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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/ND No./Date of Reason for suspension
A mount Disallowed Nature of transaction
Issuance / disallowance
No registration
of contractors and
bidder's bond were
submitted during the
Payment of
bidding bidding
work accomplishment
documents were not
on the construction of
P 882,500.36 properly accomplished;
ADB-Small Towns Water
NS Nos. 04-002-101 (02) / and the winning bidder did
Supply
both dat ed March 8, 2004 not issue an official receipt
P 1,241,078.35 to acknowledge receipt of
the payments for work
Sector Project accomplished. Instead,
(STWSSP) only a Reimbursement
Expense Receipt (RER)
was issued.

Overpayment of travelallowances
of various employees; and
ND No. 04-020-101
Travel allowance and per payment of per diems despite
(02) / March 3, 2004 8,800.00
diems of various employees the fact that the seminar was a
live-in seminar which includes
registration, meals and lodging
Constitutes double payment of
Fuel and meal expenses of expenditures as the lawyer was
ND No. 04-021- 101 the CWD legal counsel; and already given appearance fee;
(02) and 04-023-10I 9,674.34 legal counsel; and and unauthorized hiring
(02)/ Both dated 2,000.00 legal expenses incurred by of private counsel to appear
March 3,2004 the IGM in his personal personal capacity in the cases
capacity filed against the IGM in his
personal capacity
Unauthorized payment
ND No. 04-022-101 of honorarium to the
Honorarium of personal
(02)/ March 3,2004 13,500.00 security guards who were
bodyguards
already paid salaries by
the security agency.
Contrary to Section
Payment of rice and
13, Presidential Decree
ND No. 04-024- clothing allowance to
(P.O.) No. 198 which states
101 (02 )/ March 25,600.00 the Interim Board of the
that the governing
3,2004 governing board Directors
board members shall be
(BOD)
entitled only to per diems.
Job order employees are not
Payment of travelling entitled to travelling allowances
ND No. 04-025-101
2,040.00 expenses of under Executive Order(E.O.) No.
(02)/ March 3, 2004
a joborder employee 248 and Rule XI of the Omnibus
Rules lmplementing Book V
 of E.O. No. 292.
Extraordinary those entitled to EME under the
ND No. 04-026-101
28,000.00 and Miscellaneous Expenses General Appropriations
(02) March 3 2004
(EME) Act (GAA) of 2002.
Violation of Civil Service
Commission (CSC) Memorand
um Circular No. 16, series of
ND-No 04-027 101 Monetization of leave
74,551.78 2002 and Section 23, Rule XVI
(02) March 3 2004 credits
of the Omnibus Rules
Implementing Book V of E.O.
No. 292.
The payment of accident
and health insurance of
the IGM was illegal as the latter
was already covered by a
compulsory life/ retirement
ND No . 04-028- Payment of
insurance with the Government
101 (02)/ March 4,258.00 annual accident and
Service Insurance System
3, 2004 health insurance
(GSIS) and health insurance
with the PhilHealth. Said
payment thus constitutes double
incurrence of expenditures for
the same purpose.
Payment of the allowances
violated Section 34 of the
ND No. 04-029-
Various allowances of the GAA of 2002, Section 8,
101 (02)/ March 52,420.00
IGM Article IX (b) of the 1987
3, 2004
Philippine Constitution and
Section 46 of P.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 are·assigned or detailed, except when authorized by law.