EN BANC
G.R. No. 222838, September 04, 2018
PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioner, v. COMMISSION ON AUDIT, CHAIRPERSON MICHAEL G. AGUINALDO, DIRECTOR JOSEPH B. ANACAY, AND SUPERVISING AUDITOR ELENA L. AGUSTIN, Respondents.
D E C I S I O N
JARDELEZA, J.:
This petition for review on certiorari1 under Rule 64,2 with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction, seeks to annul and set aside the Decision No. 2015-0933 dated April 1, 2015 and Resolution4 dated December 15, 2015, respectively, of the Commission on Audit (COA). The COA affirmed the disallowance of the Institutional Meeting Expenses (IME) for 2010 paid to members of the Board of Directors (BOD) of Philippine Health Insurance Corporation (PhilHealth) in the total amount of P2,965,428.59.
In October 2007, the PhilHealth BOD passed Board Resolution No. 1055 approving the entitlement of its members (or their authorized representatives) to the Board Extraordinary and Miscellaneous Expense (BEME) in the reimbursable amount of P30,000.00 each per month effective October 4, 2007. These allowances were intended to cover the expenses of said BOD members in the performance of their official functions, which they would otherwise personally shoulder.5 Correspondingly, a supplemental budget in the amount of P1,560,000.00 was also appropriated for the purpose.6
In December 2007, the BOD amended Board Resolution No. 1055 through Board Resolution No. 1084. It allowed the unexpended balance of the monthly Extraordinary and Miscellaneous Expense (EME) to be carried over and expended in the succeeding months within the same calendar year, effective retroactively from October 5, 2007.7
In another Resolution8 dated February 12, 2009, the BOD resolved to allocate the amount of P4,320,000.00 from the 2009 Corporate Operating Budget (COB) of the Office of the Corporate Secretary and every year thereafter for the reimbursement of expenses incurred by the members of the BOD (or their authorized representatives) in the discharge of their official functions and duties outside board meetings.
On May 24, 2011, the COA Supervising Auditor issued an Audit Observation Memorandum9 (AOM) which showed that reimbursements of EME totaling P19.95 million in calendar year 2010 were charged to the Representation Expenses account under the sub-accounts "Institutional Meeting Expenses (865-10) and Committee Meeting Expenses (865-20)." The AOM noted that PhilHealth had been using IME and Committee Meeting Expenses accounts to accommodate reimbursements of EME since charges to the EME account already far exceeded the General Appropriations Act (GAA) prescribed limitation for each official. The COA Supervising Auditor viewed the charging of EME against other accounts to be irregular because the nature and purpose of these expenses fall under the budgetary controls in the disbursement of EME as stated in the GAA and COA Circular No. 2006-01. The charging of EME against other accounts likewise increased the amount of the excess from the GAA-prescribed annual rate for EME.10 The Supervising Auditor also observed that P5.63 million of the total amount was reimbursement of expenses made by members of the PhilHealth BOD and personnel whose positions were not entitled to EME.11
PhilHealth commented on the AOM, but its comment was found unsatisfactory. Consequently, Notice of Disallowance (ND) No. HO 12-004 (10) was issued on July 18, 2012 disallowing the payment for IME of the members of the PhilHealth BOD for the period January to December 2010 in the amount of P2,965,428.59 for lack of legal basis.12
PhilHealth filed an appeal before the COA-Corporate Government Sector (CGS), but the same was denied. The COA-CGS affirmed the ruling of the Supervising Auditor that Section 18(d) of Republic Act (RA) No. 787513 expressly provides that a per diem is precisely intended to be the compensation for members of the PhilHealth BOD. Nowhere in RA No. 7875 can it be found that PhilHealth is authorized to grant additional compensation, allowances or benefits to its BOD. Neither is the BOD authorized to grant compensation beyond what RA No. 7875 provides. Although the BOD is empowered to formulate the necessary rules and regulations pursuant to RA No. 7875, this power must be exercised within the scope of the authority given by the legislature. Thus, the COA-CGS found that the BOD exceeded its authority when it issued Board Resolution No. 1193 authorizing its members to receive EME contrary to Section 18(d) of RA No. 7875.14
The COA-CGS further ruled that PhilHealth cannot seek refuge on the previous rulings of the Court with regard to the non-refund of the disallowed benefits. Citing the AOM, the COA-CGS pointed out that the expenses in question were already disallowed in audit. As such, the BOD members already knew, at the time they received the IME, that said benefits had no legal basis.15
PhilHealth filed a petition for review before the COA Proper. In its assailed Decision, however, the COA Proper dismissed the petition for being filed out of time, noting that the ND and the COA-CGS Decision were appealed only after 181 and 42 days, respectively, had lapsed from the dates of their receipt by PhilHealth. The COA Proper also found no compelling reason to relax its procedural rules because PhilHealth did not offer any justification for the belated filing of its petition. PhilHealth moved for reconsideration, but the same was also denied.16
Hence, this petition which raises grave abuse of discretion on the part of COA for denying the appeal on mere procedural grounds instead of deciding on the merits of the case in the interest of substantial justice.
