Case No.

3 : National Electrification Administration vs COA

GR No. 143481, February 15, 2002
Ponente : Justice Carpio

Facts:

In response to pressing economic difficulties and the need to alleviate the plight of government
personnel, Joint Resolution No. 01 was passed to adjust the salary increase schedule of all
officials and employees of the government. It was approved by then President Fidel V. Ramos
on March 7, 1994.
Paragraph 10 of Joint Resolution No. 01 provides that "the new salary schedule shall be
implemented within four (4) years" beginning in 1994.
On December 28, 1996, then President Fidel V. Ramos issued EO 389 which directed payment
of the fourth and final salary increases authorized under Joint Resolution No. 01 in two
scheduled payments.
In 1997, petitioner National Electrification Administration, a GOCC, implemented salary increase
in only one lump sum which is not in accordance to EO 389.

With that, COA Auditor issued a Notice of Suspension and required submission of legal basis
for the one-time payment of NEA. NEA failed to submit basis. COA moved to issue Notice of
Disallowance.

NEA petitioned to COA to reconsider the disallowance but was denied by COA.

NEA again appealed two times to COA, but again denied and the disallowance was sustained.

Hence, NEA petitioned for certiorari to the Supreme Court.

Issue:

1. Whether or not COA has the jurisdiction to issue Notice of Disallowance.

2. Whether or not NEA has the right to accelerate payment.

Ruling

1. Yes, COA has jurisdiction to issue Notice of Disallowance in accordance to Section 2

Paragraph D, Art. 9 of 1987 constitution which provides that the “The Commission shall have
exclusive authority, subject to the limitations in the Article, 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 uses of government funds and properties."

2.No, NEA has no right to accelerate payment as it was non-compliant to an existing executive
order, namely EO 389.
Hence, petition of NEA is DISMISSED for lack of merit and the Decision of the Commission on Audit is
AFFIRMED.