G.R. No. 263155 - Tiblani et al. vs. Commission on Audit

Case Summary (G.R. No. 263155)

Petition and Procedural Setting

Petitioners filed a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court, challenging COA-CP rulings that upheld the disallowance of CEMA and, by reinstating liability, required petitioners (as payees) to refund the amounts they respectively received for 2010 to 2012. Petitioners primarily sought to set aside the COA-CP Resolution and to obtain an exemption from returning the disallowed CEMA.

Factual Background: CEMA Under NEDA’s Awards System

On January 10, 2001, the CSC issued Resolution No. 010112 establishing PRAISE, followed by CSC Memorandum Circular (MC) No. 1, s. 2001 adopting revised policies on PRAISE. These issuances required departments and agencies to establish their own employee suggestions and incentive award systems subject to prescribed principles and guidelines.

In response, NEDA-CO issued Office Circular No. 03-2005 dated April 26, 2005, providing guidelines for NEDA’s Awards and Incentives System (NAIS). Among the awards enumerated in the NAIS was CEMA, described as an incentive granted to employees or teams whose contributions—such as ideas, suggestions, inventions, discoveries, or performance of functions—resulted in savings in man-hours and costs, or otherwise benefited the agency and the government as a whole. The NAIS also stated that there was no limit to the number of recipients and that nominations could be submitted directly to the NAIS Committee by proponents of productivity-improvement projects or activities, which proposals were required to be properly documented and to highlight expected benefits.

The NAIS further provided parameters for qualification, nomination, selection, period of reference, and cash awards. Notably, it stated that all personnel in NEDA service as of a reference date were entitled, subject to pro-rated rules for those with less than a year of service or for personnel with certain leave-without-pay circumstances, and it excluded those no longer in service or AWOL at the date of payment. It also limited the period of reference to January 1 to November 30 of the current year and required that the cash award would be subject to the availability of year-end savings.

On August 10, 2005, CSC-NCR Director IV Agnes D. Padilla certified that the NAIS complied with CSC MC No. 1, s. 2001 and could be implemented. Consequently, NEDA-CO granted CEMA to NEDA personnel, including petitioners, in December 2010, 2011, and 2012.

COA Audit Findings and the Issuance of the Notice of Disallowance

The grant of CEMA faced COA scrutiny. On April 12, 2013, the supervising auditor issued Audit Observation Memorandum (AOM) No. 2013-002, requiring the refund of CEMA released to NEDA personnel for 2010 to 2012. Thereafter, on May 7, 2013, ND No. 2013-01-101 (2010-2012) was issued disallowing the CEMA based on several grounds.

First, COA observed that CEMA was formulated outside the bounds of the Total Compensation Framework under Senate and House of Representatives Joint Resolution (JR) No. 04, s. 2009. COA maintained that CEMA was neither among incentives authorized under the JR nor specifically authorized by the President pursuant to the JR’s terms, and that it was not categorized by the Department of Budget and Management (DBM) as an incentive under the JR.

Second, COA treated the payments as null and void and unauthorized because CEMA was allegedly not among the incentives authorized under the JR and because the payments were not supported by specific appropriation as supposedly required under the General Provisions of Republic Act (RA) Nos. 9970, 10147, and 10155 and the respective General Appropriations Acts (GAAs) for fiscal years 2010 to 2012.

Third, COA ruled that CSC had no authority to allocate executive-branch savings for incentives and awards, and that NEDA was not authorized by the President to use savings from its appropriations to pay for CEMA.

Fourth, COA found insufficiency in the basis for concluding that employees’ accomplishments were superior or extraordinary and that savings or benefits were causally linked to such exceptional accomplishments. COA emphasized the absence of adequate indicators, baselines, metrics, and standards to establish the alleged extraordinary nature of accomplishments, the causality between accomplishments and savings or benefits, and the quantitative and qualitative measurement of the resulting benefits.

Based on the ND, petitioners received letters in May 2013 requiring them to return the CEMA they each received for 2010 to 2012.

