G.R. No. 238882 , January 05, 2021
Juan B. Ngalob, in his capacity as Vice-Chairman of the Regional Development Council – Cordillera Administrative Region [RDC-CAR] and former Regional Director of the National Economic and Development Authority-Cordillera Administrative Region (NEDA-CAR), Herminia B. Samuel, in her capacity as Regional Accountant, Paterno C. Laboy, in his capacity as former Chief Administrative Officer, and all payees in the payroll (as recipients of the year-end incentives), Petitioners, vs. Commission on Audit, Respondent.

FACTS

The Cordillera Administrative Region (CAR) – Regional Development Council (RDC) Executive Committee issued RDC ExCom Resolution No. 73 on August 28, 2009, authorizing the grant of incentives covering January to June 2008 and quarterly releases for 2009 to compensate officials and secretariat for “extra work” in implementing the RDC-CAR Work Program on Development and Autonomy, disbursing P1,095,000.00. On December 10, 2010, RDC ExCom issued Resolution No. CAR-103, providing a year-end incentive in lieu of honoraria, disbursing P1,080,000.00. Upon audit, the Commission on Audit (COA) issued Notice of Disallowance (ND) No. 11-001-101(09) dated April 13, 2011, for the P1,095,000.00, and ND No. 11-005-101(10) dated June 21, 2011, for the P1,080,000.00, both for lack of legal basis. Petitioners Juan B. Ngalob (who approved the payment), Herminia B. Samuel (who certified supporting documents), Paterno C. Laboy (who certified charges as necessary and lawful), and all payees were held liable. Ngalob appealed, arguing the task of social preparation for autonomy was a special project entitling officials to honoraria under DBM Circular No. 2007-2 and relevant General Appropriations Acts (GAAs), funded by a 2007 GAA allocation. The COA-CAR and later the COA Proper denied the appeals, ruling the task was a regular function under EO No. 325, that there was no appropriation for incentives in the Personal Services account, that the disbursements were improperly charged to MOOE, and that basic requirements for granting honoraria were not complied with. The COA Proper also directed the forwarding of records to the Ombudsman for possible investigation.

ISSUE

1. Whether the COA acted with grave abuse of discretion in upholding the disallowance.
2. Whether the COA acted with grave abuse of discretion in affirming petitioners’ liability.

RULING

The Petition lacks merit. On the first issue, the COA did not commit grave abuse of discretion. The burden of proving the legality of the grant rests with the granting agency or claiming employees. Petitioners failed to prove that “pursuing social preparation of the CAR into an autonomous region” constituted a “special project” as defined by DBM Circular No. 2007-2, which requires an inter-office or intra-office undertaking not among regular functions, with a detailed project plan including objectives, deliverables, timetable, and staffing. The task is a regular function of the RDC-CAR under Section 4(j) of EO No. 325. Furthermore, the incentives lacked legal basis as there was no appropriation for them under the agency’s Personal Services account in the 2009 and 2010 GAAs, and they were improperly charged against Maintenance and Other Operating Expenses (MOOE). The RDC-CAR’s reliance on DBM Circulars was misplaced as the basic requirements for granting honoraria were not met.
On the second issue, the COA did not commit grave abuse of discretion in affirming petitioners’ liability. All petitioners are liable to return the disallowed amounts. Approving and certifying officers (Ngalob, Samuel, Laboy) are liable for their respective roles in the illegal expenditure under Section 43 of the Administrative Code of 1987. Their defense of good faith was rejected because they disregarded clear legal prohibitions; the grant was based solely on an RDC ExCom Resolution without statutory authority, violating Article IX-B, Section 8 of the 1987 Constitution . The payees (recipients) are also liable to return the amounts received under the principle of solutio indebiti, as they received payments without legal right. While the Court discussed the possibility of excusing payees in good faith from return under certain circumstances, a definitive ruling was not made as the factual basis for such good faith was not established in the case. The COA Proper’s directive to forward the case to the Ombudsman was also upheld as within its authority.