ASG Law

Tag: per diems

  • Navigating Double Compensation: Per Diems and RATA for Government Officials in GOCCs

    This Supreme Court case clarifies the rules surrounding additional compensation for government officials serving on the boards of government-owned and controlled corporations (GOCCs). The Court ruled that officials from the Bangko Sentral ng Pilipinas (BSP) who also serve on the board of the Philippine International Convention Center Inc. (PICCI) can receive both per diems (daily allowances) and RATA (representation and transportation allowances) without violating the constitutional prohibition against double compensation. This decision underscores that such benefits, when authorized by law and corporate bylaws, are legitimate means to cover expenses incurred while performing additional duties for the government.

    When Public Servants Wear Two Hats: Examining Compensation for Ex-Officio Roles

    At the heart of the case is the question of whether officials holding positions in both the BSP and PICCI were receiving improper additional compensation. Petitioners Amando M. Tetangco, Jr., Armando L. Suratos, and Juan D. Zuniga, Jr., while serving as officers of the BSP, also sat on the PICCI Board of Directors. They received per diems, RATA, and bonuses for their work on the PICCI board, prompting the Commission on Audit (COA) to issue a Notice of Disallowance (ND) arguing that these benefits constituted double compensation, which is generally prohibited under the Philippine Constitution. The COA, relying on the principle against double compensation, disallowed certain payments, leading to this legal challenge.

    The COA’s decision was rooted in Section 8, Art. IX (B) of the 1987 Constitution and the precedent set in Civil Liberties Union v. Executive Secretary, which generally prohibits government officers from receiving additional compensation for ex-officio roles unless specifically authorized by law. However, petitioners argued that their roles on the PICCI Board were distinct from their primary duties at the BSP and that the benefits were authorized by PICCI’s bylaws and Monetary Board resolutions. They cited the case of Singson, et al. v. COA, which involved similar circumstances and had allowed the payment of per diems and RATA to BSP officers serving on the PICCI Board.

    The Supreme Court, in its analysis, first established that PICCI is indeed a government-owned and controlled corporation (GOCC). This classification is significant because GOCCs are subject to the audit jurisdiction of the COA. The Court referenced the Administrative Code of 1987, which defines GOCCs as agencies organized as stock or non-stock corporations vested with functions relating to public needs and owned by the government directly or indirectly to the extent of at least 51% of its capital stock. PICCI, as a subsidiary of BSP (the sole stockholder), squarely fits this definition.

    Building on this foundation, the Court then addressed the core issue of whether the per diems and RATA received by the petitioners constituted double compensation. The Court emphasized the ruling in Singson, which specifically addressed the grant of per diems and RATA to BSP officials serving on the PICCI board. Singson had determined that such payments did not violate the constitutional proscription against double compensation. The Court quoted Singson, stating:

    Indeed, aside from the RATA that they have been receiving from the BSP, the grant of P1,500.00 RATA to each of the petitioners for every board meeting they attended, in their capacity as members of the Board of Directors of PICCI, in addition to their P1,000.00 per diem, does not run afoul the constitutional proscription against double compensation.

    The Court found that the COA had contradicted itself by acknowledging the applicability of Singson while simultaneously disallowing the RATA. The Court underscored that the per diems and RATA were authorized not only by Singson but also by several Monetary Board Resolutions passed in accordance with Section 30 of the Corporation Code. Section 30 allows directors to receive compensation, including per diems, as fixed by the bylaws or a vote of the stockholders.

    However, the Court differentiated the RATA and per diems from the other bonuses received by the petitioners. The Court agreed with the COA that the bonuses were unauthorized because they were considered a form of compensation for services rendered and were not specifically authorized by law, violating Section 8, Art. IX-B of the Constitution.

    The Court also addressed the issue of increases in per diems and RATA, considering Memorandum Order No. 20, which directs the suspension of increases in benefits for GOCC employees not in accordance with the Salary Standardization Law (SSL). The Court clarified that Memorandum Order No. 20 only applies to increases exceeding benefits given to government officials holding comparable positions in the National Government. The COA had disallowed the increases without determining whether they exceeded these benchmarks.

