De Jesus v. Commission on Audit
REITERATIONFacts
The Antecedents: An auditing team from the Commission on Audit (COA) discovered that between May to December 1997 and April to June 1998, members of the interim Board of Directors of the Catbalogan Water District (CWD), along with the Board Secretary, granted themselves various allowances and bonuses, including Representation and Transportation Allowance (RATA), Rice Allowance, Productivity Incentive Bonus, Anniversary Bonus, Year-End Bonus, and cash gifts. These benefits were purportedly authorized by Resolution No. 313, series of 1995, of the Local Water Utilities Administration (LWUA). The COA audit team subsequently issued notices of disallowance, asserting that these payments contravened Section 13 of Presidential Decree No. 198 (PD 198). Procedural History: The petitioners, comprising the members of the CWD's interim Board of Directors and the Board Secretary, appealed the disallowance to the COA Regional Office No. VIII, which denied their appeal. Subsequently, they filed a petition for review with the COA, which also denied the petition in a decision dated September 12, 2000. A motion for reconsideration filed by the petitioners was likewise denied by the COA on July 5, 2001. This led to the filing of the instant petition for certiorari with the Supreme Court. The Petition: The petitioners seek certiorari to annul the COA's decision and resolution, arguing that the COA committed grave abuse of discretion. They contend that the COA improperly exercised jurisdiction to declare LWUA Board Resolution No. 313, series of 1995, non-compliant with Section 13 of PD 198. Furthermore, they dispute the COA's ruling that Section 13 of PD 198 prohibits the payment of RATA, extraordinary and miscellaneous expenses, and other allowances and bonuses to them. Finally, they challenge the COA's demand for the refund of the disallowed allowances and bonuses.
Issue(s)
Whether the COA committed grave abuse of discretion in declaring LWUA Board Resolution No. 313, Series of 1995, as non-compliant with Section 13 of PD 198. Whether Section 13 of PD 198 prohibits the payment of RATA, EME, and other allowances and bonuses to members of the Board of Water Districts. Whether petitioners should be compelled to refund the disallowed allowances and bonuses received.
Ruling
The petition is meritorious in part. The Supreme Court affirmed the COA's disallowance of the allowances and bonuses but modified the ruling by stating that the petitioners need not refund the amounts received.
Ratio Decidendi
On the COA's authority to disallow allowances and benefits: The Court held that the COA has the constitutional authority under Section 2, Subdivision D, Article IX of the 1987 Constitution to examine, audit, and settle all accounts pertaining to government expenditures, including those of government-owned and controlled corporations with original charters, such as water districts created under PD 198. The COA's power to disallow illegal or irregular disbursements is exclusive and cannot be encroached upon by administrative resolutions of agencies like LWUA. To hold otherwise would render the COA ineffective in its role as a watchdog of government funds. The Court clarified that the COA was not usurping LWUA's powers but merely exercising its constitutional mandate to audit government funds and ensure compliance with law. The reliance on Eslao v. COA was deemed misplaced as that case involved conflicting administrative regulations issued by the same department (DBM), whereas here, the COA was enforcing a specific law (PD 198) against an administrative resolution. On the prohibition of RATA, EME, and bonuses under PD 198: The Court reiterated its ruling in Baybay Water District v. Commission on Audit, stating that Section 13 of PD 198 expressly prohibits members of the Board of Water Districts from receiving any compensation other than the per diem for meetings actually attended. The phrase "No director shall receive other compensation" is clear and unambiguous, leaving no room for interpretation or the grant of additional allowances and bonuses, irrespective of any LWUA resolution. The per diem is the sole authorized compensation, and any attempt by administrative fiat to grant other benefits is void. On the refund of allowances and benefits received in good faith: The Court modified its previous stance by applying the ruling in Blaquera v. Alcala. It held that while the disallowance of the benefits was sustained, the petitioners need not refund the amounts received. This is because the petitioners acted in good faith, honestly believing that LWUA Board Resolution No. 313 authorized such payments. At the time of receipt, the Supreme Court had not yet definitively ruled on the matter in Baybay Water District. The Court considered it unjust to require a refund when the benefits were received without knowledge of their illegality and in the honest belief that they were due.
Main Doctrine
Members of the Board of Directors of Water Districts, created under Presidential Decree No. 198, are entitled only to per diems as compensation and are prohibited from receiving any other compensation, allowances, or bonuses, regardless of authorization by administrative resolutions, as such would contravene Section 13 of PD 198. However, refunds of such disallowed benefits received in good faith prior to a definitive ruling on the matter may not be required.