Supreme Court voids Napocor health plan

THE SUPREME Court has ordered officials and employees of the National Power Corp. (Napocor) to return more than P34 million in private health insurance premiums, ruling that the payments constituted an illegal use of public funds.

In a 21-page decision promulgated on April 22, 2025 and made public on Feb. 20, the High Court upheld a ruling by the Commission on Audit disallowing the payments for a Group Hospitalization and Life Insurance Plan from April 2014 to March 2015.

State auditors had flagged the expenditure in 2015, citing a rule that prohibits government agencies from procuring private health insurance since employees are already covered by the Philippine Health Insurance Corp.

Napocor officials argued that the payments were authorized under a collective negotiation agreement and were meant to improve employee welfare. However, the High Court ruled that such agreements cannot override existing audit rules and national compensation laws.

The tribunal noted that while the Electric Power Industry Reform Act allows some flexibility in compensation, it does not grant the state company blanket authority to bypass the Salary Standardization Law in granting benefits.

The court held the former Napocor president and chief executive officer, a vice-president and a human resource manager liable for approving the disbursements and ordered them to return the amounts.

Employees who received the benefits were also directed to refund what they had obtained, while officials whose roles were limited to certifying fund availability were cleared of liability.

In the decision penned by Associate Justice Amy C. Lazaro-Javier, the court stressed strict adherence to fiscal rules to safeguard public funds. The ruling is final, and the obligation to return the disallowed amounts stands. — Erika Mae P. Sinaking