National Transmission Corp. v. Commission on Audit

EN BANC

[G.R. No. 241541. November 16, 2021.]

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 datedNOVEMBER 16, 2021, which reads as follows:

"G.R. No. 241541 (National Transmission Corporation vs. Commission on Audit [COA] and COA Chairperson Michael G. Aguinaldo).— This resolves the Petition for Certiorari, 1 under Rule 64 in relation to Rule 65 of the Rules of Court, assailing the Commission on Audit's (COA) Decision 2 No. 2018-173 dated January 29, 2018. The questioned decision dismissed petitioner's petition for review questioning the COA Corporate Government Sector's (COA-CGS) Decision No. 2013-21 3 dated December 3, 2013, which upheld Notice of Disallowance No. (ND) 10-01-08 dated February 16, 2010. 4 The subject ND concerned the grant of Collective Goodwill Incentive (CGI) to several officers and employees of petitioner in the total amount of PHP7,687,822.30. It stated that the amount representing the CGI was disallowed in audit because the payment of collective negotiation agreement (CNA) incentives, from which the CGI was apportioned, was not in conformity with the provisions of Department of Budget and Management (DBM) Budget Circular (BC) No. 2006-1 dated February 1, 2006.

The pertinent facts as summarized by the COA are as follows:

Records show that in 2006, the rank-and-file employees of TRANSCO organized themselves under the name Mindanao TRANSCO Employees Association (MINTREA), which was accredited by the Civil Service Commission (CSC) on November 28, 2006 as their sole and exclusive negotiating agent.

On November 12, 2007, the Board of Directors (BOD) of TRANSCO approved the CNA between TRANSCO and MINTREA, which was signed on November 29, 2007 by their respective representatives. On April 11, 2008, the CNA was registered with an effectivity period from November 29, 2007 to November 29, 2010. On the other hand, TRANSCO Employees Association Management Council (TEAMC) was created to act as an administrative mechanism for the implementation of the CNA.

Pursuant to TEAMC Resolution No. 2008-01 dated April 2, 2008, duly approved by the TRANSCO President, TRANSCO started paying CNA Incentives on April 17, 2008 funded out of its calendar year (CY) 2007 savings amounting to P274 Million, as certified and validated by its Finance and Internal Affairs Divisions.

On February 1, 2006, the Supervising Auditor (SA) of TRANSCO issued ND No. 10-01-08 on the ground that the payment of the CGI, which was apportioned from the CNA incentives as claimed by management, was not in conformity with the provisions of Department of Budget and Management (DBM) Budget Circular (BC) No. 2006-1 dated February 1, 2006, requiring the CNA Incentive to be paid out of the savings generated after the signing and ratification of the CNA. Since the CNA took effect only on November 29, 2007 or barely a month before the end of the year, the SA concluded that the grant of CNA Incentive generated from the CY 2007 savings was contrary to the aforementioned circular. Thus, all those who authorized and approved the payment of the CGI were made liable for the disallowance. 5 (citations omitted)

Both the COA-CGS and COA upheld the ND. The COA, however, added that employees who were mere recipients need not refund the benefit they received in good faith.

Hence, this petition.

Petitioner, through the Office of the Government Corporate Counsel (OGCC), argues that the grant of CGI was not violative of DBM BC No. 2006-01 considering that (1) such grant was the sole corporate act of MINTREA; (2) said circular does not specifically provide for the reckoning point from which cost-cutting measures may be implemented; and (3) the concerned officials of petitioner acted in good faith when they assisted in the release of CGI to qualified beneficiaries. 6

On the other hand, COA, represented by the Office of the Solicitor General (OSG), argues that the petition should be denied considering that (1) it was prematurely filed; (2) there was no grave abuse of discretion on the part of COA in upholding the disallowance of the grant of CNA incentives; (3) the grant of CNA incentives violated DBM BC No. 2006-01; and (4) good faith is not a defense to unlawful disbursement. 7

Petitioner filed its Reply, 8 where it countered that direct resort to this Court is warranted under the circumstances and that it had sufficiently alleged grave abuse of discretion in its petition.

