G.R. No. L-15743 - Ombe vs. Diga

The case arises from the privatization efforts of the National Power Corporation (NPC) under Republic Act No. 9136 (Electric Power Industry Reform Act or EPIRA).
EPIRA divided the electric power industry into four sectors—generation, transmission, distribution, and supply—and provided for the privatization of NPC’s assets.
Pursuant to EPIRA, two entities were created:

National Transmission Corporation (TRANSCO) to acquire and manage NPC’s transmission assets.
Power Sector Assets and Liabilities Management Corporation (PSALM) to handle NPC’s generation assets and associated liabilities.

As part of the privatization process, TRANSCO’s employees, previously of NPC, were separated from service effective June 30, 2009.
EPIRA, specifically Section 63, provided that affected employees were entitled to separation pay computed as one and one-half month’s salary for every year of government service.
TRANSCO’s Board of Directors was empowered to set the compensation and benefits of its employees, and it issued resolutions implementing an Early Leavers Program to facilitate separation benefits.
Two formulas emerged in the computation:

Basic Salary included the 13th month pay (effectively 1.5-month basic salary).
Length of Service was computed by counting each year of service, with any fraction equal to six months or more treated as one whole year.

TRANSCO President/CEO’s Circular No. 2009-0010 introduced an additional multiplier by crediting “length of service” with an extra 1.5 multiplier.

Macapodi, a legal researcher at TRANSCO, received his separation benefits computed via the modified formula:

Basic salary of P30,150.00 per month with inclusion of the 13th month pay.
Length of service was credited as 61 years (after applying the additional multiplier) instead of his actual 42.97 years.
His separation benefit amounted to P2,988,618.75.

COA Auditor EspaAo, on post-audit, issued Notice of Disallowance (ND TC-10-004(09)) disallowing a portion of Macapodi’s separation benefits amounting to P883,341.63.

The adjustment was made by reverting to the “actual” length of service without any rounding or the extra multiplier.
The rationale was that the additional multiplier resulted in an overpayment not authorized under the EPIRA.

The COA Director denied TRANSCO’s appeal regarding the disallowance, holding that the extra multiplier was unwarranted and without legal basis.
The ruling was subsequently reviewed and affirmed by the COA Proper in Decision No. 2017-154, with modifications related to personal liabilities.
Liability findings included:

The disallowed amount was attributed to the illegal application of an additional multiplier.
While Macapodi, as the payee, was held liable for the excessive amount, the officers (Singson and Ilagan) who verified and certified the payment were also initially implicated.
The Board resolutions were scrutinized, and it was noted that the illegal circular issued by the President/CEO was the root cause of the error.

Whether the COA Proper gravely abused its discretion in issuing the Decision that upheld the disallowance of the excessive separation benefits.

Who among the parties involved, if any, should be held liable for the disallowed excess separation benefit amount.
TRANSCO contended that:

The use of an additional multiplier in the separation pay computation was lawful under RA 1616 on top of the EPIRA formula.
The Board acted within its powers and the management exercised good faith when adopting the board resolutions and subsequent policies.