G.R. No. 156982 - National Amnesty Commission vs. Commission on Audit

Case Summary (G.R. No. 156982)

Factual Background

The National Amnesty Commission was created by Proclamation No. 347 on March 25, 1994 to receive, process and review amnesty applications and was composed of seven members: a Chairperson, three regular members appointed by the President, and the Secretaries of Justice, National Defense and Interior and Local Government as ex officio members. The three ex officio members designated representatives who attended NAC meetings and received honoraria beginning December 12, 1994. On October 15, 1997, the NAC resident auditor, Ernesto C. Eulalia, disallowed honoraria payments to those representatives totaling P255,750 for the period December 12, 1994 to June 27, 1997 pursuant to COA Memorandum No. 97-038. Notices of disallowance issued on NGAO review named seven representatives and specified amounts aggregating to P255,750.

Administrative Order and NAC’s Rule

On April 28, 1999, the NAC promulgated Administrative Order No. 2 as the new Implementing Rules and Regulations of Proclamation No. 347, which President Joseph Estrada approved on October 19, 1999. Section 1, Rule II of that order provided that the ex officio members may designate their representatives to the Commission and that such representatives “shall be entitled to per diems, allowances, bonuses and other benefits as may be authorized by law.” The NAC relied on this provision to challenge the COA disallowances.

COA Memorandum No. 97-038 and NGAO Action

COA Memorandum No. 97-038, issued September 19, 1997, directed auditors to implement Senate Committee Report No. 509 by disallowing payments of additional compensation or remuneration to cabinet secretaries, their deputies and assistants, or their representatives, in violation of the rule on multiple positions and to effect refunds for such payments back to the finality of the Supreme Court ruling in Civil Liberties Union v. The Executive Secretary. The NGAO upheld the resident auditor’s disallowance in NGAO Decision No. 98-006 dated September 21, 1998 and instructed the issuance of notices of disallowance for the identified payments.

Procedural History

The NAC exhausted administrative remedies before COA; COA rendered Decision No. 2001-144 dated July 26, 2001, and later Decision No. 2003-026 dated January 30, 2003, both affirming the NGAO ruling and the auditor’s notices of disallowance. The NAC filed a petition for review under Rule 64, 1997 Rules of Civil Procedure on March 14, 2003, seeking annulment of the COA decisions.

NAC’s Contentions on Review

The National Amnesty Commission contended that COA committed grave abuse of discretion by: (1) implementing COA Memorandum No. 97-038 without the publication required by Article 2 of the Civil Code; (2) invoking paragraph 2, Section 7, Article IX-B of the 1987 Constitution to sustain the disallowances; (3) applying the memorandum to representatives who were appointive officials below Assistant Secretary; (4) interpreting laws and rules beyond its authority and declaring Section 1, Rule II of Administrative Order No. 2 null and void; and (5) disallowing payments on the ground that representatives lacked authority to attend and act for ex officio members.

Legal Issues Presented

The case presented whether COA properly disallowed honoraria and related payments to representatives of ex officio members of the NAC; whether COA Memorandum No. 97-038 required publication under Article 2 of the Civil Code to be effective; whether the NAC’s Administrative Order could lawfully authorize payment to designated representatives; whether designation confers entitlement to compensation in the absence of appointment; and whether the reopening and revalidation of settled accounts fell within COA’s jurisdiction.

The Court’s Conclusions on COA Authority and Memorandum Publication

The Court held that COA exercised lawful and exclusive auditing authority under Article IX-D, 1987 Constitution, which empowers COA to define the scope of its audit, promulgate accounting and auditing rules, and disallow irregular or unconscionable expenditures. The Court ruled that COA Memorandum No. 97-038 did not require the publication mandated by Article 2 of the Civil Code because the memorandum was an internal, interpretative regulation or a letter of instruction enforcing constitutional prohibitions rather than an implementing rule of a statute affecting private rights. The Court relied on the distinction articulated in Tanada v. Tuvera between administrative rules that must be published and internal interpretative regulations that need not.

