EN BANC
G.R. No. 218304, December 09, 2020
NINIA P. LUMAUAN, Petitioner, v. COMMISSION ON AUDIT, Respondents.
D E C I S I O N
HERNANDO, J.:
Before the Court is a Petition for Certiorari1 filed under Rule 64, in relation to Rule 65, of the Rules of Court assailing the June 4, 2014 Decision2 and the February 27, 2015 Resolution3 of respondent Commission on Audit (COA).
Factual Antecedents
Petitioner Ninia P. Lumauan (Lumauan) was the Acting General Manager of Metropolitan Tuguegarao Water District (MTWD),4 a government-owned and controlled corporation (GOCC) created pursuant to Presidential Decree (PD) No. 198 or the Provincial Water Utilities Act of 1973, as amended by Republic Act (RA) No. 9286.
In 2009, the Board of Directors of MTWD issued Board Resolution Nos. 2009-00535 and 2009-0122,6 approving the payment of accrued Cost of Living Allowance (COLA) to qualified MTWD employees for calendar years (CYs) 1992 to 1997 in the aggregate amount of P1,689,750.00.7
However, after post-audit, Supervising Auditor Floricen T. Unida and Audit Team Leader Basilisa T. Garcia issued Notice of Disallowance No. 10-003-101-(09),8 disallowing the payment of P1,689,750.00 for lack of legal basis specifically since the COLA was already deemed integrated into the basic salary of the employees pursuant to Section 129 of RA No. 6758, otherwise known as the Compensation and Position Classification Act of 1989, and the Department of Budget and Management (DBM) Corporate Compensation Circular (CCC) No. 10.10 Held liable under the Notice of Disallowance were petitioner; Ms. Visitacion M. Rimando (Rimando), Division Manager-Administrative; Ms. Marcela Siddayao (Siddayao), Cashier; and the employees of MTWD, as payees.11
Petitioner appealed the disallowance to the COA Regional Director,12 citing the ruling of the Court in Philippine Ports Authority (PPA) Employees Hired After July 1, 1989 v. Commission on Audit,13 where the rights of the PPA employees to claim COLA and amelioration allowance until March 16, 1999 were upheld.
Ruling of the Regional Director
In a November 23, 2011 Decision,14 Regional Director III Atty. Elwin Gregorio A. Torre denied the appeal for lack of merit. He affirmed the disallowance on the ground that the payment of COLA was prohibited since it was already integrated into the basic salary of the employees.15
He opined that after the promulgation of Philippine Ports Authority (PPA) Employees Hired After July 1, 1989 v. Commission on Audit, the DBM issued National Budget Circular (NBC) No. 2005-502 dated October 26, 2005, which clarified that "payment of allowances and other benefits, such as COLA, which are already integrated in the basic salary, remains prohibited unless otherwise provided by law or ruled by the Supreme Court."16 Regarding petitioner's defense of good faith, he found the same bereft of any merit considering that the payment of the said benefit was already prohibited since October 26, 2005.17
Unfazed, petitioner elevated the matter to respondent COA-Commission Proper (CP).
