MEMORANDUM Section 26 pd1445

MEMORANDUM
SUBJECT : Section 26, PD 1445

Authority and Powers of the Commission on Audit
Administrative Circular No. 10-2000
DATE : 17 July 2017
Anent to your request for legal opinion as to whether the NHA may enter into
compromise agreement or not. The NHA may enter into compromise agreement
but subject to the COA rules specifically provided in Section 26 of PD 1445.
As provided in Section 26, PD 1445 to wit:
The authority and powers of the Commission shall extend to and

comprehend all matters relating to auditing procedures, systems
and controls, the keeping of the general accounts of the
Government, the preservation of vouchers pertaining thereto for a
period of ten years, the examination and inspection of the books,
records, and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or
property received or held by them in an accountable capacity, as
well as the examination, audit, and settlement of all debts and
claims of any sort due from or owing to the Government or any of
its subdivisions, agencies and instrumentalities. The said
jurisdiction extends to all government-owned or controlled
corporations, including their subsidiaries, and other self-governing
boards, commissions, or agencies of the Government, and as herein
prescribed, including non-governmental entities subsidized by the
government, those funded by donation through the government,
those required to pay levies or government share, and those for
which the government has put up a counterpart fund or those
partly funded by the government.1
Under this section, the authority and powers of the COA shall extend to and
comprehends all matters relating to the following:
1. Auditing procedures, systems and controls;

2. Keeping the general accounts of the Government;
3. Preservation of vouchers pertaining to the general accounts for a period of
ten years;
4. Examination and inspection of the books, records, and papers relating to
said accounts;
5. Audit and settlement of the accounts of all persons respecting funds or
property received or held by them in an accountable capacity; and
Sec. 26, PD 1445 1
6. Examination, audit, and settlement of all debts and claims of any sort
due from or owing to the entities within its jurisdiction.
The documentation as used in claims against the government pertains to

evidences necessary to support claims against government funds as enumerated
by laws and administrative requirements. These evidences are used by the auditor
to evaluate the authenticity and authority of a claim.
Under COA Memorandum No. 2002-053 dated August 26, 2002, requests for
adjudication of money claims of all sorts under existing laws shall be filed with the
Legal and Adjudication Office – National, Corporate or Local Sectors, as the case
may be, for their appropriate action. Cases involving money claim against the
Government cognizable by the Commission Proper may be filed directly with the
Commission Secretary. (Rule VIII, Sec. 1, 1997 COA Revised Rules of Procedure)
Also, a claim filed by a claimant with the auditor of a government-owned or
controlled corporation or self-governing boards or agencies of the Government is
a claim filed with the COA. (Puyat & Sons, Inc. v. Auditor General, 30 SCRA 22)
Furthermore, Supreme Court Administrative Circular No. 10-2000 issued on

October 25, 2000, provides as follows:
“In order to prevent possible circumvention of the rules and procedures of the
Commission on Audit, judges are hereby enjoined to observe utmost caution,
prudence and judiciousness in the issuance of writs of execution to satisfy money
judgments against government agencies and local government units.
Judges should bear in mind that in Commissioner of Public Highways v. San

Diego (31 SCRA 617, 625 [1970]), this Court explicitly stated:
The universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit claimant’s action ‘only up to the
completion of proceedings anterior to the stage of execution’ and that the power of
the Courts ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of
public funds must be covered by the corresponding appropriation as required by law.
The functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects, as appropriated by law.
Moreover, it is settled jurisprudence that upon determination of State liability, the

prosecution, enforcement or satisfaction thereof must still be pursued in
accordance with the rules and procedures laid down in P.D. No. 1445, otherwise
known as the Government Auditing Code of the Philippines (Department of
Agriculture v. NLRC, 227 SCRA 693, 701-02 [1993] citing Republic vs. Villasor, 54
SCRA 84 [1973]). All money claims against the Government must first be filed with
the Commission on Audit which must act upon it within sixty days. Rejection of the
claim will authorize the claimant to elevate the matter to the Supreme Court
on certiorari and in effect sue the State thereby (P.D. 1445, Sections 49-50).
However, notwithstanding the rule that government properties are not subject to
levy and execution unless otherwise provided for by statute (Republic v. Palacio,
23 SCRA 899 [1968], Commissioner of Public Highways v. San Diego, supra) or
municipal ordinance (Municipality of Makati v. Court of Appeals, 190 SCRA 206
[1990]), the Court has, in various instances, distinguished between government
funds and properties for public use and those not held for public use. Thus,
in Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil 52 [1962]), the Court
ruled that “[w]here property of a municipal or other public corporation is sought
to be subjected to execution to satisfy judgments recovered against such
corporation, the question as to whether such property is leviable on not is to be
determined by the usage and purposes for which it is held.” The following can be
culled from Viuda de Tan Toco v. Municipal Council of Iloilo:
1.Properties held for public uses – and generally everything held for governmental
purposes – are not subject to levy and sale under execution against such
corporation. The same rule applies to funds in the hands of a public officer and
taxes due to a municipal corporation.
2.Where a municipal corporation owns in its proprietary capacity, as
distinguished from its public or governmental capacity, property not used or used
for a public purpose but for quasi private purposes, it is the general rule that such
property may be seized and sold under execution against the corporation.
3.Property held for public purposes is not subject to execution merely because it is
temporarily used for private purposes. If the public use is wholly abandoned, such
property becomes subject to execution.”
Under a Resolution of the Commission Proper dated September 17, 1979, COA
Regional Directors have been authorized to approve claims for the acquisition
cost/purchase price of lots affected by the IBRD Package Projects, and under COA
Memorandum No. 80-239 dated July 17, 1980, the same Regional Directors have
likewise been authorized to process and approve road right-of-way claims
involving amounts below P100,000.00 in each case. Similarly, under COA
Resolution No. 79-5 of the Commission Proper, the Auditor of the Ministry of
Public Works has been empowered to pass upon and approve vouchers covering
payments for properties situated within the site of, and affected by, the National
Government Center Project in Quezon City. And under certain issuances of this
Commission (1stIndorsement, dated September 12, 1978, et seq.), the Auditor of
the National Power Corporation has been authorized to pass upon and approve
vouchers covering payment for damaged improvements up to certain amounts.
For your information and guidance.
ATTY. ELEONOR A. BALATBAT

Officer-in-Charge
Legal Department

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MEMORANDUM

SUBJECT : Section 26, PD 1445

DATE : 17 July 2017

As provided in Section 26, PD 1445 to wit:

The authority and powers of the Commission shall extend to and

1. Auditing procedures, systems and controls;

The documentation as used in claims against the government pertains to

Furthermore, Supreme Court Administrative Circular No. 10-2000 issued on

Judges should bear in mind that in Commissioner of Public Highways v. San

Moreover, it is settled jurisprudence that upon determination of State liability, the

For your information and guidance.

ATTY. ELEONOR A. BALATBAT

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