Dubongco v. Commission on Audit
REITERATIONFacts
The Antecedents: In 2009 and 2010, the Department of Agrarian Reform-Provincial Office-Cavite (DARPO-Cavite) granted Collective Negotiation Agreement (CNA) Incentives to its officials and employees, totaling P1,518,800.00 in 2009 and P1,176,000.00 in 2010. These incentives were sourced from the Comprehensive Agrarian Reform Program (CARP) Fund, also known as Fund 158. The grant of these incentives was subsequently questioned by audit officers, who issued Notices of Disallowance (NDs) on the grounds that the CARP Fund, a special fund, could only be utilized for the specific purposes for which it was created, and not for CNA incentives. Procedural History: The Notices of Disallowance were appealed by the then Provincial Agrarian Reform Officers II of DARPO-Cavite to the Commission on Audit (COA) Regional Office No. IV. The Regional Office denied the appeals and affirmed the disallowances, ruling that CNA Incentives must be sourced from savings from Maintenance and Other Operating Expenses (MOOE) allotments, as stipulated in DBM Budget Circular No. 2006-1. This decision was further appealed to the COA En Banc, which also ruled that the grant of CNA incentives sourced from the CARP Fund was illegal. The COA En Banc denied the petition for review and affirmed the disallowances, directing the forwarding of the case to the Ombudsman for investigation. The current petitioner, James Arthur T. Dubongco, moved for reconsideration, which was denied by the COA. The Petition: Petitioner James Arthur T. Dubongco, the current Provincial Agrarian Reform Program Officer II of DARPO-Cavite, filed a petition for certiorari under Rule 64 of the Revised Rules of Court. The petition challenges the COA's decisions, arguing that the CARP Fund could be a valid source for CNA incentives, that DARPO-Cavite relied on a DBM Secretary's opinion, and that the officials and employees acted in good faith. The petition also questions whether the recipients should be held liable for refunding the disallowed incentives. The petitioner contends that the CARP Fund, while special, could be used for employee welfare as they are crucial to the agency's objectives, and that the officials and employees acted in good faith. The COA, in its comment, counters that the CNA Incentive must be sourced solely from MOOE savings as per DBM Budget Circular No. 2006-01, and that the CARP Fund is a special trust fund with a specific purpose, making the recipients personally liable for the disallowed amounts under P.D. No. 1445.
Issue(s)
Whether the CARP Fund or Fund 158 can be a valid source for the grant of CNA Incentive to rank-and-file employees. Whether the recipients may be held liable for the refund of the disallowed CNA Incentive.
Ruling
The petition is dismissed. The May 2, 2017 Decision and the October 26, 2017 Resolution of the Commission on Audit are affirmed. All recipients of the disallowed CNA Incentive are liable to return the same through salary deduction or any other mode which the Commission on Audit may deem just and proper. This pronouncement is without prejudice to any other administrative or criminal liabilities of the officials responsible for the illegal disbursement.
Ratio Decidendi
On the issue of whether the CARP Fund can be a valid source for the grant of CNA Incentive: The Court held that the CNA Incentive may be granted to rank-and-file employees only if there are savings from operating expenses. PSLMC Resolution No. 4, Series of 2002, A.O. No. 135, and DBM Budget Circular No. 2006-01 unequivocally state that the CNA Incentive shall be sourced solely from savings from released Maintenance and Other Operating Expenses (MOOE) allotments. The use of the word "shall" in these issuances denotes their mandatory character. The CARP Fund, being a special trust fund created for the implementation of agrarian reform projects, cannot be used to finance the CNA Incentive. The purpose of the CARP Fund is distinct from the purpose of the CNA Incentive, which is to recognize joint efforts in achieving targets at a lesser cost. Relying on the opinion of a former DBM Secretary does not bind the COA, which is constitutionally mandated to audit public funds. The grant of CNA incentives financed by the CARP Fund is not only illegal but also inconsiderate of the plight of Filipino farmers. Furthermore, the CARP Fund is a special fund that must be used exclusively for its stated purpose, as held in Confederation of Coconut Farmers Organizations of the Philippines, Inc. v. Aquino III. The Court emphasized that the plain meaning rule in statutory construction dictates that clear and unambiguous provisions must be applied literally without interpretation. On the issue of whether the recipients may be held liable for the refund of the disallowed CNA Incentive: The Court ruled that all recipients of the disallowed CNA Incentive are liable to refund the same. The grant of the CNA Incentive was financed by the CARP Fund, contrary to the express mandates of PSLMC Resolution No. 4, Series of 2002, A.O. No. 135, and DBM Budget Circular No. 2006-01. This means the payees had no valid claim to the benefits they received, leading to unjust enrichment. The principle of unjust enrichment requires that a person be benefited without a valid basis or justification, and that such benefit is derived at the expense of another. The employees' participation in the negotiation and approval of the CNA implies they had knowledge of the prerequisites for the valid release of the CNA Incentive, including the source of funds. Section 103 of P.D. No. 1445 states that expenditures in violation of law or regulations shall be a personal liability of the official or employee found directly responsible. The payees are considered trustees of an implied trust under Article 1456 of the Civil Code, as it is against equity and good conscience for them to retain the disallowed amounts.
Main Doctrine
The Collective Negotiation Agreement (CNA) Incentive must be sourced solely from savings from Maintenance and Other Operating Expenses (MOOE) allotments, and not from special funds like the Comprehensive Agrarian Reform Program (CARP) Fund. Recipients of disallowed incentives are liable to refund the same.