COA Primary Jurisdiction Over Disallowances: Insights From a 2020 Supreme Court Ruling

The Commission on Audit (COA) holds broad constitutional authority over government accounts, and its decisions on disallowances are not subject to review by regional trial courts. In a November 2020 ruling, the Supreme Court En Banc clarified the limits of judicial intervention in audit matters, emphasizing that parties must exhaust administrative remedies before the COA before seeking relief from the courts.

The case arose from a former governor's attempt to challenge Notices of Disallowance (NDs) issued by provincial auditors before the Regional Trial Court (RTC), rather than appealing to the COA Commission Proper. The Court's decision serves as an important reminder for public officials and government agencies about the proper procedure for contesting audit findings.

The Facts of the Case

During his term as Governor of Camarines Sur, the private respondent approved various disbursements from 2006 to 2010 for provincial government activities and projects. Upon audit, the COA found deficiencies, including non-compliance with Republic Act No. 9184 (Government Procurement Act) and unnecessary expenditures under COA Circular No. 2012-003.

The COA issued ten Notices of Disallowance covering transactions totaling over Php23 million, including payments for architectural services, promotion of a wakeboarding championship, security services, petty cash replenishments, and mobilization fees for infrastructure projects. The former governor did not appeal these NDs to the COA. Consequently, Notices of Finality of Decision were issued.

Instead of appealing to the COA Commission Proper, the former governor filed petitions for certiorari and prohibition with the RTC of Pili, Camarines Sur, assailing the Notices of Finality and seeking injunctive relief. The RTC issued a temporary restraining order and later a writ of preliminary injunction, preventing the COA from implementing the NDs.

The Issue Before the Court

The central question was whether the RTC committed grave abuse of discretion when it denied the COA auditors' motion to dismiss the former governor's petitions. This hinged on whether the former governor properly resorted to the RTC to assail the provincial auditors' NDs.

The Ruling: COA Has Primary Jurisdiction

The Supreme Court granted the COA's petition and dismissed the cases before the RTC. The Court ruled that the COA has primary jurisdiction over issues involving disallowances. Under Article IX of the 1987 Constitution and Commonwealth Act No. 327, as amended by Section 26 of Presidential Decree No. 1445, the COA has the authority to examine, audit, and settle all accounts pertaining to government funds and property.

The Court explained that when a case requires the expertise and specialized knowledge of an administrative body, relief must first be obtained through administrative proceedings before courts may intervene. Matters involving compliance with auditing laws and procurement rules fall within the special competence of COA auditors, not judges.

Only the Supreme Court May Review COA Decisions

The Court emphasized that Section 7, Article IX of the 1987 Constitution provides that decisions of constitutional commissions may only be brought to the Supreme Court on certiorari within thirty days from receipt of a copy. Nothing in law grants trial courts authority to determine questions involving COA's alleged grave abuse of discretion.

Allowing trial courts to issue writs of certiorari against NDs would cause unnecessary delay in the audit process, weaken COA's authority, and encourage public officials to stall or evade enforcement mechanisms. The Court also noted that the exceptions to the doctrine of primary jurisdiction did not apply, as the former governor failed to explain why he did not appeal to the COA Commission Proper.

The NDs Had Become Final and Executory

The Court further held that under Section 48 of PD 1445, a person aggrieved by an auditor's decision must appeal in writing to the COA within six months from receipt. The former governor failed to do so, rendering the NDs final and executory. The doctrine of immutability of judgments bars courts from modifying decisions that have attained finality.

Practical Takeaways

• Exhaust administrative remedies first. Public officials who receive Notices of Disallowance must appeal to the COA Commission Proper within six months from receipt. Failure to do so makes the NDs final and executory.
• Trial courts have no jurisdiction over COA disallowances. Only the Supreme Court may review COA decisions, and only through a petition for certiorari within thirty days from receipt.
• Primary jurisdiction applies to audit matters. Courts will defer to COA's expertise on questions involving auditing rules, procurement compliance, and disallowances.
• Good faith is not purely a legal question. Determining liability for disallowed amounts requires factual inquiry into the good faith of the parties, which is best addressed before the COA.
• Act promptly. The reglementary periods under the law are strict. Missing them forecloses the opportunity to contest audit findings.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.