Disallowed Centennial Bonus: Liability of Certifying Officers and Recipient Employees

Introduction:

In a recent decision by the Supreme Court, the issue of a disallowed centennial bonus granted to officers and employees of a certain water district was brought to attention. The case involved the Commission on Audit (COA) affirming the disallowance of the bonus and the subsequent appeal by the certifying officers and employees concerned.

This blog post aims to summarize the key points of the case and discuss the liability of the certifying officers and recipient employees concerned.

Background:

Under Resolution No. 046-2009, the subject water district authorized the grant of a centennial bonus equivalent to 50% of the employees’ salary to commemorate the 100th anniversary of the City where the water district is located.

However, the COA Audit Team concerned disallowed the bonus, citing the suspension of new or additional benefits under Administrative Order No. 103 issued by then President Gloria Macapagal-Arroyo. This led to the COA’s decision to require the refund of the disallowed bonus.

Proceedings and Decision:

The certifying officers and employees appealed to the COA Regional Office concerned, arguing that the disallowance was defective and that they acted in good faith. However, said Regional Office affirmed the disallowance, stating that there was no supervising auditor assigned at the time, and the water district had disregarded the provisions of AO 103.

The certifying officers and employees further appealed to the COA En Banc, which rendered a decision affirming the disallowance but modifying the extent of liability. The certifying officers were held jointly and severally liable for the disallowed amounts received by the individual employees.

Liability of Certifying Officers:

The Supreme Court emphasized that liability for unlawful expenditures arises when certifying officers perform their duties with bad faith, malice, or gross negligence. In this case, although the certifying officers did not act with malice or bad faith, they were found guilty of gross negligence for disregarding the provisions of AO 103.

Gross negligence refers to the flagrant and culpable refusal or unwillingness to perform a duty, and in this case, it was evident that the grant of the centennial bonus was contrary to the suspended benefits. Therefore, the certifying officers were held jointly and severally liable to return the disallowed amounts received by the employees.

Liability of Recipient Employees:

The general rule, as established by the Court, is that recipient employees must be held liable to return disallowed payments based on the principle of solutio indebiti or unjust enrichment. This principle arises when something is received without the right to demand it. However, there are exceptions to this rule, such as when the amounts received by the employees constitute disallowed benefits genuinely given in consideration of services rendered. In this case, the centennial bonus cannot be considered as such, and therefore, the recipient employees were held individually liable to return the amounts they received.

Conclusion:

In conclusion, the recent decision by the Supreme Court regarding the disallowed centennial bonus granted to the subject water district officers and employees emphasizes the importance of compliance with laws and regulations governing public funds. The certifying officers were held jointly and severally liable for their gross negligence, while the recipient employees were individually liable to return the amounts they received. This case serves as a reminder of the accountability and responsibility that public officials and employees have when handling government funds.

Reference

G.R. No. 245274, October 13, 2020