Development Bank of the Philippines vs. Commission on Audit

The DBP Board of Directors’ power to fix compensation is not absolute; leave monetization must be based on “monthly salary” or basic pay, not on gross monthly cash compensation including allowances, and a compensation plan otherwise unauthorized is not validated by a presidential approval made within the election ban. Where the COA violates the right to speedy disposition of cases, the Court may excuse approving or certifying officers and recipients from refunding disallowed amounts under the Madera guidelines.

The Development Bank of the Philippines is a government financial institution whose Revised Charter, Executive Order No. 81, Series of 1986, as amended by Republic Act No. 8523, grants its Board of Directors authority to fix the remunerations and other emoluments of its officers and employees and exempts it from existing laws, rules, and regulations on compensation, position classification, and qualification standards, subject to conformity with the principles of the Salary Standardization Law. The Commission on Audit is the constitutional commission vested with audit authority over government agencies and government-owned or controlled corporations, including government financial institutions. The dispute concerns the audit of DBP’s monetization of leave credits, a benefit governed by CSC and DBM rules prescribing computation based on monthly salary, and by presidential approval requirements for SSL-exempt entities under P.D. No. 1597 and Memorandum Order No. 20.

The Development Bank of the Philippines is a government financial institution whose Board of Directors issued Circular No. 10 on March 7, 2005, amending provision number 4 of DBP Circular No. 39 on the computation of the money value of leave credits of its officials and employees. Instead of the “highest monthly salary received,” the basis of the money value of leave credits became the “gross monthly cash compensation,” composed of basic salary, officer’s allowance, Representation and Transportation Allowances, Personnel Economic Relief Allowances, Additional Compensation, meal, children’s, and family allowances, including longevity pay. Employees of DBP subsequently availed of the benefits under Circular No. 10.

On July 31, 2006, the Corporate Auditor of DBP issued an Audit Observation Memorandum stating that the money value of leave credits computed based on gross monthly cash compensation was contrary to Section 24 of Civil Service Commission Circular No. 41, Series of 1998 and Section 2(i) of Presidential Decree No. 1146, or the Revised Government Service Insurance Act of 1977. The Corporate Auditor noted that P.D. No. 1146 refers the term “salary” to “basic pay received by an employee excluding per diems, bonuses, overtime pay, and allowance.” DBP countered that neither the Supreme Court nor the CSC had issued any ruling, resolution, or clear pronouncement that “monthly salary” pertains to “basic monthly salary” in the computation of leave credits. It also asserted that Section 13 of DBP’s Revised Charter empowers the bank’s Board of Directors to fix the remuneration and other emoluments of the bank’s officers and employees, and that the same provision exempts DBP from existing laws, rules, and regulations on compensation classification and qualification standards such as the Salary Standardization Law.

On February 28, 2007, the Corporate Auditor issued various Notices of Disallowance to officers and rank-and-file employees of DBP on the money value of leave credits covering the period from March to December 2005, in the total amount of ₱26,182,467.36. The notices covered various rank-and-file personnel in the Head Office in the amount of ₱2,270,892.63; various officers in the branches in the amount of ₱8,290,866.16; various officers in the Head Office in the amount of ₱11,406,757.62; and various rank-and-file personnel in the branches in the amount of ₱4,213,950.95. Among those named liable were Ma. Theresa R. Pacada, Estrella R. Aclan, and Alberto B. Reyno, as well as members of the Board of Directors, namely Vitaliano N. Nañagas II, Reynaldo G. David, Alexander R. Magno, Floro F. Oliveros, Joseph N. Pangilinan, and Rey Magno Teves, who approved Board Resolution No. 0071 dated February 10, 2005. DBP filed a motion for reconsideration, which the Supervising Auditor denied in her Action on Motion for Reconsideration dated May 15, 2007. The Action stated that the present salary or compensation of DBP officers and employees was without the requisite authority or approval of the Office of the President and the Department of Budget and Management, and cited the rulings in Intia vs. COA, Philippine Retirement Authority vs. Bunag, and Central Bank Employees Association vs. BSP.

DBP filed Notices of Appeal dated June 27, 2007 and July 17, 2007 to the Director, Cluster 1, Corporate Government Sector of the COA. After two years, or on July 20, 2009, the Cluster Director directed DBP to submit an appeal memorandum within 20 days from receipt of the order. Prior to the lapse of the period to file an appeal memorandum, the COA Legal Services Sector issued a Decision dated August 12, 2009 pertaining to DBP’s earlier motion for reconsideration. It affirmed the Notices of Disallowance and ordered DBP officials who approved the monetization of leave credits based on gross monthly compensation to jointly and severally refund the total excess payments made thereon, while employees who merely received the amounts were not required to refund. DBP filed a Manifestation and Motion claiming that the Legal Services Sector Decision was redundant because it pertained to the motion for reconsideration already resolved in the Action dated May 15, 2007, and that COA violated its right to due process when it rendered the Decision while DBP still had the benefit of the period to file its appeal memorandum. On August 24, 2009, DBP filed a Memorandum of Appeal, alleging that the Supervising Auditor disregarded the provision of DBP’s Revised Charter authorizing its Board of Directors to fix the remunerations and emoluments of its officers and employees, which includes the power to adopt a policy defining “monthly salary.” It asserted that its Board did not need to ask for the approval of the Office of the President and the Department of Budget and Management, and that the Supervising Auditor’s purported bases for disallowance did not directly prohibit the computation of the money value of leave credits based on gross monthly compensation. Even assuming a legal basis for disallowance, DBP prayed that the bank and its concerned employees should not be made to return the amounts received on the ground of good faith when they relied on the provision of the bank’s Revised Charter. The COA filed its reply memorandum on August 25, 2009.

DBP thereafter filed several manifestations and motions. On July 20, 2010, it informed the COA that then President Gloria Macapagal-Arroyo had confirmed the power and authority of the Board of Directors of DBP, independently of Memorandum Order No. 20 dated June 25, 2001, to approve and allow the implementation and subsequent refinements of DBP’s compensation plan adopted in March 1999. DBP claimed that the refinements included DBP Circular No. 10, and theorized that with the President’s approval, the ground on which the Notices of Disallowance were based had been rendered moot and academic. On November 26, 2010, DBP filed a Motion to Resolve, alleging that many employees named accountable for the Notices of Disallowance had retired or otherwise separated from the bank, or were about to do so, but because of the unsettled issue on the disallowances, no final settlement could be effected to their prejudice. It also noted that the unsettled disallowances had long been outstanding in the books of the bank and had affected its financial standing and status before regulating bodies. On March 8, 2012, DBP filed a Second Manifestation and Motion, noting that in another case involving the disallowance of the increase in the compensation of DBP senior officers, the COA Commission Proper held that President Arroyo’s subsequent approval of the bank’s compensation plan legitimized the same and the reason for disallowance had ceased to exist. On July 22, 2014, DBP filed a Third Manifestation and Motion, highlighting that in Land Bank of the Philippines vs. Naval, Jr., the Supreme Court recognized as valid the independence and autonomy of the Land Bank of the Philippines, a government financial institution, to design its own compensation plan. DBP underscored the similarity between its own Charter and that of Land Bank and reiterated that the COA should allow or pass in audit the payment of the money value of leave credits of DBP officials and employees.

