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EN BANC

PHILIPPINE HEALTH G.R. No. 249061

INSURANCE CORPORATION,
Petitioner, Present:

GESMUNDO, C.J.,
LEONEN,
- versus - CAGUIOA,
HERNANDO,
LAZARO-JAVIER,
INTING,
ZALAMEDA,
COMMISSION ON AUDIT, LOPEZ,M.
MICHAEL G. AGUINALDO, GAERLAN,
CHAIRPERSON, ROSARIO,
Respondent. LOPEZ, J.
DIMAAMPAO,
MARQUEZ,
KHO, JR., and
SINGH,JJ

Promulgated:

May 21, 2024

RESOLUTION

SINGH, J.:

This resolves the Special Civil Action for certiorari 1 (Petition) under
Rule 65, in relation to Rule 64, with prayer for Temporary Restraining Order
(TRO) and Writ of Preliminary Injunction (WPI) filed by petitioner
Philippine Health Insurance Corporation (PhilHealth) assailing the
December 20, 2017 Decision No. 2017-4222 of the Commission on Audit

1
Rollo,, pp. 3-37.
2
Id. at 38-47. The December 20, 2017, Decision No.2017-422 was rendered by Chairperson Michael G.
Aguinaldo, Commissioner Jose A. Fabia, and Commissioner Isabei D. Agito of the Commission on
Audit, Commonwealth, Avenue, Quezon City.
Resolution 2 G.R. No. 249061

(COA) Commission Proper (CP) and its September 24, 2018 Resolution,3.
The COA CP affirmed with modification the June 10, 2014 Decision4 of the
COA Regional Office No. V Office of the Regional Director (COA ROV),
which affirmed the 19 Notices of Disallowance (ND) addressed to the
PhilHealth Regional Office No. V (ROV) covering the payment of various
benefits and allowances to job order contractors and project-based contractors
in the total amount of PHP 4,146,213.85.

The Facts

Between 2009 and 2011, PhilHealth ROV granted to its job order
contractors and project-based contractors various benefits, which include: (1)
transportation allowance; (2) sustenance gift; (3) nominal gift; (4)
productivity enhancement incentive; (5) special events gift; (6) project
completion incentive; (7) efficiency gift; (8) alleviation gift; (9) labor
management relations gift; (10) gratuity gift; and (11) contractors gift, the
combined amounts of which is equivalent PHP 4,146,213.85.

The Audit Team Leader and Supervising Auditor of PhilHealth ROV

subsequently disallowed the payment of the above-mentioned benefits
through 19 NDs, the details of which are outlined in the table below:

ND No. Benefit Granted Amount (PHP)

Transportation Allowance for
11-027 (10) 5 Calendar Year (CY) 2010 220,324.61
Sustenance Gift for November and
11-028 (10)6 December 2009 199,800.00
11-029 (10)7 Nominal Gift for CY 2010 140,000.00
Productivity Enhancement Incentive
11-030 (09) 8 for CY 2009 137,500.00
11-031 (10) 9 Special Events Gift for CY 2010 280,000.00
Project Completion Incentive for CY
11-032 (10) 10 2010 158,543.09
11-033 (09) 11 Efficiency Gift for CY 2009 224,000.00
11-034 (10) 12 Alleviation Gift for CY 2010 363,000.00

3
Id. at.48. The COA Commission Proper En Banc issued on September 27, 2018, a Resolution in COA
CP Case No. 2014-572, denying PhilHealth'sMotion of Resolution.
4
Id. at 145-155. The June 10, 2014, COA ROY Decision No. 2014-C-024 was penned by Director Eden
T. Rafanan of the office of the Regional Director, COA Regional office No. V ofBawis, Legaspi City.
5
Id. at 71-74.
6
Id. at 75-77.
7
Id. at 78-79.
8
Id. at 80-81.
9 • Id. at 82-83.
10
Id. at 84-85.
11
Id. at 86-87.
12
Id. at 88-90.
Resolution 3 G.R. No. 249061

Labor Management Relations Gift for

13
11-035 (10) CY 2010 358,400.00
11-036 (10) 14 Gratuity Gift for CY 2010 416,250.00
Contractors Gift for January 2010 to
11-037 (10) 15 June 2010, and December 2009 302,712.71
' Sustenance Gift for January to April
11-038 16 2011 98,400.00
Transportation Allowance for CY
11-039 17 2011 91,634.98
Project Completion Incentive for CY
11-040 18 2011 154,561.09
Labor Management Relations Gift for
11-041 19 CY 2011 419,848.34
Contractors Gift for December 24 to
11-04220 31,2010 43,239.03.
11-043 21 Special Events Gift for CY 2011 270,000.00
11-04422 Efficiency Gift for CY 2010 214,000.00
11-048 23 Alleviation Gift for CY 2010 54,000.00
TOTAL PHP 4,146,213.85

