Singson vs. Commission on Audit

When corporate by-laws expressly limit director compensation to per diems, directors cannot receive additional compensation such as RATA unless the by-laws are properly amended in accordance with Section 48 of the Corporation Code; however, public officers who receive disallowed benefits in good faith and under an honest belief of entitlement, without indicia of bad faith, are not required to refund the same.

The case involves the compensation structure of directors in government-owned and controlled corporations (GOCCs), specifically the interplay between the Corporation Code, corporate by-laws, and constitutional provisions prohibiting double compensation. It addresses whether Representation and Transportation Allowance (RATA) constitutes "compensation" subject to by-law limitations, the applicability of National Compensation Circular (NCC) No. 67 to GOCC directors, and the application of the good faith doctrine in audit disallowance cases.

• The Philippine International Convention Center, Inc. (PICCI) is a government corporation incorporated with the Securities and Exchange Commission (SEC) with the Bangko Sentral ng Pilipinas (BSP) as its sole stockholder.
• Petitioners Gabriel C. Singson, Andre Navato, Edgardo P. Zialcita, Araceli E. Villanueva, Tyrone M. Reyes, Jose Clemente, Jr., Federico Pascual, Alejandra C. Clemente, Albert P. Fenix, Jr., and Melpin A. Gonzaga were members of the PICCI Board of Directors and officials of the BSP.
• Section 8 of the PICCI By-Laws provided that directors shall not receive any salary but shall receive a per diem of P1,000.00 per meeting actually attended, and nothing contained therein shall be construed to preclude any director from serving the Corporation in any capacity and receiving compensation therefor.
• By virtue of BSP Monetary Board Resolution No. 15 dated January 5, 1994, as amended by MB Resolution No. 34 dated January 12, 1994, the BSP granted additional monthly RATA of P1,500.00 to each petitioner as members of the PICCI Board of Directors.
• From January 1996 to December 1998, petitioners received RATA totaling P1,565,000.00 in addition to their per diems.
• Petitioners were also receiving RATA from the BSP by virtue of their positions as BSP officials.
• The Corporate Auditor disallowed the RATA payments on the grounds that they violated Section 8, Article IX-B of the Constitution (prohibition against double compensation) and PICCI By-Laws, and that NCC No. 67 prohibits collection of RATA from more than one source.

• Section 30 of the Corporation Code authorizes stockholders to grant compensation to directors, and since BSP is the sole stockholder of PICCI, the MB Resolution granting RATA was a valid exercise of this authority.
• PICCI is not a national government agency but a GOCC without original charter, hence NCC No. 67 (which applies only to national government officials and employees) does not apply to petitioners.
• The prohibition against double compensation under Section 8, Article IX-B of the Constitution does not apply because RATA is an allowance to defray expenses, not compensation.
• Under the ruling in Association of Dedicated Employees of the Philippine Tourism Authority (ADEPT) v. COA, petitioners enjoy the presumption of good faith and should not be required to refund the amounts received.

• Section 8 of the PICCI By-Laws expressly limits compensation to per diems only, and the principle expression unius est exclusio alterius applies to exclude other forms of compensation such as RATA.
• The grant of RATA under MB Resolution No. 15 had no effect because it failed to comply with the procedural requirements for amending by-laws under Section 48 of the Corporation Code.
• The receipt of RATA from PICCI in addition to RATA from BSP constitutes double compensation prohibited by the Constitution and NCC No. 67.
• Petitioners themselves were authors of the PICCI By-Laws and cannot claim ignorance of the limitation on compensation.
• There is no showing of good faith that would excuse petitioners from refunding the disallowed amounts.

• Procedural:
  • N/A
• Substantive Issues:
  • Whether the grant of RATA to petitioners violated Section 30 of the Corporation Code and the PICCI By-Laws which limited director compensation to per diems only.
  • Whether the receipt of RATA by petitioners, who were also receiving RATA from BSP, constituted prohibited double compensation under Section 8, Article IX-B of the Constitution and NCC No. 67.
  • Whether petitioners must refund the disallowed RATA despite their claim of good faith.

• Procedural:
  • N/A
• Substantive:
  • The grant of RATA violated the PICCI By-Laws. Section 8 of the By-Laws expressly limited compensation to per diems of P1,000.00 per meeting. Under the principle expression unius est exclusio alterius, the express mention of per diems excludes other forms of compensation such as RATA. While Section 30 of the Corporation Code allows stockholders to fix compensation, the PICCI By-Laws had already fixed the compensation at per diems only, and no proper amendment was made under Section 48 of the Corporation Code to authorize additional compensation.
  • There was no double compensation violation. NCC No. 67 applies only to national government officials and employees, not to directors of GOCCs like PICCI which have no original charter. Furthermore, RATA is distinct from salary or per diem—it is an allowance intended to defray expenses deemed unavoidable in the discharge of office, not compensation for services rendered.
  • Petitioners need not refund the RATA. Applying the doctrine in Blaquera v. Alcala and De Jesus v. Commission on Audit, public officers who receive benefits under an honest belief that they are entitled thereto, without any indicia of bad faith, cannot be required to refund the same. Petitioners received the RATA pursuant to a valid Monetary Board Resolution and acted in good faith.

• Expression unius est exclusio alterius — The express mention of one thing in a law (or by-law) means the exclusion of others not expressly mentioned. Applied to hold that the express authorization of per diems in the PICCI By-Laws excluded other forms of compensation such as RATA.
• Good Faith Exception to Refund — Public officers who receive disallowed benefits in the honest belief that they are entitled thereto, without any indicia of bad faith, need not refund the amounts received. This doctrine protects officials who rely on resolutions or orders that appear valid at the time of receipt.
• Distinction Between Compensation and Allowances — RATA is an allowance intended to defray representation and transportation expenses incurred in the discharge of office, distinct from salary or per diem which constitutes compensation for services rendered.

• "The nomenclature for the compensation of the directors used herein is per diems, and not salary or any other words of similar import. Thus, petitioners are allowed to receive only per diems of P1,000.00 for every meeting that they actually attended."
• "RATA is a form of allowance intended to defray expenses deemed unavoidable in the discharge of office. Hence, the RATA is paid only to certain officials who, by the nature of their offices, incur representation and transportation expenses."
• "Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits... Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits."

• Leynes v. Commission on Audit — Interpreted NCC No. 67 as prohibiting only the dual collection of RATA by national officials from the budgets of more than one national agency, and held that the circular does not apply to local government units or GOCCs.
• Blaquera v. Alcala — Established the doctrine that public officials who receive disallowed benefits in good faith need not refund the same.
• Association of Dedicated Employees of the Philippine Tourism Authority (ADEPT) v. Commission on Audit — Cited for the good faith doctrine in allowance cases.
• De Jesus v. Commission on Audit — Applied the good faith doctrine from Blaquera to excuse refund of disallowed allowances.
• TUCP v. National Housing Authority — Cited regarding the scope of civil service coverage limited to corporations with original charters.
• Bengzon v. Drilon — Cited regarding the fiscal autonomy of the Bangko Sentral ng Pilipinas.

• Section 30, Corporation Code — Provides that directors shall not receive any compensation except for reasonable per diems unless fixed in the by-laws or granted by stockholders representing at least a majority of the outstanding capital stock.
• Section 48, Corporation Code — Sets forth the procedural requirements for the amendment or repeal of corporate by-laws.
• Section 8, Article IX-B, Constitution — Prohibits elective or appointive public officers from receiving additional, double, or indirect compensation unless specifically authorized by law.
• NCC No. 67 — Department of Budget and Management circular regulating the grant of Representation and Transportation Allowance to national government officials and employees.