MANILA, Philippines — The Supreme Court (SC) En Banc affirmed the disallowance of over PHP 1.57 million in funds administered by the National Commission on Indigenous Peoples (NCIP) Regional Office, decisively ruling that financial assistance designated for Indigenous Peoples (IPs) is a dedicated trust fund that must be used strictly for its intended purpose and cannot be diverted for administrative use. The decision, penned by Associate Justice M. Lopez on May 20, 2025, partially absolved one NCIP official but firmly upheld the core audit findings of the Commission on Audit (COA).
The controversy arose from a 2009 Memorandum of Agreement (MOA) between two mining corporations, the Mamanwa Tribes of Surigao del Norte, and the NCIP. The MOA stipulated that the mining companies would provide annual financial assistance, which was explicitly mandated to be “exclusively used for their Socio-Economic Projects for the IPs of Surigao del Norte.”
However, from 2013 to 2014, the NCIP Regional Office No. XIII disbursed the funds, totaling PHP 1,573,227.83, for its basic operating expenses, including salaries for support staff, office rent, travel costs, equipment purchases, and supplies. When the COA issued Notices of Disallowance (NDs), the parties attempted to fix the illegal spending by executing a subsequent Addendum to the MOA in September 2016—more than a year after the fact—which sought to retroactively expand the fund’s purpose to cover NCIP administrative costs.
The Supreme Court flatly rejected both the retroactive Addendum and the NCIP’s arguments. The Court stressed that the financial assistance was a trust fund governed by the fundamental principle of government auditing law: a trust fund must be “spent only for the specific purpose for which the trust was created or the funds received” under Section 4(3) of Presidential Decree No. 1445.
The Court held that using the IPs’ fund for the NCIP’s internal administrative costs—such as rent and salaries—was a plain disregard of the law and directly violated the MOA’s exclusive mandate for socio-economic projects. Allowing the after-the-fact Addendum to legitimize the expenditures, the Court warned, would establish a dangerous precedent, sanctioning the convenient circumvention of the trust fund principle merely by amending a contract after the diversion had already occurred. The integrity of funds specifically dedicated to marginalized communities, the Court held, must be strictly protected.
While affirming the disallowance, the SC modified the liability of the public officers involved. The Court held Ligaya Q. De Guzman, the former NCIP Chief of the Finance and Administrative Division, solidarily liable for the full disallowed amount. As the approving officer, her endorsement of disbursements for non-socio-economic projects, despite the clear restriction in the MOA, amounted to gross negligence, effectively negating the presumption of good faith.
Conversely, the Court absolved NCIP Accountant III Roselle A. Corvera-Cirunay of liability. Her role in merely certifying the availability of funds was deemed a purely ministerial duty, aligning with jurisprudence that limits an accountant’s accountability unless bad faith or falsification is proven.
The decision serves as a powerful reminder to all government agencies that their authority to administer specialized funds, particularly those dedicated to marginalized sectors like the Indigenous Peoples, demands unwavering fidelity to the law and the strict terms of the trust created.
