Case Summary (G.R. No. 245830)
Background and Legal Framework
On March 13, 2002, the Office of the President, via the Department of Budget and Management (DBM), approved a Uniform Compensation Plan (UCP) for PSALM. In 2007, PSALM sought to implement a compensation plan that was denied by DBM, which instead suggested they create an equitable performance-based incentive package. In 2009, PSALM’s Board approved the CPBI based on a corporate action plan that aimed to reward employees for achievements that exceeded performance targets.
Notice of Disallowance
However, the COA issued Notice of Disallowance No. 10-003-(2009), rejecting the disbursement on grounds that it violated Section 64 of Republic Act No. 9136 (EPIRA Law) and Administrative Order No. 103, which mandates that all benefits and emoluments require presidential approval. The amount granted was deemed excessive, exceeding the permissible limits as outlined in COA regulations.
Appeals and COA Decisions
After initial affirmations of disallowance by COA’s Corporate Government Sector, PSALM appealed to the COA Proper, which dismissed their petition for being filed past the reglementary period. Subsequently, they sought reconsideration, resulting in a modified decision that partially relieved some officers from liability but affirmed the disallowance of the CPBI.
Issues Presented
Petitioners raised several issues before the Supreme Court, primarily arguing violations of their right to due process, designation of CPBI as a reward rather than a benefit requiring approval, and asserting good faith in their actions, given COA's history of prior operational directives.
Court's Ruling on Procedural Issues
The Court addressed procedural challenges, specifically the authorization needed for the OGCC to represent PSALM, ruling that the OGCC’s involvement validated the petition's standing. The Court also found that the lack of an Audit Observation Memorandum did not infringe upon due process rights, noting that due process had been fulfilled through the appeals process with COA.
Substantive Findings
On the substantive issues, the Court found the issuance of the CPBI to be unlawful due to the absence of presidential approval as mandated by both RA 9136 and corresponding administrative orders. The assertion that CPBI was merely an incentive rather than a benefit did not hold, as the laws governing PSALM explicitly encompassed all forms of emoluments under the requirement of approval.
Excessiveness of the CPBI
Additionally, the Court agreed that the amount awarded—equivalent to 5.5 months of basic pay—was excessive and not substantiated by any prior norm or regulation governing allowable incentives, which capped such incentives at th
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Case Overview
- The case involves a petition for certiorari filed by the Power Sector Assets and Liabilities Management Corporation (PSALM) against the Commission on Audit (COA) seeking the reversal of the COA's Decision No. 2015-085 which upheld Notice of Disallowance (ND) No. 10-003-(2009).
- The disallowed amount totaled Php56,604,286.37, which pertained to the grant of Corporate Performance Based Incentive (CPBI) to PSALM officials and employees.
- The petitioners challenged the COA's findings regarding the legality and reasonableness of the CPBI, as well as the due process afforded to them during the audit and disallowance process.
Antecedents
- The basis for PSALM's grant of CPBI stemmed from the approval of a Uniform Compensation Plan by the Office of the President and subsequent recommendations from the Department of Budget and Management (DBM).
- Despite a denied request for a salary increase, PSALM's Board approved a performance-based incentive package in December 2009, citing various corporate accomplishments.
- The COA subsequently issued a Notice of Disallowance, stating the CPBI was illegal due to lack of prior presidential approval and excessive according t