EN BANC
[G.R. No. 240956. January 22, 2019.]
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 dated JANUARY 22, 2019, which reads as follows:
"G.R. No. 240956 (National Transmission Corporation v. Commission on Audit [COA], and COA Chairperson Michael G. Aguinaldo). — This is a petition for certiorari under Rule 64 of the Rules of Court seeking to annul and set aside the January 26, 2018 Decision 1 of the Commission on Audit (COA) in Decision No. 2018-135. The COA affirmed with modification the October 31, 2014 Decision 2 of the COA Corporate Government Sector (CGS) in Decision No. 2014-26. The COA-CGS affirmed with modification the October 22, 2013 Notice of Disallowance (ND) Nos. 13-002 (09)(10)(11) and 13-002 (10)(11) 3 for payment of separation benefits.
Antecedents
On June 26, 2001, Republic Act (R.A.) No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA) of 2001, took effect. The EPIRA set forth the framework for the privatization of the assets of the National Power Corporation (NPC) and created the National Transmission Corporation (TRANSCO), which assumed the electric transmission function of the NPC. The EPIRA also directed the privatization of TRANSCO either by sale or by way of concession.
On December 12, 2007, pursuant to the EPIRA, the Power Sector Assets and Liabilities Management (PSALM) successfully bid out the 25-year concession contract to operate and maintain the transmission system of TRANSCO to the National Grid Corporation of the Philippines (NGCP).
On December 1, 2008, by virtue of Republic Act No. 9511, the NGCP was granted a franchise to engage in the business of conveying and transmitting electricity. On January 15, 2009, the PSALM formally turned over the 25-year concession with TRANSCO to NGCP. As a result, TRANSCO employees, including its contractual personnel, were retired or separated from service effective June 30, 2009 and were paid separation benefits. CAIHTE
TRANSCO issued Resolution Nos. TC 2009-007 and 2009-0010, 4 dated February 26, 2009 and May 6, 2009, respectively, to implement the disbursement of separation pays. These resolutions stated, among others, that the contractual personnel of TRANSCO shall receive separation benefits; and that in the computation of the length of service, a fraction of one (1) year or equivalent to six (6) months or more shall be considered as one (1) whole year.
Notice of Disallowances
On October 22, 2013, the Audit Team Leader and Supervising Auditor of TRANSCO issued ND Nos. 13-002 (09)(10)(11) and 13-002 (10)(11), disallowing payment of separation benefits to contractual employees of TRANSCO in the amounts of P66,081,589.77 and P276,099.64, respectively. The NDs stated that the contractual personnel of TRANSCO should not have been given separation benefits because there was no employer-employee relationship between TRANSCO and its contractual employee. It also stated that TRANSCO should not have rounded-off six (6) months or more of service to one whole year because it resulted in the increase of length of service.
Aggrieved, TRANSCO appealed the NDs to the COA-CGS.
The COA-CGS Ruling
In its decision dated October 31, 2014, the COA-CGS affirmed with modification the NDs. It held that the service contracts of the contractual employees clearly state that there is no employee-employer relationship with the government, hence, they are not entitled to separation benefits. Further, the COA-CGS observed that the service contracts of the said contractual personnel were not approved by the Civil Service Commission (CSC). Likewise, it highlighted that the law is clear that separation benefits can only be granted for "every year of service" without mention of rounding off. Nevertheless, citing Manila International Airport Authority v. COA, 5 the COA-CGS held that the TRANSCO employees are not required to refund the separation benefits as these were received in good faith. It opined that only the officers who authorized the release of the funds are liable. The fallo reads:
WHEREFORE, foregoing premises considered, the instant Appeal is hereby AFFIRMED WITH MODIFICATIONS. Applying the pronouncement of the Supreme Court in the MIAA Case, only the directors responsible for the passage of Resolution Nos. TC 2009-005 and TC 2009-007 and the officers who authorized the release of funds and certified the expense as necessary and lawful are liable to the extent of the amount they respectively received. All other payees may no longer be allowed to refund the amount disallowed.
This, notwithstanding, herein Decision is not yet final and is subject to the automatic review of the COA Commission Proper pursuant to Section 7, Rule V of the 2009 Revised Rules of Procedure of the Commission on Audit. 6
Undaunted, TRANSCO filed a petition for review before the COA.