On January 30, 2018, the COA Commission Proper rendered Decision No. 2018-197, partially granting DBP’s appeal. It affirmed the Notices of Disallowance on the payment of the money value of leave credits of DBP officials and employees but held that employees who were passive recipients were not required to refund the amount they received in good faith. All other persons named liable in the Notices of Disallowance remained solidarily liable for the total disallowance of ₱26,182,467.36. The COA Commission Proper ruled that DBP’s authority to fix the remunerations and emoluments of its employees was subject to existing CSC, DBM, and COA laws, rules, and regulations. It cited Section 40 of CSC Memorandum Circular No. 14, Series of 1999 and DBM Budget Circular No. 2002-1 dated January 14, 2002, providing the guidelines and formula for the computation of terminal leave benefits and monetization of leave credits based on monthly salary. It stated that as commonly understood and practiced in all government agencies, monthly salary for purposes of monetization of leave credits pertains to basic pay, excluding all allowances and benefits, and that the same was true under Republic Act No. 8291, which amended P.D. No. 1146, and the Salary Standardization Law. The COA rejected DBP’s invocation of President Arroyo’s post facto approval of the bank’s Compensation Plan, since it was made 18 days before the May 10, 2010 Presidential and Vice-Presidential Elections. Under Article XXII of the Omnibus Election Code, a government official cannot give any increase in salary or remuneration or privilege to any government official or employee 45 days before a regular election. As to liability for the refund of the disallowed money value of leave credits, the COA Commission Proper held that the obligation fell upon the DBP Board of Directors who approved Board Resolution No. 71 dated February 10, 2005, and DBP officials who approved the payment as they were performing discretionary functions. Before approving the transactions, DBP officials were not precluded from raising reasonable questions on the funding, legality, regularity, necessity, or economy of the expenditures. Thus, as opposed to the passive recipients, the DBP Board of Directors and officials could not be deemed to be in good faith. DBP moved for reconsideration, which the COA Commission Proper denied in Decision No. 2022-072 dated January 24, 2022. The COA Commission Proper affirmed its earlier Decision with modification in that even the passive recipients of the money value of leave credits were required to refund the illegally disbursed amount regardless of their good faith. All approving and certifying officers remained solidarily liable under the Notices of Disallowance, which shall be reduced by the actual refunds of the payees who are liable to refund the amounts they received.

• Due Process: DBP argued that the COA violated its right to due process when the Legal Services Sector rendered its Decision while DBP still had the benefit of the period to file its appeal memorandum; it also claimed that the Legal Services Sector Decision was redundant because it pertained to the motion for reconsideration already resolved by the Supervising Auditor.
• Speedy Disposition: DBP asserted that the COA violated its right to speedy disposition of cases, having unjustifiably taken more than eight years to resolve DBP’s appeal and another four years to rule on its motion for reconsideration.
• Res Judicata / 2021 DBP Case: DBP claimed that the 2021 DBP case recognized that President Arroyo’s approval had legitimized DBP’s Compensation Plan, that the COA was bound by conclusiveness of judgment, and that the 2021 DBP case operated as res judicata to the present petition; it also alleged that the 2022 DBP case was inconsistent with the 2021 DBP case.
• Omnibus Election Code: DBP insisted that President Arroyo’s approval of its Compensation Plan was not prohibited under the Omnibus Election Code because it did not give any new salary increases or privileges 45 days before the May 2010 elections; the President merely confirmed the Compensation Plan from 1999 onwards.
• DBP Charter Authority: DBP maintained that Section 13 of its Revised Charter empowers its Board of Directors to fix the remuneration and emoluments of its officers and employees and exempts it from the Salary Standardization Law, such that it did not need the approval of the Office of the President and the Department of Budget and Management; the Supervising Auditor allegedly disregarded this charter provision, and the purported bases for disallowance did not directly prohibit computation based on gross monthly compensation.
• Good Faith / Refund: Even assuming a legal basis for disallowance, DBP prayed that the bank and its concerned employees should not be made to return the amounts received on the ground of good faith when they relied on the provision of the bank’s Revised Charter.
• Mootness / Presidential Approval: DBP claimed that President Arroyo confirmed the authority of the DBP Board of Directors, independently of Memorandum Order No. 20, to approve and allow the implementation and refinements of DBP’s Compensation Plan adopted in March 1999; because the refinements included Circular No. 10, the ground for the Notices of Disallowance was rendered moot and academic.
• Land Bank vs. Naval, Jr.: DBP highlighted that Land Bank of the Philippines vs. Naval, Jr. recognized the independence and autonomy of Land Bank as a government financial institution to design its own compensation plan, and underscored the similarity between its own Charter and that of Land Bank; it reiterated that the COA should allow or pass in audit the payment of the money value of leave credits.
• Injunctive Relief: DBP asked for the issuance of a temporary restraining order and/or writ of preliminary injunction upon filing of the petition.

• Due Process: The COA argued that DBP was not denied due process since it was able to actively participate in the proceedings from the issuance of the Audit Observation Memorandum to the rendition of the assailed Decisions; although DBP’s appeal memorandum was not considered in the Legal Services Sector Decision, the same was considered by the COA Commission Proper in its 2018 Decision.
• Speedy Disposition: The COA asserted that DBP’s right to speedy disposition of cases was not violated; during the pendency of DBP’s case, the COA was in the process of amending its Rules of Procedure, which was later approved on September 15, 2009, and the organizational adjustments brought by the amendments affected the COA’s proceedings and may have resulted in an unintended delay in resolving the matters before it.
• Validity of Circular No. 10: The Legal Services Sector maintained that DBP Circular No. 10 was contrary to Section 2(i) of P.D. No. 1146, Section 24 of CSC Circular No. 1, Section 40 of CSC Memorandum Circular No. 14, Series of 1999, and DBM Budget Circular No. 2002-1 dated January 14, 2002; it insisted that computing the money value of leave credits using gross monthly salary instead of basic salary effectively increased the employees’ benefits.
• Omnibus Election Code: The COA insisted that the post facto approval by President Arroyo of DBP’s Compensation Plan violated the Omnibus Election Code because it was made within the prohibited period before the May 10, 2010 elections.
• Res Judicata: The COA claimed that it was not bound by the ruling in the 2021 DBP case because, while DBP’s Compensation Plan was referred to therein, the issues involved were separate and distinct: that case pertained to the grant of salary increases to DBP officials, while the present case is about the proper computation or formula to be applied in computing the money value of leave credits; thus, the COA did not commit grave abuse of discretion.
• Liability: The COA stated that under Sections 38 and 39 in relation to Section 43 of the Administrative Code, all approving or certifying officers who participated in the approval of Circular No. 10 are solidarily liable to return the disallowed amounts since they approved or certified the same in violation of pertinent laws, rules, and regulations; as to the employees who received the money value of leave credits, they are liable to refund the disallowed amounts pursuant to the principle of solutio indebiti.
• Prayer: The COA prayed for the dismissal of the petition and the denial of DBP’s prayer for injunctive relief.

