Nayong Pilipino Foundation v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner Nayong Pilipino Foundation, Inc. (NPFI) authorized the grant of Anniversary Bonus and Extra Cash Gift to its officers and employees on various occasions, and paid honoraria to its Bids and Awards Committee (BAC) and Technical Working Group (TWG) members. The Commission on Audit (COA), through Audit Observation Memoranda (AOM) and Notices of Suspension/Disallowance, questioned these payments. Procedural History: The COA's Legal and Adjudication Office (LAO)-Corporate, Adjudication and Settlement Board (ASB), and the Commission Proper en banc affirmed the disallowance of the payments. NPFI's petition for review before the COA was denied, prompting the filing of the instant petition for certiorari. The Petition: NPFI seeks to annul the COA's decision and resolution, arguing that the COA gravely abused its discretion in disallowing the payment of Anniversary Bonus, Extra Cash Gift, and honoraria.
Issue(s)
Whether the COA gravely abused its discretion in disallowing the payment of Anniversary Bonus and Extra Cash Gift to NPFI's trustees, officials, and personnel. Whether the COA gravely abused its discretion in disallowing the payment of honoraria to NPFI's BAC and TWG members.
Ruling
The petition is partly meritorious. The Court affirms the COA's decision and resolution, with the modification that the trustees, officials, and personnel of NPFI who received the Anniversary Bonus in 2004 need not refund the same. However, the Board of Trustees and officers who participated in the approval and authorized the release of the disallowed Extra Cash Gift and honorarium are adjudged to be solidarily liable for their refund.
Ratio Decidendi
On the disallowance of Anniversary Bonus and Extra Cash Gift: The Court agreed with the COA that the grant of Anniversary Bonus for 2004 was unwarranted for failure to comply with the requirements under Administrative Order (A.O.) No. 263 and Department of Budget and Management (DBM) National Budget Circular (NBC) No. 452-96. These guidelines state that the Anniversary Bonus may only be granted in celebration of the 15th anniversary and every fifth year thereafter, and the counting of the milestone year shall start from the entity's creation as a public corporation. NPFI's milestone year should be reckoned from its incorporation as a public corporation on November 6, 1972, not as a private corporation on June 11, 1969. Therefore, the payments in 2000 and 2004 were unauthorized. However, considering that the recipients acted in good faith, relying on NPFI's articles of incorporation and traditional observance of its anniversary, no refund is necessary, consistent with jurisprudence on good faith. The Court also found that NPFI's basis for the grant of Extra Cash Gift, DBM Budget Circular 2002-4, explicitly authorizes such gifts only for the year 2002. The circular cannot be implied to provide authority for succeeding years without presidential approval. Therefore, the grant for 2004 was improper. Unlike the Anniversary Bonus, the principle of good faith could not be applied to the Extra Cash Gift because the circular's language was clear and limited. On the disallowance of honoraria to BAC and TWG members: The Court found no error in the COA's disallowance. While Section 15 of Republic Act (R.A.) No. 9184 allows honoraria for BAC members, it mandates that the Department of Budget and Management (DBM) shall promulgate the necessary guidelines. The Court reiterated its ruling in Sison, et al. v. Tablang, et al. that the provision cannot serve as a basis for the grant without enabling rules from the DBM. Furthermore, DBM Budget Circular No. 2004-5A clarified that honoraria should only be paid for "successfully completed procurement projects." Since the payments were made prior to the issuance of the DBM circular and without proof of completed procurement projects, the disallowance was proper. The Court emphasized that the law requires compliance with DBM guidelines, and the word "shall" is mandatory.
Main Doctrine
The Commission on Audit (COA) did not commit grave abuse of discretion in disallowing the payment of Anniversary Bonus and Extra Cash Gift to NPFI officials and employees, and honoraria to BAC and TWG members. However, recipients of the Anniversary Bonus in 2004 need not refund the same due to good faith. The Board of Trustees and officers who approved the Extra Cash Gift and honoraria are solidarily liable for their refund.