Republic of the Philippines
G.R. No. 232199 | December 01, 2020
National Transmission Corporation, Petitioner,
Commission On Audit And Coa Chairperson Michael G. Aguinaldo, Respondent.
This resolves the Petition for Certiorari under Rule 65, in relation to Rule 64, of the Rules of Court filed by the relational Transmission Corporation (TRANSCO) assailing the Decision No. 2017-154 dated May 18, 2017 of the Commission on Audit (COA). In the assailed Decision, the COA Proper upheld the Notice of Disallowance No. (ND) TC-10-004(09) dated June 16, 2010 on the payment of excessive separation benefits to Mr. Sabdullah T. Macapodi (Macapodi) amounting to P883,341.63.
Congress enacted Republic Act No. (RA) 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), to install reforms in the electric power industry which is composed of four sectors, viz.: generation, transmission, distribution, and supply. The EPIRA paved the way for the privatization of National Power Corporation (NPC)’s assets and liabilities.
Pursuant to this objective, the EPIRA created the following entities: (1) TRANSCO, which shall acquire NPC’s transmission assets and be responsible “for the planning, construction and centralized operation and maintenance of its high voltage transmission facilities, including grid interconnections and ancillary services;” and (2) Power Sector Assets and Liabilities Management Corporation (PSALM), a government-owned and controlled corporation (GOCC), “which shall take ownership of all existing NPC generation assets, liabilities, [independent power producer] contracts, real estate and all other disposable assets.”
PSALM was tasked to initiate TRANSCO’s privatization and “award, in open competitive bidding, the transmission facilities, including grid interconnections and ancillary services to a qualified party either through an outright sale or a concession contract.” In view of this, PSALM entered into a 25-year concession contract with the National Grid Corporation of the Philippines (NGCP).
In turn, Congress enacted RA 9511, granting a franchise to NGCP to take over TRANSCO’s transmission functions and assets which it had previously acquired from NPC. Upon the concession contract’s formal implementation, TRANSCO’s employees were separated from service, effective June 30, 2009.
The displacement or separation of NPC and TRANSCO employees was part and parcel of the EPIRA’s objective of privatizing NPC’s generation and transmission assets. Thus, the law granted separation pay to those employees affected by the electric power industry reorganization, viz.:
Sec. 63. Separation Benefits of Officials and Employees of Affected Agencies. — National Government employees displaced or separated from the service as a result of the restructuring of the electricity industry and privatization of NPC assets pursuant to this Act, shall be entitled to either a separation pay and other benefits in accordance with existing laws, rules or regulations or be entitled to avail of the privileges provided under a separation plan which shall be one and one-half month salary for every year of service in the government: Provided, however, That those who avail of such privileges shall start their government service anew if absorbed by any government-owned successor company. In no case shall there be any diminution of benefits under the separation plan until the full implementation of the restructuring and privatization.
Displaced or separated personnel as a result of the privatization, if qualified, shall be given preference in the hiring of the manpower requirements of the privatized companies.
The salaries of employees of NPC shall continue to be exempt from the coverage of Republic Act No. 6758, otherwise known as “The Salary Standardization Act.”
With respect to employees who are not related by NPC, the Government, through the Department of Labor and Employment, shall endeavor to implement re-training, job counseling, and job placement programs. (Italics supplied.)
While the EPIRA provided the computation for separation pay, the law empowered TRANSCO’s Board of Directors (Board) to fix the compensation, allowance, and benefits of TRANSCO employees. Pursuant to this, thru Resolution No. 2009-005 dated February 26, 2009, the Board implemented an Early Leavers Program to facilitate the payment of separation pay due to employees separated from TRANSCO. In Resolution No. TC 2009-007 dated February 26, 2009, the Board reiterated the separation pay computation provided by the EPIRA, viz.:
Separation Pay = Basic Salary x Length of Service x 1.5
- Basic Salary shall include 13th month pay (equivalent to 1 1/2 Monthly Basic Salary [Sec. 3 of Rule 33 of the EPIRA IRR])
- Length of Service – multiplier is defined as number of years of government service. A fraction of one (1) year, equivalent to six months or more, shall be considered as one (1) whole year.
The Separation Benefit package shall be exempt from taxes in accordance with the relevant prevailing Bureau of Internal Revenue (BIR) laws, rule: and regulations.
