EN BANC G.R. No. 193677
September 6, 2011
LUCIANO VELOSO, ABRAHA CABOCHAN, !OCEL"N #A$IS%ASUNCION #A$IS%ASUNCION &'( ARLON . LACSON, Petitioners, vs. COISSION ON AU#I), Respondent.
Facts: On December 7, 2000, the City Council of Manila enacted Ordinance No. 8040 entitled An Ordinance Authorizin the Conferment of !"em#lary $ublic %er&ice A'ard to !lecti&e (ocal O)cial* of Manila +ho a&e -een !lected for hree /1 Con*ecuti&e erm* in the %ame $o*ition. %ection 2 thereof #ro&ide* %!C. 2. he !$%A *hall con*i*t of a $la3ue of A##reciation, retirement and ratuity #ay remuneration e3ui&alent to the actual time *er&ed in the #o*ition for three /1 con*ecuti&e term*, *ubect to the a&ailability of fund* a* certi5ed by the City rea*urer. 6."""6.. $ur*uant to the ordinance, the City made #artial #ayment* to *ome former city councilor* includin herein #etitioner* the total amount of $, 2,27.00. On Auu*t 8,200, Atty. 9abriel :. !*#ina /Atty. !*#ina1, %u#er&i*in Auditor of the City of Manila, i**ued Audit Ob*er&ation Memorandum /AOM1 No. 200;<00/0107/01 *tatin that Ordinance No. 8040 i* 'ithout leal ba*i* and the amount ranted a* monetary re'ard i* e"ce**i&e and tantamount to double com#en*ation. After e&aluation of the AOM, the Director, (eal and Adudication O)ce /(AO1;(ocal of the COA i**ued a Notice of Di*allo'ance. =#on re&ie', the COA rendered the a**ailed the deci*ion *u*tainin ND /Notice of Di*allo'ance1 No. 0>; 0<0;<00;0. he motion for recon*ideration 'a* li?e'i*e denied. he COA o#ined that the monetary re'ard under the !$%A i* co&ered by the term com#en*ation. houh it reconize* the local autonomy of (9=*, it em#ha*ized the limitation* thereof *et forth in the %alary %tandardization (a' /%%(1. @t e"#lained that the %%( doe* not authorize the rant of *uch monetary re'ard or ratuity. @t al*o *tre**ed the ab*ence of a *#eci5c la' #a**ed by Conre** 'hich ordain* the conferment of *uch monetary re'ard or ratuity to the former councilor*. @n re*#on*e to the 3ue*tion on it* uri*diction to rule on the leality of the di*bur*ement, the COA held that it i* &e*ted by the Con*titution the #o'er to determine 'hether o&ernment entitie* com#ly 'ith la'* and reulation* in di*bur*in o&ernment fund* and to di*allo' irreular di*bur*ement*. he #etitioner* #etitioner* come come before before the court court claimin that the re*#ondent re*#ondent committed committed a ra&e ra&e abu*e of of di*cretion di*cretion
amountin to lac? or e"ce** of uri*diction 'hen it ruled that the monetary a'ard i&en under the !$%A #arta?e* of the nature of an additional com#en*ation #rohibited under the %alary %tandardization (a', and other e"i*tin la'*, rule* and reulation*, and not a 9A=@B &oluntarily i&en in return for a fa&or or *er&ice* rendered #urely out of enero*ity of the i&er or rantor.
Issues: <. +hether or not the a'ardee* re'ard i* e"ce**i&e and tantamount to double and additional com#en*ation. 2. +hether or not the COA ha* authority to di*allo' the di*bur*ement of local o&ernment fund*. . +hether or not the COA committed ra&e abu*e of di*cretion in a)rmin the di*allo'ance of $, 2,27.00 co&erin the !$%A of former three;term councilor* of the City of Manila authorized by Ordinance No. 8040. Ruling: <. Be*, the com#utation of the a'ardee* re'ard i* e"ce**i&e and tantamount to double and additional com#en*ation. hi* cannot be u*ti5ed by the mere fact that the a'ardee* ha&e been elected for three /1 con*ecuti&e term* in the *ame #o*ition. Neither can it be u*ti5ed that the re'ard i* i&en a* a ratuity at the end of the la*t term of the 3uali5ed electi&e o)cial. he fact remain* that the remuneration i* e3ui&alent to e&erythin that the a'ardee* recei&ed durin the entire #eriod that he *er&ed a* *uch o)cial. @ndirectly, their *alarie* and bene5t* are doubled, only that they recei&e half of them at the end of their la*t term. **Computation: he recom#utation of the a'ard di*clo*ed that it i* e3ui&alent to the total com#en*ation recei&ed by each a'ardee for nine year* that include* ba*ic *alary, additional com#en*ation, $er*onnel !conomic elief Allo'ance, re#re*entation and tran*#ortation allo'ance, rice allo'ance, 5nancial a**i*tance, clothin allo'ance, <th month #ay and ca*h ift. hi* i* not di*#uted by #etitioner*. 2. =nder the <87 Con*titution, ho'e&er, the COA i* &e*ted 'ith the authority to determine 'hether o&ernment entitie*, includin (9=*, com#ly 'ith la'* and reulation* in di*bur*in o&ernment fund*, and to di*allo' illeal or irreular di*bur*ement* of the*e fund*. %ec. 2 #ar 2 of Article @E;D of the Con*titution he Commi**ion *hall ha&e e"clu*i&e authority, *ubect to the limitation* in thi* Article, to de5ne the *co#e of it* audit and e"amination, e*tabli*h the techni3ue* and method* re3uired therefor, and #romulate accountin and auditin rule* and reulation*, includin tho*e
for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties. hu*, (9=*, thouh ranted local 5*cal autonomy, are *till 'ithin the audit uri*diction of the COA.
