G.R. No. 242342, March 10, 2020,
♦ Decision, Reyes, Jr., [J]
♦ Concurring and Dissenting Opinion, Leonen, [J]

[ G.R. No. 242342, March 10, 2020 ]

NATIONAL POWER CORPORATION BOARD OF DIRECTORS MARGARITO B. TEVES, ROLANDO G. ANDAYA, JR., PETER B. FAVILA, ARTHUR C. YAP, ELEAZAR P. QUINTO, RONALDO V. PUNO, AUGUSTO B. SANTOS, AND FROILAN A. TAMPINCO, PETITIONERS, V. COMMISSION ON AUDIT, RESPONDENT.

CONCURRING AND DISSENTING OPINION

LEONEN, J.:

I concur with the majority that the doctrine of qualified political agency does not apply to a cabinet secretary's act performed in connection with his or her position as an ex officio member of a board. However, I disagree with the ruling directing the employees of the National Power Corporation to return the disallowed benefit.

On September 10, 2009, the Board of Directors of the National Power Corporation, consisting of among others the Secretaries of: (1) Finance; (2) Energy; (3) Budget and Management; (4) Agriculture; (5) Environment and Natural Resources; (6) Interior and Local Government; and (7) Trade and Industry,1 approved Board Resolution No. 2009-52, authorizing the payment of Employee Health and Wellness Program and Related Financial Assistance (EHWPRFA) to qualified officials and employees of the National Power Corporation (NPC). Pursuant to Board Resolution No. 2009-52, all eligible employees shall be given a monthly EHWPRFA in the amount of P5,000.00.2

On post-audit, Notice of Disallowance No. NPC-11-004-10 was issued, disallowing the amount of P27,715,000.00, representing the payment of EHWPRFA for the first quarter of 2010.3 Thereafter, the Audit Team Leader and Supervising Auditor of the Commission on Audit disallowed the amount for lack of legal basis after it was found that the grant of EHWPRFA was a new benefit requiring the President's prior approval.4

On appeal, the Commission on Audit Corporate Government Cluster (COA-CGS) affirmed the Notice of Disallowance.5

Upon a Petition for Review, the Commission on Audit proper upheld the Notice of Disallowance. The Board of Directors of the National Power Corporation moved for reconsideration, which was partially granted in the Commission on Audit's March 15, 2018 Resolution.6

Dissatisfied with the decision, the Board of Directors of the National Power Corporation then filed a Petition for Certiorari before this Court.

Petitioner argues that the Commission on Audit committed grave abuse of discretion in ruling that the grant of EHWPRFA requires the President's prior approval, considering that the Board consists of cabinet secretaries who act as the President's alter ego. It further insists that it is an absurd situation to require the Department of Budget and Management's approval, as it would mean that the board's action can be overridden by one of its members.7

The majority dismissed petitioner's invocation of the alter ego doctrine ruling that the cabinet secretaries' acts performed in connection with their position as ex officio members of the National Power Corporation's Board are not covered by the doctrine of qualified agency.8

I agree.

I

As held in Manalang-Demigillo v. Trade and Investment Development Corp. of the Phils., "[t]he doctrine of qualified political agency essentially postulates that the heads of the various executive departments are the alter egos of the President[.]"9 Acts done by the executive department heads in relation to their duties and functions as such, are presumptively deemed the President's own act, which are valid and binding unless disapproved or reprobated by the Chief Executive,10 thus:

Under this doctrine, which recognizes the establishment of a single executive, "all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person on the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive."11 (Emphasis in the original, citations omitted)

The doctrine of qualified political agency was introduced in the Philippines as a recognition that by reason of the multifarious responsibilities demanding a president's attention, it becomes a necessity for his or her control power to be delegated to the members of his or her cabinet.12 This necessity springs forth from the fact that "the President of the Philippines is the Executive of the Government of the Philippines, and no other."13

In Philippine Institute for Development Studies v. Commission on Audit,14 this Court clarified that the doctrine applies only to the President's executive secretary and other cabinet secretaries.

