EN BANC
G.R. No. 244128, September 08, 2020
MARIO M. MADERA, BEVERLY C. MANANGUITE, CARISSA D. GALING, AND JOSEFINA O. PELO, PETITIONERS, V. COMMISSION ON AUDIT (COA) AND COA REGIONAL OFFICE NO. VIII, RESPONDENTS.
D E C I S I O N
CAGUIOA, J.:
In this case, the Court is presented the optimum opportunity to provide for a clear set of rules regarding the refund of amounts disallowed by the Commission on Audit (COA) in order to reach a just and equitable outcome among persons liable for disallowances.
As regards the MAMA, the grant of the same is authorized by SB Resolution No. 42, series of 2013, which provides: ChanRoblesVirtualawlibrary
WHEREAS, the effect of continuing increase of cost on prime commodities brought about by the worldwide inflation and its adverse effect in the locality xxx is felt most by our low-income salaried employees; WHEREAS, it is the policy the local government unit to alleviate the plight of our lowly paid officials and employees; and WHEREAS, the local government unit of Mondragon has shown the willingness to provide its officials, employees and workers whether local or national, serving in the LGU, an assistance to cushion the impact of increasing prices.9
With respect, to the ACA, the Whereas Clauses of Resolution No. 43, series of 2013, state: ChanRoblesVirtualawlibrary
WHEREAS, the effect of inflation has weakened the purchasing power of the local employees of Mondragon and has become a major burden in their daily subsistence; WHEREAS, it has been observed that the local officials and employees alike succumbed [to] high-interest rates loans in order to augment their low income and minimal xxx take-home pay; and WHEREAS, it is the policy of the local government unit of Mondragon to help lighten the financial burden of its local official[s] and employees from the sustaining high interest loans[.]10
Lastly, SB Resolution No. 44, series of 2013, authorizes the grant of the MAME and its Whereas Clauses states: ChanRoblesVirtualawlibrary
WHEREAS, the people of Mondragon are basically dependent on Agriculture; WHEREAS, it is deemed proper that the local government unit of Mondragon provides agricultural assistance to its officials and employees to lighten their burden in terms of agricultural shortage of products caused by typhoon "Yolanda" and help them buy agricultural seeds and other farm facilities from other provinces; and WHEREAS, premises above cited[,] this council hereby approves the grant of Agricultural Crisis Assistance (ACA) in order to help its officials and employees for their agricultural production.11
In total, these allowances in question amounted to P7,706,253.1013 as specified below: ChanRoblesVirtualawlibrary
WHEREAS, there is the global effort against climate change that continuously provides principles and assistance to reduce the human suffering during disaster and calamity; WHEREAS, the Municipality of Mondragon is vulnerable to damaging effects of a possible calamity and disaster because of its location, hence, making its people also susceptible to risk; WHEREAS, the LGU of Mondragon deemed it right to provide mitigation capability by providing financial assistance to its employees that would [equip] them to lessen the adverse impact of hazards and disaster; and WHEREAS, the mitigation assistance will provide them means to pre-empt risks and hazards such as providing their families a risk-free place to dwell.12
Allowance Total Amount Recipients ECA P3,865,203.10 Regular officials and employees, casual and job order/contractual employees, Barangay Tanods, Barangay Nutrition Scholars (BNS), Day Care Workers (DCW), Barangay Health Workers (BHW), public elementary and high school teachers and national employees stationed in the municipality MAMA P1,245,000.00 Regular officials and employees and casual employees ACA P1,771,550.00 Regular officials and employees, casual employees and job order/contractual employees MAME P824,500.00 Regular official and employees, casual employees, job order/contractual employees, BNSs, DCWs, and BHWs.14
The ATL and SA disallowed the subject allowances on the ground that the grants were in violation of the following:
ND No. Date Nature Amount Paid under Check No. 14-004-101 (2013) 02/20/2014 ECA P406,000.00 1164301 14-005-101 (2013) 02/20/2014 ECA 358,000.00 1164302 14-006-101 (2013) 02/20/2014 ECA 830,000.00 1164303 14-007-101 (2013) 02/20/2014 MAME 409,500.00 1164304 14-008-101 (2013) 02/20/2014 ACA 246,300.00 1164305 14-010-101 (2013) 02/20/2014 MAMA 1,245,000.00 1164296 14-011-101 (2013) 02/20/2014 ACA 1,525,250.00 1164297 14-012-101 (2013) 02/20/2014 MAME 415,000.00 1164298 14-013-101 (2013) 02/20/2014 ECA 219,000.00 1164300 14-014-101 (2013) 02/20/2014 ECA 44,500.00 1164306 14-015-101 (2013) 02/20/2014 ECA 2,007,703.10 1164307 TOTAL P7,706,253.1015
a) | Section 12 of Republic Act No. (R.A.) 6758 or the Salary Standardization Law (SSL) as regards the consolidation of allowances and compensation; |
b) | Item II of COA Circular No. 2013-003 dated January 30, 2013 which excluded the subject allowances among the list of authorized allowances, incentives, and benefits; |
c) | Items 4 and 5 of Section 1.a of Civil Service Commission (CSC) Resolution No. 02-0790 dated June 5, 2002, which provides that employees under contract or job order do not enjoy the benefits enjoyed by the government employees (such as the Personnel Economic Relief Allowance or PERA, Additional Compensation Allowance or ACA, and Representation Allowance and Transportation Allowance or RATA), and that the services rendered thereunder are not considered as government service.16 |
Notably, the records show that Madera, Mananguite, Galing and Pelo (petitioners) also received the benefits covered by ND Nos. 14-010-101(2013), 14-011-101(2013), 14-012-101(2013), and 14-015-101(2013).18
Name and Position Participation in the Transaction Mario M. Madera (Madera) - Municipal Mayor For certifying in the Obligation Request that the appropriations/allotments are necessary, lawful and under his direct supervision, and for approving the payment; Beverly C. Mananguite (Mananguite) - Municipal Accountant For certifying in the voucher as to the completeness of the supporting documents; Carissa D. Galing (Galing) - Municipal Treasurer For certifying the availability of funds; Josefina O. Pelo (Pelo) - Municipal Budget Officer For certifying the existence of available appropriation; All other payees as stated in the ND Nos. 14-004-101 (2013) to 14-008-101 (2013); and 14-010-101 (2013) to 14-015-101 (2013), all dated February 20, 2014 For being claimants/recipients of the allowances.17
WHEREFORE, premises considered, the Petition for Review of Mayor Mario M. Madera, et al., Municipality of Mondragon, Northern Samar, of Commission on Audit - Regional Office No. VIII Decision No. 2015-020 dated July 14, 2015 is DENIED. Accordingly, Notice of Disallowance Nos. 14-004-101(2013) to 14-008-101 (2013) and 14-010-101 (2013) to 14-015-101(2013), all dated February 20, 2014, on the grant of Economic Crisis Assistance, Agricultural Crisis Allowance, Monetary Augmentation of Municipal Agency, and Mitigation Allowance to the officials and employees of the municipality, including national government employees assigned thereat, in the total amount of P7,706,253.10, are AFFIRMED with MODIFICATION.On February 28, 2018, petitioners filed a Motion for Reconsideration (MR), which was denied in a Resolution dated August 16, 2018. Petitioners received a copy of the Resolution denying the MR on November 12, 2018.31 Aggrieved, petitioners filed the present petition.
The municipal officials who passed and approved the Sangguniang Bayan Ordinance and Resolutions authorizing the grant of subject allowances, including those who approved/certified the payment thereof, are made to refund the entire disallowed benefits or allowances. However, the officials and employees who unwittingly received the disallowed benefits or allowances are not liable for their reimbursement, they, being recipient-payees in good faith.30 (Emphasis supplied and emphasis in the original omitted)
SECTION 1. Scope. This Rule shall govern the review of judgments and final orders or resolutions of the Commission on Elections and the Commission on Audit.As gleaned from above, Rule 65 applies to petitions questioning the judgments, final orders, or resolutions of the COA only insofar as Rule 64 does not specifically provide the rules. Consequently, since Rule 64 explicitly provides the 30-day period for the filing of the petition, the same shall apply - not the 60-day period provided in Rule 65.
SEC. 2. Mode of review. A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided.
SEC. 3. Time to file petition. The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial. (Underscoring supplied)
Section 447(a)(l)(viii) of RA No. 7160 provides: ChanRoblesVirtualawlibraryIn view of the foregoing, the Court upholds the NDs against the ECA, ACA, MAME, and MAMA.SEC. 447. Powers, Duties, Functions and Compensation. - (a) The sangguniang bayan, as the legislative body of the municipality, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the municipality as provided for under Section 22 of this Code, and shall:In addition, Section 12 of RA No. 6758, the SSL, states: ChanRoblesVirtualawlibrary
(1) Approve ordinances and pass resolutions necessary for an efficient and effective municipal government, and in this connection shall: xxx (viii) Determine the positions and salaries, wages, allowances and other emoluments and benefits of officials and employees paid wholly or mainly from municipal funds and provide for expenditures necessary for the proper conduct of programs, projects, services, and activities of the municipal government;Consolidation of Allowances and Compensation. - All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed xxx. (Underscoring supplied)In this case, the municipality's compensation-setting power in Section 447 of RA No. 7160 to grant ECA, ACA, MAME, and MAMA cannot prevail over Section 12 of RA No. 6758 or the SSL. No law or administrative issuance, much less the [SSL], authorizes the grant of [the] subject benefits.
Moreover, in the case of Luciano Veloso, et al. vs. COA, the Supreme Court ruled that: ChanRoblesVirtualawlibrary[T]he disbursement of public funds, salaries and benefits of government officers and employees should be granted to compensate them for valuable public services rendered, and the salaries or benefits paid to such officers or employees must be commensurate with services rendered. In the same vein, additional allowances and benefits must be shown to be necessary or relevant to the fulfillment of the official duties and functions of the government officers and employees. Without this limitation, government officers and employees may be paid enormous sums without limit or without justification necessary other than that such sums are being paid to someone employed by the government. Public funds are the property of the people and must be used prudently at all times with a view to prevent dissipation and waste.Thus, the grant of ECA, ACA, MAME, and MAMA to the officials and employees cannot be justified as a simple gesture of gratitude of the municipality to its employees for their great contribution to the delivery of public service. The grant of any benefit to them must be necessary or relevant to the performance of their official duties and functions, which is absent in this case.
The appellants' claim that the grant of additional allowances/financial assistance to the municipal and national employees assigned thereat is a customary scheme of the municipality anchored on a yearly appropriation ordinance is misplaced, as the grant thereof is illegal. xxx40
III. Liability of the petitioners for the return of the disallowed allowances |
SECTION 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.Consequently, the COA concluded that the approving officers and each employee who received the disallowed benefit are obligated, jointly and severally, to refund the amount so received. However, in the same breath, the COA also acknowledged the ruling of the Court in several cases as regards passive recipients or payees of disallowed amounts who received the same in good faith, to wit: ChanRoblesVirtualawlibrary
Clearly, the approving officer and each employee who received the disallowed benefit are obligated, jointly and severally, to refund the amount so received. The Supreme Court has ruled that by way of exception, however, passive recipients or payees of disallowed salaries, emoluments, benefits and other allowances need not refund such disallowed amounts if they received the same in good faith. Stated otherwise, government officials and employees who unwittingly received disallowed benefits or allowances are not liable for their reimbursement if there is no finding of bad faith.Indeed, the Court recognizes that the jurisprudence regarding the refund of disallowed amounts by the COA is evolving, at times conflicting, and is primarily dealt with on a case-to-case basis. The discussions made in this petition, however, have made it apparent that there is now a need to harmonize the various rulings of the Court. For this reason, the Court takes this opportunity to lay down the rules that would be applied henceforth in determining the liability to return disallowed amounts, guided by applicable laws and rules as well as the current state of jurisprudence.