Subsequently, TRANSCO President and Chief Executive Officer Arthur N. Aguilar issued Circular No. 2009-0010 dated May 6, 2009 setting forth the rules and regulations in implementing the separation program. In addition to the 1.5 multiplier to be applied to the basic salary as provided by the EPIRA (Basic Salary Multiplier), Circular No. 2009-0010 granted another 1.5 multiplier to be applied in the computation of length of service (Length of Service Multiplier), to wit:
3.2 Separation Pay Formula. x x x
x x x x
On exceptional cases, employees who came from government offices other than NPC, NEA or ERB, their length of service shall be converted based in the following:
First 20 years
21 years to 30 years
31 years and above
When TRANSCO implemented its separation program, Macapodi was a legal researcher receiving a basic salary of P30,150.00 per month. On October 21, 2009, as payment for his separation benefits, TRANSCO issued a check payable to Macapodi amounting to P2,988,618.75, computed as follows:
|Add 13th month pay (basic salary divided by 12)|
|Multiply by length of service|
|Multiply by Basic Salary Multiplier under the|
|Amount paid to Macapodi|
TRANSCO credited Macapodi with 61 years of service, by applying the Length of Service Multiplier to his 42.97032 actual service years.
However, upon post-audit, COA Supervising Auditor Corazon V. Españo (COA Auditor Españo) issued ND TC-10-004(09) dated June 16, 2010, addressed to the TRANSCO President and CEO, disallowing a portion of Macapodi’s separation benefits amounting to P883,341.63 computed as follows:
|Add 13th month pay (basic salary divided by 12)|
|Multiply by Actual length of service|
|Multiply by Basic Salary Multiplier under the EPIRA|
|Adjusted amount of separation pay|
|Less Amount paid to Macapodi|
In arriving at the adjusted amount of separation pay, COA Auditor Españo used Macapodi’s actual length of service. Españo did not round up any fractional figures or multiply such length of service with 1.5. Españo reasoned out that “the adoption of multipliers [in addition to the] 1.5 monthly salary per year of service” effectively increased the employee’s length of service.
As a result, COA Auditor Españo held Macapodi liable for receiving an amount of separation benefits in excess of what is provided under the law. Apart from Macapodi, Españo also found the following individuals liable for the disallowed amount: (1) Susana H. Singson (Singson), Division Manager, General Accounting and Financial Reporting, for verifying that the disbursement voucher covering the subject check was supported by the necessary documents; and (2) Jose Mari M. Ilagan (Ilagan), Manager, Administrative Department, for certifying that the subject expense was necessary, lawful, and incurred under his direct supervision.
TRANSCO, through its Vice President and General Counsel Noel Z. De Leon, appealed the disallowance to the COA Director.
Ruling of the COA Director
In Corporate Government Sector – Cluster 3 Decision No. 12 dated August 4, 2014, COA Director IV Rufina S. Laquindanum (Laquindanum) denied TRANSCO’s appeal. in affirming the ND, Laquindanum reiteraced that applying “the multiplier under RA 1616 on top of the 1.5 monthly salary per year of service provided under [EPIRA] in the computation of Mr. Macapodi’s separation benefits is unwarranted and without legal basis.”
Aggrieved, TRANSCO brought the matter before the COA Proper via a petition for review.
Ruling of the COA Proper
In the assailed Decision dated May 18, 2017, the COA Proper upheld the disallowance, viz.:
WHEREFORE, premises considered, the Petition for Review of National Transmission Corporation, Quezon City, through counsel, is DENIED for lack of merit. Accordingly, Notice of Disallowance (ND) No. TC-10-004(09) dated June 16, 2010, on the payment of excessive separation benefits to Mr. Sabdullah T. Macapodi in the total amount of P883,341.63, is hereby AFFIRMED with MODIFICATION, in that Mr. Macapodi need not refund the said amount.
The other persons named liable in the ND shall remain liable, including the members of the Board of Directors, who authorized the payment of the disallowed separation benefits.
The Audit Team Leader and Supervising Auditor are instructed to issue a Supplemental ND to include the members of the Board of Directors, who approved the resolutions authorizing said retirement/separation payment scheme, as persons liable.
The COA Proper ruled as follows: first, as ruled in Herrera, et al. v. National Power Commission, et al., employees separated from TRANSCO are entitled to either separation benefits under the EPIRA or retirement benefits under RA 1616, but not to both. Second, TRANSCO’s policy allowing the fraction of one year to be considered as one whole year (round up) in the computation of length of service does not have legal basic. Third, the following are jointly and severally liable for the amount disallowed: (a) Singson and Ilagan as approving officers; and (b) TRANSCO’s Board for issuing resolutions allowing the excessive payment of separation benefits. However, Macapodi is no longer required to refund the amount, he being a mere passive recipient thereof.
Undaunted, TRANSCO, represented by the Office of the General Counsel, filed the present petition.
The Court shall resolve two 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?