    Furthermore, the Court addressed Executive Order No. 24, which requires presidential approval for any increase in per diems. The Court noted that Executive Order No. 24 took effect on March 21, 2011, after the benefits in question were granted. The Court applied the principle that laws should not have retroactive effect unless expressly stated, citing Article 4 of the Civil Code and the case of Felisa Agricultural Corp. v. National Transmission Corp. Therefore, Executive Order No. 24 could not be used to retroactively invalidate the benefits granted before its effectivity.

    Finally, the Court addressed the admissibility of the documents submitted by the petitioners in their motion for reconsideration before the COA Proper. The Court held that these documents, including the SEC Certification on PICCI’s Amended By-Laws and various Monetary Board Resolutions, were admissible. The Court emphasized that technical rules of procedure should not strictly apply to administrative cases, and parties should be given ample opportunity to present their claims. This perspective aligns with the principle that procedural rules are intended to secure, not override, substantial justice.

    FAQs

    What was the key issue in this case? The central issue was whether BSP officials concurrently serving on the PICCI Board of Directors could receive per diems, RATA, and bonuses without violating the constitutional prohibition against double compensation.
    What is the meaning of double compensation? Double compensation refers to receiving additional, double, or indirect compensation for a single service or role, which is generally prohibited for government officials unless specifically authorized by law.
    What is a GOCC? A government-owned and controlled corporation (GOCC) is an agency organized as a stock or non-stock corporation vested with public functions and owned by the government directly or indirectly, holding at least 51% of its capital stock.
    What did the Court rule regarding per diems and RATA in this case? The Court ruled that the grant of per diems and RATA to BSP officials serving on the PICCI Board did not violate the prohibition against double compensation, as these were authorized by law and PICCI’s bylaws.
    Were the bonuses also allowed by the Court? No, the Court upheld the COA’s disallowance of the bonuses, as they were considered a form of compensation not specifically authorized by law, violating the constitutional prohibition.
    What is the significance of Memorandum Order No. 20 in this case? Memorandum Order No. 20 directs the suspension of increases in benefits for GOCC employees, but the Court clarified that it only applies to increases exceeding benefits given to comparable officials in the National Government.
    How did Executive Order No. 24 affect the decision? Executive Order No. 24, requiring presidential approval for per diem increases, did not apply retroactively to the benefits granted before its effectivity.
    Were the additional documents submitted by the petitioners considered by the Court? Yes, the Court held that the additional documents, including the SEC Certification on PICCI’s Amended By-Laws, were admissible and should be considered in the case.

    In conclusion, this case offers significant guidance on the permissible bounds of compensation for public officials serving in multiple capacities. The ruling emphasizes the importance of clear legal authorization and adherence to relevant guidelines, but also highlights the need for a balanced and practical approach to ensure that individuals performing additional duties for the government are fairly compensated for their efforts.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: AMANDO M. TETANGCO, JR., VS. COMMISSION ON AUDIT, G.R. No. 244806, September 17, 2019

  • Per Diem Limits for Water District Directors: Harmonizing Executive Orders and Governing Laws

    The Supreme Court ruled that Administrative Order (AO) 103, which sets a limit on the total amount of per diems that can be received by members of governing boards of government-owned and controlled corporations (GOCCs), does not conflict with Presidential Decree (PD) 198, which allows water districts to prescribe per diems subject to the approval of the Local Water Utilities Administration (LWUA). The Court emphasized that AO 103 effectively superseded LWUA Memorandum Circular (MC) 004-02, which prescribed higher per diems, because the President has control over executive departments and GOCCs. The directors were ordered to reimburse the excess per diems they received because AO 103 was already in effect when the payments were made, negating their claim of good faith.

    When Austerity Measures Clash with Water District Compensation: Who Decides?

    This case revolves around the per diems received by the board of directors of the Baguio Water District (BWD) in September 2004. The Commission on Audit (COA) disallowed a portion of these per diems, arguing that they exceeded the limit prescribed by Administrative Order (AO) 103, which directed the continued adoption of austerity measures in the government. The BWD directors, however, contended that their per diems were approved by the Local Water Utilities Administration (LWUA) through Memorandum Circular (MC) 004-02, issued pursuant to Presidential Decree (PD) 198, also known as the Provincial Water Utilities Act of 1973. The central legal question is whether AO 103 could validly limit the per diems authorized by LWUA, and whether the BWD directors should reimburse the disallowed amounts.

