Compilation of Recent

COA Cases
(A Case Digest focusing on Personnel Services Expenditures with
list of Relevant Laws, Rules, and Regulations)

A Capstone Project of
Atty. ARNEL R. PATATAG, CPA
Atty. IV, Commission on Audit
Note

This compilation of digested audit-related cases is a Capstone Project of Atty. Arnel R. Patatag
of Commission on Audit, Regional Office No. VII, as his final requirement for his master’s
degree in development management with the Development Academy of the Philippines under
its Public Management Development Program, Middle Manager’s Class Batch 24.

Every content of this compilation is the author’s sole responsibility and neither the
Development Academy of the Philippines nor the Commission on Audit.

Compilation of digested audit case law

2022

Cover and inside content images: retrieved from google

CONTENTS

INTRODUCTION…………………………………………………………………… 6

KEY ISSUES INDEX …………………………………………………………………7

I. SUMMARY OF LEGAL PRINCIPLES………………………………………9

II. DECIDED CASES……………………………………………………………..15

1. Irene G. Ancheta, et al. vs. COA ………………………………………………...16

2. Zamboanga City Water District vs.
COA………………………………………………………………………..……….19
3. Solito Torcuator vs. COA …………………………………………………...…....20
4. Juan B. Ngalob vs. COA……………………………………………………….....22
5. PCSO vs. COA……………………………………………………………..……...25
6. Maritime Industry Authority vs. COA…………………………………….…...29
7. BFAR Employees Union of Region vs. COA……………………………….…..32
8. TESDA VS. COA…………………………………………….................................35
9. DBP vs. COA………………………………………………………………..……..36
10. DBM vs. Leones…………………………………………………………….……..38
11. Benguet State University vs. COA………………………………………..……..40
12. National Transmission Commission vs.
COA…………………………………………………………..................................42
13. Judge Dadole vs. COA…………………………………………………….….…..44
14. Ramon Yap vs. COA …………………………………………………….….……47
15. Nayong Pilipino Foundation, Inc., vs.
Pulido-Tan…………………………………………………....................................50
16. Gil G. Gawad, et. al vs. Florencio B. Abad, et. al………………………..……..53
17. DBP vs. COA……………………………………………………………..………..56
18. LBP vs. COA………………………………………………………………..……...57
19. NTC vs. COA……………………………………………………………..….…….59
20. Abellanosa et. al vs.
COA and National Housing Authority…………………………………..….….65

3
 21. Advincula, et. al vs. COA……………………………….......................................66
22. Pastrana vs. COA …………………………………………………….………..….68
23. Power Sector Assets and Liabilities
Management Corporation vs. COA………………………………………..……71
24. Guzman, et. al vs. COA……………………………………..................................75
25. Manolito P. Mendoza vs. COA……………………………………………..…....76
26. Technical Education and Skills
Development Authority vs. COA, et. al………………………………….…......77
27. Dr. Emmanuel T. Velasco, et. al vs.
COA et. al…………………………………………………………………….….…79
28. Officers and Employees of
Iloilo Government vs. COA……………………………......................................80
29. Madera vs. COA …………………………………………………………...……..83
30. NPC DAMA vs. NPC …………………………………………………...………..85

31. CSC Resolution No. 000324, Villanueva, Armando C.,

Re: Coverage of Back Salaries………………………………………..……..…...87

III. RELEVANT LAWS AND RULES ……

1. Salaries…………………………………………………………………………..92
2. Step Increments………………………………………………………………...94
3. Personnel Economic Relief Allowance……………………………………….95
4. Additional Compensation………………………………..................................95
5. Uniform/Clothing Allowance…………………………...................................96
6. Representation and Transportation Allowance……………………………..97
7. Bonuses…………………………………………………………………………..98
8. Productivity Incentive Benefit…………………………............................,......99
9. Overtime Pay and Compensatory Time-Off…………………………….…..100
10. Per Diem ……………………………………………………………….……….101
11. Honoraria……………………………………………………………….………102
12. Night-Shift Differential Pay……………………………………………….…..103
13. Hazard Duty Pay…………………………………………………………..…...103

4
14. Subsistence Allowance………………………………………………………...103
15. Laundry Allowance…………………………………………………………....104
16. Free Quarters for Certain Government Officials……………………….…...104
17. Free Quarters Privileges Hospitals…………………………………………...104
18. Anniversary Bonus………………………………………………………….….105
19. Collective Negotiation Agreement Incentive………………………….…….105
20. Terminal Leave Benefits and Monetization…………………………….……106
21. Compensation for Casual Personnel and
Those of Same Nature……………………………………………………….…107
22. COVID-19 Allowance………………………………………………………..…108
23. Magna Carta Benefits………………………………….......................................109
24. Special Hardship Allowance………………………….......................................110
25. Special Allowance…………………………………………………………...…..110
26. Phil Health Contributions…………………………………………..……….….110
27. Compensation for Government Personnel
Involved in Government Procurement……………….. …………………...…111
28. Compensation for Barangay Officials
And Personnel……………………………………………………………...…….111
29. Compensation for Ex-Officio Members
of the Local Sanggunian……………………………………………………...….111
30. Compensation for Local Regulatory Boards/
Quasi-Judicial Bodies and Barangay
Frontline Workers……………………………………………………………..…112
31. Compensation in GOCCs and GFIs……………………………………..……..112
32. Performance Based in Incentive System…………………………………..…..112
33. Service Recognition Incentive…………………………………………….....…114
34. Rehabilitation Privilege…………………………………………………….…...115
35. Provident Fund…………………………………………………………….…….115
36. Reimbursement of Basic Light and
Water Bills………………………………………………......................................115
37. Combat Duty and Incentive Pay…………………………………………..…...115

5
Introduction

The Commission on Audit fully recognizes its decade-old predicament about the inconsistent or
flipflopping interpretation by its auditors on the various auditing laws, rules, regulations, and
standards. The Commission has always been mindful of the negative implications of this
conundrum to the audited agencies, and to the country as a whole. This problem and the
finding of effective solution has always been part of the long-term strategic plan of COA. For
the present administration, it is enshrined under “GOAL B” of the 2016-2022 COA Strategic
Plan.

There have been already effective reforms and initiatives implemented by the Commission in
the past, and which are still applied at the present such as periodic training, production of
training materials, and others. Though, all these have brought about positive result, the
complaint of inconsistent interpretation remains pervading to this day.

At the present, there’s no COA reference material that heavily uses past decisions promulgated
by final authority. Believing the potential of the case law to help shape and reshape one’s
understating of the law, the author is trying to capitalize the lens of jurisprudence which he
foresees to be one effective tool towards achieving an accurate and consistent audit
interpretation among auditors, auditees, and the public administrators, in general.

Thus, this work aims to present selected cases involving personnel services (PS) digested or
synthesized into brief, concise, and easy to comprehend material for the target users. It also
presents relevant auditing laws and rules applicable to PS expenditures. This works focuses on
PS only in view of the high incidence of disallowances issued involving this object of
expenditure. This work can however be expanded to cover other important areas, such as on
procurement, unnecessary expenditures, request for relief of property accountability, and many
others.

With cases being digested, auditors will expectedly be attracted to read because they would not
waste much time and could easily find for the legal principle they need. They would be able to
see the value and importance of precedent cases as a way to strengthen and stabilize the
interpretations of auditing laws and standards, as the ultimate aim. If the auditor or the user
decides to read the full text, the copy of the link of each case is provided anyway every after
each case digest.

Certainly, reading more relevant cases will further enrich once’s grasp or interpretation
proficiency since Supreme Court decisions are great source of clarifications and exhaustive
discussions. Expectedly, the likelihood of rendering an inaccurate or inconsistent audit
interpretation will be significantly reduced.

6
 Key Topic Index

Agricultural Crisis Assistance, 83

Allowance of Judges of Courts given by LGUs, 44
Anniversary allowance, 29
Anniversary Bonus, 29, 50
Annual fee of VISA Card, 47

Back wages of illegally dismissed employees, 85

Birthday month/off month/employment date anniversary allowances, 29
Board’s Compensation, 36
Bonus (Mid-Year and Year-end), 16

Cash Gift and Extra Cash Gift, 50

Car Maintenance Allowance, 47
Christmas Groceries, 16
Cost of Living Allowance, 20

Driver’s Subsidy, 47

Economic Crisis Assistance, 83

Economic/efficiency benefit, 29
Executive Check-up, 47
Extra Cash Gift, 20, 50, 80

Fellow Ship with PCA Club Members, 47

Financial Assistance, 29
Foreign Travel Expenses, 25
Food Basket Allowance, 32

Gasoline Allowance, 47

7
H

Hazard Pay, 53
Hearing allowance, 29
Health Care Maintenance Allowance, 35

Longevity Pay, 53
Loyalty Award to rehired separated employees, 42

Medical allowance, 29
Mitigation Allowance to Municipal Employees, 83
Monetary Augmentation Allowance, 83
Monthly Allowance, 47

Incentives for special project, 22

Per diems and commutable allowances, 29

Performance Incentive Allowance, 29
Productivity Enhancement Incentive, 80
Professional Advancement Course Training, 57

RATA, 38, 87
Reimbursable representation allowance of the Board, 29
Representation Expense on a Sunday, 47
Rice allowance/Rice Subsidy, 29, 40

Separation Pay, 59
Subsistence Allowance, 53

Year-end Financial Assistance, 16

8
9
“The overarching rule is that all allowances are deemed included in the standardized salary
rate, unless excluded by law or by a DBM issuance. This rule is premised upon the distinct
policy to eliminate multiple allowances and other incentive packages, resulting in differences of
compensation among government personnel.” (Ancheta vs. COA, GR No. 236725 February 02,
2021)

“The Zamboanga City Water District Board had no authority to fill in the details of what
Memorandum Circular 174 signed by former President Arroyo may have been lacking. Its rule-
making power shall be limited to setting policies in relation to "local water supply and
wastewater disposal systems to achieve national goals and the objective of providing public
waterworks services to the greatest number at least cost”. (ZCWD vs. COA, GR No. 218374,
December 01, 2020)

“The nullity of the DBM-CCC No. 10 will not affect the validity of RA No. 6758 emphasizing the
cardinal rule on statutory construction that statutory provisions control the rules and
regulations which may be issued pursuant thereto. As such, the rules and regulations must be
consistent with and not defeat the purpose of the statute.” (Torcuator vs. COA, GR No. 210631,
March 12, 2019)

“Aside from the special project entailing rendition of additional work over and above their
regular workload, the special project should be "reform-oriented or developmental, contributes
to the improvement of service delivery and enhancement of the performance of the core
functions of the agency, and has specific timeframes and deliveries for accomplishing objectives
and milestones set by the agency for the year.” (Ngalob vs. COA, GR No. 238882, January 05,
2021)

“The power of the PCSO Board under Section 9 of RA No. 1169 (the law creating the PCSO) is
subject to pertinent civil service and compensation laws. The PCSO charter evidently does not
grant its Board the unbridled authority to set salaries and allowances of officials and
employees.” (PCSO vs. COS, GR No. 216776, April 19, 2016)

“While the DBM is delegated under Section 12 with the authority to identify such other
additional compensation over and above the standardized salary rates, it must be shown
however that the additional non-integrated allowances are given due to the unique nature of
the office and of the work performed by the employee, taking into consideration the peculiar
characteristics of each government office where performance of the same work may entail
different necessary expenses for the employee. In contrast with items (1) to (6), COLA belongs
to a different genus of allowance.” (PCSO vs. COA, GR No. 216776, April 19, 2016)

“Before the public funds may be disbursed for salaries and benefits, it must be shown that these
are commensurate to the services rendered and necessary or relevant to the functions of the
office. Additional allowances and benefits must be shown to be necessary or relevant to the
fulfillment of the official duties and functions.” (PCSO vs. COA, GR No. 216776, April 19, 2016)

“The clear policy of Section 12 is “to standardize salary rates among government personnel and
do away with multiple allowances and other incentive packages and the resulting differences in
compensation among them. Thus, the general rule is that all allowances are deemed included in
the standardized salary. Action by the DBM is not required to implement Section 12 integrating

10
allowances into the standardized salary. Rather, an issuance by the DBM is required only if
additional non-integrated allowances will be identified. Without this issuance from the DBM,
the enumerated non-integrated allowances in Section 12 remain exclusive. The integration of
the benefits and allowances is by legal fiction.” (MARINA vs. COA, GR No. 185812, January 13,
2015)

“The benefits excluded from the standardized salary rates are the "allowances" or those which
are usually granted to officials and employees of the government to defray or reimburse the
expenses incurred in the performance of their official functions.” (BFAR Employees vs. COA,
GR No. 169815, August 13, 2008)

“The Civil Service Commission Memorandum Circular No. 33 did not intend the health care
program to be a single activity or endowment to achieve a fleeting goal, for it rightfully
concerned the institutionalization of a system of healthcare for government employees. (TESDA
vs. COA, GR No. 196418, February 10, 2015)

“There are two general requisites before a benefit may be granted. First is that the allowances
and benefits were authorized by law, and second, that there was a direct and substantial
relationship between the performance of public functions and the grant of the disputed
allowances. The burden of proving the validity or legality of the grant of allowance or benefits
is with the government agency or entity granting the allowance or benefit, or the employee
claiming the same. (Yap vs. COA, GR No. 158562, April 23, 2010)

“Section 8 of the DBP Charter only mentions per diem as the compensation of the members of
its Board. It does not declare any additional benefit, other than per diems, which the said
members of the Board may receive. This rule is expressed in the familiar maxim expressio uni
us est exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it
may not, by interpretation or construction, be extended to others.” (DBP vs. COA, GR No.
221706, March 13, 2018)

“Statutory law, has consistently treated RATA as distinct from salary. Unlike salary which is
paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed
unavoidable in the discharge of office.” (DBM vs. Leones, GR No. 169726, March 18, 2010)

“For an employee not to fall under the exception in Section 3.3.1 of DBM NCC No. 67, the
functions attached to the new office must be so alien to the functions pertaining to the former
office as to make the two absolutely unrelated or non-comparable.” (DBM vs. Leones, GR No.
169726, March 18, 2010)

“R.A. No. 8292 only encompasses the freedom of the institution of higher learning to determine
for itself, on academic grounds, who may teach, what may be taught, how it shall be taught, and
who may be admitted to study. The guaranteed academic freedom does not grant an institution
of higher learning unbridled authority to disburse its funds and grant additional benefits sans
statutory basis.” (BSU vs. COA, GR No. 169637, June 08, 2007)

“Local government units may grant additional allowance to judges higher than P1,000 if the
revenues of the said city government exceed its annual expenditures since the RA 7160 did not
set a definite maximum limit.” (Dadole vs. COA, GR No. 125350, December 03, 2002)

11
“For the purpose of determining entitlement to Anniversary Bonus, the milestone year should
be reckoned from the date it became public corporation and not when the agency was
incorporated as a private corporation.” (Nayong Pilipino Foundation, Inc. vs. Pulido-Tan,
213200, September 19, 2017)

The grant of benefit by the President explicitly for a particular year is not sufficient authority for
the grant of similar benefit for the succeeding years. (Nayong Pilipino Foundation, Inc. vs.
Pulido-Tan, 213200, September 19, 2017)

“The rates of hazard pay must be at least 25% of the basic monthly salary of Public Health
Workers receiving salary grade 19 and below, and 5% receiving salary grade 20 and above. As
such, RA No. 7305 and its implementing rules noticeably prescribe the minimum rates of
hazard pay due all PHWs in the government, as is clear in the self-explanatory phrase "at least"
used in both the law and the rules.” (Gawad vs. Abad, GR No. 207145, July 28, 2015)

“The COA can cite additional basis in the notice of disallowance without violating the right to
due process because the appellants still had the opportunity to question the same through an
appeal before the Director and, subsequently, to the Commission Proper. (DBP vs. COA, GR
No. 221706, March 13, 2018)

“The true test of the necessity of the refresher course lies on who benefited from it. We believe
that both LBP and its officers gained from the refresher course. On one hand, the officers were
given an opportunity to grow professionally by acquiring eligibility in their career service, and
on the other, the bank gained a workforce with more knowledge and skills in the hope of
increasing their efficiency, whether or not the same officers pass the eligibility examination.”
(LBP vs. COA, GR No. 213424, July 11, 2017)

“The aim of the refresher course is to provide updated information on the enhancement of
managerial and verbal skills, and on the analysis and interpretation of data which can assist the
officers concerned in (1) effectively carrying out their respective duties and responsibilities, and
(2) enhancing LBP's delivery of service to its clients. These objectives of LBP in securing MSA's
service to conduct a professional advancement refresher course are clearly in line with its
mandate to provide a continuing program for career development of its personnel as laid down
in the civil service rules.” (LBP vs. COA, GR No. 213424, July 11, 2017)

“The formal approval of corporate powers must be understood to be specific to a corporation's

own board. A corporate act's validity cannot be made to rely on a resolution passed by the
board of another entity, even that of its parent company because the authority to approve
corporate transactions is purely personal to a corporation's own board. To be sure, a parent
company's board resolution authorizing the payment of benefits will not automatically redound
to its subsidiaries. The directive shall be ineffectual as to the subsidiary unless the subsidiary's
own: board separately convenes and approves it.” (Advincula vs. COA, GR No. 209712,
February 16, 2021)

“The term "all other emoluments and benefits" is intended to cover every kind of financial grant
and payment given to Power Sector Assets and Liabilities Management Corporation employees
and is thereby covered by the rule requiring Presidential approval. When the law does not
distinguish, neither should the Court.” (PSALM vs. COA, GR No. 245830, December 09, 2020)

12
“Local water districts are not private corporations but GOCCs. Being a water district, the BWD
itself is a GOCC, thus, subject to the power of control of the President.” (Guzman vs. COA, GR
No. 245274, October 13, 2020)

“The salary of a water district's general manager is covered by the SSL despite Section 23 of the
Provincial Water Utilities Act of 1973. The law grants water districts the power to fix the
compensation of their respective general managers, but it should be consistent with RA 6758 or
the "Compensation and Position Classification Act of 1989.” (Mendoza vs. COA, GR No. 195395,
September 10, 2013)

“The municipality's compensation-setting power in Section 447 of RA No. 7160 to grant

Economic Crisis Assistance, Agricultural Crisis Assistance, Mitigation Allowance to Municipal
Employees, and Monetary Augmentation of Municipal Agency cannot prevail over Section 12
of RA No. 6758 or the SSL. No law or administrative issuance, much less the [SSL], authorizes
the grant of [the] subject benefits. (Madera vs. COA, GR No. 244128, September 08, 2020)

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. In
the same vein, 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. (Madera vs. COA, GR
No. 244128, September 08, 2020)

“The Court consistently ruled that an illegally dismissed government employee is entitled to
back wages from the time of his illegal dismissal until his reinstatement because he is
considered as not having left his office.” (NPC DAMA vs. NPC (GR No. 156208, November 2017)

The award of full back wages in favor of an illegally dismissed civil service employee who was
subsequently employed in another government agency violates the constitutional prohibitions
against double compensation and double holding of government office. (NPC DAMA vs. NPC
(GR No. 156208, November 2017)

Well-settled is the rule that government employees who have illegally suspended or
terminated, or whose suspension or separation have been declared in finality as null and void
for lack of due process, are allowed to claim for backwages and other benefits due them during
the entire duration of their illegal suspension or separation. This is so because an employee
subject of illegal suspension or termination, is deemed never to have vacated or left his office
and Is, therefore entitled to whatever accrued benefits pertaining to that office, including leave
privileges and other pecuniary benefits reckoned from the date of his illegal suspension or
dismissal up to the date of his actual reinstatement." (CSC Resolution 000324, Villanueva,
Armando C., Re: Coverage of Back Salaries)

13
The entitlement to the PIB is based on actual rendition of service and the employee must have
contributed to the productivity of his office. (CSC Resolution 000324, Villanueva, Armando C.,
Re: Coverage of Back Salaries)

(CSC Resolution 000324, Villanueva, Armando C., Re: Coverage of Back Salaries)

14
15
Irene G. Ancheta, et al. vs. Commission on Audit (G.R. No. 236725 February 02, 2021)

Topic
▪ Grant of various benefits to employees of water district hired after June 30, 1989

FACTS of the CASE

Subic Water District (SWD) is a government-owned and controlled corporation (GOCC)

organized under Presidential Decree (PD) No. 1985 as amended. In 2010, it released an
aggregate amount of P3,354,123.50 worth of benefits, which include: rice allowance, medical
allowance, Christmas groceries, year-end financial assistance, mid-year bonus, and year-end
bonus for its officers and employees; and Christmas groceries for its Board of Directors. These
disbursements were disallowed in 2011 because they were granted to persons employed after
June 30, 1989, in violation of Department of Budget and Management (DBM) Corporate
Compensation Circular (CCC) No. 10 dated February 15, 1999.

DBM CCC No. 10 provides guidelines in the implementation of Republic Act (RA) No. 6758 or
the "Salary Standardization Law." The COA Audit Team particularly cited paragraph 5.5 of
DBM CCC No. 10, which enumerated the additional allowances that are not integrated in the
standardized salary rate, and allowed to be continuously given only to incumbent employees,
who are actually receiving such benefits as of June 30, 1989. Considering that the SWD officers
and employees who received the additional benefits in 2010 were employed after June 30, 1989,
the COA Audit Team concluded that the grants were unauthorized.

Upon appeal with the Regional Office, ND was sustained stating that the benefits were illegal
for violating Section 12 of RA No. 6758, which limited the grant of additional allowances only to
employees who are incumbent and receiving such benefits as of July 1, 1989.

The appellant went to the Supreme Court and raised the following issues:

ISSUES

a. Was SWD already covered by RA 6758 when the 2010 benefits were granted?

b. Was the disallowance of the 2010 benefits proper?

RULING

a. Yes. RA No. 6758 took effect on July 1, 1989 to standardize the salary rates of
government officials and employees, amending PD No. 985 and PD No. 1597. Section 12 of RA
No. 6758 provides:

SEC. 12. Consolidation of Allowances and Compensation. -All allowances, xxx.

Such other additional compensation, whether in cash or in kind, being received
by incumbents only as of July 1, 1989 not integrated into the standardized salary
rates shall continue to be authorized. (Emphasis supplied.)

16
 Hence, at present, the overarching rule is that all allowances are deemed included in the
standardized salary rate, unless excluded by law or by a DBM issuance. This rule was premised
upon the distinct policy to eliminate multiple allowances and other incentive packages,
resulting in differences of compensation among government personnel.

Nonetheless, due to the inequity and injustice that RA No. 6758 may cause to
incumbents, the legislature cushioned its effect and adopted the policy of non-diminution of
pay as embodied under Sections 12 and 17 of RA No. 6758. The second sentence of Section
12 allows government workers to continue receiving non-integrated remuneration and benefits
provided that: (1) they were incumbents when RA No. 6758 took effect on July 1, 1989; (2) they
were actually receiving such benefits as of that date; and (3) such additional compensation is
distinct and separate from the specific allowances enumerated in the first sentence of Section
12. As well, Section 17 states:

SEC. 17. Salaries of Incumbents. --Incumbents of positions presently receiving

salaries and additional compensation/fringe benefits including those absorbed
from local government units and other emoluments, the aggregate of which
exceeds the standardized salary rate as herein prescribed, shall continue to
receive such excess compensation, which shall be referred as transition
allowance. The transition allowance shall be reduced by the amount of salary
adjustment that the incumbent shall receive in the future. (Emphasis supplied.)

Coverage of RA No. 6758: Section 4 of RA No. 6758 provides that its provisions "shall
apply to all positions, appointive or elective, on full or part-time basis, now existing and
hereafter created in the government, including [GOCCs] and government financial
institutions." SWD is a GOCC with a special charter, created and organized pursuant to PD No.
198, which took effect in 1973.

Thus, it is erroneous for petitioners to insist that SWD became a GOCC only on March
12, 1992 or after the finality of the Court's decision in Davao City Water District. The
decision of the Court merely interpreted PD No. 198 in declaring LWDs as GOCCs. The Court's
interpretation constitutes part of the law, effective from the date it was originally passed,
because it merely established the contemporaneous legislative intent that the interpreted law
carried into effect. Accordingly, upon its creation by PD No. 198, SWD was already a GOCC
covered by RA No. 6758 effective July 1, 1989. The only exception to the extensive coverage of
the Salary Standardization Law is when the GOCC's charter specifically exempts the
corporation from it. In the case of LWDs, there is no provision in PD No. 198, as amended,
which exempts them from RA No. 6758's application. However, it was clarified that only LWD
officers and employees are covered by RA No. 6758. It is obvious that RA No. 6758 does not
apply to directors of water districts as their functions are in fact limited to policy-making and
are prohibited from the management of the districts.

Second issue:

b. Yes, the disallowance was proper. As to the rice allowance, medical allowance,
Christmas groceries, year-end financial assistance, mid-year bonus, and year-end bonus granted
to SWD officers and employees:

17
 By virtue of the authority given to the DBM under the first sentence of Section 12 of RA
No. 6758, DBM CCC No. 10 was issued. Sub-paragraphs 5.4 and 5.5 of DBM CCC No. 10
allowed the grant of benefits, other than those specifically enumerated in the first sentence of
Section 12, conditioned upon the incumbency requirement and the authority from the DBM,
Office of the President, or other legislative issuances. Among those listed are rice' subsidy and
medical benefits. Petitioners are, however, not incumbents as of July 1, 1989.

We stress that the Court has consistently construed the qualifying date to be July 1, 1989
or the effectivity date of RA No. 6758, in determining whether an employee was an incumbent
and actually receiving the non-integrated remunerations to be continuously entitled to
them. Accordingly, the DBM Letters, which authorized the grant of these disallowed
benefits as an established practice since December 31, 1999 were erroneous and cannot
be relied upon. Petitioners cannot, by their own interpretation, change the meaning and intent
of the law.

In Agra v. Commission on Audit, it was ordained that "if a benefit was not yet existing
when the law took effect on July 1, 1989, there is nothing to continue and no basis for applying
the policy of non-diminution of pay." Hence, the COA did not commit grave abuse of discretion
in disallowing the rice subsidy and medical allowance that the non-incumbent petitioners
received.

On the other hand, the Christmas groceries, year-end financial assistance, mid-year
bonus, and year-end bonus are not excluded from the standardized salary under the first
sentence of Section 12 of RA No. 6758 or under any DBM issuance. Petitioners could not
cite any specific authority for their grant except the DBM Letters. Again, these Letters are not
the authority contemplated in RA No. 6758 because they were merely advisory opinions, which
do not have the force and effect of a valid rule or law considering that they went beyond the
scope of the statutory authority that they were supposed to implement by arbitrarily
prescribing a different date to replace that which the legislature fixed. To be sure, the invoked
DBM Letters cannot legitimize the grant of benefits beyond what was authorized by the law.
Thus, the grant of the Christmas groceries, year-end financial assistance, mid-year bonus,
and year-end bonus to SWD's officers and employees, being based on mere advisories, are
unauthorized and appropriately disallowed regardless of incumbency.