TRANSCO insists that: (a) the use of multipliers under RA 1616 in addition to the EPIRA rate (i.e., 1.5 monthly salary per year of service) was lawful; and (b) the Board and management exercised utmost good faith, and acted within their powers in issuing the subject board resolutions.
The Court s Ruling
The Court holds that the COA Proper did not commit grave abuse of discretion, but modifies its ruling as to the liability of the persons involved.
The COA properly disallowed a portion of the separation benefits paid to Macapodi for violating the EPIRA.
The law mandates that “[n]o money shall be paid out of any public treasury or depository except in pursuance of an appropriation law or other specific statutory authority.” A disbursement of government funds that is contrary to law shall be disallowed, for being an illegal expenditure. The overpayment of Macapodi’s separation benefits to the extent of P883,341.63 is illegal because it violated Sections 63 and 12(c) of the EPIRA.
First, Section 63 of the EPIRA provides that an affected employee’s separation pay shall be equal to “one and one-half month salary for every year of service in the government.” In other words, the formula only has three components, viz.: (a) base amount consisting of the monthly salary; (b) multiplier of one and one-half or 1.5; and (c) length of service.
Contrary to the EPIRA formula, which has only one multiplier, TRANSCO’s formula uses two multipliers: (a) the Length of Service Multiplier crediting Macapodi with 61.0000 instead of only 42.9703 years; and (b) the Basic Salary Multiplier under the EPIRA, granting him a base amount equal to one and one-half of his basic salary.
And second, under Section 12(c) of the EPIRA, the power to fix the compensation, allowance, and benefits of TRANSCO employees rests upon its Board. In other words, to be valid, salaries and benefits of TRANSCO employees must be determined via a board resolution. However, to recall, the Length of Service Multiplier was incorporated to TRANSCO’s separation pay computation thru Circular No. 2009-0010 issued by TRANSCO’s President and CEO.
Certainly, the Length of Service Multiplier results in excessive benefits and was prescribed without the requisite authority, in direct contravention of the EPIRA. Thus, the COA properly disallowed the payment of P883,341.63 for being illegal.
TRANSCO’s President and CEO and Macapodi shall be liable for the illegal disbursement.
Book VI, Chapter V, Section 43 of Executive Order No. 292, or the Administrative Code of 1987, enumerates the persons liable for an illegal expenditure, to wit:
Sec. 43. Liability for Illegal Expenditures. – Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall he void. Every payment made in violation of said provisions shall he illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.
Thus, the general rule is that “public officials who are directly responsible for, or participated in making the illegal expenditures, as well as those who actually received the amounts therefrom shall be solidarity liable for their reimbursement.”
In turn, the COA determines the extent of one’s liability for each illegal expenditure of follows:
Sec. 16. Determination of Persons Responsible/Liable. —
16.1 The Liability of public officers and other persons for audit disallowances/charges shall be determined on the basis of (a) the nature of the disallowance/charge; (b) the duties and responsibilities or obligations of officers/employees concerned; (c) the extent of their participation in the disallowed/charged transaction; and (d) the amount of damage or loss to the government, thus:
x x x
Public officers who certify as to the necessity, legality and availability of funds or adequacy of documents shall be liable according to their respective
Public officers who approve or authorize expenditures shall be liable for losses arising out of their negligence or failure to exercise the diligence of a good father of a family.
x x x
The payee of an expenditure shall be personally liable for a disallowance where the ground thereof is his failure to submit the required documents, and the Auditor is convinced that the disallowed transaction did not occur or has no basis in fact.
Based on these rules, the following may be held jointly and severally liable for the overpayment of separation benefits in this case: (1) Macapodi, as the payee or recipient of the amount; (2) Singson and Ilagan, as the officers who approved and certified the specific transaction, respectively; and (3) the members of TRANSCO’s Board and/or its President and CEO, as the officials who issued directives to pay separation benefits.
1. Macapodi’s liability
The Court holds Macapodi liable for the disallowed amount.
Notably, the CO A Rules and Regulations on Settlement of Accounts holds a payee personally liable for a disallowed amount, provided the following conditions concur: (a) The payee failed to submit required documents, and (b) the disallowance was grounded on such failure. However, wt cannot impute liability to Macapodi based on this rule. The disallowance here was grounded on the expenditure’s illegality (i.e., violating the EPIRA), not on Macapodi’s failure to submit documents.
Macapodi’s liability to return the disallowed amount is grounded not on the COA rules as cited above, but on the basic principle that no one can be unjustly enriched by money mistakenly paid to him.
To be sure, a government instrumentality’s disbursement of salaries that contravenes the law is a payment through error or mistake. A person who receives such erroneous payment has the quasi-contractual obligation to return it because no one shall be unjustly enriched at the expense of another, especially if public funds are at stake. The law constitutes the person receiving money through mistake a trustee of a constructive trust for the benefit of the person from whom the property comes, which, in this case, is the government.
