PHIC vs. COA

A government-owned and controlled corporation's fiscal autonomy provision in its charter does not exempt it from the requirement of presidential approval under Section 5 of P.D. No. 1597 before granting additional allowances, honoraria, or fringe benefits to its employees, and the six-month reglementary period for appeals before the COA Proper under the RRPC is computed as 180 calendar days, with each month counted according to its actual number of days.

The Philippine Health Insurance Corporation (PHIC) is a government-owned and controlled corporation created under R.A. No. 7875, mandated to manage the National Health Insurance Fund and ensure the availability of funds for universal and affordable health care. As a government entity, PHIC's authority to fix the compensation of its employees and grant additional allowances is subject to salary standardization laws and executive oversight. The Commission on Audit (COA), through its Supervising Auditor, issued Notices of Disallowance against certain benefits PHIC granted to its officers and employees, triggering the present dispute over both procedural compliance with COA's appeal rules and the substantive legality of the disbursements.

The Philippine Health Insurance Corporation (PHIC) is a government-owned and controlled corporation created under R.A. No. 7875, tasked with managing the National Health Insurance Fund. Between 2008 and 2009, PHIC granted various benefits and allowances to its officers and employees, including a Productivity Incentive Bonus (with a withholding tax portion and a Collective Negotiation Agreement incentive component), a Presidential Citation Gratuity, and a Shuttle Service Assistance. These disbursements totaled PHP 43,810,985.26.

The Supervising Auditor of the Commission on Audit (COA) assigned to PHIC issued four separate Notices of Disallowance (NDs) on various dates in 2010. ND No. 10-001-717(08), dated March 12, 2010, disallowed the withholding tax portion of the Productivity Incentive Bonus for calendar year 2008 in the amount of PHP 12,758,649.75, which PHIC received on March 29, 2010. ND No. 10-002-725(09), dated March 29, 2010, disallowed the CNA Incentive included in the computation of the Productivity Incentive Bonus for CY 2008 in the amount of PHP 10,460,000.00, also received on March 29, 2010. ND No. 10-003-725(09), dated April 13, 2010, disallowed the Presidential Citation Gratuity for CY 2009 in the amount of PHP 18,347,758.02, received by PHIC on April 14, 2010. ND No. 10-004-725(09), dated April 21, 2010, disallowed the Shuttle Service Assistance for CY 2009 in the amount of PHP 2,244,577.49, received on the same date.

On August 24, 2010, PHIC filed a Consolidated Memorandum of Appeal before the COA-Corporate Government Sector (COA-CGS), assailing the issuance of all four NDs. On May 16, 2012, the COA-CGS rendered a Decision denying the appeal and affirming the NDs, holding that PHIC did not have authority to grant increases, emoluments, or new allowances without the approval of the President of the Philippines. PHIC received this Decision on May 22, 2012.

On June 26, 2012, PHIC filed a Motion for Extension of Time to File Petition for Review before the COA Proper. On July 13, 2012, PHIC filed its Petition for Review. The COA, in its Decision No. 2016-474 dated December 28, 2016, denied the Petition for Review with respect to ND Nos. 10-001-717(08), 10-002-725(09), and 10-003-725(09) for being filed out of time, finding that the Petition was filed 199 days after receipt of the first two NDs and 183 days after receipt of the third, both beyond the 180-day reglementary period. With respect to ND No. 10-004-725(09), which was timely filed, the COA denied it on the merits, finding that PHIC had no authority to grant additional allowances and that the shuttle service allowance was prohibited by law. On January 31, 2020, the COA denied PHIC's Motion for Reconsideration. PHIC then filed the present Petition for Certiorari dated February 14, 2021, though it was filed on February 26, 2021.

