WHETHER OR NOT THE COMMISSION ON AUDIT IN ISSUING DECISION NOS. 2002-010 AND 2003-106 DATED 08 JANUARY 2002 AND 17 JULY 2003, RESPECTIVELY, ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

Petitioners aver that the grant of hazard duty pay to PPA employees is authorized by PPA Special Order No. 407-97, which was issued pursuant to PPA Memorandum Circular No. 34-95 dated June 26, 1995 implementing DBM National Compensation Circular No. 76, series of 1995.  Hence, they assert that there is legal basis for the grant of the disallowed benefit   since the presidential veto covers only the proposal to pay hazard duty pay under the 1997 budget.  They contend that the presidential veto cannot be made to operate retrospectively since the PPA employees have acquired a vested right to the hazard duty pay covering the first semester of 1997.  

The contention is untenable.  

Indeed, DBM National Compensation Circular No. 76 dated March 31, 1995 provided the guidelines on the grant of hazard duty pay under the annual General Appropriations Act. However, on February 12, 1997, President Fidel V. Ramos vetoed the provision granting hazard duty pay in RA No. 8250 or the General Appropriations Act for Fiscal Year 1997.  DBM Circular Letter No. 13-97 dated December 15, 1997 informed government entities of the presidential veto, thus:

1. Section 44 of the General Provisions of [Republic Act No.]  8250 or the FY 1997 General Appropriations Act which authorizes the grant of hazard duty pay to government personnel assigned in certain posts or work areas has been vetoed by the President.  Government entities have no authority therefore to grant in 1997 hazard duty pay to their personnel except those agencies specifically authorized to pay such benefit under special laws like [Republic Act No.] 4670 or “The Magna Carta for Public School Teachers” and Republic Act No. 7305 or  “The Magna Carta of Public Health Workers.”

The presidential veto and the subsequent issuance of DBM Circular Letter No. 13-97 clearly show that the grant of hazard duty pay in 1997 to the personnel of government entities, including PPA, was disallowed.   Hence, the continued payment of the benefit had no more legal basis.

As regards petitioners’ contention that they have acquired a vested right on the grant of hazard duty pay, it has been ruled that the erroneous application and enforcement of the law by public officers do not estop the Government from making a subsequent correction of such errors.  Practice, without more, no matter how long continued, cannot give rise to any vested right if it is contrary to law.
 
Next, petitioners contend that the grant of the birthday cash gift was pursuant to the recommendation of the PPA’s Employees Suggestion and Incentive Awards Committee and was duly approved by the General Manager per PPA Memorandum Circular No. 22-97 dated May 28, 1997 and confirmed by the PPA Board of Directors through Resolution No. 1161.  Petitioners allege that the grant did not require the approval of the Civil Service Commission because it is a welfare benefit and is not based on the employees’ performance.

Further, petitioners assert that PPA can grant its employees birthday cash gift  and hazard duty pay,  despite the presidential veto of the latter benefit, on the basis of its corporate autonomy under  EO No. 159, thus: 

SECTION 1. Any provision of law to the contrary notwithstanding, all revenues of the Philippine Ports Authority generated from the administration of its port or port-oriented services and from whatever sources shall be utilized exclusively for the operations of the Philippine Ports Authority as well as for the maintenance, improvement and development of its port facilities, upon the approval of the Philippine  Ports Authority Board of Directors of its budgetary requirements, as exemptions to   Presidential Decree No. 1234 and the budgetary processes provided in Presidential Decree No. 1177, as amended.

Petitioners argue that the operation and development of ports require the expertise of its manpower so that expenses thereon such as salaries and other fringe benefits, which necessarily include hazard duty pay and birthday cash gift, have to be included in the budget.  Accordingly, the hazard duty pay and birthday cash gift granted to PPA employees in the first semester of 1997 and in 1998, respectively, were integrated in the budget of PPA and approved by the Board of Directors in accordance with EO No. 159.  Hence, the grant of said benefits is legal and the disallowance by COA is in violation of PPA’s exercise of its corporate prerogatives.  

