NELTON L. SUMITON, PETITIONER, VS. COMMISSION ON AUDIT, CHAIRPERSON GAMALIEL A. CORDOBA, COMMISSIONER ROLAND CAFE PONDOC, AND COMMISSIONER MARIO G. LIPANA, THE AUDIT TEAM LEADER…

Sumiton versus Commission on Audit

The Case

This is a petition for certiorari under Rule 64, in relation to Rule 65, of the Rules of Court, brought by Nelton L. Sumiton against the Commission on Audit, its Chairperson and Commissioners, and the Audit Team Leader. Sumiton, a former Community Affairs Officer of the National Commission on Indigenous Peoples, was designated Team Leader for the Free, Prior and Informed Consent process for several energy and mining projects, and received cash advances and reimbursements totaling 2,028,400 pesos. When the Commission on Audit disallowed these amounts for incomplete documentation, he appealed, lost, and now asks the Supreme Court to reverse the Commission. The case matters because it tests two things every bar candidate must know: the breadth of the Commission on Audit's jurisdiction over funds officially received by a public officer, and the strict reckoning of the six-month period to appeal a notice of disallowance.

Procedural History

The audit began with notices of suspension issued by the Audit Team Leader and the Supervising Auditor of the National Commission on Indigenous Peoples Regional Office. When Sumiton failed to fully comply within ninety days, the auditors issued notices of disallowance. Sumiton appealed to the Commission on Audit National Government Sector Cluster 1, which denied the appeal and affirmed the disallowances in a decision dated December 19, 2016. He then filed a petition for review before the Commission on Audit Proper, which dismissed the petition as filed out of time and, in any event, without merit, in a decision dated December 21, 2018, affirming the disallowances with finality. His motion for reconsideration was denied in a resolution dated January 28, 2025. He then came to the Supreme Court by petition for certiorari under Rule 64.

Facts

Sumiton was a Community Affairs Officer I of the National Commission on Indigenous Peoples, assigned to its Zamboanga del Norte Provincial Office, and was designated Team Leader to conduct the Free, Prior and Informed Consent process for three projects: the Aurora-Polanco transmission line project of the National Grid Corporation of the Philippines, the mining projects of Masada Resources and Mining Corporation, and the project of TVI Mineral Resources Philippines, Incorporated. To enable him to perform the process, several cash advances were released to him from February to June 2011, totaling 2,028,400 pesos.

After the process concluded, Sumiton liquidated the cash advances and reimbursements, submitting documents to the Regional Office Accounting Section. The auditors then issued notices of suspension asking for documents such as a duly approved Work and Financial Plan, the approved team, a bond, and a duly approved liquidation report. Sumiton wrote letters to the Audit Team Leader in May and July 2012 stating his compliance and resubmitting documents, but received no reply. On October 1, 2012, he resubmitted the liquidation reports, which reached the Commission on Audit in December 2012.

The Commission then issued the notices of disallowance, which Sumiton received only on August 22, 2013. The Regional Director who approved the payments, the Accountant who certified completeness, and Sumiton as recipient were all held liable. Sumiton appealed, insisting he had complied and that the funds were private deposit fees of the project proponents, not public funds.

Issues

• Whether or not the Commission on Audit acted with grave abuse of discretion in holding that the petition for review was filed out of time.
• Whether or not the funds disbursed to Sumiton, sourced from deposit fees paid by project proponents, are private funds outside the audit jurisdiction of the Commission on Audit.
• Whether or not Sumiton may be held liable for the disallowed amounts despite the absence of loss to the government.

Applicable Provisions

Section 2, paragraph 1 of Article IX of the Constitution provides:

SECTION 2. (1) The Commission on Audit shall have the power, authority and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds, and property, owned or held in trust by, or pertaining to the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations with original charters, and on a post-audit basis.

This is the constitutional source of the audit power the Court invokes to reach the funds in Sumiton's hands.

Section 26 of Presidential Decree No. 1445, the Government Auditing Code of the Philippines, provides:

SEC. 26. General jurisdiction. — The authority and powers of the Commission shall extend to and comprehend 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.

This extends the audit to any person holding funds in an accountable capacity, which is precisely Sumiton's position.

Section 63 of the same decree provides:

SEC. 63. Except as may otherwise be specifically provided by law or competent authority all moneys and property officially received by a public officer in any capacity or upon any occasion must be accounted for as government funds and government property.

This is the decisive rule: money officially received by a public officer is accounted for as government funds regardless of its source.

Section 3 of the same decree defines the terms:

(2) 'Government funds' includes public moneys of every sort and other resources pertaining to any agency of the government.

(4) 'Trust funds' refers to funds which have come officially into the possession of any agency of the government or of a public officer as trustee, agent, or administrator, or which have been received for the fulfillment of the obligation.

These definitions confirm that deposit fees received by a public officer for the fulfillment of an obligation are trust funds subject to audit.

Section 3 of Rule IX of the Commission on Audit Rules provides:

If the filing is by registered mail, the date of mailing stamped by the post office of origin, shall be considered as the date of filing.

This governs the reckoning of the filing date of Sumiton's appeal.

Ruling

On the first issue, the Court agreed with Sumiton on two points of reckoning but still found the petition for review late. The date of mailing, not of receipt, counts as the date of filing, so his appeal was filed on February 21, 2014. And the period ran from May 18, 2017, when Sumiton personally received the decision, not from its receipt by the agency that no longer employed him. But because he had only one day left of the six-month period, his petition for review filed on July 3, 2017 was late. The Court held that the Commission did not err, and that although it could have dismissed the petition outright, it properly resolved the case on the merits as well.

On the second issue, the Court held that the funds were within the audit jurisdiction. All money officially received by a public officer is government funds, and funds received for the fulfillment of an obligation are trust funds. The Court quoted the constitutional and statutory provisions above and concluded that the Commission's jurisdiction reaches all persons holding funds in an accountable capacity.

On the third issue, the Court held that liability attaches because the disallowances rested on incomplete documentation, irregularity, excessiveness, and noncompliance with laws on disbursement of public funds, not on proof of loss.

Doctrine

First, the audit jurisdiction of the Commission on Audit is broad and constitutionally grounded. It covers all accounts pertaining to funds and property owned or held in trust by or pertaining to the government, and extends to all persons respecting funds received or held by them in an accountable capacity.

Second, all moneys officially received by a public officer in any capacity must be accounted for as government funds and government property, unless the law or competent authority specifically provides otherwise. Funds received for the fulfillment of an obligation are trust funds, and deposit fees paid by project proponents and received by a public officer for the conduct of the process are therefore subject to audit.

Third, under the Commission on Audit Rules, an appeal from a notice of disallowance must be filed within six months from receipt, and if filed by registered mail, the date of mailing is the date of filing. The period is interrupted by the appeal to the director and resumes upon receipt of the adverse decision, so the petition for review must be filed within the time remaining.

Disposition

The petition was denied, and the decision and resolution of the Commission on Audit were affirmed.

Remember This

Memorize the line: all moneys officially received by a public officer in any capacity must be accounted for as government funds and government property. Examiners use this case to test the breadth of the Commission on Audit's jurisdiction over trust and deposit funds, and the strict six-month period to appeal a notice of disallowance.