EN BANC
|
MANUEL
LEYCANO, JR., Petitioner, - versus- COMMISSION
ON AUDIT, Respondent. |
G.R. No. 154665
Present: PANGANIBAN, C.J., PUNO, QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ,* CARPIO, AUSTRIA-MARTINEZ, CARPIO MORALES, CALLEJO, SR., AZCUNA, TINGA, CHICO-NAZARIO, and GARCIA, JJ. Promulgated: February 10, 2006 |
x
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - -x
D E C I S I O N
CARPIO
MORALES, J.:
The
Commission on Audit (COA) Decision No. 2002-129 dated July 18, 2002 which
denied petitioner’s appeal of the Notices of Disallowance Nos. 99-001-221 (95)
to 99-005-221 (95), all dated June 10, 1999, is being challenged in the present
Petition for Certiorari.
Petitioner
Manuel Leycano, Jr. was the Provincial Treasurer of Oriental Mindoro and at the
same time a member of the Provincial School Board (PSB) of that province.[1] During his tenure, he was appointed by the
PSB as a member of its Inspectorate Team which, according to him, had the
function of “monitoring the progress of PSB projects.”
In
the year 1995, several checks were issued to various private contractors in
connection with the repair, rehabilitation, and construction projects covered
by the Special Education Fund (SEF)[2] of
Oriental Mindoro in the following public schools:
1.
2.
3.
4.
Bayanan II ES
5.
Calingag ES
6.
Nabuslot CS
7.
Batino ES
8.
Calapan CS
9.
D. Safaden MS
10.
B. del Mundo ES
11.
Bansud Proper ES
12.
Bansud CS
13.
P. Tolentino MS
14.
15.
Ordivilla ES
16.
Casiligan ES
17.
Pola CS
18.
Bayuin ES
19.
Malad ES
20.
Malayas ES
21.
Manaul HS
22.
Suqui ES
23.
24.
Nabuslot NHS
25.
Melgar MS
The
Special Audit Team, COA Regional Office No. IV, headed by State Auditor Joselyn
Cirujano (the Auditor), subsequently audited selected
transactions under the SEF of the
The
Special Audit Team found deficiencies in the projects, hence, it issued the questioned
Notices of Disallowance holding petitioner, along with Sangguniang Panlalawigan Member
Remedios Marasigan and Schools Division Superintendent Benjamin Cruz, liable for
signing the Certificates of Inspection (the dates of which have not been
alleged by either party) relative to the projects and thereby falsely attesting
to their 100% completion.
The
Notices also held liable the following officers for having certified or
reported the 100% completion of the projects: Provincial Engineer Elmer Dilay, Engineering
Assistant Gerardo Ilagan, Municipal Treasurer Nelson Buñag, Chief of Planning
and Programming Section Venancio
Petitioner
appealed the Notices of Disallowance to the COA, through the Regional Director,
COA Regional Office No. IV, praying that his name be deleted from among the persons
liable.
The
Regional Director, by decision embodied in a 1st Indorsement dated
June 21, 2000, modified the Auditor’s findings by excluding petitioner from those
liable, noting inter alia the joint
certification of the Schools Division Superintendent and the Provincial
Engineer stating that the projects undertaken and charged against the SEF which
were found either incomplete or inexistent by the Auditor in 1996 had already
been corrected by the contractors concerned.
And he certified the case to the Commission Proper pursuant to Rule V
Section 6 of the Revised Rules of Procedure of the COA.[3]
On
request of the Local Government Audit Office of the COA, the projects were
re-inspected by the Technical Audit Specialist, who still found deficiencies in
the completion of the projects in the total amount of P1,039,339.57.
The
COA, by the assailed Decision dated
Upon all the foregoing considerations,
the instant request has to be, as it is hereby denied. However, the disallowance should be reduced
from P1,828,969.66 to P1,039,399.57 based on the result of the
reinspection by the Technical Audit Specialist.
Accordingly, the Auditor is hereby directed to adjust the [Certificate
of Settlement and Balance] and monitor the settlement of the disallowance by
the persons named liable under the Notices of Disallowance and to submit a
periodic report thereon to the Commission.
