G.R. No. 254570, June 29, 2021
Bernadette Lourdes B. Abejo, Executive Director of the Inter-Country Adoption Board (ICAB), Petitioner, vs. Commission on Audit, represented by Chairperson Michael Aguinaldo, Respondent.

FACTS

The Inter-Country Adoption Board (ICAB) granted Collective Negotiations Agreement (CNA) Incentives to its employees for 2011. The grant was made in two tranches: an initial payment of P20,000.00 via payroll on November 28, 2011, and a final payment via SM Gift Passes (mostly valued at P23,800.00) on December 23, 2011. The Commission on Audit (COA) issued a Notice of Disallowance, finding the grant excessive and irregular. COA held that the grant violated Section 5.7 of DBM Budget Circular (BC) No. 2006-1, which requires CNA Incentives to be paid as a one-time benefit only after the end of the year. COA also found the total amounts received by employees exceeded the P25,000.00 ceiling per employee established by DBM BC No. 2011-5, which was issued on December 26, 2011. Petitioner Bernadette Lourdes B. Abejo, as ICAB Executive Director who approved the transactions, was held solidarily liable with the payees to refund the disallowed amount of P236,500.00. Petitioner argued the payments were made in good faith in accordance with DBM BC No. 2006-1 before the issuance of DBM BC No. 2011-5, and that all planned programs for the year had been implemented.

ISSUE

1. Whether the COA Proper validly disallowed the payment of CNA Incentives.
2. Whether petitioner, as approving authority, is solidarily liable to refund the disallowed amount.
3. Whether petitioner, as a recipient, is personally liable to return the excess amount she received.

RULING

1. The disallowance was valid. The Supreme Court affirmed the COA’s disallowance. The ICAB violated the conditions in DBM BC No. 2006-1 by making two payments before the end of the year 2011, contrary to the circular’s requirement of a single payment after the year ends. Furthermore, the total amounts granted exceeded the P25,000.00 limit per employee set by DBM BC No. 2011-5.
2. Petitioner is not solidarily liable to refund the entire disallowed amount. Applying the rules on return from Madera v. Commission on Audit, the Court absolved petitioner from solidary liability. The Court found petitioner acted in good faith, as there was no showing of malice, gross negligence, or bad faith in her approval of the payments. She relied on the submissions of her subordinates and the prevailing DBM circulars. The violation stemmed from a misinterpretation of DBM BC No. 2006-1.
3. Petitioner is not personally liable to return the excess amount she received. Applying the same Madera rules, the Court also absolved petitioner from personal liability to refund the excess CNA Incentive she received. The Court found the payees, including petitioner, were in good faith. They received the benefit in the honest belief it was lawful, as it was granted pursuant to a CNA and had a direct connection to their performance and cost-saving measures.
The COA Decision was AFFIRMED with MODIFICATION. The disallowance of P236,500.00 was upheld, but petitioner Bernadette Lourdes B. Abejo was absolved from both solidary liability for the entire amount and personal liability for the excess she received.