EN BANC

G.R. No. 127515. May 10, 2005.

RODOLFO , petitioners,vs.COMMISSION ON AUDIT, respondent.

G.R. No. 127544. May 10, 2005.

ANTONIO R. DE VERA, in his capacity as Administrator, Local Water Utilities Administration, in his behalf and of other LWUA Officials and employees, petitioners,vs.COMMISSION ON AUDIT, respondent.

D E C I S I O N

TINGA, J p:

Before this Court are two petitions assailing COA Decision No. 96-650 rendered by respondent Commission on Audit (COA) on November 21, 1996, sustaining the COA Auditor's disallowance of petitioners' rice allowances disbursed on various dates. G.R. No. 127515 is a petition for certiorari filed pursuant to Section 7, Article IX (A) of thecertiorari pursuant to Section 7, Article IX of the

Petitioners in G.R. No. 127515 were the incumbent officers as of June 30, 1989 of the Local Water Utilities Administration (LWUA), a government-owned and/or controlled corporation created under

Since 1982 officials and employees of the LWUA had been receiving a rice subsidy of P200.00 for every two months pursuant to LWUA Board Resolution No. 05, Series of 1986. The amount was further increased to P350.00 in 1986 pursuant to a series of board resolutions.

In the interim, then President Corazon Aquino issued prescribing the policies and guidelines in rationalizing compensation structures in government-owned and/or controlled corporations (GOCCs). Pertinently, To implement the directives under the Department of Budget and Management (DBM) issued Corporate Budget Circular No. 15 (DBM-CBC No. 15), which laid down the procedural requirements in availing of the "transition allowance." DTIaHE

On July 1, 1989, Congress passed , commonly known as theOn October 2, 1989, the DBM issued Paragraph 5.5.1 of

Even after the effectivity of

The LWUA Corporate Auditor, however, disallowed a series of payrolls intended for the rice allowances for the years 1991 to 1994, citing Section 12 of

Petitioners in G.R. No. 127515 wrote respondent COA on May 30, 1994 and on June 27, 1994 to appeal respectively the disallowance totaling an amount of P4,160,400.00 for 1993 and P1,647,400.00 for January to April 1994. They argued that

Administrator Antonio De Vera, petitioner in G.R. No. 127544, also sent a letter-appeal to respondent COA on behalf of LWUA officials and employees for reconsideration of the disallowance of the rice subsidies for 1991 to 1992 in the total amount of P2,059,700.00. For his part, De Vera argued that the disallowance of the rice subsidies was without legal basis considering that

On November 21, 1996, respondent COA rendered the assailed decision denying De Vera's appeal on the ground that until

During the pendency of this case, this Court promulgated declaring the ineffectiveness of

From the COA Decision No. 96-650, two separate petitions were filed with this Court. In G.R. No. 127544, petitioner De Vera raises the following issues for resolution: IASEca

I. RESPONDENT COMMISSION ON AUDIT SERIOUSLY ERRED IN RELYING UPON

II. RESPONDENT COMMISSION ON AUDIT SERIOUSLY ERRED IN DISREGARDING THE CLEAR PROVISIONS OF

III. RESPONDENT COMMISSION ON AUDIT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RENDERED A DECISION THAT IS VIOLATIVE OF DUE PROCESS, THE EQUAL PROTECTION CLAUSE, AND THE BASIC RIGHTS OF WORKERS.

In G.R. No. 127515, petitioners assert that respondent COA committed grave abuse of discretion in upholding the disallowance of the rice subsidy, thus:

RESPONDENT COMMISSION ERRED IN GIVING EFFECT TO

The Court required the Office of the Solicitor General (OSG) to file respective comments to the two petitions. In a Manifestation and Motion dated April 10, 1997, filed in G.R. No. 127544, the OSG prayed for the consolidation of the two cases, which the Court allowed in a Resolution dated July 29, 1997. The OSG likewise filed on July 28, 1997 another Manifestation and Motion (In Lieu of Consolidated Comment) wherein it posited that It argued that . In light of the adverse position it had taken from that of the COA, the OSG asked that COA instead be allowed to file its own comment, aside from the fact that it is the General Counsel of respondent COA which has been filing pleadings in behalf of the Commission before this Court.

