CASE DIGEST
Hagonoy Water District
v. Commission on Audit
G.R. No. 247228, [March
2, 2021]
EN BANC, LOPEZ, M.V
Powers of
COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed
Amount
Public funds disbursements must have a
legal basis, and good faith may excuse officers' liability but not that of
recipients. Mere receipt of public funds without valid basis or justification,
regardless of good faith, obligates recipients to return what was unduly
received. Officers who approved disallowed transactions may be excused based on
good faith, but recipients, including officers, are individually liable to
return disallowed amounts. Solidary liability may be imposed on approving/certifying officers and
the Board of Directors for disallowed transactions.
The petition involves the Hagonoy Water
District (HWD), a government-owned and controlled corporation, and its
officials, including General Manager Celestino S. Vengco, Jr., and Division
Manager - Finance Remedios R. Osorio. In 2012, HWD disbursed anniversary
bonuses and rice allowances based on board resolutions. Notice of Disallowance
(ND) No. 2013-001-HWD(2012) (First ND) was issued on November 14, 2013,
disallowing disbursements of P582,000.00, including excess anniversary bonuses
and rice allowances. ND No. 2013-002-HWD(2012) (Second ND) disallowed
additional allowances to the Board of Directors for lack of LWUA approval.
Petitioners appealed, invoking good faith, but the COA Regional Office and COA
Proper affirmed the disallowances.
Whether or not the Commission on Audit
(COA) Proper committed grave abuse of discretion in sustaining the disallowance
of the rice subsidy.
NO. The Court affirmed the COA's ruling on
the disallowance of the rice subsidy. RA No. 6758, effective July 1, 1989,
consolidated allowances into standardized salary rates, allowing exceptions
only for certain specified allowances. Subsequent DBM Circulars permitted the
continuous grant of certain benefits only to incumbents as of July 1, 1989. The
2012 rice subsidy violated these provisions, as it was given to non-incumbents.
The Court rejected the argument that the grant was an established practice
since 1993, emphasizing that practice contrary to law cannot give rise to
vested rights.
Regarding liability to refund, the
Court held that good faith may excuse officers but not recipients. Recipients
are absolved only if benefits were genuinely given for services or based on
bona fide exceptions. Public funds disbursements must have a legal basis, and
good faith may excuse officers' liability but not that of recipients. Mere
receipt of public funds without valid basis or justification, regardless of
good faith, obligates recipients to return what was unduly received.The Court
found no legal basis for the 2012 rice allowance and no evidence of legitimate
considerations. Therefore, recipients, including officers who approved the
release based on a 1992 board resolution, are individually liable to return the
amounts. The Court modified the COA decision to impose solidary liability on
the Board of Directors and approving/certifying officers for the disallowed
rice allowance.
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