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DECISION NO. 2013-153

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October 02, 2013

COA DECISION NO. 2013-153

Subject: Petition for Review of Catbalogan Water District,

Catbalogan, Samar, of Legal and Adjudication Office Corporate
Decision No. 2008-037 dated June 24, 2008, affirming various Notices
of Suspension and Notices of Disallowance in the total amount of
P2,344,422.83

DECISION

FACTS OF THE CASE

Before this Commission is the Petition for Review filed by Atty. Oscar E. Mendoza,
Counsel for the Petitioner, Catbalogan Water District (CWO), Catbalogan,
Samar, of Legal and Adjudication Office (LAO)-Corporate (C) Decision No.
2008-037 dated June 24, 2008. The assailed Decision denied the appeal of
Engr. Tomas W. Bautista, Interim General Manager (IGM), CWO, Catbalogan,
Samar, for the lifting of two Notices of Suspension (NSs) and various Notices of
Disallowance (NDs) issued by the then Regional Cluster Director (RCD), LAO, COA
Regional Office (RO) No. VIII, Candahug, Palo, Leyte, in the aggregate amount
of P2,344,422.83.

Records show that in the audit conducted by an Audit Team from then Cluster III - Public
Utilities, Corporate Government Sector (CGS), COA RO No. Vlll, various transactions/claims
of different dates of CWD were found to be irregular, resulting in the issuance of several
Audit Observation Memoranda to lGM Bautista, CWD.

Upon evaluation thereof, the RCD-LAO issued two (2) NSs and various NDs , requiring all
the persons identified as liable, to submit the required documents and to settle the
amounts involved, detailed as follows:
NS/NDNo./Dateof Reasonfor
AmountDisallowed Natureoftransaction
Issuance suspension/disallowance
Noregistration
ofcontractorsand
bidder'sbondwere
submittedduringthe
Paymentof
biddingbidding
workaccomplishment
documentswerenot
ontheconstructionof
P882,500.36 properlyaccomplished;
ADBSmallTownsWater
NSNos.04002101(02)/ andthewinningbidderdid
Supply
bothdatedMarch8,2004 notissueanofficialreceipt

P1,241,078.35 toacknowledgereceiptof
thepaymentsforwork
SectorProject
accomplished.Instead,
(STWSSP)
onlyaReimbursement
ExpenseReceipt(RER)
wasissued.

Overpaymentoftravelallowances
ofvariousemployees;and
NDNo.04020101
Travelallowanceandper paymentofperdiemsdespite
(02)/March3,2004 8,800.00
diemsofvariousemployees thefactthattheseminarwasa