The result of exempting recipients who are in good faith from refunding the amount received is that the approving officers are made to shoulder the entire amount paid to the employees. This is perhaps an inequitable burden on the approving officers, considering that they are or remain exposed to administrative and even criminal liability for their act in approving such benefits, and is not consistent with the concept of solutio indebiti and the principle of unjust enrichment.
Nevertheless, in deference to the Supreme Court ruling in Silang v. COA, the Commission rules that government officials and employees who unwittingly received disallowed benefits or allowances are not liable for their reimbursement if there is no finding of bad faith. Public officials who are directly responsible for or participated in making illegal expenditures shall be solidarily liable for their reimbursement.46 (Emphasis and underscoring supplied)
SEC. 49. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Decree or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.Parenthetically, the Government Auditing Code of the Philippines48 (PD 1445), promulgated a year after PD 1177, provides: ChanRoblesVirtualawlibrary
Any official or employee of the Government knowingly incurring any obligation, or authorizing any expenditure in violation of the provisions herein, or taking part therein, shall be dismissed from the service, after due notice and hearing by the duly authorized appointing official. If the appointing official is other than the President and should he fail to remove such official or employee, the President may exercise the power of removal. (Underscoring supplied)
SECTION 102. Primary and secondary responsibility. - (1) The head of any agency of the government is immediately and primarily responsible for all government funds and property pertaining to his agency.These provisions of PD 1177 and PD 1445 are substantially reiterated in the Administrative Code of 1987, thus: ChanRoblesVirtualawlibrary
(2) Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the government.
SECTION 103. General liability for unlawful expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.
SECTION 104. Records and reports required by primarily responsible officers. - The head of any agency or instrumentality of the national government or any government-owned or controlled corporation and any other self-governing board or commission of the government shall exercise the diligence of a good father of a family in supervising accountable officers under his control to prevent the incurrence of loss of government funds or property, otherwise he shall be jointly and solidarity liable with the person primarily accountable therefore. The treasurer of the local government unit shall likewise exercise the same degree of supervision over accountable officers under his supervision otherwise, he shall be jointly and solidarity liable with them for the loss of government funds or property under their control.
SECTION 105. Measure of liability of accountable officers. - (1) Every officer accountable for government property shall be liable for its money value in case of improper or unauthorized use or misapplication thereof, by himself or any person for whose acts he may be responsible. He shall likewise be liable for all losses, damages, or deterioration occasioned by negligence in the keeping or use of the property whether or not it be at the time in his actual custody.
(2) Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds.
SECTION 51. Primary and Secondary Responsibility. - (1) The head of any agency of the Government is immediately and primarily responsible for all government funds and property pertaining to his agency;It is well-settled that administrative, civil, or even criminal liability, as the case may be, may attach to persons responsible for unlawful expenditures, as a wrongful act or omission of a public officer.51 It is in recognition of these possible results that the Court is keenly mindful of the importance of approaching the question of personal liability of officers and payees to return the disallowed amounts through the lens of these different types of liability.
(2) Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the Government.
SECTION 52. General Liability for Unlawful Expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.49
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SECTION 40. Certification of Availability of Funds. - No funds shall be disbursed, and no expenditures or obligations chargeable against any authorized allotment shall be incurred or authorized in any department, office or agency without first securing the certification of its Chief Accountant or head of accounting unit as to the availability of funds and the allotment to which the expenditure or obligation may be properly charged.
No obligation shall be certified to accounts payable unless the obligation is founded on a valid claim that is properly supported by sufficient evidence and unless there is proper authority for its incurrence. Any certification for a non-existent or fictitious obligation and/or creditor shall be considered void. The certifying official shall be dismissed from the service, without prejudice to criminal prosecution under the provisions of the Revised Penal Code. Any payment made under such certification shall be illegal and every official authorizing or making such payment, or taking part therein or receiving such payment, shall be jointly and severally liable to the government for the full amount so paid or received.
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SECTION 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.
Any official or employee of the Government knowingly incurring any obligation, or authorizing any expenditure in violation of the provisions herein, or taking part therein, shall be dismissed from the service, after due notice and hearing by the duly authorized appointing official. If the appointing official is other than the President and should he fail to remove such official or employee, the President may exercise the power of removal.50 (Underscoring supplied)
SECTION 38. Liability of Superior Officers. - (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence.By the very language of these provisions, the liability for unlawful expenditures is civil. Nonetheless, since these provisions are situated in Chapter 9, Book I of the Administrative Code of 1987 entitled "General Principles Governing Public Officers," the liability is inextricably linked with the administrative law sphere. Thus, the civil liability provided under these provisions is hinged on the fact that the public officers performed his official duties with bad faith, malice, or gross negligence.
xxxx (3) A head of a department or a superior officer shall not be civilly liable for the wrongful acts, omissions of duty, negligence, or misfeasance of his subordinates, unless he has actually authorized by written order the specific act or misconduct complained of.
SECTION 39. Liability of Subordinate Officers. - No subordinate officer or employee shall be civilly liable for acts done by him in good faith in the performance of his duties. However, he shall be liable for willful or negligent acts done by him which are contrary to law, morals, public policy and good customs even if he acted under orders or instructions of his superiors.53 (Emphasis and underscoring supplied)
Subsequent to the Old CSB Manual, COA Circular No. 94-00155 dated January 20, 1994 (MCSB) distinguished liability from responsibility and accountability, and provided the parameters for enforcing the civil liability to refund disallowed amounts: ChanRoblesVirtualawlibrary
C. Liability of Head of Agency, Accountable Officer and Other Officials and Employees 1. The liability of an official or employee for disallowances or discrepancies in accounts audited shall depend upon his participation in the transaction involved. The accountability and responsibility of officials and employees for government funds and property as provided in Sections 101 and 102 of P.D.1445 do not necessarily give rise to liability for loss or government funds or damage to property.
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III. GENERAL INSTRUCTIONS:
xxxx 5. The Head of Agency, who is immediately and primarily responsible for all government funds and property pertaining to his agency, shall see that the audit suspensions/disallowances are immediately settled. (Emphasis and underscoring supplied)
SECTION 3, DEFINITION OF TERMSThese provisions are also substantially reproduced in COA Circular No. 2009-00656 dated September 15, 2009 (RRSA) and the 2009 Revised Rules of Procedure of the Commission on Audit (RRPCOA). Under Section 4 of the RRSA: ChanRoblesVirtualawlibraryThe following terms shall be understood in the sense herein defined, unless the context otherwise indicates:xxxx
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3.10 LIABILITY. - A personal obligation arising from an audit disallowance/charge which may be satisfied through payment or restitution as determined by competent authority and in accordance with law.
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3.12 PECUNIARY LIABILITY. - the amount of consequential loss or damage arising from an act or omission and for which restitution, reparation, or indemnification is required.
SECTION 18. SETTLEMENT OF DISALLOWANCES AND CHARGESDisallowances and charges shall be settled through submission of the required explanation/justification and/or documentations by the person or persons determined by the auditor to be liable therefor, or by payment of the amount disallowed in audit; or by such other applicable modes of extinguishment of obligation as provided by law.xxxx
SECTION 34. ENFORCEMENT OF CIVIL LIABILITY.To enforce civil liability, the auditor shall submit a report on the disallowances and charges to the COA Chairman (Thru: The Director concerned), requesting that the matter be referred to the Office of the Solicitor General (National Government agencies), or to the Office of the Government Corporate Counsel (for government-owned or controlled corporations) or to the appropriate Provincial or City Attorney (in the case of local government units). The report shall be duly supported with certified copies of the subsidiary records, the CSB, and the payrolls/vouchers/collections disallowed and charged together with all necessary documents, official receipts for the filing of the appropriate civil suit. (Emphasis and underscoring supplied)
4.17 Liability - a personal obligation arising from an audit disallowance or charge which may be satisfied through payment or restitution as determined by competent authority or by other modes of extinguishment of obligation as provided by law.The procedure for the enforcement of civil liability through the withholding of payment of money due to persons liable and through referral to the OSG is found in Rule XIII of the RRPCOA, particularly, Section 3 and Section 6.
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4.17 Liability - a personal obligation arising from an audit disallowance or charge which may be satisfied through payment or restitution as determined by competent authority or by other modes of extinguishment of obligation as provided by law. xxxx 4.24 Settlement - refers to the payment/restitution or other act of extinguishing an obligation as provided by law in satisfaction of the liability under an ND/NC, or in compliance with the requirements of an NS, as defined in these Rules. (Emphasis and underscoring supplied)
xxx For one to be absolved of liability the following requisites [may be considered]: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code, (2) In-house or Department of Justice legal opinion, (3) that there is no precedent disallowing a similar case in jurisprudence, (4) that it is traditionally practiced within the agency and no prior disallowance has been issued, [or] (5) with regard the question of law, that there is a reasonable textual interpretation on its legality.59Thus, to the extent that these badges of good faith and diligence are applicable to both approving and certifying officers, these should be considered before holding these officers, whose participation in the disallowed transaction was in the performance of their official duties, liable. The presence of any of these factors in a case may tend to uphold the presumption of good faith in the performance of official functions accorded to the officers involved, which must always be examined relative to the circumstances attending therein.
Untenable is petitioners' [payees'] contention that the herein respondents be held personally liable for the refund in question. Absent a showing of bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties.The decision refused to shift the economic burden of returning the amounts the payees received to the officers who authorized or approved the grant of the benefits. Instead, the decision opted to excuse the return altogether. While the discussion on the presumption of good faith and regularity in the performance of official duties can easily be inferred as anchored on Section 38 of the Administrative Code of 1987, no statutory basis was provided for the excuse of payees from the obligation to return, leading to the conclusion that it is merely a judge made rule.
Every public official is entitled to the presumption of good faith in the discharge of official duties. Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the performance of official duties.
In upholding the constitutionality of AO 268 and AO 29, the Court reiterates the well-entrenched doctrine that "in interpreting statutes, that which will avoid a finding of unconstitutionality is to be preferred."
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits. (Emphasis, underscoring supplied and citations omitted)61
This case would not have arisen had N[E]A complied in good faith with the directives and orders of the President in the implementation of the last phase of the Salary Standardization Law II. The directives and orders are clearly and manifestly in accordance with all relevant laws. The reasons advanced by NEA in disregarding the President's directives and orders are patently flimsy, even ill[-]conceived. This cannot be countenanced as it will result in chaos and disorder in the executive branch to the detriment of public service.67Thus, the petition filed by the NEA was denied, and the Decision of the COA68 was affirmed by the Court. The affirmed decision directed "all NEA officials and employees who received compensation and allowances in violation of the provisions of Executive Order No. 389 and National Budget Circular No. 458 xxx to refund."69
Clearly, good faith is anchored on an honest belief that one is legally entitled to the benefit. In this case, the MIAA employees who had no participation in the approval and release of the disallowed benefit accepted the same on the assumption that Resolution No. 2003-067 was issued in the valid exercise of the power vested in the Board of Directors under the MIAA charter. As they were not privy as to reason and motivation of the Board of Directors, they can properly rely on the presumption that the former acted regularly in the performance of their official duties in accepting the subject benefit. Furthermore, their acceptance of the disallowed grant, in the absence of any competent proof of bad faith on their part, will not suffice to render liable for a refund.In 2015, the Court promulgated the decision in Silang74 which followed the rule in Casal. Parenthetically, the COA rationalizes the inequitable outcome it reached in this case as being in deference to Silang.75Silang involves the disallowance of CNA incentives granted to the employees of the Local Government Unit of Tayabas, Quezon. The case distinguished the liability to return based on the good faith of the persons held liable in the ND. The Court held that Mayor Silang, the Sanggunian, and the officers of the employee's organization cannot be deemed to have acted in good faith. Therefore, only passive recipients of the disallowed benefits were excused from the responsibility to return on the basis of their good faith "anchored on an honest belief that one is legally entitled to the benefit, as said employees did so believe in this case."76 The Court stated that the payees "should not be held liable to refund what they had unwittingly received."77
The same is not true as far as the Board of Directors. Their authority under Section 8 of the MIAA charter is not absolute as their exercise thereof is "subject to existing laws, rules and regulations" and they cannot deny knowledge of SSS v. COA and the various issuances of the Executive Department prohibiting the grant of the signing bonus. In fact, they are duty-bound to understand and know the law that they are tasked to implement and their unexplained failure to do so barred them from claiming that they were acting in good faith in the performance of their duty. The presumptions of "good faith" or "regular performance of official duty" are disputable and may be contradicted and overcome by other evidence.