• Due Process: Whether DBP was denied due process.
• Speedy Disposition: Whether DBP’s right to speedy disposition of cases was violated.
• Res Judicata: Whether the 2021 DBP case operates as res judicata to the present petition.
• DBP Charter / MVLC Computation: Whether DBP may legally provide a policy defining what constitutes gross monthly compensation in the computation of the money value of leave credits of its officers and employees.
• Liability for Refund: Whether DBP officials and employees who participated in the approval or certification of Circular No. 10, as well as received benefits therefrom, are liable to return the disallowed amounts.

• Due Process: No. Due process is satisfied if the party is properly notified of the allegations, given an opportunity to defend, and the defense is considered; the procedural defect in the Legal Services Sector Decision was cured by the COA Commission Proper’s subsequent Decision, and DBP participated throughout the proceedings.
• Speedy Disposition: Yes. The COA violated DBP’s right to speedy disposition of cases; the aggregate delay of 11 years in resolving the appeal and the motion for reconsideration exceeded the 60-day period under the Constitution and the COA’s own rules, and the COA failed to prove that the delay was reasonable.
• Res Judicata: No. The 2021 DBP case did not rule on the validity of DBP’s Compensation Plan; it concerned the finality of a COA Decision and the propriety of reopening it, while the present case concerns the disallowance of the money value of leave credits under Circular No. 10, so there is no identity of causes of action.
• DBP Charter / MVLC Computation: No. DBP’s Board of Directors’ power to fix compensation is not absolute; Circular No. 10, using gross monthly cash compensation, is inconsistent with CSC and DBM rules requiring computation based on “monthly salary” or basic pay, and President Arroyo’s approval was invalid.
• Liability for Refund: The approving and certifying officers, as well as the recipients, are not required to refund the disallowed amounts. While the Notices of Disallowance were valid, good faith on the part of the officers and the COA’s violation of the right to speedy disposition excused refund under the Madera guidelines.

• Due Process: Due process is satisfied if the party is properly notified of the allegations against him or her, is given an opportunity to defend himself or herself, and such defense was considered by the tribunal in arriving at its own independent conclusions. As long as the party was afforded an opportunity to defend his or her interests in due course, he or she is not denied due process. Here, the COA issued the Legal Services Sector Decision while the period for DBP to file its appeal memorandum had not yet lapsed, so that Decision did not consider DBP’s arguments on appeal. Nevertheless, this procedural defect was cured by the COA Commission Proper’s subsequent Decision, which duly discussed DBP’s arguments in its Memorandum of Appeal. More importantly, throughout the proceedings from the Supervising Auditor to the COA Commission Proper, DBP was able to present its side and defend its position. What is offensive to due process is the denial of the opportunity to be heard.

• Speedy Disposition: Section 16, Article III of the Constitution provides that all persons shall have the right to speedy disposition of their cases before all judicial, quasi-judicial, and administrative bodies. In determining whether the right is violated, several factors are considered: (a) the length of delay; (b) the reasons for such delay; (c) the assertion or failure to assert such right; and (d) the prejudice caused by the delay. The length of delay is measured in conjunction with the period for which the COA should have decided the case. Under Section 7, Article IX(A) of the Constitution, the COA shall decide any case or matter brought before it within 60 days from its submission for decision or resolution, and a case is deemed submitted upon the filing of the last pleading, brief, or memorandum required by the rules. DBP filed its Memorandum of Appeal before the COA Cluster Director on August 24, 2009, while the COA Auditor filed a Consolidated Reply Memorandum on August 25, 2009. The COA Commission Proper rendered Decision No. 2018-197 on January 30, 2018, more than eight years from the submission of the Reply Memorandum. DBP filed its motion for reconsideration on October 17, 2018, but it was resolved only on January 24, 2022, more than three years later. Since the delay extended to years, way beyond the mandate of the Constitution and the COA’s own rules, it was incumbent upon the COA to prove that the delay was reasonable or not attributable to it. The COA argued that it was amending its Rules of Procedure in 2009 and that this might have resulted in unintended delays, but the COA itself stated that its new rules were approved on September 15, 2009, while the delay spanned from August 2009 to January 2018 and November 2018 to January 2022. The COA had already finished the amendments during the long hiatus and did not substantiate the so-called organizational adjustments that caused the delay. DBP also asserted its right to speedy disposition through a Motion to Resolve dated November 23, 2010, followed by two manifestations and motions. The delay prejudiced DBP and its officials and employees, as the possibility of being required to reimburse the disallowed amounts hung over their heads like a sword of Damocles. In another case between the COA and DBP, the Court found the COA guilty of unjustified delay when it took more than three years to reverse its Decision and almost four years to resolve DBP’s motion for reconsideration, or a total of seven years; the delay in the present case was even longer, totaling 11 years. The COA Commission Proper took more than three years to dispose of the motion for reconsideration even though it found DBP’s arguments to be a mere rehash, showing that the motion did not involve a difficult question of law. The unjustified delay was vexatious and oppressive, especially as the disbursements were made 18 years earlier, many employees had retired or separated, and the disallowances remained outstanding in DBP’s books.