liveinseminarwhichincludes
registration,mealsandlodging
Constitutesdoublepaymentof
Fuelandmealexpensesof expendituresasthelawyerwas
NDNo.04021101 theCWDlegalcounsel;and alreadygivenappearancefee;
(02)and0402310I 9,674.34 legalcounsel;and andunauthorizedhiring
(02)/Bothdated 2,000.00 legalexpensesincurredby ofprivatecounseltoappear
March3,2004 theIGMinhispersonal personalcapacityinthecases
capacity filedagainsttheIGMinhis
personalcapacity
Unauthorizedpayment
NDNo.04022101 ofhonorariumtothe
Honorariumofpersonal
(02)/March3,2004 13,500.00 securityguardswhowere
bodyguards
alreadypaidsalariesby
thesecurityagency.
NDNo.04024 25,600.00 Paymentofriceand ContrarytoSection
101(02)/March clothingallowanceto 13,PresidentialDecree
 (P.O.)No.198whichstates
theInterimBoardofthe
thatthegoverning
3,2004 governingboardDirectors
boardmembersshallbe
(BOD)
entitledonlytoperdiems.
Joborderemployeesarenot
entitledtotravellingallowances
Paymentoftravelling
NDNo.04025101 underExecutiveOrder(E.O.)No
2,040.00 expensesof
(02)/March3,2004 .248andRuleXIofthe
ajoborderemployee
OmnibusRuleslmplementing
BookVofE.O.No.292.
Extraordinary thoseentitledtoEMEunderthe
NDNo.04026101
28,000.00 andMiscellaneousExpens GeneralAppropriations
(02)March32004
es(EME) Act(GAA)of2002.
ViolationofCivilService
Commission(CSC)Memorand
umCircularNo.16,seriesof
NDNo04027101 Monetizationofleave
74,551.78 2002andSection23,RuleXVI
(02)March32004 credits
oftheOmnibusRules
ImplementingBookVofE.O.
No.292.
Thepaymentofaccident
andhealthinsuranceof
theIGMwasillegalasthelatter
wasalreadycoveredbya
compulsorylife/retirement
NDNo.04 Paymentof
insurancewiththeGovernment
028101(02)/ 4,258.00 annualaccidentand
ServiceInsuranceSystem
March3,2004 healthinsurance
(GSIS)andhealthinsurance
withthePhilHealth.Said
paymentthusconstitutesdouble
incurrenceofexpendituresfor
thesamepurpose.
Paymentoftheallowances
violatedSection34ofthe
NDNo.04
Variousallowancesofthe GAAof2002,Section8,
029101(02)/ 52,420.00
IGM ArticleIX(b)ofthe1987
March3,2004
PhilippineConstitutionand
Section46ofP.D.No.807.
Total P2,344,422.83

IGM Bautista, CWD, filed an appeal dated July 28, 2004 for the lifting of the above NSs and
NDs with the RCD-LAO. Inhis 1st Indorsement dated September 21, 2004, said RCD,
however, denied the appeal, except with respect to ND No. 04- 020-101 (2). Hence, IGM
Bautista filed his Supplemental Memorandum of Appeal dated July 11, 2005 with the RCD-
LAO, who, in turn, forwarded it, through his 1st Indorsement dated July 28, 2006, to the
Director of the then LAO-C, Legal Services Sector, this Commission. Accordingly, said
Director rendered LAO-C Decision No. 2008-037 dated June 24, 2008 sustaining the NDs,
and. with the instruction to issue the corresponding NDs on the NSs which have matured
.into disallowance.

Aggrieved thereby, the CWD, through counsel, filed the instant Petition for Review,
positing, among others, the arguments on each of the following:
 1. NS Nos. 04-002-101 (02) and 04-003-101 (02), both dated March 8,
2004
The disbursements on the procurement of services for the construction of
the ADB-STWSSP should not be disallowed in audit as their correctness
can be sufficiently established by the documents examined by the
auditor.
2. ND No. 04-020-101 (02) dated March 3, 2004
The travelling expenses are not limited to the payment of meal and
lodging of the employee while on travel. They extend to other incidental
expenses. ,
3. ND Nos. 04-021-101 (02) and 04-023-101 (02) both dated March 3, 2004
The disbursements pertaining to cases handled by the CWD Legal
Counsel are regular.
4. ND No. 04-022-101 (02) dated March 3, 2004
The honoraria paid to the security assigned to IGM Bautista are regular.
They do not constitute double payment.
5. ND No. 04-024-101 (02) dated March 3, 2004
The CWD IBOD received the various monetary allowances in good
faith.
6. ND No. 04-025-101 (02) dated March 3, 2004
Payment or reimbursement of travelling expenses is not limited to
regular employees of the government but include those employed
under Job Order Employment .
7. ND No. 04-026-101 (02) dated March 3, 2004
The EME granted to IGM Bautista is not within the purview of the
extraordinary expenses provided under Section 23 of the GAA of 2002.
8. ND No. 04-027-101 (02) dated March 3 , 2004
The monetization of leave credits for the years 200 and 2002 was in
accordance with the Omnibus Rules Implementing Book V of E. O. No. 292.
9. ND No. 04-028-101 (02) dated March 3, 2004
The disbursement for the insurance premiums with Philam Life Insurance
does not constitute double expenditure for the same purpose.
10 . ND No. 04-029-101 (02) dated March 3, 2004
Although ND No. 04-029-101 (02) was not discussed in CWD's Petition for
Review, it can be inferred from its letter appeal dated July 28, 2009,
through IGM Bautista, that CWD claimed that the rice and clothing
allowances, year-end financial assistance, 13th-month pay, cash gift and
additional bonus for CY 2002 paid to IGM Bautista are not within the
context of Section 8, Article IX (b) of the 1987 Philippine Constitution and
Section 13 of P.O. No. 198; thus, there is no double compensation.

