JUDICIAL REVIEW

1. DENR EMPLOYEES UNION V. SEC. ABAD OF DBM

https://abogado.com.ph/sc-says-p25k-cap-on-govt-workers-cna-incentives-cannot-ap
ply-retroactively/

Petitioners:
● DENR Employees Union (DENREU)
Kalipunan ng mga Kawani sa Kagawaran ng Kalikasan (K4) the registered
national union of the DENR rank-and-file employees, and the DENR

Respondents:
● COA
● former DBM Secretary Florencio Abad

Rationale: The Supreme Court (SC) has held that the P25,000 ceiling imposed by the
Department of Budget and Management (DBM) in 2011 on the collective negotiation
agreement (CNA) incentives of government employees “cannot be permitted to
retroactively apply to incentives granted before its publication.”

FACTS:
On June 1, 1987, then President Corazon C. Aquino enacted Executive Order (EO)
No. 180 which provided for guidelines on the exercise of government employees' right
to organize and created a Public Sector Labor Management Council (PSLMC) tasked
to implement and administer the provisions thereof.

Public Sector Labor-Management Council (PSLMC) issued Resolution No. 4,

series of 2002 on November 14, 2002, allowing the grant of the CNA incentive to
National Government Agencies (NGAs), State Universities and Colleges (SUCs), and
Local Government Units (LGUs). Issuances on the matter of the CNA incentive
merely require that the CNA Incentive shall be derived from savings generated by
an agency.

DBM issued Budget Circular No. 2011-5 to prescribe supplemental guidelines on the
grant of the Collective Negotiation Agreement (CNA) Incentive for the Fiscal Year
2011. The circular placed a P25,000.00 ceiling per qualified employee. " It, likewise,
provided that it shall take effect immediately.

Circular was received by the DENR only on December 29, 2011, which was the last
official day for the calendar year 2011, at a time when negotiations on the CNA
Incentive between the DENR management and the union had already
concluded.

Consequently, the COA issued Notice of Disallowance(disapproval of a disbursement)

with respect to the CNA Incentives granted by the DENR to its officers and employees
for CY 2011 totaling P31,275,975.00.(31M) It disallowed the amount of
P14,983,500.40(14.98M) for being in excess of the P25,000.00 limit per qualified
employee.

Petition for Injunction and Prohibition

*injunction is a court order requiring a person to do or cease doing a specific action.
*Prohibition is defined as "an extraordinary remedy available to compel any tribunal,
corporation, board, or person exercising judicial or ministerial functions, to desist
from further proceeding in an action or matter when the proceedings in such
tribunal, corporation, board or person are without or in excess of jurisdiction or with
grave abuse of discretion."

Petitioners are assailing the constitutionality of Budget Circular No. 2011-5 circular
for lack of prior publication in the Official Gazette or newspaper of general
circulation.

respondent Secretary Florencio B. Abad of the DBM:

● questions the remedy of prohibition used by petitioners, for the assailed

circular was issued in his exercise of quasi-legislative powers.

● He also alleges that there can be no vested right to the CNA incentive for
one's right to the same becomes enforceable only upon compliance with the
conditions set forth by law and issuances. Furthermore, Secretary Abad adds
that petitioners' failure to comply with the condition imposed by DBM Budget
Circular No. 2006-1 requiring that the incentive be paid only after the end
of the year constitutes a violation thereof making the grant of the incentive
unlawful.

● As to the publication requirement, Secretary Abad counters that the DENR

admittedly received a copy of the assailed circular before the end of FY 2001
or on December 29, 2011. Thus, they cannot now challenge the validity of DBM
Budget Circular No. 2011-5 for they were given due notice. The subject
circular was, in fact, published in the Philippine Star, a newspaper of
general circulation

Application:

Actual controversy ● conflict of legal rights

petitioners assert their vested right to the incentive
dependent on the savings generated by the agency for the
year without the P25,000.00 limitation imposed by the
circular.
 Legal standing ● suffered some actual or threatened injury
To require them to refund the amount they received in good
faith would cause them grave injustice and irreparable injury

ISSUES:
1. WHETHER OR NOT DBM BUDGET CIRCULAR NO. 2011-5 DATED
DECEMBER 26, 2011 IS CONSTITUTIONAL,AND THUS, VALID AND
BINDING FOR CALENDAR YEAR 2011. YES

Ruling: PETITION IS PARTLY GRANTED

YES. Nonetheless, the P25,000.00 CNA incentive ceiling in Budget Circular No.
2011-5 is in consonance with the law and existing rules. While Executive Order
No. 180 vests power to promulgate rules to implement it in the PSLMC, it did not
necessarily deprive the Department of Budget and Management power to issue rules
in relation to compensation as a result of collective negotiations between government
employees' organizations and their employers.

As the governmental body with the power to administer the national

government's compensation and position classification system, the Department
of Budget and Management controls and regulates the payment of compensation to
all appointive and elective positions in government.

Be that as it may, We refrain from holding the DENR employees liable for the
refund of the excess CNA Incentives received. It is settled in law and jurisprudence
that publication is imperative as a condition precedent to the effectivity of a law to fully
and categorically inform the public of its contents before their rights and interests are
affected by the same.

Due process dictates that the same cannot be permitted to retroactively apply to
incentives granted before its publication. The budget circular was published in the
Philippine Star two months after the issuance and after the incentive was given. It was
also not filed with the University of the Philippines Law Center.

The SC said these lapses would not have mattered if they were merely
interpretative or internal in nature. However, publication is needed for a budget
circular that affects substantial rights, gives real consequences, and increases the
burden on the employees of all government agencies, corporations, and units.

Settled is the rule that a belated publication cannot have retroactive effect of
curing the infirmity attendant in the passage of the administrative regulation.

Timeline of events:
● DBM Budget Circular No. 2011-5 was issued on December 26, 2011
● DENR's grant of the CNA incentive on December 28, 2011
 ● Budget circular was received by the DENR only on December 29, 2011
● Budget circular was published in the Philippine Star on February 25, 2012, or
two months after the issuance

2. Whether Secretary Abad gravely abused his discretion in issuing the

assailed DBM Budget Circular No. 2011-5. NO

Ruling:
No. Abad was “duly authorized to issue policy guidelines” such as the incentive
ceiling. Clearly, in imposing a P25,000 budget ceiling for CNA incentives, the
Department of Budget and Management acted according to the authority granted to it
by law and existing rules.
Basis: General Appropriations Act of 2014

DECISION:
PARTIALLY GRANTED
ANNULLED and SET ASIDE:
(1) Notice of Disallowance
(2) COA’s order for the employees of the Department of Environment and Natural
Resources (DENR) to return the P14.98-million incentives granted in 2011 in excess
of the limit imposed by Section 3.5 of DBM Budget Circular Number 2011-5.
(3) Order of Execution instructing the DENR cashier to withhold payment of salaries
or amounts due the concerned employees to settle their liabilities under the COA
disallowance.