Case Summary (G.R. No. 141386)
Key Dates and Applicable Law
Decision date: November 29, 2001 (supreme court decision). Because the decision date is after 1990, the 1987 Constitution is the constitutional basis for the legal analysis. Governing statutory materials considered: Republic Act No. 5447 (creation of SEF and enumerated uses), Presidential Decree No. 464 (Real Property Tax Code, imposing 1% real property tax to accrue to SEF), and the Local Government Code of 1991 (notably Sections 235, 272, 99, 100(c) and the repealing clause, Section 534).
Issue Presented
Whether (1) the salaries and personnel-related benefits of teachers appointed by provincial/local school boards in connection with the establishment and maintenance of extension classes may be charged to the SEF; and (2) whether college scholarship grants provided by the provincial government may be charged to the SEF.
Procedural History
COA audited the Province of Cebu's accounts for January–June 1998 and found that salaries and personnel-related benefits of teachers appointed by the province for extension classes, and college scholarship grants, were charged against the provincial SEF. COA issued Notices of Suspension asserting such disbursements were not chargeable to the SEF. The province filed a petition for declaratory relief in the Regional Trial Court (Civil Case No. CEB-24422). The RTC (Judge Ferdinand J. Marcos) ruled on December 13, 1999, that the province was authorized to disburse SEF proceeds for the questioned expenditures. COA sought review in the Supreme Court; the High Court affirmed with modification.
Statutory Background — RA No. 5447 and PD No. 464
RA No. 5447 (effective January 1, 1969) created the SEF from specified taxes and enumerated exclusive uses, including (a) organization and operation of extension classes and creation of teacher positions for such classes, (c) payment and adjustment of salaries of public school teachers under specified statutes, and (j) granting government scholarships to poor but deserving students (among other items). PD No. 464 imposed an annual 1% tax on real property to accrue to the SEF.
Statutory Background — Local Government Code of 1991
The Local Government Code (LGC) reallocated certain functions and revenue streams. Section 235 authorized a local additional 1% real property tax accruing to the SEF. Section 272 provided that SEF proceeds be released to local school boards and shall be allocated for operation and maintenance of public schools, construction/repair of school buildings and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the local school board. Section 100(c) prioritized (1) construction, repair and maintenance of school buildings and facilities, (2) establishment and maintenance of extension classes, and (3) sports activities. Section 99 charged local school boards with determining annual supplementary budgetary needs for operation and maintenance of public schools. Section 534’s repealing clause expressly repealed certain provisions of prior law but did not expressly repeal all of RA No. 5447.
COA’s Argument
COA (petitioner) contended that with the LGC’s effectivity, RA No. 5447’s operative provisions were repealed or superseded such that the SEF’s uses were limited to the items enumerated in the LGC. COA invoked expressio unius est exclusio alterius to argue that because salaries, personnel-related benefits and scholarship grants are not expressly listed in Sections 100(c) or 272, they were excluded from permissible SEF expenditures. COA further asserted that the establishment and maintenance of extension classes should be read as limited to non-personnel upkeep and maintenance, leaving teacher compensation to the Department of Education, Culture and Sports (DECS)/national government.
Province’s Position and Trial Court Ruling
The province filed for declaratory relief to prevent enforcement of COA’s Notices of Suspension. The RTC declared that the province had authority to disburse SEF proceeds for salaries, allowances or honoraria for teachers and non‑teaching personnel in public schools and for scholarship grants to poor but deserving students, thereby nullifying COA’s audit findings on those points.
Supreme Court’s Approach to Statutory Construction
The Court reiterated that legislative intent governs statutory interpretation. It examined legislative history of the LGC (Senate and House deliberations) and found commentary indicating the legislative purpose included local responsibility for payment of salaries, emoluments and procurement of books and teaching materials in relation to local educational functions. The Court also considered the LGC’s repealing clause and the principle that repeal is not presumed except by clear, irreconcilable inconsistency or express repeal; only specific portions of RA No. 5447 were expressly repealed by the LGC. The Court applied the doctrine of necessary implication (ex necessitate legis) to infer that the allocation of SEF for establishment and maintenance of extension classes logically includes hiring and compensating teachers necessary for those classes.
Holding on Salaries and Personnel-Related Benefits for Extension Class Teachers
The Court held that salaries and personnel‑related benefits of teachers appointed by the provincial school board in connection with the establishment and maintenance of extension classes are chargeable against the SEF. The Court reasoned that (1) RA No. 5447 expressly included teacher salaries and creation of positions for extension classes; (2) the LGC’s provisions on establishment and maintenance of extension classes and operation/maintenance of public schools are not inconsistent with that allocation; (3) legislative history confirms intent to include compensation responsibilities; and (4) necessary implication supports funding of essential personnel costs incidental to establishing and maintaining extension classes. The Court qualified that not every personnel-related benefit of public school teachers can be charged to the SEF—only those pertaining to teachers appointed by local school boards specifically for extension classes.
Definition and Scope of “Extension Classes”
The Court construed “extension classes” to mean additional classes needed to
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Facts
- The provincial governor of Cebu, as chairman of the local school board under Section 98 of the Local Government Code, appointed classroom teachers who had no items in the DECS plantilla to handle extension classes intended to accommodate students in public schools.
- In the Commission on Audit (COA) audit of accounts of the Province of Cebu for January to June 1998, the salaries and personnel-related benefits of the teachers appointed by the province for extension classes were found charged against the provincial Special Education Fund (SEF).
