TESDA v. COA (2015), Pamisa, EH 202

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT
AUTHORITY, v. THE COMMISSION ON AUDIT; CHAIRMAN

REYNALDO A. VILLAR; COMMISSIONER JUANITO G. ESPINO, JR.;
and COMMISSIONER EVELYN R. SAN BUENAVENTURA, 10 February
2015, En Banc, Bersamin
Digest by: Jules B. Pamisa, EH 202
Principle in sum:
“ARTICLE VI SECTION 29 (1) OF THE 1987 CONSTITUTION, NO

MONEY SHALL BE PAID OUT OF THE TREASURY EXCEPT IN PURSUANCE
OF AN APPROPRIATION MADE BY LAW”
FACTS:
1. Then Department of Labor and Employment (DOLE) Secretary Patricia Sto.

Tomas issued Administrative Order (AO) No. 430, series of 2003,
authorizing the payment of healthcare maintenance allowance of P5,000.00
to all officials and employees of the DOLE, including its bureaus and
attached agencies, in view of the inadequate policy on basic health and
safety conditions of work experienced by government personnel. The
petitioner, Technical Education and Skills Development Authority
(TESDA), is an attached agency of the DOLE.
2. AO No. 430 was purportedly based on Civil Service Commission (CSC)
Memorandum Circular (MC) No. 33, series of 1997, and Section 34 of the
General Provisions of the 2003 General Appropriations Act.
3. 26 January 2004 – The COA State Auditor IV, Rosemarie A. Valenzuela,
issued AOM No. 04-005 upon post-audit and later endorsed the matter to the
COA Director of the LAO-National for appropriate legal action.
4. AOM No. 04-005 stated that the provisions followed by the DOLE in
issuing DOLE AO No. 430, series of 2003, has no existing guidelines and is
void of specific legal authority in authorizing payment of medical allowance
to all personnel at P5,000.00 each. Payment of such benefit cannot be
allowed and has no legal basis.
5. 26 May 2006 – The Officer In-Charge of the COA LAO-National, Atty.
Rebecca Mislang, subsequently issued Notice of Disallowance (ND) No.
2006-015, which states that the payment of the allowance had no legal basis
1
and is in violation of Republic Act No. 6758 (Salary Standardization Law of
1989), and addressed to then TESDA Director General Augusto Syjuco.
6. ND No. 2006-015 identified all TESDA officials and employees per
attached payroll as recipients as part of the persons liable for the
disallowance.
7. The TESDA filed an appeal before the COA Commission Proper, assailing
the disallowance by the LAO-National.
8. 23 March 2010 – COA Commission Proper denied the appeal for lack of
merit. Hence, this petition.
Issues:
Whether or not the COA commit grave abuse of discretion in issuing

ND No. 2006-015 pursuant to AOM No. 04-005.
RULING:
NO. The COA did not commit grave abuse of discretion in issuing ND
No. 2006-015 pursuant to AOM No. 04-005.
1. SC: “The Civil Service Commission (CSC) issued Resolution No. 97-4684 to
provide an adequate policy on basic health and safety conditions of work in
the Government. Subsequently, the CSC issued MC No. 33, which was a
reiteration of Resolution No. 97-4684, concerning the policy on the working
conditions at the workplace.”
MC No. 33 states:
The Civil Service Commission, in partnership and in
consultation with the Council of Personnel Officers and Human
Resourc
e Management Officers, recognizes the need to

