[G.R. NO. 124086 : June 26, 2006]
GODOFREDO S. SISON, in his capacity as Deputy Administrator, Social Security System, Petitioner, v. COURT OF APPEALS and DR. CONCEPCION O. LIM-TAN, Respondents.
D E C I S I O N
This is a Petition for Review on Certiorari 1 of the Decision2 dated 27 February 1996 of the Court of Appeals ("appellate court"). The Decision ordered petitioner Godofredo S. Sison ("petitioner") and the Social Security System (SSS) Regional Manager for Region 63 to pay 80% of the claims of Leona O. Lim Memorial Hospital (LLMH) and Paulina Lim Memorial Hospital (PLMH) under the Medical Care Program ("Medicare").
SSS Regional Office No. 6 in Cebu City ("SSS Cebu City Regional Office"), then managed by petitioner, received several Medicare claims from respondent Dr. Concepcion O. Lim-Tan ("respondent") from August 1988 to April 1989. Respondent is the proprietor of LLMH in Valencia, Bohol and the administrator of PLMH in Guindulman, Bohol. Claims in behalf of LLMH amounted to
Respondent made oral and written demands for payment upon petitioner. Sometime in December 1988, respondent visited petitioner in his office to inquire on the status of her claims. Petitioner told respondent that there would be delays in the payment of her claims because there were irregularities which require further investigation.4
In a demand letter dated 3 June 1989, without specifying the period for which she was claiming for payment, respondent again asked petitioner for payment of her claims.5 Respondent premised her demand on Medicare Circular No. 258, s. of 1988 ("Circular No. 258") dated 12 October 1988. The pertinent portions of Circular No. 258 state:
1.2 Claims Processing
Claims from all hospitals will be compared with the average number of claims filed for the same time period as established by previous statistics. Any deviation will be investigated and if a claim is patently in violation of rules and regulations, it will be denied. If a claim appears doubtful, the System concerned will investigate and:
The two Systems will be exchanging statistics on claims from each hospital.
Respondent asserted that because no case has been filed suspending payment within the reglementary 90-day period, SSS Cebu City Regional Office should pay respondent within the 90-day period and subject the claim to pre-audit, without prejudice to the filing of a case at a later time. Moreover, respondent directed petitioner's attention to the dismissal of I.S. No. 89-655, a criminal case filed by respondent against petitioner for violation of Section 30 of the Medicare Law.
Respondent did not receive any word from petitioner. On 3 July 1989, respondent filed a civil case for Mandamus and Damages before the Regional Trial Court of Tagbilaran City. The case was docketed as Special Civil Case No. 4522 and titled "Dr. Concepcion O. Lim-Tan v. Godofredo S. Sison." Respondent wanted petitioner to pay not only the Medicare claims, but also included interest on the claims, moral and exemplary damages, and attorney's fees and costs of the suit. On 5 March 1990, respondent filed an urgent motion for leave of court to amend petition. Respondent wanted to include the incumbent manager of SSS Cebu City Regional Office as a formal party.6 The trial court granted the motion in an order dated 8 March 1990.7
Petitioner alleged that SSS Cebu City Regional Office found that several claims from LLMH and PLMH were systematically tampered.8 Tampering consisted of forgery of claimants' signatures, claims for reimbursement by people who were never admitted in the hospitals, and use of SSS membership of other persons to pay purported hospital charges. SSS Cebu City Regional Office then segregated the tampered claims from the valid ones. To justify the segregation, petitioner referred to a memorandum on deceptions done by some hospitals and doctors issued on 26 May 1988 by SSS Deputy Administrator for Regional Operations Atty. Florencio Ongkingco. Atty. Ongkingco instructed that SSS offices should carefully screen Medicare claims and should initiate administrative and criminal actions against violators of the Medicare laws and rules.9 However, petitioner did not file any action in court or with the Philippine Medical Care Commission (PMCC) to suspend payment of respondent's claims within 90 days of filing.10
Aside from the declarations above, the findings of the trial court also include the following:
Seventh: [Petitioner] Sison admitted his awareness of PMCC Resolution No. 89-2074 authorizing payment of eighty percent (80%) of all claims upon filing under certain conditions. This resolution however could not be availed of by petitioner for the reason that it was adopted on April 27, 1989 and therefore, beyond the period covered by the claims in the extant case.