In response, the Regional Director filed his Answer alleging that the appeal was filed beyond the prescribed period.18 He claimed that since petitioner already exhausted the six-month appeal period, she should have filed the Appeal Memorandum with respondent COA-CP on the same day she received his Decision.19
Ruling of the COA-CP
On June 4, 2014, respondent COA-CP rendered a Decision denying the appeal for late filing and lack of merit. Respondent COA-CP agreed with the observation of the Regional Director that the appeal was belatedly filed.20 It ruled that the disallowance has already become final and executory because petitioner belatedly filed the Appeal Memorandum or 12 days from receipt of the Decision of the Regional Director.21 Besides, even if the appeal was timely filed, respondent COA-CP ratiocinated that the appeal should still be denied because petitioner's arguments were bereft of any merit.22
It reiterated the ruling of the Regional Director that the payment of COLA was prohibited because it was already incorporated in the standardized salary rates of government employees under the general rule of integration.23 As regards petitioner's defense of good faith, respondent COA-CP found the same unmeritorious considering that under the principle of solutio indebiti, all employees of MTWD who received the disallowed COLA were obliged to return the same.24
The dispositive portion of the assailed COA-CP Decision reads:cralawred
WHEREFORE, the instant appeal is DENIED and COA RO No. II Decision (COA-RO2 Case No. 2011-017 dated November 23, 2011) is hereby AFFIRMED. Accordingly, ND No. 10-003-101-(09) dated November 22, 2010 on the payment of Cost of Living Allowance to Metropolitan Tuguegarao Water District Employees amounting to P1,689,750.00 for calendar years 1992 to 1997 is hereby SUSTAINED.25Unfazed, petition filed a Motion for Reconsideration which the COA-CP denied in its February 27, 2015 Resolution.26
The payment of the accrued COLA for CYs 1992 to 1997 was correctly disallowed. |
R.A. No. 6758 standardized the salaries received by government officials and employees. Sec. 12 thereof states:cralawredPetitioner's reliance on the pronouncement of the Court in Philippine Ports Authority (PPA) Employees Hired After July 1, 1989 v. Commission on Audit, reiterated in Metropolitan Waterworks and Sewerage System v. Bautista, that employees of GOCC, whether incumbent or not, are entitled to COLA from 1989 to 1999, is misplaced.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.In Maritime Industry Authority v. [COA] (MIA) the Court explained the provision of Sec. 12, to wit:cralawred
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government.The clear policy of Section 12 is "to standardize salary rates among government personnel and do away with multiple allowances and other incentive packages and the resulting differences in compensation among them." Thus, the general rule is that all allowances are deemed included in the standardized salary. However, there are allowances that may be given in addition to the standardized salary. These non-integrated allowances are specifically identified in Section 12, to wit:Pursuant to R.A. No. 6758, DBM-CCC No. 10 was issued, which provided, among others, the discontinuance without qualification of all allowances and fringe benefits, including COLA, of government employees over and above their basic salaries. In 1998, the Court declared in the case of De Jesus that DBM-CCC No. 10 is without force and effect on account of its non-publication in the Official Gazette or in a newspaper of general circulation, as required by law. In 1999, DBM re-issued its DBM-CCC No. 10 in its entirety and submitted it for publication in the Official Gazette.
1. representation and transportation allowances;
2. clothing and laundry allowances;
3. subsistence allowance of marine officers and crew on board government vessels;
4. subsistence allowance of hospital personnel;
5. hazard pay; and
6. allowances of foreign service personnel stationed abroad.
In addition to the non-integrated allowances specified in Sec. 12, the Department of Budget and Management is delegated the authority to identify other allowances that may be given to government employees in addition to the standardized salary.
Thus, petitioners chiefly argue that since DBM-CCC No. 10 was invalidated and was re-published only in 1999, then the officers and employees of PWD may receive COLA and other fringe benefits for the period of 1992 to 1999.
The Court is not convinced.
As early as Philippine International Trading Corporation v. [COA], the Court held that the nullification of DBM-CCC No. 10 in De Jesus does not affect the validity of R.A. No. 6758, to wit:cralawredThere is no merit in the claim of PITC that R.A. No. 6758, particularly Section 12 thereof is void because DBM-Corporate Compensation Circular No. 10, its implementing rules, was nullified in the case of De Jesus v. [COA], for lack of publication. The basis of COA in disallowing the grant of SFI was Section 12 of R.A. No. 6758 and not DBM-CCC No. 10. Moreover, the nullity of DBM-CCC No. 10, will not affect the validity of R.A. No. 6758. It is a cardinal rule in statutory construction that statutory provisions control the rules and regulations which may be issued pursuant thereto. Such rules and regulations must be consistent with and must not defeat the purpose of the statute. The validity of R.A. No. 6758 should not be made to depend on the validity of its implementing rules. x x xIn NAPOCOR Employees Consolidated Union v. National Power-Corporation, the Court reiterated that while DBM-CCC No. 10 was nullified in De Jesus, there is nothing in that decision suggesting or intimating the suspension of the effectivity of R.A. No. 6758 pending the publication of DBM-CCC No. 10 in the Official Gazette.
