The Supreme Court partly granted a petition filed by the Philippine Health Insurance Corporation (PhilHealth), Regional Office for the National Capital Region, over the disallowance of productivity incentive and collective negotiation agreement bonuses. The Court affirmed the challenged Commission on Audit (COA) rulings with modifications and sent the case back to the COA for a final determination of the disallowed amount.
The Case
The PhilHealth Board of Directors passed Board Resolution No. 5817 granting a productivity incentive bonus to PhilHealth personnel for calendar year 2002. It later passed Board Resolution No. 667, which institutionalized the grant of the productivity incentive bonus to regular personnel and approved a computation scheme proposed by the Labor Management Consultative Council, subject to availability of funds and applicable auditing and accounting rules. The bonus consisted of the organization performance incentive bonus, the individual performance incentive bonus, and a PHP 30,000.00 collective negotiation agreement (CNA) bonus.
Under Office Order No. 0059-2013, PhilHealth granted the payment of a performance-based bonus and the CNA bonus to its officials and employees for calendar year 2012. For that year, the total productivity incentive bonus and CNA bonus granted amounted to PHP 36,467,475.60.
Upon post-audit, the Audit Team Leader and the Supervising Auditor found that PhilHealth erroneously granted the performance incentive bonus. Notice of Disallowance No. NCR-2014-001-COB(12) was issued disallowing the payment of the performance incentive bonus in the total amount of PHP 36,467,475.60, for lack of executive approval as required under Administrative Order No. 103, Section 2, of the Office of the President, and for being excessive and violative of Executive Order No. 80.
Certifying and approving officers were named liable, along with the payees. The COA Director denied PhilHealth's appeal. On petition for review, the COA Proper partially granted the appeal: it lifted the disallowance on the organizational performance incentive bonus and individual performance incentive bonus totaling PHP 16,141,834.88, while affirming the disallowance of the CNA bonus in the amount of PHP 11,192,500.00. A later resolution denied PhilHealth's Motion for Partial Reconsideration.
The Issue
The Court examined whether the disallowance should stand and who among the payees and the certifying and approving officers should be held liable to return the disallowed amounts.
The Ruling
The Court ruled that the productivity incentive bonus was disallowed not only for procedural infirmity but for lack of legal basis, and that all the identified officers and employees in the National Capital Region who received the bonus are liable to return the amounts they individually received as to the disallowed amounts.
On the certifying and approving officers, the Court held that Joel P. Santos, Maricel J. Magalang, and Jenny-Pearl R. Perez performed ministerial functions and acted in good faith, and so could not be held personally liable. It refused to acknowledge good faith on the part of Lucille B. Arenas, who certified that the charges to the budget were necessary and lawful, and Recto M. Panti, who approved the payment, finding their roles were not purely ministerial and holding them solidarily liable.
The dispositive portion states: "ACCORDINGLY, the Petition for Certiorari is PARTLY GRANTED. The January 31, 2020 Decision in COA Decision No. 2020-485 and the January 31, 2024 Resolution in COA Decision No. and 2024-015 are AFFIRMED with MODIFICATIONS. The case is REMANDED to the Commission on Audit for a final determination of the disallowed amount in relation to Notice of Disallowance No. NCR-2014-001-COB(12) dated January 14, 2014."
By the Numbers
- PHP 36,467,475.60 — total productivity incentive bonus and CNA bonus granted for calendar year 2012, initially disallowed
- PHP 16,141,834.88 — organizational and individual performance incentive bonus for which the disallowance was lifted
- PHP 11,192,500.00 — CNA bonus for which the disallowance was affirmed
- PHP 30,000.00 — CNA bonus component under Board Resolution No. 667
- January 14, 2014 — date of Notice of Disallowance No. NCR-2014-001-COB(12)
- January 31, 2020 — COA Decision No. 2020-485
- January 31, 2024 — Resolution in COA Decision No. 2024-015
The Court's Reasoning
The Court explained that incentives or benefits cannot be excused based on a broad and sweeping association to work, as this could easily be feigned by unscrupulous public officers and limit the government's ability to recover. It found no showing of any bona fide equitable consideration relevant to the nature, purpose, and amount of the grant that would warrant absolving the recipients from their civil obligation to the government.
On officer liability, the Court applied the rule that those 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, while those clearly shown to have acted in bad faith, malice, or gross negligence are solidarily liable for the net disallowed amount. Citing prior rulings, the Court reiterated that certifying officers performing ministerial duties not related to the legality of the disbursement may be excused on account of good faith. Because the disallowance was anchored on the illegality of the grant rather than on the availability of funds, Santos, Magalang, and Perez were excused. Arenas and Panti, whose roles were not purely ministerial, were held solidarily liable.
This report is based on the Supreme Court decision in G.R. No. 277172.
This report summarizes a public Supreme Court decision and is not legal advice.