Petitioners’ arguments lack merit.  

The pertinent provisions of EO No. 159 are as follows:

x x x


WHEREAS,  there is a need to ensure and hasten the continuing growth and development of the government ports directly administered and maintained by the Philippine Ports Authority in order to cater to the over-increasing needs of water-borne commerce, and to effectively serve as vital links in the overall transport system in the country;

WHEREAS, certain laws issued by the past administration adver[sely] affected the coordinated programming, operations, financing and budgetary requirements of ports or the port system under the Philippine Ports Authority, and unduly jeopardized its corporate autonomy, all to the detriment of public service

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order:

SECTION 1.  Any provision of law to the contrary notwithstanding, all revenues of the Philippine Ports Authority generated from the administration of its port or port-oriented services and from whatever sources shall be utilized exclusively for the operations of the Philippine Ports Authority as well as for the maintenance, improvement and development of its port facilities, upon the approval of the Philippine  Ports Authority Board of Directors of its budgetary requirements, as exemptions to  Presidential Decree No. 1234 and the budgetary processes provided in Presidential Decree No. 1177, as amended.

SEC. 2.  Letter of Instructions No. 734 dated September 1, 1978 is hereby repealed.  Henceforth, the Philippine Ports Authority Board of Directors is hereby authorized to program and approve all capital investments and expenditures on all projects of the Philippine Ports Authority before the same are implemented.

SEC. 3.  Any provision of law to the contrary notwithstanding, the Philippine Ports Authority shall be responsible for the planning, detailed engineering, construction, expansion, rehabilitation and capital dredging of all ports under its port system.

SEC. 4. All laws, orders, issuances, rules and regulations, or parts thereof inconsistent with this Executive Order are hereby repealed or modified accordingly.

What is clear from Section 1, which is cited by petitioners as legal basis of their claim, is that “all revenues of the Philippine Ports Authority generated from the administration of its port or port-oriented services and from whatever sources shall be utilized exclusively for the operations of the Philippine Ports Authority as well as for the maintenance, improvement and development of its port facilities.”

Nowhere in the above provisions can it be found that the PPA   Board of Directors is authorized to grant additional compensation, allowances or benefits to the employees of PPA. Neither does PD No. 857, otherwise known as the “Revised Charter of the Philippine Ports Authority,” authorize PPA or its Board of Directors to grant additional compensation, allowances or benefits to PPA employees.  Hence, PPA’s grant of birthday cash gift in 1998 per PPA Memorandum Circular No. 22-97 is without legal basis. Petitioners also cannot use PPA’s corporate autonomy under EO No. 159 to justify PPA’s grant of hazard duty pay in the first semester of 1997. 

We note that President Fidel V. Ramos vetoed the provision granting hazard duty pay in the General Appropriations Act for Fiscal Year 1997 only on February 2, 1997.  Moreover, it was at the end of 1997 or on December 15, 1997 that the DBM issued DBM Circular Letter No. 13-97 apprising government entities of the presidential veto and, therefore, of their lack of authority to grant in 1997 hazard duty pay to their personnel except for those agencies specifically authorized to pay that benefit.  Apparently, when PPA granted hazard duty pay to its employees from January to June 1997, it had no knowledge that it was no longer authorized to grant the benefit. 

In regard to the refund of  the disallowed benefits, this Court  holds that petitioners  need not refund the benefits received by them based on our rulings in Blaquera v. Alcala, De Jesus v. Commission on Audit and Kapisanan ng mga Manggagawa sa Government Service Insurance System (KMG) v. Commission on Audit.