institutionalize viable programs to improve working
conditions in the government.
Pursuant to Resolution No. 97-4684 dated December 18,
1997, the CSC promulgates and adopts the following policies:
1. All government offices shall provide the following:
a. Health Program for Government Employees
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b. Health program for employees shall include any or all
of the following:
1. Hospitalization services
2. Annual mental, medical-physical examinations
2. SC: “On the basis of the issuances by the CSC, the DOLE issued AO No.
430 to authorize the release of the challenged healthcare maintenance
allowance of P5,000.00 to all eligible DOLE employees, including the
TESDA's workforce”
3. SC: “we uphold the disallowance by the COA of the payment of the
P5,000.00 as healthcare maintenance allowance. The COA did not act
without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction because it properly exercised its
powers and discretion in disallowing the payment of the P5,000.00 as
healthcare maintenance allowance.”
4. SC: “the COA is generally accorded complete discretion in the exercise of
its constitutional duty and responsibility to examine and audit expenditures
of public funds, particularly those which are perceptibly beyond what is
sanctioned by law… we find no grave abuse of discretion on the part of the
COA in issuing the assailed decision.”
5. SC: “MC No. 33 dealt with a health care program for government
employees. A program is ordinarily understood as a system in place that
will draw the desired benefits over a period of time… MC No. 33 did not
intend the health care program to be a single activity or endowment to
achieve a fleeting goal, for it rightfully concerned the institutionalization of
a system of healthcare for government employees. A careful perusal of MC
No. 33 and its precursor reveals the unequivocal intent to afford
government employees a sustainable health care program instead of an
intermittent healthcare provision.”
6. SC: “MC No. 33 and its precursor were worded in a plain and
straightforward manner to the effect that the "(h)ealth program for
employees shall include any or all of the following: 1) Hospitalization
services, and 2) Annual mental, medical-physical examinations… The giving
of health care maintenance allowance of P5,000.00 to the TESDA's
employees was not among any of the hospitalization services or
examinations listed in the circular.”
7. SC: “The TESDA also relied on Section 34 of the GAA for 2003 (Republic
Act No. 9206)… The reliance is misplaced. Section 34 only reiterated the
rule that the personnel benefits costs of government officials and employees
should be charged against the funds from which their compensations are
paid. The provision was neither a source of right nor an authority to hastily
3
fund any or all personnel benefits without the appropriation being made by
law.”
8. SC: “pursuant to Article VI Section 29 (1) of the 1987 Constitution, no
money shall be paid out of the Treasury except in pursuance of an
appropriation made by law. Hence, the GAA should be purposeful,
deliberate, and precise in its contents and stipulations. Also, the COA was
correct when it held that the provisions of the GAA were not self-executory.
This meant that the execution of the GAA was still subject to a program of
expenditure to be approved by the President, and such approved program of
expenditure was the basis for the release of funds.”
9. SC: “The mere approval by Congress of the GAA does not instantly make
the funds available for spending by the Executive Department. The funds
authorized for disbursement under the GAA are usually still to be collected
during the fiscal year. The revenue collections of the Government, mainly
from taxes, may fall short of the approved budget, as has been the normal
occurrence almost every year. Hence, it is important that the release of
funds be duly authorized, identified, or sanctioned to avert putting the
legitimate programs, projects, and activities of the Government in fiscal
jeopardy.
10.SC: “Section 5 of Presidential Decree No. 1597 (Further Rationalizing the
System of Compensation and Position Classification in the National
Government) states that the authority to approve the grant of allowances,
honoraria, and other fringe benefits to government employees, regardless of
whether such endowment is payable by their respective offices or by other
agencies of the Government, is vested in the President.
11.SC: “The recipients accepted the benefits honestly believing that they were
receiving what they were entitled to under the law. Similarly, the Court
holds that the TESDA officials who granted the allowance to the covered
personnel acted in good faith in the honest belief that there was lawful basis
for such grant. In view of these considerations, the Court declares that the
disallowed benefits approved and received in good faith need not be
reimbursed to the Government.”
xxx

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TECHNICAL EDUCATION AND SKILLS DEVELOPMENT

AUTHORITY, v. THE COMMISSION ON AUDIT; CHAIRMAN

Digest by: Jules B. Pamisa, EH 202

“ARTICLE VI SECTION 29 (1) OF THE 1987 CONSTITUTION, NO

1. Then Department of Labor and Employment (DOLE) Secretary Patricia Sto.

Whether or not the COA commit grave abuse of discretion in issuing

e Management Officers, recognizes the need to

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