G.R. No. 237843, June 15, 2021
John N. Celeste, Edgar M. Buted, Danilo V. Gomez, Luzvimindo Caguioa, Lelito Valdez, Renato P. Millan, Catalina De Leon, Roberto Q. Abule, Petitioners, vs. Commission on Audit, Respondent.

FACTS

Petitioners were employees of the National Irrigation Administration (NIA) Region I. During the periods of March to October 2010, February 2011, and May 2011, NIA Region I paid Collective Negotiation Agreement Incentive (CNAI) to its managerial and rank-and-file employees. The Commission on Audit (COA) issued three Notices of Disallowance (NDs) against these payments, based on COA Decision No. 2010-075. The NDs identified petitioners as either approving officers, certifying officers, or payees of the disallowed amounts. The COA Regional Office No. I affirmed the disallowances, finding that the grant of CNAI is governed by Administrative Order No. 135 (AO 135) and Department of Budget and Management Budget Circular No. 2006-1 (BC 2006-1), which limit the grant of CNAI to rank-and-file employees. Petitioners appealed to the COA Commission Proper (COA-CP), arguing that Joint Resolution No. 4 (JR 4), s. 2009 of the Senate and House of Representatives, specifically Item 4(h)(ii)(aa), allows the grant of CNAI to both management and rank-and-file employees. The COA-CP affirmed the disallowances in its Assailed Decision, ruling that JR 4’s provision is not an automatic grant and is dependent on guidelines to be jointly issued by the Civil Service Commission and the DBM, which were not yet issued at the time of the grant. Petitioners’ motion for reconsideration was denied.

ISSUE

1. Whether the COA committed grave abuse of discretion when it affirmed the disallowance of CNAI paid to managerial employees of NIA.
2. Whether petitioners may be excused from refund on the basis of good faith.

RULING

1. The COA did not commit grave abuse of discretion. The disallowance was based on AO 135 and BC 2006-1, which explicitly limit the grant of CNAI to rank-and-file employees. Petitioners’ reliance on Item 4(h)(ii)(aa) of JR 4 is misplaced. While this provision states that CNAI “may be granted to both management and rank-and-file employees,” its effectivity is conditioned by Item 17(b) of the same JR 4, which requires the CSC and DBM to jointly formulate guidelines for its implementation. No such joint guidelines were issued at the time NIA granted the CNAI to its managerial employees. Therefore, the existing and applicable rules at the time were AO 135 and BC 2006-1, which prohibited the grant to managerial employees.
2. Petitioners are not excused from refund on the basis of good faith. The disallowed transactions were contrary to existing rules and regulations (AO 135 and BC 2006-1) that were clear and unambiguous in limiting CNAI to rank-and-file employees. Ignorance of the law excuses no one. Furthermore, petitioners, as responsible officers, are presumed to know the relevant rules governing the grant of incentives. Their participation in approving, certifying, and receiving the disallowed amounts makes them liable to refund, as there was no showing that they acted in good faith, given the clear illegality of the grant under the then-prevailing rules.