The petition lacks merit.

The petition was not

COA, through the OSG, argues that the petition is prematurely filed in view of the filing of a motion for reconsideration by a certain Leonor S. Quintia in the proceedings before the COA. It adds that resort to courts should be made only after the COA resolves the pending motion for reconsideration, following the doctrine of exhaustion of administrative remedies. 9

Petitioner counters by arguing that the present case raises issues that have already been raised in and passed upon by COA in its decision, warranting a liberal interpretation of the rule that a motion for reconsideration is a condition sine qua non before filing a petition for certiorari. Petitioner also manifested that it had no knowledge of Quintia's motion for reconsideration when the present petition was filed. It added that Quintia filed her motion for reconsideration in her own personal capacity. 10

The circumstances surrounding the filing of the petition and Quintia's motion for reconsideration merit a relaxation of the rule. As stated, petitioner adequately explained that it had no knowledge of Quintia's motion for reconsideration when it filed the petition.

Further, one recognized exception to the general rule that a motion for reconsideration is a condition sine qua non before a petition for certiorari is filed is "where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court." 11 A perusal of the instant petition vis-à-vis the petition for review filed in the COA as well as that filed in the COA-CSG shows that petitioner raises the same issues.

We find therefore that the petition was not prematurely filed and that the non-filing of a motion for reconsideration is warranted.

Having disposed of the foregoing procedural matter, We now review the substantive issues, which can be encapsulated in the single issue of whether COA committed grave abuse of discretion in upholding the disallowance of the grant of CGI to qualified officers and employees of petitioner.

No grave abuse of discretion

COA is empowered by no less than the Constitution to have the broadest latitude in discharging its role as the guardian of public funds and properties. 12 Specifically, COA has the "exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties." 13 In fact, Rule 64 of the Rules of Court, which governs the procedure for the present petition also provides that findings of fact of the COA, when supported by substantial evidence, shall be "final and non-reviewable." 14

Time and again, the Court has generally sustained COA's decisions or resolutions in deference to its expertise in the implementation of the laws it has been entrusted to enforce. 15 Hence, absent a clear showing that COA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, the Court will exercise judicial restraint and refuse to intervene in COA's exercise of discretion through its decisions or resolutions. 16

With specific regard to reviewing COA's decisions or resolutions, grave abuse of discretion means that there is on the part of the COA an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law, such as when the assailed decision or resolution rendered is not based on law and the evidence but on caprice, whim and despotism. 17

The petition failed to show any abuse of discretion, much less grave abuse of discretion, on the part of COA in rendering the questioned decision.

While the issues provided in the petition are phrased "whether the COA gravely abused its discretion," a perusal of the arguments and discussion in the petition reveals that the issues raised in the petition merely involve allegations of errors of judgment, not grave abuse of discretion amounting to lack or excess of jurisdiction.

For instance, petitioner attempts to disclaim liability by alleging that the grant of CGI was the sole corporate act of MINTREA, the sole and exclusive representative of petitioner's rank-and-file employees. This allegation does not ascribe grave abuse of discretion on the part of the COA. At best, the allegation is a question of fact that is not cognizable by the Court in a petition for certiorari. In fact, COA-CGS readily disposed of this argument as follows:

In its Appeal, TRANSCO focused its arguments on the grant of CGI to its officials, or those with salary grades 16 and above. It avers that the grant of CGI to officers and managerial employees of TRANSCO is a sole corporate act of MINTREA hence not violative of the provision of DBM Circular No. 2006-01.

Clear, however, from the ND and the AOM issued by the Supervising Auditor that the main crux of the disallowance was the fact that the CNA was barely a month old, as it was made effective only on November 29, 2007, when the CGI was granted on April 17, 2008 using the CY 2007 savings as source of funding. 18

We agree with the observation of COA-CGS that the main issue is the funding source of the CNA incentive, and not whether the grant thereof was the sole corporate act of MINTREA.

