G.R. No. 250787 . September 27, 2022.
PHILIPPINE HEALTH INSURANCE CORPORATION, PETITIONER, VS. COMMISSION ON AUDIT, HON. MICHAEL G. AGUINALDO, CHAIRPERSON, RESPONDENT.

FACTS

The Commission on Audit (COA) issued Notices of Disallowance (NDs) against the Philippine Health Insurance Corporation (PhilHealth) for the aggregate amount of P83,062,385.27. This sum represented payments made in 2014 for Educational Assistance Allowance (EAA) and Birthday Gift benefits to officials and employees in its Head Office and Regional Offices. The COA Auditor disallowed these payments, finding that PhilHealth granted these benefits without the requisite approval of the President of the Philippines. The disallowance was grounded on several laws and issuances, including Presidential Decree No. 1597, the Salary Standardization Law ( Republic Act No. 6758 ), Memorandum Order No. 20, Administrative Order No. 103, Executive Order No. 7, and the GOCC Governance Act of 2011 ( Republic Act No. 10149 ), all of which require such presidential approval for new or additional compensation and benefits in government-owned or -controlled corporations (GOCCs). PhilHealth appealed the disallowances, arguing its charter granted it fiscal autonomy to fix compensation.

ISSUE

Whether the COA Proper committed grave abuse of discretion in affirming the disallowance of the Educational Assistance Allowance and Birthday Gift benefits granted by PhilHealth to its personnel for lack of presidential approval.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the COA Proper’s decision. The Court held that the COA did not commit grave abuse of discretion. The legal logic is anchored on the principle that while certain GOCCs are exempt from the Salary Standardization Law (SSL) by express provision in their charters, PhilHealth’s charter contains no such explicit exemption. Section 16(n) of Republic Act No. 7875 , the PhilHealth Charter, merely grants the corporation the power to fix compensation, but this general grant is not an exemption from the overarching requirement of presidential approval for new allowances as mandated by prevailing laws. Presidential Decree No. 1597 and subsequent issuances like Executive Order No. 7 impose a clear condition: any increase in salary or grant of new benefits by GOCCs must have the President’s approval. Since the EAA and Birthday Gift were new benefits not previously authorized, and PhilHealth failed to secure the required presidential approval, the disbursements were correctly disallowed for being illegal and contrary to law. The Court emphasized that the requirement for presidential approval is a crucial control mechanism to ensure fiscal responsibility and uniformity in compensation across all government entities, and PhilHealth’s claimed fiscal autonomy does not override this specific statutory mandate.