Perez v. Aguinaldo
REITERATIONFacts
1. The Antecedents: On December 8, 2011, the Bureau of Fisheries and Aquatic Resources (BFAR) disbursed P20,595,549.99, equivalent to P60,000.00 per employee, as Collective Negotiation Agreement (CNA) incentives for calendar year 2011 to 351 of its officers and employees. Subsequently, the Commission on Audit (COA) issued a Notice of Disallowance (ND) No. 14-05-101(11) dated June 10, 2014, disallowing P12,285,000.00 of this amount. The disallowance was based on the assertion that the payment exceeded the P25,000.00 ceiling per qualified employee stipulated in Item 3.5 of Department of Budget and Management (DBM) Budget Circular (BC) No. 2011-5, issued on December 26, 2011. The ND identified Atty. Asis G. Perez, Atty. Benjamin F.S. Tabios, Jr., Jericardo S. Mondragon, and Lina F. Zulueta as liable for the excess payments. 2. Procedural History: The petitioners appealed the ND to the COA National Government Sector (NGS) – Cluster 8, arguing that DBM BC No. 2011-5 could not be applied retroactively to incentives paid prior to its issuance and invoking good faith. However, the COA NGS Director denied the appeal on September 16, 2015, finding that it was filed beyond the six-month reglementary period. The petitioners then elevated the case to the COA Proper via a petition for review. In its Decision No. 2020-160 dated January 28, 2020, the COA affirmed the NGS Director's decision, upholding the disallowance on the merits despite the belated filing. The COA found that BFAR had overpaid the CNA incentives and violated DBM BC No. 2006-1 by paying them before the end of the year, which would have allowed compliance with DBM BC No. 2011-5. 3. The Petition: The petitioners filed a Petition for Certiorari under Rule 64, in relation to Rule 65, of the Rules of Court, assailing the COA's Decision No. 2020-160. They argue that the COA committed grave abuse of discretion by upholding the ND, asserting that the CNA incentives were paid in accordance with guidelines in force prior to DBM BC No. 2011-5. The COA, through the Office of the Solicitor General, sought dismissal, contending that the appeal was out of time and that a motion for reconsideration of the COA Decision was not filed. The core issues presented to the Supreme Court were whether DBM BC 2011-5 could be applied retroactively to the incentives already released and received, and whether the petitioners were liable to return the disallowed amounts. The Court noted that while the ND had become final due to the belated appeal, it would still resolve the case on the merits due to meritorious considerations and public interest, similar to the COURAGE case. The Court also found that a motion for reconsideration was not necessary as the issues were purely legal and had been squarely argued before the COA.
Issue(s)
Whether the P25,000.00 ceiling under DBM BC 2011-5 dated December 26, 2011 may be retroactively applied to the CNA incentives already released to and received by petitioners for CY 2011. Whether petitioners are liable to return the disallowed excess amounts.
Ruling
The petition is PARTLY GRANTED. The Decision No. 2020-160 dated January 28, 2020 of the Commission on Audit is AFFIRMED WITH MODIFICATION. The Notice of Disallowance No. 14-05-101(11) dated June 10, 2014 is UPHELD to the extent that it disallowed the payment of Collective Negotiation Agreement incentives for failure to comply with the Department of Budget and Management Budget Circular No. 2006-1. Accordingly, petitioners Jericardo S. Mondragon, Lina F. Zulueta, and all employees-payees are not liable to return the disallowed amounts. On the other hand, petitioners Atty. Asis G. Perez and Atty. Benjamin F.S. Tabios, Jr., as approving officers, need not refund the disallowed amounts.
Ratio Decidendi
On Issue 1: The Court ruled that DBM BC No. 2011-5 cannot be given retroactive effect. Applying the precedent in Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) v. Abad, the Court emphasized that the DBM had not established a ceiling when the incentives were granted and received on December 8, 2011. Since the circular was issued only on December 26, 2011, and published even later, the benefits had already vested in the employees' behalf. Retroactive application would unfairly force the return of funds received at a time when no such limitation existed. Consequently, the P25,000.00 ceiling does not apply to the subject 2011 CNA incentives. On Issue 2: Regarding liability, the Court applied the Madera rules. Payees are generally excused from returning disallowed amounts received in good faith or when the grounds for disallowance do not involve their personal bad faith. While the approving officers, Atty. Perez and Atty. Tabios, Jr., were found grossly negligent for violating DBM BC No. 2006-1 (which requires payment only after the end of the year), they are not required to refund the amounts because the payees themselves are excused from returning them. Additionally, Zulueta and Mondragon were cleared of solidary liability because their participation was ministerial and did not involve the policy-making decisions that led to the premature release of the funds.
Main Doctrine
The Court held that Department of Budget and Management (DBM) Budget Circular (BC) No. 2011-5, which imposes a ceiling on Collective Negotiation Agreement (CNA) incentives, cannot be applied retroactively to incentives already released and received by employees prior to its issuance. Such benefits are considered vested rights that cannot be impaired by subsequent administrative regulations. Furthermore, under the Madera rules, if payees are excused from returning disallowed amounts, the approving officers' liability to refund those specific amounts is effectively extinguished, even if they were found negligent in the performance of their duties.