Granting that the benefit in question is a CNA Incentive, MIAA's Board of Directors has no authority to include its members, the members of the Board Secretariat, ExeCom and other employees not occupying rank-and-file positions in the grant. Indeed, this is an open and contumacious violation of PSLMC Resolution No. 2 and A.O. No. 135, which were unequivocal in stating that only rank-and-file employees are entitled to the CNA Incentive. Given their repeated invocation of these rules to justify the disallowed benefit, they cannot feign ignorance of these rules. That they deliberately ignored provisions of PSLMC Resolution No. 2 and A.O. No. 135 that they failed to observe bolsters the finding of bad faith against them.
The same is true as far as the concerned officers of MIAA are concerned. They cannot approve the release of funds and certify as to the legality of the subject disbursement knowing that it is a signing bonus. Alternatively, if they acted on the belief that the benefit is a CNA Incentive, they were in no position to approve its funding without assuring themselves that the conditions imposed by PSLMC Resolution No. 2 are complied with. They were also not in the position to release payment to the members of the Board of Directors, ExeCom and employees who do not occupy rank-and-file positions considering the express language of PSLMC Resolution No. 2.
Simply put, these individuals cannot honestly claim that they have no knowledge of the illegality of their acts. Thus, this Court finds that a refund of the amount of P30,000.00 received by each of the responsible officers and members of MIAA's Board of Directors is in order.73 (Underscoring supplied and citations omitted)
Anent the benefits which were improperly disallowed, the same rightfully belong to respondents without qualification. As for benefits which were justifiably disallowed by the COA, the same were erroneously granted to and received by respondents who now have the obligation to return the same to the System.The COA similarly applies the principle of solutio indebiti to require the return from payees regardless of good faith. The COA Decisions in the cases of Jalbuena v. COA,84DBP v. COA85 and Montejo v. COA,86 are examples to that effect. In the instant case, the COA Decision expressly articulated this predicament of exempting recipients who are in good faith and expressed that the same is not consistent with the concept of solutio indebiti and the principle of unjust enrichment: ChanRoblesVirtualawlibrary
It cannot be denied that respondents were recipients of benefits that were properly disallowed by the COA. These COA disallowances would otherwise have been deducted from their salaries, were it not for the feet that respondents retired before such deductions could be effected. The GSIS can no longer recover these amounts by any administrative means due to the specific exemption of retirement benefits from COA disallowances. Respondents resultantly retained benefits to which they were not legally entitled which, in turn, gave rise to an obligation on their part to return the amounts under the principle of solutio indebiti.
Under Article 2154 of the Civil Code, if something is received and unduly delivered through mistake when there is no right to demand it, the obligation to return the thing arises. Payment by reason of mistake in the construction or application of a doubtful or difficult question of law also comes within the scope of solutio indebiti.
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While the GSIS cannot directly proceed against respondents' retirement benefits, it can nonetheless seek restoration of the amounts by means of a proper court action for its recovery. Respondents themselves submit that this should be the case, although any judgment rendered therein cannot be enforced against retirement benefits due to the exemption provided in Section 39 of RA 8291. However, there is no prohibition against enforcing a final monetary judgment against respondents' other assets and properties. This is only fair and consistent with basic principles of due process.83 (Citations omitted)
Clearly, the approving officer and each employee who received the disallowed benefit are obligated, jointly and severally, to refund the amount so received. The Supreme Court has ruled that by way of exception, however, passive recipients or payees of disallowed salaries, emoluments, benefits and other allowances need not refund such disallowed amounts if they received the same in good faith. Stated otherwise, government officials and employees who unwittingly received disallowed benefits or allowances are not liable for their reimbursement if there is no finding of bad faith.With the liability for unlawful expenditures properly understood, payees who receive undue payment, regardless of good faith, are liable for the return of the amounts they received. Notably, in situations where officers are covered by Section 38 of the Administrative Code of 1987 either by presumption or by proof of having acted in good faith, in the regular performance of their official duties, and with the diligence of a good father of a family, payees remain liable for the disallowed amount unless the Court excuses the return. For the same reason, any amounts allowed to be retained by payees shall reduce the solidary liability of officers found to have acted in bad faith, malice, and gross negligence. In this regard, Justice Bernabe coins the term "net disallowed amount" to refer to the total disallowed amount minus the amounts excused to be returned by the payees.88 Likewise, Justice Leonen is of the same view that the officers held liable have a solidary obligation only to the extent of what should be refunded and this does not include the amounts received by those absolved of liability.89 In short, the net disallowed amount shall be solidarily shared by the approving/authorizing officers who were clearly shown to have acted in bad faith, with malice, or were grossly negligent.
The result of exempting recipients who are in good faith from refunding the amount received is that the approving officers are made to shoulder the entire amount paid to the employees. This is perhaps an inequitable burden on the approving officers, considering that they are or remain exposed to administrative and even criminal liability for their act in approving such benefits, and is not consistent with the concept of solutio indebiti and the principle of unjust enrichment.
Nevertheless, in deference to the Supreme Court ruling in Silang v. COA, the Commission rules that government officials and employees who unwittingly received disallowed benefits or allowances are not liable for their reimbursement if there is no finding of bad faith. Public officials who are directly responsible for or participated in making illegal expenditures shall be solidarily liable for their reimbursement.87 (Emphasis and underscoring supplied)
SECTION 16. DETERMINATION OF PERSONS RESPONSIBLE/LIABLETo recount, as noted from the cases earlier mentioned, retention by passive payees of disallowed amounts received in good faith has been justified on said payee's "lack of participation in the disbursement." However, this justification is unwarranted because a payee's mere receipt of funds not being part of the performance of his official functions still equates to him unduly benefiting from the disallowed transaction; this gives rise to his liability to return.
16.1 The liability of public officers and other persons for audit disallowances/charges shall be determined on the basis of (a) the nature of the disallowance/charge; (b) the duties and responsibilities or obligations of officers/employees concerned; (c) the extent of their participation in the disallowed/charged transaction; and (d) the amount of damage or loss to the government, thus: xxxx 16.1.5 The payee of an expenditure shall be personally liable for a disallowance where the ground thereof is his failure to submit the required documents, and the Auditor is convinced that the disallowed transaction did not occur or has no basis in fact. 16.3 The liability of persons determined to be liable under an ND/NC shall be solidary and the Commission may go against any person liable without prejudice to the latter's claim against the rest of the persons liable.
Finally, the payees received the disallowed benefits with the mistaken belief that they were entitled to the same. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. A constructive trust is substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect of property, which has been acquired by fraud, or where, although acquired originally without fraud, it is against equity that it should be retained by the person holding it. In fine, payees are considered trustees of the disallowed amounts, as although they committed no fraud in obtaining these benefits, it is against equity and good conscience for them to continue holding on to them.95 (Italics in the original and citations omitted)Similarly, in DPWH v. COA,96 the disallowance of CNA incentives sourced out of the Engineering Administrative Overhead (EAO) was upheld, and the recipients of the disallowed benefits were held liable to return. In finding that the payees are obliged to return the amounts they received, the Court stated: ChanRoblesVirtualawlibrary
Jurisprudence holds that there is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience. The statutory basis for the principle of unjust enrichment is Article 22 of the Civil Code which provides that "[e]very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him."That the incentives were negotiated and approved by the employees was only one of several reasons for the return in the said case. The excerpt cited above sufficiently signals that the elements of unjust enrichment are completed as soon as a payee receives public funds without valid basis or justification - without necessarily requiring participation in the grant and disbursement.
The principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at another's expense or damage. There is no unjust enrichment when the person who will benefit has a valid claim to such benefit.
The conditions set forth under Article 22 of the Civil Code are present in this case.
It is settled that the subject CNA Incentive was invalidly released by the DPWH IV-A to its employees as a consequence of the erroneous application by its certifying and approving officers of the provisions of DBM Budget Circular No. 2006-1. As such, it only follows that the DPWH IV-A employees received the CNA Incentive without valid basis or justification; and that the DPWH IV-A employees have no valid claim to the benefit. Moreover, it is clear that the DPWH IV-A employees received the subject benefit at the expense of another, specifically, the government. Thus, applying the principle of unjust enrichment, the DPWH IV-A employees must return the benefit they unduly received.97 (Underscoring supplied and citations omitted)
xxx Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. Rightly, we have stressed that social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality. Social justice would be a meaningless term if an element of rigidity would be affixed to the procedural precepts. Flexibility should not be ruled out. Precisely, what is sought to be accomplished by such a fundamental principle expressly so declared by the Constitution is the effectiveness of the community's effort to assist the economically underprivileged. For under existing conditions, without such succor and support, they might not, unaided, be able to secure justice for themselves. To make them suffer, even inadvertently, from the effect of a judicial ruling, which perhaps they could not have anticipated when such deplorable result could be avoided, would be to disregard what the social justice concept stands for.107 (Italics in the original)The pronouncements in Uy108 illustrate the Court's willingness to consider social justice in disallowance cases. These considerations may be utilized in assessing whether there may be an exception to the rule on solutio indebiti so that the return may be excused altogether. As Justice Inting correctly pointed out, "each disallowance case is unique, inasmuch as the facts behind, nature of the amounts involved, and individuals so charged in one notice of disallowance are hardly ever the same with any other."109
It has been a customary scheme of the municipality to grant additional allowances during year-end period and which act is legally anchored on yearly appropriation ordinance by the sanggunian. Similar scheme is also practiced in all government agencies, local or national.All in all, petitioners' averments are well-taken. In evaluating the presence of good faith in cases involving disallowances, the Court's pronouncement in Lumayna is still instructive and remains true even under the foregoing guidelines: ChanRoblesVirtualawlibrary
On such previous disbursement[s] of the municipality, there were no disallowance[s] issued by the COA or DBM, hence, the municipal officials [believed] in good faith that such grant of additional allowances were legal and allowed.
It was only on June 26,2014 when [the NDs herein were] issued and [the Municipality was informed]. That is why, since 2014, petitioners never grant[ed] additional allowances anymore to its employees.
xxxx
On [a] final note, since the COA foiled to show bad faith on the approving officers, the alleged refund should not be personally imposed on them, they being in good faith that recipients richly deserved such benefits and the officers relied merely on the yearly basis of granting additional allowances, without them being informed by [the] COA or DBM that such disbursements were illegal.111
Furthermore, granting arguendo that the municipality's budget adopted the incorrect salary rates, this error or mistake was not in any way indicative of bad faith. Under prevailing jurisprudence, mistakes committed by a public officer are not actionable, absent a clear showing that he was motivated by malice or gross negligence amounting to bad faith. It does not simply connote bad moral judgment or negligence. Rather, there must be some dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a sworn duty through some motive or intent, or ill will. It partakes of the nature of fraud and contemplates a state of mind affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes. xxx112 (Emphasis supplied)Applying the foregoing, the Court accepts the arguments raised by the petitioners as badges of good faith.
