Bustamante vs. Commissioner on Audit

A government official assigned a government motor vehicle may not simultaneously claim transportation allowance, COA Circular No. 75-6 rendering the two benefits mutually exclusive, and the Commission on Audit's disallowance of such a claim does not constitute grave abuse of discretion.

Petitioner Benito M. Bustamante served as Regional Legal Counsel of the National Power Corporation (NPC) for the Northern Luzon Regional Center, covering the provinces from Rizal to Batanes. In that capacity, he was issued a government vehicle bearing plate number SCC 387. The NPC, a government-owned and controlled corporation created under Republic Act No. 6395, had adopted Board Resolution No. 81-95 dated April 20, 1981, authorizing the monthly reimbursement of representation and transportation allowances to employees, implemented through Circular 81-11 dated April 22, 1988. The Commission on Audit, exercising its constitutional mandate to examine, audit, and settle accounts pertaining to government funds and property, had promulgated COA Circular No. 75-6 dated November 7, 1975, regulating the use of government motor vehicles and prohibiting officials furnished motor transportation from also using government vehicles operated and maintained from appropriated funds.

Petitioner Benito M. Bustamante was the Regional Legal Counsel of the National Power Corporation (NPC) for the Northern Luzon Regional Center, a jurisdiction spanning the provinces from Rizal up to Batanes. In that position, he was issued a government vehicle bearing plate number SCC 387. Pursuant to NPC policy as reflected in Board Resolution No. 81-95, which authorized the monthly disbursement of transportation allowance, petitioner claimed his transportation allowance for the month of January 1989 in the amount of ₱1,250.00, in addition to his use of the assigned government vehicle.

On May 31, 1990, petitioner received an Auditor's Notice to Person Liable dated April 17, 1990 from respondent Regional Auditor Martha Roxana Caburian, disallowing the ₱1,250.00 transportation allowance claim. Petitioner moved for reconsideration of the disallowance in a letter to the Regional Auditor dated June 18, 1990. The Regional Auditor denied the motion in a letter dated June 27, 1990, expressing serious doubts as to the nature of the use of the vehicle assigned to petitioner.

Petitioner then appealed the denial to the Commission on Audit in Quezon City. The Commission denied due course to the appeal in its Decision dated February 5, 1991. The Commission's factual finding that petitioner was indeed assigned a government vehicle was conclusive. It was on the basis of COA Circular No. 75-6, which prohibits officials furnished motor transportation allowance from also using government vehicles, that the transportation allowance was disallowed. Petitioner thereafter filed the present petition for certiorari with preliminary injunction before the Supreme Court.

• Exclusion from COA Circular Coverage: Petitioner contended that COA Circular No. 75-6 did not mention the NPC as one of the corporations or offices covered by it, and therefore should not apply to his claim.
• NPC's Own Policy Authorizing the Allowance: Petitioner argued that under the NPC Charter, Republic Act No. 6395, the NPC has the power to formulate and adopt policies and measures for its management and operation, and that pursuant thereto, NPC passed Board Resolution No. 81-95 authorizing the monthly reimbursement of representation and transportation allowance, implemented by Circular 81-11.
• Usurpation of NPC Board Functions: Petitioner maintained that the Commission on Audit, in disallowing the claim, usurped the statutory functions of the NPC Board of Directors, effectively allowing a mere board resolution of a government-owned and controlled corporation to override a constitutional provision.
• Improper Basis for Disallowance: Petitioner faulted the Regional Auditor for relying on her serious doubts as to the nature of the use of the vehicle assigned to him as the basis for the disallowance.

• Grave Abuse of Discretion: Whether the denial of due course to petitioner's appeal by the Commission on Audit constitutes grave abuse of discretion amounting to lack of jurisdiction.
• Applicability of COA Circular No. 75-6 to NPC: Whether COA Circular No. 75-6 covers the National Power Corporation notwithstanding the absence of its express mention in the circular.
• Primacy of COA Constitutional Authority over NPC Board Resolution: Whether an NPC Board resolution authorizing transportation allowance can override the Commission on Audit's constitutional power to audit and disallow expenditures of government-owned and controlled corporations.

• Grave Abuse of Discretion: No. The denial of due course to petitioner's appeal did not constitute grave abuse of discretion, the Commission on Audit having acted within its constitutional power to examine, audit, and settle accounts pertaining to government funds.
• Applicability of COA Circular No. 75-6 to NPC: Yes. COA Circular No. 75-6 applies to the NPC, the circular being addressed, among others, to managing heads of government-owned or controlled corporations, a category to which the NPC belongs.
• Primacy of COA Constitutional Authority over NPC Board Resolution: No. An NPC Board resolution cannot override the Commission on Audit's constitutional mandate; sustaining the contrary would render the constitutional body inutile and lead to the absurd conclusion that a mere board resolution can nullify a constitutional provision.

• Grave Abuse of Discretion: Grave abuse of discretion implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, or an arbitrary or despotic exercise of power by reason of passion or personal hostility, so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined by law. The discretion exercised by the Commission on Audit in denying due course to petitioner's appeal falls squarely within its constitutional power to examine, audit, and settle accounts pertaining to expenditures of government-owned and controlled corporations. Construed in light of applicable law and rules, the COA decision disallowing the claim does not exhibit any of the characteristics of grave abuse of discretion warranting its nullification.

