EN BANC
[G.R. No. 229958. August 14, 2018.]
NATIONAL TRANSMISSION CORPORATION, petitioner,vs. COMMISSION ON AUDIT (COA) AND COA CHAIRPERSON MICHAEL G. AGUINALDO, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court en banc issued a Resolution datedAUGUST 14, 2018, which reads as follows: ASEcHI
"G.R. No. 229958 (National Transmission Corporation, v. Commission on Audit (COA) and COA Chairperson Michael G. Aguinaldo). — In this Petition for Certiorari, 1 the National Transmission Corporation (TransCo) assails the November 11, 2014 Decision 2 and February 16, 2017 Resolution 3 of the Commission on Audit (COA) which sustained the disallowance 4 of P126,095.02 representing the alleged excess amount in separation pay resulting from TransCo's adoption of a rounding-off scheme in the computation of the length of service of some of its separated 5 personnel. The rounding-off scheme, as approved by TransCo's Board of Directors (BoD) in 2009, considered a fraction of at least six (6) months as on (1) whole year. According to COA, rounding-off the fractional service effectively increased the separated employees' length of service and the amount of their separation benefits, and without the President's approval, must be disapproved. 6
The dispositive portion of the February 16, 2017 Resolution reads:
WHEREFORE, premises considered, the Motion for Reconsideration is PARTIALLY GRANTED. Accordingly, Commission on Audit Decision No. 2014-333 dated November 11, 2014 is hereby MODIFIED in that payees need not refund the excess amount of the separation pay they received. The approving and certifying officers, however, namely: Ms. Flordeliza C. Palo, Mr. Jose Mari M. Ilagan, Ms. Bernardine L. Protomartir, and Ms. Edilberta R. Labaro shall remain solidarily liable for the disallowance amounting to P126,095.02.
The Audit Team Leader and the Supervising Auditor are hereby directed to issue Supplemental Notice of Disallowance to include the members of the National Transmission Corporation Board of Directors who passed Resolution Nos. TC 2009-005 and TC 2009-007 as persons liable under Notice of Disallowance Nos. 11-010(09), 11-024(10), 11-098(10), 11-010(10), 11-026(09), 11-017(10), 11-074(09), 11-003(09), 11-053(10), 11-086(10), and 11-100(10). 7
TransCo asserts that its authority to apply the rounding-off scheme is rooted in Section 10 of its charter, Republic Act No. (RA) 9136 or the Electric Power Industry Reform Act (EPIRA), which empowers TransCo to do any act necessary or proper to carry out its purpose or any act which its BoD may declare as necessary, useful or incidental to accomplish its objectives, and to exercise all the powers of a corporation under the Corporation Code which are not inconsistent with the EPIRA. TransCo avers that Section 36 of the Corporation Code grants every corporation the power to "establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees." 8
TransCo further asserts that the rounding-off scheme was consistent with Section 63 of the EPIRA and Section 13 of RA 9511 9 (or the law that granted to the National Grid Corporation of the Philippines a franchise to operate the nationwide transmission grid and triggered the separation of TransCo employees). As harmonized, said provisions allegedly confer on separated TransCo employees the following: (a) a separation pay and other benefits in accordance with existing laws, rules and regulations, or the privileges set forth in a separation plan which shall be one and one-half month salary for every year of service; and, (b) such additional benefits as the TransCo BoD may decide to grant. 10
TransCo likewise posits that the rounding-off scheme finds support in Article 287 of the Labor Code where a fraction of at least six (6) months is considered as one (1) year, and that in the interpretation of labor-related policies, doubts should be resolved in favor of the working class. 11
TransCo maintains that its BoD and its approving and certifying officers, who enjoy the presumption of regularity in the performance of their official duties, acted in good faith as they honestly believed that the separated personnel were deserving of the benefits so granted pursuant to the above-cited laws. For this reason, they allegedly should not be made solidarily liable for the disallowed amount. 12 ITAaHc
For its part, COA argues that TransCo's power to provide separation benefits under Section 63 of the EPIRA is not unilateral and absolute. Section 64 of RA 9136 requires TransCo to exercise fiscal prudence in the handling of government resources; it further provides that TransCo's power to increase its employees' benefits is subject to the President's approval. Without such approval, TransCo's rounding-off scheme allegedly had no legal ground and constituted an ultra vires act. 13
COA further argues that the money held by TransCo constitutes public funds, and its use must at all times be (a) authorized by law, and (b) serve a public purpose. Mere disbursement to pay salaries and allowances to government employees does not by itself constitute release of government funds for a public purpose. COA contends that TransCo failed to comply with the public purpose requirement since TransCo's rounding-off scheme resulted in additional benefits not commensurate to services actually rendered, and TransCo failed to show that such benefits were necessary or relevant to the fulfillment of official duties of the separated employees. 14
COA adds the fact that the same benefits are enjoyed in private corporations is not sufficient to clothe the gratuity with public purpose or legal authority because unlike private corporations, government-owned and controlled corporations like TransCo are entrusted with public funds which is precisely the reason they are subject to audit. 15
The Court's Ruling
After considering the arguments on both sides, the Court resolves to uphold the disallowance.
Section 13 of RA 9511, in pertinent part, provides:
Sec. 13. Transfer of Personnel. — x x x
Notwithstanding the grant of this franchise, and subject to the conditions provided herein, employees of TRANSCO shall be entitled to receive from the government all benefits provided under Section 63 of Republic Act No. 9136 without prejudice to such other additional benefits as the Board of Directors of TRANSCO may determine. (Emphasis ours.)
