G.R. No. 235832 - Philippine Health Insurance Corp. vs. Commission on Audit

PHIC is a government corporation established under Republic Act No. 7875, as amended by RA 9241 and RA 10606. Its functions include administering the country’s national health insurance program and formulating related policies.
The Commission on Audit (COA) is a constitutional commission with the power to examine, audit, and settle all accounts of government funds and properties, as provided under the Constitution.

The Resident Auditor issued several Notices of Disallowance (NDs) against benefits granted by the PHIC Board of Directors to its personnel. These benefits included:

ND No. 2008-056(07) (Birthday Gift, CY 2007) – P5,974,572.83
ND No. 2008-057(07) (Special Event Gift, CY 2007) – P8,714,500.00
ND No. 2008-058(07) (Nominal Gift, CY 2007) – P29,519,296.78
ND No. 2008-059(07) (Educational Assistance Allowance, CY 2007) – P49,285,894.89
ND No. 2008-060(07) (Project Completion Benefit, CY 2007) – P4,986,122.35
ND No. HO 2009-001 (Payment of liability insurance premium for BOD and Officers) – P638,000.00
ND No. HO 2009-002 (Corporate Transition and Achievement Premium, CY 2008) – P81,059,403.54
ND No. HO 2009-003 (Medical Mission Critical Allowance, CY 2008) – P7,916,205.82
ND No. HO 2009-005-725(08) (Efficiency Gift) – P16,275,578.16

Except for ND No. HO 2009-001, the NDs were issued because the benefits were given without prior approval from the Office of the President (OP) as required under specific Memorandum and Administrative Orders.
ND No. HO 2009-001 was based on the finding that the payment of liability insurance premium violated Section 73 of RA 9184 and GPPB Resolution No. 21-05.

A consolidated memorandum of appeal before the COA-Corporate Government Sector (COA-CGS) concerning ND Nos. 2008-056(07) to 2008-060(07) on December 18, 2009.
Separate Consolidated Memoranda of Appeal for ND Nos. HO 2009-001 to HO 2009-003 (filed on January 29, 2010 and March 4, 2010) and ND No. HO 2009-005-725(08).

On July 12, 2012, the COA-CGS denied PHIC’s appeals and affirmed the NDs amounting to a total of P204,072,574.37.
PHIC then filed a Petition for Review with the COA Proper.
In Decision No. 2016-436 dated December 27, 2016, the COA Proper dismissed the petition for review on two grounds:

ND No. HO 2009-005-725(08) was dismissed for lack of merit.
The remaining NDs were dismissed for being filed out of time, as PHIC failed to file its petition within the reglementary period of 180 days despite having filed a motion for extension, which was not acted upon.

The dismissal on procedural grounds was unwarranted because it had filed a motion for extension within the allowed period.
Its charter provides fiscal autonomy or independence to fix the compensation of its personnel, thereby giving legal basis for the benefits.
The disallowed benefits were supported by a collective negotiation agreement and prior issuances, and the liability insurance was confirmed by the GPPB.
The officers and employees acted in good faith, and even if disallowance is sustained, they should not have to refund the benefits.

The COA Proper correctly dismissed the petition due to the untimely filing of the appeal, as procedural rules are jurisdictional and mandatory.
PHIC’s appeal would have failed on the merits even if timely filed, given that its claimed fiscal autonomy does not exempt it from the requirements of prior approval under the law.
The benefits approved by PHIC were inconsistent with the standards set forth under the applicable laws and guidelines, including those relating to salary and allowances.

On January 30, 2018, a temporary restraining order was issued to enjoin the respondents from implementing the COA’s assailed decision and resolution.

Whether the COA Proper committed grave abuse of discretion by dismissing PHIC’s petition for review on the basis of procedural irregularities, specifically the late filing of the appeal.
Whether the filing of a motion for extension within the reglementary period could justify a belated petition for review.

Whether the disallowed benefits, including the Efficiency Gift, have a proper legal basis under PHIC’s asserted fiscal autonomy provided by its charter and related legislative provisions.
Whether such benefits, in light of the requirement for prior approval from the Office of the President and adherence to DBM guidelines, can be validly granted.

Whether the PHIC officials who approved and certified the benefits acted in good faith or are liable for the disallowed payments.
Whether the recipients of the benefits must return the amounts received pursuant to the principle of solutio indebiti to avoid unjust enrichment.