Barbo v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioners, officials of the Local Water Utilities Administration (LWUA) and members of the Interim Board of Directors of the San Fernando Water District (SFWD), received various allowances and bonuses, including Representation and Transportation Allowance (RATA), Travel Allowance, Extraordinary & Miscellaneous Expense (EME), Christmas Bonus, Uniform Allowance, Rice Allowance, Medical and Dental Benefits, and Productivity Incentive Bonus, from SFWD between 1994 and 1996. These payments were authorized by LWUA Board Resolutions. Procedural History: A Special Audit Team of the Commission on Audit (COA) disallowed these payments, deeming them excessive and contrary to relevant government accounting and auditing manuals and civil service resolutions, specifically citing Presidential Decree (PD) No. 198. Petitioners appealed to the COA Regional Director, who affirmed the disallowance. Their subsequent petition for review to the COA was also denied, leading to the issuance of COA Decision No. 2000-133 and a subsequent Resolution denying their motion for reconsideration. The Petition: Petitioners filed a Petition for Certiorari under Rule 64 of the Rules of Court, challenging the COA's decisions. They raised issues concerning the COA's jurisdiction to declare LWUA Board Resolutions in conflict with PD No. 198, whether Section 13 of PD No. 198 prohibited their entitlement to the disallowed benefits, and their liability to refund the received amounts. The core of their argument was that the LWUA Board Resolutions authorized the payments and that they acted in good faith.
Issue(s)
Whether the Commission on Audit (COA) has the jurisdiction to motu proprio declare LWUA Board Resolution No. 313, Series of 1995, as amended by Resolution No. 39, Series of 1996, to be totally in conflict with Section 13 of PD No. 198, as amended. Whether Section 13, PD No. 198, as amended, prohibits petitioners' entitlement to RATA, EME, bonuses, and other benefits and allowances. Whether petitioners are liable to settle/refund the disallowed allowances, bonuses, and other benefits received by them.
Ruling
The petition is partly meritorious. The COA Decision No. 2000-133 and Resolution dated February 27, 2003 are affirmed with the modification that the petitioners need not refund the benefits and allowances disallowed by the COA.
Ratio Decidendi
On the jurisdiction of the COA: The Court affirmed the COA's jurisdiction to rule on the legality of government fund disbursements. Citing Section 2, Subdivision D, Article IX of the 1987 Constitution, the Court reiterated that the COA's mandate includes auditing all government agencies and determining compliance with laws and regulations in disbursing funds. This constitutional body is tasked with safeguarding the proper use of public property, and its authority to disallow illegal or irregular disbursements is well-established. The Court has consistently upheld this power, even when it involves government-owned and controlled corporations with special charters, such as water districts. On the prohibition of benefits under Section 13 of PD No. 198: The Court held that Section 13 of PD No. 198, as amended, expressly prohibits the grant of compensation other than per diems to members of the board of Water Districts. The provision clearly states that "No director shall receive other compensation" besides the per diem for meetings attended. This explicit prohibition preempts any discretion by water districts to pay other allowances and bonuses. The Court cited previous rulings, such as Baybay Water District v. Commission on Audit, which interpreted Section 13 to mean that per diems are the sole form of compensation authorized for board members, and any other allowance or bonus is considered additional compensation prohibited by law. On the liability for refund: While sustaining the disallowance of the benefits, the Court found that the petitioners acted in good faith. They received the allowances and bonuses under the honest belief that LWUA Board Resolutions No. 313 and 39 authorized such payments. At the time of receipt, the Court had not yet definitively ruled on the matter, and petitioners had no knowledge that such payments lacked a legal basis. Citing Abanilla v. Commission On Audit and Querubin v. Regional Cluster Director, the Court held that when officials disburse funds and recipients accept them in good faith, and no indicia of bad faith are present, refund is not warranted. Therefore, petitioners, having acted in good faith, were not required to refund the disallowed benefits and allowances.
Main Doctrine
Members of the Board of Directors of Water Districts are prohibited from receiving compensation other than per diems, and any allowances or bonuses received in good faith prior to a definitive ruling on the matter need not be refunded.