Johanson V. Disuanco vs. Villafuerte

Only the Supreme Court has jurisdiction to review decisions, orders, or rulings of the Commission on Audit on certiorari; a Regional Trial Court cannot entertain a petition for certiorari assailing a Notice of Disallowance issued by a COA Auditor, and the aggrieved party must first exhaust administrative remedies by appealing to the COA Director and then the Commission Proper before seeking judicial review.

The Commission on Audit, as an independent constitutional commission under Article IX of the 1987 Constitution, is vested with exclusive authority to examine, audit, and settle all accounts pertaining to government funds and to promulgate auditing rules and regulations, including those for the prevention and disallowance of irregular expenditures. Pursuant to this authority, the COA promulgated the 2009 Revised Rules of Procedure, which establish a specific appellate mechanism: from the Auditor to the COA Director, then to the Commission Proper, and finally to the Supreme Court on certiorari. This framework finds statutory basis in P.D. No. 1445 (Government Auditing Code) and constitutional anchor in Section 7, Article IX-A of the 1987 Constitution, which provides that any decision, order, or ruling of each Constitutional Commission may be brought to the Supreme Court on certiorari.

On December 16, 2014, the Sangguniang Panlalawigan of Camarines Sur enacted Ordinance No. 039, series of 2014, authorizing the General Fund Annual Budget for FY 2015 in the amount of ₱2,214,525,491.00, and Resolution No. 516, series of 2014, authorizing then Governor Miguel Luis R. Villafuerte to grant additional allowances to public school teachers, barangay health workers, barangay officials, barangay tanods, day care workers, and barangay nutrition scholars in the Province of Camarines Sur. For fiscal year 2015, the Provincial Government disbursed a total of ₱2,406,939.00 in additional allowances pursuant to these enactments.

On February 26, 2016, petitioners — members of COA Audit Group LGS-C, Province of Camarines Sur — issued Audit Observation Memorandum No. 2016-11-100-01(2015), containing two principal observations: first, that the Provincial Government had paid approximately ₱1.4 million in additional allowances to barangay officials contrary to Section 4.2 of Budget Circular No. 63; and second, that the necessity of granting ₱0.92 million to selected school officials and employees could not be ascertained due to incomplete documentary evidence, contrary to COA Circular Nos. 2012-001 and 2012-003. The AOM recommended that the province refrain from granting additional allowances to barangay officials and that identified claimants refund ₱14,000.00. The Provincial Government, through its Internal Audit Office, replied that the allowances were disbursed pursuant to a duly-enacted Sangguniang Panlalawigan ordinance and resolution, which enjoyed the presumption of validity, and that an administrative issuance such as DBM Local Circular No. 63 could not invalidate the ordinance.

Thereafter, on December 9, 2016, petitioners issued ND No. 2016-002-100(2015), disallowing the amount of ₱1,412,839.00 and holding respondent liable together with other persons. The ND was grounded on two reasons: first, the grant of additional allowances to barangay officials by the province was expressly prohibited by Section 4.2 of Local Budget Circular No. 63; and second, the sole basis for the allowances was Sangguniang Panlalawigan Resolution No. 516, series of 2014, which cited Section 468(1) of R.A. No. 7160 as legal basis, but R.A. No. 7160 did not authorize the Sangguniang Panlalawigan to provide for such allowances.

Upon receipt of the ND on December 20, 2016, respondent filed a petition for certiorari under Rule 65 before the RTC of Pili, Camarines Sur, Branch 33, docketed as Spec. Civil Action No. P-169-2017, instead of appealing to the COA Director as prescribed by the COA Rules. The RTC partially granted the petition on April 25, 2019, upholding the ND for absence of grave abuse of discretion in its issuance but deleting respondent's personal liability for lack of malice or bad faith. Dissatisfied, petitioners elevated the matter directly to the Supreme Court via a petition for review on certiorari under Rule 45, raising pure questions of law.

• Improper Remedy: Petitioners contended that a petition for certiorari under Rule 65 is not the proper mode of review to assail a Notice of Disallowance issued by the COA, and that the RTC should have dismissed the petition outright. Under Rule V of the 2009 Revised Rules of Procedure of the COA, an aggrieved party must appeal the Auditor's decision to the COA Director having jurisdiction over the agency under audit, and thereafter to the Commission Proper, within six months.
• Violation of the Local Government Code: Petitioners argued that the grant of additional allowances to barangay health workers, barangay officials, barangay tanods, day care workers, and barangay nutrition scholars violated Section 468(1)(xi) of R.A. No. 7160, as there is no express mention of these officials as recipients of additional allowances and benefits.
• Solidary Liability: Petitioners equated the absence of legal basis for the allowances, coupled with the prohibition under DBM Local Budget Circular No. 63 against the grant of additional compensation to barangay officials from provincial, city, municipal, or barangay funds, with bad faith, for which respondent must be held solidarily liable for the return of the disallowed funds.

