G.R. No. 157542 - Barbo vs. Commission on Audit

Petitioners: Rebecca A. Barbo, Eleonora R. De Jesus, and Antonio B. Magtibay – officials of the Local Water Utilities Administration (LWUA) and designated members of the Interim Board of Directors of the San Fernando Water District (SFWD).
Respondent: The Commission on Audit (COA).

The LWUA Board of Trustees issued Board Resolution No. 313, Series of 1995, and Board Resolution No. 39, Series of 1996, authorizing SFWD’s Board of Directors to receive various reimbursable allowances and benefits.
Benefits disbursed to petitioners between 1994 and 1996 included Extraordinary & Miscellaneous Expense (EME), Rice Allowance, Christmas Bonus, and Productivity Bonus, among potentially other allowances.

On June 30, 1997, a COA Special Audit Team audited SFWD’s financial accounts (covering January 1, 1994 to July 15, 1996) and issued Notice of Disallowance No. 97-004 (94, 95, 96).
The disallowance was based on findings that the allowances and benefits were excessive and contrary to Sections 228, 162, and 163 of the Government Accounting and Auditing Manual (GAAM) and Civil Service Commission (CSC) Resolution No. 954073, involving implications of Section 13 of Presidential Decree (PD) No. 198.

The COA Regional Director, through his First Indorsement dated June 5, 1998, affirmed the Special Audit Team’s findings, relying on the precedent set in Cruz v. Cabili and de Vera, which held that LWUA officers serving on water district boards were not entitled to additional compensation beyond per diems.
Petitioners appealed the regional decision to the COA, challenging the validity of the authorizations under board resolutions and arguing that allowances such as Christmas Bonus, Productivity Bonus, and others were not part of “compensation.”
COA Decision No. 2000-133 dated May 16, 2000 upheld the Regional Director’s ruling, emphasizing that directors were prohibited from receiving additional compensation.
A subsequent motion for reconsideration by the petitioners was denied in COA Resolution dated February 27, 2003.

Petitioners advanced a Petition for Certiorari under Rule 64 alleging grave abuse of discretion and lack of jurisdiction by the COA.
Their arguments included:

The CSC Resolution applied in Cruz v. Cabili and de Vera could not be extended to them as they were not parties to that case.
The resolution, framed as an implementing rule, exceeded CSC’s jurisdiction.
The appropriate authority to decide matters of compensation was the Department of Budget and Management (DBM) rather than the CSC.
Allowances and benefits such as the Christmas Bonus, Rice Allowance, and EME were not "compensation" in the strict legal sense.

Petitioners further maintained that they acted in good faith under the belief that the board resolutions from LWUA authorized the payments and that they were thus not liable to refund the disallowed amounts.

Whether the COA has the jurisdiction to motu proprio declare that LWUA Board Resolution No. 313, as amended by Resolution No. 39, conflicts with Section 13 of PD No. 198.
Whether this determination on the matter of allowances and other benefits falls within the power of an independent constitutional body such as the COA, or should be reserved for the courts or DBM.

Whether Section 13 of PD No. 198, as amended, prohibits petitioners’ entitlement to additional allowances (RATA, EME, bonuses, and other benefits) beyond what is allowed (i.e., per diems).
The proper interpretation of “compensation” for members of the board of directors of water districts.

Whether petitioners are liable to refund or settle the disallowed allowances, bonuses, and benefits received despite having acted in good faith under the belief that the board resolutions authorized such payments.