As to the Christmas groceries granted to the Board of Directors:

As earlier intimated, RA No. 6758 does not apply to LWD board of directors. As such,
the additional compensation given to the SWD Board of Directors is governed under PD No.
198, as amended by RA No. 9286. Section 13 of PD No. 198, as amended by RA No. 9286,
allows the grant of allowances and benefits to LWD directors, in addition to the per diems
that they receive as compensation, subject to the board's prescription and the approval
of the Local Water Utilities Administration (LWUA). However, no board resolution or LWUA
approval for the additional benefits o SWD directors was alleged or proved in this case. Thus,
the grant of such benefits to the Board of Directors was unauthorized and properly disallowed.

Full text of the case law

https://sc.judiciary.gov.ph/19831/

18
Zamboanga City Water District vs. COA (G.R. No. 218374, December 01, 2020)

Topic
▪ Grant of financial subsidy to the water districts’ officials and employees

FACTS of the CASE

Pursuant to MC 174 signed by former Pres. Arroyo calling all government agencies, including
GOCCs to support the Philippine Government Employees Association's public sector agenda.
The MC specifically provides:

In view thereof, all government agencies, including GOCCS, State Universities and Colleges are
hereby enjoined to the following to their employees:

• Shuttle service
• Financial subsidy and other needed support to make the Botika ng Bayan more
accessible to them
• Scholarship programs for their children with siblings
• PX mart that sell affordable commodities and the provision of its seed fund

The ZCWD Board then granted a financial subsidy in favor of ZCWD officials and employees
equivalent to one (1) month salary irrespective of the nature of their appointments, provided
they satisfy the service requirements under the guidelines set by the Board itself.

Later, as a result of the audit investigation, the COA audit team found that the subject
disbursement violated Section 57 of RA 9524, otherwise known as the General Appropriations
Act of 2009 (2009 GAA). The financial subsidy was disallowed and the audit team ordered the
ZCWD officers and employees to refund the amounts that they received.

ZCWD appealed the disallowance. The audit team’s decision was upheld by the COA Regional
Director. The COA Proper affirmed the COA Regional Director’s ruling, holding that contrary
to the mandate of ZCWD Board Resolution No. 206, MC 174 did not authorize any direct
payment to the employees.

ISSUE

Whether or not the disallowance of financial subsidy paid to ZCWD employees was proper.

RULING

Yes, the disallowance was proper.

ZCWD Board had no authority to fill in the details of what MC 174 may have been lacking. Its
rule-making power shall be limited to setting policies in relation to "local water supply and
wastewater disposal systems to achieve national goals and the objective of providing public

19
waterworks services to the greatest number at least cost. As things presently stand, there is no
law supporting the Board's self-determination of the financial subsidy amount. Thus, their
decision to grant and pay the subject financial subsidy was made ultra vires, which renders the
subsequent disbursement illegal.

Parenthetically, even the amount so granted by the Board—a full month's salary—finds no basis
in law. First, MC 174 granted the financial subsidy to enable government employees to gain
more access to the Botika ng Bayan and to low-cost medicine. A month's salary, especially those
received by high-ranking officials, appears to be disproportionate to the medicine purchases
envisioned by the circular and incoherent to its overall objective. Second, the subject subsidy
may be considered as a form of medical benefit, which is typically subject to the limits set by
applicable laws. Letter of Implementation No. 97, s. 1979, for instance, provides a cap of
"P2,500.00 per annum per official/employee."

Thus, even if the Court brushes aside the ultra vires character of Board Resolution. No. 206, the
subject disbursement may still be disallowed for being unnecessary and/or excessive.

Full text of the case law

https://lawphil.net/judjuris/juri2020/dec2020/gr_218374_2020.html

Solito Torcuator, Polomolok Water District, and Employees of the Polomolok Water
District vs. Commission on Audit (G.R. No. 210631, March 12, 2019)

Topic
▪ Granting of benefits during the period when the implementing rules of RA No.
6758 was declared ineffective

FACTS of the CASE

The case was a petition for certiorari which seeks to annul and set aside the COA Decision and
Resolution on the various Notices of Disallowance pertaining to the medical, food and rice
allowances as well as cost of living allowance (COLA) which were received by the employees of
the Polomok Water District (PWD), a government and controlled-corporation.

The above-mentioned benefits which were enjoyed by the employees prior to November 1, 1989
were discontinued under Republic Act No. 6758. The DBM also issued Corporate
Compensation Circular No. 10 which provides for the discontinuance of the all allowances and
fringe benefits including the COLA, of government officers and employees over and above their
basic salaries starting July 1, 1989. Thus, PWD then stopped paying its officers and employees.
However, with the promulgation of De Jesus v COA in August 12, 1998 stating that CCC No. 10
was ineffective due to its non-publication and was only reissued and properly published on
February 15, 1999, PWD issued a Board Resolution authorizing the payment of COLA and other
allowances for the period 1992-1999 which were released in 2006 on staggered basis.

20
Thus, four Notices of Disallowance were issued which were sustained by the COA Region XII
and the COA Proper.

First, for the payment of medical, food gift, and rice allowances,

Second, for the payment of year-end financial assistance, cash gift, and extra cash gift for
calendar year 2005,

Third, for the payment of the down payment of one unit L-300 van, and

Fourth, for the payment of the COLA.

ISSUE

Whether or not the above benefits and allowances were properly disallowed.

RULING

Yes. It held that Section 12 of RA 6758 is self-executory which was explained in the case of
Maritime Industry Authority v COA. It stated that as a general rule, all allowances are deemed
included in the standardized salary but some allowances may be given in addition to the
standardized salary such as 1) representation and transportation allowances; 2) clothing and
laundry allowances; 3) subsistence allowance of marine officers and crew on board government
vessels; 5) hazard pay; and 6) allowances of foreign service personnel stationed abroad.

Further, DBM was delegated with the authority to identify other allowances that may be given
to government employees on top of the standardized salary.

The court held in Philippine International Trading Corporation v COA that the nullity of the
DBM-CCC No. 10 will not affect the validity of RA No. 6758 emphasizing the cardinal rule on
statutory construction that statutory provisions control the rules and regulations which may be
issued pursuant thereto. As such, the rules and regulations must be consistent with and not
defeat the purpose of the statute.

Further, in NAPOCOR Employees Consolidated Union, et at v. National Power Corporation, et

al., the court held that while DBM CCC No. 10 was nullified, nowhere in the De Jesus decision
suggest the suspension of the effectivity of RA 6758 pending the publication of DBM-CCC No.
10 in the Official Gazette. Also, it was held in Gutierrez case that COLA is deemed
integrated in the standardized salary rates of the government employees under the general rule
of integration.

Verily, the Court has consistently held that Sec. 12 of R.A. No. 6758 is valid and self-executory
even without the implementing rules of DBM-CCC No. 10. The said provision clearly states that
all allowances and benefits received by government officials and employees are deemed
integrated in their salaries. As applied in this case, the COLA, medical, food gift, and rice
allowances are deemed integrated in the salaries of the PWD officers and employees. Petitioners

21
could not cite any specific implementing rule, stating that these are non-integrated allowances.
Thus, the general rule of integration shall apply.

Full text of the case law

https://lawphil.net/judjuris/juri2019/mar2019/gr_210631_2019.html

Juan B. Ngalob VS. Commission on Audit (G.R. No. 238882, January 05, 2021)

Topic
▪ Grant of incentives to compensate extra work perform

FACTS of the CASE

On August 28, 2009, the Cordillera Administrative Region (CAR) - Regional Development
Council (ROC) Executive Committee (ExCom), thru petitioner Juan B. Ngalob (Ngalob), issued
RDC ExCom Resolution No. 73,4 authorizing the grant of incentives covering January to June
2008, and quarterly releases for the third and fourth quarters of 2009 to compensate RDC-CAR
officials and secretariat's "extra work" in implementing the RDC-CAR Work Program on
Development and Autonomy. The CAR-RDC disbursed P1,095,000.00 for this purpose.

Similarly, on December 10, 2010, the RDC ExCom issued Resolution No. CAR-103, providing
for a year-end incentive to its officers and secretariat, in lieu of honoraria from the ROC
Regional Development and Autonomy Fund, to recognize the considerable responsibilities and
tasks related to regional autonomy that they undertook over and above their regular functions.
This time, P1,080,000.00 was disbursed.

Upon audit, both of these incentives amounting to P1,095,000.00 and P1,080,000.00 for lack of
legal basis.

The disallowance was sustained by the Regional Office ruling that the social preparation of the
CAR for autonomy is not an additional task, but a regular function of the RDC-CAR because it
is in line with one of the functions of the RDCs under Section 4 (j) of EO No. 325, i.e., to
"perform other related functions and activities as may be necessary to promote and sustain the
socio-economic development of the regions."

The COA Regional Office also affirmed that there was no appropriation for incentives or
honoraria in the RDC-CAR's PS account under the 2009 and 2010 GAAs; hence, the incentives
were illegally charged against the agency's MOOE. Further, the COA-CAR observed that while
the RDC-CAR asserted that the incentives were given in lieu of honoraria, the basic
requirements set forth for the grant of honoraria under Section 46(e) of the 2009 GAA and
Section 49(e) of the 2010 GAA were not complied with. Aside from its general allegation that the
incentives were gauged against factors provided in DBM Circular No. 2007-2, the RDC-CAR did
not present proof of the approved plan of activities for the alleged special project and proof of

22
target accomplishment and deliverables to support the grant of incentives. Lastly, the COA-
CAR ruled that the RDC-CAR has no authority to grant additional allowances, incentives, or
compensation.

The petitioner went to the Supreme Court after their petition before the Commission Proper
was denied.

ISSUE

Were the disallowances proper?

RULING

Yes. At the outset, we emphasize the basic rule that the burden of proving the validity or
legality of the grant of allowance, benefits, or compensation is with the government agency or
entity granting, or the employee claiming them. Here, petitioners cite DBM Circular No. 2007-2
and DBM Circular No. 2007-510 as authorization to grant incentives to their employees and
officials for a special project that was allegedly undertaken. They argue that the mandate to
pursue social preparation in the CAR for regional autonomy is a special project because it is not
a part of the RDC-CAR's regular and permanent functions, entitling its officials and employees
to additional incentives.

Petitioners are mistaken. The general averment of "pursuing social preparation of the CAR into
an autonomous region" does not suffice to prove that a "project" was undertaken to warrant
disbursements for the payment of honoraria.

Paragraph 2.2 of DBM Circular No. 2007-2 defines a "special project" as "a duly
authorized inter-office or intra-office undertaking of a composite group of government officials
and employees which is not among the regular and permanent functions of their respective
agencies. Such undertaking x x x is reform-oriented or developmental in nature, and is
contributory to the improvement of service delivery and enhancement of the performance of the
core functions of an agency or member agencies." Conformably, under the Administrative Code
of 1987, a "project" is defined as "a component of a program covering a homogenous group of
activities that results in the accomplishment of an identifiable output," while a "'program' refers
to the functions and activities necessary for the performance of a major purpose for which a
government agency is established. “Paragraph 4.3 of DBM Circular No. 2007-2 is explicit in
requiring that a special project plan should be "prepared in consultation with all personnel
assigned to a project and approved by the department/agency/lead agency head which must
contain specific details as provided therein.

Moreover, paragraph 4.5 of DBM Circular No. 2007-2 was emphatic in requiring that payment
of honorarium shall be made only upon completion and acceptance by the agency head of the
deliverable per project component. Similar conditions for the grant of honoraria to officials and
employees assigned to special projects are imposed in the 2009 and 2010 GAAs, i.e., aside from

23
the special project entailing rendition of additional work over and above their regular
workload, the special project should be "reform-oriented or developmental, contribute[s] to the
improvement of service delivery and enhancement of the performance of the core functions of
the agency, and ha[s] specific timeframes and deliveries for accomplishing objectives and
milestones set by the agency for the year; x x x."

In this case, while petitioners put forward an identifiable output, i.e., to socially prepare the
CAR for regional autonomy, only general principles on the concept of special project and
honorarium were presented. Petitioners did not show any approved plan of activities or
undertakings for the accomplishment of such goal. Despite several opportunities before the
Audit Team, the COA-CAR, the COA Proper, and even before this Court, the RDC-CAR
consistently disregarded its burden to prove the validity or legality of the disallowed incentives
by failing to present an approved special project plan in accordance with paragraph 4.3 of DBM
Circular 2007-2. Thus, absent a specific project and its supporting documents contemplated
under the rules, we find no reason and basis to rule on whether such project can be considered
as a regular function of the RDC-CAR.

Furthermore, even assuming that a legitimate special project was undertaken, the RDC-CAR
failed to present a transparent and fair "performance evaluation plan that considers timeliness,
quality outputs, and other applicable work efficiency determinants," required under paragraph
4.7 of DBM Circular No. 2007-2 to be the basis of the computation of the "honoraria." The 2009
and 2010 GAAs mandated that "the rate of honoraria be dependent upon] the level of
responsibilities, nature of work rendered, and extent of individual contribution to produce the
desired outputs: PROVIDED, that [the] total honoraria received from all special projects shall
not exceed 25% of the annual basic salaries." Petitioners failed to adduce evidence of
accomplishments or deliverables upon which the computation of incentives may have been
based. Interestingly, RDC ExCom Resolution No. CAR-103 itself required the RDC secretariat to
make a determination of the incentives on the basis of additional tasks given to the RDC staff
and officers, the burden of accountability, and other criteria that the secretariat head deemed
appropriate. Yet, the records bare no proof that the secretariat complied with such
determination before petitioners-officers approved and certified the release of the incentives
granted.

What is more, the COA appropriately observed that the disallowed incentives were illegally
charged against the agency's MOOE as there was no specific appropriation in the RDC-CAR's
PS account under the 2009 and 2010 GAAs for the payment of honoraria or incentives to officers
and employees assigned to a special project. All government agencies were prescribed to use
the NGAS effective January 1, 2002 under COA Circular No. 2001-004.The NGAS Manual
provides that "basic pay, all authorized allowances bonus, cash gifts, incentives and other
personnel benefits of officials and employees of the government" are expenses chargeable
against the agency's PS account, not the MOOE, which only "include expenses necessary for the
regular operations of an agency like, among others, travelling expenses, training and seminar
expenses, water, electricity, supplies expense, maintenance of property, plant and equipment,

24
and other maintenance and operating expenses." Concomitantly, DBM Circular No. 2007-2
provides that the amounts necessary for payment of honoraria shall be "charged against [the
national government agencies' respective appropriations in the annual GAA." As well, DBM
Circular No. 2007-510 provides that the honoraria should be "charged against the
appropriations for the purpose in the annual GAA." Thus, the COA correctly ruled that these
DBM circulars necessarily required that there should have been a specific appropriation for
incentives or honoraria under the RDC-CAR's PS account in the 2009 and 2010 GAAs. This is
consistent with Section 29(1), Article VI of the 1987 Constitution which firmly declares that "[n]o
money shall be paid out of the Treasury except in pursuance of an appropriation made by law."
We have explained before that this constitutional edict requires that the GAA be purposeful,
deliberate, and precise in its provisions and stipulations. The requirement under the DBM
circulars that the amounts to fund the honoraria were to be appropriated by the GAA only
meant that such funding must be purposefully, deliberately, and precisely included in the GAA.
Hence, Section 57 of the 2009 GAA and Section 5845 of the 2010 GAA state that even the grant
of personnel benefits authorized by law shall be deemed unauthorized if not supported by
specific appropriations.

Full text of the case law

https://lawphil.net/judjuris/juri2021/jan2021/gr_238882_2021.html

Philippine Charity and Sweepstakes Office vs. Commission on Audit (G.R. No. 216776,
April 19, 2016)

Topic
▪ Grant of COLA to PCSO employees based on BOD Resolution which was
approved by an Executive Secretary, an alter-ego of the President

FACTS of the CASE

In 2010, the PCSO released the sum of P381,545.43 to all qualified officials and employees of its
Nueva Ecija Provincial District Office based on the Resolution promulgated by the PCSO Board
Directors approving the payment of monthly cost of living allowance (COLA) to its officials and
employees for a period of three (3) years in accordance with the Collective Negotiation
Agreement. A year after, then Executive Secretary Paquito N. Ochoa, Jr. confirmed the benefits
and incentives provided for in the Resolution but with a directive to the PCSO to strictly abide
by E.O. No. 7 that imposed a moratorium on any grant of new or increase in the salaries and
incentives until specifically authorized by the President

The amount was then disallowed in audit on the grounds that it is contrary to the Department
of Budget and Management (DBM) Circular No. 2001-03 dated November 12, 2001 and it
amounts to double compensation that is prohibited under the 1987 Constitution.

25
The PCSO appealed contending, among others, that (1) The PCSO Board of Directors is
authorized under Sections 6 and 9 of R.A. No. 1169, as amended, to fix salaries and to determine
allowances, bonuses, and other incentives of its officers and employees; and (2) Executive
Secretary Ochoa, Jr. approved the grant of benefits and incentives previously given to the PCSO
officials and employees and such post facto approval/ratification by the Office of the President is
enshrined in Article VII Section 17 of the 1987 Constitution in relation to Book III Section 1 of
the Administrative Code of 1987.

ISSUE

Whether the authority of the PCSO Board under its charter on the fixing of salaries, reasonable
allowances, bonuses, and other incentives suffices to grant a COLA.

RULING

No. Sections 6 and 9 of R.A. No. 1169, as amended, cannot be relied upon by the PCSO to grant
the COLA. Section 6 merely states, among others, that fifteen percent (15%) of the net receipts
from the sale of sweepstakes tickets (whether for sweepstakes races, lotteries, or other similar
activities) shall be set aside as contributions to the operating expenses and capital expenditures
of the PCSO. Also, Section 9 loosely provides that among the powers and functions of the PCSO
Board of Directors is "to fix the salaries and determine the reasonable allowances, bonuses and
other incentives of its officers and employees as may be recommended by the General Manager
x x x subject to pertinent civil service and compensation laws." The power of the PCSO Board
under Section 9 of RA No. 1169 (the law creating the PCSO) is subject to pertinent civil service
and compensation laws. The PCSO charter evidently does not grant its Board the unbridled
authority to set salaries and allowances of officials and employees. On the contrary, as a GOCC,
it was expressly covered by P.D. No. 985 or "The Budgetary Reform Decree on Compensation and
Position Classification of 1976," and its 1978 amendment, P.D. No. 1597, and mandated to comply
with the rules of then, Office of Compensation and Position Classification (OCPC) under the
DBM.

Even if it is assumed that there is an explicit provision exempting the PCSO from the OCPC
rules, the power of the Board to fix the salaries and determine the reasonable allowances,
bonuses and other incentives was still subject to the DBM review. In Intia, Jr. v. COA, the Court
stressed that the discretion of the Board of Philippine Postal Corporation on the matter of
personnel compensation is not absolute as the same must be exercised in accordance with the
standard laid down by law, i.e., its compensation system, including the allowances granted by
the Board, must strictly conform with that provided for other government agencies under R.A.
No. 675816 in relation to the General Appropriations Act. To ensure such compliance, the
resolutions of the Board affecting such matters should first be reviewed and approved by the
DBM pursuant to Section 6 of P.D. No. 1597. Following Intia, Jr., We subsequently ruled in Phil.
Retirement Authority (PRA) v. Buñag:

In accordance with the ruling of this Court in Intia, we agree with petitioner PRA that these
provisions should be read together with P.D. No. 985 and P.D. No. 1597, particularly Section 6
of P.D. No. 1597. Thus, notwithstanding exemptions from the authority of the Office of
Compensation and Position Classification granted to PRA under its charter, PRA is still

26
required to 1) observe the policies and guidelines issued by the President with respect to
position classification, salary rates, levels of allowances, project and other honoraria, overtime
rates, and other forms of compensation and fringe benefits and 2) report to the President,
through the Budget Commission, on their position classification and compensation plans,
policies, rates and other related details following such specifications as may be prescribed by
the President.

Despite the power granted to the Board of Directors of PRA to establish and fix a compensation
and benefits scheme for its employees, the same is subject to the review of the Department of
Budget and Management. However, in view of the express powers granted to PRA under its
charter, the extent of the review authority of the Department of Budget and Management is
limited. As stated in Intia, the task of the Department of Budget and Management is simply to
review the compensation and benefits plan of the government agency or entity concerned and
determine if the same complies with the prescribed policies and guidelines issued in this
regard. The role of the Department of Budget and Management is supervisorial in nature, its
main duty being to ascertain that the proposed compensation, benefits and other incentives to
be given to PRA officials and employees adhere to the policies and guidelines issued in
accordance with applicable laws.

The rationale for the review authority of the Department of Budget and Management is
obvious. Even prior to R.A. No. 6758, the declared policy of the national government is to
provide "equal pay for substantially equal work and to base differences in pay upon substantive
differences in duties and responsibilities, and qualification requirements of the positions." To
implement this policy, P.D. No. 985 provided for the standardized compensation of government
employees and officials, including those in government-owned and controlled corporations.
Subsequently, P.D. No. 1597 was enacted prescribing the duties to be followed by agencies and
offices exempt from coverage of the rules and regulations of the Office of Compensation and
Position Classification. The intention, therefore, was to provide a compensation standardization
scheme such that notwithstanding any exemptions from the coverage of the Office of
Compensation and Position Classification, the exempt government entity or office is still
required to observe the policies and guidelines issued by the President and to submit a report to
the Budget Commission on matters concerning position classification and compensation plans,
policies, rates and other related details. This ought to be the interpretation if the avowed policy
of compensation standardization in government is to be given full effect. The policy of "equal
pay for substantially equal work" will be an empty directive if government entities exempt from
the coverage of the Office of Compensation and Position Classification may freely impose any
type of salary scheme, benefit or monetary incentive to its employees in any amount, without
regard to the compensation plan implemented in the other government agencies or entities.
Thus, even prior to the passage of R.A No. 6758, consistent with the salary standardization laws
in effect, the compensation and benefits scheme of PRA is subject to the review of the DBM.

ISSUE

Whether the COLA is considered as an allowance that is excluded from the standardizes salary
rates of the PCSO officials and employees.

27
RULING

No. Upon the effectivity of R.A. No. 6758 (or the Position and Classification Act of 1989),
GOCCs like the PCSO are included in the Compensation and Position Classification System
because Section 16 of the law repeals all laws, decrees, executive orders, corporate charters, and
other issuances or parts thereof, that exempt agencies from the coverage of the System, or that
authorize and fix position classification, salaries, pay rates or allowances of specified positions,
or groups of officials and employees or of agencies, which are inconsistent with the System.

As per section 12 of RA No. 6758, all kinds of allowances are integrated into the prescribed
standardized salary rates except:

(1) representation and transportation allowances (RATA);

(2) clothing and laundry allowances;
(3) subsistence allowance of marine officers and crew on board government
vessels;
(4) subsistence allowance of hospital personnel;
(5) hazard pay;
(6) allowance of foreign service personnel stationed abroad; and
(7) such other additional compensation not otherwise specified in Section 12 as
may be determined by the DBM.

Since the COLA is not among those expressly excluded from integration by R.A. No. 6758, it
should be considered as deemed integrated in the standardized salaries of the PCSO officials
and employees under the general rule of integration.

While the DBM is delegated under Section 12 with the authority to identify such other
additional compensation over and above the standardized salary rates, it must be shown
however that the additional non-integrated allowances are given due to the unique nature of
the office and of the work performed by the employee, taking into consideration the peculiar
characteristics of each government office where performance of the same work may entail
different necessary expenses for the employee. In contrast with items (1) to (6), COLA belongs
to a different genus of allowance.

Third Issue. Whether the post facto approval of the executive secretary cures the defect of the
illegality of the disbursement.

RULING

No. Section 29(1), Article VI of the 1987 Constitution provides, no money shall be paid out of
the Treasury except in pursuance of an appropriation made by law.

Further, before public funds may be disbursed for salaries and benefits, it must be shown that
these are commensurate to the services rendered and necessary or relevant to the functions of
the office. Additional allowances and benefits must be shown to be necessary or relevant to the
fulfillment of the official duties and functions.

28
In Yap v. Commission on Audit, the Court laid down two general requisites before a benefit may
be granted. First is that the allowances and benefits were authorized by law, and second, that
there was a direct and substantial relationship between the performance of public functions and
the grant of the disputed allowances. The burden of proving the validity or legality of the grant
of allowance or benefits is with the government agency or entity granting the allowance or
benefit, or the employee claiming the same.

In this petition, the Court cannot rule on the validity of the alleged post facto approval by the
Office of the President. The PCSO failed to prove its existence since no documentary evidence,
original copy or otherwise, was submitted before Us. Even so, where there is an express
provision of the law prohibiting the grant of certain benefits, the law must be enforced even if it
prejudices certain parties on account of an error committed by public officials in granting the
benefit.

Full text of the case law

https://www.chanrobles.com/cralaw/2016aprildecisions.php?id=343

Maritime Industry Authority vs. Commission on Aduit (GR No. 185812, January 13,
2015)

Topic
▪ Grant of Rice and Medical Allowance, Allowances of Board Members and
Secretary, Representation Allowance of Board Members and Secretary,
Performance Incentive Allowance, Birthday and Employment Anniversary Bonus,
Anniversary Allowance

FACTS of the CASE

On September 30, 1989, the DBM issued National Compensation Circular Nos. 56 and
59 implementing Republic Act No. 6758. Maritime Industry Authority (MARINA), an attached
agency of the Department of Transportation and Communication and created under
Presidential Decree No. 474, then discontinued the grant of several allowances and incentives to
its officials and employees allegedly due to the issuance of this national compensation circular.

In the memorandum dated February 10, 2000, the Administrator of MARINA

recommended to then President Estrada the approval and/or restoration of financial incentives,
benefits, or allowances to its officers and employees. The allowances and incentives received by
the employees and officers as of the date of the memorandum and needing approval of the
President are the following:

(1) Per diems and commutable allowance received by the members of the
Board;
(2) Rice subsidy allowance; and

29
 (3) Medical allowance.

The allowances and incentives sought to be restored are the following:

1) Reimbursable representation allowance for members of the Board;

2) Performance incentives allowance
3) Economic/efficiency/financial assistance/benefit;
4) Hearing allowance; and
5) Birthday month/off month/employment date anniversary allowances.

