G.R. No. 177011 - Sison vs. Tablang

Petitioners, composed of Joseph Peter Sison, Rosemarie Sioting, Fe P. Valenzuela, Roberto L. Bautista, Mario P. Escober, Arlene Puzon, Danilo G. Gerona, Necitas B. Clemente, Ramon Macatangay, and Neofito Hernandez, served as members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) of the National Housing Authority (NHA).
Respondents include Rogelio Tablang, Director IV, Commission on Audit; Elizabeth S. Zosa, Assistant Commissioner - Legal Adjudication and Settlement Board Chairperson; Emma M. Espina, Jaime P. Naranjo, Amorsonia B. Escarda, and Carmela S. Perez, members of the Commission on Audit Legal Adjudication and Settlement Board.

The controversy arose from the payment of honoraria in the amount of P364,299.31, which was remitted to petitioners for their services as members of the BAC and TWG.
Audit Observation Memoranda from the Supervising Auditor of the NHA reported excess or unauthorized honoraria payments for the specified periods.
Three distinct Notices of Disallowance (NDs) were issued by the Legal and Adjudication Office-Corporate (LAO-C):

ND No. 2004-001 (04) dated November 22, 2004, disallowed P73,768.00 for overpayments for January and March 2004, based on the absence of a legal basis.
ND No. 2004-002 (03) dated December 2, 2004, disallowed P290,531.31 for payments covering March to September 2003 (for lack of legal basis) and for October to December 2003 (for exceeding allowed rates under DBM Circular No. 2004-5 dated March 23, 2004).
ND No. 2005-001 (04) dated May 24, 2005, disallowed P68,096.00 for the period from April to June 2004 together with honoraria paid to regular and provisionary BAC members from January to June 2004, as these were contrary to the allowed rates.

On January 3, 2005, petitioners filed motions for reconsideration with the LAO-C, contending that:

The honoraria payments were computed based on the number of projects completed and were in accordance with the IRR of R.A. 9184, which provided that award to BAC and TWG members “may” receive honoraria not exceeding 25% of their basic monthly salary, subject to the availability of funds.
Since the DBM had not yet promulgated the necessary guidelines for the honoraria, the flat 25% of the basic salary was applicable under the circumstances.
The computation should use the date of the Recommendation of Award rather than the Notice of Award and that any computed remaining disallowed amount be offset against future collectibles or honoraria.

On September 13, 2005, the LAO-C denied the motions for reconsideration, also rejecting the petitioners’ request to set off the disallowed amount against future payments.

Petitioners filed a petition for certiorari before the Supreme Court after the Adjudication and Settlement Board (ASB) of the Commission on Audit, in its Decision dated March 5, 2007, affirmed the LAO-C’s ruling.
The court noted that petitioners failed to first avail themselves of the appeal to the Commission on Audit Proper as mandated by the COA rules, thereby breaching the principle of exhaustion of administrative remedies.

Section 15 of Republic Act No. 9184, governing the payment of honoraria, allows for a payment not exceeding 25% of a BAC member’s basic monthly salary, contingent upon DBM promulgating the corresponding guidelines.
DBM Budget Circular No. 2004-5 provided the necessary guidelines, prescribing that honoraria should be paid only for “successfully completed procurement projects” and within specific rate limits per project.
Petitioners remunerated themselves based on their monthly salaries even before the DBM guidelines became effective, thus contravening the procedural requirement for disbursement.

Whether the petitioners’ failure to exhaust administrative remedies by not appealing the ASB decision to the Commission on Audit Proper before seeking judicial intervention renders the petition invalid.
Whether the payment of honoraria amounting to 25% of the petitioners’ basic monthly salaries, in the absence of DBM’s implementing guidelines, is legally justified.
Whether the disallowance of the honoraria payments, as implemented through the three Notices of Disallowance, was proper and in accordance with Section 15 of R.A. No. 9184 and the subsequent DBM Circular.