G.R. No. 132593 June 25, 1999
PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner, vs. COMMISSION ON AUDIT, respondent.

FACTS

The Philippine International Trading Corporation (PITC), a government-owned and controlled corporation, established a Car Plan Program for its officers in October 1988. Under this program, PITC would shoulder fifty percent of a vehicle’s purchase price and fifty percent of related annual registration, insurance, and chattel mortgage registration costs for five years, with the officer paying the balance through salary deductions. Republic Act No. 6758 , prescribing a revised government compensation system, took effect on July 1, 1989. Its implementing rules, specifically DBM Corporate Compensation Circular No. 10, discontinued all fringe benefits and allowances not explicitly authorized, effective November 1, 1989. The resident COA auditor subsequently disallowed PITC’s reimbursements for the car plan benefits made after this date, a disallowance affirmed by the COA Commission Proper. PITC filed this petition, arguing the benefits were existing compensations authorized to continue under Section 12 of RA 6758.

ISSUE

Whether the car plan benefits granted by PITC to its officers constitute “additional compensation” being received as of July 1, 1989, which are allowed to continue under Section 12 of RA 6758, and are thus not disallowed by DBM-CCC No. 10.

RULING

The Supreme Court DENIED the petition and AFFIRMED the COA’s decision. The legal logic hinges on the distinction between an authorized “additional compensation” and a disallowed “fringe benefit.” Section 12 of RA 6758 permits only specific, enumerated allowances and “such other additional compensation” being received as of July 1, 1989, to continue. The Court ruled that PITC’s car plan is a fringe benefit, not an integrated part of standardized salary, and is therefore governed by DBM-CCC No. 10. Paragraph 5.6 of this circular explicitly discontinues all fringe benefits not listed in its preceding sections. Since the car plan is not among the enumerated benefits allowed to continue, its payment after the November 1, 1989 cutoff was correctly disallowed as an illegal disbursement. The Court further held that the car loan agreements between PITC and its officers, being merely contracts for implementing the fringe benefit, do not create a vested right that supersedes the overarching statutory and regulatory policy of standardizing government compensation. The law and its implementing rules, which have the force of law, validly withdrew the authority to grant such non-integrated benefits.