G.R. No.

185812, January 13, 2015

MARITIME INDUSTRY AUTHORITY, petitioner
v.
COMMISSION ON AUDIT, respondent
BRION, J.:

FACTS:
On September 30, 1998, the Department of Budget and Management issued National
Compensation Circular Numbers 56 and 59 which were then implemented Republic Act No. 6758. RA
6758 is an act that “standardizes salary rates among government personnel s and do away with multiple
allowances and other incentive packages and the resulting differences in compensation among them.” To
standardize salary rates among government personnel and do away with multiple allowances and other
incentives and the resulting differences in compensation among them is the clear policy of RA 6758’s
section 12.
There are factors that will guide the Department of Budget and Management in order to
prepare the index of occupational services, to wit; (1) the education and excellence required to perform
the duties and responsibilities of the position; (2) the nature and complexity of the work to be
performed; (3) the kind of supervision received; (4)mental and/or physical strain required in the
completion of the work; (5) nature and extent of internal and external relationships; (6) kind of
supervision exercised; (7) decision-making responsibility; (8) responsibility for accuracy of records and
reports; (9) accountability for funds, properties, and equipment, and; (10) hardship, hazard, and
personal risk involved in the job.
While there are factors as stated above, there are some who are granted fiscal autonomy by the
constitution. Specifically the Judiciary, Civil Service Commission, Commission on Audit, Commission on
Elections, and the Office of the Ombudsman. Fiscal Autonomy “covers the grant to the Judiciary of the
authority to use and dispose of its funds and properties at ill, free from outside control or interference.”
Due to the fact that the Constitutional and Fiscal Autonomy Group is not under the President’s power of
control, they are able to determine the allowance of benefits that suit the functions of the office. And
although they have fiscal autonomy, public funds may be disbursed for salaries and benefits to
government officers given that the services the committed are necessary or relevant to the function of
the office. This is according the Article VI of Section 29 of the 1987 Constitution that states “no money
shall be paid out of the Treasury except in pursuance of an appropriation made by law.” Although RA
6758 sees the allowances and benefits of government employees as under them, there are exceptions.
Unless they are excluded by law or by the issuance of the Department of Budget and Management.
Because of this new act, it raised a few question among government employees, specifically on
Section 12. This is where the Maritime Industry Authority comes in. Petitioner discontinued the grant of
several allowances and incentives to its employees and official because of the issuance of this Republic
Act. Thus, a petition for certiorari was filed by petitioner.
On February 10, 2000, the Administrator of Maritime Industry Authority wrote a memorandum
the then President Joseph Estrada. Written in the memorandum are the approval and/or restoration of
the financial incentives, benefits, or allowances to the officers and employees of the Maritime Industry
Authority. Other incentives that are awaiting the approval of the president are; (1) Per diems and
commutable allowance received by the members of the Board of Maritime Industry Authority; (2) Rice
subsidy allowance; and (3)  Medical allowance. Also written in the memorandum are the request to
bring back the following; (1) Reimbursable representation allowance for members of the Board of
Maritime Industry Authority; (2) Performance incentives allowance; (3) Economic efficiency, financial
assistance/benefit; (4) Hearing allowance, and (5)Birthday month, off month, employment date
anniversary allowances.
On October 16, 2000, the memorandum was allegedly approved with the signature of the
President of the Philippines. This is the assurance that the petitioner relied on to grant the allowances
and incentives to its employees that will start on January 2001.
A total of 5,565,455.02 Php was then issued by the Resident Auditor of the Maritime Industry
Authority to its employees from January to May 2001. Although the Resident Auditor issued the
allowance, it then disallowed the grant of the allowances and incentives. On the grounds that according
to Article IX (b) of the 1987 Constitution, it constituted as double compensation to public officers and
employees and that the President’s approval of the memorandum was not the law contemplated by the
Constitution as an exception to the prohibition on double compensation. Petitioner filed a motion for
reconsideration on October 25, 2002 before the Commission on Audit Director of the Legal and
Adjudication Office.
Because of this, petitioner filed a petition for review before the Commission on Audit. It was
then denied on March 3 2005 due to the fact that disallowed allowances are integrated in the
standardized salary rates under the Section 12 of RA 6758. Furthermore, the alleged memorandum of
the President was not established. There was no copy of the file in the records of the Malacañang Office
Records.
On December 9, 2008, the petitioner’s motion for reconsideration was denied. This was what
lead to the petition for certiorari.
The petition was denied.

