Republic of the Philippines

COMMISSION ON AUDIT
Office of the State Auditor
Audit Team I, NGS Cluster 9, SUCs & Other SAAs
City of San Fernando, La Union
Tel. No. 205-9075 / Email coadmmmsuofficial@gmail.com

RO I Case No. 2020-012

JAIME I. MANUEL, ET AL.,

Don Mariano Marcos Memorial
State University (DMMMSU -
NLUC), Sapilang, Bacnotan, La
Union
Appellants,
For: Appeal from Notice of
- versus – Disallowance (ND) No. 18-
004-101-(17) dated May
15, 2018

THE AUDIT TEAM LEADER,

Audit Group NGS-SUCS and other
NGS Stand-Alone Agencies, Audit
Team R1-01 and THE OIC-
SUPERVISING AUDITOR,
Commission on Audit,
Appellees.
x - - - - - - - - - - - - - - - - - - - - - - - - -x

ANSWER

APPELLEES in their capacities as Audit Team Leader, of Don Mariano

Marcos Memorial State University (DMMMSU), Bacnotan, La Union and as OIC -
Supervising Auditor of NGS 9 - SUCS and other NGS Stand-Alone Agencies, this
Region, unto this Honorable Office of the COA Regional Director hereby most
respectfully submit this ANSWER.

PREFATORY STATEMENT

APPELLEES, Audit Team Leader of DMMMSU, Bacnotan, La Union and

OIC - Supervising Auditor, NGS 9 - SUCS and other NGS Stand-Alone Agencies are
in receipt of an ORDER dated January 24, 2020 from the Honorable Regional
Director Michael R. Bacani directing them to submit an answer to the appeal.

The subject Appeal Memorandum is the result of Notice of Disallowance

(ND) No. 18-004-101-(17) dated May 21, 2018 issued by then OIC – Supervising
Auditor and Concurrent OIC - Audit Team Leader Elma L. Maximo, within her
jurisdiction. The disallowed amount of ₱648,958.33 represented payment of full
amount of Collective Negotiation Agreement (CNA) incentives to DMMMSU-NLUC

Integrity, Commitment and Competence in the Commission

faculty and staff who did not render full time service during the year the incentive was
granted.

That APPELLEES’ Answer to the herein appeal is fully articulated in the

appropriate portion hereof.

That the APPELLANTS erred in their Preliminary Statement that the Notice
of Disallowance subject of their appeal was issued by the Commission on Audit, thru
State Auditor Alma L. Luna. The truth of the matter being that the Notice of
Disallowance was in fact issued thru the OIC – Supervising Auditor and Concurrent
OIC – Audit Team Leader Elma L. Maximo, all other matters stated and the Statement
of Facts in the Memorandum are hereby admitted.

ISSUES

The issues raised by the APPELLANTS are the following:

1. Whether or not the herein Appeal Memorandum be admitted and the

collection of the amount in the subject Notice of Disallowance be
suspended pending resolution of this case, and

2. Whether or not the personnel scholars are entitled to receive CNA

incentive.

THE APPELLANTS’ GROUNDS FOR APPEAL

1. That the subject matter of ND No. 18-005-101-(17) which was

properly and timely appealed and pending before the
Commission Proper through a Petition for Review filed on July 5,
2019 has exactly the same subject matter as of the case at bar
under ND No. 18-004-101-(17). The resolution on the validity of the
claims as stated in the Appeal Memorandum and on the Petition for
Review for ND No. 18-005-101-(17) shall likewise be applicable to
the case at bar, hence, Appeal Memorandum for this case was
deemed repetitive and unnecessary, and

2. That the personnel scholars are entitled to receive CNA incentive

on the following grounds:

a. Their pursuit of further studies contributes to the accomplishment

of performance targets, efficiency, productivity and profitability in
terms of University’s vision, University’s levelling status,
Establishment of Centers of Excellence (COE) or Centers of
Development (COD) and Program Accreditation;

b. Nowhere in the law is physical presence required for one to be

entitled to CNA Incentive, and

c. The conditions for the grant of CNA Incentives are met.

Integrity, Commitment and Competence in the Commission

 APPELLEES’ ARGUMENTS AND DISCUSSION

That the Appellees deny specifically the Appellants’ grounds for appeal, the
truth of the matter being:

1st Ground – Appeal Memorandum for this case was deemed repetitive and
unnecessary.

The Appellants in their Motion to Admit Appeal Memorandum aver that the
subject matter of Notice of Disallowance (ND) 18-005-101-(17) which was properly
addressed through a timely filed Appeal Memorandum and now pending before the
Commission Proper through a Petition for Review filed on July 25, 2019, was exactly
the same as the subject matter of the case at bar under ND 18-004-101-(17). As such,
the resolution on the Petition for Review shall likewise be applicable to the case at
hand. Hence, Appeal Memorandum for this case was no longer filed as it was deemed
repetitive and unnecessary.

