G.R. No. 217915 . October 12, 2021
THE NATIONAL TOBACCO ADMINISTRATION (NTA), REPRESENTED BY MS. CRISTINA C. LOPEZ, MANAGER, ADMINISTRATIVE DEPARTMENT; MS. MA. TERESA B. LAUDENCIA, MANAGER, FINANCE DEPARTMENT; MR. REYNALDO R. AQUINO, BUDGET OFFICER V, FINANCE DEPARTMENT; AND MS. ELVIRA R. PARAS, HUMAN RESOURCE MANAGEMENT OFFICER V, ADMINISTRATIVE DEPARTMENT, PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.

FACTS

The National Tobacco Administration (NTA), a government-owned and controlled corporation, and the Employees Association of the National Tobacco Administration (EANTA) entered into a Collective Negotiation Agreement (CNA) on March 25, 2010. This 2010 CNA provided for a CNA Signing Incentive of P50,000.00 each for all rank-and-file employees and management officials. Relying on this provision, the NTA National Office and its Isabela Branch Office released these incentives to their employees. The Commission on Audit (COA) issued Notices of Disallowance (NDs) against these payments. For the NTA National Office, ND 10-002(10) and ND 10-006(10) disallowed an aggregate amount of P4,325,000.00, finding a lack of funding source as required under DBM Budget Circular No. 2006-1 and noting that payments to Board of Directors members were improper as they were not rank-and-file personnel. For the NTA-Isabela Branch, ND 2011-10-01 disallowed P1,300,000.00, also for lack of a proper funding source. The COA held various certifying and approving officers, as well as the recipient employees, liable. NTA-National and NTA-Isabela appealed to the COA Director and subsequently to the COA Proper, but their appeals were denied. They then filed the present petitions before the Supreme Court.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the CNA Signing Incentives granted by the National Tobacco Administration to its employees.

RULING

The Supreme Court DISMISSED the petitions and AFFIRMED the assailed Commission on Audit rulings. The Court held that the COA did not commit grave abuse of discretion. The grant of the CNA Signing Incentive had no legal basis. DBM Budget Circular No. 2006-1, which governs the grant of CNA incentives, allows such incentives only if sourced from savings generated from the cost-cutting measures identified in the CNA. The NTA failed to prove that the incentives were paid from such savings. The Court also noted that the 2010 CNA provision for a “CNA Signing Incentive” was essentially a prohibited signing bonus. Furthermore, the incentive was improperly extended to management officials and Board members who are not rank-and-file employees. Following the doctrine of strictissimi juris in the interpretation of provisions granting benefits from public funds, and the rule that disallowed benefits constitute undue enrichment, the approving/certifying officers are solidarily liable for the refund, while the payee-recipients are liable to return the amounts they received, unless they can prove they received the amounts in good faith. The Court also ruled that the disallowance pertaining to ND 10-002(10) had already become final and executory due to NTA’s failure to timely appeal the COA Director’s decision on that specific ND.