Nonetheless, the doctrine does not extend to acts of a cabinet secretary performed while sitting as an ex-officio member of a board,15 thus:

The doctrine of qualified political agency essentially postulates that the heads of the various executive departments are the alter egos of the President, and, thus, the actions taken by such heads in the performance of their official duties are deemed the acts of the President unless the President himself should disapprove such acts. This doctrine is in recognition of the fact that in our presidential form of government, all executive organizations are adjuncts of a single Chief Executive; that the heads of the Executive Departments are assistants and agents of the Chief Executive; and that the multiple executive functions of the President as the Chief Executive are performed through the Executive Departments. The doctrine has been adopted here out of practical necessity, considering that the President cannot be expected to personally perform the multifarious functions of the executive office.

But the doctrine of qualified political agency could not be extended to the acts of the Board of Directors of TIDCORP despite some of its members being themselves the appointees of the President to the Cabinet. Under Section 10 of Presidential Decree No. 1080, as further amended by Section 6 of Republic Act No. 8494, the five ex officio members were the Secretary of Finance, the Secretary of Trade and Industry, the Governor of the Bangko Sentral ng Pilipinas, the Director-General of the National Economic and Development Authority, and the Chairman of the Philippine Overseas Construction Board, while the four other members of the Board were the three from the private sector (at least one of whom should come from the export community), who were elected by the ex officio members of the Board for a term of not more than two consecutive years, and the President of TIDCORP who was concurrently the Vice-Chairman of the Board. Such Cabinet members sat on the Board of Directors of TIDCORP ex officio, or by reason of their office or function, not because of their direct appointment to the Board by the President. Evidently, it was the law, not the President, that sat them in the Board.

Under the circumstances, when the members of the Board of Directors effected the assailed 2002 reorganization, they were acting as the responsible members of the Board of Directors of TIDCORP constituted pursuant to Presidential Decree No. 1080, as amended by Republic Act No. 8494, not as the alter egos of the President. We cannot stretch the application of a doctrine that already delegates an enormous amount of power. Also, it is settled that the delegation of power is not to be lightly inferred.16 (Emphasis supplied, citations omitted)

The heads of the various executive departments are appointed by the President to act on his or her behalf on matters relating to his or her executive and administrative functions as Chief Executive of the government. By this reason, the President's alter egos occupy a position that is political by nature and "should be of the President's bosom confidence[.]"17 Necessarily, "their personality is in reality but the projection of that of the President."18

Section 48 of Republic Act No. 9136 otherwise known as the "Electric Power Industry Reform Act of 2001" explicitly provides for the composition and organization of the National Power Board of the National Power Corporation. It states:

SECTION 48. National Power Board of Directors. — Upon the passage of this Act, Section 6 of RA 6395, as amended, and Section 13 of RA 7638, as amended, referring to the composition of the National Power Board of Directors, are hereby repealed and a new Board shall be immediately organized. The new Board shall be composed of the Secretary of Finance as Chairman, with the following as members: the Secretary of Energy, the Secretary of Budget and Management, the Secretary of Agriculture, the Director-General of the National Economic and Development Authority, the Secretary of Environment and Natural Resources, the Secretary of Interior and Local Government, the Secretary of the Department of Trade and Industry, and the President of the National Power Corporation.

A perusal of Section 48 would disclose that the assumption of the heads of the various executive departments of a position in the National Power Board was not made through any express act, nor acquiescence, of the President. The heads of the various executive departments sat as directors in the National Power Board, not by virtue of the President's power of appointment, but by reason of their position and function. In this light, when the members of the National Power Board issued its resolution authorizing the payment of EHWPRFA, they were acting as directors of the National Power Corporation by reason of their position and function, as provided under R.A. No. 9136.19

II

In modifying the Commission on Audit's decision and requiring the passive recipients to return the disallowed amount, the majority decreed that the passive recipients cannot invoke good faith on the ground that "they are deemed trustees of a constructive trust for having received benefits they were never entitled to in the first place."20 The majority cited Dubongco v. Commission on Audit,21 Rotoras v. Commission on Audit22 and Department of Public Works and Highways v. Commission on Audit23 where this Court applied the principle of unjust enrichment and directed the recipients to return the disallowed amount.

With all due respect, I am of the opinion that the doctrine in Dubongco, Department of Public Works and Highways and Rotoras were incorrectly applied.