Hence,
the present petition. Petitioner faults the
COA for having “committed reversible error in the interpretation/application of
the law and acted with grave abuse of discretion amounting to excess of
jurisdiction in the appreciation of the facts and evidence presented,” in
support of which he advances the following arguments:
I. COA relied solely on the findings of the
State Auditor;
II. COA made erroneous findings of fact and law;
III.
Audit report is not in accordance
with prescribed Auditing Standard
IV. Audit
Report was meant to harass
The
first and second arguments are inter-related and will be discussed together.
Petitioner
admits having signed the Certificate of Inspection in which he attested
that the projects were 100% completed.
Significantly, he does not dispute the finding of the COA that
the subject projects were not completed.
He alleges, however, that the COA overlooked the fact that the PSB merely
intended the Inspectorate Team, of which he was a member, to perform monitoring
functions, leaving the strict implementation and supervision of the projects in
the hands of the Provincial Engineering Office.
He thus concludes that he is not the accountable officer and instead
points to the Project Engineer and Provincial Engineer, who are in charge of
the supervision and control of PSB Projects.
In
support of his claim that the duty of strict supervision over PSB projects belongs to
the Provincial Engineering Office and not to the Inspectorate
Team, petitioner invokes PSB Resolution No. 05-96 APPROVING AND
ADOPTING THE NEW GUIDE-LINES/PROCEDURES IN THE IMPLEMENTATION OF PSB PROJECTS approved
on
At
the outset, it bears stressing that petitioner’s reliance on this Resolution is
misplaced, as the same was approved by the PSB only on
But
assuming arguendo that the above-said PSB Resolution accurately reflects
the functions of the Inspectorate Team at the time the events relevant to this
case occurred, it only refutes, rather than strengthens, petitioner’s contention
that the Team was created “merely for monitoring functions.”
The
flow chart[4] clearly
shows that, after the PROJECT IMPLEMENTATION stage, the project must be
inspected by the PROJECT INSPECTORATE TEAM before there can be ACCEPTANCE/TURNOVER
and thereafter, PAYMENT. Notably, there
is no indication that the Inspectorate Team is an unessential part of the
process such that payment may be released to contractors even before it has
performed its functions, as petitioner seems to imply when he claims that it
merely performs monitoring functions. Rather,
it can be deduced from the flow chart that prior examination of the
project by the Inspectorate Team is necessary before there can be acceptance
or turnover of PSB projects and payment to the contractors concerned.
In
light of this function of the Inspectorate Team, its members may be held liable
by the COA for any irregular expenditure of the SEF if their participation in
such irregularity can be established.
While petitioner, in his capacity as member of the Inspectorate Team,
is not an accountable officer as contemplated in Section 101 of P.D. No. 1445,[5]
which states:
SEC. 101. Accountable officers; bond requirement. — (1) Every officer of any government agency whose duties permit or require the possession or custody of government funds or property shall be accountable therefor and for the safekeeping thereof in conformity with law.
(2) Every accountable officer shall be properly bonded in accordance with law,
he may, nonetheless, be held liable
by the COA under the broad jurisdiction vested on it by the Constitution “to
examine, audit, and settle all accounts pertaining to the revenue and
receipts of, and expenditures or uses of funds and property, owned or
held in trust by, or pertaining to, the Government.”[6] In addition, the authority of the COA to hold
petitioner liable is also implied in its duty 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.”[7]
Furthermore,
Section 340 of the Local Government Code (LGC) clearly provides:
SECTION 340. Persons Accountable
for Local Government Funds. — Any officer of the local government unit
whose duty permits or requires the possession or custody of local government
funds shall be accountable and responsible for the safekeeping thereof in
conformity with the provisions of this Title. Other local officers who, though
not accountable by the nature of their duties, may likewise be similarly held
accountable and responsible for local government funds through their
participation in the use or application thereof. (Emphasis and underscoring
supplied)
Since,
as earlier noted, payment should not be made to a contractor without the prior
inspection of the project by the Inspectorate Team, the members thereof who
sign the certificate of inspection participate in the use and application of
local government funds (in this case, the Special Education Fund of the
Province of Oriental Mindoro). Thus, if there
is an irregularity in the performance of this duty, they may be held liable for
any loss that is incurred by the government as a consequence thereof. In this case, there was such irregularity when
petitioner and other members of the Team attested to the 100% completion of the
projects notwithstanding their undisputed deficiencies.
