Teves v. Commission on Audit
REITERATIONFacts
The Antecedents: The National Power Corporation (NPC) Board of Directors confirmed and ratified a resolution granting Calendar Year (CY) 2009 Performance Incentive Benefits (PIB) equivalent to five and one-half monthly basic salary to officials and employees, amounting to P327,272,424.91. The NPC Audit Team issued a Notice of Suspension, questioning the grant for lack of presidential approval and for being extravagant, considering NPC-SPUG's net loss in CY 2009. Procedural History: The NPC management rationalized the grant, citing privatization successes and corporate performance ratings, but did not invoke any specific presidential issuance. The COA Audit Team disallowed the PIB in Notice of Disallowance (ND) No. NPC 12-007 (09,10) dated October 15, 2012. Petitioners appealed to the COA Corporate Government Sector (CGS) Cluster 3 – Public Utilities, arguing the PIB was authorized by Presidential Memorandum Order (MO) No. 198 and that the NPC Board members, being alter egos of the President, implicitly approved it. They also maintained the grant was not extravagant and that the disbursement was within the four-month basic salary limitation. The COA CGS affirmed the disallowance. Petitioners filed a Petition for Review before the COA Proper, which dismissed it for being filed out of time. This Petition for Certiorari followed. The Petition: Petitioners challenged the COA's dismissal of their appeal for being filed out of time, arguing that the period to appeal had not commenced due to improper service of the ND. They reiterated their arguments on the merits of the PIB grant and claimed good faith.
Issue(s)
Whether the COA acted with grave abuse of discretion in dismissing the appeal for being filed beyond the reglementary period. Whether the COA acted with grave abuse of discretion in affirming the disallowance. In case the disallowance is upheld, whether the COA acted with grave abuse of discretion in holding petitioners liable to refund the disallowed amounts.
Ruling
The Petition is dismissed. The Commission on Audit Decision No. 2015-108 dated April 6, 2015, is affirmed. The National Power Corporation Board of Directors, as approving and certifying officers, are solidarity liable to refund the disallowed amounts; while the payees are individually liable to return the amounts that they received.
Ratio Decidendi
On the issue of grave abuse of discretion in dismissing the appeal for being filed beyond the reglementary period: The Supreme Court held that the COA did not commit grave abuse of discretion. The Notice of Disallowance (ND) was received by Froilan A. Tampinco on October 23, 2012. Petitioners filed an appeal to the COA CGS on April 11, 2013, which was 170 days after receipt of the ND, leaving only 10 days to file a petition for review to the COA Proper. Petitioners received the COA CGS Decision on March 14, 2014, and filed their Petition for Review to the COA Proper on March 26, 2014, which was 12 days later, clearly beyond the remaining 10-day period. The Court reiterated that the perfection of an appeal within the period prescribed by law is mandatory and jurisdictional. Furthermore, the Court found that constructive service of the ND upon Tampinco was valid, as per Section 7, Rule IV of the 2009 Revised Rules of Procedure of the COA and Section 12.1 of COA Circular No. 2009-006, because personal service to numerous payees was impracticable. This constructive service constituted notice to all concerned parties, including the petitioners, thereby commencing the reglementary period for appeal. The essence of due process is the opportunity to be heard, which was afforded to the petitioners as they were able to file an appeal to the COA CGS. On the issue of grave abuse of discretion in affirming the disallowance: The Supreme Court found that even if the procedural issue were set aside, the petition would still fail on the merits. The grant of the PIB was found to be without legal basis. Memorandum Order (MO) No. 198, invoked by petitioners, stipulated a four-year implementation plan for the NPC Compensation Plan, with the 'pay for performance' component intended to be implemented from 1995 to 1997. The 2009 PIB was granted long after this period. Moreover, MO No. 198 required the 'pay for performance' to be based on a Productivity Enhancement Program (PEP), limited to zero to four months' basic salary, and given in lump-sum. The 2009 PIB, equivalent to five and one-half months' salary and released in installments, failed to meet these requirements. Additionally, Administrative Order (AO) No. 103 suspended the grant of additional benefits without presidential approval, and the PIB was neither a Collective Negotiation Agreement (CNA) incentive nor a benefit expressly authorized by a presidential issuance. The argument that the NPC Board members, as alter egos of the President, approved the PIB was rejected, as they acted in their ex officio capacity as members of the NPC Board, not as direct appointees of the President to the Board. The Court also noted that the PIB was granted when NPC incurred a massive net loss, rendering the grant extravagant and unconscionable. On the liability of petitioners to refund the disallowed amounts: The Supreme Court affirmed the COA's ruling on liability. Given that the ND had attained finality due to the failure to file a timely appeal, and the disallowance was upheld on its merits, the principles of unjust enrichment and solutio indebiti apply. The Court reiterated the rules on return of disallowed amounts, stating that approving and certifying officers who acted in bad faith, malice, or gross negligence are solidarily liable. Recipients are liable to return amounts received unless they can show the amounts were genuinely for services rendered or if exceptions apply. In this case, the NPC Board of Directors, as approving and certifying officers, were found to have acted with gross negligence due to their palpable disregard of laws and directives, making them solidarily liable. The recipients were held individually liable to return the amounts received because the PIB lacked proper legal basis, and they failed to prove their entitlement or that the incentive was directly connected to services rendered, thus constituting undue enrichment.
Main Doctrine
The failure to file an appeal within the reglementary period renders the decision final and executory. Constructive service of a Notice of Disallowance is valid when personal service is impracticable, especially in cases involving numerous payees, provided there is a mechanism for informing all concerned parties. Public officers authorizing or making payments without legal basis are solidarily liable to refund the disallowed amounts, particularly when acting with gross negligence, malice, or bad faith, regardless of whether they were recipients.