HON. BENJAMIN B. MAGALONG, AS MAYOR OF BAGUIO CITY AND IN LIEU OF THEN MAYORS MAURICIO G. DOMOGAN AND REINALDO A. BAUTISTA, JR.; ANTONIO L. TABIN, AS CITY ACCOUNTANT; AND, VARIOUS OFFICIALS AND EMPLOYEES OF BAGUIO CITY, VS. COMMISSION ON AUDIT; THE DIRECTOR, COMMISSION ON AUDIT, CORDILLERA ADMINISTR

Ruling

WHEREFORE , premises considered, the Petition for Review is hereby DENIED. Accordingly, Notice of Disallowance (ND) Nos. 2009-001-100-(2008) dated July 5, 2009; 2009-002-100-(2008) dated July 15, 2009; and 2009-003-100-(2009) dated July 22, 2009, all covering the payment of Cost of Living Allowance (COLA) to the officials and employees of Baguio City for the period of January 1, 1990 to March 16, 1999, in the total amount of [PHP] 59,774,096.09, are AFFIRMED. ND No. 2009-001-100(2008)-A is MODIFIED reducing the liability of Mayor Reinaldo A. Bautista and Mr. Antonio L. Tabin to [PHP] 3,944,991.16. The employees of the city, who were mere passive recipients of COLA, need not refund the benefits they received. [17] (Emphasis in the original) In upholding the disallowance, COA ruled that pursuant to Section 12 of Republic Act No. 6758, [18] all allowances, except those enumerated therein, are deemed integrated in the standardized salary rates. Moreover, DBM LBC No. 081-05 is clear that the grant of COLA is prohibited. Thus, as of December 12, 2005, the issue on the integration of COLA had been resolved as far as local government units (LGUs) are concerned. The cases cited by petitioners involve a different DBM issuance, which does not cover LGUs. [19] Anent the issue of liability for the disallowed amounts, COA held that the officers who approved the grant of COLA and the resolutions directing payment of the same are solidarily liable for the disallowances. No presumption of good faith can be ascribed with the approving officers in view of their payment of COLA despite the issuance of DBM LBC No. 081-­05 two years prior. Meanwhile, the passive-recipients were absolved on the ground of good faith. [20] Finally, upon review of the records, COA found the Supplemental ND No. 2009-001-100 (2008)-A valid. Thus, to clarify the exact liability of all parties involved, COA explained the following: (1) under ND No. 2009-001­100 (2008)-A, Mayor Bautista and Mr. Tabin were liable only in the amount of PHP 3,944,991.16 since they were already held liable under ND Nos. 2009-001-100 (2008), 2009-002-100 (2008), and 2009-003-100 (2009); (2) employees who were mere passive recipients are absolved from liability; and (3) the SP members are liable for the total amount of PHP 63,719,087.25. [21] Mayor Magalong et al. moved for reconsideration on March 15, 2019, insisting that approving officers should be absolved of liability based on good faith. [22] On January 24, 2022, COA denied the same and affirmed its December 21, 2018 Decision with modification. [23] The COA affirmed the validity of the disallowance, but reversed the exoneration of the passive recipients. Citing Madera v. Commission on Audit , [24] COA ruled that the passive recipients are required to return what they personally received applying the principles of unjust enrichment and solutio indebiti . [25] The dispositive portion of COA's resolution reads: WHEREFORE , the Motion for Reconsideration is hereby