EN BANC
G.R. No. 213200, September 19, 2017
NAYONG PILIPINO FOUNDATION, INC., 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
REYES, JR., J.:
This is a petition for certiorari1 under Rule 64 and Rule 65 of the Rules of Court filed by petitioner Nayong Pilipino Foundation, Inc. (NPFI), seeking to annul respondent Commission on Audit's (COA) Decision dated November 20, 2013, and Resolution dated April 4, 2014.
The Decision dated November 20, 2013 affirmed Decision No. 2011-074 dated June 7, 2011 of the Adjudication and Settlement Board (ASB) and Decision No. 2007-031 dated May 25, 2007 of the Legal and Adjudication Office (LAO)-Corporate, both of which sustained Notice of Disallowance (ND) No. 2007-001 dated June 14, 2007 relating to the payments of Anniversary Bonus and Extra Cash Gift to NPFI's officers and employees amounting to Php 108,000.00 and Php 90,500.00, respectively, and excess honoraria to the members of the Bids and Awards Committee (BAC) and Technical Working Group (TWG) in the amount of Php 132,000.00.
WHEREFORE, the premises considered, and in view of Management's compliance with our requirements on the allowances granted to OGCC lawyers charged to NPFI, this Office LIFTS the suspension thereon and accordingly allows the same in audit. However, as regard the other suspended payments for anniversary bonus and Christmas cash gift as well as the excessive honoraria to BAC members under the same NS, said payments have matured into disallowance for non-compliance of the audit requirements. Accordingly, Notice of Disallowance No. 2007-001 is hereby issued by this Office.11On appeal, the Adjudication and Settlement Board (ASB) dismissed the appeal and affirmed the Decision of the LAO-Corporate through its Decision No. 2011-074 dated June 7, 2011.12
Verily, the Court has sustained the decisions of administrative authorities like the COA as a matter of general policy, not only on the basis of the doctrine of separation of powers but also upon the recognition that such administrative authorities held the expertise as to the laws they are entrusted to enforce.20Thus, the Court has accorded not only respect but also finality to COA's findings particularly when their decisions are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion.21
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.29The ruling in Blaquera was reiterated and applied in the case of De Jesus.30 In De Jesus, the petitioners assail the Decision of the COA which affirmed the disallowance of payment of allowances and bonuses to members of the interim Board of Directors of the Catbalogan Water District. The Court speaking through Justice Carpio, held that the members of the board of water districts cannot receive allowances and benefits in excess of that allowed by Presidential Decree No. 198, citing the then recently decided case of Baybay Water District v. Commission on Audit.31 Similar to the ruling in Blaquera however, the Court did not order the refund of the disallowed benefits, explaining that:
Petitioners here received the additional allowances and bonuses in good faith under the honest belief that LWUA Board Resolution No. 313 authorized such payment. At the time petitioners received the additional allowances and bonuses, the Court had not yet decided Baybay Water District. Petitioners had no knowledge that such payment was without legal basis. Thus, being in good faith, petitioners need not refund the allowances and bonuses they received but disallowed by the COA.32 (Citation omitted)Indeed, akin to the foregoing cases, no bad faith may be attributed to NPFI. Jurisprudence defines good faith in relation to the requirement of refund of disallowed benefits or allowances, to wit:
Good faith, in relation to the requirement of refund of disallowed benefits or allowances, is that state of mind denoting honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon 'inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even though technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render transactions 'unconscientious.33In this case, the reckoning point for the counting of the milestone year insofar as agencies such as NPFI which is first brought to existence as a private corporation has not been expressly provided in A.O. No. 263 nor clearly specified under DBM NBC No. 452-96. Simply, NPFI's Board of Trustees, officials, and employees have no way of knowing that they are mistaken in following the traditional celebration of NPFI's anniversary on June 11, 1969. With this, it can be concluded that the NPFI Board of Trustees, officials, and employees are in good faith more so that the disallowed Anniversary Bonus was granted prior to the pronouncement of the OP through the DBM and the COA as to the proper counting of its milestone year. The Court is therefore of the belief that the Board of Trustees of NPFI in granting such Anniversary Bonus were impelled by the honest belief that they are due, and the employees in receiving the same acted in good faith that they are entitled to such benefit, thus barring any need for refund.34
SEC. 15. Honoraria of BAC Members. - The Procuring Entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the Department of Budget and Management (DBM) shall promulgate the necessary guidelines.In effect, NPFI claims that even in the absence of a DBM Circular at the time of payment, the law offers sufficient basis for the allowance of the honoraria in an amount not exceeding 25% of the basic salary. NPFI is mistaken.
