483 Phil. 666
CARPIO, J.:
This Office finds the foregoing contentions untenable. The doctrine of autonomy of contracts is not challenged in the case at bar. Records show that the Contract for Manpower Services dated March 18, 1997 which is being cited by Appellant to have contained stipulations that HDMF could grant additional benefits to DBPSC personnel is the Renewal Service Contract for the year 1997. This is the pivotal point in this case since COA Auditor asserts that what has been paid on June 24, 1997 was the amelioration allowance for 1996. And this is corroborated by the Affidavit dated October 17, 1997 of Mr. Vicente D. Julian, Jr. who is the Chief of Division of the Benefits and Compensation, Human Resources Management and Development Department, HDMF, that the proposal and subsequent Board Approval (Board Resolution No. 1313, series 97) for the grant of an amelioration allowance covers employees of the Fund as of December 31, 1996.Dissatisfied with the decision, the HDMF appealed to the COA for relief through a petition for review.
It is worth stressing that the 1996 Renewal Contract for Manpower Services did not provide or stipulate that HDMF could grant additional allowance/benefits whatsoever to DBPSC personnel who are under contract with HDMF.
Assuming arguendo that what has been paid on June 24, 1997 was the 1997 amelioration allowance, still the same is bereft of legal basis since Administrative Order No. 365 dated October 10, 1997 which authorized the grant of amelioration assistance to government personnel expressly prohibits payment of said benefit to those serving under service contract (Section 1, AO 365). Such being the case, the principle of vested right cannot be invoked since there is no legal right to receive the allowance in question.
Premises considered, the within appeal of the Home Development Mutual Fund (HDMF) is hereby denied. Accordingly, the disallowance on the payment of amelioration allowance to DBP Service Corporation personnel assigned at HDMF embodied under ND No. 97-006-101(97) in the aggregate amount of P1,376,666.67 is hereby affirmed. Likewise, ND No. 97-001-101(97) which pertains to amelioration allowance paid to DBPSC personnel assigned at HDMF Baclaran Branch is affirmed.[15]
The Director, Corporate Audit Office I correctly opined that under Section 2 of Administrative Order No. 365, all Heads of NGA’s, LGU’s including GOCC’s and GFI’s as well as their governing boards are enjoined and prohibited from authorizing/granting amelioration assistance or any other similar benefit without prior approval and authorization as specifically provided by the Office of the President. Granting that Administrative Order No. 365 is not applicable in this case, petitioner’s contention on the legality of the payment of amelioration allowance is largely dependent on its contract with DBPSC. The Contract for Manpower Services dated March 18, 1997 cited by petitioner to have contained stipulations that HDMF could grant additional benefits to DBPSC personnel is actually the Renewal Service Contract for the year 1997. The Original Service Contract in 1995 as well as the Renewal Contract for 1996 did not contain any stipulation that DBPSC personnel are allowed to receive benefits from HDMF. Records, however, disclosed that in an affidavit dated October 17, 1997 executed by the Chief of Division of the Benefits and Compensation, Human Resources Management and Development of the HDMF, what has been paid on June 24, 1997 using the 1997 funds was the amelioration allowance for the year 1996. Moreover, it is without doubt that the HDMF Board of Trustees possesses the usual corporate powers for their effective governance. However, unlike private corporations, government corporations are circumscribed by laws which limit their governing boards’ power in the adoption of rules and regulations as well as the authorization of expenditures. Every expenditure must have a legal basis and should not be contrary to law, rules and regulations. The use of 1997 funds to pay amelioration allowance for the previous year without prior approval of the Office of the President is contrary to laws, rules and regulations.[16]In a resolution dated 30 January 2003, the COA denied HDMF’s motion for reconsideration and affirmed with finality its decision, prompting HDMF to come to this Court for relief.
WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of merit. Accordingly, the disallowance of the amelioration allowance granted to DBPSC personnel in the total amount of P1,376,666.67 is hereby affirmed.[17]
HDMF points out that it paid the amelioration allowance to the DBPSC personnel on 24 June 1997. Administrative Order No. 365 (“AO 365”),[19] prohibiting the payment of amelioration allowance to persons serving under service contracts, was issued only on 10 October 1997. Hence, AO 365 cannot apply retroactively to the payment of amelioration allowance in 1996. HDMF asserts that the payment of amelioration allowance to DBPSC personnel was part of its contractual obligation in the 1997 Contract. Finally, HDMF maintains that the employees should retain the amelioration allowance already paid following the ruling of this Court in Association of Dedicated Employees of the Philippine Tourism Authority v. COA.[20]
- Whether Administrative Order No. 365 issued on October 10, 1997, which expressly prohibits the payment of amelioration allowance to those serving under service contract, has retroactive effect to the payment made on June 24, 1997;
- Whether the payment made in 1997 of the amelioration allowance for 1996, based on the stipulation for such benefit in the 1997 contract, is valid;
- Assuming that the COA correctly disallowed the amelioration allowance for lack of legal basis, whether the COA should nevertheless allow such payment in audit since HDMF paid the amelioration allowance to the employees in good faith.[18]
SECTION 1. All National Government Agencies, Government-Owned and Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), and Local Government Units are hereby authorized to grant Amelioration Assistance in the maximum amount of Seven Thousand Two Hundred Pesos (P7,200) each to their personnel, regardless of salary and appointment status, who have rendered at least four (4) months of service as of the payment of the said benefit except those serving under service contract.AO 365 took effect on 10 October 1997. The HDMF Board of Trustees approved on 2 June 1997 Resolution No. 1313, Series of 1997, granting the amelioration allowance. A law or regulation has no retroactive application unless the law or regulation expressly provides for retroactivity.[22] Article 4 of the Civil Code is clear on the matter: “Laws shall have no retroactive effect, unless the contrary is provided.” The Court explained the reason for the law in Lopez and Lopez v. Crow:[23]
Personnel who rendered less than four (4) months of service shall be entitled to an amount proportionate to the actual service rendered while part-time personnel shall be entitled to one-half (1/2) of the benefit of a full-time personnel.
SECTION 2. Heads of NGAs, LGUs including GOCCs and GFIs as well as their respective governing boards are hereby enjoined and prohibited from authorizing/granting Amelioration Assistance or any other similar benefit without prior approval and authorization via Administrative Order by the Office of the President. Henceforth, anyone found violating any of the provisions of this Order, including all officials/employees and the COA Resident Auditor of such government entity found to have taken part thereof, shall be accordingly and severely dealt with in accordance with the applicable provisions of existing administrative and penal laws.
Consequently, all administrative authorizations granting any and all forms of additional compensation paid outside of the prescribed basic salary under RA 6758 that are inconsistent with the legislated policy on the matter or are not covered by any legislative action are hereby revoked.
SECTION 3. All government entities which authorized the payment of Amelioration Assistance in 1997 in excess of the amount authorized herein are hereby directed to cause the refund of the excess within a period of three (3) months to commence after the issuance of this Order.
SECTION 4. Entities are hereby allowed to pay the benefit herein authorized out of any available savings for FY 1997. In case of deficiency, the benefit shall be partially and uniformly implemented. No additional funds for the purpose shall be released by the Department of Budget and Management. (Emphasis supplied)
x x x According to this provision of law, in order that a law may have retroactive effect it is necessary that an express provision to this effect be made in the law, otherwise nothing should be understood which is not embodied in the law. x x x. Furthermore, it must be borne in mind that a law is a rule established to guide our actions with no binding effect until it is enacted, wherefore, it has no application to past times but only to future time, and that is why it is said that the law looks to the future only and has no retroactive effect unless the legislator may have formally given that effect to some legal provisions.AO 365 does not provide for any retroactive effect. Besides, AO 365 clearly applies only to FY 1997 since Sections 3 and 4 of AO 365 refer only to amelioration allowance paid in 1997 from “any available savings for FY 1997.” Thus, AO 365 cannot apply to 1996 and prior years.
SEC. 2. Each department or agency shall prepare a career and personnel development plan which shall be integrated into a national plan by the Commission which shall serve as the basis for all career and personnel development activities in the government. The Career and Personnel Development Plan shall include provisions on merit promotions, performance evaluation; in-service training; overseas and local scholarships and training grants; suggestions, incentive awards systems; provisions for welfare, counseling, recreation and similar services; and other human resource development interventions such as on the job training, counseling, coaching, job rotation, secondment, job swapping and others.This provision, however, refers to career and personnel development plans. It covers merit promotions, performance evaluation, in-service training, scholarships and training grants, suggestions and incentive awards systems, and provisions for welfare, counseling, recreation and similar services, as well as other human resource development interventions. In granting amelioration allowance to the DBPSC personnel, HDMF stretched the scope of the “welfare provision” beyond its meaning.