ISSUE
The issue to be resolved is whether or not the arguments presented by the petitioner are
meritorious as to warrant the reversal of LAO-C Decision No. 2008- 037 dated June 24,
2008.

DISCUSSION
This Commission finds the arguments presented by the CWD devoid of merit.
1 . Re: NS Nos. 04-002-101 (02) and 04 - 003-101 (02) on the construction of the
ADB-STWSSP
The two NSs required the submission of certain documentary or technical requirements,
including the registration of the contractors, the bidder's bonds, bid documents, and
official receipt (OR) from the winning bidder. The Auditor validly issued the subject NSs, as
provided in Section 14.1.1 of the 1993 Revised Manual on Certificate of Settlement and
Balances (CSB) which states that "the Auditor's NS is issued for transactions or accounts
which could otherwise have been settled except for some documentary or technical
requirements, like lack of supporting documents or proper signatures."
The two NSs had already matured into disallowance due to the failure of appellants to
settle the same within the ninety (90)-day reglementary period.1
2. Re: ND No. 04-020-101 (02) on per diem during a live-in seminar
In their letter-appeal dated July 28, 2004, this Commission was informed that "all payees
have refunded the excess amount except for Mr. Custodio who was already dead." This
averment was not however supported by evidence or proof that said payees had indeed
refunded the amount. In a long line of cases decided by the Supreme Court, bare
allegations, unsubstantiated by evidence, are not equivalent to proof under the rules.
While Section 18 of the 1993 Revised Manual on CSB recognizes payment as one of the
modes of settling a disallowance, it appears that the alleged payment of the said
disallowances by the persons liable was not substantiated. Hence, this particular
disallowance remains, unless proven otherwise.
3. Re: ND No. 04-021-101 (02) and 04-023-101 (02) on legal counsel's
expenses
A perusal of the records revealed that the case, which required the services of the legal
counsel hired by CWD, was not against CWD but against the person of IGM Bautista for
grave coercion.This Commission thus holds that the same should be for the personal
account of Engr. Bautista and not of the agency.
In the case of Urbano vs. Chavez (G.R. No. 87977, March 19, 1990), the Supreme Court
held that "a public official who is sued in a criminal case is actually sued in his personal
capacity in as much as his principal, the State, can never be the author of a wrongful act,
much less commit a crime."
Thus, any expense incurred by the official concerned in connection with a case filed
against him shall be his personal liability, unless a law gives him express authority to
charge it against government funds.
Section 416, Government Accounting and Auditing Manual, Volume I, provides for the
conditions and documents required to support claims for legal expenses incurred by
public officials and employees, viz:
a. Public officers and employees acting in good faith may be indemnified for legal
expenses incurred in suits brought against them for acts committed in the
performance of their official duties. Thus, in order that an officer or employee may be
reimbursed for any amount spent in connection with his defense in suits filed against
him, the offense with which he is charged must have a direct relation or connection
with the discharge of his duties and in the absence of a causal relationship, he is not
entitled to reimbursement.
Claims shall be supported by:
1. An application of the official or employee concerned giving facts of the
offense he was charged with and approved by the proper Department Head
concerned and passed upon by the COA Chairman.
2. Copies of decisions exonerating him from administrative or criminal liability .
3. Receipts of actual and related expenses
4. Certificate of availability of funds.
b. As a general rule, government officials and employees who are criminally prosecuted
for acts committed in the perfortnance of their duties may be allowed reimbursement
of reasonable attorney's fees including the bail bond premiums incurred in connection
with their defense, only upon their acquittal from such criminal cases.
XXX
In the instant case, there was no evidence presented by the Petitioner that it complied
with all the foregoing requirements to support its claim for reimbursement of legal
expenses. Hence, the subject disallowance is valid and, thus, remains.
Even granting, for the sake of argument, that the private lawyer is legally entitled to
represent Engr. Bautista under the retainer contract, still, the reimbursement of fuel and
meal expenses is not in accordance with Item 32 of the terms and conditions of the
contract which states that the appearance fee shall be in lieu of transportation and meal
expenses.
 4. Re: ND No. 04-022-101 (02) on the honoraria paid to the Security Guard
assigned to the IGM
The appellant's contention that the honorarium paid to the security guard assigned to IGM
Bautista is regular and does not constitute double payment is bereft of merit. The IGM
was authorized to have only one personal guard either from the security services or from
the police, thus, the detail of another personal guard to him was unnecessary and without
legal basis.
Records also show that the additional guard assigned to IGM Bautista was an employee of
a private security agency with whom the CWD had an existing contract. Hence, said guard
should have been securing the CWD premises and not IGM Bautista alone, and should
have been receiving salary only from the agency as said guard was not an employee of
the CWD.
5. Re: ND No. 04-024-101 (02) on allowances of IBODs -
Good faith as a defense by the Petitioner cannot be considered. At the time of the receipt
of the clothing and rice allowances on February 12 and March 6, 2002, respectively, the
Supreme Court had already decided the case of Baybay Water District vs. COA (G.R. Nos.
147248-49, January 23, 2002), where the Supreme Court had ruled that members of the
board of water districts cannot receive allowances and benefits more than those allowed
by P.D. No. 198.

