Villa v. Commission on Audit
CLARIFICATIONFacts
The Antecedents: The instant case stemmed from the payment of Medical/Health Care Allowance (MHCA) to the officials and employees of the Department of Agrarian Reform (DAR) for the period of December 2001 to May 2005, totaling PHP 70,301,385.00. The disbursement of the MHCA was based on a collective negotiation agreement (CNA) entered into between DAR and the DAR Employees Foundation, Inc., with its funding charged to the Agrarian Reform Fund (ARF) or the Comprehensive Agrarian Reform Program (CARP) Fund. Procedural History: On post-audit, the audit team leader and the supervising auditor of the Commission on Audit (COA) assigned to DAR issued Notice of Disallowance (ND) Nos. 10-001-158(01) to 10-012-158(15) on May 12, 2010, disallowing the payments for violations of Section 9 of Presidential Decree No. 477 and Section 4(3) of Presidential Decree No. 1445, as the ARF was a special fund for specific CARP purposes (payment of land purchase price and implementation of support services), and the MHCA was outside these purposes. Petitioner Atty. Rene C. Villa, then DAR Secretary and a signatory of the CNA, was among those held liable. Other approving/certifying officers, Teresita L. Panlilio and Violeta M. Bonilla, appealed the NDs to the COA Cluster Director, which was denied on May 23, 2013. They then appealed to the COA Commission Proper (COA Proper). In a Decision dated September 6, 2017, the COA Proper denied their appeal, affirming the disallowance and additionally finding violations of Article XI-B of the 1987 Constitution, COA Resolution No. 2005-001, and Republic Act No. 6758 (Salary Standardization Law), classifying MHCA as a non-negotiable item. Initially, the COA Proper absolved passive payee recipients, citing Silang v. Commission on Audit. Villa received the COA Proper Decision on October 24, 2017, and filed a Motion for Reconsideration (MR) on November 21, 2017, arguing that his right to procedural due process was violated, his participation was limited to signing the CNA, he did not approve the payments, and he acted in good faith based on Department of Budget and Management (DBM) and presidential authorization. In a Resolution dated December 23, 2021, the COA Proper denied Villa's MR for lack of merit, but modified his liability by limiting it to payments based on the CNA signed during his tenure and, pursuant to Madera v. Commission on Audit, reversed itself to require payees to refund the amounts received. The Petition: Not satisfied, Villa filed the present Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court before the Supreme Court, reiterating his arguments. He prayed for the relaxation of the 30-day reglementary period, argued denial of due process due to non-notification of the NDs and inability to participate in COA proceedings, contended that holding him solidarily liable while requiring payees to return would be tantamount to double recovery, asserted good faith in signing the CNA without direct involvement in the approval of the MHCA grant, and claimed the grant of MHCA was essential and incidental to the implementation of the agrarian reform program. The COA, represented by the Office of the Solicitor General, argued for outright dismissal due to late filing and maintained that Villa was not denied due process, was correctly held solidarily liable for signing the CNA, and there was no double recovery of the disallowed amount.
Issue(s)
Whether the Petition for Certiorari was timely filed, and if the reglementary period should be relaxed. Whether petitioner Atty. Rene C. Villa's right to due process was violated. Whether the disallowance of the Medical/Health Care Allowance (MHCA) was proper. Whether petitioner Atty. Rene C. Villa should be held solidarily liable for the disallowed amounts.
Ruling
The Petition is PARTLY GRANTED. Decision No. 2017-272 dated September 6, 2017, and Resolution dated December 23, 2021, of the Commission on Audit Commission Proper are AFFIRMED with MODIFICATION. Petitioner Atty. Rene C. Villa is ABSOLVED from his solidary obligation to return the disallowed amount.
Ratio Decidendi
On Issue 1: The Supreme Court found that the Petition was filed belatedly, 13 days beyond the allowable reglementary period provided under Rule 64, Section 3 of the Rules of Court. However, citing Madera v. Commission on Audit, the Court held that the observance of procedural rules may be relaxed when the substantial merits of a case warrant a review of the Commission on Audit (COA) Proper's Decision and Resolution. In this instance, the Court deemed it necessary to relax the procedural rules to address the substantive issues raised by the petitioner, particularly concerning his liability. This relaxation is an exception to the strict application of the reglementary period, which mandates a 30-day period for filing petitions for certiorari. The Court's decision to proceed despite the late filing underscores its commitment to resolving cases on their merits when compelling reasons exist. On Issue 2: The Court ruled that petitioner Atty. Rene C. Villa's right to due process was not violated. It distinguished this case from Barosso v. Commission on Audit, where the petitioner was unable to argue the merits due to lack of proper information. Instead, the Court applied Mendoza v. Commission on Audit, which held that due process in administrative proceedings is satisfied when a party is afforded the opportunity to explain one's side or seek reconsideration. Villa was able to file a Motion for Reconsideration (MR) before the COA Proper, where he argued on the merits of the Decision, not just the due process issue. The COA Proper's Resolution also considered petitioner's defenses in upholding its Decision, demonstrating that he was afforded a full opportunity to be heard, which is the essence of administrative due process. On Issue 3: The Supreme Court affirmed the propriety of the disallowance of the Medical/Health Care Allowance (MHCA) granted to Department of Agrarian Reform (DAR) officials and employees. The Court reiterated its rulings in Dubongco v. Commission on Audit and Department of Agrarian Reform Employees Association (DAREA) v. Commission on Audit, which established that Collective Negotiation Agreement (CNA) incentives, or similar benefits like MHCA, cannot be sourced from the Agrarian Reform Fund (ARF) or Comprehensive Agrarian Reform Program (CARP) Fund. These funds are special funds exclusively designated for specific CARP implementation purposes, such as land payments and support services, as mandated by Executive Order No. 229 and Republic Act No. 6657. Sourcing MHCA from the ARF was deemed illegal, as CNA incentives must be derived from an agency's savings from operating expenses, not from special purpose funds, to ensure proper utilization of public funds. On Issue 4: The Court absolved petitioner Atty. Rene C. Villa from solidary liability to return the disallowed amount. Citing Madera v. Commission on Audit and Abellanosa v. Commission on Audit, the Court emphasized that approving and certifying officers are not civilly liable unless there is a clear showing of bad faith, malice, or gross negligence, as per Section 38 of the Administrative Code of 1987. The COA Proper itself admitted that Villa had "no direct participation in the approval of, and the actual disbursement of the medical allowance," only that the Collective Negotiation Agreement (CNA) he signed was the basis for payment. Applying Ampatuan v. Commission on Audit, the Court held that a mere signature on a CNA, without proof of conspiracy, bad faith, malice, or gross negligence in the actual disbursement, is insufficient to impute personal liability. Therefore, absent such proof, Villa could not be held solidarily liable for the disallowed amounts.
Main Doctrine
The Commission on Audit (COA) is constitutionally empowered to disallow illegal expenditures. While the disallowance of the Medical/Health Care Allowance (MHCA) sourced from the Agrarian Reform Fund (ARF) is proper, approving and certifying officers are not civilly liable to return disallowed amounts unless there is a clear showing of bad faith, malice, or gross negligence. Mere signing of a Collective Negotiation Agreement (CNA) without direct participation in the disbursement and without proof of bad faith, malice, or gross negligence is insufficient to hold an officer solidarily liable. This doctrine emphasizes the need for actual culpability beyond mere official position or initial approval for civil liability to attach to approving officers.