We deny the petition.
It is the "period of time running from the beginning of a certain numbered day up to, but not including, the corresponding numbered day of the next month, and if there is not a sufficient number of days in the next month, then up to and including the last day of that month." To illustrate, one calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from January 31, 2008 will be from February 1, 2008 until February 29, 2008.19 (Citations omitted.)
Sec. 3. Section 18 of the Law shall be amended to read as follows:"Sec. 18. The Board of Directors. –
a) Composition – The Corporation shall be governed by a Board of Directors hereinafter referred to as the Board, composed of the following members:The Secretary of Health;
The Secretary of Labor and Employment or his representative;
The Secretary of the Interior and Local Government or his representative;
The Secretary of Social Welfare and Development or his representative;
The President of the Corporation;
A representative of the labor sector;
A representative of employers;
The SSS Administrator or his representative;
The GSIS General Manager or his representative;
The Vice Chairperson for the basic sector of the National Anti-Poverty Commission or his representative;
A representative of Filipino overseas workers;
A representative of the self-employed sector; and
A representative of health care providers to be endorsed by the national associations of health care institutions and medical health professionals.
The Secretary of Health shall be the ex officio Chairperson while the President of the Corporation shall be the Vice Chairperson of the Board.
The reason is that these services are already paid for and covered by the compensation attached to his principal office. It should be obvious that if, say, the Secretary of Finance attends a meeting of the Monetary Board as an ex-officio member thereof, he is actually and in legal contemplation performing the primary function of his principal office in defining policy in monetary and banking matters, which come under the jurisdiction of his department. For such attendance, therefore, he is not entitled to collect any extra compensation, whether it be in the form of a per diem or an honorarium or an allowance, or some other such euphemism. By whatever name it is designated, such additional compensation is prohibited by the Constitution.25 (Emphasis supplied.)
First, the BCDA claims that the Board can grant the year-end benefit to its members and full-time consultants because, under Section 10 of RA No. 7227, the functions of the Board include the adoption of a compensation and benefit scheme.
The Court is not impressed. The Board's power to adopt a compensation and benefit scheme is not unlimited. Section 9 of RA No. 7227 states that Board members are entitled to a per diem:"Members of the Board shall receive a per diem of not more than Five thousand pesos (P5,000) for every board meeting: Provided, however, That the per diem collected per month does not exceed the equivalent of four (4) meetings: Provided, further, That the amount of per diem for every board meeting may be increased by the President but such amount shall not be increased within two (2) years after its last increase." x x x
Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the amount of per diem to not more than P5,000; and limits the total amount of per diem for one month to not more than four meetings. In Magno v. Commission on Audit, Cabili v. Civil Service Commission, De Jesus v. Civil Service Commission, Molen, Jr. v. Commission on Audit, and Baybay Water District v. Commission on Audit, the Court held that the specification of compensation and limitation of the amount of compensation in a statute indicate that Board members are entitled only to the per diem authorized by law and no other. In Baybay Water District, the Court held that:"By specifying the compensation which a director is entitled to receive and by limiting the amount he/she is allowed to receive in a month, x x x the law quite clearly indicates that directors x x x are authorized to receive only the per diem authorized by law and no other compensation or allowance in whatever form."
Fourth, the BCDA claims that the Board can grant the year-end benefit to its members and the full-time consultants because RA No. 7227 does not expressly prohibit it from doing so.