In the case of Casal et al. vs. COA (G.R. No . 149633, November 30, 2006), the Supreme
Court ruled that " The failure of petitioners-approving officers to observe all these
issuances cannot be deemed a mere lapse consistent with the presumption of good faith.
Rather, even if the grant of the incentive award were not for a dishonest purpose as they
claimed, the patent disregard of the issuances of the President and the directives of the
COA amounts to gross negligence, making them liable for the refund thereof ."
(Underscoring supplied)

Moreover, records show that the disbursement vouchers representing the disallowed
payments for the allowances of the IBOD are "subject to refund if found not in order." For
these reasons, good faith as a defense cannot be appreciated.
6. Re: ND No. 04-025-101 (02) on travelling expenses
The Petitioner justifies the reimbursement of travelling expenses, alleging that the same
is not limited to permanent employees only of the government. This argument is
unmeritorious. Under CSC Memorandum Circular No. 17, s. 2002, a contract of services
need not be submitted to the CSC because such services are not considered as
government service. Since services of a Job OrderPersonnel are not
considered as government service, Ms. Maria Reyes, a job order employee, should not
have been paid the allow ances and travelling expenses prescribed by E.O. No. 2483 as
the same is applicable only to government personnel.
7. Re: ND No . 04-026-101 (02) on EME of the IGM
COA Circular No. 89-300 dated March 21, 1989 enumerates the scope of expenses that
may be charged to the EME, viz:
II. Scope and coverage - Conformably to Section 19 and other related sections of R.A. No.
6688, appropriations authorized under GAA for National Government agencies may be
used for incurrence of extraordinary and miscellaneous expenses at the rates and by
the offices and officials specified therein for, among others:
a. meetings, seminars and conferences;
b. official entertainment;
c. public relations;
d. educational, athletic and cultural activities;
e. contribution to civic or charitable institution;
f. membership in government associations;
g. membership in national professional organizations duly accredited by the
Professional Regulation Commission ;
h. membership in the Integrated Bar of the Philippines;
 i. subscription to professional technical journals and informative magazines,
library books and materials;
j. office equipment and supplies; and
k. other similar expenses not supported by the regular budget allocation .

