Case Summary (G.R. No. 263014)
Applicable Law
The case primarily pertains to Republic Act No. 6758, the Compensation and Position Classification Act of 1989, particularly Section 12 which deals with the integration of allowances into standardized salary rates. Furthermore, various COA circulars and administrative orders relevant to disallowed benefits and the concept of unjust enrichment were invoked in the proceedings.
The Disallowed Benefits
During the period of January 1 to December 31, 2011, the SRWD Board of Directors authorized the payment of various allowances and bonuses to employees hired after December 31, 1999, totaling PHP 1,727,409.75, as well as PHP 239,000.00 in year-end financial assistance and cash gifts to its board members. However, post-audit findings indicated that these payments lacked a legal basis, leading to the issuance of Notices of Disallowance (ND) Nos. 12-001-101(11) and 12-002-101(11).
COA's Rationale for Disallowance
The COA ruled that the additional allowances and bonuses for employees hired post-December 31, 1999, were already integrated into the basic salaries under Republic Act No. 6758. Additionally, payments to board members required explicit authorization, which was not duly provided, as evidenced by a lack of approval from the President under relevant circulars. The COA partially granted the petition, absolving the employee-recipients from refunding the amounts but maintaining liability for other SRWD officials.
Petitioners' Claims of Good Faith
CastaAeda, Jr. and other officials contended that they acted in good faith, relying on a letter from the Department of Budget and Management (DBM) which purportedly authorized the benefits. They argued that their actions were based on established practices and prior decisions, which they believed provided a valid basis for the allowances, thus asserting that they should be excused from refunding the disallowed amounts.
Respondent's Counterarguments
The COA, represented by the Office of the Solicitor General, rejected the petitioners' claims of good faith, asserting that their reliance on the DBM letter was misplaced, and emphasized that they failed to adhere to the relevant laws governing public funds. The COA also pointed out that presumption of good faith is negated by gross negligence, which was evident in the approving and certifying officers' neglect of their duty to ensure compliance with laws and regulations.
The Court's Findings
Ultimately, the Court upheld the COA's findings, ruling that the integration of allowances
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Background and Parties Involved
- Petitioners are Engr. Numeriano M. CastaAeda, Jr., General Manager of San Rafael Water District (SRWD), and other SRWD officials and employees.
- Respondent is the Commission on Audit (COA).
- The case arose from COA Notices of Disallowance (NDs) disallowing payments made to employees hired after December 31, 1999, and to the Board of Directors (BOD) of SRWD for the period January 1 to December 31, 2011.
Nature of the Petition
- Petition for Certiorari under Rule 65 in relation to Rule 64 of the Rules of Court.
- The petition challenges COA Decision No. 2018-188 and Resolution No. 2022-118 affirming Notices of Disallowance Nos. 12-001-101(11) and 12-002-101(11).
- The disallowances involve:
- Additional allowances and bonuses amounting to PHP 857,340.75 paid to employees hired after December 31, 1999.
- Year-end financial assistance and cash gifts amounting to PHP 239,000.00 paid to SRWD BOD members.
- Petitioners were found liable for refund of the disallowed amounts.
Legal Framework
- SRWD is a government-owned and controlled corporation (GOCC) under Presidential Decree No. 198, as amended.
- Republic Act No. 6758 (Compensation and Position Classification Act of 1989) was enacted on July 1, 1989.
- Section 12 of RA 6758 mandates integration of allowances into standardized salary rates except for specified allowances such as representation, transportation, clothing, hazard pay, etc., and allowances received by incumbents as of July 1, 1989.
- DBM Corporate Compensation Circular (CCC) No. 10-99 implements the law’s provisions.
- LWUA Board Resolution No. 239 and LWUA Memorandum Circular No. 004.11 pertain to allowances to water district BODs.
- Executive Order No. 24 and Administrative Order No. 103 also govern compensation and austerity measures in GOCCs.
Facts and Audit Findings
- SRWD paid additional benefits including rice, grocery, medical allowances, and year-end financial assistance to 22 employees hired after December 31, 1999, totaling PHP 1,727,409.75 in 2011.
- Year-end financial assistance and cash gift also paid to SRWD BOD members amounting to PHP 239,000.00.
- COA Audit Observation Memorandum found these payments were without legal basis.
- SRWD claimed good faith payment upon authorization from LWUA and DBM.
- COA issued Notices of Disallowance and named officers and employees liable for the payments.
- Appeals by petitioners were denied by COA Regional Office.
COA Decision
- COA Decision No. 2018-188 partially granted petition but affirmed the disallowance:
- Employee-recipients were absolved from refunding the disallowed benefits initially.
- Approving and certifying officers and BOD members remain liable for refund.
- COA ruled that allowances granted