The grant of the FGI to petitioners has a lofty purpose behind it: the alleviation, to any extent possible, of the difficulty in keeping up with the rising cost of living. Indeed, under the circumstances, We find that the FGI was given and received in good faith. The NFA Council approved the grant under the belief, albeit mistaken, that the presidential issuances and the OGCC Opinion provided enough bases to support it; and the NFA officials and employees received the grant with utmost gratefulness.116Second, that these additional allowances had been customarily granted over the years and there was no previous disallowance issued by the COA against these allowances further bolster petitioners' claim of good faith. Indeed, while it is true that this customary scheme does not ripen into valid allowances, it is equally true that in all those years that the additional allowances had been granted, the COA did not issue any ND against these grants, thereby leading petitioners to believe that these allowances were lawful.
Very truly yours, (SGD) EDGAR O. ARICHETA Clerk of Court |
Endnotes:
1Rollo, pp. 3-17.
2 Id. at 18-19.
3 See id. at 30.
4 Id. at 41-43.
5 Id. at 31-32.
6 Id. at 33-34.
7 Id. at 35-36.
8 Id. at 38-39.
9 Id. at 31.
10 Id. at 33.
11 Id. at 35.
12 Id. at 37.
13 Id. at 19.
14 Id. at 19-20.
15 Id. at 20.
16 Id.
17 Id. at 21.
18 Id. at 84-88, 89-93, 94-98, 110-116.
19Section 12. Consolidation of Allowances and Compensation. - All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government.
20Rollo, p. 21.
21 Id. at 22.
22 Id. at 126-132.
23 Id. at 22-23.
24 Id. at 23.
25 SECTION 327. Review of Appropriation Ordinances of Component Cities and Municipalities. - The sangguniang panlalawigan shall review the ordinance authorizing annual or supplemental appropriations of component cities and municipalities in the same manner and within the same period prescribed for the review of other ordinances.
If within ninety (90) days from receipt of copies of such ordinance, the sangguniang panlalawigan takes no action thereon, the same shall be deemed to have been reviewed in accordance with law and shall continue to be in full force and effect. If within the same period, the sangguniang panlalawigan shall have ascertained that the ordinance authorizing annual or supplemental appropriations has not complied with the requirements set forth in this Title, the sangguniang panlalawigan shall, within the ninety-day period hereinabove prescribed, declare such ordinance inoperative in its entirety or in part. Items of appropriation contrary to limitations prescribed in this Title or in excess of the amounts prescribed herein shall be disallowed or reduced accordingly.
The sangguniang panlalawigan shall, within the same period, advise the sangguniang panlungsod or sangguniang bayan concerned, through the local chief executive, of any action on the ordinance under review. Upon receipt of such advice, the city or municipal treasurer concerned shall not make further disbursements of funds from any of the items of appropriation declared inoperative, disallowed or reduced.
26 SECTION 322. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations. - Unexpended balances of appropriations authorized in the annual appropriations ordinance shall revert to the unappropriated surplus of the general fund at the end of the fiscal year and shall not thereafter be available for the expenditure except by subsequent enactment. However, appropriations for capital outlays shall continue and remain valid until fully spent, reverted or the project is completed. Reversions of continuing appropriations shall not be allowed unless obligations therefor have been fully paid or otherwise settled.
The balances of continuing appropriations shall be reviewed as part of the annual budget preparation and the sanggunian concerned may approve, upon recommendation of the local chief executive, the reversion of funds no longer needed in connection with the activities funded by said continuing appropriations subject to the provisions of this section.
27Rollo, p. 23.
28 Id.
29 Id. at 27.
30 Id. at 28.
31 Id. at 6.
32 Id. at 161-177.
33 Id. at 6.
34 See Barnes v. Padilla, G.R. No. 160753, September 30, 2004, 439 SCRA 675, 686.
35Miralles v. Commission on Audit, G.R. No. 210571, September 19, 2017, 840 SCRA 108, 116.
36 Id. at 116-117.
37Estalilla v. Commission on Audit, G.R. No. 217448, September 10, 2019, accessed at .
38Catu-Lopez v. Commission on Audit, G.R. No. 217997, November 12, 2019, accessed at .
39Rollo, p. 8.
40 Id. at 25-26.
41Blaquera v. Alcala, G.R. No. 109406, September 11,1998, 295 SCRA 366; De Jesus v. Commission on Audit, G.R. No. 149154, 403 SCRA 666; Home Development Mutual Fund v. Commission on Audit, G.R. No. 157001, October 19, 2004, 440 SCRA 643; and Lumayna v. Commission on Audit, G.R. No. 185001, September 25, 2009, 601 SCRA 163.
42Rollo, pp. 10-13.
43 Id. at 13.
44 G.R. No. 213189, September 8, 2015, 770 SCRA 110, 126.
45Rollo, pp. 26-27.
46 Id. at 26-28.
47 Presidential Decree No. 1177, July 30, 1977.
48 Presidential Decree No. 1445, June 11, 1978.
49 Chapter 9, Subtitle B, Title I, Book V.
50 Book VI, Chapter 5.
51Domingo v. Rayala, G.R. Nos. 155831, 155840 & 158700, February 18, 2008, 546 SCRA 90, 112: "Basic in the law of public officers is the three-fold liability rule, which states that the wrongful acts or omissions of a public officer may give rise to civil, criminal and administrative liability, xxx".
52 See Suarez v. Commission on Audit, G.R. No. 131077, August 7, 1998, 294 SCRA 96, 108-109, which treats liability for disallowance as civil liability, viz.,In holding petitioner liable for having failed to show good faith and diligence in properly performing her functions as a member of the PBAC, Respondent COA misconstrued Sec. 29.2 of the Revised CSB Manual. The aforesaid section requires a clear showing of bad faith, malice or gross negligence before a public officer may be held civilly liable for acts done in the performance of his or her official duties. The same principle is reiterated in Book I, Chapter 9, Section 38 of the 1987 Administrative Code. A public officer is presumed to have acted in the regular performance of his/her duty; therefore, he/she cannot be held civilly liable, unless contrary evidence is presented to overcome the presumption. There is no such evidence in this case. From the foregoing, it is as clear as day that Respondent COA committed grave abuse of discretion in including petitioner among those liable for the subject disallowance. (Underscoring supplied)53 See Eslao v. Commission on Audit, G.R. No. 89745, April 8, 1991, 195 SCRA 730 (procurement of plans and designs for extension of school building); Andres v. Commission on Audit, G.R. No. 94476, September 26, 1991, 201 SCRA 780 (overpricing in purchase of school desks); Arriola v. Commission on Audit, G.R. No. 90364, September 30, 1991, 202 SCRA 147 (overpricing of Batangas Water Well Project); Orocio v. Commission on Audit, G.R. No. 75959, August 31, 1992, 213 SCRA 109 (legal officer sought to be held liable for hospitalization costs advanced by National Power Corporation based on his legal opinion that the agency is liable under quasi-delict for the accident in Malaya Thermal Plant); Suarez v. Commission on Audit, id.
54 Restating the Requirements for the Use of the Certificate of Settlement and Balances and Providing Guidelines on Its Issuance Including the Accounting Treatment Thereof.
55 Prescribing the Use of the Manual on Certificate of Settlement and Balances (Revised 1993).
56 Prescribing the Use of the Rules and Regulations on Settlement of Accounts.
57 See Section 19 of the MCSB and Section 16 of the RRSA.
58 Separate Concurring Opinion of Justice Leonen, pp. 8, 13.
59 Id. at 8.
60 Supra note 41.
61Rotaras v. Commission on Audit, G.R. No. 211999, August 20, 2019, accessed at .
62 Supra note 41.
63 G.R. No. 150769, August 31, 2004, 437 SCRA 371.
64 Supra note 41.
65Rollo, p. 12.
66 G.R. No. 143481, February 15, 2002, 377 SCRA 223.
67 Id. at 240.
68 The COA in its Decision stated: "Thus, when the NEA effected full implementation of the new salary schedule on January 1, 1997, instead of November 1, 1997, NEA was, then, clearly acting in violation of the mandates of the law. Consequently, said wrongful implementation must be struck down for being baseless and unlawful, and all its employees who received the undue increases must necessarily return the amount thus received," id. at 227-228; emphasis and underscoring supplied.
69 Id. at 224.
70 G.R. No. 149633, November 30, 2006, 509 SCRA 138.
71 G.R. No. 194710, February 14, 2012, 665 SCRA 653.
72 G.R. No. 204869, March 11, 2014, 718 SCRA 402.
73 Supra note 71, at 678-679.
74 Supra note 44.
75Rollo, pp. 27-28.
76Silang v. Commission on Audit, supra note 44, at 129.
77 Id.
78 Supra note 41, at 182-183. The relevant portion reads: ChanRoblesVirtualawlibraryFurthermore, granting arguendo that the municipality's budget adopted the incorrect salary rates, this error or mistake was not in any way indicative of bad faith. Under prevailing jurisprudence, mistakes committed by a public officer are not actionable, absent a clear showing that he was motivated by malice or gross negligence amounting to bad faith. It does not simply connote bad moral judgment or negligence. Rather, there must be some dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a sworn duty through some motive or intent, or ill will. It partakes of the nature of fraud and contemplates a state of mind affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes. As we see it, the disbursement of the 5% salary increase was done in good faith. Accordingly, petitioners need not refund the disallowed disbursement in the amount of P895,891.50. (Citations omitted and underscoring supplied)79 G.R. No. 159299, July 7, 2004, 433 SCRA 769.
80Rollo, pp. 12-13.
81 See Melchor v. Commission on Audit, G.R. No. 95398, August 16, 1991, 200 SCRA 704, 714, citing Eslao v. Commission on Audit, supra note 53, at 739. This case applies the same principle of unjust enrichment in cases where the contractor seeks payment to this case where reimbursement is sought from the official concerned; see also Andres v. Commission on Audit, supra note 53.
82 G.R. Nos. 138381 & 141625, November 10, 2004, 441 SCRA 532.
83 Id. at 548-550.
84 G.R. No. 218478, June 19, 2018, p. 2, (Unsigned Resolution), [En Banc].
85 G.R. No. 210838, July 3, 2018, accessed at .
86 G.R. No. 232272, July 24, 2018, accessed at .
87Rollo, pp. 27-28.
88 Separate Concurring Opinion of Justice Bernabe, p. 13.
89 Separate Concurring Opinion of Justice Leonen, p. 12.
90 G.R. No. 237813, March 5, 2019, accessed at .
91Blaquera v. Alcala, supra note 41, at 448.
92 Sections 3.19 and 4.28 of the MCSB and the RRSA, respectively.
93 The RRSA, Section 16.1.
94 Supra note 90.
95 Id.
96 G.R. No. 237987, March 19, 2019, accessed at .
97 Id.
98 G.R. Nos. 226319 & 235031, October 8, 2019.
99 Supra note 61.
100 Separate Concurring Opinion of Justice Leonen, p. 12.
101 Supra note 61. The dispositive portion of Rotoras reads:
WHEREFORE, the Petition for Certiorari is DISMISSED. The November 3, 2011 Decision and February 14, 2014 Resolution of the Commission on Audit in COA CP Case No. 2010-341 are AFFIRMED. The members of the governing boards of the state universities and colleges shall return the disallowed benefits. Their obligation to return shall not be solidary.
SO ORDERED.
102 Separate Concurring Opinion of Justice Bernabe, p. 12.
103 Id. at 11-12.
104 Id. at 11. Justice Bernabe further explains: ChanRoblesVirtualawlibraryxxx To be sure, Republic Act No. 6758, otherwise known as the "Compensation and Position Classification Act of 1989," "standardize[s] salary rates among government personnel and do[es] away with multiple allowances and other incentive packages and the resulting differences in compensation among them." Section 12 lays down the general rule that all allowances of state workers are to be included in their standardized salary rates, with the exception of the following allowances: xxx105 Id. at 12.
