858 Phil. 865
BERSAMIN, C.J.:
The Audit Team Leader (ATL) of Angeles City Water District (ACWD), Angeles City issued Notices of Disallowance (NDs) Nos. 2012-003-101 (2008), 2012-004-101 (2008), 2012-005-101 (2008) and 2012-006-101(2009), all dated 26 November 2012 to Appellant General Manager of the ACWD. Subject NDs pertained to the grocery allowance for the year 2008 and year-end financial assistance for 2008 and 2009. The basis for the disallowed grocery allowance was premised on the fact that the same had no legal basis and that, prior year's (2010-2011) expenses of the same nature had been disallowed and affirmed by the COA Region III Decision No. 2012-25 dated July 12, 2012. On the other hand, the year-end financial assistance were disallowed because it was not in accordance with the established benefits as of December 31, 1999 per DBM letter dated April 27, 2001 and PAWAD Memorandum Circular No. 2, s. of 2001 dated May 4, 2001. Both NDs were previously decided and affirmed by the COA Regional Office No. III under COA Region III Decision No. 2012-25 dated July 12, 2012.The NDs in question are summarized as follows:[4]
In his Appeal Memorandum dated May 20, 2013, Appellant invoked that the ATL can no longer audit the assailed grocery allowances and year-end financial assistance for the years 2008 and 2009 because the same were already audited by the ATL assigned at ACWD during his time and that, there were no disallowances issued pertaining to the said allowances and benefits. Moreover, the NDs issued by the succeeding ATL runs counter to the non-diminution of benefits principle considering that the allowances were allowed in principle by DBM Secretary Emilia T. Boncodin in her letter dated 27 April 2001, addressed to President Loreto G. Limcolioc of the PAWAD, stating therein that the grant of allowances shall be continued if the same were an established and existing practice.
In her Answer dated 01 July 2013, Appellee, the incumbent Supervising Auditor for water districts, reiterates the disallowances, citing Section 4.5 of DBM Budget Circular No. 16 and Section 2 of Administrative Order No. 365, s. 1997, viz:
Section 4.5 of DBM Budget Circular No. 16"All agencies are prohibited from granting any food, rice, gift, checks, or any other form of incentives/allowances except those authorized via Administrative Order by the Office of the President; andShe likewise advanced the justification that there was no proof that the benefits met the requirements provided under paragraph 2, Section 12 of RA 6758, which showed that the recipients were incumbents as of July 1, 1989 in order that the allowances may be continued. Furthermore, Appellee is of view that the opinion by the former DBM Secretary cannot prevail over settled decisions and jurisprudence, as well as the provisions of Section 12 of RA 6758. On the issue regarding the authority of the ATL to conduct the audit which resulted in the issuance of the NDs, she cited the Memorandum dated 9 March 2012 of Atty. Leonor M. Boado, then Director IV of the Fraud Audit and Investigation Office (FAIO), which was approved by Assistant Commissioner Elizabeth S. Zosa and Chairperson Ma. Gracia M. Pulido-Tan, ordering the re-opening of the accounts of ACWD, in response to the request to audit the long time corruption at ACWD in terms of monetary benefits received by its employees and other irregularities. In her prayer, Appellee not only manifested her denial to lift the subject disallowances but likewise made a representation that the aggregate amount of the NDs should be increased from P14,556,195.00 to P26,462,024.00.[3]
Section 2. Administrative Order No. 365, s. of 1997 enjoins and prohibits Heads of Government Agencies, Local Government Units including Government-Owned and Controlled Corporations, Government Financing Institution as well as their respective governing boards from authorizing/granting Amelioration Allowance or any similar benefits without prior approval and authorization via Administrative Order (AO) by the President."
On May 28, 2013, the petitioner filed his appeal memorandum with COA-RO3 seeking the lifting and setting aside of the NDs.[5] However, the Regional Director denied the appeal through Decision No. 2013-91 dated September 18, 2013, a copy of which the petitioner received on September 19, 2013. Hence, the petitioner filed with the COA Proper the petition for review dated October 7, 2013, and paid the corresponding filing fee on December 27, 2013.[6]
Benefit Amount Audited Disallowed Difference Grocery Allowance ND No. 2012-003-101(2008) P7,248,000.00 P7,248,000.00 - ND No. 2012-005-101(2009) 5,049,765.50 4,955,500.00 P94,265.50 Year-End Financial Assistance ND No. 2012-004-101(2008) 6,418,626.00 1,069,771.00 5,348,855.00 ND No. 2012-006-101(2009) 7,745,632.50 1,282,924.00 6,462,708.50 Total P26,462,024.00 P14,556,195.00 P11,905,829.00
Hence, this recourse.
