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Development Bank of The Philippines v. Commission On Audit, 373 SCRA 356 (2002)

This case involved a Commission on Audit (COA) audit of the Catbalogan Water District (CWD) that discovered board members granted themselves unauthorized allowances and bonuses between 1997-1998. The COA disallowed these, finding that under Presidential Decree 198, water district board members are only authorized to receive per diems and no other compensation. The COA has jurisdiction to audit government-owned corporations like water districts. While the additional payments were not legally authorized, the directors did not have to refund amounts received in good faith prior to the court clarifying the law.

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99 views2 pages

Development Bank of The Philippines v. Commission On Audit, 373 SCRA 356 (2002)

This case involved a Commission on Audit (COA) audit of the Catbalogan Water District (CWD) that discovered board members granted themselves unauthorized allowances and bonuses between 1997-1998. The COA disallowed these, finding that under Presidential Decree 198, water district board members are only authorized to receive per diems and no other compensation. The COA has jurisdiction to audit government-owned corporations like water districts. While the additional payments were not legally authorized, the directors did not have to refund amounts received in good faith prior to the court clarifying the law.

Uploaded by

Kael Marmalade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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De Jesus vs.

COA (2003)

Summary Cases:

● De Jesus vs. COA

Subject: Water districts are GOCCSs with a special charter and are subject to the jurisdiction of the
COA; Directors of water districts are authorized to receive only the per diem authorized by law and no
other compensation or allowance in whatever form; Directors not required to refund the allowances and
benefits received in good faith

Facts:

An auditing team from the Commission on Audit ("COA") audited the accounts of the Catbalogan Water
District ("CWD") in Catbalogan, Samar. The auditing team discovered that between May to December
1997 and April to June 1998, members of CWD's interim Board of Directors ("Board") granted
themselves the following benefits: Representation and Transportation Allowance ("RATA"), Rice
Allowance, Productivity Incentive Bonus, Anniversary Bonus, Year-End Bonus and cash gifts. These
allowances and bonuses were authorized under Resolution No. 313, series of 1995, of the Local Water
Utilities Administration ("LWUA").

The audit team disallowed the allowances and bonuses on the ground that members of the CWD Board
cannot receive compensation and other benefits in addition to the per diems allowed by Section 13 of
Presidential Decree No. 198.

Petitioners appealed to the COA but the appeal was denied.

Held:

Water districts are GOCCSs with a special charter and are subject to the jurisdiction of the COA

1. The Catbalogan Water District was created pursuant to PD 198 (Provincial Water Utilities Act of
1973). PD 198 authorized the local legislative bodies, through an enabling resolution, to create their
respective water districts, subject to the guidelines and regulations under PD 198. PD 198 further
created the Local Water Utilities Administration ("LWUA"), a national agency, and granted LWUA
regulatory powers necessary to optimize public service from water districts.

2. Petitioners claim that the COA has no jurisdiction to construe any provision of PD 198 on the
compensation and other benefits granted to LWUA-designated members of the board of water districts.
By exercising motu proprio plenary jurisdiction to construe and apply Section 13 of PD 198, the COA
encroached on the powers of the LWUA.

3. The 1987 Constitution mandate the COA to audit all government agencies, including
government-owned and controlled corporations with original charters. Indeed, the Constitution
specifically vests in the COA the authority to determine whether government entities comply with laws
and regulations in disbursing government funds, and to disallow illegal or irregular disbursements of
government funds. (see Section 2, Subdivision D, Article IX of the 1987 Constitution)

4. A water district is a government-owned and controlled corporation with a special charter since it is
created pursuant to a special law, PD 198. The COA has the authority to investigate whether directors,
officials or employees of government-owned and controlled corporations, receiving additional allowances
and bonuses, are entitled to such benefits under applicable laws. Thus, water districts are subject to the
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jurisdiction of the COA.

5. We cannot sustain petitioners' claim that the COA usurped the functions of the LWUA in construing
PD 198 and disallowing payment of the additional allowances and bonuses. Such a theory leads to the
absurd situation where the board of an administrative agency, by the mere act of issuing a resolution,
can put to naught the broad and extensive powers granted to the COA by the Constitution. This will
prevent the COA from discharging its constitutional duty as an effective, efficient and independent
watchdog of the financial operations of the government.

6. Petitioners confuse the COA which is an independent constitutional body with the DBM which is under
the executive branch of the government. The DBM is responsible for formulating and implementing the
national budget. While the DBM is the government agency tasked to release government funds, the duty
to examine and audit government accounts and expenditure properly pertains to the COA.

Directors of water districts are authorized to receive only the per diem authorized by law and no
other compensation or allowance in whatever form

7. Section 13 of PD 198, as amended, reads as follows:

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 diems 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.

8. Petitioners argue that the term "compensation" in Section 13 of PD 198 does not include RATA, EME,
bonuses and other similar benefits disallowed in this case. However, Section 13 of PD 198 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.

9. Per diem is precisely intended to be the compensation of members of board of directors of water
districts. Indeed, words and phrases in a statute must be given their natural, ordinary, and
commonly-accepted meaning, due regard being given to the context in which the words and phrases are
used. By 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 diems, the law quite clearly indicates that
directors of water districts are authorized to receive only the per diem authorized by law and no other
compensation or allowance in whatever form. (see Baybay Water District v. Commission on Audit)

Directors not required to refund the allowances and benefits received in good faith

10. The ruling in Blaquera v. Alcala applies to the instant case. Petitioners here received the additional
allowances and bonuses in good faith under the honest belief that LWUA Board Resolution No. 313
authorized such payment. At the time petitioners received the additional allowances and bonuses, the
Court had not yet decided Baybay Water District. Petitioners had no knowledge that such payment was
without legal basis. Thus, being in good faith, petitioners need not refund the allowances and bonuses
they received but disallowed by the COA.

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