DECISION NO.

2023-064
March 22, 2023

Subject: Automatic Review of Commission on Audit Regional Office No. XI Decision No.
2018-34 dated September 3, 2018, on the Appeal of Davao City Water District
(DCWD), represented by its Acting General Manager, Mildred G. Aviles et al., from
Notice of Disallowance (ND) Nos. 2016-002(2014), 2016-003(2014), 2016-
004(2014), 2016-005(2014), 2016-006(2014), 2016-007(2014), 2016-008(2014) and
2016-009(2014), all dated November 2, 2016, in the total amount of P84,391,812.55

DECISION

FACTS OF THE CASE

For automatic review1 is Commission on Audit (COA) Regional Office (RO) No. XI Decision No. 2018-34 dated September
3, 2018, on the Appeal of Davao City Water District (DCWD), represented by Acting General Manager Mildred G. Aviles et al.,
from Notice of Disallowance (ND) Nos. 2016-002 (2014), 2016-003 (2014), 2016-004 (2014), 2016-005 (2014), 2016-006
(2014), 2016-007 (2014), 2016-008 (2014), and 2016-009 (2014), all dated November 2, 2016, on the payment of Service
Separation Pay (SSP) in the total amount of P84,391,812.55. The decision denied the appeal and affirmed the NDs, but exempted
the DCWD officials and employees from refunding the SSP they received on account of good faith.

DCWD received the NDs on November 11, 2016. 2 On March 2, 2017, or 110 days thereafter, DCWD filed its Appeal
Memorandum3 which is within the reglementary period provided under Section 4, Rule V of the 2009 Revised Rules of Procedure
of the COA. Subsequently, two Supplemental Appeal Memoranda were filed on July 5 and 12, 2017, respectively.

The SSP was a retirement package in the Collective Bargaining Agreement (CBA) entered into by DCWD Management with
the employees’ union on January 1, 1988. The package was offered to employees of DCWD upon reaching the age of 60 or after
30 years of service, whichever comes first.

On September 7, 1989, the Board of Directors (BOD) of DCWD issued Resolution No. 89-143 4 adopting a retirement plan
for its employees. The existing retirement plan of DCWD under its Resolution No. 08-308 5 dated August 19, 2008 was abolished.
It based the abolition on the opinion of the Office of the Government Corporate Counsel (OGCC) that there should be only one
Retirement Plan, in accordance with the Civil Service Commission (CSC) and the Government Service Insurance System (GSIS)
laws, and the Supreme Court (SC) ruling in the case of Bacolod City Water District vs. Juanito H. Bayona, et al.6

On September 10, 2008, the OGCC issued Opinion No. 192 7 stating that notwithstanding the subsequent abolition of the
Retirement Plan, the DCWD employees, if hired on or before December 31, 1999, are still entitled to the retirement benefits under
the Retirement Plan. Thus, the BOD subsequently issued Resolution No. 08-376 dated October 15, 2008,8 approving the
Implementing Rules and Regulations (IRR) of Resolution No. 08-308. However, in its Resolution No. 09-496 dated November 26,
2009,9 the BOD held in abeyance the IRR pending resolution of the case of Abijay, et al. vs. DCWD10 before the CSC-Region XI,
for reinstatement, backwages and monetary claims.

In Decision No. 09-02 dated November 4, 2009,11 the CSC-Region XI ruled that the complainants’ retirement/separation
was illegal. The complainants did not initiate the filing or tendering of their resignation not until the DCWD management
informed them and let them comply with the requirements under the retirement plan. Thus, there was no voluntariness or
willingness as they were forced to retire pursuant to the retirement plan.

DCWD filed a motion for reconsideration but was denied. Thereafter i t filed a petition for review before the CSC
Commission Proper (CP). In the Decision No. 110204 dated April 20, 2011, 12 the CSC CP granted the petition and ruled that the
delay in asserting the complainants’ claim constitutes laches. After voluntarily applying for and being paid their retirement
benefits, they did not anymore lift a finger to assail the propriety of the mandatory retirement provision in the retirement plan.
They conveniently kept their peace. It was only after the SC rendered a decision in the case of Bayona that they took the step to
impugn the propriety of their retirement.

