G.R. No. UDK 16666, January 19, 2021
Ismael C. Bugna, Jr., Beverly C. Mananguite, Carissa D. Galing, and Josefina O. Pelo, Petitioners, vs. Commission on Audit (COA) Commission Proper and COA Regional Office No. VIII, Respondents.

FACTS

The Sangguniang Bayan of Mondragon, Northern Samar passed Resolution No. 53 and Resolution No. 55 on December 10, 2012, authorizing the grant of Economic Crisis Assistance (ECA) and Monetary Augmentation of Municipal Agency (MAMA) allowances to municipal employees, with funding from municipal savings via Ordinance No. 07. On February 20, 2014, the COA Audit Team issued three Notices of Disallowance (NDs) against these allowances for being contrary to Section 12 of Republic Act No. 6758 and related issuances. Petitioners Ismael C. Bugna, Jr. (Mayor), Beverly C. Mananguite (Municipal Accountant), Carissa D. Galing (Municipal Treasurer), and Josefina O. Pelo (Municipal Budget Officer) appealed the NDs. The COA Regional Office denied their appeal on July 14, 2015. Their subsequent appeal to the COA Proper was dismissed in a Decision dated December 28, 2017, for being filed out of time, as it was filed 267 days after receipt of the NDs without explanation for the delay. The COA also ruled the allowances lacked legal basis. Their motion for reconsideration was denied on January 29, 2020. Petitioners filed this petition, invoking good faith, arguing the allowances were customarily granted without prior disallowance, and that illegality does not automatically imply personal liability.

ISSUE

Did the COA commit grave abuse of discretion in denying the appeal filed by petitioners and in upholding the notices of disallowances issued against the grant of the ECA and MAMA to municipal employees?

RULING

The petition was partially granted. The Supreme Court affirmed the COA’s disallowance of the ECA and MAMA allowances for lack of legal basis. However, it modified the COA’s decision by absolving the petitioners from civil liability for the disallowed amounts. The Court acknowledged that the appeal was filed out of time and that the right to appeal must comply with reglementary periods. Nevertheless, it exercised its equity jurisdiction, citing extraordinary circumstances where the petition was intertwined with a prior case, Madera v. Commission on Audit, involving the same municipality and similar allowances. Applying the Madera rubrics, the Court found the petitioners acted in good faith. The allowances were intended to alleviate economic hardship, especially after Typhoon Yolanda; they had been customarily granted for years without prior disallowance, leading petitioners to believe they were lawful; and petitioners relied on the Sangguniang Bayan’s resolutions and ordinance, which had not been invalidated. In the absence of evidence of bad faith, malice, or gross negligence, petitioners were exempt from civil liability under Section 38 of the Administrative Code of 1987 and were not required to return the disallowed amounts.