Angeles v. Commission on Audit, G.R. No. 228795, [December 1, 2020]

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Angeles v. Commission on Audit

 G.R. No. 228795, [December 1, 2020]

EN BANC, LOPEZ, M.V

 

Administrative Law; Robbery of Payroll Money; Accountability of Municipal Treasurer 

The accountability for government funds involves the diligence of a good father of a family. The absence of a security escort alone does not indicate negligence, and a balanced approach is necessary to prevent injustice to government employees not guilty of negligence. The decision rejects the idea that a higher degree of diligence is required merely due to the substantial amount involved and emphasizes the need for a reasonable assessment of the circumstances surrounding the loss of government funds. 

On March 12, 2010, Lily De Jesus (cashier) and Estrellita Ramos (revenue collection officer) of the Municipality of San Mateo, Rizal, along with driver Felix Alcantara, withdrew P1,300,000.00 payroll money from Land Bank. While returning to the office, an armed man shot Felix, resulting in injuries, and later another man forcibly took the payroll money from Lily, causing her death. The suspects were later arrested and indicted for Robbery with Homicide. Estelita, the officer-in-charge municipal treasurer, sought relief from accountability for the lost money, citing the absence of specific regulations on safeguarding payroll money while in transit. The COA denied her petition for review, emphasizing the necessity of a higher degree of precaution due to the substantial amount involved.

 

Whether or not Estelita should be held accountable for the lost payroll money due to the absence of a security escort during the bank transaction. 

NO. The Court reversed the Commission on Audit's (COA) decision, granting Estelita relief from accountability. The Court held that Estelita and Lily had exercised reasonable care and caution under the circumstances. They followed the standard procedure, using the municipal service vehicle and obtaining a travel pass. The robbery was unexpected, occurring in broad daylight on a public street. The Court emphasized that the absence of a security escort alone does not indicate negligence, and it criticized the COA's stringent condition for requiring one. The COA's conclusion, in hindsight, that a security escort should have been requested was insufficient to establish negligence. The Court stressed the need for a balanced approach to prevent injustice to government employees not guilty of negligence.

 

 

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Trinidad, Jr. v. Office of the Ombudsman, G.R. No. 227440 (Resolution), [December 2, 2020]

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Trinidad, Jr. v. Office of the Ombudsman

 G.R. No. 227440 (Resolution), [December 2, 2020]

EN BANC, LOPEZ, M.V

 

Administrative Law; Administrative case against DPWH Engineer; Gross Neglect of Duty

 

The unjustified reliance on a subordinate constitutes inexcusable negligence. Public officials are not granted a blanket authority to depend on their subordinates, and even minor tasks, no matter how minuscule, must be diligently accomplished. 

Ricardo served as Engineer II in the Department of Public Works and Highways - Quezon City Second Engineering District (DPWH-QCSED). He was responsible for overseeing laborers of the DPWH-QCSED's Oyster Program, designed to provide jobs to Filipinos as gardeners or cleaners. Subsequently, an administrative case was filed against Ricardo for dishonesty, gross neglect of duty, grave misconduct, and conduct prejudicial to the best interest of the service. The case arose from the approval of daily time records (DTRs) for certain laborers who were found to be simultaneously employed in other government agencies, resulting in double or triple compensations. Ricardo relied solely on his subordinate's logbook in signing the workers' DTRs.

  

Whether or not Ricardo's reliance on his subordinate's logbook in signing the workers' DTRs constitutes gross negligence. 

NO. The Court rejects Ricardo's argument that his reliance on the logbook is justified due to the minor nature of his duties with the Oyster Program. While good faith may exculpate a public official from criminal liability, it does not necessarily relieve him from administrative liability. The Court distinguishes between criminal and administrative gross negligence, emphasizing that the purpose of administrative proceedings is to protect the public service. Ricardo's negligence, although not gross, is deemed simple negligence. Simple negligence is defined as the failure to give proper attention to a required task due to carelessness or indifference, as opposed to gross negligence characterized by a flagrant and culpable refusal or unwillingness to perform a duty. The penalty imposed is a two-month suspension without pay, considering that supervising the Oyster Program's workers is not Ricardo's primary task, and this being his first infraction. Ricardo is warned of more severe consequences for any repetition of the offense.

