8/4/2015 G.R. No.

178160

TodayisTuesday,August04,2015

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.178160February26,2009

BASESCONVERSIONANDDEVELOPMENTAUTHORITY,Petitioner,
vs.
COMMISSIONONAUDIT,Respondent.

DECISION

CARPIO,J.:

TheCase

Thisisapetitionforcertiorari1withprayerfortheissuanceofatemporaryrestrainingorderandawritofpreliminary
injunction. The petition seeks to nullify Decision No. 20070202 dated 12 April 2007 of the Commission on Audit
(COA).

TheFacts

On 13 March 1992, Congress approved Republic Act (RA) No. 72273 creating the Bases Conversion and
Development Authority (BCDA). Section 9 of RA No. 7227 states that the BCDA Board of Directors (Board) shall
exercise the powers and functions of the BCDA. Under Section 10, the functions of the Board include the
determination of the organizational structure and the adoption of a compensation and benefit scheme at least
equivalent tothatof theBangkoSentralngPilipinas (BSP). Accordingly, theBoard determined the organizational
structureoftheBCDAandadoptedacompensationandbenefitschemeforitsofficialsandemployees.

On 20 December 1996, the Board adopted a new compensation and benefit scheme which included a P10,000
yearend benefit granted to each contractual employee, regular permanent employee, and Board member. In a
memorandum4 dated 25 August 1997, Board Chairman Victoriano A. Basco (Chairman Basco) recommended to
President Fidel V. Ramos (President Ramos) the approval of the new compensation and benefit scheme. In a
memorandum5dated9October1997,PresidentRamosapprovedthenewcompensationandbenefitscheme.

In1999,theBSPgaveaP30,000yearendbenefittoitsofficialsandemployees.In2000,theBSPincreasedthe
yearend benefit from P30,000 to P35,000. Pursuant to Section 10 of RA No. 7227 which states that the
compensationandbenefitschemeoftheBCDAshallbeatleastequivalenttothatoftheBSP,theBoardincreased
the yearend benefit of BCDA officials and employees from P10,000 to P30,000. Thus in 2000 and 2001, BCDA
officialsandemployeesreceivedaP30,000yearendbenefit,and,on1October2002,theBoardpassedResolution
No.2002101936approvingthereleaseofaP30,000yearendbenefitfor2002.

Asidefromthecontractualemployees,regularpermanentemployees,andBoardmembers,thefulltimeconsultants
oftheBCDAalsoreceivedtheyearendbenefit.

On 20 February 2003, State Auditor IV Corazon V. Espao of the COA issued Audit Observation Memorandum
(AOM)No.20030047statingthatthegrantofyearendbenefittoBoardmemberswascontrarytoDepartmentof
BudgetandManagement(DBM)CircularLetterNo.20022dated2January2002.InNoticeofDisallowance(ND)
No.03001BCDA(02)8dated8January2004,DirectorIVRogelioD.Tablang(DirectorTablang),COA,Legaland
Adjudication OfficeCorporate, disallowed the grant of yearend benefit to the Board members and fulltime
consultants.InDecisionNo.20040139dated13January2004,DirectorTablang"concurred"withAOMNo.2003
004andNDNo.03001BCDA(02).

In a letter10 dated 20 February 2004, BCDA President and Chief Executive Officer Rufo Colayco requested the
reconsideration of Decision No. 2004013. In a Resolution11 dated 22 June 2004, Director Tablang denied the

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request. The BCDA filed a notice of appeal12 dated 8 September 2004 and an appeal memorandum13 dated 23
December2004withtheCOA.

TheCOAsRuling

In Decision No. 2007020,14 the COA affirmed the disallowance of the yearend benefit granted to the Board
members and fulltime consultants and held that the presumption of good faith did not apply to them. The COA
statedthat:

ThegrantingofYEBxxxisnotwithoutxxxlimitation.DBMCircularLetterNo.200202datedJanuary2,2002
stating,viz:

"2.0 To clarify and address issues/requests concerning the same, the following compensation policies are
herebyreiterated:

2.1PERA,ADCOM,YEBandretirementbenefits,arepersonnelbenefitsgrantedinadditiontosalaries.As
fringebenefits,theseshallbepaidonlywhenthebasicsalaryisalsopaid.

