April 2016 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
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.
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 |
The PCSO appealed, but the COA Regional Director affirmed the disallowance in a Decision9 dated September 6, 2012. Similarly, the COA Commission Proper denied the petition for review and motion for reconsideration of PCSO. Hence, this petition contending that:
- The PCSO Board of Directors is authorized under Sections 6 and 9 of R.A. No. 1169, as amended, to fix salaries and to determine allowances, bonuses, and other incentives of its officers and employees;
- Executive Secretary Ochoa, Jr. approved the grant of benefits and incentives previously given to the PCSO officials and employees and such post facto approval/ratification by the Office of the President is enshrined in Article VII Section 17 of the 1987 Constitution in relation to Book III Section 1 of the Administrative Code of 1987 as well as recognized by the Supreme Court in Cruz v. Commission on Audit10 and GSIS v. Commission on Audit;11
- The disallowance of COLA violates the principle of non-diminution of benefits because the PCSO officials and employees already acquired vested rights over the same for having been a part of their compensation for a considerable length of time; and
- The recipients of the disallowed amounts need not return the COLA received since they are in good faith for lack of knowledge at the time that the same lacked legal basis.
During the pendency of the case, the COA issued an Order of Execution12 dated July 3, 2015 directing to withhold the payment of salaries or any amount due the five above-named officials as settlement of their liabilities. Arguing that these employees were discriminated against and were denied due process, the PCSO filed a Petition for the Issuance of Temporary Restraining Order (TRO).13 On August 25, 2015, the Court merely noted the prayer for TRO.
The petition is denied. No grave abuse of discretion amounting to lack or excess of jurisdiction could be attributed to the COA.
Authority of the PCSO
The PCSO stresses that it is a self-sustaining government instrumentality which generates its own fund to support its operations and does not depend on the national government for its budgetary support. Thus, it enjoys certain latitude to establish and grant allowances and incentives to its officers and employees.
We do not agree. Sections 6 and 9 of R.A. No. 1169, as amended, cannot be relied upon by the PCSO to grant the COLA. Section 6 merely states, among others, that fifteen percent (15%) of the net receipts from the sale of sweepstakes tickets (whether for sweepstakes races, lotteries, or other similar activities) shall be set aside as contributions to the operating expenses and capital expenditures of the PCSO. Also, Section 9 loosely provides that among the powers and functions of the PCSO Board of Directors is "to fix the salaries and determine the reasonable allowances, bonuses and other incentives of its officers and employees as may be recommended by the General Manager x x x subject to pertinent civil service and compensation laws." The PCSO charter evidently does not grant its Bioard the unbridled authority to set salaries and allowances of officials and employees. On the contrary, as a government owned and/or controlled corporation (GOCC), it was expressly covered by P.D. No. 985 or "The Budgetary Reform Decree on Compensation and Position Classification of 1976," and its 1978 amendment, P.D. No. 1597 {Further Rationalizing the System of Compensation and Position Classification in the National Government), and mandated to comply with the rules of then Office of Compensation and Position Classification (OCPC) under the DBM.14
Even if it is assumed that there is an explicit provision exempting the PCSO from the OCPC rules, the power of the Board to fix the salaries and determine the reasonable allowances, bonuses and other incentives was still subject to the DBM review. In Intia, Jr. v. COA,15 the Court stressed that the discretion of the Board of Philippine Postal Corporation on the matter of personnel compensation is not absolute as the same must be exercised in accordance with the standard laid down by law, i.e., its compensation system, including the allowances granted by the Board, must strictly conform with that provided for other government agencies under R.A. No. 675816 in relation to the General Appropriations Act. To ensure such compliance, the resolutions of the Board affecting such matters should first be reviewed and approved by the DBM pursuant to Section 6 of P.D. No. 1597. Following Intia, Jr., We subsequently ruled in Phil. Retirement Authority (PRA) v. Bu