G.R. No. 221706, March 13, 2018
Development Bank of the Philippines vs. Commission on Audit

FACTS

The Development Bank of the Philippines (DBP), through its Board of Directors, passed resolutions granting its Board members, excluding the DBP President, various benefits beyond the statutory per diem. These included reimbursements for transportation, representation, medical expenses, a motor vehicle lease plan, a health care plan, rice subsidies, and anniversary bonuses. The DBP justified these grants by citing a provision in its Charter (E.O. No. 81, as amended by R.A. No. 8523) and by securing a “No objection” note from then President Gloria Macapagal Arroyo on a memorandum requesting approval of the new compensation scheme. The Commission on Audit (COA) issued a Notice of Disallowance, asserting that the DBP Charter only authorizes the grant of per diems to Board members. The COA held that the President’s approval authority under the law is limited to setting the amount of the per diem, not to authorizing additional forms of compensation. The COA-Corporate Government Sector and the COA Commission Proper affirmed the disallowance.

ISSUE

Whether the COA committed grave abuse of discretion in affirming the disallowance of the additional compensation and benefits granted to the DBP Board of Directors beyond the prescribed per diem.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the COA’s disallowance, with modification regarding the refund. The Court upheld the COA’s finding that the grants were illegal. The legal logic is anchored on a strict interpretation of the DBP Charter. Section 8 of the law explicitly states that Board members shall receive a per diem for each meeting attended, the amount of which may be set by the Board with the President’s approval. The Court applied the principle of expressio unius est exclusio alterius; by expressly mentioning only “per diem,” the law excludes all other forms of compensation, such as allowances, bonuses, and reimbursements. The President’s approval power is confined to the quantitative adjustment of the per diem rate and cannot legitimize the creation of entirely new benefits not contemplated by the statute. Legislative intent is clear: Board members of government financial institutions are considered non-salaried officials whose compensation is strictly limited by law to prevent excessive disbursement of public funds. The Court also found the alleged presidential approval insufficient, as it was a mere “No objection” note on a memorandum, not a formal approval required by the Charter. Consequently, the disbursements were correctly disallowed for being contrary to law. However, applying the doctrine of good faith in recent jurisprudence, the Court modified the ruling to absolve the approving and receiving officers from the obligation to refund the disallowed amounts, as they acted without wrongful intent in relying on the Board resolutions and the presidential note.