    The Supreme Court addressed the apparent conflict between AO 103 and PD 198 by applying the principle of statutory construction, which prioritizes harmonizing seemingly inconsistent laws. The Court stated:

    It is a basic principle in statutory construction that when faced with apparently irreconcilable inconsistencies between two laws, the first step is to attempt to harmonize the seemingly inconsistent laws.

    In this light, the Court found that PD 198 and AO 103 could coexist. PD 198, as amended by Republic Act 9286, grants the water district board the power to set per diems, subject to LWUA approval:

    Sec. 13. Compensation. – Each director shall receive per diem to be determined by the Board, for each meeting of the Board actually attended by him, but no director shall receive per diems in any given month in excess of the equivalent of the total per diem of four meetings in any given month. Any per diem in excess of One hundred fifty pesos (P150.00) shall be subject to the approval of the Administration.

    AO 103, on the other hand, imposed a ceiling on the total per diems and benefits that non-full-time government officials, including members of governing boards, could receive:

    SEC. 3. All NGAs, SUCs, GOCCs, GFIs and OGCEs, whether exempt from the Salary Standardization Law or not, are hereby directed to: (ii) in the case of those receiving per diems, honoraria and other fringe benefits in excess of Twenty Thousand Pesos (P20,000.00) per month, reduce the combined total of said per diems, honoraria and benefits to a maximum of Twenty Thousand Pesos (P20,000.00) per month.

    The Court clarified that the true conflict lay between AO 103 and MC 004-02, the LWUA circular that prescribed the higher per diems. Here, the President’s power of control over the executive branch becomes relevant.

    The President’s power of control, as enshrined in Section 17, Article VII of the 1987 Constitution, allows the President to:

    alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the President over that of the subordinate officer.

    Since LWUA is a government-owned and controlled corporation, it is subject to the President’s control. Therefore, AO 103 effectively superseded MC 004-02, limiting the per diems that BWD directors could receive.

    The petitioners also argued that they acted in good faith when they received the excess per diems, citing Blaquera v. Alcala and De Jesus v. Commission on Audit. However, the Court rejected this argument because AO 103 was already in effect when the questioned payments were made. The Court emphasized that AO 103 took effect immediately upon its publication in two newspapers of general circulation on September 3, 2004.

    The Court distinguished the present case from Blaquera, where the disallowed amounts were released before the issuance of the regulating administrative order. Similarly, in De Jesus, the Court considered the ambiguity of the term “compensation” in the relevant decree, which led to the good faith reliance of the petitioners. The Court stated:

    At the time petitioners received the additional allowances and bonuses, the Court had not yet decided Baybay Water District. Petitioners had no knowledge that such payment was without legal basis. Thus, being in good faith, petitioners need not refund the allowances and bonuses they received but disallowed by the COA.

    In contrast, AO 103 explicitly and clearly ordered the discontinuance of per diems exceeding P20,000. Thus, the directors’ failure to comply with AO 103 was deemed unwarranted, and they were ordered to reimburse the excess amount.

    The implications of this decision are significant for government-owned and controlled corporations. It underscores the President’s authority to implement austerity measures and control the compensation of government officials. It also clarifies that reliance on previous authorizations is not a valid defense when a subsequent administrative order limits or prohibits such payments.