The COA Ruling
In its decision dated January 26, 2018, the COA affirmed with modification the ruling of the COA-CGS. Citing National Transmission Corporation v. Commission on Audit, et al., 7 it held that although separation pay should not have been given to the contractual employees, the officers who authorized the release of the funds cannot be held liable because they exercised good faith. Thus, they were not anymore liable to pay the amount of P66,081,589.77 under ND No. 13-002 (09)(10)(11).
However, the COA observed that the officers who authorized the rounding-off of the length of service of six months or more to one whole year should still be held solidarily liable. It emphasized that without the approval of the President through the Secretary of the Department of Budget and Management (DBM), the rounding-off is without legal basis. Thus, the COA concluded that the officers of TRANSCO were still liable to pay the relevant amount of P276,099.64 under ND No. 13-002 (10)(11), which pertains to the rounding-off of length of service. The dispositive portion states:
WHEREFORE, premises considered, Commission on Audit Corporate Government Sector-Cluster 3 Decision No. 2014-26 dated October 31, 2014 hereby is PARTIALLY APPROVED. Accordingly, Notice of Disallowance (ND) Nos. 13-002 (09)(10)(11) and 13-002 (10)(11), both dated October 22, 2013, on the payment of separation benefits to the employees of the National Transmission Commission in the total amount of P66,357,689.41, are AFFIRMED, but all the persons named liable in the NDs and the members of the Board of Directors (BOD) are exempt from the obligation to refund the amount disallowed. DETACa
However, the approving/certifying officers and members of the BOD remain solidarily liable with respect to the equivalent amount of separation benefit resulting from the rounding-off of fractional service of six months or more to one year. The Auditor is directed to determine the amount of the ND that pertains to the rounding-off of length of service. 8
Hence, this petition.
ISSUE
WHETHER COA GRAVELY ABUSED ITS DISCRETION IN RULING THAT THE TRANSCO OFFICERS AND BOARD ARE SOLIDARILY LIABLE TO THE AMOUNT OF SEPARATION PAY RESULTING FROM THE ROUNDING OFF OF FRACTIONAL SERVICE OF SIX MONTHS OR MORE TO ONE YEAR. 9
TRANSCO argues that Sec. 63 of R.A. No. 9136 and Sec. 13 of R.A. No. 9511 gave the power to (1) give separation benefits; (2) provide separation plans; and (3) provide additional benefits as the TRANSCO Board of Directors (Board) may determine. Thus, the rounding-off of the length of service of six months or more to one whole year was part of the Board's managerial power, exercised in good faith, to provide additional benefits for the welfare of its employees. TRANSCO underscored that there is no existing law or regulation that prohibits the rounding-off of the length of service for employees.
In its Comment, 10 the COA affirmed that although separation pay should not have been given to the contractual employees, the officers who authorized the release of the funds cannot be held liable because they exercised good faith. Nevertheless, it argued that the rounding-off of the length of service is illegal because Sec. 3, Rule 33 of the IRR of R.A. No. 9136 is very clear in stating that separation benefit is computed based on every year of service. The provision did not mention any rounding-off of fractional figures. As the law speaks in clear and categorical language, there is no room for interpretation. It also argued that without the approval of the President, through the DBM Secretary, the rounding-off is without legal basis.
The Court's Ruling
The petition is partially granted.
Rounding-off scheme is invalid
Sec. 13 of R.A. No. 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 supplied.)
On the other hand, Sec. 63 of R.A. No. 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. (emphasis and underscoring supplied)
The issue raised in this petition is whether the rounding-off of the length of service of six (6) months or more to one (1) whole year was part of the Board's managerial power, exercised in good faith, to provide additional benefits for the welfare of its employees. Notably, this issue has been recently resolved by the Court in National Transmission Corporation v. Commission on Audit. 11
In that case, the COA issued a ND against TRANSCO because the latter rounded-off the length of service of six (6) months or more to one (1) whole year of its separated personnel. In its defense, TRANSCO argued that Sec. 63 of R.A. No. 9136 and Sec. 13 of R.A. No. 9511, as harmonized, confer on separated TRANSCO employees the following: (a) a separation pay, which shall be one and one-half (1 1/2) month salary for every year of service; and, (b) such additional benefits as the TRANSCO Board may decide to grant. Thus, the TRANSCO Board can grant the rounding-off of the length of service of six (6) months or more to one (1) whole year of the separated employees as additional benefits. aDSIHc
The Court, however, was not convinced. It held that TRANSCO was not given unbridled discretion to increase the benefits granted to the separated employees. Sec. 64 of R.A. No. 9136 clearly limited the power of TRANSCO to grant additional benefits to personnel, wherein any increase of benefits shall be subject to the approval of the President, to wit:
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 supplied)
Thus, the Court held that 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 the TRANSCO Board to grant additional benefits under Sec. 13 of R.A. No. 9511 is subject to the limitation under Sec. 64 of R.A. No. 9136 requiring the President's imprimatur for increases in emoluments and benefits of TRANSCO personnel.