In ND Nos. 11-027 (10) and 11-039, the grant of Transportation

Allowance for CY 2010 and 2011, respectively, to job order contractors was
disallowed because of the lack of approval from the Office of the President
(OP). Additionally, the NDs cited that the grant was not in accordance with
the Collective Negotiation Agreement (CNA) executed between the
PhilHealth, ROV and the PhilHealth Insurance Corporation PHIC Employees
Association because what was provided for in the CNA is the provision of
shuttle services, and not cash assistance. 24

The benefits in the rest of the assailed NDs were disallowed for lack of
legal basis. 25

Other than the payees, the persons determined to be liable in the various
transactions are outlined in the table below:

13
Id. at 93-94.
14
Id. at 95-96.
15
Id. at 97-99.
16
Id. at 100-102.
17
Id. at 103-105.
18
Id. at 106-107.
19
Id. at 108-109.
20
Id. at 110-111.
21
Id. at 112-113.
22
Id. at 114-115.
23
Id. at 91-92.
24
Id. at 71 & 103.
25
Id. at 146-151.
Resolution 4 G.R. No. 249061

Name and Nature of Identified in ND No.'

Designation Participation
Grazielle R. Castillo, Approving Officer 11-027(10)
Fiscal Controller IV 11-028 (10)
Certified that adequate 11-029 (10)
fund is available, and 11-030 (09)
expenditure is proper 11-031 (10)
and supported by 11-032 (10)
26
documents 11-033 (09)
11-034 (10)
11-036(10)
11-037 (10)
11-038
11-039
11-040
11-041
11-042
'
11-043
11-044
11-048
Veronica T. Mateum, Approved the payment 11-027(10)
M.D., MO VII, ore, 11-028 (10)
PHROV 11-029 (10)
11-032 (10)
11-033 (09)
11-034 (10)
11-035 (10)
11-036 (10)
11-037 (10)
11-038
11-039
11-040
11-042
11-043 '
11-044
11-048
Orlando D. Ifiigo, Jr., Approved the payment 11-027 (10)
RVP 11-028 (10)
11-030 (09)
11-031 (I 0)
11-037 (IO)
Lorena M. Rubis, Certified that the 11-027 (10)
Chief, MSD expenses are necessary, 11-028(10)
lawful and authorized 11-029 (10)
under her direct 11-034 (IO)
27
supervision 11-035 (10)
26
Except in Notice ofDisallowance (ND) Nos. 11-027 (10), 11-038, 11-042.
27
Except in ND No. 11-041.
Resolution 5 G.R. No. 249061

11-036 (10)
Approved the payment 11-037 (10)
signing on behalf of 11-038
Veronica T. Mateum28 11-039
11-041
11-042
11-043
11-044
11-048
Darlene L. Nuyles, Certified that the 11-027(10)
CSIO/Acting AO IV expense 1s necessary, 11-028(10)
lawful and authorized 11-030 (09)
under her direct 11-031 (10)
superv1s1on 11-032 (10)
11-033 (09)
11-037 (10)
11-039
11-040
11-041
11-038
Rosie B. Saldivar, Certified that the 11-027 (10)
Human Resources expenses are necessary, 11-028 (10)
Management III lawful and authorized
under her direct
..
superv1s10n, s1gmng on
behalf of Darlene L.
Nurles
Shirley S. Victoria, Certified that adequate 11-027(10)
Fiscal Controller III fund 1s available, 11-028 (10)
expenditure proper and 11-035 (10)
supported by 11-038
documents, and signing 11-039
on behalf of Grazielle 11-042
R. Castillo29
David I. Escandor Division Chief, and 11-027 (10)
signing on behalf of 11-037 (10)
Veronica T. Mateum30

PhilHealth ROY appealed the NDs to the COA ROY arguing that the
PhilHealth has fiscal autonomy under Republic Act No. 7875, or the National
Health Insurance Act of 1995,31 including the explicit power to fix the
compensation of its personnel. 32 Furthermore, PhilHealth ROY submitted

28 InNDNos.11-038, 11-039,and 11-041.

29
In ND Nos. 11-028 (10) and 11-035 (IO).
30 In ND No. 11-037 (10).
31
Republic Act No. 7875 (1995), as amended by Republic Act No. 9241 (2004), Republic Act No. 10606
(2013), and Republic Act No. 11223 (2019).
32
Rollo, p. 119.
Resolution 6 G.R. No. 249061

that PhilHealth personnel who received the questioned benefits did so in good
faith and thus should not be held liable to refund of the same. 33 Finally,
PhilHealth ROY invoked the principle of equity claiming that similar benefits
were granted in other PhilHealth regional offices without disallowance. 34

The Ruling ofthe COA ROV

In its Decision No. 2014-C-024, dated June 10, 2014, the COA ROY
1

denied PhilHealth ROV's appeal, and affirmed the assailed NDs.