 

 

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National Transmission Corp. v. Commission on Audit, G.R. No. 246173, [June 22, 2021]

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National Transmission Corp. v. Commission on Audit

 G.R. No. 246173, [June 22, 2021]

EN BANC, LOPEZ, M.V

 

Appeal to COA's decision; Separation pay of Dismissed Employees; Rules on the Refund of Benefits received under Disallowed amounts

 

The power of GOCCs to grant additional benefits, including rounding-off fractional lengths of service to one whole year for separation pay, is subject to limitations and requires presidential approval. However, officers who relied on board resolutions in approving and certifying the release of separation pay, and who implemented policies set by the Board of Directors (BOD), were absolved from solidary liability for the refund. Good faith was recognized in the absence of controlling jurisprudence on the rounding-off issue at the time.

 

The petitioner, National Transmission Corporation (TransCo), is a government-owned-and-controlled corporation created under the Electric Power Industry Reform Act of 2001 (EPIRA) to assume the electrical transmission function of the National Power Corporation (NPC). TransCo was initially wholly-owned by the Power Sector Assets and Liabilities Management Corporation (PSALM). Pursuant to the EPIRA's directive, TransCo underwent privatization, and a 25-year concession contract was awarded to the National Grid Corporation of the Philippines (NGCP). As a result, certain TransCo employees were separated from service effective June 30, 2009. The separated employees were granted separation pay based on specific board resolutions and circulars issued by TransCo. 

The COA disallowed the excess payment of separation pay amounting to P1,488,278.00, resulting from rounding off the fractional length of service equivalent to six months or more to one whole year, and also holding the approving and certifying officers solidarily liable for the return of such excess payment. 

 

Whether or not COA Proper gravely abused its discretion in disallowing the excess separation pay and holding the approving and certifying officers solidarily liable. 

NO. The Court partially granted the petition. It affirmed the COA Proper's decision on the disallowance of the excess payment but modified the ruling on the liability for the refund. The Court agreed with COA Proper's disallowance of the excess separation pay resulting from the rounding-off method, which results in an undue increase in separation pay for government employees, stating that it lacked a legal basis. The Court emphasized that TransCo did not have unbridled discretion to increase benefits without presidential approval.

However, the Court absolved the approving and certifying officers from solidary liability, citing good faith. The Court recognized that these officers merely relied on board resolutions in approving and certifying the release of separation pay. It was the Board of Directors (BOD) that determined the policy for separation pay, and the officers had the duty to implement these resolutions. The Court considered that at the time of disbursements in 2009 and 2010, there was no definitive ruling on the rounding-off issue, making it difficult for the officers to foresee its illegality.

 

 

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Abella v. Commission on Audit Proper, G.R. No. 238940, [April 19, 2022]

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Abella v. Commission on Audit Proper

 G.R. No. 238940, [April 19, 2022]

EN BANC, LOPEZ, M.V

 

Administrative Law; Disallowances by COA against extraordinary and miscellaneous expenses to LGU Officials 

The appropriation of Extraordinary and Miscellaneous Expenses (EME) separate from discretionary funds in a local government's budget, in violation of Section 325(h) of the Local Government Code, is impermissible. The decision underscores the principle that local government units must adhere to limitations set by law, and any attempt to circumvent these limitations through separate appropriations is subject to disallowance. Additionally, the court affirmed that the good faith or bad faith of the recipients is inconsequential when disbursements are without legal basis, and recipients are liable to refund the amounts received.

 

The case involves the disapproval by the Department of Budget and Management (DBM) Regional Office No. XIII of the separate item for Extraordinary and Miscellaneous Expenses (EME) appropriation in the City of Butuan's annual budget for the fiscal year 2000. The disapproval was based on the violation of Section 325(h)4 of Republic Act (RA) No. 71605 or the Local Government Code of 1991 (LGC), which prohibits appropriations with the same purpose as discretionary funds. Despite seeking reconsideration, the disapproval was affirmed by the DBM. Subsequently, the City Government of Butuan continued to appropriate and grant EME to its officials until 2010, leading to several Notices of Disallowance (NDs) being issued for lack of legal basis. The petitioners, as recipients held liable to settle the disallowances, appealed the NDs, arguing violations of their right to speedy disposition, contesting the propriety of the NDs, and invoking good faith. 

 

Whether there was a violation of the right to speedy disposition of cases.

NO. The court held that the constitutional guarantee to a speedy disposition of cases is not violated merely by the length of time taken for resolution. It emphasized the need to consider factors such as the complexity of the case, number of transactions involved, and other relevant circumstances. The court found that the delay in this case was not arbitrary or oppressive, considering the thorough audit required for 94 disallowances dating back to 2004-2009, and challenges faced by the COA, including the destruction of records in a fire.

