G.R. No. 204152 , January 19, 2021
DENR EMPLOYEES UNION (DENREU) AND KALIPUNAN NG MGA KAWANI SA KAGAWARAN NG KALIKASAN (K4), PETITIONERS, VS. SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT AND THE COMMISSION ON AUDIT, RESPONDENTS.

FACTS

Petitioners DENR Employees Union and K4 filed a Petition for Injunction and Prohibition assailing the constitutionality of Department of Budget and Management (DBM) Budget Circular No. 2011-5 dated December 26, 2011, which placed a P25,000.00 ceiling on the amount of the Collective Negotiation Agreement (CNA) Incentive for Fiscal Year 2011. The circular was issued pursuant to the Senate and House of Representatives Joint Resolution No. 4, series of 2009. In compliance with this circular, the Commission on Audit (COA) disallowed the DENR’s issuance of CNA Incentives to its officers and employees for exceeding the said limit, issuing Notice of Disallowance No. 12-002-101 (11) dated May 22, 2012. Petitioners appealed the disallowance to the COA, but the appeal was dismissed for being filed out of time. Subsequently, the COA issued a Notice of Finality of Decision and an Order of Execution. Prior to their COA appeal, petitioners filed the instant petition, arguing that DBM Budget Circular No. 2011-5 is unconstitutional for lack of prior publication in the Official Gazette or a newspaper of general circulation, a condition for its effectivity. They contended that the circular, received by the DENR only on December 29, 2011 (the last official day of 2011), could not validly impose restrictions on incentives for that same fiscal year. They also asserted a vested right to the incentive based on agency savings without the P25,000.00 limit. Respondent DBM Secretary argued that the circular was a valid exercise of quasi-legislative power, that petitioners had no vested right to the incentive, and that the circular was, in fact, published in the Philippine Star.

ISSUE

Whether or not DBM Budget Circular No. 2011-5 dated December 26, 2011 is constitutional, and thus, valid and binding for Calendar Year 2011.

RULING

The petition is granted in part. The Supreme Court ruled that DBM Budget Circular No. 2011-5 is void for lack of proper publication and for being contrary to law. The circular, which imposed a P25,000.00 cap on the CNA Incentive for FY 2011, is an administrative regulation that must be published in the Official Gazette or a newspaper of general circulation to be effective. The certification of publication in the Philippine Star submitted by the DBM Secretary was dated January 2, 2012, which was after the circular’s stated effectivity date of December 26, 2011, and more critically, after the end of Fiscal Year 2011. Publication is a prerequisite for the effectivity of laws and administrative rules to ensure due process and inform the public of their rights and obligations. Since the circular was not published until after the fiscal year it sought to govern had ended, it could not validly impose the cap for FY 2011. Furthermore, the circular was issued pursuant to Joint Resolution No. 4, s. 2009, which authorized the President to modify the compensation of government personnel. The Court found that the circular, by imposing an absolute cap, contravened the very PSLMC resolutions it sought to implement (PSLMC Resolution Nos. 4, s. 2002 and 2, s. 2003), which intended the incentive amount to be determined based on savings generated from cost-cutting measures identified in the CNA. The P25,000.00 ceiling was an arbitrary imposition not authorized by the joint resolution. Consequently, the COA’s disallowance based on this void circular has no legal basis. However, the Court clarified that this ruling does not automatically entitle petitioners to the disallowed amounts; the grant of CNA Incentives remains subject to all other valid legal conditions and guidelines.