G.R. No. 213200 , September 19, 2017
Nayong Pilipino Foundation, Inc. (NPFI) vs. Chairperson Ma. Gracia M. Pulido Tan, et al., Commission on Audit (COA)

FACTS

The Nayong Pilipino Foundation, Inc. (NPFI), a government-owned and controlled corporation, granted an Anniversary Bonus and an Extra Cash Gift to its officers and employees in 2004, totaling Php 108,000.00 and Php 90,500.00 respectively, in commemoration of its founding anniversary. It also paid honoraria to members of its Bids and Awards Committee and Technical Working Group amounting to Php 132,000.00. The Commission on Audit (COA) issued Audit Observation Memoranda, finding the Anniversary Bonus and Extra Cash Gift to lack the required legal basis and presidential approval, and the honoraria to lack the necessary exemption from the Department of Budget and Management (DBM). The DBM later opined that NPFI’s anniversary should be reckoned from its establishment as a public corporation in 1972, not as a private entity in 1969, making the 2004 grant premature. COA subsequently issued a Notice of Disallowance for the total amount of Php 330,500.00. NPFI’s appeals were denied by the COA Adjudication and Settlement Board and the Commission Proper.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the Anniversary Bonus, Extra Cash Gift, and honoraria granted by NPFI.

RULING

The Supreme Court dismissed the petition and affirmed the COA’s disallowance. On the Anniversary Bonus, the Court upheld the DBM’s determination that NPFI’s reckoning date as a government entity is November 6, 1972, pursuant to its charter, Presidential Decree No. 37. Therefore, its 35th anniversary would fall in 2007, not 2004. The grant in 2004 was thus unauthorized under Administrative Order No. 263 and the relevant budget circulars, which require the bonus to be given only on the actual milestone year of a government agency. The Court rejected NPFI’s claim of good faith, stating that ignorance of the correct reckoning date does not excuse non-compliance with clear rules. Regarding the Extra Cash Gift, the Court found no specific legal authority or presidential approval for such a grant, as required by law and jurisprudence. Budget Circular No. 2002-4, cited by NPFI, applies to year-end bonuses and cash gifts, not to an additional “extra” cash gift absent explicit authorization. For the honoraria, the Court sustained COA’s finding that NPFI failed to secure the required DBM exemption to exceed the statutory ceiling, rendering the excess payments illegal. The Court emphasized that claims of pending motions for reconsideration before the DBM do not bar COA from exercising its constitutional audit authority. All approving and receiving officers were held solidarily liable for the refund, as the disbursements were made without legal basis.