The request to restore these benefits or allowances was premised on "inflation-

caused difficulties resulting to the exodus of technically/specially trained personnel into
the private sector or abroad who shall carry on the delicate and unique functions of the
agency and in consideration of the additional functions of the agency. The request to
restore was also made to "further enhance/provide/promote employees’
welfare/productivity and deter graft and corruption activities.

The memorandum was then allegedly stamped with "approved" on October 16, 2000
with the signature of the President of the Philippines below the stamp.22 Relying on the alleged
approval of the President of the Philippines, Maritime Industry Authority granted the
allowances and incentives to its officers and employees starting January 2001.23

COA then issued the notices of disallowance with a total amount of 5,565,445.02 for the
following allowances or benefits received by the officers or employees from January to May
2001:

1. Rice and Medical Allowance

2. Allowances of Board Members and Secretary
3. Representation Allowance of Board Members and Secretary
4. Performance Incentive Allowance
5. Birthday and Employment Anniversary Bonus
6. Anniversary Allowance

COA said that it constituted double compensation to public officers and employees
proscribed by Article IX(b) of the 1987 Constitution, in relation to Section 229 of the
Government Accounting and Auditing Manual or GAAM Volume 1.

Maritime Industry Authority argues that the allowances and incentives granted to its
officers and employees are not integrated in the standardized salary relying on the last clause of
the first sentence of Section 12 of Republic Act No. 6758, thus

“Section 12. Consolidation of Allowances and Compensation. - All allowances,

except for representation and transportation allowances; clothing and laundry
allowances; subsistence allowance of marine officers and crew on board government
vessels and hospital personnel; hazard pay; allowances of foreign service personnel
stationed abroad; and such other additional compensation not otherwise specified herein
as may be determined by the DBM, shall be deemed included in the standardized salary
rates herein prescribed. xxx.”

30
MARINA insists that a circular must be issued by the DBM for a specific allowance to be
deemed integrated in the standardized salary.

ISSUE

Whether the disallowance proper.

RULING

Yes. The clear policy of Section 12 is “to standardize salary rates among government personnel
and do away with multiple allowances and other incentive packages and the resulting
differences in compensation among them. Thus, the general rule is that all allowances are
deemed included in the standardized salary. Action by the DBM is not required to implement
Section 12 integrating allowances into the standardized salary. Rather, an issuance by the DBM
is required only if additional non-integrated allowances will be identified. Without this issuance
from the DBM, the enumerated non-integrated allowances in Section 12 remain exclusive. The
integration of the benefits and allowances is by legal fiction.

The disallowed benefits and allowances were not excluded by law or an issuance by the DBM.
Thus, these were deemed already given to the officials and employees when they received their
basic salaries. Their receipt of the disallowed benefits and allowances was tantamount to double
compensation.

MARINA also contended that since that NCC Circular is invalid for not being published, hence
will result in the in the non-integration of allowances in the standardized salary.

The Supreme Court did not agree ruling that the non-publication of NCC No. 59 will not affect
the execution of Section 12 of Republic Act No. 6758. The validity of R.A. No. 6758 should not
be made to depend on the validity of its implementing rules.

(Note: The Memorandum dated February 10, 2000 of the Administrator of MARINA was allegedly
stamped with “approved” on October 16, 2000 with the signature of the President of the Philippines
below the stamp. But this was not honored by the SC because MARINA failed to prove its existence. The
alleged approval contained in a mere photocopy. The original was not presented during the proceedings.
A copy of the document is not in the Malacañang Records Office.)

Full text of the case law

https://www.chanrobles.com/cralaw/2015januarydecisions.php?id=92

31
BFAR Employees Union of Region VII vs. COA (GR No. 169815, August 13, 2008)

Topic
▪ Grant of food basket allowance to BFAR employees upon authority of the
Undersecretary of the Department of Agriculture

FACTS of the CASE

On October 18, 1999, petitioner BFAR Employees Union, Regional Office No. VII, Cebu
City issued Resolution No. 01, series of 1999 requesting the BFAR Central Office for a Food
Basket Allowance. It justified its request on the high cost of living, i.e., "the increase in prices of
petroleum products which catapulted the cost of food commodities, has greatly affected the
economic conditions and living standard of the government employees of BFAR Region VII and
could hardly sustain its need to cope up with the four (4) basic needs, i.e., food, shelter, clothing
and education.

It also relied on the Employees Suggestions and Incentive Awards System (ESIAS),
pursuant to Book V of Executive Order No. 292, or the Administrative Code of 1987, and
approved by the Civil Service Commission on December 3, 1996. The ESIAS "includes the
granting of incentives that will help employees overcome present economic difficulties, boost
their morale, and further commitment and dedication to public service.

The Undersecretary for Fisheries and Livestock of the Department of Agriculture then
approved to grant the Food Basket Allowance at the rate of P10,000.00 each to the 130
employees of BFAR Region VII. On the strength of the approval, the office then released the
allowance to the BFAR employees.

COA then disallowed the grant of the Food Basket Allowance for lack of legal basis and
that it violated: a) Sec. 15(d) of the General Appropriations Act of 1999, prohibiting the payment
of honoraria, allowances, or other forms of compensation to any government official or
employee, except those specifically authorized by law; b) par. 4.5 of Budget Circular No. 16
dated November 28, 1998, prohibiting the grant of food, rice, gift checks, or any other form of
incentives/allowances, except those authorized via Administrative Order by the Office of the
President; and c) Sec. 12 of Republic Act (R.A.) No. 6758, or the Salary Standardization Law of
1989, which includes all allowances in the standardized salary rates, subject to certain
exceptions.

The petitioner contended before the Supreme Court, the following:

1. The disallowance in question is unconstitutional as it contravenes the fundamental principle

of the State enshrined under Sections 9 and 10, Article II of the 1987 Constitution, which provide
as follows:

SEC. 9. The State shall promote a just and dynamic social order that will ensure
the prosperity and independence of the nation and free the people from poverty

32
 through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.

SEC. 10. The State shall promote social justice in all phases of national
development.6

2. The Undersecretary for Fisheries and Livestock is an extension of the Secretary of Agriculture
who is an alter-ego of the President. His approval was tantamount to the authority from the
Office of the President, as contemplated in DBM Budget Circular No. 16, dated November 28,
1998.7

3. The grant of the Food Basket Allowance is in conformity with Sec. 12 of the Salary
Standardization Law.

ISSUES

1. Whether the invocation by the petitioners of the social justice provision of the Constitution
proper.

2. Whether the Food Basket Allowance falls under the class of non-integrated benefit
particularly on the 7th category of Section 12 of the SSL.

3. Whether the approval of the Undersecretary is a sufficient compliance of the DBM Budget
Circular No. 16, dated November 28, 1998.

RULING

First issue:

No. Time and again, we have ruled that the social justice provisions of the Constitution
are not self-executing principles ready for enforcement through the courts. They are merely
statements of principles and policies. To give them effect, legislative enactment is required. As
we held in Kilosbayan, Incorporated v. Morato,9 the principles and state policies enumerated in
Article II and some sections of Article XII are "not self-executing provisions, the disregard of
which can give rise to a cause of action in the courts. They do not embody judicially enforceable
constitutional rights but guidelines for legislation."

Second issue:

No. The Petitioner erred in asserting that the Food Basket Allowance falls under the 7th
category of Section 12 of the SSL which states that "other additional compensation not otherwise
specified herein as may be determined by the DBM."

33
 The Court has had the occasion to interpret Sec. 12 of R.A. No. 6758. In National Tobacco
Administration v. Commission on Audit, we held that under the first sentence of Section 12, the
benefits excluded from the standardized salary rates are the "allowances" or those which are
usually granted to officials and employees of the government to defray or reimburse the
expenses incurred in the performance of their official functions. These are the RATA, clothing
and laundry allowance, subsistence allowance of marine officers and crew on board
government vessels and hospital personnel, hazard pay, and others, as enumerated in the first
sentence of Section 12. We further ruled that the phrase "and such other additional
compensation not otherwise specified herein as may be determined by the DBM" is a catch-all
proviso for benefits in the nature of allowances similar to those enumerated. In Philippine Ports
Authority v. Commission on Audit, we explained that if these allowances were consolidated
with the standardized salary rates, then government officials or employees would be compelled
to spend their personal funds in attending to their duties.

In the instant case, the Food Basket Allowance is definitely not in the nature of an
allowance to reimburse expenses incurred by officials and employees of the government in the
performance of their official functions. It is a form of financial assistance to all officials and
employees of BFAR.

Third issue:

No. The approval of the DA Undersecretary of the Food Basket Allowance is not the law
which authorizes its release. It is crystal clear that the Undersecretary has no authority to grant
any allowance to the employees of BFAR. Section 4.5 of Budget Circular No. 16 dated
November 28, 1998 states: “All agencies are hereby prohibited from granting any food, rice, gift checks,
or any other form of incentives/allowances except those authorized via Administrative Order by the Office
of the President.”

In the instant case, no Administrative Order has been issued by the Office of the President to
exempt BFAR from the express prohibition against the grant of any food, rice, gift checks, or
any other form of incentive/allowance to its employees.

Full text of the case law

https://lawphil.net/judjuris/juri2008/aug2008/gr_169815_2008.html

34
Technical Education and Skills Development Authority vs. COA (GR No. 196418
February 10, 2015)

Topic
▪ Grant of healthcare maintenance allowance on the basis of CSC MC No. 33

FACTS of the CASE

In 1997, the Civil Service Commission issued MC No. 33 which reiterated the CSC issued
Resolution No. 97-4684 in 1997 to provide adequate policy on basic health and safety conditions
of work in the Government. The resolution relevantly provides:
1. All government offices shall provide the following:

a. Health program for government employees shall include any or all of the
following:

1. Hospitalization services
2. Annual mental. Medical-physical examinations

Then the DOLE issued an Administrative Order (AO) No. 430, series of 2003, authorizing the
payment of healthcare maintenance allowance of P5,000.00 to all officials and employees of the
DOLE, including its bureaus and attached agencies.

On the basis of the above AO, TESDA being an attached agency of the DOLE paid to its official
and employees a healthcare maintenance allowance of P5,000.00. Upon post-audit, COA
disallowed the payment for lack of legal basis.

ISSUE

Whether the CSC MC No. 33 is sufficient legal authority to grant healthcare maintenance
allowance.

RULING

No. MC No. 33 dealt with a health care program for government employees. A program is
ordinarily understood as a system in place that will draw the desired benefits over a period of
time. Its dictionary meaning includes “a plan of procedure: a schedule or system under which
action may be taken toward a desired goal.” Ostensibly, MC No. 33 did not intend the health
care program to be a single activity or endowment to achieve a fleeting goal, for it rightfully
concerned the institutionalization of a system of healthcare for government employees.

A careful perusal of MC No. 33 and its precursor reveals the unequivocal intent to afford
government employees a sustainable health care program instead of an intermittent healthcare
provision. The giving of health care maintenance allowance of P5,000.00 to the TESDA’s
employees was not among any of the hospitalization services or examinations listed in the
circular.

35
Other Issue

TESDA contended that the grant is authorized under Section 34 of GAA for 2003, which states:

Section 34. Funding of Personnel Benefits. The personnel benefits costs of government officials and
employees shall be charged against the funds from which their compensations are paid. All
authorized supplemental or additional compensation, fringe benefits xxx, compensation
insurance premiums, health insurance premiums, hospitalization and medical benefits, xxx,
and terminal leave benefits, shall similarly be charged against the corresponding fund from
which their basic salaries are drawn and in no case shall such personnel benefits costs be
charged against the General Fund of the National Government. xxx.
RULING

The reliance is misplaced. Section 34 only reiterated the rule that the personnel benefits costs of
government officials and employees should be charged against the funds from which their
compensations are paid. The provision was neither a source of right nor an authority to hastily
fund any or all personnel benefits without the appropriation being made by law. Also, the COA
was correct when it held that the provisions of the GAA were not self-executory. This meant
that the execution of the GAA was still subject to a program of expenditure to be approved by
the President, and such approved program of expenditure was the basis for the release of funds.

Full text of the case law

https://www.chanrobles.com/cralaw/2015februarydecisions.php?id=105

Development Bank of the Philippines vs. Commission on Audit (GR No. 221706 March
13, 2018)

Topic
▪ Compensation of DBP boards at the rate comparable to DBP consultants

FACTS of the CASE

On August 23, 2006, the DBP Board passed Resolution No. 00376 approving the
following guidelines in determining the entitlement to per diems and other benefits of the
Board, among others: (1). That the members of the Board shall continue to be entitled to
₱1,000.00 for each meeting of the Board actually attended: xxx, (2). That the members of the
Board shall be compensated at rates comparable to DBP consultants for work undertaken for
the Bank including but not limited to Committee assignments, xxx;

Then later, the Board’s compensation which were charged under the Representation and
Entertainment - Others expense was disallowed in audit on the ground that pursuant to the
DBP Charter, the Board members are only entitled to per diems; that the approval of the

36
President under Section 8 of DBP Charter only refers to the increase of the per diem for each
meeting attended.

On April 23, 2007, DBP submitted its Comment to the AOM arguing that there is no
prohibition under the law in granting additional benefits to its Board members; and that it
secured the approval of President Arroyo before granting the assailed benefits.

ISSUE

Whether the authority of the Board under Section 8 of the DBP Charter is not limited to the
amount of per diem that may be granted to the Board of Directors.

RULING

No. Section 8 of the DBP Charter provides among others:

“Unless otherwise set by the Board and approved by the President of the Philippines,
members of the Board shall be paid a per diem of One Thousand Pesos (₱1,000.00) for
each meeting of the Board of Directors actually attended: xxx.”

Section 8 of the DBP Charter only mentions per diem as the compensation of the members of its
Board. It does not declare any additional benefit, other than per diems, which the said members
of the Board may receive. Conspicuously, the heading of the provision states that Section 8 only
refers to the Board, their composition, tenure, and per diems. It is a settled rule of statutory
construction that the express mention of one person, thing, act, or consequence excludes all
others. This rule is expressed in the familiar maxim expressio uni us est exclusio alterius. Where
a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or
construction, be extended to others. The rule proceeds from the premise that the legislature
would not have made specified enumerations in a statute had the intention been not to restrict
its meaning and to confine its terms to those expressly mentioned.

The President's approval of the DBP Memorandum is immaterial. Again, under the DBP
Charter, only the per diems of its members may be increased by the Board with the approval of
the President.

Full text of the case law

https://www.chanrobles.com/cralaw/2018marchdecisions.php?id=259

37
Department of Budget and Management vs. Leones (GR No. 169726 March 18, 2010)

Topic
▪ Entitlement of RATA to a Municipal Treasurer who was transferred to Provincial
Treasurer’s Office

FACTS of the CASE

Before 1996, respondent Olivia D. Leones was the Municipal Treasurer of Bacnotan, La Union.
In December 1996, respondent was reassigned to the Office of the Provincial Treasurer, La
Union, pending resolution of administrative cases filed against her. The municipal government
then stopped paying RATA to respondent upon her reassignment to the Provincial
Government.

Respondent then sought an opinion from the DBM Secretary, on her entitlement to RATA. In its
reply dated 3 September 2003 (Opinion), the DBM found respondent entitled to RATA only for
1999 under the General Appropriation Act (GAA) for that year which, unlike previous and
succeeding years, did not require "actual performance of x x x functions" as condition for receipt
of RATA.
ISSUES

1. Whether the RATA of the local government treasurer paid for through the Local Council-
enacted budget is subject to the condition imposed by the GAA which requires “actual
performance of duties”.

2. Whether a municipal treasurer reassigned to the provincial treasurer’s office is considered

to have been performing comparable function.

RULING

Yes. We hold that respondent was entitled to receive RATA after her reassignment, not because
the allowance forms part of her salary, but because the discontinuance of payment lacks legal
basis.

RATA Distinct from Salary

Statutory law, has consistently treated RATA as distinct from salary. Unlike salary which is
paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed
unavoidable in the discharge of office. Hence, RATA is paid only to certain officials who, by the
nature of their offices, incur representation and transportation expenses. The denial of RATA
must be grounded on relevant and specific provision of law.
No Law Justifies Denial of RATA for Reassigned Local Government Officials.

The DBM erred in contending that respondent’s reassignment to La Union treasurer’s office cut
off this entitlement. As bases for this claim, the DBM invokes the GAAs from 1996 to 2005
(except in 1999) uniformly providing (in different sections) thus:

38
“The following officials and those of equivalent rank as may be determined by the DBM while
in the actual performance of their respective functions are hereby granted monthly commutable
representation and transportation allowances x x x. (Emphasis supplied)”

As secondary basis, the DBM calls the Court’s attention to Section 3.3.1 of the National
Compensation Circular No. 67 dated 1 January 1992, which provides:

3.3. The officials and employees referred to in Sections 2.1, 2.2 and 2.3 hereof shall no
longer be authorized to continue to collect RATA in the following instances:

3.3.1 When on full-time detail with another organizational unit of the same agency,
another agency, or special project for one (1) full calendar month or more, except when
the duties and responsibilities they perform are comparable with those of their regular
positions, in which case, they may be authorized to continue to collect RATA on a
reimbursable basis. (Emphasis supplied)

None of these rules supports the DBM’s case.

We find these GAAs of no application to a local government official whose compensation and
allowances are funded by local appropriation laws passed by the Sangguniang Bayan. The
Court cannot subscribe to the theory of the DBM that although respondent’s salary and
allowances were charged against Bacnotan’s annual budget, they were subject to the condition
contained in the GAAs for 1996-2005 linking the payment of RATA to the actual performance of
duties.

Nor can the DBM anchor its case on Section 3.3.1. of the National Compensation Circular No.
67, re: "Representation and Transportation Allowances of National Government Officials and
Employees," thus excluding local government officials from its ambit. At any rate, respondent
falls under the exception clause in Section 3.3.1, having been reassigned to another unit of the
same agency with duties and responsibilities "comparable" to her previous position.

Respondent was reassigned to La Union treasurer’s office within the same "agency," namely,
the Department of Finance, because local treasuries remain under the control of the Secretary of
Finance. Thus, irrespective of the level of the local government unit involved, no distinction
exists in the functions of local treasurers except in the technical supervision by the provincial
treasurer over subordinate treasury offices. Logically, the employees in all local treasuries
perform comparable functions within the framework of Section 70 (d) and (e) of RA 7160 (Local
Government Code of 1991).

Indeed, for an employee not to fall under the exception in Section 3.3.1, the functions attached
to the new office must be so alien to the functions pertaining to the former office as to make the
two absolutely unrelated or non-comparable.

Full text of the case law

https://lawphil.net/judjuris/juri2010/mar2010/gr_169726_2010.html

39
Benguet State University vs. Commission on Audit (GR. No. 169637, June 08, 2007)

Topic
▪ Grant of rice subsidy and health care allowance which was anchored on the
Higher Education Modernization Act.

FACTS of the CASE

Pursuant to Section 4 of RA No. 8292 or Higher Education Modernization Act of 1997, the Board
of Regents of the Benguet State University passed and approved Board Resolution No. 794 on
October 31, 1997, granting rice subsidy and health care allowance to BSU’s employees. The
sums were taken from the income derived from the operations of BSU and were given to the
employees at different periods in 1998.

The rice subsidy and health care allowance in the total amount of P4,350,000.00 was disallowed
in audit on October 20, 1999 stating that R.A. No. 8292 does not provide for the grant of said
allowance to employees and officials of the university. The disallowance was sustained by the
COA Regional Office citing Section 55 (2) of R.A. No. 8522 or the General Appropriation Act of
1998, it held that a non-existent item, project, activity, purpose, or object of expenditure cannot
be funded by augmentation from savings or by the use of appropriations. It further held that
the grant of said allowances lacked statutory basis, transgressed the constitutional proscription
on additional, double, or indirect compensation and ran counter to the provisions of the Salary
Standardization Law.

Relying on R.A. No. 8292, BSU maintains that it can grant said benefits to its employees. It
argues that the said law vests state universities and colleges with fiscal autonomy, and grants
them ample leeway in the appropriation and disbursement of their funds. BSU adds that the
grant did not contravene the constitutional prohibition on additional compensation because the
allowances are granted as an incentive in appreciation of services rendered and in recognition
of the economic plight of the employees. Also, the amounts used were taken from income
generated by its operation and retained by the university which, under R.A. No. 8292, may be
disbursed by its Governing Board in a manner it may determine to carry out its programs.
Finally, it argues that the Salary Standardization Law does not expressly prohibit the benefits,
because the said allowances are in the nature of a financial assistance and not an additional
income.

BSU theorizes that the phrase "other programs/projects of the university or college" in Section 4
(d) covers all projects and programs of the university, including those designed to uplift the
economic plight of the employees. It is not limited to those programs which the university may
specifically undertake in pursuance of its primary objective to achieve quality education,
contrary to the interpretation of the COA.

ISSUES

1. Whether the rice subsidy and health care allowance are deemed integrated in the SSL.

40
2. Whether RA No. 8292 vests state universities and colleges with fiscal autonomy, and grants
them ample leeway in the appropriation and disbursement of their funds.

RULING

First issue:

Yes. The benefits excluded from the standardized salary rates are the "allowances" which are
usually granted to officials and employees of the government to defray or reimburse the
expenses incurred in the performance of their official functions. Clearly, the rice subsidy and
health care allowance granted by BSU were not among the allowances listed in Section 12 which
State workers can continue to receive under R.A. No. 6758 over and above their standardized
salary rates. Hence, no abuse of discretion was committed by the COA in disallowing the
disbursement of funds.

Second issue:

No. A reading of the entire provision supports the COA’s interpretation that the authority given
to the Governing Board of state universities and colleges is not plenary and absolute. It is clear
in Section 4 that the powers of the Governing Board are subject to limitations. This belies BSU's
claim of plenary and absolute authority.

A closer perusal of the specific legal provision under Par. D of Sec. 4. Powers and Duties of
Governing Boards reads, thus:

“Any provision of existing laws, rules and regulations to the contrary

notwithstanding, any income generated by the university or college, from tuition
fee and other charges, as well as from the operation of auxiliary services and land
grants, shall be retained by the university or college, and may be disbursed by
the Board of Regents/Trustees for instruction, research, extension or other
programs/projects of the university or college x x x"

Clearly negate such claim of authority. It is noted that the term "other programs/projects" refers
to such programs which the university may specifically undertake in pursuance of its primary
objective which is to attain quality higher education. Under the principle of ejusdem generis,
where a statute describes things of a particular class or kind accompanied by words of a generic
character, the generic word will usually be limited to things of a similar nature with those
particularly enumerated, unless there be something in the context of the statute which would
repel such inference. The COA correctly ruled that the "other programs/projects" under R.A.
No. 8292 and its Implementing Rules should be of the same nature as instruction, research, and
extension.

Neither can BSU find solace in the academic freedom clause of the Constitution. Academic
freedom as adverted to in the Constitution and in

41
R.A. No. 8292 only encompasses the freedom of the institution of higher learning to determine
for itself, on academic grounds, who may teach, what may be taught, how it shall be taught, and
who may be admitted to study. The guaranteed academic freedom does not grant an institution
of higher learning unbridled authority to disburse its funds and grant additional benefits sans
statutory basis. Unfortunately for BSU, it failed to present any sound legal basis that would
justify the grant of these additional benefits to its employees.

Section 8, Article IX-B of the 1987 Constitution, is clear that:

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 Congress, any present, emolument, office or title
of any kind from any foreign government.

Full text of the case law

https://lawphil.net/judjuris/juri2007/jun2007/gr_169637_2007.html

National Transmission Commission vs, Commission on Audit (G.R. No. 204800,

October 14, 2014)

Topic
▪ Grant of various benefits to employees of water district hired after June 30, 1989

FACTS of the CASE

In 2003, the National Power Corporation (NPC) underwent reorganization pursuant to EPIRA
Law, splitting NPC into two: 1) NPC and 2) National Transmission Corporation (Transco). Due
to such reorganization, services of all the employees of the NPC were terminated effective
February 28, 2003, and employees got their separation benefit. The next day, some of the
employees were rehired by Transco.

On June 24, 2004, banking on CSC clarification on the earlier query regarding the Loyalty
Award, Transco Circular No. 2004-37 was issued granting loyalty award to qualified
employees, taking into account the services rendered in the NPC prior to re-employment by
Transco.

On November 18, 2004, Transco received an observation from the State Auditor of COA,
pertaining the legality of the loyalty award. It averred that the transaction violated EPIRA Law
and CSC Memorandum Circular. On November 22, 2004, Transco posited in their reply that the
award was made in compliance with Transco Circular, that it was allowed in the CSC letter
dated March 23, 2004; and that there was no gap in the service of the employee.

42
Unsatisfied with the reply, COA disallowed the payment of loyalty award. Respondents
argued that the separated employees were considered legally terminated when they availed the
separation pay. Thus, when they were rehired, they are considered as new.

Transco, elevated its appeal to the COA, and argued: 1) that the separation benefit availed in
accordance with the EPIRA Law did not include the rights of the employees that had already
accrued by reason of continuous service; 2) that the purpose of EPIRA law was to limit the claim
of separation benefit; and 3) that the grant of the loyalty award was in accordance with the CSC
Director’s letter, interpreting the CSC Memo Circular No. 06, s. 2002;
The petition, and also the Motion for Reconsideration was denied by the COA. Thus, this
petition for review.

ISSUE

Whether or not the NPC employees who were separated from the service due to reorganization
and who received separation pay under EPIRA Law are still entitled to receive loyalty awards
under the CSC Memorandum Circular.

RULING

The Court ruled in the affirmative.

The Court held that the payment or non-payment of separation pay was never made a
condition for the grant of loyalty awards to these employees. The CSC Memorandum Circular
neither distinguishes nor imposes a qualification for the grant of loyalty award except that: (1)
effective January 1, 2002, the services rendered in one or more government agencies without
any gap; and; (2) services rendered in one or more government agencies prior to January 1, 2002
shall not be considered. Adding the qualification of non-payment of separation pay would in
effect be expanding the law inappropriately without due process.

The Court further ratiocinated that entitlement to separation pay does not disqualify the
separated employee who is likewise qualified to receive loyalty award pursuant to the CSC
Memorandum Circular. When an employee has complied with the statutory requirements for
the grant of loyalty award under the CSC Memorandum Circular, his right to receive what is
due him by virtue thereof becomes vested and may not thereafter be revoked or impaired.

