G.R. No. 128001, September 22, 1999
Minerva Franco, petitioner, vs. Commission on Audit and Secretary of the Department of Budget and Management, respondents.

FACTS

Petitioner Minerva P. Franco, Executive Director of the Product Development and Design Center of the Philippines (PDDCP), granted incentive awards to PDDCP officers and employees in December 1990, totaling P520,100.00 (P140,900.00 for Performance Awards and P379,200.00 for Loyalty Awards). State Auditor Lourdes S. de la Cruz suspended the disbursement in post-audit due to lack of authority from the Department of Budget and Management (DBM) to use PDDCP savings for such payment and lack of approval from the Civil Service Commission (CSC) for the proposed grant guidelines. Petitioner subsequently wrote to DBM Secretary Guillermo N. Carague on September 20, 1991, requesting authority to use savings, and to CSC Chairman Patricia A. Sto. Tomas on September 23, 1991, seeking approval of the guidelines. The DBM did not respond to petitioner’s letters. The CSC, in a letter dated November 25, 1992, opined that the grant was in order and the guidelines did not need CSC approval as they were implemented in 1990, prior to the effectivity of the relevant Omnibus Rules. Based on the CSC’s opinion, the State Auditor allowed the disbursement for performance awards but disallowed the P379,200.00 for loyalty awards due to the absence of DBM authority. Petitioner appealed to the Commission on Audit (COA), which affirmed the disallowance in a decision dated November 21, 1996, citing the failure to secure DBM authorization.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in disallowing the disbursement for loyalty awards solely due to the absence of DBM authority, when the request for such authority was still pending with the DBM.

RULING

The petition is meritorious. The Supreme Court granted the writ of mandamus. The Court acknowledged that prior DBM authority is required under Section 49, Book VI of Executive Order No. 292 (Administrative Code of 1987) to use savings for cash awards. While the initial disallowance by the State Auditor for lack of such authority was proper, the COA’s affirmation of the disallowance was improper given that the DBM had not yet acted on PDDCP’s pending request. The Court held it would have been prudent to await the DBM’s action, as the DBM could still grant the authority. The Supreme Court set aside the COA decision and ordered the DBM to act on PDDCP’s request within fifteen days from notice. The COA may render a new decision based on the DBM’s action.