. he Court 5nd no ra&e abu*e of di*cretion on the #art of the COA in i**uin the a**ailed deci*ion*. @t i* the eneral #olicy of the Court to *u*tain the deci*ion* of admini*trati&e authoritie*, e*#ecially one 'hich i* con*titutionally;created not only on the ba*i* of the doctrine of *e#aration of #o'er* but al*o for their #re*umed e"#erti*e in the la'* they are entru*ted to enforce.
DECISION *ERAL)A, J.:
This is a Petition for Review on Certiorari under Rule ! of the Rules of Court assailin" De#ision No. $%%&'%&& ( dated Septe)*er $, $%%& and De#ision No. $%(%'%++ $ dated Au"ust $, $%(% of the Co))ission on Audit -COA sustainin" Noti#e of Disallowan#e -ND No. %'%(%'(%%'%! dated /a0 $1, $%% disallowin" the pa0)ent of )onetar0 reward as part of the E2e)plar0 Pu*li# Servi#e Award -EPSA to for)er three'ter) #oun#ilors of the Cit0 of /anila authori3ed *0 Cit0 Ordinan#e No. &%1%. The fa#ts of the #ase are as follows4 On De#e)*er +, $%%%, the Cit0 Coun#il of /anila ena#ted Ordinan#e No. &%1% entitled An Ordinan#e Authori3in" the Confer)ent of E2e)plar0 Pu*li# Servi#e Award to Ele#tive 5o#al Offi#ials of /anila 6ho 7ave Been Ele#ted for Three - Conse#utive Ter)s in the Sa)e Position. Se#tion $ thereof provides4 SEC. $. The EPSA shall #onsist of a Pla8ue of Appre#iation, retirement and gratuity pay remuneration equivalent to the actual time served in the position for three (3) consecutive terms, su*9e#t to the availa*ilit0 of funds as #ertified *0 the Cit0 Treasurer. PRO:IDED, That ;it< shall *e a##orded to 8ualified ele#ted Cit0 Offi#ials on or *efore the first da0 of servi#e in an appropriated pu*li# #ere)on0 to *e #ondu#ted for the purpose. PRO:IDED =>RT7ER, That this Ordinan#e shall onl0 #over the Position of /a0or, :i#e'/a0or and Coun#ilor4 PRO:IDED =>RT7ER/ORE, That those who were ele#ted for this ter) and run for hi"her ele#tive position thereafter, after *ein" ele#ted shall still *e eli"i*le for this award for the a#tual ti)e served4 PRO:IDED =INA55? That the ne#essar0 and in#idental e2penses needed to i)ple)ent the provisions of this Ordinan#e shall *e appropriated and *e in#luded in the e2e#utive *ud"et for the 0ear when an0 #it0
offi#ial will 8ualif0 for the Award.1 The ordinan#e was dee)ed approved on Au"ust $, $%%$. Pursuant to the ordinan#e, the Cit0 )ade partial pa0)ents in favor of the followin" for)er #oun#ilors4 Co+'-or/Re-p-e't
A*raha) C. Ca*o#han
Ce
#&te
Amo+'t
!%(% %@%+@%! P(,!&,&.%
ulio E. 5o"arta, r.
!(! %@(1@%! P(,!&,&.%&
5u#iano /. :eloso
!++& %@%@%! P(,!&,&.%&
o#el0n Dawis'Asun#ion !(!! %@(1@%! P(,!&,&.%& /arlon /. 5a#son
!(!+ %@(1@%! P(,!&,&.%&
7eirs of 7ilarion C. Silva !% %@%@%! P(,$&,((.! TOTA5
P,$,$!+.%%
!
