Espinas Vs Coa

G.R. No.
198271 April 1, 2014
ARNALDO M. ESPINAS, LILLIAN N. ASPRER, and ELEANORA R. DE JESUS, Petitioners,

vs.
COMMISSION ON AUDIT, Respondent.
FACTS
This is a petition for certiorari, wherein the respondent Commission on Audit's (CoA) has
affirmed the Decision No. 2011-0392 dated August 8, 2011 regarding Notice of Disallowance
No. 09-001-GF(06)3 dated July 21, 2009 covering petitioners’ reimbursement claims for
extraordinary and miscellaneous expenses for the period January to December 2006 which
includes expenses for official entertainment, service awards, gifts and plaques, membership
fees, and seminars/conferences. Out of the said amount, ₱13,110,998.26 was reimbursed only
through an attached certification attesting to their claimed incurrence ("certification").9 According
to the AOM, this violated CoA Circular No. 2006-01 10 dated January 3, 2006 (CoA Circular No.
2006-01), which pertinently states that the "claim for reimbursement of such expenses shall be
supported by receipts and/or other documents evidencing disbursements."11
On April 16, 2007, the Office of the CoA Auditor, through Priscilla DG. Cruz, the Supervising
Auditor assigned to the LWUA (SA Cruz), issued Audit Observation Memorandum (AOM) No.
AOM-2006-27,7 revealing that the 31 LWUA officials were able to reimburse ₱16,900,705.69 in
EME.
During the CoA Exit Conference held sometime in April 2007, LWUA management officials,
including herein petitioners, manifested that they were unaware of the existence of CoA Circular
No. 2006-01, particularly during the period January to December 2006.12
After the post-audit of the LWUA EME account for the same period, SA Cruz issued Notice of
Disallowance No. 09-001-GF(06) disallowing the EME reimbursement claims of the 31 LWUA
officials, in the total amount of ₱13,110,998.26, for the reason that they "were not supported by
receipts and/or [other] documents evidencing disbursements as required under [Item III(3)] of
[CoA Circular No. 2006-01]."
In the decision of COA , the Notice of Disallowance No. 09-001-GF(06) has been affirmed.
Issues:
1. Whether or not grave abuse of discretion attended the CoA’s ruling in this case.
Held:
No. COA did not committed a grave abuse of discretion. The CoA’s audit power is among the
constitutional mechanisms that gives life to the check-and-balance system inherent in our
system of government.41 As an essential complement, the CoA has been vested with the
exclusive authority to promulgate accounting and auditing rules and regulations, including those
for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures or uses of government funds and properties. This is found in
Section 2, Article IX-D of the 1987 Philippine Constitution which provides that:
Sec. 2. x x x.
(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to
define the scope of its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures or uses of government funds and properties. (Emphases supplied)
As an independent constitutional body conferred with such power, it reasonably follows that the
CoA’s interpretation of its own auditing rules and regulations, as enunciated in its decisions,
should be accorded great weight and respect.
OTHER IMPORTANT CONCEPTS:
x x x [I]t is the general policy of the Court to sustain the decisions of administrative authorities,
especially one which is constitutionally-created, such as the CoA, not only on the basis of the
doctrine of separation of powers but also for their presumed expertise in the laws they are
entrusted to enforce. Findings of administrative agencies are accorded not only respect but also
finality when the decision and order are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this
Court entertains a petition questioning its rulings. x x x. (Emphases and underscoring supplied)
The concept is well-entrenched: grave abuse of discretion exists when there is an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of
law as when the judgment rendered is not based on law and evidence but on caprice, whim,
and despotism.45 Not every error in the proceedings, or every erroneous conclusion of law or
fact, constitutes grave abuse of discretion. The abuse of discretion to be qualified as "grave"
must be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal to
perform the duty or to act at all in contemplation of law.46
Viewed in the foregoing light, the Court finds that the CoA did not commit any grave abuse of
discretion as its affirmance of Notice of Disallowance No. 09-001-GF(06) is based on cogent
legal grounds.
The Court upholds the CoA’s finding that there exists a substantial distinction55 between officials
of NGAs and the officials of GOCCs, GFIs and their subsidiaries which justify the peculiarity in
regulation. Since the EME of GOCCs, GFIs and their subsidiaries, are, pursuant to law,
allocated by their own internal governing boards, as opposed to the EME of NGAs which are
appropriated in the annual GAA duly enacted by Congress, there is a perceivable rational
impetus for the CoA to impose nuanced control measures to check if the EME disbursements of
GOCCs, GFIs and their subsidiaries constitute irregular, unnecessary, excessive, extravagant,
or unconscionable government expenditures. Case in point is the LWUA Board of Trustees
which, pursuant to Section 69 of PD 198, as amended, is "authorized to appropriate out of any
funds of the Administration, such amounts as it may deem necessary for the operational and
other expenses of the Administration including the purchase of necessary equipment." Indeed,
the Court recognizes that denying GOCCs, GFIs and their subsidiaries the benefit of submitting
a secondary-alternate document in support of an EME reimbursement, such as the
"certification" discussed herein, is a CoA policy intended to address the disparity in EME
disbursement autonomy. As pertinently stated in CoA Circular No. 2006-01, the consideration
underlying the rules and regulations contained therein is the fact that "[g]overning boards of
[GOCCs/GFIs] are invariably empowered to appropriate through resolutions such amounts as
they deem appropriate for extraordinary and miscellaneous expenses."56 Hence, in due
deference to the CoA’s constitutional prerogatives, the Court, absent any semblance of grave
abuse of discretion in this case, respects the regulation, and consequently dismisses the
petition. With these pronouncements, the Court finds it unnecessary to delve on the other
ancillary issues raised by the parties in their pleadings. Notice of Disallowance No. 09-001-
GF(06) dated July 21, 2009 is therefore upheld and the persons therein held liable are ordered
to duly return the disallowed amount of ₱13,110,998.26.
WHEREFORE, the petition is DISMISSED. Accordingly, Notice of Disallowance No. 09-001-

GF(06) dated July 21, 2009 is hereby AFFIRMED.

Espinas Vs Coa

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G.R. No.

198271 April 1, 2014

ARNALDO M. ESPINAS, LILLIAN N. ASPRER, and ELEANORA R. DE JESUS, Petitioners,

OTHER IMPORTANT CONCEPTS:

WHEREFORE, the petition is DISMISSED. Accordingly, Notice of Disallowance No. 09-001-

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