NationalElectrificationAdministrationv.

CommissiononAudit
NationalElectrificationAdministration,petitionerv.CommissiononAudit,respondent

Doctrine :TheBranchesofGovern
Doctrine:TheBran chesofGovernment;Execut
ment;ExecutiveDepartment;
iveDepartment;Powersand
PowersandFunctionsof
Functionsofthe
the
President;ControlofEx
President;ControlofExecutiveDepar
ecutiveDepartments*
tments*
Nature :SpecialCivilActionintheSupremeCourt.Certiorari.
Nature:SpecialCivilActionintheSupremeCourt.Certiorari.
Date:2002
Date:2002
Ponente:Carpio,J.
Ponente:Carpio,J.

Facts:
Facts:
Governmentemployeesalaries
Governmentemployeesalarieswereraised
wereraisedviaaJoint
viaaJointResolutionof
ResolutionofCongress(No.
Congress(No.01),urgingthe
01),urgingthe
Presidenttorevisethe
Presidenttorevisetheexistingcompen
existingcompensation.This
sation.Thiswasmadeinto
wasmadeintoa4-yearpr
a4-yearprogram.On28
ogram.On28
December1996,PresidentRamos
December1996,PresidentRamosissuesExecuti
issuesExecutiveOrderNo.
veOrderNo.389(EO389)to
389(EO389)toimplementthe
implementthefinal
final
yearsalaryincreasesa
yearsalaryincreasesauthorizedbyt
uthorizedbytheJointR
heJointResolution.EO
esolution.EO389calledf
389calledfora2-tran
ora2-tranche(or2-par
che(or2-part)
t)
salaryincrease:oneon
salaryincrease:oneon1January
1January1997,andanot
1997,andanotheron1Nove
heron1November1997.
mber1997.

InJanuary1997,petitione
InJanuary1997,petitionerNEAimplemen
rNEAimplementedthesal
tedthesalaryincrease
aryincreases.However,th
s.However,theyimplements
eyimplementsuch
uch
increaseinasingle
increaseinasinglelumpsumbeginn
lumpsumbeginning1Januar
ing1January1997(NEAacc
y1997(NEAacceleratedthe
eleratedtheimplementation
implementationby
by
payingthesecondtranche
payingthesecondtranchestarting1
starting1Januaryinst
Januaryinsteadof1Novembe
eadof1November).Respondent
r).RespondentCOAissueda
COAissueda
NoticeofSuspensionandNot
NoticeofSuspensionandNoticesofDisal
icesofDisallowance.The
lowance.TheNoticesofD
NoticesofDisallowance
isallowancewereappeale
wereappealedby
dby
NEA,butrejectedbytheCommissionenbanc.Thedecisi
enbanc .Thedecisionofthe
onoftherespondentwas
respondentwasthenchal
thenchallenged
lenged
intheSupremeCourt.

Issues:
Issues:
DidtheCOAcommitagravea
DidtheCOAcommitagraveabuseofdiscre
buseofdiscretionamounting
tionamountingtolackor
tolackorexcessofj
excessofjurisdictionin
urisdictionin
disallowingtheincrease
disallowingtheincreasedsalaries?
dsalaries?Inother
Inotherwords,isNEA
words,isNEAallowedto
allowedtoaccelerate
acceleratetheimplementa
theimplementation
tion
ofthesalariesduetoavailabilityoffunds?

Held:
Held:
No,COAdidnotcommitany
No,COAdidnotcommitanygraveabuseof
graveabuseofdiscretion.
discretion.Neitheris
NeitherisNEAallowe
NEAallowedtoacceler
dtoacceleratethe
atethe
implementation.

Thepetitionwasdismissedfor
Thepetitionwasdismissedforlackof
lackofmerit.COA’s
merit.COA’sdecisionwasa
decisionwasaffirmed
ffirmedintoto.
intoto.

Ratio:
Ratio:
OnNEA’sacceleratedimplementationanditsaccordancewiththelaw.
TheCourtruledthatsuchaccelerationwasnotinaccordancewiththelaw.NEAclaimedthat
RepublicActNo.8250(Gen
RepublicActNo.8250(GeneralAppropriat
eralAppropriationsActof
ionsActof1997)wasthe
1997)wastheirlegalb
irlegalbasis.However,
asis.However,such
such
lawwasnotself-executory. BudgetaryappropriationsundertheGAAdonotconstitute
unbridledauthoritytogovernmentagenciestospendtheappropriatedamountsasthey
wish.

