G.R. No. 124086; June 26, 2006
GODOFREDO S. SISON, in his capacity as Deputy Administrator, Social Security System, Petitioner, vs. COURT OF APPEALS and DR. CONCEPCION O. LIM-TAN, Respondents.

FACTS

Respondent Dr. Concepcion O. Lim-Tan, proprietor and administrator of two hospitals in Bohol, filed numerous Medicare claims with the SSS Regional Office in Cebu from August 1988 to April 1989. Petitioner Godofredo Sison, the regional manager, informed her of delays due to suspected irregularities, including allegations of forged signatures and claims for non-admitted patients. Respondent demanded payment, invoking Medicare Circular No. 258, which mandated that if a claim appears doubtful, the System must either file a case to suspend payment or pay within ninety days and subject it to pre-audit. No such suspensive case was filed within the period. Respondent subsequently filed a mandamus and damages case to compel payment.
The trial court found that petitioner failed to file any judicial or administrative action to suspend payment within the 90-day reglementary period under the Circular. It also noted petitioner’s public allegations of a multi-million scam against respondent’s hospitals, which were largely unsupported, and the dismissal of related criminal cases. During litigation, SSS authorized payment of P850,000 via checks, which respondent refused to encash upon advice of counsel.

ISSUE

Whether petitioner SSS, through Sison, is obligated to pay the Medicare claims of respondent despite allegations of fraud, given its failure to comply with the procedure in Circular No. 258 for suspending payment.

RULING

Yes. The Supreme Court affirmed the Court of Appeals’ decision ordering payment of 80% of the claims. The legal logic centers on the mandatory nature of administrative circulars and the principle of estoppel. Circular No. 258 established a clear procedure: upon finding a doubtful claim, the SSS must either file a case to suspend payment within 90 days or pay and then conduct a pre-audit. Petitioner, aware of the circular, admitted not filing any suspensive case within the prescribed period. This failure rendered the continued withholding of payment unjustified.
The Court emphasized that the government, when acting through its agencies, must honor its own rules and cannot later disavow them to the prejudice of a party who relied thereon. Petitioner’s inaction bound the SSS to the alternative duty to pay and then audit. The subsequent discovery of alleged irregularities does not excuse the initial procedural lapse, as the circular was precisely designed to balance the need for fraud investigation with the timely settlement of hospital claims. The award of 80% aligns with a subsequent PMCC resolution promoting accelerated payment to ensure the financial viability of medical care providers, reflecting the state’s policy to protect public health.