Local Government Units (LGU) just like all the government offices go through audit by the Commission on Audit (COA) which is supposed to make sure that government expenditures or use of public funds are done in accordance with the rules established by law and other relevant rules. Local Government Units and the COA most of the time find themselves at opposing sides when it comes to disbursements and expenditures and one issue that always surfaces is on the relationship of the National Government and the LGU. Although the Constitution says that “The territorial and political subdivisions shall enjoy local autonomy”(Philippine Constitution, Article X, Section 2) it also provides that: “The President of the Philippines shall exercise general supervision over local governments.” (Philippine Constitution, Article X, Section 4). This is where most controversies arise.
Province of Negros Occidental vs. COA
Back in 1994, the Province of Negros Occidental (The Province) through an ordinance allotted its retained earnings for hospitalization and healthcare insurance of its employees. Philam Care as the winning bidder insured said employees. On post-audit, the COA suspended the payment because the province did not obtain approval of the Office of the President as mandated by AO 103 and that the allocation violated the Salary Standardization Act (R.A. 6758). “The COA ruled that under AO 103, no government entity, including a local government unit, is exempt from securing prior approval from the President granting additional benefits to its personnel” (G.R. No. 182574, September 28, 2010). The COA disallowed the payments and ordered the refund by all concerned employees. Negros Occidental filed a petition before the Supreme Court challenging the decision of the COA.
The COA Committed an Error
The Supreme Court disagreed with the COA. The Province did not violate AO 103. The Court said: “From a close reading of the provisions of AO 103, petitioner did not violate the rule of prior approval from the President since Section 2 states that the prohibition applies only to “government offices/agencies, including government-owned and/or controlled corporations, as well as their respective governing boards.” There was no need for the Province to obtain a prior approval from the President because the law did not require. The only agencies required are those under the control of the President such as the executive departments but the Local Governments are merely under his “general supervision”. The following discussion of the Court is very enlightening: 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. This 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.The power of control gives the President the power to revise or reverse the acts or decisions of a subordinate officer involving the exercise of discretion. Since LGUs are subject only to the power of general supervision of the President, the President’s authority 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 have the discretion to modify or replace the rules. 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.”
Until now, however many issues still haunt the LGUs as to their status. Countless memoranda have been issued and are still being issued which are in essence directing LGUs to undertake certain acts making the principle of local autonomy more and more hazy.