CASE #123
DEVELOPMENT BANK OF THE PHILIPPINES vs. COMMISSION ON AUDIT
G.R. No. 216538, April 18, 2017
FACTS:
Under the Motor Vehicle Lease-Purchase Plan (RR-MVLPP) for Government Financial
Institution (GFI) officers approved by the Monetary Board and Office of the President, forming part of
the package of fringe benefits, the GFI concerned was to finance the acquisition of brand-new motor
vehicles to be leased or sold to the GFI's eligible officers. The officers availing themselves of the
benefits under the plan were required to execute a Lease Purchase Agreement with maximum
periods of 10 years, and the aggregate monthly rentals for one year of not exceeding 10% of the
acquisition cost of each motor vehicle would be payable through salary deduction. At the end of the
lease periods, the GFI would transfer the ownership over the vehicles to the officers concerned, but
should the officers opt to purchase the vehicles prior to the termination of the lease periods, the
purchase prices would be equal to the acquisition costs minus the rentals already paid.
Among the GFIs covered by the RR-MVLPP was petitioner Development Bank of the
Philippines (DBP). Commission on Audit (COA) disallowed the 50% subsidy granted by DBP to its
officers who had availed themselves of the benefits granted under the MVLPP. The supervising
auditor opined that because Board Resolution No. 0246 ran contrary to the RR-MVLPP, DBP should
cease its practice of requiring officers-availees to pay only 50% of the cost of the vehicle or totalling
P64,436,931.61; and that DBP should oblige all its officers-availees to pay the remaining 50% cost of
their vehicles. The Notice of Disallowance declared the Members of the Board of Directors, Certify
payroll/HRM, Accountant, and Cashier of DBP liable based on their respective participation in the
subject transaction.
Further, the multi-purpose loan and special dividend in DBP's Resolution No. 0246 were not
sanctioned by the Monetary Board Resolution No. 132 (RR-MVLPP).
ISSUES:
1. Whether DBP had the authority to grant multi-purpose loans and special dividends from the
MVLPP car funds.
2. Whether the persons identified by the COA as liable should be ordered to refund the total
amounts disallowed by the COA.
HELD:
No for both.
Issue #1:
The Constitution vests enough latitude in the COA, as the guardian of public funds, to
determine, prevent and disallow irregular, unnecessary, excessive, extravagant or unconscionable
expenditures of government fund. COA's finding that Resolution No. 0246 was inconsistent with the
RR-MVLPP, resulting in the disallowance of the amount of P64,436,931.61 representing 50% of the
costs of the car subsidy granted by DBP under its MVLPP, should not be disturbed.
The car fund was limited to the acquisition of the brand new motor vehicles to be leased or
sold to eligible officers. That purpose could not be expanded to DBP's granting of multi-purpose loans
to its officers-availees and to investing the car funds in money market placements and trust
instruments even if doing so was aimed at aiding its officers-availees in their acquisition of motor
vehicles. On face value, a multi-purpose loan can fund any endeavor or luxury desired by the availee
other than a car. The singular purpose of the RR-MVLPP and the Fund that it authorizes to create is
the provision of a loan for a car. The expansion of the purpose of the loan is absolutely unwarranted
under the RR-MVLPP. Hence, disallowance was proper.
Issue #2:
It is settled that the recipients or payees of salaries, emoluments, benefits, and allowances
subsequently disallowed need not refund the disallowed amounts that they had received in good faith.
It is equally settled that the officers taking part in the approval of the disallowed salaries and benefits
are required to refund only the amounts thereof received when they are found to be in bad faith.
The Notice of Disallowance nowhere discussed the respective liabilities of the persons thereby
identified by the COA except for the payees of the MVLPP car funds; neither did the COA make a
factual finding on the participation of those it had identified aside from the payees, or state the
grounds and the legal basis why said individuals were liable. The COA did not also substantiate the
imputation of bad faith against the approving officers and the officers-availees. Without any evidence
being presented by the COA to show that the individual beneficiaries and the approving officers had
acted in bad faith and with gross negligence in the performance of their duties in relation to the
MVLPP, the persons identified by the COA to be liable for the disallowances should not be ordered to
refund the amounts or restitute the benefits disallowed by the COA.