• Timeliness of Appeal: PHIC argued that it timely filed its Petition for Review, asserting that a computation of the elapsed period would show it did not exhaust the reglementary period. PHIC maintained that under the Civil Code, the word "month" means thirty days, and combined with its timely filed Motion for Extension, the Petition for Review was filed within the 180-day period.
• Relaxation of Procedural Rules: PHIC argued that mere procedural technicalities should not hinder the complete adjudication of the case on the merits, as the outcome could potentially affect thousands of PHIC personnel.
• Legal Basis for Disallowed Benefits: PHIC argued that the grant of the disallowed benefits was pursuant to law and a valid Collective Negotiating Agreement, and that PHIC had the fiscal authority to grant them, as confirmed and approved by former President Gloria Macapagal Arroyo through the letter of former Secretary of Health Francisco T. Duque III dated March 7, 2008.
• Fiscal Autonomy: PHIC relied on Section 16(n) of R.A. No. 7875, which authorizes PHIC to organize its office, fix the compensation of, and appoint personnel as may be deemed necessary, arguing this provision confirmed its fiscal authority and independence to grant the benefits.

• Timeliness of Appeal: The COA, through the Office of the Solicitor General, maintained that the Petition for Review with respect to ND Nos. 10-001-717(08), 10-002-725(09), and 10-003-725(09) was filed out of time, and that without any justifiable reason warranting a relaxation of the rules, PHIC could not expect procedural leniency in its favor.
• No Grave Abuse of Discretion: The COA maintained that there was no grave abuse of discretion committed in issuing the NDs and denying the Petition for Review.

• Timeliness of Appeal: Whether the COA gravely abused its discretion in dismissing PHIC's Petition for Review with respect to ND Nos. 10-001-717(08), 10-002-725(09), and 10-003-725(09) for being filed out of time.
• Merits of the Disallowance: Whether the COA gravely abused its discretion in dismissing PHIC's Petition for Review with respect to ND No. 10-004-725(09) for lack of merit.

• Timeliness of Appeal: No. The COA did not commit grave abuse of discretion in dismissing the appeal for ND Nos. 10-001-717(08), 10-002-725(09), and 10-003-725(09), as the Petition for Review was filed beyond the 180-day reglementary period prescribed by the RRPC, and the mere filing of a Motion for Extension did not automatically extend the period.
• Merits of the Disallowance: No. The COA correctly disallowed the Shuttle Service Assistance and the other benefits, as PHIC's authority to fix compensation under Section 16(n) of R.A. No. 7875 is not absolute and remains subject to the requirement of presidential approval under P.D. No. 1597, and the presidential communications cited by PHIC approved its Rationalization Plan, not the specific disallowed benefits.

• Timeliness of Appeal: The six-month reglementary period for filing an appeal before the COA Proper is prescribed by Rule V, Section 4 and Rule VII, Section 3 of the Revised Rules of Procedure of the Commission on Audit (RRPC). The Court had already settled in PHIC vs. COA (839 Phil. 573 [2018]) that the six-month period means 180 days, with one month treated as equivalent to 30 days. Applying this rule, PHIC should have filed its appeals on June 24, 2012 for ND Nos. 10-001-717(08) and 10-002-725(09), and on July 10, 2012 for ND No. 10-003-725(09). The Petition for Review was filed on July 13, 2012 — 199 days after receipt of the first two NDs and 183 days after receipt of the third. PHIC's proposed computation was flawed because it treated all months as thirty days, disregarding that March, May, and July have thirty-one days. Furthermore, PHIC's Motion for Extension was not acted upon by the COA, and the mere filing of such a motion does not automatically entitle the movant to the additional time requested — whether the motion is meritorious is discretionary upon the tribunal. The right to appeal is a statutory privilege that must be exercised in compliance with the applicable rules; otherwise, it is forfeited. Only the appeal with respect to ND No. 10-004-725(09) was timely filed.