    FAQs

    What was the key issue in this case? The key issue was whether the Commission on Audit (COA) correctly disallowed the per diems received by the Baguio Water District (BWD) directors, which exceeded the limit set by Administrative Order (AO) 103. This involved determining whether AO 103 superseded prior authorizations for higher per diems.
    What is Administrative Order (AO) 103? AO 103 is an executive issuance directing the continued adoption of austerity measures in the government. It sets a limit of P20,000 per month on the combined per diems, honoraria, and fringe benefits for non-full-time government officials, including members of governing boards.
    What is Presidential Decree (PD) 198? PD 198, also known as the Provincial Water Utilities Act of 1973, governs the creation and operation of water districts in the Philippines. It authorizes the boards of water districts to determine the per diems of their directors, subject to the approval of the Local Water Utilities Administration (LWUA).
    What is the role of the Local Water Utilities Administration (LWUA)? The LWUA is a government-owned and controlled corporation (GOCC) that regulates and supervises water districts in the Philippines. It has the power to approve the per diems, allowances, and benefits prescribed by the boards of water districts.
    Why did the COA disallow the per diems? The COA disallowed the per diems because they exceeded the P20,000 limit set by AO 103. The COA argued that AO 103 superseded the LWUA’s prior authorization for higher per diems.
    What was the basis for the BWD directors’ claim that they should not have to reimburse the disallowed amounts? The BWD directors argued that they received the per diems in good faith, relying on the LWUA’s prior authorization and the principle established in previous Supreme Court cases. They believed that they should not be made to reimburse the amounts if they acted in good faith.
    How did the Supreme Court reconcile AO 103 and PD 198? The Supreme Court reconciled the two by stating that AO 103 does not negate the power of the LWUA to approve applications for per diems greater than P150. It emphasized that the conflict lay between AO 103 and MC 004-02, and that AO 103 effectively overruled the latter.
    Why was the defense of good faith rejected by the Supreme Court? The Supreme Court rejected the defense of good faith because AO 103 was already in effect when the questioned payments were made. The AO took effect immediately upon its publication in two newspapers of general circulation, putting the directors on notice of the new limit.
    What is the significance of the President’s power of control in this case? The President’s power of control over the executive branch, including GOCCs like the LWUA, was crucial in this case. It allowed the President to issue AO 103, which effectively modified or set aside the LWUA’s prior authorization for higher per diems.

    In conclusion, the Supreme Court’s decision affirms the President’s authority to implement austerity measures and control the compensation of government officials, even in GOCCs. This case serves as a reminder that government officials must adhere to prevailing administrative orders and cannot rely on prior authorizations when subsequent issuances impose stricter limits.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: TERESITA P. DE GUZMAN vs. COMMISSION ON AUDIT, G.R. No. 217999, July 26, 2016

  • Ex Officio Roles and Compensation: When Extra Pay Violates the Constitution

    The Supreme Court affirmed that ex officio members of the Philippine Economic Zone Authority (PEZA) Board are not entitled to receive per diems for their attendance in board meetings. This decision reinforces the principle that public officials serving in an ex officio capacity are already compensated through their primary positions and cannot receive additional payments for fulfilling duties related to those positions. The ruling underscores the constitutional prohibition against double compensation for public officials, ensuring that public funds are used judiciously and in accordance with the law.

    Double Dipping Debacle: Can PEZA Board Members Claim Extra Pay?

    The Philippine Economic Zone Authority (PEZA) found itself in hot water over its practice of granting per diems to ex officio members of its Board of Directors. These members, primarily Undersecretaries from various government departments, were receiving additional compensation for attending PEZA board meetings. The Commission on Audit (COA) flagged these payments, issuing Notices of Disallowance (NDs) for a total of P5,451,500.00 paid out between 2001 and 2006. This prompted a legal battle that ultimately reached the Supreme Court, centering on the legality of these per diems and the good faith of PEZA in disbursing them.

    PEZA argued that Section 11 of Republic Act (R.A.) No. 7916, which initially authorized per diems for board members, was never explicitly repealed by R.A. No. 8748, the amendatory law. However, the COA countered that R.A. No. 8748 intentionally omitted the provision allowing per diems, aligning the law with the constitutional prohibition against double compensation. The COA also pointed to prior Supreme Court rulings, such as Civil Liberties Union v. Executive Secretary, which clarified that public officials serving in an ex officio capacity are not entitled to additional compensation for their services, as their primary compensation already covers these duties.

    The Supreme Court sided with the COA, firmly establishing that the ex officio members of the PEZA Board were not entitled to the disputed per diems. The Court referenced its previous decision in Bitonio, Jr. v. Commission on Audit, which explicitly stated that R.A. No. 8748 deleted the provision in R.A. No. 7916 authorizing per diems for PEZA Board members. The deletion was a deliberate act to rectify a flaw in the original law and align it with the constitutional proscription against double compensation.

    The Court emphasized that the Civil Liberties Union case, decided well before the disallowed payments were made, clearly articulated the constitutional prohibition. This prohibition states that public officials performing additional duties in an ex officio capacity should not receive additional compensation if those duties are already within the scope of their primary functions. To allow such additional compensation would be a violation of Section 13, Article VII of the 1987 Constitution.

