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Ronnie H. Lumayna, et al. Vs. Commission on Audit, En Banc, G.R. No.

185001, 25
September, 2009.
DEL CASTILLO, J.

Facts:
The Department of Budget and Management granted a maximum of 5% salary
adjustment to personnel in the LGU pursuant to RA 9137 and issued a circular to
provide guidelines on personal services limitation pursuant to the LGC. A 2003 Annual
Municipal Budget resolution was enacted by the Sangguniang Bayan of Mayoyao,
Ifugao, adopting a first class salary scheme for the municipality and implementing a 5%
salary increase for its personnel re-aligning the amount originally appropriated in their
2002 Annual Municipal Budget for the salaries and benefits of 17 new positions. The
Sangguniang Panlalawigan disallowed the increase and the re-alignment of funds on the
ground that the re-alignment is not sufficient in form to implement a salary increase but
it reconsidered upon finding good faith on the part of the officials of the municipality.
The COA subsequently issued a Notice of Disallowance for the salary increases of
municipal personnel and ordered petitioners to refund the amount contending that the
increase was not in accordance with the LGC – the limitation on personal services had
been exceeded, and that the Sangguniang Bayan resolution was not the appropriate
manner of granting the increase.
Issue:
Whether the COA gravely abused its discretion when it upheld the notice of
disallowance which directed the petitioners to refund the amount
Ruling:
In the instant case, although the 5% salary increase exceeded the limitation for

appropriations for personal services in the Municipality of Mayoyao, this alone is

insufficient to overthrow the presumption of good faith in favor of petitioners as

municipal officials. It must be mentioned that the disbursement of the 5% salary

increase of municipal personnel was done under the color and by virtue of resolutions
enacted pursuant to LBC No. 74, and was made only after the Sangguniang

Panlalawigan declared operative the 2002 municipal budget. In fact, the Notice of

Disallowance was issued only on 16 May 2003, after the municipality had already

implemented the salary increase.Moreover, in its Resolution No. 2004-1185, the

Sangguniang Panlalawigan reconsidered its prior disallowance of the adoption of a

first class salary schedule and 5% salary increase of the Municipality of Mayoyao based

on its finding that the municipal officials concerned acted in good faith.

Under prevailing jurisprudence, mistakes committed by a public officer are not

actionable, absent a clear showing that he was motivated by malice or gross negligence

amounting to bad faith. It does not simply connote bad moral judgment or negligence.

Rather, there must be some dishonest purpose or some moral obliquity and conscious

doing of a wrong, a breach of a sworn duty through some motive or intent, or ill will. It

partakes of the nature of fraud and contemplates a state of mind affirmatively operating

with furtive design or some motive of self-interest or ill will for ulterior purposes.

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