G.R. No. 237987 - Department of Public Works and Highways, Region IV-A vs. Commission on Audit

Case Summary (G.R. No. 237987)

Petitioner and Respondent

Petitioners: Department of Public Works and Highways Region IV-A; Genevieve E. Cuaresma
Respondent: Commission on Audit

Key Dates

December 16, 2008: DPWH Central Office memorandum authorizes 2008 CNA Incentive
December 14, 2009: COA Regional Office issues Notice of Disallowance (ND No. 09-01-101-(09))
May 26, 2010: DPWH IV-A files appeal with COA IV-A
October 21, 2013: COA IV-A Decision No. 2013-29 affirms disallowance
November 10, 2016: COA Proper Decision No. 2016-377 denies petition for review
December 27, 2017: COA Resolution No. 2017-458 denies motion for reconsideration
March 19, 2019: Supreme Court issues decision under 1987 Constitution

Applicable Law

1987 Philippine Constitution, Article IX-D (Commission on Audit’s mandate)
Rules of Court, Rule 64, Section 1 (certiorari)
Public Sector Labor-Management Council Resolution No. 4, Series of 2002
Administrative Order No. 135, Series of 2005
Department of Budget and Management Budget Circular No. 2006-1
Civil Code, Article 22 (unjust enrichment)

Factual Background

Secretary Ebdane’s December 16, 2008 memorandum, pursuant to A.O. No. 135 and PSLMC Resolution No. 4, authorized payment of CNA Incentive to rank-and-file DPWH employees from “savings generated from the MOOE, completed projects and EAO,” subject to accounting rules. DPWH Region IV-A released ₱3,915,000 in CNA Incentive. COA auditors later disallowed the entire amount because it was charged to Engineering and Administrative Overhead (EAO) instead of Maintenance and Other Operating Expenses (MOOE), contrary to DBM Circular No. 2006-1.

Procedural History

COA IV-A issued Notice of Disallowance.
DPWH IV-A appealed; COA IV-A Decision No. 2013-29 (Oct. 21, 2013) affirmed disallowance, noting MOOE as sole funding source and rank-and-file eligibility only.
Employees Association petitioned COA Proper; Decision No. 2016-377 (Nov. 10, 2016) denied review, upholding the violation of DBM Circular No. 2006-1 and absence of proof of cost-cutting measures.
Motion for reconsideration denied by COA Resolution No. 2017-458 (Dec. 27, 2017); certified and approving officers held liable, while “passive recipients” were excused from refund.
Cuaresma filed certiorari with the Supreme Court.

Issues Presented

I. Validity of the CNA Incentive under governing laws and regulations
II. Alleged grave abuse of discretion by COA in denying reconsideration and affirming disallowance
III. Alleged grave abuse of discretion in exempting passive recipients from liability while holding officers accountable

Supreme Court’s Ruling on Disallowance

The COA acted within its constitutional mandate (1987 Constitution, Art. IX-D) to guard public funds and enforce auditing rules. DBM Circular No. 2006-1 explicitly requires CNA Incentive to be sourced “solely from savings from released MOOE allotments,” subject to conditions. Here, the ₱3,915,000 was charged to EAO, in clear violation of the Circular. Arguments relying on budget hearing discussions or alleged selective enforcement failed:

Budget hearing remarks addressed 2011 GAA, not 2008 disbursements.
No evidence of intentional discrimination; selective enforcement claim rejected.
Prior allowance of 2007 CNA Incentive, if erroneous, cannot estop COA from safeguarding funds.

Liability of Approving/Certifying Officers

Under PSLMC Resolution No. 4, A.O. 135, and DBM Circular No. 2006-1, Cuaresma and other certifying/approving officers were duty-bound to verify compliance before authorizing disbursement. Their failure to ensure MOOE as the sole source constitutes grave abuse of discretion.

Unjust Enrichment and Employee Liabilit

Case Syllabus (G.R. No. 237987)

Facts

On December 16, 2008, DPWH Secretary Hermogenes E. Ebdane, Jr. issued a memorandum authorizing the grant of the Collective Negotiation Agreement (CNA) Incentive to rank-and-file employees of DPWH for calendar year 2008.
The memorandum provided that the CNA Incentive “shall be paid out of savings generated from the Maintenance and Other Operating Expenses (MOOE), completed projects and Engineering and Administrative Overhead (EAO) of each office…, subject to the usual accounting and auditing rules and regulations.”
The memorandum cited Administrative Order No. 135, Series of 2005 and PSLMC Resolution No. 04, Series of 2002 as its legal bases.
DPWH Region IV-A released P3,915,000.00 as CNA Incentive for 2008, charging the amount to its EAO account.
On December 14, 2009, COA Regional Office IV-A issued Notice of Disallowance (ND) No. 09-01-101-(09), disallowing the P3,915,000.00 because it was paid out of EAO in violation of DBM Budget Circular No. 2006-1, which limits the CNA Incentive funding source exclusively to MOOE savings.
COA IV-A held liable certain DPWH IV-A officers, including Chief Accountant Genevieve E. Cuaresma, for certifying fund availability and validity of the obligation.

Procedural History

January 6, 2010: DPWH IV-A received ND No. 09-01-101-(09).
May 26, 2010: Regional Director Marcelina N. Ocampo appealed to COA IV-A.
October 21, 2013: COA IV-A, in Decision No. 2013-29, dismissed the appeal, affirmed the ND, and ruled the incentive illegally charged to EAO and granted to non-rank-and-file employees.
DPWH IV-A Employees Association, through President Engr. Diosdado J. Villanueva, filed a petition for review to the COA Proper.
November 10, 2016: COA en banc, in Decision No. 2016-377, denied the petition for review, affirmed ND No. 09-01-101-(09), and upheld the disallowance for misuse of EAO savings and failure to prove cost-cutting measures.
December 27, 2017: COA en banc, in Resolution No. 2017-458, denied the motion for reconsideration with finality, maintained liability of approving and certifying officers, but relieved passive recipients from refunding the incentive.
February 28, 2018: Cuaresma, among those held liable, received a copy of the final COA resolution and filed a petition for certiorari under Rule 64, Section 1 of the Rules of Court.

Issues

Whether the grant of the CNA Incentive was valid and supported by law and pertinent rules and regulations.
Whether COA committed grave abuse of discretion or acted without or in excess of jur