An honorarium is defined as something given not as a matter of obligation but in appreciation for services rendered, a voluntary donation in consideration of services which admit of no compensation in money. Section 15 of R.A. No. 9184 uses the word "may" which signifies that the honorarium cannot be demanded as a matter of right.In ligt of the aforesaid ruling therefore, since the payments of the honoraria to the members of the BAC and TWG by NPFI were made on January 16, 2014, February 10, 2004, and March 9, 2004, prior to the issuance on March 23, 2004 of DBM Circular No. 2004-5 which sets forth the guidelines on the grant of honoraria to government personnel involved in procurement, and absent proof of completed procurement projects in accordance with the circular, the disallowance is proper.
The government is not unmindful of the tasks that may be required of government employees outside of their regular functions. It agrees that they ought to be compensated; thus, honoraria are given as a recompense for their efforts and performance of substantially similar duties, with substantially similar degrees of responsibility and accountability. However, the payment of honoraria to the members of the BAC and the TWG must be circumscribed by applicable rules and guidelines prescribed by the DBM, as provided by law. Section 15 of R.A. No. 9185 is explicit as it states: "For this purpose, the DBM shall promulgate the necessary guidelines." The word "shall" has always been deemed mandatory, and not merely directory. Thus, in this case, petitioners should have first waited for the rules and guidelines of the DBM before payment of the honoraria. As the rules and guidelines were still forthcoming, petitioners could not just award themselves the straight amount of 25% of their monthly basic salaries as honoraria. This is not the intendment of the law.
Furthermore, albeit in hindsight, the DBM Budget Circular provides that the payment of honoraria should be made only for "successfully completed procurement projects." This phrase was clarified in DBM Budget Circular No. 2004-5A dated October 7, 2005, to wit:5.1 The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. In accordance with Section 7 of the Implementing Rules and Regulations Part A (IRR-A) of RA No. 9184, a procurement project refers to the entire project identified, described, detailed, scheduled and budgeted for in the Project Procurement Management Plan prepared by the agency.
A procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder.
No interpretation is needed for a law that is clear, plain and free from ambiguity. Now, the DBM has already set the guidelines for the payment of honoraria as required by law. Since the payment of honoraria to petitioners did not comply with the law and the applicable rules and guidelines of the DBM, the notices of disallowance are hereby upheld.37 (Citations omitted, emphasis and underscoring supplied)
Section 103. General liability for unlawful expenditures. Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor.The provision is read in relation to Section 19 of the Manual of Certificate of Settlement and Balances, COA Circular No. 94-001, to wit:
19.1. The liability of public officers and other persons for audit disallowances shall be determined on the basis of: (a) the nature of the disallowance; (b) the duties, responsibilities or obligations of the officers/persons concerned; (c) the extent of their participation or involvement in the disallowed transaction; and (d) the amount of losses or damages suffered by the government thereby.Interpreting the foregoing provisions, jurisprudence settled that insofar as the disallowance of benefits and allowances of government employees, recipients or payees need not refund these disallowed amounts in the absence of proof to rebut the presumption that they received the same in good faith. However, officers who participated in the approval of the disallowed allowances or benefits are required to refund the disallowed benefits when in so granting, they acted in bad faith or are grossly negligent tantamount to bad faith, as when an explicit provision of law, rule or regulation has been violated.38 The liability of the "participating" public officers in this instance stands whether or not they received the disallowed benefit.39
19.1.3. Public officers who approve or authorize transactions involving the expenditure of government funds and uses of government properties shall be liable for all losses arising out of their negligence or failure to exercise the diligence of a good father of a family.
Endnotes:
** Designated Acting Chief Justice per Special Order No. 2483 dated September 14, 2017.
1Rollo, pp. 3-17.
2 Id. at 53.
3 Id. at 54-55.
4 Id. at 56-58.
5 Id. at 59-60.
6 Id. at 61.
7 Id. at 62-63.
8 Id. at 64-65.
9 Id. at 66-71.
10 Id. at 41-46.
11 Id. at 9, 48.
12 Id. at 47-52.
13 Id. at 24-30.
14 Id. at 32-40.
15 Id. at 31.
16Yap v. Commission on Audit, 633 Phil. 174 (2010).
17Technical Education and Skills Development Authority v. The Commission on Audit, et al., 753 Phil. 434 (2015).
18Nazareth v. Villar, 702 Phil. 319 (2013).
19 Id.
20 Id. at 324.
21 Id.
22Espinas, et. al. v. Commission on Audit, 731 Phil. 67 (2014).
