EN BANC
G.R. No. 237843, June 15, 2021
JOHN N. CELESTE, EDGAR M. BUTED, DANILO V. GOMEZ, LUZVIMINDO CAGUIOA, LELITO VALDEZ, RENATO P. MILLAN, CATALINA DE LEON, ROBERTO Q. ABULE, Petitioners, v. COMMISSION ON AUDIT, Respondent.
D E C I S I O N
CAGUIOA, J.:
This is a Petition for Certiorari1 (Petition) filed under Rule 64 in relation to Rule 65 of the Rules of Court (Rules), assailing Decision No. 2016-4782 (Assailed Decision) of the Commission on Audit (COA) Commission Proper (COA-CP) dated December 28, 2016, which affirmed the disallowances of the payment by National Irrigation Administration (NIA) of Collective Negotiation Agreement Incentive (CNAI) to officials of NIA performing managerial functions for the periods of March to October 2010, February 2011, and May 2011.
Name | Position/Designation | Nature of Participation in the Transaction |
1. Edgar M. Buted | Sr. Corporate Accountant | For certifying availability of funds |
2. Mgr. John N. Celeste | RIM6 | For approving the claim/Payee |
3. Danilo V. Gomez | Division Manager A | Payee |
4. Luzvimindo Caguioa | Division Manager A | Payee |
5. Lelito Valdez | Division Manager A | Payee |
6. Renato P. Millan | Division Manager A | Payee |
7. Catalina De Leon | Cashier C | For payment |
Name | Position/Designation | Nature of Participation in the Transaction |
1. Edgar M. Buted | Sr. Corporate Accountant | For certifying availability of funds |
2. Mgr. John N. Celeste | RIM | For approving the claim/Payee |
3. Luzvimindo Caguioa | Division Manager A | Payee |
4. Lelito Valdez | Division Manager A | Payee |
6. Renato P. Millan | Division Manager A | Payee |
7. Catalina De Leon | Cashier C | For payment |
Name | Position/Designation | Nature of Participation in the Transaction |
1. Mgr. John N. Celeste | RIM | For approving the claim/Payee |
2. Luzvimindo Caguioa | Division Manager A | Payee |
3. Roberto Q. | Division Manager A | Payee |
4. Renato P. Millan | Division Manager A | Payee |
(4) Compensation System - x x x
x x x
(h) Incentives- This shall be limited to the following:
x x x
(ii) Incentives as rewards for exceeding agency financial and operational performance targets, and to motivate employee efforts toward higher productivity, as follows:(aa) Collective Negotiation Agreement (CNA) Incentive- This may be granted to both management and rank-and-file employees of agencies with approved and successfully implemented CNAs in recognition of their efforts in accomplishing performance targets at lesser cost, in attaining more efficient and viable operations through cost-cutting measures and systems improvement, such CNA incentive shall be provided for under the annual General Appropriations Act[.]
(17) Functional Responsibilities- x x x
x x x
(b) The CSC and the DBM shall jointly formulate the guidelines, rules and regulations on the grant of incentives in items (4)(h)(i) and (ii).
Petitioners take exception to the foregoing issuances, relying heavily on Item 4(h)(ii)(aa) of JR 4. To recall, this provision states:chanroblesvirtualawlibrary
Sec. 2. Limitation — The CNA incentive shall be granted only to rankand-file employees. The existing CNA incentive shall be rationalized to simplify its administration and to preclude duplication with incentives granted through the Program on Awards and Incentives for Service Excellence (PRAISE). (Emphasis and underscoring supplied)
Similarly, BC 2006-1 provides in part:
1.0 Background
x x x
To recognize the joint efforts of labor and management in achieving all planned targets, programs and services approved in agency budgets at lesser cost, the grant of the CNA Incentive was authorized for rank-and-file employees of NGAs, SUCs, and LGUs under PSLMC Resolution No. 04, s. 2002 dated November 14, 2002. On May 19, 2003, the same benefit was authorized for rank-and-file employees of GOCCs and GFis under PSLMC Resolution No. 02, s. 2003, to recognize the joint efforts of labor and management m attaining more efficient and viable operations.