The COA ROY emphasized that the payees of the assailed NDs were
job order contractors and project-based contractors who are not considered to
have any employee-employer relationship with PhilHealth. Thus, the grant of
various incentives, benefits, and transportation allowances to them lacked
legal bases and violate the law on government disbursements. 35

Also, COA ROV did not lend credence to the claim of good faith by
PhilHealth ROV, as the latter persisted in granting such benefits despite
previous similar disallowances. The COA ROV, however, declined to pass
upon the issue of equity, since it is only an administrative body bound by the
letter of the law, unlike regular courts which are courts of both justice and
equity. 36

The PhilHealth ROY appealed to the COA CP, reiterating the

arguments it interprised before the COA ROV. 37

The Ruling ofthe COA CP

In its assailed December 20, 2017, Decision,38 the COA CP partially

granted the appeal of PhilHealth ROY. The COA CP agreed with the
PhilHealth ROY that bad faith could not be ascribed to the job order
contractors and project-based contractors who were payees in the assailed
NDs. Being mere passive receiver, the payee, we absolved from the order to
refund the disallowed benefits. 39

However, the COA CP affirmed the assailed NDs in all other respects,
emphasizing that the corporate powers of PhilHealth to determine the
compensation of its officers and employees are limited by law, the policies of

33
Id. at 137-142.
34
Rollo, pp. 142-143.
35
Id. at 152-154.
36
Id. at 154.
37
Id. at 156-174.
38
Id. at 38-47.
39 Id. at 45-46.
Resolution 7 G.R. No. 249061

the Office of the President (OP) and the Department of Budget and
Management (DBM). 40 The COA CP also ruled that the approving and
certifying officers remain solidarily liable (with the members of PhilHeath's
Board of Directors) for the disallowances. 41

The dispositive portion of the COA CP Decision reads,

WHEREFORE, premises considered, the Petition for Review of

[PhilHealth] Regional Office (RO) No. V, Legazpi City, represented by its
Officers-in-Charge, Mr. Orlando D. Ifiigo, of Commission on Audit (COA)
RO No. V Decision No. 2014-C-024 dated June 10, 2014 is PARTIALLY
GRANTED. Accordingly, COA RO No. V Decision No. 2014-C-024
dated June 10, 2014, and Notice ofDisallowance (ND) Nos. 11-027(10) to
11-029(10), 11-030(09), 11-031(10) to 11-037(10) and 11-038 to 11-044,
all dated August 9, 2011; and 11-048 dated September 28, 2011, are hereby
MODIFIED, in that the payees need not refund the disallowed benefits
received. The approving and certifying officers however, shall remain
solidarily liable for the disallowance amounting to [PHP] 4,146,213.85.

The Audit Team Leader and the Supervising Auditor, PHIC RO No.
V, are hereby directed to issue a Supplemental ND to include as persons
liable, the PHIC Board of Directors, who issued and approved the Board
Resolutions granting the disallowed benefits and allowances. 42 (Emphasis
in the original)

PhilHealth ROV filed a Motion for Reconsideration43 primarily seeking

reconsideration of the determination on the solidary liability of the approving
and certifying officers. PhilHealth ROV argued that the approving and
certifying officers were akin to passive recipients in that they were in honest
belief that the Office Orders issued by the PhilHealth President and Chief
Executive Officer (CEO) were legal and issued in the PhilHealth Board's
valid exercise of power. The reliance of the approving and certifying officers
on the PhilHealth Board's resolutions bolster their position of good faith. 44

In its Resolution, dated September 27, 2018, the COA CP denied said
Motion for Reconsideration. Undaunted PhilHealth ROV filed this Petition
before the Court to assail the Decision of the COA CP.

In its September 24, 2019, Resolution, the Court required the

respondents, COA and its Chairperson Michael G. Aguinaldo to file their
.

40
Id. at41--44.
41
Id. at 44--45.
42
Id. at 46.
43
Id. at 50-58.
44 Id. at 51-52.
Resolution 8 G.R. No. 249061

Comment. 45 Subsequently, the respondents filed Comment on the petition,46

dated January 9, 2020, through the Office of the Solicitor General (OSG).

The Court also required PhilHealth to file a Reply on the respondents'

Comment. 47 The PhilHealth, through the Office of the Government Corporate
Counsel (OGCC) complied by filing its Reply, 48 dated June 17, 2020.

