EN BANC
G.R. No. 218072, March 08, 2016
METROPOLITAN NAGA WATER DISTRICT, VIRGINIA I. NERO, JEREMIAS P. ABAN JR., AND EMMA A. CUYO, Petitioners, v. COMMISSION ON AUDIT, Respondent.
D E C I S I O N
MENDOZA, J.:
This petition for certiorari under Rule 64 of the Revised Rules of Court seeks to reverse and set aside the September 10, 2014 Decision1 and the March 9, 2015 Resolution of the Commission on Audit (COA)2 which affirmed the October 24, 2011 Decision3 of the COA Regional Office No. V (COA Regional Office) disallowing the payment of backpay differential of Cost of Living Allowance (COLA) to the officials and employees of Metro Naga Water District (MNWD) in the amount of P3,499,681.14.
On August 20, 2002, the Board of Directors (the Board) of petitioner MNWD passed a resolution4 granting the payment of accrued COLA covering the period from 1992 to 1999 in favor of qualified MNWD personnel. The Board issued the said resolution on the basis of the Court's ruling in de Jesus v. COA5 and its subsequent rulings, and the series of opinions of the Office of the Government Corporate Counsel (OGCC). The MNWD employees began receiving their respective accrued COLA in installment basis starting 2002.6
During the post-audit, the Audit Team Leader Jaime T. Posada, Jr. (Posada) observed that the payment of COLA in the amount of P3,499,681.14 in 2007 lacked documentation. Thus, Posada required MNWD to submit its payroll as of June 30, 1989 for COLA and its payroll as of July 31, 1989 for salary and other benefits including COLA. The purpose was to determine whether the COLA was received by MNWD employees prior to the effectivity of the Salary Standardization Law (SSL).7 MNWD failed to submit the requested documents.
On June 15, 2009 Posada issued Notice of Disallowance (ND) No. 2009-0018 disallowing the COLA paid in 2007 amounting to P3,499,681.14 and directing the named MNWD officers to immediately settle the disallowance. On October 8, 2009, MNWD filed a notice of appeal with the COA Regional Office.
The COA Regional Office Ruling
In its October 24, 2011 decision, the COA Regional Office upheld the ND covering the disbursement of COLA in 2007 amounting to P3,499,681.14. It opined that MNWD could not rely on the case of PPA Employees hired after July 1, 1989 v. COA (PPA Employees)9 because the circumstances were dissimilar considering that MNWD was unable to prove that it had granted COLA to its employees since July 1, 1989. Moreover, the COA Regional Office ruled that MWND could not assert that its employees were entitled to COLA by virtue of Letter of Implementation (LOI) No. 9710 because the latter did not include water districts in its coverage.
Undaunted, MWND appealed before the COA.
The COA Ruling
On September 10, 2014, the COA rendered the assailed decision affirming the ruling of the COA Regional Office. It agreed with the COA Regional Office that there was substantial distinction between the case of Philippine Ports Authority (PPA) and that of MNWD which warranted the difference in the treatment of the back payment of COLA. The COA noted that in PPA Employees, it was established that the PPA had been paying COLA to its employees even prior to July 1, 1989. MNWD, on the other hand, admitted that it had not previously paid the COLA and merely disbursed the same after the passage of a board resolution in 2002. The COA also negated the argument of MNWD that its personnel were entitled to COLA as a matter of right. The COA ruled that water districts were not within the coverage of LOI No. 97.
Aggrieved, MNWD moved for reconsideration, but its motion was denied by the COA in its assailed resolution, dated March 9, 2015.
Hence, this present petition raising the following
Essentially, the Court is tasked to resolve whether the back payment of the COLA was correctly disallowed; and in the event the disbursement was improper, whether MNWD is liable to refund the same.ISSUES
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN NOT RECOGNIZING WATER DISTRICT EMPLOYEES' ENTITLEMENT TO ACCRUED COLA FOR THE PERIOD 1992-1999 AS A MATER OF RIGHT IN ACCORDANCE WITH LOI 97.
