G.R. No. 218310 - POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION, REPRESENTED BY MS. LOURDES S. ALZONA, IN HER CAPACITY AS OFFICER-IN-CHARGE, AND IN BEHALF OF THE 37 PSALM OFFICERS AND EMPLOYEES LISTED IN ND 10-002 (2009),[1], VS. COMMISSION ON AUDIT.D E C I S I O N - Supreme Court E-Lib

Ruling

WHEREFORE, foregoing premises considered, this Office DENIES the instant appeal for lack of merit. Accordingly, Notice of Disallowance No. 10-002-(2009) dated March 24, 2010 is hereby affirmed. [11] The COA-CGS explained that the issuance of an AOM is not a prerequisite before an ND can be issued. It took note of a similar transaction subject of another ND where PSALM granted loyalty award to forty nine of its employees in 2010. The COA-CGS held that the CSC Rules on the grant of loyalty award are applicable considering that the criterion used by PSALM was the employees' length of service. Finally, the COA-CGS pointed out that the appealed decision found no indication that the COB for the Special Service Incentive Award was approved by the DBM. [12] Unperturbed, petitioners went to the COA-Commission Proper ( COA-­CP ) through a Petition for Review [13] dated January 12, 2011 reiterating their previous justifications. On August 28, 2014, the COA-CP rendered a Decision denying the petition, the decretal portion of which reads: WHEREFORE , the Petition for Review is hereby DENIED for lack of merit, Accordingly, ASB Decision No. 2011-110 dated July 20, 2011 affirming Notice of Disallowance No. 10-002-(2009) dated March 24,2010 on the payment of gift checks as Special Service Incentive Award in the amount of P751,245.00 is AFFIRMED . [14] In denying the petition, the COA-CP stressed that an AOM is not a pre­requisite before an ND can be issued. Citing COA Circular No. 2009-006 dated September 15, 2009, the COA-CP explained that an AOM is issued when an auditor requires the submission of documents to support its decision. However, when the auditor has sufficient basis to disallow a transaction, he or she can outrightly issue an ND. Further, the COA-CP explained that there was no violation of due process as petitioners were duly accorded ample opportunity to explain the questioned transaction and refute the audit findings against them. [15] As to the grant of special service incentive leave that petitioners claim to have made pursuant to the COB for the year 2009 that was approved by the DBM, the COA-CP stressed that the DBM merely confirmed the current obligations of PSALM for the given year and the confirmation should not be construed as a blanket authority to disregard the laws, rules, and regulations in the use of government funds. [16] On the matter of good faith as a defense to avoid liability, the COA-CP denied the same and applied the principle of solutio indebiti [17] as prescribed in Article 2154 of the New Civil Code as enunciated in GSIS v. COA , [18] whereby a person who receives something by mistake has the duty to return it. Petitioners moved for reconsideration, [19] but the same was denied by the COA-CP in its Resolution dated March 9, 2015. Thus, petitioners elevated the case before this Court through the present petition on certiorari . The Issues I. Whether respondent COA committed grave abuse of discretion amounting to lack or exce