02. It is expressly understood and agreed that the employees assigned by DBPSC to the FUND are, for all legal intents and purposes, the employees of DBPSC and not of the FUND, hence the FUND does not maintain any employee-employer relationship with said personnel of DBPSC. However, DBPSC employees assigned to the FUND shall be subject to the latter’s existing office rules, regulations and decorum.[29]The 1996 and 1997 Contracts reiterated the same stipulation.[30]
SEC. 12.. – The Board shall have the following powers:Such power, however, is subject to existing laws and does not give the HDMF Board blanket authority to adopt budgets and authorize payments contrary to law.
x x x
(c) To authorize expenditures of the Fund in the interest of effective administration and operations, to adopt from time to time the budget for said purposes.
x x x notwithstanding a standardized salary system established for all employees, additional financial incentives may be established by government corporation and financial institutions for their employees to be supported fully from their corporate funds and for such technical positions as may be approved by the President in critical government agencies. (Emphasis supplied)PD 985 authorizes additional financial incentives only to employees of government corporations and financial institutions. Presidential Decree No. 1597 (“PD 1597”),[33] which took effect on 11 June 1978, reiterates the same condition. Section 5 of PD 1597 provides that:
x x x (a)llowances, honoraria and other fringe benefits which may be granted to government employees, whether payable by their respective offices or by other agencies of government, shall be subject to the approval of the President upon recommendation of the Commissioner of the Budget. x x x .Republic Act No. 6758 (“RA 6758”)[34] further strengthened PD 985 and PD 1597. RA 6758 integrated all allowances, except those enumerated, in the standardized salary rates prescribed, thus:
SEC. 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.True, RA 6758 does not specifically prohibit the grant of other allowances. However, Section 21 of RA 6758 provides that the provisions of PD 985 and PD 1597, which are not expressly modified, repealed or otherwise inconsistent with RA 6758 shall remain in effect.
SEC. 3. Compliance with Legal Requirements. – All government-owned or controlled corporations are henceforth required to comply strictly with laws, rules and regulations governing the grant of salary increases, allowances and other benefits to their officials and employees. The head of the corporations shall be held responsible for any unauthorized grant without prejudice to requiring the refund by the employees concerned. (Emphasis supplied)Clearly, the HDMF Board does not have the authority, except for 1997, to grant amelioration allowance to its own employees. Nothing in any existing law or presidential issuance grants authority to the HDMF Board to pay amelioration allowance to private employees of HDMF’s service contractors.
Considering that the amelioration allowance was for the year 1996, HDMF could not justify extending the allowance to DBPSC personnel by invoking the 1997 contract. The stipulation states that HDMF “may grant additional benefits/emoluments/bonuses to detailed DBPSC personnel.” The use of the word “may” in contrast to “shall” used in the other provisions of the contract show that the grant of additional benefits, emoluments or bonuses is not a mandatory obligation of HDMF.
- The FUND, based on HDMF Board approval, may grant additional benefits/emoluments/bonuses to detailed DBPSC personnel. The grant may be in cash or in kind. Given the one-time nature of the grants, these shall not form part of the billing rate.[37]
The 1996 Contract does not obligate HDMF to pay the amelioration allowance, which is not a mandated wage increase. The payment of such allowance in 1997 for services rendered in 1996 is an ex gratia payment. Such payment constitutes a gratuity for past services.ARTICLE V
CONSIDERATION
01. For and in consideration of the service/s rendered. (sic) The Fund hereby agrees to pay DBPSC the agreed amount in pesos for services rendered in accordance with the statement of billing rates attached herewith as Annex “A” and forming part of the contract. The rate is based on an 8 hour work schedule, from Monday to Friday and includes the ten (10%) percent Value Added Tax. However, the rate shall be adjusted accordingly in case of future government mandated wage increase and other charges upon written request by DBPSC and approved by the FUND;
Provided however, that tardiness, undertime, half-days and absences incurred by the employees assigned to the FUND shall be deducted accordingly from the monthly billing of the DBPSC.
x x x.
ARTICLE VI
MANNER OF PAYMENT/BILLING
x x x
02. DBPSC shall be solely responsible for the payment of the employees’ monthly wages, which shall be paid every 15th and end of the month.[38] (Emphasis supplied)
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits.[40]In the case before us, the HDMF Board also acted in good faith. The Minutes of the HDMF Board meeting on 2 June 1997 showed that the grant of amelioration allowance originally covered only “direct-hired contractual employees” of the HDMF, or those directly hired by HDMF such as doctors and nurses. The grant of amelioration allowance did not include temporary manpower supplied by agencies like the DBPSC. There was a suggestion to delete the word “direct” to include employees of manpower agencies. A trustee seconded the suggestion in the interest of equity and fair play and on the ground that the DBPSC personnel perform the work normally done by regular employees.