G.R. No. 131529. April 30, 1999
IRINEO V. INTIA, JR., et al., petitioners, vs. THE COMMISSION ON AUDIT and the CORPORATE AUDITOR FOR PHILIPPINE POSTAL CORPORATION, respondents.

FACTS

The Philippine Postal Corporation (PPC) Board of Directors, invoking powers under its charter (R.A. No. 7354), approved Board Resolution No. 95-50 and issued Circular No. 95-22, which prescribed a progressive increase in Representation and Transportation Allowance (RATA) for its officials, culminating in rates equivalent to 40% of basic salary by 1997. These rates exceeded the fixed monthly ceilings prescribed for government officials under Section 35 of the General Appropriations Act of 1996 (R.A. No. 8174). The Corporate Auditor for PPC subsequently issued Notices of Disallowance for RATA payments made to petitioners in 1996 that were in excess of the statutory rates. Petitioners appealed to the Commission on Audit (COA), arguing that PPC’s charter exempted it from the Salary Standardization Law and the compensation standards of the Compensation and Position Classification Office, granting the Board autonomous power to fix salaries and allowances.

ISSUE

Whether the PPC Board of Directors has the unqualified authority to fix RATA rates for its officials without regard to the ceilings prescribed in the General Appropriations Act and without prior review and approval by the Department of Budget and Management (DBM).

RULING

The Supreme Court dismissed the petition and affirmed the COA decision with modifications. The Court held that while Section 25 of R.A. No. 7354 indeed exempts PPC from the rules and regulations of the Compensation and Position Classification Office, this exemption is not absolute. The Board’s discretion in establishing a compensation system, including the grant of allowances, must be exercised in accordance with the standard that it must “strictly conform with that provided for other government agencies under R.A. No. 6758 (Salary Standardization Law) in relation to the General Appropriations Act.” The General Appropriations Act is a law of general application that sets ceilings for allowances, and PPC, as a government-owned or -controlled corporation, is not automatically exempt from such a law absent a clear, specific statutory provision to the contrary. Furthermore, to ensure compliance with this standard, the Court ruled that the Board’s resolutions on compensation matters must be reviewed and approved by the DBM pursuant to Section 6 of P.D. No. 1597. Since the disallowed RATA payments were made pursuant to a board resolution that had not received such DBM approval and that authorized rates exceeding the statutory ceilings, the COA correctly disallowed them. The PPC’s compensation system must conform as closely as possible with the system for other government agencies and is subject to DBM review.