Bitonio vs. Commission on Audit

The constitutional prohibition on Cabinet members, their deputies, and assistants holding other government offices or positions and receiving additional compensation therefor extends to their representatives who sit in such positions by designation. A representative who sits on a board in place of a principal covered by the prohibition cannot receive per diems or other additional compensation, as a contrary rule would give the representative a better right than the principal.

Petitioner Benedicto Ernesto R. Bitonio, Jr. was a Director IV of the Bureau of Labor Relations in the Department of Labor and Employment (DOLE). In 1995, he was designated by the Acting Secretary of Labor as the DOLE representative to the Board of Directors of the Philippine Economic Zone Authority (PEZA), pursuant to Section 11 of Republic Act No. 7916, the Special Economic Zone Act of 1995. Section 11 provided that the PEZA Board shall be composed of the Director General as ex officio chairman and eight members, including the Secretaries or their representatives of various departments, and that members of the Board shall receive a per diem not exceeding the equivalent of four meetings per month. The constitutional backdrop is Section 13, Article VII of the 1987 Constitution, which prohibits the President, Vice-President, Members of the Cabinet, and their deputies or assistants from holding any other office or employment during their tenure unless otherwise provided in the Constitution.

In 1994, petitioner Benedicto Ernesto R. Bitonio, Jr. was appointed Director IV of the Bureau of Labor Relations in the Department of Labor and Employment. By Letter dated May 11, 1995 addressed to the Secretary of the Department of Trade and Industry, Acting Secretary Jose S. Brilliantes of the DOLE designated the petitioner as the DOLE representative to the Board of Directors of the Philippine Economic Zone Authority (PEZA), pursuant to Section 11 of Republic Act No. 7916, the Special Economic Zone Act of 1995. Section 11 created the PEZA Board composed of the Director General as ex officio chairman and eight members, including the Secretaries or their representatives of the Department of Trade and Industry, the Department of Finance, the Department of Labor and Employment, the Department of the Interior and Local Government, the National Economic and Development Authority, and the Bangko Sentral ng Pilipinas, one representative from the labor sector, and one representative from the investor/business sector. The provision stated that members of the Board shall receive a per diem of not less than the amount equivalent to the representation and transportation allowances of the members of the Board and/or as may be determined by the Department of Budget and Management, provided that the per diem collected per month does not exceed the equivalent of four meetings.

As representative of the Secretary of Labor to the PEZA, the petitioner received a per diem for every board meeting he attended during the years 1995 to 1997. After a post audit of the PEZA's disbursement transactions, the COA disallowed the payment of per diems to the petitioner and issued Notice of Disallowance No. 98-008-101 (95) dated July 31, 1998 for the total sum of P24,500 covering July-December 1995; Notice of Disallowance No. 98-003-101 (96) also dated July 31, 1998 for P100,000 covering January 1996 to January 1997; and Notice of Disallowance No. 98-017-101 (97) dated October 9, 1998 for P210,000 covering February 1997 to January 1998. The uniform reason for the disallowance was that Cabinet members, their deputies and assistants holding other offices in addition to their primary office and receiving compensation therefor was declared unconstitutional in Civil Liberties Union vs. Executive Secretary, and the disallowance was in pursuance to COA Memorandum No. 97-038 dated September 19, 1997 implementing Senate Committee Report No. 509.

On November 24, 1998, the petitioner filed a motion for reconsideration, arguing that the Supreme Court's Resolution dated August 2, 1991 on the motion for clarification filed by the Solicitor General modified the earlier ruling in the Civil Liberties Union case, limiting the prohibition to Cabinet Secretaries, Undersecretaries, and their Assistants, and that Section 11 of R.A. No. 7916 provided the legal basis for him to receive per diem, enacted four years after the Civil Liberties Union case became final. The COA denied the motion on January 30, 2001. The petitioner admitted that there was no separate or special appointment for his position as representative to the PEZA Board; his presence in the Board meetings was solely by virtue of his capacity as representative of the Secretary of Labor.

• Statutory Basis for Per Diems: Petitioner maintained that he is entitled to the payment of per diems because R.A. No. 7916 specifically and categorically provides for the payment of a per diem for the attendance of the members of the Board of Directors at board meetings of PEZA, and this law is presumed valid and cannot be rendered nugatory by a mere memorandum circular such as COA Memorandum No. 97-038, since a statute is superior to an administrative directive.
• Legislative Awareness of Prior Rulings: Petitioner posited that R.A. No. 7916 was enacted four years after the Civil Liberties Union case was promulgated, and the legislature is presumed to have been aware of prior court holdings; since the constitutionality of R.A. No. 7916 was never challenged, the provision on the payment of per diems remains in force.
• Position Not Covered by Prohibition: Petitioner argued that his position as Director IV is not included in the enumeration of officials prohibited to receive additional compensation as clarified in the Resolution of the Court dated August 1, 1991, and thus he is still entitled to receive the per diems.

