G.R. No. 226319 and G.R. No. 235031, October 08, 2019
Jessica M. Chozas, et al., Petitioners, v. Commission on Audit, Respondent. / Dr. Mariano C. De Jesus and Hermogena A. Bautista, for themselves and as attorneys-in-fact of other officials and employees of the Bulacan State University (BulSU), Petitioners, v. Commission on Audit, Respondent.

FACTS

The Board of Regents (BoR) of the Bulacan State University (BulSU) passed Resolution No. 39, Series of 2012, authorizing the grant of an Accomplishment Incentive Award to its officials and employees, funded from the Special Trust Fund (STF). The Commission on Audit (COA) issued Notice of Disallowance (ND) Nos. 13-001-164(12) to 13-042-164(12), disallowing the total amount of P37,876,296.57 for being irregular, without legal basis, and in contravention of the Constitution, the Salary Standardization Law, and COA Circular No. 2013-003. The COA Regional Director upheld the disallowance. The petitioners-employees and petitioners-officials filed separate Petitions for Review before the COA. In COA Decision No. 2016-096, the COA denied the petition of the petitioners-employees, affirming the disallowance and holding them, along with specified approving officers, liable for refund. In COA Decision No. 2017-326, the COA dismissed the petition of the petitioners-officials for being filed out of time (231 days late) and also ruled against them on the merits. The petitioners filed consolidated Petitions for Certiorari before the Supreme Court.

ISSUE

Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction in affirming the disallowance of the Accomplishment Incentive Award and in declaring the petitioners personally liable to refund the amount.

RULING

The Supreme Court dismissed the petitions and affirmed the COA decisions. The Court held that the COA did not commit grave abuse of discretion. The disallowance was proper because the grant of the Accomplishment Incentive Award had no legal basis. The use of the Special Trust Fund (STF) under Section 4(d) of Republic Act No. 8292 (Higher Education Modernization Act of 1997) is limited to expenditures for the basic and primary objectives of the university, such as instruction, research, and extension. The incentive award was not part of BulSU’s academic programs and thus was an unauthorized expenditure. Furthermore, the grant violated DBM Circular No. 16, which requires prior Administrative Order from the Office of the President for such incentives. The Court also upheld the dismissal of the petitioners-officials’ appeal for being filed beyond the reglementary period. On the liability for refund, the Court applied the principle of solutio indebiti, requiring all payees who received the disallowed amounts in good faith to return them. The approving officers were held solidarily liable for the full amount, while the passive recipients were liable only for the amount they individually received.