De Guzman et.al v. Commission on Audit G.R.No.245274 13 October 2020 Lazaro - Javier, J.:

De Guzman et.al v. Commission on Audit

G.R.No.245274

13 October 2020

Lazaro - Javier, J.:

En Banc

Nature of the Action: This is a Petition for Certiorari assailing the issuances of the Commission on Audit (COA) in "Petition for Review of Ma. Teresita P. De Guzman, Ms. Viveca V. Villafuerte, Ms. Wilhelmina A. Aquino, and employees of Baguio Water District (BWD), Baguio City, of Commission on Audit -Cordillera Administrative Region Division No. 2015-26 affirming Notice of Disallowance No. 12-023-101-(09) on the payment of Centennial Bonus to the officers and employment of BWD for calendar year 2009.

Facts:

The Baguio Water District (BWD) authorized the award of the Centennial Bonus to the BWD officers and employees in the amount equivalent to 50% of the employee 's salary subsequently the COA Audit Team issued a notice of disallowance for being allegedly devoid of legal basis. 

As a consequence of the disallowance, the recipients were each directed to refund the centennial bonus they received. Then petitioners appealed to COA alleging among others that bonus was released to the officers and employees in good faith. However, COA-CAR affirmed the disallowance.

Thus, petitioners appeal to the COA En Banc which it affirmed COA-CAR's decision with modification that the passive recipients should not be required to refund the amounts they received in good faith. Only the approving/certifying/authorizing officers should refund the disallowed amount.

The petitioners then moved for reconsideration but was denied. Hence, this petition.

Issue:

Whether the recipient employees must be held liable to return disallowed payments?

Ruling:

Under the principle of solutio indebiti, if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

Madera, however, decrees as well that restitution may be excused in the following instances:

x x x x 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 determine 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.

None of these exceptions are present here. First, the centennial bonus cannot be considered to have been given in consideration of services rendered or in the nature of performance incentives, productivity pay, or merit increases. Second, a monetary grant that contravenes the unambiguous letter of the law cannot be forgone on social justice considerations. Liability arises and should be enforced when there is disregard for the basic principle of statutory construction that when the law was clear, there should be no room for interpretation but only application.

Verily, therefore, the employees must be held liable to return the amounts that they had received. As earlier discussed, the approving officers of BWD, herein petitioners, are jointly and severally liable for the disallowed amounts received by the individual employees.