Title
National Power Corp. vs. Commission on Audit
Case
G.R. No. 242342
Decision Date
Mar 10, 2020
NPC's EHWPRFA cash benefit disallowed by COA for lack of presidential approval; SC upheld, requiring refund by all recipients due to unjust enrichment.
national power corp
commission on audit
supreme court
A

Case Summary (G.R. No. 242342)

Factual Background and Nature of the Benefit

The NPC Board adopted Board Resolution No. 2009-52 authorizing EHWPRFA, a cash benefit amounting to P5,000 per month per qualified official/employee, to be disbursed quarterly. COA post-audit issued a Notice of Disallowance for the payment of the EHWPRFA for the first quarter of 2010 on the ground that the benefit was new and had not received prior approval from the Office of the President as required by existing rules (notably M.O. No. 20).

Procedural History

After issuance of the COA Notice of Disallowance, NPC appealed to COA Corporate Government Sector-Cluster 3, which affirmed the ND. The COA proper likewise affirmed the ND in its Feb. 16, 2017 Decision. NPC’s motion for reconsideration prompted a Mar. 15, 2018 COA Resolution that partially granted reconsideration by absolving passive recipients (those who only received payments) but maintaining liability for officials who authorized or approved the grant. NPC then filed a petition for certiorari before the Supreme Court challenging COA’s rulings.

Issues Presented to the Court

Two principal issues were posed: (I) whether COA gravely abused its discretion in ruling that EHWPRFA was a new benefit; and (II) whether COA gravely abused its discretion in ruling that the grant of EHWPRFA required presidential approval (i.e., approval through DBM/Office of the President under then-applicable issuances).

COA’s Rationale and Position

COA characterized EHWPRFA as a new cash benefit distinct from previously authorized non-cash wellness benefits under the NPC Star Program and the CHBP (Circular No. 2000-55). COA relied on M.O. No. 20 and A.O. No. 103, which (1) suspended the grant of new salary increases and benefits, and (2) required presidential approval for any increase in salary or compensation or the grant of new/additional benefits by GOCCs exempt from standard salary laws. COA also rejected NPC’s invocation of the doctrine of qualified political agency on the ground that cabinet secretaries serving on the NPC Board acted ex officio as board members, not as the President’s alter egos.

Standard of Review and COA’s Deference

The Court reiterated that COA, as constitutionally mandated guardian of public funds, has broad authority to determine and disallow irregular, unnecessary, excessive, or unconscionable expenditures. COA’s findings are generally accorded respect and finality when supported by substantial evidence. Relief against COA requires a showing of lack or excess of jurisdiction or grave abuse of discretion (i.e., decisions not grounded in law/evidence but in caprice or whim). The petitioner bore the burden to prove grave abuse; the Court found petitioners did not meet that burden.

Analysis on Whether EHWPRFA Was a New Benefit

The Court compared the CHBP (Circular No. 2000-55) benefits to the EHWPRFA. CHBP provided reimbursements, medical assistance (limited to certain diseases), annual physical exams and executive check-ups — none of which comprised a straightforward cash disbursement to employees irrespective of medical need. EHWPRFA, by contrast, was a cash benefit of P5,000 monthly distributable quarterly to employees regardless of health condition. The Court therefore concluded EHWPRFA was a new benefit and not merely an increase in amounts under CHBP.

Analysis on Requirement of Presidential Approval and Application of M.O. No. 20 / A.O. No. 103

The Court observed that both M.O. No. 20 and A.O. No. 103 either suspended grant of new/increased benefits or required presidential approval for increases in salary/benefits. These issuances covered not only new benefits but also increases to existing benefits. Hence, even if EHWPRFA were an augmentation rather than a novel type of benefit, the increase still required presidential imprimatur through the DBM. Because EHWPRFA was granted without securing prior presidential approval, the grant was held contrary to existing laws, rules and regulations.

Doctrine of Qualified Political Agency and Ex Officio Board Membership

NPC argued that the presence and concurrence of the DBM Secretary on the NPC Board meant presidential approval was effectively secured under the doctrine of qualified political agency (department secretaries as the President’s alter egos). The Court rejected this argument, relying on established precedent distinguishing actions taken by cabinet secretaries in their departmental capacity from actions taken by them in an ex officio capacity on corporate/government board(s). Section 48 of RA 9136 put the secretaries on the NPC Board by law (ex officio), not by presidential appointment to the Board; therefore their acts as board members do not automatically carry the President’s imprimatur. The alter ego doctrine does not extend to ex officio acts of cabinet secretaries sitting as board members.

Unjust Enrichment, Constructive Trust, and Obligation to Refund — Majority Reasoning

On the question of refund, the Supreme Court found the COA erred in exempting passive recipients from refunding the disallowed benefit. The Court applied the doctrine of unjust enrichment and prior jurisprudence (e.g., Dubongco, DPWH, Rotoras, GSIS v. COA) holding that recipients who received benefits without legal basis are, in equity, trustees of a constructive trust and are obliged to return the amounts they received even if they acted in good faith. The Court concluded that NPC employees who received EHWPRFA lacked a valid legal claim to it (grant was void for lack of presidential approval) and therefore must reimburse what they actually received, subject to modes of repayment (salary deduction or other methods COA considers proper).

Modification of COA Ruling and Final Disposition

Accordingly, the Supreme Court denied the petition for certiorari insofar as it sought to set aside COA’s disallowance on the ground of grave abuse, affirmed COA’s determinations that EHWPRFA was a new benefit requiring presidential approval, and modified COA’s March 15, 2018 Resolution by holding that both the certifying/approving officers and the e

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