Case Summary (G.R. No. 182574)
Facts of the Case
On December 21, 1994, the Sangguniang Panlalawigan of Negros Occidental enacted Resolution No. 720-A, which allocated P4,000,000 from its retained earnings for hospitalization and health care insurance benefits for 1,949 officials and employees. Following a public bidding, Philam Care Health System Incorporated was awarded the insurance coverage. A Group Health Care Agreement was subsequently signed between the Province and Philam Care, leading to a total premium payment of P3,760,000 made on January 25, 1996.
However, on January 23, 1997, the Provincial Auditor issued Notice of Suspension No. 97-001-101, suspending the premium payment due to a lack of prior approval from the Office of the President, as mandated by Administrative Order No. 103 (AO 103). The auditor argued that the payment violated Republic Act No. 6758 (RA 6758), known as the Salary Standardization Law. A memorandum from then-President Joseph E. Estrada later directed COA to lift the suspension for only P100,000, a directive that the Provincial Auditor disregarded. Instead, on September 10, 1999, the auditor issued Notice of Disallowance No. 99-005-101(96) with similar grounds, which prompted the petitioner to appeal to COA.
COA Decisions
In its decision dated July 14, 2006, COA confirmed the disallowance of the premium payment, asserting that no government entity, including local government units (LGUs), is exempt from obtaining prior approval from the President for additional benefits. COA highlighted that the insurance benefits were duplicative of what employees were entitled to under the Medicare program. Consequently, COA held liable all 1,949 benefitting officials and employees, the former Governor Rafael L. Coscolluela, and members of the Sangguniang Panlalawigan who approved the resolution. However, it did not hold Philam Care accountable, citing the unjust nature of requiring a refund for services rendered.
Legal Issue Presented
The central issue is whether COA was justified in affirming the disallowance of P3,760,000 allocated for hospitalization and health care insurance benefits provided by the Province of Negros Occidental to its officials and employees, or if such disallowance constituted a grave abuse of discretion by COA.
Court's Ruling
The petitioner contended that its actions were lawful under local fiscal autonomy, emphasizing their power to allocate resources under a valid appropriation ordinance. Conversely, respondents insisted that LGUs remain subject to RA 6758 and must follow the prior approval mandate established by AO 103. The Court noted that AO 103, effective January 14, 1994, was intended to standardize compensation to avoid discontent among government employees and provided clear directives prohibiting local offices from granting additional benefits without prior presidential approval.
The Court ultimately disagreed with COA, interpreting AO 103 to mean that the prior approval requirement does not extend to LGUs. It reasoned that while LGUs are subject to the President's general s
...continue readingCase Syllabus (G.R. No. 182574)
Case Overview
- The case involves a petition for certiorari challenging the decisions of the Commission on Audit (COA) which disallowed premium payments for health care benefits to 1,949 officials and employees of the Province of Negros Occidental.
- The specific decisions being contested are Decision No. 2006-044 dated 14 July 2006 and Decision No. 2008-010 dated 30 January 2008.
Background Facts
- On 21 December 1994, the Sangguniang Panlalawigan of Negros Occidental passed Resolution No. 720-A, allocating P4,000,000 for hospitalization and health care insurance benefits.
- After a public bidding, Philam Care Health System Incorporated was selected to provide insurance coverage, resulting in a Group Health Care Agreement with a total payment of P3,760,000.
- The premium payment was made on 25 January 1996.
- A post-audit investigation by the Provincial Auditor on 23 January 1997 led to Notice of Suspension No. 97-001-101 due to lack of prior approval from the Office of the President, as mandated by Administrative Order No. 103.
- The Provincial Auditor cited violations of Republic Act No. 6758 (Salary Standardization Law).
- In response, the petitioner sought approval from the Office of the President, which was partially granted for only P100,000.
- The subsequent Notice of Disallowance No. 99-005-101 was issued, affirming disallowance of the entire premium payment.
- Petitioner appealed, but the COA upheld the disallowance in 2006 and 2008.
Legal Issue
- The main legal issue is whether the COA committed grave abuse of discretion by affirming the disallowance of P3,760,000 paid for