal basis, citing a previous court decision that declared the DOH AO void. The Court upheld the COA's decision, reiterating the void status of DOH AO No. 2006-0011 for conflicting with RA No. 7305. The Court rejected petitioners' claims that the DOH AO enjoyed a presumption of validity, stating that the Court's determination in a previous case formed part of the legal system until subsequently overturned. The Court emphasized that administrative issuances must conform to the enabling law, and the DOH exceeded its power by fixing an exact amount for hazard pay. 

 

Whether the petitioners were validly held liable to refund the disallowed amounts.

NO. While the Court upheld the disallowance due to the invalid DOH AO, it found that petitioners should not be held liable to refund the disallowed amounts. The recipients' good faith or bad faith was deemed inconsequential, as liability was grounded on principles of solutio indebiti and unjust enrichment. The Court cited exceptions where liability could be excused, such as genuine consideration for services rendered or undue prejudice, social justice considerations, and other bona fide exceptions. In this case, the hazard pay was within the amount authorized by law, petitioners were entitled to it, and there was a clear connection to the actual performance of their duties. The COA Proper was deemed to have committed grave abuse of discretion in holding petitioners liable.

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Development Bank of the Philippines v. Land Bank of the Philippines, G.R. Nos. 229274 & 229289, [June 16, 2021]

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Development Bank of the Philippines v. Land Bank of the Philippines

G.R. Nos. 229274 & 229289, [June 16, 2021]

SECOND, LOPEZ, M.V

 

Eminent Domain; Determination of Just Compensation is a judicial function

The determination of just compensation in cases involving the Comprehensive Agrarian Reform Program (CARP) is a judicial function vested in the Regional Trial Court (RTC) acting as a Special Agrarian Court (SAC). The court, in exercising this function, must consider the factors enumerated under Section 17 of Republic Act No. 6657 (CARP Law) and the guidelines and formulas set forth in the Department of Agrarian Reform Administrative Order No. 5, series of 1998 (DAR AO No. 5-98), but it is not strictly bound by the determinations of the administrative agencies.

 

The case involves a parcel of land in Barangay Duhat, Bocaue, Bulacan, registered in the name of the Development Bank of the Philippines (DBP) under Transfer Certificate of Title (TCT) No. T-144547 with an area of 2,225 square meters. Originally owned by Spouses Angel Armando and Remedios Martin, the property was mortgaged to DBP in 1979, amounting to P400,000.00. After defaulting on payments, the property was foreclosed in 1990, and DBP acquired it in 1992 due to Spouses Angel and Remedios' failure to redeem. In 1998, a 1,567-sq.m. portion was placed under the Comprehensive Agrarian Reform Program (CARP). Land Bank of the Philippines (LBP) valued the property, leading to a dispute with DBP over the just compensation amount. The Regional Trial Court's (RTC) and CA’s valuation, fixing the just compensation for DBP's property at P18.85/sqm or a total of P29,544.01 plus legal interest. DBP do not agree to the amount of just compensation, hence this petition.

 

Whether RTC and CA’s valuation of just compensation was correct.

The Supreme Court (SC) partly granted DBP's petition, denying LBP's petition. The SC reversed the CA's decision and remanded Civil Case No. 368-M-2008 to the RTC for the proper determination of just compensation. The RTC and CA were faulted for solely relying on LBP's valuation, not considering factors under Section 17 of RA No. 6657, and failing to verify the accuracy of LBP's figures. The SC emphasized that the court must make an independent determination, considering all evidence and guidelines under DAR AO No. 5-98 while not being strictly bound by it. While the court should take into account the standards provided by law and administrative issuances, it is not strictly bound by them. The court has the authority to deviate from the formula if warranted by the circumstances of the case, provided that it explains such deviation.

The court highlighted the need for evidence verification and proper consideration of prevailing values at the time of taking. The court should not merely rely on administrative valuations but should critically examine the data and numbers to arrive at a fair and just compensation amount. Interest may be awarded based on the circumstances, and the court has the discretion to impose legal interest on the amount of just compensation in case of delay in payment. Case is remanded to RTC to follow in the reassessment of just compensation.

