Bitonio, Jr. vs. Commission on Audit

Factual Background

In 1994, petitioner was appointed Director IV of the Bureau of Labor Relations under DOLE. On May 11, 1995, a letter addressed to the then Secretary of the Department of Trade and Industry designated petitioner as the DOLE representative to the Board of Directors of the Philippine Economic Zone Authority (PEZA). The designation was made pursuant to Section 11 of Republic Act No. 7916, the Special Economic Zone Act of 1995, which created PEZA and provided that PEZA’s Board would include representatives from specified government departments and sectors, with board members receiving a per diem. Under the structure then in force, petitioner received per diems for each board meeting he attended during 1995 to 1997.

Following a post audit of PEZA’s disbursement transactions, the COA disallowed petitioner’s per diems and issued three notices of disallowance. Notice of Disallowance 98-008-101 (95) was dated July 31, 1998 for P24,500 covering July to December 1995. Notice of Disallowance 98-003-101 (96) was also dated July 31, 1998 for P100,000 covering January 1996 to January 1997. Notice of Disallowance 98-017-101 (97) was dated October 9, 1998 for P210,000 covering February 1997 to January 1998.

The uniform stated reason for the disallowance was that the Supreme Court, in Civil Liberties Union v. Executive Secretary, declared unconstitutional an executive issuance authorizing multiple government positions for certain officials, and that the disallowance was implemented pursuant to COA Memorandum No. 97-038 based on Senate Committee Report No. 509.

COA Proceedings and Denial of Reconsideration

On November 24, 1998, petitioner filed a motion for reconsideration with COA. He argued that the Supreme Court’s earlier ruling in Civil Liberties Union had been modified by a later Resolution dated August 2, 1991, clarifying that the prohibition was limited to Cabinet Secretaries, Undersecretaries, and their assistants, and did not extend to officials of equivalent rank or below the rank of assistant secretary. He further relied on the argument that R.A. No. 7916, enacted in 1995, specifically authorized per diems and remained valid and binding because its constitutionality had not been directly challenged, and because legislative enactment should be presumed to have been made with knowledge of judicial parameters.

COA rejected the motion and, on January 30, 2001, rendered the assailed decision denying reconsideration. The present petition followed under Rule 64, and an amended petition was filed on August 16, 2002 to include Notice of Disallowance 98-003-101 (96), which petitioner alleged he received only on August 13, 2002.

Issue Raised

The central issue was whether COA correctly disallowed the per diems petitioner received for attending PEZA Board meetings as the representative of the Secretary of Labor.

The Parties’ Contentions

Petitioner maintained that he was entitled to per diems because Section 11 of R.A. No. 7916 expressly provided for per diems for PEZA Board members’ attendance. He argued that the law should be presumed valid until declared unconstitutional and should not be defeated by a COA memorandum implementing Civil Liberties Union. He also contended that he belonged to a rank not covered by the constitutional prohibition as clarified in the Civil Liberties Union clarificatory resolution, and that as a statutory matter, the legislature must have been aware of the judicial interpretation when it enacted R.A. No. 7916.

COA, as reflected in the rationale it adopted and the decision rendered, anchored the disallowance on the constitutional prohibition under Section 13, Article VII of the 1987 Constitution, as interpreted in Civil Liberties Union, and on the audit directives embodied in COA Memorandum No. 97-038 responding to the Blue Ribbon report.

Legal Basis and Reasoning

The Court upheld COA’s disallowance. It explained that COA’s action was founded on Civil Liberties Union v. Executive Secretary, where the Court declared Executive Order No. 284 unconstitutional insofar as it allowed Cabinet members and their deputies and assistants to hold other offices or employments and receive compensation therefor, except where the Constitution expressly provides. The Court treated the constitutional prohibition as flowing from Section 13, Article VII of the 1987 Constitution, which bars the President, Vice-President, Cabinet members, and their deputies or assistants from holding other office or employment during their tenure and from receiving compensation in connection with such additional positions, subject only to constitutional exceptions.

The Court further noted that, consistent with the final and executory effect of Civil Liberties Union as of August 19, 1991, COA issued Memorandum No. 97-038, which directed national government agencies and audit unit leaders to implement disallowance and refund of additional compensation or remuneration, including per diems, from the time of finality of the Supreme Court ruling to the present. The memorandum was traced to the urge contained in Senate Committee Report No. 509.

On petitioner’s reliance on R.A. No. 7916, the Court rejected the contention that the statute’s express grant could override the constitutional proscription. It stressed that petitioner’s participation in PEZA Board meetings depended on his appointment as the Secretary of Labor’s representative, not on a separate office or special appointment for the PEZA position itself. Because the Secretary of Labor was prohibited from receiving compensation for an additional office or employment during tenure, the representative could not lawfully obtain compensation in a capacity legally tied to the prohibited additional office.

The Court found the case controlled by Dela Cruz v. Commission on Audit, where it had upheld disallowance of honoraria and per diems paid to officials who sat as members of a board in an ex officio or alternate capacity. In that case, the Court reasoned that because the ex officio position was, in legal contemplation, part of the principal office, the official had no right to receive additional compensation for services already covered by compensation attached to the principal office. The Court in the present case adopted the same logic: petitioners standing as representative could not place him in a better position than his principal. Since the Secretary of Labor authorized petitioner to sit on the PEZA Board, petitioner’s authority mirrored the principal’s capacity and constraints. Thus, even if petitioner’s own rank was not among those enumerated in the clarificatory resolution, his representative role placed him under the same constitutional prohibition.

The Court likewise rejected petitioner’s argument that the legislature, having enacted R.A. No. 7916 after Civil Liberties Union became final, must have intended to allow per diems. It emphasized that legislative enactments must conform to the Constitution and cannot render the constitutional prohibition nugatory. It noted, too, that the constitutional invalidity of the earlier framework was later addressed by legislative amendment through R.A. No. 8748, enacted on June 1, 1999, which amended Section 11 of R.A. No. 7916. The amendment changed PEZA Board composition by increasing the number of board members and deleting the option of Cabinet Secretaries to designate representatives, and it also deleted the last paragraph concerning per diems to board me