- The COA also found that the province charged college scholarship grants to the provincial SEF.
- The COA issued Notices of Suspension to the Province of Cebu, stating that disbursements for the salaries of teachers and scholarship grants are not chargeable to the provincial SEF (Annex "1" - "1-h", Records, pp. 31-39 and Annex "8", Records, p. 64).
- In response to the COA Notices of Suspension, the Province of Cebu, represented by its governor, filed a petition for declaratory relief in the Regional Trial Court, Civil Case No. CEB-24422.
- On December 13, 1999, the trial court (Judge Ferdinand J. Marcos) rendered a decision giving due course to the petition and declaring that the Province was authorized to disburse SEF proceeds for payment of salaries, allowances or honoraria for teachers and non-teaching personnel in public schools of the Province and for expenses for scholarship grants to poor but deserving students; the court declared respondent's audit findings in the Annual Audit Report for the year ending December 31, 1999 null and void (Rollo, p. 38).
Procedural History
- The Province of Cebu filed a petition for declaratory relief in the Regional Trial Court after COA issued Notices of Suspension.
- The trial court ruled in favor of the Province, declaring the questioned expenses as authorized SEF expenditures and nullifying COA's audit findings.
- The Commission on Audit filed a petition for review (the instant petition) to annul and set aside the trial court's decision; the present matter raises a pure question of law.
- The Supreme Court, en banc, resolved the petition in a decision penned by Justice Ynares‑Santiago, reviewing statutory interpretation and related issues and rendering a modified affirmance of the RTC decision.
Issues Presented
- May the salaries and personnel-related benefits of public school teachers appointed by local chief executives in connection with the establishment and maintenance of extension classes be charged to the Special Education Fund of the local government unit concerned?
- May the expenses for college scholarship grants be charged to the Special Education Fund of the local government unit concerned?
- Was the petition for declaratory relief properly entertained despite COA's contention that the Notices of Suspension constituted a breach or violation rendering the petition inappropriate?
Relevant Statutes and Provisions
- R.A. No. 5447 (An act creating a Special Education Fund to be constituted from specified taxes and defining activities to be financed, creating school boards, etc.), effective January 1, 1969.
- Section 1 of R.A. No. 5447 enumerated permissible SEF expenditures, including (inter alia): organization and operation of extension classes with creation of positions for classroom teachers, payment and adjustment of salaries of public school teachers under RA 5168 and benefits under RA 4670, and granting government scholarships to poor but deserving students under RA 4090.
- P.D. No. 464 (Real Property Tax Code) imposed an annual 1% real property tax to accrue to the SEF (Sec. 41 as cited).
- Local Government Code of 1991 provisions relevant to the SEF and local school boards:
- Sec. 235: authorizes additional 1% annual real property tax whose proceeds shall exclusively accrue to the SEF.
- Sec. 272: proceeds from this additional 1% SEF tax shall be automatically released to local school boards and, in provinces, divided equally between provincial and municipal school boards; proceeds to be allocated for operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the local school board.
- Sec. 100 (c): the annual school board budget shall give priority to construction/repair/maintenance of school buildings and other facilities, establishment and maintenance of extension classes where necessary, and sports activities at specified levels.
- Sec. 99: the function of local school boards includes determining the annual supplementary budgetary needs for operation and maintenance of public schools and the supplementary local costs of meeting such needs.
- Sec. 534(c) (Repealing Clause): expressly repealed certain provisions of R.A. No. 5447 (notably Section 3, allocation of taxes on Virginia-type cigarettes and duties on imported leaf tobacco).
Parties' Contentions
- Commission on Audit (petitioner before the Supreme Court):
- Contends that R.A. No. 5447 was repealed by the Local Government Code; therefore, the enumerated expenditures in R.A. No. 5447 should be governed by the Local Government Code provisions.
- Invokes expressio unius est exclusio alterius to argue that because salaries, personnel-related benefits, and scholarship grants are not listed among authorized SEF expenditures in the Local Government Code (Secs. 272 and 100(c)), they are excluded and thus not chargeable to the SEF.
- Argues that the budget of local school boards for establishment and maintenance of extension classes should be construed to mean upkeep and maintenance of buildings and facilities only, not personnel-related benefits, since maintenance and operation of public schools principally pertain to DECS.
- Asserts that the Notices of Suspension constituted a breach or violation implying that the petition for declaratory relief should have been denied by the trial court.
- Province of Cebu (respondent in Supreme Court; petitioner in RTC):
- Appointed teachers to handle extension classes and charged salaries/personnel benefits and scholarship grants to the provincial SEF.
- Sought declaratory relief to confirm the authority to disburse SEF proceeds for those purposes, and obtained favorable verdict from the RTC declaring such expenditures authorized under SEF (including scholarships).
Legislative History and Legislative Intent
- Senate deliberations (July 30, 1990) on the Local Government Code:
- Exchange between Senators Guingona and Pimentel reveals that the Committee's stand was to respect national government decisions on curriculum but that the proposed transfer covers construction, repair, maintenance of school buildings and structures, payment of salaries, emoluments, allowances, procurement of books and other teaching materials and equipment needed for program implementation; Committee's language included salaries and allowances among locally covered items, while preserving national control over curriculum.
- House of Representatives deliberations (August 16, 1990