TL;DR

The Supreme Court upheld the Commission on Audit’s (COA) disallowance of over P8 million in meal allowances granted to Metropolitan Waterworks and Sewerage System (MWSS) employees for 2012-2013. The Court ruled that while the MWSS Board has corporate powers, these are limited by laws like Republic Act No. 6758, which standardized government salaries. Meal allowances beyond the originally authorized amount require Presidential approval, which was lacking. Employees who received the disallowed allowances must return the funds, but liability for approving officers varies based on their specific roles in the disbursement process, distinguishing between those who certified legality and those who merely certified fund availability.

When Boardroom Autonomy Meets COA Oversight: Examining the Boundaries of Benefit Grants in Government Corporations

This case, Abrigo v. Commission on Audit, delves into the complex relationship between the autonomy of government-owned and controlled corporations (GOCCs) and the oversight power of the Commission on Audit (COA), particularly concerning employee benefits. At the heart of the dispute is the Metropolitan Waterworks and Sewerage System (MWSS), a GOCC tasked with providing essential water services. For years, MWSS had been granting meal allowances to its employees, citing its corporate charter and board resolutions as legal basis. However, the COA stepped in, disallowing meal allowances totaling P8,173,730.00 for calendar years 2012 and 2013, arguing these lacked proper legal footing. This disallowance sparked a legal battle, ultimately reaching the Supreme Court, forcing a crucial examination of the extent to which GOCC boards can independently determine employee compensation and benefits in the face of national compensation standardization laws.

The petitioners, officers and employees of MWSS, argued that the MWSS Charter granted the Board of Trustees sufficient autonomy to set employee benefits. They pointed to historical precedent and even concession agreements that acknowledged these allowances. They contended that disallowing these benefits would violate the principle of non-diminution of pay. However, the COA countered that Republic Act No. 6758, the Salary Standardization Law, superseded the MWSS Charter in matters of compensation. This law aimed to standardize salaries across government agencies, including GOCCs, and effectively integrated most allowances into basic pay unless explicitly exempted. The COA emphasized that any additional allowances required Presidential approval, which was absent for the disallowed MWSS meal allowances.

The Supreme Court sided with the COA, reinforcing the principle that GOCC autonomy is not absolute and must operate within the bounds of general laws governing compensation in the public sector. The Court cited its previous ruling in Metropolitan Waterworks and Sewerage System v. Commission on Audit, which unequivocally established that MWSS is indeed covered by RA 6758. According to the Court, this law repealed any provisions in the MWSS Charter that might have exempted it from the standardized compensation and position classification system. Therefore, the MWSS Board’s grant of benefits beyond what is legally authorized became an ultra vires act, exceeding its lawful authority.

Section 12 of RA 6758 is central to this issue. It states that all allowances are considered included in the standardized salary, except for a few specific exceptions like representation and transportation allowances, and “such other additional compensation not otherwise specified herein as may be determined by the DBM.” The meal allowances in question did not fall under these exceptions, nor did they have the requisite approval from the Department of Budget and Management (DBM) or the President. The Court clarified that while RA 6758 allowed for the continuation of certain allowances for incumbents as of July 1, 1989, this was a protection against pay diminution for those already receiving benefits at the time of the law’s enactment. It did not grant a blanket authority for GOCCs to unilaterally increase or expand these benefits without proper authorization.

Crucially, the Supreme Court applied the Madera v. Commission on Audit framework to determine liability for the disallowed amounts. This framework distinguishes between the liability of recipients and approving/certifying officers. Recipients, regardless of good faith, are generally liable to return disallowed amounts under the principle of solutio indebiti, which obligates the return of what was unduly received. However, the Madera Rules provide nuances for approving and certifying officers. Those who acted in good faith, in regular performance of their duties, and with due diligence are generally not held personally liable. Conversely, officers who acted in bad faith, with malice, or gross negligence are solidarily liable.

In Abrigo, the Court differentiated between certifying officers. Those who merely certified the availability of funds and completeness of documents were exonerated from solidary liability. Their role was deemed ministerial and not directly involved in determining the legality of the allowance itself. However, officers who certified the legality and necessity of the expenses, approved the payments, and the MWSS Board members who authorized the allowances through resolutions were held solidarily liable. The Court reasoned that these officers had a greater responsibility to ensure the legal basis of the disbursements and could not simply rely on board resolutions, especially given prior warnings about the lack of legal basis for these allowances.

The Court modified the COA decision in one aspect: the cut-off date for incumbency. The Notices of Disallowance used June 30, 1989, but the Court clarified that the correct date is July 1, 1989, aligning with the effectivity of RA 6758. This adjustment, while seemingly minor, underscores the importance of precise application of legal dates and provisions. Ultimately, Abrigo v. COA serves as a significant reminder that while GOCCs possess corporate powers, these are not unfettered, especially in matters of public funds and employee compensation. It reinforces the COA’s crucial role in ensuring fiscal responsibility and adherence to standardized compensation frameworks across the government sector.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Abrigo v. COA, G.R. No. 253117, March 29, 2022