G.R. No. 252369 . February 07, 2023
ATTY. ASIS G. PEREZ, AS THEN DIRECTOR OF BUREAU OF FISHERIES AND AQUATIC RESOURCES (BFAR), ATTY. BENJAMIN F.S. TABIOS, JR., AS THEN OFFICER-IN-CHARGE-ASSISTANT DIRECTOR FOR ADMINISTRATIVE SERVICES; LINA F. ZULUETA, OIC-CHIEF ACCOUNTANT, AND JERICARDO S. MONDRAGON, PRESIDENT AND ATTORNEY-IN-FACT OF EMPLOYEES UNION; ALL OF THE BUREAU OF FISHERIES AND AQUATIC RESOURCES EMPLOYEES, PETITIONERS, VS. HON. MICHAEL G. AGUINALDO, CHAIRPERSON, COMMISSION ON AUDIT (COA), ROLAND C. PONDOC, COMMISSIONER-COA, AND JOSE A. FABIA, COMMISSIONER-COA, RESPONDENTS.

FACTS

On December 8, 2011, the Bureau of Fisheries and Aquatic Resources (BFAR) paid 351 of its officers and employees a total of ₱20,595,549.99, equivalent to ₱60,000.00 each, as Collective Negotiation Agreement (CNA) incentives for calendar year 2011. On June 10, 2014, the Commission on Audit (COA) Audit Team issued Notice of Disallowance No. 14-05-101(11), disallowing ₱12,285,000.00 for being in excess of the ₱25,000.00 ceiling per employee under Item 3.5 of Department of Budget and Management (DBM) Budget Circular No. 2011-5 dated December 26, 2011. The ND held liable BFAR Director Atty. Asis G. Perez, Assistant Director Atty. Benjamin F.S. Tabios, Jr., OIC-Chief Accountant Lina F. Zulueta, Employees Union President Jericardo S. Mondragon, and the recipient employees. Petitioners appealed, arguing DBM BC No. 2011-5 could not be applied retroactively as the payment was made on December 8, 2011, prior to the circular’s issuance on December 26, 2011, and invoked good faith. The COA National Government Sector Director denied the appeal for being filed 183 days from receipt of the ND, beyond the 180-day reglementary period. The COA Proper, in Decision No. 2020-160 dated January 28, 2020, affirmed the ND, noting the BFAR also violated DBM BC No. 2006-1, which mandates CNA incentives be paid only after the end of the year.

ISSUE

1. Whether the ₱25,000.00 ceiling under DBM BC No. 2011-5 dated December 26, 2011, may be retroactively applied to the CNA incentives paid to petitioners on December 8, 2011.
2. Whether petitioners are liable to return the disallowed excess amounts.

RULING

The Court upheld the Notice of Disallowance but ruled petitioners are not liable to return the amounts received.
1. On the first issue, the Court, citing Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) v. Abad, ruled that DBM BC No. 2011-5 cannot be applied retroactively. The CNA incentives were paid on December 8, 2011, and had already vested in favor of the employees before the circular setting the ₱25,000.00 ceiling was issued on December 26, 2011. However, the disallowance was sustained on a separate, valid ground: the BFAR violated Item No. 5.7 of DBM BC No. 2006-1, which mandates that CNA incentives “shall be paid as a one-time benefit after the end of the year.” The BFAR’s payment on December 8, 2011, was premature and contrary to this existing rule.
2. On the second issue, the Court ruled that the petitioners-payees (recipient employees) are not liable to return the disallowed amounts. Following the doctrine in Madera v. Commission on Audit, recipients who received the disallowed amounts in good faith and without knowledge of the irregularities in its grant are not required to refund. The Court found the employees acted in good faith as they received the incentive pursuant to a valid CNA and prior to the issuance of the limiting circular. Regarding the approving officers (Perez, Tabios, Jr., Zulueta, and Mondragon), the Court, applying Philippine Health Insurance Corporation v. Commission on Audit, ruled they are not liable for refund if they acted in good faith and in the regular performance of official duties, with no clear showing of bad faith, malice, or gross negligence. The Court found no such showing, noting the payment was made under a valid CNA and before the new ceiling was imposed.