EN
BANC
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GABRIEL A. MAGNO, NIEVES P. CASTRO, EMIDIO S.
MORALES, CONCEPCION Y. AQUINO AND RODOLFO Y. CERVAS, AS MEMBERS OF THE BOARD
OF DIRECTORS, MANGALDAN WATER DISTRICT,
Petitioners, - versus - HON. COMMISSION ON AUDIT, Respondent. |
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G. R.
No. 149941 Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
CARPIO
MORALES, AZCUNA,
TINGA, CHICO-NAZARIO,
GARCIA,
VELASCO,
JR., NACHURA,
and REYES,
JJ. Promulgated: August 28, 2007 |
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CHICO-NAZARIO, J.:
This case is a Petition for Certiorari under Rule 64 in relation to
Rule 65 of the 1997 Revised Rules of Civil Procedure, seeking to annul or
modify on the grounds of grave abuse of discretion amounting to lack or excess
of jurisdiction and for being contrary to law and jurisprudence, (1) Commission
on Audit (COA) Decision No. 2000-385,[1]
dated 29 December 2000, which affirmed the decision[2] of
the Director, COA Regional Office No. 1, San Fernando, La Union, disallowing
the payment of various monetary benefits to herein petitioners for calendar
year 1997 in the total amount of P303,172.00; and (2) COA Resolution No.
2000-177,[3]
dated 6 September 2001, which denied petitioners’ Motion for Reconsideration.
Herein petitioners Gabriel A. Magno,
Nieves P. Castro, Emidio S. Morales, Concepcion Y. Aquino and Rodolfo Y. Cervas
were members of the Board of Directors of the Mangaldan Water District (MAWAD),
Mangaldan, Pangasinan from
The factual milieu of the present
case are the following:
The Local Water Utilities Administration,[4]
through its Board of Trustees, adopted and approved Resolution No. 313, Series
of 1995, as amended by Board Resolution No. 39, Series of 1996 (Resolution No.
313, as amended), entitled Policy
Guidelines on Compensation and Other Benefits for the Water District Board of
Directors, under which the members of the Water District Board of Directors
were granted bonuses, benefits, and allowances.
By virtue of the said Resolution, various benefits consisting of rice,
uniform, representation, transportation, special financial assistance, bonus,
cash gift and productivity/incentive allowances amounting to P303,172.00
were granted by MAWAD to the petitioners.
Meanwhile, the Director and
Officer-in-Charge of Corporate Audit Office II, COA, sent a Memorandum to the COA
General Counsel requesting an Authoritative Opinion regarding the
above-mentioned Policy Guidelines. In
response to the said Memorandum, the COA General Counsel issued Opinion No.
97-015,[5]
dated 7 August 1997, stating therein that the payments of compensation and
other benefits aside from the allowable per
diems to Water District Board of Directors pursuant to Resolution No. 313, as
amended, should be disallowed in audit for lack of legal basis, because the
same was inconsistent with the provision of Section 13 of Presidential Decree No.
198,[6] as
amended, which is the law governing the Local Water Districts. Said Section 13, Presidential Decree No. 198,
as amended, specifically provides that:
Sec. 13.
Compensation. - Each director shall receive a per diem, to be determined by the board,
for each meeting of the Board actually attended by him, but no director shall
receive per diems in any given month in excess of the equivalent of the total per diem of four meetings in any given
month. No director shall receive
other compensation for services to the district.
Any
per diem in excess of P50
shall be subject to approval of the Administration. (Emphasis supplied.)
The Director, COA Regional Office No.
1,
The COA, through its Auditors --
namely: Elsa H. Ramos-Mapili and Concordia R. Decano from COA Regional Office
No. 1, San Fernando, La Union, in their capacity as team leader and member,
respectively -- conducted a special audit on the operations of MAWAD for the
year 1997. On P303,172.00, which were granted to the petitioners in
violation of aforecited Section 13, Presidential Decree No. 198, as amended. The said disallowance was stated under Notice
of Disallowance No. 98-002-000 (97). The
petitioners were likewise requested to refund the allowances, bonuses and
benefits conferred upon them.
Petitioners appealed the aforesaid
disallowance to the Director, COA Regional Office No. 1,
Hence, this Petition.