That the amount was already released to the employee through no fault of his own does not diminish the payment’s patent illegality or cure its defect. His obligation to return arose because the payment was a clear mistake. He has no right to retain the amount, irrespective of his good faith in receiving it.
In the recent case of Madera v. Commission on Audit (Madera), the Court “returned lo the basic premise that the responsibility to return is a civil obligation to which fundamental civil law principles, such as unjust enrichment and ‘solutio indebiti‘ apply regardless of the good faith of passive recipients.” In the absence of bona fide exceptions manifest on the record, the Court shall remain stringent in appreciating the defense of good faith when determining a payee’s liability over disallowed expenses.
Following the Court’s pronouncement in Madera, it is clear that we shall no longer settle with the lax notion that a payee’s receipt, coupled by an honest belief that he is entitled to the payment, amounts to good faith, which exonerates him from his obligation. To be sure, the Court’s decision to excuse a civil servant from his liability to refund the salaries clearly received by virtue of a patently illegal directive to disburse and, thus, by mistake must rest on “truly exceptional circumstances.”
2. Singson and Ilagan’s liability
The Court absolves Singson and Ilagan from liability.
In the present case, Singson verified that the disbursement voucher covering the subject check was supported by the necessary documents. On the other hand, Ilagan certified that subject expense was necessary, lawful, and incurred under his direct supervision.
The general rule is that a verifier and/or certifier of an illegal disbursement is/are liable for audit disallowances under the above-quoted provisions of Sections 16.1.2 and 16.1.3 of COA Circular No. 006-09, respectively. However, this liability does not “automatically attach simply because one took part in the disbursement approval process.”
Significantly, a verifiers/certifier’s authority to approve a disbursement is subordinate only to a higher official’s authority to direct or instruct the payment per se. Upon the higher authority’s instruction to disburse funds, a verifier shall evaluate the disbursement “in accordance with the applicable internal control procedures and rules mandated by the COA and/or the government instrumentality itself.” On the other hand, a certifier would independently review the transaction for purposes of attesting “that funds are available for the disbursement, x x x that the corresponding allotment may be charged, and x x x that the expense/disbursement is valid, authorized, and supported by sufficient evidence.”
Thus, according to the nature of their participation, Singson and Ilagan performed their respective duties based on a superior officer’s directive. At that time, they approved the disbursement in the honest belief that it was supported by a valid exercise of corporate powers.
Inasmuch as these personnel are public officers, they are presumed to have performed their duties regularly and in good faith. Absent proof of “bad faith or malice, public officers are not personally liable for damages resulting from the performance of official duties.” In the present case, ‘there is no evidence showing that either Ilagan or Singson performed their duties in bad faith or negligently. Thus, there is no reason for the Court to dispel the presumption of regularity and good faith favoring them.
3. The Board and/or the President/CEO’s liability
The root of the illegal disbursement in the present case is a mere circular issued by the President and CEO, not a board resolution. A closer look at the Factual antecedents would reveal that the board resolutions related to TRANSCO’s separation program echoed the same formula under the EPIRA. It was only Circular No. 2009-0010 that incorporated the Length of Service Multiplier into TRANSCO’s computation of separation pay.
Inasmuch as Circular No. 2009-0010 directly defied the EPIRA, the issuance thereof was ultra vires and negligent. That the act was unauthorized negates good faith in the performance of duties. As the flawed circular was, however, not issued by the members of the Board but by President and CEO Arthur N. Aguilar alone, who was not made a party to this case, We must modify the COA Proper Decision in that the former are exonerated from liability.
To summarize, the COA properly disallowed the excessive and illegal payment of separation benefits to Macapodi in the amount of P883,341.63. However, the COA should not have excused him from reimbursing it. He is civilly liable to return the disallowed amount pursuant to the legal prohibition against unjust enrichment. In addition, the President and CEO’s Circular No. 2009-0010, not Board Resolution No. TC 2009-007, caused the illegal disbursement by prescribing a computation violate of the law. Consequently, the members of the Board are not civilly liable, without prejudice to the filing of the appropriate action against President and CEO Arthur N. Aguilar.
WHEREFORE, the COA Proper Decision No. 2017-154 dated May 18, 2017 is AFFIRMED WITH MODIFICATION in that Sabdullah T. Macapodi is liable to return the disallowed amount of P883,341.63 via a mode of payment deemed just and proper by the Commission on Audit This pronouncement is without prejudice to the institution of the appropriate action against Arthur N. Aguilar, the official responsible for the illegal disbursement.