Position of both Parties;

 Petitioner Maritime Industry Authority
Petitioner Maritime Industry Authority argues that the allowances and incentives granted to its
officers and employees are not integrated in the standardized salary. It relies on the last clause of the
first sentence of Section 12 of Republic Act No. 6758:

Section 12. Consolidation of Allowances and Compensation. - All allowances, except for

representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel; hazard
pay; allowances of foreign service personnel stationed abroad; and such other additional
compensation not otherwise specified herein as may be determined by the DBM, shall be deemed
included in the standardized salary rates herein prescribed. Such other additional compensation,
whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into
the standardized salary rates shall continue to be authorized.
 Existing additional compensation of any national government official or employee paid from of a
local government unit shall be absorbed into the basic salary of said official or employee and
shall be paid by the National Government.

Petitioner insists that a circular must be issued by the Department of Budget and Management for a
specific allowance to be deemed integrated in the standardized salary pursuant to Section 12 of
Republic Act No. 6758. Petitioner argues that since the National Compensation Circular No. 59, the
circular issued by the Department of Budget and Management implementing Section 12, was not
published in the Official Gazette or any newspaper of general circulation, there can be no allowance
deemed integrated in the standardized salary rates.

 Respondent Commission on Audit

Petitioner interpreted RA 6758’s Section 12 differently. It considers all allowances as deemed

included in the standardized salary except those specifically enumerated in Section 12 of Republic Act
No. 6758. The issuance of a circular by the Department of Budget and Management is necessary only for
the grant of allowance other than those enumerated under Section 12 of Republic Act No. 6758 in
addition to the standardized salary.

Issue:
Whether or Not the allowance or incentives granted to the officers and employees of Maritime
Industry Authority have legal basis.

Held:
Because the respondent didn’t commit a grave abuse of discretion, the petition was denied
under the Rule 64 of before this court. A petition under Rule 64 may prosper only after a finding that the
administrative agency committed grave abuse of discretion amounting to lack or excess of jurisdiction.
Petitioner Maritime Industry Authority argues that it was denied administrative due process.
Respondent Commission on Audit affirmed the notices of disallowance on the basis of provisions of law
that are different from the bases cited in the notices of disallowance. Respondent does not deny the
grounds of Petitioner but they then argue that they are only pursuant to Article IX (D), Section 2 of the
1987 Constitution and is a necessary incident of its appellate jurisdiction as provided in Rule II, Section 4
of the 1997 COA Revised Rules of Procedure.

Refunds must also be made but only to those who committed the acts in unlawful expenditures.
Presidential Decree No. 1445 provides for a general liability for unlawful expenditures:

 Section 103. General liability for unlawful expenditures. Expenditures of government funds or
uses of government property in violation of law or regulations shall be a personal liability of the
official or employee found to be directly responsible therefor.
 Section 19 of the Manual of Certificate of Settlement and Balances, Commission on Audit
Circular No. 94-001 provides:
 o 19.1. The liability of public officers and other persons for audit disallowances shall be
determined on the basis of: (a) the nature of the disallowance; (b) the duties,
responsibilities or obligations of the officers/persons concerned; (c) the extent of their
participation or involvement in the disallowed transaction; and (d) the amount of losses
or damages suffered by the government thereby.

Among the employees of the Maritime Industry Authority who received the incentives, the cashier
Erlinda Baltazar received higher amounts compared to the others. The disparity in the amounts given to
Erlinda Baltazar compared to the other officers and employee is too substantial to consider her and the
approving officers to be in good faith when Erlinda Baltazar received the amounts. Because of this,
Erlinda Baltazar and the approving officers are solidarily liable to refund all amounts received by Erlinda
Baltazar based on what was disallowed by respondent Commission on Audit.

Ruling:

The decision of the respondent Commission on Audit dated on March 3, 2005 and resolution December
9, 2008 are AFFIRMED with MODIFICATION. The approving officers and Erlinda Baltazar are solidarily
liable to refund the disallowed amounts received by Erlinda Baltazar. The other payees need not refund
the amounts received.