From the foregoing, it is clear that the coverage of the EME is broad enough to include
the incidental and miscellaneous expenses of the CWD. Hence, the expenses charged to
EME fall within the enumeration. Under Department of Budget and Management (DBM)
Corporate Budget Circular (CBC) No. 18 dated November 14, 2000 and SME Manual on
Categorization/Recategorization of LWDs Model Organizational Structure/Staffing Pattern
Compensation Policy Rules for Implementation, however, a General Manager E of an
Average Water District to which CWD belongs-is equated to a Division Chief level position
only, who is not among the officials having an equivalent rank to those enumerated as
authorized to incur EME under Section 23 of GAA 2002, viz:
Appropriations herein authorized may be used for extraordinary expenses of the following
officials and those of equivalent rank as may be authorized by the DBM not exceeding:
a. P180,000.00 for each Department Secretary;
b. P65,000.00 for each Department Undersecretary;
c. P35,000.00 for each Department Assistant Secretary;
d. P30,000.00 for each head of bureau or organization of equal rank to a bureau and
for each Department Regional Director;
e. P18,000.00 for each Bureau Regional Director; and
f. P 13,000.00 for each Municipal Trial Court Judge, Municipal Circuit Trial Court
Judge, and Shari'a Circuit Court Judge .

8. Re: ND No. 04-027-101 (02) on monetization of leave credits

Section 22 of Rule XVI of the Omnibus Rules Implementing Book V of E.O. No. 292, which
provides the guidelines for the grant of monetization of leave credits, states that
monetization of earned leaves may be made for a minimum of 10 to a maximum of 30
days per year. Section 23 of said Rule also provides another criterion for monetizing
earned leaves of 50% or more of the leave credits, that is, based on meritorious
conditions, subject to the discretion of the agency head and the availability of funds.

Based on the schedule of employees who monetized their earned leaves provided by the
petitioner, it appears that the employees monetized their leave credits for 10 to 30 days
in a given year, and that the leave credits monetized were both vacation and sick leaves.
Some of the employees had monetized 30 days, of which 25 days were taken from their
sick leave credits. It is evident therefrom that the leave credits. were improperly
monetized as it disregarded the conditions provided under the aforementioned Section 22
that only vacation leave credits can be monetized in a minimum of 10 to a maximum of
30 days in a given year .

Even granting that the monetization was less than the 50% of the earned leaves, it will
not cure the illegality of the disbursements as the situation of the CWD falls squarely
within said Section 22.
9. Re: ND No. 04-028-101 (02) on Philam Life insurance premiums
In the case of Province of Negros Occidental vs. COA, G.R. No. 182574, September 28,
2010, the Supreme Court stated that, under Section 2 of Administrative Order (AO) No.
103,4 the President enjoined all heads of government offices and agencies to refrain
from granting productivity incentive benefits or any and all similar forms of allowances
and benefits without the President's prior approval. In the instant case, CWD has not
secured the approval of the President on the grant and payment of the accident and
health insurance of IGM Bautista.
Moreover, IGM Bautista was covered by the compulsory life/retirement
insurance of the GSIS and health insurance of PhilHealth which covers
accidental death benefits. Being so, the procurement of another insurance
 policy with a private insurance agency was a duplication of already existing
benefits, which the law prohibits.
10. Re: ND No. 04-029-101 (02) on allowances of the IGM
Although this ND was not discussed in the Petition for Review, it is part of the
total amount of suspensions and disallowances amounting to P2,344,422.83
that is the subject of the petition. The payments of rice allowances from January
to July 2002, clothing allowance, year-end financial assistance, 13th-month pay,
cash gift and additional Christmas bonus for CY 2002 to IGM Bautista were
improper and violative of Section 345 of the GAA of 2002 since IGM Bautista had
been paid similar allowances covering the same period by the Local Water
Utilities Administration, CWD's parent agency. This second payment apparently
resulted in double compensation which violated Section 8, Article IX (b) of the
1987 Philippine Constitution and Section 46 of P.D. No. 807 prohibiting public
officers and employees from receiving additional, double or indirect
compensation unless specifically authorized by law.
In fine, this Commission finds the justification submitted by the appellants
unmeritorious to warrant the reversal of LAO-C Decision No. 2008-037 dated
June 24, 2008.

