Benguet State University v. Commission on Audit
REITERATIONFacts
The Antecedents: Benguet State University (BSU), through its Board of Regents, passed Board Resolution No. 794 on October 31, 1997, granting rice subsidy and health care allowance to its employees, funded from its operational income. These allowances were disbursed in 1998. Procedural History: The grant was disallowed in audit by the Commission on Audit (COA) under Notice of Disallowance No. 99-001-STF (98) for lack of statutory basis. BSU's request for reconsideration was denied by the COA Regional Office (COA-CAR Decision No. 2000-3), which cited Section 55(2) of the General Appropriation Act of 1998 and held that the grant transgressed constitutional proscriptions against additional compensation and ran counter to the Salary Standardization Law. The COA affirmed this disallowance in COA Decision No. 2003-112, and denied BSU's motion for reconsideration in COA Decision No. 2005-019. The Petition: BSU filed a Petition for Review on Certiorari seeking to nullify the COA decisions, arguing that R.A. No. 8292 granted it fiscal autonomy and ample leeway in disbursing funds, that the allowances were incentives and not additional compensation, and that the amounts used were from retained income. BSU also questioned the requirement for reimbursement.
Issue(s)
Whether or not petitioner Benguet State University (BSU) is authorized to grant Health Care Allowance and Rice Subsidy to its employees. Whether or not the recipients of the disallowed benefits should reimburse the amounts received by them. Whether a Petition for Review on Certiorari is the proper mode to assail COA decisions.
Ruling
The Supreme Court affirmed the disallowance of the rice subsidy and health care allowance but modified the ruling by stating that BSU employees need not refund the amounts received in good faith. The Court treated the Petition for Review on Certiorari as a Petition for Certiorari under Rule 65.
Ratio Decidendi
On the authority to grant allowances and the prohibition against additional compensation: The Court ruled that BSU is not authorized to grant the rice subsidy and health care allowance. While BSU relied on Section 4(d) of R.A. No. 8292, which allows disbursement of retained income for "instruction, research, extension, or other programs/projects," the Court applied the principle of ejusdem generis. This principle dictates that the general term "other programs/projects" should be interpreted to mean those of the same class or nature as the specific terms enumerated. Therefore, "other programs/projects" must be similar to instruction, research, and extension, and cannot encompass benefits like rice subsidy and health care allowances, which are not directly related to the academic mission of the university. The Court clarified that the fiscal autonomy granted to state universities is not plenary and absolute. The Court reiterated that Section 8, Article IX-B of the 1987 Constitution prohibits public officers and employees from receiving additional, double, or indirect compensation unless specifically authorized by law. The grant of rice subsidy and health care allowance by BSU lacked such specific statutory authorization. Furthermore, Section 12 of R.A. No. 6758, the Salary Standardization Law, consolidates most allowances into standardized salary rates, and the disallowed benefits were not among those expressly excluded and allowed to be continued. Thus, the grant contravened the constitutional and statutory prohibitions. The Court clarified that academic freedom, as guaranteed by the Constitution and R.A. No. 8292, pertains to the freedom to determine who may teach, what may be taught, how it shall be taught, and who may be admitted to study. It does not grant an institution unbridled authority to disburse funds and grant additional benefits without a statutory basis. BSU failed to present any legal basis for the grant of these additional benefits under the guise of academic freedom. On the refund of disallowed benefits: The Court ruled that the BSU employees need not refund the rice subsidy and health care allowances received. Citing the case of Philippine Ports Authority v. Commission on Audit, the Court held that where benefits are received in good faith, based on a resolution or order that was believed to be valid at the time, and without knowledge of any defect in its legal basis, refund is not necessary. In this case, the employees received the allowances in good faith, authorized by Board Resolution No. 794, and without knowledge that the grant lacked statutory basis. On the propriety of the mode of appeal: The Court noted that a Petition for Review on Certiorari is not the proper mode to assail COA decisions, which should be brought via a petition for certiorari under Rule 65. However, the Court treated the instant petition as one for certiorari under Rule 65, considering the allegations of "grave abuse of discretion" and "reversible legal error," and in the interest of justice, equity, and fair play. The Court emphasized that the averments in the complaint, not its nomenclature, determine the nature of the action.
Main Doctrine
The phrase "other programs/projects" in Section 4(d) of R.A. No. 8292, granting fiscal autonomy to state universities and colleges, must be interpreted in light of the specific enumeration of "instruction, research, extension" under the principle of ejusdem generis, and therefore does not include the grant of rice subsidy and health care allowances to employees, as these are not directly related to the academic mission of the university. Such grants, lacking statutory basis, are also prohibited under Article IX-B, Section 8 of the Constitution and Section 12 of R.A. No. 6758 (Salary Standardization Law). However, employees who received these benefits in good faith need not refund them.