On Au"ust &, $%%!, Att0. a*riel . Espina -Att0. Espina, Supervisin" Auditor of the Cit0 of /anila, issued Audit O*servation /e)orandu) -AO/ No. $%%!'(%%-%!%+-%! with the followin" o*servations4 (. The initial pa0)ent of )onetar0 reward as part of E2e)plar0 Pu*li# Servi#e Award -EPSA a)ountin" to P,$,$!+.%% to for)er #oun#ilors of the Cit0 overn)ent of /anila who have *een ele#ted for three - #onse#utive ter)s to the sa)e position as authori3ed *0 Cit0 Ordinan#e No. &%1% is without le"al *asis. $. The a)ount "ranted as )onetar0 reward is e2#essive and tanta)ount to dou*le #o)pensation in #ontravention to Arti#le (+% -# of the IRR of RA +(% whi#h provides that no ele#tive or appointive lo#al offi#ial shall re#eive additional, dou*le or indire#t #o)pensation unless spe#ifi#all0 authori3ed *0 law. . The appropriations for retire)ent "ratuit0 to i)ple)ent EPSA ordinan#e was #lassified as /aintenan#e and Other Operatin" E2penses instead of Personal Servi#es #ontrar0 to Se#tion +, :olu)e III of the /anual on the New overn)ent A##ountin" S0ste) -NAS for lo#al "overn)ent units and COA Cir#ular No. $%%1' %%& dated Septe)*er $%, $%%1 whi#h provide the updated des#ription of a##ounts under the NAS. +
After evaluation of the AO/, the Dire#tor, 5e"al and Ad9udi#ation Offi#e -5AO'5o#al of the COA issued ND No. %'%(%' (%%'%!& dated /a0 $1, $%%. On Nove)*er , $%%, for)er #oun#ilors o#el0n Dawis'Asun#ion -Dawis'Asun#ion, 5u#iano /. :eloso -:eloso, A*raha) C. Ca*o#han -Ca*o#han, /arlon /. 5a#son -5a#son, ulio E. 5o"arta, r., and /onina >. Silva, Cit0 A##ountant loria C. uilantan", Cit0 Bud"et Offi#er Ali#ia /os#a0a and then :i#e /a0or and Presidin" Offi#er Danilo B. 5a#una filed a /otion to 5ift the Noti#e of Disallowan#e. In its De#ision No. $%%+'(+( (% dated Nove)*er $, $%%+, the 5AO'5o#al de#ided in favor of the )ovants, the pertinent portion of whi#h reads4 67ERE=ORE, pre)ises #onsidered, the )otion of for)er :i#e' /a0or Danilo B. 5a#una, et al., is RANTED and ND No. %'%(%'(%%'%! dated /a0 $1, $%% is here*0 ordered lifted as the reasons for the disallowan#e have *een suffi#ientl0 e2plained. This de#ision, however, should not *e taen as pre#eden#e -si# to other or si)ilar personal *enefits that a lo#al "overn)ent unit )a0 e2tend whi#h should *e appre#iated *ased on their separate and pe#uliar #ir#u)stan#es. (( Citin" Arti#le (+% of the I)ple)entin" Rules and Re"ulations -IRR of Repu*li# A#t -RA No. +(%, the 5AO'5o #al held that the )onetar0 reward "iven to the for)er #oun#ilors #an *e one of "ratuit0 and, therefore, #annot *e #onsidered as additional, dou*le or indire#t #o)pensation. ivin" i)portan#e to the prin#iple of lo#al autono)0, the 5AO'lo#al upheld the power of lo#al "overn)ent units -5>s to "rant allowan#es. /ore i)portantl0, it e)phasi3ed that the Depart)ent of Bud"et and /ana"e)ent -DB/ did not disapprove the appropriation for the EPSA of the Cit0 whi#h indi#ate that the sa)e is valid.($ >pon r eview, the COA rendered the assailed De#ision No. $%%&'%&& sustainin" ND No. %'%(%'(%%'%!. ( The )otion for re#onsideration was liewise denied in De#ision No. $%(%'%++. (1 The COA opined that the )onetar0 reward under the EPSA is #overed *0 the ter) F#o)pensation.F Thou"h it re#o"ni3es the lo#al autono)0 of 5>s, it e)p hasi3ed the li)itations thereof set forth in the Salar0 Standardi3ation 5aw - SS5. It e2plained that the SS5 does not authori3e the "rant of su#h )onetar0 reward or "ratuit0. It also stressed the a*sen#e of a spe#ifi# law passed *0 Con"ress whi#h ordains the #onfer)ent of su#h )onetar0 reward or "ratuit0 to the for)er #oun#ilors. (! In De#ision No. $%(%'%++, in response to the 8uestion on its 9urisdi#tion to rule on the le"alit0 of the dis*urse)ent, the COA held that it is vested *0 the Constitution the power to deter)ine whether "overn)ent entities #o)pl0 with laws and r e"ulations in dis*ursin" "overn)ent funds and to disallow irre"ular dis*urse)ents.( A""rieved, petitioners :eloso, Ca*o#han, Dawis'Asun#ion and 5a#son #o)e *efore the Court in this spe#ial #ivil a#tion for certiorari alle"in" "rave a*use of dis#retion on the part of the COA. Spe#ifi#all0, petitioners #lai) that4 The respondent Co))ission on Audit did not onl0 #o))it a reversi*le error *ut was, in fa#t, "uilt0 of "rave a*use of dis#retion a)ountin" to la# or e2#ess of 9urisdi#tion when it ruled that the )onetar0 award "iven under the EPSA partaes of the nature of an additional #o)pensation prohi*ited under the Salar0 Standardi3ation 5aw, and other e2istin" laws, rules and re"ulations, and not a RAT>IT? Fvoluntaril0 "iven in return for a favor or servi#es rendered purel0 out of "enerosit0 of
