GR 142297; (June, 2004) (Digest)
G.R. No. 142297; June 15, 2004
Home Development Mutual Fund vs. Commission on Audit
FACTS
The Home Development Mutual Fund (HDMF or Pag-IBIG Fund) granted a Productivity Incentive Bonus equivalent to one month’s salary plus allowance to all its personnel on November 21, 1991, pursuant to Republic Act No. 6971 (the Productivity Incentives Act of 1990). The law’s initial implementing rules, issued on June 4, 1991, stated it applied to government-owned and controlled corporations (GOCCs) performing proprietary functions. However, prior to this grant, the Department of Budget and Management had advised all GOCCs and government financial institutions with original charters to defer such payments pending a ruling from the Office of the President. Subsequently, on December 27, 1991, supplemental implementing rules were issued, expressly excluding from RA 6971’s coverage those GOCCs whose officers and employees are covered by the Civil Service. In 1996, the Commission on Audit (COA) disallowed the payment, a decision affirmed by COA in 1998 and 2000.
ISSUE
Whether the COA committed grave abuse of discretion in affirming the disallowance of the Productivity Incentive Bonus paid by HDMF to its personnel under RA 6971.
RULING
The Supreme Court dismissed the petition and affirmed the COA’s resolution. The legal logic centers on the fundamental classification of HDMF as a GOCC with an original charter. The Court clarified that RA 6971 is a labor law designed for the private sector. Citing the Constitution and jurisprudence, the Court held that GOCCs with original charters, like HDMF, are part of the Civil Service. Their employees are governed by civil service laws and regulations on compensation, not by the Labor Code or related statutes like RA 6971. Therefore, HDMF was never legally covered by RA 6971 from the outset. The supplemental rules issued in December 1991 did not retroactively divest a right; they merely clarified the law’s original intent and correct scope, which always excluded civil service-covered entities. The Court found that HDMF proceeded with the grant despite the DBM’s advisory to defer, and the payment constituted an unauthorized use of public funds. Consequently, COA acted within its jurisdiction and without grave abuse of discretion in disallowing the expenditure.