G.R. No. 195640 ; December 4, 2012
SUGAR REGULATORY ADMINISTRATION, represented by its Administrator, Petitioner, vs. ENCARNACION B. TORMON, et al., and the COMMISSION ON AUDIT, Respondents.

FACTS

Private respondents were former employees of the Philippine Sugar Institute (PHILSUGIN) and the Sugar Quota Administration (SQA). These agencies were abolished in 1977 by Presidential Decree No. 388, which created the Philippine Sugar Commission (PHILSUCOM). Upon abolition, they received retirement/gratuity and incentive benefits. They were subsequently reinstated by PHILSUCOM on the condition that they refund these benefits. PHILSUCOM was later replaced by the Sugar Regulatory Administration (SRA, petitioner), which retained the employees. In 2004, under a rationalization program, private respondents were separated from SRA and were to receive new benefits based on creditable service.
Petitioner SRA, however, discovered no record that the employees had refunded their 1977 gratuities to PHILSUCOM. Consequently, SRA considered their service interrupted, recomputed their 2004 benefits to exclude pre-1977 service, and withheld 25% of the originally computed amount. The employees claimed they had refunded the amounts via salary deductions and submitted affidavits from former SRA officials attesting to this fact, arguing the payroll records were lost.

ISSUE

Whether the Commission on Audit (COA) committed grave abuse of discretion in affirming the SRA’s denial of the employees’ claim for full benefits due to insufficient proof of refund.

RULING

The Supreme Court dismissed the petition and affirmed the COA decision. The Court held that no grave abuse of discretion attended COA’s ruling. Grave abuse of discretion implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. Here, COA’s finding was based on the insufficiency of the evidence presented by the employees to prove the fact of refund.
The burden of proof lies with the party making the affirmative allegation. Private respondents alleged payment, thus they had the duty to substantiate their claim with clear and convincing evidence. The sworn affidavits of former officials, presented as secondary evidence due to the alleged loss of primary payroll records, were deemed insufficient. The Court agreed with COA that these affidavits, standing alone without other corroborative documentary evidence, did not constitute substantial proof of payment. The SRA and COA acted within their authority in requiring more concrete evidence to justify the inclusion of the earlier service period for benefit computation. Therefore, COA’s decision was a proper exercise of its constitutional mandate and audit authority, not tainted by arbitrariness.