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EN BANC

G.R. No. 108310 September 1, 1994

RUFINO O. ESLAO, in his capacity as President of Pangasinan State University, Petitioner, v. COMMISSION ON AUDIT, Respondent.

Mehol K. Sadain for petitioner.

FELICIANO, J.:

In this Petition for Certiorari, Rufino O. Eslao in his capacity as President of the Pangasinan State University ("PSU") asks us to set aside Commission on Audit ("COA") Decisions Nos. 1547 (1990) and 2571 (1992) which denied honoraria and per diems claimed under National Compensation Circular No. 53 by certain PSU personnel including petitioner.chanroblesvirtualawlibrarychanrobles virtual law library

On 9 December 1988, PSU entered into a Memorandum of Agreement ("MOA") ¹with the Department of Environment and Natural Resources ("DENR") for the evaluation of eleven (11) government reforestation operations in Pangasinan. ²The evaluation project was part of the commitment of the Asian Development Bank ("ADB") under the ADB/OECF Forestry Sector Program Loan to the Republic of the Philippines and was one among identical project agreements entered into by the DENR with sixteen (16) other state universities.chanroblesvirtualawlibrarychanrobles virtual law library

On 9 December 1988, a notice to proceed ³with the review and evaluation of the eleven (11) reforestation operations was issued by the DENR to PSU. The latter complied with this notice and did proceed.chanroblesvirtualawlibrarychanrobles virtual law library

On 16 January 1989, per advice of the PSU Auditor-in-Charge with respect to the payment of honoraria and per diems of PSU personnel engaged in the review and evaluation project, PSU Vice President for Research and Extension and Assistant Project Director Victorino P. Espero requested the Office of the President, PSU, to have the University's Board of Regents ("BOR") confirm the appointments or designations of involved PSU personnel including the rates of honoraria and per diems corresponding to their specific roles and functions. ⁴chanrobles virtual law library

The BOR approved the MOA on 30 January 1989 ⁵and on 1 February 1989, PSU issued Voucher No. 8902007 ⁶representing the amount of P70,375.00 for payment of honoraria to PSU personnel engaged in the project. Later, however, the approved honoraria rates were found to be somewhat higher than the rates provided for in the guidelines of National Compensation Circular ("NCC") No. 53. Accordingly, the amounts were adjusted downwards to conform to NCC No. 53. Adjustments were made by deducting amounts from subsequent disbursements of honoraria. By June 1989, NCC No. 53 was being complied with. ⁷chanrobles virtual law library

On 6 July 1989, Bonifacio Icu, COA resident auditor at PSU, alleging that there were excess payments of honoraria, issued a "Notice of Disallowance" ⁸disallowing P64,925.00 from the amount of P70,375.00 stated in Voucher No. 8902007, mentioned earlier. The resident auditor based his action on the premise that Compensation Policy Guidelines ("CPG") No. 80-4, dated 7 August 1980, issued by the Department of Budget and Management which provided for lower rates than NCC No. 53 dated 21 June 1988, also issued by the Department of Budget and Management, was the schedule for honoraria and per diems applicable to work done under the MOA of 9 December 1988 between the PSU and the DENR.chanroblesvirtualawlibrarychanrobles virtual law library

On 18 October 1989, a letter ⁹was sent by PSU Vice President and Assistant Project Director Espero to the Chairman of the COA requesting reconsideration of the action of its resident auditor. In the meantime, the Department of Budget and Management ("DBM"), upon request by PSU, issued a letter ¹⁰clarifying that the basis for the project's honoraria should not be CPG No. 80-4 which pertains to locally funded projects but rather NCC No. 53 which pertains to foreign-assisted projects. A copy of this clarification was sent to the COA upon request by PSU.chanroblesvirtualawlibrarychanrobles virtual law library

On 18 September 1990, COA Decision No. 1547 ¹¹was issued denying reconsideration of the decision of its resident auditor. The COA ruled that CPG. No. 80-4 is the applicable guideline in respect of the honoraria as CPG No. 80-4 does not distinguish between projects locally funded and projects funded or assisted with monies of foreign-origin.chanroblesvirtualawlibrarychanrobles virtual law library

PSU President Eslao sent a letter ¹²dated 20 March 1991 requesting reconsideration of COA Decision No. 1547 (1990) alleging that (a) COA had erred in applying CPG No. 80-4 and not NCC No. 53 as the project was foreign-assisted and (b) the decision was discriminatory - honoraria based on NCC No. 53 having been approved and granted by COA resident auditors in two (2) other state universities engaged in the same reforestation project. PSU then submitted to the COA (a) a certification ¹³from the DENR to the effect that the DENR evaluation project was foreign- assisted and (b) the letter of the DBM quoted in the margin supra.

