Power Sector Assets and Liabilities Management Corporation v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner PSALM, a government-owned and controlled corporation, approved a Health Maintenance Program (HMP) in 2006, which was later expanded through Board Resolutions in 2007 and 2008 to include additional medical benefits such as prescription drugs, reimbursement for emergency cases, consultation fees, and diagnostic services. These expanded benefits were intended to be equivalent to existing programs for government personnel under AO No. 402 and CSC MC No. 33. Procedural History: On May 9, 2011, the COA issued Notice of Disallowance (ND) No. 11-02-(2010) disallowing PSALM's expanded medical assistance benefits for 2010 amounting to P5,642,739.95 for lack of legal basis and necessity. PSALM appealed to the COA Cluster Director, who affirmed the disallowance. PSALM's subsequent petition for review with the COA Proper was also denied, affirming the disallowance. A motion for reconsideration was likewise denied, leading to the present petition for certiorari. The Petition: PSALM assailed the COA's Decision and Resolution affirming the disallowance, arguing that the COA acted with grave abuse of discretion in disallowing the benefits and in requiring the refund despite claims of good faith.
Issue(s)
Whether the COA acted with grave abuse of discretion when it affirmed the disallowance of the 2010 expanded medical allowances extended by PSALM to its officers and employees for lack of legal basis. Whether the COA acted with grave abuse of discretion in requiring PSALM's Board of Directors, officers, and employees to refund the 2010 medical allowances despite their claim of good faith.
Ruling
The petition is DENIED. The assailed Decision No. 2016-272 dated 26 September 2016 and Resolution dated 26 October 2017 of the Commission on Audit are AFFIRMED with MODIFICATION regarding the liability for return of the disallowed amounts.
Ratio Decidendi
On the issue of whether the COA acted with grave abuse of discretion in affirming the disallowance of the 2010 expanded medical allowances for lack of legal basis: The Court held that the petition lacks merit. It reiterated its ruling in a previous case (G.R. Nos. 205490 & 218177) that the expanded medical assistance benefits (MABs) granted by PSALM under Board Resolution Nos. 07-67 and 2008-1124-004 were devoid of legal basis. Administrative Order (AO) No. 402, Series of 1998, which authorized an annual medical check-up program, was strictly interpreted to cover only diagnostic procedures and not treatments or enhancements. The expanded benefits, including prescription drugs, consultation fees, and reimbursement for emergency cases, went beyond the scope of a mere medical check-up program as contemplated by AO 402 and the principle of ejusdem generis. The Court emphasized that any augmented benefits must conform to the class of diagnostic procedures. Therefore, the disallowance by the COA was proper. On the issue of whether the COA acted with grave abuse of discretion in requiring PSALM's Board of Directors, officers, and employees to refund the 2010 medical allowances despite their claim of good faith: The Court applied the Madera Rules on the return of disallowed amounts. It found that the approving and certifying officers were guilty of gross negligence because they continued to grant the expanded MABs despite prior notices of disallowance for the 2008 and 2009 MABs. This persistence demonstrated a disregard for the clear provisions of AO 402 and prior audit findings. Consequently, these officers are jointly and severally liable for the return of the disallowed amounts. Regarding the recipient employees, the Court ruled that they are liable to return the amounts received, as the benefits were devoid of legal basis and not given in consideration of services rendered, nor were there any exceptional circumstances like undue prejudice or social justice considerations to excuse their return. The principle of solutio indebiti applies, requiring restitution for amounts unduly received.
Main Doctrine
The expanded medical assistance benefits granted by PSALM to its officers and employees lacked legal basis, and the disallowance by the COA was affirmed. Approving and certifying officers were found guilty of gross negligence and are jointly and severally liable, while recipient employees are liable to return the amounts received.