EN BANC
G.R. No. 218374, December 01, 2020
ZAMBOANGA CITY WATER DISTRICT AND ITS EMPLOYEES, REPRESENTED BY GENERAL MANAGER LEONARDO REY D. VASQUEZ, Petitioner, v. COMMISSION ON AUDIT, Respondents.
D E C I S I O N
INTING, J.:
This resolves the Petition1 for Certiorari under Rule 65 in relation to Rule 64 of the Rules of Court filed by the Zamboanga City Water District (ZCWD), represented by its General Manager Leonardo Rey D. Vasquez, assailing the Decision No. 2014-1822 dated August 28, 2014 and the Resolution3 dated March 9, 2015 of the Commission on Audit (COA) Commission Proper (COA Proper). In the assailed issuances, the COA Proper upheld the Notice of Disallowance (ND) No. 10-127(09)4 dated September 7, 2010 which disallowed the payment of P5,127,523.00 financial subsidy to ZCWD officials and employees.
In view thereof, all government agencies, including Government Owned and Controlled Corporations, State Universities and Colleges are hereby enjoined to provide the following to their employees:In a letter dated November 25, 2009,8 ZCWD, through General Manager Leonardo Rey D. Vasquez, submitted the following queries to the Office of the Government Corporate Counsel (OGCC) relative to MC 174's provisions: "(1) does [ZCWD] have the power to prescribe the amount to be granted as financial subsidy?; (2) are the benefits enumerated in [MC 174] in the nature of "de minimis" benefits and/or can be treated as such by ZCWD?; and (3) how often can ZCWD allow the grant of such subsidy (monthly or annually)?"9The DOLE is hereby directed to monitor and to ensure the implementation of this Circular. (Italics supplied.)
- shuttle service;
- financial subsidy and other needed support to make the Botika ng Bayan more accessible to them;
- scholarships programs for their children with siblings;
- PX mart that sell affordable commodities and the provision of its seed fund.
RESOLVED, as it is hereby resolved, to approve the grant of Financial Subsidy authorized under [MC 174] dated May 13, 2009 to an amount equivalent to one (1) month salary of every ZCWD Officials and employees irrespective of the nature of their appointments, whether permanent, casual, temporary or contractual who have rendered at least a total or an aggregate of four (4) months service including leaves of absence with pay. Provided: That employees who have rendered services less than four (4) months shall be entitled to such benefit pro rata. Provided further: That the Guidelines, herewith annexed, be adopted for purposes of implementation of [MC 174].On even date, the Board also issued guidelines11 on the financial subsidy grant reiterating that each covered official or employee shall receive a financial subsidy equal to one month's salary; and that an official or employee is covered by the grant irrespective of the nature of his appointment, provided he/she satisfies the service requirements under the guidelines.
x x x x
(signed) MS. NELIDA F. ATILANO Secretary
ATTESTED:
(signed) (signed) EDWIN N. MAKASIAR GREGORIO I. MOLINA Chairman Vice Chairman (signed) (signed) MILAGROS L. FERNANDEZ EFREN ARAÑEZ Director Director
Anent your first query [ZCWD's power 10 prescribe the amount to be granted as financial subsidy], we answer in the affirmative. The [MC 174] itself does not provide for the amount of financial subsidy x x x. The Department of Budget and Management (DBM) has not issued a set of guidelines on the implementation of the said [MC 174]. Hence, considering that water districts generate their own income, it is our view that the Board has sufficient discretion and authority to determine the amount of the financial subsidy .that it will grant through a board resolution, subject to the availability of funds. It is noted though that the financial subsidy is intended to support the Botika ng Bayan, and thus, would presumably be for the purpose of purchasing medicines.Later in 2010. as a result of their investigation, the COA audit team issued Audit Observation Memorandum No. (AOM) ZCWD-2010-05(09)14 dated July 21, 2010 finding the subject disbursement violative of Section 57 of Republic Act No. (RA) 9524, otherwise known as the General Appropriations Act of 2009 (2009 GAA), which provides:cralawred
We likewise answer your second query [nature of benefits enumerated under MC 174] in the affirmative. Financial subsidies given pursuant to [MC 174] may be classified as "de minimis" benefits which are not subject to withholding tax on compensation pursuant to Section 2.78.1 (B) (11) (b) of Revenue Regulation No. 2-98. These are being given to address the needs of government employees in the midst of the present global economic crisis, thus:
x x x x
As to your third query [frequency of grant], [MC 174] is likewise silent as to how often a GOCC may grant the financial subsidy. Hence, unless the Office of the President or the DBM will issue guidelines in the implementation thereof, it is our considered view that there are no legal objections if ZCWD were to adopt its own guidelines on the frequency of the grants, which as mentioned earlier, would be subject to availability of funds.