the "iver or "rantor.F -Plasti# Tower Corporation vs. N5RC, (+$ SCRA !&%'!&(. Apart fro) *ein" totall0 o*livious of the fa#t that the )onetar0 award "iven under the EPSA was intended or "iven in return for the e2e)plar0 servi#e rendered *0 its re#ipient-s, the respondent COA further #o))itted "rave a*use of dis#retion when it effe#tivel0 nullified a dul0'ena#ted ordinan#e whi#h is essentiall0 a 9udi#ial fun#tion. In other words, in the "uise of disallowin" the dis*urse)ent in 8uestion, the respondent Co))ission arro"ated unto itself an authorit0 it did not possess, and a prero"ative it did not have. (+ On Nove)*er %, $%(%, the Court issued a Status uo Ante Order (& re8uirin" the parties to )aintain the status 8uo prevailin" *efore the i)ple)entation of the assailed COA de#isions. There are two issues for resolution4 -( whether the COA has the authorit0 to disallow the dis*urse)ent of lo#al "overn)ent fundsG and -$ whether the COA #o))itted "rave a*use of dis#retion in affir)in" the disallowan#e of P,$,$!+.%% #overin" the EPSA of for)er three'ter) #oun#ilors of the Cit0 of /anila authori3ed *0 Ordinan#e No. &%1%. In their Repl0,( petitioners insist that the power and authorit0 of the COA to audit "overn)ent funds and a##ounts does not #arr0 with it in all instan#es the power to disallow a parti#ular dis*urse)ent. $% Citin" Guevara v. Gimenez,$( petitioners #lai) that the COA has no dis#retion or authorit0 to disapprove pa0)ents on the "r ound that the sa)e was un wise or that the a)ount is unreasona*le. The COAHs re)ed0, a##ordin" to petitioners, is to *rin" to the attention of the proper ad)inistrative offi#er su#h e2penditures that, in its opinion, are irre"ular, unne#essar0, e2#essive or e2trava"ant. $$ 6hile ad)ittin" that the #ited #ase was de#ided *0 the Court under the (! Constitution, petitioners su*)it that the s a)e prin#iple applies in the present #ase. 6e do not a"ree. As held in National Electrification Administration v. Commission on Audit, $ the rulin" in Guevara #ited *0 petitioners has alread0 *een overturned *0 the Court in Caltex Philippines, Inc. v. Commission on Audit.$1 The Court e2plained $! that under the (! Constitution, the Auditor eneral #ould not #orre#t irre"ular, unne#essar0, e2#e ssive or e2trava"ant e2penditures of pu*li# funds, *ut #ould onl0 *rin" the )atter to the attention of the proper ad)inistrative offi#er. >nder the (&+ Constitution, however, the COA is vested with the authorit0 to deter)ine whether "overn)ent entities, in#ludin" 5>s, #o)pl0 with laws and re"ulations in dis*ursin" "overn)ent funds, and to disallow ille"al or irre"ular dis*urse)ents of these funds. Se#tion $, Arti#le I'D of the Constitution "ives a *road outline of the powers and fun#tions of the COA, to wit4 Se#tion $. -( The Co))ission on Audit shall have the power, authorit0, and dut0 to e2a)ine, audit, and settle all a##ounts pertainin" to the revenue and re#eipts of, and e2penditures or uses of funds and propert0, owned or held in trust *0, or pertainin" to, the overn)ent, or an0 of its su*divisions, a"en#ies, or instru)entalities, in#ludin" "overn)ent'owned or #ontrolled #orporations with ori"inal #harters, and on a post'audit *asis4 -a #onstitutional *odies, #o))issions and offi#es