• Res Judicata: There is conclusiveness of judgment where there is identity of parties in the first and second cases but no identity of causes of action. The first judgment is conclusive only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. The subject of the 2021 DBP case was the grant of salary increases to eight senior officers of DBP pursuant to DBP’s Compensation Plan, the same Compensation Plan involved in the present case. The COA Supervising Auditor disallowed the same because the Compensation Plan lacked presidential approval; the COA Cluster Director affirmed; DBP appealed to the COA Commission Proper invoking President Arroyo’s post facto approval. In its Decision dated February 1, 2012, the COA granted the petition and lifted the notice of disallowance, stating that the subsequent approval of the Compensation Plan made the principal issue of the absence of presidential approval moot and academic. DBP received a copy on February 6, 2012 but did not file a motion for reconsideration or a petition. In March 2012, Paragan, an officer of DBP, submitted confidential letters to the COA arguing that the post facto approval was void because it was made within 45 days before a regular election. The COA treated the letters as a motion for reconsideration and exercised its power to open and revise settled accounts under the Government Auditing Code. In its Decision dated April 13, 2015, the COA reversed its earlier ruling and held that the increase in salaries of DBP’s senior officers had no legal basis, finding that President Arroyo’s approval was illegal for being made 18 days before the May 10, 2010 elections. DBP elevated the case to the Supreme Court. The Court granted the petition and reinstated the COA Decision dated February 1, 2012 on the following grounds: (1) Paragan was not a real party in interest or aggrieved party entitled to file a motion for reconsideration or appeal; (2) the COA was guilty of unjustified delay in acting on Paragan’s letters and resolving DBP’s motion for reconsideration; and (3) the COA Decision dated February 1, 2012 was already final and executory absent a timely motion for reconsideration or appeal. The Court did not make any pronouncement regarding the validity of President Arroyo’s post facto approval of DBP’s Compensation Plan. In fact, under the first ground, the Court already stated that Paragan had no personality to question the legality of such approval. Thus, the validity of the Compensation Plan was not put into issue; rather, the heart of the controversy was the propriety of the COA’s reopening of an already final and executory Decision. Conversely, the present petition deals with the COA’s disallowance of the monetization of leave benefits of DBP officers and employees computed based on their gross monthly cash compensation pursuant to DBP Circular No. 10. One of the main defenses of DBP is President Arroyo’s subsequent approval of its Compensation Plan, which allegedly included DBP Circular No. 10. Considering that the Court did not rule on the validity of the Compensation Plan in the 2021 DBP case, it cannot be said that it operates as res judicata to the present case. There is also no inconsistency between the rulings in the 2021 and 2022 DBP cases. The 2022 DBP case involves two consolidated petitions seeking to nullify the COA’s issuance of Notices of Disallowance on (1) the grant of additional allowances and fringe benefits to DBP officers acting as officers of DBP Subsidiaries in 2006; and (2) the grant of officers’ allowance, economic assistance, and merit increase to DBP’s officers and employees. In both petitions, DBP averred that the subsequent approval by President Arroyo of its Compensation Plan rendered the disallowances moot and academic. The Court held in the 2022 DBP case that President Arroyo’s approval was void for being made within the prohibited 45-day period before the May 2010 elections. The 2021 DBP case did not touch on the legality of the Compensation Plan.

• DBP Charter / MVLC Computation: DBP relies on Section 13 of its Revised Charter as authority for computing the money value of leave credits based on gross monthly cash compensation. Section 13 provides that the Board of Directors shall provide for an organization and staff of officers and employees of the Bank and, upon recommendation of the President of the Bank, fix their remunerations and other emoluments. All positions shall be governed by the compensation, position classification system, and qualification standards approved by the Board of Directors based on a comprehensive job analysis of actual duties and responsibilities. The compensation plan shall be comparable with prevailing compensation plans in the private sector and shall be subject to periodic review by the Board of Directors once every two years, without prejudice to yearly merit or increases based on the Bank’s productivity and profitability. The Bank shall be exempt from existing laws, rules, and regulations on compensation, position classification, and qualification standards, but shall endeavor to make its system conform as closely as possible with the principles under the Compensation and Position Classification Act of 1989, Republic Act No. 6758, as amended. In the 2018 case of Development Bank of the Philippines vs. Commission on Audit, the Court declared that the authority granted to the DBP Board of Directors under Section 13 is not absolute but remains subject to the principles of the Salary Standardization Law, notwithstanding that DBP is exempt from existing laws on compensation, position classification, and qualification standards. There, the COA disallowed the Governance Forum Productivity Award granted by the DBP Board of Directors to its officers and employees for lack of legal basis. DBP asserted that its charter gave it a free hand in fixing compensation and allowances. In rejecting DBP’s claim, the Court explained that while Section 13 of DBP’s charter exempts it from existing laws on compensation and position classification, it concludes by expressly stating that DBP’s system of compensation shall nonetheless conform to the principles under the Salary Standardization Law. There is no basis to conclude that the DBP’s Board of Directors was conferred unbridled authority to fix the salaries and allowances of its officers and employees. The authority granted DBP to freely fix its compensation structure under which it may grant allowances and monetary awards remains circumscribed by the Salary Standardization Law; it may not entirely depart from the spirit of the guidelines therein. The policy requiring prior presidential approval upon recommendation from the Secretary of Budget as provided in P.D. No. 1597, with respect to the grant of allowances and benefits, was reaffirmed by Congress in 2009 through Joint Resolution No. 4, also known as the Salary Standardization Law III, which provides that the coverage, conditions for the grant, including the rates of allowances, benefits, and incentives to all government employees, shall be rationalized in accordance with the policies to be issued by the President upon recommendation of the Department of Budget and Management. This policy mirrors Memorandum Order No. 20 issued in 2001, which directed the heads of government-owned or controlled corporations, government financial institutions, and subsidiaries exempted from the Salary Standardization Law to implement pay rationalization in all senior officer positions. The Court reiterated this ruling in the 2022 DBP case, where it further noted that the DBP Board of Directors’ power to fix personnel compensation must not only be as close as possible with the principle of the Salary Standardization Law but must also be in accord with the prevailing rules and regulations issued by the President of the Philippines and/or the Department of