Abella v. Commission on Audit
REITERATIONFacts
The Antecedents: The underlying dispute concerns the disallowance of extraordinary and miscellaneous expenses (EME) paid to officials of the City Government of Butuan for the years 2004 to 2009, totaling P8,099,080.66. The Department of Budget and Management (DBM) initially disapproved the EME appropriation in Butuan City's 2000 budget, citing a violation of Section 325(h) of the Local Government Code of 1991, which prohibits separate appropriations for purposes already covered by discretionary funds. Despite this, the Sangguniang Panlungsod of Butuan City enacted an ordinance in 2004 to grant EME allowances, leading to subsequent disbursements. Procedural History: The Commission on Audit (COA) issued several Notices of Disallowance (NDs) starting in 2006 for EME payments made in 2004. These initial disallowances became final due to a lack of appeal. Further NDs were issued in 2009 and 2012, disallowing EME payments from 2008 and the period of 2004-2009, respectively. The petitioners, as recipients of these disallowed EMEs, appealed to the COA Regional Office XIII, which denied their consolidated appeals. The COA Proper subsequently affirmed the denial in its Decision No. 2016-488 and Resolution No. 2018-012, upholding the disallowances. The Petition: The petitioners filed a Petition for Certiorari under Rule 64, in relation to Rule 65, of the Revised Rules of Court. They argue that their right to a speedy disposition of cases was violated due to the prolonged resolution of their appeals by the COA. Substantively, they contend that they are not bound by the DBM Legal Opinion, that the disallowances infringe upon the city government's fiscal autonomy, and that they should be absolved from liability due to their good faith as passive recipients of the funds.
Issue(s)
Whether there was a violation of the right to speedy disposition of cases; Whether the issuance of the Notices of Disallowance (NDs) was proper; Whether good faith can exonerate petitioners' liability to settle the disallowances.
Ruling
The petition is dismissed. The Decision No. 2016-488 dated December 29, 2016, and the Resolution No. 2018-012 dated October 26, 2017, of the Commission on Audit Proper are affirmed.
Ratio Decidendi
On the right to speedy disposition of cases: The Court held that the constitutional guarantee to a speedy disposition of cases is not violated by every delay. The balancing test, considering the length of delay, reason for the delay, assertion of the right, and prejudice to the defendant, is applied. In this case, the delay was not considered vexatious, capricious, or oppressive due to the complexity of reviewing 94 disallowances spanning multiple years and the destruction of records in a fire. Furthermore, the petitioners failed to seasonably assert their right to speedy disposition before the COA, raising it for the first time in the petition for certiorari, thus depriving the COA of the opportunity to address the issue earlier. The Court emphasized that the right is not a last-resort remedy when facing an unfavorable outcome. On the propriety of the EME disallowances: The Court affirmed the disallowances, finding that EME appropriations have the same purpose as discretionary funds and thus cannot be a separate item of appropriation under Section 325(h) of the Local Government Code. This prohibition is supported by various COA Circulars that characterize EME as similar to discretionary expenses. The SP Ordinance No. 2557-2004, which authorized the EME, was a circumvention of the LGC's limitations, especially since the City of Butuan already had an appropriation for the Mayor's discretionary expenses. The SP's designation of officials as equivalent in rank to national officials entitled to EME was also made without the required authorization from the DBM, contravening the General Appropriations Acts (GAAs). The principle of local autonomy does not grant absolute freedom to LGUs to spend unrestrictedly, as they remain subject to national laws and supervision. On the liability of passive recipients and the defense of good faith: The Court ruled that petitioners' invocation of good faith as passive recipients cannot exonerate them from liability to refund the disallowed EMEs. Applying the principles of solutio indebiti and unjust enrichment, the Court held that no legal right is conferred to recipients of public funds disbursed without legal basis. The exceptions to refund liability, such as services rendered or undue prejudice, were not met as no vouchers or supporting documents were presented to substantiate the EME reimbursements. The Court also noted that the three-year period rule for excusing liability could not be applied because the petitioners had sufficient notice of the illegality of the EME disbursements from earlier disallowances in 2006 and 2009.
Main Doctrine
Extraordinary and Miscellaneous Expenses (EME) appropriations are deemed part of discretionary funds and cannot be a separate item of appropriation under Section 325(h) of the Local Government Code. Passive recipients of disallowed EMEs are liable to refund the amounts received, as good faith does not exonerate them from liability under the principles of solutio indebiti and unjust enrichment, unless specific exceptions apply.