The said allowances are the "only allowances which government employees can continue to receive in addition to their standardized salary rates." Conversely, "all allowances not covered by the [above] exceptions xxx are presumed to have been integrated into the basic standardized pay" and hence, subject to disallowance. Id. at 11-12.
106 G.R. No. 130685, March 21, 2000, 328 SCRA 607.
107 Id. at 619.
108 Id.
109 Concurring Opinion, p. 1.
110 Separate Concurring Opinion of Justice Leonen, p. 8. To reiterate, Justice Leonen proposes the following circumstances or badges for the determination of whether an authorizing officer exercised the diligence of a good father of a family: "(1) Certificate of Availability of Funds pursuant to Section 40 of the Administrative Code, (2) In-house or Department of Justice legal opinion, (3) that there is no precedent disallowing a similar case in jurisprudence, (4) that it is traditionally practiced within the agency and no prior disallowance has been issued, and (5) with regard the question of law, that there is a reasonable textual interpretation on its legality."
111Rollo, pp. 9-13.
112 Supra note 41, at 182.
113Rollo, p. 31.
114 Id. at 35.
115 Id. at 37.
116 G.R. Nos. 217818, 218334, 219979, 220201, & 222118, May 31, 2016, p. 8 (Unsigned Resolution).
117Rollo, p. 9.
118 R.A. 7160, Section 447(a)(1)(viii).
119 G.R. No. 193677, September 6, 2011, 656 SCRA 767.
120Philippine Economic Zone Authority (PEZA) v. Commission on Audit, G.R. 210903, October 11, 2016, 805 SCRA 618.
121 Id. at 621.
122Rollo, p. 27.
123 Id.
PERLAS-BERNABE, J.:
I concur.
In this case, the Court has decided to set straight the conflicting jurisprudential guidelines in cases involving the directive to return amounts that are validly disallowed by the Commission on Audit (COA). As definitively expressed in the ponencia, the guidelines agreed upon by the members of this Court now serve to enlighten both the government and the public regarding the proper parameters for the return of disallowed public funds.
Consistent with the guidelines in the ponencia, I express my views on the frameworks of law that pertinently govern the return of amounts disallowed by the government. These frameworks of law pertain to the body of statutory provisions found in the Administrative Code on the one hand, and the applicable provisions of the Civil Code, on the other. An in-depth discussion of these two legal frameworks provides for a better understanding of the underlying reasons that justify the parameters for the return of disallowed amounts.
Undoubtedly, an essential administrative function of the government is the disbursement of public funds. In this regard, public officers and government employees tasked with this vital function are mandated to ensure that public expenditures are made in conformity with the law. This mandate stems from the Constitution itself which states that "[n]o money shall be paid out of the Treasury except in pursuance of an appropriation made by law."4 This command is also mirrored in Section 32, Chapter 5, Book VI of the Administrative Code which states that "[a]ll moneys appropriated for functions, activities, projects and programs shall be available solely for the specific purposes for which these are appropriated."CHAPTER 9
General Principles Governing Public Officers
Section 32. Nature of Public Office. - Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with the utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives.
Section 52. General Liability for Unlawful Expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. (Emphasis and underscoring supplied)This provision is mirrored in Section 103, Chapter 5, Title II of Presidential Decree No. 14458 (PD 1445), otherwise known as the "Government Auditing Code of the Philippines" (Audit Code): ChanRoblesVirtualawlibrary
Section 103. General Liability for Unlawful Expenditures. - Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. (Emphasis and underscoring supplied)Notably, the liability for unlawful expenditures per se must be distinguished from the liability of accountable officers tasked with the custody and safekeeping of government property and funds pertaining to an agency.9 With respect to the latter, Section 51, Chapter 9, Subtitle B, Title I, Book V of the Administrative Code distinctly provides for the primary and secondary responsibilities of the following officers: ChanRoblesVirtualawlibrary
Section 51. Primary and Secondary Responsibility. - (1) The head of any agency of the Government is immediately and primarily responsible for all government funds and property pertaining to his agency;Under COA Circular No. 2009-00611 or the "Rules and Regulations for the Settlement of Accounts," the term "persons responsible" is defined as those "persons determined to be answerable for compliance with the audit requirements as called for in the Notice of Suspension."12A public officer who approves or authorizes a public expenditure (approving/authorizing officer) is necessarily considered as a person directly responsible.
(2) Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the Government.10 (Emphases supplied)
16.1.3 Public officers who approve or authorize expenditures shall be liable for losses arising out of their negligence or failure to exercise the diligence of a good father of a family. (Emphases and underscoring supplied)This implementing Circular is an apparent reflection of the exacting requirements of the Administrative Code. Under Section 38 (1), Chapter 9, Book I thereof, there must be a "clear showing" of bad faith, malice, or gross negligence in order to hold a public officer civilly liable for acts done in the performance of his official duties: ChanRoblesVirtualawlibrary
Section 38. Liability of Superior Officers. - (1) A public officer shall not be civilly liable for acts done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence. (Emphases and underscoring supplied)This provision is supplemented by Section 39 of the same Code which prescribes the need to debunk the good faith of a subordinate officer before he is likewise held civilly liable for acts done under orders or instructions of his superiors: ChanRoblesVirtualawlibrary
Section 39. Liability of Subordinate Officers. - No subordinate officer or employee shall be civilly liable for acts done by him in good faith in the performance of his duties. However, he shall be liable for willful or negligent acts done by him which are contrary to law, morals, public policy and good customs even if he acted under orders or instructions of his superiors. (Emphases and underscoring supplied)To be sure, the need to first prove bad faith, malice, or gross negligence before holding a public officer civilly liable traces its roots to the core concept of the law on public officers. From the perspective of administrative law, public officers are considered as agents of the State, and as such, acts done in the performance of their official functions are considered as acts of the State. In contrast, when a public officer acts negligently, or worse, in bad faith, the protective mantle of State immunity is lost as the officer is deemed to have acted outside the scope of his official functions; hence, he is treated to have acted in his personal capacity and necessarily, subject to liability on his own. In the case of Vinzons-Chato v. Fortune Tobacco Corporation,13 the Court explained this distinct and peculiar treatment of public officer liability as follows: ChanRoblesVirtualawlibrary
[T]he general rule is that a public officer is not liable for damages which a person may suffer arising from the just performance of his official duties and within the scope of his assigned tasks. An officer who acts within his authority to administer the affairs of the office which he/she heads is not liable for damages that may have been caused to another, as it would virtually be a charge against the Republic, which is not amenable to judgment for monetary claims without its consent. However, a public officer is by law not immune from damages in his/her personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official actions.14 (Emphases and underscoring supplied)In line with this, public officers are accorded with the presumption of regularity in the performance of their official functions - "[t]hat is, when an act has been completed, it is to be supposed that the act was done in the manner prescribed and by an officer authorized by law to do it."15 This presumption is a rule borne out of administrative necessity and practicality. In Yap v. Lagtapon,16 the Court characterized the presumption of regularity as "an aid to the effective and unhampered administration of government functions. Without such benefit, every official action could be negated with minimal effort from litigants, irrespective of merit or sufficiency of evidence to support such challenge."17
In holding petitioner liable for having failed to show good faith and diligence in properly performing her functions as a member of the PBAC, Respondent COA misconstrued Sec. 29.2 of the Revised CSB Manual. The aforesaid section requires a clear showing of bad faith, malice or gross negligence before a public officer may be held civilly liable for acts done in the performance of his or her official duties. The same principle is reiterated in Book I, Chapter 9, Section 38 of the 1987 Administrative Code. A public officer is presumed to have acted in the regular performance of his/her duty; therefore, he/she cannot be held civilly liable, unless contrary evidence is presented to overcome the presumption. xxx21 (Emphasis and underscoring supplied)Also, in the oft-cited case of Blaquera v. Alcala22 (September 11, 1998), the Court ruled that: ChanRoblesVirtualawlibrary
Absent a showing of bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties.In disallowance cases, "good faith" has been defined as a "state of mind denoting honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even through technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render transaction unconscientious."24 Thus, in order to overcome the presumption of regularity on the ground of bad faith, as well as the synonymous ground of malice, there must be a clear showing that the said officer approved/authorized an unlawful expenditure, acting with full knowledge of the circumstances and with the intention of taking unconscientious advantage of his public position. This intention may be shown by, for instance, proof that he approved/authorized the unlawful expenditure for his personal gain or to benefit another. Because the Administrative Code requires a clear showing of bad faith or malice, the Court may analogously apply the jurisprudential definition of "evident bad faith" to gauge the intention behind the acts involved: ChanRoblesVirtualawlibrary
Every public official is entitled to the presumption of good faith in the discharge of official duties. Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the performance of official duties.23 (Emphases supplied)
"[E]vident bad faith" connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. It contemplates a state of mind affirmatively operating with furtive design or with some motive or self-interest or ill will or for ulterior purposes.25 (Emphasis and underscoring supplied)In the 2019 case of Rotoras v. COA26 (Rotoras; August 20, 2019), the Court held that "officials and officers who disbursed the disallowed amounts are liable to refund: (1) when they patently disregarded existing rules in granting the benefits to be disbursed, amounting to gross negligence;27 (2) when there was clearly no legal basis for the benefits or allowances;28 (3) when the amount disbursed is so exorbitant that the approving/authorizing officers were alerted to its validity and legality;29 or (4) when they knew that they had no authority over such disbursement.30 " To my mind, these instances are manifestations of the public officer's bad faith or malice.
[N]egligence characterized by the want of even slight care, or by acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to the consequences, insofar as other persons may be affected. It is the omission of that care that even inattentive and thoughtless men never fail to give to their own property. It denotes a flagrant and culpable refusal or unwillingness of a person to perform a duty. In cases involving public officials, gross negligence occurs when a breach of duty is flagrant and palpable.31 (Emphases and underscoring supplied)Gross negligence may become evident through the non-compliance of an approving/authorizing officer of clear and straightforward requirements of an appropriation law, or budgetary rule or regulation, which because of their clarity and straightforwardness only call for one reasonable interpretation. On the other hand, gross negligence may be rebutted by showing that an appropriation law, or budgetary rule or regulation is susceptible of various reasonable interpretations because its application involves complicated questions of law,32 or that by consistent institutional practice over the years, the law, rule or regulation has been unwittingly applied by said officer in accordance with such practice. In Rotoras, the Court observed that in previous occasions, public officials and employees were allowed to keep disallowed benefits and allowances they had already received when, inter alia, "the approving authority failed to exercise diligence or made mistakes but did not act with malice or in bad faith,"33 or "there was ambiguity in existing rules and regulations that have not yet been clarified."34 The rationale, as practically observed by the Court in Castro v. COA,35 is that: ChanRoblesVirtualawlibrary
[I]t [would be] unfair to penalize public officials based on overly stretched and strained interpretations of rules which were not that readily capable of being understood at the time such functionaries acted in good faith. xxx A contrary rule would be counterproductive. It could result in paralysis, or lack of innovative ideas getting tried. In addition, it could dissuade others from joining the government. When government service becomes unattractive, it could only have adverse consequences for society.36Thus, in order to establish gross negligence, one must ultimately determine whether or not in effecting the unlawful expenditure, there was "want of even slight care" on the part of the approving/authorizing officer with a "conscious indifference to the consequences." If there is clear showing of the affirmative, then the approving/authorizing officer must be held civilly liable for the return of the disallowed amounts to the government.