In Gutierrez, the Court definitively ruled that COLA is integrated in the standard salary of government officials and employees under Sec. 12 of R.A. No. 6758, to wit:cralawredThe drawing up of the above list is consistent with Section 12 above. R.A. [No.] 6758 did not prohibit the DBM from identifying for the purpose of implementation what fell into the class of "all allowances." With respect to what employees' benefits fell outside the term apart from those that the law specified, the DBM, said this Court in a case, needed to promulgate rules and regulations identifying those excluded benefits. This leads to the inevitable conclusion that until and unless the DBM issues such rules and regulations, the enumerated exclusions in items (1) to (6) remain exclusive. Thus so, not being an enumerated exclusion, COLA is deemed already incorporated in the standardized salary rates of government employees under the general rule of integration.In MIA, the Court emphasized that R.A. No. 6758 deems all allowances and benefits received by government officials and employees as incorporated in the standardized salary, unless excluded by law or an issuance by the DBM. The integration of the benefits and allowances is by legal fiction.
x x x x
Clearly, COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and employees of the government in the performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of living refers to "the level of prices relating to a range of everyday items" or "the cost of purchasing those goods and services which are included in an accepted standard level of consumption." Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates. x x x
It was also discussed therein that "[o]ther than those specifically enumerated in [Sec] 12, non-integrated allowances, incentives, or benefits, may still be identified and granted to government employees. This is categorically allowed in [R.A.] No. 6758. This is also in line with the President's power of control over executive departments, bureaus, and offices. These allowances, however, cannot be granted indiscriminately. Otherwise, the purpose and mandate of [R.A.] No. 6758 will be defeated."
More recently, in Zamboanga City Water District v. [COA] (ZCWD), it was declared by the Court that, in accordance with the MIA ruling, the COLA and Amelioration Allowance (AA) are already deemed integrated in the standardized salary, particularly, in local water districts.
Verily, the Court has consistently held that Sec. 12 of R.A. No. 6758 is valid and self-executory even without the implementing rules of DBM-CCC No. 10. The said provision clearly states that all allowances and benefits received by government officials and employees are deemed integrated in their salaries. As applied in this case, the COLA, medical, food gift, and rice allowances are deemed integrated in the salaries of the PWD officers and employees. Petitioners could not cite any specific implementing rule, stating that these are non-integrated allowances. Thus, the general rule of integration shall apply.41 (Citations omitted.)
Petitioner can be held personally liable for the disallowed benefit to the extent of the amount she actually and individually received pursuant to our ruling in Madera v. Commission on Audit.45 |
It must be stressed at the outset that petitioner Lumauan, as Acting General Manager of MTWD, was not the one who approved the grant of the accrued COLA or certified for its funding availability. It was the Board of Directors of MTWD through Board Resolution Nos. 2009-005346 and 2009-012247 that approved the payment of the accrued COLA.
- If a Notice of Disallowance is set aside by the Court, no return shall be required from any of the persons held liable therein;
- If a Notice of Disallowance is upheld, the rules on return are as follows:
- Approving and certifying officers who acted in good faith, regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return consistent with Section 38 of the Administrative Code of 1987;
- Approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable to return only the net disallowed amount which, as discussed herein, excludes amounts excused under the following sections 2c and 2d.
- Recipients - whether approving or certifying officers or mere passive recipients - are liable to return the disallowed amounts respectively received by them, unless they are able to show that the amounts they received were genuinely given in consideration of services rendered.