The Court is not impressed. A careful reading of Section 9 of RA No. 7227 reveals that the Board is prohibited from granting its members other benefits. x x xx x x x
Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the amount of per diem to not more than P5,000; limits the total amount of per diem for one month to not more than four meetings; and does not state that Board members may receive other benefits. In Magno, Cabili, De Jesus, Molen, Jr., and Baybay Water District, the Court held that the specification of compensation and limitation of the amount of compensation in a statute indicate that Board members are entitled only to the per diem authorized by law and no other.
The specification that Board members shall receive a per diem of not more than P5,000 for every meeting and the omission of a provision allowing Board members to receive other benefits lead the Court to the inference that Congress intended to limit the compensation of Board members to the per diem authorized by law and no other. Expressio unius est exclusio alterius. Had Congress intended to allow the Board members to receive other benefits, it would have expressly stated so. For example, Congress' intention to allow Board members to receive other benefits besides the per diem authorized by law is expressly stated in Section 1 of RA No. 9286:"SECTION 1. Section 13 of Presidential Decree No. 198, as amended, is hereby amended to read as follows:"SEC. 13. Compensation.–Each director shall receive per diem to be determined by the Board, for each meeting of the Board actually attended by him, but no director shall receive per diems in any given month in excess of the equivalent of the total per diem of four meetings in any given month.
Any per diem in excess of One hundred fifty pesos (P150.00) shall be subject to the approval of the Administration. In addition thereto, each director shall receive allowances and benefits as the Board may prescribe subject to the approval of the Administration." x x x
The Court cannot, in the guise of interpretation, enlarge the scope of a statute or insert into a statute what Congress omitted, whether intentionally or unintentionally.32 (Emphasis supplied; citations omitted.)
As clearly expressed in PCSO v. COA, even if it is assumed that there is an explicit provision exempting a GOCC from the rules of the then Office of Compensation and Position Classification (OCPC) under the DBM, the power of its Board to fix the salaries and determine the reasonable allowances, bonuses and other incentives was still subject to the standards laid down by applicable laws: P.D. No. 985, its 1978 amendment, P.D. No. 1597, the SSL, and at present, R.A. 10149. To sustain petitioners' claim that it is the PHIC, and PHIC alone, that will ensure that its compensation system conforms with applicable law will result in an invalid delegation of legislative power, granting the PHIC unlimited authority to unilaterally fix its compensation structure. Certainly, such effect could not have been the intent of the legislature.36 (Emphasis supplied; citations omitted.)
III. Audit Guidelines
- The amount of extraordinary and miscellaneous expenses, as authorized in the corporate charters of GOCCs/GFIs, shall be the ceiling in the disbursement of these funds. Where no such authority is granted in the corporate charter and the authority to grant extraordinary and miscellaneous expenses is derived from the General Appropriations Act (GAA), the amounts fixed thereunder shall be the ceiling in the disbursements;
- Payment of these expenditures shall be strictly on a non-commutable or reimbursable basis;
- The claim for reimbursement of such expenses shall be supported by receipts and/or other documents evidencing disbursements; and
- No portion of the amounts appropriated shall be used for salaries, wages, allowances, intelligence and confidential expenses which are covered by separate appropriations. (Emphasis supplied.)
Sec. 28. Extraordinary and Miscellaneous Expenses. Appropriations authorized herein may be used for extraordinary expenses of the following officials and those of equivalent rank as may be determined by the DBM, not exceeding:
(a) P220,000 for each Department Secretary; (b) P90,000 for each Department Undersecretary; (c) P50,000 for each Department Assistant Secretary; (d) P38,000 for each head of bureau or organization of equivalent rank, and for each head of a Department Regional Office; (e) P22,000 for each head of a Bureau Regional Office or organization of equivalent rank; and (f) P16,000 for each Municipal Trial Court Judge, Municipal Circuit Trial Court Judge, and Shari'a Circuit Court Judge.
