National Transmission Corporation v. Commission on Audit
REITERATIONFacts
1. The Antecedents: The National Transmission Corporation (TransCo) paid its officials Extraordinary and Miscellaneous Expenses (EME) in 2010, purportedly pursuant to Republic Act No. 9970 (General Appropriations Act of 2010). These payments were later disallowed by the Commission on Audit (COA) for allegedly being unsupported by proper documentation, specifically receipts, and for being processed on a commutable basis rather than a reimbursable one, contrary to COA Circular No. 2006-001. 2. Procedural History: A Notice of Disallowance (ND) No. 11-58-(2010) was issued on June 1, 2011, disallowing P1,841,165.44 in EME payments. TransCo appealed to the COA Corporate Government Sector (COA-CGS), which initially lifted the disallowance in Decision No. 2014-16, accepting certifications as valid supporting documents. However, upon automatic review, the COA Proper, in Decision No. 2017-115 dated April 26, 2017, reversed the COA-CGS ruling, sustained the disallowance, and found TransCo officials solidarily liable. A motion for reconsideration was denied, and a Notice of Finality of Decision was issued. TransCo then filed a petition for certiorari with the Supreme Court. 3. The Petition: TransCo filed a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court, assailing COA Decision No. 2017-115. TransCo argued that the COA erred in sustaining the disallowance, claiming the auditor failed to prove the payments were commutable, that recipients acted in good faith, and that officials were not liable in the absence of malice or gross negligence. The petition also sought to enjoin the implementation of the COA decision. The core of the petition is that the COA acted with grave abuse of discretion in its rulings on the burden of proof and the inapplicability of the good faith doctrine.
Issue(s)
Whether or not the COA acted with grave abuse of discretion in ruling that TransCo has the burden of proof to show that payments were not made on a commutable basis. Whether or not the COA acted with grave abuse of discretion in holding that the doctrine of good faith is inapplicable in this case.
Ruling
The Supreme Court dismissed the Petition for Certiorari and affirmed with modification the COA Decision No. 2017-115. It ordered all passive recipients of the disallowed EME, including approving/certifying officials who received the amounts in their capacity as payees, to return the amounts respectively received by them.
Ratio Decidendi
On the issue of burden of proof and the validity of certifications for EME reimbursement: The Court held that TransCo has the burden of proving its entitlement to EME reimbursement. COA Circular No. 2006-001 mandates that EME payments be strictly on a non-commutable or reimbursable basis and supported by receipts or other documents evidencing disbursements. A mere certification, which does not substantiate the "paying out of an account payable" or a disbursement, is insufficient. The Court clarified that TransCo could not invoke COA Circular No. 89-300, which applies to NGAs, as GOCCs have different funding sources. The absence of receipts and the uniformity of amounts paid were considered by the COA as proof of commutable basis, and the Court found no grave abuse of discretion in upholding the disallowance based on the lack of proper supporting documents. On the issue of liability and the applicability of good faith: The Court reiterated the rules on the return of disallowed amounts as laid down in Madera v. Commission on Audit. While approving and certifying officers acting in good faith are generally not civilly liable, recipients are liable to return disallowed amounts unless they can show the amounts were genuinely given in consideration of services rendered, or if exceptional circumstances like undue prejudice, social justice, or humanitarian considerations exist. The Court found that TransCo officials made an honest lapse of judgment in relying on certifications, especially given the lack of clear judicial interpretation prior to Espinas v. Commission on Audit. Therefore, the approving/certifying officers who acted in good faith were not ordered to return the disallowed amounts in their capacity as approving officers. However, all passive recipients, including these approving/certifying officers who received the disallowed amounts, are liable to return the amounts they respectively received based on the principle of solutio indebiti, regardless of their good faith, as no exceptional circumstances were proven.
Main Doctrine
A certification alone, without substantiating the "paying out of an account payable" or a disbursement, is not a valid document to support claims for reimbursement of Extraordinary and Miscellaneous Expenses (EME) by officials of Government-Owned and Controlled Corporations (GOCCs). All passive recipients, including approving/certifying officers who received disallowed amounts, are liable to return the amounts received on the basis of solutio indebiti, regardless of good faith, unless exceptional circumstances exist.