2.2 Members of the Board of Directors of agencies are not salaried officials of the government. As non
salaried officials they are not entitled to PERA, ADCOM, YEB and retirement benefits unless expressly
providedbylaw.

2.3DepartmentSecretaries,UndersecretariesandAssistantSecretarieswhoserveasExofficioMembersof
the Board of Directors are not entitled to any remuneration in line with the Supreme Court ruling that their
services in the Board are already paid for and covered by the remuneration attached to their office."
(underscoringours)

Clearly,asstatedabove,themembersandexofficiomembersoftheBoardofDirectorsarenotentitledto
YEB,theybeingnotsalariedofficialsofthegovernment.Thesamegoeswithfulltimeconsultantswhereinno
employeremployeerelationshipsexistbetweenthemandtheBCDA.Thus,thewholeamountpaidtothemtotaling
P342,000isproperlydisallowedinaudit.

Moreover, the presumption of good faith may not apply to the members and exofficio members of the Board of
DirectorsbecausedespitetheearlierclarificationonthematterbytheDBMthrutheissuanceonJanuary2,2002of
DBMCircularLetterNo.200202,still,theBCDABoardofDirectorsenactedResolutionNo.20021093onOctober
1, 2002 granting YEB to the BCDA personnel including themselves. Full time consultants, being nonsalaried
personnel, are also not entitled to such presumption since they knew from the very beginning that they are only
entitledtotheamountstipulatedintheircontractsascompensationfortheirservices.Hence,theyshouldbemade
torefundthedisallowedYEB.15(Boldfacingintheoriginal)

Hence,thispetition.

TheCourtsRuling

TheBoardmembersandfulltimeconsultantsoftheBCDAarenotentitledtotheyearendbenefit.

First, the BCDA claims that the Board can grant the yearend benefit to its members and fulltime consultants
because,underSection10ofRANo.7227,thefunctionsoftheBoardincludetheadoptionofacompensationand
benefitscheme.

The Court is not impressed. The Boards power to adopt a compensation and benefit scheme is not unlimited.
Section9ofRANo.7227statesthatBoardmembersareentitledtoaperdiem:

Members of the Board shall receive a perdiem of not more than Five thousand pesos (P5,000) for every
boardmeeting:Provided,however,Thattheperdiemcollectedpermonthdoesnotexceedtheequivalentof
four(4)meetings:Provided,further,Thattheamountofperdiemforeveryboardmeetingmaybeincreasedbythe
Presidentbutsuchamountshallnotbeincreasedwithintwo(2)yearsafteritslastincrease.(Emphasissupplied) 1awphi1

Section9specifiesthatBoardmembersshallreceiveaperdiemforeveryboardmeetinglimitstheamountofper
diemtonotmorethanP5,000andlimitsthetotalamountofperdiemforonemonthtonotmorethanfourmeetings.
InMagnov.CommissiononAudit,16Cabiliv.CivilServiceCommission,17DeJesusv.CivilServiceCommission,18
Molen,Jr.v.CommissiononAudit,19andBaybayWaterDistrictv.CommissiononAudit,20theCourtheldthatthe
specificationofcompensationandlimitationoftheamountofcompensationinastatuteindicatethatBoard
membersareentitledonlytotheperdiemauthorizedbylawandnoother.InBaybayWaterDistrict,theCourt
heldthat:

Byspecifyingthecompensationwhichadirectorisentitledtoreceiveandbylimitingtheamounthe/sheisallowed
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toreceiveinamonth,xxxthelawquiteclearlyindicatesthatdirectorsxxxareauthorizedtoreceiveonlytheper
diemauthorizedbylawandnoothercompensationorallowanceinwhateverform.21

Also, DBM Circular Letter No. 20022 states that, "Members of the Board of Directors of agencies are not
salaried officials of the government. As nonsalaried officials they are not entitled to PERA, ADCOM, YEB
andretirementbenefitsunlessexpresslyprovidedbylaw."RANo.7227doesnotstatethattheBoardmembers
areentitledtoayearendbenefit.

