G.R. No. 250089 . November 09, 2021.
PHILIPPINE HEALTH INSURANCE CORPORATION, PETITIONER, VS. COMMISSION ON AUDIT AND CHAIRPERSON MICHAEL G. AGUINALDO, RESPONDENTS.

FACTS

The Philippine Health Insurance Corporation (PhilHealth), a government-owned and -controlled corporation (GOCC), assails the Commission on Audit (COA) Decision No. 2015-421 and the subsequent COA en banc Resolution which affirmed the disallowance of various allowances and benefits granted to its officials and employees for the year 2012, totaling P56,577,286.88. The disallowed items included Shuttle Service Allowance, Medical Mission and Critical Allowance, Birthday Gift, Welfare Support Allowance, Educational Assistance, Subsistence Allowance, Laundry Allowance, Christmas Package, Productivity Incentive Allowance, Corporate Transition and Achievement, and several gifts/allowances for contractors. PhilHealth argued that the payments were lawful under the fiscal autonomy granted to it by Section 16(n) of Republic Act No. 7875 (The National Health Insurance Act of 1995), as amended, and were confirmed by former President Gloria Macapagal-Arroyo. It also contended that the benefits were granted in good faith with Board approval. The COA-Corporate Government Sector (COA-CGS) affirmed the disallowance, ruling that PhilHealth’s compensation scheme remained subject to Presidential approval under P.D. No. 1597. The COA Commission Proper initially dismissed PhilHealth’s petition for review as filed out of time, but later denied its motion for reconsideration on the merits.

ISSUE

Whether the COA committed grave abuse of discretion in affirming the disallowance of the various allowances and benefits granted by PhilHealth to its officials and employees for the year 2012.

RULING

The Supreme Court dismissed the petition and affirmed the COA’s disallowance. The Court held that while Section 16(n) of R.A. No. 7875 grants PhilHealth fiscal autonomy, this power is not absolute and must be exercised within the standards and limitations set by law, particularly P.D. No. 1597, which requires the President’s approval upon DBM recommendation for compensation plans. The Court found no proof of such required approval for the disallowed benefits. It also ruled that PhilHealth is not a Government Financial Institution (GFI) entitled to the fiscal autonomy recognized in the Central Bank case. The allowances were not exempt from the Salary Standardization Law. The Shuttle Service Allowance and Birthday Gift, even if under a CNA, were disallowed as they were not the product of negotiated savings as required by relevant rules. The Subsistence and Laundry Allowances were improperly granted, as PhilHealth personnel were not considered “public health workers” under R.A. No. 7305 at the time of the grant. The Welfare Support Allowance was correctly disallowed for lack of legal basis. The approving officers were found liable for the disallowed amounts due to their gross negligence in granting benefits without the requisite legal basis, despite prior COA disallowances. However, the passive recipient employees who received the disallowed amounts in good faith need not refund them, following the principle of solutio indebiti.