Eight [sic]: [Petitioner] Sison caused the publication in Sun Star Daily of Cebu and then the Sunday Post of Tagbilaran City the alleged involvement of [respondent] and her hospitals in the multi-million [M]edicare scam when, in truth and in fact, Sison could only specify the case of the Galimbas involving about SEVEN HUNDRED THIRTY NINE (
Ninth: [Petitioner] Sison filed various criminal cases against petitioner (Exhs. "D", "E", "F", "I", and "J") which were dismissed by the provincial prosecutor's office.
Tenth: [Petitioner] Sison with malice aforethought caused the cancellation of the membership of certain self-employed members (Exh. "3") without notifying [respondent] and the other hospitals in Bohol in order to justify his act which departs from tenets of good faith and fair play, and
Eleventh: [Petitioner] introduced evidence which were either not priorly reserved for presentation during the pretrial or were immaterial, impertinent and irrelevant to the extant case such as Exh. "2", Exhs. "3" to "8-A", Exhs. "39" to "48", Exhs. "49" to "117", Exhs. "118" to "402", Exh. "403", Exh. "419", Exhs. "420" to "450" and Exhs. "451" to "457".11
While the case was pending before the trial court, SSS Cebu City Regional Office authorized the payment of
The Ruling of the Trial Court
In its decision dated 24 August 1990, the trial court ruled that respondent has clearly shown her right to demand payment from petitioner.
Petitioner has the ministerial duty to pay respondent in view of Circular No. 258. Thus:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered in favor of petitioner [Dr. Concepcion O. Lim-Tan] and against respondents [Godofredo Sison and the manager of the SSS Cebu City Regional Office] ordering forthwith:
On 7 September 1990, petitioner notified the trial court of his desire to file an appeal before the appellate court. In his memorandum, petitioner raised the following issues:
The Ruling of the Appellate Court
The appellate court did not agree with petitioner's position. It upheld the trial court's decision and modified the amount due. The appellate court stated that the records of the case clearly revealed that petitioner, while alleging that respondent committed fraud in her Medicare claims, suspended payment of the claims but did not file the corresponding cases within the prescribed 90-day period. Thus, petitioner has the duty to pay respondent's Medicare claims without prejudice to filing cases at a later time. Furthermore, the appellate court held that the principle of exhaustion of administrative remedies does not apply when the case, as in the present, involves a purely legal question.
The appellate court applied PMCC Res. No. 89-207415 and ordered respondent, in his official capacity, to pay only 80%, or
WHEREFORE, the appealed decision of the lower court in Special Civil Case No. 4522 is hereby AFFIRMED WITH MODIFICATION anent the amount of liability. Respondent-appellant in his official capacity is hereby ordered to pay petitioner only 80% of the total
IT IS SO ORDERED.16
Dissatisfied with the appellate court's ruling, petitioner filed a petition before this Court and raised the following issues:
The Ruling of the Court
The petition has partial merit.
The main issue in this appeal is whether petitioner can be compelled by mandamus to pay respondent's claims. Other issues to be discussed are the necessity of exhaustion of administrative remedies and the extent of petitioner's liability.
Nature of Settlement of Claims
Petitioner submits that the settlement of Medicare claims within the 90-day period is merely directory and cannot defeat the discretionary authority of petitioner to withhold payment of fraudulent claims, specially those involving amounts as huge as respondent's claims. Petitioner further states that the 90-day period prescribed for the filing of cases against erring claimants cannot be regarded as mandatory because there is nothing in the circular which states that filing of cases may not be done in any other time than that designated.18
On the other hand, respondent claims that despite her repeated demands, petitioner neglected the performance of a duty which the law specifically enjoins him to perform. Because of petitioner's neglect, LLMH and PLMH were excluded from the enjoyment of the right to be paid for the hospitals' services to availing SSS members.19
As a general rule, the performance of an official act or duty which necessarily involves the exercise of judgment cannot be compelled by mandamus . It is nonetheless also available to compel action, when refused, in matters involving judgment and discretion, but not to direct the exercise of judgment in a particular manner. However, this rule admits of exceptions. Mandamus is the proper remedy in cases where there is gross abuse of
discretion, manifest injustice, or palpable excess of authority.20 The exception applies to the present case.
