G.R. No. 244128, September 8, 2020
MARIO M. MADERA, ET AL., PETITIONERS, VS. COMMISSION ON AUDIT (COA) AND COA REGIONAL OFFICE NO. VIII, RESPONDENTS.

FACTS

Petitioners, officials of the Municipality of Mondragon, Northern Samar, assail COA decisions affirming the disallowance of various allowances (Economic Crisis Assistance, Monetary Augmentation of Municipal Agency, Agricultural Crisis Assistance, and Mitigation Allowance to Municipal Employees) granted to municipal personnel in 2013 via local ordinances and resolutions. The total disallowed amount was P7,706,253.10. COA disallowed the grants for violating Section 12 of the Salary Standardization Law (SSL), which integrates all allowances into the standardized salary except for specific authorized items. COA also cited its Circular No. 2013-003, which excluded these allowances from the list of authorized benefits, and relevant Civil Service Commission rules.
The petitioners argued the allowances were a valid exercise of local fiscal autonomy under the Local Government Code, intended to alleviate economic hardship for employees. They contended the grants were based on the municipality’s genuine needs and available funds. COA maintained the allowances were unauthorized additional compensation prohibited by the SSL, as they were not among the legislated exceptions, and their grant contravened the uniform compensation scheme intended by law.

ISSUE

Whether the Commission on Audit correctly disallowed the grant of the subject allowances for violating the Salary Standardization Law.

RULING

Yes, the COA correctly disallowed the allowances. The Supreme Court affirmed the disallowance, ruling that the grants violated the SSL. The legal logic is anchored on the principle of standardization in government compensation. Section 12 of R.A. No. 6758 (SSL) explicitly provides that all allowances are deemed integrated into the standardized salary, except for those specifically identified therein (e.g., representation and transportation allowances, clothing allowance). The subject allowances—ECA, MAMA, ACA, and MAME—are not among these statutory exceptions.
The Court rejected the invocation of local fiscal autonomy under the Local Government Code. While local government units have the power to create positions and determine salaries, this power is expressly made “subject to the budgetary limitations” and, more critically, “the rules and regulations of the Commission on Audit” and other existing laws. The SSL is a paramount existing law that establishes a uniform national compensation plan. The local government’s power cannot be exercised to grant benefits that contravene this national standardization scheme, as doing so would create salary disparities and defeat the law’s purpose. The disallowance stands as the allowances constitute unauthorized additional compensation.