In
another vein, petitioner argues that his membership in the Inspectorate Team is
not a valid basis for the COA to exercise jurisdiction over him since, by his
claim, the creation of such Team is null and void, it being beyond the powers of
the PSB as defined by the LGC.
It
bears noting, however, that Section 99(b) of the LGC, which enumerates the
functions of the PSB, provides that the PSB shall “[a]uthorize the provincial,
city, or municipal treasurer, as the case may be, to disburse funds from the
Special Education Fund pursuant to the budget prepared and in accordance with
existing rules and regulations.” While
this provision does not mandate the PSB to create inspectorate teams, it
implicitly empowers the PSB to institute measures for ascertaining that the disbursements
intended will, in fact, be in accordance with the prepared budget. The creation
of the Inspectorate Team in this case may be considered as one such measure and
is, therefore, not null and void.
Petitioner,
nonetheless, invokes good faith, claiming that he merely relied on the reports
and representations of subordinates and other officers that the subject projects
were already completed.
Specifically,
petitioner alleges that, due to the geographical location of the various PSB
projects, coupled with his immense responsibilities as Provincial Treasurer, he
had to delegate the actual inspection of PSB projects to the Municipal
Treasurers. Moreover, he claims that he
was convinced to sign the Certificate of Inspection by the representation of
the Project Engineer and Provincial Engineer appearing in the Statements of
Work Accomplished that there was 100% project completion, as well as by the existence
of Acceptance Reports issued by officials of the Department of Education Culture
and Sports (DECS).
Petitioner
concludes that he cannot be held liable in view of the doctrine enunciated in Arias
v. Sandiganbayan, to wit:
We can, in retrospect, argue that Arias should have probed records, inspected documents, received procedures, and questioned persons. It is doubtful if any auditor for a fairly sized office could personally do all these things in all vouchers presented for his signature. The Court would be asking for the impossible. All heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies, or enter into negotiations. If a department secretary entertains important visitors, the auditor is not ordinarily expected to call the restaurant about the amount of the bill, question each guest whether he was present at the luncheon, inquire whether the correct amount of food was served, and otherwise personally look into the reimbursement voucher's accuracy, propriety, and sufficiency. There has to be some added reason why he should examine each voucher in such detail. Any executive head of even small government agencies or commissions can attest to the volume of papers that must be signed. There are hundreds of documents, letters, memoranda, vouchers, and supporting papers that routinely pass through his hands. The number in bigger offices or departments is even more appalling.[8] (Emphasis and underscoring supplied)
Circumstances obtaining in this case, however, preclude the
application of Arias.
To
begin with, when petitioner signed the certificate of inspection, he was acting
not in his capacity as treasurer but as a member of the Inspectorate Team. The function of inspecting PSB projects is
not among the duties of a treasurer enumerated in Section 470 of the LGC.[9] Since, petitioner was not then acting as a
head of office, Arias finds no application.
Significantly,
petitioner himself acknowledges the distinction between his office as treasurer
and his position as member of the Inspectorate Team. In fact, he takes it to the extreme, arguing
that, in his capacity as member of the Team, he was not even a public officer:
“It is admitted that herein petitioner being then the Provincial Treasurer of
Oriental Mindoro was a public officer.
But there is a clear and unmistakable distinction between the Office
of Provincial Treasurer and membership in the PSB Inspectorate Team. As a member of the PSB, petitioner was not
vested with public office as such.” (Underscoring supplied) If, as petitioner argues, he was not a public
officer in his capacity as member of the Inspectorate Team, then he certainly could
not have been a head of office in such capacity.
Moreover,
the application of Arias may be barred in certain cases in view of exceptional
circumstances. Thus, in Cruz v.
