Lumayna v. Commission on Audit
REITERATIONFacts
The Antecedents: The Sangguniang Bayan of Mayoyao, Ifugao, enacted Resolution No. 66, s. 2002, approving a 5% salary increase for its personnel based on Local Budget Circular (LBC) No. 74. This was funded by Resolution No. 94, s. 2002, which realigned funds from 17 newly created positions. The Sangguniang Panlalawigan initially declared the 2002 Annual Municipal Budget operative, subject to conditions, but later disallowed the salary increase and realignment. Subsequently, the Sangguniang Panlalawigan reconsidered its position and allowed the salary increase upon finding good faith. Procedural History: The Regional Legal and Adjudication Office (RLAO) of COA-Cordillera Administrative Region issued a Notice of Disallowance on May 16, 2003, for ₱895,891.50, representing salary increases for municipal personnel from February 15 to September 30, 2002. COA-CAR cited violations of Sections 325 and 326 of the Local Government Code (LGC), exceeding the personal services limitation, and improper procedure for granting the increase. Petitioners' motion for reconsideration was denied by RLAO-COA-CAR, and their appeal to the Director of LAO-Local was also denied. The Commission on Audit (COA) affirmed the disallowance in Decision No. 2005-071 and denied the motion for reconsideration in Decision No. 2007-040. The Petition: Petitioners filed a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court, assailing the COA decisions. They argued that the resolutions were valid exercises of legislative prerogative, that the budget did not exceed personal services limitations, and that the realignment was proper. They also contended that the COA gravely abused its discretion in holding that the realignment caused the municipality to exceed PS limitations and in upholding the disallowance based on LBC No. 75, which they claimed had an exempting effect. Finally, they argued that they acted in good faith and should not be made to refund the disallowed amounts.
Issue(s)
Whether the COA committed grave abuse of discretion in affirming the disallowance of the 5% salary increase. Whether the petitioners should be ordered to refund the disallowed amount.
Ruling
The petition is PARTIALLY GRANTED. The disallowance of the 5% salary increase is affirmed, but the petitioners are not required to refund the disallowed amount.
Ratio Decidendi
On the disallowance of the 5% salary increase: The Court affirmed the COA's disallowance of the ₱895,891.50 representing the 5% salary increase. The COA's factual findings, supported by the computation of the Provincial Budget Officer, indicated that the annual budget of Mayoyao for 2002 exceeded the personal services (PS) limit by ₱3,944,568.05, as prescribed by Section 325(a) of the Local Government Code (LGC). Furthermore, the COA correctly noted that the grant of the increase through a higher salary class schedule was not among the waivers permitted under Local Budget Circular (LBC) No. 75. The municipality also adopted salary rates under LBC No. 69, not LBC No. 74 as claimed by petitioners. The Court found no grave abuse of discretion on the part of the COA in reaching these conclusions, emphasizing that factual findings of administrative bodies are afforded great weight. On the requirement for petitioners to refund the disallowed amount: The Court ruled that petitioners should not be ordered to refund the disallowed amount, holding that they acted in good faith. The Court cited jurisprudence, including Abanilla v. Commission on Audit, Querubin v. Regional Cluster Director, and Blaquera v. Alcala, which established that public officers are not personally liable for damages absent bad faith or malice, and that good faith is presumed in the performance of official duties. In this case, the salary increase was implemented under resolutions enacted pursuant to LBC No. 74 and after the Sangguniang Panlalawigan declared the budget operative. The Notice of Disallowance was issued much later, after the increase had been implemented. The Sangguniang Panlalawigan's subsequent resolution recognizing the good faith of the municipal officials further supported this conclusion. The Court reiterated that mistakes committed by public officers are not actionable unless motivated by malice or gross negligence amounting to bad faith, and that the disbursement here was done with the honest belief that it was due.
Main Doctrine
While the disallowance of the 5% salary increase was sustained for exceeding the personal services limitation, the petitioners were not required to refund the disallowed amount due to their good faith in implementing the increase.