• Proper Remedy: Respondent countered that a petition for certiorari under Rule 65 is the proper remedy to nullify the ND issued with grave abuse of discretion, and that his case falls as an exception to the doctrine of exhaustion of administrative remedies since the question involved is purely legal and would ultimately be decided by the courts. He maintained that he did not raise errors of judgment on the part of the COA but rather the latter's acts showing grave abuse of discretion.
• Validity of Allowances: Respondent claimed that the grant of additional allowances to the enumerated barangay personnel did not violate Section 468(1)(xi) of R.A. No. 7160 and that he acted in good faith pursuant to a validly enacted ordinance.

• Jurisdiction of the RTC: Whether the RTC has jurisdiction to entertain a petition for certiorari under Rule 65 assailing a Notice of Disallowance issued by a COA Auditor.
• Proper Mode of Review: Whether a petition for certiorari under Rule 65 is the proper mode of review to assail a Notice of Disallowance by the COA, or whether administrative remedies under the COA Rules must first be exhausted.
• Validity of Allowances: Whether the grant of additional allowance to barangay health workers, barangay officials, barangay tanods, day care workers, and barangay nutrition scholars violated Section 468(1)(XI) of R.A. No. 7160.
• Solidary Liability: Whether respondent is solidarily liable for the disallowed amount.

• Jurisdiction of the RTC: No. The RTC has no jurisdiction to entertain a petition for certiorari over a COA Auditor's Notice of Disallowance. Section 7, Article IX-A of the Constitution and Section 50 of P.D. No. 1445 vest certiorari jurisdiction over COA decisions exclusively in the Supreme Court, and the RTC's general jurisdiction under B.P. 129 must yield to these specific provisions.
• Proper Mode of Review: No. A petition for certiorari under Rule 65 before the RTC is not the proper remedy. The aggrieved party must appeal to the COA Director, then to the Commission Proper, and only thereafter file a petition for certiorari with the Supreme Court under Rule 64 in relation to Rule 65. The ND became final and executory when respondent failed to appeal within the six-month reglementary period.
• Validity of Allowances: N/A — The Court found it no longer necessary to tackle this issue, as the reinstatement of the ND rendered the discussion academic.
• Solidary Liability: N/A — The Court found it no longer necessary to tackle this issue for the same reason.

• Jurisdiction of the RTC: The Constitution created the COA as an independent constitutional commission and vested in the Supreme Court — not the RTC — the exclusive authority to review COA decisions on certiorari. Section 7, Article IX-A provides that any decision, order, or ruling of each Constitutional Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days. Section 50 of P.D. No. 1445 similarly provides that a party aggrieved by any decision of the Commission may appeal on certiorari to the Supreme Court. While the RTC has general original jurisdiction to issue writs of certiorari under Section 21 of B.P. 129, this general legislation must yield to the specific constitutional and statutory provisions designating the Supreme Court as the sole court with certiorari jurisdiction over COA decisions, pursuant to the principle of lex specialis derogat generali. Because jurisdiction over the subject matter is conferred by law and cannot be acquired by consent or acquiescence, the RTC's decision reviewing the ND is void for having been rendered despite lack of jurisdiction.

• Proper Mode of Review: The COA Rules establish a specific appellate framework: the Auditor issues the ND, which is considered an audit decision; the aggrieved party may appeal to the COA Director within six months; the Director's decision is subject to automatic review by the Commission Proper if it reverses, modifies, or alters the Auditor's decision; and only after the Commission Proper renders a decision may the aggrieved party file a petition for certiorari with the Supreme Court within thirty days. The fact that the question involved is purely legal does not authorize bypassing this process, because most COA Auditor decisions inherently involve questions of law — the COA's authority includes inquiring into the legal basis for disbursements of public funds. Respondent's filing of a petition for certiorari with the RTC, a court without jurisdiction, did not toll the six-month appeal period. Consequently, ND No. 2016-002-100(2015) became final and executory by operation of law upon the lapse of that period. A final and executory judgment is immutable and unalterable and can no longer be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law. The RTC gravely erred in taking cognizance of the petition, and its pronouncements on the contents of the ND are void; the ND must be reinstated with its original dispositions.

• Exhaustion of Administrative Remedies in COA Proceedings — A party aggrieved by a Notice of Disallowance issued by a COA Auditor must first appeal to the COA Director, then to the Commission Proper, before seeking judicial review. Only the Supreme Court, not the RTC, has certiorari jurisdiction over COA decisions. The Court applied this doctrine by holding that respondent's resort to a Rule 65 petition before the RTC, instead of following the COA's administrative appeal process, was improper and did not toll the reglementary period for appeal, causing the ND to become final and executory.

