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DENREU v. SECRETARY ABAD

FACTS:

The petitioners, DENREU and K4, filed a petition challenging the constitutionality of DBM Budget Circular No. 2011-5, which imposed a P25,000.00 ceiling on the CNA incentives for the year 2011. The COA subsequently disallowed the DENR's grant of CNA incentives for exceeding the limit.

The case involves a petition filed by DENR employees, asserting their vested right to the CNA incentive and seeking an injunction against the implementation of the circular. The DBM Secretary argued that the circular was valid and necessary to prevent agencies from accumulating savings for the incentive and hindering government programs. The Court allowed the petition for certiorari based on exceptions to the general rule.

The case involves a petition challenging the constitutionality of Budget Circular No. 2011-5, which imposed a ceiling on CNA incentives for government employees. The petitioners argued that the circular was unconstitutional and went against existing laws and jurisprudence. The DBM Secretary defended the circular, stating that it fell within the scope of the DBM's authority to regulate compensation.

The case involves a petition challenging certain provisions of Joint Circular No. 1 issued by the DBM and CSC. The petitioners argued that the provisions violated their constitutional rights to negotiate and collectively bargain. The DBM's role is to administer and regulate the payment of compensation to government employees and ensure compliance with established policies and guidelines.

ISSUES:

  1. Whether the Department of Budget and Management (DBM) has the authority to regulate and review compensation and benefits received by officials and employees of government agencies.

  2. Whether the DBM's authority to administer compensation systems of government entities extends to the determination of rates for Collective Negotiation Agreement (CNA) incentives.

  3. Whether the Department of Budget and Management (DBM) acted within its authority in imposing a budget ceiling for Collective Negotiation Agreement (CNA) incentives.

  4. Whether the employees of the Department of Environment and Natural Resources (DENR) are liable for the refund of excess CNA incentives received.

  5. Whether or not DBM Budget Circular No. 2011-5 is required to be published and filed with the U.P. Law Center-ONAR.

  6. Whether or not DBM Budget Circular No. 2011-5 is merely interpretative or internal in nature.

  7. Whether the publication of an administrative circular is necessary for it to be effective and enforceable.

  8. Whether the belated publication of an administrative circular can have retroactive effect to cure the infirmity of its issuance.

  9. Whether the publication requirement for the implementing rules of statutes is mandatory even if there was public consultation and submission of comments by the parties.

  10. Whether the retroactive application of Budget Circular No. 2011-5 to CNA incentives already released to the employees violates due process.

RULING:

  1. Yes, the DBM has the authority to regulate and review compensation and benefits received by officials and employees of government agencies. The Court ruled in previous cases that while government agencies have the power to establish and fix their own compensation and benefits schemes, these are subject to the review and approval of the DBM to ensure compliance with prescribed policies and guidelines. The DBM's role is supervisory in nature, primarily to ascertain that proposed compensation and benefits adhere to applicable laws and policies.

  2. Yes, the DBM's authority to administer compensation systems of government entities extends to the determination of rates for CNA incentives. Government Appropriations Acts have consistently limited the rates of CNA incentives to reasonable rates as determined by the DBM. The DBM is authorized to issue policy and procedural guidelines for the implementation of CNA incentives.

  3. The DBM acted within its authority in imposing a budget ceiling for CNA incentives. Republic Act No. 10633 allows savings from allowable MOOE allotments to be used for the grant of CNA incentives, subject to the funding sources and amount being limited to the allowable MOOE allotments and rates determined by the DBM. The DBM's imposition of a P25,000 budget ceiling for CNA incentives is in accordance with the law.

  4. The employees of DENR are not liable for the refund of excess CNA incentives received. The Court emphasizes the requirement of publication as a condition precedent to the effectivity of a law. As the law requiring the refund was not published, the DENR employees cannot be held liable for the refund.

  5. DBM Budget Circular No. 2011-5 is required to be published and filed with the U.P. Law Center-ONAR. The fact that it was published on February 25, 2012, two months after its issuance, and that it was not filed with the U.P. Law Center-ONAR as mandated by the Administrative Code of 1987, render its publication and filing non-compliant with the law.

  6. DBM Budget Circular No. 2011-5 is not merely interpretative or internal in nature. Without the circular, there would be no maximum allowable amount of P25,000.00 for the CNA incentive per qualified employee. It substantially increases the burden of those governed and affects substantial rights of individuals. Therefore, it cannot be exempted from the requirement of prior publication and filing.

  7. Yes, the publication of an administrative circular is necessary for it to be effective and enforceable. The publication requirement is a constitutional mandate of due process and a guarantee of the right to information on matters of public concern. The omission of publication is tantamount to denying the public knowledge and information of the laws that govern them, thus violating due process.

  8. No, the belated publication of an administrative circular cannot have retroactive effect to cure the infirmity of its issuance. Laws and rules are binding only when their existence and contents are confirmed by valid publication. The fact that an administrative circular was published after its effectivity does not cure the violation of due process, especially when it aims to impose restrictions on previous fiscal years.

  9. The publication requirement for implementing rules of statutes is mandatory and cannot be dispensed with, even if there was public consultation and submission of comments by the parties. The purpose of publication is to give wide publicity so that all persons having an interest in the proceedings may be notified thereof. Therefore, the failure to publish the GRAM Implementing Rules in the Official Gazette or a newspaper of general circulation renders them ineffective.

  10. The retroactive application of Budget Circular No. 2011-5 to CNA incentives already released to the employees violates due process. While the Department of Budget and Management has the power to impose conditions for grants of CNA incentives, in this case, the conditions were imposed after the benefits had already been released and received by the employees. The benefits had already vested in the employees' behalf, and the circular cannot be retroactively applied to incentives granted before its publication.

PRINCIPLES:

  • The DBM has the sole power and discretion to administer the compensation and position classification system of the national government.

  • Compensation and benefits received by government officials and employees without the approval or authority of the DBM are unauthorized and irregular.

  • Government agencies have the power to establish and fix their own compensation and benefits schemes, but these are subject to the review and approval of the DBM to ensure compliance with prescribed policies and guidelines.

  • The DBM's role in reviewing compensation systems is supervisory in nature, primarily to ensure compliance with applicable laws and policies.

  • The DBM's authority to administer compensation systems includes the determination of rates for CNA incentives, which are limited to reasonable rates as determined by the DBM.

  • The principle of authority to impose budget ceilings - The DBM has the authority to impose budget ceilings for CNA incentives pursuant to Republic Act No. 10633.

  • The principle of publication - Publication is necessary for the effectivity of a law and must be complied with to fully inform the public of its contents before their rights and interests are affected.

  • The publication requirement is part of the constitutional mandate of due process and ensures that the public is informed of the laws that govern them.

  • Laws and rules are binding only when their existence and contents are confirmed by valid publication.

  • Belated publication does not have retroactive effect to cure the infirmity of an administrative circular.

  • Notification of the existence of an administrative circular does not exempt it from compliance with the publication requirement.

  • The publication requirement for implementing rules of statutes is mandatory.

  • Procedural due process requires wide publicity for administrative issuances.

  • Benefits that have already vested cannot be retroactively affected by subsequent regulations.