G.R. No. 104637-38 - San Miguel Corporation vs. Sandiganbayan

The case involves a Petition for Certiorari under Rule 64 (in relation to Rule 65) filed by the Philippine Health Insurance Corporation (Philhealth) against the Commission on Audit (COA) and specific COA officials.
The petition challenges COA Proper’s Decision dated January 29, 2018, and its subsequent Resolution dated August 15, 2019 in COA CP Case No. 2015-683.
The disallowances pertain to Philhealth’s payment of benefits—specifically the Educational Assistance Allowance (EAA) and Birthday Gift—to its officials and employees in both the Head Office and Regional Offices during 2014.

The COA Auditor issued two Notices of Disallowance that disallowed payments totaling P83,062,385.27, comprising:

The basis for disallowance was the alleged failure of Philhealth to secure prior executive approval on the grant of such benefits, as mandated by several laws and issuances, including:

After the initial issuance of the disallowances by the COA Auditor, Philhealth appealed to the COA Director, which was denied.
Subsequently, the case was elevated to the COA Proper, which affirmed the disallowances.
The COA Proper noted that prior rulings and disallowance cases against similar benefits and allowances (from 2008 and 2009) highlighted that such payments lacked the necessary executive and DBM approvals under existing laws and regulations.

Its Section 16(n) under RA No. 7875 (as amended) explicitly grants it fiscal autonomy to fix the compensation of its personnel.
This fiscal autonomy had been confirmed by then-President Gloria Macapagal-Arroyo and supported by the opinions of the Office of the Government Corporate General Counsel (OGCC) and legislative deliberations.
By virtue of being classified as a Government Financial Institution (GFI), Philhealth should enjoy the related fiscal autonomy as recognized in previous jurisprudence.
The benefits disbursed were granted pursuant to a duly executed Collective Negotiation Agreement (CNA) between the management and its employees’ association.
The officials and employees who received these benefits acted in good faith and should therefore not be required to refund any disallowed amounts.

Philhealth’s overarching argument relied heavily on the concept of fiscal autonomy and the authority of its Board of Directors to set personnel compensation, attempting to justify the grant and subsequent disbursement of the EAA and Birthday Gift.

Philhealth does not have unfettered power to fix the compensation of its personnel, as such power is subject to statutory guidelines including the Salary Standardization Law and other relevant issuances.
The benefits in question do not fall within the exceptions provided under the SSL and are not valid CNA Incentives.
Even if there were errors in judgment, mere mistakes or oversights in applying the law do not amount to grave abuse of discretion that merits judicial intervention.

It was contended that the COA Proper’s rulings were within its jurisdiction, and any errors were not of such gravity as to constitute a capricious or whimsical exercise of discretion.

Whether the COA Proper committed grave abuse of discretion in affirming the disallowances imposed on Philhealth for the unauthorized grant and payment of the EAA and Birthday Gift.

Specifically, whether the COA Proper’s decision amounted to a jurisdictional error or a capricious and whimsical exercise of judgment justifying judicial review under Rule 64.
Whether Philhealth’s claim of fiscal autonomy and subsequent defense of good faith are sufficient to exonerate both the approving officers and the payees from liability for the disallowed amounts.