G.R. No. 100773 - Philippine Ports Authority vs. Commission on Audit

Philippine Ports Authority (PPA) is a government-owned and controlled corporation created under Presidential Decree (PD) No. 857, in charge of port administration and operation in the country.
PPA officials, including various supervisory and managerial personnel, were receiving representation and transportation allowances (RATA) pursuant to guidelines set in earlier issuances.

On August 22, 1976, PD No. 985 standardized compensation for government officials and employees, including those in GOCCs.
LOI No. 97, issued on August 31, 1979, authorized a compensation position classification system for the infrastructure/utilities group of GOCCs and provided specifically in Section 5(g) for RATA up to 40% of basic pay.
Subsequent memoranda by PPA detailed the payment of RATA:

Memorandum Circular No. 57-87 (October 1, 1987) granted a RATA of 40% of basic salary to specified managerial and supervisory officials (designated as first category officials).
Memorandum Circular No. 36-89 (October 23, 1989) and its amendment in Memorandum Circular No. 46-90 (November 14, 1990) provided for RATA to certain section chiefs and supervisory positions, initially at 20% then increased to 40% (designated as second category officials).

RA No. 6758, passed on August 9, 1989 and effective as of July 1, 1989, revised the compensation and position classification system to apply to all government positions, including those in GOCCs.
Under Section 12, first paragraph of RA 6758, allowances not integrated into the standardized salary (including RATA) were to continue only for incumbents as of July 1, 1989.
Provisions in Section 16 of RA 6758 effectively repealed earlier special salary laws and regulations (including those underlying LOI No. 97) if inconsistent with the new standardized system.

PPA had paid RATA differentials amounting to P826,131.60 for first category officials and P246,456.14 for second category officials.
The Commission on Audit (COA), through its Corporate Auditor Judy M. Hugo, disallowed these payments on post-audit:

COA maintained that following the effectivity of RA 6758, the RATA should be computed not as 40% of basic salary but based on the highest amount received by the incumbent as of June 30, 1989.
COA found that LOI No. 97, being inconsistent with RA 6758, had been effectively repealed to the extent that it provided for additional financial incentives beyond what the standardized system allowed.

PPA, along with affected officials (petitioners), argued that LOI No. 97 still authorized the continued payment of RATA at 40% of basic salary for those who had been receiving it as of July 1, 1989.
The petitioners cited the OGCC Opinion No. 68 (March 23, 1990), which opined that Section 5(g) of LOI No. 97 was not repealed by RA 6758.
Respondent COA, however, based its position on:

The interpretation of Section 12 of RA 6758 that limits continuing RATA benefits to incumbents as of July 1, 1989.
A determination that any post-July 1, 1989 grant or retroactive application would amount to an impermissible deviation from the standardized system.

The dispute further centered on whether the computation of RATA after July 1, 1989 should be based on the rates provided by LOI No. 97 or recalculated according to the DBM’s cut-off approach.

Are the petitioners-officials still entitled to receive their representation and transportation allowance (RATA) at the rates provided for by LOI No. 97 despite the enactment of RA No. 6758?

Has RA No. 6758, by its provisions and through the operation of Section 16, effectively repealed LOI No. 97 on matters of RATA, or do certain benefits continue for incumbents?

What is the proper basis for computing RATA after July 1, 1989?
Should it continue as 40% of basic salary (or standardized salary) for those who were already receiving RATA, or be limited to the highest amount received as of June 30, 1989?

Does the vested right to RATA under LOI No. 97 extend equally to both first category officials (receiving RATA before July 1, 1989) and second category officials (those not receiving RATA before that date)?