Full text of the case law

https://lawphil.net/judjuris/juri2014/oct2014/gr_204800_2014.html

43
Judge Dadole vs. Commission on Audit (G.R. No. 125350. December 3, 2002)

Topic
▪ Monthly allowance given by LGU to Judges of Courts

FACTS of the CASE

In 1986, the RTC and MTC judges of Mandaue City started receiving monthly allowances of
P1,260 each through the yearly appropriation ordinance enacted by the Sangguniang
Panlungsod of the said city. In 1991, Mandaue City increased the amount to P1,500 for each
judge. On March 15, 1994, the Department of Budget and Management (DBM) issued the
disputed Local Budget Circular No. 55 (LBC 55) which provided that:

2.3.2. In the light of the authority granted to the local government units under the Local
Government Code to provide for additional allowances and other benefits to national
government officials and employees assigned in their locality, such additional allowances in the
form of honorarium at rates not exceeding P1,000.00 in provinces and cities and P700.00 in
municipalities may be granted subject to the following conditions:

a) That the grant is not mandatory on the part of the LGUs;

b) That all contractual and statutory obligations of the LGU including the
implementation of R.A. 6758 shall have been fully provided in the budget;

c) That the budgetary requirements/limitations under Section 324 and 325 of

R.A. 7160 should be satisfied and/or complied with; and

d) That the LGU has fully implemented the devolution of functions/personnel

in accordance with R.A. 7160.3 (italics supplied)

Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance to
herein petitioners, in excess of the amount authorized by LBC 55. Beginning October, 1994, the
additional monthly allowances of the petitioner judges were reduced to P1,000 each. They were
also asked to reimburse the amount they received in excess of P1,000 from April to September,
1994.

Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of
Mandaue City by dictating a uniform amount that a local government unit can disburse as
additional allowances to judges stationed therein. They maintain that said circular is not
supported by any law and therefore goes beyond the supervisory powers of the President.

On the other contrary, the yearly appropriation ordinance providing for additional
allowances to judges is allowed by Section 458, par. (a)(1)[xi], of RA 7160, otherwise known as
the Local Government Code of 1991, which provides that:

44
 Sec. 458. Powers, Duties, Functions and Compensation. – (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:

xxx xxx xxx

(xi) When the finances of the city government allow, provide for
additional allowances and other benefits to judges, prosecutors, public
elementary and high school teachers, and other national government officials
stationed in or assigned to the city; (italics supplied)

ISSUE

1. Whether the City Ordinance of Mandaue which provides for a higher rate of allowances
to the appellant judges may prevail over that fixed by the DBM under Local Budget
Circular No. 55.

2. Whether the yearly appropriation ordinance enacted by Mandaue City providing for
fixed allowances for judges contravenes any law and should therefore be struck down as
null and void.

RULING

First issue:

LBC 55 which provides that the additional monthly allowances to be given by a local
government unit should not exceed P1,000 in provinces and cities and P700 in municipalities
goes beyond the law it seeks to implement. Section 458, par. (a)(1)(xi), of RA 7160, the law that
supposedly serves as the legal basis of LBC 55, allows the grant of additional allowances to
judges when the finances of the city government allow. The said provision does not authorize
setting a definite maximum limit to the additional allowances granted to judges. Thus, we need
not belabor the point that the finances of a city government may allow the grant of additional
allowances higher than P1,000 if the revenues of the said city government exceed its annual
expenditures. Thus, to illustrate, a city government with locally generated annual revenues of
P40 million and expenditures of P35 million can afford to grant additional allowances of more
than P1,000 each to, say, ten judges inasmuch as the finances of the city can afford it.

Setting a uniform amount for the grant of additional allowances is an inappropriate way of
enforcing the criterion found in Section 458, par. (a)(1)(xi), of RA 7160. The DBM over-stepped
its power of supervision over local government units by imposing a prohibition that did not
correspond with the law it sought to implement. In other words, the prohibitory nature of the
circular had no legal basis.

45
Second issue

According to respondent COA, even if LBC 55 were void, the ordinances enacted by Mandaue
City granting additional allowances to the petitioner judges would "still (be) bereft of legal basis
for want of a lawful source of funds considering that the IRA cannot be used for such
purposes." Respondent COA showed that Mandaue City's funds consisted of locally generated
revenues and the IRA. From 1989 to 1995, Mandaue City's yearly expenditures exceeded its
locally generated revenues, thus resulting in a deficit. During all those years, it was the IRA that
enabled Mandaue City to incur a surplus. Respondent avers that Mandaue City used its IRA to
pay for said additional allowances and this violated paragraph 2 of the Special Provisions, page
1060, of RA 7845 (The General Appropriations Act of 1995)12 and paragraph 3 of the Special
Provision, page 1225, of RA 7663 (The General Appropriations Act of 1994) which specifically
identified the objects of expenditure of the IRA. Nowhere in said provisions of the two
budgetary laws does it say that the IRA can be used for additional allowances of judges.
Respondent COA thus argues that the provisions in the ordinance providing for such
disbursement are against the law, considering that the grant of the subject allowances is not
within the specified use allowed by the aforesaid yearly appropriations acts.

We disagree.

Respondent COA failed to prove that Mandaue City used the IRA to spend for the additional
allowances of the judges. There was no evidence submitted by COA showing the breakdown of
the expenses of the city government and the funds used for said expenses. All the COA
presented were the amounts expended, the locally generated revenues, the deficit, the surplus
and the IRA received each year. Aside from these items, no data or figures were presented to
show that Mandaue City deducted the subject allowances from the IRA. In other words, just
because Mandaue City's locally generated revenues were not enough to cover its expenditures,
this did not mean that the additional allowances of petitioner judges were taken from the IRA
and not from the city's own revenues.

Moreover, the DBM neither conducted a formal review nor ordered a disapproval of Mandaue
City's appropriation ordinances, in accordance with the procedure outlined by Sections 326 and
327 of RA 7160.

Full text of the case law

https://www.chanrobles.com/scdecisions/jurisprudence2002/dec2002/125350.php

46
Ramon Yap vs. Commission on Audit (GR No. 158562, April 23, 2010)

Topic
▪ Application of the “public purpose test” in benefits and allowances

FACTS of the CASE

Ramon R. Yap is holder of a regular position of Department Manager of the National

Development Company (NDC), a government-owned and controlled corporation with original
charter. He was appointed by the Board of Directors, Manila Gas Corporation (MGC), a
subsidiary of NDC as Vice-President for Finance effective June 14, 1991 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.
As such capacity, he received from the MGC the following benefits which were then disallowed
by the Auditor, to wit:

1. Subscription to National Geographic and Reader's Digest

2. Car maintenance allowance
3. Annual fee of VISA card
4. Representation expense on a Sunday
5. Fellowship with other PCA club Members on Sunday
6. Executive check-up
7. Monthly allowance
8. Gasoline allowance and driver's subsidy

Among of the grounds relied upon by COA is that the above disbursements failed to pass
"public purpose test" as enshrined in PD No. 1445, Section 4(2) which states: Government funds
or property shall be spent or used solely for public purpose.

ISSUE

Whether the Commission correctly concluded that these disallowed benefits and allowances
were not for public purpose.

RULING

Yes. The petitioner contended that the respondent's act of subjecting the salaries, allowances
and benefits of MGC employees to the "public purpose test" is not only wrong, but also an act of
grave abuse of discretion since the said salaries, allowances and benefits are intended to
compensate MGC employees for services performed on behalf of the corporation. According to
petitioner, if the "public purpose requirement" will be applied in auditing these salaries,
allowances and benefits being given to government employees, no such compensation could
ever pass audit, as, by their very nature, they are solely intended to benefit their recipients, who
are the employees of the government department, office, agency or corporation concerned.

47
We cannot countenance petitioner's misleading assertion on this point. This is a rather simplistic
and narrow view of the nature of government employee compensation. Not unlike other
government expenditures, it is necessary that the release of public funds to pay the salaries and
allowances of government employees must not contravene the law on disbursement of public
funds as laid out in Section 4 of Presidential Decree No. 1445 on the basic guidelines that
government entities must follow in disbursing public funds

To summarize, 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.

In this regard, it is necessary for this Court to elaborate on the nature and meaning of the term
"public purpose," in relation to disbursement of public funds. As understood in the traditional
sense, public purpose or public use 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."1 However, the concept of public use is not limited to traditional purposes. Here
as elsewhere, the idea that "public use" is strictly limited to clear cases of "use by the public" has
been discarded. In fact, this Court 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.

To our mind, in view of the public purpose requirement, 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. In the same vein, 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. We cannot accept
petitioner's theory that the compensation and benefits of public officers are intended purely for
the personal benefit of such officers, or that the mere payment of salaries and benefits to a
public officer satisfies the public purpose requirement. That theory would lead to the
anomalous conclusion that government officers and employees may be paid enormous sums
without limit or without any 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.

Petitioner also contends that assuming, without conceding, that the other allowances and
benefits do not pass the "public purpose" test, the rest of the allowances, such as the basic
monthly allowances, executive check-up and the gasoline allowances should not be disallowed,

48
as they are normally given to officers of corporations, whether private or government-owned
and controlled.

We cannot uphold petitioner's plausible but unsubstantiated argument on this point since,
respondent COA is in the best position to determine which allowances and benefits may be
properly allowed under the circumstances, as it is the sole constitutional body mandated to
examine, audit and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property of the government.

To reiterate, the public purpose requirement for the disbursement of public funds is a valid
limitation on the types of allowances and benefits that may be granted to public officers. It was
incumbent upon petitioner to show that his allowances and benefits were authorized by law
and that there was a direct and substantial relationship between the performance of his public
functions and the grant of the disputed allowances to him.

While subscriptions to newspapers and magazines by government offices may be justified,

petitioner's personal subscriptions to magazines and the annual fee of his credit card cannot
ipso facto be considered as part of his remunerations or benefits as a public official.

There is likewise no evidence that the purported representation and "fellowship" expenses on
weekends are necessary and related to petitioner's work as Vice-President of Finance and
Treasurer of the MGC. We find no reason to believe that as an MGC officer, his duties include
business relations or clientele-building functions, since a finance officer and treasurer, even in
the private sector, is ordinarily tasked with accounting, disbursement and custody of corporate
funds.

Medical expenses, such as those for an executive check-up, may be justified if specifically
authorized by the appropriate laws, rules or circulars. However, petitioner failed to point to the
existence of such law or regulation applicable to his case. It also appears from the records that
petitioner already receives medical benefits from the NDC, and that the ground cited by the
MGC Corporate Auditor for the disallowance of his expense for executive check-up was his
own failure to submit appropriate supporting documents to claim such benefit.

The COA's disallowance of the car maintenance, gasoline allowance and driver's subsidy was
likewise in order since petitioner neither alleged nor proved that these benefits were also
authorized by law or regulation. He did not even allege that the car was an official company
vehicle or that the driver was an employee of the MGC. On the contrary, the MGC Corporate
Auditor found that the vehicle involved was the personal vehicle of petitioner, although it was
granted to him under an NDC car plan, and that he was already receiving gasoline and/or
transportation allowance from the NDC. It was also found that petitioner reported to the MGC
office, at most, once a week to attend meetings; and documents, which required his signature,
were often brought to him at the NDC.
In order to demonstrate the legality of the grant of his benefits, it was insufficient for the
petitioner to assert that the disputed allowances and benefits were approved by the board of
directors of the MGC. Such board action should in itself be authorized by law or regulation or
have valid legal basis. Otherwise, it becomes an illegal corporate act that is void and cannot be
validated. In this case, the MGC board action that permitted the disallowed disbursements was

49
not shown to have complied with Section 15(d) of both Republic Act No. 8522 and Republic Act
No. 8745, otherwise known as the General Appropriations Act of 1998 and the General
Appropriations Act of 1999, respectively.

Full text of the case law

https://www.chanrobles.com/scdecisions/jurisprudence2010/april2010/158562.php

Nayong Pilipino Foundation, Inc., vs. Pulido-Tan (GR No. 213200, September 19, 2017)

Topic
▪ Grant of anniversary bonus and extra cash gifts by GOCC employees for
milestone year which was reckoned from the date it was incorporated as a
private corporation, and not when it became a public corporation

FACTS of the CASE

On June 6, 2000, in commemoration of NPFI's 30th Founding Anniversary, NPFI Board of

Trustees, authorized the grant to its officers and employees who have rendered services for at
least one (1) year, an Anniversary Bonus amounting to Php 3,000.00 each.

In May 2004, NPFI's Board of Trustees on the occasion of NPFI's 35th Founding Anniversary
authorized the grant of Anniversary Bonus amounting to a total of Php 108,000.00 to its trustees,
employees, and Job Order personnel. Another resolution was passed authorizing the release to
the same recipients Extra Cash Gift in the total amount of Php 90,500.00.

On September 30, 2005, acting on the referral for comment and/or recommendation by the OP,
the DBM issued a letter-resolution. Therein, DBM Secretary Romulo L. Neri concluded that the
payment to NPFI personnel of Anniversary Bonus for the years 2000 and 2004 is unauthorized
and contrary to existing policy, as the reckoning date of the NPFI' s anniversary is November 6,
1972, the date of its establishment as a public corporation under Presidential Decree (P.D.) No.
37, instead of June 11, 1969, when it was a private corporation. Thus, NPFI's entitlement to
Anniversary Bonus shall be in 1987 on its 15th anniversary, 1992 on its 20th, 1997 on its 25th,
2002 on its 30th and 2007 on its 35th anniversary. Similarly, the DBM found the grant of Extra
Cash Gift for the year 2004 to be improper, considering that it was not specifically authorized by
law or approved by the President.

Anent the allowance of Extra Cash Gift, NPFI claims that same is supported by DBM Budget
Circular No. 2002-04 dated November 28, 2002, which then President Gloria Macapagal-Arroyo
approved.

50
ISSUE

Whether the grant of Anniversary Bonus of the GOCC employees which was reckoned from the
date it was incorporated as private corporation and not when it became a public corporation is
valid.

Whether the DBM Budget Circular No. 2002-04, approved by the president, which authorizes
the grant of Extra Cash Gift in year 2002 suffices to validly grant the same benefit in the
succeeding year/s.

RULING

No. The Court agrees with the COA in that the award of Anniversary Bonus for the year 2004 is
unwarranted for failure to comply with the requirements set forth under A.O. No. 263 and DBM
NBC No. 452-96.

A.O. No. 263, issued on March 28, 1996 provides for general authority to Government-owned
and controlled corporations (GOCCs), Government Financial Institutions (GFIs), and national
government agencies to commemorate milestone anniversaries through the grant of
anniversary bonus to their employees in an amount not exceeding Php 3,000.00. To amplify and
clarify the implementation of the order, the DBM issued NBC No. 452-9624 on May 20, 1996.

From these guidelines, the Court can infer the following rules relative to the grant of
Anniversary Bonus and pertinent to the issue at hand:

a) All government personnel whether employed on a regular or parttime basis,

or under permanent, temporary or casual status, and contractual personnel
whose employment is in the nature of a regular employee, xxx, shall be
entitled to the Anniversary Bonus;

b) The Anniversary Bonus may only be granted in celebration of milestone

year or the 15th anniversary and to every fifth year thereafter; and

c) The counting of milestone year shall start from the year the government
entity was created regardless of whether it was subsequently renamed or
reorganized provided that its original primary functions have not substantially
changed.

The DBM and COA are correct in that for the purpose of determining entitlement to
Anniversary Bonus, NPFI's milestone year should be reckoned from the date it was
incorporated as a public corporation by virtue of Presidential Decree No. 37 or on November 6,
1972 instead of June 11, 1969 when it was then incorporated as a private corporation. It follows
therefore, that NPFI is entitled to Anniversary Bonus in 1997 for its 25th Anniversary, 2002 for
its 30th and 2007 for its 35th Anniversary. Clearly, the payment of Anniversary Bonus in 2000
and 2004 is therefore unauthorized.

51
ISSUE

Whether the DBM Budget Circular No. 2002-04, approved by the president, which authorizes
the grant of Extra Cash Gift in year 2002 suffices to validly grant the same benefit in the
succeeding year/s.

NPFI based its grant of the 2004 Extra Cash Gift pursuant to DBM Budget Circular 2002-4 dated
November 28, 2002, which then President Gloria Macapagal-Arroyo approved. As NPFI itself
stated in its Letter dated April 28, 2005 to the OP, the said Budget circular authorizes the grant
of Extra Cash Gifts only for the year 2002. In light of its explicit language, it cannot therefore be
simply implied that the Circular provides sufficient authority for the grant of similar benefit for
the succeeding years without the need of approval by the President.

Full text of the case law

https://www.chanrobles.com/cralaw/2017septemberdecisions.php?id=786

Nayong Pilipino Foundation, Inc. vs. Pulido-Tan (GR No. 213200, September 19, 2017)

Topic
Grant of honoraria to BAC and TWG members in 2004, the time when RA No.
9184 took effect and without yet guidelines issued by the DBM

FACTS of the CASE

In 2004, NPFI paid a total of Php 132,000.00 as honoraria to the members of its BAC and TWG.
At this time, the DBM Guidelines for the payment of the honorarium was still in progress.

COA disallowed said honoraria stating that NPFI did not submit the required exemption from
the Department of Budget and Management (DBM) for the payment of honoraria to its BAC
and TWG members.

NPFI argued that COA erred in making a sweeping disallowance absent any evidence that the
same is in excess of the 25% (of the basic salary) ceiling set forth under Section 15 of Republic
Act (R.A.) No. 9184.

ISSUE

Whether the grant of the BAC and TWG honoraria in 2004 when the DBM guidelines on the
matter is yet to be issued as mandatorily required under RA No. 9184 is proper.

RULING

No. NPFI argues that its grant of honoraria is supported by Section 15 Article V of R.A. No. 9184
otherwise known as the Government Procurement Reform Act, which provides:

52
SEC. 15. Honoraria of BAC Members. - The Procuring Entity may grant payment of honoraria to
the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic
monthly salary subject to availability of funds. For this purpose, the Department of Budget and
Management (DBM) shall promulgate the necessary guidelines.

In effect, NPFI claims that even in the absence of a DBM Circular at the time of payment, the
law offers sufficient basis for the allowance of the honoraria in an amount not exceeding 25% of
the basic salary. NPFI is mistaken.

The Court in Sison, et al. v. Tablang, ruled that the provision of itself cannot serve as basis for
the grant of honoraria to the members of the BAC without an enabling rule or guideline from
the DBM; and compliance therewith is necessary for the right to accrue. We quote:

An honorarium is defined as something given not as a matter of obligation but in appreciation

for services rendered, a voluntary donation in consideration of services which admit of no
compensation in money. Section 15 of R.A. No. 9184 uses the word "may" which signifies that
the honorarium cannot be demanded as a matter of right.

The payment of honoraria to the members of the BAC and the TWG must be circumscribed by
applicable rules and guidelines prescribed by the DBM, as provided by law. Section 15 of R.A.
No. 9185 is explicit as it states: "For this purpose, the DBM shall promulgate the necessary
guidelines." The word "shall" has always been deemed mandatory, and not merely directory.
Thus, in this case, petitioners should have first waited for the rules and guidelines of the DBM
before payment of the honoraria. As the rules and guidelines were still forthcoming, petitioners
could not just award themselves the straight amount of 25% of their monthly basic salaries as
honoraria. This is not the intendment of the law.

Full text of the case law

https://www.chanrobles.com/cralaw/2017septemberdecisions.php?id=786

Gil G. Gawad, et. al vs. Florencio B. Abad, et. al (G.R. No. 207145, July 28, 2015)

Topic
▪ Grant of Hazard Pay, Subsistence Allowance, and Longevity Pay to Public
Health Worker wherein there is inconsistency between the law and the
implementing guidelines

FACTS of the CASE

Basing from the Republic Act (RA) No. 7305, otherwise known as The Magna Carta of Public
Health Workers which was signed into law on March 26, 1992 and from its implementing rules
and regulations, the DBM and DOH issued Joint Circular No. 1, Series of 2012, the relevant
provisions of which state:

53
Hazard Pay

7.2.1 For PHWs whose positions are at SG-19 and below, Hazard Pay shall be based on the
degree of exposure to high risk or low risk hazards, as specified in sub-items 7 .1.1 and 7 .1.2
above, and the number of workdays of actual exposure over 22 workdays in a month, at rates
not to exceed 25% of monthly basic salary. In case of exposure to both high risk and low risk
hazards, the Hazard Pay for the month shall be based on only one risk level, whichever is more
advantageous to the PHW.

7.2.2 PHWs whose positions are at SG-20 and above may be entitled to Hazard Pay at 5% of
their monthly basic salaries for all days of exposure to high risk and/or low risk hazards.
However, those exposed to high-risk hazards for 12 or more days in a month may be entitled to
a fixed amount of ₱4,989.75 per month.

Subsistence Allowance

8.3 The Subsistence Allowance shall be ₱50 for each day of actual full-time service, or ₱25 for
each day of actual part-time service.

Longevity Pay (LP)

9.1 Pursuant to Section 23 of R.A. No. 7305, a PHW may be granted LP at 5% of his/her current
monthly basic salary, in recognition of every 5 years of continuous, efficient, and meritorious
services rendered as PHW. The grant thereof is based on the following criteria:

9.1.1 The PHW holds a position in the agency plantilla of regular positions; and

9.1.2 He/She has rendered at least satisfactory performance and has not been found
guilty of any administrative or criminal case within all rating periods covered
by the 5-year period.

Petitioners expressed their opposition to the Joint Circular cited above on the ground that the
same diminishes the benefits granted by the Magna Carta to PHWs. . Specifically, petitioners
assert that the DBM-DOH Joint Circular grants the payment of Hazard Pay only if the nature of
the PHWs' duties expose them to danger when RA No. 7305 does not make any qualification.
They likewise claim that said circular unduly fixes Subsistence Allowance at ₱50 for each day of
full-time service and ₱25 for part-time service which are not in accordance with prevailing
circumstances determined by the Secretary of Health as required by RA No. 7305. As to the
grant of Longevity Pay, petitioners posit that the same was wrongfully granted only to PHWs
holding regular plantilla positions.

ISSUE

Whether or not the DBM-DOH Joint Circular No. 1 series of 2012 insofar as the grant of hazard
pay, subsistence allowance, and longevity pay has to be struck down for being inconsistent with
the Magna Carta of Public Health Worker

54
RULING

For the hazard pay provision. Yes. The Magna Carta provides:

SEC. 21. Hazard Allowance. - Public health worker in hospitals, sanitaria, rural
health units, main centers, health infirmaries, barangay health stations, clinics and
other health-related establishments located in difficult areas, strife-torn or embattled
areas, distresses or isolated stations, prisons camps, mental hospitals, radiation-
exposed clinics, laboratories or disease-infested areas or in areas declared under
state of calamity or emergency for the duration thereof which expose them to great
danger, contagion, radiation, volcanic activity/eruption occupational risks or perils
to life as determined by the Secretary of Health or the Head of the unit with the
approval of the Secretary of Health, shall be compensated hazard allowance
equivalent to at least twenty-five percent (25%)of the monthly basic salary of health
workers receiving salary grade 19 and below, and five percent (5%) for health
workers with salary grade 20 and above.

It is evident from the foregoing provisions that the rates of hazard pay must be at least 25% of
the basic monthly salary of PWHs receiving salary grade 19 and below, and 5% receiving salary
grade 20 and above. As such, RA No. 7305 and its implementing rules noticeably prescribe the
minimum rates of hazard pay due all PHWs in the government, as is clear in the self-
explanatory phrase "at least" used in both the law and the rules. Thus, the rates embodied in
Section 7.2 of DBM-DOH Joint Circular must be struck down as invalid for being contrary to the
mandate of RA No. 7305 and its Revised IRR.

On the Subsistence Allowance and Longevity Pay. No.

The fixing the Subsistence Allowance at ₱50 for each day of full-time service and ₱25 for part-
time service was merely a reiteration of the limits prescribed by the Revised IRR, validly issued
by the Secretary of Health pursuant to Section 35 of RA No. 7305, the pertinent portions of
which states:

Section 7.2.3 Rates of Subsistence Allowance

a. Subsistence allowance shall be implemented at not less than Ph₱50.00 per day or
Ph₱1,500.00 per month as certified by head of agency.

d. Part-time public health workers/consultants are entitled to one-half (1/2) of the

prescribed rates received by full-time public health workers.

The condition imposed by the DBM-DOH Joint Circular granting longevity pay only to those
PHWs holding regular plantilla positions merely implements the qualification imposed by the
Revised IRR.

Full text of the case law

https://lawphil.net/judjuris/juri2015/jul2015/gr_207145_2015.html

55
Development Bank of the Philippines vs. COA (GR No. 221706 March 13, 2018)

Topic
▪ Putting of additional ground in a notice of disallowance

FACTS of the CASE

Upon post-audit of the DBP accounts, COA issued an Audit Observation (AOM) in 2007 stating
that the Board's compensations, were contrary to Section 8 of Executive Order (E.O.) No. 81, as
amended by Republic Act (R.A.) No. 8523 (DBP Charter). The AOM stated that pursuant to the
law, the Board members are only entitled to per diem.

Not satisfied with the DBP’s explanation of the AOM, the Board’s compensation was
disallowed stating that pursuant to the DBP Charter, the Board members are only entitled to
per diems; that the approval of the President under Section 8 of DBP Charter only refers to the
increase of the per diem for each meeting attended; and that COA Decision No. 2001-026 dated
January 25, 2001, provided that granting additional compensation to the Board members other
than those prescribed requires legislative action and that it cannot be substituted by
administrative authorization.

ISSUE

Whether the ND violated the right of the DBP to due process since the auditor added as a
ground for disallowance COA Decision No. 2001-026 dated January 25, 2001 which was never
mentioned in the AOM.

RULING

No. DBP's argument-that it was deprived of due process because the ND mentioned COA
Decision No. 2001-026 even though it was not included in the AOM - is specious. It is apparent
from the assailed decision that COA Decision No. 2001-026 was not the sole basis in denying
DBP's petition. Assuming arguendo that the decision was cited in the ND, it did not violate
DBP's right to due process because it still had the opportunity to question the same through an
appeal before the Director of the COA-CGS and, subsequently, to the COA En Banc.

Full text of the case law

https://www.chanrobles.com/cralaw/2018marchdecisions.php?id=259

56
Land Bank of the Philippines vs. Commission on Audit (G.R. No. 213424, July 11, 2017)

Topic
▪ Shouldering of the training/ advancement refresher course for the bank
managerial employees for the second time

FACTS of the CASE

On 3 November 2004 and 1 July 2005, petitioner LBP engaged MSA for the conduct of the
Professional Advancement Refresher Course (PARC), a five-day refresher program designed to
provide LBP officers nationwide with Pay Grade 9 (Career Executive Service position) and up,
with managerial, verbal, and analytical skills which can assist them in effectively carrying out
their respective duties and responsibilities. The said refresher course was also LBP's response to
the Civil Service Commission's (CSC) policy on temporary appointments as laid down in CSC
MC No. 20.

A total of 122 bank officers holding the positions of Managers and Assistant Managers attended
the first refresher course held in November 2004 while 192 bank officers attended the second
refresher course held in July 2005. Fifty-one out of the 192 officers who attended the second
refresher course in July 2005 failed in the CSEE/MATB examination given. Hence, they were
given by LBP's Management Committee the privilege to review for the second time.

