Monetary Board Members Liable for Unauthorized Extraordinary Expenses

The Supreme Court has affirmed the Commission on Audit's (COA) disallowance of Extraordinary and Miscellaneous Expenses (EMEs) paid to ex officio members of the Monetary Board (MBM) of the Bangko Sentral ng Pilipinas (BSP). In Tetangco, Jr. v. Commission on Audit (G.R. No. 215061, June 6, 2017), the Court ruled that these officials cannot receive EMEs beyond what the General Appropriations Act (GAA) provides for their principal offices, and that their defense of good faith does not excuse their liability.

The Nature of Ex Officio Positions

The case involved BSP Governor Amando Tetangco, Jr., several cabinet members who served as ex officio members of the Monetary Board, and BSP employees who processed the EME payments. COA disallowed the EMEs totaling over P1.5 million, holding that the ex officio members were not entitled to additional EMEs from the BSP because they already received such allowances under the GAA as cabinet members.

The Court explained that an ex officio position is not a separate office but is annexed to the principal office. Since the ex officio members already received their EMEs from their respective departments, the additional EMEs from the BSP were irregular and unnecessary.

The Core Issue

The central question was whether COA gravely abused its discretion in disallowing the EMEs. The petitioners argued that COA erred because the disallowed expenses were incurred before COA Decision No. 2010-048 became final, and that their functions as MBMs were separate from their principal offices.

The Supreme Court ruled in favor of COA, finding no grave abuse of discretion. The Court noted that the irregularity of giving additional compensation to ex officio members was already settled by jurisprudence as early as 1991 in Civil Liberties Union v. Executive Secretary, followed by Dela Cruz v. COA and National Amnesty Commission v. COA.

Good Faith Defense Rejected

The petitioners invoked good faith in approving the EMEs, but the Court found this defense unavailing. Citing Section 2 of Republic Act No. 8791 (General Banking Law of 2000), the Court emphasized that bank officials must exercise the highest standards of integrity and performance.

The Court applied the rulings in Casal v. COA and Velasco v. COA, holding that the petitioners' patent disregard of existing laws, COA issuances, and settled jurisprudence amounted to gross negligence, which is inconsistent with the presumption of good faith.

Liability of Recipients

The Court also rejected petitioner Favila's argument that he should not be liable because he did not participate in approving the resolutions authorizing the EMEs. His liability arose from his receipt of the allowances in 2008 while he was an ex officio member. As a cabinet member, he was aware of the extent of benefits he was entitled to under the GAA.

Practical Takeaways

• Ex officio members cannot receive double compensation. Officials serving in ex officio capacities are entitled only to the allowances appropriated for their principal offices, not additional benefits from the agencies where they sit ex officio.
• Good faith is not a blanket defense. Approving officials who disregard clear laws, COA directives, and settled jurisprudence are considered grossly negligent and cannot claim good faith.
• Highest diligence applies to bank officials. Under the General Banking Law, officials of banking institutions must observe the highest standards of integrity and performance, not just ordinary diligence.
• Recipients of disallowed benefits may be liable. Even those who did not approve the disbursement may be held liable if they received the irregular benefits and knew or should have known of the legal limitations.
• COA findings are given great weight. Courts accord finality to COA factual findings supported by evidence, absent a showing of grave abuse of discretion.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.