G.R. No. 253218 - Department of Science and Technology Officials and Personnel vs. Commission on Audit

Case Summary (G.R. No. 253218)

Statutory Framework and the Origin of the Disallowance

On December 22, 1997, the Congress enacted Republic Act No. 8439, also known as the Magna Carta for Scientists, Engineers, Researchers and other S & T personnel in the Government. The decision noted that under Section 7(g) of Republic Act No. 8439, S & T personnel were granted a monthly longevity pay equal to five percent of their monthly basic salary for every five years of continuous and meritorious service, determined by the DOST Secretary, notwithstanding Section 12 of Republic Act No. 6758.

On October 3, 2005, the DOST received Audit Observation Memorandum (AOM) No. 2005-011(05) from Norberta R. Mateo. Mateo observed that 11 S & T personnel had been granted both step increment and longevity pay. Mateo relied on DBM Circular No. 2004-4 dated February 26, 2004, which, in the COA’s account, treated longevity pay and step increment due to length of service as alternatives that should not be granted simultaneously to the same person.

Based on the audit finding, the DOST Accounting Division received ND No. 09-002-101-(05-08) on April 16, 2009. COA records reflected that the ND disallowed step increment differentials for the period January 1, 2005 to December 31, 2008 in the amount of PHP 1,031,928.50, covering 103 payees identified as DOST S & T personnel. The disallowance further identified certain DOST officers as liable with the payees because of their participation in the disbursements, including those who approved the payments and certified entitlement.

Administrative Proceedings Before COA Cluster-B and COA Proper

When DOST sought reconsideration, then DOST Secretary Estrella F. Alabastro argued that Republic Act No. 8439 governed longevity pay for S & T personnel; that longevity pay under the statute was distinct from step increment under Republic Act No. 6758; and that DBM Circular No. 2004-04 did not apply to S & T personnel. After denial, Secretary Alabastro appealed to COA Cluster B-General Public Services II and Defense National Government Sector (NGS).

The COA Cluster-B Director, in NGS Cluster B-Decision No. 2010-003 dated May 17, 2010, upheld the disallowance and denied Alabastro’s appeal. The Cluster-B Director reasoned that DBM Circular Letter No. 2004-4 was presumed valid, that supplemental rules must be respected until judicially nullified, and that the issue on the validity of DBM’s interpretations was a question of law not for COA to decide. The dispositive portion denied the appeal and noted that the disallowance may be enforced while preserving the right of persons liable to appeal to the COA Commission Proper.

The COA Proper later affirmed the disallowance in Decision No. 2014-381 dated December 17, 2014, and it denied reconsideration through Resolution dated December 23, 2015. The COA Proper also dismissed proceedings triggered by Montejo’s April 22, 2016 letter through Resolution No. 2020-036 dated January 21, 2020, for lack of jurisdiction and for being a prohibited pleading.

Position of DOST Through De La Pena

In the petition, De La Pena argued on procedural and substantive grounds. Procedurally, he asserted that the Court’s trend was to allow the broadest opportunity to litigate the merits without being constrained by technicalities.

On the merits, De La Pena contended that the COA Decision was legally erroneous. He maintained that step increment is inherently different from longevity pay. He supported this distinction through (a) definitions and concepts drawn from Presidential Decree No. 985, which defines step increment as an increase from one step to another within a salary grade; and (b) the statutory description in Republic Act No. 8439, which computes longevity pay as a monthly incentive equivalent to five percent of monthly basic salary for every five years of continuous and meritorious service determined by the DOST Secretary. He further argued that the purpose of longevity pay, as reflected in the statute, was to develop and sustain scientific and technological manpower, while step increment’s purpose was not stated in the law. He also argued that step increment was typically granted in general at three-year intervals, while longevity pay was granted at five-year intervals; he characterized step increment as adjusting basic salary, whereas longevity pay was a separate computed incentive.

De La Pena further argued that Section 7 of Republic Act No. 8439 granted longevity pay notwithstanding Section 12 of Republic Act No. 6758, that DBM Circular No. 2004-04 was limited to public health workers, and that the DOST’s contemporaneous construction of Republic Act No. 8439 merited weight. From these premises, he asserted that the statutory prohibition against double recovery under Section 13 of Republic Act No. 8439 was not violated when S & T personnel received both benefits.

COA’s Response: Timeliness, Grave Abuse, and Finality

The COA maintained that the petition should be dismissed. It argued that De La Pena failed to state the material date of receipt of the assailed COA Decision, which, under its reading of applicable procedural rules, prevented an accurate determination of timeliness. It invoked the principle that the Fresh Period Rule under Neypes v. Court of Appeals does not apply to petitions for certiorari under Rule 64.

On the merits, COA argued that De La Pena failed to show that COA acted with grave abuse of discretion in disallowing step increment differentials to S & T personnel who also received longevity pay during the period January 1, 2005 to December 31, 2008. COA stressed that DBM, acting under authority to implement Presidential Decree No. 985 as amended by Republic Act No. 6758, issued DBM Circular No. 2004-4, interpreting step increment due to length of service and longevity pay as essentially the same benefit for purposes of the statutory prohibition on double recovery under Section 13 of Republic Act No. 8439.

