Public Ofce not a Contract

ABANILLA vs
COA
Metropolitan Cebu Water
District (MCWD), a local
water district was organized
as a government-owned
corporation with original
charter Pursuant to P D 198
(Provincial Water Utilities ct
o! 19"#)
$C%&
MCWD, t'roug' its (oard o!
Directors, issued )esolutions
giving bene*ts and privileges
(hospitalization privileges,
allowing the monetization of
leave credits to its personnel,
Christmas bonus and longevit
allowance) one o! w'o+ is Dulce
M, banilla, MCWD-s .eneral
Manager,
/n !anuar ", "#$#, MCWD and
Metropolitan Cebu Water District
0+plo1ees Union,e3ecuted a
collective bargaining
agreement %CBA& providing !or
t'e continuous grant to all its
regular ran' and (le
emploees o! e3isting bene*ts,
suc' as cash advances,
thirteenth month pa, mid-
ear bonus, Christmas bonus,
vacation and sic' leave
credits, hospitalization,
medicare, uniform privileges,
and water allowance,
/n !anuar ", "##), t'e
parties renewed t'eir
C(,
n audit tea+ 'eaded b1
(ernardita %, 4abines o! t'e
COA *egional O+ce No,
-II at Cebu Cit, one o!
t'e 'ereinrespondents,
conducted an audit o! t'e
accounts and
transactions of .C/0,
%'e *egional 0irector o! C/
)egional /5ce 6o, 788, sent
MCWD several notices
disallowing t'e a+ount
o!P19,991,19:,8; representing
hospitalization bene(ts,
mid-ear bonus, "1
th
month
pa, Christmas bonus and
longevit pa,
Petitioner appeal to respondent COA at
3uezon Cit citing C/ Me+orandu+
Circular 6o, ::9<9= providing t'at >all
bene(ts provided under the dul
e4isting CBAs entered into prior to
.arch "), "##), t'e date o! o5cial
entr1 o! ?udg+ent o! t'e &upre+e Court
ruling inDavao City Water District, et
al. vs. CSC and COA,s'all continue up
to the respective e4pir dates of
the bene(ts or CBA whichever
comes earlier,@
C/denied petitioner-s appeal
citing t'is &C-s ruling inDavao City
Water District vs. Civil Service
Commissiont'at >a water district
is a corporation created pursuant
to a special law 5 6,0, No, "#$, as
a+ended, and as suc',its o+cers
and emploees are covered b
the Civil 7ervice Law,@

)espondent C/ t'en 'eld t'atA

>%'ere is no Buestion t'at t'e CBA was
concluded after t'e decision in t'e 0avao case was
promulgated, s !ar as t'e C( is concerned t'e
critical moment is t'e date o! t'e promulgation
itsel!, An transaction (C() concluded after t'is
date in violation of e4isting laws and regulations
applicable to government entities is void and of no
e8ect, 8t con!erred no demandable right, it created
no enforceable obligation,
3 3 3
P)0M8&0& C/6&8D0)0D, t'e instant appeal 'as
to be, as it is 'ereb1, denied, %'e disallowance in t'e
total a+ount o!P19,991,19:,8; is 'ereb1 $$8)M0D,
&/ /)D0)0D,@
Petitioner *led a +otion !or
reconsideration but it was denied,
C/ ruled t'at t'e compensation
pac'age of .C/0 personnel
+a1 no longer be t'e sub9ect o!
a C(, $or t'e ter+s o!
e+plo1+ent o! t'ose personnel
are covered, not b1 t'e Cabor
Code, but b1 t'e Civil 7ervice
Law,
1, W'et'er C/ was correct
in disallowing t'e
hospitalization bene(ts,
mid-ear bonus,
"1
th
month pa,
Christmas bonus and
longevit pa:
I77;<
9, W'et'er MCWD
personnel s'ould
refund said a+ountsD
I77;<
8n lig't o! t'is Court-s ruling
inDavao City Water Districtt'at
t'e o+cers and emploees o! a
water district are covered b
the Civil 7ervice Caw,

petitioner-s invocation o! t'e C(,
in ?usti!1ing t'e receipt b1 t'e
MCWD personnel o! bene*ts and
privileges, is utterl misplaced,
" =<L0 E0&
&ub?ect to t'e +ini+u+ reBuire+ents o!
wage laws and ot'er labor and wel!are
legislation, t'e ter+s and conditions o!
e+plo1+ent in t'e unionized private
sector are settled t'roug' t'e process o!
collective bargaining, 8n government
emploment, 'owever, it is t'e
legislature and, w'ere properl1 given
delegated power, t'e ad+inistrative
'eads o! govern+ent w'ic' *3 t'e ter+s
and conditions o! e+plo1+ent, nd t'is
is eFected t'roug' statutes or
administrative circulars, rules, and
regulations,not through collective
bargaining agreements,>
.C/0a8ected personnel
who received the above
mentioned bene(ts and
privileges acted in good faith
under the honest belief that
the CBAauthorized such
pament, Conse?uentl,
the need not refund them,
) =<L0 NO
>Considering, 'owever, t'at all t'e
parties 'ere acted in good !ait', we
cannot countenance t'e re!und o!
sub?ect incentive bene*ts !or t'e 1ear
1999, w'ic' a+ounts t'e petitioners
'ave alread1 received, 8ndeed,
noindiciaof bad faith can be
detected under the attendant
facts and circumstances, %'e
o5cials and c'ie!s o! o5ces concerned
disbursed suc' incentive bene*ts in
t'e honest belief that the amounts
given were due to the recipients
and the latter accept the same
with gratitude, con(dent that the
richl deserve such bene(ts,
3 3 3, Petitioners 'ere received t'e additional
allowances and bonuses in good faith under
the honest belief that L/;A Board
*esolution No, 1"1 authorized such
pament, t t'e time petitioners received
t'e additional allowances and bonuses, t'e
Court had not et decidedBaybay Water
District, Petitioners 'ad no 'nowledge
that such pament was without legal
basis,@hus, being in good faith,
petitioners need not refund the
allowances and bonuses the received
but disallowed b the COA,@