EN BANC
G.R. No. 216776, April 19, 2016
PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO), Petitioner, v. CHAIRPERSON MA. GRACIA M. PULIDO-TAN, COMMISSIONER HEIDI L. MENDOZA, COMMISSIONER ROWENA V. GUANZON, THE COMMISSIONERS, COMMISSION ON AUDIT (COA), Respondents.
D E C I S I O N
PERALTA, J.:
This petition for certiorari under Rule 64, in relation to Rule 65, of the Rules of Court (Rules) seeks to annul and set aside the June 5, 2014 Decision1 and December 22, 2014 Resolution2 of the Commission on Audit (COA) Commission Proper, which affirmed the notice of disallowance on the cost of living allowance received by the officials and employees of the Philippine Charity Sweepstakes Office-Nueva Ecija Provincial District Office in 2010.
Created by Republic Act (R.A.) No. 1169,3 as amended by Presidential Decree (P.O.) No. 11574 and Batas Pambansa (B.P.) Blg. 42,5 the Philippine Charity Sweepstakes Office (PCSO) is the principal government agency for raising and providing funds for health programs, medical assistance and services, and charities of national character. On March 4, 2008, the PCSO Board of Directors, through Resolution No. 135, approved the payment of monthly cost of living allowance (COLA) to its officials and employees for a period of three (3) years in accordance with the Collective Negotiation Agreement. Pursuant thereto, in 2010, the PCSO released the sum of P381,545.43 to all qualified officials and employees of its Nueva Ecija Provincial District Office. A year after, on March 19, 2011, Executive Secretary Paquito N. Ochoa, Jr. confirmed the benefits and incentives provided for in Resolution No. 135, but with a directive to the PCSO to strictly abide by Executive Order (E.O.) No. 7 that imposed a moratorium on any grant of new or increase in the salaries and incentives until specifically authorized by the President.6
On post audit, the Team Leader and Supervising Auditor of the PCSO-Nueva Ecija Provincial District Office issued Notice of Disallowance (ND) 11-001-101-(10)7 dated May 16, 2011 invalidating the payment of P381,545.43 on the grounds that it is contrary to the Department of Budget and Management (DBM) Circular No. 2001-03 dated November 12, 2001 and it amounts to double compensation that is prohibited under the 1987 Constitution. Those found liable for the disallowed disbursement were:
Name | Position/ Designation | Nature of Participation in the Transaction |
1. Josefina A. Sarsonas | Department Manager | Approving Officer |
2. Francis S. Manalad | CLOO | Recommending Approval |
3. Alberto B. Pertinente | Acting Auditor | |
5. Mary Ann T. Baltazar | Acting SLOO | Certifies Cash Available |
6. Moriel C. Blanco | Cashier II | Issued Check8 |
In accordance with the ruling of this Court in Intia, we agree with petitioner PRA that these provisions should be read together with P.D. No. 985 and P.D. No. 1597, particularly Section 6 of P.D. No. 1597. Thus, notwithstanding exemptions from the authority of the Office of Compensation and Position Classification granted to PRA under its charter, PRA is still required to 1) observe the policies and guidelines issued by the President with respect to position classification, salary rates, levels of allowances, project and other honoraria, overtime rates, and other forms of compensation and fringe benefits and 2) report to the President, through the Budget Commission, on their position classification and compensation plans, policies, rates and other related details following such specifications as may be prescribed by the President.
Despite the power granted to the Board of Directors of PRA to establish and fix a compensation and benefits scheme for its employees, the same is subject to the review of the Department of Budget and Management. However, in view of the express powers granted to PRA under its charter, the extent of the review authority of the Department of Budget and Management is limited. As stated in Intia, the task of the Department of Budget and Management is simply to review the compensation and benefits plan of the government agency or entity concerned and determine if the same complies with the prescribed policies and guidelines issued in this regard. The role of the Department of Budget and Management is supervisorial in nature, its main duty being to ascertain that the proposed compensation, benefits and other incentives to be given to PRA officials and employees adhere to the policies and guidelines issued in accordance with applicable laws.