 

 

 

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Ancheta v. Commission on Audit, G.R. No. 236725, [February 2, 2021]

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Ancheta v. Commission on Audit

 G.R. No. 236725, [February 2, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Notice of Disallowances; petition for Review; Employees of GOCC 

The overarching rule is that all allowances are deemed included in the standardized salary rate, unless excluded by law or by a DBM issuance. This rule is premised upon the distinct policy to eliminate multiple allowances and other incentive packages, resulting in differences of compensation among government personnel.

 

The case involves the disallowance of benefits amounting to P3,354,123.50 granted by the Special Water District (SWD) in 2010. These benefits, including rice allowance, medical allowance, Christmas groceries, year-end financial assistance, mid-year bonus, and year-end bonus for its Board of Directors, were disallowed because they violated Department of Budget and Management (DBM) Corporate Compensation Circular (CCC) No. 10, which specified that additional allowances should only be given to incumbents as of June 30, 1989. Considering that the SWD Officers and Employees, who are actually receiving such benefits were employed after June 30, 1989, the COA concluded that the grants were unauthorized. 

SWD, a government-owned and controlled corporation (GOCC), was organized under Presidential Decree (PD) No. 198. The disallowance was challenged through appeals, first to the COA Regional Office No. 3 (COA-RO3), then to the COA Proper. Both the COA-RO3 and COA Proper affirmed the disallowance. Ancheta, the General Manager of SWD, along with other responsible parties, appealed to the Supreme Court. Petitioners insisted that the disbursements were authorized by DBM Secretary Diokno’s Letter dated November 8, 2000 addressed to certain local water district. 

 

Whether SWD was already covered by RA No. 6758 when the 2010 benefits were granted.

YES. The Supreme Court clarified that SWD, being a GOCC created under PD No. 198, was covered by RA No. 6758 starting from its creation in 1973. Under RA 6758, all allowances are deemed included in the standardized salary rate, unless excluded by law or by a DB Issuance. The Court emphasized that the coverage of RA No. 6758 applies to all positions, including those in GOCCs. This rule was premised upon the policy to eliminate multiple allowances and other incentive packages, resulting in differences of compensation among government personnel.

 

Whether the disallowance of the 2010 benefits was proper.

YES. The Court determined that the disallowance of benefits was proper, emphasizing that Section 12 of RA No. 6758 and DBM CCC No. 10 limit additional allowances to incumbents as of June 30, 1989. The Court rejected SWD's argument that DBM Letters authorized the benefits, stating that these letters could not override the law and that the benefits were unauthorized and appropriately disallowed.

 

Whether petitioners should be held liable for the refund of the disallowed amount

YES. The Court affirmed the COA's decision on the liability of Ancheta and Rapsing, the approving and certifying officers. It held that they were not acting in good faith or with diligence, as they neglected SWD's charter requirements and existing case laws that settled the application of Section 12 of RA No. 6758. The Court emphasized that good faith and diligence could absolve public officers from liability, but Ancheta and Rapsing's actions demonstrated a lack of due diligence. The Court further clarified that their liability should be limited to the "net disallowed amounts," excluding amounts already retained by other recipients who were absolved from liability. In conclusion, the Supreme Court affirmed the COA's decision with modifications, holding Ancheta and Rapsing solidarily liable to return only the "net disallowed amounts."

 

 

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Municipality of Bakun, Benguet v. Municipality of Sugpon, Ilocos Sur, G.R. No. 241370, [April 20, 2022]

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Municipality of Bakun, Benguet v. Municipality of Sugpon, Ilocos Sur

 G.R. No. 241370, [April 20, 2022]

THIRD, LOPEZ, M.V

 

Boundary Dispute; LGU Territorial Jurisdiction; Law on Public Corporations; Local Government Code

Act No. 1646 in establishing the new boundary lines between the sub-province of Amburayan and the provinces of Ilocos Sur and La Union, and Act No. 2877 in modifying the boundaries between the Mountain Province and the provinces of Ilocos Sur and La Union, they do not prove that the disputed properties would form part of the territory of Bakun. Bakun simply failed to show, by preponderant evidence, that the conflicted areas are located within the "new boundary line."