Withregardtothefulltimeconsultants,DBMCircularLetterNo.20022statesthat,"YEBandretirementbenefits,
arepersonnelbenefitsgrantedinadditiontosalaries.Asfringebenefits,theseshallbepaidonlywhenthe
basicsalaryisalsopaid."ThefulltimeconsultantsarenotpartoftheBCDApersonnelandarenotpaidthebasic
salary. The fulltime consultants consultancy contracts expressly state that there is no employeremployee
relationshipbetweentheBCDAandtheconsultants,andthattheBCDAshallpaytheconsultantsacontractprice.
Forexample,theconsultancycontract22ofacertainDr.FaithM.Reyesstates:

SECTION2.ContractPrice.ForandinconsiderationoftheservicestobeperformedbytheCONSULTANT(16
hours/week), BCDA shall pay her the amount of TWENTY THOUSAND PESOS and 00/100 (P20,000.00),
Philippinecurrency,permonth.

xxxx

SECTION 4. EmployeeEmployer Relationship. It is understood that no employeeemployer relationship shall

existbetweenBCDAandtheCONSULTANT.

SECTION5.PeriodofEffectivity.ThisCONTRACTshallhaveaneffectivityperiodofone(1)year,fromJanuary
01,2002toDecember31,2002,unlesssoonerterminatedbyBCDAinaccordancewithSection6below.

SECTION6.TerminationofServices.BCDA,initssolediscretionmayopttoterminatethisCONTRACTwhenit
seesthatthereisnomoreneedfortheservicescontractedfor.(Boldfacingintheoriginal)

SincefulltimeconsultantsarenotsalariedemployeesofBCDA,theyarenotentitledtotheyearendbenefitwhich
isa"personnelbenefitgrantedinadditiontosalaries" and which is "paid only when the basic salary is also
paid."

Second,theBCDAclaimsthattheBoardmembersandfulltimeconsultantsshouldbegrantedtheyearendbenefit
becausethegrantingofyearendbenefitisconsistentwithSections5and18,ArticleIIoftheConstitution.Sections
5and18state:

Section5.Themaintenanceofpeaceandorder,theprotectionoflife,liberty,andproperty,andthepromotionofthe
generalwelfareareessentialfortheenjoymentbyallpeopleoftheblessingsofdemocracy.

Section18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and
promotetheirwelfare.

TheCourtisnotimpressed.ArticleIIoftheConstitutionisentitledDeclarationofPrinciplesandStatePolicies.Byits
very title, Article II is a statement of general ideological principles and policies. It is not a source of enforceable
rights.23InTondoMedicalCenterEmployeesAssociationv.CourtofAppeals,24theCourtheldthatSections5and
18,ArticleIIoftheConstitutionarenotselfexecutingprovisions.Inthatcase,theCourtheldthat"Someofthe
constitutional provisions invoked in the present case were taken from Article II of the Constitution specifically,
Sections5xxxand18theprovisionsofwhichtheCourtcategoricallyruledtobenonselfexecuting."

Third,theBCDAclaimsthatthedenialofyearendbenefittotheBoardmembersandfulltimeconsultantsviolates
Section1,ArticleIIIoftheConstitution.25Morespecifically,theBCDAclaimsthatthereisnosubstantialdistinction
betweenregularofficialsandemployeesononehand,andBoardmembersandfulltimeconsultantsontheother.
The BCDA states that "there is here only a distinction, but no difference" because both "have undeniably one
commongoalashumans,thatisxxxtokeepbodyandsoultogether"or,"[d]ifferentlyput,bothhavemouthsto
feedandstomachstofill."

