1) The situation this topic covers

In Philippine government offices (national agencies, SUCs, LGUs, GOCCs and government instrumentalities), it is common for a vacant position—especially a supervisory or division-level post—to be “covered” in the meantime by designating another employee to act or serve as Officer-in-Charge (OIC). This creates recurring questions:

Is the acting employee entitled to the salary of the higher position?
Is the acting employee entitled to an allowance (often called acting allowance)?
What happens once the vacancy is filled by a duly appointed incumbent—does the allowance stop automatically?
If payments continue (or were wrongly paid), can the agency withdraw or recover them, and from whom?

This article explains the legal framework, the common lawful entitlements (and common misconceptions), and what “withdrawal” and “refund” look like in practice under Philippine rules.

2) Key concepts you must distinguish

A. Appointment vs. designation (acting/OIC)

Appointment is a formal act that vests a person with title to a public office/position, usually evidenced by an appointment paper and acceptance, and subject to Civil Service rules (and, where applicable, approval/attestation). It is the normal legal basis for receiving the salary attached to the position.

Designation (including “OIC” or “acting capacity”) is generally a temporary assignment of functions. It does not, by itself, confer title to the position. In most ordinary government settings, designation is treated as an administrative arrangement to ensure continuity of service while the vacancy is being filled.

Why the distinction matters: Compensation is normally attached to the position, not the functions. Performing the functions of a higher position without being appointed to it is usually not enough to claim the higher salary.

B. Salary vs. allowances

Salary is the basic compensation fixed for a position under the government compensation system (primarily under Republic Act No. 6758, as amended, and related issuance/rules).
Allowances are additional benefits. In government, these are tightly controlled because the Constitution generally prohibits “additional, double, or indirect compensation” unless specifically authorized by law (Constitution, Art. IX-B, Sec. 8).

So, even if an employee is validly designated as OIC, the lawful question is not “fairness,” but authority: Is there a law/rule allowing payment of this particular allowance to an acting/OIC designee?

3) The legal backbone (Philippine context)

A. Constitutional limits

The Constitution’s compensation clause for public officers and employees bars additional compensation unless authorized by law (Art. IX-B, Sec. 8). This is the reason why “acting allowances” cannot be improvised by memo or office practice.

B. The Compensation and Position Classification framework

Republic Act No. 6758 (Compensation and Position Classification Act of 1989), together with implementing rules and DBM issuances, organizes:

position classifications and salary grades,
rules on what compensation components exist,
and the principle that benefits must have legal basis.

C. Civil Service rules on temporary arrangements

Civil Service rules recognize interim arrangements (e.g., designation/OIC) for continuity, but these arrangements are not automatically salary-upgrading events. They exist to keep operations running while the appointing authority completes the selection/appointment process.

D. COA’s role (audit and disallowance)

The Commission on Audit (COA) audits compensation and benefits. If an acting allowance (or salary differential) has no legal basis, COA may issue a Notice of Disallowance (ND), which can lead to refund/recovery issues.

4) What people commonly mean by “temporary acting allowance”

In practice, “temporary acting allowance” can refer to different things. You must identify which one is being claimed:

Type 1: Salary differential / higher salary claim

This is the claim that the acting/OIC employee should receive the salary of the higher vacant position (or the difference between their salary and the higher position’s salary).

General rule in government practice: mere designation to perform higher functions does not entitle one to the higher salary, because there is no appointment to the higher position. Government compensation is position-based, and the lawful basis is appointment, not workload.

If you see these phrases, it usually signals a salary differential claim:

“I acted as Chief so I should get SG of Chief”
“Pay me the difference”
“I served as OIC, so I should be paid as the vacant position”

Type 2: Allowances attached to the position (e.g., RATA) while acting

Some positions carry allowances by law/rule (example: Representation and Transportation Allowance, or other authorized allowances for certain officials). In some settings, rules allow the temporary grant of a position-based allowance to an OIC who actually performs the functions, subject to strict conditions.

This is not automatic. It depends on:

whether the allowance is legally authorized for that category of officials,
whether the designee is within the class of eligible personnel,
whether there is a valid designation and actual performance,
and whether agency/DBM/COA rules allow acting/OIC receipt.

Type 3: Honoraria / special assignments

Sometimes agencies try to compensate acting responsibilities by “honoraria,” “special duty pay,” or ad hoc incentives. These are the most vulnerable to COA disallowance unless covered by a specific law/issuance.

5) When is an acting/OIC allowance lawful?

A temporary acting/OIC allowance is lawful only if all these are present:

Specific authority (law, DBM issuance, or valid government-wide rule) allowing that allowance.
Proper designation documentation (written order/memo identifying:
- the vacant position or office covered,
- the designation period (start date),
- and the scope of authority).
Actual performance of the duties of the position/office.
Availability of funds and proper charging under budget rules.
Compliance with eligibility limitations (some allowances are limited to certain ranks/positions).

If any of these is missing, payments are exposed to COA disallowance.

6) What happens when the vacancy is filled?

A. The “acting” basis ends as a matter of function and authority

Once a duly appointed and qualified incumbent assumes the vacant position, the practical and legal reason for an acting/OIC designation disappears. In most office setups, the acting designation is understood to be co-terminous with:

the return of the original incumbent, or
the assumption of the newly appointed incumbent, or
the expiration date in the designation order (whichever comes first).

