TESDA vs. Commission on Audit

Duplicate payment of extraordinary and miscellaneous expenses from two funds to the same officials is unauthorized where the General Appropriations Act fixes a single ceiling and names only specific officials and those of equivalent rank authorized by the Department of Budget and Management, but only the approving officers in bad faith, not good-faith passive recipients, are liable to refund the excess.

The Technical Education and Skills Development Authority is a government instrumentality established under Republic Act No. 7796, whose budget for implementation of the Act is included in the annual General Appropriations Act. Its foreign-assisted Technical Education and Skills Development Project Fund, sourced from the Treasury, constitutes public funds in the hands of public officials. The Commission on Audit is constitutionally vested with exclusive authority to examine government expenditures and to prevent and disallow irregular, unnecessary, excessive, extravagant, or unconscionable uses of public funds.

TESDA is headed by a Director-General as chief executive of its Secretariat, which proposes resource allocations and exercises supervision over technical and administrative personnel. For calendar years 2004 to 2007, TESDA paid extraordinary and miscellaneous expenses twice each year to its officials, once from the General Fund for locally-funded projects and again from the Technical Education and Skills Development Project Fund for foreign-assisted projects. The General Provisions of the 2004-2007 General Appropriations Acts authorized appropriations to be used for extraordinary expenses of enumerated officials and those of equivalent rank as may be authorized by the Department of Budget and Management, not exceeding fixed amounts per rank, plus miscellaneous expenses not exceeding P50,000 for each of the offices under them, later increased to P60,000.

Upon post-audit, the TESDA audit team leader found the payments excessive and extended to officials whose positions were not of equivalent rank authorized by the Department of Budget and Management. On 15 May 2008 the audit team issued Notice of Disallowance No. 08-002-101 (04-06) for P5,498,706.60, holding liable the approving officers, payees, and accountants who certified the vouchers. The payees included Director-Generals Alcestis Guiang and Augusto Boboy Syjuco, Jr., deputy directors general, executive directors, project officers, and accounting division chiefs. According to TESDA, the General Fund and TESDP Fund were distinct, and officials designated concurrently as project officers were entitled to separate extraordinary and miscellaneous expenses from each fund so long as the ceiling for each fund was not exceeded, pursuant to various memoranda issued by then Director-General Syjuco as TESDP Project Director. Syjuco himself received P809,691.11 from the TESDP Fund.

The COA Cluster Director denied the appeal, finding the GAA ceiling controlling regardless of source fund, the project manager designations mere additional functions without another appointment or Personnel Service Itemization and Department of Budget and Management authority, and reassigned regional directors in the Office of the Director-General not separately entitled where that office already claimed the amount. The Commission on Audit affirmed, emphasizing the clear ceiling and ordering refund of the excess for failure to adhere to the appropriations laws.

• Dual Payment from Separate Funds: Petitioner argued that the 2004-2007 GAAs and the Government Accounting and Auditing Manual allowed the grant of extraordinary and miscellaneous expenses from both the General Fund and the TESDP Fund provided the legal ceiling was not exceeded for each fund, the two funds being distinct and the officials having been designated as project officers concurrently with regular functions.
• Ceiling and Authorization: Petitioner maintained that Sections 23, 25 and 26 of the General Provisions of the 2004-2007 GAAs did not prohibit receipt of additional extraordinary and miscellaneous expenses chargeable against another authorized funding for another office to which officials had been designated, characterizing the grant as institutional practice.
• Good Faith and De Facto Officers: Petitioner argued that its officers were individually shielded from liability for the P5,498,706.60 disallowance as de facto officers in good faith entitled to extraordinary and miscellaneous expenses for actual services rendered.
• Cantillo vs. Arrieta: Petitioner maintained that the ruling in Cantillo vs. Arrieta on de facto officers supported non-liability and had been disregarded by the Commission on Audit.

• Validity of Dual EME Payments: Whether the Commission on Audit gravely erred in disallowing TESDA's payments of extraordinary and miscellaneous expenses to its officials from both the General Fund and the TESDP Fund.
• Ceiling and Entitlement: Whether the concerned TESDA officials' claims were unauthorized and excessive in light of the ceilings in Sections 23, 25 and 26 of the General Provisions of the 2004-2007 GAAs and the requirement of equivalent rank authorized by the Department of Budget and Management.
• Refund Liability and Good Faith: Whether TESDA officers are individually liable for the total disallowance of P5,498,706.60 or are excused as de facto officers in good faith for actual services rendered under Cantillo vs. Arrieta.