In its Resolution, 49 dated March 28, 2023, the Court required the parties
to move in the premises within l O days from notice. Respondents, complied
with the Resolution through their Compliance and Manifestation,50 dated June
20, 2023. Similarly, PhilHealth filed its Compliance, 51 dated July 10, 2023,
informing the Court that it has submitted a letter, 52 dated June 14, 2023,
addressed to President Ferdinand R. Marcos, Jr. requesting for post facto
presidential approval of the allowances, benefits, and incentives (ABls)
granted to PhilHealth officers and employees but were subsequently
disallowed. 53 PhilHealth averred that the request for the President's postfacto
approval would, among other things, evince and uphold the clear intent to
provide the ABis to PhilHealth employees. 54

The Issue

Whether the COA CP committed grave abuse of discretion when it

affirmed the assailed NDs.

The Ruling of the Court

The Petition is partly meritorious.

At the outset, the Court's review of COA decisions on a Rule 64 petition

is limited to a review ofjurisdictional errors or grave abuse of discretion. The
Court's intervention is justified only when it is clearly shown that the COA
acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction.55

45
/d.atl92-193.
46
Id. at201-242.
47 Id. at 243-244.
48
Id.at251-264.
49
Id. at 268-269.
50 Id. at 270---277.
51 Id. at 286-289.
52
Id.at290-29I.
53
Id. at 291.
54
Id. at 287.
55
Social Security System v. Commission on Audit, G.R. No. 231391, June 22, 2021 [Per J. Inting, En Banc].
at 5--6. This pinpoint citation tefen to the copy of the Decision uploaded to the S u p r e m 7
Resolution 9 G.R. No. 249061

As held in Miralles v. Commission on Audit, 56 grave abuse of discretion

exists when the assailed decision or resolution is not based on law and the
evidence but on caprice, whim, and despotism, thus:

The Constitution vests the broadest latitude in the COA in discharging

its role as the guardian of public funds and properties by granting it "exclusive
authority, subject to the limitations in this Article, to define the scope of its
audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations,
including those for the prevention and disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures or uses of
government funds and properties." In recognition of such constitutional
empowerment of the COA, the Court has generally sustained the COA's
decisions or resolutions in deference to its expertise in the implementation of
the laws it has been entrusted to enforce. Only when the COA has clearly
acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess ofjurisdiction has the Court intervened to correct
the COA's decisions or resolutions. For this purpose, grave abuse of
discretion means that there is on the part of the COA an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law or to
act in contemplation of law, such as when the assailed decision or
resolution rendered is not based on law and the evidence but on caprice,
whim[,] and despotism. 57 (Emphasis supplied; citation omitted)

Absent this breach, the Court generally sustains the decisions of

administrative authorities, especially one which is constitutionally created,
such as the COA, not only on the basis of the doctrine of separation of powers
but also for their presumed expertise in the laws they are entrusted to
enforce. 58

'
Here, the Petition failed to prove that the COA committed grave abuse
of discretion in affirming the assailed NDs. Nevertheless, the Court must
clarify the liability of the individuals identified in the NDs in light of
jurisprudential guidelines.

PhilHealth's pos1t10n is anchored on what it believes is its fiscal

autonomy granted under Republic Act No. 7875. 59 According to PhilHealth,
this grant has been confirmed by Opinions of the OGCC, letters from the OP,
and legislative deliberations. 60

56
818 Phil. 380(2017) [Per J. Bersamin, En Banc].
57
Id. at 389-390.
58
Phi/Health v. Commission on Audit, G.R. No. 258100, September 27, 2022 [Per J. Zalameda, En Banc].
at 6. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
59
Section 16. Powers and Functions. The Corporation shall have the following powers and functions: '

(n) to organize its office, fix the compensation off,] and appoint personnel as may be deemed necessary
and upon the recommendation of the president of the Corporation.
60
Rollo, pp. 10-16.
Resolution 10 G.R. No. 249061

However, the view that PhilHealth enjoys absolute authority to

determine the grant of benefits and allowances to its employees had already
been consistently rejected by the Court.

In the 2023 case of Phi/Health v. COA, 61 the Court had outlined case
law settling the issue of the limits of the fiscal independence of PhilHealth. In
the 2016 case of Phi/Health v. COA, 62 and reiterated in 2021 in Phi/Health v.
COA, 63 the Court held that while Republic Act No. 7875 granted PhilHealth
the liberty to fix the compensation of its personnel, it does not necessarily
mean that PhilHealth has an unbridled discretion to issue any and all kinds of
allowances, circumscribed only by the provisions of its charter. 64

The Court thus held that PhilHealth is bound by the provisions of the
Salary Standardization Law; 65 Presidential Decree No. 1597 on the
requirement of Presidential approval for the grant of allowances, honoraria,
and other fringe benefits; 66 Public Sector Labor-Management Council
Resolution No. 4, Series of 2022 issued by the DBM, which requires
qualifications to the grant of CNA incentives by government-owned and
controlled corporations, such as Phi1Health; 67 and other prevailing rules and
regulations issued by the OP and the DBM. 68

Moreover, the corporate powers of PhilHealth do not permit it to grant

the disallowed allowances and incentives to job order contractors and project-
based contractors, who are not its regular employees.