Subsequently, AO No. 135, "Authorizing the Grant of Collective Negotiation Agreement (CNA) Incentive to Employees in Government Agencies," issued on December 27, 2005, confirmed the grant of the CNA Incentive in strict compliance with the said PSLMC Resolutions and provided for the rationalization cf the existing CNA cash incentives.
x x x
3.0 Coverage
This Circular covers the following employees whose appointments are permanent, temporary, contractual, or casual in nature, on full-time or part-time basis:chanroblesvirtualawlibrary
3.1 Rank-and-file employees who are members of employees' organizations accredited by the Civil Service Commission (CSC) in NGAs, SUCs, LGUs and GOCCs/GFIs, whether or not covered by RA No. 6758 (Compensation and Position Classification Act of 1989): and
3.2 Other non-managerial employees who are not members of employees' organizations accredited by the CSC but enjoy or accept benefits under the CNA, and who were assessed and have paid the corresponding agency fees pursuant to PSLMC Resolution No.1,s.1993.
x x x
5.0 Policy Guidelines
5.1 The CNA Incentive in the form of cash may be granted to employees covered by this Circular, if provided for in the CNAs or in the supplements thereto, executed between the representatives of management and employees' organization accredited by the CSC as the sole and exclusive negotiating agent for the purpose of collective negotiations with the management of an organizational unit listed in Annex "A" of PSLMC Resolution No. 01, s. 2002, and as updated. (Emphasis and underscoring supplied)
Furthermore, petitioners point to the following paragraph in JR 4:
(4) Compensation System — x x x
x x x
(h) Incentives- This shall be limited to the following:
x x x
(ii) Incentives as rewards for exceeding agency financial and operational performance targets, and to motivate employee efforts toward higher productivity, as follows:chanroblesvirtualawlibrary(aa) Collective Negotiation Agreement (CNA) Incentive - This may be granted to both management and rank-and-file employees of agencies with approved and successfully implemented CNAs in recognition of their efforts in accomplishing performance targets at lesser cost, in attaining more efficient and viable operations through cost-cutting measures and systems improvement, such CNA incentive shall be provided for under the annual General Appropriations Act[.] (Italics and underscoring supplied)
Resolved, finally, That the amendments of existing laws and issuances contrary to the provisions of this Joint Resolution shall be effective upan approval of this Joint Resolution.
(17) Functional Responsibilities- x x x
(b) The CSC and the DBM shall jointly formulate the guidelines, rules and regulations on the grant of incentives in items (4)(h)(i) and (ii).
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. 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.
Correspondingly, personal liability to return the disallowed amounts must be understood as civil liability based on the loss incurred by the government because of the transaction, while administrative or criminal liability may arise from irregular or unlawful acts attending the transaction. This should be the starting point of determining who must return The existence and amount of the loss and the nature of the transaction must dictate upon whom the liability to return is imposed.
Sections 38 and 39, Chapter 9, Book I of the Administrative Code of 1987 cover the civil liability of officers for acts done in performance of official duties:
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.
x x x
(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 arc contrary to law, morals, public policy and good customs even if he acted under orders or instructions of his superiors.
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 [their) official duties with bad faith, malice, or gross negligence.28 (Citations omitted, and emphasis and underscoring supplied)
Notably, the COA's regulations relating to the settlement of accounts and balances illustrate when different actors in an audit disallowance can be held liable either based on their having custody of the funds, and having approved or certified the expenditure. The Court notes that officers referred to under Sections 19.1.1 and 19.1.3 of the MCSB [(Manual on Certificate of Settlement and Balances)], and Sections 16.1.1 and 16.1.3 of the RRSA [(Rules and Regulations on Settlement of Accounts)], may nevertheless be held liable based on the extent of their certifications contained in the forms required by the COA under Section 19.1.2 of MCSB, and Section 16.1.2 of the RRSA. To ensure that public officers who have in their favor the unrebutted presumption of good faith and regularity in the performance of official duty, or those who can show that the circumstances of their case prove that they acted in good faith and with diligence, the Court adopts Associate Justice Marv1c M.V.F. Leonen's (Justice Leonen) proposed circumstances or badges for the determination of whether an authorizing officer exercised the diligence of a good father of a family:x x x 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 Admi istrative 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.
