Corvera-Cirunay v. COA

G.R. No. 278177, May 20, 2025

EN BANC
M. Lopez, J.

DOCTRINE:

The financial assistance given to the NCIP for socio-economic projects constitutes a trust fund that cannot be illegally used for administrative and operating expenses, but only the approving officer, who acted with gross negligence in disregarding the law, is held solidarily liable, while the certifying officer, who performed a ministerial duty, is absolved.

FACTS:

Taganito Mining Corporation (TMC) and Taganito HPAL Nickel Corporation (THPAL) executed a Memorandum of Agreement (MOA) in November 2009 with the Mamanwa Tribes and the NCIP regarding the construction and operation of a nickel mineral processing plant within the ancestral domain of the Mamanwa Tribes. Item 5.6 of the MOA required THPAL to provide annual financial assistance of Two Million Pesos (P2,000,000.00) to a Trust Account established by the NCIP, which was stipulated “to be exclusively used for their Socio-Economic Projects for the [IPs] of Surigao del Norte” for the project’s duration.

From January 2013 to August 2014, NCIP Regional Office No. XIII used P1,422,445.89 of this financial assistance to cover its basic operating expenses, including salaries, rent, travel, equipment, and maintenance. Based on Audit Observation Memoranda (AOMs), the Commission on Audit (COA) issued five Notices of Disallowances (NDs) on May 26, 2015, totaling P1,573,227.83, on the ground that the funds were used for operating expenses and not for the intended purpose of socio-economic projects. Petitioners Roselle A. Corvera-Cirunay (NCIP Accountant III) and Ligaya Q. De Guzman (NCIP Chief, Finance and Administrative Division/Approving Officer) were held liable.

In their appeals, the petitioners argued that the disallowances were justified by the Mamanwa Tribe’s Resolusyon No. 14 and a subsequent Addendum to the MOA, executed in September 2016 (after the NDs), which retroactively expanded the use of the financial assistance to include NCIP’s Maintenance Operating and Other Expenses (MOOE). Although the COA Regional Director granted the appeal, the COA Proper reversed the ruling, upholding the NDs on the basis that trust funds must be spent strictly for the specific purpose for which they were created.

ISSUE(S):

1. Did the COA Proper commit grave abuse of discretion in affirming the Notices of Disallowances regarding the use of financial assistance for NCIP’s operating expenses?
2. Should the NCIP Chief, Finance and Administrative Division (Ligaya Q. De Guzman), and the NCIP Accountant III (Roselle A. Corvera-Cirunay) be held solidarily liable for the disallowed amounts?
3.  

RULING:

1. Did the COA Proper commit grave abuse of discretion in affirming the Notices of Disallowances regarding the use of financial assistance for NCIP’s operating expenses?

NO. Similar to the royalty payments under Republic Act No. 7842, the financial assistance constitutes a trust fund as expressly stated under Item No. 5.6(b) of the MOA:

5.6.b. Payment. The payments specified in the above paragraph shall be made by THPAL to the Trust Account established by [the] NCIP.

It is well-settled that trust funds held by any government agency must be “spent only for the specific purpose for which the trust was created or the funds received.” This is one of the fundamental principles governing the financial transactions and operations of any government agency as stated in Presidential Decree No. 1445 or the Government Auditing Code of the Philippines. Here, the questioned disbursements were taken from a Trust Account, specifically created “to be exclusively used for… [s]ocio-economic projects to benefit the IPs/ICCs of Surigao del Norte. Clearly, using the funds for NCIP Region No. XIII’s basic running costs—rent, equipment purchases, maintenance, communication, and supplies violated the law.

To stress, Resolusyon No. 14 was merely a recommendatory tribal issuance, which cannot be validly invoked to justify the disbursement of the financial assistance for purposes other than that specified in the MOA. Neither can the Addendum, which expanded the original purpose of the Trust Account, legitimize the illegal/irregular expenditures. It is noteworthy that the Addendum was executed only in November 2016 or more than a year after the issuance of the NDs in May 2015. The disallowed amounts were disbursed in 2013 and 2014. These circumstances hinder the Court to believe that the Addendum reflects the true intention of the parties as to the purpose of the financial assistance under the MOA… To allow such afterthought and alteration to the agreement in place would be to authorize the convenient circumvention of the trust fund principle under Section 4(3) of Presidential Decree No. 1445.

2. Should the NCIP Chief, Finance and Administrative Division (Ligaya Q. De Guzman), and the NCIP Accountant III (Roselle A. Corvera-Cirunay) be held solidarily liable for the disallowed amounts?

Yes, for Ligaya Q. De Guzman; No, for Roselle A. Corvera-Cirunay.The prevailing rule is that “[a]pproving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return [the disallowed amounts].” On the other hand, those “clearly shown to have acted in bad faith, malice, or gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable to return the net disallowed amount[.]

Here, Ligaya approved the disallowed transactions… without legal basis and proper justification. She cannot feign ignorance of the long-established principle under Section 4(3) of Presidential Decree No. 1445 that trust funds should be used only for the purpose for which the trust was created or the funds received. This plain disregard of the law negates the presumption of good faith and regularity on her part. Hence, her solidary liability for the disallowed amounts should be sustained.

On the other hand, as NCIP Accountant III, Roselle should be absolved from liability… Citing Celeste v. Commission on Audit, the Court ruled: ‘Those performing ministerial duties may be excused from the solidary liability to return. Specifically, the duty to certify the availability of funds and the completeness of signatures and supporting documents prior to payment is merely ministerial. There is no room to refuse to perform these duties if the documents were indeed complete and cash was available.’ Verily, no bad faith, malice, or gross negligence can be imputed against Roselle for merely certifying the availability of funds from the financial assistance.