Republic of the Philippines

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City, Philippines

DECISION NO. 2011- 0<03

OCT 1 7 2011

Subject: Appeal of Ms. Evelyn F. Tablang,

Deputy Executive Director,
Employees Compensation
Commiss ion (ECC) , et al., fro m
COJ\ Legal Services Sector
(LSS) Decision No. 2009-342
dated November 17, 2009,
affirming Notice of Disallowance
(NO) Nos. 2006-003 , 2006-001 ,
and 2006-004 issued hy the Audit
Team Leader (ATL) di sallowing
the aggregate amount of
P3, 7 15,053.04

DECISION

FACTS OF THE CASE

In Audit Observation Memorandum (AOM) No. 2005-09-(05 ) dated

December 22, 2005, M s. Estrcllita C. Amponin, A TL, ECC, quest ion ed the
legality of the pa yments of M agna Carta Benefit s, Program on Award s and
Incentives for Service Excellence (PRAISE) Be nefits, and Ann iversary
Bo nu s to ECC officials and employees. In response thereto, the ECC
Executive Director Elmor D . Juric.l ico submitted a reply-justificati on dated
January 13, 2006. On February 2, 2006, Ms. Amponin forw arded the
documents to the then Legal and Adjudication Office - Corpo rate (LAO-C),
th rough the Directo r, then C luster ll , Corpo rate Government Sect or (CGS).
both of this Co mmiss ion, for evaluation. On M arch 23, 2006, the Director,
then C luster ll-CG S, instructed Ms. Amponin to act thereon pursua nt to COA
Resolution No. 2006-00 l dated January 3 1, 2006.
which was held to be in the nature of a Productivity Incentive Bonus (PIB);
2006-003 dated November 30, 2006 in the amount of 1'2,6R5,053.04 for
Magna Carta f(Jr Public Health Workers (PHWs) benefits; and 2006-004 dated
December 14, 20(16 in the amount of P3SO,OOO.OO for the excess Anniversary
Bonus which was deemed contrary to that prescribed under Admini>trative
Order (A.O.) No. 263 dated March 28, 1996.

The persons liable tailed to tile a motion tor reconsideration or appeal

from the NDs within the six-month reglementary period. For this reason.
Ms. Amponin issued a Memorandum dated July 10, 2007, informing them that
the NDs had become tina! and executory. Consequently, Ms. Amponin
issued three (3) Auditor's Orders. directing the ECC Cashier,
Mr. Alejandro F. Buniag, to withhold the salaries of the persons held liable for
the af(xementioned disallowances. The Auditor's Orders were issued to
execute the said NDs pursuant to Section 2, Rule XII of the !997 Revised
Rules of Procedure of this Commission.

Ms. Evelyn r:. Tablang, Deputy Executive Director, FCC, liled a

Petition tor Reconsideration and Withdrawal ofNDs and Auditor's Orders in a
Memorandum dated August 28. 2007. The petition was denied under LAO-C
Decision No. 2008-045 dated August 4, 2008, even as it ruled that
Ms. Amponin had no authority to issue the Auditor's Orders. The decision
held that:

a. Ms. Amponin, as ATL of ECC. had authority to issue the

subject NDs. By virtue of COA Resolution No. 2006-00 I
dated hnuary 31, 2006, the responsibility to issue ND,
Notice of Charge (NC) or Notice of Suspension (NS) arising
trom the review of transactions, except those arising from
special audits conducted by COA. Legal and Adjudication
Sector (LAS), was restored to the Audit Sectors. Thus, the
subject 'iDs were valid and binding as these were issued by
the A TL after the effectivity of COA Resolution No. 2006-
001;

b. The subject NDs have already become final and cxecutoy

atier appellants failed to file a request f(,r reconsideration or
an appeal within the six-month reglementary period
prescribed under Section 48, Presidential Decree (P.D.) No.
1445 and Section 5, Rule V, 1997 COA Revised Rules of
Procedure; and

c. Ms. Amponin had no authority to issue the Auditor's Orders

and thm said Auditor's Orders produced no legal effects.
COA Memorandum No. 2002-053 dated August 26, 2002,
delegated to the LAS, through the General CounseL the
 issuance of the Final Order of Adjudication (FOA), which
was equivalent to the Auditor's Order under the 1997 COA
Revised Rules of Procedure. COA Resolution No. 2006-001
did not transfer to the audit sectors the authority of the LAS
to issue the FOA.