The rationale for the review authority of the Department of Budget and Management is obvious. Even prior to R.A. No. 6758, the declared policy of the national government is to provide "equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions." To implement this policy, P.D. No. 985 provided for the standardized compensation of government employees and officials, including those in government-owned and controlled corporations. Subsequently, P.D. No. 1597 was enacted prescribing the duties to be followed by agencies and offices exempt from coverage of the rules and regulations of the Office of Compensation and Position Classification. The intention, therefore, was to provide a compensation standardization scheme such that notwithstanding any exemptions from the coverage of the Office of Compensation and Position Classification, the exempt government entity or office is still required to observe the policies and guidelines issued by the President and to submit a report to the Budget Commission on matters concerning position classification and compensation plans, policies, rates and other related details. This ought to be the interpretation if the avowed policy of compensation standardization in government is to be given full effect. The policy of "equal pay for substantially equal work" will be an empty directive if government entities exempt from the coverage of the Office of Compensation and Position Classification may freely impose any type of salary scheme, benefit or monetary incentive to its employees in any amount, without regard to the compensation plan implemented in the other government agencies or entities. Thus, even prior to the passage of R.A No. 6758, consistent with the salary standardization laws in effect, the compensation and benefits scheme of PRA is subject to the review of the Department of Budget and Management.18
SEC. 12. Consolidation of Allowances and Compensation. - All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized, x x x"
(1) representation and transportation allowances (RATA);
(2) clothing and laundry allowances;
(3) subsistence allowance of marine officers and crew on board government vessels;
(4) subsistence allowance of hospital personnel;
(5) hazard pay;
(6) allowance of foreign service personnel stationed abroad; and
(7) such other additional compensation not otherwise specified in Section 12 as may be determined by the DBM.28
Analyzing No. 7, which is the last clause of the first sentence of Section 12, in relation to the other benefits therein enumerated, it can be gleaned unerringly that it is a "catch-all proviso." Further reflection on the nature of subject fringe benefits indicates that all of them have one thing in common - they belong to one category of privilege called allowances which are usually granted to officials and employees of the government to defray or reimburse the expenses incurred in the performance of their official functions. In Philippine Ports Authority vs. Commission on Audit, this Court rationalized that "if these allowances are consolidated with the standardized rate, then the government official or employee will be compelled to spend his personal funds in attending to his duties."35
In any event, the Court finds the inclusion of COLA in the standardized salary rates proper. In -National Tobacco Administration v. Commission on Audit, the Court ruled that the enumerated fringe benefits in items (1) to (6) have one thing in common - they belong to one category of privilege called allowances which are usually granted to officials and employees of the government to defray or reimburse the expenses incurred in the performance of their official functions. Consequently, if these allowances are consolidated with the standardized salary rates, then the government official or employee will be compelled to spend his personal funds in attending to his duties. On the other hand, item (7) is a "catch-all proviso" for benefits in the nature of allowances similar to those enumerated.
Clearly, COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and employees of the government in the performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of living refers to "the level of prices relating to a range of everyday items" or "the cost of purchasing those goods and services which are included in an accepted standard level of consumption." Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.37
Further, before public funds may be disbursed for salaries and benefits to government officers and employees, it must be shown that these are commensurate to the services rendered and necessary or relevant to the functions of the office. "Additional allowances and benefits must be shown to be necessary or relevant to the fulfillment of the official duties and functions of the government officers and employees."
In Yap v. Commission on Audit, this Court laid down two general requisites before a benefit may be granted to government officials or employees. First is that the allowances and benefits were authorized by law, and second, that there was a direct and substantial relationship between the performance of public functions and the grant of the disputed allowances. Thus:[t]o reiterate, the public purpose requirement for the disbursement of public funds is a valid limitation on the types of allowances and,benefits that may be granted to public officers. It was incumbent upon petitioner to show that his allowances and benefits were authorized by law and that there was a direct and substantial relationship between the performance of his public functions and the grant of the disputed allowances to him.
