Advincula v. Commission on Audit
REITERATIONFacts
The Antecedents: The Bases Conversion and Development Authority (BCDA) Management and Holdings, Inc. (BMHI), a subsidiary of BCDA, paid Annual Gift Checks (AGCs) to its employees and board members amounting to P2,912,000.00. The payment was authorized by BCDA Board Resolution No. 2003-09-186 and its accompanying guidelines, which included provisions for employees on detail and those hired by BCDA prior to a certain date. The disbursement vouchers were approved by BMHI President Isaac S. Puno III and certified by Department Head Rowena B. Tanagon and Accounting Department Head Glorificacion M. Nocos. Procedural History: The Commission on Audit (COA) issued Audit Observation Memorandum No. (AOM) 2004-05, questioning the payment to non-salaried personnel. Subsequently, Notice of Disallowance (ND) No. BMHI-04-002-(03) was issued, disallowing P2,158,000.00 of the AGCs, holding payees, certifying, and approving officers liable. The COA Legal and Adjudication Office-Corporate (LAO-C) upheld the disallowance in LAO-C Decision No. 2008-011, issuing Supplemental ND No. BMHI-2008-008 to disallow the entire P2,912,000.00. The COA Proper, in its Original COA Proper Decision, sustained the disallowance but absolved most payees, holding board members and approving/certifying officials liable. Upon motion for reconsideration, the COA Proper, in its Resolution dated September 27, 2013, upheld the disallowance but reinstated the payees' liability to refund. The Petition: Petitioners, who are payees of the disallowed AGCs, filed a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court, assailing the COA Proper's Decision and Resolution. They argued that the COA Proper committed grave abuse of discretion by upholding the disallowance on grounds different from the Director's, giving due course to a belated motion for reconsideration, and reversing its original decision to hold payees liable.
Issue(s)
Whether the Commission on Audit (COA) Proper committed grave abuse of discretion amounting to lack or excess of jurisdiction in upholding the disallowance of the Annual Gift Checks (AGCs) and holding the petitioners/payees, the BMHI Board, and other approving/certifying officials liable therefor. Whether the disallowance of the AGCs had attained finality due to the petitioners' failure to perfect their appeal to the COA Proper within the reglementary period. Whether the disallowance of the AGCs and the ruling on the liability of the payees, approving, and certifying officers are supported by law and jurisprudence.
Ruling
The Supreme Court set aside the Commission on Audit Commission Proper Decision No. 2010-116 dated November 15, 2010, and the Resolution dated September 27, 2013. It affirmed the Commission on Audit Legal and Adjudication Office-Corporate Decision No. 2008-011 dated March 4, 2008, holding Isaac S. Puno III, as approving officer, and Rowena B. Tanagon and Glorificacion M. Nocos, as certifying officers, solidarily liable for the return of the disallowed amounts. The petitioners, as payees, were individually liable for the return of the disallowed amounts they respectively received.
Ratio Decidendi
On the issue of grave abuse of discretion, disallowance, and liability: Even if the procedural lapse were disregarded, the Court found that the disallowance and the ruling on liability were supported by law and jurisprudence. The payment of AGCs lacked legal basis as it was not founded on any specific law and was based solely on a resolution of the parent company (BCDA), not BMHI's own board. Corporate acts require approval from the corporation's own board, and a parent company's resolution does not automatically bind its subsidiary. Therefore, the disbursement was illegal and subject to disallowance. The Court reiterated that payees are liable to refund disallowed amounts regardless of good faith, as the disbursement was unlawful and considered paid in error, invoking principles of unjust enrichment and solutio indebiti. Regarding approving and certifying officers, while presumed to act in good faith, their signatures on disbursement vouchers attested to the necessity, validity, and propriety of the expense. In this case, their certification despite the clear absence of a BMHI board resolution authorizing the expense demonstrated a patent disregard for applicable issuances, disputing good faith and the regular performance of their duties, thus justifying their liability. On the issue of finality of the disallowance: The Court found that the petitioners' appeal to the COA Proper was belated. The six-month reglementary period for appeal, as prescribed by Presidential Decree No. 1445 and the Revised Rules of Procedure of the COA, is reckoned from the receipt of the notice of disallowance. An appeal to the Director merely tolls the running of this period, and the remainder of the six months must be used to elevate the case to the COA Proper. In this case, the petitioners had already exhausted the six-month period to appeal to the Director, and thus, their subsequent appeal to the COA Proper was filed out of time, rendering the Director's ruling final and executory. On the merits of the disallowance and liability: Even if the procedural lapse were disregarded, the Court found that the disallowance and the ruling on liability were supported by law and jurisprudence. The payment of AGCs lacked legal basis as it was not founded on any specific law and was based solely on a resolution of the parent company (BCDA), not BMHI's own board. Corporate acts require approval from the corporation's own board, and a parent company's resolution does not automatically bind its subsidiary. Therefore, the disbursement was illegal and subject to disallowance.
Main Doctrine
The Supreme Court affirmed the disallowance of Annual Gift Checks (AGCs) paid by Bases Conversion and Development Authority (BCDA) Management and Holdings, Inc. (BMHI) for lack of legal basis and requisite board approval. The Court held that BMHI's own board, not its parent company BCDA's board, must approve such disbursements. Furthermore, the Court ruled that the disallowance had attained finality due to the petitioners' failure to perfect their appeal to the Commission on Audit Proper within the reglementary period. Consequently, the payees were held liable to refund the disallowed amounts, consistent with the principles of unjust enrichment and solutio indebiti, while approving and certifying officers were found liable for their patent disregard of applicable issuances, amounting to gross negligence.