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DEVELOPMENT BANK OF PHILIPPINES v. COA

FACTS:

Petitioner Development Bank of the Philippines (DBP) implemented the Motor Vehicle Lease Purchase Plan (MVLPP) which granted a 50% subsidy to its officers who availed themselves of the benefits. The plan involved the acquisition of motor vehicles that would be leased or sold to qualified officers. The officers would enter into lease purchase agreements and make monthly rental payments through salary deduction. At the end of the lease period, ownership of the vehicles would be transferred to the officers. On July 30, 1992, DBP issued Circular No. 25 to establish the conditions for the MVLPP. In 2007, the Commission on Audit (COA) issued an Audit Observation Memorandum stating that DBP should require officers to pay the remaining 50% cost of their vehicles, which DBP contested. The case concerns the legality and compliance of the MVLPP.

The case also involves petitioners who assert that their constitutional rights to due process and speedy disposition of cases were violated by the COA. They claim that they were not given notice, hearing, and the opportunity to present evidence before the COA held them personally liable. They argue that the delay in issuing the Notice of Disallowance rendered it null and void. The petitioners further contend that the COA did not provide a legal and factual basis for disallowing their benefits under the MVLPP. They also question the authority of DBP to grant multi-purpose loans and special dividends, and argue that the COA is estopped from disallowing DBP's disbursements.

The petitioners in G.R. No. 216954 argue that they were not afforded due process and their constitutional rights were violated by the COA. They claim that they were not served with copies of relevant COA issuances, were not given notice of adverse findings, were not provided the opportunity to comment or submit evidence, and that the delay in issuing the Notice of Disallowance violated their right to speedy disposition of cases. However, the COA contends that they complied with the rules and served the Notice of Disallowance to each of the individuals liable, as required by the COA's Revised Rules of Procedure.

ISSUES:

  1. Whether or not the COA was estopped from disallowing DBP's disbursements from its MVLPP.

  2. Whether or not the persons identified by the COA as liable should be ordered to refund the total amounts disallowed by the COA.

  3. Whether the Commission on Audit (COA)'s disallowance of the amount representing the costs of the car subsidy granted by DBP under its Multi-Purpose Loan Program for Professionals (MVLPP) was valid.

  4. Whether DBP had the authority to grant multi-purpose loans and distribute dividends from the car funds intended for the acquisition of motor vehicles.

  5. Whether the Commission on Audit (COA) acted without jurisdiction or with grave abuse of discretion in disallowing the amount of P64,436,931.61 representing 50% of the acquisition costs of the vehicles granted under the MVLPP.

  6. Whether the COA is estopped from disallowing the expenses of the DBP relative to its MVLPP.

  7. Whether the persons liable, as identified by the COA, should be ordered to refund the total amount disallowed by the COA.

  8. Whether the officers-availees of the Motor Vehicle Loan Program (MVLPP) of the Development Bank of the Philippines (DBP) should be held liable for the disallowed amounts by the Commission on Audit (COA).

  9. Whether the claim of good faith on the part of the officers-availees is valid.

RULING:

  1. The consolidated petitions are partly meritorious.

  2. The petitioners in G.R. No. 216954 were not deprived of their rights to due process and speedy disposition of cases.

    • The petitioners were not denied due process because they were not served copies of any relevant issuances by the COA. The COA has the duty to serve copies of the Notice of Disallowance, orders, and decisions to the individuals to be held liable.
    • The petitioners had the opportunity to submit their joint motion for reconsideration and individual letters seeking reconsideration, which were considered by the COA. They were afforded the opportunity to explain their side and seek a reconsideration of the ruling.
    • The petitioners' claim of violation of their constitutional right to the speedy disposition of cases was unwarranted as there were no unjustified postponements or long periods of time without trial.

  6. The DBP had no authority to grant multi-purpose loans and special dividends from the MVLPP car funds.

    • The DBP's MVLPP granting multi-purpose loans to officers-availees as payment for the vehicles acquired contravened the provisions of the RR-MVLPP.
    • The COA's invocation of Memorandum Order No. 20 to defeat the provisions of Executive Order No. 81, as amended by Republic Act No. 8523, the basis of the MVLPP, was not erroneous.
    • The COA correctly disallowed the multi-purpose loans and special dividends granted under Resolution No. 0246 as they were not sanctioned by the RR-MVLPP.

  10. The disallowance made by the COA was valid. The Court upheld the COA's finding that DBP's Resolution No. 0246 was inconsistent with the RR-MVLPP, which resulted in the disallowance of the amount in question. The MVLPP funds were specifically designated for the acquisition of motor vehicles to be leased or sold to eligible officers, and thus their use for granting multi-purpose loans and investing in money market placements and trust instruments was considered unauthorized. DBP did not have the legal authority to use the car funds for purposes outside the specified scope of the RR-MVLPP.

  11. The COA did not act without jurisdiction or with grave abuse of discretion in disallowing the amount of P64,436,931.61 representing 50% of the acquisition costs of the vehicles granted under the MVLPP.

  12. The COA is not estopped from disallowing the expenses of the DBP relative to its MVLPP. The general rule is that the government is never estopped by the mistake or error of its agents. Exceptions to the general rule of non-estoppel may be allowed only in rare and unusual circumstances, and no exceptional circumstance existed in this case that warranted the application of estoppel against the COA.

  13. The persons liable, as identified by the COA, should not be ordered to refund the total amount disallowed by the COA. Recipients or payees of salaries, emoluments, benefits, and allowances subsequently disallowed need not refund the disallowed amounts if they received them in good faith. The officers taking part in the approval of disallowed salaries and benefits are required to refund only if they are found to be in bad faith and the disbursement was made in good faith. In this case, the COA failed to prove bad faith on the part of the individuals identified as liable, and the COA did not substantiate the imputation of bad faith against the approving officers and the officers-availees.

  14. The Supreme Court affirmed the decision of the Commission on Audit subject to modifications. The court held that the persons identified by the COA as liable, including the members of the Board of Directors, the Payroll Office, the Human Resources Management, the Accountant, the Cashier, and all the payees per the payrolls and schedules subjected to the audit, are not required to refund the disallowed amounts. The court considered the circumstances surrounding the implementation of the MVLPP and the lack of evidence showing bad faith or gross negligence on the part of the beneficiaries and approving officers. The claim of good faith was recognized, but only because the disallowances were made long after the disallowed availments were made and because there was no evidence of funds not fully returned.

PRINCIPLES:

  • Due process requires the opportunity to be heard and explain one's side. Lack of previous notice does not violate due process as long as there is an opportunity for defense.

  • The right to speedy disposition of cases requires proceedings to be conducted without vexatious delays.

  • Government agencies must comply with their duty to serve copies of relevant issuances to parties held liable.

  • Authorities must adhere to the provisions of laws and regulations in granting benefits and disbursements.

  • The COA has the discretion to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds. The Court generally upholds the COA's decisions in recognition of its expertise, and intervenes only if the COA acts without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction.

  • When the words and phrases of a statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says. The courts may not speculate as to the probable intent of the framers of the law, especially when the law is clear.

  • Trust funds shall be available and may be spent only for the specific purpose for which the trust was created or the funds received. Their nature as trust funds constitutes a limitation on their use or application.

  • Good faith is a valid defense if there is no evidence of bad faith or gross negligence.

  • The reliance on past positive findings of auditors may support the claim of good faith.

  • The lack of evidence of losses sustained and abuse of benefits may impact the liability of the officers-availees.

  • Availments made after a disallowance is issued would not be considered in favor of good faith.