The Importance of Due Process in Notice of Disallowance Cases

Delilah J. Ablong, et al. v. Commission on Audit, G.R. No. 233308, August 18, 2020

Imagine receiving a significant portion of your salary as an allowance, only to be told years later that you must return it all because the payment was disallowed. This is not just a hypothetical scenario but the reality faced by teachers at Negros Oriental State University (NORSU). The Supreme Court’s ruling in the case of Delilah J. Ablong, et al. v. Commission on Audit sheds light on the critical role of due process in such situations, ensuring that individuals are informed of any disallowances and given a chance to contest them.

In this case, the teachers of NORSU received Economic Relief Allowance (ERA) from 2008 to 2010, only to be later notified that these payments were disallowed by the Commission on Audit (COA). The central legal question revolved around whether the teachers were adequately notified of the disallowance and thus, whether they were denied due process.

Legal Context: Understanding Due Process and Notices of Disallowance

Due process, as enshrined in Section 1, Article III of the Philippine Constitution, is a fundamental right that protects individuals from arbitrary actions by the government. In the context of government auditing, due process is crucial when the COA issues a Notice of Disallowance (ND). An ND is a formal declaration by the COA that certain expenditures are not allowed and must be refunded.

The relevant legal framework includes Section 48 of Presidential Decree No. 1445 (Government Auditing Code of the Philippines) and Section 33, Chapter 5(B)(1) of the Administrative Code of 1987, which set a six-month period for appealing an ND. Additionally, COA Circular No. 2009-006 outlines the procedures for serving NDs, requiring that they be addressed to the agency head and accountant, and served on the persons liable.

The key provision from COA Circular No. 2009-006 states: “10.2 The ND shall be addressed to the agency head and the accountant; served on the persons liable; and shall indicate the transactions and amount disallowed, reasons for the disallowance, the laws/rules/regulations violated, and persons liable.” This emphasizes the necessity of direct notification to ensure due process.

Case Breakdown: The Journey of the NORSU Teachers

The story of the NORSU teachers began in 2008 when the university’s Board of Regents granted them ERA. However, in 2011, the COA issued NDs on these payments, citing lack of presidential approval and improper debiting from tuition fees. The NDs were served to NORSU’s Acting Chief Accountant, Liwayway G. Alba, but not directly to the teachers.

The teachers only learned of the disallowance in late 2011 when they received copies of the Notice of Finality of Decision (NFD). In January 2012, Delilah J. Ablong, on behalf of the teachers, wrote to the COA Regional Director requesting reconsideration of the Order of Execution (COE). This request was denied, prompting the teachers to file a Petition for Review with the COA Proper, which was dismissed in July 2016 for being untimely and improper.

The Supreme Court’s ruling highlighted the COA’s failure to serve the NDs directly to the teachers, as required by COA Circular No. 2009-006. The Court emphasized the importance of due process, stating, “Such lack of notice to the petitioners amounted to a violation of their fundamental right to due process as the same is considered satisfied only if a party is properly notified of the allegations against him or her and is given an opportunity to defend himself or herself.”

The Court further noted, “Due process of law, as guaranteed in Section 1, Article III of the Constitution, is a safeguard against any arbitrariness on the part of the Government, and serves as a protection essential to every inhabitant of the country.”

Ultimately, the Supreme Court reversed the COA’s decision and remanded the case for resolution on the merits, emphasizing that the violation of due process rights is a jurisdictional defect.

Practical Implications: Ensuring Due Process in Future Cases

This ruling underscores the importance of direct notification in ND cases. Agencies and individuals involved in government transactions must ensure that all parties affected by a disallowance are properly notified. This decision may lead to more stringent adherence to COA Circular No. 2009-006, ensuring that NDs are served directly to all persons liable.

For businesses and individuals dealing with government funds, it is crucial to stay informed about the status of any allowances or payments received. If faced with an ND, they should promptly seek legal advice to understand their rights and options for appeal.

Key Lessons:

• Direct notification to all parties affected by an ND is essential for due process.
• Agencies must follow COA Circular No. 2009-006 to avoid legal challenges.
• Individuals should be proactive in seeking information about the legality of received payments.

Frequently Asked Questions

What is a Notice of Disallowance?

A Notice of Disallowance (ND) is a formal declaration by the Commission on Audit (COA) that certain government expenditures are not allowed and must be refunded.

How should an ND be served according to COA Circular No. 2009-006?

According to COA Circular No. 2009-006, an ND must be addressed to the agency head and the accountant, and served directly to all persons liable.

What happens if an ND is not served directly to the persons liable?

If an ND is not served directly to the persons liable, it may result in a violation of due process, potentially leading to the reversal of any subsequent decisions based on the ND.

Can an ND be appealed, and within what timeframe?

Yes, an ND can be appealed within six months from receipt, as per Section 48 of Presidential Decree No. 1445 and Section 33, Chapter 5(B)(1) of the Administrative Code of 1987.

What should individuals do if they receive an ND?

Individuals should seek legal advice immediately to understand their rights and the proper steps for appealing the ND.

How does this ruling affect future ND cases?

This ruling emphasizes the importance of direct notification, which may lead to more rigorous compliance with COA procedures and better protection of due process rights in future cases.

ASG Law specializes in government auditing and due process issues. Contact us or email hello@asglawpartners.com to schedule a consultation.