The principle of unjust enrichment provided under Article 22 of the Civil Code states that "[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." It exists "when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience."24

In Dubongco, the benefit involved a Collective Negotiation Agreement (CNA) incentive sourced from the Comprehensive Agrarian Reform Program (CARP) fund. The employee-beneficiaries were required to return the disallowed benefit on the ground that they participated in the grant and approval of the benefit. By participating in the CNA incentive's negotiation and approval, the employees could not have feigned ignorance on the necessity of it being sourced from the Maintenance and Other Operating Expenses (MOOE) allotment savings:

Hence, it can be gleaned that unlike ordinary monetary benefits granted by the government, CNA Incentives require the participation of the employees who are. the intended beneficiaries. The employees indirectly participate through the negotiation between the government agency and the employees' collective negotiation representative and directly, through the approval of the CNA by the majority of the rank-and-file employees in the negotiating unit. Thus, the employees' participation in the negotiation and approval of the CNA, whether direct or indirect, allows them to acquire knowledge as to the prerequisites for the valid release of the CNA Incentive. They could not feign ignorance of the requirement that CNA Incentive must be sourced from savings from released MOOE.25

Similarly, in Department of Public Works and Highways, Region IV-A v. Commission on Audit, the amount disallowed represented the collective negotiation agreement incentive granted as a result of the collective negotiation between Department of Public Works and Highways and the employees' collective negotiation representative, thus:

The obligation of the DPWH IV-A employees to reimburse the amounts they received becomes more obvious when the nature of CNA Incentive as negotiated benefit is considered.

It must be recalled that CNA Incentive is granted as a form of reward to motivate employees to exert more effort toward higher productivity and better performance. However, before any CNA Incentive may be granted, the CNA on which it is based must first be negotiated, approved, and implemented. . . .

. . . .

From the provisions of the aforecited rule, there are two necessary steps which must be undertaken before the CNA Incentive could be released to the government employees: first, the negotiation between the government agency and the employees' collective negotiation representative; and second, the approval by the majority of the rank-and-file employees in the negotiating unit. In the first step, the government employees concerned participates through their duly-elected representative; in the second, the rank-and-file employees participate directly. Thus, unlike ordinary monetary benefits granted by the government, the CNA Incentive involve the participation of the employees who are intended to be the beneficiaries thereof.

In this case, the DPWH IV-A employees' participation in the negotiation and approval of the CNA, whether direct or indirect, certainly gives them the necessary information to know the requirements for the valid release of the CNA incentive. Verily, when they received the subject benefit, they must have known that they were undeserving of it.26 (Emphasis supplied)

The pronouncement in Dubongco was reiterated and further clarified in Rotoras wherein this Court made a categorical statement that rank-and-file employees can no longer invoke the defense of good faith when the disallowed benefit was the result of a collective negotiation agreement:

The defense of good faith is, therefore, no longer available to members of governing boards and officials who have approved the disallowed allowance or benefit. Neither would the defense be available to the rank and file should the allowance or benefit be the subject of collective negotiation agreement negotiations. Furthermore, the rank and file's obligation to return shall be limited only to what they have actually received. They may, subject to the Commission on Audit's approval, agree to the terms of payment for the return of the disallowed funds. For the approving board members or officers, however, the nature of the obligation to return — whether it be solidary or not — depends on the circumstances.27 (Emphasis supplied.)

Unlike in the abovementioned cases, the issuance of Board Resolution No. 2009-52—granting the EHWPRFA—was not the result of collective negotiation between NPC and the employees' association. The NPC employees had neither direct nor indirect participation in the benefit's approval, which would have alerted them of the grant's lack of legal basis. The NPC employees were passive recipients who received the benefit in an honest belief that they are validly entitled to it. For this reason, the NPC employees should not be required to return the amount they received in good faith.

