Abejo vs. The Commission on Audit

A disallowance in audit is proper where additional remuneration to members of a collegial body is granted without legal basis and contrary to a statutory per diem limit and a DBM circular prohibiting honoraria to officers already receiving per diem; nonetheless, an approving officer shown to have acted in good faith under the Madera Rules is not solidarily liable to return the disallowed amount.

The Inter-Country Adoption Board (ICAB) was created under Republic Act No. 8043, the Inter-Country Adoption Act of 1995, to act as the central authority in matters relating to inter-country adoption and as the policy-making body for carrying out the provisions of that law. It is composed of the Secretary of the Department of Social Welfare and Development as ex-officio Chairman and six other members appointed by the President. Under the Board is the Inter-Country Adoption Placement Committee (ICPC), which carries out an integrated system and network of selection and matching of applicants and children. Petitioner Bernadette Lourdes B. Abejo was the Executive Director of ICAB, while respondent Commission on Audit is the government audit body whose disallowance is at issue.

The Inter-Country Adoption Board (ICAB) was created under Republic Act No. 8043, otherwise known as the Inter-Country Adoption Act of 1995, to act as the central authority in matters relating to inter-country adoption and as the policy-making body for carrying out the provisions of that law. It is composed of the Secretary of the Department of Social Welfare and Development as ex-officio Chairman and six other members appointed by the President. Under the direction of the Board is the Inter-Country Adoption Placement Committee (ICPC), which carries out an integrated system and network of selection and matching of applicants and children. According to petitioner, the ICPC screens, reviews, evaluates, and eventually decides upon and approves applications of prospective adoptive parents (PAPs) or PAPs Dossiers.

From 2008 to 2010, there was a heavy volume of inquiries and applications from PAPs requiring action from the ICPC. To address the heavy workload and meet the ICPC’s monthly targets, the members of ICAB were asked to help with the review of the PAPs Dossiers. To compensate the work performed by ICAB members in reviewing the dossiers, Undersecretary Luwalhati F. Pablo, in her capacity as Alternate Chairperson of ICAB, issued an unnumbered memorandum dated 14 August 2008 granting the ICAB members additional remuneration of P250.00 for each application reviewed. Another unnumbered memorandum dated 16 April 2009 increased the amount to P500.00.

After audit, the Audit Team Leader and Supervising Auditor assigned to ICAB issued Notice of Disallowance No. 2011-009-101-(08-10), disallowing the additional remuneration to ICAB members amounting to P162,855.00. The disallowance was based on the following: (a) the grant had no legal basis; (b) the payment was contrary to Section 4 of Department of Budget and Management Budget Circular No. 2003-5 and Section 49 of Republic Act No. 9970, the General Appropriations Act for fiscal year 2010; (c) the Legal Service of the Department of Social Welfare and Development issued a memorandum denying the grant of honoraria to members of ICAB; and (d) Section 5 of Republic Act No. 8043 states that ICAB members are only entitled to a per diem of P1,500.00 per meeting. Petitioner, as Executive Director and approving officer, was identified in the Notice of Disallowance as the person liable to return the entire disallowed amount.

The audit and subsequent COA proceedings found that the memoranda granting the remuneration made no mention or failed to cite Republic Act No. 8043, and that no approved special project plan was presented. The COA also found that the ICAB members were already receiving per diem under Republic Act No. 8043.

• Legal Basis for Additional Remuneration: Petitioner claimed that the payment of the additional remuneration had sufficient basis in law, pointing out that the Inter-country Adoption Board Manual of Operation grants members of the ICPC honoraria for reviewing adoption applications; she argued that it was only fair to give ICAB members the same honoraria especially when they were requested to perform tasks not by them but by the ICPC.
• Special Project: Petitioner asserted that the ICAB members’ participation in the review of PAPs Dossiers is a special project under Section 49 of RA 9970 and, thus, should be compensated by way of honoraria.
• Good Faith and Non-Liability: Petitioner maintained that she was not negligent in approving the payment of the additional remuneration; in so approving, she considered not only the memoranda of Undersecretary Luwalhati but also the relevant laws and issuances such as RA 8043, RA 9970, and DBM BC 2003-5; thus, she should not be compelled to reimburse the disallowed amount as she was acting in good faith.