Petitioner De Vera in G.R. No. 127544 filed suit in his capacity as LWUA Administrator in behalf of all other officials and employees of the agency, and is represented by the Office of the Government Corporate Counsel (OGCC).On the other hand, the petitioners in G.R. No. 127515, three employees of the LWUA, filed the petition in their own behalf and have been representing themselves, they being lawyers apparently. ATcaHS

Interestingly, respondent COA, in its Memorandum, questions the legal personality of the petitioners in G.R. No. 127515, asserting that the petitioners had failed to allege in their petition their legal capacities in bringing suit against the COA. Citing relevant Civil Service Memorandum on behalf of all of the petitioners in the two petitions. Assuming arguendo that the petitioners in G.R. No. 127515 improperly filed suit without proper representation by counsel, such defect is now deemed cured and mooted by the subsequent representations in their behalf by the OGCC.

The procedural aspect having been dispensed with, a discussion on the merits is now in order. The petitions are mainly anchored on the theory that

The inefficaciousness of , where the Court was faced with the question whether petitioners therein, who are the same petitioners in G.R. No. 127515, suing on behalf of fellow LWUA employees were still entitled to the honoraria which they were receiving prior to the effectivity of

On the need for publication of subject , publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since

In the present case under scrutiny, it is decisively clear that

Lest this Court be reproached for taking the path of least resistance, a scrutiny of whether or not the disallowance of the rice subsidy was meritorious is in order. The bone of contention is whether or not the rice subsidy granted to LWUA officials and employees after the effectivity of CcAESI

The consolidation of allowances is mandated by Section 12 of

SECTION 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.

Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government.

This is not the first time that the Court is called upon to

In , the Court emphasized the intention of the legislature to protect incumbents receiving allowances over and above those authorized by

Now, under the second sentence of Section 12, first paragraph, the RATA enjoyed by these PPA officials shall continue to be authorized only if they are "being received by incumbents only as of July 1, 1989." RA 6758 has therefore, to this extent, amended LOI No. 97. By limiting the benefit of the RATA granted by LOI No. 97 to incumbents,Congress has manifested its intent to gradually phase out this privilege without upsetting the policy of non-diminution of pay.

The legislature has similarly adhered to this policy of non-diminution of pay when it provided for the transition allowance under Section 17 of RA 6758 which reads:

SEC. 17. Salaries of Incumbents. Incumbents of position presently receiving salaries and additional compensation/fringe benefits including those absorbed from local government units and other emoluments, the aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such excess compensation, which shall be referred to as transition allowance. The transition allowance shall be reduced by the amount of salary adjustment that the incumbent shall receive in the future. AEIcTD

While Section 12 refers to allowances that are not integrated into the standardized salaries whereas Section 17 refers to salaries and additional compensation or fringe benefits, both sections are intended to protect incumbents who are receiving said salaries and/or allowances at the time RA 6758 took effect.

Reiterating the same principle of non-diminution of pay, the Court in set aside a COA decision disallowing the reimbursement of car registration and insurance premium payments made after November 1, 1989 pursuant to PITC's car plan program. The Court stated that "there was no intention on the part of the legislature to revoke existing benefits by incumbents of government positions at the time of the passage of

As can be gleaned from the aforequoted rulings, the rice allowance subject of the instant dispute is one of such benefits that may be given separately to LWUA officials and employees as long as it has been granted to incumbents as of July 1, 1989 and has not been integrated into the standardized salary rates. The second sentence of Section 12 thereof, which is quoted again below for easy reference, expressly recognizes its continuous grant in accordance with the principle of non-diminution of pay:

Section 12. Consolidation of Allowances and Compensation. 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.

Respondent COA believes that the phrase "shall continue to be authorized" in the second sentence of Section 12, This condition was expressly stated under paragraph 5.5 of

Respondent COA misreads both the literal and intended meaning of the phrase. The second sentence of Section 12, incumbents only to gear the compensation policy toward standardization without upsetting the principle of non-diminution of pay.