On 16 November 1992, COA Decision No. 2571 (1992) ¹⁴was issued denying reconsideration.chanroblesvirtualawlibrarychanrobles virtual law library

In the meantime, in December 1990, the DENR informed petitioner of its acceptance of the PSU final reports on the review and evaluation of the government reforestation projects. ¹⁵Subsequently, honoraria for the period from January 1989 to January 1990 were disbursed in accordance with NCC No. 53. A Certificate of Settlement and Balances (CSB No. 92-0005-184 [DENR]) ¹⁶was then issued by the COA resident auditor of PSU showing disallowance of alleged excess payment of honoraria which petitioner was being required to return.chanroblesvirtualawlibrarychanrobles virtual law library

The instant Petition prays that (a) COA Decision Nos. 1547 (1990) and 2571 (1992) be set aside; (b) the COA be ordered to pass in audit the grant of honoraria for the entire duration of the project based on the provisions and rates contained in NCC No. 53; and (c) the COA be held liable for actual damages as well as petitioner's legal expenses and attorney's fees.chanroblesvirtualawlibrarychanrobles virtual law library

The resolution of the dispute lies in the determination of the circular or set of provisions applicable in respect of the honoraria to be paid to PSU personnel who took part in the evaluation project, i.e., NCC No. 53 or CPG No. 80-4.chanroblesvirtualawlibrarychanrobles virtual law library

In asserting that NCC No. 53 supplies the applicable guideline and that the COA erred in applying CPG No. 80-4 as the pertinent standard, petitioner contends that:

(a) CPG No. 80-4 applies to "special projects" the definition and scope of which do not embrace the evaluation project undertaken by petitioner for the DENR;chanrobles virtual law library

(b) NCC No. 53 applies to foreign-assisted projects ("FAPs") while CPG No. 80-4 applies to locally-funded projects as no reference to any foreign component characterizing the projects under its coverage is made;chanrobles virtual law library

(c) the DENR evaluation project is a foreign-assisted project per certification and clarification of the DENR and DBM respectively as well as the implied admission of the COA in its Comment; andchanrobles virtual law library

(d) the DBM's position on the matter should be respected since the DBM is vested with authority to (i) classify positions and determine appropriate salaries for specific position classes, (ii) review the compensation benefits programs of agencies and (iii) design job evaluation programs.

The Office of the Solicitor General, in lieu of a Comment on the Petition, filed a Manifestation ¹⁷ stating that (a) since, per certification of the DENR and Letter/Opinion of the DBM that the project undertaken by PSU is foreign-assisted, NCC No. 53 should apply; and (b) respondent COA's contention that CPG No. 80-4 does not distinguish between projects which are foreign-funded from locally-funded projects deserves no merit, since NCC No. 53, a special guideline, must be construed as an exception to CPG No. 80-4, a general guideline. The Solicitor General, in other words, agreed with the position of petitioner.chanroblesvirtualawlibrarychanrobles virtual law library

Upon the other hand, respondent COA filed its own comment, asserting that:

(a) while the DBM is vested with the authority to issue rules and regulations pertaining to compensation, this authority is regulated by Sec. 2 (2) of Art. IX-D of the 1987 Constitution which vests respondent COA with the power to "promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties;chanrobles virtual law library

(b) the Organizational Arrangement and Obligations of the Parties sections of the MOA clearly show that the evaluation project is an "inter-agency activity" between the DENR and PSU and therefore a "special project";chanrobles virtual law library

(c) the issue as to whether the evaluation project is in fact a "special project" has become moot in view of the DBM's clarification/ruling that the evaluation project is foreign-assisted and therefore NCC No. 53, not CPG No. 80-4 which applies only to locally-funded projects, should apply;chanrobles virtual law library

(d) the DBM issuance notwithstanding, respondent COA applied CPG No. 80-4 to effectively rationalize the rates of additional compensation assigned to or detailed in "special projects" as its application is without distinction as to the source of funding and any payment therefore in excess of that provided by CPG No. 80-4 is unnecessary, excessive and disadvantageous to the government;chanrobles virtual law library

(e) respondent COA's previous allowance of payment of honoraria based on NCC No. 53 or the fact that a full five years had already elapsed since NCC No. 53's issuance does not preclude COA from assailing the circular's validity as "it is the responsibility of any public official to rectify every error he encounters in the performance of his function" and "he is not duty- bound to pursue the same mistake for the simple reason that such mistake had been continuously committed in the past";chanrobles virtual law library

(f) the DBM ruling classifying the evaluation project as foreign-assisted does not rest on solid ground since loan proceeds, regardless of source, eventually become public funds for which the government is accountable, hence, any project under the loan agreement is to be considered locally-funded;chanrobles virtual law library

(g) the DBM ruling constitutes an unreasonable classification, highly discriminatory and violative of the equal protection clause of the Constitution; andchanrobles virtual law library

(h) granting arguendo NCC No. 53 is the applicable criterion, petitioner received honoraria in excess of what was provided in the MOA.

We consider the Petition meritorious.