• Applicability of COA Circular No. 75-6 to NPC: Petitioner's contention that the circular did not expressly mention NPC was rejected. The circular is addressed, among others, to managing heads of government-owned or controlled corporations, and the NPC falls squarely within that category. The circular's prohibition against the use of government vehicles by officials provided with transportation allowance is categorical and admits of no exception for NPC. The use of a government motor vehicle and the claim for transportation allowance are mutually exclusive; it was on this basis that the ₱1,250.00 transportation allowance was disallowed.

• Primacy of COA Constitutional Authority over NPC Board Resolution: Petitioner's argument that the COA usurped the statutory functions of the NPC Board of Directors was likewise rejected. To sustain that position would lead to the absurd conclusion that a mere board of directors of a government-owned and controlled corporation, by issuing a resolution, could put to naught a constitutional provision ratified by the majority of the Filipino people. The Court emphasized that denying the Commission's power and duty to examine, audit, and settle accounts pertaining to expenditures of the NPC would render inutile the constitutional body tasked with safeguarding the proper use of government and ultimately the people's property. The issue of the nature of the use of the vehicle, which petitioner faulted the Regional Auditor for relying upon, was held immaterial, as the COA circular's prohibition is categorical regardless of the nature of use.

• Grave Abuse of Discretion — Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. The Court applied this standard and found that the COA's denial of due course to petitioner's appeal fell within its constitutional power and did not constitute grave abuse.

• Mutual Exclusivity of Government Vehicle Use and Transportation Allowance — Under COA Circular No. 75-6, an official furnished a government motor vehicle may not simultaneously claim transportation allowance; the two benefits are mutually exclusive. The Court applied this rule categorically, holding that the nature of the vehicle's use was immaterial because the prohibition itself is absolute.

• Primacy of Constitutional Audit Authority over Corporate Board Resolutions — A board resolution of a government-owned and controlled corporation cannot override the constitutional mandate of the Commission on Audit to examine, audit, and settle accounts pertaining to government funds and property. The Court relied on this principle to reject petitioner's claim that NPC Board Resolution No. 81-95 authorized his transportation allowance notwithstanding COA Circular No. 75-6.

• "The use of government motor vehicle and the claim for transportation allowance are mutually exclusive. It is on this basis that the P1,250.00 transportation allowance was disallowed." — This passage states the controlling rule applied by the Court: the categorical prohibition under COA Circular No. 75-6 against the simultaneous enjoyment of both benefits, regardless of the nature or purpose of the vehicle's use.

• "If We will not sustain the Commission's power and duty to examine, audit and settle accounts pertaining to this particular expenditures or use of funds and property, owned or held in trust by this government-owned and controlled corporation, the NPC, We will be rendering inutile this Constitutional Body which has been tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and ultimately, the people's property." — This passage articulates the ratio decidendi for upholding the COA's authority over NPC's internal board resolutions, grounding the holding in the constitutional design of the Commission on Audit as guardian of public funds.

• Dimayacyac vs. Court of Appeals, 93 SCRA 265 (1970) — Cited for the definition of grave abuse of discretion as capricious and whimsical exercise of judgment equivalent to lack of jurisdiction.
• Alhambra Cigar & Cigarette Mfg. Co., Inc. vs. National Administrator of Regional Office No. 2, Dept. of Labor, 14 SCRA 1019 (1965) — Cited alongside Dimayacyac as supporting authority for the definition of grave abuse of discretion.
• Hamoy vs. Hon. Sec. of Agriculture & Natural Resources, et al., 106 Phil. 1046 (1960) — Cited as further supporting authority for the definition of grave abuse of discretion.

• Article XII-D, Section 2(1), 1973 Constitution (corresponding to Article IX-D, Section 2, 1987 Constitution) — Grants the Commission on Audit the power, authority, and duty to examine, audit, and settle all accounts pertaining to revenue and receipts of, and expenditures or uses of funds and property owned or held in trust by the government or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations. The Court relied on this provision to uphold the COA's authority to disallow petitioner's claim.
• COA Circular No. 75-6, dated November 7, 1975 — Regulates the use of government motor vehicles, aircraft, and watercraft. Section VI prohibits officials furnished motor transportation allowance from using government vehicles operated and maintained from appropriated funds. The Court applied this circular categorically to disallow petitioner's transportation allowance.
• Section 14, Presidential Decree No. 733 — The statutory basis cited within COA Circular No. 75-6 for the prohibition against the simultaneous use of government vehicles and receipt of transportation allowance.
• Section 6(a), Republic Act No. 6395 (NPC Charter) — Grants the NPC the power to formulate and adopt policies and measures for the management and operation of the corporation. Petitioner invoked this provision to argue that NPC's Board Resolution No. 81-95 authorized his transportation allowance; the Court rejected this argument as subordinate to the COA's constitutional authority.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, and Melo, JJ., concurred.