YapvsCOA

F:RamonYapisDepartmentManagerofNationalDevelopmentCompany(aGOCC
withoriginalcharter)andwasappointedasVPforFinanceofManilaGasCorporation(a
subsidiaryofNDC).Theadditionalemploymententitledhimtoanhonorariumof50%of
hisbasicsalaryinNDCandtheallowancesattachedtotheoffice.
MGCissuednoticesofdisallowancesagainstYapwithregardstohissubscriptionto
NatGeoandReadersDigest,carmaintenance,fellowshipwithPCAclubmemberson
Sundayetc.Thedisallowanceswerepredicatedonthegroundsthathisappointmentto
MGC+hisregularpositionasDepartmentManagerofNDC(andsubsequentreceiptof
allowancesandreimbursements)directlycontravenedproscriptioninSec7(2)andSec8,
ArtIXboftheConstitution.
YapappealedtheAuditorsdisallowances,contendingthatthebenefitswereapprovedby
theMGCBoardofDirectors.HisappealwasdeniedbytheCAOII.Yapsought
reconsiderationfromCOAhearguedthathisassignmenttoMGCwasrequiredbythe
primaryfunctionsofhisofficeandallowedbylaw.
RespondentCOAdeniedhisappealandupheldCAOIIsrulingthatthedisallowances
wereprohibitedbytheConstitution.Italsoruledthattheallowancesandreimbursements
claimedbyPfailedtopassthetestofpublicpurposenotenoughthatthepaymentswere
authorizedbytheBoardofDirectorsoftheMGC.Itsalsonecessarythatthepayments
donotcontraveneprinciplesprovidedforunderSec4ofPD1445ontheuseof
governmentfunds,specificallythepublicpurposerequirementunderSec4(2)ofPD1445
(GovtAuditingCodeofthePhilippines).
PetitionerMORdeniedbyCOA.COAruledthatalthoughPwascorrectinarguingthat
therewasnolegalimpedimenttothevalidityofhisappointmentasVPandTreasurerof
MGCandtohisentitlementtocompensationforthe2ndoffice,themoreimportant
considerationistheconditionthatgovernmentfundsorpropertyshallbespentorused
solelyforpublicpurpose.
I/H/Ra:W/NCOAcommittedgaveabuseofdiscretionwhenitusedthepublicpurpose
requirementasbasisinaffirmingthequestioneddisallowances
PARGMGC,asaGOCCissubjecttothejurisdictionofCOAhoweversubjectingthe
salaries,allowancesandbenefitsofMGCemployeestopublicpurposetestiswrong
sincethesalaries,allowancesandbenefitsareintendedtocompensateMGCemployees
forservicesperformedonbehalfofthecorporation.Ifthepublicpurposerequirement
wouldbeappliedinauditingtheS,AandBgiventogovtemployees,nosuch
compensationwouldpassaudit.
SCThemereactofdisbursingpublicfundstopayallowancesandsalariesofgovt