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT FAILED TO APPLY EXISTING JURISPRUDENCE IN FAVOR OF MNWD'S EMPLOYEES FOR COLA ENTITLEMENT.11
1. Scope of the Plan - The Position and Compensation Plans for the Infrastructure and Utilities group shall apply to the corporations in the transport, the power, the infrastructure, and the water utilities sector, as follows: xxxAs can be gleaned from above, LWDs are among those included in the scope of LOI No. 97. A local water utility is defined as any district, city, municipality, province, investor-owned public utility or cooperative corporation which owns or operates a water system serving an urban center in the Philippines, except that the said term shall not include the Metropolitan Waterworks and Sewerage System (MWSS) or any system operated by the Bureau of Public Works.17 It is, therefore, categorical that MNWD, as a LWD, is included in the coverage of LOI No. 97.
d. Water Utilities
Local Water Utilities
Local Water Utilities Administration
Metropolitan Waterworks and Sewerage System16ChanRoblesVirtualawlibrary
SECTION 12. Consolidation of Allowances and Compensation. — All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.The consolidation of allowances in the standardized salary as stated in the above-cited provision is a new rule in Philippine position classification and compensation system. In Maritime Industry Authority v. COA (MIA),20 the Court explained that, in line with the clear policy of standardization set forth in Section 12 of the SSL, all allowances, including the COLA, were generally deemed integrated in the standardized salary received by government employees, and an action from the DBM was only necessary if additional non-integrated allowances would be identified. Accordingly, MNWD was without basis in claiming COLA back payments because the same had already been integrated into the salaries received by its employees.
In setting aside COA's ruling, we held in PPA Employees that there was no basis to use the elements of incumbency and prior receipt as standards to discriminate against the petitioners therein. For, DBM-CCC No. 10, upon which the incumbency and prior receipt requirements are contextually predicated, was in legal limbo from July 1, 1989 (effective date of the unpublished DBM-CCC No. 10) to March 16, 1999 (date of effectivity of the heretofore unpublished DBM circular). And being in legal limbo, the benefits otherwise covered by the circular, if properly published, were likewise in legal limbo as they cannot be classified either as effectively integrated or not integrated benefits.In PPA Employees, the crux of the issue was whether it was appropriate to distinguish between employees hired before and after July 1, 1989 in allowing the back payment of the COLA. In the said case, the Court ruled that there was no substantial difference between employees hired before July 1, 1989 and those hired thereafter to warrant the exclusion of the latter from COLA back payment. It is important to highlight that, in PPA Employees, the COLA was paid on top of the salaries received by the employees therein before it was discontinued.
There lies the difference.
Here, the employee welfare allowance was, as above demonstrated, integrated by NPC into the employees' standardized salary rates effective July 1, 1989 pursuant to Rep. Act No. 6758. Unlike in PPA Employees, the element of discrimination between incumbents as of July 1, 1989 and those joining the force thereafter is not obtaining in this case. And while after July 1, 1989, PPA employees can rightfully complain about the discontinuance of payment of COLA and amelioration allowance effected due to the incumbency and prior receipt requirements set forth in DBM-CCC No. 10, NPC cannot do likewise with respect to their welfare allowance since NPC has, for all intents and purposes, never really discontinued the payment thereof.
To stress, herein petitioners failed to establish that they suffered a diminution in pay as a consequence of the consolidation of the employee welfare allowance into their standardized salary. There is thus nothing in this case which can be the subject of a back pay since the amount corresponding to the employee welfare allowance was never in the first place withheld from the petitioners.22ChanRoblesVirtualawlibrary
Endnotes:
1 Concurred in by Chairperson Ma. Gracia M. Pulido-Tan, Commissioner Heidi L. Mendoza and Commissioner Jose A. Fabia; rollo, pp. 20-27.
2 Id. at 30.
3 Penned by Regional Director Nilda B. Plaras; id. at 45-51.
4 Id. at 31-32.
5 355 Phil. 584 (1998).
6Rollo, p. 5.
7 Id. at 20.
8 Id. at 33.
9 506 Phil. 382 (2005).
10 Authorizing the Implementation of Standard Compensation and Position Classification Plans for the Infrastructure/Utilities Group of Government Owned or Controlled Corporations.
11Rollo, p. 7.
12 278 Phil. 605 (1991).
13Rollo, pp. 94-117.
14 Id. at 124-134.
15 G.R. No. 181973, April 17, 2013, 696 SCRA 666.
16 www.gov.ph/1979/08/31/letter-of-implementation-no.97-s-1979/ [date accessed February 29, 2016].
17 Section 3(h) of Presidential Decree No. 198 or the "Provincial Water Utilities Act of 1973."
18Republic v. Remman Enterprises, Inc., G.R. No. 199310, February 19, 2014, 717 SCRA 171.
19 501 Phil. 255 (2005).
20 G.R. No. 185812, January 13, 2015.
21 519 Phil. 372 (2006).
22 Id. at 388-389.
23PEZA v. COA, 690 Phil. 104, 115 (2012), as cited in MIA, supra note 20.
24Silang et al. v. COA, G.R. No. 213189, September 8, 2015.cralawred
25 G.R. No. 195395, September 10, 2013, 705 SCRA 306.