Abellanosa v. Commission on Audit
REITERATIONFacts
The Antecedents: The National Housing Authority (NHA) was created under Presidential Decree No. (P.D.) 757, which empowered its Board to determine the organizational structure and rates of allowances for its personnel. In 1982, the NHA Board issued Resolution No. 464, granting an 'Incentive Allowance' (10% to 20% of basic pay) to project personnel. However, between 1978 and 1989, the government enacted P.D. 1597 and Republic Act No. (R.A.) 6758 (the Compensation and Position Classification Act of 1989) to rationalize and standardize government salaries. In 1990, the Commission on Audit (COA) advised NHA to discontinue the allowance. Following the Supreme Court's ruling in De Jesus v. COA, which declared DBM Corporate Compensation Circular (CCC) No. 10 ineffective for lack of publication, NHA resumed payments of the incentive allowance for the period 1994 to 1999. Procedural History: In 2001 and 2003, the NHA paid two tranches of incentive allowance differentials totaling P401,284.39. These payments were initially passed in audit by the Audit Team Leaders. However, the COA-NHA later issued an adverse opinion, leading to Audit Observation Memorandum (AOM) No. 2004-07-115. Consequently, the Legal and Adjudication Office (LAO)-Corporate issued Notice of Disallowance (ND) No. NHA-2005-001. The Adjudication and Settlement Board (ASB) of the COA affirmed the disallowance, ruling that the NHA's power to grant such incentives had been repealed by P.D. 1597 and R.A. 6758. The COA Proper subsequently affirmed the ASB's decision in Decision No. 2008-102. The Petition: Petitioners filed a Petition for Review on Certiorari under Rule 64, arguing that the grant of incentive benefits was incidental to the express powers of the NHA Board under P.D. 757. They contended that P.D. 1597 did not repeal the specific exception for government corporations found in P.D. 985. They further argued that the disallowance was unjust because the services were already rendered and the accounts had been previously settled in audit.
Issue(s)
Whether the NHA Board Resolution No. 464, granting incentive allowances, remains valid despite the enactment of P.D. 1597 and R.A. 6758. Whether the COA is estopped from disallowing the payments after they were initially passed in audit by its officials.
Ruling
The Petition is DISMISSED. The Commission on Audit Decision No. 2008-102 is AFFIRMED.
Ratio Decidendi
On Issue 1: The Court ruled that NHA Resolution No. 464 was issued without legal basis. By the time it was issued in 1982, Section 3 of Presidential Decree No. (P.D.) 1597 had already expressly repealed all decrees and issuances that authorized the grant of allowances inconsistent with the National Compensation and Position Classification Plan. The Court rejected the petitioners' argument that P.D. 1597 only repealed Section 4 of P.D. 985; it clarified that Section 3 of P.D. 1597 specifically refers to all inconsistent laws or issuances. Furthermore, Republic Act No. (R.A.) 6758 reinforced this policy by decreeing that all allowances not specifically listed in Section 12 are deemed integrated into the standardized salary rates. Since the incentive allowance was not among the exceptions (like RATA or hazard pay) and was not specifically authorized by the Department of Budget and Management (DBM), it could no longer be granted after the effectivity of R.A. 6758. The Court emphasized that the law does not distinguish between permanent and temporary allowances when applying the standardization policy. On Issue 2: The Court held that the government is not estopped by the erroneous application and enforcement of the law by its public officers. Citing Baybay Water District v. Commission on Audit, the Court explained that where there is an express provision of law prohibiting the grant of certain benefits, the law must be enforced even if it prejudices parties who relied on an error committed by a public official. The fact that the payments were initially passed in audit by the Audit Team Leaders does not prevent the COA from subsequently correcting the error and issuing a Notice of Disallowance. Practice, no matter how long continued, cannot give rise to any vested right if it is contrary to law. Therefore, the reopening of the accounts was valid as the payments lacked legal authority from the outset.
Main Doctrine
The National Housing Authority (NHA) Board's authority to grant additional compensation under Presidential Decree No. 757 was effectively repealed by Presidential Decree No. 1597 and Republic Act No. 6758. Under the 'Integration of Allowances' rule, all forms of compensation are included in the standardized salary rates unless they fall under specific statutory exceptions (e.g., RATA, clothing allowance, hazard pay) or are expressly authorized by the Department of Budget and Management (DBM). Furthermore, the government is never estopped from correcting the erroneous application of laws by its public officers; thus, a prior audit clearance does not prevent a subsequent disallowance of illegal disbursements.