Case Digest (G.R. No. 230628)
Facts:
Small Business Corporation v. Commission on Audit, G.R. No. 230628, October 03, 2017, Supreme Court En Banc, Velasco Jr., J., writing for the Court.
Petitioner Small Business Corporation (SB Corp.), a GOCC created under Republic Act No. 6977 as amended, adopted a revised organizational structure and salary scheme by Board Resolution No. 1610 (June 1, 2009) and later promulgated implementing guidelines in Board Resolution No. 1863 (October 28, 2011) that authorized step increments, including merit increases, as adjustments to basic salary. SB Corp. thereafter granted merit increases on April 12, 2013 to five Job Level 6 officers, applying them to salary periods from September 1, 2012 to August 31, 2014.
On September 8, 2010, the President issued Executive Order No. 7 (EO No. 7) which, in Section 9, imposed a moratorium on increases in rates of salaries and the grant of new increases in allowances, incentives and other benefits for GOCCs and GFIs, except for specific salary adjustments implemented by prior executive issuances. On June 6, 2011, Republic Act No. 10149 (GOCC Governance Act of 2011) created the Governance Commission for GOCCs (GCG) with powers to formulate and monitor GOCC compensation policies. SB Corp. sought confirmation from the GCG to proceed with its merit increase program by letter dated June 25, 2014; the GCG denied the request with finality on July 8, 2014 citing the EO moratorium.
The State Auditor issued Notice of Disallowance (ND) No. 14-001-401000-(13) dated August 27, 2014 disallowing the total payments and related payroll adjustments for the five officers amounting to P759,042.41 and identifying officers and officials to be made liable. SB Corp. appealed the ND to the COA Cluster Director, which denied the appeal in Decision dated April 29, 2015, holding SB Corp. estopped from contesting GCG authority because it sought GCG confirmation. SB Corp. then filed a Petition for Review to the COA En Banc; the COA En Banc in Decision No. 2017-010 dated February 16, 2017 sustained the ND, finding that (1) merit increases form part of basic salary and thus fall within EO No. 7’s moratorium, (2) SB Corp. had recognized GCG’s authority by seeking its confirmation, and (3) the CSC’s approval of SB Corp.’s salary structure did not exempt it from EO No. 7.
...(Subscriber-Only)Issues:
- Did the Commission on Audit commit grave abuse of discretion amounting to lack or excess of jurisdiction in sustaining ND No. 14-001-401000-(13)?
- Did the Board of Directors of SB Corp. have authority to grant the merit increases notwithstanding Section 9 of EO No. 7 and related issuances?
- Did the application of EO No. 7 to the merit increases constitute an impermissible retroactive application impairing vested or contractual rights?
- Was SB Corp. within the jurisdiction of the GCG, and is it estoppe...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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