TL;DR
The Supreme Court ruled that municipal officers Raquel Melloria and Eduarda Casador, acting as certifying officers, are not personally liable to return disallowed funds because they performed ministerial duties in good faith. While the Commission on Audit (COA) correctly disallowed excess cash advances for intelligence funds, the Court recognized that these officers, in their roles as Municipal Accountant and Treasurer, merely certified fund availability and allotment obligation, not the legality of the disbursement itself. This decision clarifies that certifying officers are protected from liability when performing routine duties without direct involvement in illegal transactions, provided they act in good faith and with due diligence.
Exceeding Limits: When Confidential Fund Disbursements Clash with Ministerial Duty
In the Municipality of Laak, Compostela Valley, a discrepancy arose concerning the allocation of intelligence and confidential funds. Mayor Reynaldo Navarro took cash advances amounting to PHP 4,100,000.00 for these activities in 2011. However, the Commission on Audit (COA) flagged this amount, issuing a Notice of Disallowance (ND) for PHP 2,600,000.00, citing a Department of Interior and Local Government (DILG) memorandum circular that limits such funds. This circular, DILG MC No. 99-65, stipulates that intelligence and confidential funds should not exceed 30% of the peace and order budget or 3% of the total annual appropriations, whichever is lower. The COA determined that Laak had exceeded this limit. Consequently, Raquel C. Melloria, the Municipal Accountant, and Eduarda A. Casador, the Municipal Treasurer, along with the Mayor and the Municipal Budget Officer, were held solidarily liable for the disallowed amount.
The COA’s audit revealed that the Municipality’s peace and order program budget was PHP 18,093,705.00. However, the COA subtracted PHP 13,093,705.00 allocated for human rights advocacy and community development, deeming these programs outside the scope of ‘peace and order efforts’ as defined by DILG MC No. 99-65. This reduced the base for calculating the 30% limit to PHP 5,000,000.00, resulting in a maximum allowable intelligence fund of PHP 1,500,000.00. The COA applied the principle of ejusdem generis, arguing that programs not similar to those listed in Item II.4 of DILG MC No. 99-65 should be excluded from the peace and order budget for the purpose of calculating the intelligence fund limit. Item II.4 of DILG MC No. 99-65 specifies that peace and order disbursements, excluding intelligence funds, should include, but are not limited to:
4. Disbursements from the allocation for peace and order concerns net of funds for Intelligence or Confidential undertakings shall include, but not limited to, the following: (a) purchase of firearms and other relevant equipment; (b) payment of allowances, hospitalization benefits and training subsidies; and (c) other Maintenance and Other Operating Expenditures, in favor of the personnel of the Philippine National Police, Bureau of Fire Protection and Bureau of Jail Management and Penology.
Melloria and Casador, as certifying officers, were implicated due to their roles in certifying the availability of funds and obligating the allotment. They contested the COA’s decision, arguing that the human rights and community development programs should be considered part of peace and order efforts and that they acted in good faith. The Supreme Court ultimately sided with the COA on the disallowance itself, affirming the fund limit calculation. However, the Court diverged on the liability of Melloria and Casador.
The Supreme Court emphasized the principle of according great weight to the factual findings of administrative bodies like the COA, especially in their area of expertise. The Court agreed with the COA’s interpretation of DILG MC No. 99-65 and the application of ejusdem generis. It held that the human rights advocacy and community development programs were not sufficiently linked to the enumerated examples of peace and order programs in the DILG circular. Therefore, the COA was correct in disallowing the excess PHP 2,600,000.00.
Despite upholding the disallowance, the Supreme Court crucially distinguished the liability of Melloria and Casador. The Court invoked Sections 38 and 39 of the Administrative Code of 1987 and Sections 102 and 103 of the Government Auditing Code of the Philippines, which address the liability of public officers. It highlighted the concept of good faith and the distinction between primary and secondary liability. Crucially, Rule 2(a) of the rules of return in Madera v. Commission on Audit states that certifying officers acting in good faith, in regular performance of official functions, and with due diligence are not civilly liable to return disallowed amounts.
The Court determined that Melloria and Casador were performing ministerial duties when they certified the allotment obligation and fund availability. These duties, the Court reasoned, did not involve judging the legality of the disbursement itself, which was the Mayor’s responsibility. Referencing Celeste v. Commission on Audit and Alejandrino v. Commission on Audit, the Court reiterated that certifying officers are presumed to act in good faith when attesting to facts based on records and are not involved in policymaking or decision-making regarding the disallowed transaction. The Court concluded that holding ministerial officers liable in this case would be unjust, especially when they did not directly benefit from the disallowed disbursement and acted within their prescribed roles. Thus, while the disallowance stood, Melloria and Casador were excused from personal liability due to their good faith performance of ministerial duties.
FAQs
| What was the central issue in this case? | The core issue was whether the COA correctly disallowed a portion of the Municipality of Laak’s intelligence and confidential funds for exceeding the prescribed limit, and whether the Municipal Accountant and Treasurer should be held personally liable for this disallowance. |
| What is DILG MC No. 99-65? | DILG MC No. 99-65 is a memorandum circular issued by the Department of Interior and Local Government that sets the guidelines and limitations for the use of intelligence and confidential funds by local government units, including the percentage limits based on peace and order budgets or total annual appropriations. |
| What does ‘ejusdem generis’ mean and how was it applied? | ‘Ejusdem generis’ is a legal principle meaning ‘of the same kind.’ The COA applied it to interpret Item II.4 of DILG MC No. 99-65, stating that peace and order programs should be limited to those of the same nature as the examples listed in the circular (firearms, allowances for PNP/BFP/BJMP personnel, etc.), thus excluding human rights and community development programs for the purpose of calculating the intelligence fund limit. |
| What are ministerial duties? | Ministerial duties are those that require no exercise of discretion or judgment; they are performed in a prescribed manner in obedience to legal authority. In this case, the certifying officers’ duties of verifying fund availability and allotment were considered ministerial. |
| What is the ‘good faith’ exception in this context? | The ‘good faith’ exception, particularly as clarified in Madera v. COA, protects public officers from personal liability for disallowed amounts if they acted honestly, without malice, and in the regular performance of their duties, even if the disbursement is ultimately deemed illegal. |
| Who remains liable for the disallowed amount? | While the Municipal Accountant and Treasurer were excused, the decision implies that other officials involved, particularly those who authorized and approved the disbursement exceeding the legal limit (like the Mayor and potentially the Budget Officer), might still be liable for the disallowed amount. The decision focused on excusing the certifying officers due to their ministerial roles and good faith. |
For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.
Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
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