The burden of proving the validity or legality of the grant of allowance or benefits is with the government agency or entity granting the allowance or benefit, or the employee claiming the same, xxx.46
5.4 The rates of the following allowances/fringe benefits which are not integrated into the basic salary and which are allowed to be continued after June 30, 1989 shall be subject to the condition that the grant of such benefits is covered by statutory authority:
5.4.1 Representation and Transportation Allowances (RATA) of incumbent of the position authorized to receive the same at the highest amount legally authorized as of June 30, 1989 for the level of his position within the particular GOCC/GFI;
5.4.2 Uniform and Clothing Allowance at a rate as previously authorized;
5.4.3 Hazard pay as authorized by law;
5.4.4 Honoraria/additional compensation for employees on detail with special projects or inter-agency undertakings;
5.4.5 Honoraria for services rendered by researchers, experts and specialists who are of acknowledged authorities in their fields of specialization;
5.4.6 Honoraria for lecturers and resource persons/speakers;
5.4.7 Overtime pay in accordance to Memorandum Order No. 228;
5.4.8 Clothing/laundry allowances and subsistence allowance of marine officers and crew on board GOCCs/GFIs owned vessels and used in their operations, and of hospital personnel who attend directly to patients and who by nature of their duties are required to wear uniforms;
5.4.9 Quarters Allowance of officials and employees who are presently entitled to the same;
5.4.10 Overseas, Living Quarters and other allowances presently authorized for personnel stationed abroad;
5.4.11 Night Differential of personnel on night duty;
5.4.12 Per Diems of members of the governing Boards of GOCCs/GFIs at the rate as prescribed in their respective Charters;
5.4.13 Flying Pay of personnel undertaking aerial flights;
5.4.14 Per Diems/Allowances of Chairman and Members/Staff of collegial bodies and Committee; and,
5.4.15 Per Diems/Allowances of officials and employees on official foreign and local travel outside of their official station.
5.5 Other allowances/fringe benefits not likewise integrated into the basic salary and allowed to be continued only for incumbents as of June 30, 1989 subject to the condition that the grant of same is with appropriate authorization either from the DBM, Office of the President or legislative issuances are as follows:5.5.1 Rice Subsidy
5.5.2 Sugar Subsidy
5.5.3 Death Benefits other than those granted by the GSIS;
5.5.4 Medical/dental/optical allowances/benefits;
5.5.5 Children's allowance;
5.5.6 Special Duty Pay/Allowance;
5.5.7 Meal Subsidy;
5.5.8 Longevity Pay; and
5.5.9 Teller's Allowance
RULE XII
COLLECTIVE NEGOTIATIONS
Section 1. Subject of negotiation. - Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiation.
Section 2. Negotiable matters. - The following concerns may be the subject of negotiation between the management and the accredited employees' organization:
(a) schedule of vacation and other leaves;
(b) personnel growth and development;
(c) communication system - internal (lateral and vertical), external;
(d) work assignment/reassignment/detail/transfer;
(e) distribution of work load;
(f) provision for protection and safety;
(g) provision for facilities for handicapped personnel; (h) provision for first aid medical services and supplies; (i) physical fitness program;
(j) provision for family planning services for married women:
(k) annual medical/physical examination;
(l) recreational, social, athletic and cultural activities and facilities;
(m) CNA incentive pursuant to PSLMC Resolution No. 4, s. 2002 and Resolution No. 2, s. 2003 ;57 and,
(n) such other concerns which are not prohibited by law and CSC rules and regulations.
Section 3. Compensation matters. - Increases in salary, allowances, travel expenses, and other benefits that are specifically provided by law are not negotiable..
Section 4. Effectivity of CNA. - The CNA shall take effect upon its signing by the parties and ratification by the majority of the rank-and-file employees in the negotiating unit.
