G.R. No. 244816, June 29, 2021
Melpin A. Gonzaga, for himself, and on behalf of Eloisa A. Lim, Shirley S. Ong, Socorro R. Quirino, Araceli E. Villanueva, Ruby C. Tuason, Victoria C. Berciles and Antonio A. Bernardo, Petitioners, vs. Commission on Audit, Respondent.

FACTS

The Philippine International Convention Center, Inc. (PICCI) is a government-owned or controlled corporation (GOCC) with the Bangko Sentral ng Pilipinas (BSP) as its sole stockholder, created under Presidential Decree (P.D.) No. 520. Its 2000 Amended By-Laws provided that directors “shall not receive any salary for their services but shall receive a per diem and allowances in such amounts as may be fixed by a majority of all the members of the Board of Directors… and approved by the Monetary Board.” For Calendar Years (CYs) 2010 and 2011, petitioners Eloisa A. Lim, Shirley S. Ong, Socorro R. Quirino, Araceli E. Villanueva, and Ruby C. Tuason, as members of the PICCI Board of Directors, received Representation Allowance, Medical Reimbursement, Christmas Bonus, and Anniversary Bonus totaling P882,902.06. Petitioner Melpin A. Gonzaga (Corporate Secretary) approved the payment of the January 2011 Representation Allowance; petitioner Antonio A. Bernardo, Jr. (Comptroller) certified the expenses as necessary and lawful; and petitioner Victoria C. Berciles (Director, Administrative Department) approved the payments. The Commission on Audit (COA) issued Notices of Disallowance (NDs) against these payments because PICCI incurred net losses in CYs 2009 and 2010, and the grants violated Section 30 of the Corporation Code, which limits directors’ yearly compensation to ten percent of the corporation’s net income before income tax during the preceding year. Petitioners appealed, arguing that Section 30 applied only to close corporations, the allowances were approved by the Monetary Board, and they received the benefits in good faith. The COA Director and the COA Commission Proper (COA-CP) upheld the disallowances. The COA-CP ruled that PICCI, as a GOCC, is governed by suppletory application of the Corporation Code under P.D. No. 520, and the subject benefits constituted additional compensation prohibited when the corporation had no net income. It also cited DBM Circular Letter No. 2002-02 stating that board members are not salaried officials and thus not entitled to personnel benefits like Christmas bonuses.

ISSUE

Whether the COA-CP committed grave abuse of discretion in affirming the disallowance of the Representation Allowance, Medical Reimbursement, Christmas Bonus, and Anniversary Bonus granted to the members of the PICCI Board of Directors for CYs 2010 and 2011.

RULING

No, the COA-CP did not commit grave abuse of discretion. The Supreme Court denied the petition and affirmed the COA-CP’s Decision and Resolution.
The Court held that PICCI is a GOCC whose funds are public in character. Under Section 6 of P.D. No. 520, the Corporation Code applies suppletorily to PICCI. Section 30 of the Corporation Code explicitly provides that directors’ compensation, beyond reasonable per diems, is allowable only if the corporation had net income before income tax in the preceding year. Since PICCI incurred net losses in CYs 2009 and 2010, the grant of additional benefits (Representation Allowance, Medical Reimbursement, Christmas Bonus, Anniversary Bonus) for CYs 2010 and 2011 had no legal basis. These benefits constituted additional compensation prohibited by law under the circumstances.
The Court rejected petitioners’ arguments. First, Section 30 of the Corporation Code applies to all corporations, not just close corporations. Second, while the Monetary Board approved PICCI’s budget, such approval did not legalize disbursements that contravene specific statutory limits like Section 30. Third, the Amended By-Laws provision allowing “per diem and allowances” must be read in conjunction with, and cannot override, the substantive restriction in Section 30 of the Corporation Code. Fourth, as a GOCC subsidiary of BSP, PICCI is subject to DBM rules, and DBM Circular Letter No. 2002-02 clarifies that members of the Board of Directors are not considered government employees entitled to personnel benefits like Christmas bonuses.
On the liability for refund, the Court applied the rules on return set forth in Madera v. Commission on Audit. Petitioners who are members of the Board of Directors (Lim, Ong, Quirino, Villanueva, Tuason) are recipients who must return the disallowed amounts. Petitioner Gonzaga, who approved the payment, and petitioner Berciles, who approved the payment as head of the department, are approving officers who acted in good faith but with negligence; thus, they are solidarily liable to return only if the recipients fail to do so. Petitioner Bernardo, Jr., as certifying officer, is not liable as his certification pertained to the completeness of supporting documents, not the legality of the expenditure. Good faith was not a valid defense to excuse return, as the violation of a clear legal rule (Section 30, Corporation Code) was patent.