Date NDs were received by Engr. Liwanag November 28, 2012 Date ND were appealed to the Regional Director May 28, 2013 Days elapsed from receipt of ND to appeal to the Regional Director 181 days Date of receipt of Regional Director's Decision September 19, 2013 No. of days remaining of the six months (180 days) period to file appeal one (1) day Deadline to file petition for review September 20, 2013 Date petition for review was filed December 27, 2013
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT RULED THAT ACWD's PETITION FOR REVIEW WAS FILED OUT OF TIME.
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISALLOWANCE OF GROCERY ALLOWANCE AND YEAR END FINANCIAL ASSISTANCE GRANTED TO ACWD EMPLOYEES.
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT FAILED TO RULE THAT THE AUDIT CONDUCTED BY THE ATL IS INVALID AND ILLEGAL FOR LACK OF AUTHORITY TO AUDIT ACWD ACCOUNTS WHICH ALREADY HAD BEEN AUDITED BY PREVIOUS AUDITORS.
- WHETHER COA GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT FAILED TO APPLY EXISTING JURISPRUDENCE ON THE ENTITLEMENT AND REFUND OF THE SUBJECT ALLOWANCES OF ACWD EMPLOYEES.[10]
SECTION 7. Power of Director on Appeal - The Director may affirm, reverse, modify or alter the decision of the Auditor. If the Director reverses, modifies or alters the decision of the Auditor, the case shall be elevated directly to the Commission Proper for automatic review of the Director's decision. The dispositive portion of the Director's decision shall categorically state that the decision is not final and is subject to automatic review by the CP.If it was subject to the automatic review by the COA Proper, the decision approving the disallowances did not attain finality. On that basis, the motion for reconsideration filed by the petitioner was superfluous and unnecessary.
WHEREAS, the Board of Directors thoroughly and carefully deliberated on the issues at hand and thereafter collectively decided to file a Motion for Reconsideration with the Supreme Court of the Philippines on the COA Decision 2013-91.Although such wording of the sixth Whereas clause gave the impression that only the motion for reconsideration had been thereby authorized to be filed, it was plain error on the part of the COA Proper to argue that the intent of ACWD's Board of Directors in issuing Board Resolution No. 19 was only to authorize the petitioner to file the motion for reconsideration if it was clear that the Board of Directors adopted the resolution to enable the petitioner to take the necessary remedies in this Court that would reverse the assailed COA Decision 2013-91. The proper recourse for that purpose was the original special civil action under Rule 64, in relation to Rule 65, of the Rules of Court. Such recourse is the remedy that the petitioner has precisely resorted to herein. Accordingly, it was unreasonable and illogical to insist that the aforequoted text of Board Resolution No. 19 restricted the petitioner's authority to the filing of the motion for reconsideration.
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 petitioner disagrees, submitting instead that the local water districts (LWDs) were still outside the coverage of the COA, the Civil Service Commission (CSC) and the Department of Budget Management (DBM) at the time the Salary Standardization Law (SSL) was passed in 1989; and that the grant of allowances and fringe benefits, being already an established and existing practice as far as those employed as of December 31, 1999 were concerned, should not be disallowed.
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.
5.4 The following allowances/fringe benefits which were authorized to GOCCs/GFIs under the standardized Position Classification and Compensation Plan prescribed for each of the five (5) sectoral groupings of GOCCs/GFIs pursuant to P.D. No. 985, as amended by P.D. No. 1597, the Compensation Standardization Law in operation prior to R.A. No. 6785, and to other related issuances are not to be integrated into the basic salary and allowed to be continued after June 30, 1989 only to incumbents of positions who are authorized and actually receiving such allowances/benefits as of said date, at the same terms and conditions provided in said issuances.As a consequence, all allowances and fringe benefits granted on top of the basic salary that were not otherwise enumerated or mentioned under sections 5.4 and 5.5, supra, were discontinued effective November 1, 1989.
5.4.1 Representation and Transportation Allowance (RATA);
5.4.2 Uniform and Clothing Allowance;
5.4.3 Hazard Pay as authorized by law;
5.4.4 Honoraria/additional compensation for employees on detail with special projects or inter-agency undertakings;
5.4.5 Honoraria for services rendered by researchers, experts and specialists who are of acknowledged authorities in their fields of specialization;
5.4.6 Honoraria for lecturers and resource persons/speakers;
5.4.7 Overtime pay as authorized by law;
5.4.8 Laundry and subsistence allowance for marine officers and crew on board GOCCs/GFIs owned vessels and used in their operations, and of hospital personnel who attend directly to patients and who by nature of their duties are required to wear uniforms;
5.4.9 Quarters Allowance of officials and employees who are entitled to the same;
5.4.10 Overseas, Living Quarters and other allowances presently authorized for personnel stationed abroad;
5.4.11 Night Differential of personnel on night duty;
5.4.12 Per Diems of members of the governing Boards of GOCCs/GFIs at the rate prescribed in their respective Charters;
5.4.13 Flying Pay of personnel undertaking aerial flights;
5.4.14 Per Diems/Allowances of Chairman and Members/Staff of collegial bodies and Committees; and
5.4.15 Per Diems/Allowances of officials and employees on official foreign and local travel outside of their official station.
