EN BANC

[G.R. No. 213330. November 16, 2015.]

ALELI C. ALMADOVAR, GENERAL MANAGER ISAWAD,

ISABELA CITY, BASILAN PROVINCE , petitioner, vs.
CHAIRPERSON MA. GRACIA M. PULIDO-TAN, COMMISSION
ON AUDIT, respondent.

DECISION

MENDOZA, J : p

This is a petition for certiorari under Rule 64 of the Revised Rules of

Court seeking to reverse and set aside the December 29, 2011 Decision 1 of
the Commission on Audit (COA) and the April 4, 2014 Resolution 2 of the COA
En Banc which affirmed the October 28, 2010 Decision 3 of the COA Regional
Office No. IX (COA Regional Office) regarding Notices of Disallowances (NDs).
Isabela Water District (ISAWAD) is a government owned and controlled
corporation (GOCC) created pursuant to the provisions of Presidential Decree
(P.D.) No. 198, or the "Provincial Water Utilities Act of 1973" (PWUA), as
amended by Republic Act (R.A.) No. 9286. 4 Aleli G. Almadovar (petitioner) is
the General Manager (GM) of ISAWAD. 5
On January 25, 2007, Catalino S. Genel (Genel), Audit Team Leader for
ISAWAD, Isabela City, issued the following NDs for ISAWAD's various
payments: 6
ND No. Particulars Amount

2006-001 Payment of salary increase for the GM, P73,755.00

(2005) 7 ISAWAD, from P20,823.00 to P35,574.00
per month, from August to December,
2005,
without legal basis.

Payment of legal retainer's fee at

2006- P48,000.00
P4,000.00
002(2005) 8 per month for the period from of January to
December 2005 without proper authority
from the Office of the Government
Corporate
Counsel (OGCC) and the written
concurrence
of the COA.

2006- Payment of honorarium to OGCC Lawyer P24,000.00

003(2005) 9 without express authority from the OGCC,
and proof of service rendered to the
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 ISAWAD
2006- Payment of Representation and P6,000.00

004(2005) 10 Transportation Allowances (RATA) to the

GM, ISAWAD over and above the
authorized
rate of the Department of Budget and
Management (DBM) under Corporate
Budget
Circular (CBC) No. 18 and National Budget
Circular (NBC) No. 498

On April 26, 2007, petitioner filed an appeal with the Regional Cluster
Director, Cluster III-Public Utilities, Corporation Government Sector, which
was indorsed to the COA Regional Office. Petitioner insisted that the increase
in her salary and her RATA was in accordance with R.A. No. 9286, or the law
which amended the PWUA. 11
Petitioner further claimed that the engagement of a private counsel,
Atty. Quirino Esguerra, Jr. (Atty. Esguerra) , and the designation of OGCC
lawyer, Atty. Fortunato G. Operario, Jr. (Atty. Operario) , were in accordance
with the procedure set forth by law. Consequently, the payments made to
them were appropriate. 12
The COA Regional Office Ruling
On October 28, 2010, the COA Regional Office rendered a decision
affirming with modification the assailed NDs. It explained that the
compensation of the GMs of local water districts (LWDs) was still subject to
the provisions of R.A. No. 6758, or the Salary Standardization Law (SSL).
Thus, it found that the increase in petitioner's salary was improper as it ran
afoul with the provisions of R.A. No. 6758. It also agreed that the
disallowance of petitioner's RATA was correct because it exceeded the
allowable RATA for her position pursuant to CBC No. 18, 13 dated April 1,
2005, and NBC No. 498, 14 dated November 14, 2000. ATICcS