In Blaquera, the petitioners, who were officials and employees of several government departments and agencies, were paid incentive benefits pursuant to EO No. 292 and the Omnibus Rules Implementing Book V of EO No. 292.  On January 3, 1993, then President Fidel V. Ramos issued Administrative Order (AO) No. 29 authorizing the grant of productivity incentive benefits for the year 1992 in the maximum amount of P1,000. Section 4 of AO No. 29 directed all departments, offices and agencies which authorized payment of CY 1992 Productivity Incentive Bonus in excess of P1,000  to immediately cause the refund of the excess.  Respondent heads of the departments or agencies of the government concerned caused the deduction from petitioners’ salaries or allowances of the amounts needed to cover the overpayments.  Petitioners therein filed a petition for certiorari and prohibition before this Court to prevent respondents therein from making further deductions from their salaries or allowances.  The Court ruled against the refund, thus: 

Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received.  Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.

The said ruling in Blaquera was applied in De Jesus.   

 In De Jesus, COA disallowed the payment of allowances and bonuses consisting of representation and transportation allowance, rice allowance, productivity incentive bonus, anniversary bonus, year-end bonus and cash gifts to members of the interim Board of Directors of the Catbalogan Water District. This Court affirmed the disallowance because petitioners therein were not entitled to other compensation except for payment of per diem under PD No. 198. However, the Court ruled against the refund of the allowances and bonuses received by petitioners, thus:

This ruling in Blaquera applies to the instant case.  Petitioners here received the additional allowances and bonuses in good faith under the honest belief that LWUA Board Resolution No. 313 authorized such payment.  At the time petitioners received the additional allowances and bonuses, the Court had not yet decided Baybay Water District.  Petitioners had no knowledge that such payment was without legal basis.  Thus, being in good faith, petitioners need not refund the allowances and bonuses they received but disallowed by the COA.

Further, in KMG, this Court applied the ruling   in  Blaquera  and  De Jesus  in  holding that the Social Insurance Group (SIG) personnel of the Government Service Insurance System need not refund the hazard pay received by them although said benefit was correctly disallowed by COA.  The Court ruled:

The Court however finds that the DOH and GSIS officials concerned who granted hazard pay under R.A. No. 7305 to the SIG personnel acted in good faith, in the honest belief that there was legal basis for such grant.  The SIG personnel in turn accepted the hazard pay benefits likewise believing that they were entitled to such benefit.  At that time, neither the concerned DOH and GSIS officials nor the SIG personnel knew that the grant of hazard pay to the latter is not sanctioned by law.  Thus, following the rulings of the Court in De Jesus v. Commission on Audit, and Blaquera v. Alcala, the SIG personnel who previously received hazard pay under  R.A. No. 7305 need not refund such benefits.

In the same vein, the rulings in Blaquera, De Jesus and KMG apply to this case. Petitioners received the hazard duty pay and birthday cash gift in good faith since the benefits were authorized by PPA Special Order No. 407-97 issued pursuant to PPA Memorandum Circular No. 34-95 implementing DBM National Compensation Circular No. 76, series of 1995, and PPA Memorandum Circular No. 22-97, respectively.  Petitioners at that time had no knowledge that the payment of said benefits lacked legal basis.  Being in good faith, petitioners need not refund the benefits they received.

WHEREFORE, the Commission on Audit Decision No. 2002-010 dated January 8, 2002 and COA Decision No. 2003-106 dated July 17, 2003 are AFFIRMED with MODIFICATION. Petitioners need not refund the hazard duty pay received per Philippine Ports Authority Memorandum Circular No. 34-95 dated June 26, 1995 covering the period from January 1 to June 30, 1997, and the birthday cash gift received per PPA Memorandum Circular No. 22-97 dated May 28, 1997. 

No pronouncement as to costs. 

SO ORDERED.

SOURCE: [ G.R. NO. 159200, February 16, 2006 ]PHILIPPINE PORTS AUTHORITY AND JUAN O. PEÑA, ARTURO S. BERNARDINO, AND VICENTE D. RAMOS, FOR THEIR OWN AND IN BEHALF OF THE PPA OFFICIALS AND EMPLOYEES, PETITIONERS, VS. COMMISSION ON AUDIT AND ARTHUR HINAL, RESPONDENTS. TAGS: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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