Appeals Within COA and the Shift in Liability

Both petitioners, as payees, and NEDA officials who approved the grant filed appeal memoranda against the ND on October 31, 2013 and October 1, 2013, respectively. COA’s National Government Sector (NGS) Cluster 2 Legislative and Oversight resolved the appeals by affirming the ND but exempting employees who were mere recipients of CEMA from liability to refund what they received.

On automatic review, the COA-CP affirmed the ND in Decision dated December 13, 2017. COA-CP ruled that CEMA was not specifically authorized by law and that the GAAs for 2010 to 2012 prohibited the expenditure of public funds for unauthorized allowances. COA-CP also invoked Presidential Decree (PD) No. 1597, requiring presidential approval before additional allowances, honoraria, and fringe benefits may be paid. It also reiterated the lack of criteria and standards for granting CEMA. However, COA-CP excused mere passive recipients from liability to return due to good faith, while sustaining liability for NEDA officials.

When NEDA officers filed a motion for reconsideration, COA-CP issued the later Resolution labeled Decision No. 2022-094 on January 24, 2022, partly granting the separate MRs. COA-CP affirmed the disallowance but found that NEDA officers who approved or certified the grant of CEMA acted in good faith, relying on Madera v. Commission on Audit. COA-CP then reinstated the liability of petitioners as payees to return the amounts they respectively received, applying Madera.

Petitioners then filed the present petition, praying that COA-CP’s Resolution be set aside and that they be exempted from returning the CEMA they received for 2010 to 2012.

The Parties’ Contentions

COA, through the OSG, insisted that the disallowance was proper and that COA-CP did not commit grave abuse of discretion. Petitioners countered that presidential approval was unnecessary because CEMA was not confidential funds and was not granted indiscriminately; they further invoked Madera to support exemption from return on social justice considerations, including the long lapse of time, the intervening COVID-19 pandemic, the retirement or separation of some employees, and their reliance in good faith on management’s regular grant of CEMA.

Procedural Flaw Raised by the Court and Relaxation of Rules

Before addressing the substantive issues, the Court identified a procedural flaw concerning the authority of petitioners’ affiants to verify and submit the petition on behalf of the multiple persons listed in Annex “A.” In a Resolution dated October 4, 2022, the Court directed counsel to submit proof of authority of the affiants to cause preparation of the petition and to sign for and on behalf of the numerous persons in Annex “A.”

Counsel submitted six Special Powers of Attorney (SPAs) authorizing Maria Genelin L. Licos to represent the petitioners. The Court noted that an additional SPA was incomplete—undated and unnotarized—and that the SPAs, as submitted, did not include the authorization attestations required under Rule 7, Section 4 of the Amended Rules of Civil Procedure (2019), particularly the attestations regarding personal knowledge or authentic documents, the non-harassing nature of the filing, and the evidentiary support for the factual allegations.

Despite the defect, the Court chose to relax application of the rules and proceeded to resolve the case on the merits for all signatories who authorized Ms. Licos.

COA Correctly Disallowed the Grant of CEMA

On the merits, the Court addressed the first core issue: whether COA correctly disallowed the grant of CEMA.

COA’s principal basis was that CEMA lacked legal authorization and lacked sufficient standards for a grant consistent with its character as an incentive. The Court agreed that CEMA was not specifically authorized by the relevant GAAs for 2010 to 2012 or by any other law. It recognized that the grant derived only from the NAIS, established through CSC MC No. 1, s. 2001, and it rejected the attempt to validate disbursements merely because the NAIS was certified as compliant with CSC policy requirements. The Court explained that CSC’s certification addressed compliance with CSC’s incentive system framework, while the validity of actual disbursement remained subject to the budgetary jurisdiction of the DBM and COA’s audit jurisdiction.

The Court further agreed that PD No. 1597 required presidential approval for allowances, honoraria, and other fringe benefits not covered by authorized compensation frameworks, and that presidential approval was particularly necessary where CEMA was partially paid out of NEDA’s MOOE savings rather than under the Personal Services item.