The Appellees disagree with the Appellants contention.

The ND 18-004-101(17), subject of the case at hand already attained its

finality there being no appeal filed, pursuant to Section 17.1 of the Rules and
Regulations on the Settlement of Accounts, which reads:

Section 17.1 Any person aggrieved by a disallowance or

charge may within six (6) months from receipt of the notice, appeal in
writing as prescribed in these Rules. A disallowance or charge not
appealed within the period prescribed shall become final and
executory.

The Appellants received the subject Notice of Disallowance on May 21, 2018.
There being no timely appeal filed after the lapsed of four hundred seventy-nine (479)
days from receipt, the Audit Team issued Notice of Finality of Decision (NFD) dated
September 13, 2019, pursuant to Section 22.1 of the Rules and Regulations on the
Settlement of Accounts and Section 51 of Presidential Decree No. 1445, viz:

Section 22.1. A decision of the Commission Proper, ASB,

Director or Auditor upon any matter within their respective
jurisdiction; if not appealed as herein provided, shall become final and
executory.

Section 51. Finality of Decisions of the Commission or Any

Auditor. – A decision of the Commission or of any auditor upon any
matter within its or his jurisdiction, if not appealed as herein provided,
shall be final and executory.

The Appellants received the said NFD on November 11, 2019. There being no
settlement after the subject ND became final and executory, the Regional Director of
COA Region I issued COA Order of Execution (COE) pursuant to Section 23 of the
Rules and Regulations on the Settlement of Accounts, which reads:

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 Section 23.1 COE shall be issued to enforce settlement of an
audit disallowance/charge, whenever the persons liable therefor
refuse or fail to settle them after the decision has become final and
executory.

The COE was received by the Appellants on January 23, 2020, same date
when the Appellants filed their Motion to Admit Appeal Memorandum. Needless to
say, the Appellants filed their appeal after it became final and executory. Having
attained finality, the decision is immutable and unalterable, and can no longer be
modified.

In FGU Insurance Corp. (now BPI/MS Insurance Corporation) vs. Regional

Trial Court of Makati City, Branch 66, the SC ruled that:

Under the doctrine of finality of judgment or immutability of

judgment, a decision that has acquired finality becomes immutable and
unalterable, and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact and law,
and whether it be made by the court that rendered it or by the Highest
Court of the land. Any act which violates this principle must
immediately be struck down.

The Appellants’ contention that Appeal Memorandum for this case was no
longer filed as it was deemed repetitive and unnecessary is misplaced and an
afterthought argument. If they really intend that their Appeal Memorandum on ND
18-005-101(17) would also cover the subject ND of the case at hand, they should
have expressly done so because they have already received the subject ND when they
appealed ND 18-005-101(17), but they didn’t.

Though the subject matter of the two (2) NDs is exactly the same, it bears
stressing that appeal is not a right but a mere statutory privilege. The right to appeal
is neither a natural right nor is it a component of due process. It is a mere statutory
privilege, and may be exercised only in the manner and in accordance with the
provisions of law (Fenequito v. Vergara, Jr., G.R. No. 172829, July 18,2012,677
SCRA 113, 117). Can you mention that payment of appeal fee is jurisdictional and
the NDs are separately issued hence, separate appeal is needed. Conclude that these
were not exercised by DMMMSU.

Based on the foregoing, the subject ND having attained its finality, the Appeal
Memorandum filed by the Appellants should not be admitted and the collection of the
amount should not be suspended.

2nd Ground – That the personnel scholars are entitled to receive CNA incentive on
the following grounds:

a. The personnel-scholars contributed in the accomplishment of the

University’s performance targets, efficiency, productivity, or
profitability even if they are on study leave.

The Appellants claimed that the personnel-scholars, in their

pursuit of their degrees would become more competent in delivering
quality service to clients. It was added that while pursuing their degrees
the personnel-scholars contribute to the University’s levelling status; to

Integrity, Commitment and Competence in the Commission

 the status of the University’s programs as Centers of Excellence or
Centers of Development; and in Program Accreditation which are
indicators of the SUC’s performance as an academic institution. Even if
faculty members were out on study leave, their contribution to the
attainment of the University’s mission, vision, goals and objectives is
immense.