 

The dispute revolves around a 1,117.20-hectare parcel of land situated within the boundaries of Bakun, Benguet, represented by Mayor Fausto T. Labinio, and Sugpon, Ilocos Sur, represented by Mayor Gernando C. Quiton, Sr. After failed attempts to settle the matter, the Sangguniang Panlalawigan issued Joint Resolution No. 1, Series of 2014, adjudicating the disputed area to Bakun. Dissatisfied, Sugpon appealed to the RTC, resulting in a Resolution on April 28, 2015, which reversed the Sangguniang Panlalawigan's decision. The RTC argued that the laws cited by Bakun did not delineate the boundaries, and Sugpon's evidence, particularly maps, demonstrated its territorial jurisdiction. The CA upheld the RTC's decision on February 1, 2018, emphasizing that Sugpon's evidence surpassed Bakun's, and the old legislations were insufficient for boundary determination. 

 

Whether Bakun or Sugpon holds territorial jurisdiction over the 1,117.20-hectare disputed area. 

Sugpon holds territorial jurisdiction over the 1,117.20-hectare disputed area. The Supreme Court upheld the CA's decision, denying Bakun's petition for review. The Court emphasized its limited role as a reviewer of legal issues and affirmed the lower courts' findings, supported by substantial evidence. Sugpon's evidence, including administrative maps, tax declarations, and certifications from government offices, convincingly established its territorial claim. In contrast, Bakun's reliance on Act Nos. 1646 and 2877 was deemed inadequate, as these laws lacked specificity regarding the disputed municipalities' boundaries. The Court ruled that Bakun failed to prove, by preponderance of evidence, that the conflicted areas fell within the modified boundary line set by the cited laws. Consequently, the disputed area was adjudicated as part of Sugpon's territorial jurisdiction.

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Ricalde v. Commission on Audit, G.R. No. 253724 (Resolution), [February 15, 2022]

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Ricalde v. Commission on Audit

G.R. No. 253724 (Resolution), [February 15, 2022]

EN BANC, LOPEZ, M.V

 

Powers of COA; Commission on Audit Notice of Disallowances; Prohibition on the hiring of private lawyers; Liability of Officers for the Disallowed Amounts 

Government agencies and instrumentalities are restricted in their hiring of private lawyers to render legal services or handle their cases. Public funds cannot be used to pay private lawyers unless exceptional or extraordinary circumstances exist and the hiring is accompanied by the written conformity and acquiescence of the OSG and the written concurrence of the COA. The prohibition covers the hiring of private lawyers for any form of legal services, regardless of whether it involves an actual legal controversy or court litigation. 

The Bureau of Investments (BOI) entered into service agreements with lawyers: Atty. Dennis R. Gascon, Atty. Francesca R. Custodio-Manzano, and Atty. Madonna N. Clarino. The lawyers were assigned to different offices within BOI to perform various legal services, including reviewing documents, preparing legal steps for investment incentives, rendering legal opinions, attending hearings, drafting legislative measures, and providing legal support. The lawyers received monthly salaries for their services. Notice of Disallowances (NDs) were issued, covering the salaries paid to the lawyers, amounting to P797,790.77, citing the lack of conformity from the Office of the Solicitor General (OSG) and the written concurrence of the Commission on Audit (COA). Various individuals, including the lawyers and BOI officers, were held liable for the disallowed transactions. The petitioners seek reversal of COA’s decision arguing that the lawyers are hired as technical assistants and not as legal counsel, and that their engagement is justified by the BOI’s dire need of additional staff. 

 

Whether the COAcorrectly sustained the disallowance of the payments to Atty. Gascon, Atty. Manzano, and Atty. Clarino, including the BOI officers' liability 

YES. The Court upheld the disallowance, stating that the hiring of private lawyers without adhering to the circular's requirements is subject to disallowance. COA Circular No. 86-255 regulates the government's hiring of private counsels, requiring justification, written conformity from the OSG, and written concurrence from the COA. The Court upheld the disallowance, stating that the hiring of private lawyers without adhering to the circular's requirements is subject to disallowance. The Court rejected justifications for non-compliance, emphasizing that the circular covers any legal service, not just litigation, and that general claims of "dire need" should have been verified by the OSG before hiring.

As regards to officer’s liability over the disallowances, the Court ruled that the approving and certifying officers' liability is solidary and extends only to the extent payees are required to refund. In this case, officers are not liable for the disallowed amount since payees are allowed to retain their payments. The decision is without prejudice to any appropriate administrative or criminal actions against responsible officers.

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Belgica vs. Executive Secretary G.R. Nos. 208566, 208493 & 209251, November 19, 2013

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Belgica vs. Executive Secretary

G.R. Nos. 208566, 208493 & 209251, November 19, 2013

EN BANC, LAZARO-JAVIER, J.