Budget and Management. There, the Court affirmed the COA’s disallowance of the grant of merit increases and other additional compensation or allowances because they were not specifically authorized by existing laws and did not have the requisite approval of the President as required under P.D. No. 1597 and Memorandum Order No. 20. Section 6 of P.D. No. 1597 provides the requisite presidential review, through the Department of Budget and Management, of the position classification and compensation plan of an agency exempt from the Office of Compensation and Position Classification. Memorandum Order No. 20 provides that any increase in salary or compensation of government-owned or controlled corporations and government financial institutions that is not in accordance with the Salary Standardization Law shall be subject to the approval of the President. Consequently, the threshold issues are: (a) whether DBP Circular No. 10 was in accordance with the rules and regulations existing at the time of its issuance in 2005; and (b) whether it was approved by the President. The Court ruled in the negative. The money value of leave credits is defined as the payment in advance under prescribed limits and subject to specified terms and conditions of the money value of leave credits of an employee upon his request without actually going on leave. Under CSC Memorandum Circular No. 41, Series of 1998, which amended Rules I and XVI of the Omnibus Rules Implementing Book V of the Administrative Code of 1987, the formula for the computation of leave monetization is Monthly Salary divided by 22 Working Days, multiplied by the Number of Days to be Monetized, equals the Money Value of the monetized leave. On September 4, 2003, the CSC issued Memorandum Circular No. 8, Series of 2003, which amended the computation by adopting the formula in Section 40 of CSC Memorandum Circular No. 14, Series of 1999, on the computation of terminal leave benefits. Thus, either of the following formulas shall be used for the computation of the money value of leave credits: Monthly Salary multiplied by the Number of Days to be Monetized multiplied by the Constant Factor of .0478087, or Monthly Salary divided by 20.916667 multiplied by the Number of Days to be Monetized. The constant factor is based on Section 40 of CSC Memorandum Circular No. 14, Series of 1999, and 20.916667 is the equivalent number of days in a month for computation of monetization of leave credits based on the total number of working days per year, 251, divided by the number of months in a year, 12. Concomitantly, DBM issued Budget Circular No. 2002-1 dated January 14, 2002, titled “Computation and Funding of Terminal Leave Benefits and Monetization of Leave Credits,” addressed to the heads of departments, bureaus, offices, and agencies of the National Government, government-owned or controlled corporations, government financial institutions like DBP, and chief executives of Local Government Units. Section 3.1.2 of Budget Circular No. 2002-1 states that monetization of leave credits shall be computed in accordance with the formula used in the computation of terminal leave benefits, which is terminal leave benefits equals S multiplied by D multiplied by CF, where S is the highest monthly salary received, D is the number of accumulated vacation and sick leave credits, and CF is the constant factor of .0478087. Based on the formula, the equivalent number of days in a month for purposes of computation of terminal leave benefits is 20.91667. The formula for the computation of the money value of leave credits explicitly refers to and is based on “monthly salary” and not on “gross monthly cash compensation.” In Paredes vs. COA, the Court construed the term “monthly salary” for purposes of computing the money value of terminal leave benefits to exclude bonuses and allowances; it did not include therein petitioner’s representation allowance in computing his terminal leave benefits. Considering that the formula for computing the money value of leave credits was adopted from the computation of terminal leave benefits, there is no reason not to apply the definition of “monthly salary” as stated in Paredes in computing the money value of leave credits. Accordingly, in monetization of leave credits, bonuses and allowances of personnel are not included; only the basic pay shall be the basis of the money value of leave credits. Prior to the issuance of DBP Circular No. 10, DBP under Circular No. 39 dated October 3, 2002 used “highest monthly salary received” as the base in computing the money value of leave credits. However, on March 7, 2005, DBP issued Circular No. 10, amending the formula for the computation of the money value of leave credits of its officials and employees by using “gross monthly cash compensation” as base which, in addition to basic salary, included officers’ allowances, Representation and Transportation Allowances, Personnel Economic Relief Allowances, Additional Compensation, meal, children’s and family allowances, and longevity pay. Evidently, DBP Circular No. 10 is inconsistent with the Omnibus Rules on Leave, as amended by CSC Memorandum Circular No. 14-99 and CSC Memorandum Circular No. 8-03, as it uses gross monthly cash compensation, which includes various allowances, as basis for the computation of the money value of leave credits, instead of the prescribed base of “monthly salary.” Meanwhile, DBP harped on the alleged post facto approval by President Arroyo of the bank’s Compensation Plan, which allegedly included Circular No. 10. DBP’s Letter to President Arroyo dated April 22, 2010 sought to confirm its Board of Directors’ authority to approve a compensation plan for DBP’s personnel. President Arroyo approved DBP’s Compensation Plan with the handwritten note that it would not include members of the Board of Directors and that the approval was good until June 30, 2010. A cursory review of DBP’s Letter and its annexes would show that DBP’s policy to compute its personnel’s money value of leave credits based on gross monthly cash compensation is not included in the Compensation Plan. Even if Circular No. 10 was included in the Compensation Plan approved by President Arroyo, the Court already held in the 2022 DBP case, which involves the same Compensation Plan subject of this case, that President Arroyo’s approval was invalid. First, the presidential approval was not reduced to any formal memorandum but was merely in the form of the President’s signature affixed at the end of DBP’s Letter. Second, presidential approval of a new compensation and benefits scheme, including the grant of allowances, which is unauthorized by law, will not stop the State from correcting the erroneous application of a statute. Third, President Arroyo’s approval of DBP’s Compensation Plan was void because it was made during the prohibited period under the Omnibus Election Code. The President’s approval was made on April 22, 2010, merely 18 days before the May 10, 2010 National and Local Elections. Under Section 261(g)(2) of Batas Pambansa Blg. 881, otherwise known as the Omnibus Election Code of the Philippines, the grant of increase of salary or remuneration or privilege to any government official or employee is prohibited during the period of 45 days before a regular election. Thus, President Arroyo’s approval of DBP’s authority to approve the compensation plan is clearly void because it was made within the prohibited 45-day period before the May 10, 2010 elections. That the benefits approved refer to benefits implemented long before the President’s approval during the prohibited period does not make such approval valid. It bears stressing that petitioners precisely sought the President’s approval or confirmation to validate the unauthorized grant of merit increases, economic assistance, and integration of officers’ allowance.

