G.R. No. 247787 , March 02, 2021
Development Bank of the Philippines, Petitioner, vs. Commission on Audit, Respondent.

FACTS

In 2006, the Development Bank of the Philippines (DBP) granted salary increases to eight senior officers totaling P17,380,307.64 based on its 1999 compensation plan. On June 19, 2007, the supervising auditor disallowed the amount due to lack of prior approval from the Office of the President. DBP appealed. On June 2, 2010, the COA Cluster Director denied the appeal and affirmed the disallowance. DBP then filed a petition for review before the COA, invoking a Memorandum dated April 22, 2010, where former President Gloria Macapagal-Arroyo approved the compensation plan retroactively. On February 1, 2012, the COA granted DBP’s petition and lifted the notice of disallowance, ruling that the President’s post facto approval legitimized the compensation plan. DBP received the decision on February 6, 2012, and did not file a motion for reconsideration or appeal.
Subsequently, on March 27, 2012, Mario P. Pagaragan, a DBP Vice President/Officer-In-Charge, submitted confidential letters to the COA seeking reconsideration of its February 1, 2012 Decision. He argued that the President’s April 22, 2010 approval was void for violating Section 261(g)(2) of the Omnibus Election Code, which prohibits salary increases within 45 days before a regular election (the approval was 18 days before the May 10, 2010 elections). On April 13, 2015, the COA treated Pagaragan’s letters as a motion for reconsideration and, exercising its power under Section 52 of Presidential Decree No. 1445 (the Government Auditing Code) to open and revise settled accounts, reversed its February 1, 2012 Decision and reinstated the disallowance. DBP filed a motion for reconsideration, arguing the finality of the February 1, 2012 Decision and Pagaragan’s lack of legal personality. On June 14, 2019, the COA partially granted DBP’s motion, sustaining the disallowance but exempting the approving officers and passive recipients from refund liability based on good faith. DBP filed the present Petition for Certiorari.

ISSUE

1. Whether the COA committed grave abuse of discretion in reopening and reversing its final and executory Decision dated February 1, 2012.
2. Whether Mario P. Pagaragan had the legal personality to initiate the reconsideration.
3. Whether DBP’s right to due process and speedy disposition of cases was violated.

RULING

The Supreme Court GRANTED the Petition. The COA committed grave abuse of discretion.
1. On the Finality of the COA Decision and the Power to Reopen Accounts: The COA Decision dated February 1, 2012 became final and executory after DBP, the aggrieved party, did not appeal within the reglementary period. The COA’s subsequent reversal on April 13, 2015, based on Pagaragan’s letters, violated the doctrine of immutability of final judgments. The power of the COA under Section 52 of P.D. No. 1445 to “open and revise” settled accounts is not absolute; it is limited by the rules on finality of judgments and may only be invoked within three years from settlement on grounds of fraud, collusion, error of calculation, or newly discovered material evidence. Here, the COA’s February 1, 2012 Decision was the “settled account.” The “newly discovered evidence” cited—the violation of the election ban—was a matter of law (the Omnibus Election Code and COMELEC Resolution) of which the COA could have taken judicial notice at the time of its initial decision. It was not newly discovered evidence that could justify reopening a final judgment. The COA’s act of reversing a final decision based on a belatedly raised legal argument constituted grave abuse of discretion.
2. On Pagaragan’s Legal Personality: Pagaragan was not a real party-in-interest or an aggrieved party entitled to file a motion for reconsideration. He was not a recipient of the disallowed benefits, nor was he a party to the audit case. His interest as a DBP officer concerned with proper fund management was merely incidental and insufficient to confer standing. The COA erred in treating his confidential letters as a valid motion for reconsideration.
3. On Due Process and Speedy Disposition: The Court found it unnecessary to rule on these procedural issues given its disposition on the substantive grounds. However, it noted that the COA’s four-year delay in resolving DBP’s motion for reconsideration of the April 13, 2015 Decision was unreasonable and contrary to its own rules mandating resolution within 60 days.
Conclusion: The COA’s April 13, 2015 and June 14, 2019 Decisions were annulled and set aside for having been issued with grave abuse of discretion. The COA Decision dated February 1, 2012, which lifted the notice of disallowance, was reinstated and declared final and executory.