Please be guided accordingly.
Very truly yours, (signed) ALBERTO C. AGRA Government Corporate Counsel13
SECTION 57. Personal Liability of Officials or Employees for Payment of Unauthorized Personal Services Cost. — No official or employee of the national government, LGUs, and GOCCs shall be paid any personnel benefits charged against the appropriations in this Act, other appropriations laws or income of the government, unless specifically authorized by law. Grant of personnel benefits authorized by law but not supported by specific appropriations shall also be deemed unauthorized.Further, the audit team recommended the refund by ZCWD officials and employees of the financial subsidies so received.15
The payment of any unauthorized personnel benefit in violation of this section shall be null and void. The erring officials and employees shall be subject to disciplinary action under the provisions of Section 43, Chapter 5 and Section 80, Chapter 7, Book VI of E.O. No. 292, and to appropriate criminal action under existing penal laws.
[MC 174] particularly item no. 2 of the above paragraph cannot be used as the legal basis for the payment of such benefit since the "financial subsidy" meant monetary assistance to the Botica ng Bayan and not to the employees of the agency. The MC did not specifically mention that financial assistance shall be given to the employees, The phrase "financial subsidy" should not be taken out of context.17It found all ZCWD officers and employees who received the financial subsidy liable for the disallowance and ordered them to refund the amounts so received.18
In the case of Yap vs. COA x x x the Supreme Court held:Aggrieved, ZCWD elevated the case to the COA Proper.
x x x x
x x x Such board action should in itself be authorized by law or regulation or have valid legal basis. Otherwise, it becomes an illegal corporate act that is void and cannot be validated. x x x21]
x x x Section 2 of MC 174 relied upon by the appellant does not stand on its own but has to be harmonized with Section 8, Article IX-B of the 198 V Constitution, Section 4 of PD 1445 and [the] ruling laid down by the [Court] in the case of Yap vs. COA x x x. It is basic that a law should be construed in harmony with and not in violation of the Constitution x x x.22
This Commission concurs with the interpretation of the [Audit Team Leader]. Contrary to the assertion of the Petitioners, [MC 174] does not suggest chat the financial subsidy should be paid directly to the employees. The more plausible conclusion is to direct the payment of financial subsidy to the Botika ng Bayan; otherwise, the phrase "to make Botika ng Bayan more accessible" should not have been added in the first place Moreover, the financial subsidy is intended to make the Botika ng Bayan more accessible to the government employees. If payment of financial subsidy should be made directly to the employees, as suggested by the Petitioners, the money received may not necessarily he used to purchase medicines or to purchase them from the Botika ag Bayan. This is beyond what is contemplated under [MC 174].23Hence, ZCWD filed the present petition.
MC 174 prescribes the grant of financial subsidy directly to government employees. |
ZCWD Board Resolution No. 206 was issued ultra vires. |
| Very truly yours, |
(SGD) EDGAR O. ARICHETA | |
Clerk of Court |
Endnotes:
1Rollo, pp. 3-21.
2Id. at 37-42; signed by Chairperson Ma. Gracia M. Pulido Tan and Commissioners Heidi L. Mendoza and Jose A. Fabia; and attested by Director IV and Commission Secretariat Nilda B. Plaras.
3Id. at 43.
4Id. 60-61.
5 Presidential Decree No. (PD) 198, approved on May 25, 1973.
6 See Davao City Water District v. CSC, 278 Phil. 605 (1991).
7 Entitled "Enjoining Government Agencies, Including Government Owned and Controlled Corporations, State Universities and Colleges to Support the Philippine Government Employees Association's Public Sector Agenda," approved on May 13, 2009.
8 As culled form the Office of the Government Corporate Counsel Opinion No. 001, Series of 2010 dated January 4, 2010, rollo, p. 56-B.
9Id.
10Id. at 56-56-A.
11 Guidelines on the Grant of Financial Subsidy to ZCWD Officials and Employees Pursuant to Memorandum Circular No. 174 dated May 13, 2009, id. at 54-55.
12Id. at 56-B-57; signed by then Government Corporate Counsel Alberto C. Agra.
13Id.
14Id. at 58-59.
15Id. at 59.
16Id. at 60.
17Id.
18Id.
19Id. at 62-68.
20Id. at 69-72; signed by Director IV Roberto T. Marquez, Regional Director.