Sec. 2.1 of CPG No. 80-4 defines "special project" as

an inter-agency or inter-committee activity or an undertaking by a composite group of officials/employees from various agencies which [activity or undertaking] is not among the regular and primary functions of the agencies involved. (Emphasis and brackets supplied)

Respondent COA maintains that the sections of the MOA detailing the "Organizational Arrangement and Obligations of the Parties" clearly show that the evaluation project is an "inter-agency activity." The pertinent sections of the MOA are as follows:

ORGANIZATIONAL ARRANGEMENTSchanrobles virtual law library

A Coordinating Committee shall be created which shall be responsible for the overall administration and coordination of the evaluation, to be chaired by a senior officer of the DENR. The Committee shall [be] composed [of] the following:

Chairman : Undersecretary for Planning,
Policy and Project Management
[DENR]

Co-Chairman : Vice-President for Research
and Development [PSU]

Members : Director of FMB
Dean, PSU Infanta Campus
Associate Dean, PSU Infanta
Campus
Chief, Reforestation
Division
Project Director of the ADB
Program Loan for Forestry
Sector

OBLIGATIONS OF THE PARTIESchanrobles virtual law library

Obligations of DENR:

The DENR shall have the following obligations:

1. Provide the funds necessary for the review and reevaluation of eleven (11) reforestation projects.

xxx xxx xxxchanrobles virtual law library

2. Undertake the monitoring of the study to ascertain its progress and the proper utilization of funds in conformity with the agreed work and financial plan.chanroblesvirtualawlibrarychanrobles virtual law library

3. Reserve the right to accept or reject the final report and in the latter case, DENR may request PSU to make some revisions/modifications on the same.chanroblesvirtualawlibrarychanrobles virtual law library

Obligations of the PSU:chanrobles virtual law library

The PSU shall have the following obligations:chanrobles virtual law library

1. Undertake the review and evaluation of the eleven (11) DENR-funded reforestation projects in accordance with the attached TOR;chanrobles virtual law library

2. Submit regularly to DENR financial status reports apart from the progress report required to effect the second release of funds;chanrobles virtual law library

3. Submit the final report to DENR fifteen (15) days after the completion of the work. The report should at least contain the information which appears in Annex D;chanrobles virtual law library

4. Return to DENR whatever balance is left of the funds after the completion of work.

Simply stated, respondent COA argues that since the Coordinating Committee is composed of personnel from the DENR and PSU, the evaluation project is an "inter-agency activity" within the purview of the definition of a "special project".chanroblesvirtualawlibrarychanrobles virtual law library

We are unable to agree with respondent COA.chanroblesvirtualawlibrarychanrobles virtual law library

Examination of the definition in CPG No. 80-4 of a "special project" reveals that definition has two (2) components: firstly, there should be an inter-agency or inter-committee activity or undertaking by a group of officials or employees who are drawn from various agencies; and secondly, the activity or undertaking involved is not part of the "regular or primary" functions of the participating agencies. Examination of the MOA and its annexes reveals that two (2) groups were actually created. The first group consisted of the coordinating committee, the membership of which was drawn from officials of the DENR and of the PSU; and the second, the evaluation project team itself which was, in contrast, composed exclusively of PSU personnel. ¹⁸We believe that the first component of the CPU No. 80-4's definition of "special project" is applicable in respect of the group which is charged with the actual carrying out of the project itself, rather than to the body or group which coordinates the task of the operating or implementing group. To construe the administrative definition of "special project" otherwise would create a situation, which we deem to be impractical and possibly even absurd, under which any undertaking entered into between the senior officials of government agencies would have to be considered an "inter-agency or inter-committee activity," even though the actual undertaking or operation would be carried out not by the coordinating body but rather by an separate group which might not (as in the present case) be drawn from the agencies represented in the coordinating group. In other words, an "inter-agency or inter-committee activity or . . . undertaking" must be one which is actually carried out by a composite group of officials and employees from the two (2) or more participating agencies.chanroblesvirtualawlibrarychanrobles virtual law library

As already noted, in the case at hand, the project team actually tasked with carrying out the evaluation of the DENR reforestation activity is composed exclusively of personnel from PSU; the project team's responsibility and undertaking are quite distinct from the responsibilities of the coordinating [DENR and PSU] committee. Thus, the project team is not a "composite group" as required by the definition of CPG No. 80-4 of "special projects." It follows that the evaluation projects here involved do not fall within the ambit of a "special project" as defined and regulated by CPG No. 80-4.chanroblesvirtualawlibrarychanrobles virtual law library

We do not consider it necessary to rule on whether the project at hand involved an undertaking "which is not among the regular and primary functions of the agencies involved" since the reforestation activity evaluation group is not, as pointed out above, a "special project" within the meaning of CPG No. 80-4. In any case, this particular issue was not raised by any of the parties here involved.chanroblesvirtualawlibrarychanrobles virtual law library

It is true, as respondent COA points out, that the provisions of CPG No. 80-4 do not distinguish between "a special project" which is funded by monies of local or Philippine origin and "a special project" which is funded or assisted by monies originating from international or foreign agencies. As earlier noted, CPG No. 80-4 was issued by the Department of Budget and Management back in 7 August 1980. Upon the other hand, NCC No. 53 was issued also by the Department of Budget and Management more than eight (8) years later, i.e., 9 December 1988. Examination of the provisions of NCC No. 53 makes it crystal clear that the circular is applicable to foreign-assisted projects only. The explicit text of NCC No. 53 states that it was issued to

prescribe/authorize the classification and compensation rates of positions in foreign-assisted projects (FAPs) including honoraria rates for personnel detailed to FAPs and guidelines in the implementation thereof pursuant to Memorandum No. 173 dated 16 May 1988 ¹⁹(Emphasis supplied)

and which apply to all positions in foreign-assisted projects only. Clearly, NCC No. 53 amended the earlier CPG No. 80-4 by carving out from the subject matter originally covered by CPG No. 80-4 all "foreign-assisted [special] projects." CPG No. 80-4 was, accordingly, modified so far as "foreign-assisted [special] projects (FAPs)" are concerned. It is this fact or consequence of NCC No. 53 that respondent COA apparently failed to grasp. Thus, CPG No. 80-4 does not control, nor even relate to, the DENR evaluation project for at least two (2) reasons: firstly, the evaluation project was not a "special project" within the meaning of CPG No. 80-4; secondly, that same evaluation project was a Foreign-Assisted Project to which NCC No. 53 is specifically applicable.chanroblesvirtualawlibrarychanrobles virtual law library

