G.R. No. 45130 - People vs. Bonoan y Cruz

Petitioners are Zamboanga City Water District (ZCWD), a government-owned and controlled corporation (GOCC), represented by its General Manager Leonardo Rey D. Vasquez, its Employees Union, and several employees.
Respondent is the Commission on Audit (COA).
The case involves a petition for certiorari to reverse and set aside COA’s Decision (October 28, 2010) and Resolution (June 6, 2014) affirming Notices of Disallowance (NDs) issued by COA Audit Team Leader regarding several payments made by ZCWD.

ZCWD created under P.D. No. 198 (Local Water Utilities Act of 1973), as amended by R.A. No. 9286.
On January 9, 2007, COA Audit Team Leader issued several NDs concerning payments made during former GM Juanita L. Bucoy’s tenure, totaling approximately P27.29 million. The disallowed payments included:

Salary increase of GM Bucoy exceeding Department of Budget and Management (DBM) guidelines.
Representation and transportation allowances paid not in accordance with DBM-approved rates.
Monetization of leave credits computed using improper rates.
Back payments of Cost of Living Allowance (COLA) and Amelioration Allowance (AA) in violation of laws and circulars.
Payment of midyear incentives and 14th month pay lacking legal basis.
Collective Negotiation Agreement (CNA) incentives lacking required proof of cost savings.
Excess per diems to Board of Directors (BOD) beyond authorized amounts.
Excess representation allowance payments and payments for life insurance programs outside Government Service Insurance System (GSIS).

BOD lacked authority to fix GM’s salary beyond DBM guidelines.
Payments of RATA and back pay of allowances were not in accordance with applicable laws and circulars.
Midyear and CNA incentives had no legal basis without compliance to prescribed procedures.
Per diems and 14th month pay exceeded legal limits.

COA affirmed the LAO decision on October 28, 2010 and denied ZCWD's motion for reconsideration on June 6, 2014.

BOD claims authority under Section 23, P.D. No. 198, as amended, to fix GM’s salary.
Employees assert entitlement to COLA and AA based on earlier Supreme Court ruling in Philippine Ports Authority Employees Hired After July 1, 1989 v. COA.
Position that CNA incentives were properly granted per PSLMC Resolution No. 2.
14th month pay has been consistently paid since 1989 and disallowance violates equal protection.
Per diems paid to BOD validly authorized by LWUA Board Resolution No. 120.
Petitioners argue payments made in good faith and should not be required to refund amounts.

Whether the disbursements covered by the Notices of Disallowance were proper or improper under applicable laws and regulations.
Whether the petitioner ZCWD is liable to refund disallowed amounts or may be excused by reason of good faith.