De Guzman v. Commission on Audit
REITERATIONFacts
The Antecedents: The Baguio Water District (BWD) authorized the grant of a Centennial Bonus equivalent to fifty percent (50%) of the employee's salary, distributed on the occasion of the 100th anniversary of the City of Baguio. This was authorized under Resolution (BR) No. 046-2009 dated November 20, 2009. Procedural History: The Commission on Audit (COA) Audit Team issued Notice of Disallowance (ND) No. 12-023-101-(09) dated May 15, 2012, disallowing the total amount of P1,233,860.50 for being devoid of legal basis, citing Section 3(b) of Administrative Order (AO) No. 103, which suspends the grant of new or additional benefits. The recipients were directed to refund the bonus. Petitioners appealed to the COA-CAR, arguing the ND was defective for lacking a supervising auditor's signature, that BWD was not covered by AO 103, and that the bonus was released in good faith. The COA-CAR affirmed the disallowance. The COA En Banc affirmed the COA-CAR decision with modification, stating passive recipients in good faith need not refund, but approving/certifying/authorizing officers remain liable. Petitioners' motion for reconsideration was denied. The Petition: Petitioners sought relief from the Supreme Court via a Petition for Certiorari under Rule 64, arguing the ND was defective due to the absence of a supervising auditor's signature, that BWD, under Presidential Decree No. 198, had the power to grant the bonus, and that the bonus was granted in good faith.
Issue(s)
Is ND No. 12-023-101-(09) defective for not bearing the signature of a supervising auditor? Is the BWD subject to the power of control of the Office of the President? Are petitioners liable to refund the full disallowed amount?
Ruling
The Supreme Court affirmed the decision of the Commission on Audit with modification. The Baguio Water District employees are individually liable to return the amounts they received as centennial bonus. Petitioners, as certifying and approving officers of the Baguio Water District, are jointly and solidarity liable for the return of the disallowed centennial bonus.
Ratio Decidendi
On the defectiveness of the Notice of Disallowance (ND) No. 12-023-101-(09) for not bearing the signature of a supervising auditor: The Court held that the absence of a supervising auditor's signature does not render the ND defective or without force and effect. The COA En Banc found that no supervising auditor was assigned to the BWD audit team at the time of issuance, and the OIC Regional Director had authorized the Audit Team Leader to issue notices of disallowance without the supervising auditor's signature. The Court reasoned that post-audit functions of the COA are not halted or suspended due to the temporary absence or non-appointment of a supervising auditor. The authorization memo from the OIC Regional Director served as a valid basis for the issuance of the ND under the prevailing circumstances, ensuring the continuity of audit functions. On whether the BWD is subject to the President's power of control: The Court ruled that local water districts, like the BWD, are Government-Owned or Controlled Corporations (GOCCs) with special charters pursuant to Presidential Decree No. 198. As GOCCs, they are part of the Executive Department and are subject to the power of control of the President. Citing ZCWD v. COA, the Court reiterated that the President, through executive issuances like AO 103, can limit the authority of agencies attached to departments, including the per diem allowed to board of directors, to implement austerity measures. Therefore, AO 103, which suspends the grant of new or additional benefits, governs the financial management of BWD. The centennial bonus was neither a Collective Negotiation Agreement (CNA) incentive nor expressly authorized by a presidential issuance, thus its grant was devoid of legal basis. On the liability of petitioners to refund the full disallowed amount: The Court applied the principles established in Madera, et al. v. COA. It held that both the certifying and approving officers, and the recipient employees, are liable to refund the disallowed amount. The certifying and approving officers were found guilty of gross negligence for authorizing the release of the bonus despite the clear prohibition in AO 103. Their liability is joint and several for the disallowed amounts received by the individual employees, pursuant to Section 43 of the Administrative Code. The recipient employees are liable to return the amounts received based on the principle of solutio indebiti and unjust enrichment, as the bonus was granted without legal basis. The Court found no exceptions, such as the bonus being in consideration of services rendered or falling under social justice or humanitarian considerations, to excuse the return.
Main Doctrine
The grant of a centennial bonus to officers and employees of a Water District, not being a Collective Negotiation Agreement Incentive nor expressly authorized by presidential issuance, is a violation of Administrative Order No. 103, rendering the disbursement illegal. Certifying and approving officers are liable for gross negligence, and recipient employees are liable to refund the amounts received based on the principles of solutio indebiti and unjust enrichment, unless specific exceptions apply.