The complainants appealed the case before the Court of Appeals but their appeal was denied for being filed out of time.
They elevated the case to the SC and in its Resolution dated October 23, 2013,13 the petition was denied for lack of proper
verification, certification against forum shopping, no properly accomplished jurat, failing to sufficiently show any reversible
error, and no novel issues of law that had been raised. Their motion for reconsideration was denied with finality, for no substantial
argument and compelling reason having been adduced.14

For guidance purposes, DCWD sought an opinion from the OGCC regarding the validity of the SSP and lifting of the
suspension of its implementation. The OGCC, in its Opinion No. 078 dated April 23, 2014, declared the SSP valid; as such, DCWD
BOD may lawfully lift the said suspension so that the affected employees may avail of the same, provided they were hired by
DCWD on or before December 31, 1999. Thus, the DCWD BOD issued Resolution No. 14-317 15 dated August 8, 2014 lifting the
suspension and reinstating the IRR of the SSP.

DCWD disbursed the total amount of P84,391,812.55 for the payment of the retirement benefits of 96 employees under the
SSP. On finding the payment contrary to Section 28(b) of Commonwealth Act (CA) No. 186, 16 as amended by Republic Act (RA)
No. 4968,17 which prohibits the creation of a retirement/separation plan other than the GSIS, the Audit Team (AT) then issued
Audit Observation Memorandum No. 2016-004(14)18 in January 2016. The AT observed that from the period of September 1,
2014 to December 31, 2014, 96 qualified employees19 availed of the DCWD SSP and were paid their separation pay. Of the said
number, GSIS processed 80 claims for survivorship benefits, six claimed for life insurance only and one employee has neither
claimed retirement nor life insurance.20 DCWD replied that although denominated as a retirement plan, SSP is actually similar to
claimed retirement nor life insurance.20 DCWD replied that although denominated as a retirement plan, SSP is actually similar to
a separation plan which is customarily given to private employees.

As the grant of double retirement benefits is expressly prohibited, the AT subsequently issued the following NDs:

ND No. Period Covered Amount

ND No. 2016-002(2014) Oct. 9 to Dec. 17, 2014 P 47,842,389.84
ND No. 2016-003(2014) Sept. 12 to Dec. 5, 2014 24,567,123.51
ND No. 2016-004(2014) Sept. 18, 2014 1,714,137.47
ND No. 2016-005(2014) Sept. 18, 2014 2,073,825.00
ND No. 2016-006(2014) Oct. 14 to Oct. 15, 2014 1,330,981.73
ND No. 2016-007(2014) Nov. 28, 2014 1,305,765.00
ND No. 2016-008(2014) Dec. 8, 2014 1,856,970.00
ND No. 2016-009(2014) Dec. 8, 2014 3,700,620.00
P 84,391,812.55

The following persons were determined liable under the NDs:

Names Position/Designation Nature of Participation

Engr. Edwin VS. General Manager Approved the payment
Regalado
Mildred G. Aviles Asst. General Manager -
Administration
Arnold P. Sarabia Officer-in-Charge (OIC) Pre-audited the payment
Manager – Systems and
Internal Audit
Bernadette A. Manager – Finance and Checked the payment
Dacanay Property Department
(FPD)
Marlyn L. Ronquillo OIC - FPD
Anita S. Suriba
Hilton P. Husain OIC Manager – Certified that supporting
Corazon Tubilan Accounting and Budget documents are complete;
Milanifa M. Defenio Department certified in t h e Budget
Utilization Request (BUR) that
budget is available and
earmarked/utilized for the
purpose as indicated
Ruth G. Jabines OIC Manager – Certified in the BUR that
Nancy Joyce M. Human Resource charges to budget is necessary,
Solanoy Department lawful, and under her direct
Lulyn Saniel supervision; supporting
documents are valid, proper and
legal
BOD: Approved the lifting of
Eduardo A. Chairperson suspension of DCWD SSP per
Bangayan Resolution No. 14-317 dated
Atty. Abdul M. Vice – Chairperson August 19, 2008 and its IRR
Dataya under Resolution No. 08-376
Maria Luisa L. Secretary dated October 15, 2008, and
Jacinto further approved the
Serafin C. Ledesma Member Supplemental Budget in the
Atty. Charmalou D. Member amount of P20M to be
Aldevera appropriated as additional
budget for the SSP under
Resolution No. 14-318 dated
August 8, 2014
Payees21 Various officers and Received the SSP
employees