Under the Civil Service Commission (CSC) Memorandum Circular

No. 40, Series of 1998, or the Revised Omnibus Rules on Appointments and
Other Personnel Actions, contract of service or job order employees do not
enjoy the benefits enjoyed by government employees, such as PERA, COLA,
and RATA. This was further reiterated in CSC Resolution No. 021480, 69
which provides that:

61 Philippine Health Insurance Corporation v. Commission on Audit, represented by its Chairperson,

Michael G. Aguinaldo, G.R. No. 258424, January 10, 2023 [Per J. J. Lopez, En Banc]. at 12-15. This
pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
62 Philippine Health Insurance Corporation v. Commission on Audit, Ma. Gracia Pulido Tan, Chairperson,
and Janet D. Nacion, Director IV, 801 Phil. 427 452-453 (2016) [Per J. Peralta, En Banc].
63 G.R. No. 250089, November 9, 2021 [Per J. J. Lopez, En Banc]. at 8. This pinpoint citation refers to the
copy of the Decision uploaded to the Supreme Court website.
64
Phi/Health v. Commission on Audit, G.R. No. 258424, January 10, 2023 [Per J. J. Lopez, En Banc] at
12-13. This pinpoint citation refers to the copy of Decision uploaded to the Supreme Court website.
65
Republic Act No. 6758 (I 989). See Phi/Health v. Commission on Audit, G.R. No. 250787, September
27, 2022 [Per J. Inting, En Banc] at 12. This pinpoint citation refers to the copy of Decision uploaded to
the Supreme Court website.
66
Phi/Health v. Commission on Audit, G.R. No. 250089, November 9, 2021 [Per J. J. Lopez, En Banc] at
10. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
67
Id. at 15.
68
Phi/Health v. Commission on Audit, G.R. No. 222129, February 2, 2021 [Per J. lnting, En Banc] at~-
This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
" CSC Resolution No. 021480 (2002), sec. l(b). /
Resolution 11 G.R. No. 249061

Section 1. Contract of Service -

b. Job Order -

In contracts of service and job orders, there exists no employer-employee

relationship between the hiring agency and the persons hired and it should be
made clear in their contract that services rendered thereunder can never be
accredited as government service. Furthermore, the persons hired are not
entitled to benefits enjoyed by the government employees such as PERA, ACA
andRATA.

Thus, the Court has already ruled that the grant by PhilHealth of
allowances and incentives to contractual employees cannot be sanctioned. As
held in Phi/Health v. COA, 70 the grant of transportation allowance and projett
completion incentive to contractual employees is inconsistent with the lawful
distinction between the benefits enjoyed by government employees and job
order contractors. Furthermore, the said grant is contrary to the express
provision in the job order contract that the only compensation due to the
contractor was the daily rate agreed upon. 71

Job order contractors and full-time consultants may render services for
PhilHealth, but they are not considered employees. As non-employees, their
compensation shall be determined based on their respective job order or
consultancy contracts. 72

Here, the COA found that the stipulations in the contracts of the job
order contractors clearly provided that: (a) there is no employer-employee
relationship between them and PhilHealth; (b) the services to be rendered are
not considered as government service; and (c) they are not entitled to th,e
benefits enjoyed by the regular employees. On the other hand, it was
stipulated in the contract of the project-based contractors that they shall not
be entitled to benefits other than their daily wages. 73

Additionally, PhilHealth ROV's grant of various benefits and

allowances to its job order contractors and project-based contractors was done
without the required authorization from the OP, in violation of prevailing
government rules on their grant, and unlawfully directed to non-employees.

70
G.R. No. 258100, September 27, 2022 [Per J. Zalameda, En Banc].
71
Id. at 11. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
72
Phi!Health v. Commission on Audit, G.R. No. 222129, February 2, 2021 [Per J. Inting, En Banc].at 8-9
This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
73
Rollo, p. 44.
Resolution 12 G.R. No. 249061

Conversely, PhilHealth contends that a pending request for post facto

approval that it has lodged with the OP will prove the propriety of the
disallowed benefits. This argument fails to convince.

That a belated request for approval from the OP has been made does
not by itself affect the legality of previous actions which have been disallowed
by COA, much less excuse the error. In fact, this is a solid proof that the
disallowed benefits lacked legal basis. On the other hand, even if the Court
were to suspend its judgment and await the presidential approval sought by
PhilHealth, this authority from the OP would not set aside the unlawful nature
of the disallowed payments to non-employees.