The Court also invoked constitutional limits on transferring appropriations, reinforcing that such transfers were generally prohibited except by constitutionally permitted augmentation from savings through specified officials. It likewise addressed realignment rules under the GAAs, clarifying that prior approval of DBM was needed for realignment of funds between allotment classes, and that CEMA could not be treated as exempt merely because it was sourced from savings or because realignment principles were misunderstood.

Finally, the Court held that COA was correct to focus on the lack of adequate and quantifiable standards for granting CEMA. It recognized petitioners’ argument that the NAIS itself defined entitlement and that NEDA’s perf

Case Syllabus (G.R. No. 263155)

The petitioners were NEDA Central Office non-managerial and/or rank-and-file employees listed in Annex “A”, who received the Cost Economy Measure Award (CEMA) for the years 2010 to 2012.
The respondent was the Commission on Audit (COA), which disallowed the grant of CEMA to the NEDA Central Office employees.
The petition assailed COA Commission Proper (CP) Decision No. 2017-406 dated December 13, 2017 and the COA Resolution labeled Decision No. 2022-094 dated January 24, 2022.
The controversy arose from Notice of Disallowance (ND) No. 2013-01-101 (2010-2012) dated May 7, 2013, which required refund of the amounts paid as CEMA.
The Court resolved two core questions: whether COA correctly disallowed the grant of CEMA, and whether petitioners should be excused from returning the amounts they respectively received.

Parties and Procedural Posture

The petitioners filed a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court.
The petitioners sought to set aside the COA-CP Resolution and to obtain exemption from returning the 2010 to 2012 CEMA they received.
COA defended the disallowance and argued that the assailed rulings were not issued with grave abuse of discretion.
COA initially affirmed the ND but excused petitioners as mere recipients at the NGS Cluster 2 level.
Upon elevation to the COA-CP, the CP affirmed the ND and later issued the January 24, 2022 Resolution, which reinstated petitioners’ liability to return, applying Madera.
Petitioners did not file a motion for reconsideration because they were excused from liability earlier, and thus the relevant 30-day period lapsed for them to contest the matter at the COA level.
The Court ultimately partly granted the petition by excusing petitioners from refund under Rule 2d of Madera v. Commission on Audit.

Procedural Flaw Addressed

The Court addressed a procedural flaw involving the Verification/Certification of Non-Forum Shopping executed by affiants for numerous persons in Annex “A”.
The Court required petitioners’ counsel to submit proof of authority of the affiants to sign for the persons listed in Annex “A”, whose signatures were part of a name-and-signature matrix.
Counsel complied through six Special Power of Attorney (SPA) documents authorizing Maria Genelin L. Licos to represent signatories in the case and to perform acts including signing the verification and non-forum shopping certification.
The Court noted an additional incomplete SPA that was undated and unnotarized, along with multiple complete SPAs.
The Court held that the SPAs lacked the attestations required under Rule 7, Section 4 of the Amended Rules of Civil Procedure (2019) for a proper verified pleading.
The Court nevertheless relaxed the procedural rule to proceed on the merits for petitioners who signed and those who authorized Licos, in order to fully resolve the controversy.

Statutory and Regulatory Origins

The Civil Service Commission (CSC) issued Resolution No. 010112 on January 10, 2001 establishing the Program on Awards and Incentives for Service Excellence (PRAISE).
The CSC followed with Memorandum Circular (MC) No. 1, s. 2001, adopting revised policies on PRAISE, requiring departments and agencies to establish their own incentive systems subject to enumerated principles and guidelines.
The NEDA Central Office issued Office Circular No. 03-2005 on April 26, 2005, providing guidelines for NEDA’s Awards and Incentives System (NAIS).
The NAIS enumerated CEMA as an award granted to an employee or team whose contributions such as ideas, suggestions, inventions, discoveries, or performance of functions resulted in savings in man-hours and cost, or otherwise benefited the agency and government.
The NAIS stated there was no limit on the number of CEMA recipients, and nominations could be submitted directly to the NAIS Committee by proponents of productivity improvements projects or activities.
The NAIS described required documentation, including highlighting expected benefits to be derived.
The NAIS also provided entitlement parameters, including eligibility of all personnel as of a specified date, pro-rating rules for certain employees, exclusion for those no longer in service or AWOL as of payment date, a reference period, and the condition that the cash award was subject to availability of year-end savings.

