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.  COA’s  decision  was  affirmed  in  toto.    Ratio:  On  NEA’s  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  DBM’s  approval  of  NEA’s  proposed  budget.  NEA  also  contends  that  the  DBM’s  approval  of  NEA’s  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  President’s  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.  NEA’s  reasons  in  disregarding  the  President  were  patently  flimsy,  even  ill-­‐conceived.    (No  separate  concurring  or  dissenting  opinions.)