The members of the Board, Susana H. Singson, and Jose Mari M. Ilagan are absolved from liability.
Peralta, C. J., Caguioa, Gesmundo, Hernando, Carandang, Lazaro-Javier, Zalameda, Lopez, Gaerlan, and Rosario, JJ., concur.
Perlas-Bernabe, J., on official leave. Left the concurring vote.
Leonen, and Delos Santos, JJ., on official leave.
Caguioa, J., Please See Concurring Opinion.
Please take notice that on December 1, 2020 a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on February 2, 2021 at 11:05 a.m.
Very truly yours,
(SGD) EDGAR O. ARICHETA
Clerk of Court
 Rollo, pp. 3-20.
 Id. at 22-28; penned by Commission on Audit (COA) Chairperson Michael G. Aguinaldo with Commissioners Jose A. Fabia and Isabel D. Agito, concurring.
 Id. at 27.
 Approved on June 8, 2001.
 Section 5 of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA) reads:
SECTION 5. Organization. — The electric power industry shall be divided into four (4) sectors, namely: generation; transmission; distribution and supply.
 Section 8, EPIRA reads:
SECTION 8. Creation of the National Transmission Company. — There is hereby created a National Transmission Corporation, hereinafter referred to as TRANSCO, which shall assume the electrical transmission functions of the National Power Corporation (NPC), and have the lowers and functions hereinafter granted. The TRANSCO shall assume the authority and responsibility of NPC for the planning, construction and centralized operation and maintenance of its high voltage transmission facilities, including grid interconnections and ancillary services.
Within six (6) months from the effectivity of this Act, the transmission and subtransmission facilities of NPC and all other assets related to transmission operations, including the nationwide franchise of NPC for the operation of the transmission system and the grid, shall be transferred to the TRANSCO. The TRANSCO shall be wholly owned by the Power Sector Assets and Liabilities Management Corporation (PSALM Corp.)
The subtransmission functions and assets shall be segregated from the transmission functions, assets and liabilities for transparency and disposal: Provided, That the subtransmission assets shall be operated and maintained by TRANSCO until their disposal to qualified distribution utilities which are in a position to take over the responsibility for operating, maintaining upgrading, and expanding said assets. All transmission and subtransmission related liabilities of NPC shall be transferred to and assumed by the PSALM Corp.
TRANSCO shall negotiate with and thereafter transfer such functions, assets, and associated liabilities to the qualified distribution utility or utilities connected to such subtransmission facilities not later than two (2) years from the effectivity of this Act or the start of open access, whichever comes earlier: Provided, That in the case of electric cooperatives, the TRANSCO shall grant concessional financing over a period of twenty (20) years: Provided, however, That the installment payments to TRANSCO for the acquisition of subtransmission facilities shall be given first priority by the electric cooperatives out of the net income derived from such facilities. The TRANSCO shall determine the disposal value of the subtransmission asset based or, the revenue potential of such assets.
In case of disagreement in valuation, procedures, ownership participation and other issues, the ERC shall resolve such issues.
The take over by a distribution utility of any subtransmission asset shall not cause a diminution of service and quality to the end-users. Where there are two or more connected distribution utilities, the consortium or juridical entity shall be formed by and composed of all of them and thereafter shall be granted a franchise to operate the subtransmission assets by the ERC.
The subscription rights of each distribution utility involved shall be proportionate to their load requirements unless otherwise agreed by the parties.
Aside from the PSALM Corp., TRANSCO and connected distribution utilities, no third party shall be allowed ownership or management participation, in whole or in part, in such subtransmission entity.
The TRANSCO may exercise the power of eminent domain subject to the requirements of the Constitution and existing laws. Except as provided herein, no person, company or entity other than the TRANSCO shall own any transmission facilities.
Prior to the transfer of the transmission functions by NPC to TRANSCO, and before the promulgation of the Grid Code, ERC shall ensure that NPC shall provide to all electric power industry participants open and non-discriminatory access to its transmission system. Any violation thereof shall be subject to the fines and penalties imposed herein.
 Section 49, EPIRA reads:
SECTION 49. Creation of Power Sector Assets and Liabilities Management Corporation. — There s hereby created a government-owned and -controlled corporation to be known as the “Power Sector Assets and Liabilities Management Corporation”, hereinafter referred to as the “PSALM Corp.”, which shall lake ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All outstanding obligations of the NPC arising from loans, issuances of bonds, securities and other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp. within one hundred eighty (180) days from the approval of this Act.
 Section 21, EPIRA reads.
