SC: Mamanwa trust fund must be used properly

The Supreme Court has ruled that trust funds held by government agencies must be spent only for the specific purpose for which the trust was created.

In a decision written by retired Associate Justice Mario V. Lopez dated 20 May 2025, the SC En Banc upheld the disallowance of funds intended for socio-economic programs for the Mamanwa Tribes in Surigao del Norte, which were instead used by the Regional Office of the National Commission on Indigenous Peoples (NCIP) for its operating expenses.

The case stemmed 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 Regional Office No. XIII.

The MOA covered the construction and operation of a nickel mineral processing plant within the ancestral domain of the Mamanwa Tribes. Under the MOA, THPAL committed to provide financial assistance to the NCIP, to be used exclusively for socio-economic projects that would benefit the indigenous peoples of Surigao del Norte.

It also required THPAL to deposit the financial assistance into a trust account to be created by the NCIP.

In 2012, tribal leaders signed Resolusyon No. 14 recommending that the financial assistance also be used for NCIP’s operating expenses, including the hiring of community workers, holding of tribal assemblies, and conduct of training programs.

The Commission on Audit (COA) later flagged NCIP Region XIII’s use of the financial assistance funds for its 2013 and 2014 operations, finding it contrary to the MOA.

It issued several Notices of Disallowance totaling P1,573,227.83, citing misuse of funds. Among those held liable were Roselle A. Corvera-Cirunay, who certified the availability of funds, 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 the NCIP signed an Addendum to the MOA, stating that the parties did not intend to strictly limit the use of financial assistance to socio-economic projects, but that it could cover all NCIP Region XIII initiatives benefiting the Mamanwa communities.

Corvera-Cirunay and De Guzman appealed the Notices of Disallowance, arguing that the Addendum and Resolusyon No. 14 justified the use of the funds for NCIP Region XIII’s operating expenses.

The COA regional director granted the appeal, but COA Proper reversed the ruling.

It held that Resolusyon No. 14 was inconsistent with the original purpose of the funds, which was to support the socio-economic well-being of indigenous cultural communities, as provided under Republic Act 7942, or the Philippine Mining Act of 1995. COA Proper added that trust funds must be used strictly for their designated purpose.

The SC upheld the disallowances, stressing that trust funds held by any government agency must be spent only for the specific purpose for which the trust was created, as provided under Presidential Decree 1445, or the Government Auditing Code of the Philippines.

In this case, the financial assistance constituted a trust fund as expressly stated in the MOA.