That the instant evaluation project is a Foreign-Assisted Project is borne out by the records: (a) the MOA states that the project is "part of the commitment with the Asian Development Bank (ADB) under the Forestry Sector Program Loan"; (b) the certification issued by the DENR certifies that

. . . the review and evaluation of DENR reforestation projects undertaken by State Universities and Colleges, one of which is Pangasinan State University, is one of the components of the ADB/OECF Forestry Sector Program Loan which is funded by the loan. It is therefore a
foreign-assisted project (Underscoring supplied); and

(c) the clarification issued by the DBM stating that

The honoraria rates of the detailed personnel should not be based on Compensation Policy Guidelines No. 80-4, which pertains to locally funded projects. Since the funding source for this activity come from loan proceeds, National Compensation Circular No. 53 should apply.

Even in its Comment respondent COA submits that

. . . the issue as to whether or not the project was special already became moot in the face of the opinion/ruling of the DBM that since it (the project) is "foreign-assisted" NCC 53 should apply, for CPG No. 80-4 applies only to "locally-funded projects. ²⁰chanrobles virtual law library

Under the Administration Code of 1987, the Compensation and Position Classification Bureau of the DBM "shall classify positions and determine appropriate salaries for specific position classes and review appropriate salaries for specific position classes and review the compensation benefits programs of agencies and shall design job evaluation programs." ²¹In Warren Manufacturing Workers Union (WMWU) v. Bureau of Labor Relations, ²²the Court held that "administrative regulations and policies enacted by administrative bodies to interpret the law have the force of law and are entitled to great respect." It is difficult for the Court to understand why, despite these certifications, respondent COA took such a rigid and uncompromising posture that CPG No. 80-4 was the applicable criterion for honoraria to be given members of the reforestation evaluation project team of the PSU.chanroblesvirtualawlibrarychanrobles virtual law library

Respondent COA's contention that the DBM clarification is unconstitutional as that ruling does not fulfill the requisites of a valid classification ²³is, in the Court's perception, imaginative but nonetheless an after-thought and a futile attempt to justify its action. As correctly pointed out by petitioner, the constitutional arguments raised by respondent COA here were never even mentioned, much less discussed, in COA Decisions Nos. 1547 (1990) and 2571 (1992) or in any of the proceedings conducted before it.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioner also argues that the project's duration stipulated in the MOA was implicitly extended by the parties. The DENR's acceptance, without any comment or objection, of PSU's (a) letter explaining the delay in its submission of the final project report and (b) the final project report itself brought about, according to petitioner, an implied agreement between the parties to extend the project duration. It is also contended that by the very nature of an evaluation project, the project's duration is difficult to fix and as in the case at bar, the period fixed in the MOA is merely an initial estimate subject to extension. Lastly, petitioner argues that whether the project was impliedly extended is an inconsequential consideration; the material consideration being that the project stayed within its budget. The project having been extended, petitioner concludes that the evaluation team should be paid honoraria from the time it proceeded with the project and up to the time the DENR accepted its final report.chanroblesvirtualawlibrarychanrobles virtual law library

Mindful of the detailed provisions of the MOA and Project Proposal governing project duration and project financing as regulated by NCC No. 53, the Court is not persuaded that petitioner can so casually assume implicit consent on the part of the DENR to an extension of the evaluation project's duration.chanroblesvirtualawlibrarychanrobles virtual law library

The "Duration of Work" clause of the MOA provides that

PSU shall commence the work 10 days from receipt of the Notice to Proceed and shall be completed five months thereafter. (Emphasis supplied)

On 9 December 1988, the DENR advised PSU President Rufino Eslao that PSU "may now proceed with the review and reevaluation as stipulated" in the MOA. The Notice to Proceed further stated that

Your institution is required to complete the work within five months starting ten (10) days upon receipt of this notice. (Emphasis supplied)

In respect of the financial aspects of the project, the MOA provides that

The DENR shall have the following obligations:chanrobles virtual law library

1. Provide the funds necessary for the review and reevaluation of the eleven (11) reforestation projects . . . in the amount not more than FIVE HUNDRED SIX THOUSAND TWO HUNDRED TWENTY FOUR PESOS (P506,224.00) which shall be spent in accordance with the work and financial plan which attached as Annex C. Fund remittances shall be made on a staggered basis with the following schedule:chanrobles virtual law library

a. FIRST RELEASEchanrobles virtual law library

Twenty percent (20%) of the total cost to be remitted within fifteen (15) working days upon submission of work plan;chanrobles virtual law library

b. SECOND RELEASEchanrobles virtual law library

Forty percent of the total cost upon submission of a progress report of the activities that were so far undertaken;chanrobles virtual law library

c. THIRD RELEASEchanrobles virtual law library

Thirty percent (30%) of the total amount upon submission of the draft final report;chanrobles virtual law library

d. FOURTH RELEASEchanrobles virtual law library

Ten percent of the total amount [upon submission] of the final report. (Underscoring supplied)