Despite the denial of the petition under COA LAO-C Decision

No. 2008-045, the petitioner was given 30 days from receipt of the said
decision to file a Motion for Reconsideration (MR) of the NOs with the COA-
CGS, or to tile an Appeal with the COA Commission Proper.

Ms. Tahlang opted to file an appeal from the NOs, hut it was denied on
the merits under COA LSS Decision No. 2009-342 dated November 17. 2009.
The decision sustained NO No. 2006-00 I, disallowing the PRAISE Benefits -
PIB - t(Jr being in excess of what is prescribed under Department of Budget
and Management (DBM) National Compensation Circular (NCC) No. 73
dated December n, 1994. The decision held that ECC could not pay an
additional analogous benefit based on A.O. No. 196, s. 2005, issued by the
Department of Labor and Employment (DOLE), because the said A.O.
No. 196 was applicable only to DOLE employees. Employees of ECC could
not be considered as DOLE employees, since it is the DBM that approves
ECC's budget and under Article 176 (d) of the Labor Code of the Philippines,
ECC is deemed attached to the DOLE only with respect to policy coordination
and guidance affecting its mandate. The DOLE PRAISE benefit was a
substitute of the PIB authorized under DBM NCC No. 73.

The decision also sustained NO No. 2006-003, which disallowed

payment of additional benefits under Republic Act (R.A.) No. 7305. on the
ground that the ceriit!cations from the Department of Health (DOH)
authorized only the ECC personnel in the unit/s perf()rming functions of the
Comprehensive Prevention Program (CPP) and th~ Comprehensive
Rehabilitation and Placement Program (CRPP). Stressing that the ECC is not
a hospital, clinic or inf!m1ary, but an entity adjudicating health hencflt c:laims
of employees, the decision declared that the ECC was like the Government
Service Insurance System (GSIS). It cited the ruling in Kapisanan ng mga
lvfanggaga\\'a sa GS!S (KMG) vs. COA, 437 SCRA 371, G.R. No. 150769,
August 31, 2004, where the Supreme Court held that to be included within the
coverage of R.A. No. 7305, a govemment employee must he principally
tasked to render health or health-related services.

NO No. 2006-004, disallowing the excess of the Anniversary Bonus

over that allowed under A.O. No. 263, was likewise upheld on the ground that
the Collective 1\egotiation Agreement (CNA) cannot provide for an
unauthorized benet!! or in excess of what is allowed by law.

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 From the said COA LSS Decision No. 2009-342, Ms. Tablang liled this
appeal, raising the following errors:

I. The decision failed to resolve in a delinite manner whether or not

the subJect N Ds were valid ami issued in accordance with COA
procedures;

2. It fi1ilcd to consider that the series of certifications of the Secretary

of Health authorizing the ECC employees to avail of the
compensation Benefits, privileges and incentives accorded under
R.A. No. 7305 to PHWs are considered acts of the President of the
Philippines. The actions of the Secretary of Health, being her alter
ego, should be accorded due respect and could only be que,tioned
bef(Jrc courts oflaw;

3. It failed to consider that the previous auditors had passed in audit

the Magna Carta Benefits given to ECC employees since the
passage of R.A. No. 7305 in !993 and up to July 2005. In
particular, the payments of Magna Carta Benefits from January to
July 2005 were passed in audit by then ECC A TL Teodulf() I.a
Torre as evidenced by various Disbursement Vouchers;

4. It took literally the meaning of "good faith" as the basis of the

Supreme Court in several decisions to declare a non-refund policy
on the receipt of benelits, but it failed to consider the time-honored
policy that social legislation shall be liberally interpreted in f~1vor of
the workers; and

5. In the alternative, the decision should have allowed in audit the

questioned ECC benefits out of liberality and just added a condition
that it should not be made a precedent f()r audit purposes.

ISSUE

The issue for resolution is whether or not the appeal from the
disallowances of ECC benefits consisting of PRAISE, Magna Carta Benefit:;
f()r PIIWs, and Anniversary Bonus in the total amount of P3,715,053.04, is
meritorious.

