Constitutional tenet: The trust resulting from holding public office

demands accountability from the public officer

Section 1, Article II of the 1987 Constitution declares that the Philippines is a democratic and
republican state where sovereignty resides in the people and all government authority
emanates from them. A republican government is a responsible government whose officials
hold and discharge their position as a public trust that renders them at all times accountable to
the people they are sworn to serve.10 This principle of accountability proceeds from the
constitutional tenet that public office is a public trust11 and its corollary that the stability of our
public institutions relies on the ability of our civil servants to serve their constituencies well.12
Public officers are stewards who must use government resources efficiently, effectively,
honestly and economically to avoid the wastage of public funds.13 The prudent and cautious
use of these funds is dictated by their nature as funds and property held in trust by the public
officers for the benefit of the sovereign trustees – the people themselves – and for the specific
public purposes for which they are appropriated.14 Thus, Article VI, Section 29(1) of the
Constitution provides that no money shall be paid out of any public treasury except in
pursuance of an appropriation law or other specific statutory authority.
To ensure accountability enforcement in the disbursement of public funds,15 the 1987
Constitution created the COA as an independent constitutional office charged to audit
government financial transactions. The Constitution empowered the COA to examine, audit,
and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of
funds and property, owned, held in trust by, or pertaining to, the Government and its
instrumentalities. Furthermore, our Constitution exclusively authorized the COA to promulgate
accounting and auditing rules and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures
or uses of government funds and properties. (TESDA v. COA SEPARATE OPINION)

COA Circular No. 95-011 stresses that public funds shall not be utilized for
the payment of services of a private legal counsel or law firm to represent
government agencies in court or to render legal services for them. Despite
this, the same circular provides that in the event that such legal services
cannot be avoided or is justified under extraordinary or exceptional
circumstances, the written conformity and acquiescence of the OSG or the
Office of the Government Corporate Counsel (OGCC), as the case may be,
and the written concurrence of the COA shall first be secured before the
hiring or employment of a private lawyer or law firm. The prohibition covers
the hiring of private lawyers to render any form of legal service - whether or
not the legal services to be performed involve an actual legal controversy
or court litigation.17 The purpose is to curtail the unauthorized and
unnecessary disbursement of public funds to private lawyers for services
rendered to the government, which is in line with the COA's constitutional
mandate to promulgate accounting and auditing rules and regulations,
including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant or unconscionable expenditures or
uses of government funds and properties.18

The Court has invariably sustained the statutory authority of the OSG and
the OGCC as well as the necessity of COAconcurrence in the cases of
government-owned and/or controlled corporations,19 local government
units,20 and even a state college21 like the CNSC. We see no legal
justification to deviate from the settled jurisprudence. Here, the COA noted,
and Dr. Oñate never disputed, that while the OSG authorization was
obtained the CNSC belatedly requested for the COA's concurrence on May
27, 2010,22 which is less than a week prior to the expiration of the contract
on June 1, 2010. The rule is absolute; partial compliance or honest mistake
due to ignorance of the law23 is not and can never be a valid defense.
(ONATE v. COA)

ALLEGED UNNECESSARY, EXTRAVAGANT OR EXPENSIVE

EXPENDITURES," refer to the procurement and purchase of the following:
1. Curtains;
2. Accordion Dividers;
3. Steel Railings;
4. Street Lights;
5. Steel benches;
6. Wooden benches;
7. Concrete benches;
8. Concrete pipes and wastebaskets;
9. Dental laser equipments and light cure machines; and
10. Incinerator and compactor.
The justification for the procurement and purchase of the above-listed items
are specifically enumerated and discussed in the Position Paper of the
respondent-appellant, supra. Although NCMH management has the
absolute and/or sole discretion on matters affecting the use of its funds for
a particular purpose, i.e., MOOE, as specifically stated in its budget, this
must yield to the constitutionally mandated power of the Commission to
prevent the incurrence of irregular, unnecessary, excessive, extravagant or
unconscionable use of public funds…o expenditures which could not pass
the test of prudence or the obligation of a good father of a family, thereby
non-responsiveness to the exigencies of the service. Unnecessary expenditures
are those not supportive of the implementation of the objectives and mission of the agency
relative to the nature of its operation. This could also include incurrence of expenditure not
dictated by the demands of good government, and those the utility of which cannot be
ascertained at a specific time. An expenditure that is not essential or that which can be
dispensed with without loss or damage to property is considered unnecessary. The mission and
thrust of the agency incurring the expenditure must be considered in determining whether or
not the expenditure is necessary (COA Cir. 88-55A, supra).
xxx xxx xxx
The term "extravagant expenditures" signifies those incurred without restraint, judiciousness
and economy. Extravagant expenditures exceed the bounds of propriety. These expenditures
are immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive, and injudicious (COA
Cir. 88-55A, supr 1âwphi 1 AJH

Then COA Chairman Francisco Tantuico, Jr., 21 comments:

The terms "irregular," "unnecessary," "excessive," and "extravagant," when
used in reference to expenditures of funds or uses of property, are relative.
The determination of which expenditure of funds or use of property belongs
to this or that type is situational. Circumstances of time and place,
behavioral and ecological factors, as well as political, social and economic
conditions, would influence any such determination. Viewed from this
perspective, transactions under audit are to be judged on the basis of not
only the standards of legality but also those of regularity, necessity,
reasonableness and moderation (NATIONAL CENTER FOR HEALTH
MANAGEMENT V. COA)

