Development Bank of the Philippines v. Commission on Audit
REITERATIONFacts
The Antecedents: The Development Bank of the Philippines (DBP) Board of Directors passed Resolution No. 0121 approving various benefits for its members, including per diems, reimbursement of expenses, benefits under the Motor Vehicle Lease Purchase Plan (MVLPP), and Health Care Plan. Subsequently, Resolution No. 0037 was passed, approving guidelines for compensation comparable to DBP consultants for committee assignments and representation expenses, and reimbursement for representing the Bank. DBP paid its Board members benefits accounted as Representation and Entertainment - Others, rice subsidy, and anniversary bonuses, totaling P16,656,200.09 as of December 31, 2006. Procedural History: Upon post-audit, the Commission on Audit (COA) Supervising Auditor issued an Audit Observation Memorandum (AOM) stating that the Board's compensations were contrary to Section 8 of the DBP Charter (E.O. No. 81, as amended by R.A. No. 8523), which only entitled them to per diems. DBP commented, arguing no prohibition existed and that Presidential approval was secured. The Supervising Auditor issued a Notice of Disallowance (ND) disallowing the total amount of P16,565,200.09, citing the DBP Charter and COA Decision No. 2001-026. DBP appealed to the COA-Corporate Government Sector (CGS), which affirmed the ND. DBP's petition for review to the COA was denied, and its motion for reconsideration was also denied. The Petition: DBP filed a petition for certiorari before the Supreme Court, seeking to annul and set aside the COA's decisions, arguing that the Board's authority under Section 8 of the DBP Charter, with Presidential approval, was not limited to per diems, that President Arroyo's "No objection" notation was a valid approval, that the ND violated due process by citing a case not in the AOM, that a favorable opinion from the COA General Counsel existed, and that the Board and accountable officers should not be held liable due to good faith reliance on the Charter and Presidential approval.
Issue(s)
Whether the authority of the DBP Board under Section 8 of the DBP Charter, with the approval of the President, is limited to the amount of per diem. Whether the notation "No objection" by then President Gloria Macapagal Arroyo on the DBP Memorandum is tantamount to a stamp of approval. Whether the Notice of Disallowance violated DBP's right to due process by citing COA Decision No. 2001-026, which was not mentioned in the AOM. Whether the subject transactions were supported by a favorable opinion from the then COA General Counsel. Whether the Board of Directors and accountable officers should be held liable to refund the disallowed compensation and benefits, assuming a legal basis for disallowance, due to reliance in good faith.
Ruling
The Supreme Court partially granted the petition. It affirmed the disallowance of the P16,565,200.09 in benefits but modified the ruling by absolving the persons identified as personally liable under the Notice of Disallowance from refunding the disallowed amounts due to good faith.
Ratio Decidendi
On the authority of the Board under Section 8 of the DBP Charter: The Court held that Section 8 of the DBP Charter only mentions per diem as the compensation for the Board members and does not provide for any additional benefits. The phrase "Unless otherwise set by the Board and approved by the President of the Philippines" refers solely to the authority to increase the per diem amount, not to grant other benefits. This interpretation is consistent with the doctrine of expressio unius est exclusio alterius, meaning the express mention of one thing excludes all others. The Court cited Bases Conversion and Development Authority v. COA (BCDA v. COA) where a similar provision in the BCDA Charter was interpreted to limit the Board's compensation to per diems. Furthermore, DBM Circular Letter No. 2002-02 clarifies that non-salaried officials, like Board members, are not entitled to benefits unless expressly provided by law. The Court emphasized that allowing additional benefits would render the specific provisions on per diems and their limitations in Section 8 inoperative and lead to an unbridled grant of benefits. On the Presidential approval: The Court found the alleged approval of President Arroyo to be immaterial. Even if the President had approved the DBP Memorandum, the Board could not grant additional benefits beyond what Section 8 of the DBP Charter allowed. The Court reiterated its ruling in BCDA v. COA, where Presidential approval of additional benefits was deemed insufficient when the governing law limited compensation to per diems. On the alleged violation of due process: The Court dismissed DBP's argument that the Notice of Disallowance violated its right to due process by citing COA Decision No. 2001-026, which was not in the AOM. The Court stated that this decision was not the sole basis for the COA's ruling and that DBP had the opportunity to question it through appeals before the COA-CGS and the COA En Banc, thus, its right to due process was not violated. On the COA General Counsel's opinion: The Court found the COA General Counsel's opinion inapplicable. The opinion pertained to staff assistance and incidental expenses for the Board, not to the grant of additional compensation to the Board members themselves beyond per diems. Therefore, it did not create an estoppel on the part of the COA to question the disallowed benefits. On the liability for refund due to good faith: The Court found merit in DBP's argument that the responsible officers should not be held liable for refund due to good faith. At the time the DBP resolutions were issued, there was no existing jurisprudence or administrative order expressly prohibiting the disbursement of benefits other than per diems. The Court noted that it was only in BCDA v. COA (promulgated in 2009) that the prohibition was categorically interpreted. The DBP Board members and accountable officers honestly believed they were entitled to the compensation based on their interpretation of Section 8 and the alleged Presidential approval. They lacked knowledge of facts or circumstances that would render the disbursements illegal, and they did not act with malice or bad faith. Therefore, they were absolved from the obligation to refund the disallowed amounts.
Main Doctrine
The DBP Charter, specifically Section 8, only allows per diems as compensation for Board members. Any other benefits not expressly provided by law are excluded, and the approval of the President for such additional benefits is immaterial if the law itself does not permit them. However, responsible officers may be absolved from refunding disallowed amounts if they acted in good faith.