The auditor issued AOM contending that the attendance of the 51 out of the 192 LBP officers
who took the refresher course for the second time as an unwarranted government expense and
considered it to be a personal undertaking. Thus, the seminar and training expenses of the 51
LBP officers in the amount of ₱341,769.87, as well as the traveling expenses including board and
lodging incurred by said participants, were treated in audit as unnecessary/excessive expenses

But the COA Legal and Adjudication – Corporate disallowed for lack of legal basis, not only the
review fees and expenses of the 51- officers, but ALL the review fees and expenses paid by LBP
to MSA in the total amount of ₱l,778,100.51 pertaining to the attendance of 314 bank officers. It
argued that CSEE/MA TB is an eligibility examination for personal enhancement and not to
improve performance and job competency, hence, the payment for the review fees to MSA are
considered unnecessary expenses in violation of COA Circular No. 85- 55A dated September 8,
1985.

ISSUE

Whether the training or the refresher course program designed to advance managerial skills
and competence and at the same time increase the chance of passing the CSEE/MA eligibility
examination is considered unnecessary expenses.

RULING

No. The refresher course had two objectives - first, to train and enhance the skills of the bank's
officers and make them more effective in carrying out their respective duties and

57
responsibilities, and second, to prepare the officers to pass the CSEE/MA TB examination and
be eligible for permanent appointments to third level positions. Here, the true test of the
necessity of the refresher course lies on who benefited from it. We believe that both LBP and its
officers gained from the refresher course. On one hand, the officers were given an opportunity
to grow professionally by acquiring eligibility in their career service, and on the other, the bank
gained a workforce with more knowledge and skills in the hope of increasing their efficiency,
whether or not the same officers pass the eligibility examination. Thus, the refresher course was
conducted not solely to aid the bank's officers to pass the eligibility examination but also to
strengthen the bank's upper management group who supervises LBP's more than 300 branches
and field offices nationwide while performing highly technical or specialized core banking
functions. Truly, the refresher course was a necessary and reasonable expenditure for the bank
under the circumstances.

Sections 1 and 2, Rule VIII of the Omnibus Rules Implementing Book V of E.O. 29226 state:

SECTION 1. Every official and employee of the government is an asset or

resource to be valued, developed and utilized in the delivery of basic services to
the public. Hence, the development and retention of a highly competent and
professional workforce in the public service shall be the main concern of every
department and agency.

Every department or agency shall therefore establish a continuing program for

career and personnel development for all agency personnel at all levels, and shall
create an environment or work climate conducive to the development of
personnel skills, talents and values for better public service.

SEC. 2. Each department or agency shall prepare a career and personnel

development plan which shall be integrated into a national plan by the
Commission which shall serve as the basis for all career and personnel
development activities in the government. The Career and Personnel
Development Plan shall include provisions on merit promotion, performance
evaluation; in-service training; overseas and local scholarships and training
grants; suggestions, incentive award systems, provisions for welfare,
counseling, recreation and similar services; and other human resource
development interventions such as on the job training, counseling, coaching, job
rotation, secondment, job swapping and others.

The aim of the refresher course is to provide updated information on the enhancement of
managerial and verbal skills, and on the analysis and interpretation of data which can assist the
officers concerned in (1) effectively carrying out their respective duties and responsibilities, and
(2) enhancing LBP's delivery of service to its clients. These objectives of LBP in securing MSA's
service to conduct a professional advancement refresher course are clearly in line with its
mandate to provide a continuing program for career development of its personnel as laid down
in the civil service rules.

COA erred in arguing that the corresponding costs incurred in the refresher course are
considered as unnecessary expenses in violation of COA Circular No. 85-55-A.33. The terms

58
'irregular,' 'unnecessary,' 'excessive,' and 'extravagant,' when used in reference to expenditures
of funds or uses of property, are relative. The determination of which expenditure of funds or
use of property belongs to this or that type is situational. Circumstances of time and place,
behavioral and ecological factors, as well as political, social and economic conditions, would
influence any such determination. Viewed from this perspective, transactions under audit are to
be judged on the basis of not only the standards of legality but also those of regularity,
necessity, reasonableness and moderation."

Full text of the case law

https://lawphil.net/judjuris/juri2017/jul2017/gr_213424_2017.html

National Telecommunications Commission vs. COA (G.R. No. 232199, December 01,
2020)

Topic
▪ Computation of the separation pay benefits

FACTS of the CASE

Congress enacted Republic Act No. (RA) 9136, or the Electric Power Industry Reform Act of
2001 (EPIRA) to install reforms in the electric power industry which is composed of four sectors,
viz.: generation, transmission, distribution, and supply. The EPIRA paved the way for the
privatization of National Power Corporation (NPC)'s assets and liabilities.

Pursuant to this objective, the EPIRA created the following entities: (1) TRANSCO, and (2)
Power Sector Assets and Liabilities Management Corporation (PSALM).

PSALM then entered into a 25-year concession contract with the National Grid Corporation of
the Philippines (NGCP). In turn, Congress enacted RA 9511 granting a franchise to NGCP to
take over TRANSCO's transmission functions and assets. Upon the concession contract's
implementation, TRANSCO's employees were separated from service, effective June 30, 2009.
Thus, the law granted separation pay to those employees affected by the electric power industry
reorganization, viz.:

Sec. 63. Separation Benefits of Officials and Employees of Affected Agencies.

— National Government employees displaced or separated from the service
as a result of the restructuring xxx shall be entitled to either a separation pay
and other benefits xxx which shall be one and one-half month salary for
every year of service in the government: xxx.

While the EPIRA provided the computation for separation pay, the law empowered
TRANSCO's Board of Directors (Board) to fix the compensation, allowance, and benefits of
TRANSCO employees. In its Resolution, the Board reiterated the separation pay computation
provided by the EPIRA, as follows: Separation Pay = Basic Salary x Length of Service x 1.5

59
 Where:

a. Basic Salary shall include 13th month pay (equivalent to 1 1/2 Monthly Basic
Salary [Sec. 3 of Rule 33 of the EPIRA IRR])

b. Length of Service - multiplier is defined as number of years of government

service. A fraction of one (1) year, equivalent to six months or more, shall be
considered as one (1) whole year.

Subsequently, TRANSCO President and Chief Executive Officer Arthur N. Aguilar issued
Circular No. 2009-001016 dated May 6, 2009 setting forth the rules and regulations in
implementing the separation program. In addition to the 1.5 multiplier to be applied to the basic
salary as provided by the EPIRA (Basic Salary Multiplier), said circular granted another 1.5
multiplier to be applied in the computation of length of service (Length of Service Multiplier), to
wit:

Thus, when Mr. Macapodi, a legal researcher receiving a basic salary of P30,150.00 per month
was separated, his 42.97032 actual years of service was credited as 61 years. Hence, his
separation pay was computed using this formula: (Basic salary x 61 years x 1.5 = Php
2,988,618.75

COA questioned the disbursement saying that under the EPIRA Law, the formula should be,
Basic salary x length of service x 1.5. Using this formula, the separation pay would only be
Php2,105,277.12. Hence, the excess of Php883,341.63 was disallowed in audit. According to the
auditor, the adoption of multipliers in addition to the 1.5 monthly salary per year of service"
effectively increased the employee's length of service, resulting in excessive benefits.

ISSUE

Whether COA correctly disallowed that portion of the separation pay resulting from
multiplying the length of service pursuant to the Circular issued by the NTC’s President and
CEO.

RULING

Yes. The COA properly disallowed a portion of the separation benefits paid to Macapodi for
violating the EPIRA. A disbursement of government funds that is contrary to law shall be
disallowed, for being an illegal expenditure. The overpayment of Macapodi's separation
benefits to the extent of P883,341.63 is illegal because it violated Sections 63 and 12(c) of the
EPIRA.

First, Section 63 of the EPIRA provides that an affected employee's separation pay shall be equal
to "one and one-half month salary for every year of service." In other words, the formula only
has three components, viz.: (a) base amount consisting of the monthly salary; (b) multiplier of

60
one and one-half or 1.5; and (c) length of service. Contrary to the EPIRA formula, which has
only one multiplier, TRANSCO's formula uses two multipliers: (a) the Length of Service
Multiplier crediting Macapodi with 61.0000 instead of only 42.9703 years; and (b) the Basic
Salary Multiplier under the EPIRA, granting him a base amount equal to one and one-half of his
basic salary.

Moreover, under Section 12(c) of the EPIRA, the power to fix the compensation, allowance, and
benefits of TRANSCO employees rests upon its Board. In other words, to be valid, salaries and
benefits of TRANSCO employees must be determined via a board resolution. However, to
recall, the Length of Service Multiplier was incorporated to TRANSCO's separation pay
computation thru Circular No. 2009-0010 issued by TRANSCO's President and CEO.

In this case, the Commission Proper Decision absolved Mr. Sabdullah T. Macapodi, the payee,
saying that he was a mere passive recipient thereof.

ISSUE

Whether the COA Commission Proper correctly exonerate Mr. Macapodi from liability to
refund.

RULING

No. Macapodi shall be liable for the illegal disbursement. Notably, the COA Rules and
Regulations on Settlement of Accounts holds a payee personally liable for a disallowed amount,
provided the following conditions concur: (a) The payee failed to submit required documents,
and (b) the disallowance was grounded on such failure. However, we cannot impute liability to
Macapodi based on this rule. The disallowance here was grounded on the expenditure's
illegality (i.e., violating the EPIRA), not on Macapodi's failure to submit documents.

Macapodi's liability to return the disallowed amount is grounded not on the COA rules as cited
above, but on the basic principle that no one can be unjustly enriched by money mistakenly
paid to him. To be sure, a government instrumentality's disbursement of salaries that
contravenes the law is a payment through error or mistake. A person who receives such
erroneous payment has the quasi-contractual obligation to return it because no one shall be
unjustly enriched at the expense of another, especially if public funds are at stake. The law
constitutes the person receiving money through mistake a trustee of a constructive trust for the
benefit of the person from whom the property comes, which, in this case, is the government.
That the amount was already released to the employee through no fault of his own does not
diminish the payment's patent illegality or cure its defect. His obligation to return arose because
the payment was a clear mistake. He has no right to retain the amount, irrespective of his good
faith in receiving it.

In the recent case of Madera v. Commission on Audit (Madera), the Court returned to the basic
premise that the responsibility to return is a civil obligation to which fundamental civil law
principles, such as unjust enrichment and 'solutio indebiti' apply regardless of the good faith of
passive recipients." In the absence of bona fide exceptions manifest on the record, the Court

61
shall remain stringent in appreciating the defense of good faith when determining a payee's
liability over disallowed expenses. To be sure, the Court's decision to excuse a civil servant from
to refund the salaries clearly received by virtue of a patently illegal directive to disburse and,
thus, by mistake must rest on "truly exceptional circumstances.

Rules in Determining the Person’s Liable for the Disallowance

In this case, the following were named as persons liable for the disallowance:

Susana H. Singson Division Manager, for verifying that the

General Accounting and disbursement voucher
Financial Reporting covering the subject check was
supported by the necessary
documents

Jose Mari M. Ilagan Manager, for certifying that the subject

Administrative expense was necessary, lawful,
Department and incurred under his direct
supervision

Mr. Sabdullah T. As payee but absolved

Macapodi by the COA Commission
Proper

Members of the Board For authorizing the payment of

the disallowed separation
benefits

Arthur N. Aguilar, the President and CEO, was not held liable for the disallowance.

ISSUE

Whether the COA is correct in holding the signatories of the disbursements and the members of
the Board liable, and for not naming the President and CEO who issued the circular as person
liable.

RULING

To begin with, Book VI, Chapter V, Section 43 of Executive Order No. 292, or the Administrative
Code of 1987, enumerates the persons liable for an illegal expenditure, to wit:

Sec. 43. Liability for Illegal Expenditures. - Every expenditure or obligation

authorized or incurred in violation of the provisions of this Code or of the
general and special provisions contained in the annual General or other
Appropriations Act shall he void. Every payment made in violation of said
provisions shall be illegal and every official or employee authorizing or making

62
 such payment, or taking part therein, and every person receiving such payment
shall be jointly and severally liable to the Government for the full amount so
paid or received.

Thus, the general rule is that "public officials who are directly responsible for, or participated in
making the illegal expenditures, as well as those who actually received the amounts therefrom
shall be solidarity liable for their reimbursement."

In turn, the COA determines the extent of one's liability for each illegal expenditure as follows:

Sec. 16. Determination of Persons Responsible/Liable. —

16.1 The Liability of public officers and other persons for audit
disallowances/charges shall be determined on the basis of (a) the nature of the
disallowance/charge; (b) the duties and responsibilities or obligations of
officers/employees concerned; (c) the extent of their participation in the
disallowed/charged transaction; and (d) the amount of damage or loss to the
government, thus:

16.1.1 x x x
16.1.2 Public officers who certify as to the necessity, legality and availability of
funds or adequacy of documents shall be liable according to their respective

certifications.

16.1.3 Public officers who approve or authorize expenditures shall be liable for
losses arising out of their negligence or failure to exercise the diligence of a
good father of a family.

16.1.4 x x x

16.1.5 The payee of an expenditure shall be personally liable for a disallowance

where the ground thereof is his failure to submit the required documents, and
the Auditor is convinced that the disallowed transaction did not occur or has no
basis in fact.

Based on these rules, the following may be held jointly and severally liable for the overpayment
of separation benefits in this case: (1) Macapodi, as the payee or recipient of the amount; (2)
Singson and Ilagan, as the officers who approved and certified the specific transaction,
respectively; and (3) the members of TRANSCO's Board and/or its President and CEO, as the
officials who issued directives to pay separation benefits.

1. Singson and Ilagan's liability

The Court absolves Singson and Ilagan from liability. In the present case, Singson verified that
the disbursement voucher covering the subject check was supported by the necessary

63
documents. On the other hand, Ilagan certified that subject expense was necessary, lawful, and
incurred under his direct supervision.

The general rule is that a verifier and/or certifier of an illegal disbursement is/are liable for
audit disallowances under the above-quoted provisions of Sections 16.1.2 and 16.1.3 of COA
Circular No. 006-09, respectively. However, this liability does not "automatically attach simply
because one took part in the disbursement approval process."

Significantly, a verifiers/certifier's authority to approve a disbursement is subordinate only to a

higher official's authority to direct or instruct the payment per se. Upon the higher authority's
instruction to disburse funds, a verifier shall evaluate the disbursement "in accordance with the
applicable internal control procedures and rules mandated by the COA and/or the government
instrumentality itself." On the other hand, a certifier would independently review the
transaction for purposes of attesting "that funds are available for the disbursement, x x x that
the corresponding allotment may be charged, and x x x that the expense/disbursement is valid,
authorized, and supported by sufficient evidence."

Thus, according to the nature of their participation, Singson and Ilagan performed their
respective duties based on a superior officer's directive. At that time, they approved the
disbursement in the honest belief that it was supported by a valid exercise of corporate powers.
Inasmuch as these personnel are public officers, they are presumed to have performed their
duties regularly and in good faith. Absent proof of "bad faith or malice, public officers are not
personally liable for damages resulting from the performance of official duties." In the present
case, 'there is no evidence showing that either Ilagan or Singson performed their duties in bad
faith or negligently. Thus, there is no reason for the Court to dispel the presumption of
regularity and good faith favoring them.

2. The Board and/or the President/CEO's liability

The root of the illegal disbursement in the present case is a mere circular issued by the President
and CEO, not a board resolution. A closer look at the Factual antecedents would reveal that the
board resolutions related to TRANSCO's separation program echoed the same formula under
the EPIRA. It was only Circular No. 2009-0010 that incorporated the Length of Service
Multiplier into TRANSCO's computation of separation pay.

Inasmuch as Circular No. 2009-0010 directly defied the EPIRA, the issuance thereof was ultra
vires and negligent. That the act was unauthorized negates good faith in the performance of
duties. As the flawed circular was, however, not issued by the members of the Board but by
President and CEO Arthur N. Aguilar alone, who was not made a party to this case, we must
modify the COA Proper Decision in that the former are exonerated from liability.

Full text of the case law

https://sc.judiciary.gov.ph/17188/

64
Abellanosa et. al vs. Commission on Audit and National Housing Authority (G.R. No.
185806, July 24, 2012)

Topic
▪ Grant of incentive allowances equivalent to 20% of basic pay in favor
of project personnel who were assigned to regions outside their regular station.

FACTS of the CASE

The Board of Directors of the National Housing Authority (NHA) issued Resolution No.
4645 authorizing the grant of incentive allowances equivalent to 20% of basic pay in favor
of project personnel who were assigned to regions outside their regular station. However, the
subject allowances were discontinued in light of the enactment of RA 6758 otherwise known as
the Compensation and Position Classification Act of 1989. Consequently, DBM issued CCC No.
10 entitled "Rules and Regulations for the Implementation of the Revised Compensation and
Position Classification System Prescribed under RA 6758 for Government-Owned and/or
Controlled Corporations and Financial Institutions (GFIs)."

NHA resumed payment of the subject allowances after the Court struck down DBM CCC No.
10 for lack of publication. This prompted petitioners to demand full back payment of incentive
allowances for the period of February 1994 to December 1999. Uncertain about the legality of
these claims, the NHA sought clarification from COA.

Pending clarification, Abellanosa authorized the disbursement of the amount of P100,3210.16

with him and other petitioners as payees. COA issued an adverse opinion relative to the
incentive allowances, thus, the NHA informed Abellanosa that the payment of the same should
be discontinued for lack of legal basis. This notwithstanding, Abellanosa, once again,
authorized the disbursement of the amount of P300,963.29 as incentive allowances, with him
and other petitioners as payees.

The Legal and Adjudication Office of the COA disallowed the disbursements for lack of legal
basis and held petitioners liable in the following capacities: (a) Abellanosa, as approving officer
and payee; (b) Laigo, as certifying officer and payee; and (c) Pineda, Rucat, Siao, and Baviera,
each as payees. Aggrieved, petitioners appealed the ND to ASB-COA arguing that RA 6758
does not apply to the NHA incentive allowances as the same were authorized prior to the
passage of the said law, and that DBM CCC No. 10 was already struck down by the Court.

ASB-COA affirmed the disallowance. COA affirmed the ruling of the ASB-COA. In the same
vein, it held that the subject allowances granted by the NHA to its displaced employees lacked
legal basis.

ISSUE

Whether or not the disallowance was proper

65
RULING

Yes, the disallowance was proper. The issuance of Resolution No. 464 by the NHA was without
legal basis. At the time of its issuance in 1982, Section 3 of P.D. 1597 had already expressly
repealed all decrees, executive orders, and issuances that authorized the grant of allowances to
groups of officials or employees despite the inconsistency of those allowances with the position
classification or rates indicated in the National Compensation and Position Classification Plan.

In this case, the incentive allowances granted under Resolution No. 464 are clearly not among
those enumerated under R.A. 6758. Neither has there been any allegation that the allowances
were specifically determined by the DBM to be an exception to the standardized salary rates.
Hence, such allowances can no longer be granted after the effectivity of R.A. 6758.
Notwithstanding petitioners' claim that the incentive allowances were incidental to and
necessary for the enforcement of the NHA's powers and duties, the same can no longer be
granted in light of the express provisions of RA 6758 which, upon its effectivity, rationalized
government salary rates in pursuit of similarly noteworthy objectives.

Full text of the case law

https://lawphil.net/judjuris/juri2012/jul2012/gr_185806_2012.html

Advincula, et. al vs. Commission on Audit (G.R. No. 209712, February 16, 2021)

Topic
▪ Payment of Annual Gift Checks through board resolution.
FACTS of the CASE

Bases Conversion and Development Authority (BCDA) is a government instrumentality tasked

to facilitate the conversion of the Clark and Subic military reservations and extensions into
alternative productive uses created under RA 7227. While BCDA Management and Holdings,
Inc. (BMHI) is a subsidiary of the former.

On September 18, 2003, the BCDA Board of Directors (Board) approved Resolution No. 2003-09-
186 authorizing the payment of 2003 Annual Gift Checks (AGC), with the following provisions:

“Annual gift checks shall be granted to all BCDA regular plantilla personnel and contractual
officers and employees including the members of the Board, office-based consultants and those
on detail from other government agencies rendering full time service to BCDA and who are
in the service as of 30 September 2003”

“For this purpose, services rendered continuously by employees of BMHI, the BCDA
manpower Services provider, office-based consultants performing BCDA functions who were
subsequently hired by BCDA prior to 30 September 2003 are considered actual service in
BCDA”

66
On the strength of their parent company’s Board Resolution No. 2003-09-186 and guidelines,
BMHI management released the AGCs to its employees and the members of the Board, through
Disbursement Voucher (DV) Nos. 2003-09-13015 and 2003-09-1.3 l 16 dated September 23, 2003,
amounting to P2,569,000.00 and P343,000.00, respectively. The said payment was disallowed in
audit, on the following grounds:

a) The members of the BMHI Board are not entitled to these benefits because they are not
salaried government officials contrary to DBM Circular No. 2002-2;

The BMHI Board is not entitled to AGCs. Under the BMHI by-laws; the members of the Board
shall be entitled only to a reasonable per diem· allowance per board meeting and compensation,
which shall not exceed l0% of the preceding year's net income before income tax.

b) BMHI's employees are not automatically entitled to the benefits accruing to the
personnel of the parent corporation;

BMHI, a subsidiary, has a personality separate and distinct from BCDA, its parent. BCDA
Board Resolution No. 2003-09-186 cannot justify BMHI's grant/payment of AGCs to the latter's
employees. Verily, BMHI's own Board is empowered to adopt a compensation plan and
prepare/approve BMHI's annual budget. However, the BMHI Board did not pass a separate
resolution exercising these powers to grant the subject AGCs.

ISSUE

Did the COA Proper commit grave abuse of discretion amounting to lack or excess of
jurisdiction in upholding the disallowance and holding the petitioners/payees, the BMHI
Board, and other approving/certifying officials liable therefor?

RULING

The disallowance and ruling on the liability therefor are supported by law and jurisprudence, as
the Court explained:

a) The disallowance is proper because the payment of AGCs lacks legal basis and requisite
board approval.
The fundamental principles governing government financial transactions require all public
disbursements to be founded on a specific statute and to bear the approval of the proper
officials. Otherwise, these payments shall be considered as illegal.
A closer look at the subject transaction reveals that the payment of AGCs was not founded on
any specific law authorizing its grant/release. It is undisputed that BMHI paid the subject
AGCs solely based on BCDA Board Resolution No. 2003-09-186, which was passed by the Board
of its parent company, not its own

Verily, the law considers a corporate act valid and effective only if it bears the board's seal of
approval, which is ordinarily evidenced by a resolution passed by-the board acting as a body
and in accordance with the formalities requited by the corporate by-laws.

67
However, the formal approval of corporate powers must be understood to be specific to a
corporation's own board. A corporate act's validity cannot be made to rely on a resolution
passed by the board of another entity, even that of its parent company because the authority to
approve corporate transactions is purely personal to a corporation's own board. To be sure, a
parent company's board resolution authorizing the payment of benefits will not automatically
redound to its subsidiaries. The directive shall be ineffectual as to the subsidiary unless the
subsidiary's own: board separately convenes and approves it. Certainly, without an express
statutory grant and/or a specific board resolution approving its payment, the release of AGCs
contravenes the law and must be disallowed.

b) The finding of liability conforms with the law and jurisprudence.

A person's liability for unlawful expenditures hinges upon the extent of his participation in the
disallowed transaction

Payees shall be liable to refund the disallowed amount, regardless of good faith and passive
receipt thereof. The disbursement of AGCs, having adjudged to be unlawful, is considered to
have been paid in error or through mistake. Thus, herein petitioners/payees' liability "is a civil
obligation to which fundamental civil law principles, such as unjust enrichment and 'solutio
indebiti' apply." Unless there are "bona fide exceptions manifest on the record, the Court shall
remain stringent in appreciating the defense of good faith when determining a payees liability
over disallowed expenses." On the other hand, approvers, as public officers, are presumed to
have acted in the regular performance of their duties and in good faith. Thus, they shall not
answer for the disallowed amount, unless it is shown that they are guilty of bad faith or malice.

In the present case, Puno approved DV Nos. 2003-09-130 and 2003-09-131, allowing the
payment of AGCs. For their part, Tanagon and Nocos did not merely certify that funds were
available for the subject disbursement. They attested that it was· necessary/valid/proper and
supported by complete documentation. That these personnel affixed their signatures on the DV
s despite the clear absence of a BMHI board resolution authorizing the expense disputes good
faith and regular performance of their respective duties. Based on these considerations, the
finding of liability against the payees and BMHI approving/certifying personnel is also proper.

Full text of the case law

https://sc.judiciary.gov.ph/18761/

Ser John Pastrana vs. Commission on Audit (G.R. No. 242082, June 15, 2021)

Topic
▪ Payment of CNA Incentives

FACTS of the CASE

Land Registration Authority (LRA) and Gabay ng LRA represented by Pastrana (Petitioner)
entered into a Collective Negotiation Agreement (CNA) providing for, among others, the grant

68
of incentives to all officers and employees “in recognition of the joint efforts of labor and
management to achieve all planned targets, programs, and services approved in the budget of
the agency at a lesser cost.
On January 6, 2011, COA issued ND disapproving in audit the payment of the CNA incentives
in the total amount of P30,180,000.00 on the following grounds:

- The CNA was granted out of the regular fund release intended to cover additional
MOOE and CO requirements for CY 2009
- The payment of CNA is an irregular transaction as it was paid without adhering to
established guidelines, existing rules and regulations, and the provisions of the CNA
such as;
o Special provisions in the appropriation of the LRA for CY 2010
o DBM Circular no. 2006-1
o AO 135
o Public Sector Labor-Management Council (PSLMC) Resolution no. 04, series of
2002
o 2008-2011 LRA-CNAs
o GAAM
- The amount of CNA was predetermined and fixed in the amount of P15,000 per
employee contrary to DBM Cir. No. 2006-1

Gabay ng LRA filed an appeal to COA-NGS Cluster B which was eventually denied for lack of
merit and affirmed the said ND. Gabay LRA also filed a petition for review before the COA
Proper, however it was dismissed for having been filed out of time. A motion for
reconsideration was partly granted by the COA proper through a resolution. It affirmed the
said ND and Decision of COA-NGS Cluster but with modifications, stating that the payees who
received the disallowed incentives in good faith need not refund the same. The recommending,
certifying, and approving officers named liable for the disallowance shall remain liable therefor.

Aggrieved by the decision, petitioners filed their Petitions for Certiorari before the SC assailing
the said ND, the decision of COA-NGS-Cluster B and the COA Proper decision and resolution.