Section 63 of RA 9136 or the EPIRA, in turn, states:
Sec. 63. Separation Benefits of Officials and Employees of Affected Agencies. — National government employees displaced or separated from the service as a result of the restructuring of the electricity industry and privatization of NPC assets pursuant to this Act, shall be entitled to either a separation pay and other benefits in accordance with existing laws, rules or regulations or be entitled to avail of the privileges provided under a separation plan which shall be one and one-half month salary for every year of service in the government: Provided, however, That those who avail of such privilege shall start their government service anew if absorbed by any government-owned successor company. In no case shall there be any diminution of benefits under the separation plan until the full implementation of the restructuring and privatization.
xxx xxx xxx (Emphasis ours)
On the basis of the foregoing provisions, TransCo argues that its employees were "entitled to a separation plan which shall be one and one-half (1 1/2) month salary for every year of service in the government (RA 9136) IN ADDITION to such other benefits the TransCo BOD may determine (RA 9511)." 16 For this reason, TransCo concludes that there was sufficient legal basis for the additional benefit derived by the separated employees from the rounding-off scheme approved by its BoD.
The above-quoted provisions, however, cannot be read in isolation from Section 64 of the EPIRA which requires:
Sec. 64. Fiscal Prudence. — To promote the prudent management of government resources, the creation of new positions and the levels of or increase in salaries and all other emoluments and benefits of TRANSCO and PSALM Corp. personnel shall be subject to the approval of the President of the Philippines. The compensation and all other emoluments and benefits of the officials and members of the Board of the TRANSCO and PSALM Corp. shall be subject to the approval of the President of the Philippines. (Emphasis ours.)
The rounding-off scheme indeed effectively increased the separation benefits of the separated employees. Absent the President's approval, it cannot be sustained. As the COA correctly held, the power of TransCo's BoD to grant additional benefits under Section 13 of RA 9511 is subject to the limitation under Section 64 of its charter requiring the President's imprimatur for increases in emoluments and benefits of TransCo personnel. This exercise of fiscal prudence proceeds from the public nature of the funds held by TransCo as a government-owned and controlled corporation. The Court, thus, finds that COA did not commit grave abuse of discretion in sustaining the disallowance. CHTAIc
Officers who approved and the employees who received the disallowed amount may not be held personally liable for refund absent a showing of bad faith or malice. This recognition stems from the rule that every public official is entitled to the presumption of good faith in the discharge of official duties. 17
Under the attendant facts and circumstances, the Court finds no indicia of bad faith on the part of the BoD members and the approving and certifying officers of TransCo. They appeared to have acted on a belief that they could employ the rounding-off scheme on the basis of Section 13 of RA 9511 18 and that the recipients were deserving of the increment in their separation pay given their years of "dedicated, competent and honest service." 19 There was also no controlling jurisprudence or definitive guide on the issue when they granted the additional benefit. 20 Accordingly, they need not refund the disallowed amount.
WHEREFORE, the petition is PARTIALLY GRANTED. The November 11, 2014 Decision and February 16, 2017 Resolution of the Commission on Audit are hereby AFFIRMED with MODIFICATION in that the disallowed amount need not be refunded." (adv24)
Very truly yours,
(SGD.) EDGAR O. ARICHETAClerk of Court
Footnotes
1.Rollo, pp. 42-58.
2. Decision No. 2014-333 rendered by COA Chairperson Ma. Gracia M. Pulido Tan and COA Commissioners Heidi L. Mendoza and Jose A. Fabia. Id. at 8-13.
3. Decision No. 2017-034 rendered by COA Chairperson Michael G. Aguinaldo and COA Commissioners Jose A. Fabia and Isabel D. Agito. Id. at 85-89.
4. The Notices of Disallowance, of various dates and in the total amount of P126,095.02, were issued by Audit Team Leader, Minerva T. Cabigting, and Supervising Auditor, Corazon V. Españo. Id. at 90-111.
5. Separation was effected on June 30, 2009. Id. at 9.
6. The case stems from TransCo's appeal from the disallowance. The COA Corporate Government Sector (CGS)-Cluster 3, through Director IV Rufina S. Laquindanum, issued Decision No. 2013-13 on October 22, 2013 affirming the disallowance and ordering the BoD members who approved the rounding-off scheme and the officers who authorized the release of funds and certified the expense as necessary and lawful, to refund the disallowed amount. (Id. at 59-64) On automatic review, COA proper rendered the assailed Decision disapproving the CGS-Cluster 3's Decision, insofar as it excluded the payees as persons liable for refunding the disallowed amount. The assailed Resolution is COA's action on TransCo's motion for reconsideration.
7.Rollo, p. 38.
8.Id. at 46-47.
9. An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity Through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for Other Purposes.
10.Rollo, pp. 48-49.
11.Id. at 52.
12.Id. at 52-53.
13.Id. at 156 and 160.
14.Id. at 157-158.
15.Id. at 159.
16.Id. at 49.
17.Duty Free Phils. Corp. v. Commission on Audit, et al., 789 Phil. 662, 677 (2016).
18.Development Bank of the Philippines v. Commission on Audit, G.R. No. 221706, March 13, 2018.
19.Rollo, p. 47.
20.Development Bank of the Philippines v. Commission on Audit, supra. Duty Free Phils. Corp. v. Commission on Audit, et al., supra.