SC clarifies LGU power to grant additional pay to workers

A ruling by the Supreme Court (SC) has upheld the power of local government units (LGUs) to grant additional compensation to their officials and employees even without prior approval from Malacañang.

The tribunal made the decision by Senior Justice Antonio Carpio in a case involving the provincial government of Negros Occidental, which had questioned the rulings of the Commission on Audit (CoA) disallowing premium payment for the hospitalization and health care insurance benefits of 1,949 officials and employees of the province for 1996.

State auditors from the CoA said the grant of such benefits violates Administrative Order (AO) 103 issued in 1994 by then President Fidel Ramos. AO 103 requires government entities to secure approval from the Chief Executive prior to granting additional benefits to its personnel.

CoA also ruled that the hospitalization and insurance benefits provided by Philam Care, the private firm contracted by then Gov. Rafael Coscolluela, was a duplication of the benefits given to government workers under the Medicare program which is mandated by law.

The SC en banc said the grant and release of the benefits were validly enacted through an ordinance passed by the Sangguniang Panlalawigan of Negros Occidental in 1994.The High Court cited the “state policy of local autonomy” as guaranteed by the 1987 Constitution, under Section 25, Article II and Section 2, Article X, as well as the Local Government Code of 1991.

The court held that the CoA committed grave abuse of discretion in affirming the disallowance of P3.76 million for premium paid for the hospitalization and healthcare insurance of all officials and employees of the provincial government.

Contrary to CoA’s pronouncement, the high court said that a close reading of the provisions of AO 103 would show that Negros Occidental “did not violate the rule of prior approval from the President.”

Section 2 of AO 103 provides that the prohibition applies only to “government offices/agencies, including government-owned-and-controlled-corporations (GOCCs), as well as their respective governing boards,” it pointed out.

The court said nowhere it is indicated in Section 2 that the prohibition also applies to LGUs.

“The requirement then of prior approval from the President under AO 103 is applicable only to departments, bureaus, offices and government-owned-and- controlled-corporations under the Executive branch,” the court said.

In other words, the Court said AO 103 must be observed by government offices under the President’s control as mandated by Section 17, Article VII of the Constitution which provides that the President “shall have control of all executive departments, bureaus and offices” and that he “shall ensure that the laws be faithfully executed.”

The court said that being an LGU, the province of Negros Occidental “is merely under the President’s general supervision pursuant to Section 4, Article X of the Constitution.” “The President’s power of general supervision means the power of a superior officer to see to it that subordinates perform their functions according to law,” the court explained.

Such power, according to the court, is distinguished from the President’s power of control which is the power to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the President over that of the subordinate officer.”

Since LGUs are subject only to the power of general supervision of the President, the court said the authority of the Chief Executive is limited to seeing to it that rules are followed and laws are faithfully executed.

“The President may only point out that rules have not been followed but the President cannot lay down the rules, neither does he has the discretion to modify or replace the rules,” the Court noted.

“Thus, the grant of additional compensation like hospitalization and health care insurance benefits in the present case does not need the approval of the President to be valid,” it added. –Benjamin B. Pulta, Daily Tribune