that have *een "ranted fis#al autono)0 under this ConstitutionG -* autono)ous state #olle"es and universitiesG -# other "overn)ent'owned or #ontrolled #orporations and their su*sidiariesG and -d su#h non'"overn)ental entities re#eivin" su*sid0 or e8uit0, dire#tl0 or indire#tl0, fro) or throu"h the overn)ent, whi#h are re8uired *0 law or the "rantin" institution to su*)it to su#h audit as a #ondition of su*sid0 or e8uit0. 7owever, where the internal #ontrol s0ste) of the audited a"en#ies is inade8uate, the Co))ission )a0 adopt su#h )easures, in#ludin" te)porar0 or spe#ial pre'audit, as are ne#essar0 and appropriate to #orre#t the defi#ien#ies. It shall eep the "eneral a##ounts of the overn)ent and, for su#h period as )a0 *e provided *0 law, preserve the vou#hers and other supportin" papers pertainin" thereto. -$ The Co))ission shall have e2#lusive authorit0, su*9e#t to the li)itations in this Arti#le, to define the s#ope of its audit and e2a)ination, esta*lish the te#hni8ues and )ethods re8uired therefor, and pro)ul"ate a##ountin" and auditin" rules and re"ulations, in#ludin" those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.$ Se#tion ((, Chapter 1, Su*title B, Title I, Boo : of the Ad)inistrative Code of (&+ e#hoes this #onstitutional )andate to COA. >nder the first para"raph of the a*ove provision, the COAHs audit 9urisdi#tion extends to the government, or any of its subdivisions, agencies, or instrumentalities, in#ludin" "overn)ent'owned or #ontrolled #orporations with ori"inal #harters. Its 9urisdi#tion liewise #overs, al*eit on a post'audit *asis, the #onstitutional *odies, #o))issions and offi#es that have *een "ranted fis#al autono)0, autono)ous state #olle"es and universities, other "overn)ent'owned or #ontrolled #orporations and their su*sidiaries, and su#h non'"overn)ental entities re#eivin" su*sid0 or e8uit0 fro) or throu"h the "overn)ent. The power of the COA to e2a)ine and audit "overn)ent a"en#ies #annot *e taen awa0 fro) it as Se#tion , Arti#le I'D of the Constitution )andates that Fno law shall *e passed e2e)ptin" an0 entit0 of the overn)ent or its su*sidiar0 in an0 "uise whatever, or an0 invest)ent of pu*li# funds, fro) the 9urisdi#tion of the ;COA<.F Pursuant to its )andate as the "uardian of pu*li# funds, the COA is vested with *road powers over all a##ounts pertainin" to "overn)ent revenue and e2penditures and the uses of pu*li# funds and propert0. $+ This in#ludes the e2#lusive authorit0 to define the s#ope of its audit and e2a)ination, esta*lish the te#hni8ues and )eth ods for su#h review, and pro)ul"ate a##ountin" and auditin" rules and re"ulations. $& The COA is endowed with enou"h latitude to deter)ine, prevent and disallow irre"ular, unne#essar0, e2#essive, e2trava"ant or un#ons#iona*le e2penditures of "overn)ent funds.$ It is tased to *e vi"ilant and #ons#ientious in safe"uardin" the proper use of the "overn)entHs, and ulti)atel0 the peopleHs, propert0.% The e2er#ise of its "eneral audit power is a)on" the #onstitutional )e#hanis)s that "ives life to the #he# and *alan#e s0ste) inherent in our for) of "overn)ent. ( The Court had therefore previousl0 upheld the authorit0 of the COA to disapprove pa0)ents whi#h it finds e2#essive and disadvanta"eous to the overn)entG to deter)ine the )eanin" of Fpu*li# *iddin"F and when there is failure in the *iddin"G to disallow e2penditures whi#h it finds unne#essar0 a##ordin" to its rules even if disallowan#e will )ean dis#ontinuan#e of forei"n aidG to disallow a #ontra#t even after it has *een e2e#uted and "oods have *een delivered. $
Thus, 5>s, thou"h "ranted lo#al fis#al autono)0, are still within the audit 9urisdi#tion of the COA. Now on the )ore i)portant issue of whether the COA properl0 e2er#ised its 9urisdi#tion in disallowin" the dis*urse)ent of the Cit0 of /anilaHs funds for the EPSA of its for)er three'ter) #oun#ilors. It is the "eneral poli#0 of the Court to sustain the de#isions of ad)inistrative authorities, espe#iall0 one whi#h is #onstitutionall0'#reated not onl0 on the *asis of the do#trine of separation of powers *ut also for their presu)ed e2pertise in the laws the0 are entrusted to enfor#e. =indin"s of ad)inistrative a"en#ies are a##orded not onl0 respe#t *ut also finalit0 when the de#ision and order are not tainted with unfairness or ar*itrariness that would a)ount to "rave a*use of dis#retion. It is onl0 when the COA has a#ted without or in e2#ess of 9urisdi#tion, or with "rave a*use of dis#retion a)ountin" to la# or e2#ess of 9urisdi#tion, that this Court entertains a petition 8uestionin" its rulin"s. 1 There is "rave a*use of dis#retion when there is an evasion of a positive dut0 or a virtual refusal to perfor) a dut0 en9oined *0 law or to a#t in #onte)plation of law as when the 9ud")ent rendered is not *ased on law and eviden#e *ut on #apri#e, whi) and despotis).! In this #ase, we find no "rave a*use of dis#retion on the part of the COA in issuin" the assailed de#isions as will *e dis#ussed *elow. Petitioners #lai) that the "rant of the retire)ent and "ratuit0 pa0 re)uneration is a valid e2er#ise of the powers of the San""unian" Panlun"sod set forth in RA +(%. 