DBP v.

COA 231 SCRA 202 [1994]

Facts: This petition for certiorari seeks the reversal of the May 13, 1992 decision of respondent Commission on Audit
(COA) disallowing the amount of P246,539.25 representing payment of customs duties and taxes for one (1) unit of KVA
Uninterruptible Power Supply (UPS) purchased by petitioner Development Bank of the Philippines (DBP) at a public
bidding conducted by DBP itself. The DBP purchased UPS from Voltronics, but the bid price which the Voltronics offered
was 1,190,00.00 which does not include the customs duties and taxes. The COA exercise their authority to pre-audit the
items and was presumed that they shall allow the DBP to purchase the stocks. But on their post-audit the COA disallowed
DBP on purchasing this items from Voltronics, despite being the lowest price in the bid, they should not include customs
duties and taxes on the bid price since bid price as suppose to the COA is the Amount that DBP should pay.
Issue: Whether or not the COA has the Right to Post audit on matters that concerning biddings that was pre audit.
Ruling: YES, it is clear that the Commission on Audit shall have the power, authority, and duty 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, or any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies,
commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges
and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by
law or the granting institution to submit to such audit as a condition of subsidy or equity (italics supplied). The Decision
of the court here was in favor of DBP since the price bid to be purchased is at par from the price of others.

Eslao v. COA 236 SCRA 161 [1994]

Facts: In 1988, Pangasinan State University(PSU) entered into a Memorandum of Agreement (MOA) with the
Department of Environment and Natural Resources (DENR) to evaluate government reforestation programs in
Pangasinan. The evaluation project was being funded by the government under an Asian Development Bank loan to the
Philippines.
In January 1989, the Board of Regents (BOR) of PSU approved and confirmed the rates of honoraria and per diems for
the PSU personnel involved in the project. Subsequently, PSU issued authority to pay P70, 375.00 representing honoraria
to PSU personnel engaged in the project. This amount was reduced pursuant to the National Compensation Circular
(NCC) #53 which was promulgated by the Department of Budget (DBM) in June 21, 1988. In July 1989, the resident
auditor of PSU alleged that there were excesses in the payment of honoraria based on the provisions of the Compensation
Policy Guidelines (CPG) #80-4 which was promulgated also by the DBM in August 7, 1980. Due to the request of PSU
DBM clarified the matter, thru a letter, saying that the basis for the project's honoraria should not be CPG No. 80-4 which
pertains to locally funded projects but rather NCC No. 53 which pertains to foreign-assisted projects. However, COA
decided against the reconsideration filed by PSU and it argued the following: since under the MOA a Coordinating
Committee shall be created which shall be responsible for the overall administration and coordination of the evaluation to
be chaired by the DENR and co-chaired by the PSU VP for Research and Development this type of project contemplated
under the MOA fits the description of a locally funded project which is an inter-agency activity between DENR and
PSU and therefore it also fits the description of a special project. And (2) COA argues that the DBM ruling classifying
the project as foreign-assisted does not rest on solid ground since loan proceeds, regardless of source, eventually become
public funds for which the government is accountable. Hence any project funded under the ADB loan agreement is
considered to be locally funded.
Issue: WON the NCC No. 53 should govern the payment of honoraria and per diem to the personnel of PSU involved in
the DENR and PSU project. And W/n a post audit may be allowed in such case.
Ruling: The court granted the petition. NCC should apply not CPG 80-4.First, Special project is defined under Sec 2.1 of
the CPG 80-4 as an inter-agency or inter-committee activity or an undertaking by a composite group of
officials/employees from various agencies which [activity or undertaking] is not among the regular and primary functions
of the agencies involved. Power of the Commission on Audit to audit and examine government expenditures is enshrined
in Section 2(1), Article IX-D of the 1987 Constitution. (National Housing Corporation vs. Commission on Audit, 226
SCRA 55 [1993])
There are two components of a special project (1) there should be an inter-agency or inter-committee activity or
undertaking by a group of officials or employees who are drawn from various agencies and (2) the activity or undertaking
involved is not part of the "regular or primary" functions of the participating agencies. The first component refers to the
group of personnel from 2 or more government agencies which will actually carry out the project in the field and not to
the coordinating body. In this case, the project team who will actually carry out the work is composed of only PSU
personnel. Thus, the project team is not a "composite group" as required by the definition of CPG No. 80-4 of "special
projects.

CPG 80-4 was issued 8 years before NCC#53 was promulgated. Examination of the provisions of NCC No. 53 makes it
crystal clear that the circular is applicable to foreign-assisted projects only. Pertinent provision of NCC#53 states that :
prescribe/authorize the classification and compensation rates of positions in foreign-assisted projects (FAPs) including
honoraria rates for personnel detailed to FAPs and guidelines in the implementation thereof pursuant to Memorandum No.
173 dated 16 May 1988 19. Clearly, NCC No. 53 amended the earlier CPG No. 80-4 by carving out from the subject
matter originally covered by CPG No. 80-4 all "foreign-assisted [special] projects." The MOA between PSU and DENR
also state that the project is part of the commitment with the ADB under the Forestry Sector Program Loan and the DERN
certification which states that the project being done by PSU and other state universities are foreign funded under the
ADB/OECF Forestry Sector Program Loan. Second, Under the Administration Code of 1987, the Compensation and
Position Classification Bureau of the DBM "shall classify positions and determine appropriate salaries for specific
position classes and review appropriate salaries for specific position classes and review the compensation benefits
programs of agencies and shall design job evaluation programs."
COA is not authorized under its constitutional mandate to substitute its own judgement for any applicable law or
administrative regulation with the wisdom or propriety of which, however, it does not agree, at least before such law or
regulation is set aside the authorized agency of government or by the courts
Note: COA post audit involves doing the same kind of work under pre-audit and looking at exactly the same
disbursement vouchers and supporting documents already available even prior to payment, except that it is intentionally
done later, or AFTER execution and payment of transactionsAccording to Eslao v COA the post-audit authority is limited
to determining compliance to government laws and regulations like checking if there is an appropriation or budget,
inquiring about the legality of transactions, and checking if proper approval and documentation was followed not to
determine which law is more applicable.