E N

B A N C

DULCE M. ABANILLA, in her capacity as General Manager of the Metropolitan Cebu Water District, Cebu City, Petitioner,

G.R. No. 142347

Present:

DAVIDE, JR., C.J. PUNO,

- versus -

PANGANIBAN, QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO,

COMMISSION ON AUDIT, its CHAIRMAN CELSO D. GANGAN, COMMISSIONERS RAUL C. FLORES and EMMANUEL M. DALMAN, and REGIONAL DIRECTOR OF COA REGION VII, Respondents.

AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, CALLEJO, SR.,

x ----------------------------------------------------- x

AZCUNA, TINGA,

METROPOLITAN CEBU WATER DISTRICT EMPLOYEES UNION, Petitioner-in-Intervention.

CHICO-NAZARIO, and GARCIA, JJ.

Promulgated:

August 25, 2005
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0161-86 dated November 29. 2000 rendered by the Commission on Audit (COA). the date of official entry of judgment of the Supreme Court ruling in Davao City Water District.: Before us is a petition for certiorari under Rule 64 in relation to Rule 65 of the 1997 Rules of Civil Procedure. CSC and COA. hospitalization. sent MCWD several notices disallowing the amount of P12. On January 1. Metropolitan Cebu Water District (MCWD). Subsequently. On January 1. On November 13. (3) Board Resolution No. medicare. an audit team headed by Bernardita T. Christmas bonus and longevity pay. through its Board of Directors. shall continue up to the respective expiry dates of the benefits or CBA whichever comes earlier.” . Abanilla. Christmas bonus. issued the following Resolutions giving benefits and privileges to its personnel. 002-94 providing that “all benefits provided under the duly existing CBAs entered into prior to March 12. as amended. 98-465[1] dated December 3. MCWD. 1989. executed a collective bargaining agreement (CBA) providing for the continuous grant to all its regular rank and file employees of existing benefits. Thereafter. 1995. a local water district was organized as a government-owned corporation with original charter. and water allowance.86 representing hospitalization benefits. thirteenth month pay. 054-83 dated May 23. Jabines of the COA Regional Office No. 091-83 and 0203-85 dated October 21. 1992. (2) Board Resolution Nos. J. vacation and sick leave credits. MCWD’s General Manager. such as cash advances. one of the herein respondents. The antecedents are: Pursuant to Presidential Decree 198 or the Provincial Water Utilities Act of 1973. [3] Aggrieved. She cited COA Memorandum Circular No. mid-year bonus. 1992. petitioner interposed an appeal to respondent COA at Quezon City. 1998 and Resolution No. uniform privileges. VII. MCWD and Metropolitan Cebu Water District Employees Union. 1986 granting Christmas bonus. VII at Cebu City. assailing the Decision No. petitioner herein: (1) Board Resolution No. also a respondent. petitioner-in-intervention . 083-88 granting longevity allowance.D E C I S I O N SANDOVAL-GUTIERREZ. allowing the monetization of leave credits. respectively. the Regional Director of COA Regional Office No. the parties renewed their CBA. one of whom is Dulce M. 2000-062[2] dated February 15. vs. and (4) Board Resolution No. 13 th month pay.221. conducted an audit of the accounts and transactions of MCWD. mid-year bonus. 1983 and November 20. 1985. 1983 granting hospitalization privileges. et al.120.

the General Appropriations Act and applicable issuances of the Department of Budget and Management.221. Thus.” Respondent COA then held that: “There is no question that the CBA was concluded after the decision in the Davao case was promulgated. is utterly misplaced. In sustaining the disallowance in the amount of P12. denied. not by the Labor Code. but by the Civil Service Law. In Alliance of Government Workers vs. respondent COA cited this Court’s ruling in Davao City Water District vs. The petition is bereft of merit. this petition for certiorari. Civil Service Commission [5] that “a water district is a corporation created pursuant to a special law – P. respondent COA ruled that the compensation package of For the terms of employment of those personnel are covered.D. xxx PREMISES CONSIDERED. where properly given delegated power. the administrative heads of government which fix the terms and conditions of employment. No.[9] this Court held: “Subject to the minimum requirements of wage laws and other labor and welfare legislation. like the affected MCWD employees. the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining. maintains that the COA did not gravely abuse its discretion in denying petitioner’s appeal considering that the terms and conditions of employment. and as such. MCWD personnel may no longer be the subject of a CBA. not through collective bargaining agreements. P12. As far as the CBA is concerned the critical moment is the date of the promulgation itself. The Solicitor General. it is the legislature and. in his comment.On December 3. 2000. And this is effected through statutes or administrative circulars.86. such as the entitlement of government personnel. It conferred no demandable right.” . Minister of Labor and Employment . not by the Labor Code. however. its officers and employees are covered by the Civil Service Law . [8] petitioner’s invocation of the CBA. 198. In government employment. In light of this Court’s ruling in Davao City Water District[7] that the officers and employees of a water district are covered by the Civil Service Law. and regulations. rules. Hence. as it is hereby. in justifying the receipt by the MCWD personnel of benefits and privileges. 2000-062 [6] dated February 15. In denying petitioner’s motion. Petitioner contends that respondent COA acted with grave abuse of discretion in disallowing the above benefits and privileges and contravened the Labor Code provision on non-diminution of benefits. as amended.221.” The disallowance in the total amount of Petitioner filed a motion for reconsideration but it was denied by respondent COA in a Resolution No. respondent COA rendered its Decision No.86 is hereby AFFIRMED. the instant appeal has to be. Any transaction (CBA) concluded after this date in violation of existing laws and regulations applicable to government entities is void and of no effect.120. to privileges and benefits are governed by the Civil Service Law. 1998. we sustain the disallowance by respondent COA. 98-465[4] denying petitioner’s appeal. it created no enforceable obligation.120. SO ORDERED.