Nature of the Disallowed Benefit

The petitioners received CEMA grants in December of 2010, 2011, and 2012.
COA treated CEMA as an allowance or incentive-like benefit whose disbursement had to comply with constitutional and statutory constraints on government expenditures.
COA characterized the payment as lacking a sufficient legal basis and as having inadequate standards for determining entitlement consistent with its nature as a performance-based incentive.

Key Factual Allegations

COA grounded the Notice of Disallowance on multiple grounds, including the absence of specific authorization in law and the lack of sufficient standards for granting CEMA.
COA asserted that CEMA was formulated outside the bounds of the Total Compensation Framework established under Senate and House of Representatives Joint Resolution (JR) No. 04, s. 2009.
COA stated CEMA was not among authorized incentives under the JR, and it was not categorized by the DBM as an incentive pursuant to the JR provisions.
COA further asserted that CEMA payments were null and void for being unauthorized, and that they were not supported by specific appropriation as required by General Provision restrictions in the relevant annual appropriations for fiscal years 2010 to 2012.
COA invoked Presidential Decree (PD) No. 1597, which required prior presidential approval before allowances, honoraria, and fringe benefits could be paid under conditions not covered by specific appropriation.
COA treated the CSC Director Padilla’s certification that the NAIS was in accordance with CSC rules as not conferring validity on the actual disbursement of CEMA.
COA also found that NEDA’s supporting documentation failed to provide adequate indicators, baselines, metrics, or standards to conclude that the accomplishments were superior or extraordinary, to establish causality between savings and such accomplishments, and to ascertain the amount of savings or quantitative and qualitative benefits attributable to extraordinary contributions.
Petitioners, as recipients, were required by their superiors to return the amounts each received for 2010 to 2012 after issuance of the ND.
Petitioners argued that they received CEMA in consideration of services rendered, in good faith, and that ordering repayment would produce undue prejudice on rank-and-file employees, including those who had already retired or were no longer employed at NEDA.

COA’s Reasoning on Disallowance

The COA-CP held that CEMA was not specifically authorized by any law and that the GAAs for 2010 to 2012 prohibited the expenditure of government funds for unauthorized allowances.
COA reiterated that CSC MC No. 01, s. 2001 could not override governing budget and expenditure rules, as actual disbursement authority remained within DBM and COA jurisdictions.
COA relied on the need for presidential approval for allowances and fringe benefits not specifically authorized by law, applying PD No. 1597.
COA treated the requirement as especially important where part of the 2012 CEMA was funded from NEDA’s MOOE rather than Personal Services, raising appropriation and realignment constraints.
COA invoked the constitutional prohibition on enactments authorizing transfer of appropriations, with only narrow exceptions for augmentation from savings under the Constitution.
COA read the General Provisions of the 2012 GAA, including provisions authorizing augmentation by specific officials and requiring DBM approval for realignment of funds across allotment classes.
Petitioners argued that presidential approval was not needed because CEMA was not confidential funds and because PD No. 807 (Civil Service Decree) and the Administrative Code mandated a government-wide incentive awards system.
COA rejected these arguments by reconciling incentive-award enabling provisions with budget rules, and by emphasizing the express requirement of presidential approval in PD No. 1597.
COA also rejected petitioners’ misunderstanding of the 2012 GAA Section 56, explaining that realignment of funds from one allotment class to another required prior DBM approval, and that the need for presidential approval arose because CEMA was an additional benefit outside approved compensation plan appropriations for 2010 to 2012.

Standards and Lack of Metrics

On the issue of entitlement criteria, COA and the OSG focused on the absence of sufficient and measurable sta