Section 5. Other matters. - Nothing herein shall be construed to prevent any of the parties from submitting proposals regarding other matters to Congress and the proper authorities to improve the terms and conditions of their employment.
Endnotes:
1Rollo, pp. 19-24.
2 Id. at 25.
3 Entitled "An Act Providing for Charity Sweepstakes Horse Races and Lotteries " (approved and took effect on June 18, 1954).
4 Entitled "Increasing the Rates of Tea on Winnings in Jai-Alai and Horse-Racing and the Share of the Government from the Sweepstakes Total Prize Fund" (issued and took effect on June 3, 1977).
5 Entitled "An Act Amending the Charter of the Philippine Charity Sweepstakes Office " (approved and took effect on September 24, 1979).
6 Sec. 9 of. E.O. No. 7, which is entitled "Directing the Rationalization of the Compensation and Position Classification System in the Government-Owned and Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), and for Other Purposes" and issued on September 8, 2010, states:
SECTION 9. Moratorium on Increases in Salaries, Allowances, Incentives and Other Benefits. - Moratorium on increases in the rates of salaries, and the grant of new or increases in the rates of allowances, incentives and other benefits, except salary adjustments pursuant to Executive Order No. 811 dated June 17, 2009 and Executive Order No. 900 dated June 23, 2010, are hereby imposed until specifically authorized by the President.
7Rollo, pp. 35-36.
8 Id. at 36.
9 Id. at 39-42.
10 420 Phil. 102(2001).
11 430 Phil. 717(2002).
12Rollo, pp. 91-92.
13 Id. at 79-86.
14 See Sections 2 and 4, in relation to Section 17 (g.), of P.D. No. 985 and Section 1, in relation to Section 5, of P.D. No. 1597.
15 366 Phil. 273 (1999).
16 Entitled "Compensation and Position Classification Act of 1989" (took effect on July 1, 1989)
17 444 Phil. 859(2003).
18Phil. Retirement Authority (PRA) v. Buñag, supra, at 869-871. (Citations omitted).
19 See Phil. Retirement Authority (PRA) v. Buñag, supra note 17, at 872-873. The subject provision of Section 2 of P.D. No. 985 stated that notwithstanding a standardized salary system established for all employees, additional financial incentives may be established by government corporations and financial institutions for their employees to be supported fully from their corporate funds and for such technical positions as maybe approved by the President in critical government agencies. Section 16 of the law provided for the creation of compensation committees under the leadership of the Commissioner of the Budget, the purpose of which is to recommend on compensation standards, policies, rules and regulations that shall apply to critical government agencies, including those of government-owned or controlled corporations and financial institutions.
20 This Act shall be applicable to all GOCCs, GICPs/GCEs, and government financial institutions, including their subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local water districts, economic zone authorities and research institutions: Provided, That in economic zone authorities and research institutions, the President shall appoint one-third (1/3) of the board members from the list submitted by the GCG. (Sec. 4, R.A. No. 10149).
21 Sec. 2 (f), R.A. No. 10149.
22 Sec. 5 (h), R.A. No. 10149.
23 Sec. 8, R.A. No. 10149.
24 Sec. 9, R.A. No. 10149.cralawred
25 ADOPTING A COMPENSATION AND POSITION CLASSIFICATION SYSTEM (CPCS) AND A GENERAL INDEX OF OCCUPATIONAL SERVICES (IOS) FOR THE GOCC SECTOR COVERED BY REPUBLIC ACT NO. 10149 AND FOR OTHER PURPOSES.
26 Sec. 2, E.O No. 203.cralawred
27 Sec. 6, E.O No. 203.
28Maritime Industry Authority v. Commission on Audit, 745 Phil. 300 (2015); Land Bank of the Philippines v. Naval, G.R. No. 195687, April 14, 2014; Gutierrez, el al. v. Dept. of Budget and Mgt., et al, 630 Phil. 1, 14 (2010); Bureau of Fisheries and Aquatic Resources (BFAR) Employees Union v. Commission on Audit, 584 Phil. 132, 139 (2008); NAPOCOR Employees Consolidated Union (NECU) v. National Power Corporation (NPC), 519 Phil. 372, 384 (2006); and National Tobacco Administration v. COA, 370 Phil. 793, 805 (1999).