DISCUSSION

COA LAO-C Decision No. 2008-045, which denied appellant's Petition

for Rccon:;ideration and Withdrawal of NOs, gave the principle of due process
a broader dimension. :hile said decision held that the NOs had alread'

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become final and executory, it still gave herein appellants a chance to lnve the
merits of the NOs resolved. Not only that, it gave appellants 30 days to file an
MR or appeal within the prescribed period. Obviously, there was no
arbitrariness in this decision, it even over-extended its fealty to due process.

Appellants· second attempt to have the disallowances reconsidered,

failed under COA LSS Decision No. 2009-342. Their third try, the instant
appeal, should als,, tail.

The first assignment of error raised the issue that COA LSS Decision
No. 2009-342 failed to resolve in a definite manner the validity of the subject
NDs.

While the COA LSS Decision no longer discussed the matter

extensively, LAO-C Decision No. 200R-045 squarely addressed that issue. It
held that Ms. Amponin had authority to issue the subject NOs, as she issued
them a tier COA Resolution No. 2006-00 I dated January 31, 2006 took effect,
restoring to the audit sectors the responsibility to issue NO, NC, and NS

COA Resolution No. 2006-00 I retained the authority of LAO to issue

Auditor's Orders. But since the NOs were already declared valid under
LAO-C Decision No. 2008-045, the invalidity of the Auditor's Orders issued
executing them never affected the validity of the NOs. Thus, appellants were
wrong in contending that inferentially. LAO-C Decision No. 201)g.()45
declared the said NOs invalid.

Corollarily. it should be stressed that the subject NOs have already

become final and executory. Records show that appellants received NO
No. 2006-00 I on November 17, 2006, ND No. 2006-003 on December 6, 2006
and NO No. 2006-004 on December 18, 2006. from that time on, appellants
did not file an MR or an appeal, which prompted Ms. Amponin to isouc the
three Auditor's Orders all dated August 14, 2007. Clearly, more than six (6)
months have passed lrom the dates the NOs were received up to the time of
the issuance of the Auditor's Orders.

Therefore, appellants have no more right to question the NDs. A

judgment becomes tina! and executory by operation of law. Finality becomes
a tact when the reglementary period to appeal lapses and no appeal is perfected
within such period. (SSS l'S. !sip, G.R. No. 165417, April 3, 2007)

Appellants slept on their right. The first action of appellants was to

submit a reply-justification on January 13, 2006, before the NOs were issued.
Then their next actions were made only after the NDs had acquired finality
and worse, after the issuance of the Auditor's Orders. These were the Petition
for Reconsideratil'n and Withdrawal of N Ds and Auditor's Orders filed on

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August 28, 2007; Reiteration of Petition for Reconsideration and Withdrawal
of NOs on August 29, 2007; and Appeal to LAO-Con September 5, 2007.

Appellants say that they waited t(Jr LAO-C to act on the reply-
justification dated January 13, 2006. That was a waiting that produced no
legal ctfect whatsoever. It must be emphasized that the reply-justitlcation was
addressed to Ms. Amponin, not to the LAO-C and that it was Ms. Amponin,
not the appellants, who forwarded the reply justification to the LAO-C. If
somebody had the right to defer action to await that reply, it was not
appellants, but Ms. Amponin.

Thus, appellants could not honestly expect an answer ti·om LAO-C

addressed direct!) to them. Since it was Ms. Amponin who forwarded it,
naturally LAO-C's answer would he directly addressed to her, not to
appellants. And since Ms. Amponin issued the NOs, it would he natural to
expect that she already received the reply, as she actually did. The NOs were
just the consequence of such reply. These procedures were internal to COA
only, as appellants correctly argued, although such argument is irrelevant. The
NOs were the result of such internal procedure. Appellants ought to know that
after issuance of the AOM, the management comments or, in their case. reply-
memorandum should be submitted and, if found unsatisfactory, issuance of
NO would f(Jllow suit. When the subject NOs were issued, appellants should
have acted accordingly in accordance with the procedures required by the
COA, paiiicularly Sections I and 2, Rule V of the then 1997 Rules of
Procedure of the COA, in force at that time, which provide:

Section I. Who May Appeal. - An aggrieved party may appeal

from an order or decision or ruling rendered by the Auditor
embodied m a report, memorandum, letter. notice of
disallowances and charges, Certitlcate of Settlement and
Balances, to the Director who has jurisdiction over the agency
under audit

Section 2. How Appeal Taken. - An appeal trom an order,

decision or ruling by the Auditor may be taken to the Director
within six ( 6) months after notification to the party of the report,
notice of disallowance and charges. Certitlcate of Settlement and
Balances, urder or decision complained ot~ by tiling with the
Auditor a l\otice of Appeal.