23 AUTHORIZING THE GRANT OF ANNIVERSARY BONUS TO OFFICIALS AND EMPLOYEES OF GOVERNMENT ENTITIES
WHEREAS, certain Government Financial Institutions (GFIs) have been authorized to celebrate and commemorate milestone anniversaries with the traditional grant of Anniversary Bonus to their officials and employees;
WHEREAS, the government deems it desirable and fitting to commemorate milestone anniversaries of GOCCs, GFIs, and national government agencies as well by way of granting anniversary bonus to their employees;
WHEREAS, the grant of anniversary bonus on the occasion of milestone years of government agencies will directly improve and enhance employee morale consistent with Section 36(2), Chapter 5, Subtitle A, Title I, Book V of Executive Order No. 292, the Administrative Code of 1987;
WHEREAS, there is a need to regulate the grant of such benefit by adopting a uniform scheme for its implementation to ensure fairness and equity and to conform with the policy of standardization of compensation enunciated under Republic Act No. 6758;
WHEREAS, Section 17 Article VII of the 1987 Constitution vests in the President of the Philippines prerogatives which include, among others the determination of the rates, timing and schedule of payment, and final authority to commit limited resources of government for the payment of personnel incentives, cash rewards, bonuses and other forms of additional compensation and fringe benefits to government personnel.
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Philippines, by virtue of the powers vested in me by law, do hereby order the grant of Anniversary Bonus in accordance with the rules prescribed hereunder:
1.0 Coverage/Exemption.
1.1 All government personnel whether employed on a full-time or regular, part-time basis or under permanent, temporary or casual status, and contractual personnel whose employment is in the nature of a regular employee, who have been appointed as such in a specific government entity by virtue of a valid appointment and continue to be employed in the same government entity as of the occasion of its milestone anniversary, shall be entitled to the anniversary bonus.
1.2 Government personnel who have been found guilty of any offense in connection with their work during the five-year interval between milestone years, as defined in 2.5 herein, shall not be entitled to the immediately succeeding anniversary bonus.
2.0 Rules and Regulations.
2.1 "Government entities" shall refer to department, bureaus, offices, commissions and similar bodies of the national government, including GOCCs and GFIs; provided that staff bureaus or entities which form part of the organization structure of departments or offices shall be deemed absorbed by the latter and shall not be treated as a separate agency.
2.2 A frontline bureau or entity created as such under a distinct enabling act or law and, thus, deemed as an institution in its own right shall be considered a distinct and separate agency for purposes of this benefit notwithstanding that fact that it had since been organizationally integrated with a department or office.
2.3 The Anniversary Bonus authorized under this Order shall be granted only during milestone years.
2.4 A milestone year refers to the 15th anniversary and to every fifth year thereafter. 2.5 Payment of the Anniversary Bonus shall be in an amount not exceeding P3,000.00 each employee provided that the employee has rendered at least one (1) year service in the same agency as of the date of the milestone year.
2.5.1 In case of insufficiency of funds, the government entity concerned may grant the benefit at a rate lower than that prescribed herein, provided that such rate shall be uniformly applied to all its officials and employee.
2.6 An employee may receive Anniversary Bonus only once every five years, regardless of transfers from one government entity to another.
2.7 Government entities which have already passed a milestone year as defined herein prior to the effectivity of this Order without previously granting an anniversary bonus or a similar incentive may grant the Anniversary Bonus therefor in 1996 subject to the same conditions specified herein.
2.8 No other bonus or allowance or whatever name it may be called of similar nature which relate to or in connection with an entity's anniversary shall be granted.
2.9 Existing administrative authorizations granting similar benefits to specific government entities are hereby revoked and superseded by this authorization.
3.0 Funding Source. The cost of implementing the benefit under this Order shall be sourced strictly from savings from released allotment for current operating expenditures provided that all authorized mandatory expenses shall have been paid first. For government-owned and/or -controlled corporations and government financial institutions the amount shall be charged against their respective corporate funds.
4.0 Responsibility of the Agency Head. The heads of concerned government entities shall be held responsible and personally liable for any payment of Anniversary Bonus not in accordance with the provisions of this Order, without prejudice to the refund of any excess payment by the employee concerned.
5.0 Savings Clause. Cases not covered by the provisions of this Order shall be submitted to the Secretary of Budget and Management for appropriate evaluation and recommendation to the Office of the President.
6.0 Effectivity.
This Order shall take effect immediately.
DONE in the City of Manila, this 28th day of March in the year of Our Lord, Nineteen Hundred and Ninety-Six.
(Sgd.) FIDEL V. RAMOS
President of the Philippines
By the President:
(Sgd.) RUBEN D. TORRES
Executive Secretary
24 Amplifying and Clarifying the Implementation of the Grant of Anniversary Bonus to Officials and Employees of Government Entities
1. Purpose
The Circular is issued to amplify and clarify the implementation of the grant of Anniversary Bonus to officials and employees of government entities as authorized under the Administrative Order No. 263 dated March 28, 1996.