The COA Regional Office also agreed that the payment of honoraria to
Atty. Operario had no basis because it constituted an unnecessary and
excessive expenditure. The disallowed amount in ND No. 2006-002(2005),
was reduced from P48,000.00 to P40,000.00 because Atty. Esguerra's
services from November to December 2005 were covered by a retainership
contract duly approved by the OGCC and with the written concurrence of the
COA.
The case was automatically elevated for review to the COA pursuant to
Section 7, Rule V of the 2009 Revised Rules of Procedures of the COA.
The COA Ruling
On December 29, 2011, the COA rendered the assailed decision
affirming the ruling of the COA Regional Office. It stressed that before a
private lawyer may be hired by the GOCC, the written conformity of the
OGCC and the written concurrence of the COA must first be secured — which
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 also applied in cases of contract renewal. The COA ruled that the payments
to Atty. Esguerra from January to October 2005 were improper because his
services were retained without the necessary conformity and concurrence of
both the OGCC and the COA. Only the retainership contract for a period of
one year effective on November 1, 2005 was with the conformity and
concurrence of both the OGCC and the COA.
Aggrieved, petitioner moved for reconsideration of the decision but her
motion was denied by the COA En Banc in its assailed resolution, dated April
4, 2014.
Hence, this present petition.
ISSUES
1] Whether or not the disbursements under the NDs were
improper.
2] In the event the disbursements were improper, whether or
not petitioner liable to refund the same.
Petitioner insists that her salary increase was proper because LWDs
were exempt from the coverage of the SSL as Section 23 of R.A. No. 9286, a
later law, empowered the board of directors of LWDs to fix the salary of its
GM, thereby impliedly repealing R.A. No. 6758; that her salary was within
the scale provided by the Office of the Philippine Association of Water
Districts, Inc.; and that she need not refund the alleged overpaid RATA
because she acted in good faith as she stopped claiming the same after the
NDs were issued. 15
Petitioner also claims that the payments to Atty. Esguerra from January
to October 2005 were valid because the OGCC concurred with the
retainership contract for one year effective from November 1, 2004. She
faults the COA for belatedly acting upon the request for conformity. Likewise,
petitioner posits that the written concurrence of the COA only applies to the
engagement or hiring of a private lawyer and not the renewal of the
retainership. She argues that the retainership of Atty. Esguerra had been
effected on a yearly basis starting November 1, 2003, which necessarily
follows that subsequent renewal should be in November of the succeeding
year. 16
Petitioner also faults the OGCC for the delay in issuing the necessary
authority for Atty. Operario, baring that as early as 2004 the board of
directors of ISAWAD already requested from the OGCC the necessary
authority, but it was given only on July 11, 2006. She avers that denying the
lawyers the remuneration for their services will be tantamount to unjust
enrichment. 17
Citing Mendoza v. COA 18 (Mendoza), petitioner claims that she acted
in good faith in making all the disbursements and, therefore, she should not
be made to refund them because they were given under an honest belief
that the payees were entitled to the said remunerations and these were in
consideration for their services rendered. Petitioner likewise prays for the
issuance of a Writ of Preliminary Injunction and/or TRO because she stands
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 to suffer grave injustice and great irreparable injury.
In its Comment, 19 dated July 28, 2014, the COA countered that LWDs
were covered by R.A. No. 6758 or the SSL. R.A. No. 9286 did not expressly
repeal it, and an implied repeal, as claimed by petitioner, was disfavored by
law.
The COA also contended that the renewal of retainership contracts
required the written concurrence of the COA. It is also insisted that the
payments of honorarium made to Atty. Operario were improper because at
the time he rendered his services, the OGCC had yet to issue any authority.
It noted that the OGCC approval and the COA concurrence were required to
ensure that there was basis for the engagement of a private lawyer.
The COA argued that petitioner could not claim good faith because the
case cited by her, allowing the defense of good faith, was premised on the
fact that there was no prior case or rule that settled the applicability of R.A.
No. 6758 to LWDs. Finally, the COA opined that petitioner failed to state
factual allegations to support the issuance of a writ of Preliminary Injunction
and/or TRO.
In her Reply, 20 dated March 13, 2015, petitioner merely reiterated her
previous arguments.
The Court's Ruling
R.A. No. 6758 covers local water districts
The increase in the salary of the petitioner was correctly disallowed
because it contravened the provisions of the SSL. In Mendoza, 21 the Court
ruled that the salaries of GMs of LWDs were subject to the provision of the
SSL, to wit:
The Salary Standardization Law applies to all government
positions, including those in government-owned or controlled
corporations, without qualification. The exception to this rule is
when the government-owned or controlled corporation's
charter specifically exempts the corporation from the
coverage of the Salary Standardization Law. . . . TIADCc