Annex "C" referred to in the MOA is the Project Proposal. Per the Proposal's "Budget Estimate," P175,000.00 and P92,500.00 were allotted for "Expert Services" and "Support Services" respectively itemized as follows:

PERSONAL SERVICES
EXPERT SERVICES

Duration

Expert of Service Rate/ Total

(mo.) mo.chanrobles virtual law library

1. Ecologist 4 P5,000 P20,000

2. Silviculturist 3 -do- 15,000

3. Forestry Economist 4 -do- 20,000

4. Soils Expert 2 -do- 10,000

5. Social Forestry Expert 4 -do- 20,000

6. Management Expert 2 -do- 10,000

7. Horticulturist 2 -do- 10,000

8. Agricultural Engineer 2 -do- 10,000

9. Systems Analysts/Programer 2 -do- 10,000

10. Statistician 2 -do- 10,000

11. Shoreline Resources Expert 2 -do- 10,000

12. Animal Science Specialist 2 -do- 10,000

13. Policy/Administrative 4 -do- 20,000

Expert

T O T A L P175,000chanrobles virtual law library

Support Services

Research Associates (2) P8,000
Honorarium P1,000/mo. for 4 months
Special Disbursing Officer (1) 4,000
Honorarium P1,000/mo. for 4 months
Enumerators/Data Gatheres 36,000
360 mandays at P100/manday
including COLA
Coders/Encoders 30,000
300 mandays at P100/manday
including COLA
Cartographer/Illustrator 5,000
50 mandays at P100/manday
including COLA
Documentalist 4,500
45 mandays at P100/manday
including COLA
Typist 5,000
50 mandays at P100/manday
including COLA

T O T A L P92,500
----

In addition, the Proposal already provided a list of identified experts:

EXPERTS

1. Dr. Victorino P. Espero Enviromental Science
2. Dean Antonio Q. Repollo Silviculture
3. Prof. Artemio M. Rebugio Forestry Economics
4. Ms. Naomenida Olermo Soils
5. Dr. Elvira R. Castillo Social Forestry
6. Dr. Alfredo F. Aquino Management
7. Dr. Lydio Calonge Horticulture
8. Engr. Manolito Bernabe Engineering
9. Dr. Elmer C. Vingua Animal Science
10. Prof. Rolando J. Andico Systems Analysts
Programming
11. Dr. Eusebio Miclat, Jr. Statistics/
Instrumentation
12. Dr. Porferio Basilio Shoreline Resources
13. Dr. Rufino O. Eslao Policy Administration

who, together with six (6) staff members namely Henedina M. Tantoco, Alicia Angelo Yolanda Z. Sotelo, Gregoria Q. Calela, Nora A. Caburnay and Marlene S. Bernebe composed the evaluation project team. At this point, it should be pointed out that the " Budget Estimate even provides a duration for the participation of each and every person whether rendering expert or support services.chanroblesvirtualawlibrarychanrobles virtual law library

 chanrobles virtual law library

On the other hand, NCC No. 53 provides:

3.3.1 The approved 0rganization and staffing shall be valid up to project completion except for modifications deemed necessary by the Project Manager. The Project Manager shall be given the flexibility to determine the timing of hiring personnel provided the approved man-years for a given position for the duration of the project is not exceeded.

xxx xxx xxxchanrobles virtual law library

3.6 A regular employee who may detailed to any FAPs on a part-time basis shall be entitled to receive honoraria in accordance with the schedule shown in Attachment II hereof.

xxx xxx xxxchanrobles virtual law library

3.7 Payment of honoraria shall be made out of project funds and in no case shall payment thereof be made out of regular agency fund.

xxx xxx xxxchanrobles virtual law library

3.10 The total amount of compensation to be paid shall not exceed the original amount allocated for personal services of the individual foreign-assisted projects. Any disbursement in excess of the original amount allotted for personal services of the individual projects shall be the personal liability and responsibility of the officials and employees authorizing or making such payment. (Underscoring supplied)

Attachment II of NCC No. 53 prescribes the monthly rates allowed for officials/employees on assignment to foreign- assisted special projects:

A. Position Level - Project Manager/Project
Director

Responsibility - . . .

Parttime - P2,000.00

B. Position Level - Assistant Project
Director

Responsibility - . . .

Parttime - P1,500.00

C. Position Level - Project Consultant

Responsibility - . . .

Parttime - P1,000.00

D. Position Level - Supervisor/Senior Staff
Member

Responsibility - . . .

Parttime - P1,000.00

E. Position Level - Staff Member

Responsibility - . . .

Parttime - P700.00

Administrative and Clerical Support

A. Position Level - Administrative Assistant

Responsibility - . . .

Parttime - P500.00

B. Position Level - Administrative Support
Staff

Responsibility - . . .