In its Appeal Memorandum and Supplemental Appeals, DCWD contended that:

1) The disallowance will affect vested rights and result in diminution of benefits;

2) It acted in honest belief that the SSP is legal and valid by virtue of the opinion rendered by the OGCC;

3) In the case of Abijay, et. al., vs. DCWD,22 the SC did not strike down the SSP as illegal. There was a presumption
that the legality of the SSP was passed upon, and that the SSP is lawful and in order, absent any pronouncement to
the contrary;

4) The SSP is pure and simple separation pay which is different and distinct from retirement gratuity under the GSIS.
The availment thereof does not constitute double benefits. The retirement benefits under the GSIS are mandatory
in nature to be given to retirees upon reaching the retirement age. Also under the GSIS, an employee has the
active participation in view of his/her premiums or contributions, which were directly taken from his/her salaries;

5) The Department of Budget and Management (DBM), through its letters to DCWD dated November 8, 2000,23
April 18, 2002,24 and June 15, 2017,25 states that all allowances/benefits being received by the DCWD’s
incumbent employees prior to their declarations and approval in the CBA and execution of the board resolution,
were authorized to continually be paid in view of non-diminution of pay policy of the government;

6) The application of Gonzales, et al. vs. Catbalogan Water District ,26 GSIS, et al. vs. COA,27 and Conte vs. COA28
 6) The application of Gonzales, et al. vs. Catbalogan Water District ,26 GSIS, et al. vs. COA,27 and Conte vs. COA28
were misplaced;

7) The officials who are required to refund the disallowance acted in good faith in the disbursements of the SSP; and

8) The DCWD complied with the financial requirements set forth by the DBM, to wit:29

a) Positive balance in average net income prior 12 months operations;

b) Up to date debt service payment;

c) Unaccounted for water ratio must not exceed 40% based on six months operation;

d) Existing benefits are included in the budged of LWDs; and

e) Total staff for every 100 active service connections.

The Supervising Auditor (SA) and the Audit Team Leader (ATL) maintained the propriety of the disallowance in their
Answer dated November 14, 2017, to wit:

1) The declaration of DCWD as GOCC under DCWD vs. COA, et al.30 brought it under the mandatory coverage of
GSIS;

2) Despite the DBM and OGCC’s letter and opinion, respectively, the SSP cannot be availed of or enjoyed by virtue
of the clear mandate of the GSIS Act of 1997; and

3) The payments made to the alleged qualified employees under the SSP in addition to the claims made under the
GSIS are considered double benefits.

In resolving the matter, the Regional Director (RD) rendered COA RO XI Decision No. 2018-34, denying the appeal but
exempting both the officials and employees of DCWD from refunding the SSP they received on account of good faith, for absence
of wanton and malicious disregard of the prevailing rules. There is want of evidence that in granting the SSP benefits, the officials
acted with malevolent intention to violate existing law. Hence, this automatic review.

On June 16, 2022, DCWD submitted its Supplemental to the Appeal Memorandum, reiterating its contention that the
disallowance is not proper based on the following grounds:

1) SSP is not violative of Section 28(b) of the CA No. 186. SSP was originally established as DCWD Retirement Plan by
virtue of CBA on January 8, 1988. At that time, DCWD was still operating as a private corporation. Thus, the prohibition
is not yet applicable to DCWD;

2) SSP has ripened into a vested right which now become fixed, consummated and established right;

3) The availment of SSP does not constitute double benefits. Benefits under the SSP were pure and simple separation pay,
totally different and distinct from retirement gratuity under the GSIS. Hence, it does not run contrary to the
exclusiveness of benefits under the GSIS law; and

4) The statement in DBM letter dated November 8, 2000 that “in no case shall be availed to avail both the [sic] benefits
under the DCWD Plan and the retirement plan being administered by the GSIS” is superseded by the approval in DBM
letter dated January 7, 2002.

5) The earlier DBM letters were confirmed with the latest DBM Letter of Authority dated June 15, 2017,31 which allowed
the continued grant of benefits traditionally given as of December 31, 1999, among which is Retirement/Separation
Benefits.

