G.R. No. 238940 - Abella vs. Commission on Audit

The Department of Budget and Management (DBM) Regional Office No. XIII disapproved the separate item for extraordinary and miscellaneous expenses (EME) in the Butuan City annual budget for the fiscal year 2000.
The disapproval was based on Section 325(h) of Republic Act No. 7160 (Local Government Code of 1991), which prohibits a separate appropriation for funds that duplicate discretionary funds.
The DBM explained that the EME is essentially part of the discretionary expenses of the local chief executive and, therefore, cannot be appropriated independently.

Despite the DBM’s disapproval and subsequent affirmation in its Legal Opinion No. L-B-2001-10, the Sangguniang Panlungsod (SP) of Butuan City enacted SP Ordinance No. 2557-2004, granting EME allowances to certain officials.
Disbursements of EME were made starting with payments in 2004 and continued until at least 2010, despite the absence of a proper legal basis.

On January 12, 2006, COA Regional Office No. XIII issued ND No. 2006-001 (2004) disallowing EME disbursements made in June and July 2004, noting lack of legal basis.
In March 2009, eight more NDs (2009 NDs) were issued disallowing payments for 2008, amounting to P2,177,463.16.
On January 24, 2012, 87 additional NDs (2012 NDs) were issued, covering disallowances for all EME disbursements between 2004 and 2009.

Petitioners, as recipients held liable to settle the disallowances, appealed to the COA Regional Office No. XIII on July 31, 2012, covering both the 2012 NDs and seven of the 2009 NDs.
The COA Regional Office, in its Decision No. 2013-007 dated May 6, 2013, denied the consolidated appeals on the basis that the disallowances were in line with DBM Legal Opinion No. L-B-2001-10.
Subsequent appeals before the COA Proper culminated in the denial of petitioners’ appeal in Decision No. 2016-488 and Resolution No. 2018-012, thus sustaining the disallowances.

Petitioners contended that the long period for the resolution of the COA proceedings—over a year and four months at the COA Regional Office and an additional three years and seven months at the COA Proper—violated their right to speedy disposition of cases.
They argued that they should not be bound by the DBM Legal Opinion since they were not signatories to the SP’s query that prompted its issuance.
Petitioners claimed that the disallowances struck at their fiscal autonomy as guaranteed by the Constitution and invoked good faith as passive recipients exculpating them from the refund liability.

The COA maintained that the time taken to resolve the appeals was reasonable given the complexity and volume (94 disallowances spanning transactions from 2004 to 2009) involved in the audit.
It justified the disallowances on the basis that the EME funds were improperly appropriated in violation of Section 325(h) and observed that the funds were essentially a circumvention of the limitations imposed on discretionary funds.
The COA further held that petitioners, regardless of their good faith as passive recipients, were liable to refund amounts that were disbursed without legal basis.

Whether there was a violation of the right to speedy disposition of cases due to the extended period taken to resolve the appeals.
Whether the issuance of the Notices of Disallowance (NDs) for EME expenses was proper and in accordance with existing laws and regulations.
Whether the invocation of good faith by the petitioners as passive recipients can exonerate them from the liability to refund the disallowed EME amounts.