Political Law Case Digest:

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION (PSALM), represented by MR. EMMANUEL R. LEDESMA, JR., in his capacity as President and Chief Executive Officer (CEO), and the concerned and affected OFFICERS of PSALM v COMMISSION ON AUDIT (COA)

Principle:

Well-settled is the rule that the essence of due process is simply an opportunity to be heard; an opportunity to explain one’s side; or the opportunity to seek a reconsideration of the action or ruling complained of.

Facts:

Petitioner Power Sector Assets and Liabilities Management Corporation (PSALM) is a government-owned and controlled corporation (GOCC) created under “Electric Power Industry Reform Act of 2001” (EPIRA). Its principal purpose is to manage the orderly sale, disposition, and privatization of National Power Corporation (NPC) assets to liquidate all NPC financial obligations and stranded contract costs in an optimal manner.

Since 2002, PSALM had been reimbursing Extraordinary and Miscellaneous Expenses (EME) to its officers and employees with certifications issued by the claimant as evidence of disbursement in accordance with Section 397 (c) of the Government Accounting and Auditing Manual (GAAM) — Volume I and COA Circular No. 89-300. Later in 2008, the COA Audit Team Leader reminded PSALM that COA Circular No. 2006-001 dated January 3, 2006 no longer allows the use of such certification as an alternative supporting document for reimbursement claims of EME and other similar expenses. Notably, PSALM and all its departments were furnished a copy of COA Circular No. 2006-001 on March 8, 2006.

Despite such advice, PSALM continued to pay out EME in 2008 and 2009, supported merely by certifications. Consequently, the disbursed 2008 EME became the subject of Notice of Suspension (NS) on the ground that they were not supported by documents required under COA Circular No. 2006-001. The NS required PSALM to submit receipts corresponding to the 2008 EME reimbursements.

PSALM filed a motion for reconsideration (MR) for the lifting of the NS. Unmoved, the Auditor issued Notice of Disallowance (ND) disallowing the 2008 EME, amounting to an aggregate of P2,385,334.06. The approving and certifying officers, as well as the individual payees were all made liable to settle the disallowed amount. On appeal to COA CGS denied it. PSALM filed petition for review before COA Proper but the same was denied. No MR or petition for certiorari was filed. Thus, Decision No. 2013- 229 became final and executory.

Meanwhile, pending resolution of the 2008 EME ND appeal, ND No. 10- 005-(2009) was issued, similarly disallowing the 2009 EME reimbursements, amounting to an aggregate of P2,615,500.79, for failure to submit the documentary requirements under COA Circular No. 2006-001. All the approving/certifying officers and payees of the 2009 EME were likewise made liable for the disallowed transactions. On appeal to COA CGS but denied. PSALM filed petition for review before COA Proper but likewise denied.

Issue:

Whether COA committed grave abuse of discretion in denying the reliefs sought as it violate its right to due process

Ruling:

No. the COA did not commit grave abuse of discretion.

The Court ruled that COA’s audit power is among the constitutional mechanisms structured to ensure the check-and-balance system inherent in our form of government. Under the 1987 Constitution, the COA is vested with broad powers over all accounts pertaining to government revenues and expenditures, including the exclusive authority to promulgate accounting and auditing rules and regulations for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable uses of government funds and properties.

As a necessary consequence, the COA’s interpretation of its own auditing rules and regulations, as enunciated in its decisions, should be accorded great weight and respect. It is the general policy of the Court to sustain the decisions of the COA, unless it acted without or in excess of jurisdiction or with grave abuse of discretion. Congruent with this precept is the limited scope of the Court’s review under the extraordinary remedy of certiorari, wherein the Court is confined solely to questions of jurisdiction whenever a tribunal, board or officer exercising judicial or quasi-judicial function acts without jurisdiction or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion speaks of 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.

Here, in G.R. No. 213425, PSALM laments that the Auditor’s failure to issue an AOM before the issuance of the 2009 EME ND is a breach of the right to due process. The court agrees with COA that COA Circular No. 2009-006 that it does not require the issuance of an AOM before a disallowance may be issued.

Paragraph 5.3 of the RRSA states that an AOM shall be issued only “[i]n case an audit decision cannot as yet be reached due to incomplete documentation/information, or if the deficiencies noted refer to financial or operational matters which do not involve pecuniary loss[.]”

Considering the clear violation of a COA regulation as stated in the 2009 EME ND, and the disallowance of a previous similar transaction, the COA correctly observed that the transaction subject of the 2009 EME ND was “already ripe for auditorial determination.”

Correspondingly, under paragraph 10.1 of the RRSA, an ND shall issue, without the mention of an AOM, “for transactions which are irregular/unnecessary/excessive and extravagant as defined in COA Circular No. 85-55A as well as other COA issuances, and those which are illegal and unconscionable.” In fact, paragraph 10.3 of the RRSA requires that “[t]he ND shall be issued as often as disallowances are made by the Auditor in order to notify the agency head, the accountant, and the persons liable for the amount disallowed in audit.” Upon receipt of the ND, the affected officers and employees can appeal the ND to the COA CGS, then to the COA Proper, and even question it before this Court as PSALM did. Thus, despite non-issuance of an AOM, PSALM was afforded the right to be properly notified and fully heard. It cannot complain that due process requirements were disregarded. Well-settled is the rule that the essence of due process is simply an opportunity to be heard; an opportunity to explain one’s side; or the opportunity to seek a reconsideration of the action or ruling complained of. It safeguards, not the lack of previous notice, but the denial of the opportunity to be heard. When the party was afforded the opportunity to defend his interests in due course, there is no denial of due process.

Thus, the COA did not commit grave abuse of discretion in upholding the 2009 EME ND despite non-issuance of an AOM.