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NATIONAL TRANSMISSION CORPORATION v. COA

FACTS:

This case involves the Petition for Certiorari filed by TRANSCO against the COA's Decision, which upheld the disallowance of excessive separation benefits to Mr. Macapodi, a former employee of TRANSCO. The disallowed amount was P883,341.63.

The case stems from the implementation of the EPIRA, which aimed to reform the electric power industry. As part of the reform, TRANSCO was created to acquire NPC's transmission assets, while PSALM was tasked with privatizing NPC's generation assets. In line with this, PSALM entered into a concession contract with NGCP, leading to the separation of TRANSCO employees.

Separation pay was granted to the affected employees, but TRANSCO's Board had the authority to determine the compensation and benefits. The Board implemented an Early Leavers Program, which included the use of a multiplier in the computation of separation pay.

Macapodi, a legal researcher, received a separation benefit amounting to P2,988,618.75. However, the COA disallowed the payment, deeming it excessive. The COA ruled that TRANSCO employees are entitled to either separation benefits under the EPIRA or retirement benefits under RA 1616, not both. They also stated that the rounding up of fractional years in the computation of length of service has no legal basis. Other persons, including the members of the Board of Directors, were held liable for the disallowed amount.

ISSUES:

  1. Did the COA Proper gravely abuse its discretion in issuing its assailed Decision?

  2. Who shall be liable for the disallowed amount, if any?

  3. Whether Macapodi can be held liable for the disallowed amount.

  4. Whether Singson and Ilagan can be held liable for the disallowed amount.

  5. Whether the Board and/or the President/CEO can be held liable for the disallowed amount.

  6. Whether Circular No. 2009-0010, which incorporated the Length of Service Multiplier into TRANSCO's computation of separation pay, is ultra vires and negligent.

  7. Whether the members of the Board are liable for the illegal disbursement of separation benefits.

RULING:

  1. The COA Proper did not commit grave abuse of discretion, but its ruling was modified as to the liability of the persons involved.

  2. TRANSCO's President and CEO, as well as Macapodi, shall be liable for the illegal disbursement.

  3. Macapodi is liable for the disallowed amount. The liability is grounded on the basic principle that no one can be unjustly enriched by money mistakenly paid to him. Macapodi's liability to return the disallowed amount is not based on the COA rules but on the principle that a person receiving money through mistake has the obligation to return it.

  4. Singson and Ilagan are absolved from liability. They performed their duties based on a superior officer's directive and there is no evidence showing that they performed their duties in bad faith or negligently.

  5. The Board and/or the President/CEO are not liable for the disallowed amount. The root of the illegal disbursement was a circular issued by the President and CEO, not a board resolution. Absent proof of bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties.

  6. The Supreme Court held that Circular No. 2009-0010 is ultra vires and negligent as it directly defied the Electric Power Industry Reform Act (EPIRA). However, since the circular was not issued by the members of the Board but by the President and CEO alone, they are exonerated from liability.

  7. The Court affirmed the Commission on Audit's decision disallowing the excessive and illegal payment of separation benefits, absolving the members of the Board from liability. However, Sabdullah T. Macapodi, the recipient of the disallowed amount, is held civilly liable to return the amount pursuant to the prohibition against unjust enrichment. The Court also noted that the appropriate action may be filed against President and CEO Arthur N. Aguilar, who issued the flawed circular.

PRINCIPLES:

  • Disbursement of government funds contrary to law shall be disallowed, for being an illegal expenditure.

  • Separation benefits for affected employees under the EPIRA should be equal to "one and one-half month salary for every year of service in the government" and should only have three components: base amount, multiplier, and length of service.

  • The power to fix the compensation, allowance, and benefits of TRANSCO employees rests upon its Board, and should be determined via a board resolution.

  • Persons liable for illegal expenditures are those who authorized, incurred, participated, or received the illegal payment, and they shall be jointly and severally liable to the government.

  • The extent of one's liability for each illegal expenditure shall be determined based on the nature of the disallowance/charge, duties and responsibilities or obligations, extent of participation, and amount of damage or loss to the government.

  • No one can be unjustly enriched by money mistakenly paid to him.

  • A person receiving money through mistake has the obligation to return it.

  • Public officers are presumed to have performed their duties regularly and in good faith.

  • Public officers are not personally liable for damages resulting from the performance of official duties in the absence of bad faith or negligence.

  • The issuance of Circular No. 2009-0010, which directly defied the Electric Power Industry Reform Act (EPIRA), is ultra vires and negligent.

  • Unauthorized acts by public officials negate good faith in the performance of duties.

  • The prohibition against unjust enrichment requires the return of disallowed amounts.

  • Liability for illegal disbursement of funds is not imposed on members of the Board when the flawed circular was not issued by them, but by a different official.