G.R. No. 246173 , June 22, 2021
National Transmission Corporation (TransCo), Petitioner, vs. Commission on Audit [COA], and Hon. Michael G. Aguinaldo, Chairperson, COA Respondents.

FACTS

The National Transmission Corporation (TransCo), a GOCC created under the EPIRA (RA 9136), was privatized via a concession contract awarded to the National Grid Corporation of the Philippines (NGCP). This resulted in the separation of TransCo employees effective June 30, 2009. The TransCo Board of Directors issued Board Resolution Nos. TC 2009-005 and TC 2009-007, granting separation pay computed as: Basic Salary x Length of Service x 1.5. The Board Resolutions defined “Length of Service” such that “A fraction of one (1) year, equivalent to six months or more, shall be considered as one (1) whole year.” This was implemented via Circular No. 2009-0010. The Commission on Audit (COA) issued several Notices of Disallowance (NDs) totaling P51,989,990.91. A portion of this amount, specifically P1,488,278.00, was disallowed because it represented excess payment resulting from the rounding-off of the length of service (where a fraction of six months or more was counted as one whole year). TransCo appealed, arguing the rounding-off was valid under its Board’s power to grant additional benefits. The COA Corporate Government Sector-Cluster 3 partially granted the appeal. Upon automatic review, the COA Proper affirmed the disallowances but modified the liability. It held that the payees need not refund the amounts received in good faith. However, it sustained the solidary liability of the approving and certifying officers for the excess amount of P1,488,278.00 resulting from the rounding-off. TransCo filed this petition, challenging only the disallowance of the P1,488,278.00 excess and the solidary liability of the officers.

ISSUE

1. Did the COA Proper gravely abuse its discretion in affirming the disallowance of the excess payment of separation pay amounting to P1,488,278.00, which resulted from the rounding-off of the fractional length of service equivalent to six months or more to one whole year?
2. If the disallowance is affirmed, did the COA Proper gravely abuse its discretion in holding the approving and certifying officers solidarily liable for the return of such excess payment?

RULING

1. The disallowance was proper. The Supreme Court ruled that the rounding-off scheme had no legal basis. The separation benefits were governed by Section 63 of the EPIRA and its Implementing Rules and Regulations (IRR), which provide a specific formula: one and one-fourth (1.25) month’s salary for every year of service. The EPIRA and its IRR do not authorize rounding-off fractional years of service. While Section 13 of RA 9511 grants the TransCo Board the power to provide “additional and other benefits,” this power is limited by the requirement that such benefits must have a “clear, direct, and reasonable connection” to the purpose of easing the transition for separated employees. The rounding-off scheme, which arbitrarily increased the multiplier, constituted an unwarranted and excessive benefit not contemplated by law. The Court distinguished the cited labor cases (Genuino Ice Company and Shimizu) and Article 287 (now 302) of the Labor Code, as those apply to private sector employees and are not relevant to the computation of separation pay for government corporate personnel under a specific statute like the EPIRA. Therefore, the COA did not gravely abuse its discretion in disallowing the excess payments.
2. The approving and certifying officers are not solidarily liable for the refund. The Supreme Court applied the doctrine of good faith. The officers relied on the Board Resolutions and the implementing Circular issued by the TransCo President, who was authorized by the Board. The disbursement was made pursuant to these official directives. There was no showing that the officers acted with malice, gross negligence, or in bad faith. Following jurisprudence, public officials who act in good faith and upon a belief that they are authorized by law are not personally liable for refund. The liability to return the disallowed amount rests solely on the payees who received the excess. However, since the COA Proper already absolved the payees based on good faith in receiving the benefits, and this finding was not appealed, it has become final. Consequently, no one is liable to refund the disallowed amount of P1,488,278.00. The Petition was partly meritorious; the disallowance was sustained but the liability of the officers was deleted.