Career Executive Service Board v. Commission on Audit
REITERATIONFacts
The Antecedents: The Career Executive Service Board (CESB) granted various monetary benefits to its officials and employees for Calendar Years 2002 and 2003, pursuant to Section 2, Article V of its Collective Negotiation Agreement (CNA) with the Samahan ng Kawaning Nagkakaisa sa Diwa, Gawa at Nilalayon (SANDIGAN). These benefits included fringe benefits, rice subsidy, birthday cash gift, Christmas grocery, loyalty award, retirement benefit, and funeral assistance. Upon post-audit, the Audit Team Leader issued an Audit Observation Memorandum questioning the legality of these grants. Subsequently, the Director of the Legal and Adjudication Office-National issued a Notice of Disallowance (ND) for the total amount of P2,386,000.00, stating that the payment of these monetary benefits lacked legal support. Procedural History: Following the issuance of the Notice of Disallowance (ND) No. 2004-067, the CESB sought reconsideration, which was denied by the Legal and Adjudication Office-National (LAO-N) through Decision Number 2005-134. The CESB's subsequent appeal was also denied by the LAO-N through Resolution No. 2005-134A. Ultimately, the Commission on Audit (COA) rendered Decision No. 2010-121, affirming the ND. The CESB then filed the present petition for certiorari and prohibition before the Supreme Court, assailing the COA Decision for allegedly being rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. The Petition: The petitioner, CESB, seeks to nullify COA Decision No. 2010-121, arguing that the COA committed grave abuse of discretion in affirming the disallowance of the monetary benefits granted under the CNA. The CESB contended that it had the authority to use its agency savings for these benefits, citing National Budget Circular No. 487 and Section 12 of Republic Act No. 6758. The petition specifically questions whether the COA gravely abused its discretion in disallowing the benefits and in ordering the refund of the amounts received by the CESB employees. The CESB asserts that the benefits were authorized and that the use of savings was permissible under existing regulations.
Issue(s)
Whether respondent COA committed grave abuse of discretion when it affirmed the recommendation of the Audit Team Leader (ATL) and the Supervising Auditor (SA) disallowing the monetary benefits granted by the petitioner; Whether respondent COA committed grave abuse of discretion when it ordered the refund of the amounts received by the CESB employees.
Ruling
The Supreme Court partly granted the petition for certiorari, upholding COA Decision No. 2010-121 but modifying it by declaring that the officials who approved the granting of the monetary benefits and the employees who received them need not refund the disallowed amounts due to their good faith.
Ratio Decidendi
On the issue of whether respondent COA committed grave abuse of discretion in disallowing the monetary benefits: The Court found that the COA did not commit grave abuse of discretion. The CESB's assertion that it could use agency savings for these benefits, citing National Budget Circular No. 487, was deemed unfounded. The Court clarified that the DBM did not have a hand in determining the specific CNA benefits, which were solely between the CESB and SANDIGAN. Furthermore, the benefits granted were not subject to negotiation under Executive Order (EO) 180 and its Implementing Rules and Regulations (IRR), as Section 3, Rule VIII of the IRR explicitly listed benefits requiring appropriation and not subject to negotiation, which included items similar to those granted. The CESB's reliance on National Budget Circular 487 was also misplaced because the CESB lacked the legal authority to use its savings for such payments, as Section 29(1), Article VI of the 1987 Constitution requires an appropriation made by law, and the CESB is not among the officials authorized to transfer appropriations from savings. The COA, in disallowing the benefits, merely discharged its constitutional mandate as the guardian of public funds. On the issue of whether respondent COA committed grave abuse of discretion when it ordered the refund of the amounts received by the CESB employees: While upholding the disallowance, the Court ruled that the CESB officials and employees who received the benefits need not refund the disallowed amounts. This ruling was based on the principle of good faith, consistently applied in jurisprudence. The Court cited cases like De Jesus v. Commission on Audit and Blaquera v. Alcala, which held that when officials disbursed payments and recipients accepted them in the honest belief that they were due and legally entitled, and there were no indicia of bad faith, refund should not be compelled. The CESB officials acted with the honest belief that the grant was proper and had legal basis, relying on its autonomous character. The recipients also believed they were legally entitled to the benefits. Moreover, at the time of payment, there was no prior ruling establishing that such CNA benefits were not negotiable or that the CESB could not use savings for them. Therefore, their good faith absolved them from the obligation to reimburse.
Main Doctrine
While the disallowance of monetary benefits granted under a Collective Negotiation Agreement (CNA) by the Commission on Audit (COA) may be upheld for being without legal basis, the officials who approved the payment and the employees who received such benefits need not refund the disallowed amounts if they acted in good faith.