N/A — The decision does not separately recount the respondents' arguments beyond the grounds stated in the Notices of Disallowance and the COA's denial of the motion for reconsideration.

• Validity of the Disallowance of Per Diems: Whether the COA correctly disallowed the per diems received by the petitioner for his attendance in the PEZA Board of Directors' meetings as representative of the Secretary of Labor.

• Validity of the Disallowance of Per Diems: Yes. The COA correctly disallowed the per diems. The petitioner sat on the PEZA Board solely as representative of the Secretary of Labor, and since the Secretary of Labor is prohibited from receiving compensation for an additional office or employment under Section 13, Article VII of the 1987 Constitution, as interpreted in Civil Liberties Union vs. Executive Secretary, the prohibition likewise applies to the petitioner.

• Validity of the Disallowance of Per Diems: The Court anchored the disallowance on Civil Liberties Union vs. Executive Secretary, which declared Executive Order No. 284 unconstitutional insofar as it allowed Cabinet members, their deputies, and assistants to hold other offices in addition to their primary office and to receive compensation therefor. The Court's ruling was in conformity with Section 13, Article VII of the 1987 Constitution, which prohibits the President, Vice-President, Members of the Cabinet, and their deputies or assistants from holding any other office or employment during their tenure unless otherwise provided in the Constitution. The COA issued Memorandum No. 97-038 pursuant to the Court's ruling and Senate Committee Report No. 509, which urged the COA to disallow any payment of additional compensation to cabinet secretaries, their deputies and assistants, or their representatives in violation of the rule on multiple positions.

The Court found the petitioner's case to stand on all fours with Dela Cruz vs. Commission on Audit, where the Court upheld the COA in disallowing the payment of honoraria and per diems to officers who sat as alternates of their superiors in an ex officio capacity on the Board of Directors of the National Housing Authority. In that case, the Court explained that the ex officio position is actually and in legal contemplation part of the principal office, and the official concerned has no right to receive additional compensation for services in that position because these services are already paid for and covered by the compensation attached to the principal office. The Court quoted Dela Cruz at length: "By whatever name it is designated, such additional compensation is prohibited by the Constitution." Since the Executive Department Secretaries, as ex officio members of the NHA Board, were prohibited from receiving extra compensation, the petitioners who sat as their alternates could not likewise be entitled to receive such compensation, for "a contrary rule would give petitioners a better right than their principals."

Applying the same principle, the Court held that the petitioner, who sat as representative of the Secretary of Labor in the PEZA Board, cannot be allowed to have a better right than his principal. As the representative, the petitioner sat in the Board in the same capacity as his principal; whatever laws and rules the member is covered by, so is the representative, and whatever prohibitions or restrictions the member is subjected to, the representative is likewise not exempted. The petitioner's position as Director IV of the DOLE, which he claimed was not covered by the constitutional prohibition, was of no moment, because he attended the board meetings by the authority given to him by the Secretary of Labor to sit as his representative, and if not for such designation, he would not have been in the Board at all.

The Court also rejected the petitioner's argument that the legislature was aware of the parameters set by the Court when it enacted R.A. No. 7916. The Court stated that any legislative enactment must not be repugnant to the Constitution, which is superior to a statute, and that if a law infringes upon or violates the fundamental law, courts may nullify its effectiveness. The Court quoted the clarificatory resolution in the Civil Liberties Union case, which stressed that the legislature's competence to provide funds for a public purpose is not unlimited and must be exercised within the framework of the fundamental law. The Court noted that the framers of R.A. No. 7916 must have realized the flaw in the law, which is why it was later amended by R.A. No. 8748 to cure the defect: the members of the Board were increased from 8 to 13, specifying that it is the undersecretaries of the different Departments who should sit as board members, the option of designating representatives by the Cabinet Secretaries was deleted, and the paragraph on the payment of per diems was deleted as clearly in conflict with the constitutional proscription.

• Prohibition on Multiple Positions and Additional Compensation — Under Section 13, Article VII of the 1987 Constitution, the President, Vice-President, Members of the Cabinet, and their deputies or assistants shall not, unless otherwise provided in the Constitution, hold any other office or employment during their tenure. The Court applied this doctrine to hold that a representative designated by a Cabinet Secretary to sit on a board in the Secretary's place is subject to the same prohibition on receiving additional compensation, since the representative sits in the same capacity as the principal.
• Ex Officio Position as Part of Principal Office — An ex officio position is actually and in legal contemplation part of the principal office, and the official concerned has no right to receive additional compensation for services in the said position, because these services are already paid for and covered by the compensation attached to the principal office. The Court applied this doctrine, as articulated in Dela Cruz vs. Commission on Audit, to hold that a representative of a Cabinet Secretary cannot receive per diems for board attendance, as a contrary rule would give the representative a better right than the principal.
• Supremacy of the Constitution over Statutes — Any legislative enactment must not be repugnant to the Constitution, which is the highest law of the land; no law can render the Constitution nugatory because the Constitution is superior to a statute. If a law infringes upon or violates the fundamental law, courts of justice may step in to nullify its effectiveness. The Court applied this doctrine to reject the argument that R.A. No. 7916, being a statute, could validly authorize per diem payments notwithstanding the constitutional prohibition.