Moreover, the action taken by the Provincial Auditor and the COA Regional
Director, as representatives of the Commission on Audit, is in accordance
with the law and in pursuance of the mandate of the Constitution which
vests in this Commission the exclusive authority "to promulgate accounting
and auditing rules and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant or
unconscionable expenditures, or uses of government funds and
properties." (Art, IX-D, Sec. 2(2) 1987 Constitution).
Accordingly, this Commission regrets to dismiss, as it hereby dismisses,
your herein appeal for lack of merit. (Annex R, Petition, pp. 126-127, Rollo).
Hence, the present petition.
Petitioner assails the ruling of the COA as not valid. It contends that the
contract of sale has not only been perfected between the Province of
Isabela and petitioner but delivery has been made by it with the
corresponding partial payment by the Province of Isabela. Thus, it is
allegedly incumbent upon COA to authorize the payment of the balance
because to act otherwise will constitute an impairment of contract.
We reject petitioner's contention.
In the exercises of the regulatory power vested upon it by the Constitution,
the Commission on Audit adheres to the policy that government funds and
property should be fully protected and conserved and that irregular,
unnecessary, excessive or extravagant expenditures or uses of such funds
and property should be prevented. On the proposition that improper or
wasteful spending of public funds or immoral use of government property,
for being highly irregular or unnecessary, or scandalously excessive or
extravagant, offends the sovereign people's will, it behooves the
Commission on Audit to put a stop thereto. (Tantuico, State Audit Code
Philippines, p. 235)
In the cases of Danville Maritime, Inc. v. Commission on Audit, 175 SCRA
701 (1989) and D.M. Consunji Inc. v. Commission on Audit, 199 SCRA 549
(1991), We defined the role of the COA in this wise:
. . . No less than the Constitution has ordained that the COA shall have
exclusive authority to define the scope of its audit and examination,
establish the techniques and methods required therefor, and promulgate
accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary excessive,
extravagant or unconscionable expenditures or use of government funds
and properties. (Art. IX D, Sec. 2 (2) 1987 Constitution of the Philippines)
(emphasis supplied)
Indeed, not only is the Commission on Audit (COA) vested with the power
and authority, but is also charged with the duty to examine, audit and settle
all accounts pertaining to . . . the expenditure or uses of funds . . . owned
by or pertaining to, the Government or any of its subdivisions, agencies or
instrumentalities (Article IX (D-1) Section 2(1), 1987 Constitution). That
authority extends to the accounts of all persons respecting funds or
properties received or held by them in any accountable capacity. (Section
26, P.D. No. 1445). In the exercise of its jurisdiction, it determines whether
or not the fiscal responsibility that rests directly with the head of the
government agency has been properly and effectively discharged (Section
25 (1) ibid), and whether or not there has been loss or wastage of
government resources. It is also empowered to review and evaluate
contracts. (Section 18 (4), ibid.). (EDMUNDO SAMBELI V. PROVINCE OF
ISABELA)
Surely, the approved budget for the land acquisition did not in itself
constitute an authority for the AFP-RSBS to exhaust the entire amount of
the budget set aside. As it now turns out, the deed of sale executed by both
the AFP-RSBS and Concord and registered with the RD of Calamba shows
that both the AFP-RSBS and Concord attested that P91,024,800.00 was
the correct price, whereas the deed of sale on file with AFP-RSBS was
signed by Concord alone, and it bore the amount of P341,343,000.00
actually paid by AFP-RSBS to Concord. On the basis of these two deeds of
sale, the COA concluded that the AFP-RSBS squandered up to
P250,318,200.00 in savings for the government.
Section 16 of the 2009 Rules and Regulations on Settlement of Accounts,
as prescribed in COA Circular No. 2009-006, on who are liable for audit
disallowances, provides:
Section 16.1 The Liability of public officers and other persons for audit
disallowances/charges shall be determined on the basis of (a) the nature of
the disallowance/charge; (b) the duties and responsibilities or obligations of
officers/employees concerned; (c) the extent of their participation in the
disallowed/charged transaction; and (d) the amount of damage or loss to
the government, thus:
16.1.1 Public officers who are custodians of government funds shall be
liable for their failure to ensure that such funds are safely guarded loss or
damage; that they are expended, utilized, disposed of or transferred in
accordance with law and regulations, and on the basis of prescribed
documents and necessary records.
16.1.2 Public officers who certify as to the necessity, legality and availability
of funds or adequacy of documents shall be liable according to their
respective certifications.
16.1.3 Public officers who approve or authorize expenditures shall be held
liable for losses arising out of their negligence or failure to exercise the
diligence of a good father of a family.
x x x x (Emphasis supplied)
By signing the verification in the check vouchers to "attest" to the
"correctness" of AFP-RSBS's land banking purchase after merely
comparing the same against the approved investment budgets, but without
however performing appropriate additional internal audit procedures to
allow her to conduct further verification of the true amounts involved, the
petitioner rendered herself liable upon the loss incurred by AFP-RSBS
because she is thereby said to have lent her approval to the anomalous
purchase. (PARAISO-ABAN v. COA)