Dubongco v.

Commission on Audit
March 5, 2019
Ponente: J.C. Reyes, JR., J.
By: Rein Justin F. Nantes
Topics: CARP Funds, Purpose of CARP
Facts:
On November 14, 2002, the Public Sector Labor Management Council (PSLMC) issued
Resolution No. 4, Series of 2002, entitled "Grant of Collective Negotiation Agreement (CNA)
Incentive for National Government Agencies, State Universities and Colleges and Local
Government Units." The CNA Incentive is awarded for the successful coordination of labor and
management in meeting the targeted programs and services approved in the agency’s budget at
a lower cost. The resolution provided that the source for the incentive shall be the savings from
the agency’s released allotment for a given year. Former president Gloria Macapagal-Arroyo
issued an Administrative Order (AO) which clarified that the incentive shall also be granted to
rank-and-file employees. In 2009 and 2010, the Department of Agrarian Reform Provincial Office
of Cavite (DARPO-Cavite) released its CNA Incentives to its employees and officials. The grant
was sourced from the Comprehensive Agrarian Reform Program (CARP) Fund. Consequently,
the Commission on Audit (COA) group in Cavite issued two Notices of Disallowance (ND)
addressed to the release of incentives by DARPO-Cavite. DARPO-Cavite appealed the issuance
of the ND’s by the COA denied their appeal and ruled that It reasoned that the source of funds
for the grant was not taken from savings of the allotment for MOOE but was charged against the
CARP Fund of the agency. The COA added that the CARP Fund is a special fund which could
only be utilized for the purpose for which it was created, that is, solely for the implementation of
CARP projects.
Issue: W/N the CARP fund may be a valid source of CNA Incentives for rank-and-file incentives.
Held:
No. CNA Incentive may be granted to rank-and-file employees only if there are savings
from operating expenses. Sec. 7.1 of Budget Circular No. 2006-1, which provides the procedural
guidelines and limitations on the grant of the CNA Incentive provide that The CAN Incentive shall
be sourced solely from savings from released Maintenance and Other Operating Expenses
(MOOE) allotments for the year under review.
Based on the applicable provisions, the CARP Fund may not be legally used to finance
the grant of the CNA Incentive. The circular used the word “shall” in referring to the use of MOOE
funds for the CNA. It is a rule in statutory construction that the use of “shall” denotes an imperative,
underscoring the mandatory character of the provisions. Thus, there can be no logical conclusion
than that the CNA Incentive may be awarded to rank-and-file employees only if there are savings
in the agency's operating expenses. The grant of CNA incentives financed by the CARP Fund is
not only illegal but also inconsiderate of the plight of Filipino farmers for whose benefit the CARP
Fund is allocated.
The CARP Fund is a special trust fund. The court ruled before that the revenue collected
for a special purpose shall be treated as a special fund to be used exclusively for the stated
purpose. This serves as a deterrent for abuse in the disposition of special funds. Therefore, the
CARP fund may not be used as a source for CNA Incentives.