GR 227715; (November, 2020) (Digest)
G.R. No. 227715 , November 03, 2020
FR. RANHILIO CALLANGAN AQUINO, DR. PABLO F. NARAG, IN REPRESENTATION OF PERMANENT EMPLOYEES OF THE CAGAYAN STATE UNIVERSITY, PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.
FACTS
On December 19, 2014, the President of Cagayan State University (CSU) issued a Special Order granting year-end incentives not exceeding P40,000 to all officials and employees. The source was the unused appropriated income for 2014, pursuant to CHED Memorandum Order No. 20, s. 2011. The order included a provision that receipt was without prejudice to a refund if disallowed by the Commission on Audit (COA). In May 2015, COA issued a Notice of Disallowance, holding that the grant lacked legal basis under Republic Act No. 8292 (The Higher Education Modernization Act of 1997). The disallowance named the university president, approving officers, and all payees as liable.
The petitioners, representing the permanent employees, filed this Petition for Certiorari after allegedly discovering the disallowance only upon receipt of a memorandum directing refund. They argued the incentives were a valid exercise of the university’s fiscal autonomy under R.A. 8292 to appropriate funds for institutional purposes like rewarding loyalty. They further contended that the employees received the funds in good faith, without participation in the disbursement, and should not be required to refund the amounts.
ISSUE
Whether the COA committed grave abuse of discretion in disallowing the year-end incentives and in holding the recipient employees liable for refund.
RULING
No. The Supreme Court upheld the COA’s disallowance and the order for refund. The legal logic is twofold. First, on the validity of the disbursement: R.A. 8292 grants fiscal autonomy but does not authorize the grant of additional allowances or incentives beyond those specifically authorized by law. The year-end incentive was not among the allowances enumerated under Section 4 of the law. CHED Memorandum Order No. 20, s. 2011, cited as basis, cannot expand the law’s scope or legitimize an otherwise unauthorized expenditure. The source, being savings from the special trust fund, could not be used for this purpose as it constituted an illegal disbursement of public funds.
Second, on the liability to refund: The Court applied the settled doctrine of solutio indebiti. When a disbursement is illegal, the recipients are obligated to return the amounts received, even if they accepted the funds in good faith and without participation in the irregularity. The principle ensures the protection of public funds. The presence of a clause in the Special Order acknowledging possible refund and the employees’ execution of waivers reinforced this obligation. The defense of good faith does not excuse return; it merely affects whether the approving officers are held solidarily liable. Consequently, the COA did not commit grave abuse of discretion, as its decision was grounded in law and jurisprudence safeguarding the proper use of government resources.