2. The exemption on the grant of Anniversary Bonus as provided under Administrative Order No. 263 is hereby expanded to include government personnel under the following circumstances:
2.1.1. Those who are on absence without leave (AWOL) as of the date of the milestone year for which the Anniversary Bonus is being paid;
2.2 Those who are no longer in service in the same government entity as of the date of the milestone year;
2.3 Those who are not hired as part of the organic manpower of government entities but as consultant or experts for a limited period to perform specific activities or services with expected outputs; student laborers; apprentices; laborers of contracted projects; mail contractors, including those paid by piecework basis; and others similarly situated.
3. The following are additional rules and regulations relative to the grant of Anniversary Bonus
3.1 Officials and employees may be granted Anniversary Bonus only if the government entity where they are employed has been in existence for at least fifteen (15) years and has not yet granted any Anniversary Bonus as of FY 1996, and have rendered at least one (1) year service in the same government entity as of the date of the milestone year (See Illustrative Example l, Annex A)
3.2 The counting of milestone years shall start from the year the government entity was created regardless of whether it was subsequently renamed/reorganized provided that its original primary functions have not substantially changed. Otherwise, the counting shall start from the date the functions were substantially changed.
3.3 The counting of the milestone years of merged government entities shall start from the date they were merged.
3.4 The initial grant of Anniversary Bonus in 1996 shall be for the latest milestone only, regardless of whether the government entity has existed for 30, 35, 50, or 60 or more years. There shall be no retroactive payment of milestone years.
3.5 A government entity which is now, for example, on its 18th anniversary but has not granted any Anniversary Bonus may grant the same for its 15th milestone year 1 in FY 1996. Two years hence, or in FY 1998, Anniversary Bonus for the next milestone year -the 20th anniversary -may be granted.
3.6 An official or employee of a government entity in the example in 3.5 above, who was hired after the government entity's 15th milestone year shall not qualify to receive the Anniversary Bonus in FY 1996, but only to the Anniversary Bonus that will be granted in FY 1998. (See Illustrative Example 2, Annex A)
3.7 Officials and employees in government entities attached to or are placed directly under a department/department level government entity and whose creation is not through charter may be considered as organic personnel of the mother department for purposes of availment of the Anniversary Bonus due the officials and employees of the department.
3.8 A government entity which attained its latest milestone year in FY 1996 and has granted Anniversary Bonus that is less than P3,000 per official and employee prior to the issuance of Administrative Order No. 263 may grant the difference between the actual amount granted and P3,000.Where the amount granted is more than P3,000, the excess amount shall be refunded.
4. Funding Source
The cost to implement the Anniversary Bonus shall be solely charged from savings from released allotment for Current Operating Expenses (COE) without the need for prior authority from the Department of Budget and Management, provided that all authorized mandatory expenses shall have been paid first. Requests for augmentation of such savings shall not be allowed.
5. Responsibility of the Head of Entity
The head of entity shall be held responsible and personally liable for any payment of Anniversary Bonus not in accordance with the provisions of Administrative Order No. 263 and this Circular without prejudice, however, to refund of any= excess payment by the official or employee concerned.
6. Saving Clause
Appropriate cases not covered by the provisions of this Circular shall be submitted to the Secretary of Budget and Management for appropriate resolution.
7. Effectivity
This Circular shall take effect immediately.
25Nazareth v. Villar, 702 Phil. 319 (2013).
26 356 Phil. 678 (1998).
27 451 Phil. 814 (2003).
28 Supra note 26.
29 Id. at 765-766.
30 Supra note 27.
31 425 Phil. 326 (2002).
32De Jesus v. COA, supra note 27, at 824.
33Zamboanga City Water District, et al. v. COA, G.R. No. 213472, January 26, 2016, 782 SCRA 78, 80, citing Philippine Economic Zone Authority v. Commission on Audit, 690 Phil. 104 (2012).
34Zamboanga City Water District, et al. v. COA, G.R. No. 213472, January 26, 2016, 782 SCRA 78.
35 Re: Confirming approval of the grant of Anniversary Bonus and Extra Cash Gift for NFP Officials and Workers; rollo pp. 59-60.
36 606 Phil. 740 (2009).
37 Id. at 750-751.
38Rhodelia L. Sambo and Loryl J. Avila v. COA, G.R. No. 223244, June 20, 2017; Maritime Industry Authority (MIA) v. COA, 750 Phil. 288 (2015).
39Silang v. COA, 769 Phil. 327 (2015).
40Rhodelia L. Sambo and Loryl J. Avila v. COA, supra note 38.
41Rollo pp. 59-60.
42 Id. at 41-46.
43 Id. at 66-71.
44 Id. at 42 43.
45 Id. at 66-71.
46 G.R. No. 223244, June 20, 2017.
47 Book VI, Chapter V, Section 43 of the Administrative Code, provides:
Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.