G.R. No. 175803, December 4, 2009
GOVERNOR ORLANDO A. FUA, JR., IN REPRESENTATION OF THE PROVINCIAL GOVERNMENT OF SIQUIJOR AND ALL ITS OFFICIALS AND EMPLOYEES, Petitioners, vs. THE COMMISSION ON AUDIT and ELIZABETH S. ZOSA, DIRECTOR IV, LEGAL AND ADJUDICATION OFFICE-LOCAL COMMISSION OF AUDIT, QUEZON CITY, PHILIPPINES, Respondents.

FACTS

On November 14, 2003, the Sangguniang Panlalawigan of Siquijor adopted Resolution No. 2003-247 and Appropriation Ordinance No. 029, segregating ₱8,600,000.00 to grant an extra Christmas bonus of ₱20,000.00 each to all provincial officials and employees. The Provincial Government, through Governor Orlando B. Fua, requested authority from President Gloria Macapagal Arroyo, who wrote a marginal note “NO OBJECTION” on the request letter. Relying on this, the province released the bonuses. However, post-audit by Audit Team Leader Eufemia C. Jaugan resulted in Audit Observation Memoranda questioning the legality of the payment, citing Budget Circular No. 2003-7 (limiting extra Christmas bonus to ₱5,000.00) and Section 325(a) of the Local Government Code (55% limitation on Personal Services expenditures). Subsequently, Regional Cluster Director Atty. Roy L. Ursal issued Notices of Disallowance totaling ₱6,345,000.00, citing violation of Budget Circular No. 2002-A (prohibiting increases in compensation not in accordance with the Salary Standardization Law and unauthorized benefits without prior presidential approval, and noting that the President’s marginal note was not an approval) and exceeding the Personal Services limitation. Petitioner’s motion for reconsideration was denied by the Regional Cluster Director. An appeal to the COA-Legal and Adjudication Office-Local (COA-LAO-Local), headed by Director Elizabeth S. Zosa, was denied in a Decision dated October 19, 2006, affirming the disallowance. Petitioner filed the present Petition for Certiorari directly with the Supreme Court.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the extra Christmas bonus.

RULING

The Supreme Court DISMISSED the petition for lack of merit. The Court held that petitioner failed to exhaust administrative remedies by not appealing the Decision of the COA-LAO-Local Director to the Commission Proper (the full Commission on Audit) as required under the 1997 Revised Rules of Procedure of the COA (Rule VI, Section 1). The general rule on exhaustion of administrative remedies mandates that issues within an agency’s competence must first be resolved by that agency before judicial intervention is sought. The Court found no exception to this rule, rejecting petitioner’s claim that the issue was purely legal, as the Commission Proper was best suited to determine factual matters like the authenticity and legal effect of the President’s marginal note. Furthermore, a petition for certiorari under Rule 65 is only available when there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. Since an appeal to the Commission Proper was available, certiorari was not the proper remedy. Consequently, the Decision of the COA-LAO-Local had become final and executory and could no longer be altered.