 

Whether the issuance of the Notice of Disallowance was proper.

YES. The court upheld the disallowance, stating that EME and discretionary funds have the same purpose and cannot be made separate items of appropriation, as per Section 325(h) of the LGC. The court noted that COA Circulars consistently characterized Extraordinary and Miscellaneous Expenses (EME) as similar to discretionary expenses. It also highlighted that the local ordinance circumvented limitations in the LGC and the General Appropriations Acts by appropriating separate amounts for discretionary purposes.

 

Whether good faith can exonerate petitioners' liability to settle the disallowances.

NO. The court rejected petitioners' argument that good faith. It clarified that the recipients' good faith or bad faith is inconsequential, applying principles of solutio indebiti and unjust enrichment. Recipients are liable to refund if the disbursement is without legal basis. The court also explained that local autonomy does not preclude national government intervention, emphasizing compliance with laws and regulations. Ultimately, the court dismissed the petition, affirming the COA's decision on the disallowances.

 

 

 

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National Power Corp. Board of Directors v. Commission on Audit, G.R. No. 218052, [January 26, 2021]

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National Power Corp. Board of Directors v. Commission on Audit

 G.R. No. 218052, [January 26, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Liability of approving and certifying officers and recipients of the disallowed amounts 

Public officials, specifically approving and certifying officers, who act in bad faith, malice, or gross negligence in the performance of their official duties, are jointly and severally liable to the government for the full amount of disallowed payments. The court clarified that the essence of due process is satisfied when individuals are afforded an opportunity to be heard, and the court may excuse the return of disallowed amounts based on undue prejudice, social justice considerations, and other bona fide exceptions on a case-to-case basis. The absence of legal basis or justification for disallowed payments may result in individual liability for recipients.

 

On February 1, 2010, the NPC Board of Directors confirmed and ratified Board Resolution No. 2009-72, granting Calendar Year (CY) 2009 Performance Incentive Benefits (PIB) to NPC Non-Operation and Maintenance Agreement (NMA)-Small Power Utility Group (SPUG)/Watershed and Operation and Maintenance (OMA) Head Office and Engineering officials and employees. The PIB, equivalent to five and one-half monthly basic salaries, was implemented through NPC Circular No. 2009-585, approved by NPC President and CEO, Froilan A. Tampinco. The total amount released was P327,272,424.91. The COA later issued a Notice of Suspension and disallowed the PIB due to lack of presidential approval and its extravagance, considering NPC-SPUG's net loss in CY 2009.

 

Whether or not the Commission on Audit (COA) Proper is correct in affirming the disallowance, and holding petitioners liable to refund the disallowed amounts.

YES. The court found that the COA properly gave notice of disallowance (ND) through constructive service to Tampinco, who had the duty to inform all involved parties. Despite the late filing of the appeal to the COA Proper, the essence of due process was satisfied as petitioners were given an opportunity to be heard. On the merits, the court held that MO No. 198 did not authorize the PIB for CY 2009, and the grant violated the specific requirements of MO No. 198, including the lack of a Productivity Enhancement Program (PEP). The court rejected the argument that the NPC Board's approval was deemed presidential authorization and emphasized the non-compliance with statutory provisions.

The court ruled that petitioners, both approving and certifying officers, are solidarily liable to refund the disallowed amounts. It affirmed the COA decision, stating that the ND was not void, unjust, or inequitable, and petitioners failed to show entitlement to the PIB or any special circumstances justifying non-refund. The court applied Section 43 of the Administrative Code, holding that officers acting in bad faith are liable, and emphasized the absence of genuine justifications for the recipients. The NPC Board of Directors was specified as solidarily liable, while individual recipients were held individually liable for the amounts received. The Petition was dismissed, and the COA decision was affirmed.

 

 

 

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Power Sector Assets and Liabilities Management Corp. v. Commission on Audit, G.R. Nos. 213425 & 216606, [April 27, 2021]

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Power Sector Assets and Liabilities Management Corp. v. Commission on Audit

G.R. Nos. 213425 & 216606, [April 27, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount 

The essence of due process is an opportunity to be heard, and the absence of an Audit Observation Memorandum (AOM) before the issuance of a Notice of Disallowance (ND) did not violate due process. Good faith or bad faith is evaluated based on the unique facts of each case, and in this instance, non-compliance with relevant regulations justified holding PSALM's officers and employees liable for the disallowed transactions.

