G.R. No. 205490 and G.R. No. 218177, September 22, 2020
Power Sector Assets and Liabilities Management Corporation represented by Mr. Emmanuel R. Ledesma, Jr., in his capacity as President and Chief Executive Officer, and the concerned and affected officers and employees of PSALM, petitioners, v. Commission on Audit, respondent. (G.R. No. 205490)

Power Sector Assets and Liabilities Management Corporation represented by Ms. Maria Lourdes S. Alzona, in her capacity as Officer-in-Charge, Office of the President and CEO, and the concerned and affected officers and employees of PSALM, petitioners, v. Commission on Audit, respondent. (G.R. No. 218177)

FACTS

The Power Sector Assets and Liabilities Management Corporation (PSALM) granted Medical Assistance Benefits (MAB) to its officers and employees for the years 2008 and 2009. This was based on PSALM Board Resolution No. 06-46 dated August 2, 2006, which approved a Health Maintenance Program pursuant to Civil Service Commission Memorandum Circular No. 33, series of 1997, and Administrative Order No. 402, series of 1998. The program included annual physical examinations, immunization, and the purchase of emergency drugs. Subsequently, Board Resolution No. 07-67 dated October 31, 2007 authorized additional components: purchase of emergency over-the-counter drugs and prescription drugs, dental and optometric medications, and reimbursement of expenses on emergency and special cases. The Commission on Audit (COA) disallowed the 2008 MAB in the amount of P5,702,517.42 and the 2009 MAB in the amount of P5,586,999.60. The COA Commission Proper affirmed the disallowances, ruling that the grant was without legal basis as AO 402 only authorized a medical check-up program, not a medical assistance benefit, and that the benefits were not integrated into PSALM’s Collective Negotiation Agreement. PSALM filed petitions for certiorari assailing the COA decisions.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the Medical Assistance Benefits granted by PSALM to its officers and employees for 2008 and 2009.

RULING

The Supreme Court dismissed the petitions and affirmed the Commission on Audit’s decisions. The Court ruled that the COA did not commit grave abuse of discretion. Administrative Order No. 402 authorized only an annual medical check-up program, not a comprehensive medical assistance benefit that included reimbursement for medicines and other medical services. The PSALM Board Resolutions expanded the benefit beyond what was authorized by law. Furthermore, the grant was not pursuant to a Collective Negotiation Agreement, which could have provided a legal basis for such additional benefits. The disallowance was therefore proper as the expenditures were contrary to law. The approving and certifying officers were held liable for the disallowed amounts, but the recipients who received the benefits in good faith need not refund them.