- The Court may likewise excuse the return of recipients based on undue prejudicie, social justice considerations, and other bona fide exceptions as it may determine on a case to case basis. (Emphasis supplied).
In the ultimate analysis, the Court, through these new precedents, has returned to the basic premise that the responsibility to return is a civil obligation to which fundamental civil law principles, such as unjust enrichment and solutio indebiti apply regardless of the good faith of passive recipients. This, as well, is the foundation of the rules of return that the Court now promulgates.As stated, as an exception to this rule, a payee or recipient may be excused from returning the disallowed amount when he/she has shown that he/she was "actually entitled to what he/[she] received" or "when undue prejudice will result from requiring payees to return or where social justice or humanitarian considerations are attendant."
Moreover, solutio indebiti is an equitable principle applicable to cases involving disallowed benefits which prevents undue fiscal leakage that may take place if the government is unable to recover from passive recipients amounts corresponding to a properly disallowed transaction.
Nevertheless, while the principle of solutio indebiti is henceforth to be consistently applied in determining the liability of payees to return, the Court, as earlier intimated, is not foreclosing the possibility of situations which may constitute bona fide exceptions to the application of solutio indebiti. As Justice Bernabe proposes, and which the Court herein accepts, the jurisprudential standard for the exception to apply is that the amounts received by the payees constitute disallowed benefits that were genuinely given in consideration of services rendered (or to be rendered) negating the application of unjust enrichment and the solutio indebiti principle. As examples, Justice Bernabe explains that these disallowed benefits may be in the nature of performance incentives, productivity pay, or merit increases that have not been authorized by the Department of Budget and Management as an exception to the rule on standardized salaries. In addition to this proposed exception standard, Justice Bernabe states that the Court may also determinie in the proper case bona fide exceptions, depending on the purpose and nature of the amount disallowed. These proposals are well-taken.
Moreover, the Court may also determine in a proper case other circumstances that warrant excusing the return despite the application of solutio indebiti, such as when undue prejudice will result from requiring payees to return or where social justice or humanitarian considerations are attendant. x x x50
| Very truly yours, |
(SGD) EDGAR O. ARICHETA | |
Clerk of Court |
Endnotes:
1Rollo, pp. 3-7.
2 Id. at 8-14; penned by Chairperson Ma. Gracia M. Pulido Tan and Commissioner Heidi L. Mendoza.
3 Id. at 15.
4 Id. at 8.
5 Id. at 17-18.
6 Id. at 19-20.
7 Id. at 8.
8 Id. at 21-22.
9 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.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government.
10Rollo, p.21.
11 Id.
12 Id. at 9.
13 506 Phil. 382 (2005).
14Rollo, pp. 23-27.
15 Id. at 26.
16 Id.
17 Id. at 27.
18 Id. at 10.
19 Id.
20 Id.
21 Id. at 10-11.
22 Id. at 11.
23 Id. at 11-12.
24 Id. at 12-13.
25 Id. at 13.
26 Id. at 15.
27 Id. at 4.
28 Id. at 4-5.
29 572 Phil. 383 (2008).
30Rollo, p.5.
31 Id. at 5-6.
32 Id. at 54-63.
33 Id. at 58-60.
34 Id.
35 Id. at 60-62.
36 Id. at 61.
37 Id. at 34.
38 Id. at 28-34.
39 Id. at 23.
40 G.R. No. 210631 (Resolution), March 12, 2019.
41 Id.
42 750 Phil. 288, 319 (2015), citing Napocor Employees Consolidated Union v. National Power Corporation, 519 Phil. 372 (2006).
43 805 Phil. 294 (2017).
44 Id. at 339.
45 G.R. No. 244128, September 8, 2020.
46Rollo, pp. 17-18.
47 Id. at 19-20.
48Madera v. Commission on Audit, supra, note 45.
49 Id.
50 Id.