G.R. No. 150222; March 18, 2005
MOISES G. MOLEN, JR., ET AL. AND METRO ILOILO WATER DISTRICT (MIWD), Petitioners, vs. COMMISSION ON AUDIT AND DOMINADOR T. TERSOL, REGIONAL DIRECTOR, COA REGION VI, ILOILO CITY, Respondents.

FACTS

The Commission on Audit (COA) disallowed various monetary benefits, including cash gifts, representation allowances, rice subsidies, and medical allowances, totaling P730,910.43, granted in 1995 to the members of the Board of Directors of the Metro Iloilo Water District (MIWD). The COA’s legal basis was Section 13 of Presidential Decree No. 198, as amended, which states that directors shall receive only a per diem for board meetings attended and that “[n]o director shall receive other compensation for services to the district.” The disallowance also held liable the approving, certifying, and accounting officers of MIWD. Petitioners appealed, arguing that P.D. No. 198 had been impliedly repealed by Republic Act No. 6758 (the Compensation and Position Classification Act of 1989) and that the benefits were authorized by the Local Water Utilities Administration (LWUA) under its charter.

ISSUE

The primary issue is whether the members of the MIWD Board of Directors are legally entitled to receive the disallowed benefits in addition to the per diem authorized under P.D. No. 198.

RULING

The Supreme Court ruled that the disallowance was proper, affirming the COA’s decision with modification regarding the refund. The Court held that Section 13 of P.D. No. 198 explicitly and unequivocally prohibits members of water district boards from receiving any compensation other than the prescribed per diem. This specific prohibition was not impliedly repealed by the general provisions of R.A. No. 6758. The Court reiterated its ruling in Baybay Water District v. Commission on Audit, which established that water districts, as government-owned and controlled corporations, are governed by their specific charter (P.D. No. 198), and their board members are not salaried employees but are limited to per diems.
Furthermore, the Court found that LWUA’s resolution authorizing such benefits could not contravene the clear statutory prohibition in P.D. No. 198. However, applying the principle of good faith from De Jesus v. Commission on Audit, the Court modified the COA’s order. Since the benefits were received in 1995, prior to the 2002 Baybay ruling that clarified the illegality, the recipients need not refund the cash gift, representation allowance, traveling expenses, rice subsidy, and medical/uniform allowance. They were required to refund only the family and group hospitalization insurance premium and the expenses for wreaths and mass cards, which were not included in the LWUA resolution and were clearly personal and unnecessary. The approving officers were likewise absolved from refund liability based on good faith.