MANILA — The Supreme Court (SC) has reiterated that trust funds held by government agencies must be spent only for the specific purpose for which the trust was created, upholding the disallowance of funds intended for socio-economic programs for the Mamanwa Tribes in Surigao del Norte.

The decision, written by retired Associate Justice Mario V. Lopez, concerns the use of financial assistance by NCIP Regional Office No. XIII (NCIP Region XIII) for operating expenses instead of the projects’ intended socio-economic purposes.

The dispute arose from a 2009 Memorandum of Agreement (MOA) among Taganito Mining Corporation (TMC), Taganito HPAL Nickel Corporation (THPAL), the Mamanwa Tribes of Taganito and Urbiztondo in Claver, Surigao del Norte, and NCIP Region XIII. The MOA, which covered the construction and operation of a nickel mineral processing plant within the tribes’ ancestral domain, required THPAL to provide financial assistance exclusively for socio-economic programs benefiting the indigenous peoples, with funds deposited into a trust account created by the NCIP.

In 2012, tribal leaders signed Resolusyon No. 14, recommending that the funds also cover NCIP operating expenses, including hiring community workers, holding tribal assemblies, and conducting training programs.

The Commission on Audit (COA) later flagged NCIP Region XIII’s use of the funds for 2013 and 2014 operations, issuing several Notices of Disallowance totaling PHP 1,573,227.83. Officials held liable included Roselle A. Corvera-Cirunay, who certified fund availability, and Ligaya Q. De Guzman, Chief of NCIP’s Finance and Administrative Division, who approved the transactions.

A year later, TMC, THPAL, the Mamanwa Tribes, and NCIP signed an Addendum to the MOA, stating that the parties did not intend to strictly limit the use of funds to socio-economic programs. Corvera-Cirunay and De Guzman appealed the COA disallowances, arguing that the Addendum and Resolusyon No. 14 justified the operating expenses.

The COA Regional Director initially granted the appeal, but COA Proper reversed the ruling, emphasizing that Resolusyon No. 14 was inconsistent with the original purpose of the funds, which is to support the socio-economic well-being of indigenous cultural communities (ICCs) under Republic Act No. 7942 (Philippine Mining Act of 1995). COA Proper stressed that trust funds must be used strictly for their designated purpose.

The SC upheld COA Proper’s ruling, noting that the funds in question constitute a trust fund and were disbursed from an account created exclusively for socio-economic projects benefiting the Mamanwa Tribes. Using the funds for NCIP Region XIII operating expenses—such as rent, equipment purchases, maintenance, communication, and supplies—violated the law.

“The tribal resolution alone cannot validly change the trust agreement under the MOA,” the SC said, ruling that Resolusyon No. 14 could not justify using the financial assistance for other purposes. The Court also rejected the Addendum, signed more than a year after the disallowances, as a retroactive justification for the expenses, warning that such a practice would set a dangerous precedent.

The SC further highlighted that allowing the use of the financial assistance for NCIP regional office expenses goes against NCIP Administrative Order No. 1, series of 2006 (FPIC Guidelines), which require all mining agreements on ancestral lands to be embodied in a MOA to protect the rights of ICCs/IPs.

Ultimately, the SC found Ligaya Q. De Guzman liable for approving the disallowed transactions without legal basis, but absolved Roselle A. Corvera-Cirunay, since she only certified fund availability.