• Procedural Propriety: Whether the petition for certiorari may be resolved despite petitioner’s failure to file a motion for reconsideration of the COA Proper decision.
• Validity of Disallowance: Whether the COA correctly disallowed the additional remuneration given to ICAB members.
• Liability of Petitioner: Whether petitioner should be held liable for the disallowed amount.
• Finality of Recipients’ Exoneration: Whether the COA Proper’s exoneration of the ICAB members who received the remuneration may still be disturbed.

• Procedural Propriety: Yes. Although a motion for reconsideration is generally indispensable before certiorari, the second exception applies because the same main issues were raised and passed upon by the COA Proper; the Court resolved the petition on the merits in the interest of substantial justice.
• Validity of Disallowance: Yes. The additional remuneration was correctly disallowed; RA 8043 limits ICAB members to a per diem and DBM BC No. 2003-5 prohibits honoraria to officers already receiving per diem, while the Manual of Operation covered only ICPC members and no approved special project plan was shown.
• Liability of Petitioner: No. Petitioner should not be held solidarily liable to return the disallowed amount; the presumption of good faith was upheld under the Madera Rules because badges of good faith were present.
• Finality of Recipients’ Exoneration: Yes. The COA Proper’s exoneration of the recipients attained finality and may no longer be disturbed under the doctrine of immutability of final orders or judgments.

• Procedural Propriety: The general rule remains that the filing of a motion for reconsideration is an indispensable condition before the special civil action for certiorari could be availed of, to give the tribunal concerned an opportunity to correct any errors it may have committed in its decision. General rules admit exceptions, and the Court accepts several excuses for failure to file a motion for reconsideration, including where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court. The second exception applies because petitioner raised the same main issues before, and they were passed upon by, the COA Proper: (1) whether the additional remuneration given to the ICAB members has legal basis, and (2) whether petitioner acted in good faith in approving the grant. Thus, the Court deemed it proper to resolve the present petition on the merits despite petitioner’s procedural misstep.
• Validity of Disallowance: While additional work done outside of a government official’s regular function may be compensated, the grant of such compensation must still be in accordance with the applicable laws and rules. In Sison vs. Tablang, 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; the word “may” signifies that the honorarium cannot be demanded as a matter of right, and the payment of honoraria must be circumscribed by applicable rules and guidelines prescribed by the DBM, as provided by law. RA 8043 and DBM BC No. 2003-5 prevent the ICAB members from receiving additional compensation for the work they have done reviewing the PAPs Dossiers. Section 5 of RA 8043 is clear as to the limit of the amount of per diem the ICAB members are to receive, while Item 4.3 of DBM BC 2003-5 expressly prohibits the payment of honoraria to officers already receiving per diem, such as the ICAB members. The Intercountry Adoption Board Manual of Operation does not authorize the grant because Section 5 thereof pertains exclusively to members of the ICPC and made no mention of members of the ICAB; a manual could never defeat an express provision of law, or a rule specifically promulgated to govern a government official’s privilege to receive honoraria, and said Section 5 subjects the grant of honorarium to the usual accounting and auditing rules and regulations. Petitioner’s view that the additional work done by the ICAB members could be considered a “special project” under Section 49 of RA 9970 also fails. In Ngalob vs. Commission on Audit, the Court discussed the requirements before a task, function, or activity may be considered a “special project,” including the definition under DBM Circular No. 2007-2 and the requirement of an approved special project plan containing the title, objectives, outputs, timetable, skills, personnel, deliverables, and cost, with payment of honorarium made only upon completion and acceptance by the agency head of the deliverable per project component. Apart from her bare allegations, petitioner failed to show any approved special project plan of activities or undertakings as required by DBM Circular 2007-2; in the absence of this approved plan, the Court has no basis to rule whether the ICAB members’ review of the PAPs Dossiers constitutes a special project.
• Liability of Petitioner: In finding petitioner liable, the COA Proper found her negligent as the rules and regulations violated by the grant of the disallowed remuneration ought to have been within her knowledge considering the position she holds. The Court disagreed. In Madera vs. Commission on Audit, the Court provided a definitive set of rules in determining the liability of government officers and employees being made to return employee benefits that were disallowed in audit: if the Notice of Disallowance is set aside, no return shall be required; if the Notice of Disallowance is upheld, approving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return consistent with Section 38 of the Administrative Code of 1987; approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are solidarily liable to return only the net disallowed amount; recipients are liable to return the disallowed amounts respectively received by them, unless they are able to show that the amounts they received were genuinely given in consideration of services rendered; and the Court may likewise excuse the return of recipients based on undue prejudice, social justice considerations, and other bona fide exceptions. These rules are anchored on the principle that public officers are accorded the presumption of regularity in the performance of their official functions. The Court accepted circumstances as badges of good faith that may be considered in favor of government officers who approved or certified the disallowed benefit: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code; (2) in-house or Department of Justice legal opinion; (3) that there is no precedent disallowing a similar case in jurisprudence; (4) that it is traditionally practiced within the agency and no prior disallowance has been issued; or (5) with regard to the question of law, that there is a reasonable textual interpretation on its legality. Madera also added that these badges of good faith should be considered first before holding these officers liable, and the presence of any of these factors may tend to uphold the presumption of good faith. Badges of good faith could be appreciated in favor of petitioner. No prior disallowance of the same benefit has been issued against ICAB. Also, there is no precedent disallowing a similar case in jurisprudence. The only other COA disallowance petition involving ICAB was Abejo vs. Commission on Audit, docketed as G.R. No. 254570, resolved on 29 January 2021, and it pertains to an entirely different incentive. Considering the foregoing, the Court chose to uphold petitioner’s presumption of good faith.
• Finality of Recipients’ Exoneration: The individual members of ICAB who received the additional remuneration were not held liable in the Notice of Disallowance. COA’s apparent intention is to exonerate them from liability. Their non-inclusion in the Notice of Disallowance was no longer raised as an issue, and therefore already attained finality. To disturb their exoneration is to violate the doctrine of immutability of final orders or judgments.