TheCourtisnotimpressed.EverypresumptionshouldbeindulgedinfavoroftheconstitutionalityofRANo.
7227andtheburdenofproofisontheBCDAtoshowthatthereisaclearandunequivocalbreachofthe
Constitution.26InAbakadaGuroPartyListv.Purisima,27theCourtheldthat:

AlawenactedbyCongressenjoysthestrongpresumptionofconstitutionality.Tojustifyitsnullification,theremust
be a clear and unequivocal breach of the Constitution, not a doubtful and unequivocal one. To invalidate [a law]
basedonxxxbaselesssuppositionisanaffronttothewisdomnotonlyofthelegislaturethatpasseditbutalsoof
theexecutivewhichapprovedit.

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TheBCDAfailedtoshowthatRANo.7227unreasonablysingledoutBoardmembersandfulltimeconsultantsin
thegrantoftheyearendbenefit.ItdidnotshowanyclearandunequivocalbreachoftheConstitution.Theclaim
thatthereisnodifferencebetweenregularofficialsandemployees,andBoardmembersandfulltimeconsultants
becausebothgroups"havemouthstofeedandstomachstofill"isfatuous.Surely,personsarenotautomatically
similarlysituatedthus,automaticallydeservingofequalprotectionofthelawsjustbecausetheyboth"have
mouths to feed and stomachs to fill." Otherwise, the existence of a substantial distinction would become forever
highlyimprobable.

Fourth,theBCDAclaimsthattheBoardcangranttheyearendbenefittoitsmembersandthefulltimeconsultants
becauseRANo.7227doesnotexpresslyprohibititfromdoingso.

TheCourtisnotimpressed.AcarefulreadingofSection9ofRANo.7227revealsthattheBoardisprohibitedfrom
grantingitsmembersotherbenefits.Section9states:

Members of the Board shall receive a perdiem of not more than Five thousand pesos (P5,000) for every
boardmeeting:Provided,however,Thattheperdiemcollectedpermonthdoesnotexceedtheequivalentof
four(4)meetings:Provided,further,Thattheamountofperdiemforeveryboardmeetingmaybeincreasedbythe
Presidentbutsuchamountshallnotbeincreasedwithintwo(2)yearsafteritslastincrease.(Emphasissupplied)

Section9specifiesthatBoardmembersshallreceiveaperdiemforeveryboardmeetinglimitstheamountofper
diemtonotmorethanP5,000limitsthetotalamountofperdiemforonemonthtonotmorethanfourmeetingsand
doesnotstatethatBoardmembersmayreceiveotherbenefits.InMagno,28Cabili,29DeJesus,30Molen,Jr.,31and
BaybayWaterDistrict,32theCourtheldthatthespecificationofcompensationandlimitationoftheamountof
compensationinastatuteindicatethatBoardmembersareentitledonlytotheperdiemauthorizedbylaw
andnoother.

ThespecificationthatBoardmembersshallreceiveaperdiemofnotmorethanP5,000foreverymeetingandthe
omission of a provision allowing Board members to receive other benefits lead the Court to the inference that
Congress intended to limit the compensation of Board members to the perdiem authorized by law and no other.
Expressiouniusestexclusioalterius.HadCongressintendedtoallowtheBoardmemberstoreceiveotherbenefits,
it would have expressly stated so.33 For example, Congress intention to allow Board members to receive other
benefitsbesidestheperdiemauthorizedbylawisexpresslystatedinSection1ofRANo.9286:34

SECTION1.Section13ofPresidentialDecreeNo.198,asamended,isherebyamendedtoreadasfollows:

"SEC.13.Compensation.EachdirectorshallreceiveperdiemtobedeterminedbytheBoard,foreachmeeting
oftheBoardactuallyattendedbyhim,butnodirectorshallreceiveperdiemsinanygivenmonthinexcessofthe
equivalentofthetotalperdiemoffourmeetingsinanygivenmonth.