• Liability for Refund: While there were sufficient grounds for the issuance of the Notices of Disallowance, the Court found it necessary to review the liabilities of the DBP officers and employees to return the disallowed amount. In Madera vs. Commission on Audit, the Court provided guidelines on the liability of government officials and employees affected by the disallowance of benefits and compensations upheld by the Court: (1) if a Notice of Disallowance is set aside by the Court, no return shall be required from any of the persons held liable therein; (2) if a Notice of Disallowance is upheld, the rules on return are as follows: (a) approving and certifying officers who acted in good faith, in the 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; (b) approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable to return only the net disallowed amount, which excludes amounts excused under the following sections 2c and 2d; (c) recipients, whether approving or certifying officers or more passive 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 (d) the Court may likewise excuse the return of recipients based on undue prejudice, social justice considerations, and other bona fide exceptions as it may determine on a case-to-case basis. With respect to the DBP officers who approved and certified the disallowed transactions pursuant to DBP Circular No. 10, Rules 2a and 2b under Madera shall apply. The said rules are jurisprudentially anchored on Sections 38 and 39, Chapter 9, Book 1 of the Administrative Code of 1987, which provide that government officials who approved or certified the grant of disallowed benefits could only be civilly liable to return the amount thereof when they acted in evident bad faith, with malice, or if they were grossly negligent in the performance of their official duties. In Ancheta vs. Commission on Audit, the Court recognized the following badges of good faith and diligence that may be considered to absolve the approving or certifying officers’ liability: (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. On the other hand, recipients are liable to refund, regardless of good faith, on the basis of solutio indebiti and unjust enrichment, considering that when a disbursement is adjudged to be illegal, irregular, excessive, extravagant, and/or unconscionable, an individual’s receipt of any portion thereof is regarded as erroneous. They may be excused from this liability only when: (1) they are able to show that the amounts they received were genuinely given in consideration of the services rendered under Rule 2c of Madera; or (2) the Court excuses them based on undue prejudice, social justice considerations, or the bona fide exceptions as will be determined on a case-to-case basis under Rule 2d of Madera. In Abellanosa vs. Commission on Audit, a payee may benefit from exception under Rule 2c of Madera only when the following conditions concur: (a) if 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. Similarly, in Abellanosa, the Court noted that for the exception under Rule 2d of Madera to apply, there must be a bona fide instance that would strongly impel the Court to prevent a clear inequity arising from a directive to return. It is only in highly exceptional circumstances, taking into account all factors such as the nature and purpose of the disbursement and its underlying conditions, that the civil liability to return may be excused. Otherwise, Rules 2c and 2d of Madera could be used as a jurisprudential loophole to cause government fiscal leakage and debilitating loss. In Cagayan De Oro City Water District vs. Commission on Audit, the Court laid down considerations in determining whether a refund can be excused under Rule 2d of Madera: (1) the Court shall evaluate the nature and purpose of the disallowed allowances and benefits; recipients must prove with substantial evidence (a) the nature and purpose of disallowed allowances and benefits, and (b) the existence and truthfulness of its factual basis; recipients of disallowed allowances and benefits proved to be granted for legitimate humanitarian and compelling grounds shall be excused from making a refund due to equity and social justice considerations; and (2) the Court shall consider the lapse of time between the receipt of the allowances and benefits and the issuance of the notice of disallowance or any similar notice indicating its possible illegality or irregularity; absent any circumstances the Court may deem sufficient, the lapse of three years without any such notice shall be sufficient to excuse recipients from making a refund, but this three-year period rule shall not apply in favor of persons found to have actively participated in fraudulent transactions. Guided by these case laws, the Court excused the certifying and approving officers as well as the recipients of benefits under DBP Circular No. 10 from refunding the disallowed amounts. First, the Court appreciated good faith on the part of the DBP Board of Directors and DBP’s officers who approved or certified the disallowed money value of leave credits as they believed that Section 13 of DBP’s Revised Charter authorized them to fix the compensation of the bank’s personnel, including the determination of what “monthly salary” is for purposes of monetization of leave credits. In the 2022 DBP case, the Court likewise excused the officers who approved or certified the grant of disallowed benefits, namely the grant of merit increase to DBP officers and employees, integration of officers’ allowance to basic pay, and grant of economic assistance to DBP employees, because they acted in good faith relying on their exemption from the Salary Standardization Law and believing that they were authorized under DBP’s Revised Charter to approve the compensation plan for DBP personnel, including the grant of economic assistance and merit increases, even without presidential approval. Second, as to the recipients of the money value of leave credits, the Court absolved them from returning the disallowed amounts under Rule 2d of Madera on the ground of undue prejudice caused by the COA’s violation of their right to speedy disposition of cases. While it is true that the Notices of Disallowance in this case were issued within two years from the disbursement of the disallowed amounts, or within the threshold three-year period mentioned in Cagayan De Oro City Water District, the Court, in at least two instances, upheld the recipient’s right to speedy disposition of cases vis-à-vis the COA’s inordinate delay in ruling on the appeal before it. In Navarro vs. Commission on Audit Central Office, the Court granted the petition for certiorari praying for the reversal of the rulings of the COA disallowing the procurement of supplementary and reference materials on account of the Commission’s violation of therein petitioners’ constitutional right to speedy disposition of cases; there, the COA failed to establish that the delay of more than seven years was reasonable or that petitioners caused the same. In Rosario vs. Commission on Audit, the Court reversed the rulings of the COA on the ground of the COA’s inexplicable delay of 11 years in disposing of therein petitioner’s case; the Court noted that petitioner no longer had access to the Bids and Awards Committee’s documents relative to the procurement of modular workstations, which impeded her ability to raise a complete defense against her supposed liability in the notice of disallowance. Here, as earlier discussed, the COA failed to discharge its burden of proving that the aggregate 11 years delay in the resolution of DBP’s appeal, eight years, and motion for reconsideration, three years, was due to the fault of DBP or that it was reasonable under the circumstances. In particular, the COA Commission Proper took more than three years to dispose of the motion for reconsideration, yet in its Decision No. 2022-072, it found that DBP’s arguments were a mere rehash of those already raised in its appeal and manifestations and motions. This showed that the said motion did not involve a difficult question of law that would justify an extended period to answer. The unjustified delay of the COA Commission Proper was vexatious and oppressive on the part of DBP and its officers and employees. For a total of 11 years, they were subjected to worry and distress that they might be liable to return ₱26,182,467.36 representing the disallowed amounts in the payment of the money value of leave credits. The money value of leave credits subject of the Notices of Disallowance covered the period of March to December 2005, and the disbursements were made 18 years earlier. DBP alleged, and the COA did not dispute, that many of the employees named accountable in the Notices of Disallowance had retired or otherwise separated from the bank, but due to the issue of the disallowances, no final settlement could be effected to their prejudice. DBP also claimed that the disallowances had long been outstanding in its books and had affected its financial standing and status before regulating bodies. Meanwhile, the Court was aware that in the 2022 DBP case, it did not absolve the recipients of the disallowed benefits from returning them; there, the Court found no extraordinary or highly meritorious considerations to exonerate the payees under Rules 2c and/or 2d of Madera. Quite the contrary, in the present case, the Court found that the COA violated the constitutional right to speedy disposition of cases of the recipients of the disallowed amounts, and no such allegation or similar violation was found in the 2022 DBP case. In fine, the COA, as a Constitutional Commission, should not only safeguard the interest of the Government; it must be equally conscious of protecting the rights of all the parties before it. However, this is not the first time that the COA’s rulings were reversed due to its violation of a person’s right to speedy disposition of cases. If the COA’s inexplicable delays in the resolution of cases continue, it would end up prejudicing the very institution that it seeks to protect—the Government.

