G.R. No. 211376, December 07, 2021
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION, REPRESENTED BY MR. EMMANUEL R. LEDESMA, JR., IN HIS CAPACITY AS PRESIDENT AND CHIEF EXECUTIVE OFFICER, MEMBERS OF THE PSALM BOARD OF DIRECTORS AND THE CONCERNED AND AFFECTED OFFICERS OF PSALM, PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.

FACTS

Power Sector Assets and Liabilities Management Corporation (PSALM), a government-owned and -controlled corporation, had its 2008 Corporate Operating Budget approved by the Department of Budget and Management. The budget required the setting up of a separate account for business development expenses (BDE), subject to Commission on Audit (COA) approval, but PSALM failed to establish this separate account. Through Board Resolution No. 2008-1124-008 and Memorandum Order No. 2008-017, PSALM authorized its officials to incur and claim BDE, with claims to be supported by receipts or certifications. The COA Audit Team Leader issued an Audit Observation Memorandum noting deficiencies in the reimbursed BDE claims amounting to P1,177,027.75, citing incomplete supporting documents (such as receipts for meals and groceries lacking details on purpose and participants) and deficiencies in official receipts (some pre-dating the guidelines or dated on non-working days). PSALM argued its claims were supported by certifications as per its memorandum. The COA Auditor subsequently issued Notice of Disallowance No. 09-0003-(08) disallowing P1,110,078.89 in BDE claims for being irregular, unnecessary, excessive, or extravagant expenditures, in violation of COA Circular No. 85-55-A. PSALM’s appeals to the COA Corporate Government Sector and the COA Proper were denied, prompting the filing of this Petition for Certiorari.

ISSUE

1. Whether Notice of Disallowance No. 09-0003-(08) violates the constitutional guarantee of due process and COA rules.
2. Whether the disallowance of PSALM’s BDE claims has factual and legal bases.

RULING

The Supreme Court dismissed the petition. First, the petition was filed out of time. PSALM received the COA Proper’s Decision on December 11, 2012, and its denial of reconsideration on January 6, 2014, but filed the petition only on February 21, 2014, beyond the 30-day reglementary period under Rule 64. Second, the COA did not commit grave abuse of discretion. The Notice of Disallowance was not void; it was based on the detailed Audit Observation Memorandum, and PSALM was given opportunity to respond. On the merits, the disallowance had factual and legal bases. PSALM failed to comply with the condition in its approved budget to set up a separate BDE account subject to COA approval. The BDE claims lacked complete supporting documents as required by auditing rules; mere certifications were insufficient to establish the validity, correctness, and public purpose of the expenses. The claims were thus properly disallowed as irregular expenditures. The approving and certifying officers, as well as the payees, were held liable for the disallowed amount.