RAMON R.

YAP, Petitioner,
vs.
COMMISION ON AUDIT, Respondent.

FACTS: 

Ramon R. Yap is holder of a regular position of Department Manager of the National Development
Company (NDC), a GOCC and was appointed by the Board of Directors of Manila Gas Corporation (MGC)
a subsidiary of NDC as Vice-President for Finance while remaining as a regular employee of NDC. The
additional employment entitled him to honoraria equivalent to fifty percent (50%) of his basic salary at
NDC and various allowances attached to the office.

In the course of the regular audit, MGC issued notices of disallowances against Mr. Ramon R. Yap which
were predicated on the ground that appellant’s appointment to MGC in addition to his regular position
as Department Manager III of NDC and the subsequent receipt of the questioned allowances and
reimbursements from the former directly contravened the proscription contained in Section 7 (2) and
Section 8, Article IX-b of the Constitution.

Yap appealed the Auditors disallowances contending that the questioned benefits were all approved by
the MGC Board of Directors. His appeal was denied by the CAO II (Corporate Audit Office II). Yap sought
reconsideration from COA, he argued that his assignment to MGC was required by the primary functions
of his office and allowed by law. Respondent COA denied his appeal and upheld CAO II’s ruling that the
disallowances were prohibited by the Constitution. It also ruled that the said allowances and
reimbursements claimed by petitioner failed to pass the test of public purpose requirement of the law
and further emphasized that it is not enough that payments made to petitioner be authorized by the
Board of Directors of the MGC but it is necessary that said payments do not contravene the principles
provided for under Section 4 of Presidential Decree No. 1445 on the use of government funds, more
specifically on the public purpose requirement that is provided in Section 4(2) of Presidential Decree No.
1445, otherwise known as the Government Auditing Code of the Philippines. A Motion for
Reconsideration was subsequently filed by petitioner, but was denied by respondent COA.

ISSUE:

Did the COA commit grave abuse of discretion amounting to lack of jurisdiction when it used as a basis
the public purpose requirement in affirming the questioned disallowances?

HELD: 

The disbursement of public funds, salaries and benefits of government officers and employees should be
granted to compensate them for valuable public services rendered, and the salaries or benefits paid to
such officers or employees must be commensurate with services rendered. Additional allowances and
benefits must be shown to be necessary or relevant to the fulfillment of the official duties and functions
of the government officers and employees. Without this limitation, government officers and employees
may be paid enormous sums without limit or without justification necessary other than that such sums
are being paid to someone employed by the government. Public funds are the property of the people
and must be used prudently at all times with a view to prevent dissipation and waste.

Any disbursement of public funds, which includes payment of salaries and benefits to government
employees and officials, must (a) be authorized by law, and (b) serve a public purpose. Public purpose
in relation to disbursement of public funds means any purpose or use directly available to the general
public as a matter of right. Thus, it has also been defined as an activity as will serve as benefit to the
community as a body and which at the same time is directly related function of government. However,
the concept of public use is not limited to traditional purposes. The idea that public use is strictly limited
to clear cases of use by the public has been discarded. In fact, the SC has already categorically stated
that the term public purpose is not defined, since it is an elastic concept that can be hammered to fit
modern standards. It should be given a broad interpretation; therefore, it does not only pertain to those
purposes that which are traditionally viewed as essentially government functions, such as building roads
and delivery of basic services, but also includes those purposes designed to promote social justice. Thus,
public money may now be used for the relocation of illegal settlers, low-cost housing and urban or
agrarian reform. In short, public use is now equated with public interest, and that it is not
unconstitutional merely because it incidentally benefits a limited number of persons.

On a final note, with regard to the petitioner’s claim of grave abuse of discretion, there is grave abuse of
discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by
law or to act in contemplation of law as when the judgment rendered is not based on law and evidence
but on caprice, whim and despotism. In the case at bar, no grave abuse of discretion was found on the
part of respondent COA in issuing the assailed Decisions. On the contrary, it is held that respondent
COA’s pronouncements were made in faithful compliance with its mandate and in judicious exercise of
its general audit power as conferred on it by the Constitution and the pertinent laws.

The petition was dismissed.

Topic: DOUBLE COMPENSATION

Constitutional Provision:
- No elective or appointive public officer or employee shall receive additional, double, or indirect
compensation, unless specifically authorized by law, nor accept without the consent of the Congress,
any present, emolument, office, or title of any kind from any foreign government. Pensions or gratuities
shall not be considered as additional, double, or indirect compensation. (Sec.8, Art. IX-B)

DUAL PURPOSE ON THE PROHIBITION AGAINST ADDITIONAL, DOUBLE OR INDIRECT COMPENSATION:

a. To inform the people of the exact amount a public functionary is receiving from the government so
they can demand commensurate services; and
b. To prevent the public functionary from dividing his time among the several positions concurrently
held by him and ineptly performing his duties in all of them because he cannot devote to each the
proper attention it deserves. (Cruz, p. 647)

Exception on the prohibition against additional, double or indirect compensation:

- Where the law allows him to receive extra compensation for services rendered in another position
which is an extension or connected with his basic work, as where the chairmen of the committees on
education in the two houses of the Congress may collect allowances as ex-officio members of the UP
Board of Regents.

THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES

ARTICLE IX
 Constitutional Commissions

B. THE CIVIL SERVICE COMMISSION

Section 7. No elective official shall be eligible for appointment or designation in any capacity to any
public office or position during his tenure.

Unless otherwise allowed by law or by the primary functions of his position, no appointive official
shall hold any other office or employment in the Government or any subdivision, agency or
instrumentality thereof, including Government-owned or controlled corporations or their subsidiaries.

Section 8. Each Commission shall perform such other functions as may be provided by law.

PRESIDENTIAL DECREE No. 1445

Section 4. Fundamental principles. Financial transactions and operations of any government agency shall
be governed by the fundamental principles set forth hereunder, to wit:

1. No money shall be paid out of any public treasury of depository except in pursuance of an
appropriation law or other specific statutory authority.
2. Government funds or property shall be spent or used solely for public purposes.
3. Trust funds shall be available and may be spent only for the specific purpose for which the trust was
created or the funds received.
4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the
financial affairs, transactions, and operations of the government agency.
5. Disbursements or disposition of government funds or property shall invariably bear the approval of
the proper officials.
6. Claims against government funds shall be supported with complete documentation.
7. All laws and regulations applicable to financial transactions shall be faithfully adhered to.
8. Generally accepted principles and practices of accounting as well as of sound management and fiscal
administration shall be observed, provided that they do not contravene existing laws and regulations.