G.R. No. 249061 , May 21, 2024
Philippine Health Insurance Corporation, Petitioner, vs. Commission on Audit, Michael G. Aguinaldo, Chairperson, Respondent.

FACTS

Between 2009 and 2011, the PhilHealth Regional Office No. V (ROV) granted various benefits and allowances totaling PHP 4,146,213.85 to its job order contractors and project-based contractors. These benefits included transportation allowance, sustenance gift, nominal gift, productivity enhancement incentive, special events gift, project completion incentive, efficiency gift, alleviation gift, labor management relations gift, gratuity gift, and contractors gift. The Audit Team Leader and Supervising Auditor of PhilHealth ROV disallowed these payments through 19 Notices of Disallowance (NDs). The NDs disallowed the transportation allowances for lack of approval from the Office of the President and for not being in accordance with the Collective Negotiation Agreement, and disallowed the other benefits for lack of legal basis. PhilHealth ROV appealed, arguing its fiscal autonomy under Republic Act No. 7875 , the good faith of its personnel, and the principle of equity as similar benefits were granted in other regional offices. The COA Regional Office No. V affirmed the NDs, ruling the payees were not employees and the grants lacked legal basis. The COA Commission Proper partially granted the appeal, absolving the payees from refund liability as passive recipients but affirming the disallowances and holding the approving and certifying officers solidarily liable. PhilHealth’s motion for reconsideration was denied.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming the disallowance of the various benefits and allowances granted to job order and project-based contractors and in holding the approving and certifying officers solidarily liable for the refund.

RULING

The Supreme Court dismissed the petition and affirmed the assailed Commission on Audit Decision and Resolution. The Court held that the grant of benefits and allowances to job order and project-based contractors lacked legal basis. The corporate power of PhilHealth to determine compensation is limited by law and the policies of the Office of the President and the Department of Budget and Management. Job order and project-based contractors are not considered employees of the government and are thus not entitled to such benefits. The Court also ruled that the approving and certifying officers are not in good faith and are solidarily liable for the disallowed amounts. Good faith requires diligence and caution; reliance on the PhilHealth Board’s resolutions does not automatically constitute good faith, especially when the grants are patently illegal. The officers failed to exercise the required degree of care in approving and certifying the disbursements. The payees, however, as passive recipients, need not refund the amounts received.