• Merits of the Disallowance: Even assuming the rules were relaxed, PHIC's case would still fail on the merits. Article IX-B, Section 8 of the 1987 Constitution prohibits additional, double, or indirect compensation unless specifically authorized by law. Section 5 of P.D. No. 1597 requires that allowances, honoraria, and other fringe benefits granted to government employees be subject to the approval of the President upon recommendation of the Commissioner of the Budget. The Court in Philippine Mining Development Corporation vs. COA held that P.D. No. 1597 subjects covered institutions to executive imprimatur and requires presidential approval prior to granting allowances. While some government entities have been expressly exempted from salary standardization laws by their creating statutes, Section 16(n) of R.A. No. 7875 — which authorizes PHIC to "fix the compensation of and appoint personnel" — does not expressly exempt PHIC from existing laws on compensation and position classification. The Court had consistently ruled in PHIC vs. COA (801 Phil. 427 [2016]) and Philhealth vs. COA (839 Phil. 573 [2018]) that Section 16(n) does not give PHIC unbridled authority to fix compensation and unilaterally provide allowances, and that its fiscal autonomy must be read in conjunction with applicable laws and regulations. PHIC's reliance on the letters of Secretary Duque dated September 18, 2006 and March 7, 2008, which were signed by President Arroyo, was untenable because those letters referred to the approval of the PHIC Rationalization Plan — addressing human resource needs such as opening permanent positions and hiring job order contractors — not the disbursement of the disallowed benefits and allowances. No formal document or memorandum authorized PHIC to grant these specific allowances. Additionally, PHIC failed to comply with the regulations governing CNA benefits under Administrative Order No. 135, Series of 2015, and DBM Circular No. 2006-1: the CNA made no reference to the source of funding or generated savings, and it provided for fixed amounts with yearly increases, contrary to the requirement that CNA incentives shall not be predetermined and shall depend on savings generated.

• Right to appeal is a statutory privilege — The right to appeal is a mere statutory right, and anyone who seeks to invoke such privilege must comply with the applicable rules; otherwise, the right to appeal is forfeited. The Court applied this doctrine to hold that PHIC's failure to file its Petition for Review within the 180-day reglementary period under the RRPC resulted in the forfeiture of its right to appeal with respect to three of the four NDs.

• Computation of the six-month reglementary period under the RRPC — The six-month period for filing an appeal before the COA Proper is understood to mean 180 days, with one month treated as equivalent to 30 days, such that six months equals 180 days. The period is counted from receipt of the decision appealed from, taking into account any tolling of the period during pendency of appeals before lower COA adjudicatory bodies.

• Filing of a motion for extension does not automatically grant additional time — A party may be allowed to move for an extension of time to file a required pleading, but the mere filing of the motion does not automatically entitle the litigant to the fresh or extended period requested. Whether the motion is meritorious and should be granted is discretionary upon the court or tribunal from which relief is sought.

• Fiscal autonomy of GOCCs is not absolute — A fiscal autonomy provision in a GOCC's charter does not give it unbridled authority to fix compensation and unilaterally grant allowances. Such authority must be read in conjunction with applicable laws and regulations, including P.D. No. 1597, which requires presidential approval for additional allowances, honoraria, and fringe benefits. The power to fix salaries and determine allowances remains subject to the standards laid down by applicable salary standardization laws.

• Presidential approval must be specific to the benefit granted — A general presidential approval of a government entity's rationalization plan or organizational restructuring does not constitute authorization to grant specific allowances and benefits. Absent a formal document or memorandum authorizing the grant of particular allowances, disbursements cannot be said to have been legally disbursed.

• "Nothing in the above-quoted provision expressly exempts PHIC from existing laws, rules, and regulations on compensation, position classification, and qualification standards. Consequently, PHIC is governed by P.D. 1597, which requires executive approval before additional benefits may be granted to its officers and employees." — This passage articulates the ratio decidendi on the merits: that PHIC's charter provision on fiscal autonomy does not exempt it from the presidential approval requirement under P.D. No. 1597.

• "The mere filing of the motion does not automatically entitle the litigant to the fresh or extended period requested. Whether the motion is meritorious and should be granted shall be discretionary upon the court or tribunal from which relief is sought." — This passage states the controlling doctrine on motions for extension, which the Court applied to reject PHIC's assumption that its Motion for Extension was deemed granted.