• DBP Board of Directors’ compensation authority is not absolute — Section 13 of DBP’s Revised Charter exempts DBP from existing laws, rules, and regulations on compensation, position classification, and qualification standards, but expressly requires DBP’s system to conform as closely as possible with the principles under the Salary Standardization Law. The Court applied this doctrine by holding that DBP Circular No. 10, which used gross monthly cash compensation as the base for leave monetization, exceeded the Board’s authority and was inconsistent with the Salary Standardization Law and related presidential approval requirements.

• “Monthly salary” in leave monetization means basic pay, excluding allowances and bonuses — Under CSC Memorandum Circular No. 41, Series of 1998, CSC Memorandum Circular No. 14, Series of 1999, CSC Memorandum Circular No. 8, Series of 2003, and DBM Budget Circular No. 2002-1, the formula for computing the money value of leave credits and terminal leave benefits uses “monthly salary.” In Paredes vs. COA, the Court construed “monthly salary” to exclude bonuses and allowances. Because the leave monetization formula was adopted from the terminal leave benefits formula, the Court applied the same definition and held that only basic pay may be used as the base.

• Presidential approval of a compensation plan must be valid and not made within the election ban — A compensation plan of an SSL-exempt government financial institution that is not in accordance with the Salary Standardization Law requires presidential approval under P.D. No. 1597 and Memorandum Order No. 20. President Arroyo’s approval of DBP’s Compensation Plan was invalid because it was not reduced to a formal memorandum, could not validate an unauthorized scheme, and was made on April 22, 2010, within the 45-day prohibited period before the May 10, 2010 elections under Section 261(g)(2) of the Omnibus Election Code.

• Right to speedy disposition of cases — Section 16, Article III of the Constitution guarantees the right to speedy disposition of cases before all judicial, quasi-judicial, and administrative bodies. The Court considers the length of delay, the reasons for the delay, the assertion or failure to assert the right, and the prejudice caused. Under Section 7, Article IX(A) of the Constitution, the COA must decide a case within 60 days from submission for decision or resolution. The Court applied this doctrine by finding that the COA’s aggregate 11-year delay violated DBP’s and its personnel’s right to speedy disposition.

• Res judicata and conclusiveness of judgment — Conclusiveness of judgment applies where there is identity of parties in the first and second cases but no identity of causes of action. The first judgment is conclusive only as to matters actually and directly controverted and determined, not as to matters merely involved. The Court applied this doctrine by holding that the 2021 DBP case did not rule on the validity of DBP’s Compensation Plan and therefore did not bar the present petition concerning the disallowance of leave monetization under Circular No. 10.

• Madera guidelines on liability for disallowed benefits — When a Notice of Disallowance is upheld, approving and certifying officers who acted in good faith, in the regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return. Approving and certifying officers who acted in bad faith, with malice, or with gross negligence are solidarily liable to return only the net disallowed amount. Recipients are liable to return the disallowed amounts they respectively received unless they show that the amounts were genuinely given in consideration of services rendered. The Court may also excuse recipients based on undue prejudice, social justice considerations, and other bona fide exceptions on a case-to-case basis. The Court applied these guidelines by excusing both the approving and certifying officers and the recipients from refunding the disallowed amounts.

• Badges of good faith and diligence for approving and certifying officers — Under Ancheta vs. Commission on Audit, the following may absolve approving or certifying officers: (1) Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code; (2) in-house or Department of Justice legal opinion; (3) absence of precedent disallowing a similar case; (4) traditional practice within the agency with no prior disallowance; or (5) a reasonable textual interpretation on the legality of the questioned act. The Court applied this doctrine in finding that the DBP Board of Directors and officers acted in good faith in relying on Section 13 of the DBP Revised Charter.

• Solutio indebiti and unjust enrichment — Recipients of illegally disbursed amounts are generally liable to refund regardless of good faith on the basis of solutio indebiti and unjust enrichment, because receipt of any portion of an illegal, irregular, excessive, extravagant, or unconscionable disbursement is regarded as erroneous. They may be excused only under Rule 2c or Rule 2d of Madera. The Court applied this doctrine by recognizing the general liability but excusing the recipients under Rule 2d due to the COA’s violation of their right to speedy disposition.

• Rule 2c and Rule 2d exceptions under Madera — Under Abellanosa vs. Commission on Audit, Rule 2c requires that the benefit have a proper basis in law but be disallowed only due to procedural irregularities, and that it have a clear, direct, and reasonable connection to the actual performance of the recipient’s official work. Rule 2d requires a bona fide instance that would strongly impel the Court to prevent a clear inequity, and applies only in highly exceptional circumstances. Under Cagayan De Oro City Water District vs. Commission on Audit, the Court evaluates the nature and purpose of the disallowed benefit and the lapse of time between receipt and notice; a lapse of three years without notice is sufficient to excuse refund, except for persons found to have actively participated in fraudulent transactions. The Court applied Rule 2d because of the COA’s 11-year delay.

• "The authority granted DBP to freely fix its compensation structure under which it may grant allowances and monetary awards remains circumscribed by the SSL; it may not entirely depart from the spirit of the guidelines therein." — This passage states the ratio decidendi that DBP’s charter authority is not absolute and remains subject to the Salary Standardization Law, which is the foundation for invalidating Circular No. 10’s use of gross monthly cash compensation.

• "Conformably with the above-stated, the formula for the computation MLC explicitly refers to and is based on "monthly salary" and not on "gross monthly cash compensation"." — This passage defines the controlling computation base for leave monetization and directly supports the disallowance of DBP Circular No. 10.

• "Thus, President Arroyo's approval of DBP's authority to approve the compensation plan is clearly void because it was made within the prohibited 45-day period before the 10 May 2010 elections." — This passage is the Court’s canonical ruling that the presidential approval relied upon by DBP was void under the Omnibus Election Code, foreclosing DBP’s defense that the approval legitimized Circular No. 10.

• "Here, as earlier discussed, the COA failed to discharge its burden of proving that the aggregate 11 years delay in the resolution of DBP's appeal (8 years) and motion for reconsideration (3 years) was due to the fault of DBP or that it was reasonable under the circumstances." — This passage states the ratio for the finding of a violation of the right to speedy disposition of cases, which in turn justified excusing the refund of the disallowed amounts.

• Development Bank of the Philippines vs. Commission on Audit, 835 Phil. 268 (2018) — Controlling precedent; held that the DBP Board of Directors’ authority under Section 13 of its Revised Charter is not absolute but remains subject to the principles of the Salary Standardization Law, and affirmed the disallowance of the Governance Forum Productivity Award.

• Development Bank of the Philippines vs. Commission on Audit, G.R. Nos. 210965 & 217623, March 22, 2022 — Controlling precedent; held that President Arroyo’s approval of DBP’s Compensation Plan was void for being made within the prohibited 45-day period before the May 2010 elections, and affirmed the disallowance of merit increases and other additional compensation or allowances.

• Development Bank of the Philippines vs. Commission on Audit, G.R. No. 247787, March 2, 2021 — Distinguished; did not rule on the validity of DBP’s Compensation Plan and instead concerned the finality of a COA Decision and the propriety of reopening it, so it did not operate as res judicata on the present issue.

• Madera vs. Commission on Audit, G.R. No. 244128, September 8, 2020 — Controlling precedent; laid down the guidelines on the liability of government officials and employees for disallowed benefits, including the rules on approving and certifying officers, recipients, and exceptions to refund.

• Paredes vs. COA, 201 Phil. 644 (1982) — Followed; construed “monthly salary” for purposes of computing terminal leave benefits to exclude bonuses and allowances, which the Court applied to the computation of the money value of leave credits.

• Navarro vs. Commission on Audit Central Office, 866 Phil. 324 (2019) — Followed; recognized a violation of the right to speedy disposition of cases where the COA failed to establish that a delay of more than seven years was reasonable or caused by the petitioners.

• Rosario vs. Commission on Audit, G.R. No. 253686, June 29, 2021 — Followed; reversed the COA rulings due to an inexplicable 11-year delay in disposing of the case, which prejudiced the petitioner’s ability to raise a complete defense.