For one to be absolved of liability the following requisites [may be considered]: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code, (2) In-house or Department of Justice legal opinion, (3) that there is no precedent allowing a similar case in jurisprudence, (4) that it is traditionally practiced within the agency and no prior disallowance has been issued, [or] (5) with regard the question of law, that there is a reasonable textual interpretation on its legality.37and aptly pointed out that "[t]he presence of any of these factors in a case may tend to uphold the presumption of good faith in the performance of official functions accorded to the officers involved, which must always be examined relative to the circumstances attending therein."38
Section 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received. (Emphases and underscoring supplied)Notably, with respect to "every official or employee authorizing or making such payment" in bad faith, with malice, or gross negligence, the law justifies holding them solidarity liable for the amounts they may or may not have received, considering that the payees would not have received the disallowed amounts if it were not for the officers' irregular discharge of their duties.
16.3 The liability of persons determined to be liable under an ND/NC shall be solidary and the Commission may go against any person liable without prejudice to the latter's claim against the rest of the persons liable. (Emphasis supplied)That being said, it must be observed that a disallowed amount under a Notice of Disallowance does not only comprise of amounts received by guilty public officials but also of amounts unwittingly received by passive recipients. This begs the following question: should the erring public officer be held liable for the return of the entire disallowed amount, including the amounts received by passive recipients? To this end, the nature of a passive recipient's liability must be examined under the perspective of the civil law principles of solutio indebiti and unjust enrichment.
Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.42 (Emphasis supplied)In the same case, the Court observed that "[t]he principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause."43 These requisites clearly obtain in the case of passive recipients who, by mistake of the erring approving/authorizing officer, were able to unduly receive compensation from disbursements later disallowed by the COA. Indeed, from a strictly technical point of view, there would be no legal duty to pay compensation which contravenes or lacks basis in law. Hence, as a general rule, passive recipients, notwithstanding their good faith, should be liable to return disallowed amounts they have respectively received on the basis of solutio indebiti. To note, this same general rule must equally apply to approving/authorizing officers who have not acted in bad faith, with malice, or with gross negligence because while they may not be held civilly liable under Section 38(1), Chapter 9, Book I of the Administrative Code, they are still subject to return the amounts unduly received by them on the basis of solutio indebiti. In this respect, they may also be considered as passive recipients.
The said allowances are the "only allowances which government employees can continue to receive in addition to their standardized salary rates." Conversely, "all allowances not covered by the [above] exceptions xxx are presumed to have been integrated into the basic standardized pay" and hence, subject to disallowance.
- Representation and transportation allowances (RATA);
- Clothing and laundry allowances;
- Subsistence allowances of marine officers and crew on board government vessels;
- Subsistence allowance of hospital personnel;
- Hazard pay;
- Allowance of foreign service personnel stationed abroad; and
- Such other additional compensation not otherwise specified herein as may be determined by the DBM. (Emphasis supplied)
Endnotes:
1 Executive Order No. 292, entitled "INSTITUTING THE 'ADMINISTRATIVE CODE OF 1987'" (August 3, 1988), 4th Whereas clause.
2 ADMINISTRATIVE CODE, 3rd Whereas clause.
3ARTICLE XI
Accountability of Public Officers
Section 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.
4 1987 CONSTITUTION, Article VI, Section 29 (1).
5 ADMINISTRATIVE CODE, Book V, Title I, Subtitle B, Chapter 9, Section 52.
6 Section 4.16 of COA Circular No. 2009-006 defines a disallowance as "the disapproval or in audit of a transaction."
7 Section 10 of COA Circular No. 2009-006 pertinently reads: ChanRoblesVirtualawlibrarySection 10. Notice of Disallowance (ND). -8 Entitled "ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE PHILIPPINES," approved on June 11, 1978.
10.1 The Auditor shall issue an ND-Form 3 - for transactions which are irregular/unnecessary/excessive and extravagant as defined in COA Circular No. 85-55A as well as other COA issuances, and those which are illegal and unconscionable.
10.1.1 Illegal expenditures are expenditures which are contrary to law.
xxxx (Emphasis supplied)
9 Section 50, Chapter 9, Subtitle B, Title I, Book V of the ADMINISTRATIVE CODE characterizes these officers as follows: ChanRoblesVirtualawlibrarySection 50. Accountable Officers; Board Requirements. - (1) Every officer of any government agency whose duties permit or require the possession or custody government funds shall be accountable therefor and for safekeeping thereof in conformity with law; and10 See also Section 102, Chapter 5, Title II of the AUDIT CODE.
(2) Every accountable officer shall be properly bonded in accordance with law.
11 Approved on September 15, 2009. Notably, the issuance superseded COA Circular No. 94-001, approved on January 20, 1994, otherwise known as the "Manual on Certificate of Settlement and Balances" (see Section 29, Chapter VII of COA Circular No. 2009-006), but the provisions on liability of public officers for disallowed expenditures have remained unchanged.
12 COA Circular No. 2009-06, Section 4.21.
13 552 Phil. 101 (2007).
14 Id.
15People v. Jolliffe, 105 Phil. 677, 682-683 (1959).
16 803 Phil. 652 (2017).
17 Id. at 653.
18 See Alejandrino v. COA, G.R. No. 245400, November 12, 2019; Gubat Water District v. COA, G.R. No. 222054, October 1, 2019; Unsigned Resolution in Castro v. COA, G.R. No. 233499, February 26, 2019; Montejo v. COA, G.R. No. 232272, July 24, 2018; Career Executive Service Board v. COA, G.R. No. 212348, June 19, 2018, 866 SCRA 475; Development Bank of the Philippines v. COA, 827 Phil. 818 (2018); Metropolitan Waterworks and Sewerage System v. COA, 821 Phil. 117 (2017); Philippine Health Insurance Corporation v. COA, 801 Phil. 427 (2016); Development Academy of the Philippines v. Tan, 797 Phil. 537 (2016); Philippine Economic Zone Authority v. COA, 797 Phil. 117 (2016); Social Security System v. COA, 794 Phil. 387 (2016); Velasco v. COA, 695 Phil. 226 (2012); Veloso v. COA, 672 Phil. 419 (2011); Agra v. COA, 677 Phil. 608 (2011); Singson v. COA, 641 Phil. 154 (2010); Lumayna v. COA, 616 Phil. 928 (2009); Bases Conversion and Development Authority v. COA, 599 Phil. 455 (2009); Barbo v. COA, 589 Phil. 289 (2008); Magno v. COA, 558 Phil. 76 (2007); Public Estates Authority v. COA, 541 Phil. 412 (2007); Casal v. COA, 538 Phil. 634 (2006); Kapisanan ng mga Manggagawa sa Government Service Insurance System v. COA, 480 Phil. 861 (2004); Abanilla v. COA, 505 Phil. 202 (2005); Home Development Mutual Fund v. COA, 483 Phil. 666 (2004); and Blaquera v. Alcala, 356 Phil. 678 (1998).
19 355 Phil. 527 (1998).
20 Id. at 540-541.
21 Id.
22 Supra note 18.
23 Id. at 165.
24Development Bank of the Philippines v. COA, supra note 18, at 833; Maritime Industry Authority v. COA, 750 Phil. 288, 337 (2015); and Philippine Economic Zone Authority v. COA, 690 Phil. 104, 115 (2012); emphases supplied.
25Fuentes v. People, 808 Phil. 586, 594 (2017).
26 See G.R. No. 211999.
27 See id.; citing Casal v. COA, supra note 18 and Sambo v. COA, 811 Phil. 344 (2017).
28 See id.; citing Manila International Airport Authority v. COA, 681 Phil. 644 (2012) and Oriondo v. COA, G.R. No. 211293, June 4, 2019.
29 Id.; citing Maritime Industry Authority v. COA, supra note 24.
30 Id.; citing Silang v. COA, 769 Phil. 327 (2015).
31Office of the Ombudsman v. De Leon, 705 Phil. 26, 37-38 (2013).
32 "[B]y law and jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good faith." (Philippine National Bank v. Heirs of Militar, 526 Phil. 788, 797 [2006]).
33 See supra note 26; citing Home Development Mutual Fund v. COA, supra note 18 and Lumayna v. COA, supra note 18.
34 Rotoras, id.
35 See supra note 18; see also Philippine Economic Zone Authority v. COA, supra note 18.
36Castro v. COA, supra note 18.
37Ponencia, pp. 21-22.
38 Id. at 22; emphasis supplied.
39AFP Retirement and Separation Benefits System v. Sanvictores, 793 Phil. 442, 451 (2016); emphasis and underscoring supplied.
40 CIVIL CODE, Article 1217.
41 596 Phil. 760 (2009).
42 Id. at 772-773.
43 Id. at 773.
44Philippine National Bank v. Court of Appeals, 291 Phil. 356, 367 (1993).
45 Entitled "AN ACT PRESCRIBING A REVISED COMPENSATION AND POSITION CLASSIFICATION SYSTEM IN THE GOVERNMENT AND FOR OTHER PURPOSES," approved on August 21, 1989.
46Gubat Water District v. COA, supra note 18.
47Ramie Textiles, Inc. v. Mathay, Sr., 178 Phil 482, 487 (1979).
48 Section 16.1.4 of COA Circular No. 2009-006 provides: ChanRoblesVirtualawlibrary16.1.4 Public officers and other persons who confederated or conspired in a transaction which is disadvantageous or prejudicial to the government shall be held liable jointly and severally with those who benefited therefrom. (Emphases supplied)49Ponencia, pp. 4-5.
50 Id. at 4-6.
51 See id. at 7.
52 Section 12. Consolidation of Allowances and Compensation. - All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government. (Emphasis and underscoring supplied)
53 Entitled "AN ACT PRESCRIBING A REVISED COMPENSATION AND POSITION CLASSIFICATION SYSTEM IN THE GOVERNMENT AND FOR OTHER PURPOSES," also known as the "COMPENSATION AND POSITION CLASSIFICATION ACT OF 1989" (July 1, 1989).
54 See ponencia, p. 7.
LEONEN, J.:
Before this Court are Mario Madera, Beverly Mananguite, Carissa Galing, and Josefina Pelo—the mayor, municipal accountant, and budget officers, respectively, of the municipality of Mondragon, Northern Samar. In their Petition for Certiorari under Rule 64 of the Rules of Court, they question the disallowances of Sangguniang Bayan Ordinance No. 08 and Sangguniang Bayan Resolution Nos. 41, 42, 43, and 48, series of 2013, which had granted various allowances1 to the municipality's officials and employees amounting to P7,706,253.10.2 They likewise contest being jointly and severally liable to refund the disbursed amounts, insisting that they approved the disbursements in good faith.
I concur with the ponencia that respondent Commission on Audit was correct in issuing the Notices of Disallowance, and that the public officers who authorized the disallowed benefits should be free of liability. Nevertheless, I qualify the additional guidelines on the liability that may attach to the authorizing officers, as well as the recipients (either passive or active) of the disallowed benefits.
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 or controlled corporations with original charters, and on a post-audit basis[.]5In Yap v. Commission on Audit:6
We have previously declared that it is the general policy of the Court to sustain the decisions of administrative authorities, especially one that was constitutionally created like herein respondent COA, not only on the basis of the doctrine of separation of powers, but also of their presumed expertise in the laws they are entrusted to enforce. It is, in fact, an oft-repeated rule that findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion. Thus, only when the COA acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, may this Court entertain a petition for certiorari under Rule 65 of the Rules of Court.Under Article IX-D, Section 2(2) of the 1987 Constitution, the Commission on Audit shall have exclusive authority to "promulgate accounting and auditing rules and regulations, including those for the prevention of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties." This was reiterated in Section 33 of the Government Auditing Code of the Philippines,8 which states: ChanRoblesVirtualawlibrary
There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism.7 (Citations omitted)
SECTION 33. Prevention of irregular, unnecessary, excessive, or extravagant expenditures of funds or uses of property; power to disallow such expenditures. - The Commission shall promulgate such auditing and accounting rules and regulations as shall prevent irregular, unnecessary, excessive, or extravagant expenditures or uses of government funds or property.The constitutional commission is granted enough autonomy and authority to fulfill its role of maintaining checks and balances within the government. In Delos Santos v. Commission on Audit,9 this Court, in upholding the Commission on Audit's disallowance of the irregularly disbursed Priority Development Assistance Fund, stated: ChanRoblesVirtualawlibrary
At the outset, it must be emphasized that the CoA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and ultimately the people's, property. The exercise of its general audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our form of government.Nevertheless, pursuant to the Constitution, the Commission on Audit's power to disallow is limited to transactions deemed "irregular, unnecessary, excessive, extravagant, illegal, or unconscionable"11 expenditures or uses of government funds and property.12
Corollary thereto, it is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally-created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings.10 (Emphasis supplied, citation omitted)
"IRREGULAR" EXPENDITURES15Based on these definitions, it is apparent that the disallowed benefits here are illegal, irregular government expenditures.