21Id. at 71; emphasis and italics omitted.
22Id. at 72.
23Id. at 40.
24Id. at 10.
25 See Fontanilla v. The Commissioner Proper, COA, 787 Phil. 713 (2016).
26 See Ramiscal v. Commission on Audit, 819 Phil. 597 (2017).
27Rollo, p. 16.
28Go v. East Oceanic Leasing and Finance Corporation, G.R. No. 206841-42, January 18, 2019.
29 See Fontanilla v. The Commissioner Proper, COA, supra note 25.
30 See Fortune Life Insurance Company, Inc. v. COA Proper, et al., 752 Phil. 97 (2015).
31Rollo, p. 43.
32 See Agoy v. Araneta Center, Inc., 685 Phil. 246 (2012).
33 See Ramiscal v. Commission on Audit, supra note 26 at 604.
34 See Fernandez v. Commission on Audit, G.R. No. 205389, November 19, 2019.
35Id., citing Career Executive Service Board v. Commission on Audit, G.R. No. 212348, June 19, 2018, 866 SCRA 475, 488.
36Rollo, p. 53.
37Id. at 91.
38Bolos v. Bolos, 648 Phil. 630, 637 (2010).
39Rollo, pp. 56-56-A.
40 Section 2, PD 198 provides:
SECTION 2. Declaration of Policy. — The creation, operation, maintenance and expansion of reliable and economically viable and sound water supply and wastewater disposal system for population centers of the Philippines is hereby declared to be an objective of national policy of high priority. For purpose of achieving said objective, the formulation and operation of independent, locally controlled public water districts is found and declared to be the most feasible and favored institutional structure. To this end, it is hereby declared to be in the national interest that said districts be formed and that local water supply and wastewater disposal systems be operated by and through such districts to the greatest extent practicable. To encourage the formulation of such local water districts and the transfer thereto to existing water supply and wastewater disposal facilities, this Decree provides the general act the authority for the formation thereof, on a local option basis. It is likewise declared appropriate, necessary and advisable that all funding requirements for such local water systems, other than those provided by local revenues, should be channeled through and administered by an institution on the national level, which institution shall be responsible for and have authority to promulgate and enforce certain rules and regulations to achieve national goals and the objective of providing public waterworks services to the greatest number at least cost, to effect system integration or joint investments and operations whenever economically warranted and to assure the maintenance of uniform standards, training of personnel and the adoption of sound operating and accounting procedures.
41 It is state policy to "adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost," (Section II, Article XII, 1987 Constitution). Thus, the Botika ng Eayan/Barangay Program was implemented to establish drug outlets "to improve access to essential drugs and the general healthcare of the population, especially the poor" (Implementing Rules and Regulations oi RA 9502 (Universally Accessible, Cheaper and Quality Medicines Act of 2008), Joint DOH-DTI-IPO-BFAD Administrative Order No. 01-08, [November 4, 2008]), more specifically "to sell, distribute, offer for sale and/or make available low-priced generic home remedies, over-the-counter (OTC) drugs and x x x selected x x x prescription antibiotic drug's," pursuant to (Department of Health Administrative Order No. 144, s. 2004, Guidelines for the Establishment and Operations of Botika ng Barangays (BnB) and Pharmaceutical Distribution Networks). Emphasis supplied.
42 Signed on August 31, 19 79. Available on: https://www.officialgazette.gov.ph/1979/08/31/letter-of-implementation-no-97-s-1979/ (last accessed: October 23, 2020).
43 Paragraph 3.2, COA Circular No. 85-55-A (September 8, 1985) defines unnecessary expenditures as follows: "x x x expenditures which could not pass the test of prudence or the diligence of a good father of a family, thereby denoting non-responsiveness to the exigencies of the service. Unnecessary expenditures are those not supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation. This would also include incurrence of expenditure not dictated by the demands of good government, and those the utility of which can not be ascertained at a specific time. An expenditure that is not essential or that which can be dispensed with without loss or damage to property is considered unnecessary. The mission and thrusts of the agency incurring the expenditures must be considered in determining in whether or not an expenditure is necessary."
44 Paragraph 3.3, COA Circular No. 85-55-A (September 8, 1985) defines excessive expenditures as follows: "unreasonable expense or expenses incurred at an immoderate quantity and exorbitant price. It also includes expenses which exceed what is usual or proper as well as expenses which are unreasonably high, and beyond just measure or amount. They also include expenses in excess of reasonable limits."
45 G.R. No. 244128, September 8, 2020.