6e disa"ree. Indeed, Se#tion 1!& of RA +(% defines the power, duties, fun#tions and #o)pensation of the San""unian" Panlun"sod, to wit4 SEC. 1!&. Powers, Duties, unctions and Compensation. ! -a The San""unian" Panlun"sod, as the le"islative *od0 of the #it0, shall ena#t ordinan#es, approve resolutions and appropriate funds for the "eneral welfare of the #it0 and its inha*itants pursuant to Se#tion ( of this Code and in the proper e2er#ise of the #orporate powers of the #it0 as provided for under Se#tion $$ of this Code, and shall4 2222 -viii Deter)ine the positions and salaries, wa"es, allowan#es and other e)olu)ents and *enefits of offi#ials and e)plo0ees paid wholl0 or )ainl0 fro) #it0 funds and provide for e2penditures ne#essar0 for the proper #ondu#t of pro"ra)s, pro9e#ts, servi#es, and a#tivities of the #it0 "overn)ent. In the e2er#ise of the a*ove power, the Cit0 Coun#il of /anila ena#ted on De#e)*er +, $%%% Ordinan#e No. &%1%, *ut the sa)e was dee)ed approved on Au"ust $, $%%$. The ordinan#e authori3ed the #onfer)ent of the EPSA to the for)er
three'ter) #oun#ilors and, as part of the award, the 8ualified #it0 offi#ials were to *e "iven Fretire)ent and "ratuit0 pa0 re)uneration.F 6e *elieve that the award is a F"ratuit0F whi#h is a free "ift, a present, or *enefit of pe#uniar0 value *estowed without #lai) or de)and, or without #onsideration. 7owever, as #orre#tl0 held *0 the COA, the a*ove power is not without li)itations. These li)itations are e)*odied in Se#tion &( of RA +(%, to wit4 SEC. &(. Compensation of "ocal #fficials and Emplo$ees. The #o)pensation of lo#al offi#ials and personnel shall *e deter)ined *0 the san""unian #on#erned4 Provided , That the in#rease in #o)pensation of ele#tive lo#al offi#ials shall tae effe#t onl0 after the ter)s of offi#e of those approvin" su#h in#rease shall have e2pired4 Provided, further, That the in#rease in #o)pensation of the appointive offi#ials and e)plo0ees shall tae effe#t as provided in the ordinan#e authori3in" su#h in#reaseG Provided however, That said in#reases shall not e2#eed the li)itations on *ud"etar0 allo#ations for personal servi#es provided under Title =ive, Boo II of this Code4 Provided finall$ , That su#h #o)pensation )a0 *e *ased upon the pertinent provisions of Repu*li# A#t Nu)*ered Si2t0'seven fift0'ei"ht -R.A. No. +!&, otherwise nown as the FCo)pensation and Position Classifi#ation A#t of (&. /oreover, the IRR of RA +(% reprodu#ed the Constitutional provision that Fno ele#tive or appointive lo#al offi#ial or e)plo0ee shall re#eive additional, dou*le, or indire#t #o)pensation, unless spe#ifi#all0 authori3ed *0 law, nor a##ept without the #onsent of the Con"ress, an0 present, e)olu)ents, offi#e, or title of an0 ind fro) an0 forei"n "overn)ent.F Se#tion $! of the law li)it the total appropriations for personal servi#es + of a lo#al "overn)ent unit to not )ore than 1!J of its total annual in#o)e fro) re"ular sour#es reali3ed in the ne2t pre#e din" fis#al 0ear. 6hile it )a0 *e true that the a*ove appropriation did not e2#eed the *ud"etar0 li)itation set *0 RA +(%, we find that the COA is #orre#t in sustainin" ND No. %'%(%'(%%'%!. Se#tion $ of Ordinan#e No. &%1% provides for the pa0)ent of retirement and gratuity pay remuneration equivalent to the actual time served in the position for three (3) consecutive terms as part of the EPSA. The re#o)putation of the award dis#losed that it is e8uivalent to the total #o)pensation re#eived *0 ea#h awardee for nine 0ears that in#ludes *asi# salar0, additional #o)pensation, Personnel E#ono)i# Relief Allowan#e, representation and transportation allowan#e, ri#e allowan#e, finan#ial assistan#e, #lothin" allowan#e, (th )onth pa0 and #ash "ift. & This is not disputed *0 petitioners. There is nothin" wron" with the lo#al "overn)ent "rantin" additional *enefits to th e offi#ials and e)plo0ees. The laws even en#oura"e the "rantin" of in#entive *enefits ai)ed at i)provin" the servi#es of these e)plo0ees. Considerin", however, that the pa0)ent of these *enefits #onstitute dis*urse)ent of pu*li# funds, it )ust not #ontravene the law on dis*urse)ent of pu*li# funds. lawphi% As #learl0 e2plained *0 the Court in &ap v. Commission on Audit, 1% the dis*urse)ent of pu*li# funds, salaries and *enefits of "overn)ent offi#ers and e)plo0ees should *e "ranted to #o) pensate the) for valua*le pu*li# servi#es rendered, and the salaries or *enefits paid to su#h offi#ers or e)plo0ees )ust *e #o))ensurate with servi#es rendered. In the sa)e vein, additional allowan#es and *enefits )ust *e shown to *e ne#essar0 or relevant to the fulfill)ent of the offi#ial duties
and fun#tions of the "overn)ent offi#ers and e)plo0ees. 6ithout this li)itation, "overn)ent offi#ers and e)plo0ees )a0 *e paid enor)ous su)s without li)it or without 9ustifi#ation ne#essar0 other than that su#h su)s are *ein" paid to so)eone e)plo0ed *0 the "overn)ent. Pu*li# funds are the propert0 of the people and )ust *e used prudentl0 at all ti)es with a view to prevent dissipation and waste. 1( >ndou*tedl0, the a*ove #o)putation of the a wardeesH reward is e2#essive and tanta)ount to dou*le and additional #o)pensation. This #annot *e 9ustified *0 the )ere fa#t that the awardees have *een ele#ted for three - #onse#utive ter)s in the sa)e position. Neither #an it *e 9ustified that the reward is "iven as a "ratuit0 at the end of the last ter) of the 8ualified ele#tive offi#ial. The fa#t re)ains that the re)uneration is e8uivalent to ever0thin" that the awardees re#eived durin" the entire period that he served as su#h offi#ial. Indire#tl0, their salaries and *enefits are dou*led, onl0 that the0 re#eive half of the) at the end of their last ter). The purpose of the prohi*ition a"ainst additional or dou*le #o)pensation is *est e2pressed in Peralta v. Auditor General ,1$ to wit4 This is to )anifest a #o))it)ent to the funda)ental prin#iple that a pu*li# offi#e is a pu*li# trust. It is e2pe#ted of a "overn)ent offi#ial or e)plo0ee that he eeps upper)ost in )ind the de)ands of pu*li# welfare. 7e is there to render pu*li# servi#e. 7e is of #ourse entitled to *e rewarded for the perfor)an#e of the fun#tions entrusted to hi), *ut that should not *e the overridin" #onsideration. The intrusion of the thou"ht of private "ain should *e unwel#o)e. The te)ptation to further personal ends, pu*li# e)plo0)ent as a )eans for the a#8uisition of wealth, is to *e resisted. That at least is the idea. There is then to *e an awareness on the part of the offi#er or e)plo0ee of the "overn)ent that he is to re#eive onl0 su#h #o)pensation as )a0 *e fi2ed *0 law. !ith such a reali"ation, he is expected not to avail himself of devious or circuitous means to increase the remuneration attached to his position.1 :eril0, the COAHs assailed de#isions were )ade in faithful #o)plian#e with its )andate and in 9udi#ious e2er#ise of its "eneral audit power as #onferred on it *0 the Constitution. 11 The COA adheres to the poli#0 that "overn)ent funds and propert0 should *e full0 prote#ted and #onserved and that irre"ular, unne#essar0, e2#essive or e2trava"ant e2penditures or uses of su#h funds and propert0 should *e prevented. 1! 7owever, in line with e2istin" 9urispruden#e,1 we need not re8uire the refund of the disallowed a)ount *e#ause all the parties a#ted in "ood faith. In this #ase, the 8uestioned dis*urse)ent was )ade pursuant to an ordinan#e ena#ted as earl0 as De#e)*er +, $%%% althou"h dee)ed app r oved onl0 on Au"ust $$, $%%$. The #it0 offi#ials dis*ursed the retire)ent and "ratuit0 pa0 re)uneration in the honest *elief that the a)ounts "iven were due to the re#ipients and the latter a##epted the sa)e with "ratitude, #onfident that the0 ri#hl0 deserve su#h reward. $HEREORE, the petition is #ISISSE#. De#ision No. $%%&'%&& dated Septe)*er $, $%%& and De#ision No. $%(%'%++ dated Au"ust $, $%(% of the Co))ission on Audit, are AIRE# $I)H O#IICA)ION. The re#ipients need not refund the retire)ent and "ratuit0 pa0 re)uneration that the0 alread0 re#eived.