The term "irregular expenditure" signifies an expenditure incurred without adhering to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in laws. Irregular expenditures are incurred if funds are disbursed without conforming with prescribed usages and rules of discipline. There is no observance of an established pattern, course, mode of action, behavior, or conduct in the incurrence of an irregular expenditure. A transaction conducted in a manner that deviates or departs from, or which does not comply with standards set is deemed irregular. A transaction which fails to follow or violates appropriate rules of procedure is, likewise, irregular.
"UNNECESSARY" EXPENDITURES16
The term pertains to expenditures which could not pass the test of prudence or the diligence of a good father of a family, thereby denoting non-responsiveness to the exigencies of the service. Unnecessary expenditures are those not supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation. This would also include incurrence of expenditure not dictated by the demands of good government, and those the utility of which cannot be ascertained at a specific time. An expenditure that is not essential or that which can be dispensed with without loss or damage to property is considered unnecessary. The mission and thrusts of the agency incurring the expenditures must be considered in determining whether or not an expenditure is necessary.
"EXCESSIVE" EXPENDITURES17
The term "excessive expenditures" signifies unreasonable expense or expenses incurred at an immoderate quantity and exorbitant price. It also includes expenses which exceed what is usual or proper, as well as expenses which are unreasonably high and beyond just measure or amount. They also include expenses in excess of reasonable limits.
"EXTRAVAGANT" EXPENDITURES18
The term "extravagant expenditure" signifies those incurred without restraint, judiciousness and economy. Extravagant expenditures exceed the bound of propriety. These expenditures are immoderate, prodigal, lavish, luxurious, grossly excessive, and injudicious.
"UNCONSCIONABLE" EXPENDITURES19
The term "unconscionable expenditures" pertains to expenditures which are unreasonable and immoderate, and which no man in his right sense would make, nor a fair and honest man would accept as reasonable, and those incurred in violation of ethical and moral standards.
SECTION 12. Consolidation of Allowances and Compensation. - All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.Respondent also cited Item II of its Circular No. 2013-003 to emphasize that "[g]overnment officials and employees shall be entitled only to allowances, incentives, and other benefits expressly provided by law, and other statutory authority, and the rules and regulations promulgated by competent authority."20 As the allowances issued by petitioners were not authorized in Circular No. 2013-003 or in the exemptions mentioned in the Salary Standardization Law, it is patently clear that petitioners' claim that respondent's disallowances were erroneous is without basis.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government.
The failure of petitioners-approving officers to observe all these issuances cannot be deemed a mere lapse consistent with the presumption of good faith. Rather, even if the grant of the incentive award were not for a dishonest purpose as they claimed, the patent disregard of the issuances of the President and the directives of the COA amounts to gross negligence, making them liable for the refund thereof. The following ruling in National Electrification Administration v. COA bears repeating: ChanRoblesVirtualawlibraryOn the other hand, this Court has been more forgiving in disallowed expenditures that were unnecessary—those not supportive of the government agency's main objective, inessential, or dispensable. For these, the participants need not return the expenditures to allow the executives or implementers leeway in carrying out their functions. They are expected to create contingencies in light of circumstances that are fluid and susceptible to change. Given that the Commission on Audit merely reviews expenditures in hindsight, to make authorizing officers liable to return the disallowed amounts will hamper the decision-making of an executive and further constrain the implementation of government programs. Moreover, it may cause a chilling effect on government officials.....
This case would not have arisen had NEA complied in good faith with the directives and orders of the President in implementation of the last phase of the Salary Standardization Law II. The directives and orders are clearly and manifestly in accordance with all relevant laws. The reasons advanced by NEA in disregarding the President's directives and orders are patently flimsy, even ill-conceived. This cannot be countenanced as it will result in chaos and disorder in the executive branch to the detriment of public service.25 (Citations omitted)
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.28 (Emphasis supplied)In Lumayna v. Commission on Audit,29 officers of the municipality of Mayoyao, Ifugao assailed the disallowance of the 5% salary increase of municipality personnel, as well as the directive for them to refund. This Court affirmed the disallowance but excused both the authorizing officials and passive employees from returning the disallowed amounts. It stated: ChanRoblesVirtualawlibrary
In the instant case, although the 5% salary increase exceeded the limitation for appropriations for personal services in the Municipality of Mayoyao, this alone is insufficient to overthrow the presumption of good faith in favor of petitioners as municipal officials. It must be mentioned that the disbursement of the 5% salary increase of municipal personnel was done under the color and by virtue of resolutions enacted pursuant to LBC No. 74, and was made only after the Sangguniang Panlalawigan declared operative the 2002 municipal budget. In fact, the Notice of Disallowance was issued only on 16 May 2003, after the municipality had already implemented the salary increase. Moreover, in its Resolution No. 2004-1185, the Sangguniang Panlalawigan reconsidered its prior disallowance of the adoption of a first class salary schedule and 5% salary increase of the Municipality of Mayoyao based on its finding that the municipal officials concerned acted in good faith, thus:In both Blaquera and Lumayna, the authorizing officers granted the disallowed benefits believing that they had basis for their implementation, and only upon audit did they discover that these exceeded what was allowed. Thus, when the authorizing officers have a colorable basis for the benefits that were disallowed, this Court refrains from ordering them to refund the wrongfully released amounts. The officers will not be liable to return the amount released.
....
Furthermore, granting arguendo that the municipality's budget adopted the incorrect salary rates, this error or mistake was not in any way indicative of bad faith. Under prevailing jurisprudence, mistakes committed by a public officer are not actionable, absent a clear showing that he was motivated by malice or gross negligence amounting to bad faith. It does not simply connote bad moral judgment or negligence. Rather, there must be some dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a sworn duty through some motive or intent, or ill will. It partakes of the nature of fraud and contemplates a state of mind affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes. As we see it, the disbursement of the 5% salary increase was done in good faith. Accordingly, petitioners need not refund the disallowed disbursement in the amount of P895,891.50.30 (Emphasis supplied, citations omitted)
In this case, it must be emphasized that the grant of CNA Incentive was financed by the CARP Fund, contrary to the express mandate of PSLMC Resolution No. 4, Series of 2002, A.O. No. 135 and DBM Budget Circular No. 2006-01. This is not simply a case of a negotiating union lacking the authority to represent the employees in the CNA negotiations, or lack of knowledge that the CNA benefits given were not negotiable, or failure to comply with the requirement that payment of the CNA Incentive should be a one-time benefit after the end of the year. Here, the use of the CARP Fund has no basis as the three issuances governing the grant of CNA Incentive could not have been any clearer in that the CNA Incentive shall be sourced solely from savings from released MOOE allotments for the year under review. Consequently, the payees have no valid claim to the benefits they received.In Dubongco, the recipients were made to return the incentives since these were borne from a collective negotiation agreement that they themselves ratified, meaning they were not mere passive recipients and could not deny their participation in its disbursement. Likewise, in Department of Public Works and Highways, Region IV-A v. Commission on Audit,33 the recipients of the disallowed benefits were obligated to return the amounts they had received since they negotiated and approved the disbursement despite no valid justification.
....
Hence, it can be gleaned that unlike ordinary monetary benefits granted by the government, CNA Incentives require the participation of the employees who are the intended beneficiaries. The employees indirectly participate through the negotiation between the government agency and the employees' collective negotiation representative and directly, through the approval of the CNA by the majority of the rank-and-file employees in the negotiating unit. Thus, the employees' participation in the negotiation and approval of the CNA, whether direct or indirect, allows them to acquire knowledge as to the prerequisites for the valid release of the CNA Incentive. They could not feign ignorance of the requirement that CNA Incentive must be sourced from savings from released MOOE.32 (Emphasis supplied, citations omitted)
In this case, the majority of the petitioners are the LGU of Tayabas, Quezon's rank-and-file employees and bona fide members of UNGKAT (named-below) who received the 2008 and 2009 CNA Incentives on the honest belief that UNGKAT was fully clothed with the authority to represent them in the CNA negotiations. As the records bear out, there was no indication that these rank-and-file employees, except the UNGKAT officers or members of its Board of Directors named below, had participated in any of the negotiations or were, in any manner, privy to the internal workings related to the approval of said incentives; hence, under such limitation, the reasonable conclusion is that they were mere passive recipients who cannot be charged with knowledge of any irregularity attending the disallowed disbursement. Verily, good faith is anchored on an honest belief that one is legally entitled to the benefit, as said employees did so believe in this case. Therefore, said petitioners should not be held liable to refund what they had unwittingly received.It must be highlighted that the liability of the responsible officers and recipients is solidary only to the extent of what should be refunded. This does not include the amounts received by the rank and file who were absolved of liability to return. This is pursuant to Rotoras v. Commission on Audit,36 in which this Court stated that the nature of the obligation of approving officials to return "depends on the circumstances": ChanRoblesVirtualawlibrary
....
Similarly, such finding of good faith cannot be made to apply to Silang, who, as City Mayor, approved the allowances, as well as the local Sanggunian members, who enacted the ordinances authorizing the payment of the subject CNA Incentives. As City Mayor and members of the local Sanggunian, they are presumed to be acquainted with—and, in fact, even duty bound to have full knowledge of—the requirements under the applicable policies for the valid grant of CNA Incentives, i.e., the requisite accreditation of UNGKAT with the CSC at the time of the signing of the CNA as required under DBM Budget Circular No. 2006-01. Indeed, knowledge of basic procedure is part and parcel of their shared fiscal responsibility under Section 305 (1), Chapter I, Title V, Book II of the LGC[.]35 (Emphasis supplied, citations omitted)
The defense of good faith is, therefore, no longer available to members of governing boards and officials who have approved the disallowed allowance or benefit. Neither would the defense be available to the rank and file should the allowance or benefit be the subject of collective negotiation agreement negotiations. Furthermore, the rank and file's obligation to return shall be limited only to what they have actually received. They may, subject to the Commission on Audit's approval, agree to the terms of payment for the return of the disallowed funds. For the approving board members or officers, however, the nature of the obligation to return—whether it be solidary or not—depends on the circumstances.37In this regard, Section 16.3 of Commission on Audit Circular No. 2009-006, series of 2009, states: ChanRoblesVirtualawlibrary
16.3 The liability of persons determined to be liable under an ND/NC shall be solidary and the Commission may go against any person liable without prejudice to the latter's claim against the rest of the persons liable.Based on this, those held liable have a solidary obligation only to the extent of what should be refunded. This does not include the amounts received by those absolved of liability.
With this matrix, we move away from a subjective determination of "good faith," and therefore provide better guidelines for the management of branches and offices in government.