Thus. COA Regional Office VI. Indeed. 313 authorized such payment. being in good faith. At the time petitioners received the additional allowances and bonuses.86 representing disallowed benefits and privileges should not be refunded by the MCWD personnel. Commission on Audit . In Querubin vs. we find that the MCWD affected personnel who received the above mentioned benefits and privileges acted in good faith under the honest belief that the CBA authorized such payment . 2000-062 dated February 15.” WHEREFORE. the petition is DENIED. Regional Cluster Director. confident that they richly deserve such benefits. the Court had not yet decided Baybay Water District. ANGELINA SANDOVAL-GUTIERREZ Associate Justice WE CONCUR: . which amounts the petitioners have already received. however. Pavia. 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 accept the same with gratitude. petitioners need not refund the allowances and bonuses they received but disallowed by the COA .[11] this Court held: “Considering. x x x. SO ORDERED.221. no indicia of bad faith can be detected under the attendant facts and circumstances. Petitioners had no knowledge that such payment was without legal basis. 98-465 dated December 3.[10] citing De Jesus vs. Petitioners here received the additional allowances and bonuses in good faith under the honest belief that LWUA Board Resolution No. Iloilo City. that all the parties here acted in good faith. 2000 of respondent COA are AFFIRMED with MODIFICATION in the sense that the amount of P12. 1998 and Resolution No. we cannot countenance the refund of subject incentive benefits for the year 1992.While we sustain the disallowance of the above benefits by respondent COA. The assailed Decision No. Consequently.120. however. Legal and Adjudication Office. they need not refund them .

PUNO Associate Justice ARTEMIO V. Chief Justice REYNATO S. ALICIA AUSTRIA-MARTINEZ Associate Justice RENATO C. JR. QUISUMBING Associate Justice CONSUELO YNARES-SANTIAGO Associate Justice ANTONIO T. PANGANIBAN Associate Justice LEONARDO A.HILARIO G. CARPIO Associate Justice MA. Associate Justice ADOLFO S. DAVIDE. CORONA Associate Justice CONCHITA CARPIO MORALES Associate Justice ROMEO J. AZCUNA Associate Justice DANTE O. CALLEJO. TINGA MINITA CHICO-NAZARIO . SR.

all impleaded as respondent herein. respondent. 96-050. 96-068 and 96-075 covering the disallowed 13th month pay for the year 1995. September 13. 96-075 covering disallowed longevity pay. . 96-036. Petition for Certiorari. Rollo at 23-26. 96-069. 95237-38. at 20-22. DAVIDE. Dalman. Gangan. it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Gangan. Ursal (not impleaded as respondent) and Commissioner Raul C. 96-081 covering disallowed Christmas bonus. Notice of Disallowance No. Signed by Chairman Celso D. respondent. Annex “A”. The terms and conditions of employment which are not fixed by law may be the subject of negotiation between duly recognized employee’s organizations and appropriate government authorities. [4] [5] [6] [7] [8] “SEC. No. including those in government-owned or controlled corporations with original charters. 3. Article VIII of the Constitution.Associate Justice Associate Justice CANCIO C. 201 SCRA 593.” . Notice of Disallowance No. 96-055. (Civil Service Law). 1991. Flores. and Notice of Disallowance No. Supra.R. 96-025 covering disallowed payment of mid-year bonus for the year 1995. 96-073 and 96-074 covering disallowed hospitalization privileges for the year 1995. Flores and Commissioner Emmanuel M. 96-026. Commissioner Raul C. G. shall be fixed by law . GARCIA Associate Justice CERTIFICATION Pursuant to Section 13. Signed by Chairman Celso D. HILARIO G. Notice of Disallowance Nos. – The terms and conditions of employment of all government employees. Chief Justice [1] [2] [3] Annex “B”. Notice of Disallowance Nos.Terms and Conditions of Employment. id. Commissioner Sofronio B. JR. 96-051.

433 SCRA 769. and agencies of the Government. 773. No. Scope of Civil Service. G. G. No. – (1) The Civil Service embraces all branches. 124 SCRA 1. July 7. No.” [9] [10] G.“SEC.R. 60403. June 10. 149154. instrumentalities. August 3. subdivisions. including government-owned or controlled corporations with original charters. 13. 2003. 2004. 6.R. [11] .R. 159299. 1983. 676. 403 SCRA 666.