 

The petitioner, Power Sector Assets and Liabilities Management Corporation (PSALM), is a government-owned and controlled corporation (GOCC) established under Republic Act No. 9136, also known as the "Electric Power Industry Reform Act of 2001" (EPIRA). PSALM's primary mandate is to facilitate the orderly sale, disposition, and privatization of National Power Corporation (NPC) assets to settle NPC's financial obligations and stranded contract costs. Since 2002, PSALM has been reimbursing Extraordinary and Miscellaneous Expenses (EME) to its officers and employees based on certifications, as allowed by Government Accounting and Auditing Manual (GAAM) and COA Circular No. 89-30. In 2008 and 2009, despite a reminder from the COA, PSALM continued to disburse EME without proper documentation, leading to disallowance notices and subsequent legal actions.

 

Whether or not the Commission on Audit (COA) Proper properly disallowed the Extraordinary and Miscellaneous Expenses (EME) given PSALM’s officers and employees.

YES. The court ruled against PSALM, finding no merit in both petitions. The COA's broad audit powers, enshrined in the Constitution, aim to ensure fiscal responsibility. In addressing the claim of due process violation regarding the 2009 EME ND, the court held that COA Circular No. 2009-006 does not mandate an Audit Observation Memorandum (AOM) before disallowance. PSALM was given the opportunity to be heard, and its failure to avail itself of legal remedies led to the finality of the COA decision.

On the equal protection claim, the court rejected PSALM's argument, citing a lack of evidence supporting preferential treatment for other entities. The court affirmed the COA's decision to hold approving and certifying officers solidarily liable for the disallowed amounts and the individual recipients liable for the amounts they received. The court emphasized that the absence of receipts and non-compliance with COA Circular No. 2006-001 justified the liability of PSALM's officers and employees.

 

 

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Paguio v. Commission on Audit, G.R. No. 223547, [April 27, 2021]

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Paguio v. Commission on Audit

G.R. No. 223547, [April 27, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount 

The COA, in the exercise of its constitutional duty, is accorded plenary discretion to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds. The court generally upholds the decisions of the COA, intervening only when there is a showing of grave abuse of discretion, evasion of a positive duty, or a refusal to perform a duty enjoined by law.

 

Petitioners, including Engr. Alex C. Paguio and Angeline R. Aguilar, officers of Pagsanjan Water District (PAGWAD), and members of the PAGWAD Board of Directors, received various benefits in 2009 and 2010 based on board resolutions. These benefits included extra year-end financial assistance, medical allowance, anniversary bonus, and productivity enhancement incentive. A Notice of Disallowance (ND) was issued on May 10, 2012, disallowing the disbursements amounting to P283,965.00 due to lack of legal basis. The benefits were given without approval from the Local Water Utilities Administration (LWUA), violating relevant regulations. 

 

Whether or not the Commission on Audit (COA) Proper properly disallowed the amounts for lack of legal basis of the benefits given.

YES. The court dismissed the petition, upholding the COA's decision. The COA's authority as the guardian of public funds allows it discretion to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds. The court noted that there was no grave abuse of discretion by the COA in dismissing the petitioners' appeal for being filed beyond the prescribed period.

Regarding the propriety of the disallowance, the court emphasized that the LWUA approval was required for additional allowances to Board Members, and the PAGWAD Board did not comply with this requirement. Even if LWUA issuances were cited, they did not legitimize the grants, especially considering the suspension of new benefits under Administrative Order No. 103. The court concluded that the COA did not commit grave abuse of discretion in upholding the disallowance for lack of legal basis.

As for the liability to refund the disallowed amounts, the court cited Section 43 of the Administrative Code of 1987, holding that officials involved in the disallowed transactions are jointly and severally liable to the government. The court affirmed the liability of the PAGWAD Board of Directors to refund the unauthorized benefits, grounded on their gross negligence and violation of laws and directives.

 

 

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Ngalob v. Commission on Audit, G.R. No. 238882, [January 5, 2021]

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Ngalob v. Commission on Audit

 G.R. No. 238882, [January 5, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount 

The burden of proving the validity or legality of the grant of allowances, benefits, or compensation lies with the government agency or entity granting, or the employee claiming them. Good faith is not a defense to excuse the liability of the recipients to return the disallowed amounts. The mere receipt of public funds without valid basis or justification, regardless of good faith or bad faith, is considered undue benefit, giving rise to the obligation to return the amounts received.