SECTION 21. TRANSCO Privatization. — Within six (6) months from the effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement by the Joint Power Commission and the approval of the President of the Philippines. The President of the Philippines thereafter shall direct PSALM Corp. to award, in open competitive bidding, the transmission facilities, including grid interconnections and ancillary services to a qualified party either through an outright sale or a concession contract. The buyer/concessionaire shall be responsible for the improvement, expansion, operation, and/or maintenance of its transmission assets and the operation of any related business. The award shall result in maximum present value of proceeds to the national government. In case a concession contract is awarded, the concessionaire shall have a contract period of twenty-five (25) years, subject to review and renewal for a maximum period of another twenty-five (25) years.
In any case, the awardee shall comply with the Grid Code and the TDP as approved. The sale agreement/concession contract shall include, but not limited to, the provision for performance and financial guarantees or any other covenants which the national government may require. Failure to comply with such obligations shall result in the imposition of appropriate sanctions or penalties by the ERC.
The awardee shall be financially and technically capable, with proven domestic and/or international experience and expertise as a leading transmission system operator. Such experience must be with a transmission system of comparable capacity and coverage as the Philippines.
 A consortium composed of Monte Oro Grid Resources Corporation, Calaca High Power Corporation, and State Grid Corporation of China, rollo, p. 50.
 Entitled, “An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity Through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for Other Purposes,” Approved on December 1, 2008.
 Section 1 of Republic Ac. No. 9511 provides, “[s]ubject to the previsions of the Constitution and applicable laws, rules and regulations, and subject to the terms and conditions of the concession agreement and other documents executed with the Nationa1 Transmission Corporation (TRANSCO) and the Power Sector Assets and Liabilities Management Corporation (PSALM) pursuant to Section 21 of Republic Act No. 9136, which are not inconsistent herewith, there is hereby granted to the National Grid Corporation of the Philippines, hereunder referred to as the Grantee, its successors or assigns, a franchise to operate, manage and maintain, and in connection therewith, to engage in the business of conveying or transmitting electricity through high voltage back-bone system of interconnected transmission lines, substation and related facilities, systems operations, and other activities that are necessary to support the safe and reliable operation of a transmission system and to construct, install, finance, manage, improve, expand, operate, maintain, rehabilitate, repair and refurbish the present nationwide transmission system of the Republic of the Philippines. The Grantee shall continue to operate and maintain the subtransmission systems which have not been disposed by TRANSCO. Likewise, the Grantee is authorized to engage in ancillary business and any related business which maximizes utilization of its assets such as, but not limited to, telecommunications system, pursuant to Section 20 of Republic Act No. 9136. The scope of the franchise shall be nationwide in accordance with the Transmission Development Plan, subject to amendments or modifications of the said Plan, as may be approved by the Department of Energy of the Republic of the Philippines.”
 Section 12(c), EPIRA reads:
SECTION 12. Powers and Duties of the Board. — The following are the powers of the Board:
x x x
To organize, re-organize, and determine the organizational structure and staffing pattern of TRANSCO; abolish and create offices and positions; fix the number of its officers and employees; transfer and re-align such officers and personnel; fix their compensation,
allowance, and benefits;
 Rollo, p. 51.
 Id. at 82-86.
 Id. at 83.
 Id. at 87-90.
 Id. at 88.
 Id. at 29.
 Id. 30-31.
 Then incumbent Presides, and CEO Moslemen T. Macarambon, id. at 30.
 Id. at 48.
 Id. at 49-54.
 Copies of the COA Director’s ruling were served upon TRANSCO’s President, General Counsel, and the payee. Id. at 54.
 Id. at 53.
 Id. at 55-70.
 Id. at 22-28.
 Id. at 27.
 623 Phil. 383 (2009).
 Entitled, “An Act Further Amending Section Twelve of Commonwealth Act Numbered One hundred Eighty-Six, As Amended, By Prescribing Two Other Modes of Retirement and For Other Purposes,” approved on May 31, 1957.
 Rollo, p. 24.
 Id. at 25.
 Id. at 27.
 Id. at 17.
 Presidential Decree No. 1445 otherwise known as the “Government Auditing Code of the Philippines,” [June 11, 1978].
 Section 10.1 and 10.1.1, Rules and Regulations on Settlement of Accounts, as prescribed by COA Circular No. 006-09, [September 15, 2009]:
SECTION 10. Notice of Disallowance (ND). –
The Auditor shall issue an ND-Form 3 — for transactions which are irregular/unnecessary excessive and extravagant as defined in COA Circular No. 85-55A as well as other COA issuances, and those which are illegal and unconscionable.
10.1.1 Illegal expenditures are expenditures which are contrary to law.
 See NPC Drivers and Mechanics Assn. (NPC DAMA), et al. v. The National Power Corporation (NPC), et al., 821 Phil. 62.