6) Citing the case of Elaine Abanto et. al vs. The Board of Directors of DBP, where the SC considered the Early Retirement
Incentive Plan (ERIP) of DBP as analogous to a separation pay, then the grant of benefit under it along with the grant of
benefits under the retirement laws should not be considered as form of double compensation.

ISSUE

The issue to be resolved is whether COA RO No. XI Decision No. 2018-34 is proper.

DISCUSSION

This Commission finds the COA RO No. XI Decision No. 2018-34 proper.

It is settled that all LWDs, such as DCWD, are GOCCs. As early as in the case of Baguio Water District vs. Trajano, et al., 32
the SC ruled that an LWD is a corporation created pursuant to a special law – Presidential Decree (PD) No. 198, 33 as amended by
PD No. 1479. Thus, it can be safely concluded that when the BOD of DCWD created its retirement plan in 1989, which granted its
retiring employees the SSP benefits, it was fully aware of its status as a GOCC. Thus, being a GOCC, it is bound by applicable
compensation laws and regulations including its mandatory coverage under the GSIS Law. Sec. 28(b) of the Miscellaneous
Provisions of CA No. 186, as amended by RA No. 4968, states:

Hereafter no insurance or retirement plan for officers or employees shall be created by any
employer. All supplementary retirement or pension plans heretofore in force in any government
office, agency, or instrumentality or corporation owned or controlled by the government, are hereby
declared inoperative or abolished: Provided, That the rights of those who are already eligible to
retire thereunder shall not be affected.

In the case of Avelina B. Conte and Leticia Boiser — Palma vs. COA,34 the SC ruled that:
 In the case of Avelina B. Conte and Leticia Boiser — Palma vs. COA,34 the SC ruled that:

[S]aid Section 28(b) of CA No. 186, as amended by R.A. 4968 in no uncertain terms bars the creation
of any insurance or retirement plan — other than the GSIS — for government officers and
employees, in order to prevent the undue and inequituous proliferation of such plans. (Underscoring
supplied)

Clearly, CA No. 186 was already enforced as to bar DCWD from creating its own retirement plan other than the retirement
package under the GSIS. Employees who retired or qualified to retire are covered by the provision on Exclusiveness of Benefits
under the GSIS Law. Thus, it is obligatory for DCWD to comply with the existing law, rules and regulations in the grant of
retirement benefits.

The BOD of DCWD does not have unbridled and plenary power to determine additional benefit to its eligible
employees. DCWD is still bound to observe guidelines and policies such as those sanctioned in Section 12 of RA No. 6758,
Sections 5 and 6 35 of PD No. 1597, and Item No. 9 36 of Congress Joint Resolution No. 4 dated June 17, 2009, all of which subject
to the approval of the Office of the President upon recommendation of the DBM, the grant of additional allowances/benefits.

Section 12 of RA No. 6758 integrated all kinds of allowances in the standardized salary rates except those specifically
mentioned under the law, such as: Representation and Transportation Allowance; Clothing and Laundry Allowance; 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, as may be determined by the
DBM. 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.

This Commission agrees with the RD that it was irregular and illegal to grant SSP benefits to employees by way of a board
resolution considering that there is a SC decision classifying LWD as GOCC. Thus, as GOCC, its funds are vested with public
interest and government can impose restrictions, limitations and condition on its proper use. This Commission concurs with the
RD’s decision in affirming the NDs.

The argument on non-diminution of benefits is also untenable. Diminution results when the following requisites are
present:

1) The grant of benefit is founded on a policy or has ripened into a practice over a long period of time;

2) The practice is consistent and deliberate;

3) The practice is not due to error in the construction or application of a doubtful or difficult question of law;
and

4) The diminution or discontinuance is done unilaterally by the employer.37

There could be no diminution of benefits when the recipients thereof are not entitled to it in the first place. Since the
additional retirement benefits granted to DCWD personnel are legally infirmed, the payees had no vested rights over the
disallowed amount. Article 2254 of the New Civil Code of the Philippines declares that no vested or acquired right can arise from
acts or omissions which are against the law. As held by the SC in Abellanosa, et al. vs. COA,38

In Baybay Water District vs. Commission on Audit, 39 this Court stated that public officers' erroneous
application and enforcement of the law do not estop the government from making a subsequent
correction of those errors. Where there is an express provision of law prohibiting the grant of certain
benefits, the law must be enforced even if it prejudices certain parties on account of an error
committed by public officials in granting the benefit. x x x Practice, without more - no matter how
long continued - cannot give rise to any vested right if it is contrary to law. (Underscoring supplied)

Notwithstanding the various resolutions passed by the BOD of DCWD in the exercise of its authority while DCWD was
operating as a private corporation, the grant of the subject benefits and allowances no matter how long practiced, if the same were
given in violation of existing rules and regulations, is still considered as unauthorized and should be disallowed.