Petitioners vehemently argue that the
COA acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in sustaining the Notice of Disallowance against them. Petitioners further claim that the COA Decision,
affirming the said Notice of Disallowance, was rendered by it on the basis of Opinion
No. 97-015 of the COA General Counsel, which Opinion was not approved by the COA
as a collegial body. Citing Orocio v. Commission on Audit,[8] petitioners
maintain that the COA General Counsel can only offer legal advice or render an
opinion to aid the COA in the resolution of a case or a legal question, but it is
bereft of any power to act for or on behalf of the COA.
Petitioners likewise ascribe grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of COA
in finding that they were already under the coverage of Republic Act No. 6758,[9]
and were governed by the implementing guidelines set forth in Department of
Budget and Management Corporate Compensation Circular (DBM CCC) No. 10, Section
2.0, dated 23 October 1989; thus, they were no longer entitled to the
allowances, benefits and bonuses provided for under the previously mentioned
Resolution No. 313, as amended.
Petitioners contend that for the year 1997, the year covered by the
assailed audit, they cannot be said to have been governed by DBM CCC No. 10,
dated
Given
the foregoing, the issues that must be resolved in this Petition are the
following:
I.
Whether
the COA acted with grave abuse of discretion in affirming the Notice of
Disallowance against the petitioners, allegedly based on the Opinion of the COA
General Counsel.
II.
Whether the
COA gravely abused its discretion in finding that the petitioners were governed
by Republic Act No. 6758, as implemented by DBM CCC No. 10, thus, they were not
anymore entitled to the bonuses, allowances and benefits provided for in
Resolution No 313, as amended.
The petitioners in this case are
laboring under the wrong impression that the COA Decision, affirming the Notice
of Disallowance against them, was based on the Opinion of the COA General
Counsel. The Court believes otherwise.
It must be remembered that the COA,
before sustaining the Notice of Disallowance against the petitioners, had taken
into consideration the findings of its Auditors from COA Regional Office No. 1,
San Fernando, La Union, who were duly authorized to conduct an audit
examination on the operations of MAWAD; as well as the decision of the
Director, COA Regional Office No. 1, San Fernando, La Union. The COA, in affirming the Notice of
Disallowance against the petitioners, went further by applying Republic Act No.
6758, as implemented by DBM CCC No. 10.
The pertinent portion of the questioned COA Decision reads as follows:
Markworthy is the fact that the decision to
impose the subject disallowance was rendered by Auditors Elsa H. Ramos-Mapili
and Concordia R. Decano and was affirmed by Atty. Rafael C. Marquez, Director,
COA Regional Office No. 1, San Fernando, La Union, obviously convinced that the
legal opinion rendered by the then COA General Counsel, Director Raquel R.
Habitan, was in order. It must be
pointed out that the COA General Counsel is authorized to render opinion or
interpret pertinent laws as well as auditing rules and regulations, as a guide
to all COA officials/auditors especially on matters within the province of
their auditing tasks, as mandated by the Constitution, purposely to see to it
that public funds are disbursed pursuant to law.
In
this respect, [COA] finds the imposition of the herein subject disallowance to
be proper. This is so because Water
Districts like the [MAWAD], are classified as government-controlled
corporations, and therefore, the Water District Directors like the herein
petitioners, are considered as government officials/employees, whose monetary
compensation and other forms of benefits are expressly covered and governed by
the provision of R.A. No. 6758 (citation omitted), x x x particularly Section 4
thereof. As the implementing guideline
thereon, Corporate Compensation Circular (CCC) No. 10, Section 2.0, issued by
the DBM on
“The Compensation and Position Classification
System herein provided shall apply to all positions, appointive or elective, on
full or part-time basis, now existing or hereafter created in the government
including government-owned or controlled corporations and government financial
institutions”, and
“The Compensation and Position Classification
System referred to herein, shall apply to all positions, whether permanent,
casual, temporary, contractual, on full or part-time basis, now existing or
hereafter created in government-owned and/or controlled corporations and
government financial institutions whether they perform governmental or
proprietory (sic) functions,” (Item No.
2.0 DBM CCC No. 10).
x x x x
x x x.
Being such, [herein petitioners]
are, therefore, covered and governed by R.A. 6758 and [DBM CCC No. 10, dated
x x x. Hence, the grant of the herein questioned
benefits by the LWUA to the [petitioners] is, therefore, null and void for being ultra vires.[10] x x x. (Emphasis supplied.)