Nature of Disallowance Presumption and Liability Extent of Obligation for Refund Illegal, Irregular Authorizing officer
Not liable if the following are present:
1) Certificate of availability of funds;
2) In-house or Department of Justice legal opinion;
3) No precedent disallowing a similar case in jurisprudence; 4) It is traditionally practiced within the agency and no prior disallowance has been issued; and
5) There is a reasonable textual interpretation on its legality. RecipientsGenerally, not liableExcept if the recipients participated in the negotiations for the implementation and release of the benefits.Exception to exception: Recipient is a rank-and-file employee who was absent during the negotiations and did not ratify the agreement releasing the benefit. Solidary, but see Rotoras v. Commission on Audit regarding extent. Unnecessary Authorizing officers and recipients are not liable, unless it is shown that expenditures are purposely or knowingly made. Solidary, but see Rotoras v. Commission on Audit regarding extent. Excessive, Extravagant, Unconscionable, Ostentatious Authorizing officers and recipients are liable. Entire amount is disallowed.
Endnotes:
1 Ponencia, p. 2. These disallowed allowances were: (1) Economic Crisis Assistance; (2) Monetary Augmentation of Municipal Agency; (3) Agricultural Crisis Assistance; and (4) Mitigation Allowance to Municipal Employees.
2 Id. at 4.
3 Id. at 10.
4 Id.
5 CONST., art. IX-D, sec. 2(1).
6 633 Phil. 174 (2010) [Per J. Leonardo-De Castro, En Banc].
7 Id. at 195-196.
8 Presidential Decree No. 1445 (1978).
9 716 Phil. 322 (2013) [Per J. Perlas-Bernabe, En Banc].
10 Id. at 332-333.
11Miralles v. Commission on Audit, 818 Phil. 380, 384 (2017) [Per J. Bersamin, En Banc].
12 Id. at 390-391.
13 Id. at 392.
14 Updated Guidelines for the Prevention and Disallowance of Irregular, Unnecessary. Excessive, Extravagant and Unconscionable Expenditures, available at (last accessed on September 7, 2020).
15 COA Circular No. 2012-003(2012), item no. 3.1.
16 COA Circular No. 2012-003(2012), item no. 4.1.
17 COA Circular No. 2012-003(2012), item no. 5.1.
18 COA Circular No. 2012-003 (2012), item no. 6.1.
19 COA Circular No. 2012-003 (2012), item no. 7.1.
20 COA Circular 2013-003 (2013), item II. Reiteration of Audit Disallowance of Payments without Legal Basis of Allowances, Incentives, and Other Benefits of Government Officials and Employees in the NGAs, LGUs, and GOCCs and their Subsidiaries, available at (last accessed on September 7, 2020).
21 Rules and Regulations on the Settlement of Accounts (2009).
22 COA Circular No. 2009-006 (2009), sec. 16.1.
23 427 Phil. 464 (2002) [Per J. Carpio, En Banc].
24 538 Phil. 634 (2006) [Per J. Carpio Morales, En Banc].
25 Id. at 644-645.
26 SECTION 40. Certification of Availability of Funds. - No funds shall be disbursed, and no expenditures or obligations chargeable against any authorized allotment shall be incurred or authorized in any department, office or agency without first securing the certification of its Chief Accountant or head of accounting unit as to the availability of funds and the allotment to which the expenditure or obligation may be properly charged.
No obligation shall be certified to accounts payable unless the obligation is founded on a valid claim that is properly supported by sufficient evidence and unless there is proper authority for its incurrence. Any certification for a non-existent or fictitious obligation and/or creditor shall be considered void. The certifying official shall be dismissed from the service, without prejudice to criminal prosecution under the provisions of the Revised Penal Code. Any payment made under such certification shall be illegal and every official authorizing or making such payment, or taking part therein or receiving such payment, shall be jointly and severally liable to the government for the full amount so paid or received.
27 356 Phil. 678 (1998) [Per J. Purisima, En Banc].
28 Id. at 765-766.
29 616 Phil. 929 (2009) [Per J. Del Castillo, En Banc].
30 Id. at 944-945.
31 G.R. No. 237813, March 5, 2019, [Per J.C. Reyes, En Banc].
32 Id.
33 G.R. No. 237987, March 19, 2019, [Per. J. Reyes, Jr., En Banc].
34 769 Phil. 327 (2015) [Per J. Perlas-Bernabe, En Banc].
35 Id. at 347-349.
36 G.R. No. 211999, August 20, 2019, [Per J. Leonen, En Banc].
37 Id. at 24.
38 Ponencia, p. 34.
39 CONST., art. XI, sec. 1.
INTING, J.:
I concur.
I expound on my views on the liability of the actors involved in a disallowed transaction, as well as the concept of "good faith" in disallowance cases.
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.2 (Underscoring and italics supplied.)The following factual milieu sets Blaquera apart from other cases involving illegal disbursements of compensation and bonuses: first, it was not integrally a disallowance case inasmuch as it was primarily a constitutionality case. The petitioners therein came to the Court assailing the validity of administrative issuances, not the issuance of notices of disallowance or any Commission on Audit (COA) decision holding them, public officials, liable for the disallowed amount. Notably, the Court only mentioned in passing that the corporate auditor disallowed the subject disbursement, without referring to a specific notice of disallowance nor identifying the officials charged therein. Second, as already observed by Associate Justice Arturo D. Brion in his Separate Opinion in TESDA v. COA Chairperson Tan, et al.,3 the case involved "numerous petitioners, numbering in several hundreds, that would make a refund very cumbersome" and "small amounts (about P1,000.00 per plaintiff) whose aggregate sum was not commensurate with the administrative costs of enforcing the refund." Third, by the time the case was brought to the Court, the government had already recovered a significant portion of the bonuses ordered to be refunded by way of salary deductions from those who received them.
Some may interpret the variations in the Court's rulings as "inconsistencies" or "flip-flopping." However, the disparity in the Court's ratio decidendi is only a logical result of the different circumstances present in and most of the time unique to each disallowance case.
Disallowed Disbursement Ground for Disallowance Persons involved Charged in Notice of Disallowance/Notice of Suspension? Liable in SC Ruling? 1) Executive Director Casal v. Commission on Audit Incentive award Illegal disbursement Recipients Yes Not
liable cf. good faith Officers No -NA- Certifier/Approver Yes Liable cf. patent disregard of issuances2) Lumayna, et al. v. Commission on Audit 5% salary increase Illegal disbursement Recipients No -NA- Officers Yes
(e.g., municipal mayor, Sangguniang Bayan members who approved the resolution) Not liable cf. good faith Certifier/Approver Yes
(e.g., budget officer, municipal accountant) Not liable cf. good faith 3) TESDA v. COA Chairperson Tan, et al. Extraordinary Illegal Recipients Yes Not liable cf. Disallowed Disbursement Ground for Disallowance Persons involved Charged in Notice of Disallowance/Notice of
Suspension? Liable in SC Ruling? and Miscellaneous Expenses (EME) disbursement good faith; honest belief that they were entitled to
amount Officers Yes
(e.g. TESDA
Director-Generals
who directed the
payment and were,
at the same time,
recipients thereof) Liable Certifier/Approver Yes Not liable
(no discussion on
good faith) 4) Silang, et al. v. Commission on Audit Collective Negotiation Agreement Incentives Irregular disbursement Recipients Yes In general, not
liable cf. good faith Officers Yes
(e.g., mayor, local sanggunian members who enacted ordinances authorizing payment) Liable Certifier/Approver No -NA- 5) Metropolitan Naga Water District, et al. v. Commission on Audit Backpay differential of Cost of Living Allowance (COLA) Illegal disbursement Recipients No Not charged under the Notice
of Disallowance but nonetheless adjudged as not liable for being mere passive recipients (cf. Silang v. COA) Officers No -NA- Certifier/ Yes Not liable Disallowed Disbursement Ground for Disallowance Persons involved Charged in Notice of Disallowance/Notice of Suspension? Liable in SC Ruling? Approver cf. good faith 6) National Transmission Corporation v. Commission on Audit, et al. Separation benefits Illegal disbursement Recipients Yes
(one payee only) Not liable for being mere passive recipient (cf. Silang v. COA) Officers Yes
(e.g., Board of Directors) Not liable (abandoned Lopez v. MWSS13 but still exonerated pro hac vice) Certifier/Approver No -NA- 7) Nayong Filipino Foundation, Inc. v. Chairperson Pulido Tan, et al. a. Anniversary bonus Illegal disbursement Recipients No Not liable cf. good faith Officers No
(e.g., Board of Trustees and corporate officers) Not liable cf. good faith, relied on existing jurisprudence Certifier/Approver Yes No mention b. Extra cash gift and excess honoraria to Bids and Awards Committee and Technical Working Group Illegal disbursement Recipients No Not liable cf. good faith Officers No
(e.g., Board of Trustees and corporate officers) Liable Certifier/Approver Yes Liable 8) Balayan Water District v. Commission on Audit COLA Illegal Recipients Details of the Notice of Disallowance not Not liable for being mere passive recipient Disallowed Disbursement Ground for Disallowance Persons involved Charged in Notice of Disallowance/Notice of Suspension? Liable in SC Ruling? expressly mentioned (cf. Silang v. COA) Officers Yes Liable Certifier/Approver No -NA-
SECTION 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every pay rient made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received. (Emphasis supplied.)In her separate opinion, Senior Associate Justice Estela M. Perlas-Bernabe aptly identified the three categories of persons solidarily liable for disallowed amounts under the above-cited provision, to wit: (i) every official or employee authorizing or making such payment, (ii) those taking part therein, and (iii) recipients.
(i) | Authority to direct or instruct the payment of a disbursement per se. |
(ii) | Authority to act on instructions/directives and approve documents to effect payment thereof. |
(ii) | Authority to certify that funds are available for the disbursement and that the allotment therefor may be charged accordingly. |
Endnotes:
1 356 Phil. 678 (1998).
2Id. at 765-766.
3 729 Phil. 60 (2014).
4 See Silang, et al. v. Commission on Audit, 769 Phil. 327 (2015).
5 538 Phil. 634 (2006).
6 616 Phil. 929 (2009).
7TESDA v. COA Chairperson Tan, et al., supra note 3.
8Silang, et al. v. Commission on Audit, supra note 4.
9 782 Phil. 281 (2016).
10 800 Phil. 618 (2016).
11 818 Phil. 406 (2017).
12 G.R. No. 229780, January 22, 2019.
13 501 Phil. 115 (2005).
14 Section 16.1, Prescribing the Use of the Rules and Regulations on Settlement of Accounts, COA Circular No. 006-09, [September 15, 2009].
15 Section 16.1.1, id.
16 Section 16.1.2, id.
17 Section 16.1.3, id.
18 Section 16.1.4, id.
19 Section 16 1.5, id.
20 Section 43, Chapter 5, Book VI, Executive Order No. 292.
21 Section 29(1), Article VI, 1987 Constitution. See also Section 16.1, Prescribing the Use of the Rules and Regulations on Settlement of Accounts, COA Circular No. 006-09, [September 15, 2009].
22 Section 45, Chapter 8, Subtitle B, Title I, Book V, Administrative Code of 1987.
23 Paragraph 3.1, COA Circular No. 85-55-A, [September 8, 1985].
24 Section 40, Chapter 5, Book VI, Administrative Code of 1987.
25 Section 40, Chapter 5, Book VI, Administrative Code of 1987 provides, "xxx No obligation shall be certified to accounts payable unless the obligation is founded on a valid claim that is properly supported by sufficient evidence and unless there is proper authority for its incurrence."
26 Section 40, Chapter 5, Book VI, Administrative Code of 1987 provides, "xxx Any payment made under such certification shall be illegal and every official authorizing or making such payment, or taking part therein or receiving such payment, shall be jointly and severally liable to the government for the full amount so paid or received."
27 Section 16.1.2, Prescribing the Use of the Rules and Regulations on Settlement of Accounts, COA Circular No. 006-09, [September 15, 2009].
28 Section 40, Chapter 5, Book VI, Administrative Code of 1987 provides, "xxx The certifying official shall be dismissed from the service, without prejudice to criminal prosecution under the provisions of the Revised Penal Code."
29 Article 2176, Civil Code.