The Superior Court of Justice has defined a deadline for Audit Courts to demand evidence of regular use of public funds – Leal Cotrim Advogados

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The Superior Court of Justice has defined a deadline for Audit Courts to demand evidence of regular use of public funds

The Superior Court of Justice (STJ) has recently dealt with a matter that raises debates within the ambit of Audit Courts: up to when these control bodies may demand accountability reports on the regular use of public funds and apply possible administrative sanctions.

The lack of a specific legal provision to regulate the matter brought about controversies concerning (i) the possibility of Audit Courts to request evidence of the regular use of public funds at any time, in view of the supposed non-applicability of statute of limitation with respect to claims for damages to the public treasury; (ii) the applicability of statute of limitation terms set forth in the Civil Code; and (iii) the applicability, by analogy, of rules that govern the deadlines for the Public Administration to exercise its police powers.

While judging Special Appeal 1,480,350/RS, the STJ affirmed that, even if one understands that claims for damages to the public treasury are not subject to statute of limitation — being it noteworthy that such may represent a collision with the most recent understanding of the Supreme Court on the matter —, it must be borne in mind that the burden of proof, in the case of such lawsuits, would be incumbent upon the claimant, whereas in the case of accountability reports the burden of proof is of the party responsible for the use of funds.

Due to such reason, said superior court concluded that the party responsible for the use of funds cannot be under the never ending obligation to prove that acted regularly, subject to the violation of the principles of legal security and due process of law, in contrast with the Rule of Law.

In the lack of a specific deadline set forth by law for such cases, and setting aside the possibility to apply the terms set forth by the Civil Code to the case, due to the particularities of Administrative Law, the STJ examined the rules concerning statute of limitation and decadence terms with respect to relationships between the Public Administration and citizens and concluded that the 5 year term is prevalent, so that it shall apply, by analogy, as the deadline to which Audit Courts shall abide to request accountability reports.

However, it must be noted that such understanding differs from the majority opinion within the Federal Audit Court (TCU). The latter understands the deadline for the imposition of sanctions is the general statute of limitation deadline set forth in the Civil Code, i.e., 10 years, which has been confirmed by TCU Normative Instruction 71, as of 28 November 2012, and was confirmed by said Audit Court in an Incident for Standardisation of Case Law judged shortly after the referred to Precedent of the STJ.

Notwithstanding the insistence of the Federal Audit Court with respect to the 10 year deadline, the existence of a precedent by the Superior Court of Justice enhances claims by public officers and/or private persons or entities to whom said audit court applied sanctions after the elapse of 5 years.

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01 December 2020