• Validity of Dual EME Payments: No. The disallowance was sustained, no grave abuse of discretion having attended the enforcement of the clear GAA ceilings and the constitutional requirement of specific appropriation authority.
• Ceiling and Entitlement: Yes. The claims were excessive and unauthorized, the GAA fixing a single ceiling and limiting entitlement to named officials, DBM-authorized equivalents, and their offices, excluding mere designees as project officers.
• Refund Liability and Good Faith: Partly. Only the approving Director-Generals must refund the excess they received for themselves; passive recipients in good faith need not refund, and Cantillo vs. Arrieta is inapplicable to mere designations.

• Validity of Dual EME Payments: The GAA provisions plainly state that appropriations may be used for extraordinary expenses not exceeding fixed amounts, implemented by COA Circular No. 2012-001 and COA Circular No. 89-300 treating the GAA amount as ceiling and control. Because the TESDP Fund, sourced from the Treasury, remains public funds, payment therefrom required specific legal authorization, and none in the 2004-2007 GAAs permitted another set of extraordinary and miscellaneous expenses from another fund. Even the 2005 GAA's specific appropriation for foreign-assisted projects retained a ceiling, and inclusion of both funds in the budget could not justify excess payments from 2004 to 2007.
• Ceiling and Entitlement: Applied to the facts, the same officials already paid from the General Fund were again paid from the TESDP Fund as designated project managers, a position not listed in the GAA, not included in the Personnel Service Itemization, and not created or equated by the Department of Budget and Management. Designation imposed only additional duties without another appointment and did not attach separate compensation, consistent with the principle that extraordinary and miscellaneous expenses enable occupants of key positions to meet financial demands. Reassigned regional directors likewise could not duplicate the Director-General's office entitlement.
• Refund Liability and Good Faith: Under Blaquera vs. Alcala, Casal vs. COA, Velasco vs. COA, and Section 16 of the 2009 Rules and Regulations on Settlement of Accounts, approving officers grossly negligent in patent disregard of clear law are in bad faith and liable, while passive recipients who merely relied on the approval's color of legality remain in good faith. The then Director-General authorized the TESDP charges without statutory basis as institutional practice, received P809,691.11 himself contrary to his own limitation, and insisted on a self-serving interpretation instead of seeking Department of Budget and Management clarification despite the plain-meaning rule. Passive officials honestly believing the designation carried reimbursement were therefore excused, and designation, not de facto officership under Cantillo vs. Arrieta, governed.

• Commission on Audit's disallowance power — The Constitution vests the Commission with exclusive authority to define the scope of its audit, establish techniques and methods, and promulgate accounting and auditing rules including those for prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures. Complete discretion is generally accorded in recognition of its expertise, reviewable only for lack or excess of jurisdiction or grave abuse of discretion.
• Grave abuse of discretion — There is grave abuse when there is evasion of a positive duty or virtual refusal to perform a duty enjoined by law or to act in contemplation of law, as when judgment is not based on law and evidence but on caprice, whim and despotism. No such abuse attended a disallowance faithfully implementing clear appropriations ceilings.
• Plain-meaning rule in appropriations — When the law is clear, plain and free from ambiguity, there is no room for interpretation but only application. The General Appropriations Act language fixing maximum extraordinary and miscellaneous expenses per official and office was thus applied as a single controlling ceiling regardless of fund source.
• No money paid without appropriation — No money shall be paid out of the Treasury except in pursuance of an appropriation made by law, reiterated in the State Audit Code requiring an appropriation law or statute specifically authorizing payment from public funds. Failure to point to a law authorizing a second set of extraordinary and miscellaneous expenses from the TESDP Fund sustained the disallowance, following Yap vs. Commission on Audit.
• Designation vs. entitlement to additional benefits — Designation is mere imposition of additional duties without another appointment and does not entail additional benefits. TESDA officials designated concurrently as project officers, without Personnel Service Itemization inclusion or Department of Budget and Management creation or rank equivalency, therefore gained no separate extraordinary and miscellaneous expenses entitlement, following Dimaandal vs. Commission on Audit.
• Good faith in refund of disallowed benefits — Under Blaquera vs. Alcala as qualified by Casal vs. Commission on Audit and Velasco vs. Commission on Audit, recipients without indicia of bad faith who honestly believed in entitlement need not refund, but approving officers whose blatant disregard of clear issuances amounts to gross negligence are in bad faith and liable. Passive TESDA recipients were thus excused while approving Director-Generals were ordered to refund what they received for themselves, consistent with Section 16 of the 2009 Rules and Regulations on Settlement of Accounts holding approving or authorizing officers liable for losses from negligence or failure to exercise diligence of a good father of a family.