As can be gleaned from the
afore-quoted COA Decision, it is crystal clear that its basis for affirming the
Notice of Disallowance against the petitioners was Republic Act No. 6758, as implemented
by DBM CCC No. 10 and not the Opinion of the COA General Counsel. And this gave rise to the second issue: Whether
the COA gravely abused its discretion in finding that the petitioners were
governed by Republic Act No. 6758, as implemented by DBM CCC No. 10; thus, they
were not anymore entitled to the bonuses, allowances and benefits provided for
in Resolution No. 313, as amended.
In Molen, Jr. v. Commission on Audit,[11]
citing the case of Baybay Water District
v. Commission on Audit,[12]
the Court already ruled that:
x x x [R.A.
No. 6758 also known as] the Salary Standardization Law, does not apply to petitioners because directors of water
districts are in fact limited to policy-making and are prohibited from the
management of the districts. [Section 18, P.D. No. 198] described the
functions of members of boards of directors of water districts as follows:
Sec. 18.
Functions Limited to Policy-Making. — The function of the board shall be to
establish policy. The Board shall not engage in the detailed management
of the district.
Furthermore, the fact that [Secs.] 12 and 17 of the Salary Standardization Law speak of allowances as “benefits” paid in addition to the salaries incumbents are presently receiving makes it clear that the law does not refer to the compensation of board of directors of water districts as these directors do not receive salaries but per diems for their compensation.
It
is noteworthy that even the Local Water
Utilities Administration (LWUA), in Resolution No. 313, s. 1995, entitled
“Policy Guidelines on Compensation and Other Benefits to WD Board of
Directors,” on which petitioners rely for authority to grant themselves
additional benefits, acknowledges that directors of water districts are not
organic personnel and, as such, are deemed excluded from the coverage of the
Salary Standardization Law. Memorandum Circular No. 94-002 of the
DBM-CSC-LWUA-PAWD Oversight Committee states in pertinent part:
As
the WD Board of Directors’ function is limited to policy-making under Sec. 18
of Presidential Decree 198, as amended, it is the position of the Oversight
Committee that said WD Directors are not to be treated as organic personnel,
and as such are deemed excluded from the coverage of RA 6758, and that their
powers, rights and privileges are governed by the pertinent provisions of PD
198, as amended, not by R.A. 6758 x x x. (Emphasis supplied.)
Applying the aforesaid pronouncement
of the Court in the case at bar, this Court holds that the petitioners, being
members of the MAWAD Board of Directors, are excluded from the coverage of
Republic Act No. 6758; thus, it was grave abuse of discretion on the part of
the COA to affirm the Notice of Disallowance of petitioners’ bonuses, benefits
and allowances on the basis of Republic Act No. 6758.
As regards the implementing
guidelines of Republic Act No. 6758, i.e.,
DBM CCC No. 10, it is already settled in De
Jesus v. Commission on Audit,[13] that
the same is in the nature of an administrative circular, because the purpose is
to enforce or implement an existing law, which is Republic Act No. 6758; hence,
it must be published in the Official Gazette or in a newspaper of general
circulation in the country, as required by law.
And since the said DBM CCC No. 10 was not published, the same did not
become effective and enforceable.
However, it was re-issued on
Although the Court finds that the COA
committed grave abuse of discretion in affirming the Notice of Disallowance of
petitioners’ bonuses, benefits and allowances by applying Republic Act No.
6758, as implemented by DBM CCC No. 10, the said bonuses, benefits and
allowances granted to the petitioners pursuant to LWUA’s Resolution No. 313, as
amended, must still be disallowed.
