Case Digest (G.R. No. 179117)
Facts:
In the case of Hagonoy Water District, Celestino S. Vengco Jr., and Remedios M. Osorio v. Commission on Audit (COA) [G.R. No. 247228, March 02, 2021], the petitioners are the Hagonoy Water District (HWD), a government-owned and controlled corporation established under Presidential Decree No. 198, and its officials Celestino S. Vengco Jr., the General Manager, and Remedios M. Osorio, the Division Manager of Finance. The events unfolded when HWD disbursed an anniversary bonus and rice allowance to its employees in 2012 according to Board Resolutions from the 1990s. Subsequently, the COA issued Notice of Disallowance (ND) No. 2013-001-HWD(2012) on November 14, 2013, disallowing P582,000 of these disbursements—specifically, a P174,000 excess in the anniversary bonus which exceeded the limit set by Administrative Order No. 263, and a P408,000 rice allowance to employees hired after July 1, 1989, contrary to Section 12 of RA No. 6758 which restricts such payments to incumbents as of tCase Digest (G.R. No. 179117)
Facts:
- Parties Involved
- Petitioner – Hagonoy Water District (HWD): A government-owned and controlled corporation (GOCC) organized under Presidential Decree No. 198 as amended.
- Petitioners –
- Celestino S. Vengco, Jr.: General Manager of HWD.
- Remedios R. Osorio: Division Manager – Finance of HWD.
- Respondent – Commission on Audit (COA).
- Disbursements and Allowances
- In 2012, HWD disbursed an anniversary bonus and rice allowance to its officials and employees based on previously adopted board resolutions (Board Resolution No. 009 for the anniversary bonus and Board Resolution No. 016 for the rice allowance).
- Additional allowances were similarly granted to the members of the HWD Board of Directors during the same period.
- Issuance of Notices of Disallowance (NDs)
- First Notice of Disallowance (ND No. 2013-001-HWD(2012)):
- Disallowed amounts totaling ₱582,000.00.
- Comprised ₱174,000.00 representing an excess in the anniversary bonus attributable to payments above the ₱3,000.00 limit mandated by AO No. 263.
- Comprised ₱408,000.00 corresponding to the rice allowance paid to employees hired after July 1, 1989, thereby violating Section 12 of RA No. 6758 and COA Resolution No. 2004-006.
- Second Notice of Disallowance (ND No. 2013-002-HWD(2012)):
- Disallowed additional allowances granted to the HWD Board of Directors for lack of approval from the Local Water Utilities Administration (LWUA) in contravention of Section 13 of PD No. 198 (as amended by RA No. 9286) and LWUA MC No. 004-002.
- COA Proceedings and Rulings
- Petitioners filed separate appeal memoranda with the COA Regional Office No. III questioning both NDs.
- COA Regional Office Decision No. 2014-84 (dated October 9, 2014) affirmed both NDs:
- Upheld the disallowance of the rice subsidy for non-incumbent employees as mandated by Section 12 of RA No. 6758.
- Affirmed the disallowance of additional allowances given to the Board of Directors due to non-compliance with LWUA approval requirements.
- COA Proper Decision No. 2017-486 affirmed the two NDs, clarifying that:
- The passive beneficiaries who received the rice allowance in good faith are excused from refunding the amount.
- The members of the Board of Directors, as well as the approving and certifying officers, are held solidarily liable to refund the disallowed amounts.
- Subsequent motion for reconsideration filed by petitioners was denied in COA Resolution dated November 26, 2018.
- Petitioners’ Arguments
- Asserted good faith in the disbursement of the rice allowance based on an established practice at HWD since 1993 and the issuance of a board resolution in 1992.
- Argued that, similarly to the passive recipients who were excused from refunding under the doctrine of good faith, the officers who approved and certified the rice allowance should likewise be absolved from liability.
Issues:
- Whether the Commission on Audit gravely abused its discretion in sustaining the disallowance of the rice subsidy, given that the rice allowance was a long-established practice in HWD.
- Whether the Commission on Audit erred in holding the approving and certifying officers, as well as the HWD Board of Directors, solidarily liable for refunding the disallowed rice allowance despite their purported good faith.
- Whether the principle of non-diminution of pay and the established practice can be invoked to justify the payment of allowances that contravene the clear statutory provisions under RA No. 6758 and relevant DBM issuances.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)