ISSUE

Whether the COA correctly disallowed the CNA.

RULING

Yes. The instant petitions are bereft of merit. The PSLMC resolution no. 4, AO no. 135, and DBM
Budget Circular 2006-1 provide the comprehensive policy and procedural guidelines and
limitations on the grant of the CNA incentive. The rule is that to justify the grant of the CNA
incentive, it is not enough that savings are attained by the concerned NGA, LGU, SUC, GOCC,
or GFI, as the case may be. It must be clearly demonstrated that the savings from which the
payment of the CNA incentive was sourced are:

69
 - first, derived from the released MOOE allotments
- second, generated out of the cost-cutting measures specified in the CNA and its
supplements.
- Further, since it is exclusively sourced from the savings generated from cost-cutting
measures and systems improvement, the amount/ rate of CNA incentive must not have
been previously agreed upon in the CNA or fixed in its supplements.

In the present case, the release of the CNA incentives was not in accordance with the foregoing
established policies and guidelines. The records are bereft of evidence showing that the LRA’s
purported savings in the amount of P57,524,088.12 stemmed from the cost-cutting and systems
improvement measures undertaken by the agency and its personnel. There is glaring absence of
proof that the savings were realized on account of the cost-saving initiatives and strategies of
the LRA and its employees, as stipulated in the CNA. It is not even clear that the balance
P57,524,088.12 actually represents the LRA’s unencumbered savings after the satisfaction of all
of its obligations at the end of the year because of the lack of detailed computation and proper
documentation to substantiate this claim. All the LRA offered was a sweeping and unfounded
declaration that "the amount of P57,524,088.12 representing the unobligated balance of
allotment of LRA is its savings for FY 2009"50 and nothing more.
It is also essential that the representatives from the management and the employees'
organization come to an agreement establishing the following matters:

(I) the guidelines/criteria for the grant of the CNA incentive;

(2) the total amount of unencumbered savings at the end of the year; and
(3) the apportionment of savings.

The consensus shall be integrated in a written resolution signed by the representatives of the
management and the employees' organization and noted by the agency head, which shall serve
as basis for accounting and auditing purposes.

None of these requirements were shown to have been complied with by the management and
the employees' organization. It was NOT shown that the target programs, activities or projects
of the LRA had been implemented and accomplished and that the CNA incentive of PIS,000.00
per employee was pegged in view of the employees' contribution to LRA's accomplishment.
Further, the guidelines issued in the payment of the CNA incentive were embodied in the LRA
Circular dated April 7, 2010 which was solely signed by Administrator Ulep.

Hence, payment of the CNA incentive was correctly disallowed in audit.

Full text of the case law
https://sc.judiciary.gov.ph/22241/

70
Power Sector Assets and Liabilities Management Corporation vs. Commission on
Audit (G.R. No. 245830, December 09, 2020)

Topic
▪ Payment of across-the-board Corporate Performance-Based Incentive
equivalent to five and a half months of basic pay, net of tax approved by the
board.

FACTS of the CASE

Pursuant to Republic Act No. (RA) 9136, the Office of the President, through the Department of
Budget and Management (DBM), approved on 13 March 2002 a Uniform Compensation Plan
(UCP) for three (3) corporations including Power Sector Assets and Liabilities Management
Corporation (PSALM).

Pursuant to Corporate Action Plan and a Corporate Performance Matrix providing for a
framework for assessing their corporate accomplishments. PSALM's Board of Directors
approved Resolution No. 2009-1016-001 dated 16 October 2009 6 establishing its Corporate
Action Plan, Corporate Performance Metrics and Corporate Strategic Plan (CAP/CPM/CSP).
On 15 December 2009, or two (2) months after coming up with PSALM's CAP/CPM/CSP, its
Board of Directors approved Resolution No. 2009- 1215-006 granting an across-the-board CPBI
equivalent to five and a half (5 1/2) months of basic pay, net of tax, in the total amount of
Php56,604,286.37. However, the COA Audit Team Leader assigned to PSALM issued the
assailed ND No. 10-003-(2009) 10 disallowing the above disbursement for being illegal and
excessive. On appeal, the COA Corporate Government Sector (CGS)-Cluster B issued Decision
No. 2011-015 dated 20 December 2011 18 affirming the disallowance of PSALM's CPBI for CY
2009.

Petitioner filed a petition for review before the COA Proper, which initially denied the same in
its Decision No. 2015-085 dated 26 March 2015 20 for failure of petitioners to appeal within the
reglementary period of six (6) months or 180 days counted from their receipt of the assailed ND.
Petitioners filed for a motion for reconsideration. The COA Proper, through its Decision No.
2018-301 dated 15 March 2018, 22 affirmed the disallowance, with the modification of excusing
certain officers from liability.

Thus, petitioners filed for certiorari seeking the reversal of the Decision No. 2015-085 1 dated 26
March 2015 of the Commission on Audit (COA), which affirmed the Notice of Disallowance
(ND) No. 10-003-(2009) dated 15 June 2010 issued against the grant of Corporate Performance
Based Incentive (CPBI) to the former in the total amount of Php56,604,286.37.

Petitioners argues that the grant of 2009 CPBI to petitioners is not excessive on the ground that
the 2009 CPBI is an equitable performance-based incentive package that was formulated,
validated and approved by the PSALM BOD in its Resolution No. 2009-1215-006 dated
December 15, 2009 and justified by the totality of the achievements of PSALM.

71
Further, they contend that CPBI is a reward or financial incentive and not a benefit, hence it is
not covered by the requirements of approval by the Office of the President under Section 64 of
RA 9136 and the grant of 2009 CBPI cannot be considered as "unnecessary expense" within the
meaning and contemplation of COA Circular No. 85-55-A.

ISSUES

1. Whether the grant of the CPBI equivalent to five and a half months of basic pay net of tax to
PSALM's employees was correctly disallowed in audit

2. Whether CPBI is a reward or financial incentive and not a benefit, hence it is not covered by
the requirements of approval by the Office of the President under Section 64 of RA 9136 and the
grant of 2009 CBPI cannot be considered as "unnecessary expense" within the meaning and
contemplation of COA Circular No. 85-55-A.

RULINGS

First Issue

YES. Even if PSALM claims to have exceeded its targets and achieved outstanding
performance, the rate of five and a half (5 1/2) months basic pay net of tax had no basis at all.
Petitioners should have been guided by the rates of incentives in previous issuances such as
Executive Order No. 486 which was later amended by Executive Order No. 518 dated 29 May
1992 47 setting forth the maximum rate for GOCC incentives and the source from which these
incentives are to be funded, thus:
This incentive fund shall be the source for rewards, either in kind or in cash bonuses, to be
granted by GOCCs only to deserving officers and employees based on an evaluation of their
individual performance and relative contribution to the attainment of the corporation's goals
and targets. The maximum allowable amount of incentive bonus for a GOCC officer or
employee shall vary according to the performance grade of the GOCC and of his department or
division or unit, and to his individual performance but shall in no case exceed three (3) months'
basic salary or its equivalent.

It is crystal clear from these issuances that the permissible maximum rate for incentives is three
(3) months basic salary or its equivalent. No other law or issuance allows PSALM to grant more
than this. Consequently, the CPBI given by PSALM to its employees was indeed excessive and
extravagant as it exceeded reasonable limits. Thus, it was held that respondent, did not act with
grave abuse of discretion in disallowing the CPBI equivalent to five and a half (5 1/2) months
basic salary net of tax, or a total disbursement of Php56,604,286.37.

Second Issue

NO. It is covered by the rule requiring Presidential approval. RA 9136, which created PSALM,
specifically provided guidelines in the grant of all emoluments and benefits to the corporation's
personnel, thus:

72
SECTION 64. Fiscal Prudence. — To promote the prudent management of government
resources, the creation of new positions and the levels of or increases in salaries and all other
emoluments and benefits of TRANSCO and PSALM Corp. personnel shall be subject to the
approval of the President of the Philippines. The compensation and all other emoluments and
benefits of the officials and members of the Board of TRANSCO and PSALM Corp. shall be
subject to the approval of the President of the Philippines.

Rule 32 (a) of the Implementing Rules and Regulations of RA 9136 similarly provides:

RULE 32
Fiscal Prudence
(a) Pursuant to Section 64 of the Act, the creation of new positions and
the levels of or increases in salaries and all other emoluments and
benefits of TRANSCO and PSALM personnel shall be subject to the
approval of the President of the Philippines. 41 (Emphasis supplied).

Clearly, the term "all other emoluments and benefits" is intended to cover every kind of
financial grant and payment given to PSALM employees and is thereby covered by the rule
requiring Presidential approval. When the law does not distinguish, neither should the Court.

Petitioners' resort to semantics in attempting to distinguish incentive from "all other

emoluments and benefits" is made even more specious by the DBM's advice to PSALM
recommending an equitable performance-based incentive in lieu of upgrading the pay and
benefits of PSALM personnel through a harmonized compensation plan that, “…any upgrading
of pay and benefits at this stage will be a strong disincentive to the privatization effort currently
under way.”

Further, DBM in its advice was clear that,” in lieu of the proposed harmonized compensation
plan, therefore we suggest that an equitable performance-based incentive package covering
allowances, bonus or similar incentives be considered consistent with the above-mentioned
Special Provision proposed to Congress.”

Evidently, the CPBI was devised as an alternative to implementing an across-the-board increase

in allowances and other benefits. Operating on such premise, PSALM cannot claim the CPBI is
an incentive not requiring Presidential approval pursuant to RA 9136 whereas the original
allowances and benefits proposed to be implemented would be covered by the same law.

Moreover, PSALM should have taken special note of Section 3 (b) and (c) of Administrative
Order No. 103 dated 31 August 2004, 43 viz.:
SECTION 3. All NGAs, SUCs, GOCCs, GFIs and OGCEs, whether exempt from the Salary
Standardization Law or not, are hereby directed to:

(b) Suspend the grant of new or additional benefits to full-time officials

and employees and officials, except for (i) Collective Negotiation
Agreement (CNA) Incentives which are agreed to be given in strict
compliance with the provisions of the Public Sector Labor-Management

73
 Council Resolutions No. 04, s. 2002 and No. 2, s. 2003, and (ii) those
expressly provided by presidential issuance;

(c) For other non-full-time officials and employees, including members

of their governing boards, committees, and commissions: (i) suspend the
grant of new or additional benefits, such as but not limited to per diems,
honoraria, housing and miscellaneous allowances, or car plans; and (ii)
in the case of those receiving per diems, honoraria and other fringe
benefits in excess of Twenty Thousand Pesos (P20,000.00) per month,
reduce the combined total of said per diems, honoraria and benefits to a
maximum of Twenty Thousand Pesos (P20,000.00) per month.
This issuance should, thus, have cautioned petitioners from granting
CPBI, or at least, prompted them to initially seek the approval of the
President before the release of the grant. The document that petitioners
claim to be a certified true copy of the President's "confidential"
approval cannot be given credence because it lacks the signature of the
President. It was also established that "the said confidential documents
are not among the records available on file or in the possession of the
Malacañang Records Office."

It also bears stressing that the supposed approval was only procured on 30 December 2009,
which was after the PSALM Board of Directors had already approved the grant of CPBI for CY
2009.

At any rate, the grant of CPBI to PSALM employees was truly excessive and extravagant
warranting disallowance. Excessive expenditures have been recognized as "unreasonable
expense or expenses incurred at an immoderate quantity and exorbitant price.

Full text of the case law

https://lawphil.net/judjuris/juri2020/dec2020/gr_245830_2020.html

74
Guzman, et. al vs. Commission on Audit (G.R. No. 245274, October 13, 2020)

Topic
▪ Grant of Centennial Bonus equivalent to 50% of the employee’s salary
pursuant to board resolution.

FACTS of the CASE

Under Resolution (BR) No. 046-2009 dated November 20, 2009, the Baguio Water District (BWD)
authorized the grant of Centennial Bonus to its officers and employees in the amount equivalent
to fifty percent (50%) of the employee's salary. The bonus was distributed to the recipients on
the occasion of the 100th anniversary of the City of Baguio.

The COA Audit Team disallowed the amount of ₱1,233,860.50 granted as centennial bonus to
the BWD officers and employees for being allegedly devoid of legal basis. Petitioners appealed
to the COA-CAR arguing that the agency was not covered by the austerity measures embodied
in AO 103 and, the bonus was released to the officers and employees in good faith. The COA-
CAR and COA En Banc affirmed the disallowance.

ISSUE

Whether the grant of the centennial bonus through a board resolution proper.

RULING

Yes. The disallowance of the centennial bonus is in accord with law and jurisprudence. Local
water districts are not private corporations but GOCCs. Being a water district, the BWD itself is
a GOCC, thus, subject to the power of control of the President.

Undeniably, AO 103 governs the manner by which local water districts like the BWD manage
and handle their finances. And under AO 103, BWD, as a GOCC, is directed to Suspend the
grant of new or additional benefits to full-time officials and employees and officials, except for
(i) Collective Negotiation Agreement (CNA) Incentives which are agreed to be given in strict
compliance with the provisions of the Public Sector Labor- Management Council Resolutions
No. 04, s. 2002 and No. 2, s. 2003, and (ii) those expressly provided by presidential issuance.
Here, the commemorative or centennial bonus granted to the BWD officers and employees on
the occasion of the agency's 100th anniversary of Baguio City is neither a CNA incentive nor
authorized by a presidential issuance. Its grant, therefore, was devoid of any legal basis.

Full text of the case law

https://lawphil.net/judjuris/juri2020/oct2020/gr_245274_2020.html

75
Manolito P. Mendoza vs. Commission on Audit (G.R. No. 195395, September 10, 2013)

Topic
▪ Salary of the water district’s general manager which is inconsistent with the
SSL.

FACTS of the CASE

Petitioner Mendoza is the general manager of Talisay Water District. The Water District was
formed pursuant to PD No. 198, otherwise known as the "Provincial Water Utilities Act of
1973." COA disallowed a total amount of P380,208.00 which Mendoza received as part of his
salary from 2005 to 2006. The Commission found that petitioner Mendoza's salary as general
manager was not in consonance with the rate prescribed under RA 6758, otherwise known as
the Salary Standardization Law and the approved Plantilla of Position of the district.

COA issued the "Notice of Finality of COA Decision" informing petitioner Mendoza of the
finality of the Notice of Disallowance/s (ND/s). Mendoza argued that Section 23 of the
Provincial Water Utilities Act of 1973 gives Talisay Water District board of directors the right to
fix and increase his salary as general manager and is an exception to the Salary Standardization
Law. Finally, he argued that he had relied on Section 23 in good faith. As such, he cannot be
ordered to refund the salaries he had received.

COA ruled that Section 23 of the Provincial Water Utilities Act is not an exception to SSL, albeit,
it can be reconciled. Although Section 23 grants a water district the power to fix the
compensation of its general manager, this power is not absolute. The salary of a general
manager is limited by the SSL Law to a grade of Salary Grade 30 maximum. The alleged good
faith of petitioner Mendoza in relying on Section 23 does not excuse him from reimbursing the
government the amounts unduly disbursed to him.

ISSUE

Whether or not the disallowance was proper?

RULING

Yes, the disallowance was proper. However, petitioner need not refund the amount received
because he received it in good faith. The salary of a water district's general manager is covered
by the SSL despite Section 23 of the Provincial Water Utilities Act of 1973. The law grants water
districts the power to fix the compensation of their respective general managers, but it should
be consistent with RA 6758 or the "Compensation and Position Classification Act of 1989. The
SSL applies to all government positions, including those in government-owned or controlled
corporations, without qualification. The exception to this rule is when the government-owned
or controlled corporation's charter specifically exempts the corporation from the coverage of the
SSL. In this case, there was none for Talisay Water District.

76
Full text of the case law
https://www.chanrobles.com/cralaw/2013septemberdecisions.php?id=810

Technical Education and Skills Development Authority vs. Commission on Audit, et. al
(G.R. No. 204869, March 11, 2014)

Topic
▪ Payment of Extraordinary and Miscellaneous Expenses twice from two
different sources – from locally-funded projects and foreign-assisted projects.

FACTS of the CASE

TESDA audit team leader discovered that for the calendar years 2004-2007, TESDA paid EME
twice each year to its officials from two sources, the General fund for locally-funded projects,
and the Technical Education and Skills Development Project (TESDP) Fund for the foreign-
assisted projects. The payment of EME was authorized under the 2004-2007 GAAs provided the
legal ceiling was not exceeded for each fund.

The audit team issued Notice of Disallowance disallowing the payment of EME amounting to
P5,498,706.60 for being in excess of the amount allowed in the 2004-2007 GAAs. In addition, the
EME were disbursed to TESDA officials whose positions were not of equivalent ranks as
authorized by the DBM. The ND indicated the persons liable for the excessive payment of EME:
the approving officers, payees and the accountants.

TESDA, through its then Director-General Augusto Boboy Syjuco, Jr., filed an Appeal
Memorandum arguing that the 2004-2007 GAAs and the Government Accounting and Auditing
Manual allowed the grant of EME from both the General Fund and the TESDP. According to
TESDA, the General Fund and the TESDP Fund are distinct from each other, and TESDA
officials who were designated as project officers concurrently with their regular functions were
entitled to separate EME from both funds.

The COA Cluster Director denied the appeal for lack of merit. The COA Cluster Director ruled
that the GAA provision on EME is very clear to the effect that payment of EME may be taken
from any authorized appropriation but shall not exceed the ceiling stated therein. The Audit
Team Leader stated that the inclusion in TESDA budget for EME in TESDP Fund, which was
actually found only in the GAA for FY 2005 could not serve as basis for the grant of EME and
should not be treated distinctly and separately from EME under GAA as the officials who were
paid the EME from [TESDP Fund] are the same TESDA officials who were already paid EME
out [of the General Fund].

TESDA, through its Director-General, filed a petition for review with COA. COA denied
TESDA's petition for lack of merit. Accordingly, COA ruled that the failure of the TESDA
officials to adhere to the 2004-2007 GAAs negated their claim of good faith. Thus, the COA
ordered them to refund the excess EME they received.

77
TESDA insisted on its interpretation justifying its payment of EME out of the TESDP Fund. It
argued that the 2004-2007 GAAs did not prohibit its officials from receiving additional EME
chargeable against an authorized funding, the TESDP Fund in this case, for another office to
which they have been designated. Thus, they submitted this case at bar.
ISSUE

Whether the double receipt of EME from local and foreign fund sources are illegal?

RULING

Yes. The GAA provisions are clear that the EME shall not exceed the amounts fixed in the GAA.
The GAA provisions are also clear that only the officials named in the GAA, the officers of
equivalent rank as may be authorized by the DBM, and the offices under them are entitled to
claim EME not exceeding the amount provided in the GAA.

COA merely complied with its mandate when it disallowed the EME that were reimbursed to
officers who were not entitled to the EME, or who received EME in excess of the allowable
amount. When the law is clear, plain and free from ambiguity, there should be no room for
interpretation but only its application.
In this case, TESDA failed to point out the law specifically authorizing it to grant additional
reimbursement for EME from the TESDP Fund. There is nothing in the 2004-2007 GAAs which
allows TESDA to grant its officials another set of EME from another source of fund like the
TESDP Fund. COA aptly pointed out that not even TESDA's inclusion of EME from both the
General Fund and the TESDP Fund in the 2005 GAA justified its payment of excessive EME
from 2004 up to 2007.

Accordingly, the Director-General's blatant violation of the clear provisions of the Constitution,
the 2004-2007 GAAs and the COA circulars is equivalent to gross negligence amounting to bad
faith. He is required to refund the EME he received from the TESDP Fund for himself. As for
the TESDA officials who had no participation in the approval of the excessive EME, they acted
in good faith since they had no hand in the approval of the unauthorized EME. They also
honestly believed that the additional EME were reimbursement for their designation as project
officers by the Director-General. Being in good faith, they need not refund the excess EME they
received.

Full text of the case law

https://lawphil.net/judjuris/juri2014/mar2014/gr_204869_2014.html

78
Dr. Emmanuel T. Velasco, et. al vs. Commission on Audit, et. al (G.R. No. 189774,
September 18, 2012)

Topic
▪ Merit Incentive Award through an authority of the chairman, Tariff
Commission.

FACTS of the CASE

The Tariff Commission established its own Employee Suggestions and Incentives Awards
System (ESIAS), which was approved but was subject to revisions by the Civil Service
Commission (CSC) to comply with certain requirements. Without the revised ESIAS having
been acted upon by the CSC, the Tariff Commission, through its then Chairman Emmanuel T.
Velasco, issued a Special Order granting the subject Merit Incentive Award to its officials and
employees in amounts ranging from P1,000.00 to P7,000.00, depending on the date of
employment, for a total disbursement of P929,000.00. Subsequently, the Tariff Commission also
issued another resolution granting Birthday Cash Gift of P2,000.00 to eligible officials and
employees for calendar years 1994, 1995 and 1996, for which it disbursed P794,000.00.

Upon post-audit conducted by the COA, the grant of the Merit Incentive Award was suspended
for "lack of approval of the Office of the President." The Birthday Cash Gift was likewise
suspended for "lack of legal basis." There being no settlement or submission by the Tariff
Commission of the requirements for the lifting of both suspensions, the same eventually
matured into disallowances.

Chairman Velasco sought reconsideration with a request that if the disallowances are not
reconsidered, the Merit Incentive Award be converted instead into "Hazard Pay," and converted
the Birthday Cash Gift into "Amelioration Assistance" to match the same benefit granted to
NEDA officials and staff.

State Auditor Malaya R. Ochosa denied Chairman Velasco's request for reconsideration, stating
that the grant of the subject incentives was contrary to AO 161 and DBM Circular No. 73, which
prohibited heads of departments and agencies from establishing and authorizing a separate
productivity and performance incentive award. She also found no legal basis for the conversion
of the disallowed payments into other forms of allowances. COA En Banc upholded the
disallowances.

ISSUE

Whether the disallowance was proper.

RULING

Yes, the disallowance was proper. AO 161 prohibited the establishment of separate productivity
and performance incentive awards. It also expressly revoked all administrative
authorization/decrees relative to the grant of incentive award or bonus pursuant to Sections 31,

79
24 35 and 36 (2), Chapter 5, Subtitle A, Title I, Book V of EO 292. Also, the DBM issued NCC 73
which, echoing the presidential issuance, prohibited the different government agencies from
establishing separate productivity and performance incentive awards.

The Tariff Commission's ESIAS cannot be implemented independently and without regard to
subsequent presidential administrative orders such as AO 161. In the present case, the Court
finds that AO 161 was issued in the valid exercise of presidential control over the executive
departments, which Chairman Velasco was duty bound to observe. Considering, that the
resolutions were issued in direct contravention of the prohibition in AO 161, it follows that the
grant of the incentive awards therein were invalid and lacked legal basis. The blatant failure of
the petitioners approving officers to abide with the provisions of AO 103 and AO 161 overcame
the presumption of good faith. The deliberate disregard of these issuances is equivalent to gross
negligence amounting to bad faith. Therefore, the petitioners-approving officers are accountable
for the refund of the subject incentives which they received.

Full text of the case law

https://lawphil.net/judjuris/juri2012/sep2012/am_p-12-3086_2012.html

Officers and Employees of Iloilo Provincial Government vs. Commission on Audit (GR
NO. 218383 January 5, 2021

Topic
▪ Receipt of Productivity Enhancement Incentive (PEI) even exceeding Personnel
Services (PS) limitation.

FACTS of the CASE

In December 2009, the Sangguniang Panlalawigan of Iloilo enacted Appropriation Ordinance

No. 2009-063 allowing the request for additional funds4 to cover the grant of PEI amounting to
Php50,000.00 per employee, or a total disbursement of Php102.7 million.

On post-audit, the Audit Team Leader and the Supervising Auditor of the Province of Iloilo
disallowed the payment of the PEI through ND Nos. 2010-06-101(09) to 2010-85-101(09), for the
total amount disbursed, on the ground that the payment is irregular and illegal for violating the
following provisions: (1) Section 325(a) of Republic Act No. (RA) 7160 on the provision of
Personal Services limitation; and (2) Department of Budget and Management (DBM) Local
Budget Circular No. 2009-03 dated 17 December 2009.

Based on post-audit computations, the Province of Iloilo had already exceeded its Personal
Services limitation by Php38,701,198.90 even prior to the grant of the PEI benefit to its
employees. Hence, the province should not have given this additional benefit to its employees
for CY 2009.

80
The COA Regional Office, through Decision No. 2012-021 dated 28 August 2012,10 denied
petitioners' appeal and affirmed the subject NDs.
The COA Commission Proper also denied the petition and affirmed the subject NDs on August
2014. Hence this case.

ISSUES

1. Whether or not the COA DISALLOWANCE on grant of PEI to officials and employees is
correct.
2. Should the grant of PEI to herein, payees for CY 2009, he considered as genuinely given in
consideration of service's rendered thereby excusing them from returning the amounts they
received?

RULINGS

1. YES. Administrative Order No. 276 dated 15 December 2009 authorized the grant of PEI
to government employees, including those in the LGUs, for CY 2009. To clarify the guidelines in
granting PEI to local government personnel, DBM Local Budget Circular No. 2009-9321 was
issued, hence:

2.0 Grant of the PEI

2.1 The respective sanggunian may grant the PEI to local government
personnel depending on the financial capability of the local government
unit (LGU). The PEI shall be in lieu of the Additional Benefit/Extra Cash
Gift authorized in previous years.
Xxxx

3.0 Funding Source

The PEI for local government personnel shall be charged against LGU
funds, subject to the budgetary conditions and Personal Services
limitation in LGU budgets pursuant to Sections 325(a) and 331(b) of R.A.
No. 7160.
Meanwhile, Sections 325(a) of RA 7160 provides:

SECTION 325. General Limitations. — The use of the provincial, city, and
municipal funds shall be subject to the following limitations:
(a) The total appropriations, whether annual or supplemental, for
personal services of a local government unit for one (1) fiscal year shall
not exceed forty-five percent (45%) in the case of first to third class
provinces, cities and municipalities, and fifty-five percent (55%) in the
case of fourth class or lower, of the total annual income from regular
sources realized in the next preceding fiscal year. The appropriations for
salaries, wages, representation and transportation allowances of officials
and employees of the public utilities and economic enterprises owned,
operated, and maintained by the local government unit concerned shall

81
 not be included in the annual budget or in the computation of the
maximum amount for personal services. The appropriations for the
personal services of such economic enterprises shall be charged to their
respective budgets;
x x x x (Emphasis supplied)

A perusal of petitioners' computation shows the province still exceeded its Personal Services
limitation even if the waived items are removed from the computation. In fact, this computation
is already an implied admission that the province exceeded its Personal Services limitation
mandated by Section 325(a) of RA 7160. The Court also notes that the COA already reviewed
this particular argument and deemed it irrelevant in upholding the NDs: THEREFORE, THE
GRANT OF PEI IS VALIDLY DISALLOWED IN AUDIT.