As to the Abanto et. al vs. The Board of Directors of DBP, where the SC considered the ERIP of DBP as analogous to a
separation pay, then the grant of benefit under it along with the grant of benefits under the retirement laws should not be
considered as form of double compensation, does not hold applicable in the instant case. In the abovementioned case, the ERIP IV
partakes the form of a separation pay in that it is given to employees who are affected by the reorganization and streamlining of
DBP. By analogy, the objective of ERIP IV is similar to those grounds for termination under Article 283 of the Labor Code of the
Philippines,40 whereas, the establishment of SSP in the instant case was pursuant to CBA and not for the purpose reorganization.

Nonetheless, this Commission agrees with the RD’s decision to exempt all DCWD officials and employees from refunding
the disallowed amount on the basis of good faith.

Under the law, the approving officers and each employee who received the disallowed benefit are obligated, jointly and
severally, to refund the amount they received.

On the other hand, the SC, in the case of Development Bank vs. COA,41 considered good faith in favor of the approving
officers, to wit:

Good faith absolves liable officers from refund

In Blaquera, the Court did not require government officials who approved the disallowed
disbursements to refund the same on the basis of good faith, to wit:

Untenable is petitioners' contention that the herein respondents be held personally liable for the
refund in question. Absent a showing of bad faith or malice, public officers are not personally liable
for damages resulting from the performance of official duties.
 Every public official is entitled to the presumption of good faith in the discharge of official duties.
Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the
performance of official duties.

xxx

Considering, however, that all the parties here acted in good faith, we cannot countenance the refund
of subject incentive benefits for the year 1992, which amounts the petitioners have already received.
Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The
officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that
the amounts given were due to the recipients and the latter accepted the same with gratitude,
confident that they richly deserve such benefits.

A careful reading of the above-cited jurisprudence shows that even approving officers may be
excused from being personally liable to refund the amounts disallowed in a COA audit, provided that
they had acted in good faith. Moreover, lack of knowledge of a similar ruling by this Court
prohibiting a particular disbursement is a badge of good faith.

In Mendoza v. COA, the Court held that the lack of a similar ruling disallowing a certain expenditure
is a basis of good faith. At the time that the disallowed disbursement was made, there was yet to be a
jurisprudence or ruling that the benefits which may be received by members of the commission were
limited to those enumerated under the law.

By the same token, in SSS [Social Security System] v. COA, the Court pronounced that good
faith may be appreciated because the approving officers did not have knowledge of any circumstance
or information which would render the disallowed expenditure illegal or unconscientious. The Board
members therein could also not be deemed grossly negligent as they believed they could disburse the
said amounts on the basis of the provisions of the R.A. No. 8282 to create their own budget.

In Zamboanga City Water District v. COA ,42 the SC held that approving officers could be absolved from refunding the
disallowed amount if there was a showing of good faith, to wit:

Absent a showing of bad faith or malice, public officers are not personally liable for damages
resulting from the performance of official duties.

Every public official is entitled to the presumption of good faith in the discharge of official duties.
Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the
performance of official duties.

xxx

Considering, however, that all the parties here acted in good faith, we cannot countenance the refund
of subject incentive benefits for the year 1992, which amounts the petitioners have already received.
Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The
officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the
amounts given were due to the recipients and the latter accepted the same with gratitude, confident
that they richly deserve such benefits.

