Philippine Economic Zone Authority v. Commission on Audit
REITERATIONFacts
The Antecedents: The Philippine Economic Zone Authority (PEZA) Board of Directors, composed of 13 members including various government Undersecretaries serving in an ex officio capacity, authorized the payment of per diems for their attendance at board meetings. These payments, totaling P5,451,500.00, were made for the period spanning 2001 to 2006. Procedural History: The PEZA Auditor issued Notices of Disallowance for these per diem payments, citing a Supreme Court resolution that disallowed similar payments and a prior ruling in Civil Liberties Union v. Executive Secretary which established that ex officio members are not entitled to additional compensation. PEZA's motion for reconsideration, arguing good faith and the pending finality of related cases, was denied. Subsequent appeals to the COA Cluster Director and the Commission on Audit itself were also denied, with the COA affirming the disallowances and ordering the refund of the per diems. The Petition: PEZA filed a petition for certiorari under Rule 64 in relation to Rule 65 of the Rules of Civil Procedure, seeking to annul the COA's decision. PEZA argued that Republic Act No. 7916, as amended by Republic Act No. 8748, still permits the payment of per diems and that the ex officio members received these payments in good faith, believing they were legally entitled to them. The petition challenges the COA's interpretation of the relevant statutes and its finding that PEZA lacked good faith in disbursing the funds.
Issue(s)
Whether Republic Act No. 7916, as amended by Republic Act No. 8748, allows the payment of per diems to the ex officio members of the PEZA Board of Directors. Whether there was good faith in PEZA's grant and the ex officio members' receipt of the per diems.
Ruling
The petition is devoid of merit. The assailed COA Decision No. 2009-081 is affirmed and upheld. All recipients and persons liable are required to refund the disallowed per diems.
Ratio Decidendi
On the issue of legal basis for per diems: The Court held that there is no legal basis for granting per diems to ex officio members of the PEZA Board. This was settled in Bitonio, Jr. v. Commission on Audit, where it was held that Republic Act No. 8748, the amendatory law, purposely deleted the last paragraph of Section 11 of Republic Act No. 7916 that authorized the grant of per diems. This deletion was made because such a provision was in conflict with the proscription laid down in the 1987 Constitution. The Court reiterated that the deletion of this provision in the amendatory law was to cure the flaw in the original law and to conform with the constitutional prohibition against double compensation. Therefore, PEZA's insistence on a legal basis for these payments is without merit. On the issue of good faith: The Court found that PEZA cannot claim good faith in making the disbursements. The Court emphasized that "good faith" requires freedom from knowledge of circumstances that ought to put one on inquiry. In this case, the Supreme Court had already clarified the prohibition under Section 13, Article VII of the Constitution in Civil Liberties Union v. Executive Secretary (promulgated in 1991), a decade before the disallowed payments were made. This ruling explicitly stated that public officials holding ex officio positions are not entitled to additional compensation. Furthermore, PEZA had been repeatedly notified of the illegality of these payments through previous Notices of Disallowance and the ruling in the Bitonio, Jr. case. The continued disbursement of per diems despite these clear pronouncements and notices militates against any claim of good faith.
Main Doctrine
The payment of per diems to ex officio members of the Philippine Economic Zone Authority (PEZA) Board of Directors is illegal, as Republic Act No. 8748 deleted the provision in Republic Act No. 7916 authorizing such payments, and such payments are in conflict with the constitutional prohibition against double compensation for public officials holding ex officio positions.