• "There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism." — Defines the limited standard for setting aside Commission on Audit action and supports sustaining the disallowance as based on law and evidence.
• "When the law is clear, plain and free from ambiguity, there should be no room for interpretation but only its application." — States the controlling statutory-construction basis for rejecting TESDA's dual-fund interpretation of the General Appropriations Act ceilings.
• "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law." — Recites the constitutional anchor for requiring specific legal authority before disbursing a second set of extraordinary and miscellaneous expenses from the TESDP Fund.
• "the blatant failure of the petitioners-approving officers to abide with the provisions of AO 103 and AO 161 overcame the presumption of good faith." — Quotes the Velasco vs. Commission on Audit formulation applied by analogy to hold TESDA's approving Director-Generals liable while excusing good-faith passive recipients.

• Yap vs. Commission on Audit, G.R. No. 158562, 23 April 2010 — Followed as authority for upholding disallowance where petitioner failed to point to a law specifically authorizing medical expenses and other benefits, and for the grave-abuse standard.
• Dimaandal vs. COA, 353 Phil. 525 (1998) — Followed for the rule that designation is mere imposition of additional duties not entailing additional benefits, defeating separate TESDP extraordinary and miscellaneous expenses.
• Cantillo vs. Arrieta, 158 Phil. 714 (1974) — Cited by petitioner on de facto officers but held inapplicable because TESDA officials were merely designated to additional duties.
• Blaquera vs. Alcala, 356 Phil. 678 (1998) — Applied as starting point excusing refund by recipients without indicia of bad faith who honestly believed in entitlement.
• Casal vs. COA, 538 Phil. 634 (2006) — Applied to qualify Blaquera, holding approving officials liable for patent disregard of presidential issuances and Commission directives amounting to gross negligence inconsistent with good faith.
• Velasco vs. COA, G.R. No. 189774, 18 September 2012 — Applied to distinguish liable approving officers in bad faith from employees with no participation in approval who need not refund benefits received in good faith.
• Professional Video, Inc. vs. Technical Education and Skills Development Authority, G.R. No. 155504, 26 June 2009 — Cited to establish that the TESDP Fund sourced from the Treasury remains government funds in the hands of public officials.

• Article IX-D, Section 2, 1987 Constitution — Vests the Commission on Audit with exclusive authority to audit and to promulgate rules for prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures; basis for sustaining its disallowance discretion absent grave abuse.
• Article VI, Section 29, 1987 Constitution — Prohibits payment of money out of the Treasury except in pursuance of an appropriation made by law; applied to require specific authority for additional extraordinary and miscellaneous expenses from the TESDP Fund.
• Section 4, Presidential Decree No. 1445 (State Audit Code) — Reiterates the appropriation requirement for disbursing public funds; reinforced the need for statutory authorization.
• Sections 23, 25 and 26, General Provisions, 2004-2007 GAAs — Fix maximum extraordinary expenses per official and miscellaneous expenses per office and limit claimants to named officials and DBM-authorized equivalents; enforced as single ceiling barring duplicate TESDP payments and payments to unauthorized designees.
• Sections 10, 11 and 33, Republic Act No. 7796 (TESDA Act of 1994) — Include the TESDA budget in the annual General Appropriations Act and define the Secretariat and Director-General's allocation and supervisory functions; used to attribute approval responsibility to the Director-General.
• COA Circular No. 89-300 and COA Circular No. 2012-001 — Prescribe that the General Appropriations Act amount is the ceiling and control for disbursement of extraordinary and miscellaneous expenses; implemented to measure excess.
• Section 16, 2009 Rules and Regulations on Settlement of Accounts — Determines liability for disallowances by nature of disallowance, duties, extent of participation, and loss, holding approving or authorizing officers liable for negligence; applied to confine refund to approving Director-Generals.

Maria Lourdes P. A. Sereno, Chief Justice, Presbiter J. Velasco, Jr., Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Lucas P. Bersamin, Mariano C. Del Castillo, Roberto A. Abad, Martin S. Villarama, Jr., Jose Portugal Perez, Jose Catral Mendoza, Bienvenido L. Reyes, Estela M. Perlas-Bernabe, and Marvic Mario Victor F. Leonen, JJ., concurred.