We are not convinced that Section 23 of Presidential

D e c r e e No. 198, as amended, or any of its provisions,
exempts water utilities from the coverage of the Salary
Standardization Law. In statutes subsequent to Republic Act No.
6758, Congress consistently provided not only for the power to fix
compensation but also the agency's or corporation's exemption from
the Salary Standardization Law. If Congress had intended to exempt
water utilities from the coverage of the Salary Standardization Law
and other laws on compensation and position classification, it could
have expressly provided in Presidential Decree No. 198 an exemption
clause similar to those provided in the respective charters of the
Philippine Postal Corporation, Trade Investment and Development
Corporation, Land Bank of the Philippines, Social Security System,
Small Business Guarantee and Finance Corporation, Government
Service Insurance System, Development Bank of the Philippines,
Home Guaranty Corporation, and the Philippine Deposit Insurance
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 Corporation.
Congress could have amended Section 23 of Presidential
Decree No. 198 to expressly provide that the compensation of a
general manager is exempted from the Salary Standardization Law.
However, Congress did not. Section 23 was amended to emphasize
that the general manager "shall not be removed from office, except
for cause and after due process."
This does not mean that water utilities cannot fix the
compensation of their respective general managers. Section 23
of Presidential Decree No. 198 clearly provides that a water utility's
board of directors has the power to define the duties and fix the
compensation of a general manager. However, the compensation
fixed must be in accordance with the position classification
system under the Salary Standardization Law. . . . 22
[Emphases Supplied]
Petitioner claims that R.A. No. 9286, being a later law, repealed the
SSL. The Court, however, notes that R.A. No. 9286 did not expressly repeal
the SSL. Neither did R.A. No. 9286 impliedly repeal the SSL because repeal
by implication is not favored by law and is only resorted to in case of
irreconcilable inconsistency and repugnancy between the new law and the
old law. 23 As clearly pointed out in Mendoza, there is no irreconcilable
inconsistency between R.A. No. 9286 and the SSL. It is conceded though that
the board of directors has full discretion in fixing the salary of the GM, but it
is always subject to the limits under the SSL, unless the charter of the LWD
exempts it from the coverage of the said law.
Engagements of Atty. Esguerra
and Atty. Operario were unauthorized
COA Circular No. 95-011, dated December 4, 1995, provides that in the
event that the need for the legal services of a private lawyer cannot be
avoided or is justified under extraordinary or exceptional circumstances, the
written conformity and acquiescence of the OGCC and the written
concurrence of the COA shall first be secured. The failure to secure the
written concurrence makes the engagement of the private lawyer or law firm
unauthorized. 24
In the case at bench, petitioner does not deny that there was no
written concurrence from the COA when Atty. Esguerra, a private lawyer,
rendered legal services from January to October 2005. She, instead, argues
that it is not mandatory to secure the written concurrence of COA because it
only applies to the hiring or employment of a lawyer and not the renewal of
a retainership contract. Further, petitioner blames the COA because it
belatedly acted on the request of ISAWAD for a written concurrence. cSEDTC

The arguments of petitioner fail to persuade.

ISAWAD first engaged Atty. Esguerra under a retainership contract 25
for a period of one year effective November 1, 2003, with the written
concurrence of the OGCC and the COA. The following year, another
retainership contract 26 was executed, effective one year from November 1,
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 2004, with the concurrence of the OGCC but not the COA. Again, in the
following year, a retainership contract 27 was executed for another one year
effective on November 1, 2005, with the written concurrence of both the
OGCC and the COA.
ISAWAD engaged Atty. Esguerra under a general retainer for a specific
length of time, which was regularly renewed after its termination. Each
renewal constituted the hiring of Atty. Esguerra because after the lapse of
one year, the engagement was terminated; and each renewal for another
one-year term required the written conformity of the COA.
Petitioner likewise faults the COA for failing to act on time on the
request for concurrence. This, however, is a bare assertion as petitioner
failed to provide any document showing that a request for the COA's written
concurrence was even made. Petitioner only presented the OGCC's written
approval, 28 dated September 5, 2005, of the retainership contract effective
November 1, 2004. The letter significantly reminded ISAWAD to seek the
conformity of the COA — which it failed to do.
With regard to Atty. Operario, Executive Order (E.O.) No. 878, series of
1983, allows any member of the OGCC's legal staff to be designated in a
concurrent capacity to act as a corporate officer of the GOCC being serviced
by the OGCC when the exigency of the service so requires, provided that the
Government Corporate Counsel approves the designation.
Petitioner admits that it was only on July 11, 2006 that the authority of
Atty. Operaria to render services for ISAWAD was issued. Obviously, he had
no authority to provide legal services to ISAWAD prior to the approval of the
OGCC. Consequently, Atty. Operario was not entitled to the honorarium
given for the alleged services he had rendered.
Petitioner cannot argue that disallowing the payments made to Atty.
Esguerra and Atty. Operario is tantamount to unjust enrichment. In The Law
Firm of Laguesma Magsalin Consulta and Gastardo v. COA , 29 the Court,
notwithstanding the fact that actual services had been rendered, upheld the
disallowance of payment made to a law firm, which was unauthorized to act
in behalf of a GOCC, for failure to secure the COA's concurrence. In the case
at bench, there is no unjust enrichment because the NDs directed the
responsible officers of ISAWAD, who made the disbursements (including
petitioner), and not the lawyers engaged, to make the refund.
Refund not necessary if the
disbursements were made
in good faith
In Mendoza, the Court excused the erring officials therein from
refunding the amounts subject of the ND, to wit:
The salaries petitioner Mendoza received were fixed by the
Talisay Water District's board of directors pursuant to Section 23 of
the Presidential Decree No. 198. Petitioner Mendoza had no hand in
fixing the amount of compensation he received. Moreover, at the time
petitioner Mendoza received the disputed amount in 2005 and 2006,
there was no jurisprudence yet ruling that water utilities are not
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 exempted from the Salary Standardization Law.
Pursuant to de Jesus v. Commission on Audit, petitioner
Mendoza received the disallowed salaries in good faith. He need not
refund the disallowed amount.
In this case, the Court is of the view that the payment of the erroneous
increase in petitioner's salary was nonetheless made in good faith. The
increase was computed in accordance with the scale provided by the Office
of the Philippine Association of Water Districts, Inc., which also made an
erroneous opinion that R.A. No. 9286 repealed the SSL. Further, at the time
the disbursement was made, no categorical pronouncement, similar to
Mendoza, that the LWDs are subject to the provisions of the SSL, had been
issued.
Good faith, however, cannot be appreciated in petitioner's other
disbursements. Petitioner knowingly approved the payments to Atty.
Esguerra and Atty. Operaria in spite of the lack of the necessary approval by
the government offices concerned. Further, petitioner's failure to claim her
excessive RATA after the NDs were issued does not evince good faith
because, at that time, CBC No. 18 and NBC No. 498 already provided for the
allowable RATA to be given to GMs of LWDs.
No basis for the issuance of a writ of injunction
In Calawag v. University of the Philippines Visayas, 30 the Court ruled
that the right sought to be protected must not be doubtful in order for an
injunctive relief to be issued, to wit: AaCTcI