In Development Bank ofthe Philippines v. COA, 74 the Court held that a

presidential approval must not only be clear and unequivocal, such as one
embodied in a formal memorandum, the grant itself authorized by the
President must not also be contrary to law. Ruling that the presidential
approval was invalid in that case, the Court stated that:

First, the presidential approval was not reduced to any formal

memorandum but merely in the form of the president's signature affrxed
at the end of [Development Bank of the Philippines (DBP)]'s Letter.
Second, presidential approval of a new compensation and benefits
scheme, including the grant of allowances, which is unauthorized by law
will not stop the State from correcting the erroneous application of a
statute. Third, [President Gloria Macapagal Arroyo (PGMA)]'s approval of
DBP's Compensation Plan was void because it was made during the
prohibited period under the Omnibus Election Code, to wit: (Emphasis
supplied)

Moreover, as noted by COA, the President's approval

was made on [April 22,] 2010, merely 18 days before the
[May 10,] 2010 National and Local Elections. Under
Section 261 (g)(2) of Batas Pambansa Blg. 881, otherwise
known as the "Omnibus Election Code of the Philippines,"
the grant of increase of salary or remuneration or privilege
to any government official or employee is prohibited during
the period of 45 days before a regular election. Thus,
President Arroyo's approval of DBP's authority to
approve the compensation plan is clearly void because it
was made within the prohibited 45-day period before the
[May 10,] 2010 elections. That the benefits approved
refer to benefits implemented long before the president's
approval during the prohibited period does not make
such approval valid. It bears stressing that petitioners
precisely sought the president's approval or confirmation to
validate the unauthorized grant of merit increases, economic

74
G.R. No. 262 I 93, July 11, 2023 [Per J. Gaerlan, En Banc].
Resolution 13 G.R. No. 249061

assistance, and integration of officers' allowance.75

(Emphasis in the original, citations omitted)

The crux of the immateriality of a post facto presidential approval in

evaluating the propriety of the disallowed disbursements is the inherent
repugnance of the disfavored act to the law. In Philippine Charity
Sweepstakes Office v. COA, 76 the Court maintained this critical view:

In its effort to maintain the validity of the benefits subject of the

NDs, [Philippine Charity Sweepstakes Office (PCSO)] has repeatedly
utilized the letter of Executive Secretary Ochoa supposedly containing the
post facto approval of then President Aquino. However, the Court has
been consistent in rejecting post facto approval to justify disallowed
disbursements. In Philippine Charity Sweepstakes Office v. Pulido-Tan
(Pulido-Tan), We ruled:

In this petition, We cannot rule on the validity of the

alleged post facto approval by the Office of the President as
regards the grant of[Cost of Living Allowance] to the PCSO
officials and employees. The PCSO failed to prove its
existence since no documentary evidence, original copy or
otherwise, was submitted before Us. Even so, where there
is an express provision of the law prohibiting the grant of
certain benefits, the law must be enforced even if it
prejudices certain parties on account ofan error committed
by public officials in granting the benefit An executive act
shall be valid only when it is not contrary to the laws or the
Constitution. 77 (Emphasis supplied; citation omitted)

In the case of bench, PhilHealth merely promises that the post facto
Presidential approval is forthcoming. But as pointed out, even if granted, the
disbursement of the disallowed benefits and incentives in favor of the job
order and project-based contractors will remain legally infirm.

Verily, the disallowances were warranted and in this respect, COA

committed no grave abuse of discretion in affirming them.

Having found the disallowances to be proper, the Court must next

determine the liability of the approving and certifying officers of the subje~t
NDs.

The Court has laid down the rules on return of disallowed amounts in
Madera v. COA, 78 thus:

75 Id. at 21-22. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court
website.
76 G.R. No. 246313, February 15, 2022 [Per J. Zalameda, En Banc].
77
Id. at 7. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
78 Madera v. Commission on Audit, 882 Phil. 744 (2020) [Per J. Caguioa, En Banc].
Resolution 14 G.R. No. 249061

1. If a Notice of Disallowance is set aside by the Court, no return shall be

required from any of the persons held liable therein.