Timeliness and Finality of the ND and the COA Proper Decision

The Court held that the petition lacked merit principally because the ND and the COA Proper Decision had long become final and immutable. Under Rule IV, Section 8 of the 2009 Revised Rules of Procedure of the Commission on Audit (2009 RRPC), the auditor’s decision becomes final after the expiration of six months from the date of receipt, and for disallowed payrolls with multiple payees, the six-month period is reckoned from the time the ND is served to the accountant. Under Rule IV, Section 7 of the 2009 RRPC, such service to the accountant constitutes constructive service to all payees listed in the payroll.

Applying these rules, the Court reasoned that the ND was received by the DOST Accounting Department on April 16, 2009. None of the 103 persons held liable appealed the ND to the COA Cluster-B Director. The Court therefore concluded that more than the six-month period had elapsed, and the ND had already attained finality as to the 103 liable persons.

The Court further held that the assailed COA Proper Decision likewise attained finality on March 19, 2015, based on the 30-day period for filing a petition for certiorari under Rule XII, Section 1 of the 2009 RRPC after the COA Proper Decision was served on the DOST on February 17, 2015. De La Pena’s predecessor, Secretary Alabastro, and later Secretary Montejo, and their representatives, did not file a timely petition within the reglementary period. The Court treated the May 27, 2015 motion for reconsideration filed by Atty. Oswaldo C. Santos and Engr. Arnaldo C. Reyes as one that did not toll the 30-day period because it was filed 99 days after service and therefore out of time.

The Court also held that Montejo’s subsequent April 22, 2016 letter to the COA Chairperson could not revive the already final COA action. The COA Proper had treated the letter as a second motion for reconsideration in violation of the 2009 RRPC, and the Court sustained the jurisdictional and procedural bar. The Court emphasized the doctrine that once a decision becomes final, it becomes immutable and unalterable, except for narrow exceptions such as correction of clerical errors, nunc pro tunc entries without prejudice, void judgment, or supervening circumstances making execution unjust and inequitable. It found none of those exceptions present.

Lack of Legal Standing of De La Pena as Petitioner

Apart from finality, the Court held that De La Pena also lacked the legal standing required to assail the COA Proper’s definitive ruling. It underscored that actions in disallowance cases pertain to a personal obligation of the persons held liable. Under the 2009 RRPC, only an aggrieved party may appeal the auditor’s decision to the Director and only an aggrieved party may appeal to the COA Proper. Likewise, under Rule 64 and Rule 65, the petitioner in certiorari must be the person aggrieved.

The Court reasoned that the COA ruling on a question of law does not, by itself, create a binding precedent that applies to future cases, and that persons similarly situated but not actually parties to the disallowance proceeding are strangers to it and are not bound by the judgment. It concluded that only the 103 persons held liable under ND No. 09-002-101-(05-08) had standing to assail the disallowance.

The Court further stated that De La Pena was not among those 103 liable persons. It also noted that the incumbent DOST Secretary at the time the ND was issued was Sec. Alabastro, so the COA proceedings did not create any administrative, civil, or criminal liability for De La Pena personally. It also held that De La Pena failed to allege and demonstrate that the COA Decision adversely affected the interest of the DOST in a way that would allow the head of an agency to sue under the 2009 RRPC provision permitting action by the proper head when a COA decision adversely affects a government agency’s interest.

The Court pointed out that De La Pena did not identify any DOST is

Case Syllabus (G.R. No. 253218)

The case arose from a Petition for Certiorari filed under Rule 64, in relation to Rule 65, of the Rules of Court, assailing Commission on Audit (COA) issuances that disallowed step increment differentials granted to science and technology (S & T) personnel.
The Petition was filed by Fortunato T. De La Pena, in his official capacity as Secretary of the Department of Science and Technology (DOST), and on behalf of DOST officials and personnel.
The COA Proper affirmed Notice of Disallowance (ND) No. 09-002-101-(05-08) and the related Cluster-B decision, resulting in a total disallowance of PHP 1,031,928.50 for the period January 1, 2005 to December 31, 2008.
The Court dismissed the Petition for lack of merit, affirming the COA issuances.

Parties and Procedural Posture

Petitioners were Department of Science and Technology (DOST) officials and personnel represented by Sec. Fortunato De La Pena, in his capacity as Secretary, while Respondent was the Commission on Audit (COA).
The assailed COA Proper Decision was Decision No. 2014-381 dated December 17, 2014, and the assailed COA Proper denials and dismissals included Resolution dated December 23, 2015 and Resolution No. 2020-036 dated January 21, 2020.
The COA disallowance was earlier sustained by COA Cluster-B in NGS Cluster-B Decision No. 2010-003 dated May 17, 2010, which denied DOST Secretary Estrella F. Alabastro’s appeal.
No appeal to the COA Cluster-B Director or COA Proper was filed by the 103 persons held liable under ND No. 09-002-101-(05-08).
The Court reviewed both procedural obstacles to judicial review and the substantive grounds invoked by petitioners to challenge the COA disallowance.