employeesdoesntbyitselfconstitutereleaseofgovernmentfundsforpublicpurpose
thisisasimplisticandnarrowviewofthenatureofgovernmentemployeecompensation.
Justlikeothergovernmentexpenditures,itisnecessarythatthereleaseofpublicfundsto
paysalariesandallowancesofgovernmentemployeesmustnotcontravenethelawon
disbursementofpublicfunds.
Soanydisbursementofpublicfundsmusta)beauthorizedbylawandb)serveapublic
purpose.
Whatisthemeaningofpublicpurpose?Traditionally,itmeantanactivitythatwillserve
asbenefittothecommunityandatthesametimeisadirectlyrelatedfunctionof
government.Currently,theCourthasalreadystatedthatthetermpublicpurposeisnt
definedandshouldbegivenabroadinterpretationsoitshouldalsoincludepurposes
designedtopromotesocialjustice.Publicuse=publicinterest.
Inviewofthepublicpurposerequirement,thedisbursementofpublicfunds,salariesand
benefitsofgovtofficersandemployeesshouldbegrantedtocompensatethemfor
valuablepublicservicesrenderedandthesalariesorbenefitspaidtosuchofficersor
employeesmustbecommensuratewithservicesrendered.Additionalallowancesand
benefitsmustthenbeshowntobenecessaryorrelevanttothefulfilmentoftheofficial
dutiesandfunctionsofthegovtofficersandemployees.
Ptheorywouldleadtotheanomalousconclusionthatgovtofficersandemployeesmay
bepaidenormoussumswithoutlimitorwithoutjustificationnecessaryotherthanthat
suchsumsarebeingpaidtosomeoneemployedbythegovt.Publicfundsarethe
propertyofthepeopleandmustbeusedprudentlyatalltimeswithaviewtoprevent
dissipationandwaste.
W/NCOAcommittedgraveabuseofdiscretionwhenitaffirmedthedisallowancesona
grounddifferentfromtheonereliedonbytheresidentauditor
PARGCOAabandonedthegroundofdoublecompensationasabasisforthe
questioneddisallowancesandaffirmedthesameonthenewgroundthattheallowances
didnotmeetthetestofpublicpurposerequirement.Parguesthatthisisawhimsical
actiononthepartofCOA,sincePhadalreadylegallyjustifiedhisoppositiononthe
originalgroundsonthedisallowances.
COAARGnoprovisionintheConstiandtheGovtAuditingCodeorthe
AdministrativeCodethatrestrictsitspowerandauthoritytoexamineandauditgovt
expenditurestomerelyreviewinganddecidingonthevalidityofthefindingsand
conclusionsofitsauditors.
SCToresolvethisissue,theSCexaminedthepowersvestedinCOAbypertinentlaws
intheland.

1987Consti:COAistheguardianofpublicfundsandisvestedwithbroadpowersover
allaccountspertainingtogovtrevenueandexpendituresandtheuseofpublicfundsand
propertyincludingtheexclusiveauthoritytodefinethescopeofitsauditand
examination,establishthetechniquesandmethodsforsuchreviewandpromulgate
accountingandauditingrulesandregulations
Sec11,Chap4,SubtitleB,TitleI,BookVofAdminCodeof1987:echoesthis
constitutionalmandategiventoCOAregardingitsgeneraljurisdiction
Jurisprudence:CourthaspreviouslydeclaredthatCOAisendowedwithenoughlatitude
todetermine,preventanddisallowirregular,unnecessary,excessive,extravagantor
unconscionableexpendituresofgovernmentfunds.
So,basedonthepreviousparagraphsandtheabsenceofanylaworjurisprudencesaying
otherwise,SCrulesthatinresolvingcasesbroughtbeforeitonappeal,COAisnot
requiredtolimititsreviewonlytothegroundsreliedonbyagovernmentagencys
auditorwithrespecttodisallowingcertaindisbursementsofpublicfunds.COAisnotjust
legallypermittedbutitisalsodutyboundtomakeitsownassessmentofthemeritsofthe
disalloweddisbursementandnotsimplyrestrictitselftoreviewingthevalidityofthe
groundreliedonbytheauditorofthegovtagencyconcerned.
Evenassumingthatthepublicpurposerequirementisrelevanttothepresentcase,COA
stillcommittedgraveabuseofdiscretionwhenitdisallowedalltheallowancesreceived
bytheP.
PARGbasicmonthlyallowances,executivecheckupandgasolineallowancesshould
notbedisallowedastheyarenormallygiventoofficersofcorporations,whetherprivate
orgoc
SCNo.Aspreviouslydiscussed,COAisinthebestpositiontodeterminewhich
allowancesandbenefitsmayproperlybeallowedunderthecircumstances,beingthesole
constitutionalbodymandatedtodoso.
Also,thatcertainallowancesareenjoyedbycorporateofficersintheprivatesector
doesntjustifythegrantofthesamebenefitstosimilarlydesignatedpublicofficerseven
iftheyareofficersofGOCCswhichperformpurelyproprietaryfunctions.Thefundsof
GOCCsarestillpublicfundsandthatisthereasonwhytheyaresubjecttoauditbyCOA.
Sothereisadistinctionbetweentheofficersofpubliccorporationsandthoseofprivate
corporations.
ItwasincumbentonPtoshowthathisallowancesandbenefitswereauthorizedbylaw
andthattherewasadirectandsubstantialrelationshipbetweentheperformanceofhis
publicfunctionsandthegrantofthedisputedallowancestohim.

Ru:Petitionisdismissed