Case Digest: DBP v. COA GR 88435

FACTS:  After learning that the DBP had signed a contract with a private auditing firm for calendar year 1986, the new COA Chairman wrote the DBP Chairman that the COA resident auditors were under instructions to disallow any payment to the private auditor whose services were unconstitutional, illegal and unnecessary. On July 1, 1987, the DBP Chairman sent to the COA Chairman a copy of the DBP's contract with Joaquin Cunanan& Co., signed four months earlier on March 5, 1987. The DBP Chairman's covering handwritten note sought the COA’s concurrence to the contract. During the pendency of the DBP Chairman's note-request for concurrence, the DBP paid the billings of the private auditor in the total amount of P487,321.14 despite the objection of the COA. On October 30, 1987, the COA Chairman issued a Memorandum disallowing the payments, and holding the following persons personally liable for such payment. 

ISSUE:  Whether or not the Constitution vests in the COA the sole and exclusive power to examine and audit government banks so as to prohibit concurrent audit by private external auditors under any circumstance 

DECISION:  No. COA does not have the sole and exclusive power to examine and audit government banks so as to prohibit concurrent audit by private external auditors under any circumstance. 

RATIO DECIDENDI:  The clear and unmistakable conclusion from a reading of the entire Section 2, Article IX-D is that the COA's power to examine and audit is non-exclusive. On the other hand, the COA's authority to define the scope of its audit, promulgate auditing rules and regulations, and disallow unnecessary expenditures is exclusive. As the constitutionally mandated auditor of all government agencies, the COA's findings and conclusions necessarily prevail over those of private auditors, at least insofar as government agencies and officials are concerned. The mere fact that private auditors may audit government agencies does not divest the COA of its power to examine and audit the same government agencies.  The COA is neither by-passed nor ignored since even with a private audit the COA will still conduct its usual examination and audit, and its findings and conclusions will still bind government agencies and their officials. A concurrent private audit poses no danger whatsoever of public funds or assets escaping the usual scrutiny of a COA audit.