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SC affirms COA rule disallowing P15M benefits to PhilHealth staff

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The Supreme Court has affirmed a decision of the Commission on Audit (COA) disallowing the grant of P15 million in allowances and incentives to employees of the Philippine Health Insurance Corp. (PhilHealth).

In a 19-page decision, the SC en banc denied a petition filed by PhilHealth seeking to issue a temporary restraining order against a COA decision.

The decision affirmed the notices of disallowance (NDs) on PhilHealth’s payment of transportation allowance, project completion incentive, and educational assistance worth P15 million to its regular and contractual employees.

Penned by Associate Justice Rodil Zalameda, the decision was promulgated on September 27, 2022, but released only recently.

“The COA correctly upheld the NDs in view of the lack of legal basis for the grant of transportation allowance, project completion incentive, and educational assistance allowance,” the Court said.

In a similar ruling, the Court found two officials of the Bacolod Southeast Asian Games Committee (BASOC) civilly liable for the P36.8-million disallowance issued by the COA involving negotiated contracts for the construction of venues and facilities needed for the Bacolod leg of the 23rd SEA Games in 2005.

In a 17-page en banc decision penned by Associate Justice Japar Dimaampao and only made public on Tuesday, the SC denied the petition with urgent prayer for a restraining order or writ of preliminary injunction filed by BASOC chairperson Monico Puentevella.

Puentevella sought to set aside the November 9, 2016 decision and the January 31, 2020 resolution of the COA, which affirmed the notice of disallowance (ND) issued against him and BASOC secretary-general Eric Loretizo.

According to the Court, PhilHealth’s fiscal autonomy is not absolute and cannot be the basis for granting benefits.

“Consistent thereto, we reiterated that [PhilHealth’s] fiscal autonomy is not absolute and affirmed the NDs pertaining to the contractor’s gift, special event gifts, project completion incentive, nominal gift, and birthday gifts granted by [PhilHealth],” it said.

Recipients of disallowed public benefits and allowances can no longer invoke good faith as their defense, the Court also said.

“Good faith is no longer a defense available to recipients, unlike approving officers. This Court views the receipt by the payees of disallowed benefits sa one by mistake, thus creating an obligation on their part to return the same,” the Court said.

In the Bacolod case, while the high court upheld the ND, it modified COA’s ruling by remanding the case to the agency for the determination of the civil liability of Puentevella and Loretizo.

The Court explained that “despite the impropriety of the contracts” with different contractors and suppliers, they are still entitled to retain the value of their deliveries and services to the BASCO.

According to the high court, the determination of the amount that the contractors and suppliers are entitled to “is factual in nature and beyond its authority.”

The tribunal said the total amount that the contractors and suppliers are entitled to retain should be deducted from the disallowed amount of P36.8 million.

“Disbursement of large public funds deserves no less; taxpayers’ money should always be spent with paramount consideration of full transparency and reasonable budget allocation,” the SC said.

“Indubitably, these cannot be wantonly sacrificed on the altar of exigency inasmuch as reckless handling and accounting of public funds have no place in a government that endeavor to keep inviolate the trust of the people,” the Court stressed.

In 2002, the Council of the SEA Games Federation awarded to the Philippines the privilege to host the 23rd Edition of the SEA Games to be held from November 27, 2005 to December 5, 2005.

Aware of the need to undertake rehabilitation works in the playing venues in Bacolod City, the Philippine Sports Commission (PSC) granted financial assistance to the BASOC through the petitioner in the total amount of P50.5 million.

Due to tight schedule and budget limitations, the BASOC directly negotiated with contractors to hasten the rehabilitation of venues and facilities needed for the Bacolod leg of the sports event.

On January 30, 2014, COA’s special audit team revaluated all the documents submitted by BASOC and subsequently issued ND after it flagged a total amount of P36.8 million.

The special audit team found BASOC’s documentation inadequate and unable to support the validity and correctness of its various transactions covering the rehabilitation of Paglaum Sports Complex and installation of weightlifting facilities at the Bacolod Convention Plaza and several others.

Thus, Puentevella and Loretizo were made liable for the disallowance as they were the signatories to the various infrastructure contracts with the suppliers and contractors.


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