Finally, neither is the case of Government Service Insurance System v. Commission on Audit28 applicable.1âшphi1 In that case, this Court applied the principle of unjust enrichment and required the payees to return the retirement benefits they received under the GSIS RFP. This Court rejected the payees' plea of good faith due to the nature of the benefit involved. It decreed that unlike cash gifts or other fringe benefits which are given as a form of additional compensation, retirement benefits are given as a reward for the services rendered by the separated employee. Its purpose is to aid the employees during their twilight years, thus:

While it is true, as claimed by the Movants Federico Pascual, et al., that based on prevailing jurisprudence, disallowed benefits received in good faith need not be refunded, the case before us may be distinguished from all the cases cited by Movants Federico Pascual, et al. because the monies involved here are retirement benefits.

Retirement benefits belong to a different class of benefits. All the cases cited by the Movants Federico Pascual, et al. involved benefits such as cash gifts, representation allowances, rice subsidies, uniform allowances, per diems, transportation allowances, and the like. The foregoing allowances or fringe benefits are given in addition to one's salary, either to reimburse him for expenses he might have incurred in relation to his work, or as a form of supplementary compensation. On the other hand, retirement benefits are given to one who is separated from employment either voluntarily or compulsorily. Such benefits, subject to certain requisites imposed by law and/or contract, are given to the employee on the assumption that he can no longer work. They are also given as a form of reward for the services he had rendered. The purpose is not to enrich him but to help him during his non-productive years.

Our Decision dated October 11, 2011 does not preclude Movants Federico Pascual, et al. from receiving retirement benefits provided by existing retirement laws. What they are prohibited from getting are the additional benefits under the GSIS RFP, which we found to have emanated from a void and illegal board resolution. To allow the payees to retain the disallowed benefits would amount to their unjust enrichment to the prejudice of the GSIS, whose avowed purpose is to maintain its actuarial solvency to finance the retirement, disability, and life insurance benefits of its members.29 (Emphasis in the original, citations omitted)

ACCORDINGLY, I submit that the Petition for Certiorari be DISMISSED.



Footnotes

1 Rollo, p. 11.

2 Ponencia, p. 2.

3 Id.

4 Rollo, pp. 18-19.

5 Ponencia, p. 2.

6 Id. at 2-3.

7 Id. at 4.

8 Id. at 7-8.

9 705 Phil. 331, 347 (2013) [Per J. Bersamin, En Banc].

10 Id.

11 Carpio v. Executive Secretary, 283 Phil. 196, 204-205 ( 1992) [Per J. Paras, En Banc].

12 Philippine Institute for Development Studies v. Commission on Audit, G.R. No. 212022, August 20, 2019, [Per J. Leonen, En Banc].

13 Villena v. Secretary of the Interior, 67 Phil. 451, 464 ( 1939) [Per J. Laurel, En Banc].

14 G.R. No. 212022, August 20, 2019, [Per J. Leonen, En Banc].

15 Manalang-Demigillo v. Trade Investment Corporation, 705 Phil. 331, 348-349 (2013) [Per J. Bersamin, En Banc].

16 Id. at 347-349.

17 Villena v. Secretary of the Interior, 67 Phil. 451, 464 (1939) [Per J. Laurel, En Banc.]

18 Id.

19 Republic Act No. 9136 (2001), sec. 48.

20 Ponencia, p. 10.

21 Dubongco v. Commission on Audit, G.R. No. 237813, March 5, 2019, [Per J. Reyes, Jr., En Banc].

22 Rotoras v. Commission on Audit, G.R. No. 211999, August 20, 2019, [Per J. Leonen, En Banc].

23 Department of Public Works and Highways, Region IV-A v. Commission on Audit, G.R. No. 237987, March 19, 2019, [Per J. Reyes, Jr., En Banc].

24 Reyes v. Lim, 456 Phil. 1, 14 (2003) [Per J. Carpio, First Division] citing 66 Am. Jur. 20 Restitution and Implied Contracts § 2 (1973).

25 Dubongco v. Commission on Audit, G.R. No. 237813, March 5, 2019, [Per J. Reyes, Jr., En Banc].

26 G.R. No. 237987, March 19, 2019, [Per J. Reyes, Jr. , En Banc].

27 Rotoras v. Commission on Audit, G.R. No. 211999, August 20, 2019, [Per J. Leonen, En Banc].

28 Government System Insurance System v. Commission on Audit, 694 Phil. 518 (2012) [Per J. Leonardo-­De Castro, En Banc].

29 Id. at 524-525.


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