GR 227796; (February, 2018) (Digest)
G.R. No. 227796 . February 20, 2018
NATIONAL TRANSMISSION CORPORATION, PETITIONER, VS. COMMISSION ON AUDIT (COA) AND COA CHAIRPERSON MICHAEL G. AGUINALDO, RESPONDENTS.
FACTS
The National Transmission Corporation (TransCo), a government instrumentality created under the EPIRA Law, underwent privatization, leading to the separation of its employees in 2009. Among them was Alfredo V. Agulto, Jr., a regular employee who received separation benefits. During a post-audit, the COA Supervising Auditor issued a Notice of Disallowance for a portion of Agulto’s benefits amounting to ₱22,965.81. This specific amount corresponded to a period from March 1 to 15, 2004, during which Agulto was engaged under a contractual Service Agreement that explicitly stated his service “is not considered and will not be credited as government service.”
TransCo appealed the disallowance, arguing the payment was lawful under the EPIRA Law, the Corporation Code, and its Board Resolutions. The COA Director partially granted the appeal, exempting Agulto from liability due to good faith but holding the approving officers liable. This decision was elevated for automatic review to the COA Commission Proper (COA-CP).
ISSUE
Whether the COA Commission Proper committed grave abuse of discretion in affirming the disallowance of a portion of Agulto’s separation benefits and in holding him and the TransCo Board of Directors solidarily liable for its refund.
RULING
The Supreme Court found the petition partly meritorious but upheld the COA-CP’s disallowance, ruling it did not commit grave abuse of discretion. The legal logic centers on the strict application of statutory conditions for entitlement to separation benefits under the EPIRA Law. Section 63 of Republic Act No. 9136 , in relation to the implementing rules, specifically limits the grant of such benefits to displaced contractual employees only if their appointments were duly approved or attested to by the Civil Service Commission (CSC).
The Court, citing a prior analogous case (National Transmission Corporation v. Commission on Audit), emphasized that this condition is mandatory. Since TransCo failed to present proof that Agulto’s contractual appointment for the disputed period received the requisite CSC approval or attestation, the corresponding benefits were correctly disallowed. The contractual agreement itself, which expressly denied government service credit, fortified this conclusion. Regarding liability, the Court sustained the COA-CP’s finding of solidary liability for Agulto and the approving Board Members. The defense of good faith in receipt was rejected, as ignorance of the law does not excuse compliance, and the payment constituted an unlawful disbursement of public funds that must be returned. The COA’s decision was thus a valid exercise of its constitutional audit authority, not tainted by grave abuse of discretion.