• Lex Specialis Derogat Generali — General legislation must yield to special legislation on the same subject; where two statutes are of equal theoretical application to a particular case, the one specially designed therefor should prevail. The Court applied this principle by ruling that the RTC's general jurisdiction to issue writs of certiorari under B.P. 129 must give way to the specific constitutional and statutory provisions (Section 7, Article IX-A of the Constitution and Section 50 of P.D. No. 1445) vesting certiorari jurisdiction over COA decisions exclusively in the Supreme Court.

• Finality and Immutability of Judgments — Once a decision becomes final and executory, it is immutable and unalterable and can no longer be modified in any respect, even if the modification is meant to correct what is perceived as an erroneous conclusion of fact or law, regardless of whether the modification is attempted by the court rendering it or by the highest court of the land. The Court applied this doctrine by holding that the ND became final and executory after the lapse of the six-month period without an appeal being perfected, rendering it immutable and requiring its reinstatement.

• "Hence, with the presence of a rule specifying that any decision, order, or ruling of the COA may be brought to the Supreme Court on certiorari, the RTC erroneously took cognizance of Spec. Civil Action No. P-169-2017, which reviewed the ND No. 2016-002-100 (2015) issued by the COA Auditors. With this, it necessarily follows that its decision thereon is void for having been rendered despite its lack of jurisdiction over the subject matter." — This passage states the ratio decidendi: the RTC lacked jurisdiction over the petition for certiorari assailing a COA ND, and its decision is void.

• "While an ND issued by a COA Auditor have the force of a decision rendered by the Commission itself, the remedy of appeal under the COA Rules granted to an aggrieved party, makes the ND susceptible to review and modifications. Upon the lapse of the six-month period without an appeal being taken, the ND becomes a decision of the Commission itself, which has the effect of a final and executory decision." — This passage explains the procedural framework governing COA Notices of Disallowance and the consequence of failing to appeal within the reglementary period.

• "It is a long-standing rule in statutory construction that general legislation must give way to special legislation on the same subject, and generally is so interpreted as to embrace only cases in which the special provisions are not applicable - lex specialis derogat generali." — This articulates the principle of lex specialis applied to resolve the jurisdictional conflict between the RTC's general certiorari jurisdiction and the specific provisions vesting such jurisdiction over COA decisions in the Supreme Court.

• Barrio Fiesta Restaurant vs. Beronia, 789 Phil. 520 (2016) — Cited for the doctrine that once a decision becomes final and executory, it is immutable and unalterable, and can no longer be modified in any respect. The Court relied on this to hold that the ND, having become final, must be reinstated as originally worded.
• Nieves vs. Duldulao, 731 Phil. 189 (2014) — Cited for the principle of lex specialis derogat generali, supporting the ruling that the RTC's general certiorari jurisdiction under B.P. 129 must yield to the specific provisions vesting certiorari jurisdiction over COA decisions in the Supreme Court.
• Bilag vs. Ay-ay, 809 Phil. 236 (2017) — Cited for the definition of jurisdiction over the subject matter and the rule that a court without jurisdiction has only the power to dismiss the action, supporting the conclusion that the RTC's decision is void.

• Section 7, Article IX-A, 1987 Constitution — Provides that any decision, order, or ruling of each Constitutional Commission (including the COA) may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt. Applied to establish that only the Supreme Court has certiorari jurisdiction over COA decisions, excluding the RTC.
• Section 50, P.D. No. 1445 (Government Auditing Code) — Provides that a party aggrieved by any decision, order, or ruling of the Commission may appeal on certiorari to the Supreme Court within thirty days. Applied as statutory basis for the exclusive certiorari jurisdiction of the Supreme Court over COA decisions.
• Section 48, P.D. No. 1445 — Provides that a person aggrieved by the decision of an auditor may appeal in writing to the Commission within six months from receipt. Applied to establish the administrative remedy available before seeking judicial review and to determine the reglementary period within which respondent should have appealed.
• Rules IV, V, VII, X, and XII, 2009 Revised Rules of Procedure of the COA — Outline the appellate mechanism from the Auditor to the Director, to the Commission Proper, and finally to the Supreme Court. Applied to demonstrate the specific procedural framework that respondent failed to follow.
• Section 21, B.P. 129 — Confers on Regional Trial Courts original jurisdiction to issue writs of certiorari. Distinguished as general legislation that must yield to the specific constitutional and statutory provisions vesting certiorari jurisdiction over COA decisions in the Supreme Court.
• Section 305, R.A. No. 7160 (Local Government Code) — Sets forth fundamental principles on the use of local government funds, including that no money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law. Cited to explain why COA audit decisions typically involve questions of law, as the COA's authority includes inquiring into the legal basis for disbursements.

Gesmundo, C.J., Perlas-Bernabe, Leonen, Caguioa, Hernando, Carandang, Lazaro-Javier, Inting, Zalameda, M. Lopez, Gaerlan, and Rosario, JJ.