Sandiganbayan, this Court ruled:
Unlike in Arias, however,
there exists in the present case an exceptional circumstance which
should have prodded petitioner, if he were out to protect the interest of the
municipality he swore to serve, to be curious and go beyond what his
subordinates prepared or recommended. In fine, the added reason contemplated in Arias
which would have put petitioner on his guard and examine the check/s and
vouchers with some degree of circumspection before signing the same was
obtaining in this case.
We refer to the unusual
fact that the checks issued as payment for construction materials purchased by
the municipality were not made payable to the supplier, Kelly Lumber,
but to petitioner himself even as the disbursement vouchers attached
thereto were in the name of Kelly Lumber. The discrepancy
between the names indicated in the checks, on one hand, and those in the
disbursement vouchers, on the other, should have alerted petitioner - if
he were conscientious of his duties as he purports to be - that something
was definitely amiss. x x x[10]
(Emphasis and underscoring supplied)
Such an exceptional circumstance exists in the present
case. Assuming again that PSB Resolution
No. 05-96, which petitioner cites, accurately reflects the functions of the
Inspectorate Team in the implementation of PSB projects, it should have been
clear to petitioner that the acceptance or turnover of PSB projects is effected
only after these projects have gone through the Inspectorate Team. Thus, petitioner should have perceived the
anomaly in the existence of Acceptance Reports executed by DECS officials prior
to the Inspectorate Team’s assessment of the projects and its issuance of a certificate
of inspection. Strangely, rather than
being alerted by this circumstance, petitioner even claims that these
Acceptance Reports were among his bases for signing the Certificate of
Inspection.
The
Court, therefore, finds no grave abuse of discretion on the part of the COA
when it denied petitioner’s appeal.
On
the third ground of the petition — that petitioner cannot be held liable for
the disallowed amount since the COA released the subject Notices of
Disallowance without first issuing a Certificate of Settlement and Balances
(CSB) and a Notice of Suspension, the same is bereft of merit.
Section
3.5 of the Manual on Certificate of Settlement and Balances prescribed by COA
Circular No. 94-001,[11] cited
by petitioner, defines “Certificate of Settlement and Balances” as “[a] written
notification by the auditor to the agency head and the accountable officer
concerned of the total suspensions, disallowances and charges found in audit,
as well as the total settlements thereof.”
Section 11.1.1 of the same document states that the CSB “summarizes all
suspensions, disallowances and charges found in audit, including settlements
thereof, as of a given date.” It can
thus be gathered from the Manual that the CSB is a mere summary of findings in
audit which is furnished to the officers concerned. In the present case, the alleged failure to
issue the CSB could not have prejudiced petitioner, since he was already amply
notified by the COA of his total liability through the issuance of the subject
Notices of Disallowance which were all received by him on the same day.[12]
Neither
is petitioner’s contention that a Notice of Suspension should have been issued
prior to a Notice of Disallowance impressed with merit. “Suspension” is defined by Section 3.18 of
the Manual as “[t]he deferment of action to allow or disallow in audit a transaction
pending compliance with certain requirements.” A Notice of Suspension, as provided in
Section 11.2 of the Manual, informs the concerned officer of the requirements
he must submit to the auditor so that the suspension may be lifted.[13] In the present case, petitioner is being held
liable, not for failure to submit any required document, nor even for the
deficiency in the projects themselves, but for his act of certifying the 100%
completion of these projects when, in fact, they
were not completed. Thus, a Notice of
Suspension would have served no purpose in this case.
In
light of the foregoing discussions, consideration of petitioner’s fourth argument
has become unnecessary.
WHEREFORE,
the petition is DISMISSED.
Costs
against petitioner.
SO ORDERED.
CONCHITA
CARPIO MORALES
Associate Justice
WE CONCUR:
ARTEMIO V.
PANGANIBAN
Chief Justice
|
REYNATO S. PUNO Associate Justice CONSUELO YNARES- Associate Justice |
LEONARDO A. QUISUMBING Associate Justice (ON SICK LEAVE) ANGELINA SANDOVAL-GUTIERREZ Associate Justice |
|
ANTONIO T. CARPIO Associate Justice |
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice |
|
(ON LEAVE) RENATO C. CORONA Associate Justice ADOLFO S. AZCUNA Associate Justice |
ROMEO J. CALLEJO, SR. Associate Justice DANTE O. TINGA Associate Justice |
|
MINITA
V. CHICO-NAZARIO Associate Justice |
CANCIO
C. GARCIA
Associate Justice |
CERTIFICATION
Pursuant to
Article VIII, Section 13 of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court.
