BCDA

v COA
G.R. No. 178160
February 26, 2009
Ponente: CARPIO, J.
FACTS:
On March 13, 1992, Congress approved RA No. 7227 creating
the Bases Conversion and Development Authority. Under
Section 10, the functions of the board include the adoption of a
compensation and benefit scheme at least equivalent to that of
the Bangko Sentral ng Pilipinas.
20 December 1996, the Board of Directors of the BCDA adopted
a new compensation and benefit scheme which included P 10,
000 year end benefit (YEB) to each contractual employee,
regular permanent employee, and Board member. Board
Chairman Victoriano Basco recommended to President Fidel V.
Ramos the approval of this new compensation and benefit
scheme.
In 1999, the BSP gave a P30,000 YEB to its employees and
increased it to P35,000 in the year 2000. In line with Section
10 of RA No. 7227, the BCDA Board increased their YEB from
P10,000 to P30,000 for contractual and regular employees,
Board members, and full time consultants.
On 20 February 2003, State Auditor of COA issued Audit
Observation Memorandum (AOM) No. 2003-004 stating that
the grant of YEB to Board members was contrary to Department
of Budget and Management (DBM) Circular Letter No. 2002-2
dated 2 January 2002. They disallowed the grant of YEB to

Board members and full time consultants.

ISSUE:

Whether or not BCDA Board members and full-time consultants
are entitled to YEB
{ The COAs Ruling }
In Decision No. 2007-020, the COA affirmed the
disallowance of the YEB granted to Board members and full-
time consultants and held that the presumption of good
faith did not apply to them.
Citing DBM Circular Letter No. 2002-02, COA states that
members of the Board are not entitled to YEB because they
are not salaried officials of the government. They should be
made to refund the YEB.
HELD:
1. PETITIONER: The Board can grant the YEB to its members
and full-time consultants, citing Section 10 of RA 7227.

SC: The Boards power to adopt a compensation and benefit

scheme is not unlimited.
Section 9 of RA 7227
Members of the board shall receive a per diem (per day;
payment to cover a task/service) of not more than P5,000 for
every board meeting: Provided, however, that the per diem
collected per month does not exceed the equivalent of 4
meetings

Board is limited to the specified per diem authorized by law.
DBM Circular Letter No. 2002-02 Members of the Board of
Directors of agencies are not salaried officials of the
government. Therefore, they are not entitled to YEB unless
expressly provided by law.

As to full-time consultants, they are not part of the BCDA
personnel and are not paid the basic salary (there is no
employer-employee relationship). This circular states that YEB
is a personal benefit granted in addition to salaries. As fringe
benefits, these shall be paid only when the basic salary is also
paid.
2. PETITIONER: Board members and full-time consultants
should be granted the YEB because it is consistent with Section
5 and 18, Art II of the Constitution.

Section 5. The maintenance of peace and order, the protection

of life, liberty, and property, and the promotion of the general
welfare are essential for the enjoyment by all people of the
blessings of democracy.
Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.
SC: Art II is a statement of general ideological principles and
policies. It is not a source of enforceable rights. Sections 5 and
18 are not self-executing provisions (from Court ruling in Tondo
Medical Center Employees Association v. CA)
3. PETITIONER : The denial of YEB to the Board members and
full-time consultants violates Section 1 Art III of the
Constitution. BCDA claims that there is no substantial
distinction between regular employees and Board members and
full-time consultants. There is a distinction, but no difference.
Section 1. No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be
denied the equal protection of the laws.
SC: Every presumption should be indulged in favor of the
constitutionality of RA 7227 and the burden of proof is on the
BCDA to show that there is a clear and unequivocal breach of the
Constitution.

4. PETITIONER: The Board can grant the YEB to its members

and full-time consultants because RA 7227 does not expressly
prohibit it from doing so.
SC: A careful reading of Section 9 of RA 7227 (refer above)
reveals that the Board is prohibited from granting its members
other benefits.
5. PETITIONER: Board members and full-time consultants are
entitled to YEB because a) President Ramos approved the
granting of the benefit b) they have been receiving it since 1997
SC: The State is not estopped from correcting a public officers
erroneous application of a statute, and an unlawful practice, no
matter how long, cannot give rise to any vested right.

FINAL SC RULING:
The Court notes that the Board members and full-time
consultants received the YEB in good faith. Board members
relied on:
. Section 10 of RA 7227, authorizing a compensation and
benefit scheme.
. The fact that RA 7227 does not expressly prohibit it.
. Ramos approved it.
Petition is partially granted. YEB is disallowed but the Board
members and full- time consultants of the BCDA are not
required to refund the YEB they have already received.