Thus, 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.29 (Citations omitted, and emphasis and underscoring supplied)
Name | Position/Designation | Nature of Participation in the Transaction |
1. Edgar M. Buted | SCA | For certifying availability of funds |
2. Mgr. John N. Celeste | RIM | For approving the claim/Payee |
3. Catalina De Leon | Cashier C | For payment |
x x x A purely ministerial act or duty in contradiction to a discretional act is one which an officer or tribunal performs in a given state of facts. in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed, such duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires neither the exercise of official discretion or judgment.30
Similarly in this case, petlttOners merely relied on Board Resolution No. 57 which authvrized the grant of the rice allowances. As they correctly raised, it was the BOD which determined it as a policy to grant the allowances. Meanwhile, petitioners, especially Jalbuena, as general manager, had the duty to implement the Resolution as with all the other plans and policies of the BOD. There being no revocation or declaration of the invalidity of the resolution, it was incumbent upon Jalbuena to implement it as general manager in accordance with his mandate under PD No. 198.32 (Citations omitted, and emphasis and underscoring supplied)
In the case of MWSS v. COA and Uy v. MWSS and COA, We held that although petitioners were officers of MWSS, they had nothing to do with policy-making or decision-making for the MWSS, and were merely involved in its day-to-day operations. Therein, the petitioners who were department/division managers, Officer-in-Charge-Personnel and Administrative Services and the Chief of Controllership and Accounting Section were not held personally liable for the disallowed amounts, to quote:chanroblesvirtualawlibrary
The COA has not proved or shown that the petitioners, among others, were the approving officers contemplated by Jaw to be personally liable to refund the illegal disbursements in the MWSS. While it is tme that there was no distiflct
We note that in this case, petitioners' participation in the disallowed transactions were done while performing their ministerial duties as Head of Human Resources and Administa·ation, and Acting Treasurer, respectively. Petitioner Alejandrino 's main function is the administration of human resottrces and personnel services, while petitioner Pasetes certified and approved the check voucher and certified the availability of funds as the acting tra,smer. It has not been shown that petitioners acted in bad faith as they were merely perfonning their official duties in approving the pay ment of tho:: lawyers under the directive of PNCC's executive officers. Petitioners, although officers of PNCC, could not be held personally liable for the disallowed amounts as they were not involved in policy-making or decision-making concerning the hiring and engagement of the private lawyers and were only performing assigned duties which can be considered as ministerial.34 (Emphasis and underscoring supplied)
Area of
ResponsibilitySeq. Activity
Cashier 15Verifies completeness of signature on the DV. Reviews the amount of the check against the DV and supporting documents. Signs the check.
xxxx Cashier 18 Releases the original of check and Copy 3 of OV to the payee. Attaches OR/Invoice on Copy 1 of DV. Files Copies 2-3 of check, Copies 1-2 of DV; originals of supporting documents.
SECTION 16. DETERMINATION OF PERSONS RESPONSIBLE/LIABLEHence, insofar as the disallowances in this case are anchored on the illegality of granting CNAI to managerial employees - and not on the availability of funds nor adequacy of documents - during the subject periods, Buted and De Leon acted in good faith and cannot be held liable for the amounts disallowed.
16.1 The Liability of public officers and other persons for audit disallowances/charges shall be determined on the basis of (a) the nature ofthe 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: x x x x 16.1.2 Public officers who certify as to the necessity, legality, and availability of funds or adequacy of documents shall be liable according to their respective certifications. (Emphasis and underscoring supplied)
Verily, excusing payees from return on the basis of good faith has been previously recognized as an exception to the laws on liability for unlawful expenditures. However, being civil in nature, the liability of officers and payees for unlawful expenditures provided in the Administrative Code of 1987 will have to be consistent with civil law principles such as solutio indebiti and unjust enrichment. These civil law principles support the propositions that (1) the good faith of payees is not determinative of their liability to return; and (2) when the Court excuses payees on the basis of good faith or lack of participation, it amounts to a remission of an obligation at the expense of the government.40 (Emphasis and underscoring supplied)
- If a Notice of Disallowance is upheld, the rules on return are as follows:
x x x
c. Recipients — whether approving or certifying officers or mere passive recipients — are liable to return the disallowed amounts respectively received by them, unless they are able to show that the atnounts tl1ey received were genui11ely given in consideration of services rendered. d. The Court may likewise excuse the return of recipients based on undue prejudice, social justice considerations, and other bona fide exceptions as it may determine on a case-to-case basis.41
(a) the personnel incentive or benefit has proper basis in law but is only disallowed due to irregularities that are merely procedural in nature; and (b) the personnel incentive or benefit must have a clear, direct, and reasonable connection to the actual performance of the payee recipient's official work and functions for which the benefit or incentive was intended as further compensation.43 (Emphasis omitted)
Endnotes:
1 Rollo, pp. 3-17.
2 Id. at 79-85.
3 Id. at 22-28.
4 Id. at 38-40. This is a decision by the COA Adjudication and Settlement Board on a disallowance of CNAI paid to officials ofNIA Regional Office No. XII, Midsayap, Cotabato.