• Honoraria and Per Diem Limitations — An honorarium is not demandable as a matter of right; it is given in appreciation of services and may be paid only in accordance with law and DBM rules. RA 8043, Section 5 limits ICAB members to a per diem of P1,500.00 per meeting and no compensation for more than four meetings a month. DBM BC No. 2003-5, Item 4.3 prohibits honoraria to chairs and members of collegial bodies who are neither paid salaries nor per diems. Since ICAB members received per diem, the additional honoraria were properly disallowed.
• Special Project Requirements for Honoraria — Under Ngalob vs. Commission on Audit and DBM Circular No. 2007-2, a special project must be a duly authorized inter-office or intra-office undertaking of a composite group of government officials and employees, not among the regular and permanent functions of their respective agencies, reform-oriented or developmental in nature, contributory to the improvement of service delivery and enhancement of the performance of core functions, and with an approved special project plan containing specified elements; honorarium payment is made only upon completion and acceptance by the agency head of the deliverable per project component. Bare allegations do not suffice. Here, no approved special project plan was shown, so the grant had no basis.
• Madera Rules on Liability for Disallowed Benefits — If a Notice of Disallowance is set aside, no return shall be required from any person held liable. If the Notice of Disallowance is upheld: (a) approving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return; (b) approving and certifying officers clearly shown to have acted in bad faith, malice, or gross negligence are solidarily liable to return only the net disallowed amount; (c) recipients are liable to return the disallowed amounts respectively received by them, unless they show that the amounts were genuinely given in consideration of services rendered; and (d) the Court may excuse the return of recipients based on undue prejudice, social justice considerations, and other bona fide exceptions. The Court applied these rules to absolve petitioner.
• Presumption of Regularity and Badges of Good Faith — Public officers are accorded the presumption of regularity in the performance of their official functions. Badges of good faith that may be considered in favor of government officers who approved or certified a disallowed benefit include: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code; (2) in-house or Department of Justice legal opinion; (3) no precedent disallowing a similar case in jurisprudence; (4) traditional practice within the agency and no prior disallowance; and (5) a reasonable textual interpretation on the legality of the act. These badges should be considered first before holding officers liable. Here, no prior disallowance against ICAB and no precedent disallowing a similar case supported petitioner’s good faith.
• Immutability of Final Judgments — A final and executory judgment may no longer be disturbed. The COA Proper’s exoneration of the ICAB members, not having been raised as an issue, attained finality and could not be disturbed.