We agree with petitioner that his office has the discretionary authority to withhold payment of fraudulent claims. Petitioner's desire to protect government funds is laudable. Even so, his zeal has to be tempered by the application of the mandate of Medicare laws and regulations. Contrary to petitioner's assertions, the exercise of his discretionary authority to approve and deny claims is not absolute. Petitioner's exercise of authority is defined by the limits provided by Circular No. 258. Petitioner's mandate under Circular No. 258 is clear. Petitioner can only deny a patently wrongful claim. For doubtful claims, petitioner only has two options: (1) file a case within 90 days and suspend payment or (2) pay within 90 days and subject the claim to pre-audit. Payment of the claim does not prejudice petitioner from filing a case at a later time. Moreover, the exercise of petitioner's discretionary authority cannot be indefinitely held in abeyance. As in the present case, government's inaction puts the financial standing of participating hospitals in a precarious position. Indeed, instead of placing a premium on participation in the government's Medicare program, petitioner effectively punished an accredited provider by refusing to provide payment for services already rendered.21
The regulations have provided an adequate safeguard for fraudulent claims which balance the government's interests in providing a comprehensive medical care plan and in giving such benefits to rightful claimants. Petitioner's allegations of violation of Medicare laws and regulations are causes of action which are separate and distinct from the case at hand. The allegations, accompanied by voluminous exhibits, are petitioner's attempts in justifying his willful neglect in addressing respondent's claims. However, the same allegations do not excuse petitioner from acting on respondent's claims with dispatch.
Exhaustion of Administrative Remedies
Interestingly, in spite of his failure to follow the procedure under Circular No. 258, petitioner faults respondent for her alleged failure to exhaust administrative remedies. Petitioner asserts that respondent ought to have raised her claims for payment before the PMCC instead of the trial court. However, petitioner's acts foreclosed respondent's resort to administrative remedies. There was no express denial of respondent's claims; therefore, there is nothing to appeal to PMCC. Petitioner himself admitted his belated action when he testified that he authorized check payments to respondent during the course of the trial.22
Assuming arguendo that respondent made a mistake in procedure, the state policy would still weigh heavily against petitioner. Application of the doctrine of exhaustion of administrative remedies is relaxed when a strong public interest is involved.23 In addition to the protection and promotion of the people's right to health,24 the Constitution provides that:
The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all people at affordable cost. There shall be priority for the needs of the underprivileged sick, elderly, disabled, women, and children. The State shall endeavor to provide free medical care to paupers.25
Republic Act No. 6111, as amended by Presidential Decree No. 1519 ("PD 1519"), established the Philippine Medical Care Plan and created the PMCC. PMCC is the precursor of today's Philippine Health Insurance Corporation, which is more popularly known as PhilHealth. Sections 2 and 3 of PD 1519 state that:
SEC. 2. Declaration of Policy. It is hereby declared to [be] the policy of the government to gradually provide total medical service of our people by adopting and implementing a comprehensive and coordinated medical care plan based on the following concepts of health care:
SEC. 3. Purpose and Objectives. The main purposes and objectives of this Decree are:
Indeed, this Court allows a liberal interpretation of the technical rules of procedure when a rigid enforcement will result in a deprivation of legal rights.
Extent of Liability
We conclude that petitioner, in his official capacity, must pay respondent the following amounts for her claims for the period of August 1988 to April 1989:
We affirm the appellate court's deletion of the trial court's award of moral damages as we disagree with the trial court's finding of bad faith on the part of petitioner. However, we recognize the damage caused by his inordinate delay in resolving respondent's claims. Although this delay may be explained by petitioner's desire to prevent dissipation of government funds, petitioner's acts only serve to perpetuate the negative image of corruption in the government bureaucracy. He gave cause for respondent to set a personal meeting with him for a possible "negotiation" of the claims and even became an open target for allegations of maliciously persecuting respondent. As a public official, petitioner ought to have acted with the highest degree of excellence, professionalism, intelligence and skill. Petitioner is thus liable, in his personal capacity, for exemplary damages of
We delete the award for attorney's fees because, as stated earlier, there is no sufficient showing of petitioner's bad faith. As respondent was compelled to litigate her claims, we charge petitioner with the costs of litigation.
WHEREFORE, the Court PARTLY GRANTS the petition. The Decision dated 27 February 1996 of the appellate court is AFFIRMED WITH MODIFICATION. Petitioner Godofredo S. Sison, in his official capacity, must pay respondent Dr. Concepcion O. Lim-Tan actual damages for respondent's claims from August 1988 to April 1989 in the amounts of
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