Benefits include education allowance, birthday gift

MANILA — The Supreme Court has upheld a Commission on Audit (COA) ruling disallowing the release of P83 million in benefits to PhilHealth officials and employees in its head office and some regional offices in 2014.

The benefits consisted of P51.5 million in educational assistance allowance (EAA) given to officials and employees in its head office, P27.8 million EAA for its regional offices in Rizal and the National Capital Region and P3.695 million as birthday gifts.

But the high court, in a decision dated September 27, ruled these were unauthorized and should be refunded.

The COA auditor, director and COA proper flagged the disbursements because they were done without the President’s approval and violated several laws and regulations including the Salary Standardization Law which mandates that allowances shall be deemed part of standardized salary rates of government employees.

Arguing fiscal autonomy, the state health insurer challenged COA’s findings before the Supreme Court, claiming it has the power to fix the compensation of its personnel.

Voting 13-0, with 2 justices on official business, the Supreme Court en banc said PhilHealth is not exempted from the provisions of the Salary Standardization Law.

Citing several of its prior decisions, SC said “it is already settled that PhilHealth does not have absolute discretion in determining the compensation of its officials.”

“Its power to fix personnel compensation is limited and ‘must necessarily yield to the state policy of ‘equal pay for equal work.’ Thus, any disbursement of allowances and other forms of employee compensation must conform with prevailing rules and regulations issued by the President of the Philippines and/or the [DBM]’,” it said, in a ruling penned by Associate Justice Henri Jean Paul Inting.

The ruling characterized the resolutions of the PhilHealth board granting the benefits without approval of the executive and the Department of Budget and Management as “ultra vires” acts while the disbursements were treated as “illegal and irregular.”

The court noted the EAA and birthday gifts are not among the allowable “non-integrated” allowances under the law and their disbursements could amount to “double compensation.”

PhilHealth tried to justify the disbursements as forms of collective negotiation agreement (CNA) incentives which are given only when there is a valid CNA between labor and management and both parties tried to attain more efficient and viable operations.

However, the grant of EAA and birthday gifts has nothing to do with the productivity and performance of the state health insurer, the court said.

SC also cited a July 2021 ruling involving PhilHealth’s CARAGA office and COA which ruled that the “disbursement of various PhilHealth benefits, including the EAA and birthday gift lacked legal basis.”

SC ORDERS RETURN OF FUNDS

The high court went beyond declaring the disbursements illegal and declared both the payees who received the benefits and the officers who approved and certified the disbursements liable.

The officers, it said, were either “ignorant” of previous investigations and disallowance proceedings or are aware “but chose to turn a blind eye” to them and could not be said to have acted in good faith.

The payees, for their part, are liable to return the amounts they received based on a 2020 SC decision in Madera vs. COA.

Under the ruling, payees can only be exempted from returning the amounts they received if these were given in consideration of the services they rendered or if the court excuses them based on undue prejudice, social justice considerations or other exceptions determined on a case-to-case basis.

“The Court does not find any of the above-mentioned exceptions to be availing in the present case. First, the payments of EAA and Birthday Gift lack legal basis…these were granted ultra vires and cannot be classified as valid CNA Incentives (Rule 2c of Madera case),” it said.

“Second, there are no circumstances in the present case that compel the Court to excuse herein payees (Rule 2d of Madera case). In these lights, they must refund the corresponding amounts received in error,” it added.

ABS-CBN News sought the side of PhilHealth on this issue but has yet to receive a response as of writing.