March 12, 2010

COA DECISION NO. 2010-034

SUBJECT

:
Petition of Mr. Godofredo F. Gallega, President, Polytechnic State College of
Antique (PSCA), Sibalom, Antique, for Review of the Decision of the Director, COA
Regional Office No. VI, Pavia, Iloilo, Affirming Notice of Disallowance (ND) No. 2000006-101 (98) Dated June 28, 2000, on the Payment of Staple Food Incentive (SFI) for
CY 1998 in the Total Amount of P1,022,000.00

DECISION

FACTS OF THE CASE

Records disclose that Polytechnic State College of Antique (PSCA). Sibalom, Antique, paid Staple Food
Incentive (SFI) to PSCA ocials and employees for CY 1998 in the total amount of P1,022,000.00. In
justifying the grant, the College President submitted PSCA Board of Trustees Resolution No. 67 series of
1999 approving the payment of SFI based on the Memorandum Circular (MC) dated November 13, 1998
issued by the Chairman of the Commission on Higher Education (CHED) in relation to the MC issued by then
President Joseph E. Estrada in his capacity as concurrent Secretary of the Department of Interior and Local
Government (DILG).
In his 1st Indorsement dated March 10, 1999, the Director, COA Regional Oce No. VI, Pavia, Iloilo, opined
that the CHED and/or State Universities and Colleges (SUCs) are not among the bureaus or agencies
attached to the DILG. Therefore, the authority given to the latter to grant SFI to its employees does not
apply to PSCA employees. Hence, payment to them of the SFI may be disallowed in audit.
Mr. Godofredo E. Gallega, President, PSCA, moved for reconsideration of such opinion, ratiocinating that
when President Estrada issued the MC granting SFI to the DILG employees, he acted as Secretary of the
Department and not as President. In the same vein, the CHED Chairman, having an equivalent rank to a
Secretary of the Executive Department, issued the MC for SUCs to avail of the SFI. Hence, such
memorandum has legal and binding eect similar to that issued by President Estrada then acting as the
Secretary of the DILG.
The grant was found to be without legal basis. Hence, Notice of Disallowance (ND) No. 2000-006-101 (98)
dated June 28, 2000 in the total amount of P1,022,000.00 was issued.
In his letter dated August 23, 2000 addressed to the Honorable Chairman, this Commission, Mr. Gallega
appealed the ND raising the following arguments, viz.:
1.

The DILG was given SFI through a MC issued by the Department Secretary. The Chairman
of CHED with a rank equivalent to the Secretary is an alter ego of the President, hence, he
can decide on matters pertaining to CHED functions.

2.

The Board of Trustees of PSCA in its Resolution No. 67 series of 1999 conrmed the
granting of SFI to the employees.

3.

Almost all SUCs throughout the archipelago granted SFI to all their employees but only
the SFI of PSCA was disallowed; and

4.

The payment of SFI was charged to the agency savings.

In his answer dated January 31, 2001, the Director, COA Regional Oce No. VI, Pavia, Iloilo, argued that
under Section 8, Article IX-B of the 1987 Constitution, the grant of additional, double or indirect
compensation to ocials and employees of the government without specic authority of law is illegal. The
specic authority of law contemplated therein is either the authority issued by the Department of Budget
and Management, the Oce of the President, or a legislative enactment. He further contended that, unlike
in the case of DILG, the CHED Chairman did not happen to be the President of the Philippines at the same
time, thus, the MC issued for the grant of SFI fell short of the authority required.
The herein petitioner maintained and reiterated his contention that the memorandum issued by the CHED
Chairman is valid and has a binding eect because the latter acted as the head of the agency with the rank
equivalent to that of Department Secretary.
The then Director, then National Government Audit Oce II, concurred in the stand of the Director, COA
Regional Office No. VI, Pavia, Iloilo and recommended that the decision of the latter be affirmed.
ISSUE
Whether or not the grant of SFI to employees of PSCA has legal basis.
DISCUSSION
After a judicious evaluation of the facts and the law herein obtaining, this Commission nds the instant
petition devoid of merit.
The petitioner erred in his argument on the application of the alter ego doctrine or doctrine of qualied
political agency. In the absence of a Constitutional provision or statute to the contrary, the official acts of the
Department Secretary are deemed the acts of the President himself unless disapproved by the latter
(Federation of Free Workers vs. Inciong, 161 SCRA 295 ). The acts of the department secretary bear the
presumptive approval of the President (Kilusang Bayan vs. Dominguez, 205 SCRA 92) . The heads of the