The Court’s Application of Constitutional Prohibitions Against Multiple Offices and Compensation

The Court applied its precedents interpreting the two constitutional prohibitions against multiple offices and double compensation: the general prohibition in paragraph 2, Section 7, Article IX-B and the stricter prohibition in Section 13, Article VII, 1987 Constitution applicable to the President, Vice-President and Cabinet members and their deputies or assistants. The Court reaffirmed the rule in Civil Liberties Union v. The Executive Secretary that ex officio posts held without additional compensation are part of the principal office and that services performed in an ex officio capacity are already covered by the compensation attached to the principal office. Consequently, ex officio members are not entitled to additional compensation for duties performed ex officio and their representatives cannot claim better rights than the principals.

Designation versus Appointment and the Representative’s Entitlement

Invoking prior authorities including Dimaandal v. COA and Santiago v. COA, the Court explained that designation differs from appointment. A designation imposes duties but does not confer the right to receive the salary or emoluments of the designated position absent a valid appointment. Because the NAC representatives were designated rather than appointed, they had no legal basis to claim salaries, honoraria or per diems. The Court rejected the NAC’s contention that the representatives were de facto officers entitled to compensation because they lacked colorable appointment and could not claim good faith in view of the clear constitutional prohibition and controlling decisions predating the payments.

Validity and Effect of Adminis

Case Syllabus (G.R. No. 156982)

Parties and Procedural Posture

National Amnesty Commission filed a petition for review under Rule 64 challenging COA decisions that affirmed an NGAO ruling disallowing payment of honoraria to representatives of its ex officio members.
Commission on Audit promulgated COA Memorandum No. 97-038 and issued decisions dated July 26, 2001 and January 30, 2003 that affirmed NGAO Decision No. 98-006.
NGAO upheld the resident auditor Ernesto C. Eulalia's order disallowing honoraria and caused notices of disallowance to be issued to seven named representatives.
The petition contested the COA rulings on grounds of lack of publication, misapplication of constitutional provisions, misinterpretation of Administrative Order No. 2, and wrongful disallowance for lack of authority of representatives.

Key Factual Allegations

Proclamation No. 347 created the NAC as a seven-member body including three ex officio members: the Secretaries of Justice, National Defense, and Interior and Local Government.
The three ex officio members initially attended NAC meetings personally but later designated representatives who began receiving honoraria from December 12, 1994.
Resident Auditor Ernesto C. Eulalia disallowed honoraria totaling P255,750 for the period December 12, 1994 to June 27, 1997 pursuant to COA Memorandum No. 97-038.
Administrative Order No. 2 (NAC IRR) provided that ex officio members may designate representatives and that said representatives "shall be entitled to per diems, allowances, bonuses and other benefits as may be authorized by law."

Administrative Acts and Orders

COA Memorandum No. 97-038 directed auditors to disallow payments of additional compensation to cabinet secretaries, their deputies and assistants, or their representatives, in implementation of Senate Committee Report No. 509 and the Court's decision in Civil Liberties Union v. Executive Secretary.
Administrative Order No. 2 amended the NAC IRR to permit designation of representatives and to state that such representatives are entitled to compensation "as may be authorized by law."
NGAO issued Decision No. 98-006 upholding the auditor's disallowance and COA subsequently affirmed that ruling in its cited decisions.

Issues Presented

Whether COA Memorandum No. 97-038 required publication under Article 2 of the Civil Code to be valid and effective.
Whether COA correctly invoked paragraph 2, Section 7, Article IX-B and Section 13, Article VII of the 1987 Constitution to disallow honoraria for representatives of ex officio members.
Whether Administrative Order No. 2 validly authorized payment of per diems and honoraria to designated representatives.
Whether the representatives could be considered de facto officers entitled to emoluments.
Whether COA acted within its authority in re-opening settled accounts under Section 52, P.D. No. 1445.

Contentions of the Parties

Petitioner NAC contended that COA Memorandum No. 97-038 was invalid for lack of publication, that the COA misapplied constitutional provisions, that the Memorandum should not apply to representatives below Assistant Secretary rank, that Administrative Order No. 2 authorized payment of compensation, and that representatives were entitled to allowances or were de facto officers.
Respondent COA contended that the Memorandum wa