G.R. No. 60015 - Chua Peng Hian vs. Court of Appeals

On 25 May 1982, an accident occurred at the Malaya Thermal Plant of the National Power Corporation (NPC) when tube leaks on HPH 5B were confirmed at 2:30 a.m.
After detection, the system was drained and prepared for repair by mechanical maintenance personnel until it was declared safe at 8:45 a.m.
Repair work proceeded until 11:10 a.m. when a leaking tube’s plug gave way, suddenly releasing steam and hot water.

Two employees sustained injuries: Ernesto Pumaloy, an NPC employee, suffered first and second degree burns on his lower body, and Domingo Abodizo, a casual employee of O.P. Landrito’s General Services (OPLGS), incurred similar burns over nearly 70% of his body.
Both injured personnel were first treated at Tanay General Hospital and later transferred for further care, with hospital expenses for Abodizo reaching P53,802.26.

NPC advanced the hospitalization expenses by setting up an account receivable from OPLGS, to be deducted gradually from its billings.
OPLGS, through its manager Ofelia Landrito, requested a refund of the deducted amount via letters dated 30 August 1982 and 6 September 1982.
A memorandum from NPC’s Assistant Chief Legal Counsel, Atty. C.Q. Crucillo (dated 14 September 1982), recommended favorable action on the request, citing legal principles on quasi-delict and referencing Article 2176 of the Civil Code and established doctrines such as “res ipsa loquitor.”
Subsequently, NPC refunded the hospitalization expenses to OPLGS based on the legal opinion rendered by the petitioner (then acting Legal Services Chief and officer-in-charge of the Office of the General Counsel).

In 1989, a Certificate of Settlement and Balances (CSB No. 01-04-83) prepared by the COA’s Unit Auditor disallowed the refund on the ground that under the NPC-OPLGS contract there was no employer-employee relationship between NPC and OPLGS’s employees.
Specific officials were first held liable for the disallowance: Mr. M.V. Villafuerte (Approving Authority), E. Camama and P. Gajasan (Management Examiners) and L. Hermosura (Chief Accountant).
General Counsel Marcelino C. Ilao of the NPC later sought reconsideration of the disallowance, emphasizing the opinion’s legal basis on negligence under quasi-delict.
A series of indorsements and memoranda within the COA’s internal processes ensued—from the initial indorsement by respondent Agustin (22 March 1985) to subsequent indorsements and a 5th indorsement by COA General Counsel Ricardo G. Nepomuceno, Jr.
On 30 June 1986, the COA effectively transmitted a memorandum directing that the disallowance be “booked” in petitioner’s name, thereby including him as jointly and severally liable along with other officials.
A Debit Memorandum was eventually issued on 22 July 1986 against the petitioner’s account with the NPC.

Petitioner (Victoriano) filed a petition on 28 September 1986 seeking annulment and setting aside various COA decisions and indorsements, and requested a writ of preliminary injunction to halt enforcement of these actions.
Petitioner argued that his legal opinion, rendered in the performance of his official duties as officer-in-charge of the Office of the General Counsel under Section 15-A of R.A. No. 6395, was a recommendation and not a final adjudication.
The petition was initially dismissed for tardiness and non-payment of legal fees but was later reinstated upon the petitioner’s motion for reconsideration.
The Office of the Solicitor General, representing respondents, contended that the COA’s audit powers included the authority to disallow such disbursements and hold officials personally liable according to relevant provisions in the Government Auditing Code.

Whether the legal opinion of the petitioner, which was the basis for the disbursement of P53,802.26, precluded the Commission on Audit (COA) from post-auditing and disallowing that disbursement.
Whether the General Counsel of the COA had the authority to decide on the motion for reconsideration regarding the disallowance.
Whether the petitioner should be held personally liable for the disallowed disbursement given that his legal opinion enabled the refund process.