National

Electrification Administration v. Commission on Audit

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

Doctrine: The Branches of Government; Executive Department; Powers and Functions of the President; Control of Executive Departments* Nature: Special Civil Action in the Supreme Court. Certiorari. Date: 2002 Ponente: Carpio, J. Facts: Government employee salaries were raised via a Joint Resolution of Congress (No. 01), urging the President to revise the existing compensation. This was made into a 4-year program. On 28 December 1996, President Ramos issues Executive Order No. 389 (EO 389) to implement the final year salary increases authorized by the Joint Resolution. EO 389 called for a 2-tranche (or 2-part) salary increase: one on 1 January 1997, and another on 1 November 1997. In January 1997, petitioner NEA implemented the salary increases. However, they implement such increase in a single lump sum beginning 1 January 1997 (NEA accelerated the implementation by paying the second tranche starting 1 January instead of 1 November). Respondent COA issued a Notice of Suspension and Notices of Disallowance. The Notices of Disallowance were appealed by NEA, but rejected by the Commission en banc. The decision of the respondent was then challenged in the Supreme Court. Issues: Did the COA commit a grave abuse of discretion amounting to lack or excess of jurisdiction in disallowing the increased salaries? In other words, is NEA allowed to accelerate the implementation of the salaries due to availability of funds? Held: No, COA did not commit any grave abuse of discretion. Neither is NEA allowed to accelerate the implementation. The petition was dismissed for lack of merit. COAs decision was affirmed in toto. Ratio: On NEAs 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 (General Appropriations Act of 1997) was their legal basis. However, 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 Personal Services (the appropriation used by NEA) is prepared after the enactment of the GAA, and requires the approval of the President (Sec. 23, Chap. 4, Book IV of the Administrative Code, p. 229). The execution of the GAA is subject to a program of expenditure 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 DBMs approval of NEAs proposed budget. NEA also contends that the DBMs approval of NEAs 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 Presidents 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. NEAs reasons in disregarding the President were patently flimsy, even ill-conceived. (No separate concurring or dissenting opinions.)