5.5 The following allowances/fringe benefits authorized to GOCCs/GFIs pursuant to the aforementioned issuances are not likewise to be integrated into the basic salary and allowed to be continued only for incumbents of positions as of June 30, 1989 who are authorized and actually receiving such allowances/benefits as of said date, at the same terms and conditions prescribed in said issuances.
5.5.1 Rice Subsidy;
5.5.2 Sugar Subsidy;
5.5.3 Death Benefits other than those granted by the GSIS;
5.5.4 Medical/dental/optical allowances/benefits;
5.5.5 Children's allowance;
5.5.6 Special Duty Pay/Allowance;
5.5.7 Meal Subsidy;
5.5.8 Longevity Pay; and
5.5.9 Teller's Allowance.
5.6 Payment of other allowance/fringe benefits and all other forms of compensation granted on top of basic salary, whether in cash or in kind, not mentioned in Sub-Paragraphs 5.4 and 5.5 above shall continue be not authorized. Payment made for such unauthorized allowances/fringe benefits shall be considered as illegal disbursements of public funds.
x x x the continued grant of allowances/fringe benefits after December 31, 1999 that are outside of what has been prescribed by law and other compensation issuances and were being enjoyed prior to the declaration of the Supreme Court that LWDs are GOCCs, will be allowed only if the following are met by the concerned LWDs:
In the view of the COA Proper, therefore, the petitioner did not discharge the burden to establish that the grant of allowances and fringe benefits had been an established and existing practice as of the cut-off date of December 31, 1999; and that the above-listed parameters for the continued grant of said allowances and fringe benefits had been met. The COA Proper further observed that while the grant of year-end financial assistance had been an existing practice, the petitioner's mere assertion that ACWD had already complied with the parameters set under the letter issued by then DBM Secretary Boncodin without presenting proof to substantiate it was really not enough; and that, moreover, although the petitioner had also listed the following benefits to have been granted to the employees of ACWD hired prior to 1999, namely:
- positive balance in average net income in prior 12 months operations;
- up-to-date debt service payment;
- unaccounted-for-water (UFW) ratio must not exceed 40% based on six-month operations;
- existing benefits are included in the budgets of LWDs; and
- total staff to total service connection should not be less than 1 staff for every 100 active service connections."[18]
Section 15. Issuance of Notices by Special Audit Team. -Ostensibly, the COA did not comply with its own aforequoted guidelines on the conduct of special audits.
15.1 The following procedures shall be observed in the issuance of the notices for transactions disallowed and charged in special audits and settlements thereof:15.1.1 The Special Audit Team Leader and Supervisor shall sign the ND/NC for transactions audited.15.2 The Special Audit Team shall be authorized to reopen accounts already post-audited and/or settled pursuant to Section 52 of PD 1445. The Office Order directing the special audit is deemed sufficient authority to reopen the accounts.
15.1.2 The ND and NC issued shall be marked a "Special Audit ND/NC No. _, Office Order No. _."
15.1.3 The ND/NC/ issued shall be transmitted by the Cluster Director of the Office that conducted the special audit, to the agency head and the accountant through the Auditor of the agency audited and the concerned Cluster/Regional Director, together with the special audit report. The Audit Team Leader shall serve the copies of the ND/NC on the persons liable and such ND/NC shall be included in the SASDC for the current quarter.
15.1.4 In case of settlement of the ND/NC by the persons liable, evaluation thereof shall be made by the Director of the Office which conducted the special audit, who shall then advice the auditor of the agency concerned to issue the NSSDC.
15.3 In case the transaction subject of the special audit has been earlier allowed in audit, the special audit team shall preliminarily discuss the disallowance or charge with the Auditor concerned. If the latter disagrees with the findings of the audit team, the written comment shall be requested from the Auditor for evaluation of the special audit team.
15.4 The Auditor shall consider the significance or impact of the disallowances and charges issued by the special audit team on the fairness of presentation of the balance of the accounts of the agency, and consequently on the audit opinion.
Section 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws.is truly a constitutional safeguard against any arbitrariness on the part of the Government, and serves as a protection essential to every inhabitant of the country.[19] As Justice Cruz, a respected commentator on Constitutional Law, has vividly written:[20]
x x x. If the law itself unreasonably deprives a person of his life, liberty, or property, he is denied the protection of due process. If the enjoyment of his rights is conditioned on an unreasonable requirement, due process is likewise violated. Whatsoever be the source of such rights, be it the Constitution itself or merely a statute, its unjustified withholding would also be a violation of due process. Any government act that militates against the ordinary norms of justice or fair play is considered an infraction of the great guaranty of due process; and this is true whether the denial involves violation merely of the procedure prescribed by the law or affects the very validity of the law itself.Accordingly, the special audits and their results should be declared invalid and ineffectual as to ACWD and the petitioner.