AnyperdieminexcessofOnehundredfiftypesos(P150.00)shallbesubjecttotheapprovaloftheAdministration.
Inadditionthereto,eachdirectorshallreceiveallowancesandbenefitsastheBoardmayprescribesubject
totheapprovaloftheAdministration."(Emphasissupplied)

TheCourtcannot,intheguiseofinterpretation,enlargethescopeofastatuteorinsertintoastatutewhatCongress
omitted,whetherintentionallyorunintentionally.35

When a statute is susceptible of two interpretations, the Court must "adopt the one in consonance with the
presumedintentionofthelegislaturetogiveitsenactmentsthemostreasonableandbeneficialconstruction,theone
that will render them operative and effective."36 The Court always presumes that Congress intended to enact
sensiblestatutes.37IftheCourtweretorulethattheBoardcouldgranttheyearendbenefittoitsmembers,Section
9ofRANo.7227wouldbecomeinoperativeandineffectivethespecificationthatBoardmembersshallreceivea
perdiemofnotmorethanP5,000foreverymeetingthespecificationthattheperdiemreceivedpermonthshallnot
exceed the equivalent of four meetings the vesting of the power to increase the amount of per diem in the
President and the limitation that the amount of per diem shall not be increased within two years from its last
increasewouldallbecomeuselessbecausetheBoardcouldalwaysgrantitsmembersotherbenefits.

Withregardtothefulltimeconsultants,DBMCircularLetterNo.20022statesthat,"YEBandretirementbenefits,
arepersonnelbenefitsgrantedinadditiontosalaries.Asfringebenefits,theseshallbepaidonlywhenthe
basicsalaryisalsopaid."ThefulltimeconsultantsarenotpartoftheBCDApersonnelandarenotpaidthebasic
salary. The fulltime consultants consultancy contracts expressly state that there is no employeremployee
relationshipbetweenBCDAandtheconsultantsandthatBCDAshallpaytheconsultantsacontractprice.Sincefull
timeconsultantsarenotsalariedemployeesoftheBCDA,theyarenotentitledtotheyearendbenefitwhichisa
"personnelbenefitgrantedinadditiontosalaries"andwhichis"paidonlywhenthebasicsalaryisalsopaid."

Fifth, the BCDA claims that the Board members and fulltime consultants are entitled to the yearend benefit
because(1)PresidentRamosapprovedthegrantingofthebenefittotheBoardmembers,and(2)theyhavebeen
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receivingitsince1997.

TheCourtisnotimpressed.TheStateisnotestoppedfromcorrectingapublicofficerserroneousapplicationofa
statute,andanunlawfulpractice,nomatterhowlong,cannotgiverisetoanyvestedright.38

TheCourt,however,notesthattheBoardmembersandfulltimeconsultantsreceivedtheyearendbenefitingood
faith. The Board members relied on (1) Section 10 of RA No. 7227 which authorized the Board to adopt a
compensationandbenefitscheme(2)thefactthatRANo.7227doesnotexpresslyprohibitBoardmembersfrom
receiving benefits other than the per diem authorized by law and (3) President Ramos approval of the new
compensationandbenefitschemewhichincludedthegrantingofayearendbenefittoeachcontractualemployee,
regular permanent employee, and Board member. The fulltime consultants relied on Section 10 of RA No. 7227
which authorized the Board to adopt a compensation and benefit scheme. There is no proof that the Board
members and fulltime consultants knew that their receipt of the yearend benefit was unlawful. In keeping with
Magno,39 De Jesus,40 Molen, Jr.,41 and Kapisanan ng mga Manggagawa sa Government Service Insurance
System(KMG)v.CommissiononAudit,42theBoardmembersandfulltimeconsultantsarenotrequiredtorefund
theyearendbenefitstheyhavealreadyreceived.