Parttime - P400.00

From the clear and detailed provisions of the MOA and Project Proposal in relation to NCC No. 53, consent to any extension of the evaluation project, in this instance, must be more concrete than the alleged silence or lack of protest on the part of the DENR. Although tacit acceptance is recognized in our jurisdiction, ²⁴as a rule, silence is not equivalent to consent since its ambiguity lends itself to error. And although under the Civil Code there are instances when silence amounts to consent, ²⁵these circumstances are wanting in the case at bar. Furthermore, as correctly pointed out by the respondent COA, the date when the DENR accepted the final project report is by no means conclusive as to the terminal date of the evaluation project. Examination of the MOA (quoted earlier on pages 19-20) reveals that the submission of reports merely served to trigger the phased releases of funds. There being no explicit agreement between PSU and the DENR to extend the duration of the evaluation project, the MOA's "Budget Estimate" which, among others, provides in detail the duration of service for each member of the evaluation project as amended by the rates provided by NCC No. 53 must be the basis of the honoraria due to the evaluation team.

The other arguments of respondent COA appear to us to be insubstantial and as, essentially, afterthoughts. The COA apparently does not agree with the policy basis of NCC No. 53 in relation to CPG No. 80-4 since COA argues that loan proceeds regardless of source eventually become public funds for which the government is accountable. The result would be that any provisions under any [foreign] loan agreement should be considered locally-funded. We do not consider that the COA is, under its constitutional mandate, authorized to substitute its own judgment for any applicable law or administrative regulation with the wisdom or propriety of which, however, it does not agree, at least not before such law or regulation is set aside by the authorized agency of government - i.e., the courts - as unconstitutional or illegal and void. The COA, like all other government agencies, must respect the presumption of legality and constitutionality to which statutes and administrative regulations are entitled ²⁶until such statute or regulation is repealed or amended, or until set aside in an appropriate case by a competent court (and ultimately this Court).chanroblesvirtualawlibrarychanrobles virtual law library

Finally, we turn to petitioner's claim for moral damages and reimbursement of legal expenses. We consider that this claim cannot be granted as petitioner has failed to present evidence of bad faith or tortious intent warranting an award thereof. The presumption of regularity in the performance of duty must be accorded to respondent COA; its action should be seen as its effort to exercise (albeit erroneously, in the case at bar) its constitutional power and duty in respect of uses of government funds and properties.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, for all the foregoing, the Petition for Certiorari is hereby GRANTED. COA Decisions Nos. 1547 and 2571, respectively dated 18 September 1990 and 16 November 1992, are hereby SET ASIDE. The instant evaluation project being a Foreign-Assisted Project, the following PSU personnel involved in the project shall be paid according to the Budget Estimate schedule of the MOA as aligned with NCC No. 53:chanrobles virtual law library

A. A. For Experts

Duration Rate/
Expert of month Total
Service (NCC
(mo.) No. 53)chanrobles virtual law library

1. Dr. Rufino O. Eslao Policy/Admi- 4 P2,000 P8,000 nistrative
expert*-
2. Dr. Victorino P. Espero Ecologist** 4 1,500 6,000
3. Dean Antonio Q. Repollo Silvicul- 3 1,000 3,000
turist***
4. Prof. Artemio M. Rebugio Forestry 4 1,000 4,000
Economist
5. Ms. Naomenida Olermo Soils Expert 2 1,000 2,000
6. Dr. Elvira R. Castillo Social 4 1,000 4,000
Forestry
Expert
7. Dr. Alfredo F. Aquino Management 2 1,000 2,000
Expert
8. Dr. Lydio Calonge Horticul 2 1,000 2,000
turist
9. Engr. Manolito Bernabe Agricultural 2 1,000 2,000
Engineer
10. Prof. Rolando J. Andico Systems 2 1,000 2,000
Analysts/
Programmer
11. Dr. Eusebio Miclat, Jr. Statistician 2 1,000 2,000
12. Dr. Porferio Basilio Shoreline 2 1,000 2,000
Resources
Expert
13. Dr. Elmer C. Vingua Animal 2 1,000 2,000
Science
Specialistchanrobles virtual law library

41,000
---

* Project Manager/ Project Director
** Assistant Project Director
*** Project Consultants

B. For Support Staff

Duration Rate/
Expert of month Total
Service (NCC
(mo.) No. 53)

1 Henedina M. Tantoco Research 4 700 2,800
Associate**
2 Alicia Angelo Research 4 700 2,800
3 Yolanda Z. Sotelo Documentalist 2.04 700 1,428
4 Gregoria Q. Calela Special 4 700 2,800
Disbursing
Officer
5 Nora A. Caburnay Typist 2.27 500 1,135
6 Marlene S. Bernebe Cashier 2.27 500 1,135

---
12,098

* Per Attachment to DBM Clarification dated 10
November 1989, Rollo, p. 59.
** Staff Member
*** Administrative Assistants.

No pronouncement as to costs.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

Narvasa, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.chanroblesvirtualawlibrarychanrobles virtual law library

Cruz, Bidin, on leave.