 Section 12(c), EPIRA reads:
SECTION 12. Powers and Duties of the Board. — The following fire the powers of the Board:
x x x
(c) To organize, re-organize, and determine the organizational structure and staffing pattern of TRANSCO; abolish and create offices and positions; fix the number of its officers and employees, transfer and re-align such officers and personnel; fix their compensation, allowance, and benefits;
 See Phil. Health Insurance Corp. v. Commision on Audit, 801 Phil. 427 (2016).
 Rules and Regulations on Settlement of Accounts, as prescribed in COA Circular No. 006-09, [September 15, 2009].
 Article 2154 of the Civil Code of the Philippines (Civil Code) provides, “[i]f something, is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arrives.”
 Article 2154 of the Civil Code, id.
 Article 22 of the Civil Code provides, “[e]very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.”
 See Philippine National Bank v. Court of Appeals, 291 Phil. 356 (1993). See also Article 1456, Civil Code.
 See Dubongco v. Commission on Audit, G.R. No. 237813, March 5, 2019.
 G.R. No. 244128, September 8, 2020.
 Concurring Opinion of Associate Justice Henri Jean Paul B. Inting in Madera v. Commission on Audit, id.
 Concurring and Dissenting Opinion of Associate Justice Arturo B. Brion in TESDA v. COA Chairperson Tan, et al., 729 Phil. 60, 92 (2014).
 Concurring Opinion of Associate Justice Henri Jean Paul B. Inting in Madera v. Commission on Audit, supra note 46.
 Concurring and Dissenting Opinion of Associate Justice Arturo B. Brion in TESDA v. COA, supra note 48.
 Section 3(m), Rule 131, RULES OF COURT.
 Blaquera v. Hon. Alcala, 356 Phil. 678. 765 (1998), citing Mayor Yulo v. Civil Service Commission, 292 Phil. 465, 472 (1993).
I write to express and explain my concurrence with the ponencia. I agree that the Commission on Audit (COA) correctly disallowed the payment of excess separation benefits; consequently, the payee and any authorizing or certifying officer clearly shown to have acted in bad faith or gross negligence should be solidarily liable for the amount of the disallowance.
I understand the facts of the case as follows:
Pursuant to the privatization of the National Transmission Corporation’s (NTC) transmission assets under the Electric Power Industry Reform Act (EPIRA), the NTC Board of Directors (BOD) — which is empowered to fix the compensation and benefits of its employees under Section 12(c) of the EPIRA — issued a resolution authorizing the payment of separation benefits following the formula under Section 63 of the same law. Section 63 provided the formula as follows: ((monthly salary x 1.5) x years of service).
Subsequently, the NTC President/CEO (Chief Executive Officer) issued a Circular modifying the calculation for years of service as a multiplier. The resulting formula under the Circular was thus: ((monthly salary x 1.5) x (years of service x 1.5)). This led to the overpayment of around P883,341.63 to the payee Sabdullah T. Macapodi (Macapodi) who was credited 61 instead of 42.9 years of service.
The resident auditor disallowed the payment of separation benefits to the extent of the excess based on the EPIRA formula. The payee and the verifying/certifying persons were held liable for the disallowed amount. This was affirmed by the COA Director.
The COA Commission Proper affirmed the Notice of Disallowance (ND) with modification. It ruled that the payee no longer needs to return the amount, the verifying/certifying officers are liable and that a supplemental ND should be issued holding the BOD liable.
The ponencia partly granted the petition. It held that the COA correctly disallowed the payment because it violated Sections 63 and 12(c) of the EPIRA. In determining the liability of the persons identified in the ND, it held the payee responsible to return based on Dubongco v. COA (Dubongco); absolved the verifying and certifying officers who merely relied upon the directives of their superiors, and the BOD who followed the EPIRA formula; and, it found the President/CEO who introduced the unlawful multiplier via a Circular as responsible either criminally or administratively, as the case may be.
This disposition applies Madera v. COA, (Madera) and has my full concurrence. In Madera, the Court promulgated the Rules on Return, thus:
E. The Rules on Return
In view of the foregoing discussion, the Court pronounces:
- If a Notice of Disallowance is set aside by the Court, no return shall be required from any of the persons held liable therein.
- If a Notice of Disallowance is upheld, the rules on return are as follows:
- Approving and certifying officers who acted in good faith, in regular performance of official functions, and with the diligence of a good father of the family are not civilly liable to return consistent with Section 38 of the Administrative Code of 1987.
- Approving and certifying officers who are clearly shown to have acted in bad faith, malice, or gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable to return only the net disallowed amount which, as discussed herein, excludes amounts excused under the following sections 2c and 2d.
