G.R. No. 218052 , January 26, 2021.
NATIONAL POWER CORPORATION BOARD OF DIRECTORS MESSRS. MARGARITO B. TEVES, RONALDO V. PUNO, JOSE L. ATIENZA, AUGUSTO B. SANTOS, PETER B. FAVILA, ARTHUR C. YAP, ROLANDO G. ANDAYA, FROILAN A. TAMPINCO, AND VARIOUS PAYEES OF THE NATIONAL POWER CORPORATION, PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.

FACTS

On February 1, 2010, the National Power Corporation (NPC) Board of Directors confirmed and ratified Board Resolution No. 2009-72 dated December 18, 2009, which granted Calendar Year 2009 Performance Incentive Benefits (PIB) equivalent to five and one-half monthly basic salary to certain NPC officials and employees. NPC President Froilan A. Tampinco approved NPC Circular No. 2009-58 to implement the grant, resulting in a total disbursement of P327,272,424.91. The COA Audit Team issued a Notice of Suspension on February 15, 2012, questioning the grant for lack of prior presidential approval as required under Administrative Order No. 103 and for being extravagant under COA Circular No. 85-55A, given NPC-SPUG’s net loss of over P2.87 billion in 2009. The NPC management’s justification was deemed insufficient. Consequently, the COA Audit Team issued Notice of Disallowance (ND) No. NPC 12-007 (09,10) on October 15, 2012, disallowing the PIB and holding petitioners liable. Tampinco received the ND on October 23, 2012. Petitioners appealed to the COA Corporate Government Sector (CGS) Cluster 3 on April 11, 2013, arguing the grant was authorized by Memorandum Order No. 198 and that the Board members, as cabinet secretaries, were the President’s alter egos. The COA CGS denied the appeal on February 28, 2014. Petitioners received this decision on March 14, 2014, and filed a Petition for Review before the COA Proper on March 26, 2014. The COA Proper dismissed the petition for being filed out of time in its Decision No. 2015-108 dated April 6, 2015, prompting petitioners to file the instant Petition for Certiorari directly with the Supreme Court.

ISSUE

1. Whether the COA acted with grave abuse of discretion in dismissing the appeal for being filed beyond the reglementary period.
2. Whether the COA acted with grave abuse of discretion in affirming the disallowance.
3. 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

1. On the procedural issue: The Supreme Court ruled that the COA did not commit grave abuse of discretion in dismissing the appeal for being filed out of time. The reglementary period to appeal an ND is six months (180 days) from receipt. Tampinco received the ND on October 23, 2012. Petitioners filed their appeal to the COA CGS on April 11, 2013, using 170 days of the appeal period, leaving only 10 days to appeal an adverse decision to the COA Proper. They received the COA CGS Decision on March 14, 2014, but filed their Petition for Review with the COA Proper on March 26, 2014, which was 12 days later, thereby exceeding the remaining 10-day period. The Court found constructive service of the ND to Tampinco, as head of agency, valid under COA Circular No. 2009-006. The failure to perfect the appeal rendered the ND final and executory.
2. On the merits of the disallowance: The Supreme Court upheld the COA’s disallowance. The grant of PIB lacked the required prior presidential approval. Administrative Order No. 103, which suspended the grant of new or additional benefits, superseded Memorandum Order No. 198. Even assuming MO No. 198 applied, the PIB did not comply with its explicit requirement of being based on a Productivity Enhancement Program (PEP). Furthermore, the grant was deemed extravagant under COA Circular No. 85-55A, as it was given despite NPC incurring a substantial net loss in 2009. The Court rejected the argument that the Board, composed of cabinet secretaries, could act as the President’s alter egos for this purpose, noting that the President’s power to approve bonuses cannot be delegated in such a manner.
3. On the liability to refund: The Supreme Court sustained the COA’s ruling on liability but modified the refund obligations based on good faith. The approving and certifying officers (the NPC Board of Directors and President Tampinco) are solidarily liable to refund the disallowed amounts because they authorized the disbursement despite the clear absence of legal basis, amounting to gross negligence. However, the payee-officials and employees who received the PIB in good faith are liable to refund only the net amount they actually received (after tax withholdings). The Court applied the principle of solutio indebiti under Articles 22 and 2154 of the Civil Code, requiring the return of amounts received without legal right. Good faith, in this context, means receipt based on a belief that the disbursement was lawful, which the payees possessed as they were not in a position to question the Board’s approval.