The Supreme Court (SC) has ruled that the Commission on Audit (COA) has no power to impose administrative penalties for notices of disallowance (NDs) issued against government officials.
In a decision, the SC said the COA’s “conduct of an audit is not an exercise of the government's administrative supervision over public officers.”
“More, the liability of erring public officers in a disallowance case should partake of the nature of an obligation for restitution -- not a fine or penalty,” it said.
“Stated differently, absent any monetary loss, damage, or injury on the part of the government, the imposition of a fine or a penalty on the ground of misfeasance, nonfeasance, or malfeasance of a public officer is outside the scope of the COA's audit powers,” it also said.
It pointed out: “Upon the discovery of a violation of a law or regulation during an audit, the COA' s authority is limited to initiation of the appropriate administrative, civil, and/or criminal action.”
Thus, the SC stressed that “the COA cannot expand its audit powers so as to include the imposition of administrative penalties on erring public officers.”
The full court decision was written by Associate Justice Henri Jean B. Inting. It granted the petition filed by Jess Christopher S. Biong, officer of the Philippine Health Insurance Corporation (PhilHealth) in Region III.
A press briefer issued by the SC’s Public Information Office (PIO) stated that the COA issued NDs to PhilHealth Region III officers, including Biong, after it found irregular the payments made to Silicon Valley for printer inks and toners.
The COA found the payments irregular because of the delay in the delivery of the supplies, lack of inspection reports, and falsified supplies withdrawal slips.
Quoting from the decision, the SC-PIO said that “while the COA affirmed that the payments were irregular, it also ruled that PhilHealth Region III had a valid obligation to pay Silicon Valley since it received the supplies.”
The COA also found Biong civilly liable for the disallowance for certifying, as head of the region’s general services unit, that the items were delivered and for failing to discover the falsified supplies withdrawal slips.
Biong challenged the COA’s ruling in a petition filed before the SC.
The SC-PIO said that in granting Biong’s petition, “the Court held that the COA’s power to disallow government expenses arises from its duty to prevent the irregular use of government funds.”
“For an expense to be irregular, there must be a violation of rules and regulations at the time the expense is incurred. If the irregularity happens after, disallowance is not proper,” it said.
“In this case, the Court found the disallowance improper. Although falsifying supplies withdrawal slips may be irregular, this happened after the transactions were completed,” it also said.
It noted that the SC found that “the reasons cited by the COA for the disallowance involve the management of office supplies, which are not proper grounds for disallowance.”
“The Court added that the nature of the liability for disallowance is reimbursement or return for the loss suffered by the government. Thus, without such loss, no reimbursement is necessary,” the SC-PIO also said in its briefer.
“Since PhilHealth Region III did not suffer any loss by paying Silicon Valley for the supplies it received, Biong cannot be required to reimburse the government,” it added quoting from the SC decision.
The dispositive portion of the decision: “Accordingly, the Petition for Certiorari is grated. The assailed Commission on Audit Decision No. 2019-040 dated March 21, 2019, and Notice of Finality of Decision No. 2021-252 dated Nov. 17, 2021, are set aside. So ordered.”