In addition, miscellaneous expenses not exceeding Seventy-Two Thousand Pesos (P72,000) for each of the offices under the above named officials are herein authorized.x x x x
As the records bear out, the petitioners who approve the EMEs failed to observe the following: first, there is already a law, the GAA, that limits the grant of EMEs; second, COA Memorandum No. 97-038 dated September 19, 1997 is a directive issued by the COA to its auditors to enforce the self-executing prohibition imposed by Section 13, Article VII of the Constitution on the President and his official family, their deputies and assistants, or their representatives from holding multiple offices and receiving double compensation; and third, the irregularity of giving additional compensation or allowances to ex officio members was already settled by jurisprudence, during the time that the subject allowances were authorized by the BSP.
Indeed, the petitioners-approving officers' disregard of the aforementioned case laws, COA issuances, and the Constitution, cannot be deemed as a mere lapse consistent with the presumption of good faith.
In line with this, We cannot subscribe to petitioner Favila's insistence that he should not be liable in the approving, processing and receiving of EMEs on the basis that he did not participate in the adoption of the resolutions authorizing the payment of the EMEs.
As pointed out during the deliberation by Our learned colleague, Hon. Justice Lucas P. Bersamin, the doctrine on the non-liability of recipients of disallowed benefits based on good faith did not extend to petitioner Favila for the following reasons: first, there was precisely a law (the relevant GAAs) that expressly limited the amounts of the EMEs to be received by the ex officio members; and second, insofar as ND No. 10-004GF (2007-2008) is concerned, his liability arose from his receipt of the subject allowances in 2008, when he was an ex officio member of the Board. Hence, good faith did not favor him not only because he had failed to exercise the highest degree of responsibility, but also because as a cabinet member he was aware of the extent of the benefits he was entitled to.
Verily, petitioners Tetangco, Jr., Favila, Amatong, Favis-Villafuerte, Antonio, and Bunye, who were members of the Monetary Board were expected to keep abreast of the laws that may affect the performance of their functions. The law, jurisprudence and COA issuances subject of this case are of such clearness that the concerned officials could not have mistaken their meaning. It was incumbent upon them to instruct Petitioners Ong, Prudencio, Reyes and Catarroja who participated in the processing of the EMEs, to comply with these laws. Unfortunately, they did not. Thus, they cannot find shelter in the defense of good faith.54 (Citations omitted.)
As can be read from AOM No. 2011-10(10) dated May 24, 2011 and issued by the Supervising Auditor, PhilHealth:"Claims for reimbursement of EME by the PhilHealth Board of Directors and those holding position titles with SG+ were already disallowed in audit as these reimbursements were not in conformity with the above stated provisions in the GAA that only positions of equivalent rank as may be determined by the DBM are entitled to reimbursements of EME.57 (Underscoring in the original.)
Endnotes:
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on September 4, 2018 a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on October 4, 2018 at 3:30 p.m.Very truly yours,
(SGD.) EDGAR O. ARICHETA
Clerk of CourtEndnotes:
1Rollo, pp. 3-41.
2 In relation to Rule 65 of the Rules of Court.
3Rollo, pp. 52-55.
4Id. at 57.
5Id. at 6-7.
6Id. at 113-115.
7Id. at 116-118.
8 Board Resolution No. 1215, id. at 119-121.
9Id. at 122-125.
10Id. at 122-123.
11Id. at 122.
12Id. at 59.
13 An Act Instituting a National Health Insurance Program for All Filipinos and Establishing the Philippine Health Insurance Corporation for the Purpose.
14 Rollo, pp. 61-62.
15Id. at 63-64.
16Id. at 52-55, 57.
17 G.R. No. 162155, August 28, 2007, 531 SCRA 436.
18Rollo, pp. 11-12.
19Commissioner of Internal Revenue v. Primetown Property Group, Inc., supra at 443.
20Id. at 444.
21 See Radaza v. Court of Appeals, G.R. No. 177135, October 15, 2008, 569 SCRA 223, 236-237.
22 An Act Amending Republic Act No. 7875, otherwise known as "An Act Instituting a National Health Insurance Program for all Filipinos and Establishing the Philippine Health Insurance Corporation for the Purpose."
23Sevilla v. Court of Appeals, G.R. No. 88498, June 9, 1992, 209 SCRA 637, 642.
24Civil Liberties Union v. Executive Secretary, G.R. No. 83896, February 22, 1991, 194 SCRA 317, 333-335.