2. NO. Proceeding now to the payees of the subject PEI benefit, the Court agrees with
respondents' assertion on the applicability of the principle of solutio indebiti. Nevertheless, the
Court still carved out some exceptions to the general application of solutio indebiti when
applied to passive recipients, namely:
(1) when the amount disbursed was genuinely given in consideration of services; rendered;
(2) when undue prejudice' Will result from requiring payees to return;
(3) where social justice or humanitarian considerations are attendant; and
(4) other bona fide exceptions as may be determined on a case to case basis.

The Court now focuses on the first exception since the other exceptions clearly cannot be
applied to the present case. Indeed, the sheer excessiveness of the amounts received by the
employees, despite not having the budget therefor, prevents this Court from considering
justifications premised on social justice considerations and equity.

As a supplement to the Madera Rules on Return, the Court now finds it fitting to clarify that in
order to fall under Rule 2c, i.e., amounts genuinely given in consideration of services rendered,
the following requisites must concur:

(a) the personnel incentive or benefit has proper basis in law but is only disallowed due to
irregularities that are merely procedural in nature; and

(b) the personnel incentive or benefit must have a clear, direct, and reasonable connection to the
actual performance of the payee-recipient's official work and functions for which the benefit or
incentive was intended as further compensation.
Here, there is no evidence or proof on record to serve as foundation for a factual determination
of whether the PET benefit given to the employees of the province has a clear, direct and
reasonable connection to the actual performance. of the recipients' work and functions.
Needless to petitioners "have the onus to forward evidence that the benefit they received, falls
under the exception of being given in consideration of actual services' rendered pursuant to the
nature of, exceptions where strict application is observed. Such notion is likewise supported By
the Court's ruling in Lazaro v. Commission on Audit, where We held that "[i]t is not this Court's
duty to construe their incomplete submissions and vague narrations to determine merit in their
assertions.". HENCE, the PAYEES are still liable on the ND on the actual amount received.

82
Full text of the case law
https://lawphil.net/judjuris/juri2021/jan2021/gr_218383_2021.html

Madera vs. Commission on Audit (G.R. No. 244128, September 08, 2020)

Topic
▪ Granting of Economic Crisis Assistance, Monetary Augmentation Allowance,
Agricultural Crisis Assistance, and Mitigation Allowance through SB
resolution

FACTS of the CASE

In December 2013, the Municipality passed and approved Sangguniang Bayan (SB) Ordinance
No. 084 and SB Resolutions Nos. 41, 42, 43, and 48, all series of 2013, granting various
allowances to its officials and employees. These allowances are: 1) Economic Crisis Assistance
(ECA), 2) Monetary Augmentation of Municipal Agency (MAMA), 3) Agricultural Crisis
Assistance (ACA), and 4) Mitigation Allowance to Municipal Employees (MAME).

Pursuant to the above SB Resolutions, the municipality disbursed a total of ₱P7,706,253.10,

broken down as follows:

Allowance Total Amount Recipients

ECA 3,865,203.10 Regular officials and employees, casual and job

order/contractual employees, Barangay Tanods, Barangay
Nutrition Scholars (BNS), Day Care Workers (DCW), Barangay
Health Workers (BHW), public elementary and high school
teachers and national employees stationed in the municipality

MAMA 1,245,000.00 Regular officials and employees and casual employees

ACA 1,771,550.00 Regular officials and employees, casual employees and job
order/contractual employees

MAME 824,500.00 Regular official and employees, casual employees, job

order/contractual employees, BNSs, DCWs, and BHWs.

The above allowances were all disallowed in audit by COA auditor under different notices of
disallowance on the ground as follows:

83
a) Section 12 of Republic Act No. (R.A.) 6758 or the Salary Standardization Law (SSL) as regards
the consolidation of allowances and compensation;

b) Item II of COA Circular No. 2013-003 dated January 30, 2013 which excluded the subject
allowances among the list of authorized allowances, incentives, and benefits;

c) Items 4 and 5 of Section 1.a of Civil Service Commission (CSC) Resolution No. 02-0790 dated
June 5, 2002, which provides that employees under contract or job order do not enjoy the
benefits enjoyed by the government employees (such as the Personnel Economic Relief
Allowance or PERA, Additional Compensation Allowance or ACA, and Representation
Allowance and Transportation Allowance or RATA), and that the services rendered thereunder
are not considered as government service.

ISSUE

Whether or not the notices of disallowance were validly issued.

RULING

Yes. After a careful review of the records of the case, the Court upholds the NDs against the
subject allowances, finding no grave abuse of discretion on the part of the COA in affirming the
disallowance.

Section 447(a)(l)(viii) of RA No. 7160 provides:

SEC. 447. Powers, Duties, Functions and Compensation. - (a) The sangguniang bayan, as the
legislative body of the municipality, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the municipality and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the municipality as
provided for under Section 22 of this Code, and shall:

-1 Approve ordinances and pass resolutions necessary for an efficient and effective municipal
government, and in this connection shall: xxx

(viii) Determine the positions and salaries, wages, allowances and other emoluments and
benefits of officials and employees paid wholly or mainly from municipal funds and provide for
expenditures necessary for the proper conduct of programs, projects, services, and activities of
the municipal government;

In addition, Section 12 of RA No. 6758, the SSL, states:

Consolidation of Allowances and Compensation. - All allowances, except for representation and
transportation allowances; clothing and laundry allowances; subsistence allowance of marine
officers and crew on board government vessels and hospital personnel; hazard pay; allowances
of foreign service personnel stationed abroad; and such other additional compensation not
otherwise specified herein as may be determined by the DBM, shall be deemed included in the
standardized salary rates herein prescribed xxx. (Underscoring supplied)

84
In this case, the municipality's compensation-setting power in Section 447 of RA No. 7160 to
grant ECA, ACA, MAME, and MAMA cannot prevail over Section 12 of RA No. 6758 or the
SSL. No law or administrative issuance, much less the [SSL], authorizes the grant of [the] subject
benefits.

Moreover, in the case of Luciano Veloso, et al. vs. COA, the Supreme Court ruled that:

[T]he 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. In
the same vein, 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.

Thus, the grant of ECA, ACA, MAME, and MAMA to the officials and employees cannot be
justified as a simple gesture of gratitude of the municipality to its employees for their great
contribution to the delivery of public service. The grant of any benefit to them must be
necessary or relevant to the performance of their official duties and functions, which is absent in
this case.
In view of the foregoing, the Court upholds the NDs against the ECA, ACA, MAME, and
MAMA.

Full text of the case law

https://lawphil.net/judjuris/juri2020/sep2020/gr_244128_2020.html

National Power Corporation DAMA vs. NPC (GR No. 156208, November 21, 2017)

Topic
▪ Back wages of illegally dismissed civil service employee who finds
employment in the government.

FACTS of the CASE

In line with NPC's privatization, the EPIRA also called for the NPC's restructuring. In this
regard, the NPB passed NPB Resolution Nos. 2002-124 and 2002-125 directing the termination
from service of all NPC employees effective January 31, 2003. The restructuring plan covered
even "Early-leavers" or those who: (a) did not intend to be rehired by NPC based on the new
organizational structure, or (b) were no longer employed by NPC after June 26, 2001, the date of
the EPIRA's effectivity, for any reason other than voluntary resignation

85
In a decision dated September 26, 2006, the SC ruled that the above--mentioned resolutions
were void and without effect as these were not passed by a majority of NPB's members, as only
three out of nine members voted. The other four signatories to the resolutions were not
members of the Board. They were merely representatives of those actually named under the
EPIRA to sit as members of the NPB. Thus, their votes did not count.

Thus, among others, the termination of the petitioners' employment on January 31, 2003 was
illegal.

A day after the termination, some employees were rehired by the NPC, or absorbed or
reemployed by the Power Sector Assets and Liabilities Management Corporation (PSALM) or
Transco (both government entities).

ISSUE

Whether or not the illegally dismissed employees are entitled to back wages taking into account
their government employment after their dismissal.

Ruling

No. The Court consistently ruled that an illegally dismissed government employee is entitled to
back wages from the time of his illegal dismissal until his reinstatement because he is
considered as not having left his office.

In the recent case of Campol v. Balao-As, the Court explained at length the rationale supporting
the award of full back wages in favor of an illegally dismissed civil service employee, without
deducting any income that he may have earned in case he is employed anew in another
government position during the pendency of the action. In Campol, the Sangguniang Bayan
(SB) of Boliney, Abra passed a resolution in 2004 terminating Julius B. Campol as SB Secretary.
In 2005, while his illegal termination case was still pending, Campol obtained another job as an
administrative aide in the Public Attorney's Office. The Court ruled that Campol's PAO
earnings should not be deducted from the award of full back wages, explaining as follows:

This entitlement to full back wages also means that there is no need to deduct Campol's
earnings from his employment with PAO from the award. The right to receive full back wages
means exactly this - that it corresponds to Campol's salary at the time of his dismissal until his
reinstatement. Any income he may have obtained during the litigation of the case shall not be
deducted from this amount. This is consistent with our ruling that an employee illegally
dismissed has the right to live and to find employment elsewhere during the pendency of the
case. At the same time, an employer who illegally dismisses an employee has the obligation to
pay him or her what he or she should have received had the illegal act not be done. It is an
employer's price or penalty for illegally dismissing an employee.

However, We revisit Our ruling in Campol. We agree with Hon. Justice Antonio T. Carpio's
opinion that the award of full back wages in favor of an illegally dismissed civil service
employee who was subsequently employed in another government agency certainly violates

86
the constitutional prohibitions against double office-holding and double compensation in the
civil service.

Section 7, Article IX-B of the Constitution provides: 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.

On the other hand, Section 8, Article IX-B of the Constitution provides: 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.

Thus, We rule that petitioners who were subsequently: (a) rehired by the NPC, (b) absorbed by
PSALM or Transco, or (c) transferred or employed by other government agencies, are not
entitled to back wages.

Moreover, to award full back wages even to those who remained employed as a direct result of
the 2003 reorganization amounts to unjust enrichment and damage to the government.

In short, the prevailing rule now is that the award of full back wages in favor of an illegally
dismissed civil service employee who was subsequently employed in another government
agency violates the constitutional prohibitions against double compensation and double
holding of government office.

Full text of the case law

https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63594

CSC RESOLUTION 000324, VILLANUEVA, ARMANDO C., RE: COVERAGE OF

BACK SALARIES

Topic
▪ Entitlement to the benefits and other allowances of illegally dismissed civil
service employees such as RATA, PIB, Clothing Allowance, etc.

FACTS of the CASE

Armando C. Villanueva, Chief Personnel Specialist, Civil Service Commission Regional Office
No. II, Tuguegarao, Cagayan, requests that he be paid back salaries including Representation
and Transportation Allowance (RATA), Productivity Incentive Bonus (PIB) per General

87
Appropriations Act Circular, yearly amelioration, clothing allowances and all other benefits and
allowances. Villanueva's request is anchored on the Court of Appeals' (CA) decision reinstating
him to his former position and ordering the payment of his back salaries not to exceed five (5)
years.

Villanueva, in his request, alleges as follows: "This refers to the implementation of the decision
of the Court of Appeals in the case entitled Villanueva vs. CSC, CA-GR No. 37763, whereby the
decision of the Honorable Civil Service Commission was reversed and I was totally exonerated
from the charges against me. It may be noted that I was ordered reinstated to my former
position with payment of back salaries for a period not exceeding 5 years. Specifically, the
dispositive portion of the Court of Appeals decision dated January 31, 1997 reads: '

IN VIEW THEREFORE, the petition is hereby GIVEN DUE COURSE and is accordingly
GRANTED. The assailed Resolutions Nos. 93-350 dated February 8, 1993 and 93-1540 dated
April 22, 1993 issued by the respondent Civil Service Commission are SET ASIDE. Public
respondent is ordered to reinstate petitioner to his former position and to pay his back salaries
nor exceeding five (5) years.' This was decided with finality by the Supreme Court in Resolution
dated February 3, 1998 and became final and executory on February 23, 1998.

ISSUE

Whether the requestor is entitled to RATA, PIB, Amelioration and other allowances.

RULING

Yes to RATA. In the case of Macabuhay vs. Manuel (101 SCRA 834) cited in CSC Resolution No.
980753 (re: Jerry R. Corpuz), the Supreme Court declared that: "Well-settled is the rule that
government employees who have illegally suspended or terminated, or whose suspension or
separation have been declared in finality as null and void for lack of due process, are allowed to
claim for backwages and other benefits due them during the entire duration of their illegal
suspension or separation.

This is so because an employee subject of illegal suspension or termination, is deemed never to

have vacated or left his office and Is, therefore entitled to whatever accrued benefits pertaining
to that office, including leave privileges and other pecuniary benefits reckoned from the date of
his illegal suspension or dismissal up to the date of his actual reinstatement." and in the case of
Cesar Moscoso (CSC Resolution No. 96-2411), the Commission held that: "x x x the term salary
covers all compensation for services including RATA.

This means withdrawal or non-payment of RATA results in reduction of salary which cannot be
allowed under Civil Service Law and Rules unless the employee agrees thereto x x x". PRO
version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Hence, in view of
the foregoing pronouncements and since RATA is attached to the position of Villanueva, he is
entitled to receive it during the period of his separation from the service.

No to PIB. As to PIB - - In the case of Felicidad R. Cezar (CSC Resolution No. 990731), the
Commission ruled that: "Relevant to the grant of Productivity Incentive Benefit (PIB), National

88
Compensation Circular No. 73 and 73-A dated December 27, 1994 and March 1, 1995,
respectively provide, among other things, as follows:

3.1. The incentive pay shall be based on individual personnel productivity

and performance as evaluated and determined by the heads of the
respective offices/agencies in accordance with the policies and standards
set by the Civil Service Commission.

3.2. To be entitled to the PIB, officials/employees shall have at least a

satisfactory performance rating for the two (2) semesters immediately
preceding the year in which the incentive pay shall be released, and shall
have contributed to the productivity of their office/agency as determined
by the respective heads of agency.

3.3. The amount of incentive that will be paid deserving

officials/employees pursuant to this Circular may vary for each
official/employee within an agency depending on their individual
performance appraisal.

Pursuant to the afore-quoted provisions of law, entitlement to the PIB is based on actual
rendition of service. An employee must have at least a satisfactory rating for the two semesters
immediately preceding the year in which the incentive pay is released. Moreover , he must have
contributed to the productivity of his office. Under the present circumstances, Cezar was on
leave without pay for the whole year of 1998. Undoubtedly, she did not render service during
the said year, hence, there is no basis to grant her said benefit.

No to Amelioration Pay, Year-End Bonus, Cash Gift. Worthy of stress is the ruling of the
Commission in the aforementioned case, wherein it declared that: "On the grant of Amelioration
Assistance, Administrative Order No. 365 dated October 10, 1997 of the Office of the President,
provides as follows:

Section 1. All National Government Agencies, Government-Owned and

Controlled Corporations (GOCCs) and Government Financial Institutions
(GFIs) and Local Government Units are hereby authorized to grant
Amelioration Assistance in the maximum amount of Seven Thousand Two
Hundred Pesos (7,200) each to their personnel, regardless of salary and
appointment status, who have rendered at least four (4) months of service as
of the payment of the said benefit except those serving under service
contract. x x x'

On the basis of the afore-quoted provisions of law, the grant of Year-end Bonus, Cash Gift and
Amelioration Assistance is based on actual rendition of service. x x x "

As to clothing allowance, the case of Jose Pujalte (CSC Resolution No. 97-4142) applies, where
the Commission resolved that: "However, as to laundry, clothing and other allowances which
may be given by reason of actual occupation of the post, by their very nature, are not included

89
in the computation of Pujalte"s back salaries. The reason is not hard to find. He did not actually
render service for the period of his illegal separation and that he did not incur such expenses.

Full text of the case law

https://www.csguide.org/items/show/935

90
91
SALARIES

Issuances Titles

Republic Act No. An Act to promote the Financial Viability and Fiscal
10149, June 06, 2011 Discipline in Government-Owned or Controlled
Corporations and to Strengthen the Role of the State in its
Governance and Management to make them More
Responsive to the Needs of Public Interests and for Other
Purposes

Executive Order No. Approving the Compensation and Position Classification

150, s. 2021 System (CPCS) and Index of Occupational Services, Position
Titles, And Job Orders for GOCCs Framework

GCG CPCS Implementing Guidelines for Executive Order No. 150, s.

Implementations 2021
Guidelines No.
2021—01, January 12,
2022

Republic Act No. An Act Modifying the Salary Schedule for Civilian
11466, January 9, 2020 Government Personnel and Authorizing the Grant of
Additional Benefits, and for Other Purposes

Executive Order No. Amending the Executive Order no. 201 (s. 2016), Entitled
76, March 19, 2019 ‘’Modifying the Salary Schedule for Civilian Government
Personnel and Authorizing the Grant of Additional Benefits
for Both Civilian and Military and Uniformed Personnel’’

National Budget Implementation of the Increase in Base Pay of the Military

Circular no.574, and Uniformed Personnel (MUP) in the Government
January 10, 2018 Beginning January 1, 2018 and Other Provisions of Congress
Joint Resolution (JR) No.1,s.2018

CSC Resolution No. The 2017 Omnibus Rules on Appointments and Other
1800692, July 03, 2018 Human Resources Actions (Revised July 2018)

Executive Order No. Modifying the Salary schedule for Civilian Government and
201, February 19, 2016 Authorizing the Grant of Additional Benefits for Both
Civilian and Military and Uniformed Personnel

Local Budget Circular Guidelines in Determining Compliance to the Personal

No. 98, October 14, Services (PS) Limitation on Local Government Budgets
2011

92
 Issuances Titles

Local Budget Circular Rules and Regulations on the Salary Adjustments of Public
No. 2009-92A, Health Workers (PHW) to Supplement Local Budget Circular
December 17, 2009 (LBC) No. 2009-92

Section 8, Article IX, Prohibition on Double Compensation

1987 Constitution

DBM Local Budget Guidelines on the Grant of Anniversary Bonus in the Local
Circular No. 65, Government Unit
March 03, 1997

Corporate Rules and Regulation for the Implementation of the Revised

Compensation Compensation and Position Classification Plan in
Circular No. 11, series Government-Owned and/or Controlled Corporations and
of 1996, January 15, Government Financial Institution (GOCCs/GFIs)
1996

Joint Senate-House of Joint Resolution Urging the President of the Philippines to

Representatives Revise the Existing Compensation and Position
Resolution No. 1, s. Classification System in the Government and to Implement
1994, March 7, 1994 the Same Initially Effective January 1, 1994

Executive Order No. Adopting a Revised Compensation and Position

164, March 7, 1994 Classification System in the Government

Corporate Rules and Regulation for the Implementation of the Revised

Compensation Compensation and Position Classification Plan in
Circular No. 10, Government-Owned and/or –Controlled Corporations and
October 2, 1989 and Government Financial Institution (GOCCs/GFIs)
February 15, 1999

RA No. 7160 The Local Government Code of 1991

National List of Allowance /Additional Compensation of Government

Compensation Official and Employees Which Shall Be Deemed Integrated
Circular No. 59, Into the Basic Salary
September 30, 1989

National Rules and Regulation on the Standardization of

Compensation Compensation and Position Classification Plant in the
Circular No. 56, Government
September 30, 1989

Republic Act No. An Act Prescribing a Revised Compensation and Position

93
 Issuances Titles

6758, August 21, 1989 Classification System in the Government and for Other
Purposes

STEP INCREMENTS

Issuances Titles

CSC, DBM Joint Rules and Regulation on the Grant of Step Increments to
Circular No. 2016-01, Elective Officials based on the Length of Service
January 27, 2016

CSC, DBM Joint Rules and Regulations on the Grant of Step Increment/s Due
Circular No. 1, s.2012, to Meritorious Performance and Step Increment Due to
September 3, 2012 Length of Service

National Budget Revised Guidelines on the Grant of Step Increments for

Circular No.531, Specializing in Teaching Science and/or Mathematics
October 27, 2011

National Budget Grant of Steps Increments for Specializing in Teaching

Circular No.526, Science and/or Mathematics
September 6, 2010

CSC, DBM Joint Amending Further Joint CSC-DBM Circular No. 1, s. 1990
Circular No. 1-2003, (Entitlement to Step Increment)
April 11, 2003

CSC, DBM Joint Amending Section 1, Rule I of Joint CSC-DBM Circular No.
Circular No. 2, s. 1, s. 1990
1991, July 5, 1991

CSC, DBM Joint Rules and Regulations Governing the Grant of Step
Circular No. 1, s. Increments to Deserving Officials and Employees of the
1990. March 29, 1990 Government

94
PERSONNEL ECONOMIC RELIEF ALLOWANCE

Issuances Titles

Budget Circular No. Amendatory Rules on the Grant of the Personnel Economic
2011-2, September 26, Relief Allowance (PERA)
2011

Budget Circular No. Rules and Regulations on the Grant of the Personnel
2009-3, August 18, Economic Relief Allowance at P2,000 per Month
2009

Budget Circular No. Updated Rules and Regulations on the Grant of Personnel
12, April 7, 1997 Economic Relief Allowance (PERA) and Expansion of
Coverage to Include All Employees of the Government

Budget Circular No. Amending Budget Circular No. 4 Dated June 28, 1991
4-B, series of 1996, Relative to the Grant of Personnel Economic Relief
February 2, 1996 Allowance to All Employees of the Government

Circular Letter No. Grant of Personnel Economic Relief Allowance (PERA) to

95-9, series of 1995, Substitute Teachers
December 15, 1995

Budget Circular No. Grant of Personnel Economic Relief Allowance (PERA) to All
4-A, July 1, 1991 Employees of the Government

Budget Circular No. Grant of Personnel Economic Relief Allowance to All

4, June 28, 1991 Employees of the Government

ADDITIONAL COMPENSATION

Issuances Titles

Administrative Order Granting Additional Compensation in the Amount of the

No. 144, February 28, One Thousand Pesos (1,000.00) Per Month to All Employees
2006 of the National Government

Budget Execution Specific Guidelines on the Release of Funds for the Increase
Guidelines No. 2006- in the Additional Compensation
8, March 3, 2006
Budget Circular No. Rules and Regulation on the Increase in the additional
2006-2, March 2, 2006 Compensation of Government Employees

95
 Issuances Titles

Budget Circular No. Extending the Grant of P500 Per Month Additional
17, February 24, 1999 Compensation (ADCOM) to Government Personnel
Allocated to Salary Grade 26 and Above

Budget Circular No. Compensation and Additional Benefits of Suspended

15, March 5, 1998 Government Personnel

Administrative Order Clarifying the Implementation of the Grant of Additional

No. 53, May 17, 1993 Compensation in the Amount of P500.00 Per Month to
Contractual Personnel of the Government and to Local
Official and Employees

Administrative Order Implementing the Grant of Additional Compensation in the

No. 53, May 17, 1993 Amount of P500.00 Per Month to Public School Teachers, and
Uniformed Personnel of the Philippines National Police and
the Armed Forces of the Philippines, and Extending the
Benefit to the Rest of the Personnel of the Government

UNIFORM/CLOTHING ALLOWANCE

Issuances Titles

Budget Circular Rules and Regulations on the Grant of Uniform/ Clothing

No.2018-1, March 8, Allowance (U/CA) to Civilian Government Personnel
2018

Budget Circular No. Rules and Regulations on the Grant of Uniform/Clothing

2003-8A, July 2, 2004 Allowance (U/CA) to All Thereafter

Budget Circular No. Rules and Regulations on the Grant of Uniform/Clothing

2003-8, December 8, Allowance (U/CA) to All Government Personnel for FY
2003 2004 and Years Thereafter

96
REPRENSENTATION AND TRANSPORTATION ALLOWANCE

Issuances Titles

National Budget Amended Rules and Regulations on the Grant of

Circular No. 548, May Representation and Transportation Allowance
15, 2013

Local Budget Circular Amended Rules and Regulations on the Grant of

No. 103, May 15, 2013 Representation and Transportation Allowance

Corporate Budget Amendatory Guidelines on the Implementation of the

Circular No.21, June Revised Rates of Representation and Transportation
15, 2011 Allowance (RATA) of Officials in Local Water Districts
(LWDs)

National Budget Revised Rates of Representation and Transportation

Circular No.525, Allowances (RATA) for Certain National Government
August 20, 2010 Officials

Local Budget Circular Revised Rates of Representation and Transportation

No.96, August 20, Allowances (RATA) for Certain Local Government Officials
2010

National Budget Revised Rates if Representation and Transportation

Circular No. 498, Allowances (RATA)
April 1, 2005

Local Budget Circular Guidelines for the Implementation of the Revised Rates of
No.96, April 1, 2005 Representation and Transportation Allowances (RATA) in
Local Government Units (LGUs)

National Further Amending National Compensation Circular No. 67

Compensation Dated January 1, 1992 Relative to the Representation and
Circular No. 67-B, Transportation Allowances of National Government Official
August 8, 2002 and Employees

Corporate Budget Guidelines for the Implementation of the Revised Rates of

Circular No. 18, Representation and Transportation Allowance (RATA) of
November 14, 2000 Officials in Local Water Districts (LWDs)

National Budget Representation and Transportation Allowance of Contractual

Circular No. 450, Personnel
March 5, 1996

97
 Issuances Titles

National Budget Guidelines on the Grant of the Monthly Cash Equivalent of

Circular No. 454, the Transportation Allowance Authorized Under the Annual
October 14, 1996 General Appropriations Act

National Budget Representation and Transportation Allowances of

Circular No.450, Contractual Personnel
March 5, 1996

National Representation and Transportation Allowance of National

Compensation Government Official and Employees
Circular No. 67,
January 1, 1992

National Amending National Compensation Circular No. 67

Compensation Dated January 1, 1992 Relative to the Representation
Circular No. 67-A, and Transportation Allowance of National
May 15, 1992 Government Officials and Employees

BONUSES

Issuances Titles

Budget Circular No. Clarification on the Grant of Mid-Year Bonus to Government

2019-4, July 5, 2019 Employees on Scholarship

Budget Circular No. Rules and Regulations on the Grant of Mid-Year Bonus for
2017-2, May 8, 2017 FY 2017 and Years Thereafter

Budget Circular No. Rules and Regulations on the Grant of the Mid-Year Bonus
2016-3, April 28, 2016 for FY 2016

DBM Budget Circular Updated Rules and Regulations on the Grant of the Year-End
No. 2016-4, April 28, Bonus and Cash Gift for FY 2016 and Years Thereafter
2016

