Title
Almadovar vs. Pulido-Tan
Case
G.R. No. 213330
Decision Date
Nov 16, 2015
COA disallowed ISAWAD payments for salary increases, RATA, legal fees, and honoraria due to lack of legal basis; GM acted in good faith for salary but liable for other refunds.
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Case Digest (G.R. No. 213330)

Facts:

Background of the Case:

  • The case involves Aleli C. Almadovar, the General Manager (GM) of Isabela Water District (ISAWAD), a government-owned and controlled corporation (GOCC) created under Presidential Decree (P.D.) No. 198, as amended by Republic Act (R.A.) No. 9286.
  • The Commission on Audit (COA) issued Notices of Disallowance (NDs) for various payments made by ISAWAD, including salary increases, legal retainer fees, honoraria, and Representation and Transportation Allowances (RATA) for the GM.

Specific Disallowances:

  1. ND No. 2006-001 (2005): Payment of a salary increase for the GM from P20,823.00 to P35,574.00 per month from August to December 2005, without legal basis. Amount: P73,755.00.
  2. ND No. 2006-002 (2005): Payment of legal retainer fees at P4,000.00 per month from January to December 2005 without proper authority from the Office of the Government Corporate Counsel (OGCC) and COA concurrence. Amount: P48,000.00.
  3. ND No. 2006-003 (2005): Payment of honorarium to an OGCC lawyer without express authority from the OGCC and proof of service rendered. Amount: P24,000.00.
  4. ND No. 2006-004 (2005): Payment of RATA to the GM over and above the authorized rate under Corporate Budget Circular (CBC) No. 18 and National Budget Circular (NBC) No. 498. Amount: P6,000.00.

Petitioner's Arguments:

  • The petitioner argued that the salary increase and RATA were in accordance with R.A. No. 9286, which amended the Provincial Water Utilities Act of 1973.
  • She also claimed that the engagement of private counsel, Atty. Quirino Esguerra Jr., and the designation of OGCC lawyer, Atty. Fortunato G. Operario Jr., were in accordance with the law, and thus, the payments made to them were proper.

COA Regional Office Ruling:

  • The COA Regional Office affirmed the NDs with modifications, stating that the GM's salary increase violated R.A. No. 6758 (Salary Standardization Law or SSL). The RATA disallowance was also upheld as it exceeded the allowable rate.
  • The payment of honoraria to Atty. Operario was disallowed due to lack of authority, and the disallowed amount for Atty. Esguerra's retainer fees was reduced to P40,000.00 for the period covered by a valid contract.

COA En Banc Ruling:

  • The COA En Banc affirmed the Regional Office's decision, emphasizing that the engagement of private lawyers required the written conformity of the OGCC and COA concurrence, which was not obtained for the period from January to October 2005.

Issue:

  1. Whether the disbursements under the NDs were improper.
  2. Whether the petitioner is liable to refund the disallowed amounts.

Ruling:

  • The Supreme Court affirmed the COA's decision with modification, holding that:
    1. Salary Increase: The salary increase of the GM was improper as it violated R.A. No. 6758 (SSL). However, the petitioner acted in good faith and is not required to refund the amount.
    2. RATA: The RATA payments were correctly disallowed as they exceeded the authorized rates under CBC No. 18 and NBC No. 498.
    3. Legal Retainer Fees: The payments to Atty. Esguerra from January to October 2005 were unauthorized due to the lack of COA concurrence. The retainership contract renewal required COA concurrence, which was not obtained.
    4. Honorarium to Atty. Operario: The honorarium payments were improper as Atty. Operario lacked authority from the OGCC at the time the services were rendered.
    5. Good Faith: The petitioner acted in good faith regarding the salary increase but not in the other disbursements, which were made despite the lack of necessary approvals.
    6. Injunctive Relief: The Court denied the petitioner's request for a writ of injunction, as she failed to establish a clear legal right to the relief sought.

Ratio:

  1. Applicability of R.A. No. 6758 (SSL): The Court ruled that local water districts (LWDs) are subject to the SSL unless expressly exempted by law. R.A. No. 9286 did not expressly or impliedly repeal the SSL, and thus, the salary increase for the GM was improper.
  2. Engagement of Private Lawyers: The engagement of private lawyers by GOCCs requires the written conformity of the OGCC and COA concurrence. Failure to obtain these approvals renders the engagement unauthorized, and payments made under such circumstances are disallowed.
  3. Good Faith Defense: Good faith can excuse officials from refunding disallowed amounts if the disbursements were made under an honest belief that they were lawful. However, this defense does not apply when the disbursements were made despite the lack of necessary approvals.
  4. Refund Liability: Officials who approved improper disbursements are liable to refund the amounts unless they acted in good faith. In this case, the petitioner was excused from refunding the salary increase but not the other disallowed amounts.
  5. Injunctive Relief: Injunctive relief requires a clear legal right, which the petitioner failed to establish. The disbursements were without legal basis, and thus, the issuance of an injunction was improper.

Conclusion:

The Supreme Court affirmed the COA's decision with modification, absolving the petitioner from refunding the salary increase but upholding the disallowance of the other payments. The Court emphasized the importance of adhering to legal requirements in government transactions and the limited applicability of the good faith defense.


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