G.R. No. 109023 August 12, 1998
RODOLFO S. DE JESUS, EDELWINA DE PARUNGAO, VENUS M. POZON AND other similarly situated personnel of the LOCAL WATER UTILITIES ADMINISTRATION (LWUA), petitioners, vs. COMMISSION ON AUDIT AND LEONARDO L. JAMORALIN in his capacity as COA-LWUA Corporate Auditor, respondents.

FACTS

Petitioners are employees of the Local Water Utilities Administration (LWUA). Prior to July 1, 1989, they were receiving honoraria as designated members of the LWUA Board Secretariat and the Pre-Qualification, Bids and Awards Committee. Republic Act No. 6758 , prescribing a revised compensation system, took effect on July 1, 1989. Its Section 12 provided for the consolidation of allowances into standardized salary rates but allowed incumbents as of July 1, 1989 to continue receiving additional compensation not integrated into the standardized salary. To implement RA 6758, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10), which discontinued, effective November 1, 1989, all allowances and fringe benefits granted on top of basic salary. Pursuant to this circular, the corporate auditor disallowed the payment of honoraria to petitioners. Petitioners appealed to the Commission on Audit (COA), contending that DBM-CCC No. 10 was inconsistent with RA 6758 and void for lack of publication. The COA upheld the circular and the disallowance.

ISSUE

1. Whether DBM-CCC No. 10 is legally effective despite its lack of publication in the Official Gazette.
2. Whether paragraph 5.6 of DBM-CCC No. 10 can supplant or negate the express provisions of Section 12 of RA 6758.

RULING

The Supreme Court GRANTED the petition, SET ASIDE the COA decision, and ordered respondents to pass on audit the honoraria of petitioners. The Court ruled that DBM-CCC No. 10, being an administrative circular issued to enforce an existing law (RA 6758), must be published in the Official Gazette or in a newspaper of general circulation in the Philippines to be effective and enforceable, pursuant to Article 2 of the Civil Code and the doctrine in Tanada v. Tuvera. The circular was not a mere interpretative or internal regulation, as it operated to deprive government workers of allowances and additional compensation. Due to its non-publication, DBM-CCC No. 10 was ineffective. Consequently, the Court found it unnecessary to resolve the issue of whether the circular’s provisions supplanted or negated Section 12 of RA 6758.