 

On August 28, 2009, the Cordillera Administrative Region (CAR) - Regional Development Council (ROC) Executive Committee (ExCom), headed by petitioner Juan B. Ngalob, issued RDC ExCom Resolution No. 73, authorizing incentives for the period January to June 2008 and quarterly releases for the third and fourth quarters of 2009 to compensate RDC-CAR officials and secretariat for "extra work" related to the RDC-CAR Work Program on Development and Autonomy. A similar resolution, CAR-103, was issued on December 10, 2010, granting year-end incentives. Disbursements totaling P1,095,000.00 and P1,080,000.00 were made for these incentives. The Commission on Audit (COA) disallowed these amounts for lack of legal basis, charging petitioners with liability for the transactions.

 

Whether or not the Commission on Audit (COA) Proper properly disallowed the amounts for lack of legal basis of incentives.

YES. The COA-CAR ruled that social preparation for autonomy is a regular function of the RDC-CAR, not a special project, and there was no appropriation for incentives or honoraria in the RDC-CAR's Personal Services (PS) account under the 2009 and 2010 General Appropriations Acts (GAAs). The COA found no factual and legal basis for the incentives, and the Supreme Court (SC) upheld these rulings, emphasizing the burden on the government agency to prove the legality of grants and the failure of RDC-CAR to provide evidence of a specific project plan, transparent performance evaluation, and proper appropriation. The SC also clarified the liabilities, holding that approving and certifying officers are solidarily liable for refund, given their gross negligence. Payees, including petitioners, are individually liable to return the amounts without the possibility of justifications based on good faith. The civil liability of approving or certifying officers is solidary and is grounded upon the manifest bad faith, malice, or gross negligence of public officers. On the other hand, the obligation of payees in a disallowed transaction is based on civil law principles of solutio indebiti and unjust enrichment. The mere receipt of public funds without valid basis or justification, regardless of good faith or bad faith, is considered undue benefit, giving rise to the obligation to return the amounts received.

In conclusion, the SC dismissed the petition, finding no grave abuse of discretion in the COA's decision and affirming the liabilities of petitioners for the disallowed amounts.

 

 

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Hagonoy Water District v. Commission on Audit, G.R. No. 247228, [March 2, 2021]

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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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Estrella v. Commission on Audit, G.R. No. 252079, [September 14, 2021]

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Estrella v. Commission on Audit

 G.R. No. 252079, [September 14, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Disallowances; Grave abuse of discretion; Net Disallowed Amount 

When there are irregularities in the procurement process and non-compliance with statutory procurement requirements, the liability of approving or certifying officers, such as those involved in the Bids and Awards Committee (BAC), is up the “net disallowed amount” only. It means that the officers' liability for the disallowed amount may be reduced by the amounts due to the contractors if they have fully or substantially accomplished their obligations under the contract. This liability is grounded upon the principles of solutio indebiti and unjust enrichment. This doctrine recognizes that the government should not unjustly enrich itself at the expense of contractors who have fulfilled their obligations, even if there were irregularities in the procurement process.

 

The DPWH-NCR initiated an infrastructure project for the Restoration of the Damaged Revetment/Dredging of Flood Control of Meycauayan River (Valenzuela Side). The project was initially funded under Special Allotment Release Order (SARO) No. A-09-09064 dated December 21, 2009, with P40,000,000.00 released under Sub-Allotment No. SR2009-12-007232 dated December 22, 2009. On the same day, DPWH-NCR Regional Director Edilberto D. Tayao requested the modification of the project into eight phases, each to be separately bid out for P5,000,000.00. The request was approved by DPWH Assistant Secretary Dimas S. Soguilon and Undersecretary Manuel M. Bonoan on December 28, 2009. The DPWH-NCR Bids and Awards Committee (BAC) allegedly conducted a public bidding on the same day, with only one contractor bidding for each phase. The project was awarded and implemented by the lone bidders for each phase. Subsequently, a Notice of Disallowance (ND) was issued, disallowing payments made to the contractors amounting to P36,084,006.06 due to the alleged splitting of the SARO and contract. Assistant Regional Director Armando G. Estrella and BAC Member Lydia G. Chua were charged to settle the disallowance, along with other DPWH officers and BAC Members. 

 

Whether or not the Commission on Audit (COA) Proper committed grave abuse of discretion in sustaining ND No. 10-03 disallowing payments related to the infrastructure project.

