COA affirms P84M disallowance vs Davao City WD personnel but waives refund

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THE Commission on Audit has upheld the validity of notices of disallowance issued in 2016 against the P84.39 million service separation pay (SSP) granted to officials and employees of the Davao City Water District (DCWD).

However, it declared that persons held liable need not refund the amounts they received on the grounds of “social justice and humanitarian considerations.”

COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Café Pondoc and Mario G. Lipana held that requiring the water district personnel to repay the amount they received in good faith would result in undue prejudice.

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Records showed the sum was paid to 96 DCWD employees in 2014 but the audit team issued notices of disallowance, noting that a water district is a government-owned and controlled corporation (GOCC) as declared by the Supreme Court in the case of Baguio City Water District vs. Trajano.

As a GOCC, it is covered by the Government Service Insurance System (GSIS) Law or RA 8291 and Commonwealth Act No. 186 which prohibits a separate insurance or retirement plan for its officers and employees.

“Clearly, CA No. 186 was already enforced to bar DCWD from creating its own retirement plan other than the retirement package under the GSIS. Employees who retired or qualified to retire are covered by the provision on Exclusiveness of Benefits under the GSIS Law,” the COA Commission Proper said.

“This Commission agrees with the RD that it was irregular and illegal to grant SSP benefits to employees by way of a board resolution considering that there is an SC decision classifying LWD (local water district) as GOCC,” it added.

Despite the disallowance, the COA accorded good faith on the part of the DCWD as it noted that before approving the cash benefits, the water district board made an effort to ascertain the legality of its action by seeking clarifications from the Department of Budget and Management (DBM) and the Office of the Government Corporate Counsel (OGCC) both of which gave assent.

“The OGCC and DBM both authorized the continued grant of SSP benefits to qualified employees hired as of December 31, 1999. It is a badge of good faith in favor of the officials of DCWD and want of malicious disregard of the prevailing rules. Absent any showing of bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties,” the Commission said.

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