The Supreme Court dismissed a petition and affirmed, with modification, two Commission on Audit (COA) decisions that disallowed fringe benefits paid to the general manager (GM) and two assistant general managers (AGM) of the Baguio Water District (BWD) for the year 2009. The Court absolved only petitioner Wilhelmina A. Aquino from liability to return the disallowed amounts.
The Case
The BWD is a government-owned and controlled corporation (GOCC) established under Presidential Decree No. 198, or the Provincial Water Utilities Act of 1973.
On December 6, 2008, the BWD Board of Directors issued Resolution Nos. 64-2008 and 65-2008 authorizing the payment of monthly fringe benefits of PHP 40,000.00 to its GM and PHP 20,000.00 to its two AGM, starting in January 2009. The payments were justified as recognition of the GM and the AGMs' efforts in sustaining the operations of the District, including completing the AusAid project activation jointly with the Local Water Utilities Administration and sourcing out new water sources. Resolution No. 64-2008 further discontinued the grant of extraordinary and miscellaneous expenses (EME). The amounts were charged to the BWD's extraordinary expenses account and subjected to post-audit.
On May 15, 2012, the BWD's resident auditors issued Notice of Disallowance (ND) Nos. 12-013-101-(09) to 12-022-101-(09), covering a total of PHP 683,882.37 in disbursements to the GM and PHP 705,882.24 to the two AGMs. The disbursements to the GM were disallowed for being in excess of the amount allowed for extraordinary expenses under the then-applicable 2009 General Appropriations Act (GAA) and Corporate Budget Circular No. 18, while the disbursements to the AGMs were disallowed because AGMs are not among the personnel entitled to EME under the 2009 GAA.
Petitioners appealed to the COA-Cordillera Administrative Region (CAR), which on May 21, 2015 rendered a Decision affirming the NDs. The COA-CAR sustained the resident auditors' reasoning on the applicability of the 2009 GAA and found that the fringe benefits were based on board resolutions passed in 2008, with no proof they were part of BWD's benefit package before December 31, 1999. The COA later issued Decision Nos. 2020-487 and 2023-457, dated January 31, 2020 and December 7, 2023, which affirmed the disallowance.
The Issue
The case asked whether the fringe benefits paid to the GM and AGMs were validly disallowed, and which officers and recipients are liable to return the disallowed amounts.
The Ruling
The Supreme Court dismissed the petition and affirmed the COA decisions with modification. In its dispositive portion, the Court ruled:
"ACCORDINGLY, the Petition for Certiorari is DISMISSED. The Decision Nos. 2020-487 and 2023-457 of the Commission on Audit, dated January 31, 2020 and December 7, 2023, are AFFIRMED WITH MODIFICATION, in that petitioner Wilhelmina A. Aquino is ABSOLVED from liability to return the amounts disallowed thereunder."
By the Numbers
- PHP 40,000.00 — monthly fringe benefit for the GM
- PHP 20,000.00 — monthly fringe benefit for each of the two AGM
- PHP 683,882.37 — total disbursements to the GM disallowed
- PHP 705,882.24 — total disbursements to the two AGMs disallowed
- December 6, 2008 — date Resolution Nos. 64-2008 and 65-2008 were issued
- May 15, 2012 — date the resident auditors issued the Notices of Disallowance
- May 21, 2015 — date of the COA-CAR Decision affirming the NDs
- January 31, 2020 and December 7, 2023 — dates of COA Decision Nos. 2020-487 and 2023-457
The Court's Reasoning
The Court found the certifying and approving officers in bad faith, holding that the Watershed/ROW Supervisor and Administrative Division Manager certified that the questioned EME payments were necessary, lawful, and incurred under their direct supervision, despite the absence of any in-house or Department of Justice legal opinion or ruling supporting the grant of EMEs. Petitioners failed to present any legal opinion or ruling supporting their interpretation of the compensation-fixing power of local water districts under Presidential Decree No. 198, which the Court stressed has been soundly rejected in Paguio and its allied rulings. The Court held that the officers relied on their own institutional reading of Presidential Decree No. 198, without regard to Republic Act No. 6758 and other legal limitations on the compensation-fixing power of the BWD.
The Court found petitioners solidarily liable for the net disallowed amount, save for Aquino, whose participation as Senior Accountant was limited to certifying that the documents supporting the disbursements were complete and proper. Parties performing purely ministerial duties unrelated to the illegality of a disbursement may be excused from audit liability on the basis of good faith. The Court noted it could not extend this absolution to Joanna Carame and Jo Allan Baptista, who did not join the Petition and are therefore outside the jurisdiction of the Court.
The Court also held de Guzman, Royeca and Tenedero liable for the amounts they received, as these were granted contrary to Republic Act No. 6758 and DBM CCC No. 10. The EMEs were disallowed not for mere procedural reasons but for being ultra vires, so they cannot be considered benefits genuinely given in consideration of services rendered.
Source: Supreme Court Decision in G.R. No. 276775, penned by Associate Justice Samuel H. Gaerlan.
This report summarizes a public Supreme Court decision and is not legal advice.