• Ablong vs. Commission on Audit, G.R. No. 233308, August 18, 2020 — Followed; held that due process is satisfied if the party is properly notified of the allegations, given an opportunity to defend, and the defense is considered by the tribunal.

• Ancheta vs. Commission on Audit, G.R. No. 236725, February 2, 2021 — Followed; enumerated the badges of good faith and diligence that may absolve approving or certifying officers from civil liability for disallowed benefits.

• Abellanosa vs. Commission on Audit, G.R. No. 185806, November 17, 2020 — Followed; clarified the requirements for the Rule 2c and Rule 2d exceptions under Madera, including the need for a bona fide instance and highly exceptional circumstances to excuse refund.

• Cagayan De Oro City Water District vs. Commission on Audit, G.R. No. 213789, April 27, 2021 — Followed; laid down considerations for excusing refund under Rule 2d of Madera, including the nature and purpose of the disallowed benefit and the lapse of time between receipt and notice of disallowance.

• Land Bank of the Philippines vs. Naval, Jr., 731 Phil. 532 (2014) — Cited by DBP for the proposition that a government financial institution may design its own compensation plan; the Court did not adopt it as controlling for the disposition of this case.

• Section 13, DBP Revised Charter (Executive Order No. 81, Series of 1986, as amended by Republic Act No. 8523) — Grants the DBP Board of Directors authority to fix the remunerations and other emoluments of the bank’s officers and employees and exempts DBP from existing laws, rules, and regulations on compensation, position classification, and qualification standards, but requires DBP’s system to conform as closely as possible with the principles under the Compensation and Position Classification Act of 1989. The Court construed this provision as not conferring unbridled authority and used it to reject DBP’s reliance on Circular No. 10.

• Section 2(i), Presidential Decree No. 1146 (Revised Government Service Insurance Act of 1977) — Defines “salary” as the basic pay received by an employee, excluding per diems, bonuses, overtime pay, and allowances. The Corporate Auditor and the COA cited this provision to disallow the computation of the money value of leave credits based on gross monthly cash compensation.

• Section 24, CSC Memorandum Circular No. 41, Series of 1998 (Omnibus Rules on Leave) — Prescribes the formula for leave monetization using Monthly Salary divided by 22 Working Days, multiplied by the Number of Days to be Monetized. The Court used this provision to show that the prescribed base is monthly salary, not gross monthly cash compensation.

• Section 40, CSC Memorandum Circular No. 14, Series of 1999; CSC Memorandum Circular No. 8, Series of 2003 — Provide the formula for computing terminal leave benefits and adopt it for the monetization of leave credits, using Monthly Salary multiplied by the Number of Days to be Monetized multiplied by the Constant Factor of .0478087, or Monthly Salary divided by 20.916667 multiplied by the Number of Days to be Monetized. The Court applied these provisions to hold that only basic pay should be the base.

• DBM Budget Circular No. 2002-1 dated January 14, 2002 — Governs the computation and funding of terminal leave benefits and monetization of leave credits. Section 3.1.2 states that monetization of leave credits shall be computed in accordance with the terminal leave benefits formula, where S is the highest monthly salary received. The Court relied on this circular to confirm that the formula uses monthly salary, not gross monthly cash compensation.

• Section 6, Presidential Decree No. 1597 — Requires presidential review, through the Department of Budget and Management, of the position classification and compensation plan of an agency exempt from the Office of Compensation and Position Classification. The Court applied this provision to hold that DBP’s compensation plan required presidential approval.

• Memorandum Order No. 20 dated June 25, 2001 — Provides that any increase in salary or compensation of government-owned or controlled corporations and government financial institutions that is not in accordance with the Salary Standardization Law shall be subject to the approval of the President. The Court applied this issuance to require presidential approval of DBP’s compensation plan.

• Joint Resolution No. 4 (2009), Salary Standardization Law III — Provides that the coverage, conditions for the grant, including the rates of allowances, benefits, and incentives to all government employees, shall be rationalized in accordance with the policies to be issued by the President upon recommendation of the Department of Budget and Management. The Court cited this to reaffirm the prior presidential approval policy for SSL-exempt entities.

• Section 261(g)(2), Batas Pambansa Blg. 881 (Omnibus Election Code of the Philippines) — Prohibits the grant of any increase of salary or remuneration or privilege to any government official or employee during the period of 45 days before a regular election. The Court applied this provision to void President Arroyo’s approval of DBP’s Compensation Plan on April 22, 2010, 18 days before the May 10, 2010 elections.

• Section 16, Article III, 1987 Constitution — Guarantees the right of all persons to speedy disposition of their cases before all judicial, quasi-judicial, and administrative bodies. The Court applied this provision in finding that the COA violated DBP’s and its personnel’s right to speedy disposition.

• Section 7, Article IX(A), 1987 Constitution — Requires the Commission on Audit to decide any case or matter brought before it within 60 days from its submission for decision or resolution. The Court used this provision to measure the delay and find that the COA exceeded the constitutional period.

• Sections 38 and 39, Chapter 9, Book 1, Administrative Code of 1987 — Section 38 provides that a public officer shall not be civilly liable for acts done in the performance of official duties unless there is a clear showing of bad faith, malice, or gross negligence; Section 39 provides that a subordinate officer or employee shall not be civilly liable for acts done in good faith in the performance of duties. The Court applied these provisions in excusing the approving and certifying officers from refund.

• Section 43, Administrative Code of 1987 — Cited in relation to Sections 38 and 39 as the basis for solidary liability of approving or certifying officers who acted in bad faith, with malice, or with gross negligence. The Court used this provision in discussing the liability framework under Madera.

• Rule I(p)(7), CSC Memorandum Circular No. 41-98 — Defines the money value of leave credits as the payment in advance under prescribed limits and subject to specified terms and conditions of the money value of leave credits of an employee upon request without actually going on leave. The Court cited this definition in its computation analysis.

• Republic Act No. 8291 (Government Service Insurance System Act of 1997) — Amended P.D. No. 1146 and was cited by the COA Commission Proper in holding that monthly salary for purposes of monetization of leave credits pertains to basic pay, excluding allowances and benefits.

• Republic Act No. 6758 (Compensation and Position Classification Act of 1989, as amended) — The Salary Standardization Law, whose principles Section 13 of DBP’s Revised Charter requires DBP to conform to as closely as possible. The Court applied this law in holding that DBP’s compensation authority is not absolute.

• Rule 64, Rules of Court — The procedural rule under which DBP filed its petition for certiorari seeking to annul and set aside the COA Decisions. The Court resolved the petition under this Rule.

Gesmundo, C.J.; Leonen, SAJ; Caguioa; Hernando; Lazaro-Javier; Inting; Zalameda; M. Lopez; Rosario; J. Lopez; Dimaampao; Marquez; Kho, Jr.; and Singh, JJ.