A##ordin"l0, the Status uo Ante Order issued *0 the Court on Nove)*er %, $%(% is here*0 RECALLE#. In view, however, of this CourtHs de#ision not to re8uire the refund of the a)ounts alread0 re#eived, the Co))ission on Audit is OR#ERE# to #ease and desist fro) enfor#in" the Noti#e of =inalit0 of De#ision 1+ dated O#to*er !, $%(%. SO ORDERED. #IOS#A#O . *ERAL)A Asso#iate usti#e
6E CONC>R4 RENA)O C. CORONA Chief usti#e AN)ONIO ). CAR*IO Asso#iate usti#e
*RESBI)ERO !. VELASCO, !R. Asso#iate usti#e
)ERESI)A !. LEONAR#O%#E CAS)RO Asso#iate usti#e
AR)URO #. BRION Asso#iate usti#e
LUCAS *. BERSAIN Asso#iate usti#e
ARIANO C. #EL CAS)ILLO Asso#iate usti#e
ROBER)O A. ABA# Asso#iate usti#e
AR)IN S. VILLARAA, !R. Asso#iate usti#e
!OSE *OR)UGAL *ERE4 Asso#iate usti#e
!OSE CA)RAL EN#O4A Asso#iate usti#e
On leave ARIA LOUR#ES *. A. SERENO K Asso#iate usti#e
On offi#ial leave BIENVENI#O L. RE"ESKK Asso#iate usti#e
CERTI=ICATION Pursuant to Se#tion (, Arti#le :III of the Constitution, I #ertif0 that the #on#lusions in the a*ove De#ision had *een
rea#hed in #onsultation *efore the #ase was assi"ned to the writer of the opinion of the Court. RENA)O C. CORONA Chief usti#e
oot'ote K
On leave.
KK
On offi#ial leave.
(
'ollo, pp. $('$!.
$
Id. at $'%.
Id. at !'&.
1
Id. at (. -E)phasis supplied.
!
Id. at $.
Id. at $'1.
+
Id. at $'.
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Id. at !'&.
Id. at '1(.
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Id. at 1$'11.
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Id. at 11.
Id. at 1'11.
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Supra note (.
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Supra note $.
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Rollo, pp. $$'$1.
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Id. at $&'$.
(+
Id. at .
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Id . at +'&(.
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Id . at ((+'($+.
%$Id . at ($%.
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No. 5'(+((!, Nove)*er %, ($, SCRA &%+.
$$
'ollo, p. ($(.
$
1$+ Phil. 11, 1&( -$%%$.
$1
.R. No. $!&!, /a0 &, ($, $%& SCRA +$.
$!
Id. at +1, #itin" the o*servations of one of the Co))issioners of the (& Constitutional Co))ission, =r. oa8uin . Bernas. $
E)phasis supplied.
$+
&ap v. Commission on Audit , .R. No. (!&!$, April $, $%(%, ( SCRA (!1, (+'(&G (anchez v. C ommission on Audit, .R. No. ($+!1!, April $, $%%&, !!$ SCRA 1+(, 1++. $&
Id. at (&G Id.
$
(anchez v. Commission on Audit, supra note $+, at 1&+.
%
)ar*o v. Commission on Audit , .R. No. (!+!1$, O#to*er (%, $%%&, !& SCRA %$, (%.
(
&ap v. Commission on Audit , supra note $+, at (.
$
(anchez v. Commission on Audit, supra note $+, at 1&&.
Id. at 1&.
1
Id.
!
&ap v. Commission on Audit , supra note $+, at (+1.
Ca+iuat v. atha$ , $% Phil. !+, !&$ -(&.
+
Personal servi#es in#lude the pa0)ent of salaries and wa"esG per die) #o)pensationG so#ial se#urit0 insuran#e pre)iu)G overti)e pa0G and #o))uta*le allowan#es. &
'ollo, p. .
&ap v. Commission on Audit , supra note $+, at (1.
1%
Id. at (!1.
1(
Id. at ('(+.
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(1& Phil. $( -(+(, #ited in the separate opinion of usti#e Arturo D. Brion in -errera v. National Power C orporation, .R. No. (!+%, De#e)*er (&, $%%, %& SCRA 1+!,!%1. 1
Peralta v. Auditor General atha$ , (1& Phil. $(, $!'$ -(+(. -E)phasis supplied.
11
&ap v. Commission on Audit , supra note $+, at (+1'(+!.
1!
(am*eli v. Province of Isa*ela, .R. No. $$+, une (&, ($, $(% SCRA &%, &1.
1
(inson v. Commission on Audit , .R. No. (!!!, Au"ust , $%(%, $+ SCRA , #itin" /olen, r. v. Co))ission on Audit, 1 Phil. &+1 -$%%!G ueru*in v. Re"ional Cluster Dire#tor, 5e"al and Ad9udi#ation Offi#e, COA Re"ional Offi#e :I, Pavia, Iloilo Cit0, .R. No. (!$, ul0 +, $%%1, 1 SCRA +G De esus v. Co))ission on Audit, 1 Phil. ($ -$%%1G Philippine International Tradin" Corporation v. Co))ission on
Audit, 1( Phil. ++ -$%%. 1+
'ollo, pp. +('+.