NO. The COA National Government Section (NGS) – Cluster D ruled that there was no illegal splitting of the contract, absolving Bonoan, Soguilon, and Tayao. However, it upheld the liability of Estrella and the BAC Members due to irregularities in the procurement process, lack of compliance with pre-procurement requirements, absence of a proper public bidding, and deficiencies in the post-qualification evaluation.

The court acknowledged the importance of adhering to procurement requirements for transparency and fairness but found that DPWH-NCR did not comply with RA No. 9184 and its Revised IRR. The court held that Estrella, as BAC Chairman, was liable for the disallowance due to the absence of a public bidding and deficiencies in post-qualification evaluation. However, considering the completion of the project and rectification of defects, the court deemed it improper and unjust to hold petitioners liable for the entire disallowed amount. The liability of Estrella and Chua was reduced to the "net disallowed amount," subject to further post-audit to determine the value of the completed works. The court emphasized that this decision is without prejudice to administrative or criminal actions against responsible officers as warranted by existing laws and jurisprudence on illegal procurements.

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Ancheta v. Commission on Audit, G.R. No. 236725, [February 2, 2021]

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Ancheta v. Commission on Audit

 G.R. No. 236725, [February 2, 2021]

EN BANC, LOPEZ, M.V

 

Powers of COA;Commission on Audit Notice of Disallowances; petition for Review; Employees of GOCC 

The overarching rule is that all allowances are deemed included in the standardized salary rate, unless excluded by law or by a DBM issuance. This rule is premised upon the distinct policy to eliminate multiple allowances and other incentive packages, resulting in differences of compensation among government personnel.

 

The case involves the disallowance of benefits amounting to P3,354,123.50 granted by the Special Water District (SWD) in 2010. These benefits, including rice allowance, medical allowance, Christmas groceries, year-end financial assistance, mid-year bonus, and year-end bonus for its Board of Directors, were disallowed because they violated Department of Budget and Management (DBM) Corporate Compensation Circular (CCC) No. 10, which specified that additional allowances should only be given to incumbents as of June 30, 1989. Considering that the SWD Officers and Employees, who are actually receiving such benefits were employed after June 30, 1989, the COA concluded that the grants were unauthorized. 

SWD, a government-owned and controlled corporation (GOCC), was organized under Presidential Decree (PD) No. 198. The disallowance was challenged through appeals, first to the COA Regional Office No. 3 (COA-RO3), then to the COA Proper. Both the COA-RO3 and COA Proper affirmed the disallowance. Ancheta, the General Manager of SWD, along with other responsible parties, appealed to the Supreme Court. Petitioners insisted that the disbursements were authorized by DBM Secretary Diokno’s Letter dated November 8, 2000 addressed to certain local water district. 

 

Whether SWD was already covered by RA No. 6758 when the 2010 benefits were granted.

YES. The Supreme Court clarified that SWD, being a GOCC created under PD No. 198, was covered by RA No. 6758 starting from its creation in 1973. Under RA 6758, all allowances are deemed included in the standardized salary rate, unless excluded by law or by a DB Issuance. The Court emphasized that the coverage of RA No. 6758 applies to all positions, including those in GOCCs. This rule was premised upon the policy to eliminate multiple allowances and other incentive packages, resulting in differences of compensation among government personnel.

 

Whether the disallowance of the 2010 benefits was proper.

YES. The Court determined that the disallowance of benefits was proper, emphasizing that Section 12 of RA No. 6758 and DBM CCC No. 10 limit additional allowances to incumbents as of June 30, 1989. The Court rejected SWD's argument that DBM Letters authorized the benefits, stating that these letters could not override the law and that the benefits were unauthorized and appropriately disallowed.

 

Whether petitioners should be held liable for the refund of the disallowed amount

YES. The Court affirmed the COA's decision on the liability of Ancheta and Rapsing, the approving and certifying officers. It held that they were not acting in good faith or with diligence, as they neglected SWD's charter requirements and existing case laws that settled the application of Section 12 of RA No. 6758. The Court emphasized that good faith and diligence could absolve public officers from liability, but Ancheta and Rapsing's actions demonstrated a lack of due diligence. The Court further clarified that their liability should be limited to the "net disallowed amounts," excluding amounts already retained by other recipients who were absolved from liability. In conclusion, the Supreme Court affirmed the COA's decision with modifications, holding Ancheta and Rapsing solidarily liable to return only the "net disallowed amounts."

 

 

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