 

Administrative Law; Liability of Public Officials; Administrative Due Process; State University President not liable for Lost Payroll Money

PDAF Article and all other Congressional Pork Barrel laws are unconstitutional for violating the constitutional provisions on (a) separation of powers, (b) non-delegability of legislative power, (c) checks and balances, (d) accountability, (e) political dynasties, (f) local autonomy.

 

In 2000, the Priority Development Assistance Fund (“PDAF”) appeared in the GAA. PDAF required prior consultation with the representative of the district before the release of funds.  PDAF also allowed realignment of funds to any expense category except personal services and other personnel benefits. It was during the Arroyo administration when the formal participation of non-governmental organizations in the implementation of PDAF projects was introduced. In 2011, the PDAF Article in the GAA contained an express statement on lump-sum amounts allocated for individual legislators and the Vice-President. The 2013 PDAF Article allowed LGUs to be identified as implementing agencies.  Legislators were also allowed to identify programs/projects outside of his legislative district. 

As early as 2004, several concerned citizens sought the nullification of the PDAF but the Supreme Court dismissed the petition for lack of evidentiary basis regarding illegal misuse of PDAF in the form of kickbacks. In July 2013, the National Bureau of Investigation probed the allegation that a syndicate defrauded the government of P10 billion using funds from the pork barrel of lawmakers and various government agencies for scores of ghost projects. Whistle-blowers also alleged that at least P900 million from the Malampaya Funds had gone into a dummy NGO. 

 

Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel laws are unconstitutional. (YES) 

 

I.            SUBSTANTIVE ASPECTS

 

The separation of powers between the Executive and the Legislative Departments has been violated. The post-enactment measures including project identification, fund release, and fund realignment are not related to functions of congressional oversight and, hence, allow legislators to intervene and/or assume duties that properly belong to the sphere of budget execution, which belongs to the executive department. Any provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus unconstitutional.

 

The principle of non-delegability of legislative powers has  been violated. The 2013 PDAF Article, insofar as it confers post-enactment identification authority to individual legislators, violates the principle of non-delegability since said legislators are effectively allowed to individually exercise the power of appropriation, which – as settled in Philconsa – is lodged in Congress. 

 

Violative of the principle of checks and balances. This kind of lump-sum/post-enactment legislative identification budgeting system fosters the creation of a ―budget within a budget which subverts the prescribed procedure of presentment and consequently impairs the President‘s power of item veto. In fact, even without its post-enactment legislative identification feature, the 2013 PDAF Article would remain constitutionally flawed since it would then operate as a prohibited form of lump-sum appropriation. This is because the appropriation law leaves the actual amounts and purposes of the appropriation for further determination and, therefore, does not readily indicate a discernible item which may be subject to the President‘s power of item veto.

 

The Congressional Pork Barrel partially prevents accountability as Congress is incapable of checking itself or its    members. The conduct of oversight would be tainted as said legislators, who are vested with post-enactment authority, would, in effect, be checking on activities in which they themselves participate. 

 

The Congressional Pork Barrel violates constitutional principles on local autonomy. The Congressional Pork Barrel goes against the constitutional principles on local autonomy since it allows district representatives, who are national officers, to substitute their judgments in utilizing public funds for local development.

 

 

II. PROCEDURAL ASPECTS

 

There is an actual and justiciable controversy. The case is ripe for adjudication since the challenged funds and the laws allowing for their utilization are currently existing and operational and thereby posing an immediate or threatened injury to petitioners. The case is not moot as the proposed reforms on the PDAF and the abolition thereof does not actually terminate the controversy on the matter.  The President does not have constitutional authority to nullify or annul the legal existence of the PDAF.

 

Political Question Doctrine is Inapplicable. The intrinsic constitutionality of the “Pork Barrel System” is not an issue dependent upon the wisdom of the political branches of the government but rather a legal one which the Constitution itself has commanded the Court to act upon. The 1987 Constitution expanded the concept of judicial power such that the Supreme Court has the power to determine whether there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality on the part of the government.

 

Petitioners have legal standing to sue. Petitioners have legal standing by virtue of being taxpayers and citizens of the Philippines. As taxpayers, they are bound to suffer from the unconstitutional usage of public funds. As citizens, the issues they have raised are matters of transcendental importance, of overreaching significance to society, or of paramount public interest.

 

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