- Recipients — whether approving or certifying officers or mere passive recipients — are liable to return the disallowed amounts respectively received by them, unless they are able to show that the amounts they received were genuinely given in consideration of services rendered.
- d. The Court may likewise excuse the return of recipients based on undue prejudice, social justice considerations, and other bona fide exceptions as it may determine on a case to case basis.
These rules were based on the newer precedents including Dubongco DPWH v. COA, Chozas v. COA, and Rotoras v. COA, (Rotoras) which ordered the return of the disallowed amounts by the payees — including passive recipients — on the basis of solutio indebiti and unjust enrichment. To reiterate, through these new precedents and most comprehensively in Madera, “the Court x x x has returned to the basic premise that the responsibility to return is a civil obligation to which fundamental civil law principles, such as unjust enrichment and solutio indebiti apply regardless of the good faith of passive recipients.”
Limiting the application of the principles of solutio indebiti and unjust enrichment to certain kinds of benefits (or under a specific set of facts as in Dubongco and Rotoras) or treating the good faith of a payee as justification to retain disallowed amounts have been abandoned with the promulgation of Madera, where the Court unanimously resolved to fix the liability of payees to return amounts unduly received except if the refund will result in unjust enrichment on the part of government.
Thus, I agree with the ponencia that the payee is liable to return the excess separation benefits he received — consistent with Rule 2(c) of Madera. Verily, I fully share the esteemed ponente’s position that good faith is not an effective defense to excuse recipients from the obligation to refund the disallowed amount, and the payee’s seemingly passive stance and lack of privity to the government instrumentality’s internal policy-making and disbursement processes cannot justify holding onto or keeping an amount that was never his in the first place, as he shared during the deliberations.
This also fully squares with the concept of payee participation in Madera, thus:
As may be gleaned from Section 16 of the RRSA, “the extent of their participation [or involvement] in the disallowed/charged transaction” is one of the determinants for liability. The Court has, in the past, taken this to mean that payees should be absolved from liability for lack of participation in the approval and disbursement process. However, under the MCSB and the RRSA, a “transaction” is defined as “[a]n event or condition the recognition of which gives rise to an entry in the accounting records.” To a certain extent, therefore, payees always do have an indirect “involvement” and “participation” in the transaction where the benefits they received are disallowed because the accounting recognition of the release of funds and their mere receipt thereof results in the debit against government funds in the agency’s account and a credit in the payees’ favor. Notably, when the COA includes payees as persons liable in an ND, the nature of their participation is stated as “received payment.”
Consistent with this, “the amount of damage or loss [suffered by] the government [in the disallowed transaction],” another determinant of liability, is also indirectly attributable to payees by their mere receipt of the disallowed funds. This is because the loss incurred by the government stated in the ND as the disallowed amount corresponds to the amounts received by the payees. Thus, cogent with the application of civil law principles on unjust enrichment and solutio indebiti, the return by payees primarily rests upon this conception of a payee’s undue receipt of amounts as recognized within the government auditing framework. In this regard, it bears repeating that the extent of liability of a payee who is a passive recipient is only with respect to the transaction where he participated or was involved in, i.e., only to the extent of the amount that he unduly received. This limitation on the scope of a payee’s participation as only corresponding to the amount he received therefore forecloses the possibility that a passive recipient may be held solidarily liable with approving/certifying officers beyond the amount that he individually received.
It also bears noting that the amount of excess separation benefits received by the payee Macapodi can by no means be considered de minimis or a reasonable amount that the Court can excuse for any “exempting circumstance” under Rule 2(d).
Proceeding to the question of the liability of officers, I submit that only officers who were clearly shown to have acted in bad faith or with gross negligence should be held solidarily liable for the disallowed amount, as provided in Rule 2(b) of Madera.
Accordingly, I vote to PARTLY GRANT the petition. The payee is liable to refund the properly disallowed excess separation benefits he received. Only officers clearly shown to have acted in bad faith or with gross negligence should be held solidarily liable therefor.
 G.R. No. 237813, March 5, 2019.
 G.R. No. 244128, September 8, 2020.
 Id. at 35-36.
 G.R. No. 237987, March 19, 2019.
 G.R. Nos. 226319 & 235031, October 8, 2019.
 G.R. No. 211999, August 20, 2019.
 Madera v. COA, supra note 2, at 33-34.
 Sections 3.19 and 4.28 of the COA Circular No. 94-001 dated January 20, 1994 and the COA Circular No. 2009-006 dated September 15, 2009 (RRSA), respectively.
 The RRSA. Section 16.1.
 Madera v. COA, supra note 2, at 30-31.
 To borrow J. Inting’s phrase in his Concurring Opinion, p. 11 in Madera.