The second assignment of error banked on the erroneous assumption

that the certification of the DOH Secretary authorizing the ECC employees to
avail of the additional benefits under R.A. No. 7305 was the final
determination of their entitlement thereto. It is not. In the cited KMG case the
Supreme Court said:

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 Although it is the DOH which principally determines who are
specifically entitled to henefits under R.A. No. 7305. its
authority to make such determination must he in accordance With
the definition of terms and standards set in the law and its
Implementing Rules. Moreover, there is nothing in the law
which precludes review of the DOli's determination by other
government agencies such as the DBM and the COA in the
performance of their respective functions. xxx (underscoring
supplied)

Appellants" resort to the theory of Qualified Political Agency or the

"alter ego"' doctrine does not offer much help to this appeal. This doctrine
does not and can not make an act of a cabinet member more valid than it is,
nor make an invalid act valid.

The above KMC case provides an illuminating ruling on whether or not

personnel of agencies not directly engaged in health or health-related functions
arc PHWs and arc working in such conditions as to entitle them to the
additional benctits for PHWs.

In that case, the Supreme Court declared that the Social Insurance
Group (SIG) personnel of the GSIS were not PHWs as their functions were the
processing of claims of GSIS members. The Court said:

The record reveals that the functions of the SIG personnel arc
not principally related to health. The SIG personnel perform
tasks for the processing of GSIS members' claims for life
insurance, retirement, disability and survivorship benefits.
These functions are not similar to those of persons working in
health-related establishments such as clinics or medical
departments of government corporations, medical corps and
hospitals of the AFP, and the specific health service units of
government agencies. Undoubtedly, the SIG personnel cannot
be considered public health workers under R.A. No. 7305.

It was established that they performed tasks for the processing of GSIS
members' claims for life insurance, retirement, disability, and survi\l)rship
benefits and as such, they were not directly involved nor did they render actual
medical services to GSIS clientele. Thus, they were not considered PHWs.

The ECC personnel arc no different from the S!G personnel with
respect to their non-entitlement to the additional benefits under R.A. No. 7305.
in relation to their otticial duties. Both SIG and ECC personnel arc working in
government agencies that are not principally engaged in health or health-
related services. The two groups of personnel are engaged in the processing of
claims of members' benefits. With this significant and decisive similarities,

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ECC personnel should perforce he treated no difTerently as the SIG personnel.
As the Court ruled that SIG personnel are not rllWs, so, too. this
Commission. by liJrcc of correct precedent. should rule that ECC personnel -
who are not engaged in health or health-related services - such as doctors,
dentists, nurses, x-ray technicians and medical technologists, arc not Plf\Vs,
the DOH certifications notwithstanding. Significantly, the CY 2000
Certification of the DOH recognized payment of the benefits to employees
involved in the CPr and CRPP only and not to all ECC employees. Thus,
with due regard to such DOH certification, the Magna Carta Benefits may he
allowed to err and CRrr employees.

The third assigned error was suftlcicntly explained in the assailed LSS
decision, which is quoted below:

xxx The requirements mentioned in Section 38 of the MCSB

[Manual on the Certificate of Settlement and Balances] pertain to
settled accounts, or the transactions which had already been
passed in audit. However, it has been consistently settled that
technical requirements of the law may occasionally be set aside
if there appears an overwhelming ground to sustain the audit
disalhnvance, as in the case at bar. xxx

Appellants also raised the issue of estoppel with this third assigned
error, claiming that the ECC personnels' additional bendlts under R.A.
i'io. 7305 from its passage in 1993 to July 2005, were passed in audit by the
previous auditors. That argument should be rejected, as the same argument
was rejected in the aforesaid KlvfG case, thus:

xxx [r]ractJCC, no matter how long continued, cannot give rise to

any vested right if it is contrary to law. The erroneous
application and enforcement of the law by public oft!cers docs
not estop the Government ti-om making a subsequent correction
of such enors. Where the law expressly limits the grant of
certain benefits to a specified class of persons, such limitation
must be enforced even if it prejudices certain parties due to a
previous mtstake committed by public oftlcials in granting such
henctit.