ARTEMIO
V. PANGANIBAN
Chief Justice
* On Sick Leave.
** On Leave.
[1] Local
Government Code of 1991, Section 98(b)(1).
[2] SECTION
309. Special Funds. — There
shall be maintained in every provincial, city, or municipal treasury the
following special funds:
(a) Special Education Fund (SEF) shall consist of the respective
shares of provinces, cities, municipalities and barangays in the proceeds of
the additional tax on real property to be appropriated for purposes prescribed
in Section 272 of this Code; x x x
SEC. 272. Application of Proceeds of the Additional One Percent SEF Tax. — The proceeds from the additional one percent (1%) tax on real property accruing to the Special Education Fund (SEF) shall be automatically released to the local school boards: Provided, That, in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards: Provided, however, That the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the Local School Board. (Local Government Code of 1991, underscoring supplied)
[3] Section 6. Power
of Director on Appeal. - The Director may reverse, modify, alter, or
affirm the decision or ruling of the Auditor. However, should the Director
render a decision reversing, modifying or altering the decision or ruling of
the Auditor, the Director shall, within ten (10) days, certify the case and
elevate the entire record to the Commission Proper for review and approval.
[4] Rollo, p. 14.
[5] Ordaining
And Instituting A Government Auditing Code Of The
[6] Constitution, Article IX (D), Section 2(1) (underscoring supplied).
[7] Constitution, Article IX (D), Section 2(2) (underscoring supplied).
[8] G.R. No. 81563, December 19, 1989, 180 SCRA 309, 316.
[9] ARTICLE II. — The Treasurer
SECTION
470. Appointment, Qualifications, Powers, and Duties. — (a) The
treasurer shall be appointed by the Secretary of Finance from a list of at
least three (3) ranking, eligible recommendees of the governor or mayor, as the
case may be, subject to civil service law, rules and regulations.
(b) The treasurer shall be under
the administrative supervision of the governor or mayor, as the case may be, to
whom he shall report regularly on the tax collection efforts in the local
government unit;
(c) No person shall be appointed
treasurer unless he is a citizen of the Philippines, a resident of the local government
unit concerned, of good moral character, a holder of a college degree
preferably in commerce, public administration or law from a recognized college
or university, and a first grade civil service eligible or its equivalent. He
must have acquired experience in treasury or accounting service for at least
five (5) years in the case of the city or provincial treasurer, and three (3)
years in the case of municipal treasurer.
The
appointment of a treasurer shall be mandatory for provincial, city and
municipal governments;
(d) The treasurer shall take charge of the
treasury office, perform the duties provided for under Book II of this Code,
and shall:
(1) Advise the governor or mayor, as the case may
be, the sanggunian, and other local government and national officials concerned
regarding disposition of local government funds, and on such other matters relative
to public finance;
(2) Take custody of and exercise proper
management of the funds of the local government unit concerned;
(3) Take charge of the disbursement of all local
government funds and such other funds the custody of which may be entrusted to
him by law or other competent authority;
(4) Inspect private commercial and industrial
establishments within the jurisdiction of the local government unit concerned
in relation to the implementation of tax ordinances, pursuant to the provisions
under Book II of this Code;
(5) Maintain and update the tax information
system of the local government unit;
(6) In the case of the provincial treasurer,
exercise technical supervision over all treasury offices of component cities
and municipalities; and
(e) Exercise
such other powers and perform such other duties and functions as may be
prescribed by law or ordinance.
[10] G.R. No. 134493,
[11] Prescribing the use of the Manual on Certificate of Settlement and Balances (Revised 1993).
[12] Rollo, p. 4.
[13] The INSTRUCTIONS IN ACCOMPLISHING THE NOTICE OF SUSPENSION/S and the sample NOTICE OF SUSPENSION included in the appendices of the Manual, give the following examples of such requirements: an authorization from the Department Secretary for foreign travel, bidding documents, and authority to receive honorarium.