Here, TRANSCO presents the same arguments. It failed to provide any novel or additional grounds to justify the grant of the rounding-off scheme to its separated contractual employees. Glaringly, TRANSCO still has not proven it had the President's approval to increase the benefits of its separated contractual employees under Sec. 64 of R.A. No. 9136. Thus, rounding-off the length of service of six months or more to one whole year of the said employees remains invalid.
TRANSCO exercised good faith
Good faith is a state of mind denoting "honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even through technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render transaction unconscientious." 12
In Development Bank of the Philippines v. Commission on Audit, 13 the Court ruled that good faith may be appreciated in favor of the responsible officers under the ND provided they comply with the following requisites: (1) that they acted in good faith believing that they could disburse the disallowed amounts based on the provisions of the law; and (2) that they lacked knowledge of facts or circumstances which would render the disbursements illegal, such when there is no similar ruling by this Court prohibiting a particular disbursement or when there is no clear and unequivocal law or administrative order barring the same.
In the same recent case of National Transmission Corp. v. Commission on Audit, the Court ruled that although the rounding-off scheme was invalid, the approving and certifying officers of TRANSCO were not ordered to refund the disallowed amount based on good faith, to wit:
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.
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 and that the recipients were deserving of the increment in their separation pay given their years of "dedicated, competent and honest service." There was also no controlling jurisprudence or definitive guide on the issue when they granted the additional benefit. Accordingly, they need not refund the disallowed amount. 14 (emphasis supplied) ETHIDa
In this case, the TRANSCO Board did not exercise bad faith in approving the rounding-off scheme for its separated contractual employees. They acted under their honest belief that Sec. 13 of R.A. No. 9511 allowed them to grant the rounding-off scheme in favor of its contractual employees. Further, the disallowed disbursement in this case was made by TRANSCO when it issued Resolution Nos. TC 2009-007 and 2009-0010 on February 26, 2009 and May 6, 2009, respectively; on the other hand, the Court only issued the resolution of National Transmission Corp. v. Commission on Audit on August 14, 2018. Thus, at the time that TRANSCO made the disallowed disbursement, there was still no controlling jurisprudence or definitive guide on the issue when they granted the additional benefit in the form of the rounding-off scheme. Accordingly, they need not refund the disallowed amount on the basis of good faith.
WHEREFORE, the petition is PARTIALLY GRANTED. The January 26, 2018 Decision of the Commission on Audit in Decision No. 2018-135 is hereby AFFIRMED with MODIFICATION in that the disallowed amount need not be refunded." (adv31)
Very truly yours,
(SGD.) EDGAR O. ARICHETAClerk of Court
Footnotes
1.Rollo, pp. 24-32; concurred by Chairperson Michael G. Aguinaldo and Commissioners Jose A. Fabia and Isabel D. Agito.
2.Id. at 60-68; penned by Director Rufina S. Laquindanum.
3.Id. at 33-35.
4.Id. at 75-83.
5. 681 Phil. 644 (2012).
6.Rollo, p. 68.
7. 800 Phil. 618 (2016).
8.Rollo, p. 31.
9.Id. at 9.
10.Id. at 119-138.
11. G.R. No. 229958 (Notice), August 14, 2018.
12.Maritime Industry Authority v. Commission on Audit, 750 Phil. 288, 337 (2015), citing Philippine Economic Zone Authority v. Commission on Audit, 690 Phil. 104, 115 (2012).
13. G.R. No. 221706, March 13, 2018.
14.Supra note 11.