Philippine Charity Sweepstakes Office v. Pulido-Tan
REITERATIONFacts
The Antecedents: The Philippine Charity Sweepstakes Office (PCSO) Board of Directors, through Resolution No. 135, approved the payment of monthly Cost of Living Allowance (COLA) to its officials and employees for three years, in accordance with their Collective Negotiation Agreement. In 2010, PCSO released P381,545.43 for this purpose to its Nueva Ecija Provincial District Office. Executive Secretary Paquito N. Ochoa, Jr. later confirmed the benefits but directed PCSO to strictly adhere to Executive Order No. 7, which imposed a moratorium on new or increased salaries and incentives without presidential authorization. Procedural History: Upon post-audit, the COA issued a Notice of Disallowance (ND) 11-001-101-(10) invalidating the payment of P381,545.43, citing violation of DBM Circular No. 2001-03 and prohibition against double compensation under the Constitution. The COA Regional Director affirmed the disallowance, and the COA Commission Proper denied PCSO's petition for review and motion for reconsideration. The Petition: PCSO filed a petition for certiorari, arguing that its Board of Directors is authorized to fix salaries and grant allowances under RA 1169, as amended; that Executive Secretary Ochoa, Jr.'s approval constituted post facto approval; that the disallowance violated the principle of non-diminution of benefits; and that recipients acted in good faith and should not be required to refund.
Issue(s)
Whether the PCSO Board of Directors is authorized to grant the Cost of Living Allowance (COLA) to its officials and employees. Whether the alleged post facto approval by the Office of the President validates the grant of COLA. Whether the disallowance of COLA violates the principle of non-diminution of benefits. Whether the recipients of the disallowed COLA should refund the amounts received.
Ruling
The petition is denied. The Supreme Court affirmed the decision of the Commission on Audit (COA) disallowing the Cost of Living Allowance (COLA) granted by the PCSO, with modification. The PCSO Board of Directors who approved the resolution and the five PCSO officials found liable by the COA are ordered to refund the illegally disbursed amount.
Ratio Decidendi
On the authority of the PCSO Board to grant COLA: The Supreme Court held that Sections 6 and 9 of R.A. No. 1169, as amended, do not grant the PCSO Board unbridled authority to fix salaries and allowances. As a government-owned and/or controlled corporation (GOCC), PCSO is covered by P.D. No. 985 and P.D. No. 1597, and must comply with the rules of the Department of Budget and Management (DBM). Even with potential exemptions, the Board's power is subject to DBM review. The Court cited Intia, Jr. v. COA and Phil. Retirement Authority (PRA) v. Buñag to emphasize that compensation schemes of GOCCs are subject to standardization laws and DBM review to ensure "equal pay for substantially equal work." Furthermore, R.A. No. 10149, the GOCC Governance Act of 2011, and its implementing E.O. No. 203, reinforce the State's policy to ensure reasonable remuneration schemes and establish a Compensation and Position Classification System (CPCS) for GOCCs, with no GOCC being exempt. On the alleged post facto approval: The Court ruled that it could not rule on the validity of the alleged post facto approval by the Office of the President because PCSO failed to submit any documentary evidence to prove its existence. Even if such approval existed, an executive act must not be contrary to law or the Constitution. The Court also noted that the cited cases of Cruz v. Commission on Audit and GSIS v. Commission on Audit were not on all fours with the present case due to differing factual antecedents and applicable rules. On the principle of non-diminution of benefits: The Court found no merit in the contention that the disallowance violated the principle of non-diminution of benefits. PCSO failed to establish that the recipients were incumbents receiving COLA as of July 1, 1989, which is a requirement under the second sentence of Section 12 of R.A. No. 6758. The claim of vested rights was also unsubstantiated and, in any event, a practice contrary to law cannot give rise to a vested right. On the refund of disallowed COLA: The Court distinguished between recipients and approving officers. Recipients who had no participation in the approval and release of the benefit and acted in good faith, based on the mistaken assumption that Resolution No. 135 was valid, are not liable to refund. However, the PCSO Board of Directors who approved Resolution No. 135 and the five PCSO officials who participated in the approval and release are liable to refund the illegally disbursed amount. Their positions require them to be acquainted with and duty-bound to know relevant laws and regulations, and their ignorance of the law is not an excuse. They should have ascertained the legal basis for the grant before approving and releasing the funds.
Main Doctrine
The Cost of Living Allowance (COLA) granted by the Philippine Charity Sweepstakes Office (PCSO) to its officials and employees is deemed integrated into the standardized salary rates under Republic Act No. 6758 and is not an exception. Therefore, its grant without proper authorization is illegal and subject to disallowance by the Commission on Audit (COA).