2. If a Notice of Disallowance is upheld, the rules on return are as follows:

a. Approving and certifying officers who acted in good faith, in regular

performance of official functions, and with the diligence of a good
father of the family are not civilly liable to return consistent with
Section 38 of the Administrative Code of 1987.

b. Approving and certifying officers who are clearly shown to have

acted in bad faith, malice, or gross negligence are, pursuant to
Section 43 of the Administrative Code of 1987, solidarily liable to
return only the net disallowed amount which, as discussed herein,
excludes amounts excused under the following sections 2c and 2d.

c. Recipients - whether approving or certifying officers or mere

passive recipients - are liable to return the disallowed amounts
respectively received by them, unless they are able to show that the
amounts they received were genuinely given in consideration of
services rendered.

d. The Court may likewise excuse the return of recipients based on

undue prejudice, social justice considerations, and other bona fide
exceptions as it may determine on a case[-]to[-]case basis. 79

Nevertheless, in applying the Madera rules, the ultimate analysis of

each case would still depend on the facts presented. Hence, the surrounding
circumstances shall still be determined on a case-to-case basis. 80

As to the non-employee payees who were job order contractors and

project-based contractors, the COA CP partly reversed the COA ROV
Decision modifying the NDs. The COA CP Decision declared that the payees
need not refund the disallowed benefits. Notably, the liability of the non-
employee payees was not raised in this Petition. As such, consistent with case
law, the COA CP Decision is considered final and immutable in so far as these
payees are concemed. 81

As to the approving officers identified in the assailed NDs, their

liability is clear. They proceeded to grant benefits and allowances to non-

79
Id. at 817-818.
80 Phi!Health v. Commission on Audit, G.R. No. 258424, January 10, 2023 [Per J. J. Lopez, En Banc] at
21. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
81
Irene G. Ancheta, et al. v. Commission on Audit, G.R. No. 236725, February 2, 2021 [Per J. M. Lopez,
En Banc] at 14. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court
website. See also Securities and Exchange Commission v. Commission on Audit, G.R. No. 252198, April
27, 2021 [Per J. Lazaro-Javier, En Banc]at 20-2 I. This pinpoint citation refers to the copy of the Decision
uploaded to the Supreme Court website.
Resolution 15 G.R. No. 249061

employees despite its patent illegality and irregularity, negating any claim of
good faith. 82 In Phi/Health v. COA, 83 the Court has held:

Notwithstanding the lack of malice or bad faith, this Court finds that
the approving officers should be held solidarily liable due to gross
negligence. It is well settled that patent disregard of case law and COA
directives, as in this case, is tantamount to gross negligence.

In Casal v. Commission on Audit, the approving officers were found

to be solidarily liable for their disregard of the issuances by the executive
as well as the directives of the COA. While there was no indication of a
dishonest purpose, the Court found that their actions amounted to gross
negligence, making them liable for the refund thereof.

In De Guzman v. Commission on Audit, while there was no showing

of malice and bad faith on the part of the officers in approving the release
of the centennial bonus, the Court nevertheless ruled that they remained
jointly and severally liable for failure to abide by administrative issuances.

In Power Sector Assets and Liabilities Management Corporation

(PSALM) v. Commission on Audit, the approving and certifying officers
were found guilty of gross negligence for carelessly granting other health
benefits outside the warranted free annual medical check-up in accordance
with law. For carelessly expanding the coverage of the benefits, despite the
absence of malice and bad faith, the officers were held jointly and solidarily
liable.

The fact that petitioner does not possess unrestricted authority to

unilaterally fix its compensation structure has been affirmed time and again
by jurisprudence, such as PhilHealth Regional Office-Caraga v.
Commission on Audit, PhilHealth v. Commission on Audit in 2016, and
PhilHealth v. Commission on Audit in 2018. If only to harp on a point,
petitioner is required to observe the guidelines laid down by the President
anent position classification, allowances, among other forms of
compensation, and to report to the latter, through the DBM, on its position
classification and compensation loans, policies, rates, and other necessary
details following the guidelines as may be determined by the executive.

As PhilHealth officials, it is not extraordinary to expect that they

should be fully acquainted with their agency's mandate and the policies
affecting it. 84 (Emphasis supplied; citations omitted)

The grant of benefits and allowances in this case to job order

contractors and project-based contractors, in violation of clear limitations of
the law, manifests the gross negligence of the approving officers. Their
solidary liability under the assailed NDs is only proper.

82
Phi/Health v. Commission on Audit et al, G.R. No. 250089, November 9, 2021 [Per J. J. Lopez, En
Banc].
83 Id.
84
Id. at 29-30. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court
website.
Resolution 16 G.R. No. 24906'1

Nevertheless, as held in prevailing jurisprudence, the liability of these

approving officers, should be limited to the net disallowed amount or the total
disallowed amount less the amounts excused to be returned by the non-
employee payees. In Ancheta v. COA, 85 the Court provided that:

To rule otherwise would impose an inequitable burden upon the approving

and certifying officers of shouldering the entire amount disbursed, when
some recipients were already allowed to retain the amounts that they
received. As we have exhaustively explained in Madera:

[A]ny amounts allowed to be retained by payees shall

reduce the solidary liability of officers found to have acted
in bad faith, malice, and gross negligence. In this regard,
Justice Bernabe coins the term "net disallowed amount" to
refer to the total disallowed amount minus the amounts
excused to be returned by the payees. Likewise, Justice
Leonen is of the same view that the officers held liable have
a solidary obligation only to the extent of what should be
refunded and this does not include the amounts received by
those absolved of liability. In short, the net disallowed
amount shall be solidarily shared by the
approving/authorizing officers who were clearly shown to
have acted in bad faith, with malice, or were grossly
negligent. 86 (Citation omitted)

Thus, the approving officers should be held solidarily liable as to the

net disallowed amounts only.