A careful reading of the above-cited jurisprudence shows that even approving officers may be
excused from being personally liable to refund the amounts disallowed in a COA audit, provided
that they had acted in good faith. Moreover, lack of knowledge of a similar ruling by this Court
prohibiting a particular disbursement is a badge of good faith. [Emphases supplied]

Good faith is a state of mind denoting "honesty of intention, and freedom from knowledge of circumstances which ought to
put the holder upon inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even through
technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render transaction
unconscientious."43

Absent any showing of bad faith or malice, public officers are not personally liable for damages resulting from the
performance of official duties. As the Court explained in Philippine Economic Zone Authority (PEZA) vs. COA:44

xxx It is unfair to penalize public officials based on overly stretched and strained interpretations
of rules which were not that readily capable of being understood at the time such functionaries
acted in good faith. If there is any ambiguity, which is actually clarified years later, then it should
only be applied prospectively. A contrary rule would be counterproductive. It could result in
paralysis, or lack of innovative ideas getting tried. In addition, it could dissuade others from
joining the government. When the government service becomes unattractive, it could only have
adverse consequences for society.

This Commission concurs with the RD that the records show that after the SC decided with finality the case of Abijay, et al.
vs. DCWD,45 an inquiry was made before the OGCC on the propriety and legality of lifting the suspension over the grant of SSP.
Further, the officers of DCWD requested for confirmation from the DBM with regard to the grant of the said benefits. The OGCC
and DBM both authorized the continued grant of SSP benefits to qualified employees hired as of December 31, 1999. It is a badge
of good faith in favor of the officials of DCWD and want of malicious disregard of the prevailing rules. Neither could they be
deemed to be grossly negligent as they believed that they could continue the grant of the said benefit.

Thus, the fact that the DCWD officers had an unclear knowledge of a ruling categorically prohibiting the particular
disbursement, seeking clarity from the OGCC and DBM with regard to the grant of the said benefit, receiving a n affirmative
opinion from the OGCC and receiving authority from the DBM, through its letters to DCWD dated November 8, 2000, April 18,
2002, and June 15, 2017, which state that all allowances/benefits being received by the DCWD’s incumbent employees prior to
their declarations and approval in the CBA and execution of the board resolution, were authorized to continually be paid in view
of non-diminution of pay policy of the government that SSP may be granted to the concerned employees, and for having complied
of non-diminution of pay policy of the government that SSP may be granted to the concerned employees, and for having complied
with the financial requirements set forth by the DBM are considered as badges of good faith.

The same holds true for the employees who received the disallowed benefit. The SC, in Madera vs. COA46 held that 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. They
took no part and were not directly responsible for approving the transactions.

In view of the foregoing, the return is excused in its entirety in favor of all persons held liable in the ND.

RULING

WHEREFORE, Commission on Audit Regional Office No. XI Decision No. 2018-34 dated September 3, 2018, is
APPROVED. Accordingly, Notice of Disallowance Nos. 2016-002 (2014), 2016-003(2014), 2016-004 (2014), 2016-005 (2014),
2016-006 (2014), 2016-007 (2014), 2016-008 (2014) and 2016-009 (2014) all dated November 2, 2016, on the disallowed
payment of the Service Separation Pay (SSP), in the total amount of P84,391,812.55, are AFFIRMED, but the Davao City Water
District officials and employees are excused from refunding the SSP due to good faith.

(SGD.) GAMALIEL A. CORDOBA

Chairperson

(SGD.) ROLAND CAFÉ PONDOC (SGD.) MARIO G. LIPANA

Commissioner Commissioner

Attested by:

(SGD.) BRESILO R. SABALDAN

Director IV
Commission Secretary

Copy furnished:

Ms. Mildred G. Aviles et al.

Davao City Water District
KM 5 JP Laurel Ave. Bajada, Davao City

Mr. Hilton P. Husain

Officer-in-Charge, Accounting and Budget Department
Davao City Water District
KM 5 JP Laurel Ave. Bajada, Davao City

The Supervising Auditor

The Audit Team Leader
Water Districts and Stand Alone Agency
Commission on Audit Regional Office (RO) No. XI
CP Garcia Highway, Buhangin, Davao City

