The Supreme Court clarified the responsibilities of government employees regarding disallowed benefits, emphasizing that even with good faith, recipients must return amounts unduly received. This decision underscores the limits of a government board’s authority to grant benefits without proper legal basis and highlights the individual responsibility of public servants to ensure compliance with compensation laws. The ruling also provides a framework for determining liability among approving and certifying officers in cases of disallowed disbursements, offering a practical guide for those involved in government financial management.

Meal Allowances Under Scrutiny: Who Pays When Government Perks Exceed Legal Limits?

This case revolves around the disallowance of meal allowances granted to officials and employees of the Metropolitan Waterworks and Sewerage System (MWSS)-Corporate Office (CO) for the calendar years 2012 and 2013. The Commission on Audit (COA) flagged these allowances, totaling P8,173,730.00, asserting that they lacked proper legal foundation. The core legal question is whether the COA committed grave abuse of discretion in denying the appeal of Ronald S. Abrigo, et al., who were officers and employees of MWSS-CO, challenging the disallowance of these allowances. The petitioners argued that the MWSS Board of Trustees had the authority to grant these benefits, but the COA maintained that such power was subject to existing compensation laws and regulations.

The COA’s decision hinged on the premise that the grant and increase of meal allowances lacked a valid legal basis. Specifically, the COA pointed out that the allowances exceeded the amount authorized in the Corporate Operating Budget (COB) approved by the Department of Budget and Management (DBM) for incumbents as of June 30, 1989. The COA further emphasized that non-incumbents as of that date were not entitled to any meal allowance at all. This sparked a legal battle that ultimately reached the Supreme Court, forcing a reevaluation of the roles and responsibilities of public officials in managing government funds.

The Supreme Court, while acknowledging the procedural lapse in the filing of the petition, opted to address the substantive issues raised. This decision highlights the court’s willingness to relax procedural rules when strong considerations of substantive justice are at stake. The court emphasized that grave abuse of discretion requires proof of capricious and whimsical exercise of judgment, not mere reversible error. While the COA’s decision was upheld, the Court modified certain aspects of the Notices of Disallowance (NDs) to align with existing jurisprudence. This adjustment reflected the evolving understanding of liability and return requirements in disallowed amounts.

At the heart of the matter is the authority of the MWSS Board to grant employee benefits. The Court referenced the case of Metropolitan Waterworks and Sewerage System v. Commission on Audit, emphasizing that the MWSS is covered by Republic Act No. 6758 (RA 6758), which repealed all charters exempting agencies from the coverage of the compensation and position classification system. As such, the grant of additional benefits by the MWSS Board is considered an ultra vires act. The Court’s decision reinforced the principle that government agencies must adhere to standardized compensation systems unless specifically exempted by law.

Section 12 of RA 6758 further clarifies this point, stating:

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 Court interpreted this to mean that benefits granted to MWSS employees were integrated into the standardized salaries, and the receipt of the disallowed benefits and allowances constituted double compensation. This ruling is a powerful reminder that public funds must be managed with utmost prudence and adherence to legal guidelines. It also serves as a guide to government employees to always perform due diligence to ensure compliance with laws and regulations. Further, the court rejected the petitioner’s reliance on the Concession Agreements, stating that these agreements could not override the provisions of RA 6758.

The Supreme Court also delved into the responsibility of those who received the disallowed amounts. Citing Madera v. Commission on Audit, the Court emphasized the principle of solutio indebiti, which obligates individuals to return what they have received in error. This applies to both approving and certifying officers, as well as passive recipients. Even with the existence of good faith, if the grant of allowance has no legal basis, the recipients are duty bound to return what they received. This underscores the importance of accountability in the disbursement of public funds and the necessity for government employees to ensure that all financial transactions comply with the law.

The Court, however, clarified the extent of liability for approving and certifying officers. Those who certified that the expenses were necessary and lawful, approved the payments, or approved the COB were held solidarily liable for the disallowed amounts. On the other hand, officers who only certified the completeness of supporting documents and the availability of funds were absolved from liability. This distinction recognizes the different roles and responsibilities within the disbursement process and ensures that liability is assigned based on the specific nature of an officer’s participation.

The Court pointed out that the MWSS officials had already been apprised of the limits of the MWSS Board’s authority to approve the benefit. The Supreme Court found that the approving and certifying officials did not act in good faith when they continuously granted the meal allowance, knowing that its legal basis was questionable and may be disapproved by higher authorities. The court ruled that sheer reliance upon a board resolution does not satisfy the standard of good faith and diligence required by law, especially when the resolution itself reveals the impropriety of the benefits given. This decision reiterates the importance of due diligence and accountability in the handling of public funds.

To summarize, only those approving and certifying officers who certified the legality and necessity of the expenses, and those who approved the payments, are solidarily liable. Those whose only participation was to certify the completeness of the supporting documents and the availability of funds are absolved from liability. Passive recipients, including approving/certifying officers who also received the meal allowance as payees, are liable only for the amounts they personally received.

FAQs

What was the key issue in this case?	The key issue was whether the Commission on Audit (COA) correctly disallowed the meal allowances granted to Metropolitan Waterworks and Sewerage System (MWSS) employees and officials, and who should be held liable for the disallowed amounts.
Why were the meal allowances disallowed?	The meal allowances were disallowed because they exceeded the amount authorized in the Corporate Operating Budget (COB) approved by the Department of Budget and Management (DBM) for incumbents as of July 1, 1989, and were granted to non-incumbents without legal basis.
What is the principle of solutio indebiti?	The principle of solutio indebiti obligates individuals to return something that has been unduly delivered through mistake. In this case, it requires recipients of the disallowed meal allowances to return the amounts they received in error.
Who is liable to return the disallowed meal allowances?	Passive recipients of the disallowed meal allowances, including approving/certifying officers who received the amounts, are liable only for the amounts they personally received. Approving and certifying officers who certified the legality and necessity of the expenses and approved the payments are solidarily liable for the total disallowed amount.
What is the effect of RA 6758 on the MWSS’s authority to grant benefits?	RA 6758, the Compensation and Position Classification Act of 1989, repealed all charters exempting government agencies from the standardized compensation system. This means the MWSS Board’s authority to grant additional benefits is limited and subject to existing compensation laws and regulations.
When is a government employee considered an ‘incumbent’ for allowance purposes?	For the purpose of determining eligibility for allowances, an employee is considered an incumbent if they held the position as of July 1, 1989, and were actually receiving the allowance as of that date.
What is the significance of the Madera ruling in this case?	The Madera ruling provided the framework for determining the liability of individuals for disallowed amounts. It harmonized conflicting jurisprudence and established clear rules for the return of disallowed funds.
What does it mean for approving/certifying officers to be ‘solidarily liable’?	Solidary liability means that each approving/certifying officer is individually responsible for the entire disallowed amount. The COA can pursue any one of them for the full amount, regardless of their individual participation or the specific amount they certified.

This case serves as a crucial reminder of the importance of adhering to legal frameworks in government financial management. It emphasizes the need for public officials to exercise due diligence and accountability in disbursing public funds, even when acting in good faith. The decision provides clear guidelines on liability and the responsibility to return disallowed amounts, ultimately promoting transparency and integrity in government operations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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: Ronald S. Abrigo, et al. vs. Commission on Audit, G.R. No. 253117, March 29, 2022