---

Endnotes:

1 Annex 'A' of Petition, Rollo, pp. 24-49.chanroblesvirtualawlibrarychanrobles virtual law library

2 Bamboo Pilot Plantation Project (Infanta); Bamboo Plantation Project (Mangatarem); Bamboo Pilot Project (Natividad); Mangrove Revegetation Project (Anda/Bolinao/Alaminos); Manleluag Reforestation Project (Mangatarem); Support to PIADP (Cacaoiten/Mangatarem); Support to PIADP (San Nicolas/Natividad); Support to PIADP (Siwasiw/Sual); San Nicolas Reforestation Project (San Nicolas); Urban Forestry Project (Dagupan City) and Villaverde Trail Revegetation Project (San Nicolas).chanroblesvirtualawlibrarychanrobles virtual law library

3 Annex 'B' of Petition, Rollo, p. 49.chanroblesvirtualawlibrarychanrobles virtual law library

4 Annex 'C' of Petition, Rollo, p. 50.chanroblesvirtualawlibrarychanrobles virtual law library

5 Annex 'D' of Petition, Rollo, p. 51.chanroblesvirtualawlibrarychanrobles virtual law library

6 Annex 'E' of Petition, Rollo, p. 52.chanroblesvirtualawlibrarychanrobles virtual law library

7 Annexes 'F', 'G' and 'H', Rollo, pp. 53-55.chanroblesvirtualawlibrarychanrobles virtual law library

8 Annex "I" of Petition, Rollo, p. 56. The Notice reads:chanrobles virtual law library

July 6, 1989 chanrobles virtual law library

Mr. Rufino Eslaochanrobles virtual law library

University President, PSU Mainchanrobles virtual law library

Lingayen, Pangasinanchanrobles virtual law library

Sir/Madam:chanrobles virtual law library

This is to inform you that in our audit of 8902007 (Pres. Rufino O. Eslao and Co.) the amount of P70,375.00 has been disallowed for the following reasons:

Amount paid per payroll........... P 70,375.00chanrobles virtual law library

Amount allowed in audit .......... 5,450.00

Difference to be refunded ....... 64,925.00chanrobles virtual law library

Amount paid in excess of the authorizedchanrobles virtual law library

rates under CPG 80-4 dated August 7,chanrobles virtual law library

1980 is disallowed.

and you have been determined as one to be jointly and severally liable therefor.chanroblesvirtualawlibrarychanrobles virtual law library

In view of this, you are hereby directed to settle immediately the above disallowance. Failure to do so may compel this Office to adopt the necessary measures to enforce settlement hereof.chanroblesvirtualawlibrarychanrobles virtual law library

Very truly yours,chanrobles virtual law library

(SGD.) Bonifacio Icuchanrobles virtual law library

9 Annex 'J' of Petition, Rollo, p. 57.chanroblesvirtualawlibrarychanrobles virtual law library

10 Annex 'K' of Petition, Rollo, pp. 58-59. The letter reads:chanrobles virtual law library

November 10, 1989chanrobles virtual law library

Hon. Rufino O. Eslaochanrobles virtual law library

President, Pangasinan State Universitychanrobles virtual law library

Lingayen, Pangasinanchanrobles virtual law library

Dear President O. Eslao,chanrobles virtual law library

This pertains to your request for authority to pay the honoraria of Pangasinan State University (PSU) personnel detailed to the Department of Environment and Natural Resources - PSU Project under the ADB assisted Forestry Sector Loan (889/890 PHI).chanroblesvirtualawlibrarychanrobles virtual law library

The honoraria rates of the detailed personnel should not be based on Compensation Policy Guidelines No. 80-4, which pertains to locally funded projects. Since the funding source for this activity come from loan proceeds, National Compensation Circular No. 53 should apply.

It should be pointed out that the provisions of your Memorandum of Agreement with the DENR cannot prescribe higher honoraria rates than that authorized under existing rules and regulations.

In view of the foregoing, attached is the authority to grant honoraria to PSU personnel at the rates prescribed.

We hope that this clarifies the issues in your letter.chanroblesvirtualawlibrarychanrobles virtual law library

Very truly yours,

(SGD.)
for Guillermo N. Carague

(Underscoring supplied)chanrobles virtual law library

11 Annex 'L' of Petition, Rollo, p. 60. COA Decision NO. 1547 reads:chanrobles virtual law library

September 18, 1990chanrobles virtual law library

Mr. Victorino P. Esperochanrobles virtual law library

Officer in Charge andchanrobles virtual law library

Vice President for Researchchanrobles virtual law library

and Developmentchanrobles virtual law library

Pangasinan State Universitychanrobles virtual law library

Lingayen, Pangasinanchanrobles virtual law library

Sir:chanrobles virtual law library

This pertains to your letter dated October 9, 1989, seeking reconsideration of the decision of this Commission contained in a 2nd Indorsement dated May 10, 1989, denying the claim for honoraria and per diems of some personnel of the Pangasinan State University assigned at the DENR Reforestation Project in Pangasinan in excess of those provided under Compensation Policy Guidelines 80-4 dated April 7, 1980.chanroblesvirtualawlibrarychanrobles virtual law library