B. Entitlement to any acting allowance is time-bound

If the acting allowance was lawful, it is generally payable only for the covered period—from the effective date of designation/assumption in acting capacity up to the date immediately before the lawful assumption of the permanent/regular appointee (or earlier termination date).

C. After assumption by the permanent incumbent, continued payment becomes problematic

Payments made after the vacancy is filled are commonly treated as:

without factual basis (because the acting function is no longer being performed), and/or
without legal basis (because the authority to pay is tied to the acting designation and actual performance).

That is the typical trigger for:

stopping future payments (“withdrawal” in an administrative sense), and
possible COA disallowance for amounts already paid.

7) “Withdrawal” after filling the vacancy: what it can legally mean

The word “withdrawal” is used in two different ways:

A. Prospective withdrawal (stopping future payments) — generally straightforward

Once the vacancy is filled and the acting designation ends, the agency should:

issue a termination/revocation memo (or note that the designation is deemed ended),
stop payroll processing of the acting allowance effective the correct date,
correct HRIS/payroll records.

This is not punitive; it is simply aligning payment with authority and entitlement.

B. Retroactive withdrawal (taking back money already paid) — legally sensitive

Recovering amounts already paid is a different issue. The agency usually cannot just “deduct” at will without a lawful basis and due process, because:

government compensation is protected from arbitrary withholding,
deductions are regulated, and
COA rules and Supreme Court doctrines on refunds/disallowances may apply.

Retroactive recovery most often arises when:

COA issues a Notice of Disallowance; or
an internal audit finds the payment had no legal basis.

8) If payments were made after the vacancy was filled: who refunds?

In practice, recovery disputes are governed by COA’s disallowance framework and Supreme Court doctrines on refund liability.

A. COA Notice of Disallowance (ND) is the usual vehicle

If COA disallows the payments, the ND identifies:

the disallowed transaction,
persons liable (approving/certifying officers, and sometimes payees),
and the amounts to be refunded.

B. Refund liability commonly depends on:

the nature of the benefit (clearly illegal vs. arguably allowed),
good faith of payees and officers,
whether the payees actually received and retained the amounts, and
equitable considerations recognized in audit jurisprudence.

A central modern reference point in refund disputes is the Supreme Court’s refinement of rules on refund of disallowed benefits (often discussed as the “Madera doctrine,” from a 2020 ruling), which—at a high level—distinguishes between:

payees who received amounts in good faith under an apparent authority,
approving/certifying officers who may be liable for authorizing illegal payments,
and situations where refund may still be required because the benefit is patently illegal or recipients are not in good faith.

Practical takeaway: If an acting allowance continued even after the permanent appointee assumed office, COA may treat post-assumption payments as lacking basis. Whether the acting employee must refund can turn on good faith and on whether the payment was obviously unauthorized under existing rules.

9) Common scenarios and the likely legal outcome

Scenario 1: “I was designated OIC, vacancy existed, I received an allowance only during my acting period.”

If the allowance is authorized by law/rule and documentation is proper: generally defensible.
If no authority exists: risk of disallowance, even if duties were performed.

Scenario 2: “The vacancy got filled, but payroll continued my acting allowance for 2 more months.”

The agency should stop payments prospectively once discovered.
For the two months already paid, audit risk is high. COA may disallow; refund issues follow ND rules.

Scenario 3: “I acted for months, but I was never paid any acting allowance; can I demand the higher salary?”

Claiming the higher salary without appointment is typically weak, because salary generally follows appointment to the position, not mere performance of duties.
Claiming a specific authorized allowance (if applicable) for the acting period may be more viable, but still depends on the exact allowance authority.

Scenario 4: “Our office has a practice: acting head automatically receives the higher position’s compensation.”

Practice alone is not legal authority. This setup is a common source of COA disallowances.

10) How agencies should structure acting/OIC arrangements to avoid disallowance

Issue clear designation orders with:
- start date, end date/condition (e.g., “until the position is filled”),
- scope of authority,
- and a statement that it is not an appointment.
Identify which compensation components are allowed, and cite the legal basis.
Stop the acting designation immediately upon assumption of the permanent appointee (document it).
Coordinate HR–Budget–Accounting to ensure the payroll cut-off date matches the assumption date.
Avoid ad hoc “honoraria” unless covered by a specific authority.
Maintain assumption records (oath, assumption-to-duty, office order) because the “end date” of entitlement often hinges on the actual assumption date of the new incumbent.

11) Practical checklist for employees (and HR) when the vacancy is filled

What is the exact date the permanent appointee assumed duty?
Does the OIC designation order say it ends “upon assumption of the appointee”?
Was there any overlap period where both were performing? (This complicates entitlement.)
What allowance is being paid—salary differential or a specific authorized allowance?
Is there a clear legal basis for paying that allowance to an OIC?
If paid beyond the end date, is there:
- an internal correction process, and/or
- an existing COA observation/ND?

12) Bottom line

In Philippine public employment, acting/OIC service is primarily a functional arrangement, not an automatic compensation upgrade.
Higher salary (salary differential) generally requires a lawful appointment, not mere designation.
Any acting allowance must be specifically authorized; otherwise it is vulnerable to COA disallowance.
Once the vacancy is filled and the incumbent assumes office, any lawful acting allowance is cut off as of the end of the acting period; continued payment becomes high-risk.
Recovering amounts already paid is typically handled through audit disallowance rules, with refund liability depending on legal basis and good faith considerations.