Aquino v. Commission on Audit
REITERATIONFacts
The Antecedents: The President of Cagayan State University (CSU) issued a Special Order granting year-end incentives not exceeding P40,000.00 to all officials and employees, sourced from unused appropriated income for FY 2014. Employees executed waivers to refund the incentives if found not in order. The incentives were deposited into their bank accounts. Procedural History: The Commission on Audit (COA) issued a Notice of Disallowance (ND) on May 18, 2015, disallowing P7,688,000.00 for being contrary to Republic Act No. 8292 (RA 8292). The ND held the University President, Chief Administrative Officer, University Accountant, and all payees liable. The ND was received by the university on June 6, 2015. A Notice of Finality of Decision was issued on August 31, 2016. Petitioners claimed they were not informed of the disallowance until a memorandum directed them to return the incentives. The Petition: Petitioners, representing themselves and the Permanent Employees of CSU, filed a Petition for Certiorari before the Supreme Court, questioning the COA's disallowance and the order for return. They argued that the Board of Regents has fiscal autonomy under RA 8292, that incentives are a valid purpose, and that CHED Memorandum Order No. 20, series of 2011 (CMO 20-2011) authorized such incentives. They also claimed recipients acted in good faith and had received similar incentives in the past without disallowance.
Issue(s)
Whether petitioners have the legal personality to file the Petition. Whether petitioners' direct recourse to the Supreme Court is proper. Whether the respondent (COA) committed grave abuse of discretion in disallowing the year-end incentives. Whether petitioners are required to return the disallowed amounts.
Ruling
The Supreme Court denied the petition. It affirmed the disallowance of the year-end incentives and directed the petitioners to return the amounts they received. The Court held that the Permanent Employees of CSU lacked the legal personality to sue, that while the direct resort to the Court was excused due to lack of proper notice, the COA did not commit grave abuse of discretion in disallowing the incentives, and that recipients are liable to return the disallowed amounts.
Ratio Decidendi
On the legal personality of petitioners: The Court ruled that petitioners lacked the legal personality to file the petition on behalf of the "Permanent Employees of the Cagayan State University" because this entity had no separate juridical personality. Petitioners failed to allege their capacity to sue on behalf of the association or the legal existence of such an association, violating Rule 8, Section 4 of the Rules of Court. Citing Association of Flood Victims v. COMELEC, the Court reiterated that an unincorporated association without a juridical personality cannot sue in its own name, and its members must be individually impleaded or properly authorized representatives must be designated. The Court also noted discrepancies in the resolutions presented as proof of authority, further undermining the petitioners' claim to represent a recognized group. On the propriety of direct recourse to the Supreme Court: The Court excused the petitioners' direct resort to certiorari due to the lack of proper service of the Notice of Disallowance (ND). The Court found that the ND was not properly served to the University Accountant, and there was no proof of actual service to the liable individuals. This lack of proper notice prevented petitioners from availing of their remedies, such as filing a motion for reconsideration or appeal, before the disallowance attained finality. Therefore, the petition for certiorari was deemed a necessary recourse under Rule 12, Section 1 of the 2009 Revised Rules of Procedure of the Commission on Audit. On whether the COA committed grave abuse of discretion in disallowing the year-end incentives: The Court held that the COA did not commit grave abuse of discretion. RA 8292 limits the disbursement of special trust funds by state universities to instruction, research, extension, or other similar programs and projects. The year-end incentives, sourced from savings of the special trust fund, were not shown to be for such allowable purposes. Furthermore, the disbursement procedure outlined in CMO 20-2011, which requires consultation with the Administrative Council and approval by the Board of Regents (BOR), was not followed. The Special Order was issued by the University President in agreement with Campus Executive Officers, not by the BOR, rendering the disbursement illegal and irregular. The Court distinguished this from cases where incentives might be permissible if directly related to academic programs or projects. On whether petitioners are required to return the disallowed amounts: The Court ruled that petitioners are required to return the disallowed year-end incentives. Applying the guidelines in Madera v. Commission on Audit, recipients are liable to return disallowed amounts unless they can show entitlement based on services rendered or if specific exceptions like undue prejudice, social justice, or humanitarian considerations apply. The Court found that petitioners benefited from the funds deposited into their accounts, and allowing them to retain the incentives would result in unjust enrichment. The principle of solutio indebiti mandates the return of undue payments, irrespective of the recipient's good faith, as the liability is civil in nature and aims to prevent fiscal leakage. The Court noted that while the payees received the incentives, their liability is limited to the amount received, and the primary responsibility for illegal expenditures may fall on approving and certifying officers if they acted in bad faith, malice, or gross negligence.
Main Doctrine
Year-end incentives disbursed from the savings of a state university's special trust fund are not allowable disbursements under Republic Act No. 8292. Recipients of illegally and irregularly disbursed funds are generally required to return the amounts received, regardless of good faith, based on the principles of solutio indebiti and unjust enrichment, unless specific exceptions apply.