You allege that the project in question does not fall under the contemplation of Compensation Policy Guideline (sic) No. 80-4 since it is a foreign-assisted project. We find your position to be meritless. It bears stress that the purpose of the guideline is to rationalize the rates of additional compensation of officials on assignment to special projects and to ensure uniform practice therein. Thus, it is believed that CPG No. 80-4 remains to be the present guideline on the matter since it does not qualify whether or not the same is applicable only to locally funded special projects. Where the law does not distinguish, no distinction should be made.chanroblesvirtualawlibrarychanrobles virtual law library

Premises considered, the herein request for reconsideration has to be, as it is hereby, denied.chanroblesvirtualawlibrarychanrobles virtual law library

Very truly yours,chanrobles virtual law library

(SGD.) Eufemio C. Domingochanrobles virtual law library

Chairmanchanrobles virtual law library

(SGD.) Bartolome C. Fernandezchanrobles virtual law library

Commissionerchanrobles virtual law library

12 Annex 'M' of Petition, Rollo, p. 61.chanroblesvirtualawlibrarychanrobles virtual law library

13 Annex 'N' of Petition, Rollo, p. 62. The Certification reads:chanrobles virtual law library

28 September 1990

C E R T I F I C A T I O N

This is to certify that the review and evaluation of DENR reforestation projects undertaken by State Universities and Colleges, one of which is Pangasinan State University, is one of the components of the ADB/OECF Forestry Sector Program Loan which is funded by the loan. It is therefore a foreign-assisted project.chanroblesvirtualawlibrarychanrobles virtual law library

(SGD.) Celestino B. Ulepchanrobles virtual law library

Assistant Program Directorchanrobles virtual law library

National Program Coordinating Officechanrobles virtual law library

(Underscoring supplied).chanroblesvirtualawlibrarychanrobles virtual law library

14 Annex 'O' of Petition, Rollo, p. 63.chanroblesvirtualawlibrarychanrobles virtual law library

15 Annex 'P' of Petition, Rollo, p. 64.chanroblesvirtualawlibrarychanrobles virtual law library

16 Annex 'Q' of Petition, Rollo, p. 65. The Certificate reads:chanrobles virtual law library

December 29, 1992chanrobles virtual law library

CERTIFICATE OF SETTLEMENT AND BALANCESchanrobles virtual law library

To: Dr. Rufino O. Eslao - University Presidentchanrobles virtual law library

Ms. Marlene S. Benebe - Cashier IIIchanrobles virtual law library

PSU, Lingayen, Pangasinanchanrobles virtual law library

Attention: Mrs. Gregoria Galela - Accountantchanrobles virtual law library

We have audited in accordance with prescribed auditing procedures, the accounts of Dr. Rufino O. Eslao and Ms. Marlene S. Benebe as University President and Cashier III respectively for the period from October 16, 1990 to January 31, 1991 and arrived at a balance of P92,350.00 as of January 31, 1991 with disallowances and suspensions amounting to P92,350.00 as indicated in detail in Sections 1.A.1 and 1.A.2 respectively hereof. Items disallowed are charges against the persons held liable therefore, while items suspended and not settled within 90 days after receipt of the Notice of Suspension (NS) shall become disallowances.chanroblesvirtualawlibrarychanrobles virtual law library

Prompt settlement of all suspensions and disallowances is mandatory. The necessary action to settle the suspension is indicated in the individual NS issued.chanroblesvirtualawlibrarychanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

(SGD.) Bonifacio B. Icochanrobles virtual law library

State Auditor IVchanrobles virtual law library

(Auditor-in-charge)chanrobles virtual law library

17 Rollo, pp. 90-97.chanroblesvirtualawlibrarychanrobles virtual law library

18 Per the Project Proposal, the evaluation project team was composed of thirteen (13) experts and a support staff of at least eight (8) personnel. Per Annexes "F," "G" and "H," the team actually consisted of nineteen (19) persons - thirteen (13) experts and six (6) support staff members, all nineteen (19) persons being drawn exclusively from the PSU.chanroblesvirtualawlibrarychanrobles virtual law library

19 Rollo, p. 72.chanroblesvirtualawlibrarychanrobles virtual law library

20 Rollo, pp. 111-112.chanroblesvirtualawlibrarychanrobles virtual law library

21 Book IV, Title XVII, Chapter 3, Sec. 7(3).chanroblesvirtualawlibrarychanrobles virtual law library

22 159 SCRA 387 (1988) citing Espanol v. Philippine Veterans Administration, 135 SCRA 314 (1985).chanroblesvirtualawlibrarychanrobles virtual law library

23 NCC No. 53 is allegedly a classification (a) that is based on the source of funding which is not substantial; (b) that is violative of the standardization of compensation clause of the Constitution; (c) that is not germane to the purpose of the law, i.e. it serves no legitimate social, economic or political goals and (d) provides no justification to discriminate against local capital.chanroblesvirtualawlibrarychanrobles virtual law library

24 Article 1319-1320 of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law library

25 Article 1670, 1870-1973 of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law library

26 Fernandez v. Torres, 215 SCRA 489 (1992); Garcia v. The Executive Secretary, et al, 211 SCRA 219 (1992); Gonzales v. Land Bank of the Philippines, 183 SCRA 520 (1990); Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386 (1988); Español v. Chairman, Philippine Veterans Administration, 137 SCRA 314 (1985); Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, 20 SCRA 849 (1967).