5 Id. at 29-31.
6 Regional Irrigation Manager.
7Rollo, pp. 32-34.
8 Id. at 35-37.
9 Id. at 41-45 and 46-50.
10 Id. at 51-55.
11 Id. at 56-60.
12 AUTHORIZING THE GRANT OF COLLECTIVE NEGOTIATION AGREEMENT (CNA) INCENTIVE TO EMPLOYEES IN GOVERNMENT AGENCIES.
13 GRANT OF COLLECTIVE NEGOTIATION AGREEMENT (CNA) INCENTIVE, February 1, 2006.
14 GRANT OF COLLECTIVE NEGOTIATION AGREEMENT (CNA) INCENTIVE FOR NATIONAL GOVERNMENT AGENCIES, STATE UNIVERSITIES AND COLLEGE'S AND LOCAL GOVERNMENT UNITS, approved on November 14, 2002.
15 GRANT OF COLLECriVE NEGOTIATION AGREEMENT (CNA) INCENTIVE FOR GOVERNMENT OWNED OR CONTROLLED CORPORATIONS (GOCCS) AND GOVERNMENT FINANCIAL INSTITUTIONS (GFIS), approved on May 19, 2003.
16 ABOLITION OF THE COA ADJUDICATION AND SETTLEMENT BOARD (ASB), March 22, 2012.
17 JOINT RESOLUTIN AUTHORIZING THE PRESIDENT OR THE PHILIPPINES TO MODIFY THE COMPENSATION AND POSITION CLASSIFICATION SYSTEM OF ClVILIAN PERSONNEL AND THE BASE PAY SCHEDULE OF MILITARY AND UNIFORMED PERSONNEL IN THE GOVERNMENT, AND FOR OTHER PURPOSES, approved on June 17, 2009.
18Rollo, p. 97.
19 Id. at 130-149.
20 Id. at 109-127.
21 REMINDER ON THE OBSERVANCE OF THE GUIDELINES ON THE GRANT OF THE COLLECTIVE NEGOTIATION AGREEMENT (CNA) INCENTIVE.
22Rollo, p. 14.
23 Id. at 15.
24 Id.
25 Id. at 16.
26 G.R. No. 244128, September 8, 2020.
27 Id. at 35.
28 Id. at 17-19.
29 Id. at 21-22.
30Roble Arrastre, inc. v. lion Villaflor, G . R. No. 128509, August 22, 2006, 499 SCRA 434, 451, citing F.D. Regalado, REMIDIAL LAW COMPENDIUM , Vol. I, p. 174 (1997), further citing Samson v. Barrios, 63 Phii. 198, Lemi v. Valencia, L-20768, November 29, 1968, 26 SCRA 203, Meralco Securities Corporation v. Savellano, 203 Phil. 173 (1982).
31 G.R. No. 218478, June 19, 2018 (Unsigned Resolution), En Banc.
32 Id.
33 G.R. No. 245400. November 12, 2019.
34 Id. at 11-12.
35 Comment (On the Petition for Certiorari dated 07 March 2018), rollo, p. 124.
36 PRESCRIBING THE MANUAL ON THE NEW GOVERNMENT ACCOUNTING SYSTEM (MANUAL VERSION) FOR USE IN ALL NATIONAL GOVERNMENT AGENCIES, COA Circular No. 2002-002, June 18, 2002.
37 Id., Accounting Policies (Volume 1), Chapter 3 (Accounting Systems), Section 34 (Procedures for Disbursements by Chech).
38 PRESCRIBING THE USE OF THE RULES AND REGULATIONS ON SETTLEMENT OF ACCOUNTS, COA Circular No. 2009-06, September 15, 2009, published in the Philippine Star on September 21, 2009.
39 Budget Circular Letter No. 2011-9, supra note 21.
40Madera v. COA, supra note 26, at 27.
41 Id. at 36.
42 G.R. No. 185806, November 17, 2020.
43 Id. at 9.
cralawredlibrary