ItemizationofthePersona
ItemizationofthePersonalServices
lServices(theappropriati
(theappropriationusedby
onusedbyNEA)isprepare
NEA)isprepareddafter 
after the
the
enactmentoftheGAA,
enactmentoftheGAA,andrequire
andrequirestheapproval
stheapprovalofthePre
ofthePresident(Sec.
sident(Sec.23,Chap.4,
23,Chap.4,BookIVof
BookIVofthe
the
AdministrativeCode,p.229).
AdministrativeCode,p.229).Theexecution
TheexecutionoftheG
oftheGAAissubjec
AAissubjecttoaprogra
ttoaprogramofexpendit
mofexpendituretobe
uretobe
approvedbythePresident,whichwillbethebasisforthefundrelease(Sec.34,Chap.5,BookIVof
theAdministrativeCode,p.229).
NoportionoftheappropriationsintheGAAshallbeusedforpaymentofanysalaryincrease,unless
authorizedbylaw(Sec.60,Chap.7,BookVIoftheAdministrativeCode,p.230).Sec.33ofthe1997
GAA(p.230)alsoprovidesforsalaryincreasessubjecttotheapprovalofthePresident .

Inessence,themereapprovalofCongressoftheGAAdoesnotmakethefundsavailablefor
spendinginstantly.Thefundsmuststillbecollectedduringthefiscalyear.

NEAalsoargues,fromSec.10ofEO389(p.231)thatadequatelyfundedgovernment-ownedor
controlledcorporations(GOCCs)areexempted.TheCourtrejectedthisargument,asSec.10only
referstoGOCCswithinsufficientfunds.ThereisnothingintheSectionthatallowsthosewith
sufficientfundstoacceleratetheirschedule.ThereisnoexpressorimpliedauthorizationinSec.10.

NEAalsoarguesthatsuchaccelerationwasallowedinaMemorandumoftheOfficeofthePresident
(7November1995,p.232).However,theCourtpointedoutthattheacceleratedimplementationis
alsoalloweduponapprovaloftheDepartmentofBudgetandManagement(DBM).Therearealso
ninetermsandconditions,whichmustbemetbytheagency(listedinpp.233-234,althoughthey
arenotnecessary).NEAdidnotcomplybyseekingapprovalfromtheDBM.

TheCourtalsopointedoutthatthepetitionercannotassailtheauthorityofthePresidenttoissue
EO389.TheAdministrativeCodegivesthePresidentsuchpowers(p.234).JointResolutionNo.01
hasalsoacknowledgedsuchauthority(p.235).Consideringalsothatitisthefourthandfinalyear,
theCourtfounditoddthatNEAdidnotquestionthepreviousEOs.

NEAalsoarguedthatCOAdidnothavethepowerindeterminingwhetherNEAviolatedthelaw.
COAexceededitsauthorityinitsinquiry.NEAcitedGuevarav.Gimenez .However,theSupreme
CourtoverturnedthisdecisionwithCaltexPhilippines,Inc.v.CommissiononAudit ,statingthat
Guevarawasnotcontrollinganymore,asitwasdecidedinlightofthe1935Constitution.The1987
ConstitutiongivestheCommissionmorepowers,asprovidedinSec.2(D),Art.IX(p.237).The
ConstitutionandotherlawsmandatetheCommissiontoauditallgovernmentagencies,including
GOCCs.

OntheDBM’sapprovalofNEA’sproposedbudget.
NEAalsocontendsthattheDBM’sapprovalofNEA’sproposedbudgetwasanapprovalalsoofthe
acceleratedimplementation.ThiswasbecauseNEAincludedsuchacceleratedimplementationinits
proposal.TheCourtagainreferredtothenineconditionsrequiredofthemfortheapprovalto
actuallytakeplace.Infact,theapprovaloftheproposedbudgetwasonlyapartofthefirstphaseof
theentirebudgetprocess.(Therearefourphases:BudgetPreparation,BudgetAuthorization,
BudgetExecution,andBudgetAccountability).

OncetheproposedbudgetwasapprovedbytheDBM,itissubmittedtoCongressforevaluationand
inclusionintheappropriationslaw.Thisauthorizationdoesnotincludetheauthorityto
disburse.

*OnthePresident’scontrolofallexecutivedepartments.
TheCourtfinallycitedthecontrolofthePresidentoverallexecutivedepartments,bureaus,and
offices,asprovidedbyoursystemofgovernment.Sec.17,Art.VIIofthe1987Constitutionprovides
forthis(p.239).AccordingtotheCourt:“Thepresidentialpowerofcontrolovertheexecutive
branchofgovernmentextendstoallexecutiveemployeesfromCabinetSecretarytothe
lowliestclerk.”Thispowerisself-executinganddoesnotrequirestatutoryimplementation .It
cannotbelimitednorwithdrawnbyCongress.
Allotherexecutiveofficialsmustimplementingoodfaithhisdirectivesandorders.Thecasewould
nothavearisenhadNEAcompliedingoodfaithwiththedirectivesandordersofthePresident.
NEA’sreasonsindisregardingthePresidentwerepatentlyflimsy,evenill-conceived.

(Noseparateconcurringordissentingopinions.)