• "To sustain petitioners' claim that it is [] 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 [] PHIC unlimited authority to unilaterally fix its compensation structure. Certainly, such effect could not have been the intent of the legislature." — This quotation, drawn from the Court's prior ruling in Philhealth vs. COA and adopted in the present decision, defines the doctrinal limitation on GOCC fiscal autonomy and explains why unilateral authority to fix compensation would violate the principle against invalid delegation of legislative power.

• PHIC vs. COA, 839 Phil. 573 (2018) — Controlling precedent on the computation of the six-month reglementary period under the RRPC as 180 days, and on the limitation of PHIC's fiscal autonomy under Section 16(n) of R.A. No. 7875. Followed and applied directly to both the procedural and substantive issues in this case.

• PHIC vs. COA, 801 Phil. 427 (2016) — Controlling precedent holding that Section 16(n) of R.A. No. 7875 does not give PHIC unbridled authority to fix compensation and unilaterally provide allowances, and that such authority must be expressly authorized by law or DBM issuance. Followed.

• Philippine Mining Development Corporation vs. COA, G.R. No. 245273, July 27, 2021 — Applied to establish that P.D. No. 1597 subjects covered institutions to executive imprimatur and requires presidential approval prior to granting allowances, honoraria, and other benefits. Followed.

• Agravante vs. Commission on Election, G.R. No. 264029, August 8, 2023 — Cited for the doctrine that the right to appeal is a mere statutory privilege that must be exercised in compliance with applicable rules.

• Chozas vs. Commission on Audit, 864 Phil. 733 (2019) — Cited for the proposition that the RRPC was crafted to ensure the orderly disposition of cases.

• National Tobacco Administration vs. Commission on Audit — Cited as early precedent (1999) establishing that the validity of a grant of allowance must rest not merely on an agency's fiscal autonomy but on express authorization under the SSL, by law, or by DBM issuance.

• Article IX-B, Section 8, 1987 Constitution — Provides that no elective or appointive public officer or employee shall receive additional, double, or indirect compensation unless specifically authorized by law. Applied as the constitutional basis requiring statutory authority for any benefit granted to government employees beyond their standardized compensation.

• Section 5, Presidential Decree No. 1597 — Provides that allowances, honoraria, and other fringe benefits granted to government employees, whether payable by their respective offices or by other agencies of government, shall be subject to the approval of the President upon recommendation of the Commissioner of the Budget. Applied to require presidential approval for the disallowed benefits, which PHIC failed to obtain.

• Article IV, Section 16(n), Republic Act No. 7875 — Authorizes PHIC to organize its office, fix the compensation of, and appoint personnel as may be deemed necessary upon the recommendation of the president of the Corporation. The Court held that this provision does not expressly exempt PHIC from salary standardization laws and does not grant unbridled authority to fix compensation or grant allowances.

• Rule V, Section 4 and Rule VII, Section 3, Revised Rules of Procedure of the Commission on Audit — Prescribes the six-month (180-day) reglementary period for filing appeals before the COA Proper. Applied to hold that PHIC's Petition for Review was filed beyond the reglementary period for three of the four NDs.

• Section 4, Administrative Order No. 135, Series of 2015 — Provides that the CNA Incentive shall be sourced only from savings generated during the life of the CNA. Applied to find that PHIC's CNA made no reference to the source of funding or generated savings.

• DBM Circular No. 2006-1, Sections 5.6 and 5.7 — Provides that the amount/rate of the individual CNA Incentive shall not be predetermined in the CNAs and may vary every year depending on savings generated, and shall be paid as a one-time benefit after the end of the year. Applied to find that PHIC's CNA provided for fixed amounts with yearly increases, contrary to these requirements.

Gesmundo, C.J., Leonen, SAJ., Caguioa, Hernando, Lazaro-Javier, Inting, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, and Kho, Jr., JJ.