Facts:

The case at hand involves Balayan Water District (BWD), along with its officials Conrado S. Lopez and Romeo D. Pantoja, as petitioners against the Commission on Audit (COA) as the respondent. The events started when BWD's Board of Directors passed Resolution No. 16-06 on February 10, 2006, granting the payment of the Cost of Living Allowance (COLA) to its employees, covering accrued COLA from 1992 to 1999. However, notices of disallowance (NDs) were issued on November 14, 2012, disallowing the payment of COLA for the years 2010 and 2011. This decision was appealed to the COA Regional Office No. IV-A, which denied the appeal on November 12, 2013, stating that BWD was not covered by Letter of Instruction No. 97, which allowed similar payments to government-owned and controlled corporations (GOCC). This decision was subsequently affirmed by the COA on December 27, 2016, solidifying the denial of petitioners’ request for the payment of accrued COLA based on this instruction and

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Facts:

Parties and Institutional Background

• Petitioners:

- Balayan Water District (BWD), a government entity organized under Presidential Decree No. 198 (as amended). - Conrado S. Lopez, General Manager of BWD. - Romeo D. Pantoja, a representative of BWD employees who received the disallowed Cost of Living Allowance (COLA). - Commission on Audit (COA), which issued notices of disallowance (NDs) and rendered decisions affirming such disallowances.

Chronology and Disbursement of COLA

• On February 10, 2006, the BWD Board of Directors passed Resolution No. 16-06 granting the payment of COLA in installments, covering the accrued allowance for the period 1992–1999.
• On November 14, 2012, multiple Notices of Disallowance were issued disallowing the payment of accrued COLA for calendar years 2010 and 2011.
• Petitioners initially appealed before the COA Regional Office (COA-RO), and on November 12, 2013, the COA-RO denied the appeal, affirming the NDs based on its interpretation that water districts were not covered by LOI No. 97—which explicitly permits COLA payments for government-owned and controlled corporations (GOCCs).
• The COA-RO additionally emphasized that for BWD employees to be entitled to COLA, they needed to have been employed on or before July 1, 1989, with evidence that they were already receiving COLA at that time.

Review Proceedings and Subsequent COA Decision

• Dissatisfied with the COA-RO ruling, petitioners escalated the matter by filing a petition for review before the COA.
• In its December 27, 2016 decision, the COA reaffirmed the COA-RO decision, maintaining that:

- Local water districts were excluded from LOI No. 97. - The employees’ entitlement to COLA depended on their receipt of such allowance prior to the effectivity of R.A. No. 6758 (July 1, 1989). - The integration principle under Section 12 of R.A. No. 6758 applied, rendering the COLA already incorporated into the standardized salary rates.

Petition for Certiorari and Arguments Presented

• Petitioners filed a petition for certiorari under Rule 64 of the Revised Rules of Court seeking to reverse the COA’s decision.
• They argued that the BWD Board Resolution had appropriately applied relevant jurisprudence and that:

- Local water districts should be regarded as covered by LOI No. 97, as held in Metropolitan Naga Water District (MNWD) v. COA. - The COLA was not subject to the incumbency and prior receipt requirements since it was integrated into salaries. - They acted in good faith, thereby justifying an exemption from refunding the disallowed amounts. - The petitioners had not proven a grave abuse of discretion. - The issuance of DBM National Budget Circular No. 2005-502, existing at the time the COLA was approved, explicitly warned that officials authorizing COLA disbursements would be held liable.

Factual Discrepancies in the Application of Precedent

• Petitioners relied heavily on the MNWD case, noting that:

- Local water districts were included under LOI No. 97. - The requirement for proving incumbency or prior receipt of COLA was unnecessary. - The BWD Board approved the release of COLA back payments through a resolution issued in 2006, several years after relevant DBM circulars had taken effect. - This timing underscored the existence of a clear administrative prohibition against such payments.

Issue:

• Whether the COA gravely abused its discretion amounting to a lack or excess of jurisdiction in denying the entitlement of BWD employees to accrued COLA for the period 1992–1999 on the basis of LOI No. 97.
• Whether the COA gravely abused its discretion by failing to appreciate the “good faith” argument of the petitioners as recipients of the COLA back payments.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)