It is well-settled that Section 13,
Presidential Decree No. 198, as amended, governs the compensation of the members
of the Board of Directors of the Local Water Districts; hence, they cannot receive
allowances and benefits more than those allowed by the aforesaid law.[14] And in construing Section 13, Presidential Decree
No. 198, as amended, the Court said that the members of the Board of Directors
of the Local Water Districts are precisely intended to be compensated per diem. Indeed, the words and phrases in a statute
must be given their natural, ordinary, and commonly accepted meaning, by thus specifying
the compensation which a director is entitled to receive and by limiting the
amount he/she is allowed to receive in a month; and, in the same paragraph,
providing “No director shall receive
other compensation” than the amount
provided for per diem, the law quite
clearly indicates that the directors of water districts are authorized to
receive only the per diem authorized
by law and no other compensation or allowance in whatever form. Section 13 of Presidential Decree No. 198, as
amended, is clear enough and it needs no further interpretation. It expressly
prohibits the grant of compensation other than the payment of per diems, thus
preempting the exercise of any discretion by water districts in paying other
allowances and bonuses.[15]
Therefore, the bonuses, benefits and
allowances received by the petitioners pursuant to Resolution No. 313, as amended,
must be disallowed. Nevertheless, the
petitioners are not required to refund the said bonuses, benefits and allowances
because they had no knowledge then that such payment was without legal basis. At the time they received the same, i.e., in the year 1997, the Court had
not yet decided Baybay Water District v.
Commission on Audit,[16] where
the Court categorically declared as illegal the payment of additional
compensation to members of the water district board of directors, other than
the allowed per diem in Section 13 of
Presidential Decree No. 198, as amended; thus, petitioners can be considered to
have received the said bonuses, benefits and allowances in 1997 in good faith and
under the honest belief that Resolution No. 313, as amended, authorized such
payment.[17]
WHEREFORE, premises considered, the
instant Petition is PARTIALLY GRANTED. COA Decision No. 2000-385 and COA Resolution No.
2001-177 of the Commission on Audit, dated 29 December 2000 and 6 September
2001, respectively, are hereby AFFIRMED
as regards the disallowance of the bonuses, benefits and allowances granted to
the petitioners by virtue of Resolution No. 313, as amended, with the following
MODIFICATIONS: (1) petitioners are
not required to return the bonuses, benefits and allowances they received in
1997; and (2) the petitioners are not covered by Republic Act No. 6758, as implemented
by DBM CCC No. 10. No costs.
SO ORDERED.
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MINITA V. CHICO-NAZARIO
Associate Justice |
WE
CONCUR:
LEONARDO
A. QUISUMBING
Associate Justice |
CONSUELO
YNARES-SANTIAGO
Associate Justice |
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ANGELINA SANDOVAL-GUTIERREZ
Associate Justice |
ANTONIO
T. CARPIO Associate Justice |
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MA. ALICIA
AUSTRIA-MARTINEZ Associate Justice |
RENATO C.
CORONA
Associate Justice |
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CONCHITA
CARPIO MORALES
Associate Justice
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ADOLFO S.
AZCUNA
Associate Justice
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DANTE O.
TINGA
Associate Justice |
CANCIO C.
GARCIA
Associate Justice |
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PRESBITERO
J. VELASCO, JR.
Associate Justice |
ANTONIO EDUARDO B. NACHURA Associate Justice |
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RUBEN T.
REYES
Associate Justice |
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Pursuant
to Article VIII, Section 13 of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court.
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REYNATO
S. PUNO
Chief Justice |
[1] Penned by Celso D. Gangan, Chairman, with Commissioners, Raul C. Flores and Emmanuel M. Dalman, concurring; rollo, pp. 36-41.
[2] Penned by Regional Director Rafael C. Marquez, id. at 206.
[3] Penned by Guillermo N. Carague, Chairman with Commissioners Raul C. Flores and Emmanuel M. Dalman, concurring; id. at 42-44.
[4] Established under Presidential Decree No. 198, otherwise known as Provincial Water Utilities Act of 1973.
[5] Rollo, pp. 45-46.
[6] Otherwise known as Provincial Water Utilities Act of 1973.
[7] Rollo, pp. 363-384.
[8] G.R. No. 75959,
[9] Otherwise known as Compensation and Position Classification Act of 1989.
[10] Rollo, pp. 38-40.
[11] G.R. No. 150222,
[12] 425 Phil. 326, 340-341 (2002).
[13] 355 Phil. 584, 590 (1998).
[14] Querubin v. Regional Cluster Director Legal and Adjudication Office, COA Regional Office VI, Pavia, Iloilo City , G. R. No. 159299, 7 July 2004, 433 SCRA 769, 771-772.
[15]
[16] It was decided only in 1992.
[17] Querubin v. Regional Cluster Director Legal and Adjudication Office, COA Regional Office VI, Pavia, Iloilo City, supra note 14 at 773.