29NAPOCOR Employees Consolidated Union (NECU) v. National Power Corporation (NPC), supra.
30 See Maritime Industry Authority v. Commission on Audit, supra note 28, and NAPOCOR Employees Consolidated Union (NECU) v. National Power Corporation (NPC), supra note 20.
31 See Maritime Industry Authority v. Commission on Audit, supra note 28, and Gutierrez, et al. v. Dept. of Budget and Mgt., et al, supra note 28, at 16.
32 See Maritime Industry Authority v. Commission on Audit, supra note 28, and Gutierrez, et al. v. Dept. of Budget and Mgt., et al., supra note 28, at 16.
33 See Maritime Industry Authority v. Commission on Audit, supra note 28.
34 See Maritime Industry Authority v. Commission on Audit, supra note 28. (Citations omitted).
35National Tobacco Administration v. COA, supra note 28. (Citation omitted). See also Maritime Industry Authority v. Commission on Audit, supra note 28; Bureau of Fisheries and Aquatic Resources (BFAR) Employees Union v. Commission on Audit, supra note 28, at 139-140; and Phil. International Trading Corp. v. COA, 461 Phil. 737, 747-748 (2003).
36Supra note 28.
37 Gutierrez, et al. v. Dept. of Budget and Mgt., et al., supra note 28, at 16-17. (Citations omitted).
38 G.R. No. 198935, November 27, 2013,711 SCRA 110.
39Supra note 28.cralawred
40Supra note 28.
41Supra note 35.
42Supra note 28.
43Re: Request of CJ Narvasa (Ret.) for Re-computation of his Creditable Government Service, 581 Phil. 272, 280 (2008), as cited in Galang v. Land Bank of the Phils., 665 Phil. 37, 57 (2011).
44 Id.
45 DBM Budget Circular No. 12 dated April 7, 1997.
46Maritime Industry Authority v. Commission on Audit, supra note 28. (Citations omitted).
47Abellanosa, et al. v. Commission on Audit, et al., 691 Phil. 589, 601 (2012).
48 See CIVIL CODE, Art. 7 Paragraph (3).
49 See Public Estates Authority v. Commission on Audit, 541 Phil. 412 (2007); Phil. National Bank v. Palma, 503 Phil. 917 (2005); and Ambros v. Commission on Audit, 501 Phil. 255 (2005).
50 Abellanosa, et al. v. Commission on Audit, et al, supra note 47.
51Phil. National Bank v. Palma, supra note 49, at 936.
52 See Silang v. Commission on Audit, G.R. No. 213189, September 8, 2015 and Maritime Industry Authority v. Commission on Audit, G.R. No. 185812, January 13, 2015.
53 Entitled "Rules and Regulations for the Implementation of the Revised Compensation and Position Classification System Prescribed Under R.A. No. 6758 for Government-Owned and/or Controlled Corporations (GOCCS) and Financial Institutions (GFIS)."
54 355 Phil. 584(1998).
55National Home Mortgage Finance Corporation v. Abayari et al., 617 Phil. 446, 453 (2009), citing Magno v, Commission on Audit, 558 Phil. 76, 87 (2007).
56 Pursuant to Section 15 of E.O. No. 180 (entitled "Providing Guidelines for the Exercise of the Right to Organize of Government Employees, Creating a Public Sector Labor-Management Council, and for Other Purposes" and dated June 1, 1987).
57 PSLMC Resolution No. 2, s. 2003 is entitled "Grant of Collective Negotiation Agreement (CNA) Incentive for Government Owned and Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs)." It was issued on May 19, 2003 and published in Manila Standard on June 4, 2003.
58 Phil. International Trading Corp. v. COA, supra note 35, at 751.
59 Id. at 750.