    Furthermore, the Court rejected PEZA’s claim of good faith in granting the per diems. Good faith, in this context, implies an honest intention and a lack of knowledge of circumstances that should prompt further inquiry. Given the existing legal precedent, particularly the Civil Liberties Union case, PEZA could not credibly claim ignorance of the potential illegality of the payments. The Court noted that PEZA was already aware that the disbursements were being questioned through the Notices of Disallowance issued by the COA.

    The Supreme Court also addressed the constitutional implications of allowing ex officio members to receive additional compensation. The Court referenced Civil Liberties Union v. Executive Secretary, stating:

    It bears repeating though that in order that such additional duties or functions may not transgress the prohibition embodied in Section 13, Article VII of the 1987 Constitution, such additional duties or functions must be required by the primary functions of the official concerned, who is to perform the same in an ex-officio capacity as provided by law, without receiving any additional compensation therefor.

    The ex-officio position being actually and in legal contemplation part of the principal office, it follows that the official concerned has no right to receive additional compensation for his services in the said position. The reason is that these services are already paid for and covered by the compensation attached to his principal office. It should be obvious that if, say, the Secretary of Finance attends a meeting of the Monetary Board as an ex-officio member thereof, he is actually and in legal contemplation performing the primary function of his principal office in defining policy in monetary and banking matters, which come under the jurisdiction of his department. For such attendance, therefore, he is not entitled to collect any extra compensation, whether it be in the form of a per diem or an honorarium or an allowance, or some other such euphemism. By whatever name it is designated, such additional compensation is prohibited by the Constitution.

    The Court emphasized that the Civil Liberties Union case was promulgated in 1991, or a decade before the subject disallowed payments of per diems for the period starting 2001 were made by PEZA. This underscored the fact that PEZA should have been aware of the legal restrictions and acted accordingly.

    Therefore, the Supreme Court dismissed PEZA’s petition and affirmed the COA’s decision, holding the recipients liable for refunding the disallowed per diems. This case serves as a crucial reminder of the limits on compensation for public officials and the importance of adhering to constitutional principles in the disbursement of public funds.

    FAQs

    What was the key issue in this case? The key issue was whether ex officio members of the PEZA Board of Directors were legally entitled to receive per diems for attending board meetings. The COA disallowed the payments, arguing they violated the constitutional prohibition against double compensation.
    What does “ex officio” mean in this context? “Ex officio” refers to a position held by virtue of one’s office or position. In this case, the Undersecretaries served on the PEZA Board because of their positions in their respective government departments.
    Why did the COA disallow the per diems? The COA disallowed the per diems because it considered them a form of double compensation, as the ex officio members were already being paid salaries in their primary government positions. The COA argued that such payments violated Section 13, Article VII of the 1987 Constitution.
    What was PEZA’s main argument? PEZA argued that the law authorizing the per diems (Section 11 of R.A. No. 7916) had not been explicitly repealed and that they acted in good faith when granting the payments. They claimed they believed the payments were legal at the time.
    How did the Supreme Court rule? The Supreme Court ruled against PEZA, affirming the COA’s decision. The Court held that the law authorizing the per diems had been effectively repealed and that PEZA could not claim good faith due to existing legal precedents.
    What is the significance of the Civil Liberties Union v. Executive Secretary case? The Civil Liberties Union case established the principle that public officials serving in an ex officio capacity are not entitled to additional compensation for duties related to their primary positions. This case served as a key precedent in the PEZA case.
    What does this ruling mean for other government agencies? This ruling reinforces the importance of adhering to constitutional principles regarding compensation for public officials. It serves as a reminder that ex officio members generally cannot receive additional compensation for serving on boards or committees.
    Who is responsible for refunding the disallowed per diems? The recipients of the disallowed per diems, the ex officio members of the PEZA Board, are responsible for refunding the payments to the government. The responsible PEZA officials may also be held liable.

    This decision highlights the judiciary’s commitment to upholding constitutional principles and ensuring accountability in the use of public funds. By disallowing the per diems, the Supreme Court has reinforced the prohibition against double compensation, promoting transparency and fiscal responsibility in government.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Philippine Economic Zone Authority (PEZA) vs. Commission on Audit and Reynaldo A. Villar, Chairman, Commission on Audit, G.R. No. 189767, July 03, 2012