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**Facts:**
From 2008 to 2011, the Inter-Country Adoption Board (ICAB) granted Collective Negotiations Agreement (CNA) Incentives to its employees under DBM Budget Circular (BC) No. 2006-1 and Article XIII of the CNA. Section 5.7 of DBM BC No. 2006-1 mandated the incentive to be a one-time benefit post-year-end. Subsequently, on December 26, 2011, DBM BC No. 2011-5 limited the CNA Incentive to P25,000.00 per employee.
During a post-audit, Supervising Auditor Lucena D. Gana and Audit Team Leader Johnny S. Datug disallowed the 2011 excess CNA Incentives, observing:
1. ICAB unlawfully paid CNA Incentives twice in 2011.
2. Payments exceeded the P25,000.00 cap.
On November 28 and December 23, 2011, initial and final payments were made before the DBM’s December 26, 2011 circular, imposing a P25,000.00 limit.
Abejo, among others, was held liable for excess payments through Notice of Disallowance No. 2012-002-101-(11) on February 28, 2012.
She claimed compliance with DBM BC No. 2006-1 and DBM Circular Letter 2011-9 in her appeal. The COA – National Government Sector denied this appeal, affirming the disallowance for twice granting CNA Incentives before year-end, exceeding P25,000.00.
Procedural Posture:
1. **December 14, 2015**: COA – National Government Sector affirmed the disallowance.
2. **January 27, 2020**: COA Proper affirmed the denial.
3. **Petition for Certiorari filed**: Abejo charged COA with gross abuse of discretion.
In defense, the OSG cited violation of DBM BC Nos. 2006-1 and 2011-5 conditions: improper pre-determined payment, dual payments within the same year, and excess disbursements.
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**Issues:**
1. Whether COA’s Decision No. 2020-127 validly disallowed the disbursement of P236,500.00 as CNA Incentives.
2. If petitioner, in her approving capacity, is solidarily liable to return the disallowed amount.
3. Petitioner’s personal liability for the excess amount received.
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**Court’s Decision:**
**Issue 1:** The Supreme Court upheld the disallowance. Petitioner violated DBM BC No. 2006-1 by not adhering to a one-time allowance post-year-end, crucially breaching the P25,000.00 cap under DBM BC No. 2011-5.
**Issue 2:** As an approving authority, petitioner is not maliciously or grossly negligent. Following jurisprudence in Madera v. COA and Montejo v. COA, the absence of gross negligent precludes solidary liability.
**Issue 3:** Petitioner is not personally liable for the excess amount received, given the proper basis in law, albeit procedural technicalities in grant. Per Abellanosa v. COA and Rule 2c of Madera, amounts genuinely correlated with services rendered, coupled with the lawful foundation, exonerate her from reimbursal liabilities.
Therefore, the Notice of Disallowance remains, petitioner, despite procedural faults, escapes solidary and personal financial restitution due to good faith.
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**Doctrine:**
**1. One-Time Year-End Disbursement** – DBM BC No. 2006-1 mandates CNA Incentive as a single, year-end benefit.
**2. Liability for Excessive Incentives** – Approving officers without compromise must heed DBM caps to avoid disbursement disallowance.
**3. Good Faith in Administrative Functions** – Solidary liability exempts diligent approval authorities, absent bad faith or gross negligence.
**4. Linked Lawful Basis** – Recipients of incentives, properly grounded in law and representing service-related compensation, merit protection against return liabilities.
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**Class Notes:**
– **Good Faith & Liability:** Public officials approving disbursements are shielded from liability absent gross negligence (Madera v. COA).
– **One-Time Disbursement Policy:** Incentives under DBM BC No. 2006-1 are yearly once, conditioned against surpassing limits stipulated in DBM BC No. 2011-5.
– **Return of Disbursements:** Recipients can be relieved from repayment provided incentives are legally grounded and tied to service functions.
**Statutory References:**
1. DBM BC No. 2006-1 – CNA Incentive rules.
2. DBM BC No. 2011-5 – Imposition of P25,000.00 cap.
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**Historical Background:**
The case highlights a period (2008-2011) favoring broad utilization of cost-cutting savings for employee benefits until DBM BC No. 2011-5 imposed critical financial cap adjustments. It underscores evolving administrative jurisprudence on fiscal oversight within Philippine public entities, setting clearer accountability parameters post-2011 within organizational disbursements in public service.
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