In this regard, petitioner argues that the silence of DBM BC No. 2006-01 on the matter of the reckoning point from which cost-cutting measures may be implemented supports its position that the grant of CGI was valid.

The argument is specious.

In Silang, et al. v. Commission on Audit, 19 the Court upheld the disallowance of CNA incentives under a CNA that was signed on November 13, 2007. The source of funding for the CNA incentives was computed from September 2007, or two (2) months before the signing of the CNA. The Court held that the CNA incentive cannot be granted in view of item 7.1.2 of DBM BC No. 2006-01, 20 the same circular involved in the present case.

Here, the source of funding for the CNA incentives is the entire savings for Calendar Year 2007. Effectively, the source of funding included items as early as January 2007, which calls for the application of the Silang ruling with more authority.

Petitioner's argument that savings are not determined on a monthly basis but on a calendar year basis has no factual or legal basis and does not work to excuse it from giving CNA incentives contrary to the provisions of DBM BC No. 2006-01, which expressly provides that the savings, from which CNA incentives will be sourced, shall be reckoned from the date of signing of the CNA and supplements thereto. 21 The express mandate of DBM BC No. 2006-01 should have prompted petitioner to review its financial records more thoroughly in order to determine the specific amount of savings from maintenance and other operating expenses beginning November 13, 2007 onwards.

The officers who approved thedisallowed disbursement are

Petitioner claims that its officials acted in good faith when they assisted in the release of the CNA incentives.

The argument lacks merit.

In Madera v. Commission on Audit, 22 the Court held that in instances where a disallowance is upheld, approving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable. 23 On the other hand, approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are solidarily liable to return only the net disallowed amount. 24

The recent case of Gonzaga v. Commission on Audit25 summarized the prevailing rules pertaining to the liabilities of the approving officers and recipients of disallowed disbursements of public funds, following Madera and subsequent cases, thus:

For approving officers, on one hand, they are made solidarily liable with the recipients if they acted in bad faith, malice, or gross negligence under Sections 38, 39, and 43 of the Administrative Code. To be exonerated from liability therefor, such approving officers must demonstrate due diligence,as may be indicated: (1) by Certificates of Availability of Funds pursuant to Section 40 of the Administrative Code, (2) by In-house or Department of Justice legal opinion, (3) that there is no precedent allowing a similar case in jurisprudence, (4) that it is traditionally practiced within the agency and no prior disallowance has been issued, [or] (5) with regard [to] the question of law, that there is a reasonable textual interpretation on its legality.

Recipients, on the other hand, are liable to refund, regardless of good faith, on the basis of solutio indebiti and unjust enrichment. The metamorphosis of the rules governing accountability for disallowances, especially payee liability for the amount actually received, strives to create a harmonious interplay of the provisions, of the Administrative Code, the principles of unjust enrichment and solutio indebiti under the Civil Code, and the policy of social justice in disallowance cases.

To be sure, a government instrumentality's disbursement of salaries that contravenes the law is a payment through error or mistake. A person who receives such erroneous payment has the quasi-contractual obligation to return it because no one shall be unjustly enriched at the expense of another, especially if public funds are at stake. The law constitutes the person receiving money through mistake a trustee of a constructive trust for the benefit of the person from whom the property comes, which, in this case, is the government.

In so holding, the Court has returned to the basic premise that the responsibility to return is a civil obligation to which fundamental civil law principles, such as unjust enrichment and solutio indebiti, apply regardless of the good faith of passive recipients. 26 (emphasis supplied, citations omitted)

As stated, the bone of contention in the present case is petitioner's compliance with DBM BC No. 2006-01. Petitioner's claim of good faith is founded on its purported reliance on the "silence" of the said circular's reckoning point when petitioner's savings can be disbursed as CAN incentives. However, the Court finds that DBM BC No. 2006-01 clearly and unequivocally provides that "such savings shall be reckoned from the date of the signing of the CNA and supplements thereto." 27 The circular did not state or even remotely imply that the reckoning period is on the calendar year of the CNA.