This Commission has consistently observed such ruling. In COA

Decision No. 2007-045, dated November 27, 2007, it was held that:

Granting without conceding that the incentive pay under these

previously promulgated ordinances was not disallowed during
post-audit, will not work in favor of the petitioner. The maxim
that the State is not hound by the mistake of its agents is well-
entrenched in this jurisdiction.
 The f(Jurth assignment of error delves on good faith. The ECC received
several certifications from the different DOH Secretaries on the entitlement of
ECC personnel to Magna Carta Benefits. As the records show, the ECC was
already issued such certifications in 1993, 1995, 1996, 2000 and 2006.

It is important to note that NO No. 2006-003 disallowed the Magna

Carta Benefits paid in 2005. The DOH Certification issued in 2000 g<werns
such payment. Issued by then DOH Secretary Alberto G. Romualdez, Jr., the
certification limited the entitlement to the applicable Magna Carta Benefits to
the ECC personnd in the unit/s performing functions of the CPP and the
CRPP, and further directed that it is subsisting until it is repealed by the DOH
f(Jr some valid reasons.

Owing to this Certification, the ECC personnel assigned in the CPP and
CRPP are entitled to the benefits and the disallowance pertaining to these
employees may be lifted.

The other ECC personnel (non-CPP and CRPP) who received the
disallowed 2005 Magna Carta Benefits after the KMG case may be deemed in
good faith as they merely received the amounts not knowing that they are not
entitled thereto. However, the ECC of1icials who approvcdlauthori/ed the
payment to them could not honestly invoke good faith in their favor in view of
the specificity of the said DOH Certification on who, among the groups of
ECC personnel were entitled to the disallowed allowances. They cannot rely
on the I 9'!6 DOl-l Certification which was valid only for I 996 as stated
therein, and which was superseded by the 2000 Certitication.

Likewise, the defense of good faith is not available to both to the

recipients of and the ECC otlicials who approved the payment of PRAISE
Benefits disalkmed under NO No. 2006-001 and Anniversary Bonus
disallowed under ND No. 2006-004. They received the amounts and/or
approved the payment of the two benefits already knowing or being presumed
to know the irregularity of the payment. For this reason, raising the defense of
good faith will have no more tactual anchor and will just be a mere pretense
on their part.

RULING

WHEREFORE, this Commission AFFIRMS with

MODIFICATIONS, COA LSS Decision No. 2009-342 dated
November 17, 2009. ND No. 2006-003 dated November 30, 2006 disallowing
Magna Carta Benefits is hereby LIFTED as to the ECC employees
involved in the CPP and CRPP, but AFFIRMED as to the rest of employees.
llowcver, the payees need not refund the amounts they received, hut the

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ofticials who allowed/approved such payment shall he liable ti>r the
said amounts. The A TL, ECC, shall verify the list of employees involved 111
the CPP and CRPP and those who are not.

On the other hand, ND No. 2006-001 dated November 16. 2006

disallowing the PRAISE Beneiits and ND No. 2006-004 dated
December 14, 2006 disallowing the excess of the Anniversary Bonus are
AFFIRM EO in their entirety.

MA. GRAC Jr.~ULIDO TAN

abi~fe~on

H~ENDOZA
~~~~~sioncr
Copy furnished:
Attested by:
Ms. En~lyn F. Tablang

~UBICO
Deputy Executive Director
Employees Compensation Commission
FORTUNATA
Sen. Gil Puyat A venue, Makati City
DireetoYI~
The Director Commission Secretartac
Employees Compensation Commission
Sen. Gil Puyat Avenue, N1akati City

The Audit Team Leader

Employees Compensation Commission
Sen. (ill Puyat A \'Cnue, Makati City

The Cluster Director

Cluster A , Corporate Govcmment Sector

The Director
Adjudication and Legal Services Oftice
Legal Services Sector

The A~sistant Commissioners

Corporate Government Sector
Legal Services Sector

All of this Commissilm

FS/.:'Sli\'iAA E,.. FED,..rnrb

H: .\tayJ(l:L.:C'CTablang(from ivta;.'lll tile)

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