various executive departments are assistants and agents of the Chief Executive and the acts of the
Secretaries of such departments, performed regularly, are, unless disapproved and reprobated by the Chief
Executive, presumptively the acts of the latter (Carpio vs. Executive Secretary, 206 SCRA 290).
Every agency head cannot just declare benet at any time by invoking the alter ego doctrine without strictly
complying with the executive issuances.
It bears stressing that as early as November 21, 1998, the Oce of the President already issued
Administrative Order No. 37 enjoining and prohibiting all heads of government agencies, including
governing boards from authorizing/granting benets to their personnel without prior approval and
authorization via Administrative Order. Thus, when PSCA still paid in December 1998 the subject SFI, the
disallowance was in order.
The PSCA Board of Trustees, through its resolution, and the Chairman of the CHED, in his Memorandum
Circular could not validate the payment of the SFI. These ocials are not the proper authorities who could
grant the said incentive and the CHED Chairman could not act as the alter ego of the President. In the case
of Santos, et al. vs. Secretary of Public Works and Communications, G.R. No. L-16949, March 18, 1967, it was
ruled "[I]t is now settled that Department Secretaries are the alter ego of the President so that the decision
of the Secretary of Public Works and Communications is presumed to be that of the President, unless
disapproved." Since the CHED Chairman has only the equivalent rank of a Department Secretary, he could
not avail himself of such principle even by mere implication.
As held by the Supreme Court in the case of National Electrication Administration vs. COA, 427 Phil. 464,
"Executive ocials who are subordinated to the President should not trie with the President's
constitutional power of control over the executive branch. There is only one Chief Executive who directs and
controls the entire executive branch, and all other executive ocials must implement in good faith his
directives and orders. This is necessary to provide order, eciency and coherence in carrying out the plans,
policies and programs of the executive branch."
Following the abovementioned Supreme Court rulings, it is unquestionable that the Doctrine of Qualied
Political Agency applies only to the acts of the Department Secretaries of the various executive departments
in relation to the President, but not the acts of other executive ocials. Thus, the fact that an ocer under
the law has the same rank as a Department Secretary, like the CHED Chairman, but not head of executive
department, does not in any way mean that the Doctrine of Qualied Political Agency applies to him and to
his acts. Otherwise, we will be stretching the doctrine too far with dangerous consequences.
In addition, this doctrine cannot nd application in the instant case in view of Administrative Order No. 37
dated November 21, 1998 issued by then President Estrada which laid down mandatory requirements and
express prohibition on the grant of allowance/incentive and/or benets. The pertinent provision is quoted
hereunder:
"SECTION 2.
Heads of NGAs, LGUs including GOCCs and GFIs as well as their respective governing
boards are hereby enjoined and prohibited from authorizing/granting Amelioration Assistance or any
other similar benet without prior approval and authorization via Administrative Order by the Oce
of the President."

Clearly and unequivocally, the Administrative Order spells out the requirements in the granting/authorizing
payment of the amelioration assistance or any other similar benet for CY 1998 which should have prior
approval and authorization via Administrative Order by the Oce of the President. The presumption of
delegation to Department Secretaries will not take precedence over the clear import of Administrative Order
No. 37. It is worthy to note that the SFI was paid in December 1998 despite the fact that a month earlier, the
Office of the President already issued Administrative Order No. 37.
In the petition at hand, neither the MC issued by the CHED Chairman nor the belated Resolution of the
Board of Trustees of the PSCA will suce as the authority referred to in the Constitution. Moreover, the
argument that the SFI was charged against the savings of the agency will not exempt the grant thereof from
compliance with the existing government issuances. In any event, the grant was not authorized by the
President of the Republic of the Philippines via Administrative Order. Absent this authority, the grant of the
SFI is irregular for want of legal basis.
Under COA Decision Nos. 2001-134 and 2001-142 dated July 10, 2001 and July 26, 2001, respectively, this
Commission already ruled that prior approval and authority of the Oce of the President is required in the
grant of staple food incentive, thus, affirmed the subject disallowance.
To conclude, the approving ocials shall be held liable of the disallowance following the doctrine laid down
in the case of Casal, et al., vs. COA, G.R. No. 149633, November 30, 2006 which declared that "[T]he failure
of petitioners-approving ocers to observe all these issuances cannot be deemed a mere lapse consistent
with the presumption of good faith. Rather, even if the grant of the incentive award were not for a dishonest
purpose as they claimed, the patent disregard of the issuances of the President and the directives of the
COA amounts to gross negligence, making them liable for the refund.
"xxx xxx xxx
"As to the employees who received the incentive award without participation in the approval thereof,
it cannot be said that they were either in bad faith or grossly negligent in so doing. The imprimatur
given by the approving ocers on such award certainly tended to give it a color of legality from the
perspective of these employees. Being in good faith, they cannot, following Blaquera, be compelled
to refund the benefits already granted to them.

RULING
WHEREFORE, all premises considered, the decision of the Director, COA Regional Oce No. VI arming ND
No. 2000-006-101 (98) dated June 28, 2000 disallowing the payment of SFI to PSCA ocials and employees
in the total amount of P1,022,000.00 is hereby AFFIRMED. The employees who received the same, however,

in the total amount of P1,022,000.00 is hereby AFFIRMED. The employees who received the same, however,
need not refund following the principle of good faith, but the PSCA ocials who approved the granting
thereof are held liable for the whole disallowed amount following the doctrine laid down by the Supreme
Court in the Casal case.
(SGD.) REYNALDO A. VILLAR
Chairman
(SGD.) JUANITO G. ESPINO, JR.
Commissioner
(SGD.) EVELYN R. SAN BUENAVENTURA
Commissioner
Attested by:
(SGD.) FORTUNATA M. RUBICO
Director IV
Commission Secretariat
Copy furnished:
Mr. Godofredo E. Gallega
President
Polytechnic State College of Antique
Sibalom, Antique
The Audit Team Leader
Polytechnic State College of Antique
Sibalom, Antique
The Regional Director
COA Regional Office No. VI
Pavia, Iloilo
The Assistant Commissioner and General Counsel
Legal Services Sector
The Assistant Commissioner
National Government Sector
Both of this Commission