WHEREFORE,thepetitionisPARTIALLYGRANTED.CommissiononAuditDecisionNo.2007020dated12April
2007 is AFFIRMED with the MODIFICATION that the Board members and fulltime consultants of the Bases
ConversionandDevelopmentAuthorityarenotrequiredtorefundtheyearendbenefitstheyhavealreadyreceived.

SOORDERED.

ANTONIOT.CARPIO
AssociateJustice

WECONCUR:

REYNATOS.PUNO
ChiefJustice

(Onofficialleave)
LEONARDOA.QUISUMBING CONSUELOYNARESSANTIAGO*
AssociateJustice AssociateJustice

MA.ALICIAAUSTRIAMARTINEZ RENATOC.CORONA
AssociateJustice AssociateJustice

(Onofficialleave)
CONCHITACARPIOMORALES DANTEO.TINGA*
AssociateJustice AssociateJustice

MINITAV.CHICONAZARIO PRESBITEROJ.VELASCO,JR.
AssociateJustice AssociateJustice

ANTONIOEDUARDOB.NACHURA ARTUROD.BRION
AssociateJustice AssociateJustice

TERESITAJ.LEONARDODECASTRO DIOSDADOM.PERALTA
AssociateJustice AssociateJustice

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,IcertifythattheconclusionsintheaboveDecisionhadbeen
reachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourt.

REYNATOS.PUNO
ChiefJustice

Footnotes

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*OnofficialleaveperSpecialOrderNo.563.

*OnofficialleaveperSpecialOrderNo.571.

1UnderRule65oftheRulesofCourt.

2Rollo,pp.3744.

3Otherwiseknownasthe"BasesConversionandDevelopmentActof1992."

4Rollo,pp.4551.

5Id.at52.

6Id.at67.

7Id.at73.

8Id.at7881.

9Id.at8991.

10Id.at9293.

11Id.at9498.

12Id.at99.

13Id.at100110.

14Id.at3744.

15Id.at4243.

16G.R.No.149941,28August2007,531SCRA339,349.

17G.R.No.156503,22June2006,492SCRA252,260.

18G.R.No.156559,30September2005,471SCRA624,627.

19G.R.No.150222,18March2005,453SCRA769,778.

20425Phil.326(2002).

21Id.at337.

22Rollo,pp.158159.

23Pamatongv.CommissiononElections,G.R.No.161872,13April2004,427SCRA96,100101Taada
v.Angara,338Phil.546,580583(1997).

24G.R.No.167324,17July2007,527SCRA746,764765.

25Section1,ArticleIIIoftheConstitutionstatesthat,"Nopersonshallbexxxdeniedtheequalprotectionof
thelaws."
26BritishAmericanTobaccov.Camacho,G.R.No.163583,20August2008CentralBankEmployees
Association,Inc.v.BangkoSentralngPilipinas,487Phil.531,562(2004).
27G.R.No.166715,14August2008.

28Supranote16.

29Supranote17.

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30Supranote18.

31Supranote19.

32Supranote20.

33Romualdezv.Marcelo,G.R.Nos.16551033,28July2006,497SCRA89,107109Republicofthe
Philippinesv.HonorableEstenzo,188Phil.61,6566(1980).
34AnActFurtherAmendingPresidentialDecreeNo.198,OtherwiseKnownAs"TheProvincialWaterUtilities
Actof1973,"asamended.
35Canetv.MayorDecena,465Phil.325,332333(2004).

36Sesbreov.CentralBoardofAssessmentAppeals,337Phil.89,103104(1997).

37InreGuaria,24Phil.37,47(1913).

38VeteransFederationofthePhilippinesv.Reyes,G.R.No.155027,28February2006,483SCRA526,
556KapisananngmgaManggagawasaGovernmentServiceInsuranceSystem(KMG)v.Commissionon
Audit,G.R.No.150769,31August2004,437SCRA371,390391.
39Supranote16.

40Supranote18.

41Supranote19.

42G.R.No.150769,31August2004,437SCRA371,391.

TheLawphilProjectArellanoLawFoundation

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