• "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." — This passage, quoted from Sison vs. Tablang, defines the nature of an honorarium and establishes that it is not demandable as a matter of right, supporting the disallowance of the additional remuneration.
• "In this case, RA 8043 and DBM BC No. 2003-5 prevents the ICAB member from receiving additional compensation for the work they have done reviewing the PAPs Dossiers. Section 5 of RA 8043 is clear as to the limit of the amount of per diem the ICAB members are to receive. Meanwhile, Item 4.3 of DBM BC 2003-5 expressly prohibits the payment of honoraria to officers already receiving per diem, such as the ICAB members." — This is the ratio decidendi for upholding the disallowance, applying the statutory per diem limit and the DBM circular’s prohibition to the ICAB members.
• "Badges of good faith could be appreciated in favor of petitioner. No prior disallowance of the same benefit has been issued against ICAB. Also, there is no precedent disallowing a similar case in jurisprudence." — This passage states the basis for absolving petitioner from solidary liability under the Madera Rules, relying on the absence of prior disallowance and precedent.
• "The COA Proper's exoneration of the recipients already attained finality and may no longer be disturbed." — This passage applies the doctrine of immutability of final judgments to the COA Proper’s exoneration of the ICAB members who received the remuneration.

• Sison vs. Tablang — Cited by petitioner but held to support the disallowance: an honorarium is not demandable as a matter of right, and payment must await DBM guidelines; the word “shall” in the law requiring DBM guidelines is mandatory.
• Ngalob vs. Commission on Audit, G.R. No. 238882, 05 January 2021 — Cited for the requirements before a task may be considered a “special project” and for the need for an approved special project plan under DBM Circular No. 2007-2.
• Madera vs. Commission on Audit, G.R. No. 244128, 08 September 2020 — Cited for the definitive rules on return of disallowed benefits and the badges of good faith for approving and certifying officers.
• Abejo vs. Commission on Audit, G.R. No. 254570, 29 January 2021 — Cited to show that the only other COA disallowance petition involving ICAB pertained to a different incentive, supporting the absence of precedent disallowing a similar case.
• Del Rosario vs. ABS-CBN Broadcasting Corp., G.R. Nos. 202481, 202495, 202497, 210165, 219125, 222057, 224879, 225101 & 225874, 08 September 2020 — Cited for the exceptions to the motion-for-reconsideration requirement before certiorari.

• Section 5, Republic Act No. 8043 — Composition of ICAB; members receive a per diem of P1,500.00 for each meeting attended, with no compensation for more than four meetings a month. Applied to limit ICAB members’ compensation and disallow additional remuneration.
• Item 4.3, DBM Budget Circular No. 2003-5 — Authorizes honoraria only to chairs and members of commissions, boards, councils, and similar collegial bodies who are neither paid salaries nor per diems but compensated in the form of honoraria as provided by law, rules and regulations. Applied to prohibit honoraria to ICAB members already receiving per diem.
• Section 49, Republic Act No. 9970 (General Appropriations Act for Fiscal Year 2010) — Cited by petitioner as basis for special project honoraria; the Court found no approved special project plan to support the grant.
• Section 5, Intercountry Adoption Board Manual of Operation — Provides that a Committee member shall receive an honorarium determined by the Board subject to usual accounting and auditing rules and regulations. Applied to hold that it pertains exclusively to ICPC members and cannot defeat RA 8043 or DBM BC No. 2003-5.
• Sections 38, 39, and 43, Administrative Code of 1987 (Executive Order No. 292) — Sections 38 and 39 govern civil liability of superior and subordinate officers for bad faith, malice, or gross negligence; Section 43 makes illegal expenditures void and imposes joint and several liability. These anchor the Madera Rules applied to petitioner.
• Section 40, Administrative Code of 1987 — Mentioned as a badge of good faith: Certificate of Availability of Funds. The Court listed it among circumstances that may be considered in favor of officers.
• DBM Circular No. 2007-2 — Defines “special project” and requires an approved special project plan and payment only upon completion and acceptance. Applied to reject petitioner’s special project claim.

Gesmundo, C.J.; Leonen, SAJ; Caguioa; Hernando; Inting; M. Lopez; Gaerlan; Rosario; J. Lopez; Dimaampao; Marquez; Kho, Jr.; and Singh, JJ., concur. Lazaro-Javier, J., was on official leave.