G.R. No. 222838 - Philippine Health Insurance Corp. vs. Commission on Audit

In October 2007, the Board of Directors (BOD) of Philippine Health Insurance Corporation (PhilHealth) approved through Board Resolution No. 1055 the entitlement of its members (or their authorized representatives) to a monthly Board Extraordinary and Miscellaneous Expense (BEME) of P30,000.00.
A supplemental budget of P1,560,000.00 was appropriated along with the resolution to cover these expenses, which were meant to reimburse the BOD members for expenses incurred in performing their official functions.
In December 2007, the BOD amended the resolution (via Board Resolution No. 1084) to allow the unexpended balance of the monthly Extraordinary and Miscellaneous Expense (EME) to be carried over and used in the remaining months of the same calendar year.
Subsequently, on February 12, 2009, another resolution allocated P4,320,000.00 from the 2009 Corporate Operating Budget for the reimbursement of expenses incurred by BOD members (or their authorized representatives) outside of board meetings on an annual basis.

On May 24, 2011, the COA Supervising Auditor issued an Audit Observation Memorandum (AOM) revealing that during calendar year 2010, reimbursements for EME totaling P19.95 million were charged to the Institutional Meeting Expenses (IME) and Committee Meeting Expenses accounts.
The AOM noted that PhilHealth resorted to charging EME against alternative accounts because charges to the normal EME account had already exceeded the limitations set by the General Appropriations Act (GAA).
The irregular charging of expenses resulted in an excess over the GAA-prescribed annual rate for EME, and it was further observed that P5.63 million of these reimbursements pertained to members (and personnel) not entitled to such benefits.
PhilHealth’s response to the AOM was deemed unsatisfactory, leading to the issuance of Notice of Disallowance (ND) No. HO 12-004 (10) on July 18, 2012, which disallowed the IME payment of P2,965,428.59 made in 2010 for lack of legal basis.

PhilHealth filed an appeal before the COA-Corporate Government Sector (CGS) challenging the disallowance, but the appeal was denied on the ground that the appeal was filed out of time.
The COA-CGS maintained that Section 18(d) of RA No. 7875 limits BOD compensation strictly to per diems and that the additional EME allowances granted were not provided by law.
PhilHealth subsequently filed a petition for review before the COA Proper; however, the petition was dismissed for being filed beyond the reglementary six-month period (computed as 180 days from receipt of the ND).

PhilHealth contended that the six-month reglementary appeal period should be computed using calendar months (as in Primetown), which would extend the deadline; however, the COA applied the fixed computation of 180 days.
Additionally, PhilHealth argued for its fiscal autonomy and power to grant additional benefits to its BOD beyond the per diem provided under RA No. 7875, a contention that raised questions about the authority of the board to extend compensation benefits.

Whether the six-month reglementary period under the 2009 Revised Rules of Procedure of the COA should be understood as a period of 180 days (with each month equated to 30 days) or as a series of calendar months as argued by PhilHealth.

Whether the statutory language in Section 18(d) of RA No. 7875 limits the BOD’s compensation solely to per diems and expressly precludes any additional compensation or allowances such as the IME.
Whether there is a distinction in entitlement to benefits between appointive members and those serving in an ex officio capacity, particularly considering that ex officio members are already compensated through their primary offices.

Whether PhilHealth’s fiscal autonomy under Section 16(n) of RA No. 7875 authorizes the granting of additional allowances beyond the per diem prescribed by law.
Whether the delegation of fiscal management power extends to compensating BOD members in a manner that contravenes the express limitations provided by law.

Whether the defense of good faith on the part of PhilHealth and its BOD members can justify the receipt and non-refund of the disallowed IME, given that they were aware of the legal limitations on their entitlements.