G.R. No. 213453. November 29, 2016.
PHILIPPINE HEALTH INSURANCE CORPORATION, PETITIONER, VS. COMMISSION ON AUDIT, MA. GRACIA PULIDO TAN, CHAIRPERSON; AND JANET D. NACION, DIRECTOR IV, RESPONDENTS.

FACTS

The Philippine Health Insurance Corporation (PHIC) granted several allowances to its officers and employees, which were subsequently disallowed by the Commission on Audit (COA) via a Notice of Disallowance. The disallowed benefits included: a Collective Negotiation Agreement Signing Bonus (CNASB) of ₱5,000 each, granted in 2001 upon the extension of a CNA; a Welfare Support Assistance (WESA) of ₱4,000 each, granted in lieu of subsistence and laundry allowances under the Magna Carta of Public Health Workers; a Labor Management Relations Gratuity (LMRG); and Cost of Living Allowance (COLA) paid to personnel absorbed from a predecessor agency. COA disallowed the CNASB citing jurisprudence that invalidated such bonuses, the WESA for lack of required approval from the Office of the President, the LMRG as a duplication of another performance bonus, and the back COLA as an obligation of the predecessor agency, not PHIC.
PHIC appealed, arguing its fiscal autonomy under its charter and asserting the legality of the grants. For the CNASB, PHIC contended it was paid in 2001 under a valid DBM circular, before the Supreme Court jurisprudence disallowing it was promulgated. For the WESA, PHIC argued the grant was valid as the Health Secretary, sitting as the Ex-Officio Chairperson of the PHIC Board, participated in the board resolution approving it. The COA Commission Proper sustained the disallowance, prompting PHIC to file this petition for certiorari.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the CNASB, WESA, LMRG, and back COLA granted by PHIC to its personnel.

RULING

The Supreme Court partially granted the petition. The Court upheld COA’s disallowance of the LMRG and the back COLA. The LMRG was correctly disallowed as it constituted an additional grant outside standardized compensation, lacking legal basis and amounting to an unauthorized incentive. The back COLA was properly disallowed as the obligation properly pertained to the predecessor agency, the Philippine Medical Care Commission, for services rendered prior to the personnel’s absorption by PHIC.
However, the Court ruled that COA gravely abused its discretion in disallowing the CNASB and the WESA. Regarding the CNASB, the Court emphasized the principle of prospective application of judicial decisions. The CNASB was granted in 2001 under DBM Circular No. 2000-19, which was then operative and allowed such bonuses. The Supreme Court decision in SSS v. COA, which declared such bonuses invalid, was promulgated only in 2002. Applying this ruling retroactively to invalidate PHIC’s 2001 grant was a grave abuse of discretion. For the WESA, the Court found the grant had legal basis. The Magna Carta of Public Health Workers mandates the grant of subsistence and laundry allowances, with the rate to be determined by the Health Secretary. The Court held that the Health Secretary’s participation as the Ex-Officio Chairperson of the PHIC Board in unanimously approving the board resolution granting the WESA substantially complied with this legal requirement. Therefore, the disallowance of the WESA for lack of the Health Secretary’s approval was incorrect. The recipients of the disallowed LMRG and back COLA, however, must refund the amounts received, as these payments were made without legal authority