While the Audit Team takes cognizance of the anticipated

improved competencies and eventual contribution to the levelling status
and to the status of the University’s programs as Centers of Excellence or
Centers of Development as well as in Program Accreditation, the
Appellants’ contention cannot be given merit. As rightfully stated in their
appeal, the personnel-scholars with their pursuit of their degrees would
become more competent in delivering quality service to clients. In
view of that, their inputs/involvement are yet to be considered in the
attainment of targets; in the levelling status; and for accreditation
purposes only upon completion of their graduate studies.

It therefore reiterated that while the affected employees are in

scholarship status, they were not able to fully contribute to the joint
cost-cutting measures and systems improvement because they did not
render services on full-time basis.

b. Nowhere in the law is physical presence required for one to be

entitled to CNA incentive.

The Appellants’ contention may be true that nowhere in the law is

physical presence required for one to be entitled to CNA Incentive,
however, their CNA expressly provides that “the CNA incentive can be
paid every year and during the lifetime of this CNA from savings
generated through cost-cutting measures initiated and implemented by
the DMMMSU Administration and FAD members.

No less than the CNA entered into by and between DMMMSU

Administration and FAD provides the cost-cutting measures which shall
be adopted by FAD members and DMMMSU Administration, which read
as follows:

I. ELECTRICITY/WATER CONSERVATION
i. More prudent power consumption by limiting the
use of air-conditioning units to not more than four
(4) hours a day;
ii. The University shall provide water meters in all
cottages and residential units inside the campus
which will later be deducted from the salaries of the
occupants; and
iii. Air-conditioning units, electric fans. Lights, etc.
shall be switched off after every use by the
concerned faculty or staff.

II. OTHER UTILITIES

i. More coordinated and systematic utilization of
school activities in the conduct of official trips to

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 other places in accordance with the austerity
program of the government;
ii. Replacement of old, dilapidated, and frequent
malfunctioning vehicles which require costly
maintenance;
iii. Immediate repair of malfunctioning
power/equipment to avoid their wastages; and
iv. Telephones and computer units shall be used for
official purposes only.

III. MANPOWER
i. Limit the number of faculty and personnel
attending seminars and symposia which involve
disbursement of the University funds;
ii. The FAD shall cooperate with the Administration
to reduce the number of faculty with Contract of
Service/Part-time Appointments.

IV. OFFICE SUPPLIES

i. To avoid wastages, used office materials shall be
recycled and excessive printing of hard copies
shall be avoided.

As can be deduced from the above cost-cutting measures, it clearly

requires an employee to be physically present in order to contribute to the
generation of savings in which, the payment of CNA incentives will come
from. The mere fact that they were not physically present when the CNA
incentive were given made it impossible for them to accomplish performance
targets at lesser cost through cost-cutting measures, which in turn, disqualifies
them from receiving the incentive.

c. The conditions for the grant of CNA Incentives are met.

The Appellants cited that the grant of CNA incentives was justified by
the (a) Existence of CNA; (b) Stipulation of the grant of incentives in the CNA
between DMMMSU and Faculty Association of DMMMSU (FAD); and
DMMMSU accomplished more than 70% of all its targets.

It can be noted that compliance with the conditions required under Item
4.0 of DBM Circular No. 2017-3 dated November 16, 2017 for the grant of the
CNA incentive may be given merit, but the rate of the incentive should
likewise comply with item 4.2 which cites, among others, that the CNA
incentive may be given equally to all qualified employees under item 3.0 or at
varying rates in consideration of the employee’s or his/her office’s contribution
to the accomplishment of performance targets, efficiency, productivity, or
profitability, as determined by the agency head upon recommendation of the
Employees’ Organization-Management Consultative Committee.

It is worthy to mention that under item 3.0, the Budget Circular covers
civilian personnel occupying regular, contractual, or casual position rendering
services on full-time or part-time basis in national government agencies
(NGAs), including SUCs, GOCCs, GFIs, LWDs, and LGUs, whether or not
covered by Republic Act (RA) No. 6758, s.1989.

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 It can be deduced from the foregoing that in the determination of
entitlement to the incentive, a significant point to consider is that the personnel
render services and contribute to the accomplishment of performance targets,
efficiency, productivity, or profitability.

Thus, technicalities aside, the herein appeal should be denied. The

Appellees maintain that the personnel-scholars are not eligible to receive the
CNA incentive.

WHEREFORE, it is most respectfully prayed that the Appeal be DENIED

and the Notice of Disallowance No. 18-004-101-(17) dated May 15, 2018 be
AFFIRMED.

City of San Fernando, La Union, this 4th day of February 2020.

APPELLEES:

MARILYN D. NARAVAL
State Auditor IV
Audit Team Leader

ELMA L. MAXIMO
State Auditor IV
OIC - Supervising Auditor

Integrity, Commitment and Competence in the Commission