Case Summary (G.R. No. 230628)
Factual Background
The Small Business Corporation, a government-owned and controlled corporation, was established under Republic Act No. 6977. It provides a variety of financial services aimed at supporting small and medium enterprises in the Philippines. The legislative framework around the corporation was expanded with the enactment of the Magna Carta for Micro, Small and Medium Enterprises in 2008 which allowed the Board to structure its compensation separate from the Salary Standardization Law, albeit within certain legal constraints. Subsequently, a moratorium on salary increases was imposed via Executive Order No. 7 from September 8, 2010, until expressly lifted by the President.
Procedural History
In April 2013, SB Corp. awarded merit increases to five officers. However, after a request for confirmation with the Governance Commission for Government-Owned and Controlled Corporations (GCG) was denied, the COA issued a Notice of Disallowance on August 27, 2014, citing violations of EO No. 7. The COA rejected SB Corp.'s appeals, reiterating that the incurring of expenses was unauthorized due to the prevailing moratorium on increases.
Ruling of the COA
Upon the conclusion of the internal appeals, the COA En Banc upheld the validity of the Notice of Disallowance in a decision dated February 16, 2017. The COA determined that despite SB Corp.'s charter exemptions, the moratorium under EO No. 7 still applied because it was in effect when the merit increases were granted. Furthermore, correspondence from SB Corp. to the GCG indicated an acknowledgment of GCG's jurisdiction over such compensation matters.
Issues Raised by the Petitioner
SB Corp. contends that:
- The COA erred in ruling that SB Corp.'s Board of Directors did not possess the authority to grant merit increases.
- EO No. 7 should apply prospectively, not retroactively, to protect vested rights.
- The merit increases were permissible, consistent with approved salary structure guidelines, and previously endorsed by other relevant government agencies.
Court's Ruling
The Supreme Court dismissed the petition, confirming that the COA did not exhibit grave abuse of discretion in its rulings. The decision highlighted that the remedy of certiorari is reserved for instances showcasing clear jurisdictional errors by the COA, and SB Corp. failed to demonstrate such errors. The Court clarified that the moratorium under EO No. 7 applied to t
...continue readingCase Syllabus (G.R. No. 230628)
Case Citation
- Jurisprudence: 819 Phil. 233; 114 OG No. 29, 5030 (July 16, 2017) EN BANC
- G.R. No.: 230628, October 03, 2017
Parties Involved
- Petitioner: Small Business Corporation (SB Corp.)
- Respondent: Commission on Audit (COA)
Procedural History
- The case originated from a Petition for Certiorari filed by SB Corp. on April 7, 2017, pursuant to Rule 64, Section 1 in relation to Rule 65, Section 1 of the Rules of Civil Procedure.
- The petition challenges the COA En Banc Decision dated February 16, 2007, which upheld Notice of Disallowance (ND) No. 14-001-401000-(13) dated August 27, 2014, disallowing merit increases amounting to ₱759,042.41 paid to five officers of SB Corp.
Factual Background
Creation of SB Corp.:
- Established under Republic Act No. 6977, as amended by RA No. 8289, to provide financial services for small and medium enterprises.
- Services include guarantee, lending, financial leasing, and issuance of debt instruments.
Key Legislative Developments:
- RA No. 9501 (2008): The Magna Carta for Micro, Small and Medium Enterprises, which included provisions allowing SB Corp. to set its own salary structure.
- EO No. 7 (2010): Imposed a moratorium on salary increases and benefits for GOCC employees, with exceptions for certain salary adjustments.
- RA No. 10149 (2011): Established the Governance Commission for GOCCs (GCG), granting it oversight over compensation policies.
Internal Resolutions:
- BR No. 1610 (2009): Approved the revised organizational structure and salary structure.
- BR No. 1863 (2011): Set guidelines for merit increases, allowing step increments based on merit or length of service.
Merit Increases Granted:
- On April 12, 2013, SB Corp. granted merit increases to five officers.
- A letter requesti