Subject: Administrative Law

Topic: Rule-Making Power

Title: Eslao v. COA

Citation: 236 SCRA 22

Facts:
In 1988, Pangasinan State University entered into a Memorandum
of Agreement (MOA) with the Department of Environment and Natural
Resources (DENR) to evaluate government reforestation programs in
Pangasinan. The evaluation project was being funded by the government
under an Asian Development Bank loan to the Philippines.
In January 1989, the Board of Regents (BOR) of PSU approved and
confirmed the rates of honoraria and per diems for the PSU personnel
involved in the project. Subsequently, PSU issued authority to pay P70,
375.00 representing honoraria to PSU personnel engaged in the project.
This amount was reduced pursuant to the National Compensation
Circular (NCC) #53 which was promulgated by the Department of
Budget (DBM) in June 21, 1988.
In July 1989, the resident auditor of PSU alleged that there were
excesses in the payment of honoraria based on the provisions of the
Compensation Policy Guidelines (CPG) #80-4 which was promulgated
also by the DBM in August 7, 1980.
The resident auditor argues that CPG #80-4 should be applied in
this case and not NCC #53.
Due to the request of PSU DBM clarified the matter, thru a letter,
saying that the basis for the project's honoraria should not be CPG No.
80-4 which pertains to locally funded projects but rather NCC No. 53
which pertains to foreign-assisted projects”.
However, COA decided against the reconsideration filed by PSU
and it argued the following:
since under the MOA a Coordinating Committee shall be
created which shall be responsible for the overall administration
and coordination of the evaluation to be chaired by the DENR and
co-chaired by the PSU VP for Research and Development this type of
project contemplated under the MOA fits the description of a
locally funded project which is an “inter-agency activity” between
DENR and PSU and therefore it also fits the description of a
“special project”.
And (2) COA argues that the DBM ruling classifying the project as
foreign-assisted does not rest on solid ground since loan proceeds,
regardless of source, eventually become public funds for which the
government is accountable. Hence any project funded under the ADB
loan agreement is considered to be locally funded.
Issue:
WON the NCC #53 should govern the payment of honoraria and
per diem to the personnel of PSU involved in the DENR and PSU project.

Ruling:
Under the Administration Code of 1987, the Compensation and
Position Classification Bureau of the DBM "shall classify positions and
determine appropriate salaries for specific position classes and review
appropriate salaries for specific position classes and review the
compensation benefits programs of agencies and shall design job
evaluation programs."

COA is not authorized under its constitutional mandate to

substitute its own judgement for any applicable law or administrative
regulation with the wisdom or propriety of which, however, it does not
agree, at least before such law or regulation is set aside b the authorized
agency of government or by the courts
Note: “COA post audit involves doing the same kind of work under
pre-audit and looking at exactly the same disbursement vouchers and
supporting documents already available even prior to payment, except
that it is intentionally done later, or AFTER execution and payment of
transactions”
According to Eslao v COA the post-audit authority is limited to
determining compliance to government laws and regulations like
checking if there is an appropriation or budget, inquiring about the
legality of transactions, and checking if proper approval and
documentation was followed not to determine which law is more
applicable.