25Id. at 335.
26Rollo, pp. 65-66. It does not clearly appear from the records, even from ND No. HO 12-004 (10), which among the members of the BOD as payees were appointed or designated (or their representatives).
27 See Tetangco, Jr. v. Commission on Audit, G.R. No. 215061, June 6, 2017, 826 SCRA 179.
28 Guidelines on the Grant of Honoraria to the Governing Boards of Collegial Bodies.
29Canet v. Decena, G.R. No. 155344, January 20, 2004, 420 SCRA 388, 393-394.
30San Miguel Corporation Employees Union-Phil. Transport and General Workers Org. v. San Miguel Packaging Products Employees Union-Pambansang Diwa ng Manggagawang Pilipino, G.R. No. 171153, September 12, 2007, 533 SCRA 125, 153.
31 G.R. No. 178160, February 26, 2009, 580 SCRA 295.
32Id. at 300-306.
33 Sec. 16. Powers and Functions. – The Corporation shall have the following powers and functions:x x x x
n) to organize its office, fix the compensation of and appoint personnel as may be deemed necessary and upon the recommendation of the president of the Corporation;
34 Sec. 26. Financial Management. – The use, disposition, investment, disbursement, administration and management of the National Health Insurance Fund, including any subsidy, grant or donation received for program operations shall be governed by resolution of the Board of Directors of the Corporation, subject to the following limitations:x x x x
b) The Corporation is authorized to charge the various funds under its control for the costs of administering the Program. Such costs may include administration, monitoring, marketing and promotion, research and development, audit and evaluation, information services, and other necessary activities for the effective management of the Program. The total annual costs for these shall not exceed twelve percent (12%) of the total contributions, including government contributions to the Program and not more than three (3%) of the investment earnings collected during the immediately preceding year.
35 G.R. No. 213453, November 29, 2016, 811 SCRA 238.
36Id. at 261.
37Supra note 31.
38Id. at 301. Emphasis omitted.
39Rollo, pp. 21-22.
40Id. at 262-263.
41Bases Conversion and Development Authority v. COA, supra note 31 at 307-308.
42 G.R. No. 210940, September 6, 2016, 802 SCRA 229.
43Id. at 243-245.
44 CONSTITUTION, Art. XIII, Sec. 11; RA No. 7875, Sec. 2.
45 RA No. 7875, Sec. 4(v).
46 RA No. 7875, Sec. 24.
47 RA No. 7875, Sec. 26. Financial Management. – The use, disposition, investment, disbursement, administration and management of the National Health Insurance Fund, including any subsidy, grant or donation received for program operations shall be governed by resolution of the Board of Directors of the Corporation, subject to the following limitations:a) All funds under the management and control of the Corporation shall be subject to all rules and regulations applicable to public funds.
b) The Corporation is authorized to charge the various funds under its control for the costs of administering the Program. Such costs may include administration, monitoring, marketing and promotion, research and development, audit and evaluation, information services, and other necessary activities for the effective management of the Program. The total annual costs for these shall not exceed twelve percent (12%) of the total contributions, including government contributions to the Program and not more than three percent (3%) of the investment earnings collected during the immediately preceding year.
48 RA No. 7875, Sec. 2(i).
49 Guidelines on the Disbursement of Extraordinary and Miscellaneous Expenses and other Similar Expenses in Government-Owned and Controlled Corporations/Government Financial Institutions and Their Subsidiaries.
50 An Act Appropriating Funds for the Operation of the Government of the Republic of the Philippines from January One to December Thirty-One, Two Thousand and Ten, and for Other Purposes.
51Rollo, p. 122.
52Id. at 126-129.
53Tetangco, Jr. v. Commission on Audit, supra note 27 at 187-188.
54Id. at 188-190.
55 See Bases Conversion and Development Authority v. COA, supra note 31 at 308.
56Rollo, p. 63.
57Id.
58Zamboanga City Water District v. COA, G.R. No. 213472, January 26, 2016, 782 SCRA 78, 97, citing Philippine Economic Zone Authority v. COA, G.R. No. 189767, July 3, 2012, 675 SCRA 513 and Maritime Industry Authority v. COA, G.R. No. 185812, January 13, 2015, 745 SCRA 300.