JAT/RCL/ASV/MBD
CPCN 2018-0849

1 Pursuant to Section 7, Rule V of the 2009 Revised Rules of Procedure of the Commission on Audit (COA).
2 Stamped Received by the Office of the General Manager, rollo, p. 123.
3 Stamped Received by COA Regional Office No. XI. rollo, p. 177.
4 Rollo, pp. 95-102.
5 Rollo, pp. 76-77.
6 G.R. No. 168780, November 23, 2007.
7 Rollo, pp. 71-75.
8 Rollo, pp. 65-70.
9 Rollo, pp. 53-54.
10 3 rd Whereas clause of Resolution No. 14-317, rollo, p. 27.
11 Rollo, pp. 55-64.
12 Rollo, pp. 41-51.
13 Rollo, p. 240.
14 Rollo, p. 35.
15 Rollo, pp. 26-28.
16 The Government Service Insurance Act dated November 14, 1936.
17 An Act Amending Further Commonwealth Act Numbered One Hundred and Eighty-Six, As Amended.
18 Rollo, pp. 18-25.
19 25 employees availed the voluntary separation before the age of 60 with less than 30 years of service and 62 employees availed the voluntary separation at the age of
60 or upon reaching 30 years of service whichever comes first.
20 In a Letter dated May 2022, the GSIS submitted a list of DCWD personnel who received retirement pay from them, rollo, pp. 280-282.
21 Rollo, pp. 102-135.
22 Supra, note 10.
23 Rollo, pp. 201-203.
24 Rollo, pp. 1-2
25 Rollo, pp. 3-7.
26 COA Decision No. 2015-008, January 28, 2015.
27 G.R. No. 162372, September 11, 2012.
28 G.R. No. 116422, November 4, 1996.
29 Certification dated July 12, 2017, rollo, p. 206.
30 G.R. No. 952-37-38, September 13, 1991.
31 Rollo, p. 423.
32 G.R. No. L-65428, February 20, 1984.
33 Provincial Power Utilities Act of 1973 dated May 25, 1973.
34 G.R. No. 116422, November 4, 1996.
35 Allowances, Honoraria, and Other Fringe Benefits. Allowances, honoraria and other fringe benefits which may be granted to government employees, whether payable
by their respective offices or by other agencies of government, shall be subject to the approval of the President upon recommendation of the Commissioner of the
Budget. For this purpose, the Budget Commission shall review on a continuing basis and shall prepare, for the consideration and approval of the
President, policies and levels of allowances and other fringe benefits applicable to government personnel, including honoraria or other forms of compensation for
participation in projects which are authorized to pay additional compensation.
Section 6. Exemptions from OCPC [Office of Compensation and Position and Classification] Rules an d Regulations. Agencies positions, or groups of officials and
employees of the national government, including government owned or controlled corporations, who are hereafter exempted by law from OCPC coverage, shall observe
such guidelines an d policies as may be issued by the President governing position classification, salary rates, levels of allowances, project a n d other honoraria,
overtime rates, an d other forms of compensation an d fringe benefits. Exemptions notwithstanding, agencies shall report to the President, through the Budget
Commission, on their position classification and compensation plans, policies, rates and other related details following such specifications as may be prescribed
by the President. (Emphasis supplied)
36 Exempt Entities – Government agencies which by specific provision/s of laws are authorized to have their own compensation and position classification system shall
not be entitled to the salary adjustments provided herein. Exempt entities shall be governed by their respective Compensation and Position Classification Systems:
Provided, That such entities shall observe the policies, parameters and guidelines governing position classification, salary rates, categories and rates of allowances,
benefits and incentives, prescribed by the President: Provided, further, That any increase in the existing salary rates as well as the grant of new allowances, benefits and
incentives, or an increase in the rates thereof shall be subject to the approval by the President, upon recommendation of the DBM: Provided, finally, That exempt
entities which still follow the salary rates for positions covered by Republic Act No. 6758, as amended, are entitled to the salary adjustments due to the implementation
of this Joint Resolution, until such time that they have implemented their own compensation and position classification system.
37 In Vergara, Jr. vs. Coca Cola Bottlers Philippines, Inc., G.R. No. 176985, April 1, 2013, the Supreme Court held:
The principle of non-diminution of benefits is actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford
them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be rendered in favor of labor."
38 G.R. No. 185806, July 24, 2012.
39 G.R. Nos. 147248-49, January 23, 2002.
40 Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
41 G.R. No. 221706, March 13, 2018.
42 G.R. No. 213472, January 26, 2016.
43 Maritime Industry Authority v. COA, G.R. No. 185812, January 13, 2015.
44 G.R. No. 210903, October 11, 2016.
45 Supra, note 10.
46 G.R. No. 244128, September 08, 2020.