Finally, as to the certifying officers, the Court has consistently held that
when certifying officers merely guaranteed the availability of appropriations
and determined the completeness of the supporting documents for such
disbursements, without a showing of any bad faith on their actions, these
certifying officers cannot be held personally liable for the disallowed
benefits.87

Furthermore, the Court has also characterized the acts of treasurers

certifying the availability of funds and supporting documents as ministerial
duties, absent any bad faith, as they have nothing to do with policy-making or
decision-making, and were merely involved in day-to-day operations. 88

85 Irene G. Ancheta, et al v. Commission on Audit, G.R. No. 236725, February 2, 2021 [Per J. M. Lopez,
En Banc].
86
Id. at 18. This pinpoint citation refers to the copy of the Decision uploaded to the Supreme Court website.
87
Phi/Health v. Commission on Audit and Chairperson Michael G. Aguinaldo, G.R. No. 250089,
November 9, 2021 [Per J. J. Lopez, En Banc] at 30-31. This pinpoint citation refers to the copy of the
Decision uploaded to the Supreme Court website.
88
Perez v. Aguinaldo, G.R. 252369, February 7, 2023 [Per J. Inting, En Banc] at 9-10. This pinpoipt
citation refers to the copy of the Decision uploaded to the Supreme Court website, Alejandrina v.
Commission on Audit, 866 Phil. 188, 207-208 (2019) [Per J. Carandang, En Banc].
Resolution 17 G.R. No. 249061

In this case, the certifying officers who strictly certified only to the
availability of funds and that the expenditure is properly supported by
documents, should not be held liable following the guidelines under case law.

Therefore, the assailed NDs must be modified to be consistent with the

jurisprudential guidelines to declare that the certifying officers are not
solidarily liable for the amounts and that the approving officers shall remain
solidarily liable only as to the net disallowed amount.

However, considering that, as earlier pointed out, the payees have

already been absolved from returning the disallowed amounts, the net
disallowed amount will be equivalent to zero. Notably, what was disallowed
are the benefits granted to job order contractors and project-based contractors.
The records of the case further show that the approving and certifying officers
were not among the recipients of these disallowed benefits. This means there
is nothing more for the approving officers to return.

Consequently, there is no more need to resolve the applications for

TRO and WPI, which must both be denied .

.ACCORDINGLY, the Petition is PARTLY GRANTED. The

Decision in COA Decision No. 2017-422, dated December 20, 2017, and the
Resolution in COA CP Case No. 2014-572, dated September 27, 2018, are
AFFIRMED WITH MODIFICATIONS, as follows:

1. The disallowance of various benefits and allowances covered by

Notice ofDisallowance Nos. 11-027 (10), 11-028 (10), 11-029 (10),
11-030 (09), 11-031 (10), 11-032 (10), 11-033 (09), 11-034 (10),
11-035 (10), 11-036 (10), 11-037 (10), 11-038, 11-039, 11-040, 11-
041, 11-042, 11-043, 11-044, 11-048 are AFFIRMED;

2. The certifying officer, Shirley S. Victoria, who merely attested t~

the availability of funds and completeness of the documents to
support the disbursements of the benefits and allowances pertaining
to Notice of Disallowance Nos. 11-027 (10), 11-028 (10), 11-035
(10), 11-038, 11-039, and 11-042 is held not solidarily liable in her
official capacity to refund the disallowed amounts; and

3. As to the other approving and certifying officers, they shall no

longer refund the net disallowed amount covered by Notice of
Disallowance Nos. 11-027 (10), 11-028 (10), 11-029 (10), 11-030
(09), 11-031 (10), 11-032 (10), 11-033 (09), 11-034 (10), 11-035
(10), 11-036 (10), 11-037 (10), 11-038 (10), 11-039, 11-040, 11-
041, 11-042, 11-043, 11-044, and 11-048.
Resolution 18 G.R. No. 249061

SO ORDERED.

'M~H
Associate Justice

WE CONCUR:

IN S. CAGUIOA

Associate Justice

~
SA~LAN
Associate Justice
Resolution 19 G.R. No. 249061

RICARD JROSEmOPEZ
Associate Justice

JO~~~ Associate Justice

~~~ ~
------1CNT<ffil? T. ~O, JR. ~
Associate Justice •.

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that

the conclusions in the above Resolution had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.