• "The ex-officio position being actually and in legal contemplation part of the principal office, it follows that the official concerned has no right to receive additional compensation for his services in the said position. The reason is that these services are already paid for and covered by the compensation attached to his principal office." — This passage, quoted from Dela Cruz vs. Commission on Audit, articulates the controlling doctrine that ex officio service is part of the principal office and cannot command additional compensation.
• "By whatever name it is designated, such additional compensation is prohibited by the Constitution." — This passage, also quoted from Dela Cruz, establishes that the constitutional prohibition applies regardless of the form or label given to the additional compensation, whether per diem, honorarium, or allowance.
• "A contrary rule would give petitioners a better right than their principals." — This passage from Dela Cruz states the rationale for extending the prohibition to alternates or representatives of prohibited officials, which the Court applied directly to the petitioner's case.
• "It must be stressed that the so-called 'exclusive competence of the legislature to provide funds for a public purpose' or to enact all types of laws, for that matter, is not unlimited. Such competence must be exercised within the framework of the fundamental law from which the Legislature draws its power and with which the resulting legislation or statute must conform." — This passage, quoted from the clarificatory resolution in the Civil Liberties Union case, rejects the argument that a statute enacted by Congress can override the constitutional prohibition on additional compensation.

• Civil Liberties Union vs. Executive Secretary, 194 SCRA 317 (1991) — Controlling precedent. The Court declared Executive Order No. 284 unconstitutional insofar as it allowed Cabinet members, their deputies, and assistants to hold other offices in addition to their primary office and to receive compensation therefor. The Court relied on this case as the foundation for the disallowance of the petitioner's per diems.
• Dela Cruz vs. Commission on Audit, 371 SCRA 157 (2001) — Followed. The Court upheld the COA in disallowing honoraria and per diems to officers who sat as alternates of their superiors in an ex officio capacity on the NHA Board. The Court applied this case as directly on point, holding that representatives of prohibited officials cannot receive additional compensation.
• Aquino vs. COMELEC, 248 SCRA 400 (1995) — Cited for the proposition that no law can render the Constitution nugatory because the Constitution is superior to a statute.
• Garcia vs. Mata, 65 SCRA 517 (1975) — Cited for the proposition that if a law infringes upon or violates the fundamental law, courts of justice may step in to nullify its effectiveness.

• Section 13, Article VII, 1987 Constitution — Prohibits the President, Vice-President, Members of the Cabinet, and their deputies or assistants from holding any other office or employment during their tenure unless otherwise provided in the Constitution. The Court applied this provision to hold that the Secretary of Labor, and by extension his representative, could not receive per diems for service on the PEZA Board.
• Section 11, Republic Act No. 7916 (Special Economic Zone Act of 1995) — Created the PEZA Board and provided for the payment of per diems to its members. The Court held that this statutory grant could not override the constitutional prohibition, and noted that the provision was later amended by R.A. No. 8748 to delete the per diem stipulation and the option of designating representatives.
• Section 1, Republic Act No. 8748 — Amended Section 11 of R.A. No. 7916 by increasing the Board membership from 8 to 13, specifying that undersecretaries of the different departments should sit as board members, deleting the option of Cabinet Secretaries to designate representatives, and deleting the per diem provision. The Court cited this amendment as evidence that the original per diem stipulation was in conflict with the constitutional proscription.
• Executive Order No. 284 — Declared unconstitutional in Civil Liberties Union vs. Executive Secretary insofar as it allowed Cabinet members, undersecretaries, assistant secretaries, and other appointive officials of the Executive Department to hold additional positions in government and receive corresponding compensation therefor.
• COA Memorandum No. 97-038 (September 19, 1997) — Issued by the COA pursuant to the Civil Liberties Union ruling and Senate Committee Report No. 509, directing unit heads/auditors/team leaders to implement the disallowance of additional compensation paid to cabinet secretaries, their deputies and assistants, or their representatives.

Davide, Jr., C.J., Vitug, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, and Tinga, JJ., concurred. Puno, J., was on leave. Panganiban, J., was on official leave. Quisumbing, J., took no part due to prior Executive action at DOLE.

N/A — No dissenting opinions were noted in the decision.