Respondent COA also relies on the provisions of

Section 2 of

SECTION 2. Allowances of Incumbents. Incumbents of positions in corporate entities covered by this Memorandum Order who are presently receiving additional monthly compensation/fringe benefits and other emoluments which were continuously enjoyed for a period of at least twelve months prior to the effectivity of this Order, including those authorized solely by their governing boards effected on or before December 31, 1987, the aggregate of which exceeds the standardized rates prescribed pursuant to existing compensation laws, IDEScC

The additional compensation, fringe benefits and other emoluments which may be considered as "transition allowance" under this Memorandum Order shall be limited to those which are of common or general application to all the personnel of the corporate entities covered under Section 1 hereof. (emphasis supplied)

The pertinent portions of its implementing

5.0

5.1 Determination of the allowances and fringe benefits that any government-owned or controlled corporation may be allowed to continue paying to its qualified officials and employees in the form of "transition allowance" shall be determined by the DBM. For this purpose, government-owned or controlled corporations and financial institutions affected by the provisions of MO No. 177 shall submit to the DBM a complete list of all allowances and fringe benefits granted in excess of the prescribed rates under existing laws,

5.2 Non-submission of the above-described documents within thirty (30) days from the issuance of this Circular will automatically disqualify corporations from the coverage of the provisions of MO No. 177 and such corporations will be presumed to be granting only allowances/fringe benefits in accordance with the types and rates prescribed under existing laws.

Proceeding on the premise that LWUA had allegedly failed to submit to the DBM a complete list of all the allowances and fringe benefits granted to LWUA officials and employees as required under paragraph 5.2 of DBM-CBC No. 15, respondent COA argues that LWUA was automatically removed from the coverage of

The contention is unconvincing.

As correctly contended by petitioners in G.R. No. 127515, Section 2 of without qualification. Said provision is an explicit authorization for the giving of certain allowances or benefits on top of the standardized salary rates to the end that there would be no undue diminution of pay. Nowhere in said provision is it required that the "transition allowance" be authorized by the DBM, the Office of the President, or a legislative issuance. On the other hand, paragraph 5.1 of DBM-CBC No. 15 insofar as it empowers the DBM to determine which of the additional benefits may be considered as "transition allowance" constitutes a unilateral arrogation of authority a consequence which was not intended by, much more expressly stated in, DTIaHE

Moreover, the assailed disallowances covered the period between 1991 and 1994 when

Finally, this Court does not see the relevance to respondent COA's cause of the pronouncement in to the effect that

WHEREFORE, the petitions are GRANTED and the assailed COA Decision No. 96-650 of respondent Commission on Audit is SET ASIDE. No pronouncement as to costs.

SO ORDERED.

Davide, Jr.,C.J.,Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr.,Azcuna, Chico-Nazario and Garcia, JJ., concur.

Puno, J.,is on leave.

Panganiban and Sandoval-Gutierrez, JJ.,are on official leave.

Footnotes

1. Composed of Chairman Celso D. Gangan, Commissioner Rogelio B. Espiritu, and Commissioner Sofronio B. Ursal.

2. Adopted on January 9, 1986.

3. Issued on May 31, 1988.

4. G.R. No. 127544, Rollo,p. 90.

5. Issued on July 5, 1988.

6. 355 Phil. 584 (1998).

7. G.R. No. 127544, Rollo,p. 16.

8. G.R. No. 127515, Rollo,p. 6.

9. G.R. No. 127515, Rollo,p. 86.

10. G.R. No. L-63915, 29 December 1986, 146 SCRA 446.

11. Supra note 6 at 591.

12. Supra note 6 at 590-591.

13. Emphasis supplied.

14. G.R. No. 100773, October 16, 1992, 214 SCRA 653.

15. Id.at 660.

16. 368 Phil. 478 (1999).

17. Supra note 12 at 488-489.

18. Respondent's Comment in G.R. No. 127544, p. 10; Rollo (G.R. No. 127544),p. 228.

19. Respondent's Memorandum in G.R. No. 127544, p. 9; Rollo (G.R. No. 127544),p. 96.

20. 425 Phil. 326 (2002).