To be entitled to a writ of preliminary injunction, . . . the

petitioners must establish the following requisites: (a) the invasion of
the right sought to be protected is material and substantial; (b) the
right of the complainant is clear and unmistakable; and (c) there is an
urgent and permanent necessity for the writ to prevent serious
damage. . . . When the complainant's right is thus doubtful or
disputed, he does not have a clear legal right and, therefore,
the issuance of injunctive relief is improper.
[Emphasis Supplied]
Here, petitioner failed to show sufficient reasons to justify the issuance
of the injunctive relief. It has been thoroughly discussed that the
disbursements were without legal basis as they either were in excess of the
limits provided for by law or were issued without authority.
WHEREFORE, the December 29, 2011 Decision of the Commission on
Audit is AFFIRMED with MODIFICATION in that petitioner be absolved from
refunding the amount paid in the increase of her salary.
SO ORDERED.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Brion, Peralta,
Bersamin, Del Castillo, Villarama, Jr., Perez, Reyes, Perlas-Bernabe, Leonen
and Jardeleza, JJ., concur.

Footnotes
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 1. Rollo , pp. 25-28.
2. Id. at 29.

3. Penned by Regional Director Roberto T. Marquez; id. at 121-124.

4. Id. at 6.
5. Id. at 13.
6. Id. at 121.
7. Id. at 125.

8. Id. at 126.
9. Id. at 127.
10. Id. at 128.
11. Id. at 121-122.

12. Id.
13. Annex A thereof provides for equivalent ranks of LWD officials to national
government officials entitled to RATA. The following are the equivalent ranks
of GMs of LWDs depending on its category: (1) Very Large LWDs-Bureau
Director; (2) Large LWDs-Assistant Bureau Director; (3) Big LWDs-Bureau
Regional Director; (4) Medium LWDs-Assistant Bureau Regional Director; and
(5) Average and Small LWDs-Division Chief.

14. The following are the monthly rates of RATA for each national government
official: (1) Bureau Directors, Department Regional Directors and those of
equivalent ranks — P5,000; (2) Assistant Bureau Directors, Department
Assistant Regional Directors, Bureau Regional Directors, Department Service
Chiefs and those of equivalent ranks — P4,500; (3) Assistant Bureau Regional
Directors and those of equivalent ranks — P4,000; and (4) Chiefs of Division
identified as such in the Personal Services Itemization and Plantilla of
Personnel and those of equivalent ranks — P3,000.
15. Id. at 14-15.
16. Id. at 15-16.
17. Id. at 19.
18. G.R. No. 195395, September 10, 2013, 705 SCRA 306.

19. Rollo , pp. 89-120.

20. Id. at 185-201.
21. Supra note 18.
22. Id. at 332-333.

23. Philippine International Trading Corporation v. COA, 635 Phil. 447, 459 (2010).
24. The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, G.R. No.
185544, January 13, 2015.
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 25. Rollo , pp. 59-61.
26. Id. at 65-68.
27. Id. at 72-75.

28. Id. at 63.

29. Supra Note 24.
30. Resolution, G.R. No. 207412, August 7, 2013, 703 SCRA 373.

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