Department of Public Works and Highways v. Commission on Audit
REITERATIONFacts
The Antecedents: The Department of Public Works and Highways (DPWH), Central Office, authorized the grant of Collective Negotiation Agreement (CNA) Incentive for calendar year 2008 to rank-and-file employees, to be paid out of savings generated from Maintenance and Other Operating Expenses (MOOE), completed projects, and Engineering and Administrative Overhead (EAO), subject to usual accounting and auditing rules. DPWH Regional Office No. IV-A (DPWH IV-A) released P3,915,000.00 as CNA Incentive for 2008 to its employees and officers. Procedural History: The Commission on Audit (COA) issued Notice of Disallowance (ND) No. 09-01-101-(09) disallowing the P3,915,000.00 CNA Incentive because it was paid out of EAO, violating Department of Budget and Management (DBM) Budget Circular No. 2006-1, which mandates that CNA Incentive shall be sourced solely from MOOE savings. Petitioner Genevieve E. Cuaresma, then Chief Accountant of DPWH IV-A, was among those found liable for certifying the availability of funds. DPWH IV-A's appeal to COA IV-A was dismissed, affirming the disallowance. The DPWH IV-A Employees Association's petition for review to the COA Proper was also denied, affirming the disallowance. A motion for reconsideration was likewise denied. Cuaresma then filed a petition for certiorari with the Supreme Court. The Petition: Cuaresma sought to set aside the COA's decisions, arguing that the CNA Incentive was validly paid out of EAO savings, that she should not be held liable as she relied on the Secretary's memorandum, and that the COA acted with grave abuse of discretion by disallowing the incentive and by holding only approving/certifying officers liable while absolving passive recipients.
Issue(s)
Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it disallowed the subject CNA Incentive. Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it adjudged certain DPWH IV-A officers, including Cuaresma, liable for the amount of the disallowance, and whether passive recipients should also be held liable.
Ruling
The petition is partly meritorious. The Supreme Court affirmed the COA's disallowance of the CNA Incentive but modified the ruling on liability. The Court held that both the certifying and approving officers, as well as all employees who received the CNA Incentive, are liable for the disallowed amount and must reimburse it.
Ratio Decidendi
On the disallowance of the CNA Incentive: The Court held that the COA did not commit grave abuse of discretion in disallowing the CNA Incentive. The grant of CNA Incentive is governed by PSLMC Resolution No. 4, Series of 2002, A.O. No. 135, Series of 2005, and DBM Budget Circular No. 2006-1. DBM Budget Circular No. 2006-1 explicitly states that the CNA Incentive shall be sourced solely from savings from Maintenance and Other Operating Expenses (MOOE) allotments. The payment in this case was sourced from Engineering and Administrative Overhead (EAO) savings, which is a clear violation of the said circular. The Court rejected Cuaresma's argument that EAO and MOOE serve substantially the same purpose, noting that the cited budget deliberation did not support her conclusion and that the approval of a budget does not grant blanket authority to disregard existing laws and regulations. The argument of selective enforcement was also dismissed for lack of evidence of intentional discrimination. On the liability of officers and recipients: The Court concurred with the COA that Cuaresma, as a certifying officer, failed in her duty to ensure compliance with the regulations and must be held liable. However, the Court erred in absolving the DPWH IV-A employees who received the benefit from any liability. The Court ruled that these employees are obliged to return the amounts received under the principle of unjust enrichment, as they were received without a valid basis or justification and at the expense of the government. The Court emphasized that the CNA Incentive involves employee participation in negotiation and approval, implying they had knowledge of the requirements for its valid release. Therefore, both the certifying/approving officers and the recipients are liable for reimbursement.
Main Doctrine
The Collective Negotiation Agreement (CNA) Incentive shall be sourced solely from savings from Maintenance and Other Operating Expenses (MOOE) allotments. Payments sourced from other funds, such as Engineering and Administrative Overhead (EAO), are disallowed. Certifying and approving officers are liable for disallowed amounts, and recipients must refund the benefits received under the principle of unjust enrichment.