Budget Circular 2015- Clarification on the Procedure for the Release of Year-End
1, November 9, 2015 Bonus (YEB) and Cash Gift for FY 2015

Budget Circular No. Updated Rules and Regulations on the Grant of the Year-End
2005-6, October 28, Bonus and Cash Gift to Government Personnel for FY 2005
2005 and Years Thereafter

Budget Circular No. Liberalization of the Rules and Regulation on the Payment of

98
 Issuances Titles

2003-2 May, 2003 Year-End Bonus and Cash Gift

Circular Letter No. Prohibition on the Grant of Additional Bonuses in Any Form
2003-10, October 17,
2003

Circular Letter No. Clarification on the Service Requirement for Entitlement to

2002- 14, June 25, Year-End Benefits (YEB)
2002

Budget Circular No. Compensation and Additional Benefits of Suspended

15, March 5, 1998 Government Personnel

Republic Act No. An Act Increasing the Cash Gift to Five Thousand Pesos
8441, December 22, (5,000.00), Amending for the Purpose Certain Sections of
1997 Republic Act Numbered Six Thousand Six Hundred Eight-
Six and for Other Purposes

Circular Letter No. Grant of an Interest-Free Loan to Government Officials and

12-96, May 3, 1996 Employees

Republic Act An Act Authorizing Annual Christmas Bonus to National

No.6686, December and Local Government Officials and Employees Starting CY
14, 1988 1988

Executive Order No. Expanding the Coverage of the Year-End Bonus

74-A, December 19,
1988
Executive Order No. Granting Year-End Bonus and Cash Gift to National and
74, November 26, Local Government Official and Employees
1986

PRODUCTIVITY INCENTIVE BENEFIT

Issuances Titles

Budget Circular No. Guidelines on the Grant of the Productivity Enhancement

2017-4, December 4, Incentive (PEI) to Government Employees for Fiscal Year
2017 (FY) 2017 and Years Thereafter

Circular Letter No. Additional Guidelines on the Grant of Productivity

2002-3, January 2, Incentives Benefits (FIB)

99
 Issuances Titles

2002

Circular Letter No. Grant of Productivity Incentives Benefits

2001-6, March 2, 2001

National Supplementing National Compensation Circular No. 73

Compensation Dated December 27, 1994 on the Grant of Productivity
Circular No. 73-A, Incentives Benefits (FIB) for CY 1994 and Years Thereafter
March 1, 1995

Administrative Order Authorizing the Grant of CY-1993 Productivity Incentives

No. 103, January 14, Benefits to Government Personnel and Prohibiting
1994 Payments of Similar Benefits in Future Years Unless Duly
Authorized by the President

National Grant of Productivity Incentive Benefits to Officials and

Compensation Employees of the Government
Circular No. 71,
January 19, 1994

Administrative Order Prescribing a Standard Incentive Pay System Based on

No. 161, December 6, Productivity and Performance, for All Officials and
1994 Employees of the Government, National and Local Including
Those if Government-Owned and/or –Controlled
Corporation and Government Financial Institution and for
Other Purposes

National Budget Grant of Productivity Incentive Benefits to Officials and

Circular No. 426, Employees of the Government
April 1, 1992

OVERTIME and COMPENSATORY TIME-OFF

Issuances Titles

CSC, DBM JMC No. Policies and Guidelines on Overtime Services and Overtime
02, s. 2015 Pay for Government Employees

100
Joint Circular No. Policies and Guidelines on Overtime Services and Overtime
2015-2, November 25, Pay for Government Employees
2015

CSC, DBM Joint Non-Monetary Remuneration for Overtime Services

Circular No.2,s.2004,
November 18, 2004

Budget Circular No. Prescribing and Updating the Guidelines and Procedures on
10, March 29, 1996 the Rendition of Overtime Services with Pay of Government
Personnel

PER DIEM

Issuances Titles

GCG Memorandum Revised Interim Rules on Per Diems and Other

No. 2012-02 (Re- Compensation Entitlements of Members of the Governing
issued), May 02, 2012 Boards of GOCCs Covered by R.A. 10149

Executive Order No. Prescribing Rules to Govern the Compensation of Members

65, s. 2012, January 2, of the Board of Directors of Local Water Districts Pursuant to
2012 Section 5 of Executive Order No. 24 (s.2011)

Executive Order No. Prescribing Rules to Govern the Compensation of Members

24, February 10, 2011 of the Board of Directors/Trustees in Government-Owned or
Controlled Corporations Including Government Financial
Institutions

Budget Circular No. Guidelines Relative to the Grant of Per Diems to Member of
2003-6 September 29, Collegial Bodies and Member of the Board of
2003 Regent/Trustees of State Universities and Colleges

Executive Order No. Authorizing Officials and Employees of the Regular

389, December 30, Agencies/Offices of the National Government and of Other
1989 Government-Owned and/or Controlled Corporations to
Adopt the Rates of Per Diem and Allowances as Authorized
Pursuant to Executive Order No. 151 Dated March 19, 1987,
as Implemented by National Budget Circular No. 391 Dated
October 6, 1987, as Amended and Ratifying for the Purpose
All Previous Payments Made by National Government
Agencies/ Offices Pursuant to the Said Issuances

101
HONORARAIA

Issuances Titles

DBM Circular No. Guidelines on the Grant of Compensation to Chairpersons

2009-1, December 29, and Members of Various Professional Regulatory Boards of
2009 the Professional Regulation Commission

DBM Circular No. Guidelines on the Grant of Honoraria Due to Assignment in

2007-2, October 01, Government Special Projects
2007

Budget Circular No. Guidelines on the Grant of Honoraria to Lectures, Resource

2007-1, April 23, 2007 Persons, Coordinators and Facilitators

DBM Circular No. Guidelines on the Grant of Honoraria Due to Lecturers,

2007-1, April 23, 2007 Resource Persons, Coordinators, and Facilitators

National Budget Guidelines on the Grant of Honoraria to the Governing

Circular No. 2007- Boards of Collegial Bodies
510, May 8, 2007

Budget Circular No. Guidelines on the Grant of Honoraria Due to Assignment in

2007-2, October 1, Government Special Projects
2007

Budget Execution Updated Rules and Regulations on the Grant of Additional

Guidelines No. 2004- Allowance and Other Benefits to National Government
1, January 8, 2004 Officials/Employees Assigned to Local Government Units

Budget Circular No. Prescribing Guidelines on the Grant of Honoraria to

2003-5, September 26, Government Personnel for FY 2003 and onwards
2003

Compensation Policy National Government Officials Entitled to Honoraria

Guidelines No. 98-1 Chargeable Against Local Fund
March 23, 1998

102
NIGHT-SHIFT DIFFERENTIAL PAY

Issuances Titles

Budget Circular No. Prescribing Guidelines and Procedures for the Grant of
8, Series 1995, Night-Shift Differential Pay to Government Employees
December 4, 1995

HAZARD DUTY PAY

Issuances Titles

DBM, DOH Joint Amendment to DBM-DOH Joint Circular No. 1 s. 2012

Circular No. 1, s. Regarding the Rules and Regulations on the Grant of
2016, July 15, 2016 Compensation-Related Magna Carte benefits to Public
Health Workers (PWH)

Budget Circular No. Rules and Regulations on the Grant of Hazard Duty Pay
2005-4, July 13, 2005

RA 7305, March 26, Magna Carta of Public Health Workers

1992

RA No. 4670, June 18, The Magna Carta for Public School Teachers
1996

SUBSISTENCE ALLOWANCE

Issuances Titles

November 1999 Revised Implementing Rules and Regulations for Public

Health Workers

Republic Act No. Magna Carta of Republic Health Workers

7305, March 26, 1992

103
LAUNDRY ALLOWANCE

Issuances Titles

November 1999 Revised Implementing Rules and Regulation for Public

Health Workers

Republic Act No. Magna Carta of Public Health Workers

7305, March 26, 1992

FREE QUARTERS FOR CERTAIN GOVERNMENT OFFICIALS

Issuances Titles

National Budget Guidelines on the Provision of Free Quarters to Certain

Circular No.571, Officials
December 4, 2017

Local Budget Circular Guidelines on the Provision of Free Quarters to Provincial

No.78, March 8, 2004 Governors and Vice-Governors

National Budget Guidelines on the Provision of Free Quarters to Certain

Circular No. 456, Officials
November 11, 1996

FREE QUARTERS PRIVILEGES IN HOSPITALS

Issuances Titles

November 1999 Revised Implementing Rules and Regulations for Public

Health Workers

Republic Act No. Magna Carta of Public Health Workers

7305, March 26, 1992

104
ANNIVERSARY BONUS

Issuances Titles

Administrative Order Extending the Grant of Anniversary Bonus to Officials and

No.316, February 24, Employees of Local Government Units (LGU)
1997

Administrative Order Authorizing the Grant of Anniversary Bonus to Officials and

No. 263, March 28, Employees of Government Entities
1996

Local Budget Circular Guidelines on the Grant of Anniversary Bonus in the Local
No. 65, March 03, Government
1997

National Budget Amplifying and Clarifying the Implementation of the Grant

Circular No. 452, May of Anniversary Bonus to Officials and Employees of
20, 1996 Government Entities

COLLECTIVE NEGOTIATION AGREEMENT INCENTIVE

Issuances Titles

Budget Circular Guidelines on the Grant of Collective Negotiation Agreement

No.2020-5, November (CNA) Incentive for FY 2020
4, 2020

Circular Letter No. Remainder on the Observance of the Guidelines on the Grant
2011-9, September 29, of Collective Negotiation Agreement (CNA) Incentive
2011
Budget Circular Supplemental Guidelines on the Grant of Collective
No.2011-5, December Negotiation Agreement (CNA) Incentive for Fiscal Year (FY)
26, 2011 2011

Budget Circular No. Grant of Collective Negotiation Agreement (CNA)

2006-1, February 1, Incentive
2006

Executive Order No. Authorizing the Grant of Collective Negotiation

135, December 27, Agreement (CNA) Incentive to Employees in Government
2005 Agencies

105
 Issuances Titles

Public Sector Labor- Approving and Adopting the Amended Rules and
Management Council Regulations Governing the Exercise of the Right of
Resolution No. 02, s. Government Employees to Organize
2004, September 28,
2004

Public Sector Labor- Grant of Collective Negotiation Agreement (CNA)

Management Council Incentive for Government Owned or Controlled
Resolution No. 02, s. Corporations (GOCCs) and Government Financial
2003, May 19, 2003 Institutions (GFIs)

Public Sector Labor- Grant of Collective Negotiation Agreement (CNA) Incentive

Management Council for National Government Agencies, State Universities and
Resolution No. 04, s. Colleges and Local Government Units
2002, November 14,
2002

Executive Order No. Providing Guidelines for the Exercise if the Right to
180, June 1, 1987 Organize of Government Employees, Creating a Public
Sector Labor-Management Council and for Other Purposes

TERMINAL LEAVE BENEFITS AND MONETIZATION OF LEAVE CREDITS

Issuances Titles

Circular Letter 2019- Processing of the Monetization of Leave Credits in Fiscal

11, July 25, 2019 Year (FY) 2019

Budget Circular 2016- Computation and Funding of Terminal Leave Benefits and
2, March 29, 2016 Monetization of Leave Credits

Local Budget Circular Supplemental Rules and Regulations on Leave benefits of

No. 85, April 23, 2007 Barangay Officials

CSC, DBM Joint Leave Benefits of Barangay Officials

Circular No.1s.2004,
March 23, 2004

Budget Circular No. Computation and Funding of Terminal Leave Benefits and
2002-1, January 14, Monetization of Leave Credits
2002
Budget Circular No. Computation and Funding of Terminal Leave Benefits and

106
 Issuances Titles

2002-1, January 14, Monetization of Leave Credits

2002

CSC Memorandum Additional Provision and Amendments to CSC

Circular No. 14, s. Memorandum Circular No. 41, s. 1998
1999, August 23, 1999

CSC Memorandum Amendments to Rules I and XVI of the Omnibus Rules

Circular No. 41, s. Implementing Book V of the Administrative Code of 1987
1998, December 24, (Executive Order 292)
1998

CSC, DBM Joint Amendatory Rules and Regulations Governing the

Circular No. 2-97, Monetization of Leave Credits of Government Officials and
June 25, 1997 Employees

National Budget Separation and Retirement Benefits of National Government

Circular No.429, Agency Personnel Devolved to the Local Government Units
September 30, 1993

National Budget Amendment of Section 5 of National Budget Circular No. 429

Circular No. 429-A, dated 30 September 1993 re Separation and Retirement
December 29, 1993 Benefits of National Government Agency Personnel
Devolved to the Local Government Units

CSC, DBM Joint Rules and regulations Governing the Monetization of Leaves
Circular No. 1, s. Credits of Government Officials and Employees
1991, June 27, 1991

CSC Memorandum Guidelines in the Application for Monetization of Leave

Circular No. 31, s. Credits and the Computation of the Money Value of the Ten
1991, July 23, 1991 (10) Days Monetized Leave Credits

COMPENSATION FOR CASUAL PERSONNEL AND THOSE OF SAME NATURE

Issuances Titles

COA, DBM Joint Updated Rules and Regulations Governing Contract of

Circular No. 2, s. Services (COS) and Job Order (JO) Workers of the
2000, October 20, 2022 Government

107
 Issuances Titles

COA, DBM Joint Updated Rules and Regulations Governing Contract of

Circular No.2, s. 2020, Service (COS) and Job Order (JO) Workers in the
October 20, 2020 Government

CSC, COA, DBM Amendment to the CSC-COA-DBM Joint Circular

Joint Circular No. 1, s. No.1,s.2017
2018, November 9,
2018

CSC, COA, DBM Rules and Regulations Governing Contract of Services and
Joint Circular No. 1, s. Job Order Workers of the Government
2017, June 15, 2017

Budget Circular No. Rules and Regulations on the Computation and Payment of
2003-4, September 26, Daily Wage
2003

COVID-19 ALLOWANCE

Issuances Titles
DBM, DOH Joint Guidelines on the Continued Grant of the COVID-19 Special Risk
Circular No. 1, s. Allowance (SRA) to Public and Private Health Workers Pursuant to
2021, June 16, 2021 Administrative Order No. 42, s. 2021

Administrative Order Authorizing the Grant of Hazard Pay to Government Personnel Who
No. 43, June 01, 2021 Physically Report for Work During the Period of Implementation of
An Enhanced Community Quarantine and a Modified Enhanced
Community Quarantine, Amending Administrative Order No. 26 (s.
2020), and for Other Purposes

Administrative Order Authorizing the Grant of Hazard Pay to Government Personnel Who
(AO) No. 26, March Physically Report for Work During the Period of Implementation of
23, 2020 an Enhanced Community Quarantine Relative to the COVID-19
Outbreak

Budget Circular No. Guidelines on the Grant of the COVID-19 Hazard Pay
2020-1, March 24,
2020

Budget Circular No. Guidelines on the Grant of Special Risk Allowance to Frontline

108
 Issuances Titles
2020-2, April 7, 2020 Public Health Workers during the Period of Enhanced Community
Quarantine Relative to the COVID-19 Outbreak

Budget Circular No. Guidelines on the Grant of the COVID-19 Duty Allowance to
2020-3, July 7, 2020 Government Personnel Who Volunteer for Deployment to the
COVID-19 Mega Swabbing Facilities

Administrative Order Authorizing the Grant of Covid-19 Special Risk Allowance to Private
No. 36, November 16, and Public Health Workers Directly Catering to or in Contract with
2020 Covid-19 Patients during the State of National Emergency

Administrative Order Authorizing the Grant of Active Hazard Duty Pay to Human
No. 25, November 16, Resources for Health Serving in the Frontlines during the State of
2020 National Emergency

DBM-DOH Joint Guidelines on the Grant of the COVID-19 Active Hazard Duty Pay
Circular No. 2020-1,
November 25, 2020

DBM-DOH Joint Guidelines on the Grant of the COVID-19 Special Risk Allowance
Circular No. 2020-2,
November 25, 2020

MAGNA CARTA BENEFITS

Issuances Titles

DBM, DSWD Joint Rules and Regulations on the Grant of Compensation-

Circular No. 1, s. Related Magna Carta Benefits to public Social Workers
2018, December 28, (PSWs)
2018
DBM-DOH Joint Amendment to DBM-DOH Joint Circular No. 1 s.2012
Circular No.2016-01, Regarding the Rules and Regulations on the Grant of
July 15, 2016 Compensation-Related Magna Carta Benefits to Public
Health Workers (PHWs)

DBM,DOH Joint Rules and Regulations on the Grant of Compensation-

Circular No. 2012-01, Related Magna Carta Benefits to Public Health Workers
November 29, 2012 (PHWs)

PCW-DILG-DBM- Amendments to PCW-DILG-DBM-NEDA JMC No. 2013-01

NEDA, Joint Guidelines on the Localization of the Magna Carta of Women

109
Memorandum
Circular No. 2016-01,
January 12, 2016

DBM, DOST Joint Rules and Regulations on the Grant of Compensation-

Circular No.1 s. 2013, Related Magna Carta Benefits to Scientist, Engineers,
June 25, 2013 Researchers, and Other Science and Technology (S & T)
Personnel

SPECIAL HARDSHIP ALLOWANCE

Issuances Titles

National Budget Guidelines on the Grant of Special Hardship Allowance

Circular No.514,
December 5, 2017

SPECIAL ALLOWANCE

Issuances Titles

DBM, NLRC Joint Guidelines on the Use of Income for the Grant of Special
Circular No. 2009-01, Allowance to the Chairman, Member of the Commission and
September 4, 2009 labor Arbites of the National Labor Relations Commission

PHILHEALTH CONTRIBUTIONS

Issuances Titles

Circular Letter No. Prescribed Health Insurance Premium (HIP) Contributions of

2020-4, February 27, Government Employees to the Philippine Health Insurance
2020 Corporation (PHIC) Consistent with R.A No. 11223 (An Act
Institutionalizing Universal Health Care for all Filipinos,
Prescribing Reforms in the Health Care System, and
Appropriating Funds Therefor) for Fiscal Year 2020

Circular Letter No. Employer (Government) Share in the Health Insurance

2019-8, July 3, 2019 Premium (HIP) Contributions to the Philippine Health
Insurance Corporation (PhilHealth) Effective FY 2019

110
 Issuances Titles

Circular Letter No. Adjustment in the Employer (Government) Share in the

2018-3, July 16, 2018 Health Insurance Premium (HIP) Contributions to the
Philippine Health Insurance Corporation (PhilHealth)

Circular Letter No. Government Share on the Health Insurance Premium (HIP)
2017-3, January 3, Contributions of Government Employees to the Philippine
2017 Health Insurance Corporation (PhilHealth) Effective FY 2017

COMPENSATION FOR GOVERNMENT PERSONNEL INVOLVED IN GOVERNMENT

PROCUREMENT

Issuances Titles

Budget Circular No. Amendments to Certain Provisions of Budget Circular (BC)

2007-3, November 29, No. 2004-5A Re: Guidelines on the Grant of Honoraria and
2007 Overtime Pay to Government Personnel Involved in
Government Procurement

Budget Circular Guidelines on the Grant of Honoraria to Government

No.2004-5A, October Personnel Involved in Government Procurement
7, 2007

Budget Circular No. Guidelines on the Grant of Honoraria to Government

2004-5, May 23, 2004 Personnel Involved in Government Procurement

COMPENSATION FOR BARANGAY OFFICIALS AND PERSONNEL

Issuances Titles

Local Budget Circular Position Classification and compensation of Barangay

No.63, October 22, Officials and Personnel
1996

COMPENSATION FOR EX-OFFICIO MEMBERS OF THE LOCAL SANGGUNIAN

Issuances Titles

Local Budget Circular Additional Guidelines on the Payment of Compensation to

111
 Issuances Titles

No.66-A, August 28, Ex-Officio Members of the Local Sanggunian

2000

Local Budget Circular Guidelines on the Payment of Compensation to Ex-Officio

No.66, March 4, 1998 Members of the Local Sanggunian

COMPENSATION FOR LOCAL REGULATORY BOARDS/QUASI-JUDICIAL BODIES

AND BARANGAY FRONTLINE WORKERS

Issuances Titles

Local Budget Circular Guidelines on the Grant of Compensation Benefit to Local

No.73, January 10, Regulatory Boards/Quasi-Judicial Bodies and Similar Bodies
2001 in Provinces/Cities/Municipalities and Barangay Volunteer
Frontline Workers

COMPENSATION IN GOCCs AND GFIs

Issuances Titles

Executive Order Prescribing Rules to Govern the Compensation of Members

No.24, February 10, of the Board of Directors/Trustees in Government-Owned or
2011 Controlled Corporations Including Government Financial
Institutions

Executive Order Directing the Rationalization of the Compensation and

No.7, September 8, Position Classification System in Government-Owned and
2010 Controlled Corporations (GOCCs) and Government
Financial Institutions (GFIs), and for Other Purposes

PERFORMANCE BASED INCENTIVE SYSTEM

Issuances Titles

Memorandum Guidelines on the Grant of the Performance-Based Bonus

Circular No.2020-1, (PBB) for Fiscal Year (FY) 2020 under Executive Order No.80,
June 2, 2020 s. 2012 and Executive Order No. 201, s. 2016

112
 Issuances Titles

Memorandum Guidelines on the Grant of the Performance-Based Bonus

Circular No.2019-1, (PBB) for Fiscal Year (FY) 2019 under Executive Order No.80,
September 3, 2019 s., 2012 and Executive Order No. 201, s., 2016

GQMC Guidelines in the validation of ISO 9001:2015 Quality

Memorandum Management System (QMS) Certification/recertification as a
Circular No. 2019-1, Support to Operations (STO) Requirement for the Grant of
October 23, 2019 the FY 2019 Performance-Based Bonus (PBB)

Memorandum Supplemental Guidelines on the Grant of the Performance-

Circular No. 2019-2, Based Bonus for Fiscal Year (FY) 2019 under Executive Order
November 12, 2019 No.80, s., 2012 and EO No. 201, s., 2016

Memorandum Guidelines on the Grant of the Performance-Based Bonus for

Circular No. 2018-1, Fiscal Year 2018 under Executive Order no. 80 s. 2012 and
May 28, 2017 Executive Order No. 201 s. 2016

Memorandum Guidelines for the Grant of Performance-Based Bonus (PBB)

Circular No.2017-1, for Fiscal Year 2017 under Executive Order No. 80 s. 2012
March 9, 2017 and Executive Order No. 201 s. 2016

Memorandum Guidelines on the Validation of the ISO 9001 Quality

Circular no. 2017-1, Management System (QMS) Certification or ISO-Aligned
June 23, 2017 QMS Documents as a Requirement for the Grant of the FY
2017 Performance-Based Bonus (PBB)

Memorandum Procedure Ensuring Quality of Validation/Assessment of

Circular No. 2017-2, Requirements for the Grant of Performance-Based Bonus
December 21, 2017 (PBB) Fiscal Year (FY 2017)

Memorandum Guidelines on the Identification and Determination of

Circular No.2016-2, Delivery Units Relative to the Grant of the Performance-
October 12, 2016 Based Bonus (PBB) for Fiscal Year (FY) 2016

Memorandum Guidelines for the Grant of FY 2014 Performance-Based

Circular No.2014-05, Bonus (PBB) to Heads and Members of the Board of
July 24, 2015 Government-Owned or Controlled Corporations Covered by
DBM
Memorandum Guidelines on the Grant of the FY 2016 Performance-Based
Circular No.2016-1, Bonus (PBB) to Department Secretaries/Heads of Agencies
August 12, 2015

Memorandum Clarification on the Coverage, Setting of Performance

Circular No. 2014-02, Indicators, Targets and the Good Governance Condition in
October 8, 2014 Line with the Grant of FY 2014 PBB

113
 Issuances Titles

Memorandum Guidelines on the Grant of the Performance-Based Bonus for

Circular No. 2014-02, Fiscal Year 2014(Issued pursuant to Executive Order No.80
October 8, 2014 and Inter-Agency Task Force Issued Guidelines – For Local
Water Districts)

Memorandum Clarification on the Provision on the Nine-Month Service

Circular No. 2014-03, Requirement
December 3, 2014

Memorandum Guidelines to Clarify the Eligibility and the Ranking of

Circular No. 2012-03, Personnel in Line with the Grant of Performance-Based
January 14, 2013 Bonus (PBB) for FY 2012

Memorandum Guidelines on Determining Eligibility and Ranking Bureaus,

Circular No. 2012-03, Delivery Units, and Individuals Based on Performance in
November 12, 2012 Line with the Grant of the Performance-Based Bonus (PBB)
in FY 2012

SERVICE REGOGNITION INCENTIVE

Issuances Titles

Administrative Order Authorizing the Grant of Service Recognition Incentive to

No. 37, s. 2020, Government Employees for Fiscal Year (FY) 2020
December 18, 2020

Budget Circular 2020- Guidelines on the Grant of the One-Time Service Recognition
6, December 22, 2020 Incentive for FY 2020

Administrative Order Authorizing the Grant of Service Recognition Incentive to

No. 19, s. 2019, Government Employees for Fiscal Year (FY) 2019
December 2, 2019

Budget Circular 2019- Guidelines on the Grant of the One-Time Service Recognition
6, December 9, 2019 Incentive for FY 2019

114
REHABILITATION PRIVILEGE

Issuances Titles

Joint Circular No.1, s. Amendment to Section 3.2 of CSC-DBM Joint Circular No.1 s.
2015, February 28, 2006 Guidelines for Availing of the Rehabilitation Privilege
2015

CSC, DBM Joint Guidelines for Availing of the Rehabilitation Privilege

Circular No.01, s.
2006, April 27, 2006

PROVIDENT FUND

Issuances Titles

Budget Circular No. Rules, Regulations and Procedures on the establishment and
2008-3, June 20, 2008 Administration of Provident Funds in the Philippine
Government

REIMBURSEMENT OF BASIC LIGHT AND WATER BILLS

Issuances Titles

Circular Letter No. Reimbursement of Basic Light and Water Bills of Certain
2000-17, September Hospital Officials
19, 2000

COMBAT DUTY AND INCENTIVE PAY

Issuances Titles

Budget Circular 2016- Guidelines on the Grant of Combat Duty Pay and Combat
6, October 3, 2016 Incentive Pay for FY 2016 and Thereafter

115
 CONTRIBUTORS:

Atty. Allan Arnel D. Miel

Atty. Ronald F. Tacumba

Chrismond P. Aguinod

Ken Brayan A. Medalla

Gericah May Rodriguez

James Kevin M. Maghinay

Gale Christine S. Eso

Atty. Mark Jason S. Tirol

James Clifford L. Camello

116