RULING
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED for
lack of merit. Accordingly, Legal and Adjudication Office Corporate Decision No. 2008-037
dated June 24, 2008 is hereby AFFIRMED. However, the Regional Director of COA
Regional Office No. VIII, Candahug, Palo, Leyte is hereby directed to issue the
corresponding Notices of Disallowance for Notices of Suspension Nos. 04-002-101(02) and
04-003-101(02) , both having matured to disallowance.

(SGD.) MA. GRACIA M. PULIDO TAN

Chairperson

(SGD.) HEIDI L. MENDOZA

Commissioner

(SGD.) ROWENA V. GUANZON

Commissioner

ATTESTED BY:

(SGD.) FORTUNATA M. RUBICO

Director IV
Commission Secretariat

Copy furnished:

Atty. Oscar E. Mendoza

Counsel for the Petitioner
Verona and Mendoza Law Office
Room 219, 2nd Floor,Melecio Tan Bldg.
Cor. Salazar and P. Zamora Sts.
Tacloban City

The General Manager

Catbalogan Water District
Catbalogan Samar
The Audit Team Leader
Catbalogan Water District
Catbalogan Samar

The Regional Director

COA Regional Office No. Vlll
Candahug, Palo, Leyte

The Director
Information Technology Office
Administration Sector

The Assistant Commissioners

Corporate Government Sector
Legal Services Sector

All of this Commission

WRHE/SUV/EPF/DVG/JISL
3179-/c-371

Footnote:
page6
1 Section 15.2 of the 1993Revised Manual on CSB
page7
2 "The ATTORNEY may be granted an appearance fee of ONE THOUSAND (P1,000.00) PESOS in case of
hearing within CATBALOGAN, and ONE THOUSAND FIVE HUNDRED (P 1,500.00) PESOS, in case of hearing
outside CATBALOGAN ,SAMAR, which appearance fee shall be in lieue of transportation and meal
expenses"
page9
3 Prescribing Rules and Regulations and New Rates of Allowances for Official Local and Foreign Travels
of Government Personnel

page10
4 AO No. 103 took effect on January 14, 1994

page11
5 Section 34. Funding of Personnel Benefits. The personnel benefits costs of government officials
and employees shall be charged against the funds from which their compensations are paid. All authorized
supplemental or additional compensation, fringe benefits and other personal services costs of officials and
employees whose salaries are drawn from special accounts or special funds, such as salary increases, step
increment for length of service, incentive and service fees, commutation of vacation and sick leaves,
retirement and life insurance premiums, compensation insurance premiums, health insurance
premiums, home Development Mutual Fund (HDMF) contributions, hospitalization and medical benefits,
scholarship and educational benefits, training and seminar expenses, all kinds of allowances, whether
commutable or reimbursable, in cash or in kind, and other personnel benefits and privileges authorized by
law, including the payment of retirement gratuities, separation pay and terminal leave benefits, shall
similarly be charged against the corresponding fund from which their basic salaries - are drawn and in no
case shall - such - personnel benefits costs be charged against the General Fund of the National
Government. Officials and employees on detail with other offices, including the representatives and
support personnel of auditing units assigned to serve other offices or agencies, shall be paid their salaries,
emoluments, allowances and the foregoing supplemental compensation, fringe benefits and other
personal services costs from the appropriations of their parent agencies, and in no case shall such be
charged against the appropriations of the agencies where they areassigned or detailed, except when
authorized by law.