Case Digest: National Housing Authority (NHA), represented by its General Manager, Marcelino P. Escalada, Jr., et al. v. Commission on Audit G.R. No. 239936 (Consolidated with G.R. No. 252584), June 21, 2022 Supreme Court, En Banc Ponente: Justice Ricardo R. Rosario

 

FACTS

The case stemmed from several Notices of Disallowance (NDs) issued by the Commission on Audit (COA) against the National Housing Authority (NHA) involving the payment of various allowances, bonuses, and other emoluments granted to NHA officers and employees for Calendar Years 2008 and 2009. COA found that these benefits were granted without legal authority and in violation of compensation laws and budgetary regulations. The NHA, together with its officials and rank-and-file employees represented by the Consolidated Union of Employees (CUE), questioned the disallowances before the COA Proper.

The COA affirmed the disallowances, holding that the benefits had no sufficient legal basis under existing laws. It ruled that the approving and certifying officers, as well as the recipient employees, were liable to refund the disallowed amounts. The NHA argued that it was authorized under its charter to determine and grant allowances and additional compensation to its personnel. It likewise maintained that the recipients received the benefits in good faith and should not be required to return them.

Unsatisfied with the COA's ruling, the NHA and its employees filed a Petition for Certiorari under Rule 64 in relation to Rule 65 before the Supreme Court. A separate petition was likewise filed questioning the Notice of Finality of Decision issued by COA. The principal issue before the Court was whether COA gravely abused its discretion in affirming the disallowance and in ordering the refund of the benefits received by the NHA officials and employees.

ISSUE

Whether or not the Commission on Audit gravely abused its discretion in affirming the Notices of Disallowance covering the allowances, bonuses, and other emoluments granted by the National Housing Authority to its officers and employees.

Whether or not the National Housing Authority had legal authority under its charter and existing compensation laws to grant the questioned benefits despite the restrictions imposed by the Salary Standardization Law, the General Appropriations Acts, and relevant executive issuances.

Whether or not the approving and certifying officers, as well as the recipient employees, may be held liable to refund the disallowed amounts under the rules laid down in Madera v. Commission on Audit and subsequent jurisprudence.

HELD

The Supreme Court DISMISSED the consolidated petitions and AFFIRMED the COA Decision. The Court ruled that the disallowed allowances, bonuses, and other benefits had no legal basis. Although the NHA Charter authorizes the agency to determine the compensation and allowances of its personnel, such authority is not absolute and must conform to the Salary Standardization Law (Republic Act No. 6758), the General Appropriations Acts for 2008 and 2009, and applicable executive issuances governing compensation in government-owned and controlled corporations. Administrative authority cannot override statutory limitations on government expenditures.

The Court explained that under the 1987 Constitution, particularly Article IX-D, the Commission on Audit is vested with the constitutional authority to examine, audit, and settle all accounts pertaining to government funds and expenditures. COA therefore acted within its constitutional mandate in issuing the Notices of Disallowance after finding that the benefits were granted without sufficient legal authority. The Court found no grave abuse of discretion on the part of COA in sustaining the disallowances.

Applying the doctrine in Madera v. Commission on Audit, the Court ruled that the approving and certifying officers were solidarily liable to return the disallowed amounts because they authorized the unlawful expenditures. The Court held that they failed to prove that they exercised the required diligence expected of public officials before approving the payment of the questioned benefits. Their good faith alone did not exempt them from liability under the standards established in Madera.

The Court further held that the payee-recipients were likewise individually liable to refund the amounts they personally received. Although they merely accepted the benefits, the Court found that the payments were unsupported by law and that none of the recognized exceptions under Madera justified their exemption from refund. Accordingly, the Supreme Court affirmed the COA Decision in its entirety and upheld both the validity of the disallowance and the corresponding refund liabilities of the responsible officers and recipients.