Hence, petitioner's claim of good faith is belied by the fact that DBM BC No. 2006-01 is unambiguous in its mandate as regards sources of funding for CNA incentives. Petitioner cannot disclaim its officers' liability by relying on the circular's "silence" as this is not a "a reasonable textual interpretation" of the legality of the grant of CNA incentives subject of this case.

We therefore affirm the COA's finding that all the persons named liable in the ND 28 shall remain solidarily liable for the disallowance.

However, their liability should be tempered against the amount which the recipients of the CNA incentives were excused from paying. This is in consonance with the Court's ruling in Pastrana v. Commission on Audit, 29 pertinent portions of which provide:

Rule 2b of the Madera Rules on Return states that the approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable to return only the net disallowed amount, which excludes the amounts excused under Rules 2c and 2d. Senior Associate Justice Estela M. Perlas-Bernabe defines the term — net disallowed amount as — the total disallowed amount minus the amounts excused to be returned by the payees.

Generally, Rule 2c of the Madera Rules obligates the recipients, whether approving or certifying officers or mere passive recipients, to return the disallowed amounts respectively received by them, subject to certain exceptions. However, considering that the payee-recipients in this case had already been absolved from liability by the COA En Banc in its January 30, 2018 Resolution and that said Resolution had already attained finality, the amounts respectively received by said payee-recipients shall be discounted in the determination of the civil liability of the petitioners as approving/certifying officers. 30 (emphasis supplied)

To recall, the COA expressly absolved the payee-recipients of the CNA incentives on the basis of their good faith. The absolution of recipients was not raised as an issue by petitioner before the Court. As such, the Court will no longer review the COA's finding in this regard, and consider the same final. Hence, similar to Pastrana, where the payee-recipients were absolved by the COA En Banc, the approving and certifying officers are liable only for the net disallowed amount.

The foregoing considered, We hold that unless also named liable in the ND for being an approving officer, the recipients of the disallowed amounts are excused from returning the amounts they received as CNA incentives.

WHEREFORE, the petition for certiorari is DISMISSED. Public respondent Commission on Audit's Decision No. 2018-173 dated January 29, 2018 is AFFIRMED with MODIFICATION as to the extent of the approving and certifying officers' solidary liability, which is hereby limited to the net disallowed amount, i.e., the total disallowed amount minus the amounts excused to be returned by the payees." Perlas-Bernabe, J., on official leave. Lopez, M., J., on leave. (40)

By authority of the Court:

(SGD.) MARIFE M. LOMIBAO-CUEVASClerk of Court

 

Footnotes

1.Rollo, pp. 3-18.

2.Id. at 19-26.

3.Id. at 50-52-A.

4.Id. at 39-49.

5.Id. at 20.

6.Id. at 3-18.

7.Id. at 98-99.

8.Id. at 114-117.

9.Id. at 99-100.

10.Id. at 114-116.

11.See Republic v. Bayao, 710 Phil. 279, 287-288 [2013]; Philippine Bank of Communications v. Court of Appeals, 805 Phil. 964, 974 [2017].

12.Miralles v. Commission on Audit, 818 Phil. 380, 389 [2017].

13.Id.

14.Id.

15.Id.

16.Id.

17.Id. at 389-390.

18.Rollo, p. 52.

19. 769 Phil. 327, 342 [2015].

20.Id.

21.See DBM Budget Circular No. 2006-01, Sec. 7.1.2.

22. G.R. No. 244128, September 8, 2020.

23.Id.

24.Id.

25. G.R. No. 244816, June 29, 2021.

26.Id. citing Madera v. Commission on Audit, G.R. No. 244128, September 8, 2020; Velasquez v. Commission on Audit, G.R. No. 243503, September 15, 2020; National Transmission Corporation v. Commission on Audit, G.R. No. 244193, November 10, 2020.

27. DBM Budget Circular No. 2006-01, Sec. 7.1.2.

28.Rollo, pp. 40-41.

29. G.R. Nos. 242082-83, June 15, 2021.

30.Id.