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Passive Recipients of Disallowed Benefits Not Required to Reimburse

Picture this. Government employer declares giving of bonus, employee rejoices, receives the money and spends it all. A year later, government employer asks the employee to give all the money back because the Commission on Audit disapproved the disbursement. Seen it? The recent case of Faustino A. Silang, et al v. Commission on Audit (G.R. No. 213189, September 8, 2015, En Banc) touches on this issue.


The Local Government Unit of Tayabas, Quezon entered into collective negotiation agreements with UNGKAT, an organization of the LGU’s rank-and-file employees. UNGKAT was registered with the Department of Labor & Employment, as well as with the Civil Service Commission. However, at the time when the CNAs were entered into, UNGKAT was not yet accredited by the CSC as the LGU employees’ exclusive bargaining agent.

Pursuant to the CNA, the LGU appropriated millions of pesos to fund the payment of CNA incentives to all rank-and-file employees. It was disallowed by COA because UNGKAT was not CSC-accredited, among others.


Should the officials and employees of LGU – Tayabas be required to reimburse the disbursed amount?


The general rule is that public officials who are directly responsible for, or participated in making the illegal expenditures, and those who actually received amounts from it shall be solidarily liable for reimbursement. However, passive recipients in good faith need not refund the amount. The rank-and-file employees, apart from the UNGKAT officers, were in good faith because they had no knowledge of any irregularity attending to the release of the incentive, neither were they privy to the internal workings which led to its release.

On the other hand, the City Mayor and Sanggunian are solidarily liable with the UNGKAT officers for their lack of good faith. The UNGKAT officers should have known their lack of authority to bargain, while the public officials are presumed to know the applicable policies on CNA incentives.

To read the full text of the decision, click here.

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