Core Factual Setting

Congress enacted Republic Act No. 8439, the Magna Carta for Scientists, Engineers, Researchers and other S & T personnel in the Government, granting certain benefits to S & T personnel.
Under Section 7(g) of Republic Act No. 8439, S & T personnel were granted a monthly longevity pay equivalent to five percent of their monthly basic salary for every five years of continuous and meritorious service, as determined by the DOST Secretary, notwithstanding Section 12 of Republic Act No. 6758.
On October 3, 2005, DOST received Audit Observation Memorandum (AOM) No. 2005-011(05), which observed that 11 S & T personnel received both step increment and longevity pay.
The audit observation cited DBM Circular No. 2004-4 dated February 26, 2004, which provided guidelines on the grant of longevity pay and step increment and opined that recipients had the option to receive either step increment or longevity pay, but not both.
On April 16, 2009, DOST received ND No. 09-002-101-(05 to 08) disallowing the step increment differentials for January 1, 2005 to December 31, 2008 in the total amount of PHP 1,031,928.50, involving 103 individuals listed in the notice.
The ND also identified specific DOST officers who were found liable for participation in the disbursements, including approvals and personnel certifications regarding entitlement.
The disallowance was ultimately sustained despite petitioners’ position that S & T personnel could lawfully receive both benefits.

Statutory and Administrative Framework

Republic Act No. 8439 governed longevity pay for S & T personnel, including a provision against double recovery.
Section 13 of Republic Act No. 8439 was treated by COA as a prohibition against double benefits for S & T personnel already receiving similar benefits under other laws unless the statutory option to withdraw and opt is exercised.
Republic Act No. 6758, the Compensation and Position Classification Act of 1989, was invoked to support COA’s view that step increment is sanctioned by law but requires compliance with relevant DBM issuances.
DBM Circular No. 2004-4 was the principal administrative interpretation applied by COA, treating longevity pay and step increment as benefits not to be granted simultaneously to the same recipient.
Presidential Decree No. 985 (as amended by Republic Act No. 6758) was referenced in the case narrative as the basis for implementing the step increment system.
DOST-DBM Joint Circular No. 1, series of 2013, specifically Item 13.6, was later cited by the Court to show an institutional consensus within the implementing agencies that S & T personnel previously granted step increment due to length of service would no longer receive subsequent step increment due to length of service once longevity pay is granted.

Issues for Resolution

The Court resolved a procedural issue: whether the Petition was timely filed for judicial review of COA Proper issuances.
The Court also resolved a substantive issue: whether COA acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it disallowed step increment differentials granted to S & T personnel who also received longevity pay during January 1, 2005 to December 31, 2008.
The Court additionally considered related obstacles to review, including whether petitioners had the legal standing to file the Petition and whether the Petition’s filing defects could be excused.

Arguments of Petitioners

Petitioners argued that the “emerging trend” of the Court favored granting every litigant the “amplest opportunity” to determine the cause free from constraints of technicalities.
On the merits, petitioners contended that COA committed errors in legal interpretation and construction by treating longevity pay and step increment as duplicative benefits.
Petitioners maintained that step increment was inherently different from longevity pay, grounding the distinction on:
- the definition of step increment as an increase in salary or wage from one step to another within a grade from minimum to maximum, and
- the statutory description of longevity pay as a benefit equivalent to five percent of monthly basic salary for every five years of continuous and meritorious service as determined by the DOST Secretary.
Petitioners argued that longevity pay and step increment had different bases and purposes, including that longevity pay supported a program of science and technology human resource development, and step increment was granted based on merit and/or length of service.
Petitioners argued further that the two benefits were granted at different intervals, with step increment generally every three years and longevity pay every five years.
Petitioners asserted that Section 7 of Republic Act No. 8439 required longevity pay to be granted notwithstanding Section 12 of Republic Act No. 6758, and thus the prohibition on double benefits was allegedly not violated.
Petitioners contended that DBM Circular No. 2004-4 applied only to public health workers, and they relied on DOST’s claimed contemporaneous construction to support that S & T personnel could receive both benefits.
Petitioners also attempted to avoid dismissal by omitting the date of DOST’s receipt of the COA Proper Decision from the Petition, offering an explanation that the copy could not be located.

Arguments of COA

COA urged dismissal based on petitioners’ alleged failure to state the material date of receipt of the assailed Decision.
COA argued that the Fresh Period Rule under Neypes v. Court of Appeals did not apply to petitions for certiorari under Rule 64, relying on Fortune Life Insurance Company, Inc. v. COA Proper.
COA maintained that, because the Petition failed to state the date of receipt, the remaining filing