G.R. No. L-3560 - Ledesma vs. Doronila

On 15 June 2001, the Department of Budget and Management (DBM) issued Local Budget Circular (LBC) No. 74 authorizing a maximum 5% salary adjustment for Local Government Units (LGUs) effective 1 July 2001 pursuant to Republic Act No. 9137.
The Sangguniang Bayan (Municipal Council) of Mayoyao, Ifugao enacted Resolution No. 41, s. 2002 on 13 May 2002, approving the 2002 Annual Municipal Budget and appropriating funds (including P1,590,376.00) for the salaries and benefits of 17 newly created positions.

The Sangguniang Panlalawigan of Ifugao reviewed and approved the 2002 Annual Municipal Budget with conditions: the 17 new positions should not be made retroactive and must be filled following Civil Service rules.
On 8 July 2002, the Sangguniang Bayan approved Resolution No. 66, s. 2002, adopting a first-class salary scheme and implementing a 5% salary increase in accordance with LBC No. 74.
In furtherance of this, Resolution No. 94, s. 2002 was enacted to re-align P1,936,524.96 from the budget originally appropriated for the 17 positions to fund the salary increase.
Subsequent issuance of DBM LBC No. 75 on 12 July 2002 provided additional guidelines on personal services limitation under the Local Government Code (LGC).

The Sangguniang Panlalawigan, while approving the 2002 Annual Budget (Resolution No. 2002-556), clarified that its approval did not extend to the 5% salary increase, which was separately implemented through Resolution No. 66, s. 2002.
The Regional Legal and Adjudication Office (RLAO) of the COA-Cordillera Administrative Region (COA-CAR) issued a Notice of Disallowance on 16 May 2003 for the salary increase amounting to P895,891.50, citing that the increase exceeded the personal services (PS) budget limitation as prescribed under Section 325(a) of the LGC, and that the re-alignment done under Resolution No. 94, s. 2002 was not the proper manner of granting such increase.
Petitioners (municipal officers and employees who approved the resolutions) were ordered to refund the disallowed amount.
A Motion for Reconsideration was filed but was denied on 5 August 2003 (as seen in COA Decision No. 2007-040). Subsequently, petitioners filed a Petition for Review.

The petition for certiorari was filed under Rule 64 of the Rules of Court challenging COA Decision No. 2005-071 (dated 29 December 2005) and the subsequent denial in COA Decision No. 2007-040.
A procedural issue arose regarding the timeliness of the petition, with the respondent arguing that the Motion for Reconsideration was filed too late; nevertheless, petitioners argued that delays were justified due to the typhoon “Feria” closure in Metro Manila.

Petitioners maintained that Resolutions Nos. 66 and 94, s. 2002 were a valid exercise of legislative prerogative under DBM LBC No. 74.
They contended that the 2002 municipal budget did not exceed the PS limitations and that the re-alignment of funds did not create an additional PS allocation, but rather reallocated from funds originally earmarked for vacated and/or abolished positions.
The dispute centered on the conflicting computations based on DBM LBC No. 74 versus LBC No. 75, and the factual finding that the municipality adopted salary rates under LBC No. 69 instead of LBC No. 74.

Whether the petition for certiorari was filed within the reglementary period given the alleged delay and the justification pointing to government office closures due to typhoon “Feria”.
Whether the Motion for Reconsideration was timely and whether its delay affects the finality of COA Decision No. 2005-071.

Whether the grant of the 5% salary increase through Resolutions Nos. 66 and 94, s. 2002 constituted a valid exercise of legislative authority of the Sangguniang Bayan.
Whether the COA correctly disallowed the amount of P895,891.50 on the ground that the increase exceeded the PS limitation stipulated in Section 325(a) of the LGC.
Whether the petitioners acted in good faith such that they should not be required to refund the disallowed amount despite the administrative error in computing the PS allocation.