G.R. No. 258424 . January 10, 2023.
PHILIPPINE HEALTH INSURANCE CORPORATION, PETITIONER, VS. COMMISSION ON AUDIT, REPRESENTED BY ITS CHAIRPERSON, MICHAEL G. AGUINALDO, RESPONDENT.

FACTS

The Commission on Audit (COA) issued several Notices of Disallowance (NDs) pertaining to allowances and benefits granted to employees and job order contractors of the PhilHealth Regional Office No. VI during 2011-2013, with a total amount of PHP 5,010,607.83. The disallowed benefits included Medical Mission Critical Allowance, Sustenance Gift, Contractor’s Gift, Longevity Pay, Excess Representation and Transportation Allowance (RATA), Special Representation Allowances (SRA), Rice Allowance, Shuttle Service Assistance, Birthday Gift, Transportation Allowance for Job Order Contractors, and Public Health Workers (PHWs) Benefit. The disallowances were based on lack of legal basis, being irregular or excessive, failure to submit PhilHealth’s Corporate Operating Budget duly reviewed by the Department of Budget and Management (DBM), and lack of authority from the Office of the President. The COA Corporate Government Sector Cluster 6 affirmed the NDs. On appeal, the COA Commission Proper, in its Decision, sustained the disallowances but exempted the recipients from refunding, holding only the approving and certifying officers solidarily liable. Upon motion for reconsideration, the COA issued a Resolution modifying its Decision, holding the recipients liable to refund the amounts they received, in addition to the solidary liability of the approving and certifying officers. PhilHealth filed the instant Petition for Certiorari.

ISSUE

Whether the COA Commission Proper committed grave abuse of discretion in affirming the disallowances and in holding the approving/certifying officers and the recipient-employees liable to refund the disallowed amounts.

RULING

The Supreme Court dismissed the Petition and affirmed the assailed COA Resolution. The Court held that PhilHealth does not have unbridled authority to fix compensation and grant allowances under Section 16(n) of its Charter. Such authority is subject to the rules and regulations of the DBM and the Office of the President, pursuant to Republic Act No. 6758 (the Compensation and Position Classification Act of 1989). The disallowed benefits lacked the required prior approval from the DBM and/or the Office of the President, rendering them illegal. The Court also ruled that both the approving/certifying officers and the recipients are liable to refund the disallowed amounts. The approving/certifying officers are solidarily liable for the full amount of the disallowance, as they acted with gross negligence in approving and certifying illegal disbursements. The recipients are liable to return the amounts they received, based on the principles of solutio indebiti and unjust enrichment, as they received payments with no legal basis. The defense of good faith was not available to the recipients, as they are presumed to know the laws and rules governing the grant of allowances. The Court cited its ruling in PhilHealth v. Commission on Audit ( G.R. No. 250089 , November 9, 2021), which involved substantially identical issues and parties, as controlling precedent.